Extended Stay Hotels files for Chapter 11

NEW YORK (AP) — Extended Stay Hotels LLC filed for Chapter 11 bankruptcy protection on Monday, citing massive debt stemming from its 2007 acquisition by the Lightstone Group and a sharp drop in business travel due to the recession.

The Spartanburg, S.C.-based company, which is privately held, owns more than 680 hotels in the U.S. and Canada catering to long-term business travelers.

In June 2007, just as the hotel market peaked, the Lightstone Group, one of the country’s largest private real estate investors, bought Extended Stay from private equity firm Blackstone Group LP. Lightstone financed the purchase with about $7.4 billion in loans.

By last summer, hotel occupancy was softening, and it declined sharply after September. Led by a drop in corporate travel, that decline has accelerated as businesses have cut their staffs and their spending.

Tags: chapter 11, extended stay, business, hotels