How Much Does It Cost to Build an Economy Extended-Stay Hotel in 2026, and How Is It Financed?

An economy extended-stay hotel costs from $72,000 to $199,000 per key to build in 2026 before land, depending on the brand. WoodSpring Suites is the cheapest at $72,421 to $119,401 per room and LivSmart Studios by Hilton the dearest at $134,703 to $198,737, with ECHO Suites, Everhome Suites and StudioRes in between, per the latest available franchise disclosure documents. Lenders finance the build at 55% to 65% of cost with a bank or direct construction loan, but they size that loan off the stabilized NOI, which is why a 124-key hotel at $110,000 per key usually carries about $8.6 million of senior debt and 40% equity before a C-PACE layer.

The worked example runs through the guide: a 124-key economy extended-stay at $13.6 million of building cost plus $1.4 million of land, $15.0 million in total, earning about $955,000 of stabilized NOI at 77% occupancy and a $68 ADR. The NOI supports $8.65 million of senior debt, about 58% of cost, and a $1.5 million C-PACE assessment brings the equity to $4.85 million. The tables below show the cost per key by brand, where the money goes, what the segment earned in 2025 and how the loan sizing moves when cost per key changes. The segment-by-segment ranges for every hotel type are in how much it costs to build a hotel in 2026.

Key takeaways

• Economy extended-stay costs from $72,000 to $199,000 per key before land; WoodSpring is cheapest, LivSmart dearest.
• The median limited-service and midscale extended-stay hotel costs $170,000 to $197,000 per room per HVS.
• Extended-stay occupancy ran 12 points above the industry in 2025; economy extended-stay RevPAR fell about 1.4%.
• Lenders size the loan off NOI: a 124-key hotel at $955,000 NOI supports about $8.6M of senior debt.
• Every $10,000 of cost per key above about $110,000 adds about $1.2M of equity on a 124-key build.

What does an economy extended-stay hotel cost per key by brand?

Each figure is the brand's Item 7 total divided by the prototype room count, from the FDD named in the table. All exclude land; StudioRes also excludes permits, insurance and contingency.

Two things explain the spread. The brands at the top of the table are true economy products with no lobby program, a 300-square-foot room and six to eight employees, while LivSmart and StudioRes carry a larger common area and a higher finish spec to protect the parent brand. And the FDD low ends assume a flat site with cheap utilities; site work is excluded from the WoodSpring construction line, which is why the 2026 WoodSpring FDD widened its high end by 30% over two years.

Where does the money go?

HVS's 2025 development cost survey puts the median midscale extended-stay budget at $169,910 per room and breaks it into the components below; the shares hold for economy builds at lower totals. The component medians sum to $168,578 rather than $169,910 because the median of the totals is not the sum of the line medians.

Apply those shares, as an approximation, to a $110,000-per-key economy build and the building is about $73,000, soft costs $14,000, FF&E $11,000 and land another $9,000 to $11,000 on top. The lines that move a budget are site work (utilities, grading, stormwater), which can add $10,000 per key, and the interest reserve, which the FDD tables omit but lenders require: roughly 4% to 6% of the loan over a 14-month build.

How does the economy extended-stay segment perform?

Better than the rest of the economy tier, and that is the reason lenders will finance it at all in a flat market. Extended-stay hotels ran an occupancy premium of about 12 points over the industry in 2025, and economy and mid-price extended-stay were the least affected by the downturn that began in April 2025, because residential demand does not leave when corporate travel does; annual extended-stay demand has declined only once in 27 years, in 2020. In the 100 largest markets extended-stay RevPAR fell about 2.2% in 2025 while supply grew about 4.9%, and rooms under construction fell 21% to 24,817 at year end. Economy extended-stay RevPAR fell about 1.4% in 2025, against a larger decline for all economy hotels.

Brand data for the pro forma: stabilized WoodSpring Suites averaged 76.8% occupancy, $61.30 ADR and $47.01 RevPAR in 2025, and purpose-built prototypes $51.89; Extended Stay America Premier Suites averaged about 76% occupancy, a $91 ADR and $69 of RevPAR across 49 hotels per its 2026 brand book. Underwrite your new economy extended-stay at 75% to 78% occupancy with a flat ADR, and expect the lender to haircut year one for a six-to-eight-month ramp.

