Though the busines models are not a direct comparison, Extended
Stay America's second quarter year-over-year performance decline was less
drastic than for those reported by traditional hotel companies this earnings
season, where some quarterly revenue per available room declines landed in the
80 percent to 89 percent range, and occupancies as of June 30 were still below
the 25 percent level.
ESA's second quarter comparable year-over-year system-wide
revenue per available room declined 28.7 percent to $38.38, driven by an 18.3
percent decline in average daily rate and a 10.1 percentage point decrease in
occupancy to 69.6 percent. After bottoming in mid-April, RevPAR increased each
week for the remainder of the quarter, with declines of 34.7 percent for April,
28.2 percent for May, and 23.9 percent for June.
Net loss for the three months ended June 30 was $8.8 million
compared with a net income of $59.7 million for the same period in 2019.
"Not only did we keep every hotel in the system open
for business, we've grown occupancy across the system each week since April,"
said ESA CEO Bruce Haase during a Tuesday earnings call. "We're now
generating positive cashflow. Our ability to avoid management furloughs at
headquarters and across the country was unparalleled for the industry today."
Haase added that ESA also outperformed other mid-priced
extended-stay brands, which had "RevPAR declines of roughly 50
percent," he said. He credits the company's performance with its teams
being able to "pivot quickly to find new sources of extended-stay demand
such as warehouses and logistics, temporary medical and construction,"
when demand drivers such as transient leisure "essentially disappeared
during the quarter."
He further noted that "the folks that are staying at
our hotels for business are not people that have the option to be on Zoom calls
like the rest of us do. They have to be there physically to do their job. And I
think that's what distinguishes our business travel from most other business
travel in the lodging industry. They have to be on location."
ESA also has introduced a new program called Stay Smart,
where the company is renting out the use of its hotels and internet for the day
or for the week "for folks that need to get out of their house and have a
quiet place to work," Haase said. "We will see if it works, but I
think that is a good indication of how our sales and revenue management find
opportunities."
Previewing third quarter results, Haase said that occupancy
levels were now operating at about 81 percent in August, and that 17 of the top
50 markets were showing either positive RevPAR results or declines of less than
5 percent. In addition, "more hotels are operating above 90 percent
occupancy than below 70 percent," he said. ESA CFO Brian Nicholson added
that RevPAR was down about 20 percent in July and 18 percent so far in August.
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