The companies on Monday released details of the deal, which property executives say is the largest seller in the hotel sector during the Covid-19 period.
Extended Stay is a mid-range hotel suite that focuses on accommodation for guests interested in staying for weeks or longer, offering kitchen amenities and more instead of the usual hotel room. During the pandemic, his rooms and rooms attracted essential staff, health care professionals and others who needed to travel.
That business helped Extended Stay achieve a 74% occupancy rate last year, Blackstone said. The average occupancy rate across all U.S. hotels was 44%, according to hotel data research firm STR.
Now, as vaccines go on, employment increases and more Americans think about traveling again, Blackstone and Starwood believe a different gender network of customers will fill up. beds in Stay Extended buildings with the economy kicking back. This group includes construction workers, contractors and professionals such as solicitors and consultants.
“Corporate America is going to be a heavy investor in capital spending and this industry is going to benefit from that,” said Tyler Henritze, Blackstone’s head of purchasing for America.
The lodging sector has been one of the hardest hit during the pandemic, which has caused the bulk of tourism, customs, and industrial travel to dry up. Occupancy in U.S. hotels, which accounted for nearly 65% just before the pandemic, rose to 22% in mid-April, according to STR.
While analysts say the hotel industry will not return to prepandemic income levels for two to three years, an economic recovery is expected that some investors now think is it is a good time to buy hotels for business travelers or luxury guests.
“Resorts are coming back, and a huge package of tourism would be exciting for us,” said Starwood Capital CEO Barry Sternlicht. He says Extended Stay is a “bread-and-butter investment – it’s not glamorous.”
He said it is a lodging department that can attract guests across various economic circles, as there are always people who need a place at an affordable price for an extended period of time without a lease guarantee. He cited as examples participants in training programs, people getting separated and those moving but their new homes are not ready.
The agreement for Extended Stay, which will be shared by both companies, marks sleep of all kinds after last year ‘s mockery of stuttering in the company. Starwood owns nearly 10% of the company’s shares, Mr. Sternlicht said, although Blackstone acquired a 4.9% stake before it went out in June.
Starwood was also in second place when Blackstone led a group that bought the chain out of bankruptcy in 2010.
This time the two contestants decided it made more sense to work together. “It will give us more [cash] to continue looking at other hosting opportunities that could showcase themselves coming out of Covid, “said Mr Henritze of Blackstone.
The price of Stay Extended shares has doubled over the past year. Blackstone and Starwood’s bid represents a 23% base price to a weighted average of what Extended Stay shares were trading in the 30 days prior to the contract that ended over the weekend. An agreement for Extended Stay, which is expected to close later this year, still requires shareholder consent.
With this purchase, both companies would acquire the 567 properties owned by Extended Stay. The company licenses 82. About two-thirds of their hotels are located in the top 25 metro areas of the U.S., Blackstone said.
Extended Extension shares jumped Monday after the deal was announced. They closed at $ 19.21, up 13.4%, and slightly below the $ 19.50 value per share of the total cash bid.
When the deal closes, it marks the third time Blackstone has been in Stay Extended. He first bought the chain in 2004 and combined it with other lodging records he had been purchasing.
Both companies have extensive hosting experience. Mr. Sternlicht, the hotel operator, created Starwood Hotels & Resorts Worldwide Inc., which is now part of Marriott International Inc., and other hotel brands. Blackstone’s biggest property profit came since its 2007 acquisition of Hilton Worldwide Holdings Inc., which earned the company more than $ 14 billion in profit after it was publicly acquired and its final holdings issued. in 2018.
Blackstone shook her hotel portfolio in the years leading up to the pandemic. Lodging accounted for less than 10% of their package early last year, down from nearly 50% in 2010.
Mr Henritze suggested that the new Extended Stay purchase was just the beginning of renewed interest in the lodging industry. “Most people are very interested in investing in the revitalization of travel and leisure and that would cover all areas of hospitality,” he said.
This story was published from a wire group group with no text changes.