How do lenders size an economy extended-stay construction loan?

Off the stabilized NOI, with three tests, and the smallest answer wins. Loan-to-cost is the ceiling, not the sizing.

The worked example. A 124-key hotel at $110,000 per key is $13.64 million of building cost; add $1.36 million of land for $15.0 million, $121,000 per key all-in. In this deal, at 77% occupancy and a $68 ADR, RevPAR is $52.36, room revenue is about $2.37 million and total revenue about $2.43 million. A 54% GOP margin leaves $1.31 million; after $260,000 of property taxes and insurance and a 4% FF&E reserve of $97,000, NOI is about $955,000.

The targets come from this year's market: banks lend 65% of cost at about 6.75% with coverage starting at 1.25x, and debt funds 70% near 10%, per Crittenden's 2026 outlook, with most hotel lenders wanting 1.35x to 1.40x on hospitality and a debt yield of 10.5% to 12%. The 1-month Term SOFR index behind the floating construction rate was 3.92% on October 23, 2026, so a bank construction loan at SOFR plus 300 prices near 6.9%.

The capital stack.

Perm debt service is about $733,000 on the senior loan and $133,000 on the assessment, $866,000 against $955,000 of NOI: 1.10x with the C-PACE included, which is why many senior lenders cap the combined stack at 65% and some size the senior loan to 1.30x on the combined service, about $7.1 million. Negotiate that point before the appraisal is ordered. The lender's full checklist, from the franchise agreement to the bonded contractor, is in the hotel construction loan requirements for 2026.

How does cost per key change the loan?

The NOI does not care what the hotel cost, so every dollar of cost above what the NOI supports comes from equity. Holding the $955,000 of NOI and the $8.65 million senior loan constant:

Above about $120,000 per key all-in, your economy extended-stay at a $68 ADR stops being a 65% leverage deal and becomes a 50% one. That is the practical answer to "which brand": a WoodSpring or ECHO at $100,000 to $115,000 all-in carries two-thirds leverage; a LivSmart at $170,000 needs either a $90-plus ADR or half the project in equity. It is also why independent developers have moved to sub-$20 million hotel projects, where the sizing math and the SBA caps both work.

Which lenders and programs finance economy extended-stay builds?

• Bridge lends directly on hotel construction from $10 million to $50 million and closed a $10.45 million construction loan on a 122-key WoodSpring Suites; below $10 million it places bank, SBA and C-PACE executions.
• Banks at 55% to 65% of cost and about 6.75%, with full repayment and completion guaranties, for sponsors with a prior hotel and liquidity of 10% to 20% of the loan.
• Hotel debt funds at 70% to 75% near 10%, non-recourse with carve-outs and a completion guaranty, for speed or a thin equity partner.
• SBA 504 for projects where the debenture fits under $5.5 million: 50% bank, 35% CDC at a 6.97% fixed 25-year rate in October 2026, 15% to 20% equity. On the $15 million example the debenture would be $5.25 million and coverage under 0.9x, so 504 fits better at $12 million and below.
• USDA Business & Industry for sites outside towns of 50,000, guaranteeing 80% to 85% of a bank loan up to $25 million with real estate terms to 30 years.
• C-PACE for 10% to 15% of the stack in the 40 states with programs, at fixed rates in the high 6s to mid 7s over 25 years, with senior lender consent.
• Brand capital. Choice's FDD discloses a capital support note on strategic WoodSpring sites, so ask the franchisor what it will put in.

When is an economy extended-stay build the wrong tool?

• Avoid it if local economy extended-stay ADR is under $58. At $58 the worked example's NOI falls to about $720,000 and the senior loan to about $6.5 million.
• Avoid a site under two acres or with heavy site work. The prototypes need the footprint, and site work is where the FDD low ends stop applying.
• Avoid the premium brands on a secondary-market site. LivSmart and StudioRes at $150,000-plus per key need a $90 ADR the market may not pay.
• Avoid building within ten miles of a sister extended-stay opened in the last three years. Supply grew about 4.9% in 2025 and lenders cut the pro forma for it.
• Avoid SBA 504 above about $12 million of cost. The $5.5 million debenture cap and the 1.15x coverage floor both bite.