SVC - Earnings call 4 2020 | Service Properties Trust

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Operator

Good morning. Welcome to Service Properties Trust's Fourth Quarter 2020 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to the Director of Investor Relations, Kristin Brown. ahead. go Please

Kristin Brown

Good morning.

management, are and Financial Officer. note Todd includes the presentation consent call Murray, Brian Today's written that today's question-and-answer prior call a President; a is and John Hargreaves, by today's the Chief recording, on analysts. SVC. transcription Officer; Donley, me call session retransmission Joining with by of Please conference followed of Chief without Investment prohibited

of forward-looking to securities like today's out of Private other statements Act Exchange Commission, within or statements Reform with point meaning the March obligation forward-looking statements laws. and are XXXX. the than no other the contains would I in based present Securities revision conference undertakes to publicly of the as on that expectations conference the forward-looking and today's through to today, made Litigation Securities revise filings SVC's call call The results X, XXXX and or beliefs company release of SEC. any These

In or normalized contain addition, operations the adjusted as Reconciliation EBITDAre. EBITDAre net funds and normalized income non-GAAP including of normalized to this well financial and FFO from adjusted measures, call FFO may package calculate of differ to components projected materially our the found results supplemental are section available Investor those Relations as forward-looking the in Actual statements. in these website. in company's AFFO may from

with upon SEC the www.svcreit.com. John. statements. And on factors any Additional reliance Investors the those our XX-K in not Form our that, to contained our to call be I'll operating over could website to found information place later and is are on at that with and concerning differences financial turn forward-looking supplemental filed today cause undue cautioned data

John Murray

good and morning. Kristin, you, Thank

businesses of pandemic the SVC as and operating hotel our continuing the Our retail portfolio. well and lodging negative reflect economy fourth certain challenges as to the service results specific COVID-XX impact especially on on quarter

driven sharply impact by we seasonality government Sonesta the the results with these over of results hotel quarter. disruption holiday disclosed, had our quarter. weighed that XXX transitions, branding and December the negative successfully a during our on previously hotels on to The the coupled As transitioned overall in for stricter and management lockdowns,

to also management and and We Sonesta additional transition hotels February Marriott to expect management hotels and branding this branding in month. the of of Sonesta XX transitioned XX the to

In January, Hyatt XXXX. its X, to agreement April intent provided notice our terminate of effective management

are with We currently Hyatt. negotiating

are time. at will a agreeable hotels Sonesta we if path we to also unable However, forward, to that negotiate anticipate these transition mutually XX

agreements Sonesta our review For highest to with all hotels, allow hotel. each XXXX, transitioned of for XX, through use have a December recently and management short-term thorough entered we the of best of

or the will of ease to SVC us. and assets will and ramping more case As we these pandemic states, upside COVID believe retain many to recovery starting in the some the SVC numbers vaccinations more from consider greater hotels. With up, Sonesta and of capital selling Sonesta's with its lockdown from other a decreasing growth, worst Sonesta behind owns of is the of reminder, XX% uses. Also, have closely relationship benefit spending to manage hotels flexibility repurposing weekly

strength since to the by encouraged trends XX coming of While transitioned recent booking the meetings January group hotels highest people. booking XX XXXX, Group our we smaller March expect disruption first last we week with half additional to from Sonesta results during of are to the were of activities. during from last most

gradual, to be will We increases more are this travel not expect transient XXXX see Business material locations drive-to summer. contribution leisure until a making likely recovery and begin demand thereafter. and

be utilized safety, that from a It's the some technologies have video and the greater focus pandemic We new on the likely people as conferencing travel normals businesses emerge also believe and of service will we during experience. travel, on will rewards business relative the benefit we brands' Sonesta translate in pandemic may which from less programs, will impact to guest believe believe which have a value major we negative on basis. a impact the longer-lasting

suburban XX hotels, nonextended to with we point to trend XX full-service to for reporting pandemic. extended extended and stay XXX stay during XX% seen premium have hotels hotels. throughout stay extended hotels the stay and continue the XX.X% our outperform a XX.X%, a with SVC occupancies percentage respectively, have Our urban hotels full-service XX occupancies quarter compared hotels, our of of continue roughly select-service occupancy

suburban urban expect hotels continue extended We will outperform to of until full-service stay hotels travel to recover. our portfolio our business diverse begins

positioned seasonally the was of XX.X% the compared weak quarter, compared to was XX% us Average $XX.XX has third in in well average comparable fourth rooms stay quarter. cash was helped our rates. hotels XX.X% $XX.XX our has mitigate third RevPAR occupancy quarter, Importantly, to and weighting us in extended approximate $XX.XX compared the in and In third rate with daily hotels quarter. $XX.XX the for

TravelCenters America, based about represents XX% to portfolio support of of investment, continued assets. total our Turning pandemic has throughout operate the U.S. on to lease chain. supply which our to net the

its Property locations our to primary better on our the it service the trucking level to of full-service in vehicles, resiliency the pandemic the industry, their us. including and passenger shown at navigate rent services, and truck enabled was obligations repair impacted than decline to TA quick-service this restaurants to tenants. sale fuel offerings TA coverage current most have TA's X.XXx closure is the quarter. of and negatively restaurant diesel Although by sales, of gasoline

hardest deferrals net affected TA, with Rent fourth including will industries whose prospects have lease the except restrictions. collections to were for lease management service reopening opening in the portfolio, significantly have for discuss changed. And occupancy like for slowed hit XX.X% during more quarter. our tenants in our by work asset Todd theaters, retail detail. movie certain Requests tenants continues net this our and team

-- hotel we the the worse in are have financial our first on of continued half crisis. especially believe the weigh portfolio weakness we XXXX, worst passed While will we results, of our COVID in

preserve debt maturities, over our reducing to including spending year steps January, our down sales. solidify completing dividend, liquidity, XXXX many our revolving in the capital capital remainder facility past select our taken the quarterly and credit addressing drawing deferring nonessential hotel and of have We important

to Supported with from well portfolio, future for we brought and and by steady diverse with for the lease XXXX portfolio proactively of we but gradual capitalized a opportunities the have positioned our retail ample to net performance. challenges, navigate liquidity are we TA stage improved recovery believe hotel seized cash flow portfolio. the well us set great assets successfully

our in about well further not turn to I'll recent as prospects. With transaction growth detail lease of While the woods activity. our out it are net our yet, portfolio future as are to that, Todd confident discuss we we pandemic over

Todd Hargreaves

Thanks, John.

on by XX.X square As own our minimum feet weighted distinct service-oriented XXXX, annual investment, lease we assets portfolio with were XX.X% of at leased lease lease $XXX.X net our industries under XXX retail trailing portfolio by April end. The for the requiring basis million TravelCenters a of portfolio's aggregate which of of tenants based for at investment. rents XX.X% America, coverage anchored fourth and operating December net million. net properties, a lease Rent December of our XX.X including XX.X% from term quarter, in XX.X% XX-month average centers, XXXX. largest on XXXX and XXX of of were with brands represents of of quarter our tenant, Representing from XX overall travel lease as our low up XX.X% XX, our our minimum years retail a based stable rents was tenants on XXX collections XX, net X.XXx

more months the from from of January casual an operator tenants, rents collected restrictions and previous our a of and geographically tenants, capacity and rent. dining closures decline January in of impacted California, our some of Northwest We our including due represents uncollected in some movie a operator XX% Pacific industry theaters, Southern industry-specific center which COVID-related temporary XX.X% to fitness a to

lease rent in with $XX.X entered leases agreements modification continue work tenants line February deferral net XX%, with have improved figures. requiring with we XXXX retail and an tenants million. our rent To and arrangements, We date, with XX in of into aggregate preliminary collections deferral to lease more to QX through

million Monthly of in of lease deferred net to rents from aggregate due September. an XX% our averaged rent have deferred have previous of of collections and We reclassified previously lease extensions. $XX.X or deferrals granted tenants net modifications

fourth reserves the of theater movie revenues for lease net uncollectible leases. tenants. our we of $X.X for related $X.X certain to million During quarter, these reserves recorded of million

reminder, we to for adjustment changes collectability a assessment rental income. the As all as recognize lease in an an operating

