VANCOUVER — American Hotel Income Properties REIT LP (AHIP) provided a business update last week regarding the continually evolving COVID-19 situation and government-initiated measures.
“These continue to be unprecedented circumstances and like all businesses, we’re actively navigating the resulting challenges,” says John O’Neill, CEO. “After evaluating the market viability of certain properties during this pandemic, we’ve made the decision to temporarily suspend guest operations at four hotels, and consolidate operations at 15 properties with other adjacent AHIP hotels. In conjunction with our hotel manager, we’ve also significantly reduced staffing levels to preserve cash flow. To date, more than 1,600 hotel staff have been laid off or furloughed, which represents 65 per cent of our total hotel workforce. These decisions are always difficult, but we’ve ensured key roles remain in order to maintain the properties and be well positioned for a rapid recovery when regular travel patterns resume.”
Currently, 60 of AHIP’s 79 hotels (76 per cent) are open for business, generating revenue and serving guests in compliance with government health guidelines. While these properties will remain staffed with minimal employees to ensure their maintenance and security, they will not be accepting guest reservations for at least the next 30 days.
AHIP says occupancy levels at the 60 hotels that continue to operate have stabilized at reduced levels and are primarily benefiting from lodging contracts from government, military, medical and logistical sector organizations. Its 24 extended-stay properties continue to operate at higher occupancy levels than other properties in the portfolio.
AHIP’s hotel manager is working to effectively cater to these changing occupancy levels by sharing staff resources among several AHIP properties, wherever possible, and reducing staffing levels where appropriate.
As a result of the current economic environment, AHIP has also reduced its corporate staffing levels by approximately 27 per cent and all senior management has taken an immediate 15-per-cent salary reduction for the remainder of 2020. O’Neill has agreed to an immediate 50-per-cent salary reduction for the remainder of 2020 and will continue to receive all of his compensation in units (equity). In addition, AHIP’s Board of Directors has agreed to receive 100 per cent of its 2020 retainer fees in units, rather than cash. Collectively, these actions will reduce 2020 corporate cash expenses by approximately CAD$1.5 million.