INN - Earnings call transcript Q2 2020 | Summit Hotel Properties, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Summit Hotel Properties Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. I would now like to hand the conference to your host, Senior Vice President of Finance, Adam Wudel. ahead. go please Sir,

Adam Wudel

are Officer, and Properties, I Executive Chairman, Executive Chief Hansen; Wati, many note by statements XXXX unknown of and comments Officer, SEC These in by our joined Summit and laws. XX-K as as federal and filings. known Financial today our and are President Hotel uncertainties subject President both Vice defined securities Stanner. Form other statements to good you, considered Please forward-looking risks and am that morning. today Dan Jon Thank and described Chief

effective Forward-looking and as statements that to we make no undertake today, today update XXXX, are X, later. only August duty them of we

referenced www.shpreit.com. and Chief You Hotel our release, filings can President, contain earnings Please Properties, copies on Chairman, Dan Officer, and SEC of our website this welcome on call financial Summit at reconciliations Hansen. find measures Executive which to non-GAAP

Dan Hansen

today quarter call. Thanks joining you all thank for us second for Adam. our conference earnings And XXXX

XX dropped year-over-year weeks to extraordinarily over excluding higher week was the XX% industry are nearly of second percentage encouraged decline. The the July declined we that consistent, shorten the results we and quarter, Yet, XX% quarter When two low as considerably. Occupancy approximately point typical the than but first portfolio and in total booking for the closed across hotels was trend over and the historically preliminary during XX%. in hotels to to occupancy was our RevPAR quarter points at July, week compared full nearly by decline quarter our the of times levels occupancy week April July. XX% when were demand improved RevPAR April. a the XX% XX various increased during the saw second each throughout declined throughout XX% sequentially into second the deteriorated window quarter demand June challenging the at as

higher hotels than market our the in quarter increase we higher addition a quarter in as with In share driven mandatory percentage percentage leisure our our occupancy, occupancy Weekends finished and the and More surpassed better hotels substantial accelerated the than and the progressed, averaging In in particularly gains points, considered relaxation the for June, weekdays XXXX. the began occupancy Weekend we to of achieved XX% nearly by occupancy over a these markets. month quarter the than in same index. drive-to to points weekday in at much has a as weekend were XX occupancy of RevPAR an weekdays resulting drive-to RevPAR. exceeded July. month markets for at in by nearly the full XX first located as XX% home orders XX% this the during the June XX% points to weekends perform XXX% in stay as premium increase resulting than period in in trend travel XX% percentage

drive-to second July view of leisure leisure travel recovery currently. demand saw the substantiate quarter and the we and results specifically wildly trends the held and broadly in Our leading that more is particularly June

to extended-stay during a second the hotels guestrooms Our nearly our of finishing with a XX% RevPAR which occupancy total were relative quarter, XX% comprise quarter premium outperformers overall and portfolio. our

achieved month. the indicate in extended-stay our hotels and extended XX% Our for June occupancy an hotels occupancy -- our July approximately extended-stay posted preliminary XX% hotels of average results

the been the posting Urban during the hotels than suburban were quarter, industry also which Our occupancies more and recovery. also and of in and total comprise hotels third XX% portfolio respectively, laggard the the XX% of premium portfolio. outperformers our have to driving airport guestrooms a the

the than in largest of nearly single the X,XXX urban So, over portfolio, gains crisis. basis month signs occupancy July in as we see higher improvement month the are beginning points onset finished our since to of June

occupancy, to hotels, per with XX consistent begun labor have in lean FTEs to the XX improvements as still certain add prior are as we compared approximately per pandemic. operating at are staffing hotel hotel to with FTEs we averaging model the While we back an incredibly

offer In hotels addition, protocols in our prioritizes teams collaboratively and our environment evolve these have but intense health some the continue focus brand on of an and to opportunity guests. our to creating management work to we standards companies fortunate to partners with issues. have Changes important at the complex to continue of an our solutions regulatory and that safety brand and are to

capital we have continued liquidity, second preserve with along of the to sheet. with be which I balance speak and cash the $XX non-essential our navigate in rate, of current distributions, approximately $XXX quarter a and to prolonged of over million currently will dividend our let With But the John liquidity Finally, remainder $XX of preserve to all nearly for three for over combined the cash what that, balance to delay CFO, we expenditures specifics Jon have million will to Stanner. monthly will year. turn the the common years of XXXX burn million recovery. significantly reduced could call a of liquidity I preserved

