Extended Stay Chain Files for Bankruptcy

By Bob Van Voris and David M. Levitt

June 15 (Bloomberg) -- Extended Stay Hotels, the operator of mid-priced hotels acquired at the peak of the commercial real estate market for $8 billion, filed for bankruptcy protection as the recession cut corporate and leisure travel.

The Spartanburg, South Carolina-based chain, with more than 680 properties in 44 states, collapsed two years after Lightstone Group LLC bought the company with $7.4 billion in financing. The company said it had $7.1 billion in assets and $7.6 billion in debt at the end of last year, according to papers filed today in U.S. Bankruptcy Court in New York.

Lightstone bought the chain from Blackstone Group LP in April 2007 in its first purchase in the lodging business. Since then, prices have declined nationwide. The U.S. hotel industry is enduring its “weakest year on record,” according to PKF Hospitality Research, a research firm based in Atlanta. U.S. hotel occupancy fell 14 percent in the week ended June 6 from a year earlier and average daily room rates declined 11 percent to $95.90, according to data from Smith Travel Service. Full Story