stay-20210225
00015811640001507563false00015811642021-02-252021-02-250001581164stay:ESHHospitalityInc.Member2021-02-252021-02-2500015811642020-11-092020-11-090001581164stay:ESHHospitalityInc.Member2020-11-092020-11-09


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) – February 25, 2021
 
 
EXTENDED STAY AMERICA, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware001-3619046-3140312
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification Number)
11525 N. Community House Road, Suite 100
Charlotte
North Carolina
28277
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code (980345-1600
ESH HOSPITALITY, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware001-3619127-3559821
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification Number)
11525 N. Community House Road, Suite 100
Charlotte
North Carolina
28277
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code (980345-1600



 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.01 per share, of
STAYNasdaq Global Select Market
Extended Stay America, Inc. and Class B
Common Stock, par value $0.01 per share, of
ESH Hospitality, Inc., which are attached
and trade together as a Paired Share.
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition.
On February 25, 2021, Extended Stay America, Inc. and ESH Hospitality, Inc. issued an earnings release announcing their results of operations for the three months and year ended December 31, 2020. A copy of the earnings release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in this Item 2.02.
The information contained under Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1) is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On February 26, 2021, Extended Stay America, Inc. and ESH Hospitality, Inc. will hold a conference call announcing their results of operations for the three months and year ended December 31, 2020. A copy of management’s presentation materials is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference in this Item 7.01.
The information contained under Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.2) is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.








Item 9.01.Financial Statements and Exhibits.
 
(d)Exhibits.
 
Exhibit NumberExhibit Description
Earnings release of Extended Stay America, Inc. and ESH Hospitality, Inc., dated February 25, 2021, announcing results for the three months and year ended December 31, 2020.
Management’s presentation materials, dated February 25, 2021.
104Cover Page Interactive Data File embedded within the Inline XBRL document.























































SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each of the Registrants has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
EXTENDED STAY AMERICA, INC.
Date: February 25, 2021By:/s/ Christopher N. Dekle
Name: Christopher N. Dekle
Title: General Counsel and Corporate Secretary

ESH HOSPITALITY, INC.
Date: February 25, 2021By:/s/ Christopher N. Dekle
Name: Christopher N. Dekle
Title: General Counsel and Corporate Secretary




Document
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EXTENDED STAY AMERICA ANNOUNCES FOURTH QUARTER AND FULL YEAR 2020 RESULTS
-Net income of $65.7 million in the Fourth Quarter, $96.3 million for the Full Year 2020
-Adjusted EBITDA1 of $89.3 million in the Fourth Quarter, $374.1 million for the Full Year 2020
-Comparable system-wide RevPAR decrease of 9.4% in the Fourth Quarter, -15.0% for the Full Year 2020
-Announces quarterly distribution of $0.09 per Paired Share
-RevPAR Index increased 40% to 140 in the Fourth Quarter, +31.6% to 127 for the Full Year 20202

CHARLOTTE, N.C. - February 25, 2021 (GlobeNewswire) — Extended Stay America, Inc. (“ESA”) and ESH Hospitality, Inc. (NASDAQ:STAY) (together, the “Company”) today announced consolidated results for the three months and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights
Net income of $65.7 million
Total revenues of $259.3 million
Comparable system-wide Revenue Per Available Room (“RevPAR”) declined 9.4% to $42.46
Comparable system-wide occupancy of 73.7%
Adjusted EBITDA of $89.3 million
Adjusted Funds From Operations (“Adjusted FFO”)1 of $0.36 per diluted Paired Share
Adjusted Paired Share Income1 of $0.16 per diluted Paired Share
Comparable system-wide RevPAR index of 140, a 40 point increase

Extended Stay America’s President and Chief Executive Officer Bruce Haase, commented, “We are pleased with another strong quarter as we continue to outperform every industry benchmark, improving our RevPAR index by 40% against our closest competition during the fourth quarter. Through last week, Extended Stay America has now had 65 consecutive weeks of RevPAR index gains dating back to well before the pandemic, demonstrating the growing strength of our model relative to the overall lodging industry.”

