Extended Stay America — Q4 2020 Earnings Presentation
30 slides from Extended Stay America's earnings presentation, Feb 25, 2021
Slide 1: Q4 2020 Earnings Summary & 2021 Investor Roadmap
Q4 2020 Earnings Summary & 2021 Investor Roadmap February 25, 2021 Extended Stay America, Inc. ESH Hospitality, Inc.
Slide 2: Important disclosure information
important disclosure information This presentation 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, business strategies, financial result
Slide 3: 4Q and Full Year 2020 Highlights
wel, & S = 4Q and Full = Year 2020 = C Highlights S ~ 1, Ay extended STAY AMERICA
Slide 4: Q4 2020 operating results and financial highlights
comparable system-wide revenue per available room (fiRevPARO) 9.49% ik Q4 2019 Q4 2020 hotel operating margin? Q4 2020 operating results and financial highlights net income (in millions) iy Ni $65.7 Q4.2019 Q4 2020 adjusted FFO per diluted Paired Share? 3.3% ——=5 Q4 2019 Q4 2020 adjusted EBITDA (in
Slide 5: Full year 2020 operating results and financial highlights
full year 2020 operating results and financial highlights comparable system-wide RevPAR +15.9 $5051 or net income (in millions) 4 $165.1 ee 2019 2020 hotel operating margin 2019 2020 adjusted FFO per diluted Paired Share? $1.81 2019 2020 adjusted EBITDA (in millions)! $535.0 90.19, oe 3 Se 2020 adju
Slide 6: Significantly outperforming industry, segment and competitive set
significantly outperforming industry, segment and competitive set 1 65 consecutive weeks of RevPAR index gains STAY's Comparable system-wide RevPAR Index 130 127 120 slo ss 110 »% 100 96 90 80 70 2019 2020 A STAYis RevPAR Index?, which began to improve prior to COVID-19, has continued at very high l
Slide 7: STAY performance in a growth economy and defensive in a downturn
STAY has now shown strong performance in a growth economy and to be more defensive in a downturn RevPAR % Change - 2009 to 2019 RANEAR A Cita 20 0a 22 Mi pice Upper 80.0% ‘STAY ‘extended stay Economy Midscale Midscale Upper Upscale 30.0% 69.3% =e 70.0% 10.0% 60.0% 53.1% eam -200% — -15.0% 49.1% IN 5
Slide 8: Positive free cash flow in 2020 despite pandemic
positive free cash flow! in 2020 despite pandemic, significant capital investments into new hotel development and renovations FY20 Cash flow : i saz 1512) = i) Operational & Investing Actviies ash (in millions) FY2019 Cash from Capital Proceeds from Capital Financing Fy 2020° Cash Operations Investm
Slide 9: Roadmap
a See: Ss , Roadmap %, < Fira extended STAY AMERICA
Slide 10: 2021 shareholder value creation roadmap
2021 shareholder value creation roadmap we will continue to enhance shareholder value through the execution of ESAis long-term strategy which includes a number of accretive avenues Brand Significant Market Franchise REIT Portfolio Balanced Segmentation Operational Recovery Growth Management Capital
Slide 11: Introducing Extended Stay America Premier Suites
Introducing Extended Stay America Premier Suites Extended Stay America has earned industry-leading awareness and equity over the years for providing long-stay travelers what matters most. Premier Suites will build on this strength to attract higher-rated extended stay guests and command a higher rat
Slide 12: Competitive landscape shows opportunity at higher price points
The competitive landscape shows a significant opportunity for Extended Stay America at price points above current levels ‘Occupied rooms by ADR: 7+ night stays 2000000 wo Highest volume of 10,000.000 iy N long-stay demand 10 y \ for the industry is ie \ in the $75-99 range ” ; \ sito. ! : : \ ' : H
Slide 13: Premier Suites targets the largest extended stay customer segment
Extended Stay America Premier Suites targets the largest extended stay customer segment A Diverse, married business travelers working primarily in finance, insurance, construction and technology Representing the largest extended stay segment, comprising 32% of total extended stay market share (based
Slide 14: Extended Stay America Premier Suites features
Extended Stay America Premier Suites features: A Newly built or renovated guest rooms with upgraded design elements A New signature bedding for superior comfort A Free, enhanced healthy breakfast offering A Larger TVs A Spacious, apartment-style layouts with separation between kitchen and sleeping /
Slide 15: Core brand to be renamed Extended Stay America Suites