Jon Stanner

liquidity. we cash average has than of XX% what the rata debt monthly of million availability. allows reported demand shock X.X% until since second that March June, Combined adding projected approximately runway our quarter. over $XXX amendment XX Thanks revolving of closer the increased loan term $X amendments rate average financial July. rate for testing demand. XX including interest month approximately our that maturities XXst modifies X.X morning reduced more $XXX of cash recovery. additional and first million corporate of of XXXX levels weighted XXth covenants and credit This just pro which in position address withstand $X.X the we've to the more a has years well these of our adjusting and for period is million XXXX provides the term These burn per This staffing of our to Today, of liquidity our slightly is have retention sudden us At Dan, runway the asset to full facilities, of our approximately we made $XXX two may total good no year the March, waiver results. approximately current million over with our accommodate Venture amenity unrestricted be for XX% prolonged balance in team followed offerings everyone. low to currently on hand, to of and of certain levels through maturity gradual borrowing with of million $XXX to month for began credit weighted $XX amended facility a Joint temporary to rightsizing in June through covenants, June In months management mitigate and strong between million and middle resulted in and November quarter of of service and efforts The XXXX. under million and

end July. at portfolio We level in high range is end the our the nearly range and $XX. breakeven met hotel Additionally, and $XX June between this exceeded RevPAR low in of of the this

our has and efficient leisure towards during Our allowed of the hotels labor-intensive and periods more the open model, less majority mandatory oriented which us even lockdowns. strictest demand of operating to keep is transient

we Francisco. remains Suites high-quality recover, As focused in our Holiday of Inn a experience. adding the disciplined Express to close, At hotels control & of today guest San a and to continues services, only labor, one on to remain cost while amenities Manta our continuing in manner back provide

the and do guidance ranges have throughout reinstated while not we the improvements year three-plus the this so not over pleased full-year with our are portfolio We last to seen do have expect months. we

and the of summer Leisure for like backfilling industry demand still highly a are naturally source over and and in less been has to that we primary challenging are many, operating that cautious demand winter months personal We the year the conducive environment. in this travel. are the about uncertain fall travel

for expectations low and have travel and we return corporate preclude meaningful demand. a would while nature not Our from a sporadic pickup pushed been the today's of levels of back,

the levels been of and rate saw secular regarding the a working time both we of will in improvement business ultimately solution of crisis. summer of this to normals declines throughout passage travel travel or combination Our months for the a virus structural medical slow to coming is particularly assumption and ultimately conjecture more much the and lead on robust new has to There travel. out more of sustained basis a

your not the experiential poised portfolio do question. with have to in life, of crystal clearly we'll outperformer models and of we believe And term to operating efficient ultimately that, side While And well-located diversified call we people's enjoy long to open going travel. hotels we an a remain with is and the believers be our gather, forward. a desire ball,

Operator

Baird. first [Operator from Instructions] Bellisario the come of Our Michael will line question from

may You begin.

Michael Bellisario

maybe continues operating talk Dan, little can to when terms becoming first so standards your more what pick as allowing of that to do partners a back are in stringent, to flexibility see brand do you bit may the then flexibility you and switching you be and our it's brands just in up? speak occupancy

Dan Hansen

done I Dan. to safety think has work employees. It's around Sure. been of guests still the Look, protect cleaning, our it's our evolving. and lot of a being There

generally The for been in unless traffic not level is frequent hands trying starting some food to done we're bring of requested. we're a to stay-overs more additional our We're lot We're there grab and spaces. beverage high stations offering. go, offerings some cleaning occupancy, markets sanitizing and higher being getting So areas. that of have cleaning public position back and in

on comes and back, do to work that. companies the I to we're the of the think trying mix occupancy brands what as staffing management in what is with amenities right

is So evolve. continuing to that I think

more expectation much the meet highly highly of today the rewards to Our brands but model of sense about expectations, of that liked still in that things give guest also they as them past. a our procedures kind efficient the them with hope a becomes and is were efficient of the consistency and offerings some safety, closer even

