May down 12,570 bps y/y on -92.9% Total RevPAR
Op. ex & other costs materially reduced in May but hotels still deep in the red
What's Incremental To Our View
Based on “big data” observations from higher-rated U.S. hotels (data source: HotStats): May: -12,570 bps of GOP margin growth on -92.9% Total RevPAR (Rooms RevPAR + outside-of-the-room spend). By comparison, April was down 22,290 bps y/y on -95.0%.Total RevPAR May results were materially better than April (as expected) given tremendous cost-cutting measures were enacted and many hotels closed.
Forecasting 2Q20 EBITDA (and pretty much any future period) for the REITS remains challenging. We estimate y/y EBITDA margins for Upper Upscale/Luxury hotels that remained open throughout 2Q to be -8,000 to -12,500 bps. As a measure of relativity, historically our estimated ranges have been approx. 100bps. REIT margins may actually be worse given closed hotels and corp G&A costs. By comparison our ests for 2Q20 for the most part are at the lower-end or below this range as we attempt to factor-in the impact of closed hotels.