RLJ Lodging Trust announced that, in addition to the significant efforts underway to protect the health and safety of guests and employees, the Company is taking aggressive steps to mitigate the ongoing operational and financial impacts on its hotels from the COVID-19 pandemic.
“Over the past several weeks, the impact of the COVID-19 pandemic on the global economy, the United States and the local communities where our hotels are located, has accelerated. Our hearts are with those employees and people who have been directly impacted by this unprecedented event,” commented Leslie D. Hale, President and Chief Executive Officer. “We are taking necessary and proactive measures on multiple fronts to address the disruption from this crisis. These measures include temporarily suspending operations in many of our markets and further strengthening our balance sheet and liquidity to position us to navigate through these uncertain times.”
Some of the operational measures that the Company has taken to date include:
- Suspension of Hotel Operations: The Company, along with its operators, has temporarily suspended operations at over 50% of its hotels and will continue to evaluate the suspension of operations at its remaining hotels over the next several weeks. The decision to suspend operations was made in response to the elimination of hotel demand, resulting from COVID-19 and the related government and health official mandates in many markets, which are in the best interest of the communities served by RLJ’s properties and employees.
- Cost Containment Initiatives: The Company’s asset managers are working closely with its hotel management partners to materially reduce operating expenses and preserve liquidity by putting stringent operational cost containment measures in place. These measures include significantly reduced staffing, elimination of non-essential amenities & services and the closure of several floors and all food & beverage outlets at properties that remain open.
- Capital Investment Reduction: The Company expects to reduce its 2020 capital expenditure program by over 80% by deferring all capital investments, other than completing projects that are substantially underway and are nearing completion. Near-term, the Company will take appropriate steps to protect and preserve its properties and re-evaluate its 2020 capital plan at a time when there is improved economic clarity.
- ROI Project Suspensions: The Company reviewed all 2020 ROI initiatives and is suspending 90% of these projects.
At the corporate level, the Company is also taking aggressive actions to increase liquidity and preserve cash.
- Common Stock Dividend Reduction: The Company’s Board of Trustees recently authorized the reduction in the first quarter common cash dividend to $0.01 per common share. The Company’s Board of Trustees will continue to monitor the Company’s financial performance and economic outlook to assess when it is appropriate to resume a regular quarterly common dividend, at a level determined to be prudent based on the economic outlook, or declare and pay any dividend required to be made for 2020 at the end of the year.
- Increased Liquidity to $1.2 Billion in Corporate Cash: Out of an abundance of caution the Company took the proactive step to further enhance its liquidity position by drawing $400 million under its $600 million corporate line of credit, adding to its existing cash balance of approximately $800 million. By preemptively drawing this capital, the Company has ensured that it maintains significant liquidity to meet its obligations over an extended period of time. The Company has no scheduled debt maturities until 2022.
The Company, in conjunction with its third party management partners will continue to evaluate additional measures that may be necessary to address the effects of the ongoing disruption in the broader economy and the lodging industry from COVID-19.