GlobeNewswire Inc | Aug 10, 2020 04:02PM EDT

August 10, 2020

- Net loss of $8.8 million- Adjusted EBITDA1 of $74.4 million- Comparable system-wide RevPAR decrease of 28.7%

CHARLOTTE, N.C., Aug. 10, 2020 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. and ESH Hospitality, Inc. (NASDAQ:STAY) (together, the Company)today announced consolidated results for the three and six months ended June 30, 2020.

Second Quarter 2020 Highlights

-- Net loss of $8.8 million -- Total revenues of $230.8 million -- Comparable system-wide Revenue Per Available Room (RevPAR) declined 28.7% to $38.38 -- Comparable system-wide occupancy of 69.6% -- Adjusted EBITDA1 of $74.4 million -- Adjusted Funds From Operations (Adjusted FFO)1 of $0.17 per diluted Paired Share -- Adjusted Paired Share Loss1 of ($0.04) per diluted Paired Share -- Comparable system-wide RevPAR index of 141, a 4,640 basis point increase

Extended Stay Americas President and Chief Executive Officer Bruce Haase commented, I am proud of our Companys performance during these unprecedented times, with our second quarter comparable system-wide RevPAR decline of 28.7% being significantly better than any public hotel company in the US. System-wide occupancy levels have improved significantly off April lows to over 80% in recent weeks approaching pre-pandemic 2019 levels and many markets are now running positive RevPAR growth over last year. This performance illustrates the strength of our unique business model and our singular focus on the extended stay segment, unlike anyone else in the industry.

Since June, STAY is generating positive cash flow, and with July results showing continued improvement, we repaid our $350 million ESH REIT revolver last week. While others in the industry have deeply cut management and staff, ESA has continued to invest for the long-term growth of the Company.

Financial and Operating Results

Total revenues for the three months ended June 30, 2020 were $230.8 million, a decrease of 28.7% over the same period in 2019 due to the impact of the COVID-19 pandemic. Total revenues for the first half of 2020 were $497.1 million, a decrease of 17.3% compared to the same period in 2019.

Comparable system-wide RevPAR for the three months ended June 30, 2020 declined 28.7% over the same period in 2019 to $38.38, driven by a 18.3% decline in Average Daily Rate (ADR) and a 1,010 basis point decrease in occupancy to 69.6%. Comparable system-wide RevPAR declined 34.7%, 28.2% and 23.9% in the months of April, May and June 2020, respectively, compared to the same periods in 2019. After bottoming in mid-April, RevPAR increased each week for the remainder of the quarter. Comparable system-wide RevPAR for the first half of 2020 declined 18.1% to $41.18.

Hotel Operating Margin1for the three months ended June 30, 2020 was 41.7% compared to 54.4% in the same period in 2019 due a decrease in RevPAR caused by the COVID-19 pandemic. Hotel Operating Margin improved from 35.2% in April 2020 to June 2020 to 45.4%. Hotel operating expenses during the second quarter of 2020 declined by 9.2% from the same period in 2019, or approximately 10% on a comparable basis. Hotel Operating Margin for the first half of 2020 was 43.8% compared to 52.4% in the same period of 2019, driven by a decrease in RevPAR due to the COVID-19 pandemic.

Net loss for the three months ended June 30, 2020 was $8.8 million compared to net income of $59.7 million for the same period in 2019. The decline in net income was due to a decline in comparable system-wide RevPAR as a result of the COVID-19 pandemic, an increase in depreciation and amortization expense, and an increase in net interest expense, partially offset by a decrease in income tax expense. Net loss for the first half of 2020 was $0.9 million, compared to net income of $88.1 million for the same period in 2019.

Adjusted EBITDA for the three months ended June 30, 2020 was $74.4 million, a decline of 51.6% 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 non-cash equity-based compensation expense of $1.9 million, $1.6 million in loss on disposal of assets and $1.0 million in other expenses. Adjusted EBITDA for the first half of 2020 was $172.1 million compared to $270.0 million in the same period of 2019.

