3/19/2020 Hotel Owners Are About to Blow Through Cash on V irus T ravel Cuts – Bloomber g https://www .bloomber… [617211]

3/19/2020 Hotel Owners Are About to Blow Through Cash on V irus T ravel Cuts – Bloomber g
https://www .bloomber g.com/news/articles/2020-03-16/hotel-owners-are-about-to-blow-through-cash-on-virus-travel-cuts 1/3Markets
By Patrick Clark and Noah Buhayar
March 16, 2020, 2:15 PM EDTHotel Owners Are About to Blow Through Cash
on Virus Travel Cuts
Som e Seattle hotels saw occupancy rates fall below 10% last week, even before fresh guidance
against public gatherings from the federal government presented a new challenge to the U.S.
hospitality industry.
The data from the Downtown Seattle Association shows how bad things could get for hotel
owners in cities where cases of the novel coronavirus were slower to arrive.
Travel restrictions and restaurant closures aimed at stopping the spread of the virus, along with a
looming recession are all bad news for the hospitality industry, and even well-capitalized owners
are going to blow through cash reserves quickly, Jonathan Falik, chief executive officer of JF
Capital Advisors, said in an interview.Even well-capitalized companies face a potential cash crunch
Seattle occupancy plunge may be a harbinger for the industry

3/19/2020 Hotel Owners Are About to Blow Through Cash on V irus T ravel Cuts – Bloomber g
https://www .bloomber g.com/news/articles/2020-03-16/hotel-owners-are-about-to-blow-through-cash-on-virus-travel-cuts 2/3In this articleMore highly levered companies are at greater risk. Among publicly listed hotel owners with the
highest debt to earnings before interest, tax, depreciation and amortization ratios are Ashford
Hospitality Trust Inc., Braemar Hotels & Resorts Inc. and Hersha Hospitality Trust, according to
Falik’s research.
Companies with the lowest debt-to-ebitda ratios include Sunstone Hotel Investors Inc. and Host
Hotels & Resorts Inc.
Owners can respond to cratering occupancies by shuttering properties and laying off staff, but
debt service, property taxes, and basic building maintenance will eat through capital. Many
lenders won’t want to take over a hotel in the middle of a demand shock, so owners may be able
to modify loans.
Real estate investors are sitting on dry powder that could be used to buy distressed hotels, but
“it’s a little early for that because no one knows what the government response will be,” Falik
said.
A Bloomberg index of hotel owners was down 22% as of 2:11 p.m. New York time. Ashford
Hospitality Trust fell 30%, one of the worst performances in the index.
Washington State moved swiftly to constrain public gatherings as it fights one of the worst
outbreaks of coronavirus in the country. Governor Jay Inslee banned gatherings larger of 250
people last week and has since further ratcheted down the number to 50.Are we headed for a recession?
Get updates from Bloomberg's recession tracker delivered to your inbox.
SIGN UP ▶