SINGAPORE (THE BUSINESS TIMES) - In response to the acceleration of the coronavirus pandemic, ARA US Hospitality Trust (ARA H-Trust) has turned to a series of measures including the temporary closures of about two-thirds of its hotels in the United States with low occupancies, slashing its workforce and pay cuts for senior managers.
The stapled group shut 15 hotels during the last week of March as well as 13 other hotels in the first week of April, its managers said on Thursday night (April 16) in an investor update.
ARA H-Trust's portfolio comprises 41 upscale select-service hotels with a total of 5,340 rooms across 22 states in the US, according to its latest annual report filed on April 13.
Meanwhile, the trust has also "consolidated operations" at three hotels to other owned assets in the market, the managers said on Thursday.
They added that they have developed a recovery analysis tool to monitor key market indicators to establish re-opening dates for the hotels.
As for property management, "comprehensive" cost-cutting measures in this area include slashing the workforce by 70 per cent and a "drastic" reduction in working hours for the remaining staff.
All contract labour in property management will also be eliminated, all senior managers' salaries are lowered by 20 per cent and managers are required to cover four shifts per week within 50 hours per week over six days.
ARA H-Trust has shut down courtesy shuttles, fitness centres and pools. Accounts payable will be extended to 90 days.
In terms of asset management, the cost-cutting measures include a review of all services contracts and a reduction in services or schedules.
Property managers and franchisors are also providing fee concessions and waivers.
The trust's managers have also required deferrals and waivers for ground rent and tax payment.
All property improvement plans, asset enhancement initiatives and other non-essential capital expenditures will be deferred for a year.
These moves come amid the plunge in hotel demand and a halt to travel, following the surge in Covid-19 cases in the US and more drastic restrictions by the authorities.
ARA H-Trust's portfolio performance dived in March 2020, in line with the overall US market trend, the trust managers said.
Occupancy shrank to 39.6 per cent last month, compared to 66.5 per cent in February and 60.1 per cent in January. Revenue per available room fell to US$46, versus US$78 in February and US$68 in January.
"We expect market conditions and performance to worsen before getting better in the coming months," the trust managers said on Thursday.
The managers first announced in March that they had initiated cost controls by cutting labour cost hours and staffing, shutting certain facilities and amenities and reviewing all operating contracts.
Stapled securities of ARA H-Trust were flat at US$0.46 as at 10.07am on Friday.
The US has reported 670,353 confirmed coronavirus cases - the highest number in the world - with 11,477 deaths in the hardest hit New York City.
