Executives from Peachtree Hotel Group said they started feeling the impact of the coronavirus pandemic in early March, and started adjusting then to prepare for a low-occupancy environment.
ATLANTA—As Peachtree Hotel Group shifts strategies across its various investment vehicles as a result of the COVID-19 pandemic, executives said the biggest takeaway has been the resiliency of leaders at every level.
“From ownership down to the GMs of properties, their abilities to think strategically to reduce our costs, to (take) care of our assets and (try) to stop the losses we’re feeling across our industry” is remarkable, said Patrick Short, Peachtree’s VP of operations.
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Brian Waldman, EVP of investments for Peachtree, said the company buys, develops, finances and operates hotels, and the impact of and response to the pandemic “depends on what part of our strategy we’re talking about,” he said.
“On the owned portfolio … obviously we’ve been impacted just like everyone else in terms of overall performance drop-off, and we’ve put measures in place to reduce costs and get through this point in the cycle,” he said.
On the investment side, Waldman said Peachtree is “having conversations with all of our lenders” and working directly with borrowers to provide relief, as well as with participant lenders to restructure and modify loans.
The company is least impacted from a financing perspective, but is seeing some delays in construction, Waldman added.
“From a boots-on-the-ground perspective, depending where the hotel is and what the jurisdiction is … we’re seeing stop-work orders. … Government offices are shut down, we often can’t get the inspectors out to do the things we need to do, (and) that’s impacted the construction process,” he said. “That will likely end up slowing down some construction projects that are underway.”
Peachtree is looking closely at the performance of assets the company owns or is the lender for, he said. The company is also paying attention to two programs that could aid its hotels—emergency assistance from the Food and Drug Administration and the CARES Act.
“The positive is that the programs are there and they're available,” he said. “Our caution or concern at this point is all of those programs are already overwhelmed, and there’s a huge backlog. The question is going to be how quickly we can process through to actually get cash to our assets.”
Managing through the pandemic
As U.S. hotel occupancies hit 10% to 15% around 9 March, Peachtree started to make some changes, Short said.
“Almost immediately, we had to go from a fully-staffed hotel to right-size the operation in order to manage sometimes single-digit occupancy,” he said.
“Doing that takes a lot of hard work from the GMs of each individual property and the managers. We've really come to a point that we almost are running hotels just with a few individuals on the property, which puts a lot of pressure on human resources because of the amount of people getting furloughed or reductions of hours and the amount of paperwork that goes into them applying for unemployment and supporting them through that.”
Other cost-cutting measures have also been put into place at the property level, which include reducing the number of vendors coming on property on a weekly basis and freezing spending, payroll increases and hiring, Short said.
Peachtree also enacted pay reductions and layoffs on the management side, but “we really focused on keeping our core group together … to support the properties because they’re being run very lean with just a couple people on property,” he said.
“We’re also looking and dialing every day for business to come out of this, so our goal is to be set up to be successful when all this kind of gets back to normal. If we cut our entire above-property team, we would not be able to do that,” he said.