Art Buser, president and CEO of Sunstone, called the current downturn "one of the most challenging economic environments in recent history," adding that the company was able to control costs and deliver solid margins despite those conditions. "As a result of our cost cutting initiatives, our hotel operating margins declined just 300 basis points for the quarter," Buser noted. He said that cost-reduction efforts continue on both the corporate and the property level for the REIT.
"Over time, it's our view that the magnitude of this downturn has forced operators to redefine how they run a hotel by questioning every cost," Buser said. "We believe this will result in lasting efficiencies."
In addition to trimming staff at individual hotel properties, Sunstone has also reduced costs by $2 million to $3 million by cutting 17 positions on its corporate staff, or about 40% of the staff. "This was not an easy decision to make, but in the long run it was the right decision to make," Buser said.
Sunstone reported that it had approximately $173.9 million of cash and cash equivalents on hand at the end of the first quarter, with no outstanding debt under its $200 million line of credit. "The company continues to maintain a higher than historical cash balance in light of the current economic downturn," it said in a statement.
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