Chatham Lodging Trust (CLDT) Q4 2020 Earnings Report, Transcript and Summary

Greetings, and welcome to Chatham Lodging Trust's Fourth Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Daly, owner of Daly Gray Inc. Thank you. You may begin.

Thank you, Doug. Good afternoon, everyone, and welcome to the Chatham Lodging Trust Fourth Quarter 2020 Results Conference Call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of February 24, 2021, unless otherwise noted, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. Now to provide you with some insight in Chatham's 2020 fourth quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer; Dennis Craven, Executive Vice President and Chief Operating Officer; and Jeremy Wegner, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff?

Thanks, Chris. Good afternoon, everyone. First and foremost, I want to thank you for your interest in Chatham, and we really sincerely appreciate your participation and interest during these unusual times. As I look back, this last year has required intense asset management and operating focus. I'm thankful for our platform and relationship with Island Hospitality as we are able to pivot very quickly. From a corporate perspective, we were laser-focused on how best to preserve long-term shareholder value and knew that we needed to maximize operating performance, reduce capital expenditures and G&A expense and preserve our strong balance sheet and enhance liquidity. We've certainly produced noteworthy operating performance during the pandemic. We've had the highest absolute RevPAR of all lodging REITs over the final three quarters of 2020, including companies who have reported their fourth quarter results. Pending others who have not yet reported, we continue to have the highest operating margins of all lodging REITs. Since our IPO, we've accumulated a portfolio that delivers on a relative basis, strong top line and bottom line results, no matter the cycle. We generated the second highest EBITDA per room of all lodging REITs in 2020. And lastly, and this is pretty incredible, through this unprecedented period, we were able to produce positive adjusted EBITDA for the full year. Our sales and revenue management teams have delivered outstanding results since the outset of the pandemic, as proven by our significant RevPAR index or market share gains. Since the beginning of April, our RevPAR index has jumped 15% to an average monthly index of 136 compared to our 2019 already strong RevPAR index of 118. The impressive gains are being driven by Island's outstanding direct sales efforts from its national, regional and local sales teams as well as concentrated revenue management efforts ensuring that we're quickly adjusting to the diverse demand sources in today's lodging environment. Additionally, and very importantly, we have the largest concentration of extended-stay rooms of all lodging REITs at 58%. And another impressive statistic during 2020, 80% of our hotel EBITDA was generated by our Residence Inn and Homewood Suites hotels, a significant increase over the percentage of rooms. Our upscale extended-stay hotels provide us the flexibility during periods of growth or weakness to diversify our customer base to maximize revenue, a thesis we believed and for almost four decades. And certainly, these results are a testament to our portfolio. Without sacrificing the upside, we can limit the downside. From an operating expense standpoint, we're hyper-focused on every expense. On the Island side, we have a team of analysts that are in day-to-day touch with every hotel GM and investing 100% of their time to help each hotel micro-manage its expenses. Every regional manager is looking at current expenses daily. Labor is, by far, our biggest expense. Even though occupancy and revenue has increased substantially off the April lows, our hotel employment has not increased materially. On March 1, we had almost 1,800 hotel level employees. At June 30, our hotel employee count was 776 and as of September 30, that count was 855 employees. At year-end, factoring in the sale of the Mission Valley Hotel, employment essentially remains unchanged. Again, a fantastic job by our team to hold employment steady despite improving trends and adding back certain guest amenities. As trends improve in 2021, this focus will need to be maintained to generate strong flow-through to the bottom line. In addition to hotel level expense management, at the corporate level, we've been very aggressive. We instituted corporate pay cuts across the board to all employees and unfortunately, had to reduce our headcount by 35%. In total, we have reduced salary costs by over 50%. Our corporate G&A expense was down approximately 20% year-over-year. Also, we significantly cut CapEx during 2020. Our 2020 budgeted CapEx was $23 million, and we were able to cut that expense to $14 million, a reduction of approximately 40%. Of the $14 million spend, $11.2 million of the spending was on two renovations that were ongoing when the pandemic hit. Additionally, we will be pushing up to drive that expense line lower. We got some wins in 2020, and property tax expense was down $1.2 million or over 6% at our 39 comparable hotels. Another strategic goal was to solidify our balance sheet as much as possible and enhanced liquidity. With plenty of capacity and debt markets wide open, we were using our credit facility to fund our Warner Center development. Given the potential liquidity crisis, it was important for us to obtain more permanent financing. We paused the development in the second quarter. Having already invested about $30 million into the project, we were able to fully fund the remaining costs with the construction loan. Additionally, we were able to amend our credit facility to gain full availability of the $250 million facility that allows us to make acquisitions if we see an opportunity. So on the liquidity front, although we are burning less cash than most of our peers and even though our liquidity runway was longer than most of our peers, we felt that if the opportunity presented itself, we would be open to selling an asset if the pricing was strong so that we could further enhance our liquidity with the ultimate outcome being to adding flexibility down the road, again, to be opportunistic on the growth side. Doing this ultimately adds shareholder value long term. This exact opportunity arose when we started talking with the San Diego Housing Commission and in the fourth quarter, we sold our 192-room Residence Inn Mission Valley to the San Diego Housing Commission for $67 million or almost $350,000 per key, a very attractive 6.5 cap rate on 2019 results. As we look back on lodging transactions in 2020, this sale stacks up as one of the best of all premium-branded sales in 2020. Last year was a difficult year across all fronts. But despite all that, I'm proud of our efforts and very appreciative of the sacrifices made by our employees across the country. Our teams at Chatham and Island have the experience to persevere through these situations and our achievements in a pretty dire year are noteworthy. We certainly believe we've made some important strides to protect shareholder value now and provide flexibility to add value down the road. I think we can all say we're looking forward to better days in 2021. From a lodging perspective, booking visibility remains days and maybe a couple of weeks ahead, not a month or months in advance. Leisure travel remains the best segment in the industry and weekends are the strongest days of the week. Through the first eight weeks of the year, Friday, Saturday occupancy is 51%, about 15% higher than the other five days of the week. Our ADRs are slightly higher on the weekend. President's Day weekend was particularly strong with occupancy of 60%. March trends seem to be picking up steam, again, led by leisure travel, and I will say we are seeing a small bit of business demand pick up in various markets. With the continued vaccine rollout and the continued decrease in hospitalizations and death rate, we do expect leisure travel will lead us out of the pandemic and expect that business travel will gradually come back as we make our way through the calendar year. Although we haven't been able to reach cash flow breakeven, we still estimate we need to achieve RevPAR of approximately $75 there. I firmly believe that given our portfolio attributes, our industry-leading platform with Island, our ability to appeal to the diverse customer base that our room type and hotel type allows, we believe we'll be able to grow occupancy and rates faster than most of our lodging REIT peers and return to 2019 levels much sooner. Our liquidity is strong, our balance sheet is strong, and we have no looming debt maturities. Our teams have an incredible amount of operating and corporate experience through good times and downtimes and we are enthusiastic about what lies ahead for Chatham and our investors. With that, I'd like to turn it over to Dennis.