Adjusted FFO for the three months ended June 30, 2020 was $30.5 million, or $0.17 per diluted Paired Share, compared to $99.8 million, or $0.53 per diluted Paired Share in the same period in 2019. The decline in Adjusted FFO was due to a decline in comparable system-wide RevPAR due to the impact of the COVID-19 pandemic. Adjusted FFO for the first half of 2020 was $85.6 million, or $0.48 per diluted Paired Share, compared to $168.3 million, or $0.89 per diluted Paired Share, for the first half of 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.

Adjusted Paired Share Loss for the three months ended June 30, 2020 was $6.7 million, or ($0.04) per diluted Paired Share, compared to $61.2 million in Adjusted Paired Share Income, or $0.32 per diluted Paired Share, for the same period in 2019. The decline in Adjusted Paired Share (Loss) Income per diluted Paired Share was due to a decline in comparable system-wide RevPAR, an increase in depreciation and amortization expense and an increase in net interest expense, partially offset by a decline in income tax expense. Adjusted Paired Share Income for the first half of 2020 was $5.5 million, or $0.03 per diluted Paired Share, compared to $90.7 million, or $0.48 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 $50.7 million in capital expenditures during the second quarter of 2020. This included $1.8 million in renovation capital and $21.8 million in capital for hotel development. For the first half of 2020, the Company invested $105.3 million in capital expenditures.

As of June 30, 2020, the company had $682.4 million in cash and equivalents, including $14.9 million in restricted cash, and total debt outstanding was $3.08 billion. Since the end of the second quarter, the Company has repaid its $350.0 million revolver at ESH Hospitality, Inc. in full using unrestricted cash on hand due to the strong increases in RevPAR and the improvement in the Companys cash flow profile in recent months.

Hotel and Development Pipeline

As of June 30, 2020, the Company had a pipeline of 69 hotels representing approximately 8,400 rooms. Three Company-owned hotels and one franchised hotel opened during the second quarter.

Company Owned Pipeline & Recently Opened Hotels as of June 30, 2020Under Option Pre-Development Under Total Opened YTD Construction Pipeline# # Rooms # # Rooms # # # # # #Hotels Hotels Hotels Rooms Hotels Rooms Hotels Rooms0 0 4 504 7 888 11 1,392 4 488 Third Party Pipeline & Recently Opened Hotels as of June 30, 2020Commitments Applications Executed Total Opened YTD Pipeline# # Rooms # # Rooms # # # # # #Hotels Hotels Hotels Rooms Hotels Rooms Hotels Rooms27 3,348 4 464 27 3,184 58 6,996 2 205 Definitions Under Option Locations with a signed purchase and sale agreementPre-Development Land purchased, permitting and/or site workUnder Hotel is under constructionConstructionCommitments Signed commitment to build or convert a certain number of hotels by a third party, generally associated with a prior portfolio saleApplications Third party filed franchise application with deposit Franchise and development application approved, geography identifiedExecuted and deposits paid, various stages of pre-development and/or under construction

Distributions and Share Repurchases

On August 10, 2020, the Board of Directors of ESH Hospitality, Inc. declared a $0.01 distribution to ESH Class A and B shareholders payable on September 8, 2020 to shareholders of record on August 25, 2020. Management and the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc. intend to review future Company distributions as pandemic and business conditions continue to evolve. 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 second quarter and has $101.1 million in authorization outstanding.

Q3 and Full Year 2020 Outlook Update

Third Quarter of 2020In millions, except % Low HighComparable system-wide RevPAR -21% -18%Company owned RevPAR -22% -19%Adjusted EBITDA $98 $105 Full Year 2020In millions Low HighNet interest expense $133 $133Depreciation and amortization $198 $203Capital expenditures $160 $190

Due to the significant uncertainty surrounding the COVID-19 pandemic length, severity and the pace of economic recovery, the Company will not provide a RevPAR outlook or an Adjusted EBITDA outlook for the full year 2020 at this time. Outlook for Q3 2020 and Full Year 2020 is as of August 10, 2020. Performance for the third quarter is subject to risks and uncertainties, in particular the 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 third quarter results.

