Ensuring liquidity during Covid19: Marriott and NH Hotels take bold steps
Marriott and NH Hotels are taking decisive measures to ensure liquidity.
Bold measures have become necessary for hotel groups like Marriott and NH Hotels to maintain their liquidity and stay operational.
With hotels temporarily ceasing operations due to Covid-19, the world’s leading hotel groups have had to take bold measures to preserve liquidity until business returns.
We look at what Marriott International and NH Hotel Group have done to maintain positive cash-flow and come out of this crisis in as strong a financial position as possible.
Marriott International raises $920 million
Marriott recently announced that it has signed amendments to its agreement with JPMorgan Chase and American Express, which will provide the company with $920 million cash in total, available for general corporate purposes.
Of this figure, $570 million is from Chase. This will partly be a prepayment for future revenues and previously agreed-upon signing bonus for a co-brand credit card agreement.
The remaining $350 is from American Express and comes from a pre-purchase of Marriott Bonvoy points and other considerations.
Marriott has also terminated the $1.5 billion revolving credit facility commitment it had announced on April 14, 2020.
NH Hotel Group receives €225 million loan
Meanwhile, NH Hotel Group has signed a syndicated loan for €225 million, an operation coordinated by BBVA and Santander within the legal framework set up by the Spanish government to mitigate the economic impact of Covid-19. This loan is meant to finance the hotel group’s operational needs, and will mature in 2023.
Once the extent of Covid-19’s impact on the hotel industry became apparent, NH Hotel Group immediately took measures to cut costs and preserve liquidity.
This included cutting non-essential expenditures and investments, including reducing marketing spend, temporarily downsizing teams and renegoting rental and lease agreements. Finally, the group’s board of directors withdrew the proposed dividend of €0.15 per share for 2019, saving the company €59 million in 2020.
