- American Hotel Income Properties REIT LP (TSX:HOT.UN) is making further cost reductions, as the COVID-19 pandemic worsens
- The company is suspending its monthly distributions in April, with no known restart date announced
- Furthermore, American Hotels is deferring all capital expenditure program to 2021
- However, the company’s 79 hotels remain open, albeit with reduced occupancy rates
- American Hotel Income Properties REIT LP (HOT.UN) is down 2.5 per cent, with shares trading at C$1.56 and a market cap of $122.7 million
American Hotel Income Properties REIT LP (TSX:HOT.UN) is aggressively cutting costs, amid the industry’s upheaval by the COVID-19 pandemic.
Most notably, the company is suspending its monthly distributions after April, with no known restart date announced.
At its hotels, the company is significantly reducing staff at its operations, as well as modifying food and beverage services.
Furthermore, American Hotels is deferring all capital expenditure program to 2021. The company hopes by next year the impact of the pandemic with have abated and the market will be more stable.
Despite the measures, the company was quick to point out that all 79 of its America-based hotels remain open and operating.
However, the company has noticed a dramatic decrease in bookings and occupancy, caused by government travel restrictions and general public unease.
John O’Neill, CEO, stated the company will continue to manage assets, as market volatility and the unpredictable nature of the crisis unfold.
“We have worked closely with our hotel manager to proactively respond to changing business levels by aggressively reducing operating expenses,
“We believe this is a sensible and prudent decision to preserve liquidity during this ongoing period of disruption,” he said.
Last week the company stated that its regional hotels would be less affected by travel bans than other hotel chains in larger hub cities. However, as government mandated self-isolation becomes more prevalent, even hotels in these more rural locations are feeling the pinch.
In that same release, the company had previously reduced the monthly dividend by around 30 per cent in response to the COVID-19 crisis. Now cancelling it entirely, only a week later, displays just how unpredictable the tourism and hospitality industry has become in recent months.
American Hotel Income Properties REIT LP (HOT.UN) is down 2.5 per cent, with shares trading for C$1.56 at 12.51pm EST.