Webcast and Conference Call Details

The Company will host a conference call on Tuesday, August 11, 2020 at 8:30 a.m. Eastern Time. The conference call will be webcast simultaneously in the Investor Relations section of the Companys website at www.aboutstay.com. A replay of the call will be available for 90 days following the webcast on the Companys website. Alternatively, the conference call can be accessed 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 August 18, 2020, 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 13707704.

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, the 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, 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 Companys presentation of the Non-GAAP Financial Measures does not replace the presentation of the Companys 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, Q3 2020 and full year outlook, 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 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 Companys actual results or performance to differ from those projected in the forward-looking statements, possibly materially. For a description of factors that may cause the Companys 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 Companys combined annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 26, 2020 and other documents of the Company on file with or furnished to the SEC, including the Companys combined quarterly report on Form 10-Q filed on August 10, 2020. 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 from what is expressed, implied or forecasted by the Companys forward-looking statements.

About Extended Stay AmericaExtended Stay America is the leading brand in the mid-priced extended stay segment in the U.S. with 636 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 561 hotels and over 62,000 rooms in the U.S. ESA also manages or franchises an additional 75 Extended Stay America hotels. Visit www.esa.com for more information.

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

____________________________________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 (Loss) Income, Adjusted Paired Share (Loss) Income and Adjusted Paired Share (Loss) Income per diluted Paired Share).

EXTENDED STAY AMERICA, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(In thousands, except per share data)(Unaudited) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 % 2020 2019 % Variance Variance REVENUES: $ 219,851 $ 311,614 (29.4)% Room revenues $ 474,315 $ 578,660 (18.0)% 6,320 6,070 4.1% Other hotel 13,088 11,373 15.1% revenues 1,218 1,447 (15.8)% Franchise and 2,497 2,672 (6.5)% management fees 227,389 319,131 (28.7)% 489,900 592,705 (17.3)% Other revenues 3,445 4,526 (23.9)% from franchised 7,235 8,621 (16.1)% and managed properties 230,834 323,657 (28.7)% Total revenues 497,135 601,326 (17.3)% OPERATING EXPENSES: 133,435 146,907 (9.2)% Hotel operating 278,730 284,198 (1.9)% expenses General and 23,103 22,287 3.7% administrative 47,041 45,314 3.8% expenses 51,042 49,017 4.1% Depreciation and 101,562 97,795 3.9% amortization Impairment of 675 - n/a long-lived 675 - n/a assets 208,255 218,211 (4.6)% 428,008 427,307 0.2% Other expenses 4,083 4,996 (18.3)% from franchised 8,290 9,643 (14.0)% and managed properties 212,338 223,207 (4.9)% Total operating 436,298 436,950 (0.1)% expenses 1 1 - OTHER INCOME 3 28 (89.3)% 18,497 100,451 (81.6)% INCOME FROM 60,840 164,404 (63.0)% OPERATIONS OTHER (302 ) (171 ) 76.6% NON-OPERATING 401 (349 ) (214.9)% (INCOME) EXPENSE 33,621 29,766 13.0% INTEREST 66,306 59,370 11.7% EXPENSE, NET (LOSS) INCOME (14,822 ) 70,856 (120.9)% BEFORE INCOME (5,867 ) 105,383 (105.6)% TAX EXPENSE INCOME TAX (6,052 ) 11,198 (154.0)% (BENEFIT) (4,942 ) 17,321 (128.5)% EXPENSE (8,770 ) 59,658 (114.7)% NET (LOSS) (925 ) 88,062 (101.1)% INCOME NET INCOME (3,593 ) (6,161 ) (41.7)% ATTRIBUTABLE TO (6,884 ) (12,631 ) (45.5)% NONCONTROLLING INTERESTS NET (LOSS) INCOME ATTRIBUTABLE TO$ (12,363 ) $ 53,497 (123.1)% EXTENDED STAY $ (7,809 ) $ 75,431 (110.4)% AMERICA, INC. COMMON SHAREHOLDERS NET (LOSS) INCOME PER$ (0.07 ) $ 0.28 (124.6)% EXTENDED STAY $ (0.04 ) $ 0.40 (111.0)% AMERICA, INC. COMMON SHARE - DILUTED WEIGHTED-AVERAGE EXTENDED STAY 177,551 188,813 AMERICA, INC. 177,771 188,695 COMMON SHARES OUTSTANDING - DILUTED

