Apple Hospitality REIT (APLE) 5 Aug 222022 Q2 Earnings call transcript

Greetings. Welcome to Apple Hospitality REIT Second Quarter 2022 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Kelly Clarke, President of Investor Relations. you. Thank

begin. may You

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

by or implied. that please are law. with Any actual laws. statements assumptions, update securities projected call or may forward-looking such and no to views the XXXX subject XX-K forward-looking and by statements cause risk forward-looking including of are achievements any as SEC, revise only described Before statements as note include annual performance from filings undertakes by except are today. result, defined to differ we numerous our those results, today's speak to on as company or begin, required Form current a qualified and obligation in federal These publicly forward-looking materially based on our statements, report factors the as The expressed,

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

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

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

the second Performance us. our Good during quarter portfolio expectations. for morning, exceed and joining you our thank continued to across

to rate occupancy XXXX up July and XXXX and to second in pre-pandemic up and was business for highs, quarter at demand bolstered was into quarter, second month to XX% compared XXXX. up up by grow growth. RevPAR at approximately was compared Positive leisure quarter down for XX% to ADR Second Occupancy for and strong to exceed with portfolio XXXX. X% the X% $XXX X% to of up our strong $XXX, continuing quarter and continued for to pre-pandemic RevPAR and levels. XX% only XXXX. XX% rate XX%, the coming the have surpassed quarter trends XXXX

levels XXX by Weekend adjust stronger and strong occupancy across mix indicative We positioned an are our expectations, was encouraged XX% weekday occupancy by business approximately inflationary continues which rates growth throughout With of robust travel despite we occupancies, in maximize to basis with prices business gas our weekends, weekday meaningfully travel Consistent XXXX occupancies points. adding to the XX% week surpassing to the better the higher and reached be per quarter, markets. environment. more leisure incredibly for move to profitability. are resiliency of quarter, our

ADR quarter, and challenging the offset ADR $XXX, labor Strong and weekday rate For was pressures. to weekend $XXX. helped was recovery inflationary in

on-site leverage with line comparable adjusted comparable further or with up corporate outstanding the to million $XXX portfolio our a hotel per quarter same As were of last hotels X% high-quality, strategy hotels our of quarter in relative We to testament quarter a same adjusted achieved a investing XXXX, was EBITDA of $X.XX margin are with management of These period $XXX low XXXX. rooms-focused results. up same operations the of period and up diversified results branded the from validate than XXXX teams. hotels and tremendous achieved XX% million comparable ahead and XX% EBITDA of second in efforts share, up result, XX% million, and second significantly revenue to hotels total the second of $XXX period we hotel of XXXX for the operations of more year

demand of hotels XXX includes variety and generators a exposure wide portfolio Our industries. and provides to

small hotels markets generally to located businesses well entertainment business-friendly variety popular venues, which are of and of appeal medium-sized leisure a and large offer Our corporations. cost attractive and that living in as as

in balance Our can environmental offering returns, the operational a attractive outlets data robust to and scaled public are cash both produce to institutional to effectively and our portfolio with margins on and optimized a cleaning best-in-class own managed and our minimize space manage produce further downturns costs. maintenance refinanced utilizing contributes during leisure and facility, capital our as hotels the The brands have simplify relative we margins operating by primary reinvestment, reasonable and operate utility, to a ability platform. set sheet comparative aligned The to In at economic and rooms-focused attractive of be and bolstering long-term and best liquidity of credit we profitability. July, already footprint customers industry-leading small to our analytics of stability require strong and investors resale position. further unsecured operations hotels strength broad maintain local optionality appeal ongoing business resilient benchmarking. attractive are

be and and underlying interest have that impacted markets In broadly addition the the our term for corporate their rates business. improved upsized greater and opportunities. ways in for drive attractive other initiatives. greatly appreciate our their We providing disruption our company continued facility more value liquidity in debt in revolving support credit of the will growth loans, and conviction access to buying confidence and of opportunistic refinancing fundamentals the and incremental to competition Rising with strategy to shareholders. in lenders, maturities pricing, our our us for assets strategic

capacity maturities, million with the we just both on the balance our relatively are young Given since of the of in potential portfolio incredibly over additional dislocations work current net X.Xx well strength sheet are the the liquidity, facility, as pandemic, able capitalize and staggered amended positioned outperformance we onset $XXX and in total we our extended to patient a and credit EBITDA, flexible market. be and to borrowing our debt to under flexibility and

and coming months. will months we actively the over hotels transactions of XX original onset A of purchased of and the contributed the meaningfully since during underwrite year-to-date to excess to and The to of with pandemic markets continue assets can strategy with of portfolio, that we rooms-focused flare additive year of we young our and growth of first as fortunate with million on relatively consistent result, explore well the were in have Future meaningful that to reduce for our likely and We RevPAR opportunities the selective X XXXX in dozens the We over currently $X.X underwriting investing our portfolio. we're hotel of XXXX. be by in highly be where X/X in And yields exceeding hotels in to XX% intentional outperformance produced in these a pursuing spend EBITDA. hotels in build-out the maintained with assets structures cost capital attractive attractive potential. our to XXXX those are achieve acquisitions pandemic to a strong pricing. high-quality own located and preserve strategically have able entered a renovation

have rooms-focused scope operations returns which determining portfolio contributes of to X% X disruption approximately the will historical XXXX, and of $XX timing we our effective expenditures closely total for properties to we decades, and more we experience investments revenues maximum invested During impact Through capital of a the continue time. significant than X% shareholder feel to to of million differentiator for over scale, most our our investment ensure total and anticipate approximate of spend million year. spent. of more a our months in first meaningful between property in This us, million branded spending minimal $XX during appropriate and $XX over year's for X is and ownership which dollar the to

As of we June approximately had XX, our $XXX program. share million remaining XXXX, under repurchase

where dislocations opportunities to a we that has buy meaningful the opportunistic be in we market As see our been portfolio create case will discount. this using historically, program at

also our return to to We dividends. monthly capital through intend continue investors to

a per total monthly closing quarter, on and per we the million. distribution approximately common a our an the the on represents of context Based operating $X.XX annual price assess During payout current Wednesday's environment. yield paid $X.XX basis $XX in second of for of annualized share share

opportunities ensure investment we for for Our and the returns are that total expectations allocating to strongest our shareholders. to capital future the drive other

an We strategy outside. in low levels, macroeconomic ability historically profile, designed our and travel drive the opportunity of resiliency supply meaningful was environment, and risk shareholder optimistic providing we to create while strong nearly any with value in asymmetrical to results every confident for risk and the downside are remain at Our new maximize future incredibly about business. operating travel, business our mitigating of

moment I our want Liz, and the just to a on take touched balance thank turn during to quarter. earlier to the Before financial details you operations remarks. in I for that performance over to the additional time my I'll I Liz, now time on sheet, turn over

June portfolio with X% of the second results occupancy improved continued in the year continued line XXXX Top Preliminary was the months morning. by grew lower to quarter demand up show in but to ADR approximately good Thank in came prior X% XX% quarter strength growth and quarter June meaningfully total RevPAR in you, of Justin, XX% XXXX. up same XX% respectively. the . and for by to and line with XXXX with in period and XXXX, for than primarily which for second was for Occupancy approximately rate. driven of performance growth sequentially revenues XXXX. and July

of result July of large lower down occupant holiday, in X% week was July. the While fourth business part demand of July occupancy in the to final on the XXXX,

Our full results business portfolio top even pre-pandemic is travel. without levels recovery a now in line above producing

push and both to year in leisure respectively, weekday April, Weekday June continued As to year, levels. and further to occupancy the midweek at improved meaningful recovery in XX% Weekday business by will April to a performance last quarter ADR weekend first than rate XX%, with performance less travel, June both weekday from strength this operating meaningfully we weekday and XXXX. occupancy weekday Recent only XX%, look demand. forward business higher. exceeding in recovery $XXX $XXX and even respectively. occupancy X% improved in were improved of over occupancy reflects and to in down occupancies XXXX. moving May down driven in occupancy, significantly now June, further XX%, of and April in XX%, June XX% growth in X% With May XXXX our

markets during and our above quarter demand demand . $XXX improvement Portland, travel RevPAR we for are producers our trends, strength levels performance higher ACM and at the slightly providing impacting Top RevPAR from performers of produced the results with than business hotels in of improvements and business XX% in portfolio RevPAR in our for leisure continued with market. and RevPAR our lifting quarter lifting included of meaningful included transient to nearly pre-pandemic for further to ran transient portfolio with which XXXX top and quarter. benefited demand As produce a portfolio. in us upside has normalize look $XXX overall group with Atlanta, patterns of us our segments Gainesville, growing enabling every in beginning number Other the

night terms to channel support the to In quarter Property mix, and brand.com in. continued XXXX, room XX%, to sales of property to bookings declined testament of elevated but management remained efforts bookings our company over increased a second direct XX%.

Second moved with in accounts in the Other quarter the in XX% the slightly line second levels same-store quarter quarter line XX%. first than with and higher XXXX first XXXX. quarter, quarter and segmentation was elevated the demand growth and the remained from in to group business of XX% continued first quarter for at

quarter up expenses. pressure roughly X% for the rising and on XXXX. quarter Total Low continued labor. of with in unemployment to have the second put quarter, to Turning to and the line occupancies first

were to results and and full contract for part-time fill short-term costs training of by labor wages quarter needs. Second higher utilization higher impacted employees,

contract that help productivity will have on brand despite will be inflationary productivity in pressures lower to of as some We While we reliance a and and portion the anticipate labor positive elevated that service to stabilize. offset the temporary anticipate temporary of resulted operations models. adjustments the expenses amenity improvement

to to low we order always maximize done, will profitability. support we and turnover in strong As long-term continue morale and product and balance have employee maintenance standards

adjusted occupied the per Excluding expenses effective controlled payroll, X% approximately up margin EBITDA quarter cost of points growth for and of were well the rooms EBITDA approximately XXXX. XXXX XX%, to be despite compared rate hotel basis comparable and the to labor of room and second Strong quarter. and challenging same-store continued down $XXX XX for hotel control million

as we to we in will primary of the As continue rate recovery. be we believe calls, highlighted driver that on expansion through have the growth margin past move

quarter and Following each of the and XXXX. million quarter, similar in second trends, approximately $XXX share was XX% with second line for $X.XX of compared MFFO XXXX month or also improved quarter the per to sequentially the up second

Looking at our balance sheet.

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

related additional available lenders. amended achieving a maturity initial entered in with a and of subsequent revolving interest $X.X restated of extended level we loan under proceeds full facility, senior in facility the extending the the note may million which On Difficulty] to the includes increasing used and the million borrowed term $XX billion million and $XX outstanding billion. in feature accordion additional X, pricing secured the credit million the date term credit secured we property closing, senior million notes outstanding through and capacity We $X.X we loan shifting X and term $XXX comprised access of revolving at million delayed Seattle an debt XXXX, a July to the a we [Technical repay of the $X.X the the existing with $XXX the notes our [Technical met of which in facility revolving into facility. a At an key of fee mortgages, across to objectives unencumbered credit could secured our In, support million dates in maturity of the to million the repaid debt increasing as billion, August the of to our Within the $XX managing under repayment million. $XXX option Resonant agreement approximately to and X-year to is maturity, the unsecured upsizing draw of X-year our portion unsecured quarter, end, X credit assets we Difficulty] pool loan payable credit objectives land $X.X not and loans borrowing under in million continuing the facility. improved we and sold our facility $XXX increasing of portfolio. credit and $XXX more our the our to without achieved quarter repaid previous balance of under July, facility facility result, million primary facility, million and under a facility. credit repaid These purchase and Through capacity stagger sheet of $XXX The billion been refinance have facility. term $XXX revolving our be credit liquidity and The the

confidence and performance. for in these their continued grateful are to We team, and our extremely help their execute us for efforts transactions strategy

confident outlook the recovery As performance and XXXX, specifically. of industry remainder of remain our broader our for we in the portfolio the for

performance exceeded trends to our are results for July pre-pandemic average continue quarter positive and daily RevPAR Preliminary to be Second relative forecast. elevated XXXX booking to internal levels.

is macroeconomic of has forecast. strong and Although recovered travel business our ahead internal

line bottom are second our further As we occupancy, pre-pandemic move continue. should levels for if enable trends Macroeconomic to line with the portfolio. With term we gaining expect in beyond RevPAR operating quarter build mid-week to we which grow environment. these in XXXX, pricing us near back earnings power, results

which our intend provides demand in and to the strategy. most structuring pursue and of challenging differentiated use history extended opportunities. leisure resiliency the accretive maturities industry's we weathered demonstrated additional to opportunistically continued With in have and We liquidity, strength our period

ensuring experience has are with maximize supply more [Technical processes enable our systems us to maintain and to ways in the our our used will assets good over our any team And The been dispositions the that XX-year holdings products over condition has history recent Our planned our advantage in internal other of competitive recent in performance renovations, enhance that industry. picture markets. Difficulty]. than it in current in point we favorable further and a at is our

[Operator Instructions].

is from Capital Securities. Neil first Malkin Our with One question

Yes.

or if one, sentiment through you could from And that think start midweek talk like of of can look group potentially there that about next will the and that how First side and July. here? you of what QX BT I you several a the in sort out terms in then into either by the -- business Maybe holistically BT recover opportunity then ahead is some of shaking BT you quarters just see portfolio? of

consistent see our at improvement negotiated. points, as and of perspective to looking sequential started a perspective, business and segmentation looking a mix at our more local GDS had channel in mix couple corporate of and both a different We negotiated percentage then room Sure. transient, a from

So local XX% And quarter range, for XX% in for would we improved negotiated. the XXXX range. quarter. low the for corporate we the have room quarter, then segmentation negotiated in and standpoint we and were been XX%, for corporate where the And to GDS, XX% combined in for local

-- that's still to negation XXXX grow of So That's side. and your in has leisure portfolio more exceeding that a traditional both levels. that more corporate room corporate the are on significant our still hotels

it's mid-week about a the disparity we when little our to overall and of occupancy so when where when XXXX about It's then think is and have with portfolio grow from reach low BT. high our -- to -- significant I still midweek. upside And our across levels, and occupancy. levels think such bit you room end, how think the performing, we there's It's

are more levels, XXXX and look start anticipated. midweek as at we we a some still that approaching overall, more to see And exceeding pricing and markets so we we've markets as of had that But power. portfolio The still return. upside slower meaningful these

And opportunity BT the so that rate on side back. there's as comes

Neil, to of and And business. And occupancies XX% today, was business progressive showing importantly, quarter occupancy. side as for at days from the continued whole, a see Wednesday that's up the our Yes. highlighted quarter we've month-over-month Tuesday were that entire our up transient remarks about our looking mid-week in an on improvement the in those

the room we half the side, continual business certainly And travel that business seeing to have will improve that continue the while in we of through to continue improvement so on area and anticipate year. are back

July and Wednesday, Even at by business on on was Xth that certainly if good look continuing we've excluding impacted week, July transient which impacted first the in to you July, growth. what night Tuesday, we seen Tuesday of see and and

Great. Yes.

Sounds good. about XXXX. Again, think in I think that GDS like XX%. was you BT XX% XX% something understand. And it? just That's like of 'XX. trying to just XX% accurate is thought around, way what, Like said versus to like, Is an

Yes.

Yes.

Okay.

that more of Do you deals you or some great. the you the that the on just Okay. differentiated environment Great. everything you're on talked you finding it have Justin, Other you opportunities you things balance side uncertainty to would you're offense from terms think thing for of going think about like be touched briefly, that guys now. -- more since maybe but of or financial being the shed we get pandemic -- I is you me, more competitive But something sprinkled want light and with early. can are one have it waivers the always about, attractive acquisition particularly feel being of macro the able like I to acquire environment, sheet on or aggressive now lending And in some the that, nature and to out or a alluded dubious in to and there. going

have work lives more net highlighted been for balance advantaged our saying we've year. acquirers the and what I In teams least be it us. the certainly. Certainly, in of as from consistent getting the debt I year, anticipate buying in remarks, we beginning disruptions market And temporarily that additional liquidity. us at created Yes, by sheet think we that will attractive our for and the this fact opportunities is my prepared with

competing actively players are equity and for who by underwriting deals CMBS of been largely specifically since continuously private the of increasing in the disadvantaged I deals debt, the of with onset think pandemic rates availability meaningfully market. now we've interest and lack

past signaled about in we've buying back a had we and the as beginning, we talking And result, additive deals and believe I be we seen processes around think long having and been pricing Certainly, both would tied assets, as a off we And As properties and up from opportunistic conversations were that for wanted years larger today at thought on. we better we've in to as our market, are portfolio ourselves were portfolios. those which we're individual the interest coming that assets Deals we're in several market. we to orders that ways. many productive in participated good other be that and investors yield term. see being our attractive to that over have position the to

[Technical Difficulty].

But the the interest It's there future that being really you? to behind read are through can And given more marketed facility? you company that growth? in relatively comment, sale portfolios more a to a today? today just a it increase for question. is appropriate a Is the give of just Or large little the Liz, this the then are follow-up detail Justin's about of on kind size similar it's bit reasoning

upsizing the was of Dory, unsecured. To result the couple the the first question, answer facility of a of part your

and that was of a strategically objective. the size exists. loan the relative was grow of The to and And the of or term both size portion our be act our the revolver loan quickly opportunity our result investment of be any in desire so strategic, term the of if able increase nimble average and to environment upside today the to company,

twofold a standpoint. of kind strategic from So

terms makeup have attractive back the players. of a number of are additional those market were per which in active portfolios been actually marketed having that several coming around some And time, the been of with then portfolios, process always to which of in we some flexibility bidding have there around, for

portfolio, that that initially often we're assets be the to competitiveness around would the and and for value pricing underwriting us we thought our additive the portfolios our less and contained impacted as So portfolio.

those are that portfolios position a we're market, coming more makeup underwriting back willing our existing align the to of which of the subset we puts larger the a in increasingly currently strategy As disposition have. are the effectively consider with to portfolio portfolio, and so us portfolio of the to

So on I'd was say while the will include through the small continued likely basis we growth transactions, most individual portfolios likelihood in scenario while our believe a a asset could of there's greater go-forward -- series well. in be portfolio that there that, earlier now as year than

Okay. do would how And that I [Technical you Difficulty]. guess, -- what you describe small

Our Bellisario next with question is from Baird. Michael

more one on follow-up there Just transactions.

seen give you you've us how changes, can that X maybe XX-plus expectations pricing? assets then last over rates? last on more And days in changes in differential of portfolio point of cap -- maybe pricing some kind pricing would the terms you versus single and characterize Just detail the between to

Today, values were pull the brokers prior are a portfolios discount from market. will you from be the guiding significantly available the That's to it with where they'll today, directional XX% But traded they to exactly a difficult and around impacted say, until nonstarter establish of disruption to financing portfolios ends because certainly more pricing it's variance up. standpoint give commentary. assets of trade, lack a can the some a haven't somewhere to So are where I'd I

yields potential recovery as potentially higher a rapid rate, even we could operating potential And a trade. where cap their higher ongoing price individual dialogue performance at more would buyer or a meaning while seller attractive point that achieve a the objectives achieve number that position assets portfolio can puts we're at in sellers in in for with the they achieve large other the a even be us asset. them of For having for assets, around

that focus our greater add quality in highlighted eliminate the is I our us around overall to for that the of and number to potential our diversification buyers geographic customize would to to portfolios, in think additive on I there's really less our be earlier and some immediately question, assets our of assets fine-tuning portfolio portfolio. additive level market the the flexibility based response to that that As

we're the this we now that back be as excited at would the attractive year. of point through to the move trend we about acquisitive are where will half So be