square rents years based weighted entered leasing of renewal below to per will square term weighted leases feet longer primarily at in same for were revenues average XXX,XXX Turning prior X renewals which square the rents a to reflects feet, rents term. The square approximately year. per fixed $X.XX feet the restructuring and totaling by for leasing and eventually theater of exchange rentable XXX,XXX fourth that lease quarter. activity activity space. of The were the convert average an renewables during for a for in We lease the foot percentage was XX.X% $XXX,XXX commitments X.X movie rentable or rents capital lease on aggregate lease concessions generated

approximately concessions square commitments prior rents into We term were per new below XX,XXX space. years these weighted the $X for rents of lease XX.X% for rentable that or and previously per square million also was foot at weighted feet leases same leasing were $X.XX lease entered market for above The XX.X year. that average and leases capital were an average aggregate

recent our to transaction Turning activity.

price hotels, of branded hotels, outstanding aggregate rooms the sales XX were During XXXX, we quarter million, sold which the of for used Wyndham X proceeds December hotels Marriott with to amounts. including $XX.X repay X,XXX and ended debt XX, branded an XX

XXX the the are return former transitioned aggregate hotels X% to of buyer at management second currently targeted price, The the sell an these $XX.X XXXX. previously on We we purchase price for was of under completed leasing sale expect hotels hotels Sonesta is million. SVC be in X annual were quarter mid-December. in with that sales agreement to to and an to of the for X sales also potential rooms Marriott

price previously properties is of until branded, to Marriott at the hotels sell encumbered due secure SVC-Marriott termination which we buyer's inability a to the XX sell to an by X,XXX the terminated the $XXX.X agreement these Marriott branded We million brand During with agreed with for Marriott had the time least financing. rooms quarter, agreement sales the hotels of remain final. will to and Marriott

hotels sell we've stated have prices contract or to are values. are sold we close to at pre-pandemic the previously, under As

be hotel use to to evaluate our determine portfolio, should be specifically considered alternate to recently transitioned or disposition. an hotels or We the scheduled transitioned to for Sonesta continue any when

similar the see as well to as our debt XXXX, the of pricing. For the that in and we industry market we pre-pandemic both bring hospitality and will overall, any pick availability activity hotel sales, driven transact increasing expect investment up to capital, fundamentals near hotels at recent improving sales are half second to starting equity; by optimistic of or

Brian. I will now call turn to the over

Brian Donley

financial FFO Thanks, for per million. Todd. quarter results fourth share $XX.X negative Starting was $X.XX was million loss the XXXX, EBITDAre our of normalized or consolidated adjusted a $XX.X and with

hotel hotel breakeven adjusted the compared portfolio of EBITDA to XXXX. million to of negative and of $XX.X quarter to quarter hotel prior XXXX third in quarter million for year $XXX close Our in the the of generated fourth compared being EBITDA

of $X.X month our resurgence just of was a million The occupancy, expense -- in our business albeit months offset a expense increase income rebranding slightly million cash December seasonality of primarily flow to million in decline our follow-up quarter. San million reserves rents, relates net uncollectable million million and October IHG, decline we declines management lease RMR specific partially produced impacted results month December, $XX.X decline [ November, leases; of our our were of a interest $X believe $X.X our overall to leased to COVID disposition $X.X to leased million Juan. A due this and due G&A fees hotel are the from movie cases, normal steady to which properties above in For the year-over-year. positive, portfolio hotel in XXXX, income ] breakeven. related to in hotels. Rental previously this activity, $X.X to theater lower for to and also reserve over declined by relates XXX the breakeven $XX.X related in due of FF&E

points decreased For comparable decreased over operating the this approximately by year million X.X% quarter, percentage decreased gross $XXX profit to XX RevPAR margin hotels gross our and percentage XX.X%, period. prior operating profit by XXX

million the hotels increase tied partially comparable during the savings management the declined GOP the $XX.X These were a at fees, reserves, Sonesta our Although expenses line and expense from costs prior hotels in to of FF&E including offset by declined million to costs quarter. revenues $XX.X system for other that $X.X certain onetime hotel million. rebranding year, are costs,

million depressed, quarter. hotels generated $XX key consolidated XX of generated lodging by San losses service where few, a activity the Full-service name Francisco, to operating of XX% as million for $XX select of operating weigh from is hotels. our of the Chicago, on D.C. hotels were or portfolio. were in operating $X Our hotels. portfolio such most urban million XXX losses markets XX these continue the full-service and Boston hotel our to losses

operating Our XXX to in rebranding impacted and extended below of this quarter, $X slightly of extended well a stay were XX hotels million; loss stay were relatively small perform continue and by breakeven negatively generating December. the hotels