CONSOLIDATED BALANCE SHEET DATAAS OF JUNE 30, 2020 AND DECEMBER 31, 2019(In thousands)(Unaudited) June 30, December 31, 2020 2019 Cash and cash $ 667,553 $ 346,812 equivalents Restricted cash $ 14,893 $ 14,858 Total assets $ 4,348,239 $ 4,030,596 Total debt, net of unamortized deferred $ 3,033,718 $ 2,639,766 financing costs and debt discounts ^(1) Total equity $ 1,102,368 $ 1,176,270 ^(1) Unamortized deferred financing costs and debt discounts totaled $42.9 million and $46.7 million as of June 30, 2020 and December 31, 2019, respectively.

EXTENDED STAY AMERICA, INC.OPERATING METRICSFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(Unaudited) COMPARABLE SYSTEM-WIDE OPERATING METRICS ^(1) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 Variance 2020 2019 Variance625 625 - Number of hotels (as 624 624 - of June 30)68,815 68,815 - Number of rooms (as 68,700 68,700 - of June 30) (1010) Comparable (490)69.6% 79.7% bps System-Wide Occupancy 70.7% 75.6% bps ^(1)$55.17 $67.53 (18.3)% Comparable $58.22 $66.56 (12.5)% System-Wide ADR^(1) Comparable$38.38 $53.84 (28.7)% System-Wide RevPAR^ $41.18 $50.29 (18.1)% (1) COMPARABLE COMPANY-OWNED OPERATING METRICS ^(2) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 Variance 2020 2019 Variance553 553 - Number of hotels (as 553 553 - of June 30)61,445 61,445 - Number of rooms (as 61,445 61,445 - of June 30) (1110) Comparable (560)68.8% 79.9% bps Company-Owned 70.1% 75.7% bps Occupancy^(2)$56.61 $69.63 (18.7)% Comparable $59.93 $68.63 (12.7)% Company-Owned ADR^(2) Comparable$38.97 $55.62 (29.9)% Company-Owned RevPAR^ $42.04 $51.94 (19.1)% (2) COMPANY-OWNED OPERATING METRICS ^(3) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 Variance 2020 2019 Variance561 554 7 Number of hotels (as 561 554 7 of June 30)62,421 61,552 869 Number of rooms (as 62,421 61,552 869 of June 30)68.7% 79.9% (1120) Company-Owned 70.1% 75.7% (560) bps Occupancy^(3) bps$56.68 $69.65 (18.6)% Company-Owned ADR^(3) $60.07 $68.64 (12.5)%$38.96 $55.63 (30.0)% Company-Owned RevPAR^ $42.09 $51.94 (19.0)% (3) ^(1) Includes hotels owned, franchised or managed for the full three and sixmonths ended June 30, 2020 and 2019, respectively. ^(2) Includes hotels owned and operated by the Company for the full three andsix months ended June 30, 2020 and 2019, respectively. ^(3) Includes results of operations based on the Company's owned and operatedhotels during the periods presented, which is summarized below:

Number of Hotels Number of Number of Number ofDate Acquired or Rooms Owned Hotels^(1) Owned Rooms^(1) OpenedJanuary 1, 2019 - - 554 61,552November 2019 1 121 555 61,673December 2019 2 260 557 61,933March 2020 1 120 558 62,053April 2020 1 120 559 62,173June 2020 2 248 561 62,421 (1) As of end of period.

