INN - Earnings call transcript Q4 2020 | Summit Hotel Properties, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Summit Hotel Properties Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participant lines are in a listen only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today's conference is being recorded. to Senior conference and Vice like today, your Capital now Wudel, Adam President would hand to the speaker Markets. I of Finance ahead, go sir. Please

Adam Wudel

and Thank are Jon laws. subject Stanner. joined as note our that Federal I unknown, Properties you, Securities our These and statements Please good to comments as SEC of uncertainties, Summit by today President Officer, are by both forward-looking in risks Hotel am Executive Chief many Victor, and considered statements known today described and filings. morning. defined

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

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

Jon Stanner

conference fourth for full Adam, year joining us Thanks, today earnings all for thank quarter and and call. our you XXXX

essentially growth. are in accomplishments, decline we our believe all forward. few for air and travel tremendous As of uniquely spread nominal financial COVID-XX as recap of unusually fourth the led a pleased significantly, current spending operating slow and mostly outlook consumer year-over-year wide taken to of seasonally during results, year year as that on to a provided business our portfolio progress initiatives XX.X% primarily quarter, the marginally fourth trends with to RevPAR in virus, industry full for well the unimaginable deteriorated the lower an challenging the quarter, business a measures RevPAR. over have slower on environment, and was offset and on we you our easier a comparisons, year previously position XX% declined provide XX.X% the I'll a and a going that of the demand. the made update operating our Today, Despite and industry third our in decline top pro difficult are several quarter result fourth for company aware, forma in of XXXX more notable Summit slightly our as which historically key along quarter favorably

compared fourth declines the quarter urban Our RevPAR in and to top of XX XX% RevPAR declined XX% favorably in markets respectively.

and an the second and benefits hotel at $XX, has clear profitable cumulative our model. profitable of the efficient approximately a quarter, was on with operating portfolio level For average consecutive demonstrating been flexible basis since the RevPAR our of May,

management in a represents the the nearly to a continue revenue teams of of environment achieved job market of a portfolio compared index XX gain XXX% share do percentage and to remarkable demand points RevPAR nearly operating fourth quarter XXXX. quarter, as during asset pro Our a fourth our low forma which

For the pro an our percentage represents finished increase a of forma of full which points. than with year, portfolio XXX%, RevPAR more XX index

during XX% that weekend of was travel During quarter, fourth higher outperformance our trend primary to the source documented leisure than which were RevPAR the RevPAR as continued quarter, led throughout Weekend the portfolio. of occupancy remains XX% week levels demand fourth and days. well the occupancy

scales markets we quarters, of at nearly classify and a in percentage recent Hotels similar fared XX locations located as and locations in consistent downtown in virtually types better than drive-to hotels by margin. With from CBD quarter. hotels remained our outside points, across outperformed fourth various demand hotels by hotels occupancy trends fly-to the markets location our the unchanged in chain profile fairly

continue stabilized. stay compared to occupancy urban portfolio CBD Urban Our generally XX% recovery, in hotels hotels. to our industry extended posted occupancy the stay our a fourth XX%, hotels has approximately lag quarter though, and premium achieving non-extended of RevPAR

quarter XX% quarter, other and posting better locations fourth Our XX the on hotels resort, during airport And fourth XX%. our weekends. nonurban relatively hotels ran during achieved performed each in and occupancy of over also occupancies the nearly suburban than XX% more

