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Lack of New Business Hurt Extended Stay

SPARTANBURG, SC-The company's $8-billion buyout leads to a major hotel bankruptcy.

By Carl Cronan | Updated on June 15, 2009

SPARTANBURG, SC-Locally based Extended Stay Hotels has filed for Chapter 11 bankruptcy protection in one of the largest filings by a commercial real estate company. The 680-property national chain cites $7.1 billion in assets and $7.8 billion in liabilities.

“The contraction of construction and new business development began to significantly and adversely affected Extended Stay’s revenue stream,” the company states in documents filed Monday in US Bankruptcy Court in New York City. It cited a 23% drop in average revenue per room through the first five months of this year compared to the same period in 2008.

Extended Stay was acquired in 2007 by Lightstone Group, which paid $8 billion to Blackstone Group at the top of the market. Among its creditors are Bank of America, through its Merrill Lynch subsidiary, and Wells Fargo & Co., which owns Wachovia Bank.

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