NEW YORK — South Carolina-based hotel owner Extended Stay Hotels LLC filed for bankruptcy protection Monday, citing massive debt stemming from its 2007 acquisition by the Lightstone Group and a sharp drop in business travel because of the recession.
The Spartanburg company's brands include Extended Stay Deluxe, Extended Stay America Efficiency Studios, Homestead Studio Suites, StudioPLUS Deluxe Studios and Crossland Economy Studios.
The privately held company owns more than 680 hotels in the United States and Canada — including four in the Charleston region and 10 statewide — and caters to long-term business travelers.
The hotels are managed by HVM LLC, a separate company.
In a statement, Gary DeLapp, HVM's president and chief executive, said Extended Stay "has turned an important page in restructuring its debt and recapitalizing its business, but for hotel guests, the story is the same ... All hotels are open and welcoming guests as usual."
DeLapp also said there are no plans to close or sell any of the properties and that he expects that hotel employees — about 15 at each location — will continue to be paid and receive benefits.
Extended Stay was launched in the mid-1990s by Spartanburg native George Dean Johnson, who also co-founded the Blockbuster video chain.
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.
"The tightening credit markets, the reduction in construction activity and increased unemployment have decreased the demand for extended-stay accommodations, as fewer construction sites, consulting opportunities and travel plans are coming to fruition," the company said in court documents.
Guests at Extended Stay's hotels lodge an average of 18 to 20 nights, compared with two to three nights at other hotels, HMV said in a statement.
Extended Stay's revenue totaled about $1 billion in 2008. Revenue per available room, or "revpar," at its hotels tumbled 23.2 percent last year. Revpar is a key gauge of a hotelier's performance because it measures both occupancy and room rates.
According to the bankruptcy documents, Extended Stay's assets totaled about $7.1 billion at the end of 2008, while it had roughly $7.6 billion in debt.
The bankruptcy filing allows Extended Stay's hotels to continue operating while the company attempts to reorganize its finances under court supervision.
Extended Stay sought protection from creditors in the U.S. Bankruptcy Court in the Southern District of New York. A company representative did not immediately respond to a request for further comment.
Locally the company has four hotels — three in North Charleston and one in Mount Pleasant. It also has four properties in the Columbia area and three in the Upstate.
The Post and Courier contributed to this report.