“As we move into 2021, we are very excited about our growth prospects and opportunities. Today we unveiled our new brand segmentation strategy with the launch of the Extended Stay America Premier Suites brand, in addition to our core hotels to be branded as Extended Stay America Suites. And, we continue to see opportunities for growth from improvements to our commercial engine and operating performance as well as unlocking value in our REIT through accretive asset transactions.”

1 See “Disclosure Regarding Non-GAAP Financial Measures” for an explanation of non-GAAP measures included in this release (i.e., Hotel Operating Profit, Hotel Operating Margin, EBITDA, Adjusted EBITDA, Funds From Operations (“FFO”), Adjusted FFO, Adjusted FFO per diluted Paired Share, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per diluted Paired Share).
2 See definition of RevPAR index included in this release

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Financial and Operating Results
Total revenues for the three months ended December 31, 2020 were $259.3 million, a decrease of 8.8% over the same period in 2019 due to the impact of the COVID-19 pandemic. For the full year 2020, total revenues declined 14.4% to $1,042.3 million driven by the decrease in hotel revenues as a result of the impact of the COVID-19 pandemic.

Comparable system-wide RevPAR for the three months ended December 31, 2020 declined 9.4% over the same period in 2019 to $42.46, driven by a 7.3% decline in Average Daily Rate (“ADR”) and a 170 basis point decrease in occupancy to 73.7%. Comparable system-wide RevPAR for the full year 2020 decreased 15.0% over 2019 to $42.91, driven by a 11.6% decline in ADR and a 300 basis point decrease in occupancy to 73.8%.

Hotel Operating Margin for the three months ended December 31, 2020 was 42.5% compared to 48.3% in the same period in 2019 due a decrease in RevPAR caused by the COVID-19 pandemic and a slight increase in hotel operating expenses. Hotel operating expenses during the fourth quarter of 2020 increased by 2.5% from the same period in 2019 and were approximately flat on a comparable basis. Hotel Operating Margin for the full year 2020 was 44.5% compared to 51.8% in the same period of 2019, driven by a decrease in RevPAR due to the COVID-19 pandemic.

Net income for the three months ended December 31, 2020 was $65.7 million compared to net income of $23.8 million for the same period in 2019. The increase in net income was due to a gain on an asset sale, a decrease in corporate overhead expense and an income tax benefit, partially offset by a decline in Comparable system-wide RevPAR. Net income for the full year 2020 was $96.3 million, compared to net income of $165.1 million for the same period in 2019. The full year 2020 decrease in net income was driven by a decline in Comparable system-wide RevPAR, partially offset by a gain on an asset sale and an income tax benefit.

Adjusted EBITDA for the three months ended December 31, 2020 was $89.3 million, a decline of 17.9% compared to the same period in 2019. The decline in Adjusted EBITDA was due to a decline in Comparable system-wide RevPAR. Adjusted EBITDA for the quarter excludes a $52.5 million gain on an asset sale, non-cash equity-based compensation expense of $1.9 million, $2.7 million in loss on disposal of assets and $0.2 million in other expenses. Adjusted EBITDA for the full year 2020 was $374.1 million compared to $535.0 million in the same period of 2019.

Adjusted FFO for the three months ended December 31, 2020 was $64.2 million, or $0.36 per diluted Paired Share, compared to $67.8 million, or $0.37 per diluted Paired Share in the same period in 2019. The decrease in Adjusted FFO per diluted Paired Share was due to a decline in Comparable system-wide RevPAR, partially offset by an income tax benefit and a reduction in Paired Shares outstanding. Adjusted FFO for the full year 2020 was $220.5 million, or $1.24 per diluted Paired Share, compared to $337.6 million, or $1.81 per diluted Paired Share, for the same period in 2019. Adjusted FFO, a non-GAAP measure, represents funds from operations, as adjusted, attributable to the consolidated enterprise, whose representative equity security is a Paired Share. A Paired Share entitles its holder to participate in 100% of the common equity and earnings of both Extended Stay America, Inc. and ESH Hospitality, Inc.


