US: Extended Stay America is aiming to sell between 30 and 50 hotels by the end of 2019.
The company, which is around half way through its ESA 2.0 strategy, is moving heavily in to the franchise market and has sold 76 hotels since 2017, most of which have become franchised locations.
Speaking at the 2019 NYU International Hospitality Industry Investment Conference, EVP/chief development officer Jim Alderman said the company would sell another 30 to 50 by the end of the year. The company’s original plan called for it to sell 150 hotels over five years.
“Asset lighter, I think, may be appropriate because we are settling down a little bit, but what’s probably most important is just asset right,” Alderman said. “Let’s renovate our assets that we own. Let’s sell off the assets that do fine, they make money. And everyone we’ve sold to is doing as well as we did or better.”
Alderman said many of these hotels it has sold are in the middle of the United States, where ESA doesn’t own as many properties as densely. “We operate a lot better, a lot more efficiently, when we have multiple hotels operating together; if we can share employees between them, we can have efficiency.”
ESA is looking to sell to local companies who have clusters of hotels in a given area, these franchised properties can then operate with the same types of efficiencies ESA prefers to have with the hotels it owns.
According to Alderman, 71 of ESA’s 628 hotels are now franchised. The company also has commitments for another 40 locations. By the time ESA sells its targeted 150 hotels, Alderman estimated it will have surpassed 190 franchised locations.
ESA also is growing via new-build construction, a major departure from how it operated for more than a decade. It has seven hotels under construction with an eighth to break ground in the near future. Over the next five years, it hopes to build anywhere between 50 and 80 new locations.</p
