EXTENDED STAY AMERICA RESPONDS TO TARSADIA AND HIGHLIGHTS COMPELLING REASONS TO SUPPORT THE TRANSACTION WITH BLACKSTONE AND STARWOOD CAPITAL.

Highlights:

New Letter to Shareholders Provides Comprehensive Discussion of the Transaction Rationale and the Immediate, Certain and Compelling $19.50 Per Paired Share Cash Value

Addresses Tarsadia's Misleading and Flawed Arguments

Urges Shareholders Vote 'FOR' the Transaction on the WHITE Company Proxy Card in Vote Set for June 8, 2021

CHARLOTTE, N.C.- Extended Stay America, Inc. ('ESA') and its paired-share REIT, ESH Hospitality, Inc. ('ESH' and, together with ESA, 'Extended Stay' or the 'Company') (NASDAQ: STAY) today sent a new letter to shareholders detailing the strategic and economic factors that support the transaction with Blackstone and Starwood Capital, and addressing the misleading and highly flawed arguments from Tarsadia Capital LLC ('Tarsadia').

The transaction has received all regulatory approvals and is on track to close on June 11, 2021 pending shareholder approval. The letter urges shareholders to vote to approve the transaction at the Company's Special Meetings of Shareholders scheduled for June 8.

Compelling Shareholder Value: The Right Price, The Right Process, The Right Time

The letter provides a comprehensive discussion of the history, and the compelling strategic and economic rationale for the transaction with Blackstone and Starwood, which includes:

The Right Price: At $19.50, the transaction values the Company's paired shares at more than a 50% premium to their pre-pandemic price, and at a 15.6x trailing 2020 EBITDA multiple, 13.0x forward 2021E EBITDA multiple and 11.0x pro-forma 2019 EBITDA multiple, compared to its one-year pre-COVID average next twelve month multiple of 9.1x. Further, since the sale transaction announcement on March 15th, the lodging sector has traded down 9.5% implying an even greater transaction premium amidst an increasingly more volatile market.

The Right Process: The transaction marks the culmination of the Company's thorough, multi-year actions to explore value-enhancing alternatives, during which time only Blackstone and Starwood emerged as interested parties despite proactive outreach to others and the Company's publicly acknowledged 'strategic review' process in 2019. Rigorous negotiations driving five price increases over two months resulted in $19.50 as the buyers' 'best and final' offer.

The Right Time: The Company's unique extended stay business model and recently implemented strategic initiatives led to significant operating and share price outperformance during the pandemic. The transaction comes at a time and at a valuation such that the future upside expected in the Company's 5-year business plan, which projects 2023 EBITDA to exceed 2019 by approximately 10%, is reflected in the transaction price on a time and risk-adjusted basis.

Tarsadia's Misleading Claims and Highly Flawed Arguments Offer No Clear Path to Value Creation

Extended Stay welcomes open communication with its shareholders and constructive input toward the shared goal of enhancing shareholder value. However, many of Tarsadia's claims are misleading, as detailed in the letter, and provide no credible alternative path to value creation. Among them:

Tarsadia is focused on an agenda of ill-advised alternatives for the Company: After nine months of engagement, Tarsadia has offered no new and credible ideas for value creation, and instead has focused on ill-conceived and even irresponsible ideas of levered share repurchases and variations on OpCo/PropCo that bear no merit.

Tarsadia's valuation claims are flawed and hypocritical: In Tarsadia's own 'white paper,' shared with the Company in October 2020, Tarsadia asserted that Extended Stay should be valued at 10x EBITDA, directionally in-line with the Company's 5-year pre-COVID average of 9.5x, yet today argues the Company should only transact at EBITDA multiples more in line with luxury hotel businesses (15-20x). Comparing Extended Stay to these fundamentally different businesses - ones that the market clearly does not consider as Extended Stay's peers - is simply not credible.

