China virus After all this time in the stock - it has been zero luck.
I remember working with David Sidoo and he would say, somethings you need some luck. He was right. Here there has been zero luck.
First the renovations, second the sale of the lodges, third waiting on new acquistion, fourth is china virus, five will be a slower tourism and travel 2020.
In the companies defence, they have done well to transition the business from low end to higher end hotels and expand the basket of properties. They have also taken measures to contain cost and drive revenue at the hotel level (pay for parking, lower management cost, high cost of labour and so on).
The management bought around $10million in Q4 2019 and although these guys have deep pockets it was a bold statement. I do not expect that they even seen this coming. I truly believe they thought the good ship was coming into port. I thought the same as well.
It was a sit back and let things unfold story while collecting high dividends. Now, with tourism and business travel expected to slow down in the next few months it is going to impact our payout ratio.
The plus is that our hotels are on the East Coast and we dumped the economy lodge basket. Our hotels are nice propertiesr in good locations which have not been impacted by China Virus.
If the USA goes into lockdown then we are in serious trouble but if the USA remains in control of the virus then we are good. Two bad quarters will not be difficult to weather for this company. Plus we need to consider that interest rates are coming down which is good for a company like us. It should have a material impact on our cashflows.
I am watching everything in the USA very closely but believe that Mr. Trump will not allow the economy to nosedive before he goes in for a second term. It is foggy right now, but there is light at the end of the tunnel, it is not a frieght train coming toward us.
It has been a long, bumpy road with HOT and just when I thought we had cleared the forest it turned out we were heading for a cliff. That is the stock market. You cant win them all but I do believe that this is far from over. It will be tight for a few additional months but once the economy comes roaring back under Mr. Trump we should see the direct benifits.
Americas are very forgetfull and forgiving individuals.
This too shall pass but right now, all eyes on the USA. The market has already factored in the European situation and if the USA breaksout then we are in trouble.
The ComeBack Kid.