529: Once Upon A Time Inside the World of Hospitality | Ashish Parikh, CFO, Hersha Hospitality Trust

CFOTL: What comes to mind when we ask for a finance strategic moment?  Parikh: I think that I'd have to go back to the great financial crisis for a finance moment, the week after Lehman Brothers failed, when I actually pulled all of the top-line numbers for the hotel. For the first time in my life, I said to myself, "Well, something is just drastically wrong with our accounting system because these numbers just don't make sense. We've never seen a drop this precipitously this quickly." That was the time of one of the hardest decisions, because we had never cut our dividend up to that point. From 1999 to 2009, we had been a very consistent dividend payer. Not one of the highest dividend payers in the lodging REIT world, but I think that's when you look at forward bookings, you look at what's happening, and you have to make a very difficult decision. We probably cut our dividend at that time by 70% because we looked at it, I looked at it, and I said, "It's more important to batten down the hatches to make sure that we don't violate any of our debt covenants, to make sure that this company's on sound footing for the long term." Of course, the shareholders aren't going to like their dividends being cut by 70%, but it was the right move. You know, you can't let Wall Street and your investors' sentiment on any single day drive your decision-making. There are times when you have to call it the way you see it. I'm happy that we did because it would have been very challenging to continue to pay that type of dividend—and I'm sure that we would have violated some type of cash flow debt covenant.