Q2 2020 Chatham Lodging Trust Earnings Call
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It is now my pleasure to introduce your host Chris Daly President of Daly Gray.
Just go ahead.
I think saatchi good morning, everyone welcome to the Chatham Lodging Trust second quarter 2020 results Conference call. Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described her most recent form 10-K and other FCC filings.
All information on this call is as of August <unk> 2020, unless otherwise noted at the company undertakes no obligation to update any forward looking statements conforms statement to actual results or changes in the company's expectations.
You can find copies of our STC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website, a Chatham lodging Trust Dot com.
Oh to provide you with some insights into chathams 2022nd quarter results allow me to introduce Joe Fisher, Chairman, President and Chief Executive Officer.
Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner Senior Vice President.
Jeff.
Thanks, Chris Good morning, everyone first and foremost thank you for your interest in Chatham and we sincerely appreciate your participation during these unusual times.
The call that 19 pandemic has been one of the most destructive events to the global or national economy in history and its impact on the lodging industry is unprecedented Fortunately hotel owners and operators to manage our businesses under the most dire circumstances.
This unprecedented period as required intense asset management and operating focus and I'm very proud of the efforts of our teams both the Chatham and island hospitality, allowing us to generate some of the best operating results of all public lodging Reits.
We have watered our best in class operating platform since our IPO and during these turbulent times the benefits of that platform stand out as we ideal operating model, allowing us to work closely together to deliver leading results.
For the quarter, our revpar declined 77% to $33.
Although a dismal absolute revpar the decline of 77% for our entire portfolio not just some small subset of opened hotels is much better than most companies who have already reported revpar declines over 90%.
I certainly believe that our outperformance is attributable to the fact that 70% of our 29 teen EBITDA and 60% of our rooms are made up of extended stay hotels and important differentiator is that Chatham has the highest percentage of extended stay rooms of all large.
Moving rates basically double the next highest read and this is often overlooked.
Additionally, more than 96% of Chathams rooms are characterized as limited service rooms, the highest percentage among public lodging Reits are upscale extended stay hotels as well as our select and limited service hotels provide us the flexibility during periods of growth or weakness to do.
Diversify our customer base to maximize revenue and that's exactly what our operating team has been doing.
Within the quarter and then July we've seen gradual revenue improvements since hitting bottom in late March we laid out and our press release, our monthly Revpar stats and Revpar performance by brands for the quarter and there are some interesting point.
First occupancy improved 1000 basis points and each of May and June companies, who have already reported earnings of stated that July has been similar to our June but for US our occupancy further increased over 400 basis points to 48% for our entire portfolio.
Yes.
Having suites with full kitchens, and large rooms has been beneficial and winning business from today's travelers, primarily first responders and government or military and the first couple of months after the collapse.
These wins allowed us to keep all 40 of our hotels open.
Additionally, in Silicon Valley, where we have for Gen. One residence inns those hotels are laid out to provide extra space and rooms, well distance for longer term corporate guess when they return and this should aid our direct sales efforts. In addition, those gen. One.
Residence in hotels have of course separate entrances without the need to even enter a lobby of the hotel and folks can have a contact less experience.
100% of away, which we think as you move through 2021, well certainly prove to be another big plus for us.
Second average daily rate has rebounded not surprising HDR took a hit as the rate profile of early pandemic travelers was lower 80, our bottomed out for us in May but gained 12% in June and another 6% in July.
Third Revpar index, let's talk about our market share.
Revpar index measures the share of business you are getting versus your competitors within a market.
And it's skyrocketed throughout the pandemic, even as hotels of reopened.
In the markets, we've been able to maintain a significant premium of around 144 for the past four months, which is 22% higher than our 2019 average of 118.
Fantastic performance as a direct result of the outstanding efforts by islands direct sales and revenue management efforts.
Again, winning more than our share of existing demand.
Fourth average length of stay as markedly changed for our portfolio driven by the type of traveler during the pandemic, who prefer our extended stay hotels second quarter 2020 average length of stay was up to five nights for the home would hotels.
And 5.9 nights for residents end, which compares to second quarter 2019 average length of stay of 2.6 nights for Homewood suites hotels, and the same 2.6 nights for residents ads.
