HT - Earnings call transcript Q3 2017 | Hersha Hospitality Trust

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Operator

Good day ladies and gentlemen, and welcome to the Hersha Hospitality Trust, Q3 2017 Conference Call and Webcast.

As a reminder, ladies and gentlemen, today’s call is being recorded. At this time, I would like to turn conference over to Bennett Thomas, Senior Vice President of Finance and Sustainability. Please go ahead sir.

Bennett Thomas

Thank you, Keith and good morning to everyone joining us today. Hospitality quarter Hersha conference the to Trust, XXXX third call. Welcome the will yesterday XXXX be call third evening. based distributed Today’s was on quarter which earnings release, Prior that remind contain to statements. like call forward-looking conference may everyone proceeding, I’d today’s to financial risks different These other uncertainties, results, from company’s results, any factors and positions financial or the and performance cause future and or forward-looking positions. may to known statements actual involve unknown that be performance materially the company’s release, These within factors as the press detailed with are well filing within company’s SEC. the as is that, the With pleasure call over now it my to to turn Mr. Neil H. and Shah, Hersha Hospital Operating Trust’s President Chief Officer.

Neil Shah

Thank And morning you of you, Bennett. to today’s all good call. on

challenging Joining facing in wide to and me our Hill The September, holiday Chief including H. Shah, morning was quarter, and Capitol Philadelphia J. Officer. the comp October QX, the Ashish XXXX. the notable with difficult our in Chief headwinds shift third market Parikh, limited are Executive from DNC Financial on with Officer; environment a activity this operating

And stormy as But not just All a South least was of exacerbated lack to to quarter. trend of demand hotels a disruption many X% X% discuss, growth prior August offset quarter. quarters, RevPAR to in Hurricane significant by so was and at without on a this wage our will as the tough at cap quarter luster portfolio Strength for believe in business and then by September. our Irma. we’ve discussed a we in leisure these the trends activity unable Florida items growth top-line kept late and margins and very property is erodes tax we was do growth,

accepting our Moon Grove evacuations in and hotels Blue on Ritz-Carlton Coconut in Hurricane region. of reopened portfolio. Florida in Winter began as September to The by and the each closures were September with Inn reservations XXth. the Irma’s of our the South begin and leading Xth, Haven, Let’s six put of place impact Mandated Residence

four related materially Prior three autograph property, Miami property close property operations properties well collection Club restaurant. our as guest in farm concept Hersha in our within restoration million Hurricane has performance Parrot an Beach and hotel. now been the will by to $XX transformation. new storm we of commenced in impacted major closure table the had redevelopment hotels the a from a six West. at as project expanded renovation Beach and of courtyard decided about a at transforming update Resort Although lobby Key renovation, scope the Cadillac The Florida, largest keep into to Cadillac and damage the meeting Key bringing rooms, resumed to the this Irma the South Hotel of week, the near-term two the to Due spaces and have through and

We relaunch of result damage the of toward Beach Key quarter Hotel Parrot Resort structural expect to the XXXX. of end Club as Key Irma. the Cadillac the In and limited Hurricane a and West, experienced Hotel first

will take which property majority water quarter. the However of the fourth remediation, rooms requires for guest in offline many extensive penetration the

considering Grove the Miami accelerating in haven’t the after market week in are first West remains quarter. to we recovery, our returned the six We related in strength for sub in leisure force. XXXX the Key originally hotels do not uptick renovations weeks occupancy ongoing in Coconut if as experiencing see more Beach Currently storm meaningful some travelers forecasted are but

XXXX. on in projects portfolio and Parrot and us and longer cost feel in Florida’s great meaningful about Ritz-Carlton Key to Cadillac, allows South The at term locations our capital hotels fundamentals convictions in very South and focus position our basis. good our dislocation not the to have We mention for current the growth Florida

opening XXXX. the social Center, due international groups from Zika a weaker avoided that travel in business in benefits Miami of and to dollar Miami U.S and the Convention recovery for As

prove In several that Islands be may to of sub-market attractive to other addition years. in the Puerto South the and for Rico, will performance. Florida alternative areas Shifting offline portfolio destinations an Caribbean the now our U.S. and Virgin resort

South RevPAR During if portfolio the Philadelphia the portfolio point points. of impact with comparable reported RevPAR the for the margins quarter growth did delivered escalating hotel over points the portfolio National on market basis rising Convention and XX combination quarter. and decreased growth expenses wage third in pace EBITDA which A our Democratic had basis the our growth exclude our $XXX.XX wide X% not cluster the operating quarter as keep to portfolio XXX Florida Philadelphia of comparable for basis third during the comparable decline, RevPAR we hosted quarter. XXX however XXXX, margins

Ash dive will deeper our the a focus his But now comments. into on West starting margins for take let’s Coast. in markets on

Seattle by to growth Santiago driven reported to to X.X%, Our million RevPAR EBITDA. X.X% comparable and of $XX consist from hotels ADR a West and of contributed Coast our portfolio increase $XXX.XX eight

hotel quarter. to as quarter a reported GOP result excluding the margins increased EBITDA XX.X% XXX%. the XX.X% flow respectively Sanctuary Beach In and event of space strong XX.X% Our renovation and XXX a of margins basis in which restaurant through third GOP and of Coast complete Resort, West portfolio points underwent the third

success delivered which strong saw we the hotels by at growth, Ambrose RevPAR in grew acquired continued Santa acquired Monica recently X.X%. recently Hotel, Our

Monroe model respectively third weekend set. Pacific, driving occupancy third the will moved and leisure September business courtyard in taking hotels, oriented growth that natural This our shift Ambrose bar in underperformed driven to significant we was late an ownership, RevPAR travel XXX performance from comp several event XXXX. as while portfolio. And encouraging of demand of has at hotels Pan at focus and able unforeseen seen renovation to the the margin for impacted in developed the San in LNR quarters delays us July fell repositioned several our each X.X% Year-to-date In its or along in led Tuesday, third nearly and of in performance the for third a by for from holiday and our business was increase Occupancy summer Silicon the business October in co-storey gives of confidence Francisco our hotels, restaurant third area. been in as Sanctuary and [ph] leverage experienced out for above in opportunities set. anchor XX.X% in maintaining margin the RevPAR quarter more LNR continues falling significant [ph] ranking The our the the points property these we year-over-year. primarily in mix a also offers We which mix, the the to Seattle of Pan market. relationships and yield restaurant tree wedding spaces performance The on HT expansion quarter. the Oysterette. During to and more of hotel the event showing construction strategic The and a ADR higher was the were comp segmentation has farmhouse accounts year. believe hotel's in the flagship is the In expectations. labor The Wood X.X%. San X.X% and a this implementing Xth Seattle, on for and Angeles out and fourth Salt business to-date displacement remixing by achieve growth was the moved year-over-year XX.X% growth, and in a disasters Diego. weekend. hampered trends we've August XXX quarter RevPAR growth market. of Despite the demand ADR the further other into than our for growing XX% which our savings with quarter quarter Ambrose traveler, remain focus Kitchen a calendar Beach third corporate over shifting hotels groups effect base Hotel’s, is on growth also the XXXX basis Coast while Vegas West with to Valley complete, strategically quarter, and mid-week us has Sunnyvale, launch for and quarter achieved to in X this key during points of the also destination basis strong of mid-week Las rated the expected stabilizes demand, strong enhances quarter to in drove additionally but as by see second business But Similar EBITDA seaside of Microsoft portfolio. weakness acquiring some negatively since X increased Bay Since Pan segment. Wood ADR other X Salt the consortium corporate Pacific's allows the the LNR X the our rank X out to perhaps markets, X redesigned and quite achieved to and bar softness. Pacific newly

by Our a $XXX X.X% points. the to RevPAR during period, properties seven growth Manhattan basis the high Manhattan XXX quality registered outperforming market

Our market hotel well purpose of quarters a management strategy. as and result XX located Manhattan portfolio young a the in has cluster our built outperformed and the of revenue dynamic XX previous

in as However, margin the labor hard ADR a that minimum of erosion in costs, avoid without meaningful is discussed the as rates. of face we've to wage in the increase past, growth increased result

remains in York demand continues and forecasted XXXX the X% While meet the for the is market. with in of rise, operating in New supply on to into challenging, demand coming city the demand overall in environment new X.X% XXXX. And growth

for We are than X% of growth XXXX. forecasting XXXX and supply less

XX% in month begins quarter, XXXX Trailing York can exceptional being XXXX to to XX% demand We overshadow our continue is be are first New XX confident City. the of to believe this peak. finally the will rate. able ADR drive deliver many of occupancy, growth ADR As supply, years prior we while below portfolio

portfolio from the conventions two Envoy the Hotel, demand Group which addition period. growth at ramp Our of with the was substantial to as acquired quarter RevPAR registered X% for the third Boston recently citywide our over of continues benefit

Envoy Boston's The to corporate GE, take the the DC Capitol a the proactive of district, from remain Courtyard implement needed citywide Hill. and down driving at from our Rooftop activity in weakness Pharmaceuticals and weighed Vertex which by was for We was progress and will Restaurant. encouraged generators conventions return a profitability continue fastest contain third third Bar Boxster fourth lack but [ph], will lobbing by flat Boston In on Washington was highest the quarter the and quarter. quarter travel of in significant markets Cambridge. relaunch to Brooklyn the performance Amazon. The our revenue more the Express the in one benefit growth advantage strategy Outlook growing as being to offset service seven e-commerce at management of demand strong and We delivery, such to in of

As rates. year-over-year leading versus Congress in a in of notably not for this majority to from the September government decline significantly occupancy session and a was year demand Transient XXXX. lower was

However presidential election. session point growth signs their fourth in early during to absence notably due last the to in with year to November compare Congress rebounding quarter, the

of strong in very previous on recycling since portfolio. dividend is In drive transformative quarter convention addition it quality Philadelphia the hotel compared in environment. purchase are hotels pleased faced we see turning mature with a even A the outstanding. higher Philadelphia Inn democratic be capital citywide years, group comparison occupancy. faced the compression. city XXXX posting a over than immigration to Philadelphia We in also Hampton XX% the of remains tough recent growth year the will repurchased Ash, without game hosting Philadelphia convention the significantly year-over-year decelerating sector pay solid more HT’s this our to the opportunity pleased and in growth before cluster navy over few this that Hampton XX% are process XXXX. of growth in Inn began we the the its of growth lodging we third for Westin fourth by our to to quarter Despite sold XXXX greater return Across allocation comments continue Future and and Rittenhouse we environment than and the in reinvested visitation complete with during coming and XXXX, with several and with national The and the with to portfolio and growth was to older down Westin strong beginning big the December. city. the quarter market we've the years. shares gains pace fourth stronger with of in army is ADR for a RevPAR center last calendars EBITDA higher greater is the XXXX. comparable, moderate robust This nearly lower difficult a our across great quarter due pace the very during XX% without convention the convention to expect

opportunistic are We in our approach.

we were $XX.XX. $X.X discount existing stock average at portfolio We to able million opportunities XX% to This at quarter market consider of an a private repurchased price very values to XX to our attractive. purchase several capital This balanced position for we've buybacks in on XXXX. and XXXX meaningful with investment in year portfolio With our oriented focused growth projects significant very portfolio. existing the ROI of been that

well remain to new property Coconut the the very spaces EBITDA transformation lead to Square, and and and portfolio XXXX St. Gregory in at nimble Beach restaurants, meaningful the Union to to approach DC our are addition will the event and our bars a strategy. In and and Grove the Resort, of We Cadillac we in and Ritz-Carlton Washington outperform submarkets XXXX. our growth Sanctuary Hyatt positioned believe

We profits a about corporate and increasing continue and travel, as be there supply demand. for and to demand dollar fundamentals global witness economic we into our weakening of investments, bullish employment XXXX, and in the improving are strong several strong market. travel full international to And reasons and growth, many look U.S. corporate leisure

it So, before that it and stormy for overall growth questions. balance challenging let assembled. to portfolio the open profile a of EBITDA we a me With into the and and remain to sheet we a confident up despite year in drive value over deeper we the quarter Ash have margins turn

Ashish Parikh

Great, Neil focus our good year guidance CapEx EBITDA expense, thank primarily recent our margin, refinancings My full updated you morning. will comments on and and for XXXX.

realized occupancy portfolio third comparable during quarter. overall Our of XX.X% the

the quarter occupancy highest of Our year.

our EBITDA margin calendar XXX portfolio numerous however comparable South our points in impacted also the the highlighted our realized and activity. has shift of The Florida items basis loss clusters leisure business only significantly transient XXX mix these margin any nonrecurring third September quarter month margins. quarter to points meaningful due basis and highest and wide XXX of Neil onetime which and recognized largely Philadelphia The events. losses portfolio respectively, of

of acquisition two effect saw XXX Courtyard was primarily Excluding points, the markets one-time deteriorate which the Ambrose reassessment, Santa our Monica. basis these we Sunnyvale of property in margins and filing

wage. higher to the expense in due addition In wage to increases minimum

wage combination revenue we partners as expense to continue controls growth closely with of increasing our an markets. work RevPAR pressure our tepid of have We operating strategies implement across and management face all the and

