CorePoint Lodging has experienced some delays in selling off its noncore assets, but CorePoint President and CEO Keith Cline said they will continue selling these assets amid the current crisis.
IRVING, Texas—CorePoint Lodging has seen delays with its program selling off noncore assets due to the COVID-19 pandemic, but President and CEO Keith Cline said the company still sold 23 during the first quarter and plans to sell more in the near term.
On the company’s first-quarter earnings call, Cline said the 23 noncore hotels sold for $100 million during the quarter and three more sold after the quarter ended for $13 million.
Uncertainty in the industry surrounding the pandemic led to drastic drops in performance in April, which put disposition sales at a complete standstill during the month, he said. The three deals that closed were in the works before the virus hit and were completed in May.
Occupancy picking up
While April was a tough month for the industry, occupancy levels started to pick up in May as some travel restrictions were lifted across the United States.
As of 9 April, CorePoint had 26 hotels in its portfolio not accepting transient reservations, adding that at its peak, the company had 30, he said.
“With improving demand, we're reducing that number as more hotels begin accepting transient guests and reservations. To date, 10 of the 30 hotels are reopened to transient guests and we are currently expecting the remaining 20 hotels to resume accepting all reservations over the next several weeks,” he said.
Occupancy levels for the first half of May reached approximately 35% with hotels accepting transient reservations seeing occupancy levels close to 38%, CFO Dan Swanstrom said.
“We believe our portfolio of select-service hotels predominantly focused on the midscale segment is well-positioned to capture incremental room demand coming back online, in particular as it relates to leisure travel and the associated demand for many of our drive-to destinations hotels,” he added.
Revenue per available room decreased 22.8% in year-over-year comparisons, according to CorePoint’s earnings release. This was driven by a 5.5% decrease in average daily rate and a decrease in occupancy of 1,210 basis points.
According to the release, “The decline in occupancy was primarily driven by a significant reduction in hotel demand in March 2020 resulting from the impact of COVID-19. Top performing markets included Fort Myers, Florida; Tucson, Arizona; Fort Lauderdale, Florida; and Miami, Florida.”
As of press time, CorePoint’s stock was trading at $4.14 per share, down 61.2% year to date. The Baird/STR Hotel Stock Index was down 37.5% for the same period.