The Potters won just two of their last 11 Premier League games to slip down to a final position of 13th in the table - Stoke's first bottom-half finish in four seasons.
Questions had been raised over whether Hughes had taken the team as far as he could, but Coates is confident that the Welshman still has plenty to offer at the bet365 Stadium.
"We felt he has done well for us since he's been here and we don't expect that to change," he told Sky Sports News.
"We'd have done something about it otherwise. What he has achieved so far has given us confidence he can continue to do well for us."
Stoke had recorded three consecutive ninth-place finishes before last season.