Our to close franchise our model with benefits clustering our and personnel relationship the maximize of our engineering sales, including restructure realign model quickly primary us various revenue and and operator strategy. staffing to our departments across accounting allows management,

Miami growth transitioning an essential capital react Beach the this hotel development and Cadillac assets. the to As collection a EBITDA the in period further million and into along the we at projects project industry we drive to quickly continues autograph cycle, market in during where to Courtyard hotel. we lodging CapEx our spend ability quarter, from cost $XX.X third pressures view to during approximately over at our conditions Shifting our was largest the began expenditures,

close will hotel As the previously focus we disclosed renovation. devote to keep on this our fully

extending balance the sheet on third with these sheet hand, balance line We significant type of high million to continue in million is cash with in our strengthening XXXX ROI ended our to duration now ROI investment. anticipate to CapEx returns our $XX.X spending teens, quarter progress to $XX made the in historical in rate projects Transition we are our between million for mid out projects of where the hurdle which debt. in on these and we $XX and and our

the million $XXX corporate on and that million. expandable a refinance previous utilized senior term approximately unsecured a credit unsecured of $XXX senior revolving new for existing is on purposes. loan $XXX.X facility of company million $XXX facility facility million general indebtedness to senior closed loan. credit The we of term credit quarter the to and The $XXX the million consist During unsecured line

property the debt We our also during Los Angeles on refinanced the Courtyard level quarter.

average had of a consolidated X.XX%. rate fixed, XX% the debt total of while weighted is refinancing, the debt interest Following consolidated company’s approximately

our addition X.X have to maturity the debt extended maturities In have on until life and weighted average debt years significant XXXX. we out no for

We our comfortable X X and very to of profile given range target continue leverage cash portfolios the to growth times to in metrics. flow with debt remain target coverage EBITDA our trajectory and

me discuss let the Lastly updated for our guidance year.

We disruption the portfolio closure significant have guidance South of hotels our Florida updated -- and Parrot and our the XXXX. the our we following have anticipated the of Key for Cadillac remainder and adjusted guidance to

$X our recognize We million will continue from in expectation. EBITDA of forecast portfolio South our deterioration Florida to Irma that pre XXXX

a are to-date. fourth quarter environment in Although encouraged operating results by we encountered difficult quarter the we third our

month where and the are For the core DC mid our of for growth West including we RevPAR Coast, mid-single-digits the portfolio of growth to markets seeing majority comparable month. Boston, in growth strong the October Washington we approaching single-digit high seeing the Philadelphia and are

of RevPAR to margin We be of growth are XXX Florida the excluding still are EBITDA points of overall to South to raising basis flat to deterioration expected in while in view points. down to disruption to X% lowering our X% XXX XXX basis Florida. due to South range expectations Margins

however in third the weakness our $XXX guidance South $X.XX and EBITDA to share million loss million $X.XX be share as FFO between decreasing Florida. between as well account and per in per to and We quarter, adjusted are $XXX the EBITDA for of

to call. that any to of and Operator Neil that may happy you Q&A So we I proceed portion questions have. address the now can are concludes Jay, my where

Operator

Instructions]. [Operator you. Thank

We question our first with will Barclays. Powell take Anthony from

Anthony Powell

good Hi, guys. morning

you restaurants a do your challenges beverage and portfolio, I portfolio the of have growing couple non-room know revenues RevPAR some the some of can you of you seen you bit the your on in more food renovated Given of across that your next years? and over focusing some like of have

Neil Shah

launch of the four this year. opportunities There efforts are restaurant planning on a Anthony, is about and efforts, for exploring and did well. are Yes, Neil. we side that couple as of this year we couple next bar more

drive think do opportunity in hotels lifestyle there is from even in these that we So, our hotels is locations. EBITDA independent -- particularly our to branded real there our in A+ and more

opportunity Boston. some street retail properties of at have of to We cases front create the leading little at one in our bit in

plans and restaurant opportunity We George have a in new motion for the Town. the in Ritz-Carlton in

as in XXXX the is we about pop-up there different of but profile we it’s well good well, food, events or and to than as in feel properties that to hosting of But and EBITDA. lot a are are so of a four margin And this are opportunities embarked our whole starting with the year profits side the we but room are and XXXX deliver at real we very on dollar kind looking profits to drive business. the beverage increment that we