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Adjusted Paired Share Income for the three months ended December 31, 2020 was $27.6 million, or $0.16 per diluted Paired Share, compared to $24.9 million in Adjusted Paired Share Income, or $0.14 per diluted Paired Share, for the same period in 2019. The increase in Adjusted Paired Share Income per diluted Paired Share was due to an income tax benefit, a decrease in corporate overhead expense and a reduction in Paired Shares outstanding, partially offset by the decline in Comparable system-wide RevPAR. Adjusted Paired Share Income for the full year 2020 was $66.2 million, or $0.37 per diluted Paired Share, compared to $178.2 million, or $0.95 per diluted Paired Share, in the same period of 2019. Adjusted Paired Share Income, a non-GAAP measure, represents net income, as adjusted, attributable to the consolidated enterprise, whose representative equity security is a Paired Share.

Capital Expenditures and Balance Sheet
The Company invested $47.7 million in capital expenditures during the fourth quarter of 2020. This included $7.3 million in renovation capital and $13.9 million in capital for new hotel development. For the full year 2020, the Company invested $192.7 million in capital expenditures, including $20.9 million in renovation capital and $72.4 million for new hotel development.

As of December 31, 2020, the Company had $409.9 million in cash and equivalents, including $13.2 million in restricted cash, and total debt outstanding was $2.72 billion.

Hotel and Development Pipeline
As of December 31, 2020, the Company had a pipeline of 56 hotels representing approximately 6,800 rooms. Two Company-owned hotels and seven franchised hotels opened during the fourth quarter, resulting in a total of 17 system-wide hotels opened for the full year 2020.

Company Owned Pipeline & Recently Opened Hotels as of December 31, 2020
Under OptionPre-DevelopmentUnder ConstructionTotal PipelineOpened in 2020
# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms
004504449681,0007880
Third Party Pipeline & Recently Opened Hotels as of December 31, 2020
CommitmentsApplicationsExecutedTotal PipelineOpened in 2020
# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms# Hotels# Rooms
212,60400273,184485,78810988

Definitions
Under OptionLocations with a signed purchase and sale agreement
Pre-DevelopmentLand purchased, permitting and/or site work
Under ConstructionHotel is under construction
CommitmentsSigned commitment to build or convert a certain number of hotels by a third party, generally associated with a prior portfolio sale
ApplicationsThird party filed franchise application with deposit
ExecutedFranchise and development application approved, geography identified and deposits paid, various stages of pre-development and/or under construction

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Distributions and Share Repurchases
On February 25, 2021, ESH Hospitality, Inc. declared a $0.09 distribution to common shareholders payable on March 26, 2021 to its Class A (ESA) and Class B (Paired Shareholders) holders of record on March 12, 2021. ESH Hospitality, Inc. will continue to distribute at least 90% of its pre-tax earnings to maintain its REIT status.
The Company did not repurchase any Paired Shares during the fourth quarter and has $101.1 million in repurchase authorization outstanding.

Q1 2021 Outlook Update
The Company's Q1 2021 Outlook is as follows
in millions, except %LowHigh
Comparable system-wide RevPAR% Δ-6%-3%
Net income (loss)$(8)$(4)
Adjusted EBITDA$78$84

Full Year 2021 Outlook Update
in millions, except %LowHigh
Capital expenditures $155$175
Depreciation expense$202$207
Net interest expense$126$130
Effective tax rate10%12%

Performance and financial results for the first quarter and full year 2021 is subject to risks and uncertainties, in particular the evolving and ongoing impact of the COVID-19 pandemic, which could cause actual results to deviate materially and adversely from current trends and expectations. In such event, the Company does not expect to, and undertakes no obligation to, announce changes in expectations prior to the announcement of actual results.

