Real-estate investors Blackstone Inc. and Starwood Capital Group are teaming up for the second time in less than a year in a big bet on the extended-stay hotel sector.
The two firms have reached an agreement to jointly acquire 111 properties under the WoodSpring Suites brand for about $1.5 billion, according to people familiar with the matter. Brookfield Asset Management is the seller, and the transaction could close as early as next month, these people said.
The WoodSpring Suites brand, which is owned by Choice Hotels International Inc., specializes in accommodations for guests staying weeks or longer. The suites offer in-room kitchens and larger spaces than typical hotel rooms. During the early months of the pandemic, extended-stay properties like these attracted essential workers, healthcare workers and others who needed to travel for work while much of the country was under lockdown.
Now, Blackstone and Starwood expect a different customer to fill WoodSpring Suites beds as more Americans are traveling for business and for drive-to vacations, say people familiar with the firms’ thinking. This group of travelers includes construction workers, contractors and professionals such as consultants.
The acquisition of the WoodSpring Suites properties by Blackstone and Starwood follows their joint purchase of Extended Stay America Inc. for $6 billion last year, another deal for a long-term-stay operator where the two firms split the ownership in half. WoodSpring Suites guests often stay for more than 30 days, longer than is typical for many Extended Stay customers.
Some industry executives see the proliferation of remote work boosting demand for lodging products similar to the Extended Stay America chain.
Photo: Bruce Bennett/Getty Images
The pair of acquisitions are a sign that two of the country’s biggest real-estate investors are wagering that the extended-stay sector will continue to attract guests through different economic cycles and outperform other lodging segments.
Extended-stay hotels in the U.S. had an occupancy rate of 73.2% in 2021, compared with 55.9% for all other U.S. hotels sectors combined, according to hotel data tracker STR.
In past years, these properties have appealed to people in training programs, people who are between homes or are getting divorced and want an affordable place for an extended period without the commitment of a lease.
Some industry executives think that the proliferation of remote work could boost demand for longer-term-stay products, whether it is a hotel suite or startups that offer furnished, temporary housing.
“With hybrid work and the greater ability of people to work remotely, my expectation is that more people will travel and people will look for longer-term accommodations,” said Kevin Davis, chief executive of real-estate firm JLL’s Americas Hotels & Hospitality practice. “It’s incumbent upon the hospitality industry to satisfy that demand.”
That means more apartment-style living, he said, “at a price point for people who want to stay a week, a month, or six months.”
Even the bigger lodging brands have been exploring ways for guests to have more working and dining space in their hotel rooms. Marriott International Inc., for example, is working on a new prototype room where the bed can rise to the ceiling and a tabletop pops up for use as a workstation or for enjoying a meal.
WoodSpring was founded under the name Value Place by the entrepreneur Jack DeBoer. He helped popularize the extended-stay hotel concept by creating a number of brands in the sector, including Residence Inn, now part of Marriott, and Candlewood Suites, a chain that is part of the InterContinental Hotels Group.
Investment firm Lindsay Goldberg acquired WoodSpring, and then in 2018 sold the franchise business to Choice Hotels. It sold the WoodSpring hotels to Brookfield for about $750 million.
Write to Craig Karmin at [email protected]
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