Pebblebrook Hotel Trust (NYSE:PEB) Q2 2020 Earnings Conference Call - Final Transcript
Jul 31, 2020 • 09:00 am ET
Greetings, and welcome to the Pebblebrook Hotel Trust Second Quarter Earnings Call. [Operator Instructions] [Operator Instructions]
It is now my pleasure to introduce your host, Raymond Martz, Chief Financial Officer. Thank you. Please go ahead.
Raymond D. Martz
Thank you, Donna, and good morning, everyone. Welcome to our second quarter 2020 earnings call and webcast. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer. But before we start, a quick reminder that many of our comments today are considered forward-looking statements under federal securities laws. And these statements are subject to numerous risks and uncertainties, as described in our 10-K for 2019 and our other SEC filings.
And future results could differ materially from those implied by our comments today. Forward-looking statements that we make today are effective only as of today, July 31, 2020, and we undertake no duty to update them later. You can find our SEC reports and our earnings release, which contain reconciliations of the non-GAAP financial measures we use, on our website at pebblebrookhotels.com. So the second quarter was clearly the most challenging in the history of the hotel business due to the pandemic and the government restrictions put in place to try to slow the spread of the virus and protect the health of the general public.
On a positive note, hotel and travel demand clearly bottomed in mid-April and slowly and consistently improved during the second quarter. The demand is primarily from leisure, with a smattering of business travel beginning to appear. Fortunately, due to the recent growth and the spread of the virus and the rollback of some of the state and city reopenings, the gradual recovery in travel and hotel occupancies seem to have flattened out over the last few weeks. Though we have continued to see some week-to-week improvements within our portfolio as newly opened hotels ramp up their share of market demand.
We now have 24 hotels open, marking a significant increase from the end of March when we had just eight hotels open. We expect to open another five hotels in August, assuming we don't experience any further setbacks from cities reversing their reopening phases. As a result of these hotel reopenings and improving leisure travel demand, our monthly hotel cash burn for May and June averaged about $10.5 million, which is $6 million better at the midpoint than the $15 million to $18 million average monthly cash hotel burn that we estimated during the first quarter call, which represented our worst-case scenario and assumed all of our hotels were closed.
Our combined hotel and corporate level average monthly cash burn for May and June was $22.5 million, which includes all interest and dividend payments. This is down $5 million at the midpoint from our $25 million to $30 million monthly average cash burn we estimated on our first quarter call. Based on the 24 hotels that are currently open, we estimate our hotel cash burn for July to be $9 million to $12 million and our combined total