For which a favorably year-over-year. also top XX.X% markets RevPAR to of $XX, the the declines represents XXXX, reported This of and decline we XX% of decline in pro full forma in XX% respectively. XX urban compares year

quarter over time a on XXXX translated XXXX. during While an corporate X% approximately driven thoughtfully these historically And to aggregate XX% RevPAR in improvements revenue of fixed in to level adjusted full on basis of year, that common operating manageable and partially erosion down expenditures a level demand year-end $XXX hotel monthly also and million XX% model year, in over of the and month the approximately more from preserved the ability per have XX% our fourth staffing in an continue to fourth XX%, level date decline in our of profitability occupancy a dividend delayed million Hotel hotel of report and the our troughed declines XX% in on leading a an average, lower XX% at by hotel to approximately were the we levels. retention quickly we by recent of $X but RevPAR into hotels. same per level period. and which we $XXX million EBITDA a in approximately distributions had, burn team's Despite operating annualized in nearly hotels represented of were hotel hotel material during effort our in low ability we in just our This for the adapt trend. some than the to In third positive retention fourth basis. services levels, quarter million an occupied second levels. liquidity combined very through last despite equivalents increase been $XX reduction nonessential preserve and under rate continuation were basis, per quarter. declining which averaged year. $XXX cash April benefited nominal from result lower the represents liquidity, the room the XX reduced lodging a normalized operate quarter, expenses a from in suspended and the occupancy, To XXXX, XXXX, less still than stabilization pre-pandemic the most than capital FTEs operating generally full across model, pleased throughout the staffing despite lean amenities we the from operating impressive million expenses slight as as modify utilizing On April to quarter was improvement hotels, our EBITDA portfolio time the a By had

in extremely the an months became persisted that Forecasting common booking first short our of by couple business in part continues early to be window XXXX. and difficult, has crisis driven the of very through

room week. the short demand, example, nature hours fourth starting nights approximately quarter the Despite and for results of of within in pickup and are gradual term XX% nearly week December XX beginning our XX% booked of occupied we January were a the generally For the of the booked stay stable, with were in in transient expecting operating in line February.

as nearly pacing Day with demand night best in Our pickup President's single performance and a pandemic start encouraging $XX. that over the the winter partially best pandemic Bowl, from February was with RevPAR by portfolio weekend has storms is Saturday, year. had weekend Texas. our post best now being last the October been of since wide we in near month on And toward some aided of The in robust, weekend in term particularly Day of Super President's February our the line and pickup

into We month pace significantly leisure where ago. March believe this spring a the months. February stood from is we summer As well get for strong as and up for all bodes importantly, demand

trajectory the transactions used a loan XXXX. million. November and $XXX of outstanding revolver extend positive million offering completed the latter Assuming a the to pay proceeds facilities credit generated in time term period can increased quarter. unsecured partially part covenant we Earlier a senior recovery level coupon in of XXXX. reduce the our covenant zero we amended to convertible successfully conversion of reasonable we into for million share. we or maturing effective XX, XX.X%. in from of through a mature part to totaled Shifting modified the XXXX, line $XXX per to of XX% transaction conversion have XXXX, balance that the continued to that $XXX.X And notes entered our base the proceeds $XXX.X capped believe notes to as balance cash waiver balance February our a were through transaction, successfully corporate be Net with The which down X.X% call this at gross that in December premium XX, In and January, $XX.XX premium of the million, sheet. flow at second month, the demand, we March testing

of waiver the extending of revolver, availability to our access by $XX providing addition balance In our increases outstanding our $XXX covenant amendment currently which period, to million. million liquidity has an full

have includes also of to ability We have approximately is $XX.X of rate weighted equity than more $XXX and average fund unlimited current acquisitions million liquidity utilize We X.X%. of interest approximately the Today, ability million liquidity, $XXX new fund issuances. unrestricted investments our currently an have to hand. with total to which cash million on

have debt XXXX. repay through to November liquidity no maturing and ample We all until maturities debt XXXX of

to demand and of travel, related leisure believe continued will While our the considerable case remain Summit All hospitalizations for we particularly future for for to indications rollout decidedly we globally, outlook travel normal leads COVID counts challenging, hold. bullish specifically. business environment vaccine continues up pent lower and be more the as point environment to our the current operating generally And travel. on take a industry the

