Apple Hospitality REIT (APLE) 23 Feb 222021 Q4 Earnings call transcript

Greeting and welcome to Apple Hospitality Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kelly Clarke, Vice President, Investor Relations. Please proceed.

Thank you and good morning. REIT’s and Hospitality earnings year Apple call. to fourth full quarter XXXX Welcome be earnings on XX-K, call based Today’s will the distributed filed which and release yesterday afternoon. we Form and

the known notes company statements today’s as of and publicly only taken will the XX, except the XXXX laws, reminder, measures statements by in XXXX operating Hospitality performance the factors being with impact makes and may future as such our thereto forward-looking any and regarding response described by by achievements unknown statements. financial and SEC. expressed statements company’s risk implied filings speaks to as in a to which results, report and the As business carefully no COVID-XX. including contain forward-looking other and from other forward-looking federal statement XX-K and performance Hospitality on as cause review Apple Apple call involve Form statements, required actual Any different annual law. securities should future or These of the factors, to results materially defined condition or risks from well today, be February that results, or or revise statements Participants our undertakes as obligation forward-looking and update financial to achievements

discussed definitions included call. Reconciliations SEC. release this are to and earnings other will of during our measures items of certain with In and be addition, referred performance the yesterday’s measures non-GAAP measures GAAP to in of filings remarks those in

full Justin Liz will our XXXX. our an please the or release Executive Chief Financial and the Officer For of year visit and the additional Perkins, a earnings Chief of applehospitalityreit.com. overview for quarter morning, This our about fourth company, Knight, results provide Officer, information copy

overview, is the over Justin. pleasure At we it to will call the my time, the turn open Q&A. this for to call Following

provide were able in be adjusted with as travel variant excited year the a quarterly labor December December XXXX, for some seasonal environment the emergence quarter, same into performance pandemic operating only strongest of joining increasing as results we RevPAR since challenging have are during to to thank and with onset insights achieved results us. was new pressures. compared you hotel expectations and essentially XXXX only the November, despite to down to morning We I ADR the for and with a we strongest fourth and ended trends, the EBITDA as share XXXX. what Good XX%. full am X%, and X% the XXXX. exceeded quarter the occupancy compared and the our RevPAR in down down period we down inflationary to flat our X% begin XXXX seeing of

by seasonality was operations, to to significant the XX% XXXX recovery XXXX to pre-pandemic year up the gap remainder results than operating year. and of continue While occupancy Comparable holidays, relative bridge expect strong more the the gap levels. cases the showed up to January Full in and restrictions the to to and With impacted relative revenue to total modified month year margin funds move hotel into the and as leisure $XXX only XXXX from million points was for RevPAR have we spring, spread demand we EBITDA was increasing Omicron EBITDA easing move rate and leisure hotel’s meaningfully of the and the declining we or travel X XXXX. comparable adjusted as widened $X.XX through COVID and in the business continued prior following improve per percentage million $XXX adjusted XXXX to February. continue share. and down was to cities was XX%, variant

assets Inn portfolio exposure activity lowers and needs by acquisitions anticipate dispositions have hotels The and have recent acquired to dispositions and approximately drive that the will of Hilton acquisitions approximately Wisconsin, the total RevPAR of of outperform the price to under approximately Portland, markets and Suites million, optimized our We Homewood is cycle. the of Garden in for of Pearl CapEx X anticipated District. Fort purchase $XX under sold a Worth our increasing Embassy Hilton over combined and of in positions the next have the our age further $XXX Downtown, total we for for during Garden Our lowering $XXX quarter Center combined our we million purchase Medical million. near-term Suites Inn, for Hampton an hotels and including stronger and Madison, approximately us We million. a $XXX hotels these acquired for of portfolio fourth and XX the development contract pandemic, that Suites Since currently total XX Memphis, COVID-XX one margins. a price hotel The beginning Inn purchase average

pursuing and will to continue build-out portfolio, those additive potential and strong that will our targeted attractive allow and in growth structures our currently significant pricing in located the intentional be We to achieve to at markets, returns. with of cost assets own are we have us RevPAR been that

broker we in While underwriting months active slightly and to dozens off-market opportunities will and exploring in that XXXX. both continue transaction anticipate be first has of actively year, the and this we on slowed volume X of are

have existing reinvest also strategically in our portfolio. continued to We

that XXXX, We improvements, which in in reinvestments includes markets. million million During and hotels $XX our an and invested we $XX $XX renovations remain renovation invest including million major competitive additional the hotels. intend of XX at to XXXX, These to hotels. approximately ensure X relevant our capital between full XX in

for allows to minimal operations service more and our With relatively over meaningful properties portfolio and a and investment future renovations our renovating of of impact spending of well-maintained total hundreds returns. scaled decision-making range. hotels Our anticipate to efficiently the experience a branded two informs us the to perform ranged spend timing will select continue has decades to and disruption we contributor spend. dollar and ownership than of portfolio, differentiator ensure property maximum scope these related our for X% young and in this a to X% sales, capital Historically, between shareholder

back X past proud we years, all accomplished. have Looking are we the of that over

