Friday, March 29, 2024
spot_img
HomeReal Estate NewsCommercialBlackstone, Starwood acquire Extended Stay America for $6B

Blackstone, Starwood acquire Extended Stay America for $6B

The lodging and hospitality industries have had more than their share of setbacks during the COVID-19 pandemic. That has not stopped companies Blackstone Real Estate Partners and Starwood Capital Group from recently acquiring hotel operator Extended Stay America for $6 billion, however. The companies will own an equal stake in the hotel chain. The deal is expected to close during the second quarter of 2021.

“We are pleased to announce this transaction with Blackstone and Starwood Capital, two of the most experienced investors in the hospitality space with impressive track records of building value in a wide variety of real estate assets, and we look forward to this partnership and continued growth,” Extended Stay America’s CEO and President Bruce Haase said in a statement. “The Boards and senior management are especially grateful to the excellent team of leaders and associates who have made this company such a leader in the lodging industry and we are confident in the company’s continued success under private ownership.”

“After a thorough review of the company’s business plan, the boards concluded that the immediate cash premium offered by this transaction is compelling for stockholders,” Extended Stay America Chairman of the Boards Doug Geoga said in a statement. “We are delighted with this outcome.”

Risky or shrewd?

The Extended Stay acquisition could appear as a risky proposition for Blackstone and Starwood, but the pandemic has not negatively impacted the hotel chain as it has for others, The Wall Street Journal reports. The average U.S. hotel occupancy in 2020 was 44%, but Extended Stay saw a 74% occupancy rate. The chain likely benefitted from its model, which is designed for guests that need somewhere to stay for weeks or longer. Extended Stay rooms include kitchen areas and have more space than the average hotel room—an ideal lodging situation for essential workers, healthcare professionals and others who needed to travel during the pandemic.

“Travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended stay model,” Blackstone Head of US acquisitions Tyler Henritze said in a statement. “We helped create this company nearly 20 years ago, and believe our expertise puts us in a unique position to add long-term value.”

Henritze is also confident in this acquisition because he, and the Starwood team, believes with COVID-19 vaccinations being rolled out more people will be traveling in the U.S. again. They also expect a wider array of customers looking for a place to stay post pandemic, including contractors, construction workers, lawyers and consultants.

“Corporate America is going to be a heavy investor in capital spending and this business is going to benefit from that,” Henritze told The Wall Street Journal.

“Extended Stay has demonstrated resilience over the past year despite persistent challenges due to government lockdowns and travel restrictions,” Starwood Capital CEO Barry Sternlicht said in a statement. “We are excited about the company’s growth opportunity as restrictions ease and we’re confident that, in partnership with Blackstone and the Company, our team has the right experience to drive continued success.”

Joe Dyton can be reached at joed@fifthgenmedia.com.

- Advertisement -
- Advertisment -spot_img

Industry News

- Advertisement -