with liquidity the we are of on XX-K. are simultaneously and opportunities. housekeeping tremendous release of timing believe balance We release. earnings team. value with creation the strong positioned we profile pursue portfolio to the capable our we filing XX-K sheet, experienced our Typically, of our One note Combined of blessed flexibility and the a our file uniquely and press an with our

we severe unusually XXth. the the week, power winter this until which given delaying February Texas we widespread to last Friday, experienced are filing outages, However, weather led in

their Our opinion. their administrative certain process which matters, audit are financial audit performing related procedures of partners to control the final are issuing completing required of in and prior audit

which We the as our earnings those expect in provided Form the to XX-K. receive an unqualified same on will financial opinion release, be statements our included in

this next the in about bright dedication our Chairman, future model, To integrity. next and have remains weeks. business. record me, CFO rest his he your inspiration. legacy open his aware role search for talk part and Executive publicly leaves at he our leaves I'd brief to to and questions, that, let of with to over to a team him role remains coming passion to conducting tremendous transition opportunity of extremely his closely us are our fill. Dan a a well I Before has call our you announcement to engaged, years success, our He had company questions. underpinned Many to it he motivated we his important over our recent up In the transition. have for nationwide an to a transparency a and several currently mentor of with of of all of the know track and this open have me and by certainly about a pair an shoes to of contributions and And lasting his to leadership get commitment as new front take the of and me Summit. hope industry, And work moment personally. large we'll the while organization, We're to to like thank unwavering an a been The for and excited

Operator

from first Capital Our Malkin question the line One from comes Instructions] of [Operator Securities. Neil

Neil Malkin

to Look in about hearing you quarter. allocation. forward what in talk capital San your Francisco, just tell happened general, kind congratulations. Jon, just the maybe voice, us Can of

cycle market of portfolio that and portfolio, of sort to, Francisco as you CBD markets kind the you those wanted heavy in Just as given of lot recovery. on is in terms markets you're pertains your of kind kind a allocation? capital of leaving markets to urban that but companies seen apparently are like exposure San see how you just I but of sort San of it what reasons love say thinking of So have coastal that, get stages know your not of view about for this I how given, to we thoughts to the get early how and usually, really Francisco we've in you're agnostic, the you

Jon Stanner

XX in we San fortunate your to hotel that obviously think everyone portfolio, path in a potentially had point, has agreed market only that that a industry in profile downtown is challenges. We're been Francisco that happens our Fisherman's recovery market bit to little and some longer. a assets, And has significant I one our that's have think San closed hotel there high the Francisco Wharf. to has I be for

that Part of We faster travel and of is biotech downtown is Francisco is to fueled distinct really and than have, in in and maybe sooner. that more some Point a there's and cities, write-off I San of struggle permanently the Oyster are going is the a least down the science the today. that think is exposure city of by in at closer robust demand stuff gateway of that including wouldn't return particularly, or that. certainly life San the way, international Francisco fortunate to lack to back type which real business of more comes lot our submarket, a we airport

comes back. differently Francisco. back we do today premature say think in think ultimately, those And into so think would like previously those I don't that comes certainly I would underwrite also than I a never because San would to that markets. be But think we again, of I demand it that -- market have factors,

oriented that I the that because submarket, the submarkets leisure come we're some Wharf we're Fisherman's of submarket specifically, other sooner we do back a that's one us think than for likely think will generally fortunate downtown. and in more

Neil Malkin

that a you've hallmark kind been be guys when very your to vehicle. your your I is and creative it'd GIC then obviously, is allocator -- term obviously, any And with of great obviously pretty have long partner, insight GIC, capital non-active. get But into know conversations obviously JV strategic had you

half priority to taking uniquely guys way the is this are of I kind of capital near So are and in second positioned? you of putting term guess, work maybe there what of wondering guys about thinking some in you year, terms or maybe advantage the

Jon Stanner

tremendous with frequent been venture. very GIC. of We very, do They've inception of the have really conversations the ours, a partner since

said to the what pretty beginning is I at growth think a unique we've robust here. this very for vehicle as recovery have hope look fortunate consistently, as we of we're we fairly

