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Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Hyatt First Quarter 2020 Earnings Conference Call. (Operator Instructions)
I would now like to hand the conference over to your speaker today, Brad O'Bryan, Senior Vice President. Please go ahead.
Bradley O'Bryan - Senior VP of IR & Corporate Finance and Treasurer
Thank you, Josh. Good morning, everyone, and thank you for joining us for Hyatt's First Quarter 2020 Earnings Conference Call. On the call today are Mark Hoplamazian, Hyatt's President and Chief Executive Officer; and Joan Bottarini, Hyatt's Chief Financial Officer.
Before we get started, I'd like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, including the Form 8-K filed on April 21, 2020. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued yesterday along with the comments on this call, are made only as of today and will not be updated as actual events unfold.
In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks on our website at hyatt.com under the Financial Reporting section of our Investor Relations link and in yesterday's earnings release. An archive of this call will be available on our website for 90 days. With that, I'll turn the call over to Mark.
Mark Samuel Hoplamazian - President, CEO & Director
Thank you, Brad. Good morning, and welcome to Hyatt's First Quarter 2020 Earnings Call. I hope that all participants on this call and your families are safe and healthy and keeping well. The COVID-19 pandemic has taken a devastating toll on people around the globe and has significantly disrupted the global economy and in particular, the travel and tourism industry. The Hyatt family is grateful for those on the front line, including medical and other personnel and volunteers who are working tirelessly to protect the health and safety of so many around the world. This has affected everyone in meaningful and sometimes painful ways.
Unfortunately, the Hyatt family has been directly impacted. While I'm grateful that the percentage of colleagues who have contracted the virus has been quite low, every member of the Hyatt family matters in a powerful way. We have had 103 confirmed cases and several hundred colleagues in active quarantine due to possible exposure. Tragically, to date, we've had 6 colleagues lose their lives and many more who have lost family members or loved ones to the virus. Our deepest sympathies go out to all of those who have experienced losses during this pandemic.
I also want to express regret and sorrow for the large number of colleagues who are suffering financial hardship as a result of this crisis. With a bit over 1/3 of our hotels having suspended operations and with low occupancies in those that remain in operation, approximately 65% of our managed hotel employee base globally has been furloughed or placed on leave. It is for this reason that we established our already announced Hyatt Care Fund to support colleagues with the most pressing financial needs due to COVID-19. The Care Fund was financed with initial contributions from salary reductions of Hyatt's senior leadership team and Board of Directors as well as through donations from the Hyatt Hotels Foundation, Pritzker Family Foundations and certain Hyatt Hotel owners, and it continues to grow, thanks to ongoing contributions from individual donors.
To date, the Hyatt Care Fund has received applications from thousands of colleagues around the world and is prioritizing those who are not working and ineligible for government assistance. Beginning this week, we've provided grants to nearly 500 colleagues and are processing thousands more in the coming weeks.
In addition to our colleagues, we've been actively engaged with our hotel owners as we work to assist them in navigating this very challenging period. Our owner base is represented by a wide variety of entities, ranging from large, well-capitalized private and public institutions, including a number of REITs, to individual properties owned by small businesses. The impact of suspended or substantially reduced operations has had a significant impact on hotel owners. We've been working closely with owners to help them access government assistance where appropriate and as requested and through cost reductions or relief we are providing directly.
We also understand the challenges that our corporate and association customers, our guests and our World of Hyatt members face during this disruption. In the spirit of our purpose of care, we've implemented actions to provide guests with some measure of flexibility or relief, including an offer of points for certain canceled prepaid reservations and a waiver of fees associated with changed reservations. For World of Hyatt members, we also suspended the forfeiture of points through the end of this year, extended expiration dates for free night awards, suite upgrades and club awards through the end of this year and extended tier status to early 2022. We continue to evaluate opportunities to support our guests as they look forward to resuming their travel with us once the challenges of COVID-19 dissipate.
In a few moments, Joan will provide more details regarding the impact of the severe decline in demand on our results during March and April and the proactive steps that we've taken to address the immediate operating environment with a focus on cost reductions and liquidity.
Before turning it over to Joan, I'd like to cover 2 topics, the first of which is how we're thinking about the recovery of demand when shelter-in-place and travel restrictions begin to lift. It is very difficult to have any certainty around the timing or shape of the recovery, but we do know we'll get through this and travel will recover. We expect that the basic human desire to explore and travel will persist with a continued focus on seeking out experiences more than products.
We understand that our corporate customers are evaluating how they will ramp up, following the relaxing of the strict guidelines that remain in place in most commercial centers around the world at this time and that their plans will likely include modified work-at-home and travel practices. When we think about what the profile of a recovery might look like in the second half of this year and into 2021, it's helpful to break down the primary sources of business into leisure transient, business transient and group. We believe transient travel in general will lead the recovery with leisure transient perhaps being the first to come back. You will likely see stronger demand in drive-to resorts and leisure destinations initially. We believe business transient travel will follow as businesses ramp up their activities. We believe group business will be the slowest to recover, given lingering concerns around larger group gatherings and ongoing social distancing mandates.