Thanks, Jeff. Good afternoon, everybody. For the quarter, our RevPAR declined 60% to $47, down from our third quarter -- third quarter RevPAR of 58%, which benefited from more seasonal leisure travel. The downward shift was not surprising given the seasonality of the industry as well as the spike in COVID-19 in November and December. January RevPAR $47 was higher the November RevPAR of $45 and meaningfully higher than December RevPAR of $40. Importantly, February RevPAR through the 21st was $52, which would be the highest level since October, and again, sequentially higher at about 10% more than January RevPAR. The gains have been made in occupancy, with ADRs still in a tight range in the low $100 range. Among our top six markets, Los Angeles was our top-performing market in the fourth quarter with RevPAR of $79. Our Anaheim Hotel ran occupancy of 84% and in the fourth quarter due to a large nursing group and some corporate demand. Our Marina del Rey Hilton Garden Inn had the highest ADR in our portfolio in the quarter, with an ADR of $154, which was down 25% from 2019 levels. San Diego had our second highest RevPAR among the top six markets at $74. Our Residence Inn in Gaslamp had RevPAR of $78, on a pretty strong ADR of $143, which was only down 15% to last year. Continuing with strong performance among our top markets, our northeastern coastal market portfolio earned RevPAR of $63 on occupancy of about 50% and rates of approximately $130. Despite their geographic location in a little bit colder areas, these three hotels continue to benefit from the leisure traveler. In fact, our Hampton and Portland Maine had the second highest fourth quarter ADR in our portfolio at approximately $144. We are looking for a strong summer in all three of these markets. Since these are going to be open, we believe, knock on wood, for the entire summer after only being open for about half of the summer last year. Silicon Valley RevPAR was $46 on ADR of 105 and occupancy of 44%, which compares to the 2019 fourth quarter RevPAR of $158 on occupancy of 69%. 18 of our 39 hotels had fourth quarter occupancy over 50%, which compares to 21 hotels in the third quarter and 11 hotels in the second quarter. Some other standout performing hotels or markets, which were very similar to our third quarter outperformers, were our Fort Lauderdale Residence Inn, our two hotels in Charleston Summerville, South Carolina, and our Residence Inn in Holtsville and Mountain View, California. We continue to see an average length of stay much longer than historical levels for our portfolio, especially with respect to our two most significant brands, Residence Inn and Homewood Suites. At our Residence Inn hotels, average length of stay was 4.4 nights in the 2020 fourth quarter, which compares to 4.8 nights in the third quarter, 5.9 nights in the second quarter and 2.4 nights in the 2019 fourth quarter. For our Homewood Suites hotels, our average length of stay was 3.3 nights in the 2020 fourth quarter, which compares to 3.9 nights in the third quarter, five nights in the second quarter and 2.5 nights in the 2019 fourth quarter. Looking at our segmentation production, compared to last year, corporate revenue was off 56% versus a decline of 65% in the third quarter. Our retail production is off 60%, in line with the third quarter and governments off 54% compared to 46% in the third quarter. We saw a pretty good boost in our local negotiated segments as we scored some good wins in a handful of our Homewood Suites markets booking primarily government, nursing and prison staffing books of business. Lastly, our fourth quarter operating margins were 25% on RevPAR at $47, yet again proving how efficient our operating model remains despite the nasty overall lodging fundamentals and that we were able to adapt very quickly once seasonality kicked in, in November and December. For the second consecutive quarter and for the entire year, we were able to deliver positive adjusted EBITDA. Our margin success throughout the pandemic has been highly attributable to our ability to control all cost, but most importantly, that comes down to labor. Labor is by far, our biggest expense, comprising about 38% of our operating expenses and 29% of our revenue. Our labor costs per occupied room are down about 15% in the quarter. And when you look at our rooms department, our labor costs per occupied room were down approximately 30% to $13 a room compared to $18 per room last year. As we head into 2021, it is certainly critical for us to scrutinize our labor models and keep them under control when occupancy and rates start to jump. On past calls, we've stated our belief that the complementary food and beverage offerings will be changing for the industry due to health and safety protocols and customer desires, and those should benefit our bottom line. We are working closely with our brand leaders at Marriott and Hilton sharing our experiences and our visions for what that should look like. In the fourth quarter, our complementary food and beverage costs have come down 70% year-over-year. And interestingly, our evening hospitality costs were a grand total of $2,000 in the quarter. On the CapEx front, we spent approximately -- we spent less than $1 million in the fourth quarter on our 39 hotel portfolio and we invested $10 million in our Warner Center development. The Warner Center development is going according to plan from a timing and cost perspective, and we very much are looking forward to opening the hotel in the fourth quarter of this year. Looking ahead to 2021, our CapEx budget includes no renovations and total estimated spend of approximately $6 million, of which about half of that is for mechanical long-term investments and about $750,000 is for brand-required items primarily related to the new lock system at our Marriott-branded hotels. I think with that, I'll turn it over to Jeremy.