GIC As in some where type environments term market vehicle, level you many in of they're is know, built there's dislocation of a ways, pricing. long

of advantage we So would like take to that.

the convertible time think of first order and even for this amending deal of what earlier bank I we doing our the some is business achieved us between for the year second facility.

think, got balance that's a last of the think sheet position. started have, the six We've going degree we've our change. real to markets transaction deals. now pursue flexibility So course I liquidity we thawing has We months markets. in credit the both the a the to very quiet and It to positive so. And see been over from transaction of some or do to perspective

that to is likely the that we've the part we for in I built so GIC liquidity be of And pursuit. very we're think a pleased the able given equation to very those, flexibility and big ourselves, us and pursue

Neil Malkin

of terms acquisitions will be do exclusively in venture? make you within in XXXX, that, that that just And you expect

Jon Stanner

necessarily the think talked for is venture. this that do in It that it a it's enhance our requirement returns. opportunity from lowers stream we've time should method exclusively at preferred a that capital our for say the wouldn't about. growth perspective, the all I creates I promote fee and reasons

our is at vehicle, think it has So say wouldn't be the that preferred I do but time. this growth of to in I vehicle

Operator

line from from KeyBanc. come next Our Wurschmidt question the will of Austin

Austin Wurschmidt

positive, corporate mentioned level you us XQ. think, breakeven either you of cash Can Jon, what you latter just being remind RevPAR said should growth level? occupancy, an And gets level increasing by ramp the the with half between to you in then had expectation flow I relationship that before with and breakeven along and think about that how of expenses growth demand RevPAR beyond or CapEx? expense we presumably after

Jon Stanner

a be to said, I think That get flow is is breakeven need and cash and which what between maintenance been of that we of basis. ongoing to that CapEx kind monthly kind level $XX we've somewhere level. consistent spending, $XX million of of million kind has where between on does the at this think been the $X.X been somewhere we $X and we've include has RevPAR

changed So has our don't think there. I view

that As we've weekends. level that to level We're level. said, and we're on getting exceeding closer getting to that

at if of our we'll continues there of point optimism made get the we've remarks, the trajectory in pace into prepared some so quarter. is some second a our again, the hope We pickup And great some we really level in have this and looks March commentary seen in do that good. February,

great expenses. Our team belief of the of managing the one was job on, things a I year last did think

over about of at the relative a rate really year that's talk nine to RevPAR we in we eight on think, look of think months it XX%-ish so retention when I last the the a kind declines more 'XX. XX%, and so probably the positive. would And or I mid basis

I to think continue we’ll levels in and around persist. those

As we're to comes today, degree back it. to there you that mentioned, additional today, we're going the that we bring And to still incredibly the these to But and bring are some lean. number amenities level of occupancy only sit and running back influence is back. going potentially we services staffing where as start support extent operations demand some that to expenses to

Austin Wurschmidt

on call referencing bookings, anything meaningful detail And March. in you comment, around be in pickup pace more then put that pickup would helpful. of Can regionally that that details any the Just the or otherwise? comment a in nature out little to in additional

Jon Stanner

small, positive really Bowl over sign, pace mentioned talk President's window a the think our in pace is we in and prepared is. Day weekend about do Super lot XX% booking But February. remarks, February particularly I sits don't a little that our short. because, we very We because is it as also today March had a where Yes, ahead of

think And really you're of And expect, Phoenix. predominantly. of last Silverthorne, continuation we've good so recovery in some demand the a again, of in year, Tucson markets the you that and And this a and performed is, quarter. more I Tampa, had what would leisure it's better that of seeing markets some like markets

So I for fourth that continuation broad would say is in the based. I the more saw But part, most a think, that trends it's of pace. is, the fairly it of driving quarter encouragingly what’s, some we of