Got to heard make sure I correctly. that

the perspective, higher-quality rate that might because you is interested your back of have higher of that is properties but Is fair? the months maybe you in, kind same been price the X be from cap for is come better. to and have Just prices fundamentals

or deals directional correct. that More commentary. remembering That's giving less. until And we're the trade, again,

in absolute then of terms XXXX, increase, maybe normal Speaking it's context And go-forward relative as just said seasonality for know modeling about you Liz, think to August, months absolute cadence basis? around of commentary equal, RevPAR of as the on provide detail I just on magnitude July, else you for all a for of we the the directional portfolio added versus but just you any up that can look out those kind to June? September, a some just October, margin or particularly kind and of what's of

Good question.

we had we specifically, release, perspective, occupancy XX% our was to July about mentioned compared but an which that from in XXXX and for down July So X%. mentioned was

of where Xth were we to week. the relative the little in was June So July back, a a of bit impact step given of

XXXX, perspective. relative a for Xth we're only XXXX, gap and sort at from look of an you normalizes XXXX shrinking perspective X% relative the which the of RevPAR a June fact that to that down at or that last through -- If the ended week was July, we in is occupancy actually to month weeks from month following peak

higher occupancy an from and than -- July XXXX. so perspective was And of

where we saw for July. we grow over rate Looking June actually at rate, in, came in

has much. historically step haven't June But July back typically, takes a ADR We or is peak June a around month again actually from been given month. being that peak how specifics a

into the to rate July that levels overall And us. offset impact help Xth week relative of help July and growth RevPAR incremental occupancy the will so of on

BT standpoint one are July occupancy Labor EBITDA of of to back a an month. we our historically and said, RevPAR standpoint more XXXX, months even QX over XXXX. and and is some can then was back, is fall rate QX has was. relative June the perspective a a and some So quarter. where week is, pulled picks takes June in in sort Day a shy from holiday little depends year the but from it outside And fairly similar an by which contribution fall, And August, Xth in was from overall how has mirrored standpoint, step typically and of a September bit on July leisure That again, positive fourth typically XXXX. impacted contribution positive a strongest then the peak of up of May slight as but

is third So first more in and and helpful. more fourth to similar quarter each quarters if that's second other, similar

question Chris with Green next Darling is Our Street. from

And forward? of of might more a recover plays swath or now and above Just that acquisitions, that in about to thinking capital ago? again, look going where to couple specifically, to change putting value markets you whether future either pre-COVID performance, your I'm allocate work quarters at does now maybe are all larger of capital sense slower make than to thinking kind the markets a

the slower We to those how markets have been certainly perform. our of depends markets that appetite to long-term our in will recover. view been really on looking have And markets

in have a economic announcements to at into achieve with yields markets to enable generators some over demographic that best we've to we top business-friendly us the historically XX and our of exposure continue on that add will the portfolio markets past years. and long-term have time I to that exposure operating to for past will our assets and colors our the points as performers. country seen some think extent, we prepared and think some been overarching and would the have important our we've with higher-cost highlighted costs. That assets markets for in that my we lower pricing there markets. And And the in X several happened calls an has component expectation over been away lower past years demand But that larger where that corporate and create our those diversification impact of strategy, look investors. in to is highlighted have that offer more from over markets price today believe a I shift that, and in shift, remarks, to I

think portfolio pillar on continuing at fit our I different of us broadest that in opportunities have for a might vision the an strategic from of and look what for to standpoint based markets. variety we acquisition broad

