Blackstone and Starwood Book an Extended Stay Together

It’s just like the old saying: if you can’t beat em’, acquire a $6 billion hotel chain with ‘em. Rival investment firms Blackstone and Starwood spent last year jockeying over stakes in Extended Stay, the hotel chain focused on longer-term…

Jennifer
Image Credit: iStock Images, Andrey Krav.
Sign up for insightful business news.

It’s just like the old saying: if you can’t beat em’, acquire a $6 billion hotel chain with ‘em.

Rival investment firms Blackstone and Starwood spent last year jockeying over stakes in Extended Stay, the hotel chain focused on longer-term guests. Yesterday, the two real estate giants announced a deal to acquire it together.

Third Time’s the Charm

While hospitality has been in for a rough ride of late, Extended Stay has managed to buck the trend. The company’s properties — which offer guests kitchen facilities and above average room sizes — attracted essential workers, healthcare professionals, and other travelers during the pandemic.

Extended Stay saw a 74% occupancy rate last year, blowing the industry average 44% occupancy rate out of the water. And Blackstone and Starwood believe the company will continue to do well throughout the recovery and through various economic cycles:

  • In the future, Extended Stay expects to fill beds with business travelers who need longer stays without the hassle of a lease.
  • They also expect demand from divorcees and those moving into new homes.

Starwood Capital Chief Executive Barry Sternlicht called Extended Stay a “bread-and-butter investment,” saying “this isn’t glamorous.”

We’ve Got A History: The transaction represents the third time Blackstone has owned Extended Stay, including in 2010 when Blackstone led a group that rescued the company from bankruptcy (beating out Starwood in an auction process).

Now, the two firms will be equal partners, with their $6 billion purchase giving shareholders a 23% premium on the Extended Stay’s 30 day average share price.

the takeaway

Prepare to see a lot more news like this. Blackstone cut its lodging holdings in the years leading up to the pandemic to 10% of its portfolio, down from 50% a decade ago. Now, as the world reopens, the firm says it has a “high degree of interest” in “every segment of hospitality.”

Analysis more
(Photo Credit: Towfiqu Barbhuiya/Unsplash)

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo

(Photo Credit: Nate DeWaele/Unsplash)

The Brontosaurus Bubble: Could the bottom fall out of the dinosaur fossil market?

Recent News

Southwest Reducing Training Time Needed for New Pilots

Absolutely Nobody Can Agree on What’s Happening With the Economy Right Now

America’s Push for EVs Could Leave the Power Grid Feeling Drained

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo