Extended Stay America, a mid-price hotel chain providing long-term guests with kitchens and more space than usual hotel rooms, is being bought for $6 billion by a partnership of Blackstone Group and Starwood Capital Group, two of the country’s largest investment management firms.
During the pandemic, the chain catered to essential workers and health care professionals who needed to move among regions.
The company managed a 74-percent occupancy rate during 2020.
The hotel industry as a whole averaged 44 percent occupancy, less than the industry’s customary 50-percent break-even point, after crashing to 22 percent last April, according to data firm STR.
The industry was averaging 65-percent occupancy pre-pandemic, STR noted.
Extended Stay owns 567 properties and franchises 82 others, with two-thirds of its inns located in the 25 most populous U.S. metro areas, according to Blackstone.
Starwood and Blackstone are betting that construction workers, contractors, and lawyers and other professionals helping the U.S. economy recover from the pandemic will fill more of the chain’s rooms during 2021 as the lodging industry in general recovers.
“Corporate America is going to be a heavy investor in capital spending and this business is going to benefit from that,” Tyler Henritze, Blackstone’s chief of acquisitions in the Americas, told the Wall Street Journal.
Blackstone led a group of investors who bought Extended Stay out of bankruptcy in 2010 and later sold its 4.9-percent stake. Starwood also bid to buy the lodging chain then and now owns almost 10 percent of the company.
Blackstone and Starwood will own Extended Stay in equal shares.
The companies are well-versed in the hotel business.
Starwood CEO Barry Sternlicht created Starwood Hotels & Resorts Worldwide, which was bought by Marriott; Blackstone bought Hilton Worldwide Holdings in 2007 and collected a $14-billion profit when it sold the chain in 2014.
TRENDPOST: Again, we note these mergers to illustrate how the Bigs keep getting bigger and, as we also note in this Trends Journal, the rich have gotten much richer while the middle class (along with mom and pop businesses) keeps shrinking. (See our new article, “$4 TRILLION MORE FOR BILLIONAIRES AS MIDDLE CLASS SHRINKS.”)