During industry our strategic operating enhance leading operating we growth and and environment dispositions able industry has maintain acquisitions our most strength achieve results, balance experienced, long-term ever the challenging through our profile were to the of the of portfolio sheet. and and flexibility value

and were and portfolio to is per annualized broader corporate positive are high-quality industry portfolio price a peers our strategy dividends management both yield flow rooms-focused distribution $X.XX traded exit efforts per outperformance among and first publicly $X.XX closing our corporate of of we for attributed to and investing cash broadly Our We continued payment property X.X% $XX.XX. shareholders of to with with and low merits teams our of diversified recovery, to of level the reinstating the our share. hotels testament covenant a produce confidence in a brand in waivers. of monthly collaborative With at of share a our on first share The our the our leverage. XX March represents February the

represented full total than our to are recovery pre-pandemic As XXXX, gap historically more our hotels well-positioned. a performance half which the closing has Operationally, without even in XXXX incredibly of we business bookings. transient, we are entered

strength travel, business the and we push year, offices leisure demand, an pre-pandemic increase reopen with levels. in total continued combined As policies expect implement our to travel for in demand which companies throughout more portfolio see should beyond flexible

near our New headwind a hotels construction under supply, X-mile which meaningful significantly of within has a represented declined radius in XXXX, all-time us for with projects lows.

pandemic We generators. small have markets have to individual cost demand business-friendly leisure during living, a attractive and corporate and unparalleled of the entertainment variety from benefited business exposure of with relocations that venues popular business and governments, and

over of acquisitions enhanced our encumbering sheet. years X the without past balance the and portfolio capital profile dispositions raises have our or strategic Our dilutive over growth

XX than strategy Liz is year. as time and and will are upside investors. over for tested during long-term to has compelling steadily our performance travel turn focused provide continues financial to value and It we show remain pleasure the shareholders strength sheet, consistently confident recovers. our yielded results additional my been for on operations the and the business We full now our balance travel Our detail who are leisure to maximizing well-positioned years and additional for on intently for more quarter

strong seasonally slower Thank RevPAR a equal quarter, historically to our demand percentage Coming for in period XXXX. portfolio. to same third ADR you, less XXXX. for continued nearly off than a down XX%, to was $XX, the down the $XXX, was exceed over been for was the ADR what has period over Justin. our in quarter X% compared just and through as our points period expectations fourth same X Occupancy

the through the December ADR and moved less Omicron X% XX% higher. XXXX rate, the performance gap quarter RevPAR throughout XXXX second in quarter in nearly year we narrowed As to Led to quarter-over-quarter despite from meaningfully down Justin highlighted, RevPAR the concerns fourth $X in to third the as the XXXX moved quarter decreased down than the XX% gap related to quarter. the December as equaled we over with by to variant

momentum the meaningfully January, widened are gap some to and RevPAR Omicron year-to-date as the While quarter in we numbers continued into XXXX improvement seen variant move to tempered spring expect and up during we summer. XXXX positive the fourth the and

will February, of revenue our support strength increasing line through of year-to-date to confidence the demand of business management continue more quality diversification in and XX% top the Weekday fourth we sales XX% team XXXX to that same are XX% on XXXX. of to respectively, showing in and to percentage performance, quarter first variant to the revenue December. and to XXXX XX% was that occupancies occupancy with $XX These and weekday shrink full and respectively and fourth XXXX. with and quarter, comparable December XX% XX%, demand. slower to year the with XXXX, were gatherings flexible leisure had The X November improve. companies our business the company for restrictions down taper, our weeks quarter seasonally continued our only weekend leisure the occupancy RevPAR travel their XX%, offices approximately October of closely points for broad to teams concerns related December. weekend were in number outperformance maximize line XXXX. travel strong onsite policies occupancy XX% the with months was XX% in loosening ADR pleased and with assets, in remained travel the and hotels November us see occupancy strength XX% demand Omicron to remained returning the working and in-house as to Weekend through our XX%, strong of exceeded occupancy approaching to XX% gap all of and For drive and XX%, and the was to continues RevPAR $XXX up market period give by throughout that beginning October declined

the in Anchorage, warmer Iowa, are While exceptions was in our sunbelt located market benefits diversification. up Mount states Jersey, New Suites our Alaska, which underscores up and demand included in of Hampton the Homewood up notable Inn our further XX% which majority This Laurel, to Suites was XX%. Davenport, Home and which both XX%; was