While our group cancellations to date have been concentrated in the first half of 2020, we believe that corporate group bookings for the second half of the year are at risk, especially for meetings involving a significant number of people. We believe that association group business will be somewhat better than corporate group business through the third and fourth quarters of this year based on our discussions with our association customers. Overall, we expect group business to be down significantly this year, with higher confidence about recovery in group in 2021, where cancellations to date have been very limited.
Looking to the future, our recovery task force is focused on all aspects of recovery, with special emphasis on safety and cleaning standards in preparation for reopening hotels that have suspended operations or ramping up for those that remain open. Providing safe and clean environments for colleagues and guests has always been a top priority for Hyatt Hotels. But going back to January of this year, we began consulting with infectious disease and occupational health experts to get ahead of the situation and quickly put in place enhanced cleaning and disinfecting procedures. We've also taken steps along the way to ensure that procedures and protocols are aligned with guidance provided by various health organizations, including the World Health Organization, the Centers for Disease Control and Prevention as well as various local authorities in markets that we serve.
Just last week, we announced our global care and cleanliness commitment as an enhancement to our operational guidelines and resources around colleague and guest safety. Included as part of that commitment is an announcement that we have initiated an accreditation process through the Global Biorisk Advisory Council, or GBAC, at our hotels around the world. GBAC is a division of ISSA, the worldwide cleaning industry association, and is composed of leaders in the area of microbial pathogenic threat analysis and mitigation designed specifically to deal with biological threats and real-time crises like the COVID-19 pandemic.
We believe that Hyatt is the first hospitality company to announce plans to commit to independent accreditation at our hotels globally. As part of these efforts, we are also developing group meeting standards and protocols to ensure that groups can continue to meet in a safe and effective manner while health concerns related to COVID-19 persist. In addition, we have established a working group that includes American Airlines and Enterprise Holdings to provide guidance in this area and across the travel journey. Meanwhile, we are also working closely with the American Hospitality and Lodging Association on industry-wide standards in this area.
In summary, we are actively engaged in taking all of the steps necessary to ensure a safe and enjoyable experience for both our colleagues and our guests as travel begins to recover over the coming months and beyond.
The second area I'd like to briefly discuss is our commitment to our long-term strategy. We remain committed to driving asset-light growth through the growth of our management and franchising business while continuing our asset disposition program. During our Investor Day event in March of 2019, we announced, as part of our capital strategy, a commitment to sell an additional $1.5 billion in owned real estate. By way of reminder, we completed more than $950 million in asset sales against that $1.5 billion commitment as of the end of 2019 and have until March of 2022 to complete the remainder. We intend to fulfill that commitment.
We've always been clear that we wouldn't sell assets in a distressed market simply to sell assets. And to the extent there is near-term pressure on demand and pricing, we may see less activity for a short period of time. Our remaining portfolio of assets is comprised of many well-located assets with sustainable value.
With respect to the growth of our management and franchising fee business, for several years running, we've been delivering industry-leading net rooms growth, and our initial expectations for 2020 indicated that would continue. We delivered net rooms growth of 6.3% in the first quarter, and our pipeline, which has increased by approximately 11% year-over-year, benefited from new signings that kept pace with the solid pace of first quarter openings. If you exclude the impact of the previously disclosed removal of the Ocean Resort in Atlantic City, which had a large room base but a small fee base, our net rooms growth would have been approximately 7% in the first quarter.
While we had a healthy first quarter, we do expect delays in certain planned openings for the year and some disruption in new deal activity as we work through the worst of this crisis. We nonetheless retain an exceptionally strong pipeline of new hotels scheduled to open over the next 4 or 5 years and remain committed to expanding our presence over time. In addition to aggressively pursuing the new development opportunities, we are also very focused on conversion opportunities, which may well be available on higher-than-normal volumes, given business conditions. Our brand reputation, strong owner relations and underpenetrated distribution should all serve as an advantage in capitalizing on these opportunities.
I'll conclude my prepared remarks this morning by saying that while we are clearly facing an unprecedented challenge as an industry and as a company, we have a highly experienced management team that is well prepared to overcome these challenges. We've been proactive in taking the steps necessary to reduce costs, manage cash flow and secure the necessary liquidity to weather the storm, as Joan will discuss in a minute. We are also actively focused on positioning Hyatt to emerge in a position of strength as the brand of choice for travelers as they resume activity over the coming months and beyond. Finally, we remain committed to the execution of our growth strategy and our asset disposition strategy. I'll now turn it over to Joan to provide additional details on our opening results and some of the steps that we've taken to manage through this challenging environment. Joan, over to you.
Joan Bottarini - Executive VP & CFO
Thank you, Mark, and good morning, everyone. I'd like to start by acknowledging our colleagues and owners who are demonstrating their commitment to Hyatt despite a very challenging time for our business. While we have experienced a material impact to our financial results, we have taken significant action to mitigate the impact and secure liquidity. As Mark mentioned, we are also positioning ourselves to effectively meet the needs of our guests and as travel restrictions are lifted.
