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Blackstone Acquires 15 Limited Service Hotels as It Readies La Quinta IPO

@denschaal

Apr 04, 2014 11:25 am

Skift Take

The actual or prospective IPOs of Hilton Worldwide, Extended Stay America and La Quinta notwithstanding, Blackstone is adding pieces to the empire.

— Dennis Schaal

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Hampton Inn & Suites

Blackstone just loves the hotel industry's limited-service sector, and acquired Hampton Inn & Suites National Harbor in Oxon Hill, Maryland, as part of a 15-property deal with OTO Development. Hampton Inn & Suites


It seems like ancient history, but it was only a year ago that the hotel industry was wondering when would Blackstone cash in on some of its holdings, including Hilton Worldwide, Extended Stay America, La Quinta and Motel 6.

In 2013 Blackstone did in fact unleash the IPOs for Hilton ($2.35 billion), Extended Stay ($565 million), and La Quinta is waiting in the wings, currently priced at $780 million.

Blackstone still controls those four brands, all of which are in the limited service sector except for Hilton, and Blackstone isn’t done yet in adding to the empire.

Blackstone just acquired 15 limited-service properties, with brand names including Hampton Inn & Suites, Springhill Suites, Residence Inn and Hyatt Place, that are scattered throughout the U.S. from OTO Development. Terms of the acquisition were not disclosed.

All of the properties fall within the Marriott, Hilton or Hyatt families, according to GlobeSt.com, and on average are younger than 5 years old.

It’s a good time to be Blackstone, especially in the limited-service sector of the hotel business.

“As a real estate investment, they are looking for quality assets with stable, efficient operations and solid brand affiliations in a sector with OK demand growth, but little supply increase,” says hotel consultant Robert Cole. “Plus, I would think they foresee larger percentage average rate growth in this sector than the luxury and full-service properties.”

Cole points to some of the attractiveness of the limited-service sector.

“These hotels are also much easier to operate without banquet facilities, large food and beverage operations (including room service), and extensive recreational facilities or public spaces to maintain,” Cole says.

Blackstone isn’t believed to be managing the properties, either, considering they are “a gaggle of properties under different brands,” Cole says. “It is more their style to buy the brand or a management company. That’s simpler to deal with.”

The acquired properties, according to GlobeST.com, are: Hampton Inn & Suites Thousand Oaks in Thousand Oaks, CA; Hyatt Place Los Angeles’ Residence Inn Camarillo in Camarillo, CA; SpringHill Suites Irvine John Wayne Airport Irvine/Orange County in Irvine, CA; Residence Inn San Diego North /San Marcos in San Marcos, CA; Homewood Suites in Fresno, CA; SpringHill Suites Fresno in Fresno, CA; Residence Inn Birmingham Hoover in Birmingham; SpringHill Suites Birmingham Colonnade in Birmingham; Residence Inn Gainesville I-75 in Gainesville, FL; Hampton Inn & Suites Mt. Vernon/Belvoir-Alexandria South Area in Alexandria, VA; SpringHill Suites Columbia in Columbia, MD; Hampton Inn & Suites Manchester in Manchester, CT; SpringHill Suites Erie in Erie, PA; and Hampton Inn & Suites National Harbor / Alexandria Area in Oxon Hill, MD.

Blackstone is the largest owner in the hotel business, and it is adding to the empire, IPOs notwithstanding.

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