Chatham Lodging Trust(CLDT) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Chatham's Q1 2020 RevPAR declined by 21.8% to $96, with ADR dipping 5% to $153 and occupancy down 17% to 63% [30][34] - Adjusted EBITDA decreased by 38.9% to $16.5 million, and adjusted FFO per share fell 62% to $0.13 from $0.34 in Q1 2019 [34] - The company ended Q1 with $58 million of unrestricted cash and $11.6 million of restricted cash, with $173 million drawn under its revolving credit facility [37][38] Business Line Data and Key Metrics Changes - The company maintained all 40 hotels open, focusing on extended-stay hotels which generated over 70% of portfolio EBITDA [12][16] - Revenue management and direct sales teams are actively sourcing revenue opportunities, with occupancy having increased from a low of 17% to approximately 30% [13][14] Market Data and Key Metrics Changes - The hotel industry is facing unprecedented challenges due to COVID-19, with significant declines in occupancy and revenue across the sector [6][34] - New supply in the market has been declining, which is expected to provide a tailwind for recovery as hotel development is severely impacted [32] Company Strategy and Development Direction - The company has suspended its dividend to preserve cash flow and has made significant cuts to capital expenditures [7][8] - Chatham is focusing on premium-branded, extended-stay, and limited-service hotels as they are expected to perform better in the recovery phase [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty about the duration of the current trends and the length of recovery, emphasizing the need for liquidity analysis [6][7] - The company believes that leisure and corporate demand will be the first to recover, with a focus on adapting operational models to new health and safety standards [15][19] Other Important Information - The company recorded a $15.3 million impairment on its equity investment in the Inland JV due to the pandemic's impact [36] - Chatham's balance sheet is strong, with minimal debt maturities until 2021, allowing time for recovery before refinancing [40] Q&A Session Summary Question: Changes in the operating model post-COVID - Management discussed potential changes in housekeeping and food service, indicating that automatic room cleaning may be reduced and breakfast services may shift to grab-and-go options [42][43][44] Question: Advance booking trends - Management noted a disconnect in timing as first responders check out and leisure travelers begin to check in, with some markets showing early signs of recovery [46][48] Question: Market strength and ADR strategy - Management acknowledged concerns about ADR as occupancy levels rise, indicating that competition may lead to a race to the bottom in pricing [54][56][57] Question: Warner Center development timeline - Construction has slowed down due to labor challenges, with an expected delay in the opening timeline to the fourth quarter of 2021 [59][60] Question: Liquidity and potential dispositions - Management stated that while they would consider dispositions, current market conditions make it challenging to realize proceeds from such actions [63][64]