Thanks, Dennis. Good afternoon, everyone. Chatham's Q4 2020 RevPAR was $47, which represents a 60% decline from Q4 2019. While the $47 RevPAR was lower than our Q3 RevPAR at $58, the 60% decline versus last year was a slight improvement versus Q3's 61% decline. Q4 is always a seasonally low quarter for Chatham's business, and Q4 2020 was also impacted by elevated COVID spread relative to Q3. Through our significant efforts to contain costs, we were able to generate a same-store Q4 hotel EBITDA margin of 8.4% and GOP margin of 25.4%, which is quite strong in light of our $47 RevPAR in the quarter. Our Q4 2020 adjusted EBITDA was $0.2 million and cash flow before capital, which represents hotel EBITDA less corporate G&A, cash interest and $2.3 million of principal amortization, was minus $9.5 million. Chatham has a strong balance sheet that positions us well to weather the disruption being caused by the COVID-19 pandemic and to begin considering investment opportunities should they arise. We ended Q4 with $21.1 million of unrestricted cash and $10.3 million of restricted cash escrowed with loan servicers that can be used for capital expenditures, property taxes and insurance. In November, we completed the sale of the Residence Inn Mission Valley for $67 million, which generated a gain of $21.1 million and allowed us to repay the $26.7 million mortgage on the property and $37.7 million of borrowings under our credit facility. The $67 million sales price represents a 6.5% cap rate on the hotel's 2019 NOI of $4.3 million and a 14x multiple on 2019 EBITDA of $4.8 million. In December, we completed an amendment to our credit facility that provides us covenant relief until Q1 2022 and the ability to utilize the entire $250 million capacity of the facility. When covenants begin to be tested again starting in March 2022, EBITDA and NOI figures used for covenants will be calculated on an annualized basis for the first three quarters after testing resumes. At December 31, we had $136 million of liquidity between our unrestricted cash balance and revolving credit facility availability, which provides us a substantial amount of runway for performance to recover and capacity to consider potential investment opportunities should they arise. Our cash burn has been limited during the pandemic, given the resilience of our extended-stay and limited service asset class and superior performance of our hotel manager, and we expect cash flow to continue to improve in the upcoming quarters as COVID vaccination deployment progresses, infections decline, and we exit the seasonal low period that occurs for our hotels in Q4 and Q1. Chatham's balance sheet also benefits from minimal debt maturities over the next several years. The only debt we have maturing between now and the end of 2021 is a single $12.6 million nonrecourse mortgage loan that matures in September 2021. After that, the next debt maturity we have is for our credit facility in March 2022, but we have an option to extend that maturity through March 2023. We will have a significant amount of time for hotel operating performance to recover before we need to refinance a material amount of debt beginning in 2023. Since visibility around the timing of a recovery and hotel operating performance remains limited, we are not going to provide guidance at this time. This concludes my portion of the call. Operator, please open the line for questions.