Late yesterday, we reported a first quarter net loss attributable to Hyatt of $103 million and a diluted loss per share of $1.02. Adjusted EBITDA for the quarter was $86 million, with a systemwide RevPAR decline of approximately 28% in constant dollars. I want to start by breaking down our first quarter results to better demonstrate the impact of the COVID-19 virus on our business and then provide some insight into what we experienced in April.
We began the year with solid performance coming off of a strong year in 2019. Excluding our Asia Pacific region, global systemwide RevPAR increased 1.6% through February and 2.6% in our owned and leased hotels. With base, incentive and franchise fee growth of over 10% in constant currency, excluding Asia Pacific, and comparable owned and leased margins up 270 basis points through February, we had exceeded our own expectations on a year-to-date basis. As the month of March progressed, the impact of COVID-19 expanded in Europe, North America and other parts of the world and we began to see significant reductions in occupancy. The rate of decline in occupancy accelerated over the course of the month of March, and by April, demand had declined to the lowest levels the industry has seen. The one exception to this decline during April was Greater China, where we began to see increases in occupancy.
And to give you an idea of the progression, I'll walk through the RevPAR results for our business segments over that period of time. For the Americas, February year-to-date RevPAR was up 1%, March RevPAR was down 64% and April was down 96%. For the U.S., February year-to-date RevPAR was up 1%, March RevPAR was down 64% and April was down 96%. For our Europe, Middle East and Southwest Asia segment, February year-to-date RevPAR was up 4%, March RevPAR was down 69% and April was down 95%. For our Asia Pacific segment, February year-to-date RevPAR was down 32% or 14% excluding Greater China. March RevPAR for the segment was down 78% or 71%, excluding Greater China, and April was down 85% or 90% excluding Greater China.
As of the end of April, we had suspended operations in approximately 35% of our hotels globally. In Greater China, where we've begun to see early signs of recovery as the economy opens back up, we now have only 1 hotel with fully suspended operations, down from a high of 26 hotels in the first quarter. Occupancies in Greater China improved to approximately 25% by the end of April, up from the mid-single digits at the low point.
Additionally, in South Korea, we've seen bookings double from levels just seen 3 weeks ago, driven by short-term transient business as demand begins to show early signs of improvement in that market. Notwithstanding the improvements we've seen in China and positive booking trends in South Korea, results elsewhere in the world have worsened in April, and we expect the second quarter to be our worst quarter of the year. We expect May to look a lot like April and it's hard to say what the shape of the recovery might be beyond that.
The RevPAR declines I just discussed put pressure on our cash flow and working capital, and as a result, we've taken the following actions. We've reduced 2020 capital expenditures by at least $125 million, a 50% reduction from our original guidance. We've suspended share repurchases and our quarterly dividend through the first quarter of 2021. We've reduced current monthly SG&A by about 40% as compared to our original plan by eliminating all spending considered nonessential in the current environment and reducing near-term payroll and related personnel costs within SG&A, primarily through unpaid leaves and salary reductions. And we've reduced owned hotel expenses significantly through reduced staffing and, in many instances, suspension of hotel operations or closures of certain outlets and facilities within hotels that remain open.
We've also taken a number of significant actions relating to services managed on behalf of and reimbursed by our hotels around the globe. As both an operator and owner of hotels, we understand the pressure that we are all facing and are taking steps to minimize the cost wherever possible during this low demand environment. As a result of a reduction in activity levels from many hotel support functions, we reduced the associated costs on a current monthly run rate basis by approximately 50%.
To assist owners with their cash flow requirements, we've also temporarily modified brand requirements or waived restrictions on the use of funded reserves for replacement of furniture and equipment and negotiated reductions in costs from third-party vendors. Reimbursed systemwide expenses are included within the line items in our income statement referenced as reimbursed revenues and costs incurred on behalf of managed and franchised properties. For the full year 2019, these costs were approximately $2.5 billion. About 3/4 of those costs were payroll-related with the remainder comprised primarily of costs for services, such as technology, sales and marketing and the global contact centers that we manage on behalf of our systemwide hotels, the World of Hyatt program, various reimbursed shared or centralized services and insurance.
With respect to hotel-level payroll-related costs, occupancy levels will inform decisions made in staffing, resulting in a reduction of these costs for hotel owners in the current environment. With respect to most of the remaining reimbursed costs I described earlier, we have significantly reduced or suspended many services, resulting in reductions averaging 50% on a current monthly run rate. In summary, given the uncertainty around the shape of the recovery, these actions are meaningful and important as we work to mitigate the negative financial and operational impacts of COVID-19.