And fifth daily demand trends have completely flipped of course, you've all read about that for the industry and our portfolio as demand is strongest on the weekends for the past couple of months Friday Saturday occupancy was 50% at an 80 our of $108 while for.
The remainder of the week occupancy is 45% and HDR is $105 as most are aware the leisure traveler is the driver of this trend people want to travel and get out of their house.
Lastly revenue per day has increased every month since April and July revenue per day is higher than June.
With the exception of the week after July 4th room revenue has sequentially sequentially increase each week for the last nine weeks.
The current trends remain somewhat encouraging although the rate of growth from month to month has slowed but if we have learned anything. It's these times are in comparable and Theres really no way of accurately projecting the future.
Looking past the summer we have seen some corporate demand percolating, but only time will tell if in fact that comes to fruition and I can say that the corresponding rate is well down from the prior year, but slightly improved from the second quarter.
I firmly believe that given our portfolio attributes we believe that we'll be able to return to 2019 revenue leverage levels sooner than most of our lodging REIT peers, but the full return of the corporate transient traveler will be predicated on the availability of a vaccine.
As I stated earlier I'm thankful to have our best in class operating platform with island hospitality and this has been further proven and when you look at our ability to operate much leaner at lower operating levels, which allowed us to reach operating profit profitability much sooner and at lower Revpar level.
Sales than indicated.
Dennis in Jeremy will talk a little bit more about that but I will tell you that it required extensive adjustments to our cost structure.
Compared to pre pandemic levels, we laid off or furloughed, approximately 70% of our employees and reduce that number to 60% today as occupancy has come back.
We've reduced service levels reduced staffing at our hotels to minimal, but functional levels reduced compensation and our carefully analyzed analyzing every expense.
When you look at the monthly detail of hotel profitability in our release you could say that we were able to achieve positive GLP gross operating profit.
Revpar of less than $30 and positive EBITDA at Revpar of about $40. Those are remarkable achievements accomplished by staying hyper focused on managing expenses across all departments using our experienced operating teams and providing them the right tools to actively man.
Outage expenses on a daily basis.
As a result of much better operating performance, our second quarter cash burn before Capex of 8.4 million was a meaningful 40% lower than our original estimate of 21.3 million. Our June cash burn before Capex of 2.8 million was approximately.
50% better than our prior forecast of $7.1 million.
If you wanted to assume that June was where we were going to perform for the foreseeable future. Our liquidity runway is 41 months enough to get us through the end of 2023.
Most industry experts in London seem to think that it will take until 2022 or 2023 before revpar returns to 2019 levels.
Not knowing.
How long this downturn has got a last operating so efficiently produces operating profit, which lessens our cash burn and ultimately this has a meaningful impact on long term equity value for our shareholders. Our teams at Chatham an island to have the experience to persevere through these situations and we.
No high to lead a public lodging company through these challenging times.
With that I'd like to turn it over to data.
Thanks, Jeff I'd further add on the outlook that the impact of new supply is going to lessen significantly in the future hotels under construction for the most part are going to be slowing down but will be completed and if you aren't under construction currently it's going to be difficult underwrite the appropriate turns returns that justify construction.
Additionally, even though we were able to close on that on the construction loan for our hotel in La it's a pretty difficult process underwritings very challenging at this time and given our good credit are good relationships, we are able to get that get that loan close but don't think that that's a pervasive.
Thing that people are going to be able to do moving forward.
Given the slow expected recovery for the industry, it's hard to imagine new supply being an issue for at least the same amount of time, given the fact that it took essentially almost eight years for new supply to approach, 2% after the financial crisis.
Among our keep our key market San Diego was the top performer with Revpar $52 as it benefited from military and government related business Silicon Valley Revpar $38 was better than our portfolio average with a bit of corporate travel business in late May and June our three coastal hotels in Maine, New Hampshire were hampered during the quarter do just.
Veer hotel restrictions that were loosened in July so those hotels will be and have been better in the third quarter.
The industry, our leisure Mark Marcon hotels are certainly seeing the best rebound at our residents in Anaheim second quarter occupancy at 45 was 45% even the hotel was under renovation and June occupancy was actually 71% in July occupancy was 93%.
And our residents in legato in Fort Lauderdale second quarter occupancy was 44% with your occupancy 60% in July occupancy of 97%.
