How hotel REITs have quantified COVID-19’s impact so far

Though Hyatt Hotels Corp. and Hilton stand alone among the major hotel companies in pulling their 2020 outlooks in response to COVID-19, numerous real estate investment trusts have made that move in recent weeks. And while many of these REITs held back in quantifying the impact they had seen, several provided a window into the financial losses they have taken.

Ryman Hospitality Properties

On March 15—a week after officially pulling its full-year 2020 business outlook—Ryman Hospitality Properties provided an update on the impact it had seen due to COVID-19.

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For the two weeks ended March 14, Colin Reed, the REIT’s chairman/CEO, said Ryman experienced total attrition and cancellations of approximately 268,000 net roomnights, representing approximately $132 million of revenue. Approximately 55 percent of this impact was for March, 34 percent for April and 11 percent for May through July. The estimated amount of attrition and cancellation fees owed to the company, as of March 15, totaled approximately $63 million. Additionally, Reed said the company had seen decreased levels of booking pace in its hospitality segment’s leisure business for the remainder of March.

“In light of the decreased occupancy levels we expect over the coming weeks, we have been working closely with our operator, Marriott, to implement aggressive cost reduction and capital preservation initiatives across our hotel portfolio,” Reed said in a statement. “We have significantly reduced expense levels at each of our properties by closing portions of the hotel to match expected occupancy. Salaried employees at each hotel are now performing functions normally performed by hourly and part-time staff, and the hotels are utilizing reduced levels of hourly and part-time staffing to match expected occupancy.”

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Ryman specializes in upscale convention center resorts. Its core holdings include five large nongaming convention center hotels—all operated by Marriott International under the Gaylord Hotels brand. It also owns two adjacent hotels and a small number of Marriott-managed attractions for a combined total of 10,110 rooms and more than 2.7 million square feet of meeting space.

Xenia Hotels & Resorts

On March 11, Xenia Hotels & Resorts withdrew its previously issued full-year 2020 guidance “due to the increased uncertainty related to the financial impact of COVID-19.” Since the company issued its original guidance Feb. 24, the company said group cancellations—primarily for March and April—had increased to approximately $15 million of revenues. This estimate excluded group cancellation fees.

Additionally, the REIT said transient cancellations had significantly increased, which it attributed to corporate travel restrictions and the negative sentiment toward travel as a result of COVID-19.

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“We are working with our operating partners across our portfolio to ensure appropriate measures are in place to maintain the safety of our guests and our operators' employees,” Marcel Verbaas, chairman/CEO of Xenia, said in a statement. “Our hotel operators are expected to adjust operations, as appropriate, depending on the duration and severity of the outbreak."

Xenia owns 39 hotels with 11,245 rooms, focusing primarily on the luxury and upper-upscale segments.

Park Hotels & Resorts

A few days earlier, on March 9, Park Hotels & Resorts pulled the 2020 guidance it had offered nearly two weeks earlier. In its original outlook—given on Feb. 26—Park included approximately $8 million of lost rooms revenues resulting from known group customer cancellations related to COVID-19. Since then, company said it had seen lost rooms revenue materially increase to approximately $30 million. At the time, most of the impact was expected to occur in March and April.

Park owns 60 premium-branded hotels and resorts with more than 33,000 rooms in the United States.

Host Hotels & Resorts

That same day, Host Hotels & Resorts also withdrew its full-year 2020 guidance. As of March 9, the company said its total revenues, net income and adjusted earnings before interest, taxes, depreciation and amortization for real estate had been negatively impacted by approximately $97 million, $48 million and $48 million, respectively. These numbers excluded approximately $16 million of cancellation fees.

Group business cancellations accounted for the majority of the impact on total revenues, with California markets accounting for approximately 58 percent of the group business cancellations. Transient cancellations had also increased significantly over prior periods, which the company attributed to government and corporate travel restrictions implemented as a result of COVID-19.

Host Hotels & Resorts owns 75 properties in the United States and five properties internationally for a total of approximately 46,500 rooms.

Sunstone Hotel Investors

Sunstone Hotel Investors pulled its Q1 and full-year 2020 guidance on March 5. In its original guidance, offered on Feb. 18, the company accounted for approximately $1 million of lost revenue primarily from known group customer cancellations related to COVID-19. The REIT said it had seen a material increase in expected lost revenue from group customer cancellations, which as of March 5, had increased to approximately $11 million. The majority of this revenue was scheduled to occur in March.

As of Feb. 18, Sunstone had interests in 20 hotels with 10,610 rooms.

Other REITs Pull Guidance

Over the past couple weeks, several other REITs have pulled their guidance without saying how much of an impact they had seen so far. These companies include:

  • Summit Hotel Properties
  • Apple Hospitality REIT
  • RLJ Lodging Trust
  • Chatham Lodging Trust
  • Pebblebrook Hotel Trust