US Extended-Stay Market Booms Due to Infrastructure Bill

The massive increase in spending related to the federal infrastructure bill has had a positive effect on an unexpected sector — hotels that operate extended-stay facilities.

The reason for the increase in demand for extended-stay hotels is due to the fact that construction laborers have been forced to the road to complete the major infrastructure projects that are being funded by the bipartisan Infrastructure Investment and Jobs Act, which was passed in November 2021.

Travel management company Navan provided data recently that shows extended-stay bookings from the construction industry increased 120% in the last two years. In addition, the industry is responsible for the majority of work travel, with the sector outspending every other sector by 9.2% over the previous 12 months through August.

During his company’s earnings call in the third quarter, Choice Hotels’ CFO Scott Oaksmith pointed out all the new business that’s coming their way. He said the company estimated “50 million to 100 million room nights over the next decade that really are going to feed the extended-stay profile.”

According to a spokesperson for the hotel chain, Choice Hotels’ revenue-per-available room grew 73% in the South Atlantic region and 400% in the Mountain West region. Those two areas in particular have seen major projects financed by the IIJA get underway.

The company’s senior vice president for technology, Anna Scozzafava, even told Reuters recently that Choice Hotels has tracked the announcements of large-scale projects to help plan its own expansion. This has helped the company — which counts MainStay Suites and Everhome Suites among its many brands — to specifically cater to workers in construction as well as other related industries.

“We can follow the funding, and see where these jobs and investment dollars are going,” she said.

The infrastructure bill allocated $1.2 trillion to infrastructure and transportation projects over the next five years. It has helped to keep employment in the construction sector at a healthy level, even as the housing market has experienced a downturn in new builds because interest rates have risen exponentially.

Employment in the construction industry has increased 2.2% year-to-date, which outpaces the country’s overall employment increase of 1.55%.