In Savannah at our Springhill suites second quarter occupancy was 26% with June occupancy or 44% in July occupancy or 50%.
The three coastal new England hotels at second quarter occupancy in the low Twentys, but July occupancy for those three hotels was approximately 65% after some of those restrictions or loosen.
11 hotels had second quarter occupancy over 50%.
Out of our 40 hotels in three hotels had occupancy under 15% but of those three hotels two of them are complex with an adjacent hotel, we are where we're consolidating most guest into one hotel that's at our core yard and Houston West University, and then at one of our resins ends in Sunnyvale Silicon Valley.
On a relative basis government revenue has been our best performing performing segment during the quarter, but it's still makes up the lowest of the three major segments for our business corporate revenue comprised approximately 26% to 26% of our second quarter revenue.
In 2020 versus 29% last year with Revpar, all 79% and HDR off 40% to 50%.
Importantly, within this segment.
Is that about 40% of this business was related to traveling nurses and doctors fighting the pandemic.
On a retail side retail revenue comprised approximately 53% of our second quarter revenue this year versus 56% last year with Revpar off 78% and HDR again of off about 35% to 40%.
Moving on revenue production double this year to approximately 16% of our second quarter revenue and revenue is off 55% with 80 are off about 25% to 30%.
$225, we certainly had a lot of government related production related to.
Ships and military being housed in one of the hotels outside two hotels actually both hotels outside of Charleston.
Operationally as a major Hilton and Marriott franchisee.
We do believe that the operating model is going to look a bit different going forward. The pandemic has triggered us as an entry as an industry to reevaluate. How guests are served whether that was with respect to housekeeping food and beverage or other complimentary services as most of you have heard from us for a while we've been pushing pushing the brands for change these changes.
Certainly aren't going to happen overnight, but of course the brands are now very much in concert with us relative to making the necessary changes to generate better returns. We're hearing to all Greenland us in life safety standards and have only limited exposure to unions with only one of our hotels unionized that being the residence Inn in White Plains.
All lodging companies are having to analyze liquidity needs, which is something on hurt in lodging industry, especially for well capitalized companies such as Chatham.
At the corporate level, we've been very aggressive as a means of adjusting our cost structure. During these difficult times and minimizing cash outflow.
Our DNA was already one of the was among the lot the lowest of all lodging Reits.
But we still wanted to be as aggressive as possible we've had to reduce our headcount. Unfortunately by about 25%, Jeff and I took 50% pay cuts in every corporal employee also took a 25% paycut.
In total we've reduced salary costs by approximately 50%.
In the quarter, our board of Trustees also reduce their 2020 compensation by 25% and all in our cash DNA is down approximately 35% or over $3 million for the year.
We did file a business interruption claim related to coven 19 losses, and we'll continue to pursue them, but any potential recovery is going to take a long time and certainly the amount is not estimable.
As Jeff discussed, we're very pleased to see that our cash burn was much less than originally modeled our GP breakeven revpar ended up being approximately $26 versus our original estimate of 32% to 35, a 20% improvement our hotel EBITDA breakeven Revpar was about 40 Bucks again about 20% below our original estimate of $50.
And importantly.
We estimated on our last call, we would need revpar of approximately 90 to $100 to be cash flow positive after debt service and as we sit here today, we think that revpar breakeven levels, probably now about $75 again, 20% to 25% better than previously expected.
On the Capex front, we spent approximately $8 million in the second quarter, including 4 million on the Warner Center development 1.2 million on the renovations of the Manheim residence Inn, and the residence Inns and newer sale, New York and another million dollars wrapping up renovations in Silicon Valley.
We have to suspended all renovations that and not started and all non emergency capex preserving $10 million in 2020, we slowed down capex spending in our Warner Center development until we closed on a dedicated loan for that project. We do expect to spend on approximately $4 million on all capex other than Warner Center.
Through the balance of the year.
We're pleased to have just recently closed on on the construction loan that further solidifies our capital structure by not using liquidity on our credit facility and allows us to move full speed ahead with an expected completion.
In early 2022.
We expect this hotel to ramp up quickly and provide meaningful hotel EBITDA in 2022 and beyond.
