With the economy segment outperforming the rest of the industry throughout the pandemic, RLH Corporation CEO John Russell is confident his brands will be the first to recover from the COVID-19 crisis.
DENVER—The entire industry has been dealt double-digit revenue-per-available-room declines because of the pandemic, but RLH Corporation officials said they believe the company’s brands are positioned to be one of the first to recover.
On a call with analysts to discuss second-quarter earnings results, CEO John Russell said that while RLHC still saw revenue declines during the quarter, the company outperformed the competition.
“STR data indicates that our RevPAR exceeded U.S. RevPAR for the second quarter,” he said. “U.S. RevPAR was down 69.9% while our hotels posted 51.8% RevPAR decline.”
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Russell added that performance was driven by the company’s economy hotels, and most hotels in the portfolio are receiving business from frontline workers and drive-to leisure travelers.
RLHC’s economy hotels reported a 28.5% RevPAR decline while the overall industry recorded a 35% decrease in RevPAR for economy hotels, he said.
“Given our predominantly drive-to locations in secondary and tertiary cities, this performance, albeit early, is both encouraging and in line with our expectations,” he said. “In fact, in July we saw a continuation of these positive trends with occupancy at 47.6% for our brands overall.”
Russell added that RLHC’s economy brands saw occupancy at 57.3% in July and midscale saw 45.2%.
RLHC signed 22 franchise agreements during the quarter and three were for new locations, Russell said.
“We see this (pace) as solid given the headwinds we faced in the second quarter related to COVID, including limitations on travel to meet with prospects and heightened underwriting standards for lodging, making it difficult for new franchisees to access capital,” he said.
While the company was restricted from entering contracts for the 47 out of the 90 days during the quarter, Russell said the company signed 92 total franchise agreements with 19 in new locations on the first day of the year.
“This pace of signings, including many early relicenses for longer-term contracts, reflects the value that our franchisees see in our brand, and even more exciting when considering the headwinds we faced,” he said. “We are encouraged by the progress we're making in spite of the challenges posed by the health crises. We look forward to when cases are consistently falling, the economy is fully reopen and travelers can resume their plans.”
As of press time, RLHC’s stock was trading at $2.49 a share, down 31.4% year to date. The New York Stock Exchange Composite was down 9.2% for the same time period.
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