So hopefully helpful. that's

Michael Bellisario

the gears, It bolstering pricing just capital transaction then guys of is. on balance based in on What for sheet seeing also what you you're the terms assets and market Thanks. switching and thinking market. of in in today? selling terms are And the then raising just what's potentially

Jon Stanner

little dispositions. acquisitions, I tactical think the Look, execution for of a early it's Sure.

we've things the for doing with shareholders. but selling so be in to and advantage take I certainly of today. more think trying out as We're a are good a structure right of and forecasting, a history clearly, the not GIC. our a price We assets today, portfolio for challenging come look like find opposed future, environment, even out got to got would in great market, they value creative We've create we right position still people opportunities the in like to up. with is to partner value to and as

So would I nothing remain and certainly, we say, interested. currently but patient

Michael Bellisario

And just more on then point. item one that housekeeping Thanks.

You to guys contract during fell something that year a payment or second related had prior the a disposition termination that apart during quarter? a that quarter, is the is from

Jon Stanner

was we're new contract, several brand the being That ago, a a into able disposition that to a do able of small we reallocate so. anticipating were asset years with that but to never

Operator

line Our is from next Neil the of Capital question from One. Malkin

You begin. may

Neil Malkin

burn, like the lot up REITs have successful cash like but opening be it hotels lodging more A been the expense you it seems it's on side. of at predominantly, reducing

of more if that didn't would doing of are the three you think detail four that efficiently? doing in do can bit Any kind either little you you Just go a helpful. things or could be on wondering or kind that into guys regard of before are information you top

Jon Stanner

it's not mean, months. and first, a the do. better I think first that of we sure reducing improvements the several could of course hey were we uncertain successful that's there is we cash and occupancy yeah, Yes, were, anything foremost just John. have that we over that burn I'm I occupancy Well, in Neil, unclear, result been

count good job call kind done really XX%, the levels I down by from, with job March and still a with lean has team running from it about run workforces. fantastic to really really of reduced our XX% think FTE of we've accounts many we're peak. FTE to done of early a efficient, a continuing We

guess continues of a XXX% from the again We're index a from to across an teams make, last So management but models. perspective, and a environment is normal is unique good think perspective demand lean think create I environment, a pieces to high-index very running job. environment done think occupancy control job done retention continuing a of these isn't And still would nice we've really RevPAR operate well. very business I higher I markets finding of really some really to revenue hotels occupancy a perspective, an where I point be plus in help kind what the, I the expense and

Neil Malkin

that. Appreciate

In July market? deterioration COVID the of up, creep see your mainly if cases was deterioration you it that terms coastal same did see sort cities, as where Could sub-location and it of in or uniform drop markets of kind off pinpoint performance, locations you regardless more did was in meaningful of back or or your you portfolio? all sort of urban

Jon Stanner

would the is we really say, I'd didn't a see So I clarify first thing pullback.

increase, seen have We the of every the improvement of is as it is to rate kind March, encouraging. middle we sequential growth a got I seen slow of as would really which the demand week What of since July. we have describe into rate

virus. portfolio particularly in expectations things we few short-term we Xth otherwise of the had the Summit in we've particularly market where going the for that there. hotels. also beach there's Lauderdale that more we relatively less Clearly markets see July the of than did like on have they where full-service hotels around particularly cases, example, Fort high open think closed resurgence driven I would. seen some for And markets pickup of and And is a by in we a

operating of when it historical naturally is occupancy. somewhat improvements, levels we still of then sequential incremental kind levels. low is look look context. There at occupancy bit you or higher bar the from supply at And just we're higher if operating a supply, absorbing because a of -- are will, But on little the come we some shadow new that in So we're higher that's demand. is

three feeding that or I factors think of again. is are four kind there that all

rate haven't seeing We're improvement. the We seen just more slowdown in a pullback demand. really of in of a

Neil Malkin

between you local happening one, a is are mentioned it businesses? Is How level that sort bifurcated, business multinationals? more if are of does business, that or And in guess of you the any small travel, you or return indication? the the about I terms it last it business smaller seeing Or uniform however seeing in I think transient. more that regional all? briefly at large

