WEST PALM BEACH, FL—Chatham Lodging Trust has revealed actions it is taking to address the operating and financial impact of the COVID-19 pandemic.
“The hotel industry is in the midst of unprecedented disruption due to the extreme severity of the COVID-19 pandemic, and occupancy across the hotel industry has plummeted to levels never before experienced,” commented Jeffrey H. Fisher, Chatham’s president and CEO. “Our hotels are no different but, contrary to other hotel companies that are closing the majority of their hotels, our hotels are faring a bit better with occupancy over the last week of 19% across our portfolio. Thankfully, we have been able to provide accommodations to our nation’s military, infrastructure-related workers, first responders and critical medical workers dedicated to ending this pandemic. Unfortunately, our hotels also have had to lay off, furlough or significantly reduce hours for thousands of team members over the last few weeks. Conditions may change that warrant closing certain locations, but as of today, all hotels are open.”
He continued, “As we have previously stated, our best-in-class operating platform with Island Hospitality gives us the tools to act more expeditiously than others, which has a meaningful impact on the top and bottom line. This also enables us to generate the highest operating margins of all lodging REITs and to remain open at historically low occupancy levels.”
Chatham has taken aggressive actions to mitigate the operating and financial impact of the COVID-19 pandemic. Some of the major steps include the following:
- Suspended its monthly dividend, preserving approximately $5.3 million per month and approximately $64 million on an annual basis
- Reduced its 2020 capital expenditures budget by approximately $10 million or 45%
- Drew down cash on its unsecured credit facility, increasing its cash liquidity position to approximately $55 million. Chatham also owns 12 unencumbered hotels available as collateral to source additional liquidity.
- Temporarily reduced compensation for its executive officers. Fisher and Dennis Craven, EVP and COO, have both volunteered to reduce their salaries by 50%. Jeremy Wegner, CFO, has volunteered to reduce his salary by 25%.
- Lessened compensation for its Board of Trustees, who voluntarily agreed to temporarily reduce their proposed 2020 base compensation by approximately 25%