Extended Stay's Fate Remains Unknown
Hotels Magazine reports: Hotel chain Extended Stay Hotels could be turned over to its lenders. The situation is clearly a direct result of the weakened state of the economy in general and commercial real estate in particular.
"Hotel properties are some of the most sensitive types of commercial real estate to general economic conditions—they have daily leases, basically," says Dan Fasulo, managing director of Real Capital Analytics.
The nearly 700-hotel Extended Stay portfolio (encompassing more than 75,000 rooms) is currently owned by Lakewood, New Jersey-based Lightstone Group, which purchased the hotel chain from the Blackstone Group for US $8 billion in April/June 2007, funding the purchase with more than US $7 billion in debt.
But as business conditions continue to deteriorate, it looks more likely that a transfer of ownership is imminent.
"Occupancies have fallen significantly, and rates and RevPAR have dropped dramatically," Fasulo notes. It is possible that Extended Stay has been among the hardest hit, based on the chain's primary guest being the regular business traveler.
"The room rates and occupancy levels just are not there to support debt levels in something like this," Fasulo says.
View the full article on Hotels Magazine: Extended Stay's Fate Remains Unknown
Posted by: Matthew Stone