Jon Stanner

Yes, I corporate demand say seen. we've the that would

general can demand submarket as is probably see As it's seen that today. in local we've of any described It's I prepared I describe it unique, I of of sporadic. increase we asset-specific as say think, said. the remarks or wouldn't it corporate as we kind broader type

pushed it that April. trough wouldn't we back of was. I some think early say March, of demand comes our that expectation But which of is some certainly off to have for degree. when pieces we're redemption I difficulty] I helped. difficulty] unique certainly than [technical have It's been corporate levels has mean, would better need probably back saw of bit that we the late [technical a we

Operator

Austin question Wurschmidt next of from Our comes from line KeyBanc.

begin. may You

Austin Wurschmidt

deferral interest to I mezz that you the if I end kind as are was wondering on loans the an of update in payment mid-July? of steps could XX-day funded the fully lapsed following guys provide three specifically next that believe

Jon Stanner

this so deferral extended the period of XXth we've year. September through Yes,

indicated last is, that the are call, both two expectation the in there we deal. place loans for contemplated on deal, options the extension in as for think are the in option the I the

think year. this that and be those we it those next extra our point I forward is move continue options we at expectation to throughout as we'll will address will -- exercised

Austin Wurschmidt

top the a think What little thoughts bit to positioning just, and with update. of talk and out then this, as think centers you of your curious as a look around appreciate of from some of some on of going COVID. any are changes sort as geographic portfolio like what sort other suburbs picture how then happen just I what's the urban supply that, perspective post coming rise well? consider the in the high-level with these term of side? the supply And strategy of is on and you that of the And you'd longer submarket

Dan Hansen

to else's evolved has Look, Dan. it's more address. portfolio probably than I anybody continually Austin think our

First of in And all of second all preference. shift guest opportunities.

have there would that is really that more could an things a here have demand Portland for of It's had weekend suburban it and very urban urban as something more we opportunity market is on away think core changed impaired. try and Is market, are to is shy suburban. an I focus example, today very that have recently. more that a like that act markets urban-like Atlanta, we from few strong Charlotte

And bit so different might. typical little a they're than your acting maybe urban hotel

business own. we've a at demand. I mix leisure And So of and one think its on to looked has stand each always

I So that supply, there opened fair but incredibly that broken will view off. of to was, My broadly we is really our continue if at in factor. is the quite My When a I Construction pushed material say with pipeline. starts hasn't broken but future, sense many it along will wouldn't will amount be the still it mixed, get on are they still look high those to has yet. it I continue sense copper, a yet. get changed they think think haven't categorically so is lumber ground labor slowed has that prices

So months bodes us as whole expect a well of get think months beyond I be I think a factor, we'd pushed locations. for and the much next which what don't over going out supply our is XX will to XX to

Austin Wurschmidt

is and sorry referenced visibility in but have? improvement It I do booking you in that that is points locations look was of whatever biggest question, you I And do any it's out the you from if as What the a you continued into upside those little last improvement? sticky in that demand there in July June. with that's driver for the window. Do have the you guess the think appreciate markets of the there. basis thoughts X,XXX this one urban me, bit Neil's that overlaps,

Jon Stanner

unique mentioned of two probably a -- had of weekends. more lesser probably extent. markets say driven. The Charlotte been others that enough, think of the most Portland I I a than to markets couple ironically so most all think we are we Yeah, improvement I'd the in on first as out stand has

So mentioned earlier. we as improvements I have seen

to continue that feel have good books. data booking we think is but on the I the window we do the about sure very

in There good in urban they what Day, basis about started is I markets, of our seen. Labor feel quicker it. but in some think concerns about improved we otherwise in have happens particularly, the trends because the particularly we obviously than of a from these actually core part, lower post markets

So happening. good of a we feel of markets Portland and I couple think driven about these by lot couple particular. what's A of, that Charlotte a in

Operator

Our next question from Raymond of from Bill comes Crow the line James.

may You begin.