As you saw in our lease the inland portfolio has been appointed to receiver by the special servicer of the loans ownership is ultimately and transition and we are fully cooperating with the receiver.
Although this investment didnt quite pan out as expected since our IPO joint venture investments have generated attractive returns our total JV investment since our IPO, where approximately $87 million and those invest investments had have generated cash returns of approximately $150 million.
So all in all pretty good deals.
With that im going to turn it over to Jeremy.
Thanks, Dan US good morning, everyone. Chathams Q2, 2020, Revpar was down 77%, but we saw positive trends throughout the quarter and after Revpar increased from approximately $24 in April to $31 in may to $45 in June to $52 in July.
Through our significant efforts to contain costs, we were able to limit our adjusted EBITDA loss for the quarter to $3.3 million.
As with Revpar, we saw positive EBITDA trends throughout the quarter with hotel EBITDA losses of $2.3 million in April and zero point $8 million in May before generating positive hotel EBITDA of zero point $8 million in June.
At the end of Q1, we wrote off our entire investment in the inland JV and in Q2, we stopped recognizing any income or EBITDA from it the inland JV has not been able to negotiated that forbearance agreement in the servicer started the process of appointing a receiver to oversee control of these hotels.
Excluding the inland JV Chathams pro forma 2019 net debt to EBITDA ratio would be 5.4 times versus 5.7 times. If it was included.
The innkeepers JV is continuing to pursue a debt forbearance agreement both JV loans are non recourse to Chatham, except for certain bad boy acts and default under the JV that do not trigger cross default under any Chatham debt.
Chatham has a strong balance sheet the positions us well to weather the disruption being caused by the cobot 19 pandemic. We ended Q2 was $36.9 million, an unrestricted cash and $8.9 million of restricted cash escrow with loan servicers that can be used for capital expenditures property taxes and insurance.
In early May we completed an amendment to our credit facility. The provides us covenant relief until the end until Q2, 2021, and the ability to utilize the entire $250 million capacity of the facility when covenants begin to be tested again, starting in June 2021, EBITDA and why figures used for comments will be calculated.
On an annualized basis through the end of the year.
At June Thirtyth, we had $114 million of liquidity between our unrestricted cash balance and revolving credit facility availability.
Even after June 2020, Revpar $45, our monthly cash burn, including corporate DNA interest expense and principal amortization was approximately $2.8 million before capex. So our current liquidity position covers our current monthly cash burn for approximately 41 months. This provides a significant amount of time for operator.
In performance to recover.
Just yesterday, we obtain a $40 million construction loan to fund the remaining cost of our Warner Center development. This will enable us to complete the project without using any of the liquidity provided by our current cash balance or revolving credit facility.
The construction loan has a four year maturity with two six month extension options and as initially priced at LIBOR plus 750.
Once the property achieves a debt yield of 9% the spread on the loan decreases to 600 basis points. While we don't believe we will need additional liquidity, but beyond what we already have we have six unencumbered hotels have a book value of $276 million that could serve as collateral to raise additional debt proceeds.
Chathams balance sheet also benefits from minimal debt maturities over the next several years the only debt we have maturing between now and the end of 2021 as a single $12.8 million nonrecourse mortgage loan the matures in September 2021.
After that in the next debt maturity that we have as for our credit facility. In March 2022, we have an option to extend that maturity through March 2023.
We will have a significant amount of time for both hotel operating performance and the capital markets to recover before we need to refinance.
Material amount of debt beginning in 2023.
With the current lack of visibility around operating performance, we withdrew our earnings guidance in March some visibility around the timing of recovery in hotel operating performance remains limited, we're not going to provide guidance at this time.
This concludes my portion of the call operator, please open the line for questions.
Thank you.
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One moment, please while they pull for questions.
Just first question is from Army client SPL capital markets. Please go ahead.
Thank you and good morning, I can you talk to this specific set of what has been done to reduce the breakeven versus prior expectations.
And then how much of the cost reduction you think are permanent or maybe how different when you expect staffing levels pull up when we get back to normalized occupancy levels over the next few years.
Hey, this is Dennis.
Yeah listen I think the.
Outperformance on the operating side is.
I'd say, but it's really across the board, but it's primarily focused.
Third of our cost or labor related so it's primarily focused on being really efficient on the on the staffing side.
