Chatham Lodging Trust(CLDT) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q4 2020 RevPAR declined 60% to $47 compared to Q4 2019, which was a slight improvement from Q3's 61% decline [45] - Adjusted EBITDA for Q4 2020 was $0.2 million, with cash flow before capital expenditures at minus $9.5 million [47] - The company ended Q4 with $21.1 million of unrestricted cash and $10.3 million of restricted cash [48] Business Line Data and Key Metrics Changes - The company generated the second highest EBITDA per room of all lodging REITs in 2020 [8] - 80% of hotel EBITDA was generated by Residence Inn and Homewood Suites hotels, indicating a significant increase in performance from these brands [11] - Average length of stay at Residence Inn was 4.4 nights in Q4 2020, compared to 2.4 nights in Q4 2019 [36] Market Data and Key Metrics Changes - Los Angeles was the top-performing market in Q4 with RevPAR of $79, while San Diego had a RevPAR of $74 [31][32] - The northeastern coastal market portfolio earned RevPAR of $63 on occupancy of about 50% [33] - Silicon Valley RevPAR was $46, significantly down from $158 in Q4 2019 [34] Company Strategy and Development Direction - The company focused on preserving long-term shareholder value by maximizing operating performance and enhancing liquidity [6] - A strategic goal was to solidify the balance sheet and enhance liquidity, with a pause on development projects during the pandemic [19] - The company is open to selling assets if pricing is strong to further enhance liquidity [21] Management's Comments on Operating Environment and Future Outlook - Management expects leisure travel to lead the recovery from the pandemic, with business travel gradually returning [26] - The company anticipates achieving cash flow breakeven at a RevPAR of approximately $75 [26] - Management is optimistic about returning to 2019 levels of occupancy and rates faster than most lodging REIT peers [27] Other Important Information - The company sold the Residence Inn Mission Valley for $67 million, generating a gain of $21.1 million [49] - Corporate G&A expenses were down approximately 20% year-over-year, and salary costs were reduced by over 50% [17] - The CapEx budget for 2021 is approximately $6 million, with no renovations planned [80] Q&A Session Summary Question: How is the company thinking about the pace of bringing more employees back in relation to occupancy? - Management believes that margin improvement will occur in the future compared to pre-pandemic levels, with a focus on controlling staffing levels as occupancy increases [56][58] Question: What are the expectations for the M&A market? - Management noted that there are not many transactions currently due to a wide bid-ask gap, but they are positioned to take advantage of future opportunities [60][62] Question: How did the opportunity to sell the Residence Inn come about? - The sale was initiated through inbound interest, and there is ongoing interest from the state of California for similar transactions [66][68] Question: How is the company addressing ADR and market competition? - Management is closely monitoring rates and believes there are opportunities to hold or increase rates in leisure markets [69][71] Question: What is the current liquidity situation for potential acquisitions? - The company can use its liquidity for acquisitions as long as it maintains a minimum of $25 million in liquidity [84] Question: Is there interest in establishing new joint ventures? - There has been interest in lodging investments, but the company is currently focused on direct asset acquisitions [90]