Chatham Lodging Trust(CLDT) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Chatham's Q1 2021 RevPAR was $55, representing a 17% increase from Q4 2020's RevPAR of $47 [40] - April 2021 RevPAR reached $75, indicating a sequential improvement and a critical point for positive cash flow after debt service and corporate overhead [5][43] - The company experienced a 54% decline in Q1 2021 RevPAR compared to Q1 2019, with April's RevPAR reflecting a 45.3% decline from April 2019 [41] Business Line Data and Key Metrics Changes - The company reported that 21 of its 39 hotels had occupancy over 50% in Q1 2021, with weekend RevPAR significantly outperforming weekday RevPAR [22] - The Residence Inn brand achieved the highest occupancy at 60%, while Homewood Suites and Hampton also performed well with occupancy rates of 58% and 60% respectively [23] - The average length of stay for Residence Inn hotels was 4.5 nights, nearly double the 2.4 nights recorded in Q1 2020 [27] Market Data and Key Metrics Changes - South Florida markets, particularly Fort Lauderdale, showed strong performance with a RevPAR of $161, nearly double its Q4 2020 RevPAR [17] - Coastal New Hampshire markets are experiencing a significant uptick in room reservation demand, indicating strong summer booking momentum [55] - Silicon Valley's RevPAR was $54, with occupancy at 51%, but there are signs of recovery as business travel begins to return [15][16] Company Strategy and Development Direction - The company plans to focus on acquisitions in the extended-stay hotel sector, anticipating opportunities as the market stabilizes [8][58] - Chatham aims to emerge from the pandemic financially healthier than many peers, with no debt maturities until 2023, allowing for strategic growth [7][47] - The Warner Center development is projected to open in Q4 2021, expected to contribute to revenue and FFO growth in 2022 and 2023 [5][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return of business and transient travel, particularly from tech companies and medical sectors [11][12] - The company expects continued sequential RevPAR improvement as leisure travel demand remains strong [4] - Management highlighted the importance of controlling costs and maintaining operational efficiency to maximize profits as the market recovers [30][31] Other Important Information - The company generated positive GOP and hotel EBITDA each month during Q1 2021, with operating margins improving significantly throughout the quarter [29] - Labor costs per occupied room decreased by approximately 24% compared to Q1 2020, reflecting effective cost management strategies [31] - Chatham's liquidity improved to $145 million by the end of Q1 2021, providing a solid financial foundation for future growth [47] Q&A Session Summary Question: How should we expect ADR to play out in the rest of the portfolio? - Management noted that while leisure travel is performing well, the business side remains challenged with ADR until business traveler volume increases [49] Question: How are you thinking about staffing as occupancy ramps? - Management acknowledged labor challenges but noted that extended-stay hotels benefit from longer guest stays, reducing the frequency of room cleaning [52][53] Question: Can you discuss demand in coastal Maine and New Hampshire? - Management reported strong booking momentum in coastal New Hampshire, with expectations for high ADRs compared to 2019 levels [55][56] Question: How are you weighing acquisitions versus CapEx? - Management indicated a conservative approach to CapEx while actively seeking acquisition opportunities, particularly in the extended-stay sector [57][58] Question: What visibility do you have into May's performance? - Management expects continued RevPAR growth in May over April, with strong performance anticipated for the summer months [60][61] Question: Can you quantify labor needs in extended-stay hotels? - Management explained that extended-stay hotels require less labor due to longer stays, allowing for more efficient operations compared to traditional hotels [64][65]