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Investment firms Blackstone Group and Starwood Capital are expected to announce Monday details of a joint $6 billion takeover of Extended Stay America.
The extended-stay hotel brand is one each of the companies invested in earlier in the pandemic and that Blackstone previously owned. The deal, first reported by the Wall Street Journal, is easily the largest hotel acquisition to come from the pandemic so far.
Starwood acquired an 8.5 percent stake in Extended Stay America in March while Blackstone took a nearly 5 percent share before selling its stake in June. Both companies reportedly liked the resiliency of the extended-stay hotel sector during the early days of the pandemic when many hotel operators suspended operations.
The two investors previously made rival bids for Extended Stay America, then known as Extended Stay Inc., in 2010. Blackstone won that bidding war and exited the company in 2013 after taking Extended Stay America public.
The current joint acquisition is about preserving capital for further hotel acquisitions, Tyler Henritze — Blackstone’s head of acquisitions — told the Journal.
“As an investor, I’m really kind of tickled to death … There’s going to be so much distress,” Starwood Capital CEO Barry Sternlicht said last fall at the Saudi Arabian Ministry of Tourism’s Future Hospitality Summit of potential investment opportunities during the pandemic.
He indicated to the Journal Monday interest in large resort portfolios, but it should be noted Extended Stay America is not an example of a distressed company.
Extended Stay America did not close any of its hotels due to the pandemic downturn in operations. The overall economy extended-stay sector was the best-performing in the first month of the pandemic. This is largely because hotels in this space are typically used by essential workers as well as those making longer-term residential uses from rooms.
The company ended 2020 with a 74 percent average occupancy, well above the 44 percent U.S. national average.
This is a breaking story and will be updated.
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