Summit Hotel Properties(INN) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported pro forma RevPAR at $53, a decline of 45$65, representing a 27% month-over-month increase from February, with preliminary April results suggesting a RevPAR of nearly $70 [5][6] - Corporate level cash burn in March was less than$1 million, with expectations to be near or cash flow positive in April [6] Business Line Data and Key Metrics Changes - Nine resort hotels led the recovery with first quarter occupancy exceeding 76% and RevPAR exceeding $100, driven by strong leisure demand [9] - Urban hotels reported post-pandemic highs in occupancy and RevPAR, exceeding 50$450 million, focusing on unique and opportunistic investments [20] - The company aims to maintain a lean staffing model while addressing challenges in rehiring hourly staff due to enhanced unemployment benefits [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, particularly in leisure demand, with expectations for a robust summer travel season [26] - The return of corporate travel is anticipated as case counts decline and vaccine distribution broadens, contributing to future demand [26] - Management acknowledged ongoing challenges in the operating environment but noted that hotels are consistently profitable [13][15] Other Important Information - The company completed a convertible notes offering generating gross proceeds of $287.5 million at a 1.5% coupon [21] - The joint venture revolving credit facility was amended to provide waivers of certain covenants through the end of the year [23] - New management team additions were announced, including a new CFO and a new board member [24][25] Q&A Session Summary Question: Can you provide insights on ADR trends and corporate travel? - Management noted that March ADR was 14% higher than January, with expectations for continued growth, particularly with the return of corporate travel [30][31] Question: How is the company managing labor challenges? - Management acknowledged labor challenges due to unemployment benefits but emphasized efforts to retain key staff and gradually reintroduce normal staffing levels [50][51] Question: What is the strategy behind the GIC joint venture and asset contributions? - Management explained that the asset contributions were based on finding markets where GIC could be more constructive on pricing, with no specific number of assets predetermined [35][60] Question: How does the company view future acquisitions and capital deployment? - Management indicated a busy acquisition pipeline and the potential for redeploying capital into unique opportunities, emphasizing flexibility in capital allocation [64][62] Question: What are the plans for capital expenditures and renovations? - Management plans to accelerate renovations in response to improving demand, focusing on room and public space upgrades [88][89]