Tarsadia's claims that the two dissenting directors were 'ignored' and 'brushed aside' are patently false: Strong and diverse opinions are to be expected, particularly following a pandemic when views of operating outlook, risk tolerance and value may vary. The Boards are proud of having created a forum for opposing views to be voiced, listened to and respected. The lack of unanimity reflects best-in-class governance and a highly qualified board with independence and diversity of thought.

Extended Stay strongly recommends that shareholders vote 'FOR' the proposal on the WHITE proxy card to approve the transaction and secure the certain, immediate and compelling value of $19.50 per paired share in cash.

The full text of the letter to shareholders follows:

Dear Extended Stay America Shareholders,

The Special Meetings of Shareholders to vote on the proposed sale of Extended Stay America, Inc. ('ESA') and its paired-share REIT, ESH Hospitality, Inc. ('ESH' and, together with ESA, 'Extended Stay' or the 'Company') are scheduled for June 8, 2021, and your vote 'FOR' the transaction on the WHITE proxy card is extremely important regardless of the number of paired shares you own. With all required regulatory approvals now in hand, the transaction is on track to close on June 11, 2021 pending shareholder approval.

Your vote 'FOR' the transaction is critical to protecting your opportunity to realize immediate, certain and compelling value through a sale of the Company for $19.50 per paired share in cash - a value that is the product of the right timing, the right price, the right process, and the right transaction.

Tarsadia Capital LLC ('Tarsadia') first invested in the Company in May of last year and is soliciting proxies against this compelling transaction. Tarsadia has offered no new and credible ideas for value creation and has repeatedly bought and sold our paired shares at values well below the $19.50 deal price. We had extensive dialogue with Tarsadia numerous times over several months and have not heard any proposals from them that we have not already explored ourselves or that would otherwise offer shareholders a more attractive path forward than the proposed transaction. We urge you to discard any proxy card sent to you by Tarsadia.

At the announcement of this transaction on March 15th, and on multiple occasions since, we have articulated why the sale of the Company to Blackstone and Starwood at a greater than 50% premium to our pre-pandemic share price is a compelling, value-maximizing opportunity for shareholders. We have also been transparent that two of our 11 Directors chose not to support the transaction. We had robust boardroom debate regarding this transaction, and we are proud of having created within the boardroom a forum and a culture where differing perspectives can be voiced, heard and respected. Strong and diverse opinions are to be expected. We believe a robust Board process that involved extensive debate and complete transparency is the epitome of good governance.

The Right Timing: Why We Support the Transaction 'Now'

We fundamentally believe that the transaction as proposed today, at $19.50 per paired share in cash, provides shareholders with a compelling value that fully and fairly captures the future growth we expect in our strategic plan on a time and risk-adjusted basis.

Extended Stay America was founded 26 years ago on the notion that American workers and families value an accommodation model that can offer the in-room and on-site amenities of a home necessary for an extended hotel stay, at an affordable price. Over decades, the Company has grown to 652 hotels with locations in 44 states. Throughout its history, the Company has remained focused on fulfilling its mission of seeking value creation for shareholders and keeping in-tune with guest preferences and standards for our highly distinctive business model.

Unique Platform Drives Unique Results

Over many years, the market has told us quite clearly that the value for such a platform, regardless of ownership, management team or specific strategy, is roughly 9-10x EBITDA. It has been our constant objective to seek to improve both our EBITDA and the valuation multiple of that EBITDA. As our track record over the last eight years as a public company has shown, we have considered and explored value creating opportunities through strategic initiatives, a separation of our operations from our real estate, asset sale transactions - and everything in between. When the global pandemic shined a spotlight on our truly unique and resilient business model - as evidenced by our significant outperformance versus other lodging companies from a fundamental and market valuation standpoint (as referenced in the charts below) - the substantial outperformance of our shares suggested an overdue and welcome recognition of performance and value. And when we received a proposal from Blackstone earlier this year to purchase our already substantially appreciated shares at a substantial premium, finally closing the valuation gap with which we have been wrestling, we had a duty to our shareholders to engage and consider what was in their best interests.