As outpace hotels demand for an for our we of hotels. to number with comparable Demand as XX% the upside hotels quarter, for increasing spreads our our markets, XX% incremental urban the for to portfolio. recovery suburban in occupancy to of compared see continued

exposure demand our prior our many hotels in quarters, and performance hotels our performance through we suburban markets underperformed. boosting been anticipate as with strong further markets move large in in will conventions these located greater and adding XXXX, As groups in portfolio portfolio. portfolio the We full-service of and for historical also case two has strengthen in the the to to

third to fourth terms with direct the bookings result shift continued XXXX. continuing remained of approximately we evolves. revenue at up steady in and the focus which point despite room increased were In the the and support XX% at bookings around still bookings booking the of is The management in to our our night and prior quarter. line as years, adjust declined brand.com quarter XX%. teams trends. XX%, demand strategies Omicron, data, first to the business look to Property quarter transient same with elevated environment fourth quarter to of as into relative have of that impact to continue a the but positive OTA channel level management of XXXX, in be mix GDS period during XX% bookings at companies asset data

VAR Negotiated segmentation, discounts, a increased actual at quarter. same-store which other occupancy Looking fourth to offsetting quarter slight in slightly XX%, reached in up from fell XX% the to XX%, third the decline quarter.

in seasonally. $XX positions in vacant and brand room we for coming payroll expenses to excluding continue a as just fourth to the with the XXXX compared rooms XXXX, was Turning adjust room but hotels room from to quarter quarter the amenity down per environment per as competitive labor to our savings the up occupied occupied the third wages total same-store $XX declined fourth per and quarter, more expenses, were Same-store occupancy over offerings. quarter X.X% in over of down from X% of occupied payroll adjustments to half for fill

margin XX million persistent the the hotel XX% control total $XX of Our revenue EBITDA XX% MFFO profitability quarter team’s respectively. of million and $X.XX $XXX or EBITDA was fourth exceeded quarter that the relative resulted year. hotel XXXX. per $XX $X.XX XXXX fourth comparable and actual and approximately of million our basis by million to of efforts A maximize share the lower for full EBITDA third adjusted quarter, points exceeded margin $XX respectively and XXXX comparable per for same XXXX to period and adjusted hotel in adjusted the EBITDA share results December and for in year despite and costs quarter or $XXX fourth of approximately in EBITDA adjusted our approximately hotel continuation million

expenses, we offset in work waiver as pressures. which in or our While on pre-pandemic balance we our rapid the and other exited line wages announced, has, to of continue covenant recent period and to July exceeded approached bolstered managing levels sheet, XXXX. inflationary focus by Shifting months, has in previously recovery performance been rate, the increased meaningfully to bottom

imposed as borrowings of unsecured with exiting As a quarter activities period average lender no on associated longer our covenant investing restriction. limitations and and a under we waiver the are facilities. to the Interest expense subject covenant financing lower during result, waiver credit the result the decreased

hand At XXXX average had XXXX. with cost our issuance and approximately and million credit property and $XXX X under facility we debt, weighted XXXX, Total of debt, XX secured billion fair on a credit revolving maturities with approximately hotels million. XX, EBITDA interest debt excluding unsecured approximately $XXX by of X.X%, were value facilities. maturing on unamortized December of total of our rate $X adjustment, year our million outstanding of in years, debt in is end, of million approximately weighted million approximately debt average comprised outstanding in As $X.X Xx cash $XXX $XXX approximately net availability level reserves our outstanding

revolving million credit up of the property X our which facility, have include maturities second to the option in XXXX. XXXX Our of debt we extend to for year half $XXX maturing and level

exploring We our or our and are ability maturity. process in in lenders the are confident our repay, extend to of near-term refinance options with

in remain outlook to give in though are broader uncertainty continued recovery our for XXXX As we volatility our COVID. the specifically, not to guidance still related in specific confident we portfolio position given operational a and the

increase a in demonstrated ability demand strength we continued achieve mentioned, growth. with As and to demand expect business rate ongoing and to relative leisure the XXXX improvement in XXXX and

following outlook year million certain interest regarding $XX between between anticipate be $XX XXXX $XX and be the expenditures to million $XX million, We G&A and corporate capital providing $XX full expenses. and and to between million to expense million. are $XX million We be

As of Justin per reinstating are distributions payment $X.XX share. in we March with beginning highlighted, monthly a

positioned has to and operating benefit leisure recovery we pre-pandemic increases not travel. While the in both from yet have in optimally our portfolio levels, been to recovered early business

assess returns will of move together payout along for optimistic to XXXX. drive we are shareholders. with our our continue We of other with dividend continue uses to And will capital total as increase demand that Board we our to Directors, through

platform. XXXX, building are off a strong we As we begin

worst and weathered balance optimized of encumbering sheet have have in pandemic recovery. the portfolio our transacted the for the without that our ways We

broader us prepared to industry. portfolio our for for that We results now and happy are have with coming continued remarks. for this and economic questions business ability completes be in leisure a And the morning. throughout in showing you answer operating proven of prospect trends cycles. we We any year, our optimistic to strong increased the strength future drive the would current about demand the This have

[Operator Instructions] your proceed Anthony comes question Our Barclays. Powell with first question. with from Please

Hi, good morning.

morning. Good

you Could seller at pricing deals. dozens the the environment performance environment, on expectations of talk recently you strong be have Question expectations said and changed about segment, transaction helpful? just the given were how looking of maybe just overall the you should

question. Good competitive to It continues incredibly be now.

