EXTENDED STAY AMERICA increased its progress into the franchising arena with the sale of two portfolios of hotels, all of which will now become ESA franchises. Furthermore, the hotels’ buyers, Lodging Advisory Group of Denver, Colorado, and Dallas, Texas-based Provident Realty Advisors, plan to expand their ESA franchises in the future.
LAG purchased 16 properties in Kansas, Missouri, New Mexico, Nebraska and Arizona from ESA and its subsidiary ESH Hospitality. The company agreed to build or convert five additional ESA hotels in the future. Provident bought another 16 ESA hotels, 11 in Texas and five in Oklahoma that will be operated by Aimbridge Hospitality. Like LAG, Provident has agreed to add five more ESA hotels in the future.
“Each of these transactions come with agreements to develop additional ESA hotels,” ESA President and CEO Jonathan Halkyard said during the company’s third-quarter earnings statement. “Those commitments, combined with our on-balance sheet development progress and new franchise applications, grew our pipeline to 52 hotels, an increase of more than 50 percent during the quarter.”
ESA began franchising last year as part of its ESA 2.0 remodeling. ESA 2.0 is the brand’s growth plan for the next five years and involves franchising and increasing the number of both franchised and owned/operated units with the new prototype. Then ESA CEO Gerry Lopez told investors at the time that ESA will expand to 700 hotels from its current holdings of 629 hotels, with 75 percent being owned/operated and 25 percent being franchised.
Lopez said the company would favor licensing to seasoned, sophisticated franchisees seeking to diversify their portfolios. Jim Alderman, ESA EVP and chief asset merchant, said they want to attract owners who would build ESA properties in a market “cluster.” “
LAG and Provident fit that profile.
“We have a strong development and construction platform here at Provident that we will leverage to grow the ESA brand as a part of the ESA 2.0 initiative,” Provident CEO and Owner Leon Backes said. “Our goal as a franchise is to build a long and successful relationship with ESA.”