Pebblebrook (PEB) Provides Insights on Q3 Operating Trends
Pebblebrook Hotel Trust PEB continues to reopen its hotel properties as severe lockdown policies are gradually being given relaxations. The company has resumed operations at an additional urban hotel since Aug 17, bringing the total number of open hotels and resorts to 35. These open properties represent around 71% of its 2019 hotel EBITDA.
Markedly, with a modest increase in business travel and a marginal decline in leisure travel, hotel demand has been relatively stable in September. With this, the company’s 35 open hotels are 39% occupied, in the month-to-date period.
Moreover, the company had 23 hotels open in July that were 28.4% occupied. These open hotels generated $19.7 million of total hotel revenues and $71.53 of RevPAR.
Through subsequent re-openings, the number of hotels in operations was increased to 34 properties in August. These properties were 30.4% occupied during the month, which enabled the company to generate total hotel revenues of $25.8 million.
Additionally, Pebblebrook’s 31 independent/small branded hotels performed better than major branded hotels in August.
Further, the company noted that the monthly hotel and corporate cash burn was $6-$9 million and $17-$22, respectively. These indicate a reduction of $3 million and $2 million from the mid-August mid-point projection.
While the rebound in hotel business is encouraging, the operating levels remained significantly below the pre-pandemic levels. The July and August occupancies, in fact, underline a year-over-year decline of 68.1% and 65.3%, respectively.
Moreover, the RevPAR growth rates are dismal. In fact, the July RevPAR of $71.53 reflects a year-over-year slump of 70.4%, while the August RevPAR of $65.36 marks a plunge of 71.4%, during the same time period.
Shares of this Zacks Rank #4 (Sell) company have depreciated 55.3% over the past year, which is wider than the industry’s decline of 9.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the COVID-19 outbreak-related restrictions on travel and the social-distancing mandates undertaken to contain its spread resulted in the suspension of hotel operations across the United States. There has been a significant plunge in leisure and business travels, and reduction in event bookings, which are typically demand drivers, which continue to dampen the hotel industry fundamentals significantly.
Hotel REITs like Host Hotels & Resorts, Inc. HST, Xenia Hotels & Resorts, Inc. XHR and Park Hotels & Resorts Inc. PK are resuming operations at their properties with adherence to high levels of cleanliness and sanitation. Such urgent strategic adjustments will go a long way in encouraging patrons who might be unwilling to leave their homes.
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Host Hotels Resorts, Inc. (HST) : Free Stock Analysis Report
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