Next, I'd like to walk you through some important actions we took during April to secure additional liquidity. First, we amended our revolving credit facility to obtain a waiver of financial leverage covenants for 4 quarters through the first quarter of 2021. For the 2 quarters that follow, we also obtained an increase in our leverage ratio to 5.5:1 calculated on an annualized basis beginning with the second quarter of 2021. And second, we successfully issued $900 million in bonds on April 21, 2020. Subsequent to the issuance of the $900 million in bonds, we paid down the $350 million of outstanding revolving credit facility borrowings, and therefore today have access to the full borrowing capacity of $1.5 billion.
As a result, our total liquidity, inclusive of cash and equivalents, combined with borrowing capacity is presently over $3.1 billion. Furthermore, the only long-term debt maturity we have in the next 36 months is $250 million of senior notes due in the third quarter of 2021. We believe these successful efforts to secure additional liquidity provide us with the ability to operate at current levels for at least 30 months. We expect current occupancy levels to be temporary and improve as travel restrictions are lifted, and we therefore expect our burn rate to improve over the recovery period.
I will conclude my prepared remarks by saying that while we have seen an unprecedented decrease in demand over the last 2 months, I have great confidence in our ability to manage through this challenge. We have been proactive in managing all aspects of our expenditures and cash flow. And we've taken meaningful steps to secure additional liquidity, providing significant assurance for an extended period of time. We believe those steps, combined with our focus on recovery efforts, including safety procedures and protocols, will position us to appropriately ramp up operations in line with demand growth over time. Thank you. And with that, I'll turn it back to Josh for Q&A.
Operator
(Operator Instructions) And your first question comes from Michael Bellisario with Baird.
Michael Joseph Bellisario - VP & Senior Research Analyst
Just first question for you on incentive fees. Can you maybe provide a little bit more info on the makeup of the fees? What's the breakdown by region? And then importantly, what percentage sits behind in owner's priority?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. So first of all, the incentive fees are comprised of incentive fees that are driven from hotel profits. And the -- in general, the structure of incentive fees is that they stand behind an owner priority in the United States. And in general, outside the U.S., they are from dollar one of operating profits and, in almost all cases, they are defined. It's defined in the contract as to how to measure the operating profits.
A majority of our incentive fees are from non-U.S. hotels, and it's about 25% of incentive fees that are from U.S. properties. So that's the mix in terms of geography. We obviously had a significant decline in this -- in the incentive fee base in the quarter as a result of declining profitability at hotels where we have incentive fees.
Michael Joseph Bellisario - VP & Senior Research Analyst
Got it. That's helpful. And then just one follow-up maybe on the RFP season in the fall if you can look out a few months, thinking about it. Will it need to happen? What might travel planners ask for? And then how are you guys thinking about or at least working with your management, third-party management companies, thinking about pricing and volume strategies for the upcoming year?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. It's quite early for us to know what the profile of business is going to look like at that time. We've been extremely engaged, very highly actively engaged with our key corporate customers, group customers, in particular, to understand -- and association customers to understand what their outlook is with respect to their own activity. That is, when they're going to be traveling again, how they -- what their outlooks are for meetings and how they will hold meetings in the future.
I think it's still early for many corporations to make definitive plans at this point, certainly for 2020. I think once we get into the fall, the outlook for 2021 will have a little bit -- we'll have some more visibility. It could be much higher visibility if there have been great advances in a path towards a vaccine or other therapeutics. But if not, then I think people will be more cautious and probably look to plan into the back half of 2021.
We've been working very closely with some association customers and some key corporate customers to start design work for how we could help them hold a hybrid meeting, in which you would have both in-person and virtual participants. We think this is particularly important for association customers who rely on those meetings for a key part of their -- in some cases, the vast majority of their revenue base for the year. So there's going to be a disinclination to fully cancel gatherings by associations even later this year, which is why we are rolling up our sleeves with them and trying to co-create an approach to being able to hold those meetings in a safe and secure way.
Operator
Your next question comes from Patrick Scholes with SunTrust.
Charles Patrick Scholes - MD of Lodging, Gaming and Leisure Equity Research and Analyst
I wonder if you could just touch on your ability to cut costs for your own hotels, the ones that are unionized versus nonunionized.
Joan Bottarini - Executive VP & CFO
Sure, Patrick. Let me give you some perspective on what we've done, some of the numbers that I quoted in my prepared remarks. For the owned and leased portfolio, what we've done is we've reduced about 75% of the cost base from our stabilized cost base in the month of April. And as we noted, there's a significant amount, over 80% of our hotels are closed right now. And if you think about the 25% of costs that remain in the owned hotels, we've actually positioned those because we believe in the near term, those hotels will need to be in a position to recover in the next couple of months. So the 25% of the existing costs that remain have about a portion of those that are truly, truly fixed, which I would say of the total stabilized expense base, that's about 15% of the total stabilized expense base is truly fixed. And we've included a layer there of variable costs that remain at the properties today in order to prepare for a restart.
Certainly, to your point about union hotels, that's a -- it's a factor that we think about in the requirements under those union contracts. But generally speaking, you can refer to the percentages that I just covered.
Operator
Your next question comes from Shaun Kelley with Bank of America.
