Investment funds Blackstone Real Estate Partners and Starwood Capital Group announced on Monday that they have agreed to purchased Extended Stay America for $6 billion.
The deal, which has been fully approved by Extended Stay America’s Board of Directors, is reportedly the largest sale in the hotel industry during COVID-19 and a huge bet on the rebound of travel and tourism coming out of the pandemic.
Extended Stay America, which has been called a “pandemic success story” by CNN, has been in business for 26-years and has more than 600 hotels across the United States. The company provides accommodations for travelers who generally need a week or longer stay.
Because of its offerings, it became an attractive choice for medical professionals and other essential workers traveling during the pandemic—according to its 2020 full-year earnings, the company averaged a 74% occupancy rate during last year, 30% higher than the industry’s average.
Tyler Henritze, head of U.S. acquisitions for Blackstone Real Estate, whose investments, outside of Extended Stay, include The Cosmopolitan of Las Vegas, said that the investment reflects Blackstone’s belief in travel’s rebound.
“Travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended-stay model. We helped create this company nearly twenty years ago, and believe our expertise puts us in a unique position to add long-term value,” he said.
Barry Sternlicht, CEO of Starwood Capital, added, “Extended Stay has demonstrated resilience over the past year despite persistent challenges due to government lockdowns and travel restrictions. 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.”
Outside of the Extended Stay deal, other acquisitions made during the COVID-19 pandemic include Sonesta’s deal to acquire Red Lions Hotel Corporation, which made Sonesta one of the largest hotel companies in the U.S., and Azamara’s sale to Sycamore Partners, which was announced earlier this year.