core brand to be renamed Extended Stay America Suites A Minimal investment through signage changes A Will re-brand on all distribution channels A Better aligns with our current offering, increases customers stay intent as well as willingness to pay A Change expected in Q2 2021 A Will be the focus of
Slide 16: Transition to a family of extended stay brands
This marks ESA’s transition from a single-branded company to a growing family of extended stay brands under the ESA umbrella extended extended STAY STAY AMERICA AMERICA suites premier suites This new brand architecture allows ESA to best position our existing product to extract more rate from our cu
Slide 17: Significant operational and commercial engine improvements in 2021
significant operational and commercial engine improvements in 2021 ¥ Commercial Engine “* Launch new esa.com website in Q1 2021, taking a mobile first approach and simplifying the core booking process; expect to improve traffic and conversion as the year progresses “* Continue to improve performance
Slide 18: Mobile and desktop website
Mobile Desktop MobileDesktop
Slide 19: Strong market recovery expected post COVID-19 in largest markets
strong market recovery expected post COVID-19 5 of ESAis largest markets - which have been impacted harder than other markets - made up approximately 45% of our EBITDA decline in 2020 vs 2019, providing strong upside post-COVID-19 ESA Top Market YoY RevPAR % A in 2020 v Top Markets “+ We continue to
Slide 20: Company owned and third party hotel pipeline
# 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
Slide 21: ESH REIT asset management
ESH REIT asset management we intend to maximize the value of our REIT through proactive asset management v Evolution of markets has resulted in value dislocation, creating opportunities for transactions with multiples well above companyis trading levels * Curate certain hotels for better and higher
Slide 22: Balanced capital allocation
balanced capital allocation v Invest in the core business * Invest in high ROIC opportunities ** Maintain our hotels * Improve our commercial engine v De-lever over time “ Target 3.5x-4x net debt to adjusted EBITDA “+ Repay outstanding ESA revolver in 1H21 “+ Strong cash position v Return capital to
Slide 23: Q1 2021 and full year 2021 initial outlook
Q1 2021 and full year 2021 initial outlook? Q1 2021 Comparable system-wide RevPAR % A : -6% to -3% Net income (loss): ($8) to ($4) million Adjusted EBITDA: $78 to $84 million EY 2021 Capital expenditures: $155 to $175 million Depreciation expense : $202 to $207 million Net interest expense: $126 to
Slide 24: Appendix
RR 7; \ as \ % s _ Ca = APPENDIX S& 7, extended STAY AMERICA
Slide 25: RevPAR index
RevPAR index RevPAR Index is stated as a percentage and calculated by comparing RevPAR for comparable system-wide hotels to the aggregate RevPAR of a group of competing hotels generally in the same geographic market. As such, RevPAR Index is only a measure of RevPAR relative to certain competing hot
Slide 26: Reconciliation of net income to hotel operating profit and margin
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 ‘Three Months Ended December 31, Variance 2020 65.689 (12,426) 31,551 (27) @ (62825) $107,914 $247,525 6.530. $254,055 42.59% o 2019 23.846 1,49
Slide 27: Reconciliation of net income to EBITDA and adjusted EBITDA
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 Ended Twelve Months Ended December December Net income Interest expense, net Income tax (benefit) expense Depreciation and amo
Slide 28: Reconciliation to FFO and adjusted FFO
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 share for the three and twelve months ended December 31, 2020 and 2019 EXTENDED STAY AM
Slide 29: Reconciliation to adjusted paired share income
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 share for the three and twelve months ended December 31, 2020 and 2019 (in thousands, except
Slide 30: Reconciliation to EBITDA Q1 2020 actual and 2021 outlook
non-GAAP reconciliation of net income (loss) to EBITDA and adjusted EBITDA for three months ended March 31, 2020 (Actual) and 2021 (Outlook) (in thousands) (Unaucited) Three Months Ended ‘Three Months Ended March 31, 2021 March 31, 2020 (Outlook (Actual) Tow High s 7.845 Net income (108s) $ (7568) S
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