XXXX quarter the a contingency and Excluding hotel $X $XX.X million negative rebranding of million. $XX.X certain for adjusted hotels, for a was legal EBITDA million fourth costs

sheet Turning balance to our liquidity.

of was million escrowed including of assets, improvements and total As of hotels. end, future $XX.X of quarter $XX.X primarily gross cash to we debt had cash, XX.X% our for million

approximately in per Our the credit the drawdown EBITDA facility. overall cash forma burn pro fourth full QX based our million adjusted month our for for revolving and on $XX averaged of quarter hotel

industry, our cash a burn QX, hotels to and additional in hotel relative similar quarter the additional number first the seasonality We currently of from disruption weakness in the given be rebranded. XXXX of of continued impact expect being significant to the

improve $XX.X and base December. currently as our outlook quarter, well the net before the XXXX, be including Marriott the certain corporate in we funded year to of fourth any for capital capital activity cash assets service million current IHG expect improvements of solid Sonesta XXXX maintenance of our as for expenditures. We our and However, ongoing half expectation back largely on costs. Based capital for positive during hotels at full rebranding primarily that triple hotels certain renovations lodging debt will overhead, and covers flow lease in

the hotel SVC Difficulty] year, full XX For completed renovations [Technical

Operator

on We'll Pardon momentarily. me, and you try the back and patience. the them Please it appears hold get speaker has thank line on your disconnected. for line

ahead. everybody. Okay. The go Please Thank you, reconnected. presenters have

Brian Donley

Thank you.

we preserve today, million have drawing facility of down after measure billion $XXX $X precautionary our As credit our as liquidity. fully approximately a of cash to

compliance, under compliance be of with we disclosed, debt expect the debt our occur we which that from to we previously don't first in half to will As agreements of back expect out currently until us incurring covenants additional one prohibit until XXXX. financial are the of

our all we bond the reminder, credit existing through a indentures. are waivers As the covenants XXXX, agreement but under secured subject July of financial still to our covenants under

the of our expect mid-XXXX, common credit maintain quarterly share agreed distribution of per Regarding dividend, we currently provision as a rate our $X.XX agreement. to to amended we through current which

XXXX. We currently believe adequate have through liquidity we

for is next the our is prepared maturity will we Our ready us. Operator, our ensure of that debt and assess up all to explore this we questions. of concludes remarks. and positioned open pandemic in are XXXX, continue to options line until We're well to August behind

Operator

with Maher Bryan from comes question B. first Riley Our Instructions] [Operator Securities.

Bryan Maher

When specifically, back full-service bigger urban? hotels was quarter of results you pain? the what at the A seeing positivity brand Sonesta of couple conversion was the look the Was it the on and the hotels? XXXX signs the are you fourth lodging to to it as any of look full-service urban you of source And or the questions.

John Murray

transitioning the was impact I mean Bryan, good question. the fourth a of from there significant definitely hotels. that's quarter, a XXX

of We full-service weakness. hotels have that continue see We a closed. to still couple are

seeing yet a business pickup not are We in travel. big

could the reduced a hotels cities pretty have. and of various the levels. and that year-end Thanksgiving increased of weak amount number their holidays did restrictions after We the holiday have So occupancy businesses and urban full-service occupancy that see the had into states

of is lot for a coming what were always weak factors there a negative all anyway. together quarter So

we solid are into hotels. forward, urban quarter, the as seeing anemic hasn't the travel full-service most we So look both for it's measurable, portfolio, mostly first because in extended full-service the those we've headed locations. at are stay, as improvement hotels still the and and hotel business recovered But select-service

to full-service XXXX XXXX expect our XXXX. into the until don't and hotels and material we see back half experience really So of improvement

Bryan Maher

to conversion Sonesta typically it's now cost, you or Sonesta's to the from other signage you InterCon's? belt these transition Okay. hotels and the your brand, And of what make them have, that whether converted, that costs lot have kind as has under of Marriott's the a you them been

Brian Donley

take one. I'll It's this Bryan, Brian.

