Extended Stay America Announces $6 Billion Purchase By Two Investment Firms

Blackstone Group Inc. and Starwood Capital Group partnered to purchase the hotel chain.

Announced on Monday, it’s reported to be the largest hotel industry purchase since the COVID-19 shutdown in the U.S.

In a 50/50 deal, the two firms are set to take over ownership of Extended Stay’s 650 hotels. The chain proved value by maintaining a 30 percent occupancy rate higher than the average hotel last year.

Data from STR shows the hotel occupancy rate in 2020 was 44 percent. Extended Stay America was able to pull off a 74 percent occupancy rate by offering healthcare and essential workers rooms with kitchens while most in the country temporarily ceased operation.

“Extended Stay has demonstrated resilience over the past year despite persistent challenges due to government lockdowns and travel restrictions,” Barry Sternlicht, CEO of Starwood Capital said in a company statement. “We are excited about the company’s growth opportunity as restrictions ease.”

“Growth opportunity”

An Extended Stay America press release says the buyout won’t finalize until the second quarter of 2021. But this announcement comes on the heels of record-high new hotel industry jobs added since the beginning of the pandemic.

In February, the Bureau of Labors Statistics released data revealing 36,000 new jobs helping combat the 18,000 lost the prior month. This is just another example of hopeful news after the pandemic killed 10 years worth’ of job growth in the hotel industry.

A recent poll from Longwoods International found that 84 percent of American travelers plan to get back out again within the next six months. It’s the third consecutive report from the travel and tourism market research consultancy with data above 80 percent on that metric.

Why now? The public announcement is unclear if higher trending vaccine rates are attributable to the purchase. However, Longwoods International’s report does confirm that as cause for travelers’ confidence.

The COVID-19 vaccine rate in the U.S. now tops 100 million recipients. At least one industry expert feels the light at the end of the tunnel is beginning to shine brighter.

“Travel planning continues to accelerate as improving pandemic and vaccine data is released,” said Amir Eylon, President and CEO of Longwoods International. “Barring another surge in infections, the beginning of the travel industry recovery appears on target during 2021.”