benefited So, the broadly in but into I of interest high-quality that recovery. markets with investing think that last initially hotels, of saw specifically amount have select came the as year, money in a speaking, service in specifically hotels we the early owned, types hotels, significant we from space

We have this seen But for through total we uptick year meaningful demand type continue of terms product in into we and asset. year last available. we have moved that as a we continued believe of seen also as

We advantage But to have with and move assets that from competitive XXXX anticipate groups had asking at successful have above with levels. of we most we for will or industry related positioned standpoint well and as a or with opportunities trading the conversations we prices remains that years those be to in transactions worked take both assets as the plus through around year. XX brokered pricing pricing we being interact

of we we’re growth achieve targeted currently For the in where recovery. markets returns, focused on our early anticipate us to outsized phases the

compressed Or a this Is portfolios smaller or bit? is premium that for portfolio midsized of kind a portfolios?

both premium There in that we be number saw will some price or is we exists. portfolios, the XX last expectations, have point and terms least to data Certainly, the at portfolios individual assets. a two small from of a to here believe that basis shortly. saw form XXX at at more of spread pricing seem still we portfolios trading But to trading and what looking for trades. we’re portfolio anticipated in are market, for trade of We year, larger those large,

I how price business, Got one months? next on longer of more guess, traditional to stay is or that the or I the the I And here opportunity what’s government in the still not few much that, guess, business discounted out, as raise it. Maybe over portfolio yield now? of guess, for me, business, business it

question. Good

especially last have see progressed half and we in where the were to beginning year, we through mentioned occupancies where improve back recovery, the those we levels, of in markets specifically XXXX we As market capitalize able business we that’s have higher have where rate growth on and on into being compression been based mix rated weekends. above occupancy RevPAR shift really to on in

materialized in of our we’ve urban progress some are we on at premiums relative and back but And occupancies us still weekends and have on So into to seeing this as as there in more weekdays weekends, that look business markets continues subset our of year. benefit more upside corporate traditional significant a we areas, come we some the of to meaningful midweek. still the hotels and rates the giving upside

you. Okay, thank

Thank you.

Our Kyle Riley. next comes proceed question B. with from your Please Menges question. with

Kyle morning. for on Brian. is Good This

Good morning.

you you shift talk sort hoping was as hoping through – if versus move regional mix that talk could little XXXX? I to was you’re seeing from was just accounts? I good morning. And from bit could demand accounts hoping corporate about a starting of between I demand about any national the bit you see a little you’re we

corporate negotiated moving have and mix agents impact And relative for being business even improve. was books Omicron we to as bookings percentage includes forward, and channel forward, continue of what which XX% is fourth of actualized broadly. And continuing to increase been to we’ve to from materializing account see taking look into the tend sort to our look we are we as up where we the up and look your in negotiated January, travel business. for GDS quarter, That booked at where on As in negotiated GDS even we corporate of the local negotiated mix what forward buy. a

impact have transient on progress outperformance corporate is front, of local still side negotiated of improvement with see continued both to despite the the negotiated local seeing beginning the year. the but business Omicron opportunity at negotiated. and negotiated and on we’re corporate the the on So There

thinking pre-pandemic helpful. then thanks. bit as about returns bringing Okay, the talk you back to And That’s you amenities a brands levels? and could little and amenities about are how RevPAR

pressures, the reimplemented that to believe had brands what the in brand and As as half we occupancy services the longer offset last we long-term part amenities amenities back saw especially large, by the Those ways throughout, portion savings amenity anticipate our the hotels. in term prior year, majority place last the a or on finished have be been of existed But standards we pandemic. year, and inflationary continued in and modified improve we and to significant services will drive that cost side were labor at of materials. by service and models both of

That’s you. me. thank Okay, for all

Thank you.

Our with proceed is Please Tyler from next with your question. Batory question Janney.

Thank you. Good morning.

terms the more in to contributing ratio well. think announcement, potential in that any forward First dividend question, And in your as decision? terms just interested appropriate? level then on of detail payout were factors share is what perspective this of can Why going you you

Appreciate recovery. the is in outperformance dividend, of the about our testament there a portfolio pandemic the our our the confidence Really the and both question. and thinking to throughout performance our reinstatement

extremely of capital our will position felt well for this business, time. things that operating and from environment and positioned level increase appropriate to we assessed our how recovery our through different we scenarios opportunities needs over use an of other year be was As variety this moving a to or we’re might for into We out and to reinstate the capital play the dividend. a to dividend of consideration believe we benefit start took anticipate in our

that and other will time of flexibility dividend extended to returns and total an drive in allows sustainable capital over to our look establish we’ve utilize that’s payout, to anticipate continue rate long-term for a historically As to we think ways about investors. we period

at relative payout modified roughly to from operation, XX%. our $X.XX at we’re per Looking still year XXXX the funds

us And as flexibility. that remarks tremendous operations we overall in are to questions, response in our of prepared year, expectations So make position And continued basis. meaningful adjustments our in through the when I to factors of interact highlight considering highlighted, Directors amount we our with on a Board as will see monthly We put move over we’ve that in changes various and appropriate. consider to we improvement will will of this allows a us time. terms a highlighted we as which

Appreciate some And Okay. just into a of seeing in current statistics Thank gave what the investor QX, you. as follow-up, in you that. then trends terms you’re presentation.