Thank you. At this time, ladies and gentlemen, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ari Klein with BMO Capital Markets. Please proceed with your question.

On the cost side, how are you thinking about the pace of bringing more employees back in relation to occupancy? How do you think that trends across the year into next year? And then maybe upon a return to a normalized environment, how are you thinking about margins longer-term versus where they were maybe pre-pandemic?

Yes. I think, Ari. I think to take the second part of the question first. I think, listen, I believe between the tweaks that are happening for the evening social hours basically being eliminated, breakfast, complementary breakfast, especially at our extended-stay and limited service hotels, I think the offerings there are going to be tweaked back a little bit as well. And then I think when you're talking about room, frequency of room cleaning, we do believe there will be savings there as well. And I think we've talked about this for a few quarters now. We do see margin improvement on an apples-to-apples basis pre-pandemic to whenever we stabilize down the road. We haven't quantified it in terms of how many basis points at this point. But we do think apples-to-apples, they're going to be better in the future as opposed to they are -- as opposed to what they were pre-pandemic. I think from a 2021, and what I said in my prepared remarks, it's going to be very important for us as a management team and Island Hospitality on the operating side, as occupancy starts to come up, that the rush to bring back staffing levels and frequency of cleaning, which just isn't going to be there, is going to be pretty important to stay on top of. And especially over the last 15 to 24 months, Island Hospitality is dedicated resources on their operations team that really spends a lot of time day-to-day talking to general managers at all of our hotels, in a real-time basis, managing staffing levels and expense levels. So it's certainly -- that's just something we've got to stay really focused on to understand that it is a new operating environment, that is the standards are going to be different moving forward than what they were pre-pandemic.

Got it. And then maybe can you talk a little bit about the M&A market, your expectations there. What are you seeing from a pricing standpoint? What kind of opportunities are out there? And then from a market preference point of view, are you somewhat agnostic or you have certain preferences, whether it's Sunbelt or other types of markets that you'd prefer?

Yes, Ari, this is Jeff. Thank you. On M&A, I think you're seeing that there's not a lot of transactions right now. I think that bid-ask gap is pretty wide. And without a bunch of distressed properties coming to market yet and there's still some anticipation that happens as we move through the year. Second half of the year, you've really got some owners that are testing the market and testing what kind of values they -- or offers they might get relative to their 2019 value. And although there's been a few deals done at some pretty small discounts to a 2019 realistic value, I just don't see very much happening nor do I see a lot happening in the next three or four months. So we're in the market. We're talking to owners all the time. We've got good folks, including myself, that do that every day, but I don't think it's there yet. But we want to be positioned properly to be able to take advantage of those opportunities that may come. We want to be opportunistic, but obviously, we want to keep an eye on markets like the Southeast and other markets that seem to have, even pre-pandemic, better growth, better RevPAR growth in the markets than the average growth. So, we're looking at that. We're trying to understand the real supply trends in those markets, but that's going to take a little time to shake out as well. We really don't believe all the numbers we read. So I think time will tell over the next six months what direction that goes in.

