The COVID-19 pandemic has been a huge blow to the hotel industry, affecting every performance metric—from ADR to RevPAR to occupancy. It has also changed the role of asset managers, making them more important than ever.
To see just how much it has impacted them, Hotel Business spoke with Larry Trabulsi, cham, president of the Hotel Asset Managers Association (HAMA) and EVP at CHMWarnick.
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“The hotel business has always been cyclic and, unfortunately, this impact has been—pick your metric—three times, four times worse than the last one,” said Trabulsi. “We have never seen this type of impact in the lodging industry. What is interesting is you think back to a year ago, and the expectation was for 2020 to be sluggish with 0-1% RevPAR growth coming off roughly 10 years of unprecedented RevPAR growth. The party was coming to an end, but nowhere near where we would end up the year.”
The pandemic has caused the role of hotel asset managers to shift. The first major change, according to Trabulsi, is that they are dealing with a lot more stakeholders—and more often. “Your lenders who may have been in the background just getting paid and being happy about it are more at the table now,” he said. “They may not be getting paid, or there are discussions about repayment plans. Other investors or investor pools that may have been more passive in the past are more at the table now as well… An ownership group that you might have been talking to twice a month, now you are talking to them three or four times a week.”
With the drop in occupancy and all related hotel performance indices, for asset managers, the bottom line has been critical, and analytics have been more important. “We all have a much better sense now of our true cashflow burn,” said Trabulsi. “When we were flush with cash, it was just as simple as ‘How much are you going to send me and how does that compare?’ Now, we are looking at cashflow schedules on a daily and a weekly basis. We have never been more in-tune with cash cycles for our hotels and cash needs. That has taken a lot more time, and that has taken a lot more forecasts and cashflow forecasts, as well. I think we have all come to realize that EBITDA and cashflow are not necessarily the same thing. They are spending time to understand those key measures.”