For more information on our results and strategic initiatives, see our Fourth Quarter 2020 Earnings Presentation on our Investor Relations website at www.aboutstay.com or visit the presentation directly at https://extendedstayamerica.gcs-web.com/static-files/8097bc70-f430-48f0-aab9-def9f932b759.

Webcast and Conference Call Details
The Company will host a conference call on Friday, February 26, 2021 at 8:30 a.m. Eastern Time. The conference call will be webcast simultaneously in the Investor Relations section of the Company’s website at www.aboutstay.com. A replay of the call will be available for 90 days following the webcast on the Company’s website. Alternatively, the conference call can be accessed

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by dialing 1-877-705-6003 for domestic callers or 1-201-493-6725 for international callers. A telephone replay will be available from shortly after the call until March 5, 2021 and can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for the replay is 13715635.

RevPAR Index
RevPAR Index is stated as a percentage and calculated by comparing RevPAR for owned hotels or system-wide hotels to the aggregate RevPAR of a group of competing hotels generally in the same market. As such, RevPAR Index is only a measure of RevPAR relative to certain competing hotels and not a measure of our absolute RevPAR or profitability. We subscribe to STR, Inc. (“STR”), an independent third-party service, which collects and compiles the data used to calculate RevPAR Index. We select the competing hotels included in the RevPAR Index calculation subject to STR's guidelines. The competing hotels included in STR guidelines will generally include certain hotels that are not considered part of the extended stay lodging segment of the hospitality industry and, instead, fall within the category of short-term stay hotels. STR does not endorse the Company, or any other company, and STR data should not be viewed as investment advice or as a recommendation to take a particular course of action.

Disclosure Regarding Non-GAAP Financial Measures
Hotel Operating Profit, Hotel Operating Margin, EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, Adjusted FFO per diluted Paired Share, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per diluted Paired Share (collectively, the “Non-GAAP Financial Measures”), which are detailed in the reconciliation tables that accompany this release, are used by the Company as supplemental performance measures. The Company believes these measures provide useful information to investors regarding our results of operations and allow investors to evaluate the ongoing operating performance of our hotels and facilitate comparisons between the Company and other lodging companies, hotel owners and capital-intensive companies, including those which include a REIT as part of their legal entity structure. The Non-GAAP Financial Measures are not recognized terms under U.S. GAAP. These measures as presented may not be comparable to measures calculated by other companies. These measures should not be considered as alternative measures of, or superior to, operating profit, cash flow from operating activities, net income, net income per share or any other measure of the Company, Extended Stay America, Inc. or ESH Hospitality, Inc. calculated in accordance with U.S. GAAP. The Company’s presentation of the Non-GAAP Financial Measures does not replace the presentation of the Company’s consolidated financial statements and other disclosures prepared in accordance with U.S. GAAP.

Forward Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, statements related to our expectations regarding our business performance, financial results, liquidity and capital resources, capital expenditures, Q1 and full year 2021 outlooks, distribution policy, plans, goals, beliefs, business trends and future events, as well as the impact of the COVID-19 pandemic, its effects on the foregoing, government actions taken in response to the pandemic and actions that we have taken or plan to take in response to the pandemic and other non-historical statements. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results or performance to differ from those projected in the forward-looking statements, possibly materially.

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For a description of factors that may cause the Company’s actual results or performance to differ from projected results or performance implied by forward-looking statements, please review the information under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in the Company’s combined annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021. Any forward-looking statements made in this release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, will have the expected consequences to, or effects on, the Company, its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. We caution you that actual results may differ materially and adversely from what is expressed, implied or forecasted by the Company’s forward-looking statements.

About Extended Stay America
Extended Stay America® is the leading brand in the mid-priced extended stay segment in the U.S. with 649 hotels. ESH Hospitality, Inc. (“ESH”), a subsidiary of Extended Stay America, Inc. (“ESA”), is the largest lodging REIT in North America by unit and room count, with 563 hotels and over 62,700 rooms in the U.S. ESA also franchises an additional 86 Extended Stay America® hotels. Visit www.esa.com for more information.