Our next question comes from the line of Bryan Maher with B. Riley Securities. Please proceed with your question.

So on the same Residence Inn, how did that opportunity kind of come to you? And we've actually read about California markets looking to do more of that? And do you see the opportunity to do more of that type of transaction?

Yes. Go ahead.

No, I was going to let Mr. Craven who handled that inbound call, very acknowledged. Just teasing.

No. I mean, listen, I think, Bryan, it came to -- again, it came to us through -- well, I mean, it was inbound interest that started the conversations, not necessarily about that particular asset, but certain of our assets in Southern California. And I think as we started getting into more details and sharing information, especially the needs of certain areas, I think we were able to pretty much come down to that particular location. I think there is -- and you've read about several of these that have now happened in the state of California. There is continued interest with the state of California in each of our markets, to be honest, for certain of these type things. They're not easy to do especially from the financing side on the housing commission side. It requires a lot of different pieces of financing. It requires a building that is basically ready and up to all current standards of fire and life safety requirements, ADA accessibility to where it makes sense for the entity or for the housing commissions to do that. So we do have continuous discussions with certain of, not only Chatham hotels, but hotels that are also in California within our Innkeepers joint venture, and we'll continue to kind of go down that path to see if there's any opportunities there. But we are -- we do understand that the state is planning to make more funds available for those types of deals in 2021.

Great. And then when we think about ADR, especially when we look back to 2009, some of the cash now that we saw back then, how are you guys thinking about the market and your competitors keeping rates at -- in a rational level, whether it's lessons learned or what? And how is Island addressing that?

Yes. I mean it's -- I'd say it's very -- they're addressing it on a very specific by hotel basis, whereas, I think most of -- a lot of these markets are selling, and we've seen rates basically since early days of the pandemic in the -- what was $90 to $110 range, and that really hasn't moved much as a portfolio. But as -- if you look at our portfolio specifically, and especially when you look at leisure markets, such as Fort Lauderdale, Savannah, Portland, Maine, Portsmouth, New Hampshire, Exeter, New Hampshire, San Diego, it's very -- they have a very close eye, not only on rates over the next 30 days. But importantly, rates that are over the next 180 days through the summer months, where I think everybody believe that demand, especially on a leisure basis, is going to be really strong. So I do believe there is some good rate opportunity, again, in a lot of those more leisure markets to hold, if not increase rates even over maybe what 2019 was.

All right. Great. And just maybe one last one for Jeff. The lodging stocks, especially the REITs, have just been ripping higher, some approaching pre-pandemic levels. What are your thoughts there in an environment where we're still running industry-wide RevPAR down 40% to 50%?

Well, look, we certainly like to see that happen, right, because we think we've done the right things for our shareholders as we've talked about, that ought to position us well for going forward. There's obviously lots of expectation about business coming back pretty strong in the second half of the year. We're a believer on that front. We are real excited about our President's Day weekend and our 65% occupancy on Saturday night and our 100% occupancy in some of those hotels actually that Dennis just mentioned. So we think that there's going to be business -- real business out there to be had. Our revenue management department is absolutely taking off all pandemic pricing starting March 1 in those markets. And most all markets will wait till the very last minute to see how close we can get to fill in before there's any rate adjustment at all. So hey, we'll see how smart the market really is relative to how they're valuing these companies. But I happen to be also a firm believer that there ought to be some real bounce back as we move through the year.

Our next question comes from the line of Tyler Batory with Janney Capital Markets. Please proceed with your question.

First one I had, I just wanted to go back to the commentary on February and what you're seeing real-time in terms of demand? It sounds like February really driven by some strong leisure travel, but interested what's out there real time in terms of corporate type business? And then also curious if you can touch a little bit more on the sales and revenue management strategy as demand is coming back into some of these markets?

I'll pick up on that. I mean, really, frankly, on the business traveler front, there's little bits and pieces, as we said, in the prepared remarks here and there. But there's nothing substantial to report real time in February, that there's any kind of turnaround in the very near future. And of course, in our select-service and extended-stay hotels, which is what we are, the booking window has always been tight. So we don't have the visibility on sort of group business and otherwise other than in one or two hotels that might be connected or very close connected physically. But their business is connected to conventions, whereby there's really no action in 2021 so far on the convention front. So I think we're, like I said, in a wait-and-see mode on the business side, we do have our usual business travelers, whether it be Google or otherwise in Silicon Valley doing some business and putting people in the hotels, but at levels that are just really no greater than more or less what we've seen over the last, let's say, three months anyway. So on that front, we're waiting. And on the pricing front, as I said, we're just being day-to-day very proactive in terms of what we price business at, what kind of business do we take and for when? So if we're putting National Guard in a hotel demand a vaccination site like we have in one or two spots, we certainly aren't putting them in the hotel for Memorial Day weekend or June or July, even at this point. So we're trying to keep all our options open for that business that we do expect to come later on.