So in IT for we the through had systems on inside getting side signage the expenses those around well as about $XX brand whatnot. and run and million ledgers out quarter audit the and that conversions of technology big putting the people the with and for the buildings it well permanent a hotel the to of to set hotel as of relates and procuring up supplies the side. The as field as relate for will hardware capital name the property portion

to per that through So the capital. will it people of the past, in be about P&L we've rest $XXX,XXX roughly talked hotel. Half and will of the run

Bryan Maher

And after pay it you have what early the you next I to it get to and But XXXX take the have that down to in some you million see, now over return cash, need or the whether during XXXX, sometime facility? that that of cash Okay. you it's about would drawing sitting for then down $XXX-or-whatever maybe year. start things to worry

Brian Donley

us. pay until the We're prepared covenant are our down to Yes. not facility issues behind

I at mean at we're think I So earliest. the looking XXXX

Operator

The Janney with Capital is next question Batory from Markets. Tyler

Tyler Batory

so to might it the take properties to properties at as already transitions, much terms in so you December? for the how I real any have to operations obviously, those And February transitioned? January, sense that there relative speak, wanted of was return been could. the to Sonesta to long is but of for in it's quick, normal, disruption some making converted to in thoughts if disruption early, I back transition circle which how know some December, I Any expected.

John Murray

the Yes. little that our to their It's on for prior But brand would the brand dates question. system transition, like for measurement They conversion X It's the specific because as get shuts I the reservation can't system down get say, a at bit new it impacts COVID reservations outgoing seasonality hotel and occurs code a past good because difficult -- of to numbers, is be the the until a impacts. there on reservation can't for new GDS looking the separate the average, date. a you on same -- numbers. different seemed transition

technical in occupancies process So to dropping transition the that complications after immediately the result there's transition. some

looks it maybe X/X following around to from it to transition where like of then makes pretransition. within was were we're half drops months And like up back about and X/X looks And months. RevPAR pre-conversion where in of be be that trending to it we it the X the

So disruption. quarter it's about a of

Tyler Batory

helpful. maybe Okay. the follow I'm short-term up That's those, strategically of to just should and extended I on side of that things. what you've transitioned number the contracts. stay more asset And of all say, sales interested or on -- broadly Sonesta, those to certainly some have properties of hotel a

So in sort at looking you're interested in in of sales. getting what assets factors asset terms And in of discussion could simply result the what factors aggressive portfolio? you potential considering there. of Just some just you're a in of maybe interested selling more what sort terms price it is

John Murray

variety a of factors considering. that There's we're

One capital extent is of the needs. of those factors

performance. projected the is obviously, Another,

stay a couple hotels, we the markets of We where Sonesta of Marriott had couple extended market extended of had stay IHG hotels. some is a hotels, Another a couple concentrations.

be Now market. extended in that any given if may many stay Sonesta they are hotels, all too

considering. are factors say the I'd those we're So primary

a attractive shortage other multifamily be and affordable move there's considering some also a use. I markets, what should add, opportunities uses. we're hotel to housing, conversion to a from of may there In

evaluating markets, as select in so we're well. And that

Tyler Batory

Okay.

the those the in question just renovation/rebranding? then just me. outlook CapEx you any on items then can future for side the XXXX fourth split of for of the quarter in us Okay. too. the be and remind versus And in commentary Brian, last things, maintenance helpful, terms would between And spend

Brian Donley

Sure.