Contacts
Investors or Media:
Rob Ballew
(980) 345-1546
ir@esa.com













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EXTENDED STAY AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands, except per share data)
Three Months EndedTwelve Months Ended
December 31,December 31,
20202019% Variance20202019% Variance
(Unaudited)(Audited)
REVENUES:
$247,525 $272,397 (9.1)%  Room revenues$994,896 $1,171,726 (15.1)%
6,530 6,517 0.2%  Other hotel revenues27,170 24,365 11.5%
1,449 1,389 4.3%  Franchise and management fees5,389 5,412 (0.4)%
255,504 280,303 (8.8)%1,027,455 1,201,503 (14.5)%
3,789 3,895 (2.7)%Other revenues from franchised and managed properties14,861 16,716 (11.1)%
259,293 284,198 (8.8)%Total revenues1,042,316 1,218,219 (14.4)%
OPERATING EXPENSES:
148,833 145,210 2.5%  Hotel operating expenses576,719 582,321 (1.0)%
21,939 27,549 (20.4)%  General and administrative expenses92,173 95,155 (3.1)%
52,165 49,857 4.6%  Depreciation and amortization206,013 197,400 4.4%
— — n/a  Impairment of long-lived assets1,095 2,679 (59.1)%
222,937 222,616 0.1%876,000 877,555 (0.2)%
4,398 4,528 (2.9)%Other expenses from franchised and managed properties17,041 18,870 (9.7)%
227,335 227,144 0.1%Total operating expenses893,041 896,425 (0.4)%
52,525 — n/aGAIN ON SALE OF HOTEL PROPERTIES52,525 — n/a
300.0%OTHER INCOME32 (75.0)%
84,487 57,055 48.1%INCOME FROM OPERATIONS201,808 321,826 (37.3)%
(327)(143)128.7%OTHER NON-OPERATING INCOME(81)(391)(79.3)%
31,551 31,859 (1.0)%INTEREST EXPENSE, NET130,133 127,764 1.9%
53,263 25,339 110.2%INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE71,756 194,453 (63.1)%
(12,426)1,493 (932.3)%INCOME TAX (BENEFIT) EXPENSE(24,500)29,315 (183.6)%
65,689 23,846 175.5%NET INCOME96,256 165,138 (41.7)%
(58,833)(70,680)(16.8)%
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(1)
(72,989)(95,470)(23.5)%
$6,856 $(46,834)114.6%NET INCOME (LOSS) ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC. COMMON SHAREHOLDERS$23,267 $69,668 (66.6)%
$0.04 $(0.26)115.0%NET INCOME (LOSS) PER EXTENDED STAY AMERICA, INC. COMMON SHARE - DILUTED$0.13 $0.37 (65.0)%
178,197 182,046 WEIGHTED-AVERAGE EXTENDED STAY AMERICA, INC. COMMON SHARES OUTSTANDING - DILUTED178,103 186,822 
(1) Excluding interests in Paired Shares, the value of unaffiliated noncontrolling interests in Extended Stay America, Inc. totals to $0.1 million.
CONSOLIDATED BALANCE SHEET DATA
AS OF DECEMBER 31, 2020 AND 2019
(In thousands)
(Audited)
December 31,December 31,
20202019
Cash and cash equivalents$396,770 $346,812 
Restricted cash$13,151 $14,858 
Total assets$4,089,149 $4,030,596 
Total debt, net of unamortized deferred financing costs and debt discounts (1)
$2,683,622 $2,639,766 
Total equity$1,137,443 $1,176,270 
(1) Unamortized deferred financing costs and debt discounts totaled $39.2 million and $46.7 million as of December 31, 2020 and 2019, respectively.

