NATIONAL REPORT—Many hotel firms, from brand companies to REITS, are changing their business policies in order to slow down the negative effects of the coronavirus pandemic. Here are some of them:
Marriott Provides Mitigation Plans
Marriott International has taken a number of measures, at both the property and corporate levels, to mitigate the negative financial and operational impacts of COVID-19.
At the property level, contingency plans include measures such as closing F&B outlets, reducing staff and closing floors or even entire hotels. The company has also temporarily deferred most brand standards to help owners and franchisees, including delaying renovations due in 2020 by one year; deferring required FF&E funding; and suspending brand standard audits.
At the corporate level, these steps include making significant cuts in senior executive salaries; requiring temporary leaves in North America; shortening work weeks around the world; and canceling nonessential travel and spending. Marriott estimates these cost-cutting measures will reduce 2020 corporate general and administrative costs by at least $140 million. The company has also taken steps to dramatically reduce costs related to programs and services that hotels reimburse it for, such as marketing costs. The company has also reviewed its investment spending plans and currently expects to eliminate or defer at least one-third of its prior forecast of $700 million to $800 million of spend in 2020, generally proceeding with funding only when the company was previously obligated.
“The travel industry is being impacted in unprecedented ways by COVID-19. As the virus and efforts to contain it have spread around the world, demand at our hotels has dropped significantly,” said Arne M. Sorenson, president and CEO of Marriott International. “We are working tirelessly to take care of our associates, our guests, our owners and our other key stakeholders… While we cannot predict today how long this crisis will last, we know that it will get behind us. And when it does abate, lodging demand will rebound. We are confident that our company has the expertise and the resources to weather this crisis.”
Wyndham Hotel Group Changes Cancellation Policies
Wyndham Hotel Group (WHG) has updated its cancellation policies. Guests traveling with new or existing direct bookings for stays in any of its hotels through April 30, 2020, will have their cancellation or change penalties waived if the request is received at least 24 hours–or less if permitted by the hotel’s policy—prior to arrival. Guests who are prohibited from traveling to their booked hotel under applicable law will have their cancellation or change penalties waived on direct bookings.
For new or existing direct bookings with arrivals after April 30, all WHG properties are required to accommodate non-cancellable rate reservation changes if the request is received at least 48 hours prior to arrival and the same number of room nights or more are booked for a future stay.
WHG is also implementing new processes to protect the safety of its guests and team members, which may result in a reduction in certain services and amenities.
DiamondRock Implements Changes
DiamondRock Hospitality Company, a REIT owning a portfolio of 31 premium hotels in the U.S., has revealed the proactive steps management is taking to mitigate the financial impact of the pandemic.
“DiamondRock’s hotels have seen a material uptick in group business and transient cancellations as a result of corporate and government travel restrictions.” said Mark W. Brugger, president and CEO. “Our top priority is assisting public health efforts to slow the spread of COVID-19. We are working with our operators to ensure that we do all we can to protect our customers and employees of our hotels.”
In order to mitigate the financial impact of the slowdown in travel activity, DiamondRock has drawn the remaining $360 million on its $400 million credit facility. The company currently holds unrestricted cash of approximately $380 million. Additionally, the firm’s board of directors has approved a suspension of the quarterly dividend commencing with the first quarter dividend that would have been paid in April.
On the property side, DiamondRock has suspended operations at hotel restaurants and outlets where demand is insufficient or local prohibitions do not permit social gatherings; is proactively “right-sizing” hotels to current demand levels in order to aggressively reduce costs and maximize efficiency; and has canceled or deferred the vast majority of its capital expenditures.
Chatham Lodging Trust Temporarily Suspends Dividend
Chatham Lodging Trust, a lodging REIT that invests in upscale, extended-stay hotels and premium-branded, select-service hotels and owns 134 hotels wholly or through joint ventures, has suspended its monthly dividend and will not declare a March dividend, which would have been paid in April.
“Facing unprecedented operating conditions in the travel industry and little visibility, we believe it is most prudent to suspend our monthly dividend as a means of preserving shareholder value,” said Jeffrey H. Fisher, Chatham’s president and CEO. “We are hopeful that the effects from COVID-19 will prove to be short term and people will have the confidence to resume travel sooner rather than later. Our teams at Chatham and Island Hospitality have the experience to persevere through these situations, and we are thankful to have this platform that enables us to move aggressively and quickly. We are working vigorously to maximize revenue, and we are aggressively cutting operating costs and deferring all nonessential capital expenditures to minimize the adverse effects on cash flow.”
Dream Hotel Group Updates Cancellation Policy
Dream Hotel Group has changed its cancellation policy. Any individual bookings—new or existing—for stays through April 30, 2020, at any of its hotels may be rebooked at the same property for a future stay within one year of the original booking date, waiving any modification/cancellation penalties and applying any previously collected deposits to this future stay. This includes those reservations originally booked as non-cancellable.