|As the long Labour Day (Sept 2) weekend in the US approached, the Holiday Inn Resort Orlando Suites -- Waterpark saw its rooms effectively sold out at premium rates.
Then came a huge dampener: Warnings emerged that Hurricane Dorian, which does not show up every year in Orlando or with any ferocity, would make landfall there.
Occupancy rate at the 777-room hotel -- the largest asset in Eagle Hospitality Trust's portfolio of 18 hotels -- plummeted to as low as 27%, said management at the 3Q19 results briefing this morning.
The hurricane, fortunately, swerved and gave Orlando a miss.
Under those circumstances, the hotel cannot claim insurance for business disruption, and had to count its loss of revenue.
For 3Q, it was about US$600,000 lower than forecast, which was:
• 17.9% lower than forecast for that hotel,
• 4.2% of the total 3Q forecasted distributable income of Eagle Hospitality Trust of US$14.5 million.
It was inevitable that the forecast distribution per stapled security (DPS) would not be met.
But instead of a 4.2% fall in DPS, the shortfall was only 1.22%, thanks to positives such as property tax and interest expense savings.
The shortfall was only 0.6% compared to the forecast DPS for the period since listing date in May 2019.
Interest rate swap arrangements became effective in July, resulting in US$1.36 million per annum savings -- or US$340,000 per quarter -- and 93% fixed rate borrowings.
What if Hurricane Dorian didn't impact the hotel's bookings?
Then the 3Q DPS of Eagle Hospitality Trust would be 3.22% higher than forecast, according to management.
The 3Q DPS was 1.649 US cents, which translates into a 13.3% annualised yield based on the closing price of 49 US cents today (14 Nov).
The stock has had a severe meltdown from its IPO price of 78 US cents, after a series of media articles were published relating to an asset, The Queen Mary ship.
For details, see 3Q19 Powerpoint presentation material here.