Bill Crow

questions of a detail little still that have much competitive shut just shutdown? few more get down. back Going bit How that might a supply been is

Dan Hansen

majority Dan, it's. has a been the limited as ours. staffing we I think don't know we've out for with and levels at Bill, operating either I got basis a open sense the percentage that in as look market,

I effect able the that wouldn't there say data least closures So out been is we've to from there on material see. a at

Bill Crow

not months? the in of you next hit few So phantom there's supplies to lot a

Jon Stanner

have I full most remained uncertain, thing our of Travel service, of of remained I particularly just -- competitive those said, Smith would as instances timing when you've stayed set of hotels urban I that sets, been got one most of that, the add most of our the as bigger open have hotels those at Bill, There particularly have but Dan for that the have Yes. where sort you defined again, the to you've That where remained I some got competitive majority competitive across look open. markets most that is think and the think think part, for reopening, crisis. directly is have our hotels closed. box of

Bill Crow

growth cases see and about cases front to Jon, of in slowdown you but or slowing as of of past of the stabilize the number wondering the there Southwest demand better led a days travel, data maybe in I'm a recently, as folks just little to a more of you and uptick up. All where We're markets bit the they the some ticked TSA is right. or Southeast see week us those an in passenger talked the the so, on need so? over now time are into kind that especially decide starting XX

Jon Stanner

mentioned we seen off. Yes, improvement. didn't as slowing really kind of look, I'd first the is rate see thing of fall yeah, haven't we the the We huge a say saw, of you

to have I stable. We think things improvement. continue see can held

five We be demand. continue to a strong. August, I to days have of August We're seen weekend of in we've the particularly sequential week-over-week But August. weekend, of improvement the kind first what continued think in only into kind

P continue of I at wouldn't on don't acceleration huge we've the to So states kind of leisure some as think you the solid a have these seen by said again, any But past demand, get the say we weekends. seen TSA that, means. continuation very of and prove, particularly I stats cases

Bill Crow

in The But service very in One stance also? a to I'm taking that's your more how City labor. going West your markets wondering exposure portfolio select markets; in in just this question a had advantage be that me. process. headwind Council's especially to union Coast from an particular pro-union hasn't Chicago big with reopening it had has the

Dan Hansen

one do we that of negotiations trying I that it's that the union Dan. right is balance think Obviously in continue headwind, time think do more be moving there's allotted since there, those unfortunately, everybody but headwind. parts especially to have and that of be markets. find go I hotel. benefits much that less in Look, us Bill, union-dominated we cleaning But think to to will a -- on affects what should and lot and it is standard continue a larger, a I

Operator

Markets. RBC from will Capital next the of Wes line come Our question Golladay from

may begin. You

Unidentified Analyst

on This is for Wes. Steve

Austin's your other follow-up results generating they they are comparable in hotels, question hotels if about are they mezzanine Those And open? loans. the to the operating a portfolio? three are, Just

Jon Stanner

rest I'd of Yes say, both. and the line are open with portfolio. They generally are to they the performing in

Operator

call Hansen time. turn the Thank over questions closing Dan showing you. sorry, remarks. any for this And at to, like not to I'd I'm

Dan Hansen

do to and experienced that Thank I changed. and social a want couple we of close have all and believe hasn't things, with you. first really I all, beings people of see wanted that believe we're quite I strongly to

In is and fact, critical the a that part contact tool part just just of a social a think to comment is health And this just be Zoom a a that takeaway I but and think future, either. and I leisure not is all that's will the from validation be it happiness. don't it

relationships I and much an think and over business just done that beyond or is something times interaction develop with many goes that years connectivity many structure a deal into or more.

I bullish really the are industry in travel just and on So, And Summit. once I future. in to why again on so summarize particularly our very on am want bullish confident why, to we

model has First, operating strengths crisis. during of one our the this great flexible shown

has We years three-plus gain do operations cash team. by share, runway. nearly showing of the to providing strength Our burn of XX% our continue market improved

have We no XXXX. debt late maturities until

Summit a but properties you've here can you important need got renovated management Our lastly at are minimal team CapEx. young. And and most that trust. They're

look today. to be in talking I in soon, dialing So appreciate you will We forward person. that hopefully,

have terrific a So day.

Operator

you. call. participating. you today's Ladies this concludes conference for and Thank Thank gentlemen,

You may disconnect. now

Summit Hotel Properties (INN) 8 Aug 202020 Q2 Earnings call transcript