Chatham reports sequential improvement from December

Chatham Lodging Trust, for the first quarter ended March 31, reported a 42% RevPAR decline of $55 when compared to the same quarter last year. However, it was $8 more than was recorded in Q4 2020. ADR dropped 31% to $107 and occupancy fell 17% to 52% for the 39 owned hotels vs. the same period last year. ADR and occupancy improved by $3 and 7%, respectively, vs. Q4 2020.

“Since RevPAR dipped to $40 in December, we have produced healthy sequential gains in occupancy, ADR and RevPAR through the first four months of 2021,” said Jeffrey H. Fisher, Chatham’s president/CEO. “Leisure travel continues to lead the lodging recovery. Demand remains strongest on the weekend, and we expect leisure demand to remain strong through the summer. Also, there is a bit of business travel coming back into our hotels which is very encouraging at this point.”

He continued, “Our meaningful RevPAR gains have been accomplished with very little contribution from our most important market, Silicon Valley, and as business travel comes back in that market, our portfolio will continue to produce meaningful RevPAR gains. Additionally, we expect our coastal Maine and New Hampshire hotels to have huge summers, and since those markets were essentially shut down to inbound travel through mid-July, RevPAR gains should be meaningful. In Los Angeles, specifically Anaheim, Disneyland just opened up on April 30, and although our Residence Inn has done well through the pandemic with a lot of medical guests, we expect that market and our performance to heat up.”

All Chatham hotels have remained open throughout the pandemic. For April, RevPAR was $75 on occupancy of 65% and ADR of $117.

Other Q1 2021 operating results:

  • Net income: Improved $30.8 million to net income of $2.7 million from a net loss of $28.1 million in the 2020 first quarter. Net income per diluted share was $0.06 vs. net loss per diluted share of -$0.59 for the same period last year. During Q1 2021, Chatham recognized a gain of $23.8 million related to the sale of the Innkeepers joint venture.
  • GOP margin: Generated positive GOP margins of 30% compared to 25% in the 2020 fourth quarter and 38 percent in the 2020 first quarter.
  • Adjusted EBITDA: Produced positive adjusted EBITDA for the third consecutive quarter, generating adjusted EBITDA of $1.2 million vs. $0.2 million in Q4 2020 and $16.5 million in Q1 2020.
  • Adjusted FFO: Declined $13.4 million to -$7.1 million. Adjusted FFO per diluted share was -$0.15, compared to $0.13 in Q1 2020.
  • Cash burn before capital expenditures: First quarter 2021 cash burn was $7.6 million vs. $9.5 million in Q4 2020, $5.1 million in Q3 2020 and $12.8 million in Q2 2020. Cash burn includes $2.3 million of principal amortization per quarter.
  • Cash flow positive: Produced positive cash flow after interest expense and corporate overhead in March for the first time since the beginning of the pandemic. In April, Chatham is expected to produce positive cash flow after all debt service and overhead, reaching that mark the second fastest of all lodging REITs.

“Our strong performance is a testament to great portfolio attributes; high-quality, extended-stay hotels; and premium-branded, select-service hotels in locations that generate room revenue from diverse demand sources,” said Fisher. “For years, we have touted the benefits of a portfolio such as ours through all phases of a lodging cycle, and our performance certainly proves that. We believed we would reach cash flow breakeven sooner than most other lodging REITs, and with April RevPAR of $75, we expect that we will be positive cash flow after debt service for the month which is incredible news to deliver to our shareholders.

“Chatham will emerge from the pandemic healthier than many of our lodging REIT peers who have burned significant amounts of cash and equity value, and we will be better positioned to be acquisitive and grow FFO in addition to the FFO that will be added with the opening of our Los Angeles development,” Fisher concluded.

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