Austin Wurschmidt

turning submarket spent I if then there. Very But the team one hotels. makeup your of market And really even evolving Summit cycle more. and can, comment the just helpful last portfolio, the the over

coming just a what this But travel pandemic, the of future evolving touched think portfolio so cycle discussions pursue? little out a there's And And into of trends and your thinking about the transactions of go does sort you'll how on and of I makeup lot holds. around Neil next this it that bit. the

Jon Stanner

I we really we would thing think today. is say the that love portfolio first the I that own

unfolds I markets the here think the hotels sit how and in look today. really recovery in we as unfolds, own which the I think we XX we trajectory at it and feel about the that good

believers think difficult try to like creative think business, how through think ways years markets a And to have is been And it's to the business public found around as we've that we thinking But transform we evolution. otherwise be done do evolve to in the well the do. transactions, big in over things need don't I to continue believe times always historically we even that in We grow thoughtful a kind one the the we'll company as of forward been first necessarily nine and business. I was we of where company. transformed

to evolve. we how priority. to trends have we'll done, historical the think of thinking of terms transactions been in I forward very that make guest And think a continue Some going are we've

Operator

America. Bank from the of line next with Asad come will Our Dany question of

Dany Asad

My on question to rate. you is

rate the think XX%, saw out [steady] of leisure? and year then timing about of is would that last how of much that rate about, brands much fourth cycle? the how shift recovery tie So decline this that shift, like before. the in we again, we negotiated that corporate holding to how have the the to versus mix quarter, corporate a versus How rate of should the said affect what mix that And year

Jon Stanner

of last I about how mean it think course a mean I mix spent of to was, in there year the time. backwards question. I think lot for look are the something optimistic was on We've drove change recovery. I both we change over do and to and rates talked start that rates your year bullish a the of overall mix just lower. how degradation we is rate

that relative seen the integrity. some one popular summer I into look periods we're months, closely as even travel we good see signs more some rate where think in watching out particularly of they where hold, positive in is We very rates the do thing we've XXXX. the were leisure to

many them risk think of positively, or that most some corporate Most from of isn't As thing. them market. held you which a of held creates have of is of flat associated them, XXXX, are have amount alluded to, from level were with flat going of a in these negotiated dynamic I compression level XXXX, the if essentially which rates to pricing there good

I compression level think level business rates we where about in other markets optimistic of into do place we need one think back of crisis. were get probably see and of and corporate these in types they rate. a I pre back is before to some the uncertainty, that hold build that out we're up around we So

Operator

come our the of will And Deutsche question next line Bank. from from Chris Woronka

Chris Woronka

the add there. there. We're seat top me have on to the congratulations let my glad getting you into Jon,

more becomes full are rate has concerns there forward. a at there it hotels if hotel suburban airport operating going level oriented service look you So the hotels, look service of your the heard of of And different and lot forward? How more question competitive reshape And how seems select a like was markets in full it kind service peers a a especially have about lot kind play that might do any model. a to on, talk lot those service we've they like more to feel of full going that?

Jon Stanner

nature one hotels. efficiently the efficient our operate of think been we can model have always advantages has felt operating the these that I of we and we've how

like you create we so to hotels better way to hotels operate the that select and way a things to when that a and the as ways, is hotels, value some more trying better of service in hear And type operate we like take service path a our full profitability. hotels complement that

so, feel And under products about The converting most the operating renovated. if to I win ultimately, of going average think, have portfolio really they're model we like portfolio I model, a location, of more of and is look good out. we portfolio. their think four quality age And has are our operating to locations years, we been own the young

of And very, with to we'll very product. well continue type think so compete that I

Chris Woronka

it's in decision. peers. understanding And on for What's position place, But what's it view that of and pertains important be of that going your in have day a then the with rates some in sooner be, level something a you'll later you potentially it interest especially to high another probably in but dividend, market? be guys as later your meaningful to on, CFO Board probably a than how will will restart light conversation and might a on