And you certainly have with most FNB offerings, even in the select service complementary.
Hotels, where it's where it's obviously free the breakfast has been trim back significantly both in terms of what has been provided as well as the staffing of that and there are no evening social events. So.
Our best.
Our best contributor.
To the performance is purely labor driven.
On the ability to hold off on some of that rehiring.
As occupancy is improve.
Improved from 20% now to almost 50% and we've really only brought back about 10% of our employees.
Is pretty meaningful so it's just really working those as much as possible we have at team.
Of analysts that are really in day to day touch with every hotel GM.
Every regional manager that is looking at.
Current expenses for all types of every expense basically.
But as looking at that on a daily basis in projecting those.
For the for within a month for the month. So it's just hyper focus on every dollar that is going out the door.
And as far as the second part of your question.
As I think as we get to a stabilized basis, we do believe that the housekeeping model is going to change a bit and we do believe that the evening social hours are probably going to go away.
For the most part in breakfast is going to be modified as well so those should be beneficial to our model on a stabilized basis.
Okay and then.
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With that.
Balanced out as asset recovery advances from here and you mentioned.
Yes on some of the corporate.
Jason that you've been having.
Are they worse than the 80 hours declined that youve seen today.
No no there's no they're not worse I think as Weve I think 80 ours are going to slowly come back as the corporate traveler comes begins to come back into our hotels the rate profile for most of the people.
Like I said, 40% of our CLO corporate business in the quarter was traveling nurses and doctors and they're just at a much lower HDR profile. So.
As you know as room blocks come back in the third quarter and fourth quarter hopefully from the corporate traveler that rate is improved from where we are today.
And just last question any seasonality, we should be aware of post this summer and meeting these are travel declining a little bit.
Hi, This is Jeff higher look.
I think that that's a reasonable thing to at least be considering we know the hotels, particularly with this weekend occupancy that we're talking about here.
Our is leisure driven.
Kids go back to school around the country.
There's a strong possibility that we do get some flattening or bleed off on some of that leisure travel.
So I think we're going to take a wait and see attitude, but we would also expect for our certainly hope that for some of that potential bleed off of leisure. There is as Dennis was talking about a little more corporate travel coming back in.
To these markets and to these hotels, but hey, only time will tell that's why we're not putting out any guidance nor anybody else.
Difficult to predict.
Hi, Thanks for that thanks to the color.
Thank you.
The next question is from Anthony Powell of Barclays. Please go ahead.
Hi, good morning, guys.
Another question on the seasonality issue.
Now I'll be here, but I guess corporate business and government.
And now is that going to record steady or do you expect.
Back to fall off or change in any way in the fall winter.
Well certainly certainly the traveling nurses are going to fall off.
That we have seen a.
Slow decline in that production month by month.
Since since April so that is there will be some seasonality just because of.
The pandemic and the people that are.
Moving around and and putting out the the hotspot. So that we have seen a slow off in that type of business, but it's been offset by.
Whether it be leisure or corporate in certain markets.
Okay sounds and this may be moving onto the Warner Center.
But destruction them alone just curious you've been positive on the option.
What caused you push some of that and maybe ignore more details on the loan.
Negotiation may our returns.
That attractive.
Not attractive just mortgage group.
Okay. Anthony This is Jeff I think I'll take the first part of the question, which is when you look at where we were in the construction process with the first four floors of the structure.
Being completed.
But a hotel that has.
Underground parking and underground mechanical.
It's a complex structure, it's not a stick built suburban.
Extended stay hotels, so therefore.
We determine and the contractor helped us obviously in detail without analysis that leaving that for some extended period of time, where we already had some of the mechanical equipment. For example in the basement of the building et cetera below grade.
Pumping water out of the out of the surrounding the building de watering expense and other things like that certainly predicated continuing the construction.
And additionally.
We've talked about the opportunity in Warner Center in our view being pretty unique because it is a competitive set full of very old large group based full service hotels and one old courtyard cross the highway so.
We feel very strongly that our projections will come to fruition in terms of HDR and occupancy there by the time. This thing really gets finished and opened and pre opened.
And ramped up.
Therefore, we went out to find a construction loan and let me tell you something.
This is where dentists are Jeremy will pick up.