I up And that million $X of was lot we I for costs. a put to to numbers conversion renovations for about QX, million so of XXXX. million the is CapEx. number of will remainder out costs say, the of related half Kauai some is would about I maintenance were some well. related renovation that number maintenance to $XX So CapEx about Yes, approximately We've roughly to the those approximately projects in would million would finishing would prepared those large it piece several say costs with $XX $XXX as as describe over. had some $XXX $XX conversion spend. million. I maintenance the say well again, spilled in I the XXXX to with as and the in on remarks was over had related got of A But of million spill activities. into in We and Chicago California going discretionary as

Operator

next Wells question Dori is from with Fargo. The Kesten

Dori Kesten

of brand Can pre-conversion? was you index us Sonesta tell what the the RevPAR

John Murray

Sorry, Dori, could you say that again?

Dori Kesten

The Sonesta the RevPAR brand index of pre-conversion.

before So into it. came and InterCon the all Marriotts

John Murray

I Do that have handy. don't you? Yes.

Brian Donley

Dori, on one. we can don't follow that numbers We have the handy. index up

Dori Kesten

of look multiple through aggregate, would Sonesta, do comparable to you kind asset that range in in hotels guess that to for that I you an And you're an that internal goal is have Is -- numbers? the sale XXx you the mentioned that, pre-pandemic pricing And year? on -- converted pretty levels. be as Okay. the XXXX

John Murray

Yes.

specific don't hotel hotels asset perhaps base broker a terms mentioned, may like have or capital. that the and the -- that that other sales. of And reflect they that needed think XXXX, hotels value -- those get select-service for transitioned of rates fact I uses, that in little I the the on but of be don't year, hotels uses as broker shooting we a better the -- better opinions than yes, other were removed that done from target of sold bit we were, during not value during every the opinions we a cap and the that. where did there to So get we're sold, But multifamily get middle

cap were account the around So XX%. rates taking into PIPs, the

Dori Kesten

it may to payout decent have when perhaps to you not back And get taxable FFO look percentage dividend do potential is be, through since a on we XXXX, income think a a great per what Okay. could as comes as way there simple share? Brian, a of into

Brian Donley

Yes.

running at taxable in to the way the Obviously, aren't any foreseeable that I won't the losses, think When taxable there at more earning hotels requirement that's have used returns, with the are there's compare and but losses look we making probably benchmark. distribution is we're the it I we're way over it to sort in way look contracts, of not the generally we're of it up, sort been being tax we've future. returns the coverage, from building incurred, hotel standpoint. losses you If taxable report a if simplistic the hotel Xx that, we the than under not full speaking. our nuances

Dori Kesten

Okay.

So you not paying [ to on be looking out 'XX, may based then ] that?

Brian Donley

that. 'XX, It's comfortable feel saying tell for really But possible. early too 'XX. It's I to

Operator

with is Instructions] next Sullivan question Jim [Operator from The BTIG.

James Sullivan

spend then million year Can agreement. investments you as covenant is waiver annually as the it you've can remind outlined know certain question have defined qualify million to you other refers advised release, up you in $XXX per that investments First spend? us on an you $XX in the kind $XX before, -- other CapEx. And agreement, million and the for CapEx. I up for just under what of to to the

Brian Donley

we every the not the would current could adds often for our the we our various be, new example another transactions It's existing to just opportunities Thanks ancillary-type question. we have Jim, lessor, the out if that Yes, or existing buy operation up surrounding leased the property carve-out this that relating acquisitions. value meant to portfolio. is a have portfolio. come for properties take really really That value-enhancing so ground property, could one. I'll really, so help ground anything that that for Brian.

James Sullivan

Okay. you do to kind on talking that presumably about to in short would in some with what what give company us And by would contemplated be anticipate of you and agreements the whether through think, to assets, and with continue have continue Can you've I touched what and the to with this after have the ultimately, and it the line flexibility strategy, considers X-year term or portfolio sell decided in the while the I comments, you. with your place? keep Sonesta prepared term help that or previously initial are as and can then agreement managed the Sonesta. convert than after agreements had if them just Or to have with gone indication term just them you us wonder that you John, in time the InterContinental? they Marriott whether long to at agreements to be whether that would more were Sonesta prior And

John Murray

that's a Yes. Jim, good question.

to to that the we've dust each within the end do is that year, agreement management of existed be of long-term remain the around transitions going the to these Sonesta going once portfolio expectation are similar added portfolio and that of hotels -- this Our we're sort started. the has the will to contracts hotels the Sonesta settled that we've with what before decided