Okay. And I think I caught in the prepared remarks, CapEx spend for 2021 of only $6 million, which seems quite low versus what you've spent historically. And I think you said that you're not planning any renovation projects. Can you talk about that a little bit more? I mean, is that just reflective of the quality of the portfolio? Or are you just trying to be conservative in terms of how you're thinking about deploying capital?

Hi, Tyler, this is Dennis. Yes, $6 million is the plan as our budgeted expenditures for 2021. No renovations. I think in light of where we are in the recovery, still in the midst of the pandemic, our -- we're still taking the approach of conserving capital and I think to the extent that we won't be able -- we'll be able to bring in more business in 2021. And listen, I don't think there's any gun to our head to spend $2 million or $3 million per hotel to renovate it. So, no reason to push that capital out the door until we think the timing is right.

That makes sense. And then last question for me, just housekeeping. How much have you spent on the Warner Center development thus far? And what is the cadence of spend look like for that project in 2021?

Hold on one second. Get to the number. Yes. So we've spent -- it looks like about $44 million to date. On the development, about $34 million left -- or $24 million -- $26 million -- I'm sorry, less to go. My subtraction wasn't on at the moment. So we got about $26 million left to go in 2021. It's around $2 million per month between now and opening. So I think $2 million to $3 million a month is probably conservative and what you would want to use for the next -- for the first two quarters of the year, Tyler. I think, at that point, that will get you 18 -- $18 million of the $26 million, with the last eight kind of in the last six months of the year.

[Operator Instructions] Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

I guess, a question on acquisitions, I want -- could you remind me, are you able to use your current liquidity to buy assets without any kind of restrictions? And if there are, can you just lay them out for me?

We are able to use our liquidity under the line to acquire hotels. The only requirement under the line is that we maintain $25 million of minimum liquidity.

Got it. So I guess the math is that you'd want to make sure that you would have that before you would do a deal, so you would like to see your cash burn come down a bit. Is that fair?

Yes. Yes. I think, obviously, we'll be mindful of liquidity and availability as we consider potential investments. But we do have the ability to do something if we see something great.

Got it. And I guess have you seen leisure starting to pick up in some of the non, I guess, resort or obvious vacation hotels like -- end markets like, let's say, I don't know, Dallas, Houston, is not right now, but maybe before the storms or in the future. And I guess, broad leisure beyond kind of your Savannahs and Portland Maines and whatnot? And if not, do you expect to see that broader leisure come back to the portfolio in the spring and summer?

Yes, I mean, the answer is yes. I mean, it's -- as we talked about on another meeting, but the staycation concept is still out there. And in our hotels, we do see people that are -- whether they're traveling 10 miles down the road to take -- to go and stay at a hotel for a few nights, they might have a pool or be next to something they want to do, those are happening. And that -- I think that is going to continue to be the case as we move forward. And it's part of the leisure travel. But staycation is still a word that applies. And listen, it can be to a courtyard, it can be to a Hilton Garden Inn, it can be to a Residence Inn. And really anywhere America, but people are looking at, hey, we want to get out of the house. We want to go somewhere, a change of scenery and have a pool and head out for a couple of days. So that is certainly out there.

Got it. Maybe one more. I mean, have you been approached or started talk to counterparties for about a potential new joint venture? I mean, I know that's part of your playbook during the last recovery. So is that still something you consider? And have you -- have those started yet?

I mean, Anthony, I'd tell you that since -- for the last 9 or 10 months, I think there's certainly people who have expressed an interest in lodging and trying to establish some type of position in lodging and acquire assets. And thankfully, we're a group that's done them. So there has been interest there. But I think those are a little bit difficult for us from a corporate perspective as opposed to just buying assets outright. We're still involved, obviously, in our Colony JVs at the moment. So I think, listen, the interest is there. We're glad that we're on a list of people who would love to do business with us. And hopefully, that provides some opportunities down the road.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Well, we appreciate all the questions. And as I said at the outset, everybody's continued interest here. We look forward to moving ahead and reporting even better results for the next quarter. Thank you.

Ladies and gentlemen, that does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.