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EXTENDED STAY AMERICA, INC.
OPERATING METRICS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Unaudited)
COMPARABLE SYSTEM-WIDE OPERATING METRICS (1)
Three Months EndedTwelve Months Ended
December 31, December 31,
20202019Variance20202019Variance
625625Number of hotels (as of December 31)623623
68,77668,776Number of rooms (as of December 31)68,55468,554
73.7%75.4%(170) bps
Comparable System-Wide Occupancy(1)
73.8%76.8%(300) bps
$57.63$62.18(7.3)%
Comparable System-Wide ADR(1)
$58.14$65.76(11.6)%
$42.46$46.86(9.4)%
Comparable System-Wide RevPAR(1)
$42.91$50.51(15.0)%

COMPARABLE COMPANY-OWNED OPERATING METRICS (2)
Three Months EndedTwelve Months Ended
December 31,December 31,
20202019Variance20202019Variance
553553Number of hotels (as of December 31)552552
61,40661,406Number of rooms (as of December 31)61,29961,299
73.2%74.8%(160) bps
Comparable Company-Owned Occupancy(2)
73.3%76.8%(350) bps
$59.15$64.21(7.9)%
Comparable Company-Owned ADR(2)
$59.73$67.85(12.0)%
$43.28$48.06(9.9)%
Comparable Company-Owned RevPAR(2)
$43.79$52.1(16.0)%

COMPANY-OWNED OPERATING METRICS(3)
Three Months EndedTwelve Months Ended
December 31,December 31,
20202019Variance20202019Variance
5635576Number of hotels (as of December 31)5635576
62,66761,933734Number of rooms (as of December 31)62,66761,933734
72.9%74.8%(190) bps
Company-Owned Occupancy(3)
73.1%76.7%(360) bps
$59.22$64.34(8.0)%
Company-Owned ADR(3)
$59.87$67.97(11.9)%
$43.17$48.11(10.3)%
Company-Owned RevPAR(3)
$43.75$52.16(16.1)%
(1) Includes hotels owned, franchised or managed for the full three and twelve months ended December 31, 2020 and 2019, respectively.
(2) Includes hotels owned and operated by the Company for the full three and twelve months ended December 31, 2020 and 2019, respectively.
(3) Includes results of operations based on the Company's owned and operated hotels during the periods presented, which is summarized below:

DateNumber of Hotels
Acquired, Opened
or Disposed
Number of
Rooms
Number of
Owned Hotels(1)
Number of
Owned Rooms(1)
January 1, 201955461,552
November 2019112155561,673
December 2019226055761,933
March 2020112055862,053
April 2020112055962,173
June 2020224856162,421
August 2020112456262,545
November 2020114456362,689
November 2020(1)(146)56262,543
December 2020112456362,667
(1) As of end of period.


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EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME TO HOTEL OPERATING PROFIT AND HOTEL OPERATING MARGIN
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
20202019Variance20202019Variance
$65,689 $23,846 175.5%Net income$96,256 $165,138 (41.7)%
(12,426)1,493 (932.3)%Income tax (benefit) expense(24,500)29,315 (183.6)%
31,551 31,859 (1.0)%Interest expense, net130,133 127,764 1.9%
(327)(143)128.7%Other non-operating income(81)(391)(79.3)%
(4)(1)300.0%Other income(8)(32)(75.0)%
(52,525)— n/aGain on sale of hotel properties(52,525)— n/a
— — n/aImpairment of long-lived assets1,095 2,679 (59.1)%
52,165 49,857 4.6%Depreciation and amortization206,013 197,400 4.4%
21,939 27,549 (20.4)%General and administrative expenses92,173 95,155 (3.1)%
2,692 1,035 160.1%
Loss on disposal of assets(1)
9,001 6,072 48.2%
(1,449)(1,389)4.3%Franchise and management fees(5,389)(5,412)(0.4)%
609 633 (3.8)%System services loss, net2,180 2,154 1.2%
$107,914 $134,739 (19.9)%Hotel Operating Profit$454,348 $619,842 (26.7)%
$247,525 $272,397 (9.1)%Room revenues$994,896 $1,171,726 (15.1)%
6,530 6,517 0.2%Other hotel revenues27,170 24,365 11.5%
$254,055 $278,914 (8.9)%Total room and other hotel revenues$1,022,066 $1,196,091 (14.5)%
42.5 %48.3 %(580) bpsHotel Operating Margin44.5 %51.8 %(730) bps
(1) Included in hotel operating expenses in the consolidated statements of operations.

NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
$65,689 $23,846 Net income$96,256 $165,138 
31,551 31,859 Interest expense, net130,133 127,764 
(12,426)1,493 Income tax (benefit) expense(24,500)29,315 
52,165 49,857 Depreciation and amortization206,013 197,400 
136,979 107,055 EBITDA407,902 519,617 
1,864 782 Equity-based compensation6,510 6,913 
— — Impairment of long-lived assets1,095 2,679 
(52,525)— Gain on sale of hotel properties(52,525)— 
609 — 
System services loss, net(1)
2,180 — 
2,381 922 
Other expense(2)
8,936 5,829 
$89,308 $108,759 Adjusted EBITDA$374,098 $535,038 
(1) In light of the growth of our franchise business and in order to enhance comparability, effective January 1, 2020, the Company adopted the practice of other lodging companies with franchise businesses of excluding system services (profit) loss, net from Adjusted EBITDA; no adjustments have been made to prior periods. System services loss, net for the three and twelve months ended December 31, 2019, was $0.7 million and $2.2 million, respectively.
(2) Includes loss on disposal of assets and non-operating income, including foreign currency transaction costs. Loss on disposal of assets totaled $2.7 million, $1.0 million, $9.0 million and $6.1 million, respectively.


9


https://cdn.kscope.io/25484a932b946b8852d767589ed8cb66-staylogoa071.jpg
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
COMMON SHAREHOLDERS TO FUNDS FROM OPERATIONS, ADJUSTED FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS PER DILUTED PAIRED SHARE
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands, except per share and per Paired Share data)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
$0.04 $(0.26)Net income (loss) per Extended Stay America, Inc. common
share - diluted
$0.13 $0.37 
$6,856 $(46,834)Net income (loss) attributable to Extended Stay America, Inc. common shareholders$23,267 $69,668 
58,829 70,676 Noncontrolling interests attributable to Class B common shares of ESH REIT72,973 95,454 
50,558 48,225 Real estate depreciation and amortization199,535 191,560 
— — Impairment of long-lived assets1,095 2,679 
(52,525)— Gain on sale of hotel properties(52,525)— 
456 (4,451)
Tax effect of adjustments to net income (loss) attributable to Extended Stay America, Inc. common shareholders(1)
(23,809)(27,582)
64,174 67,616 Funds From Operations220,536 331,779 
— 17 Debt modification and extinguishment costs— 6,733 
— 132 Tax effect of adjustments to Funds From Operations— (956)
$64,174 $67,765 Adjusted Funds From Operations$220,536 $337,556 
$0.36 $0.37 Adjusted Funds From Operations per Paired Share - diluted$1.24 $1.81 
178,197 182,046 Weighted average Paired Shares outstanding - diluted178,103 186,822 
(1) The tax effect of adjustments to net income attributable to Extended Stay America, Inc. common shareholders for the three months ended December 31, 2020, is computed using a statutory rate due to the fact that the consolidated effective tax rate for the period is negative.