Fine at a construction loan while we are the test case we.
Solicited through I think one of the best.
Mortgage broker for hotels in the country.
I think what was it kind of silver 100 folks.
They paying and Dennis will get and just not a lot, but a little more detail about how difficult. It is.
[noise] secure this kind of alone.
And therefore, some of our comments about about lack of new supply generally for the industry.
I think we've got a pretty good first hand experience relative to the ability of.
Finding that kind of loan Jeremy on on if you want to add some color to that.
Yes, I'll just point out we're we're very we're very happy to get this loan done it was challenging like like Jeff mentioned, we reached out to 100 potential lenders here. There were a very limited number that had the interest and making a construction loan at this time and I think theres. Some unique factors about our project that help us.
Got it done frankly, we have $30 million of in back equity invested already the projects, 40% done already is so a little bit of risks off the table and then having a public right behind behind the loan.
And supporting the project is very different from from most private developers. So all things all those things put together help us get this done and again very happy to get it done, but I think hard to read into.
The same if theres much availability of construction financing out there right now.
And of course, Anthony what we did their.
Dennis mentioned was very importantly, not further encumber, our line of credit or our other.
Assets that support the line, therefore, reducing our liquidity so.
Very important there is as a standalone loan for that hotel.
Thanks for that's how are you guys announced the brand for that so that hotel under that's the fill up end.
See I almost slipped out there while I was talking but.
We have not so far.
Okay. Thanks Bye.
Diagnosed isight extended stay yes, yes and got it.
What will get the process of elimination going there.
Yes, it's one that was one of them, maybe two or three profitability for the now and they're going to be able to kind of it.
Excellent.
Thank you. Thank you Anthony.
The next question is from Kyle nine guess B. Riley FBR. Please go ahead.
Hi, This is Kyle on for Brian just had a couple of questions.
First off as occupancy levels improve do you anticipate any government mandated occupancy movement.
No no.
I guess, if we are those Jeff I guess, we probably would have had them already.
More at the front end of the pandemic, but.
I mean listen there were in especially in New Hampshire in Maine, where probably two of the more.
Risk averse in terms of travel restrictions for.
Yeah.
People traveling into the state or through the state or whatever it might be.
And hotel did have some occupancy restrictions in May and June in Maine, and in New Hampshire.
And those have been loosened.
In July so that was a bit of a restriction, but thankfully as we're past.
Makes sense. Thanks.
And then lastly.
Thank you about ramping up staffing has been fairly easy to bring back furloughed employees now.
The March at the same wage levels of pre carbon.
No it's not it hasn't been easy I think a common theme whether its.
Retail restaurant hospitality.
Bringing employees back when they were getting the extra $600 unemployment supplement.
Has been pretty challenging in some markets, where occupancy has rebounded significantly and has required us to.
Actually go and find some outside sources of of labor it in certain instances, having said that.
I do believe that moving forward the.
The average wage per hour is probably going to be on a stabilized basis.
Lower than what it was before the pandemic. So again, we should get some benefit out of that.
Great and then Uh huh.
Ron around 60% stock reduction in and Thats quarter, but when you're running.
We're not at 60 were about at a 60% reduction at the moment.
I think as we moved into as moved into July and August will probably that will probably come down I don't know, if we'll get to 50%.
Listen, it's a very it's a very flexible in pretty.
From an operating model perspective, so I think for us were being as aggressive as we can on limiting.
The come back on the hotel employee side.
Great well for me thank you.
Thank you.
Yes, Thanks, Pat Tyler pottery Ftn capital markets. Please go ahead.
Thank you good morning.
Good morning, and this report and all the call on the call. This morning, which I think is were worth acknowledging our one the first part of a loop on on July trends, if I could I'm sure, it's a little bit more and some of the markets have been seen over cases, spike specifically, a california is there much difference.
And what you're seeing week over week in those markets compared to some of your location that maybe having being quite as much of a surge with respect to the virus.
No not exactly Tyler I mean, I think whether you're talking about California, you're talking about the Carolinas, Florida.
Even even Texas I mean weve.
At least compared to June July has been.
Improve so.
I can't I don't believe we would say that it's automatically whacking our travel.