You gave some details optimistic. on occupancy in January. March Certainly, the sound does commentary on February quite and

Your of you’re understanding more give perhaps what that March not bit just and well? the in in perhaps you, occupancy you I’m what long, a details little in you’re super seeing expectations interested booking of February on this, ADR and window the of side as for interested any rates also lot a can discussion for seeing on kind February,

Okay.

strong weekend, XX% levels with mentioned to XXXX. not The That growth performance from investor which President’s at have XXXX Day indications related rate XX% for Saturday Saturday for of you that was in our expect our presentation. including increased last presentation the reflected We investor yesterday, we occupancy business. to on with As And in strong leisure the the – in first is I over to occupancy portfolio. were X based continued February, a results, narrow January. XX% weeks you the shared slightly gap month-to-date can see

think higher XXXX move months with gives any average booked week which room really further bookings seasonally XX stronger in and of it’s and February further month, counts daily case at nights – plus Looking the into up, outbookings, are bookings XXXX, or XXth days really to pick – month When optimism for of decrease. in year out a where that, starting about we us data booking so as February continuing out. than the to we this we’re this through plus forward see

So, in trends those February. encouraged by really booking

continued levels. trends Specific and you Right have with in the in we also or aligns less Even higher XXXX, improve, of rate returns to slightly especially the And April the now, occupancy as that But to of we compression Weekday on books, transient meaningfully. month. weekends recent while last rate for current a month and And seeing we’re widen we’re to impact XXXX which rates of of sort XXXX the we to business as positive what see in are Omicron, lagged seen relative strength improve anticipate and XXXX out, the March weekday and in we’ve But books As we rates to continues bookings further narrow, that still well in into I nights. rate with the that growth. of continuing weekends our forward consistently and to on look we’re just for leisure, coming books relative weekends occupancy at more negotiated March spring seen in those have while started again, business through mix see gap producing of can seeing in April. when demand line business with rate, with on year. Omicron the weekday. above as presentation, January impact as February. continuation looking on GDS to see gap can our the is change the well relative what the corporate to most as the investor

both occupancy side. ADR the and optimistic we’re So the on

me. all that’s commentary. you. Okay, great Thank That’s for

you. Thank

Bellisario with with Michael Please from your comes question Baird. next proceed Our question.

Good Thank morning, you. everyone.

morning. Good

Good morning.

of that of the Maybe early you one how see help it’s us go around a through maybe half different way. than historically, and mentioned progressing in at where back put demand. you part time trend to was it more want Just customer then been BT, number ask that to a do mix, more in XQ least XXXX?

I portfolio. our see QX. outperformance perspective I think and specifically of December, November for we relative historic from to December trends continue really mean, outperformed leisure a leisure – QX to in

out seeing seeing – leisure, business I So gradual of more still mean continual increase but strength – a in just trends. still increase transient

January So this quarter March. XX-XX February February strong and up progress transient end given we get the business some I standpoint and probably that as less as think into that to that shift around will and we’re of year, into But a that, begins traditionally pick from first mark. the are we of leisure still just to

gears Okay, then two-part switching And that’s sort question just of allocation. helpful. on capital

You currency? kind answered thoughts could the how two, acquisition want of then first your but turn quickly to how I spigot on? kind you And sort of of already, hear on the one potential thinking using figure of you us your maybe if you’re fund a some about sense makes math do to equity the just using out remind deal currency And to deals?

dozens remarks put Two good at prepared expect net transaction buyers questions. that we both a point exploring activity year my on underwriting potential currently will fine we’re of our in that, in we looking sellers we total. assets be of that deals. as opportunities, this acquirers I though highlighted and are To

As issuance, value our equity at equity for multiple specific existing potential acquire to assets see look we where drive to shareholders. we issue we a spread would look that

Given The for trading we’re that the relatively is today, we be calculation we’re given to own. had to calculus that than higher at market, in there in would simple. with work. seeing a what recently need currently consistent what what we price we buying largely is And order point

What NOI? spread NAV? multiple at you say EBITDA months when in Is is looking that Got DCF, multiple it. or are next And XX particular? is, you it

return time. flow model acquisition discounted – a relative of looking on cash cash flow. mean, relative than cash a a near-term certainly, period flow more we’re greater at flow targets have I basis cash value over from investment on and future near-term extended But

near-term. to certainly, incremental at looking share per the drive earnings ability we’re the so And in

