- AHIP announces that it has undertaken significant steps to mitigate the operational and financial impacts of the COVID-19 pandemic
- 60 of AHIP's 79 hotels are currently open for business, generating revenue and serving guests in compliance with government health guidelines
- Occupancy rates stabilizing at reduced levels, with extended stay properties remaining the best performing
- Hotel staffing levels reduced by 65%; will save more than
$40 million in annualized operating cost savings - Senior management compensation reduced alongside corporate office staff reductions
- Previously announced
March 2020 distribution payment will be deferred
All financial figures are presented in US dollars, unless otherwise noted.
"These continue to be unprecedented circumstances, and like all businesses, we are actively navigating the resulting challenges," said
"We continue working to ensure we have sufficient liquidity to meet the challenges this pandemic has presented. Our 60 hotels that remain open for business – and are often catering to government, military, medical and logistics sector guests – are contributing to our revenue and are, in aggregate, providing positive cash flow to support our overall business during this period of uncertainty."
60 of AHIP's 79 hotels (76%) are currently open for business, generating revenue and serving guests in compliance with government health guidelines. Business levels at these properties continue to positively contribute, in aggregate, to AHIP's cash flow. The Company has made the decision to temporarily suspend guest operations at four properties and consolidate operations from 15 hotels into other adjacent AHIP hotels, due to reduced occupancy levels in those regions and to gain operating efficiencies. While these properties will remain staffed with minimal employees to ensure their maintenance and security, they will not be accepting guest reservations for at least the next 30 days. These hotels are well equipped to reopen quickly when regular travel patterns resume.
Occupancy levels at the 60 hotels that continue to operate have stabilized at reduced levels and are primarily benefiting from lodging contracts from government, military, medical and logistical sector organizations. AHIP is continually evaluating each property to ensure the most efficient use of resources. The Company's 24 extended stay hotel properties continue to operate at higher occupancy levels than other properties in the portfolio.
AHIP's hotel manager is working diligently to effectively cater to these changing occupancy levels by sharing staff resources among several AHIP properties, wherever possible, and reducing staffing levels where appropriate. To date, the total hotel employee count across AHIP's 79 hotels has been reduced by 65% – from approximately 2,500 employees to approximately 875, which will generate more than
AHIP's hotel brand partners – primarily Marriott, Hilton, and IHG – have been accommodating in these circumstances by adjusting brand standards to meet current business levels, while still maintaining positive guest experiences. In addition, franchisors have deferred capital projects into 2021 and have approved the use of capital reserves to fund operating expenses. This, together with the potential temporary elimination of FF&E reserve funding, is expected to enhance AHIP's liquidity during the coming weeks.
Corporate Initiatives:
As a result of the current economic environment, AHIP has also reduced its corporate staffing levels by approximately 27% and all senior management has taken an immediate 15% salary reduction for the remainder of 2020.
Cash Conservation:
AHIP is taking all prudent measures necessary to reduce its expenses and conserve cash during this period of economic uncertainty. More than
$40.0 million of annualized cash flow savings from reduced hotel staffing levels$36.0 million of annualized cash flow savings from the suspension of distributions on AHIP's units$15.0 million of 2020 cash flow savings from deferred capital expenditures to future years$12.0 million of potential annualized cash flow savings if AHIP temporarily stops funding FF&E reservesCAD$1.5 million of annualized cash flow savings from reduced corporate staffing and salaries
AHIP has also already submitted formal applications for the Payroll Protection Program through the
In light of the recent reduction in business levels due to COVID-19 impacts and AHIP's strategic focus on cash conservation during this period of uncertainty, the Company will be deferring until a later date the payment of its
Insider Buying:
In the past three weeks, AHIP executives and board members have collectively purchased over 500,000 units through open market transactions, representing their belief in the long-term value of the Company. These insider purchases have been disclosed through regulatory filings.
FORWARD-LOOKING INFORMATION
Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws (also known as forward-looking statements). Forward-looking information involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information generally can be identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "feel", "intend", "may", "plan", "predict", "project", "subject to", "will", "would", and similar terms and phrases, including references to assumptions. Some of the specific forward-looking information in this news release include, but are not limited to, statements with respect to: the estimated cash savings from hotel staffing reductions, senior management compensation reductions, corporate office staff reductions, AHIP's board agreement to receive their 2020 retainer fees in units; suspension of distributions on AHIP's units, deferred capital expenditures, and potential temporary cessation of FF&E reserve funding; AHIP having ensured key roles remain in order to maintain its properties and position AHIP for rapid recovery when regular travel patterns resume; AHIP continuing to work to ensure it has sufficient liquidity; 60 of AHIP's hotels remaining open for business and continuing to positively contribute, in aggregate, to AHIP's cash flow; AHIP not accepting guest reservations for at least the next 30 days in respect of 19 of its hotels to gain operating efficiencies; such hotels being minimally staffed to ensure their maintenance and security, and AHIP's belief that such hotels are well equipped to reopen quickly when regular travel patterns resume; AHIP continually evaluating each property to ensure the most efficient use of resources; AHIP's 24 extended stay properties continuing to operate at higher occupancy levels than other properties in the portfolio; fee reductions for hotel management services from
Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: the COVID-19 pandemic will continue to negatively impact the
Forward-looking information is provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such information may not be appropriate for other purposes. Forward-looking information involves significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information. Those risks and uncertainties include, among other things, risks related to: the impacts of the COVID-19 pandemic on the
The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to AHIP. The forward-looking information is made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
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