10


https://cdn.kscope.io/25484a932b946b8852d767589ed8cb66-staylogoa071.jpg
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
COMMON SHAREHOLDERS TO PAIRED SHARE INCOME, ADJUSTED PAIRED SHARE INCOME
 AND ADJUSTED PAIRED SHARE INCOME PER DILUTED PAIRED SHARE
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands, except per share and per Paired Share data)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020201920202019
$0.04 $(0.26)Net income (loss) per Extended Stay America, Inc. common
share - diluted
$0.13 $0.37 
$6,856 $(46,834)Net income (loss) attributable to Extended Stay America, Inc. common shareholders$23,267 $69,668 
58,829 70,676 Noncontrolling interests attributable to Class B common shares of ESH REIT72,973 95,454 
65,685 23,842 Paired Share Income96,240 165,122 
— 17 Debt modification and extinguishment costs— 6,733 
— — Impairment of long-lived assets1,095 2,679 
(52,525)— Gain on sale of hotel properties(52,525)— 
609 — 
System services loss, net(1)
2,180 — 
2,381 922 
Other expense(2)
8,936 5,829 
11,475 136 
Tax effect of adjustments to Paired Share Income(3)
10,266 (2,163)
$27,625 $24,917 Adjusted Paired Share Income$66,192 $178,200 
$0.16 $0.14 Adjusted Paired Share Income per Paired Share - diluted$0.37 $0.95 
178,197 182,046 Weighted average Paired Shares outstanding - diluted178,103 186,822 
(1) In light of the growth of our franchise business and in order to enhance comparability, effective January 1, 2020, the Company adopted the practice of other lodging companies with franchise businesses of excluding system services (profit) loss, net from Adjusted Paired Share Income; no adjustments have been made to prior periods. System services loss, net for the three and twelve months ended December 31, 2019, was $0.7 million and $2.2 million, respectively.
(2) Includes loss on disposal of assets and non-operating income, including foreign currency transaction costs. Loss on disposal of assets totaled $2.7 million, $1.0 million, $9.0 million and $6.1 million, respectively.
(3) The tax effect of adjustments to Paired Share Income for the three months ended December 31, 2020, is computed using a statutory rate due to the fact that the consolidated effective tax rate for the period is negative.









11


https://cdn.kscope.io/25484a932b946b8852d767589ed8cb66-staylogoa071.jpg
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2020 (ACTUAL) AND 2021 (OUTLOOK)
(In thousands)
(Unaudited)
Three Months EndedYear Ended December 31, 2021
March 31, 2020(Outlook)
(Actual)LowHigh
$7,845 Net income (loss) $(7,568)$(4,365)
32,685 Interest expense, net31,500 32,500 
1,110 
Income tax expense (benefit)(1)
(1,032)(485)
50,520 Depreciation and amortization50,500 51,750 
92,160 EBITDA73,400 79,400 
1,126 Equity-based compensation2,000 2,000 
417 System services loss, net600 600 
4,046 
Other expense(2)
2,000 2,000 
$97,749 Adjusted EBITDA$78,000 $84,000 
(1) The Outlook with respect to income tax for the three months ended March 31, 2021, applies to absolute income tax benefit only. Due to (1) greater variability in forecasted results within the current year than in prior years and (2) a wider than usual range between the forecasted financial results of ESA, a taxable C-Corporation, and ESH REIT, a non-taxable real estate investment trust (in each case due to the volatility caused by the COVID-19 pandemic), the Outlook with respect to income tax for the three months ended March 31, 2021, does not apply to, or provide an outlook with respect to, the Company's effective tax rate or range of effective tax rates for the three months ended March 31, 2021.
(2) Includes loss on disposal of assets and non-operating (income) expense, including foreign currency transaction costs.


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# Hotels # Rooms # Hotels # Rooms # Hotels # Rooms # Hotels # Rooms # Hotels # Rooms 0 0 4 504 4 496 8 1,000 7 880 # Hotels # Rooms # Hotels # Rooms # Hotels # Rooms # Hotels # Rooms # Hotels # Rooms 21 2,604 0 0 27 3,184 48 5,788 10 988 Company Owned Pipeline & Recently Opened Hotels as of December 31, 2020 Under Option Pre-Development Under Construction Total Pipeline Opened in 2020 Third Party Pipeline & Recently Opened Hotels as of December 31, 2020 Commitments Applications Executed Total Pipeline Opened in 2020 Definitions Under Option Locations with a signed purchase and sale agreement Pre-Development Land purchased, permitting and/or site work Under Construction Hotel is under construction Commitments Signed commitment to build or convert a certain number of hotels by a third party, generally associated with a prior portfolio sale Applications Third party filed franchise application with deposit Executed Franchise and development application approved, geography identified and deposits paid, various stages of pre-development and/or under construction     


 
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