The boards of directors of Extended Stay America and its paired-share REIT, ESH Hospitality, appointed Jonathan S. Halkyard to serve as the next president and CEO of both companies, effective Jan. 1, 2018. Concurrently with the appointment of Halkyard, the company’s current president and CEO, Gerry Lopez, will transition to the role of senior advisor until March 18, 2018. Halkyard will succeed to Lopez’s positions on the ESA and ESH boards of directors on Jan. 1, 2018.
The company also updated its full-year 2017 outlook to reflect improved business conditions.
Halkyard, 52, is a corporate executive with public company experience and extensive knowledge of Extended Stay America, having served as the CFO of ESA and ESH since January 2015, and prior to that as ESA’s COO since September 2013. From July 2012 to September 2013, Halkyard served as EVP and CFO of NV Energy, a holding company providing energy services and products in Nevada, and its wholly-owned subsidiaries, Nevada Power Company and Sierra Pacific Power Company. From March 1999 to May 2012, Halkyard held various positions with Caesars Entertainment Corporation (formerly known as Harrah’s Entertainment), including VP (from 2002 to 2005), treasurer (from 2003 to 2010), SVP (from 2005 to 2010), EVP (from 2010 to 2012) and CFO (from 2006 to 2012). Halkyard currently serves on the board of directors of Dave & Buster’s.
“Extended Stay America is a great company, and I am honored to have the opportunity to lead our tremendously talented associates," Halkyard said in a statement. "Our company has the industry’s leading margins, a unique and differentiated product and a highly efficient capital structure. Gerry led us exceedingly well through the launch of ESA 2.0, and I’m enthusiastic about continuing the execution of this important growth strategy.”
“Jonathan’s appointment as president and CEO is once again great news for our shareholders, associates, and guests," Doug Geoga, chairman of the boards of directors of ESA and ESH, said in a statement. "Over the past four years, Jonathan has demonstrated his tremendous executive skills, first as COO in standardizing and streamlining our hotel operations and then as CFO through his stewardship of our balance sheet and allocation of our shareholders’ capital – all on top of the relationships and credibility he has built with the investment community as a public company executive over the past decade. I’d like to thank Gerry for the outstanding leadership he has provided during his tenure, helping us to transition out of our sponsor-controlled status and putting us on the path forward represented by ESA 2.0, all the while delivering RevPAR growth at or near the top of the industry in almost every quarter. The company is perfectly positioned to execute on the ESA 2.0 strategy that he launched and Jonathan is the ideal person to make it happen.”
Lopez joined the company in August 2015, when it was majority-owned and controlled by private equity sponsors who had taken the company public in 2013. Since then, Lopez led the implementation of several infrastructure systems and completed the renovation of the company’s entire portfolio of hotels. Lopez and his team also set the company forward on the strategic path that was introduced at the company’s investor day in June 2016. That strategy, dubbed ESA 2.0, involves three key components: selling nonstrategic assets; launching a franchising program for the first time in company history; and building new company-owned assets for the first time in more than a decade. All three pieces are now up and running, with a leader and team hired to execute the strategy, multiple transactions in process and a pipeline of new hotels now growing.
“With our business model and fundamentals on very solid ground, ESA 2.0 is off to a fast start," Lopez said in a statement. "Just last Friday, we completed our latest asset sale, a single hotel in Denver Tech Center at an EBITDA multiple of approximately 12.8x. With Jonathan now ready to take the reins, I’m delighted to hand the company over to him, completing a round of internal promotions into key management roles that set up ESA well for the future.”
Concurrent with Halkyard’s appointment, David Clarkson, currently ESA’s VP, financial planning and analysis and treasurer, will serve as acting CFO for the company while it conducts a nationwide search for a permanent CFO.
In addition to Halkyard’s appointment, ESA updated its outlook for the end of 2017. The updated outlook is the result of stronger than anticipated performance in November and December, aided by disaster-related business in Texas and Florida and improved results in Northern and Southern California. As is its customary practice, the company anticipates a Q4 and full-year 2017 earnings call after it files its annual report on Form 10-K.