Follow the money

In extraordinary times, it’s always fascinating to see where the smart money goes. Until Covid-19 struck, Extended Stay America stock was regarded as a safe if unspectacular bet, and at the turn of 2020 it was trading at just under $20 per share. In recent weeks both Blackstone and Starwood Capital have taken significant chunks in ESA, representing 4.9 per cent and 8.5 per cent equity stakes respectively, a further vote of confidence in the extended stay segment, which is comfortably outperforming the regular hotel industry in the US, particularly at the economy end of the price scale.

A combination of business from infrastructure project workers, healthcare professionals and an increasing number of residential guests has seen occupancy of around 50 per cent across the economy extended stay piece at a time when many hotels are struggling to achieve high single figures. With a slow and steady recovery on the horizon at best, and more residential business in the offing as Americans struggle to keep up with their mortgage payments, it’s clear to see the attraction of a company like ESA to the investment giants.