EXTENDED STAY AMERICA, INC.NON-GAAP RECONCILIATION OF NET (LOSS) INCOME TO HOTEL OPERATING PROFIT ANDHOTEL OPERATING MARGINFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(In thousands)(Unaudited) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 Variance 2020 2019 Variance$ (8,770 ) $ 59,658 (114.7)% Net (loss) $ (925 ) $ 88,062 (101.1)% income Income tax(6,052 ) 11,198 (154.0)% (benefit) (4,942 ) 17,321 (128.5)% expense33,621 29,766 13.0% Interest 66,306 59,370 11.7% expense, net Other(302 ) (171 ) 76.6% non-operating 401 (349 ) (214.9)% (income) expense(1 ) (1 ) - Other income (3 ) (28 ) (89.3)% Impairment of675 - n/a long-lived 675 - n/a assets Depreciation51,042 49,017 4.1% and 101,562 97,795 3.9% amortization General and23,103 22,287 3.7% administrative 47,041 45,314 3.8% expenses Loss on1,636 2,001 (18.2)% disposal of 4,979 3,377 47.4% assets ^(1) Franchise and(1,218 ) (1,447 ) (15.8)% management (2,497 ) (2,672 ) (6.5)% fees System638 470 35.7% services loss, 1,055 1,022 3.2% net Hotel$ 94,372 $ 172,778 (45.4)% Operating $ 213,652 $ 309,212 (30.9)% Profit $ 219,851 $ 311,614 (29.4)% Room revenues $ 474,315 $ 578,660 (18.0)%6,320 6,070 4.1% Other hotel 13,088 11,373 15.1% revenues Total room and$ 226,171 $ 317,684 (28.8)% other hotel $ 487,403 $ 590,033 (17.4)% revenues (1270) Hotel (860)41.7% 54.4% bps Operating 43.8% 52.4% bps Margin ^(1) Included in hotel operating expenses in the consolidated statements ofoperations.

EXTENDED STAY AMERICA, INC.NON-GAAP RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDAFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(In thousands)(Unaudited) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 2020 2019$ (8,770 ) $ 59,658 Net (loss) income $ (925 ) $ 88,062 33,621 29,766 Interest expense, net 66,306 59,370 (6,052 ) 11,198 Income tax (benefit) (4,942 ) 17,321 expense 51,042 49,017 Depreciation and 101,562 97,795 amortization 69,841 149,639 EBITDA 162,001 262,548 1,864 2,147 Equity-based 2,990 4,255 compensation 675 - Impairment of 675 - long-lived assets 638 - System services loss, 1,055 - net^(1) 1,335 1,857 Other expense^(2) 5,381 3,151 $ 74,353 $ 153,643 Adjusted EBITDA $ 172,102 $ 269,954 ^(1) In light of the growth of our franchise business and in order to enhancecomparability, effective January 1, 2020, the Company adopted the practice ofother lodging companies with franchise businesses of excluding system services(profit) loss, net from Adjusted EBITDA; no adjustments have been made to priorperiod results. System services loss, net for the three and six months endedJune 30, 2019, was $0.5 million and $1.0 million, respectively. ^(2) Includes loss on disposal of assets, non-operating (income) expense,including foreign currency transaction costs, and certain costs associated withdispositions. Loss on disposal of assets totaled $1.6 million, $2.0 million,$5.0 million and $3.4 million, respectively.

EXTENDED STAY AMERICA, INC.NON-GAAP RECONCILIATION OF NET (LOSS) INCOME ATTRIBUTABLE TO EXTENDED STAYAMERICA, INC.COMMON SHAREHOLDERS TO FUNDS FROM OPERATIONS, ADJUSTED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS PER DILUTED PAIRED SHAREFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(In thousands, except per share and per Paired Share data)(Unaudited) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 2020 2019 Net (loss) income per$ (0.07 ) $ 0.28 Extended Stay America, Inc. $ (0.04 ) $ 0.40 common share - diluted Net (loss) income$ (12,363 ) $ 53,497 attributable to Extended $ (7,809 ) $ 75,431 Stay America, Inc. common shareholders Noncontrolling interests 3,589 6,157 attributable to Class B 6,876 12,623 common shares of ESH REIT 49,429 47,655 Real estate depreciation 98,310 95,088 and amortization 675 - Impairment of long-lived 675 - assets Tax effect of adjustments to net (loss) income (10,822 ) (7,482 ) attributable to Extended (12,430 ) (14,882 ) Stay America, Inc. common shareholders 30,508 99,827 Funds from Operations 85,622 168,260 $ 30,508 $ 99,827 Adjusted Funds from $ 85,622 $ 168,260 Operations Adjusted Funds from$ 0.17 $ 0.53 Operations per Paired Share $ 0.48 $ 0.89 ? diluted Weighted average Paired 177,844 188,813 Shares outstanding ? 178,008 188,695 diluted