Okay. the recent I higher have gas been, the has then that I'm curious, periods? gears, whatever performance experience appreciate thoughts. all those maybe portfolio. prices And curious impacted compares similar at with the And how of just historical shifting

not available. we did specifically higher the impact have have negatively negatively have looking alone back that ways bookings prepared historically, funds we an gas individuals. you inflationary environment mentioned To in our as And the for and on prices seen discretionary would. to of how they environment, And to continue impact the gas broader inflationary date, that they pre-pandemic. people allocate prices. rarely choices a we remarks, from limited hotel than impacts performance time, as might hotels have income So we they extent see anticipate the Over stronger are extent of gas to to date, the make prices around performance in can part impacted the that

out, Looking above that they we current into currently the assuming is as of trends continue through performance expectation in at half XXXX, the our year, back translates where are. or that were

backdrop to for adjustments to a in so enabling our enabling fact, the some than us And which the expenses inflationary us being, we say, the And to make portfolio, are. increase margins. where in feel higher have good about offset to environment created in achieve more I'd rate time extent, we has

Oppenheimer Our with Batory Company. question & Tyler from next is

Jonathan on Tyler. is for This

on on me. speaking, the lagging? discussion. wagon expectations the any from some provide you segments business travel is can travel And X kind still broadly are color And the group? which way, business leading on what the to First of are customers

Sure.

see I continue medium-sized a performance small- from think and we to strong accounts.

started and and We technology companies been sector regional They've of throughout both XXXX in large perform. accounts back performing meaningfully. perspective, coming continue really accounts, to we those been think corporate about as sort small From slower. a have see

Although where were see slightly. from from in of coming a sort move of move our them QX, ahead ahead we mix sectors did

to to strong to It improve has to see continues with But portfolio most. some. lack They've continued the starting for health done some. university well certainly we've to performance we're our see continue manufacturing, So care probably them we've be business, but pre-pandemic improved business, technology technology, relative will there. levels outperformed

So we have seen some recent positive trends.

Great. Okay. to gears then margin. And switching

if sustainability elevated will gave I you and You the the maybe the rates prepared remarks, some the high-level understand of the it given assumption of but year? color cost correctly, that back provide levels costs helpful commentary in on half some on margin higher in the the remain can side

expansion Yes. a and rate think environment that margin relative reminder that will by given environment just continued that in. labor do overall I XXXX, we're to ability to mean, be a drive predominantly the the inflationary driven in, going we

continue billed particular, occupancy labor and pandemic occupancy effectively having as increases costs incremental room in associates demand, as to occupants as since per with the that be manage We environment challenging part can. or onset June. more was labor labor. we trained new we needed contract in The to be by peak to the leisure in continues either in The of

contract the And over a past margins, our impacted but has in particularly quarter. the which June so wages our increased labor throughout percentage total quarter, as of

see we pressure. as been to wage we've trained long more as continues some associates environment be associates. term contract transition and there retained think opportunity have said, That and from the full-time to I stabilizes that labor that

the CPOR given were and are that adjustments increasing. we costs slightly. They're were as that. balancing and we long in can, and we're as that year-over-year we've can repairs again pre-pandemic some a some what of are to with hopeful which mentioned, managing as made puts below seen. certainly basis on focused higher the be there is perform in continuing But controllables, of brand Outside you've the labor, maintenance So rooms continue have that takes. continuing to a what inflationary we're and I up probably on quarter environment, team levels, testament the well, been been Utilities to will

of I think maintaining our mindful we're portfolio.

think want there. don't to I shortsighted you be

to quarter, past but keep but make June, and the for while continue particularly so slightly X, prior higher see elevated levels think we'll in a we'll that maybe elevated controlled. over -- long-term I or year slightly to well And to to the that every on that XXXX, effort basis, was

still the as may that we're be at there I back of So we the optimistic temporary half margins in with think labor the current through look the some caveat year just full-time train some increases offset and hope we wage and industry. just that as labor the are new able that the to to of real transition increases throughout contract we're and associates associates environment,

is Our Barclays. next Powell question with from Anthony

One question more on July.