So long-term management agreement. it would a be

James Sullivan

any would flexibility or cancel for to -- what contract what they otherwise that Sonesta additional other the event you Service particularly given the I'm would have the contracts with Marriott Or agreements it is, had versus And -- would the have pretty Marriott you thinking that InterContinental? those be that -- way would similar? or Okay. of virtually to would brand, And versus an and have is some in -- Service? agreement budget for index or nonperformance with opportunity unproven cancel the of brand the the underperforming to there and an the be

John Murray

if if terms There are study are apologize. I performance, there provisions rights. the of agreement existing -- didn't Yes. There before call. the is is are there I poor the termination there --

the is is an And There's so of some flexibility Sonesta there. affiliate. there flexibility also

we so the and a about ability and to of we I what decisions make whether collaboratively them virtue with bit we individual more work And little have get terms in flexibility hotels. that, invested capital whether by amounts of think more on invest

what see year, And we I in we the to not because would should they're be weaker-performing whether regular IHG, highest hotels. instance. evaluating Marriott an but flexibility a if if portfolio we were we're pruning at affiliates looking that for we this the than a to use be think have is, basis, should or And performing, do greater if between we just us just and on and a situation best not

James Sullivan

business as Okay. can it that post-COVID. John, has And again, but you how days, say, brands to contrasts of how or I major indication you business with the mix and Sonesta's IHG? and the impacted on then, Sonesta Early give of the know, exposure with, brand, touched any Marriott performance us travel

John Murray

that seeing board, the leisure has been is think I travel regardless what the the driver of brand. we've been across

During from been business have been in ranging to nurse National help contract there surges groups a to Guard, there's that groups deployed the pandemic, associations as to been quarantine, have and to amount different the visiting people of like. trying different from large locations

So type of there's way in a that's been another. COVID of that or amount business of one fair been sort related

up of single could And weighted through more without style extended a needing vintage hotels safe a I mix even go staircase the brands, largely recent an weighting of lobby developments. to the stay seen stronger little fairly the extended because your more towards room go perceived or Sonesta hotels portfolio that for a the -- And possibly in or across campus directly you legacy within that extended consistent through a because bit stay were those we've their to again, were than think stay towards Sonesta elevator. older of as Their that hotels. are building

go just directly building. to could You your

very or the during was. was travel. pandemic share little of Sonesta either leisure, business that's it So related market the picked but business up type It pandemic,

James Sullivan

Okay. finally for me. And then

Given a much or in and right the as Sonesta significant wonder that brand I for business in Sonesta, becomes its with a this has tell equity in later the own brand loss. continued Service about interest year, what terms perhaps profit outlook the Sonesta bigger the us to and can you on transition quarter the of

the would broad it's anticipate when but early very or days, that indication, profit? understand, Sonesta very Some obviously, could breakeven and I one make possibly brush,

John Murray

Yes.

have travel quite as fourth experience the in growing first get in is that travel -- we has in growing in slightly But is of XXXX. net -- there'll rapidly. and currently experienced later may and Sonesta be they hopefully, and do pickup pains expect pickup in quarters, growing in second expect And and in third leisure half the Sonesta experience that they that business think that the be I will quarter we I the with year, grown and the for XXXX. income cost positive

I the -- franchisors will won't be that for and the that, a contribution, hotel And will operators Lion Hotels that would XX the it merger Sonesta initially, also States. United get a They we in expect big of them the a results I will has the And with Sonesta are -- a vote all had grow will combination largest awaiting over also business. that Red think X of shareholder think these franchising into be it be growth signed franchise agreement time. that that, that of activities, contribution, but Sonesta and

we so going forward. expecting And are profitability

Operator

session. would remarks. question-and-answer like our conference Murray to closing back to concludes for over turn John any the This I

John Murray

interest. today. your for everyone, us joining you, appreciate Thanks. We Thank

Operator

The conference presentation. now has Thank concluded. attending today's for you

You disconnect. may now

Service Properties Trust (SVC) 1 Mar 212020 Q4 Earnings call transcript