Extended Stay America's Model Withstands the Pandemic's Impact Better Than Most Hotels
Skift Take
We wouldn't be surprised if Extended Stay America's first quarter and upcoming second quarter operating results together were among the very best of the battered public U.S. hotel companies. Going long on long-stay has never been such a safe business model as it is now during the coronavirus pandemic.
Extended Stay America released financial results on Thursday that showcased how the economy extended stay segment is the strongest one in the weak U.S. hotel sector.
"Extended Stay America is very different from traditional transient brands, and those differences have never been more apparent than they are today," said CEO Bruce Haase during a conference call with investors to discuss first-quarter earnings.
Some large investors agree. In the past two months, Charlotte, North Carolina-based company has drawn interest as the largest owner-operator of extended-stay hotels in the mid-priced market. Blackstone Group, said to be the world's largest owner of real estate, purchased an approximately 5 percent stake at a price of about $100 million in March, the Wall Street Journal reported, while Starwood Capital snapped up 8.5 percent.
Some context on why: The hotel business is all about boosting occupancy because an owner has fixed costs to run facilities and employ labor for core operations. At a typical U.S. property, if you have, say, 100 rooms, your profit margins begin to improve once your occupancy surpasses 60 percent, on average.
