PE’s beloved thematic radar has turned towards previously niche investments for some of the largest global alternative asset managers targeting lifestyle-oriented lodging models, with a concerted effort to build scalable platforms, align with seasoned operators and consolidate fragmented sub-sectors.
At the centre of this shift is the extended stay category, where longer average stays and resilient operational performance have made these assets attractive in an otherwise defensive hospitality market. Extended stay hotel operators, which typically cater to guests staying weeks or months rather than nights, have long offered income stability and higher underlying occupancy rates compared with traditional hotels.
It is a market dominated by the US, which accounts for anywhere between 40 per cent to 50 per cent of the global room volume depending on whose figures to use. And while 2025 proved tough for the sector to navigate, The Highland Group’s most recent figures showed revenue in the extended stay category until and including November up 0.6 per cent over 2024, a modest uptick but outperforming most hotel categories.
The Highland Group principal Mark Skinner notes that extended-stay supply and demand have both been increasing, but at well below their long-term average of about 5 per cent over the last 25 year.
"It's very difficult with the interest rates where they are today and the construction costs to build any hotel, quite frankly, and that's also impacted extended stay," he says, noting that extended stay and the core hotel market are more aligned than at any point since the pandemic.
Post-Covid boom
Indeed, the shift in emphasis became apparent as the hospitality industry emerged from Covid, largely thanks to a standout transaction when Extended Stay America, one of the largest operators in the United States with some 650 properties [now nearer 700], was acquired by a consortium led by Blackstone Group and Starwood Capital in June 2021 in a $6 billion deal.
While occupancy has remained robust, the intervening years have not been without their challenges and Blackstone and Starwood have also disposed of or repurposed underperforming hotels, notably in locations where Extended Stay lacked sufficient density for operational efficiency, as well as properties with attractive alternative uses.
Blackstone and Starwood have also invested heavily, spending $251.8 million on strategic initiatives and renovations across the portfolio since then, or $10,251 per room, according to Fitch.
In October, they secured a $1.9 billion loan commitment to refinance 220 properties across 33 states. JPMorgan Chase led a consortium of six lenders to originate the commercial mortgage-backed securities loan across a portfolio of 24,560 rooms.
But is not only in the US where private equity has sought opportunities. There has also been platform-level capital raising and sponsor formation in the lifestyle and extended stay space. In 2024, AENDRE Group, a real estate platform focused on lifestyle extended stay and aparthotels, secured backing from JuneX Capital Partners and co-investor New End, specifically to develop and scale new hospitality concepts.
A first major development is expected to be announced in the near future, according to the company.
Beyond extended stay
Alongside extended stay, hybrid hospitality and co-living concepts are also emerging. Outsite, a brand with about 40 properties globally, in January secured investment from Limestone Capital, a private equity firm attracted to its community-centric ‘social extended stays’ model.
"We're creating a new category, social extended stays. It's a bit like a hostel for professionals, except that guests have private rooms instead of bunk beds," says Outsite co-founder and CEO Emmanuel Guisset of the concept, which combines private accommodation with workspaces and social programmes in a mix designed to appeal to digital nomads, remote professionals and younger demographics.
The investment includes equity in the hotel brand, a separate real estate vehicle to acquire more properties, plus working capital.
Co-living, a related concept combining shared amenities with private living units, is also seeing institutional interest and capital market activity, particularly in Asia Pacific. Singapore’s LHN Group’s co-living arm, Coliwoo, secured conditional eligibility for listing on the Singapore Exchange in September 2025, building a portfolio of nearly 3,000 rooms typically achieving high occupancy levels.
Looking to expand its footprint, in June LHN won a tender for the tenancy of a state-owned property in the Pasir Ris area, with plans to convert it into Coliwoo’s first resort-style chalet. The group has also opened the 62-room Coliwoo Bukit Timah Fire Station and the Coliwoo platform typically operates above a 97% occupancy rate.
“Our space optimisation segment, with its Coliwoo portfolio, has maintained high occupancy rates, and we’ve further expanded our co-living offerings with the addition of the new resort-style chalet at 159 Jalan Loyang Besar,” Kelvin Lim, executive chairman of LHN and founder of Coliwoo, says of the company’s approach.
Private equity’s deeper entry into these spaces is also reshaping transaction dynamics at the asset and portfolio level. In the UK, for example, Germany’s ECE Work & Live acquired two Staybridge Suites extended-stay hotels in Liverpool and Newcastle in early 2026, sourced and asset-managed with private equity from Maya Capital.
ECE Work & Live is looking to build a portfolio of seven to eight medium-sized hotels in regional UK cities outside London with a total volume of up to £150 million.
"The acquisitions are part of our opportunistic approach of investing in smaller UK hotel properties that are often overlooked by institutional investors due to their size. Extended-stay concepts in particular are in high demand in the UK and offer attractive recurring yields. We see this as an excellent opportunity to build a portfolio with significant upside potential," says Jan-Hendrik Walloch, Managing Director Investment at ECE Work & Live of the company’s ambitions.
The increasing focus on extended stay and hybrid lodging also dovetails with broader capital market shifts in hospitality investment. After years of higher interest rates and caution around leverage, investors have shifted towards lodging classes where underlying demand is less cyclical and where operational performance has shown remarkable resilience. In uncertain times, that resilience and the fact that these subsectors also touch on the broader residential market make them a safe haven amid stormy seas.
By Mark Faithfull
