in short: Benjamin Giebler’s analysis delves into the different levels of risk and performance associated with various types of hotel investments in Kansas City.
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Kansas City Country Club Plaza – Image Source Country Club Plaza
This article evaluates the performance of full-service, select-service and limited-service and extended-stay hotels in the Kansas City metropolitan market throughout the economic cycle. Our analysis highlights key differences in revenue potential, risk exposure and recovery patterns to inform development and investment decisions.
Not all hotel product types perform equally when market conditions change. In Kansas City, differences in demand structures, pricing capabilities and operating models result in meaningful changes in how each segment grows, declines and recovers. Understanding these differences is critical when evaluating development and investment opportunities across the market.
For the purposes of this article, we looked at the full-service, select-service and limited-service (combination) and extended-stay hotel types on the market. Budget hotels with limited services were not considered given the lack of new development in Kansas City and the limited remaining economic life of existing hotels in this segment.
Summary of hotel product types
Learn about full-service hotels
Full-service hotels are typically upscale, superupscale, or luxury hotel chains that offer amenities such as dining options, banquet space, and valet parking. These hotels achieve the highest RevPAR levels primarily by maximizing average room rates.
The largest sources of demand for Kansas City’s full-service hotels include corporate and government travelers, professional sporting events, concerts, country club plazasocial groups, and conference center events.
Full-service hotels also require the highest levels of capital investment and operating expenses because they offer a wide range of amenities and services, which must be considered alongside their strong revenue per room performance.
Learn about select and limited service hotels
Select-service and limited-service hotels span a wider range, from economy to upscale chain sizes. Given the diversity of this segment, management teams must consider the characteristics of each property and submarket when determining how to maximize each available revenue.
For example, select and limited-service hotels with strong brand relationships located near downtown Kansas City or the Country Club Plaza may attract a significant portion of demand from corporate and government sectors or highly rated leisure travelers. Meanwhile, similar properties in suburban locations are likely to meet much of the demand among more price-sensitive groups, such as construction and railroad workers, transient highway travelers and youth sports teams.
Select- and limited-service hotels typically have more efficient operating models and lower development costs than full-service hotels, supporting more modest but stable profitability.
Learn about extended stay hotels
Extended stay hotels range in size from budget hotels to upscale hotel chains. These hotels often have kitchenettes in every room and offer discounted rates for longer stays.
The following differences exist among the demand generators for extended stay hotels of different sizes:
Extended stay hotels typically benefit from lower operating costs (due to longer stays and reduced room service requirements) as well as lower development costs compared to full-service hotels.
Kansas City Hotel Historical Performance by Product Type
The different periods since 2009 illustrate subtle performance trends across the three product types.
Pre-pandemic: 2009-2019
From 2009 to 2019, the Kansas City economy and hotel market recovered from the Great Recession and entered a period of economic expansion. The market has experienced stable economic and population growth, supporting growing hotel demand. The revitalization of the city center has played an important role, with increased entertainment options and new developments driving more activity and visitors to the city’s core. Occupancy and average room rates increased over the years, with RevPAR stabilizing towards the end of the decade as new supply opened up across the market.
From 2009 to 2019, all product types showed different growth rates
source: supporting role
COVID-19 Pandemic: 2020
In 2020, hotel results were impacted by the COVID-19 pandemic, as shown in the table below.
Full-service has seen the largest decline during the pandemic, while long-term accommodation has seen the smallest decline
source: supporting role
While a significant drop in demand was the main reason for the revenue per available room decline, new supply entered the market in 2020, including Loews Hotels, further exacerbating the impact on full-service hotels.
Extended stay hotels experienced a less severe downturn in 2020 due to a higher proportion of their demand including medical professionals, construction workers or residents.
Post-pandemic: 2021–2025
Starting in 2021, hotel revenue will begin to recover from the epidemic and stabilize in 2025, as shown in the chart below.
Post-pandemic recovery rates vary for each product type
Extended stay hotels have recovered the fastest from the pandemic, nearly returning to pre-pandemic RevPAR levels in 2021, followed by select- and limited-service hotels, which surpassed pre-pandemic RevPAR in 2022, and then full-service hotels, which fully recovered in 2023.
expect
The forecast for Kansas City’s economy is optimistic. The market will host several FIFA World Cup matches in the summer of 2026, which is expected to generate significant demand for local hotels.
Additionally, significant developments in the area indicate a growing economy. The largest recently completed, ongoing and planned developments in the Kansas City metropolitan area include:
These factors support a strong outlook for the Kansas City economy and hotel market.
Impact on development and investment
The data indicate different strategic considerations for different product types in the Kansas City market.
Full-service hotels are expected to achieve record revenue per room levels in the near term, supported by strong average room rate growth and limited new supply. However, high barriers to entry and high development costs make new construction in this sector relatively rare, limiting near-term development opportunities.
Select-service and limited-service hotels offer a more balanced risk-reward balance. These properties benefit from a diverse demand base, supporting relatively stable performance in all market conditions. While they face some risks of oversupply, the impact is generally less pronounced than in the extended stay segment given the shorter average length of stay. As a result, select-service and limited-service hotels may offer attractive development opportunities in submarkets where demand fundamentals remain strong and new supply is limited.
From a cyclical resilience perspective, extended stay hotels offer the most compelling growth opportunities as they have demonstrated consistent performance during both expansion and contraction periods. However, relatively low barriers to entry bring the risk of oversupply; therefore, long-stay developments should be carefully evaluated at the submarket level.
At HVS, we transform data into powerful insights that drive your success. Our work in the local market allows us to conduct preliminary interviews with key market players. This approach ensures we get real-time insights and current data for every market we operate in. For more information about the Kansas City market or help making an informed investment decision that matches your goals and risk tolerance, please Contact Benjamin Gibleryour local HVS Midwest hotel expert.
About Benjamin Gibler
Benjamin Giebler is a senior manager in HVS’ consulting and appraisal practice in St. Louis. Benjamin obtained his Missouri real estate license in 2018 and his Kansas real estate license in 2020, and works as a commercial real estate broker in Kansas City. His experience in the hospitality industry includes serving as a valet and baggage supervisor at the Kansas City Marriott Downtown and as a member of the Kansas City hotel opening team as a front desk and baggage supervisor. He graduated from the University of Missouri-Kansas City with a Bachelor of Science degree in Business Administration, majoring in Real Estate and Finance. In addition, he earned a certificate in hospitality real estate investment and asset management from Cornell University. Contact Benjamin at (816) 589-0922 or bgiebler@hvs.com.
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