Summit Hotel Properties(US:INN)2020-05-13 02:35Financial Data and Key Metrics Changes - The company reported a dramatic decline in demand starting mid-March due to COVID-19, rendering standard operating measures largely irrelevant [6] - Preliminary April results indicated a RevPAR decline of approximately 89% year-over-year, with occupancy levels improving in the second half of the month [10][11] - The estimated monthly cash burn rate decreased from $15 million to $11 million due to marginal revenue generation [11] Business Line Data and Key Metrics Changes - The majority of the company's 72 hotels remained open, with only six closed and nine consolidated into adjacent hotels [8] - The company suspended all non-essential capital expenditures and common dividend distributions, preserving over $100 million in cash annually [9] Market Data and Key Metrics Changes - The company experienced a RevPAR index gain of nearly 300 basis points in January and February, despite the overall decline in revenues [19] - The suburban portfolio outperformed urban properties, with occupancy levels showing improvement in early May [29] Company Strategy and Development Direction - The company is focused on enhancing operational standards, particularly in cleanliness and hygiene, as a response to the pandemic [12] - The management believes that leisure travel will recover first, positioning the company to benefit from this trend due to its efficient operating model [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current crisis and emphasized the importance of maintaining liquidity, with nearly $300 million available [11][15] - The company withdrew full-year guidance in March due to uncertainty but plans to evaluate reinstating guidance as conditions evolve [20] Other Important Information - The company amended its senior bank credit facilities, providing an additional $150 million in undrawn funding capacity and a full financial covenant waiver for 12 months [9][14] - The weighted average interest rate on the company's debt is currently 3%, with no debt maturities until November 2022 [16] Q&A Session Summary Question: What percentage of the portfolio is drive-to versus fly-to? - Management indicated that all hotels can be driven to, but specific metrics on guest travel preferences are not available [24][25] Question: How did urban versus suburban properties perform in March and April? - Urban markets, particularly San Francisco, saw quicker declines, while suburban properties outperformed urban ones [28][29] Question: What are the requirements to access the last $50 million of available funding? - The last $50 million requires securing mortgages on borrowing base assets, while the first $100 million is secured by equity pledges [31][32] Question: What is the breakeven occupancy for hotel EBITDA? - The breakeven level for hotel EBITDA is estimated to be between 40% and 45% [55] Question: How does the company view the recovery of RevPAR versus margins? - Management believes RevPAR is likely to recover first, influenced by the operating model and market supply [61]