Extended Stay Has Dramatically Outperformed the Broader Lodging Sector Since COVID On Fundamentals...1

Figure 1 is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/5aeeb251-ee95-4995-9c82-b43dcc2dad71

...Leading to Dramatic Outperformance Not Only Compared to Lodging Companies Through the Pandemic, but Also the Broader Markets2

Figure 2 is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/24811b9d-e23c-4d9f-8981-b5fab846bf61

Extended Stay is a unique business, with unique opportunities and risks. We do not view the Company as a 'traditional' lodging company, nor do our guests, associates, shareholders and broader stakeholders for that matter. Central to our consideration of the pending transaction is our assessment of company-specific opportunities reflected in our strategic plan, associated execution and broader market risks, and probability-weighted outcomes. We are optimistic about our prospects as we implement our strategic plan. At the same time, in evaluating a premium proposal such as the one that these negotiations brought before us, we needed to translate our optimism into specific expectations for the future, with related sensitivities, and then consider associated upside and downside possibilities, to determine the best outcome for shareholders.

To assess the execution risk of our business plan, the Boards placed significant weight on the people in the best position to provide that informed input - our management team. Management's plan projects EBITDA to recover to above 2019 levels by 2023 -- and that is only if we are able to realize the benefit of over $60 million of EBITDA attributable to new revenue-enhancing initiatives, some of which are still in their early days of implementation. In addition, management's plan anticipates a minimum level of capital spending in 2021-2022 that is nearly 50% greater than historical levels, and management recognizes that even more capital may be required over this period. While there is an opportunity to grow Extended Stay's revenue, EBITDA and cash flow over the next five years to above pre-COVID levels, the capital required to support our outlook for growth and the associated execution and market risks must be considered alongside our optimism about the future. All of these considerations, among many other inputs, have translated into our current valuation judgments regarding this transaction.

Transaction Value Trumps Prospects of Unlikely Long-Term Multiple Re-Rating

The value of the Company's paired shares is a function of both its earnings and the valuation multiple applied to those earnings. And so, the evaluation of a purchase offer also must consider the opportunities and risks associated with potential future earnings multiples. In our case, that requires an assessment of the likelihood that the Company will garner a significant premium to historical multiple levels in the years ahead. As depicted in the chart below, when evaluating the proposed purchase offer against the prospects of remaining public, we estimate that the Company would need to sustain close to an 11x EBITDA multiple in the future, nearly a 2x multiple premium to its pre-pandemic level and a level the Company has never come close to sustaining in its near decade as a public company, in order to justify not transacting at $19.50. And that, of course, assumes the flawless achievement of management's plan and favorable financial market conditions.

Figure 3 is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/457d6274-debc-4374-a926-7820038e3b88

The Right Price: Unpacking ESA's Valuation Multiple and Transaction Premium

As illustrated in the chart above, price and timing are inextricably linked. Said differently, $19.50 per share today is not the same as $19.50 per share two years ago or two years from today. We evaluated the pending transaction on its standalone merits, while leveraging the insights from our past engagements with Blackstone and Starwood, and insights gathered from our multiple attempts over the years to attract interest from other credible potential investors with possible interest in our business model, as well as our understanding of 'typical' acquisition premia.

By any measure, $19.50 per share delivers a significant premium to shareholders across multiple time horizons, including at the high end of precedent REIT transactions based on the trailing 30-trading day VWAP, 3-month VWAP and 52-week high prior to announcement.3

The $19.50 per share all cash price represents a:

51% premium to the company's pre-pandemic share price4

15% premium to the $16.94 closing price the day prior to the announcement

23% premium to the 30-trading day volume weighted average price

28% premium to the 3-month volume weighted average price

44% premium to the 6-month volume weighted average price

76% premium to the 12-month volume weighted average price

15% premium to the 52-week high closing price

Further, since the sale transaction announcement on March 15th, the broader lodging sector has traded down 9.5% implying an even greater transaction premium amidst an increasingly more volatile market. Not only does this correction highlight the risks inherent in the market, but it was most pronounced during the Q1 earnings season where nearly every lodging company beat Q1 consensus estimates, validating the widely held market view that the COVID recovery was already largely priced into lodging stocks.5

