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Dec 31, 2020
Sunstone Q4 2020 Earnings Report
Sunstone navigated the pandemic and executed transactions that increased portfolio quality and reduced debt.
Key Takeaways
Sunstone Hotel Investors faced significant challenges in 2020 due to the pandemic, but managed to navigate the crisis by selling hotels, reducing debt, and focusing on long-term growth. The company saw a recovery in demand, including leisure, commercial, and group, and anticipates a return to profitability in late Q2 or early Q3 2021.
Sunstone sold two hotels, the Renaissance Baltimore and the Renaissance LAX, for combined gross proceeds of nearly $172 million.
The company reached a resolution with the lender of the mortgage on the Hilton Times Square, resulting in an assignment in lieu.
Sunstone invested $51 million into its hotel portfolio, including the complete repositioning and renovation of the Bidwell Portland.
Comparable portfolio revenues were $32 million and RevPAR was $25.36, representing declines of 86% and 87%, respectively, compared to Q4 2019.
Forward Guidance
Sunstone anticipates improved performance in the second half of 2021, with a focus on vaccine distribution, easing restrictions, and the return of group travel.
Positive Outlook
- Net transient reservations have rapidly improved since vaccine distribution began.
- Weekly forward bookings are at the highest levels since the first week of March 2020.
- Oceans Edge has seen a significant increase in transient bookings that span over a three-month period.
- Wailea has 13% more transient rooms on the books for the second half of the year compared to the same time in 2019.
- Group lead volume was up 130% in January over December.
Challenges Ahead
- Cancellations in the first quarter of 2021 are trending in line with that of the fourth quarter of last year.
- Group cancellations have increased over the last 90 days.
- The rate of acceleration will depend on the success of vaccine distribution.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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