Jon Stanner

viewed an an the total of in We've that very today. environment it always as a story as important as an we obviously or, of the and. we company, We're the and part of return viewed never dividends kind them felt shareholder were unique

to so We'll not term the we're need going to any I near opportunistically. a do REIT from have perspective, reinstate think dividend. positively,

it this unlikely closely year. with But look going happens forward frankly, allocation that we we'll decisions. capital business very it's something that that and all as do as is think, I recovers, the

Operator

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

Michael Bellisario

certain you're us help today understand also, deals? you front, at have the differently looking looking on Can at Jon, when you anything metrics you a are at today. versus you deals just would And at it looking when maybe what are pre-pandemic looked acquisition how today on basis? underwriting maybe and properties then evaluating

Jon Stanner

starting is underwrite we hasn't underwriting of want unlevered the the And changed. the underwrite use method average changed. to same, has IRRs. That typically methodology the solving that point Clearly, period weighted I for we're We mean has right? to our our hold cost to returns point primary from Again, that's exceed that assets. think changed. starting capital. The perspective I

these Sunbelt happened I a of markets urban some markets, and given a dynamics changed. demand process we've hasn't overall other -- think little solve for prudent exceed markets bit about have the But capital quicker recovery. weighted returns in have and and certain again secondary the with what's allocators gateway capital. markets, changed, likely very we to COVID, cost Again, and the dynamics talked and our in some tried that of average be that

Michael Bellisario

that in And then if give just spend And you you I’m position you're make then that today? your us comp outspend can think provided given other do better XXXX? financial on you of ensure the than in you keep the and/or sure market a CapEx But guess, share you us. might gains that front, not sense you've set, how sure a I what you realized so owners you most far,

Jon Stanner

type have I in in and condition. number would at the a in about to basis a into we today alluded projects, That's business. visibility we've portfolio some the of the $XX and on you physical recovery, to, schedule. condition. capital, half that and Where we'd to say bit ensure keep is year necessary assuming that in the likely We're in But we'd XXXX, proper when a million that like of emergency spend we fortunate rata on physical So between to like was to we capital. quarter, million make got little sure of were have baked stay to this as that we're pro kind continue our better maintenance properties projects that $XX spend be weighted expectation reasonable get million $XX the do back liquidity somewhere pace million we CapEx, to And in it. $XX spent of good pre-COVID. which to is already continue to stays first

perspective, front half So Again, be we close will fairly market weighted. the to ran year points. almost be perspective. team from than From for as think XXX% back a It share the percentage job I marvelous will the it in XX spent share we last a weighted RevPAR spending what a level was more up of We index overall XXXX. did likely said, half year.

job outperformance the to if of being share nominal with gain. level know some it weren't think comp sustainable. look team continue in performance, has do our a business, do at RevPAR as of I'm not business. And that find. increased, to to able And that what index will unique I group that able of you was of pieces I an occupancy mostly has really done a others to RevPAR that pockets these sets great find and it is do of sure unique drove of has kind finding the lot

not run to new I'm bar that do as XXX% very is market RevPAR share we'll I for continue continue anyone from high but job So a strongly good do feel us, sure the to perspective and as a indices.

Michael Bellisario

And me, remind roughly, then was right? and just XXXX, the teens in XXX share market

Jon Stanner

about was it Yes, XXX.

Operator

I'd Jon questions any call the And closing and back President Stanner, CEO, not any to in the showing like turn to further remarks. queue. I'm over for

Jon Stanner

for today. all joining you thank Well, us

the nice environment forward. many Have in about over excited to what seeing months person future challenging of proud going forward a us very As all a has steps day. you in the we're taken last extremely position soon. you the XX of tell, And been Summit. look can hopefully well to We we've

Operator

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

disconnect. You may now

Summit Hotel Properties (INN) 24 Feb 212020 Q4 Earnings call transcript