Figure 4 is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/36dce966-1e9d-47af-ba84-7f8862a0b6c6

The Facts About Our Valuation Multiple

Extended Stay's valuation multiple is a central pillar to the assessment of whether or not to transact at $19.50 per share. The transaction values the Company at 11.0x EBITDA for 20196, the most recently completed fiscal year prior to the pandemic, which reflects EBITDA that was 42% above that achieved in 2020, 19% above 2021 estimated consensus EBITDA and a level that is not expected to be achieved again until at least 2023, assuming successful implementation and execution of STAY's strategic plan and favorable financial market conditions.

The transaction values the Company at 15.6x 2020 EBITDA, 13.0x 2021 estimated consensus EBITDA and 11.6x 2022 estimated consensus EBITDA. These represent significant premiums to where Extended Stay has consistently traded over its time as a public company, averaging a 9.5x NTM EBITDA multiple over the five years prior to the pandemic, and 9.1x NTM EBITDA for the year prior to the pandemic.7

Implied Transaction Multiple Far Exceeds Extended Stay's Past Trading Multiples Over Any Measurable Period

Figure 5 is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e96b61c5-4643-48a8-971b-6e9d02a62caa

Tarsadia's opposition to this transaction is premised on misleading and hypocritical claims about the Company's multiple. Tarsadia claims that the Company's multiple should be more in-line with luxury hotel brands, luxury and upper upscale hotel REITs and pure play hotel franchise companies, which have typically been valued in the 15-20x range. The market disagrees and has consistently valued Extended Stay at a much lower relative EBITDA multiple than these companies. In its prepared materials, Tarsadia has inaccurately claimed the NTM EBITDA multiple implied by the pending transaction is '11.6x', which is in fact the 2022E or 2-year forward multiple (see chart above indicating the 2021E multiple is 13.0x). Comparing Extended Stay to these fundamentally different businesses and passing fiction as fact is not useful, practical or responsible in making this decision for our shareholders.

Any suggestion that Extended Stay should trade or transact at a run-rate multiple more in line with luxury and upper upscale hotel brands and REITs (i.e. 15-20x) is simply not credible. In fact, these recent claims from Tarsadia run directly counter to the views they previously shared with us. While their recent public disclosures reference some of their ideas for value creation, they fail to disclose that just a few months ago, in their so-called 'white paper' shared with the Company, they asserted that Extended Stay should be valued at 10x EBITDA as a standalone public company, which, according to their analysis, yielded a valuation for the Company of $14.83 per share. They also provided us their LBO analysis showing that the Company could potentially achieve a value of $17.00 per share in a sale for cash, premised, among other assumptions, on an 11.5x trailing EBITDA exit multiple. We interacted with Tarsadia more than 100 times over the course of a year via Zoom meetings, phone calls and emails. Not once did they claim that the Company should trade at the multiples they are now conveniently applying to attack this transaction today.

We agree that Extended Stay's valuation discount compared to other lodging companies warrants further exploration. It is perhaps one of the most important questions our Boards and management team over the years have endeavored to understand and address. After all, closing the persistent ~2x multiple discount to the select service lodging REITs (arguably our 'closest' comparison group) would create massive value uplift.

In order to understand our multiple discount, one must first understand the unique nature of our business. Our business model has many advantages compared to other publicly traded lodging companies: operational control of our assets, earnings visibility with ~30-day average length of stay, higher margins and more stable performance. But our model has many disadvantages as well: slower growth in upcycles compared to higher chain scales and an outsized capital expenditure burden that comes with long-duration guest stays and the oldest average age portfolio among all lodging REITs (21 years vs.

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