Shaun Clisby Kelley - MD
Joan, I appreciate the extra color on the working capital component, and I think this is really a follow-up to the last question. But just to be clear we're talking about the same thing, can you just give us a little bit more color on -- of the kind of system and services fund in particular, either what the fixed cost run rate is in that? Or maybe just more directly, kind of how much working capital across the managed operations is really going to get tied up over the next couple of months across the portfolio?
Joan Bottarini - Executive VP & CFO
So let me talk a little bit about burn rate and how we're thinking about the burn rate and the levels of liquidity that we have because I think that's helpful maybe to give a big picture of how we're thinking about the costs that we're incurring today and how we think about the burn rate. So I mentioned in the prepared remarks that our total available liquidity today is just over $3.1 billion. And that includes $1.6 billion of cash and equivalents and $1.5 billion of available capacity on our revolver. And we estimate that in our current levels of demand and spending levels, we have at least 30 months of liquidity under that total amount of liquidity that we have available.
And we break that down, it's about $90 million in our estimate on a monthly basis in the current environment. And if you break the $90 million down, it's about a little over 1/2 relates to cash flows from operations, which includes our owned and leased hotels' operating costs, corporate overhead operating costs and monthly interest costs. And then of the remainder of that $90 million, that's split about 50-50 between investment spending. The investment spending includes a small amount of maintenance CapEx, and working capital requirements is the second 1/2 of that number. And the working capital requirements is -- reflects some of the concessions that we've provided to owners and our current working capital needs.
So again, all of this is based on our current run rate and current demand levels that we're seeing today. So hopefully, that gives you kind of a perspective of order of magnitude and what we're seeing and how we're managing that cash flow.
Shaun Clisby Kelley - MD
No, it's very helpful. And then the other question I have is just as we think about Hyatt's portfolio relative to some of the other operators out there, right, I think specifically because you probably skew a little bit more towards high end in some of these larger scale group assets, we are seeing more closures or suspensions of operations in Hyatt's portfolio than what we're seeing maybe across some of the other systems. Can you just help us think about that a little bit more? Does that -- does this change the calculus as we move into a reopening phase at all? And is there anything we kind of need to know or be aware of as it relates to those closures? Clearly, the statistics you gave out of China are encouraging. But just wondering, is it going to apply exactly the same way in the U.S.? Or is it going to be a little bit more dependent on maybe some of Mark's earlier comments on group? That would be helpful.
Mark Samuel Hoplamazian - President, CEO & Director
Sure. So yes, we have clearly a more significant representation in full-service than some of our large public peers and also higher representation in urban and resort markets. If you look, our urban and resorts within our U.S. full-service portfolio, urban and resort account for about 2/3 of our total room count. So we've got both a chain scale, some significant chain scale differences as well as some locational differences relative to some of our competitors, which is really driving a lot of the differences that you might see in our reporting. The closing rate for hotels in different chain scales is quite significantly different as well. The number of properties that are closed, for example, in our America select-service category is about 19%. So we -- and significantly different therefore than the full-service hotel closures that you see elsewhere.
So I think the closure rate is different currently. And I think a lot of the -- when you really disaggregate kind of where the demand is at the moment, and I'm really talking about like nano-periods, we're talking about the coming weeks, not even months, really focused on and seeing airline crews and airport hotels running at the highest occupancies and lowest closure rates. In our case, the other categories of business that dominate, and this is mostly in our select-service portfolio, our government business, National Guard, Department of Defense, Army Corps of Engineers is a big customer, and then health care workers. So that's kind of what you see as the immediate demand profile in the United States at the moment.
I think that over time, we'll have to see how some of the change in the guidelines that are currently prohibiting or diminishing travel, once they start to come off, what the evolution is going to look like. A lot of that will be dependent on people getting on airplanes. If we look elsewhere, the market that we have the longest runway in, in terms of time that has elapsed since the beginning of the outbreak of the virus, it's China. And Joan mentioned that we've gone from 26 to 1 hotel that's now currently closed. And apart from that, what we've seen is a pretty steady increase in both occupancy and bookings from and after the time that the new infection rate dropped below 100 cases per day. The same is true in South Korea. We saw a significant increase in bookings that began to build immediately after you hit that very low level of new cases per day.
We've been looking at various models and looking at demand. The thing that was striking to us is that in China, while occupancy has been building over the course of the month, the last week was quite significantly positive. We even had a few hotels that sold out over the last weekend due to a holiday weekend. The very fact that you could even have a hotel that could sell out is kind of a notable thing at this point to begin with. Yes, the hotels that were in the highest demand are hotels that have a very significant drive-to marketplace. And we did see some enhanced demand into Sanya, which is on Hainan Island, which is a fly-to market. But I would say that really, the concentrations of activity have been amongst leisure travelers, and this was a holiday weekend, of course. And again, the highest concentration was in some of the drive-to markets.