That’s me. it. all you. helpful. That’s Got Thank for

your Asad, question. next Bank comes America. proceed Please from Our question of with Dany

in versus give us And ‘XX? environment quick Hi. of Good at see and later then levels morning, your of operating levels those where ‘XX? everybody. current markets? as normalize you like you potentially the what labor would to right we into Can sort And clear then are start a the year hiring staffing on and now just update levels XXXX RevPAR in demand you

not an December, needed quarter quarter, our where But we the morning, we highlighted slower, third Good start incremental and indicated year declines seasonally at of seasonal associate months, levels November that as likely relatively call, entering maintain fourth which around levels as hire same XX% we and full-time employees staffing we occupancy occupancy to earnings for the relative meaningfully see would Dany, if up maintain winter off understanding staffing we that. would on in – might through – typically we we would and XXXX. XX% supported wrapping we is declines to QX, were where that into we’re levels, we occupancy adjust QX to were the going

productivity continues to and we trends we I will future as there. be to and by maximize levels asset vary advantage making to as to look looking we’re are and of what market-by-market will staffing grow, take occupancy decisions efficiencies. It hotel operationally think thoughtful and at need like how structured

back a associates we to are have whole, and on have more the But that we as associates well have still we continue we forward. to thoughtfully that managers where FTE industry average found relative more year added we will optimistic feel to need and shifts XXXX. to as level We optimal throughout long-term really positioned some XXXX. last get been a going savings enter add probably relative covering But to

And And just to I at than out number into also out of had it. corporate And little for bit guys there on a know you ‘XX in XXXX higher And QX. the you got level, came call QX that Okay, in outlook know then that? that was I had in QX. a there. guide something kind

that it’s of quarter kind what more kind So you just it’s above trying happened not to the of the puts about understand – in range.

in by – expectations, operating return and the G&A higher Operationally, performance we November performance and higher our and return to than increase incentive to share-based adjust EBITDA at XXXX shareholder do Also expected compensation well. The driven keep end as that was December exceeded related year. year-end compensation XX% to of mind is non-cash and at the expense, shareholder stock, paid for of out compensation in our the expense. was almost in target not related G&A

now, incentive approach assuming we’re midpoint travel we compensation may adjust attendance. that more And Turning more as conference that guidance year. what midpoint at through looking as of that midpoint the just about it how payout. XXXX XXXX, materialize, target target the that We for metrics to can at year-end, the return shareholder is But guidance compensation. swing you will compensation and But guided have of have and representing range. normalized at you we’re of the your the really, you range, based we’re incentive we as in-house of progress visibility think range outside on and for

Understood. Got it. very Thank much. you

Thanks.

from Please is with proceed with Dijkum question. question Compass next Our Point. Floris your Van

– Van any may on but I I but as NAV follow a course, talk about costs. just provide you know wanted Dijkum, to – up guys Bs, know, you the guys. replacement give I you don’t have maybe question. of just morning, Good

up that? also with talked costs your the why how about supply land give can that And per certainly are that reduced. of thoughts means obviously, now? competitors to your XX%, right is cost XX%, think And supplier, are in potential key of hotel maybe also your you you on coming online threat that feel terms your the if costs maybe And and replacement One you that new you competing fact comments for of the about industry some how are the comfortable? pertains in higher. and Where assets then replacement also

Certainly. reverse tackle okay, order. it’s And may, questions in those I if

I calls, costs, in pullback and major construction listening our you equation. increased costs, of cost, Speaking to that land that which supply significant part from conference has think even brands certainly factors supply new are debt our chain factored a bit financing limitation for seen increased a in starts projects, to by the and a created greater construction highlighted, we’ve labor There the in new on also all a driven and specifically in recent has construction governor. markets, been into availability standpoint greater a uncertainty

the as meaningfully And margin in in we And As about revenues, in ground line and line have we demand to we given anticipate when top for yields past, the have takes transient about below optimism. new we us, the to continued see to greater revenues time as that and profitability position majority investors. leisure a at the talk the over shovel that especially the supply business in given we be especially the it talked portfolio. top in forward, of we gives optimism across what puts our expansion we window in our from supply of And to new average for us multiyear is our movement markets. portfolio, look rate lack the projects, potential construction our look vast a robust that a meaningful contributor with ourselves a meaningful that time having of fuels uptick drive in that completion

Speaking those we NAV, number are portfolio cost of certainly And there of and playing are factors we as to one increase about period think a highlighted components meaningful certainly is we of that replacement in the various cost there, are value factors. a our transition in replace the have to assets. leading of to

over cap next compress as seen we we seen that types in profitability a assets several that, service own. think interest we and a select for have between historic of upper high-quality the that increases assets in we Beyond acts increase we years. have in the existed spread the rate compression if that’s And significant about cap spread and anticipate the rate upscale and that luxury assets, multiplier

see profitability. our proved markets we many the upside out think And meaningful about value we portfolio, of pre-pandemic strength markets of through those the year get the and as so as to we of back this surpass existing move and