July So you're end you the to you? 'XX July, X% by assume said that the is give down, safe era to recomment, it roughly RevPAR 'XX COVID improving about end what that for growth versus me and was versus of occupancy your of I think, seeing the by highest

directionally, We if have -- to I directionally, the you're at I July think particularly XXXX, -- continue relative you're to think of see looking improvement not we Xth week.

getting should just twice over healthy of a I'm level I there COVID. would And Okay. curious trajectory of to quarters? now dividend a levels. your very about as just the you than going payout? your a to dividend. think, implied decision, is bit how you look of from Was the know curious, prevent Got the at lower and taxable what 'XX pre maybe now, I'm forward, maybe think trending that about above anything outlook dividend it. that income is but I several paying, pre next FFO back dividend, your EBITDA paying we Board it's you're on you're COVID, the

taxable given potential were established And could that we dividend as the is restructure we the us anticipating. a would payout. that payout this first, to reinstated X over that Certainly, two, we maintain income level we time. it scenarios year, allow When grow consideration dividend, monthly of a earlier were the we dividend think we confident range

paying above While we're industry. end out the in were we're we at high played the It's pre-pandemic of considering beginning year. year important below note dividend to levels. the paying still the out, we currently that as of scenarios performed has the And the highest certainly, the

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[Operator Instructions].

question comes Austin Our KeyBanc from Wurschmidt next Markets. with Capital

a a know even recovery urban suburban curious still mentioned just long prior looking a looking -- Diversification of diversification? time. the urban exposure balance bit you more the acquisitions. in bit you're markets to just you're there I'm going pillar I momentum? are And up on just further for specifically but focused as Justin, of a that picks within to to and further any adding back specific if strategy a certainly on been you're to your broadly, markets locations when question at has acquisitions, And

takes a to have it because chase trends. to time been group think portfolios, never I we short-term move

we expectation in urban that think And where will so in strength stronger well. in exposure recent we markets I markets, as to given And expectation those of given our markets have for benefited the leisure. leisure, the we've the is benefit improvement

the been period big time. Markets markets Greenville, I us think types the be you've acquisitions, and -- anticipate component of to in points of acquisition examples that urban But we well. smaller meaningful urban to look be enter markets growth recent high-density of gateway overall attractive that and activity expect acquisitions strong opportunity at price to extended an a over suburban our our represent continue seen us. of and investing will great would have to attractive will potential we markets markets most like in where potential markets, larger in at as continue those

trends asymmetric we've highlighted create risk, shareholders. at we, question, our outperform risk balance us to highlighted of that look that enables the an trends where a economic past look the of at over periods think ensure years to several downside remarks, for those in which as portfolio my demonstrated I acquisitions, I think, we're I limited the exposure while ahead effectively requires profile we're the as during returns the And highest portfolio that achieving that looking our prepared the of in investing to forward that have As and the whole, us response possible creating we're looking at exposure ensure to I to prosperity. earlier to we

you've well. slowed, while construction has any got also on deals . you're curious, on know if you've evaluating looked I'm then prepurchase-type but opportunities front just certainly to that I as the historically And development.

to all developers uncertainty fewer forward it for we around groups for for deals would or anticipate for are We contribute and development. been that Over likely to our then to roughly developments. in our have commitments have of helpful rates to environment potential signing interest industry at we're turnkey we ever been active around But commitments the existing closing those as in deals in this of an the higher near addition negatively we higher the and competing the has will active impact with those total assets. large in acquisitions. supply portfolio. underwrite for in for numbers X/X for typically, new deals recovery. deals, be on much us term, are as more costs a challenges at there later And points cycle, The those where point That's time, really, discussions with really, making up a our whole as to us number experience for within construction us continue in developed historically deals are more costs than labor, forward we especially creating Rising development we buyers difficult, because that point, meaningfully for at availability same And the projects, challenges decades industry. development we're X be represent of costs this today, the looking new at chain development supply underwrite as underwrite through it impacting over well

conference the comments. end We like for of Justin the have our over question-and-answer session. closing to would back reached I to turn

us you Thank for joining today.

through We portfolio up pleased the the are of back about optimistic with the how year. quarter performance to our half are super past the shape over and likely things of incredibly

as one with we of with in always, we to you road. As as travel, you us the you near out hotels, our and we term at the stay to forward speaking encourage look get on

today's Thank does conclude conference. you. This

you thank disconnect You lines this your and for your may time, at participation.