Okay, and then also you when I look at the rate of growth and I don't know hitting a little bit, but no sort of there's been a little bit a moderation in July versus June compared to the sequential improvement.
I mean, that's just as you kind of hitting a wall maybe if you want on how far leisure travel can continue or is there anything else going on it's worth calling out there.
I don't see much there really other than purely math, you know the which is what's the denominator and what the numerator isn't as.
The early part of the acceleration, obviously is going to show a higher percentage gain.
And then what Youre going to show as you move through this thing in the next 12 to 18 months, but again, we had particularly with a couple of hotels in Florida thought that things were really going to go the other way on us and.
And did not I mean, our Laguna hotel at Fort Lauderdale, You know is running 90, plus occupancy and heightened slowed down and those even though there's there's some a lot of increased cases and that hotels in Broward County.
Which is was pretty high on that list.
I'd tell you what people are still coming out obviously this fundamental midweek business of of first responder type business in that hotel.
But great we got leisure business as well so that was really a pleasant surprise on that front I think the real the real question is.
What what are other kind of corporate travel and travelers due in the fall and as I said earlier only time will tell on that front.
Okay I appreciate that and I also wanted to go back to your Revpar Index, obviously quite strong can you elaborate a little bit more on the direct sales efforts and your revenue management strategy in terms of gaming a little bit more market share here.
Yeah listen I think it's something that started early on in the pandemic with.
On the island side, they have a direct sales team you know that some based in at our corporate office. Some around the country that have been very aggressive early on going out to some of those sources of business looking.
Finally government nurses doctors and they reached out early on in the pandemic Express.
Our availability with providing hotel rooms, and certainly I think that is carried us.
Essentially through April and May.
Listen I think on the.
So that's been pretty pervasive throughout the portfolio.
For for Chatham I think the revenue management side is working 10 is working in tandem with direct sales certainly there is production through the brand dotcom site.
And rates are coming down as result of the softened demand after the pandemic, but.
It's really opening those channels.
We are quite honestly, we had closed off when times are really good because the rates are a little bit lower so it's a benefit and it's an attribute of our portfolio and our asset types in our in our room types that you know whether it's in a growth mode or whether it's in a period like now we've got the ability to diversifying our customer base.
And the for the direct sales teams to reach account to the providers of traveling nurses and doctors and government channels that.
Again, we turn will turn the on button on.
For those as opposed to six months ago that was off.
Okay and last question for me more just housekeeping can you remind us.
The restrictions in terms of dividend right now and when those are less the.
Yeah, Jeremy you want to take that.
Yeah, right now we have to keep our dividend bullough re taxable income.
And that's going to be in place through the end of this credit facility Amendment, which is march of of of next year.
In to the extent this year. The there was taxable income we have to pay a portion in stock, but I think they're probably won't be taxable income. This year. So it would really be next year at the earliest that that that would be possible to pay a pay a dividend.
Okay, Alright, that's all for me thank you.
Tyler.
There are no further questions at this time I would like to turn the floor back over to Jeff Fischer for closing comments.
Well, we certainly appreciate everybody being on the call today.
As somebody said there is a fair bit of good news in here certainly on a relative basis I'm just pleased.
To be able to talk about things in a somewhat positive man or looking at our hotels and looking at the kind of business that our teams have been able to secure and really if that nationwide direct sales effort. It's the ability to talk to somebody that can put.
Yes, first responders or nurses are our other folks.
Even.
National Guard folks that are setting up testing centers.
Whether that be on the west coast to the United States or suburban Boston or South, Florida, That's an advantage together with our daily vigilance on costs and we all receive lots of sales updates on a weekly basis from our island team.
And are very very very cute in on what expense trends and particularly payroll trends are doing and what hotels may or may not be spending money on.
With a team of folks that are spending 100% of their time on the island side.
Monitoring and doing that I think the results speak for themselves and we look forward to working our way through this.
And getting back into a.
I would say is full both positive cash flow mode and as Dennis indicated.
Only another three or $4 million to spend on capex for the rest of this year on some essential projects and.
Not much to spend nor by the way.
The brands really even thought about ramping up any requirement spend much money for 2021 on that front and our hotels were in great shape to begin with so.
We feel real real good about how we can operate moving forward. Thank you appreciate your time.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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