So that's really -- it validates, I think what we expect to see elsewhere, which is leisure will lead, drive-to markets will lead, and that's really what we've observed so far, recognizing that we're dealing with very limited data. I mean, we're talking about a number of weeks here as opposed to quarter after quarter. So that's what we've seen so far.
Operator
Your next question comes from Stephen Grambling with Goldman Sachs.
Stephen White Grambling - Equity Analyst
My first is actually a follow-up to Sean's question on working capital contribution to cash burn. How would you generally think about the trajectory of that level under various scenarios? And would you generally anticipate needing to provide any additional support to owners to get back open?
Joan Bottarini - Executive VP & CFO
So Stephen, it's difficult to tell at this point. We have not seen significant requests for deferrals or challenges at our properties and from our owners. So in the current environment, we haven't seen a lot of that dragging on our working capital. We have provided some concessions to our owners to help. And I've gone through some of the other actions that we've taken to help reduce their -- the pressure on their liquidity. So we're definitely very focused on it, but as we think about the recovery and what the shape of the recovery will be over the coming months, it's very difficult to say what those needs will be. But we have provided a reserve for it in our burn rate assumptions that I just described.
Mark Samuel Hoplamazian - President, CEO & Director
And maybe just a little extra color. We announced concessions to owners in China dating back to February. We followed on that with concessions to owners. This is really fixed fee concessions in March in both Europe and in the United States. And the duration of those was through June. So we have provided for relief for owners through June at this point. We've been trying to stay very responsive and very close to our owners, though. So I would say while it's through June, I'm not saying that it will end in June, it might extend into the third quarter. But at this point, that's what we have provided. And we also are taking some measure of reserve in our own minds and on our own planning with respect to working capital needs to further accommodate timing of payments and the like, which is really what Joan addressed earlier. So that might give you a little bit more color on the time evolution of our engagement with owners in different places.
Stephen White Grambling - Equity Analyst
That's helpful. And then changing gears as a follow-up, and as we think about the development activity, how would you characterize your developer base relative to peers and your properties and how they may or may not respond coming out of this environment, not only in the near term, but as we think over the next couple of years relative to some of the targets that you had originally set out?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. Actually, right now, given that we're in the midst of a crisis, it's a little hard to wax optimistic about the future here. But I would say that we have a very, very solid group of developers with whom we've developed relationships extensively over time. We started the year looking at new openings of over 80 hotels. And we know -- based on what we know now, and which is all subject to change, of course, we think there could be slippage of maybe 10 hotels into next year based on what we're seeing currently. Where did that come from? It came from the fact that in certain cases, construction was not considered an essential service and therefore was shut down for some period of time. Therefore, it pushes project opening opportunities.
Some of it, about 60% of the rooms that were impacted are in ASPAC. Another something like 25% are in Europe. So we're seeing places where there was early and significant disruption. And that's really had an effect of pushing. The remainder in the U.S., obviously. So we'll have to see how this evolves in the near term. I think in the longer term, the fact is that a lot of the underlying underwriting for our hotels is based on macro travel trends. We -- given our position in the marketplace, we serve a relatively higher-end traveler. And I think in this kind of a downturn, we might enjoy a benefit of those higher-end travelers wanting to get back out and start traveling both for leisure purposes but also for business reasons. And they might be slightly less constrained as a result of their economic demographic level.
But I think that the owner community with whom we are engaged is quite healthy at this point. Of course, this is putting a lot of stress on existing owners. We are super mindful that, given that we're an owner ourselves. But we have some confidence that with some help in some cases and in other cases, because they've got great balance sheets, they'll be able to persevere and continue to do what they do.
Operator
Your next question comes from Smedes Rose with Citibank.
Smedes Rose - Director & Senior Analyst
I just wanted to ask, on the hotels that are closed, do you have any concerns that some of them may not be able to open? And it sounds like if I'm reading what you said right, that you're willing to work potentially with financing needs for some owners if they're not able to work it out locally with banks or through government programs. Is that correct?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. I would say, in general, we're looking to try to figure out what owners might need. And I think in some cases, the way that I think our -- we have thought about this in the past and that it has presented itself in the past, it has to do with help with respect to deferring fees and the like. Not -- we haven't had any discussions with respect to deferring management and franchise fees at this point. Of course, management and franchise fees are all dependent on top line revenue. And when revenues decline so dramatically, so too does the fee base. So there's no significant issue there.
But with respect to chain services or hotel services that we provide outside of our management fee base, there are some fixed elements to that. And so we are paying attention to what we need to do in order to help provide some relief to owners during that period of time. So the primary way you can think about it is through the provision of working capital, which is really extending credit, if you will, to owners. In some cases, it might involve actual capital transactions, but that's really going to be the minority of the cases.
