Blackstone, Starwood Buy Hotelier Extended Stay America for $6B

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In the second multibillion-dollar hotel deal in as many weeks, Blackstone Group and Starwood Capital Group teamed up to buy hotel operator Extended Stay America for $6 billion, the companies announced on Monday.

As part of the deal, Blackstone and Starwood will both own an equal stake in the Extended Stay chain, which targets longer-term guests than traditional hotels and offers rooms with kitchens, The Wall Street Journal first reported.

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

The hospitality sector has been battered by the pandemic, which forced travelers to stay home and hotels to shutter or file for bankruptcy. However, despite the distress caused by the pandemic, Henritze told WSJ that the firm expects business travel to return as more people get vaccinated and Extended Stay will be able to capitalize on that.

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

And Extended Stay wasn’t as damaged as other hoteliers during the pandemic. While the average occupancy rate for hotels around the country was 44 percent last year, Extended Stay had 74 percent occupancy, according to WSJ.

“Extended Stay has demonstrated resilience over the past year despite persistent challenges due to government lockdowns and travel restrictions,” Starwood 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.”

Extended currently has 564 properties around the country, totaling about 62,500 rooms, and another 86 franchises.

Blackstone and Starwood both currently own stakes in Extended Stay — 4.5 percent and nearly 10 percent, respectively — and the deal is expected to close in the second quarter of this year, according to the companies. It will also be the third time Blackstone has owned Extended Stay.

The Extended Stay pact is the second, splashy hotel deal to be announced this month. The Las Vegas Sands Corp. sold The Venetian hotel on the Las Vegas Strip and the nearby Sands Expo and Convention Center to a partnership between Apollo Global Management and VICI Properties for $6.25 billion earlier this month.