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Jun 30, 2020
Sunstone Q2 2020 Earnings Report
Sunstone's results were significantly impacted by the COVID-19 pandemic, with a large portion of the portfolio remaining closed and revenues substantially declining.
Key Takeaways
Sunstone Hotel Investors reported a challenging second quarter due to the COVID-19 pandemic, with revenues significantly down, but the company is gradually resuming operations at its hotels and has a strong liquidity position.
Second-quarter revenues decreased significantly due to hotel closures and limited operations.
The company is in the process of resuming operations at many of its hotels, with occupancy trends showing encouragement.
The estimated cash burn rate has been reduced and is expected to continue to decline as hotels resume operations.
Low leverage and a strong cash position provide protection and allow for potential strategic opportunities.
Sunstone
Sunstone
Sunstone Revenue by Geographic Location
Revenue by Geographic Location
Total Portfolio Revenue
CapyFin.com Forward Guidance
Sunstone anticipates gradually resuming operations at additional hotels, with expectations of further reducing the monthly cash burn rate. Group business is unlikely to return in a meaningful way until a vaccine and or reliable therapeutics are developed, which we remain hopeful will be the case by the end of the year.
Positive Outlook
- The company expects to open additional hotels in August and September.
- Hotels that remain open or have resumed operations have witnessed encouraging occupancy trends.
- Continued expense controls are expected to further reduce the monthly cash burn rate.
- Significant cash on hand provides stability and allows for potential attractive investments.
- The company believes the worst is behind them.
Challenges Ahead
- Group cancelations for the fourth quarter have increased
- One or more hotels may not resume operations until later this year due to ongoing government travel restrictions and quarantine rules
- Ill-conceived cleaning mandates brought on by various city councils across the country that not only increase operating costs and therefore delay the resumption of operations, but more importantly increase health risk to both hotel associates and guests alike
- Group business is unlikely to return in scale until there is a greater comfort in traveling and congregating.
- The economic impact of the pandemic poses ongoing challenges to the hotel industry.