Smedes Rose - Director & Senior Analyst
Okay. And then I just wanted to ask to you, you along with other brands have talked about the stepped-up cleaning processes. Do you see any incremental labor costs to owners now, either with taking longer to clean a room or more downtime between rooms? Or how might that factor over the next several quarters with these sort of enhanced cleaning protocols?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. So first of all, I would say that the -- we're working on this right now to optimize the way in which we schedule the work and also how we're working on the supply chain to ensure that we can deliver a very cost-efficient solution because providing protective gear as well as hand sanitization -- hand sanitizer and other sanitization solutions is going to be different to how we have approached this in the past. So different means somewhat more expensive but not massively more expensive. We don't think it's material actually if you look at the totality of the expense base, and most of the expenses have to do with materials and supplies than they do with labor.
We have, as part of our global commitment, care and cleanliness commitment, have designated a hygiene manager for every single property around the world. That is not an added position necessarily. In fact, first of all, in the vast majority of our hotels in Asia and in Europe, we already have hygiene managers on staff. And secondly, with respect to our hotels in the U.S., where we don't have one, we would be looking to go through -- put a colleague through very extensive training that we've obtained through our relationship with GBAC and get them accredited so that they can actually train others but also practice what we need them to. So it's really an expansion or extension of what an existing colleague might do as opposed to adding staffing.
And then with respect to the time line, we are working right now on time line for how long it takes to actually go through it in an individual room. There will be some expansion of that, but it's not going to be material. I think it's really a matter of new and different processes and new and different supplies that will elevate the level of sanitization that you end up with.
Operator
Your next question comes from David Katz with Jefferies.
David Brian Katz - MD and Senior Equity Analyst of Gaming, Lodging & Leisure
I wanted to go back to the matter of conversions. Look, I wanted to try and go just a layer deeper. Are you thinking about the opportunities or strategies to assume franchise opportunities? Are you thinking in terms of management contracts or you're talking -- that may transfer? Or you're talking about independents that may want to join your system? What -- how would you highlight those opportunities?
Mark Samuel Hoplamazian - President, CEO & Director
Yes. So thank you. First, I would say all of the above because as I think back on the deals that we've seen over the course of the year so far, I can put my finger on individual examples of each one of the -- excuse me, examples that you provided, a managed deal converting from another brand, a franchise deal and independents. So I would say we think it's going to be across those dimensions. We had a very successful year last year, maybe one of our strongest in conversions. And we had a number of different opportunities that arose that came out of mostly independent hotels or hotels that were an owner built the property, decided that they would self-manage or plan to self-manage it and then decided -- thought better of it and then we had an opportunity to step in.
The -- so that's really been a particularly rich area of opportunity. We think it will continue to be a rich area of opportunity because, especially in this kind of environment, where I think it's going to be a very tumultuous and uncertain demand environment for a period of time, someone who developed and opened a hotel and thought they would do it themselves might well reconsider. And that is actually what we're starting to see and what we are going to stay focused on as we move forward.
David Brian Katz - MD and Senior Equity Analyst of Gaming, Lodging & Leisure
And so the natural follow-up might be, are you thinking about key money or allocating any capital in order to compete for any of those deals.
Mark Samuel Hoplamazian - President, CEO & Director
Sure. I mean, I think in some cases, it will require key money. In other cases, it won't. But I think we -- the marketplace does drive that decision and how competitive a given process might be. I think our most -- our best opportunities fall in markets where we are either not represented or underrepresented, and frankly, for us, that's a lot of markets. The vast majority of markets around the world are markets in which we don't -- we're not stepping on ourselves on every street corner.
Operator
Your next question comes from Thomas Allen with Morgan Stanley.
Thomas Glassbrooke Allen - Senior Analyst
So what kind of occupancy levels or RevPAR declines are you looking for to reopen more of your owned and leased hotels? And I'm assuming you would reopen when it's accretive to the current free cash flow declines. But at what level does it also get to breakeven EBITDA?
Joan Bottarini - Executive VP & CFO
Okay, Thomas, I'll give you some color on how we think about breakeven. And I would start by saying it depends a lot on the location and type of hotel that you're talking about. When you think about a full-service hotel in the U.S., occupancy levels at breakeven are about 40% to 45%. And a select-service hotel would be about 10 points lower than that, 30% to 35%. And then you can think about hotels with lower labor costs, maybe hotel -- some hotels in some international market being in that 30% to 35% range as well. And then hotels in higher labor markets would be above that, 40% to 45% potentially. So some of that will depend also on the F&B operations that are available to us over time as we go through the recovery period.
Mark Samuel Hoplamazian - President, CEO & Director
A couple of points I would add to that. The -- I think the occupancies that Joan just referenced are at the operating income line. If you looked at gross operating profit, GOP level, if you're familiar with hotel P&Ls, it would probably be about 10 points lower than each of those numbers that Joan just cited. So she was talking about breaking even at the operating income line as opposed to the GOP line.
In terms of the question you asked about what level of occupancy we might be looking to as we think about targeting reopening our hotels, we think that something like 15% occupancies are about a crossover point between how much you lose by staying closed versus how much you might lose by reopening. And if you thought you were going to run 15% occupancy for a few days and go back to 5%, then you wouldn't reopen, of course. So part of it also has to do with our outlook for a given market and how we imagine the profile of demand might look over time.