EXTENDED STAY AMERICA, INC.NON-GAAP RECONCILIATION OF NET (LOSS) INCOME ATTRIBUTABLE TO EXTENDED STAYAMERICA, INC.COMMON SHAREHOLDERS TO PAIRED SHARE (LOSS) INCOME, ADJUSTED PAIRED SHARE(LOSS) INCOMEAND ADJUSTED PAIRED SHARE (LOSS) INCOME PER DILUTED PAIRED SHAREFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(In thousands, except per share and per Paired Share data)(Unaudited) Three Months Ended Six Months EndedJune 30, June 30,2020 2019 2020 2019 Net (loss) income per$ (0.07 ) $ 0.28 Extended Stay America, Inc. $ (0.04 ) $ 0.40 common share - diluted Net (loss) income$ (12,363 ) $ 53,497 attributable to Extended $ (7,809 ) $ 75,431 Stay America, Inc. common shareholders Noncontrolling interests 3,589 6,157 attributable to Class B 6,876 12,623 common shares of ESH REIT (8,774 ) 59,654 Paired Share (Loss) Income (933 ) 88,054 675 - Impairment of long-lived 675 - assets 638 - System services loss, net^ 1,055 - (1) 1,335 1,857 Other expense^(2) 5,381 3,151 Tax effect of adjustments (573 ) (291 ) to Paired Share (Loss) (720 ) (493 ) Income$ (6,699 ) $ 61,220 Adjusted Paired Share $ 5,458 $ 90,712 (Loss) Income Adjusted Paired Share$ (0.04 ) $ 0.32 (Loss) Income per Paired $ 0.03 $ 0.48 Share ? diluted Weighted average Paired 177,551 188,813 Shares outstanding ? 178,008 188,695 diluted ^(1) In light of the growth of our franchise business and in order to enhancecomparability, effective January 1, 2020, the Company adopted the practice ofother lodging companies with franchise businesses of excluding system services(profit) loss, net from Adjusted Paired Share (Loss) Income; no adjustmentshave been made to prior period results. System services loss, net for the threeand six months ended June 30, 2019, was $0.5 million and $1.0 million,respectively. ^(2) Includes loss on disposal of assets, non-operating (income) expense,including foreign currency transaction costs, and certain costs associated withdispositions. Loss on disposal of assets totaled $1.6 million, $2.0 million,$5.0 million and $3.4 million, respectively.

EXTENDED STAY AMERICA, INC.NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDAFOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 (ACTUAL) AND 2020 (OUTLOOK)(In thousands)(Unaudited) Three Months Three Months Ended September 30, 2020EndedSeptember 30, (Outlook)2019(Actual) Low High $ 53,230 Net income $ 11,000 $ 44,000 36,535 Interest expense, net 33,000 33,000 10,501 Income tax expense (2,000 ) (26,000 ) (benefit)^(1) 49,748 Depreciation and 52,000 50,000 amortization 150,014 EBITDA 94,000 101,000 1,876 Equity-based 1,700 1,700 compensation 2,679 Impairment of - - long-lived assets 1,756 Other expense^(2) 2,300 2,300 $ 156,325 Adjusted EBITDA $ 98,000 $ 105,000 ^(1) The Q3-2020 Outlook with respect to income tax applies to absolute incometax expense (benefit) only. Due to (1) certain provisions of the CARES Actrelated to income tax relief, (2) a greater variability in quarterly forecastedresults within the current year than in prior years and (3) a wider than usualrange between the forecasted financial results of ESA, a taxable C-Corp, andESH REIT, a non-taxable real estate investment trust (in each case due to thevolatility in our performance caused by the COVID-19 pandemic), the Q3-2020Outlook with respect to income tax does not apply to, or provide an outlookwith respect to, the Company's effective tax rate or range of effective taxrates for either the three months ended September 30, 2020, or the year endedDecember 31, 2020. ^(2) Includes loss on disposal of assets, non-operating expense (income),including foreign currency transaction costs, and certain costs associated withdispositions.