On its third-quarter earnings call and its first full quarter as a standalone lodging REIT, CorePoint Lodging officials said the company is waiting to see the benefits from the Wyndham integration in 2019 and is working on reopening hotels affected by Hurricane Irma this year.
IRVING, Texas—The integration of La Quinta Inn & Suites into the Wyndham Hotels & Resorts system is still in the works, and CorePoint Lodging executives said they are hopeful the midscale-focused real estate investment trust will begin to see the network and distribution benefits of the Wyndham platform next year.
Wyndham completed its acquisition of La Quinta’s franchise and management business on 31 May, which created the spinoff of its 316 owned assets into CorePoint once it was approved by La Quinta’s board.
On the company’s third-quarter earnings call, Keith Cline, president and CEO of CorePoint, said “overall, the transition is progressing.”
“I would describe the working relationship with our partners at Wyndham as productive,” he said. “Both parties certainly have a vested interest in ensuring a successful integration. We believe once the La Quinta brand is fully integrated into the Wyndham platform next year, it should improve the scale, distribution and reach of La Quinta, which includes our existing portfolio of (316) hotels.”
Wyndham is expected to conduct a technology migration in the first half of 2019, Cline added, which would move all of “La Quinta’s property management and reservation systems, its revenue management platform and all digital channels, including LQ.com,” to the new platform. He said that any benefit to CorePoint from the move would not happen until the second half of 2019.
- Click here to read more from CorePoint’s CEO on the Wyndham transition, his transition to CEO if a REIT and more.
Irma-affected hotels, repositioning program
CorePoint is working on reopening all hotels affected by Hurricane Irma, and Cline said all but one should be open by the end of the year.
“At the start of the third quarter, we still had five hotels closed in Florida due to Hurricane Irma,” he said. “We are pleased to report that two of these hotels opened at the end of September, two more hotels closed after Hurricane Irma are expected (to reopen) by the end of the year, and our Fort Myers hotel, a projected reopening date in early 2019.”
A repositioning program was started under key strategic initiatives with La Quinta, which CorePoint continues to work on.
According to the company’s earnings release, “the company invested approximately $40 million in the third quarter of 2018 on capital improvements, including approximately $13 million related to its ongoing hotel strategic repositioning program.” Approximately $7 million of capital spend is expected to be invested into the repositioning project during the fourth quarter.
During the third quarter, CorePoint reported a 3.6% increase in comparable revenue per available room to $63, according to the company’s earnings release. Occupancy rose 10 basis points to 68.8% and average daily rate increased 3.5% to $91.56.
Adjusted earnings before interest, taxation, depreciation and amortization for real estate for the quarter was $55 million.
For the full year, the company expects comparable RevPAR growth to range between 3.25% and 4.25%.
CorePoint’s stock closed Tuesday trading at $15.97 per share, down 42% since the completion of the spin. The Baird/STR Hotel Stock Index was down 11.7% for the same time period.