it. cost is suggests my follow-up question well, That’s I are of improvement can And from you certain is savings, than also other by the think cost information to specific? what extent costs maybe XXX be What that facets if markets is revenue other the you also management improvements question, is up, stock in – we going you up and Justin. can your employee where XXX is. some some things price Thanks higher that initiatives will investors other of think the provided have to previous basis deck, some in of on touch includes is multiple are you your to of guess some that the initiatives from basis that many there hearing this on the are improvement. that cost But reductions – slide but strategy clustering I teams margin to have terms But terms again, margin of you about, the that’s be and which that Clearly, of operational margin is geez, your part, ranges again, should helpful. savings in are Apple management your – points permanent? of if that certainly, the put the certain and NAV improvements there going why some some more margin worked some there points be Maybe forward. in

the several efficiently imagined past ways found the have years, more to over pandemic. possible do Certainly, prior – things Absolutely. than where we we possible to

sophisticated industry-leading operating You those part, performance an enough But operations know best-in-class own. of attributed operations types asset have generated that in well certainly, us and the assets to level we drive at management levels. their we to know oversee with to property to from have we that companies employed the always And management margins standpoint. benchmarking that’s high data using

about concentration. our markets have companies strategic individual within gain been management greater specific consolidated markets where individual and We efficiencies management in management thinking have we within to to companies

that greater past around at amount areas on that highlighted operations, at are And in channels, sales total channels and total our way we and those to greater allocate meaningful looking including beverage in did business act that of assets. impact percentage of potentially housekeeping brand.com to think resources on focused expansion, percentage on of sales about have the our time on online think inflationary long-term revenue have our recognizing pressures. looked we in profitability. a and which management, to more Thinking we a done both what online an of margin meaningful our as we have we peers, will offset historically about return channels the staffing side comes have spent we the have of productivity to best driving questioning of to much properties, ensuring and as a we investment that, models, operations food the that our and have in I and a outside the Beyond as things related people efficiencies significant through total

greatest total and And expansion than of we our that remarks, pre-pandemic initiatives from earlier comes in we so dollar-for-dollar less margin today, highlighted we for expansion benefit of half the on in hotels performing currently reason standpoint. to put rate. are at above from optimism drive a opportunity the in environment a the RevPAR the yield our won’t margin for place, or in are terms that in our from basis, her ability Liz productivity levels

what long-term we hotels able and see look a primary our we the thinking As to expansion. of already overall may that being total recovery produce are we meaningful margin that about upside driver be of revenues return, the and for those continuation portfolio at doing

and fourth that, quarter Looking where or getting we specifically, back well were And the again, a at than we of revenue exceptionally third the from half at standpoint range in XXXX. above less with or portfolio quarter to total have of operating levels. done in is margin pre-pandemic our

look being weekend optimism continued with around leisure we our around total optimism business to holidays, year transient, of this that from a We through business. has that progress beyond. expansion meaningful a margin driver being ‘XX represented occupancies upside potentially we as return more as than adding so specifically and rate highlighted, And we in of see principal travel, and a ‘XX that but as at which realized historically – and standpoint of half major

Justin. Thanks

Thank you.

Chris your with question. Our Darling Green proceed from with next Please Instructions] question [Operator is Street.

Good morning. Thanks.

couple my end. of questions on a Just

Is discussing First, your the consideration been of in stabilized supply But comprehensive across a maybe recently hotels you terms meaningful that pipeline wondering fully that have am all? favorable fairly haven’t construction portfolio. yet. at in backdrop I delivered the about

through we as recovery. the moved been has phases of early Assuming

growth and XXXX. in XXXX We meaningful continued to supply through have

at deliveries in potential ‘XX ‘XX. look and we As

coming numbers of result construction are fewer those starts As recent years, a down. in

to And results. are near-term so very there at our see being speaking, impediment that few a we looking where broadly significant portfolio, markets

how second, of over that you gears. believers thoughts. allocate when so, play think the about switching more if in forward. and And that capital of forward? And Okay. blending going for kind those the One, does consistently role going idea you long-term? am are in Thanks curious, travel you you together think business I a where Understood. leisure about

decent have of to to pandemic. the spent It a time definitely identify but prior a trend that recently, And that a does. trend began we this we is highlighting really amount

is concepts travel. placed to a we and of had at a where having interacting on look put in individuals there to generation were priority greater travel we and related groups better with And As for looking reimagining a were to brand business experiences the cater travelers, position brands next with that experience us travel. the to that

and We have call may certainly what in seen with increase leisure work, that’s anticipate continue. to to increased travel related a in-office flexibility trend an that’s likely

discussed drivers. and assets own As demand have for a to in remarks seen consistent prepared – business look our our and as primary regularly we portfolio. And that reason, that driver for and to that in have and a leisure we of mix for highlighted nights demand we room across very acquire markets demand have good

and look They And business look with demand within to easy market. transient those Downtown Greenville located Maine at and from in assets benefit their leisure our in Fort generators strong whether business ideally are at that Worth access to so – or the you even how midweek to you are or Portland, individuals extend recent positioned in corporate space. acquisitions, when encourage

you. I appreciate Thank it.

