AUSTIN, TX—Summit Hotel Properties Inc. reported a loss of $19 million for the first quarter of 2020.
“Over the past two very challenging months, we have prioritized the health and safety of our guests, our brand and management company associates, and our own employees, and I am quite pleased with the result demonstrated by our team managing through this unprecedented crisis,” said Dan Hansen, chairman/president/CEO, Summit Hotel Properties, on an earnings call. “…Fortunately, the efficient nature of our operating model has allowed us to keep all but six of our 72 hotels open, with another nine hotels effectively consolidated into adjacent, typically dual-branded hotels.”
The company agreed with its bank group to an amendment of its revolving and term loan credit facilities, which provides for a 12-month financial covenant waiver, $150 million of additional liquidity and enhanced flexibility. “This amendment, along with having no debt maturities until November 2022, puts us in a strong position to make important strategic decisions during the recovery and resume our position as an industry leader,” he said.
The company also reported that RevPAR decreased 25.3% from the same period in 2019. ADR decreased 6.5% compared to the same period in 2019 and occupancy decreased 20.1% to 61.4%.
In response to the COVID-19 pandemic, some operational and liquidity enhancement measures have been implemented by the company:
Hotel-Level Costs Reduced: Comprehensive hotel-level cost reduction initiatives, including the reduction of labor and elimination of certain services and amenities. Operations have temporarily been suspended at certain hotels in response to specific government mandates or adverse market conditions.
Enhanced Health, Safety and Hygiene Measures: New standards implemented in collaboration with brand partners, including more frequent cleaning throughout the hotels with a focus on high-touch public spaces, increased availability of disinfecting products for guests and associates and enhanced cleaning standards for common areas and guestrooms.
Common Dividend Suspended: Dividends on common stock and operating partnership units have been suspended, which will conserve $19 million of cash quarterly, or $75 million on an annualized basis.
Nonessential Capital Expenditures Postponed: All nonessential capital improvement projects planned for 2020, beyond those already completed or substantially complete, have been postponed, which is expected to reduce total capital expenditures by approximately $35 million, or more than 50% based on the midpoint of the company’s previously provided guidance range for 2020.
Corporate-Level Costs Reduced: A wide range of temporary corporate cost savings initiatives, including a voluntary 25% reduction of salaries and fees for executive officers and independent Board of Directors, respectively, were implemented. Additionally, approximately 25% of the corporate-level staff has been furloughed and salary reductions have been implemented for most employees not subject to furlough.