Thomas Glassbrooke Allen - Senior Analyst
That's all really helpful. And then just as a quick follow-up. Do you have any updated thinking around your sensitivity to like 1% RevPAR change?
Joan Bottarini - Executive VP & CFO
What we've disclosed previously is that 1 point of RevPAR is approximately $10 million to $15 million of EBITDA -- has a $10 million to $15 million impact on EBITDA. And so in this environment, I would assume -- you should assume that it is higher than that, a little bit higher than that.
Bradley O'Bryan - Senior VP of IR & Corporate Finance and Treasurer
Josh, we'll take our last question now, please.
Operator
Your last question comes from Jared Shojaian from Wolfe Research.
Jared H. Shojaian - Director & Senior Analyst
So 30 months of liquidity is obviously a pretty substantial amount of capital. Your balance sheet is in pretty good order. Can you just remind us, I guess, in this environment how you're thinking about M&A? And given we're likely to see some pretty distressed asset prices, would you be more willing to acquire something that came with a larger portfolio of real estate, with intentions of disposing of that over time? Or should we think about any M&A looking more like Two Roads with more of a pure asset-light exposure?
Mark Samuel Hoplamazian - President, CEO & Director
Yes, thank you. I have to admit to you that I think most of our time and attention has been spent on managing through the initial phase of this crisis and making sure that we are positioning ourselves to take care of our various constituents, not so much time spent on imagining what the environment might bring in terms of M&A opportunities. I think one of the realities is that when you go through a disruption of this magnitude and this severity, a lot of people, I think, will end up taking a step back from making any major decisions with respect to buying and selling unless there's distress. And so far, maybe it's still a little early but we haven't seen too many things that have been put out into the marketplace because of a distressed situation.
And overall, the deal market for either hotels or in general has actually been quite quiet. You've seen more publicly announced deals that have come apart than you have any new deals that are either launching or getting closed in our industry. And I think that will probably persist for a little period of time. There's some really important reasons why that's true. The first is that for any potential buyers of assets, hotel assets, in particular, the timing and severity of the decline in demand is kind of an important underwriting factor, and it's really hard to put your hands around that yet. The second major issue is financing. I think the stress of this whole pandemic across the banking sector has been pretty significant. And I think banks, in general, will have -- will either be reluctant to or unable to actually underwrite deals with respect to assets. So I think that for those reasons, I think the total deal environment is going to be at a suppressed level for the foreseeable future.
With respect to our attitude and how we think about the world, we remain committed to continuing to expand our presence. We think that we've done that effectively through the Two Roads acquisition. If another opportunity came up, we would be very open to pursuing it, but I don't expect any to arise in the near term. I think that it's possible that there are some independent or smaller management platforms that might have other stresses and strains with their owner communities and the like, where we might be able to either be helpful by way of a partnership, a venture of some kind or by way of an acquisition.
But we have established a very strong balance sheet, first and foremost, to make sure that under any circumstance, we don't need to worry about our liquidity, and that's what we think we've done. And we want to make sure that that remains the case. There are many uncertainties that still remain. I think there's at least a possibility that there's a reinfection rate curve that we hit in the fall. We have no ability to assess that at this point, and very few experts have an ability to assess it at this point. But we just have to maintain some, I think, balance as we think about deployment of capital at this point and making sure that we have better visibility to the future before we start making commitments that would consume a lot of capital in one way or another. So that's our thinking at this point.
Jared H. Shojaian - Director & Senior Analyst
Okay. And then just for my follow-up, as it takes time to get back to prior demand levels, I think in the interim, there could be more supply if you're still compounding units at high single digits while others probably are too, just given the industry construction pipeline. How are you thinking about that supply and demand balance going forward over the next couple of years?
Mark Samuel Hoplamazian - President, CEO & Director
I think it's going to be truncated. I think between now and the time that there's a widely distributed and deployed vaccine, it's going to be very choppy and it will be market-specific and positioning-specific and customer-specific. I think once that -- I think once we're past that point, the pent-up demand is going to be significant. And I think we're going to see a resurgence of travel at a very, very high level. And so I think that the whole dynamic of supply and demand is going to shift. It's going to hit a very, very significant inflection point at that point and shift in a very significant way.
It's hard to know exactly how much time will have elapsed between now and the time that, that happens. So part of my answer to what is the future beyond that point look like depends on whether that -- whether that inflection point and widely distributed vaccine happens 6 months from now, 12 months from now or 18 months from now. Those are 3 different versions of the world and it's too hard to say.
Operator
That's all the time we have for questions. I'll turn the call back to the presenters for closing remarks.
Bradley O'Bryan - Senior VP of IR & Corporate Finance and Treasurer
All right. Thank you, Josh, and thank you to everyone for taking the time to join us today. Please stay safe out there. We look forward to speaking with you more in the coming days and weeks and certainly hope to see everyone in person before long. Take care.
Operator
This concludes today's conference call. Thank you very much for joining. You may now disconnect.