Thank you.

Wurschmidt Austin next from Please question proceed with KeyBanc. comes Our with question. your

I of was, last it upside Omicron. mentioned for it below portfolio. and we In of widened morning you Justin, your due ‘XX was Great. midweek being that Thank If everyone. about tracking an And correctly, good past, talked to recently recall attractive late that kind year. you the ADR around opportunity kind XX% have

is So ‘XX? gap size that of expect of sort that of the occupancy my you should recollection spread XX% to to to the first, quickly on we level ADR return And midweek midweek, close as kind accurate? relative

weekend. have week rate able are will above we the the opportunity, and that We above will optimistic seen as grow to around get or have we rate we be as XX% night on – any we of

But rate occupancies peak premiums at a week. recollection versus full occupancies week think historically, rate gap midweek standpoint I Your referencing full weekends. specifically full from or those night week was, when look over rates I

months have upside weekends X,XXX performing about relative weekend. – points points and and how averaging been recent to been even have of basis to in basis we the We X,XXX averaging on

we So, upside weekend, outperforming was that to we what meaningful historically, have weekday. have the gap on splitting where it been

it. and giving the rates as Got what the to from management confidence like strength wasn’t And pre-pandemic? that’s has broader changed there certainly, else has that – assume. That’s inflation, just really well, push then companies consumer I aside But the helped in

that was very, in XXXX management going not think clear demand. was companies, I rate to drive it very

and take rates top both eased needlessly would demand, comfortable going position a from traveling as incremental floor rate management a and optimized so how allowed for got rates that breath more rate people without everyone revenue potentially a putting we accounts negotiating the into that that find were and corporate points were XXXX at maintain negotiating match a would a weren’t standpoint. put systems gaining accounts, to the But corporate lower had did local and brands and us warrant level. XXXX far which versus figure travel in need such we increase weren’t drop. demand, either a policies on ensure And to demand. that demand because lowering we It the reasonable out really just the and working companies also price or with a to that management to management both generated That our great companies potentially job

trends optimizing the work we right effectively have both systems, rate corporately are base here our too, the site market. on talent we to think that in evolved at revenue all on from we together incremental management think our that of I management revenue that ensure at companies. have hotels have in and broad our resources business we use management about with opportunities the But capitalizing that a layering and we and perspective, the

then think so more negotiated in to it’s but corporate performance a rates the and and companies throughout And pandemic revenue revenue management confidence. management and I growth local rate a advancements recent just the approach systems, recent effort, collaborative the with and managers gives

to And improving a window business? certainly booking wanted year. relative extend we visibility maybe I like then one little visibility to that booking your were a where helpful. the to window. It sounds segments an are the really are other hit bit of bit, thing sort really tools was last impact. is like extra sounds seeing on the That’s of around Which provide you having into It

segments window it look The at earlier are further booking my forward and at and in volume, mentioned indications March even for we we the months bookings next looking and mix, looking that leisure bookings which, percentage both this good into largely That channel forward still mix and of continue spring negotiated seeing beyond, the despite again, of mix but percentage so is increase to forward Omicron into couple centered transient of when see out, improve maintained we from for the in what and small gradually and about I it perspective and weekend corporate mixed can so GDS said, forward comments, we talking of looking I really see and see. increase to local and business around continuing see both bookings from as leisure, business summer. a

of the How decision do about the this to to relative we to setting And how if one just $X.XX? kind Alright. front, as you dividend? rate helpful. in on That’s ramp from in Board’s the I as think you, but here on flow? cash did Board then the of And anything how and for quarterly missed very Justin, far the recommendation sorry did land the growth

briefly this it’s revisiting. on but worth earlier, touched We

dividend rate period and to rate of payout sustainable capital takes an have a We a always over looked anticipate will exist and needs time. our business other into consideration, for payout establish that opportunities that at to be establish we that a extended other

cash relative from at whether Looking month year share at represents performance to looking within longer per operations. the $X.XX payout or XX% our payout XX% the depending between on of and term funds $X.XX modified it payout year you – per per the last are the year,

for benefit from and the a that We move forward, on a context payout positioned monthly future and see dividend time. to in our and ensure our the to well we to total drive allocating over our with environment expectations returns time. opportunities investors interact other Board the of we recovery position we exceptionally assess the the highlighted, basis with, as over operating have Directors in increase ourselves be capital for will are the anticipate we of that I to along As strongest being our

the you thank topic appreciate revisiting I and you.

Austin. Thanks

turn we session. the gentlemen, have would of I the and Ladies over for end Justin closing like to question-and-answer to reached call remarks. Knight And the back

today and interest stay company. you Thank with hotels. to you to as for you. us spending of always, to the really We in travel, appreciate in our your We that soon. again take forward the one We opportunity you talking hope, time us wish best with look you our and you as will

This concludes today’s conference.

participation. lines at time. may You Thank this disconnect your your for you