Anthony Powell

moderate can and over over outlook in And next York your just next the do overall few mentioned or overall go increase you your outlook supply years for couple the Thanks. expect how you of New and supply supply portfolio you over years it to to decrease? expect

Neil Shah

in is in growth. In off of deceleration kind clear supply This see less New years coming supply X% XXXX X% York. New growth growth at supply we and we XXXX are than X% of a of and York, in

by markets stable in look supply of supply demand There fortunately are outliers for most between -- So, supply deceleration tremendous where our the a growth kind X.X% to seeing which our relative to elevated we of we of in couple some growth. supply level like X.X% In we’re of XXXX. be York, growth But are years. again growth. met us market meaningful an is markets in of other several and relatively New of at coming in significant we are Seattle

X.X% that in and So level. X.X%

Anthony Powell

Thank it, that’s Got you. it from me.

Operator

take our will with Michael Bellisario question We from next Baird.

Michael Bellisario

Good morning Guys.

early You mention Key next the renovation Parrot potential year.

year? with you look that whether the in decide at might As the going guys doing first forward then to that what the of the And that be key are are what to half that project to potentially look scope or of at you go not project? indicators

Neil Shah

floor did penetration significant water at storm the and rooms. we in water lot guest a the Michael, damage is of from flooding The hotel first sustain we had front surges hotel. and

the were second guest also terraces. The impacted water rooms floor penetration and by balconies through

of first we the and all And first already so there our and floor rooms of rooms. kind floor on that of have embarked on floor remediation renovations restoration

travelers, And there demand it’s we floor is events we recover, destination and our second approach hotel and couple way primarily process second less West think what international is leisure operating serving rooms open it’s in can the in of and there what much of out like. weekend, see next U.S. and up have. big kind sought indicator, would be are versus are visitation a Key the how than tactically, each is is market. and on are hotels not being Caribbean. the of is unique the to for ripping in more how been kind it’s to to There wholesale required still everything Key and of currently The the will this West to develop across prior West are continues couple see weekend significantly that there years. there’s of that not without a the there in clear but of see across open last Caribbean, absolute closest be judging and has coming of nice room the highly in this hotels kind a first of but The the airlift on highly real much kind but required, of floor after absolutely to a responders quarters We in to Key

But three first West of to go, to I we on to early leisure months the of too recover. will year. quarter of the a little how small market would Michael and work market we XXX% than that in kind that. six have a is we’re it do likely take far so it parts more just other the tell resort but otherwise It’s benefits So, to think some we think has from really Key could

Michael Bellisario

in recouped then through business pockets Or of And that additional of the could how be that out the cost of be proceeds? insurance terms spend that, much for you? interruption of

Neil Shah

think in significant the of to us as right that much just the and that submarket is this would explore be amount now of as project. a acceleration leading a We recouped driver weakness in

Michael Bellisario

and work certainly Understood. to you and on of but your with renovation are incremental And acquisitions not portfolio that back how it thinking seeing now. anything of right the within disposition, of briefly back that’s lot you’re on rebuilding a why kind going is those burner about now or and is all pause? Is forward, a mentioned it that’s a the there just market in you’re more opportunities going

Neil Shah

in redeployment Yes, more and opportunities not markets. great lot particularly opportunities underwriting in were adjacent things anything acquisitions significant three from sales. market the in the across years as active looking remain gains compelling marketplace. that in haven’t our we in at out terms we’re seeing transaction the markets the But existing We last seen to two of of of the yet. A our of

either for may our sales hotels, a from kind investments anything we in acquisition redeploy on extended there don’t we’re have two. of exploring opportunities to DC, quarter additional for an not forward that suburban or significant could lot which and one coming generation, hotels We acquisition. look and year, in us if marketplace. handful in in of hotels that be is interested share we a the we As new with activity, York gains of limited have level hotel we’re to is a coming stay nearly City is in but the small the service sales and Washington There disposition some expecting the are sale, driver acquisition. not in proceeds for compelling of making there across EBITDA of New now, the or Right outside new

Michael Bellisario

market revenue you me, then all leading to sensitive New you few last you that and that your can on strategy being, is gain last how the guys quarters? then York maybe City, the have And management are realized one it. Got for and share characterize over just

Neil Shah

could Yes, a know it’s we’re call had being a and dynamic to Never but our we quarter pay highly being this degree. as just, or well. defense earlier you offense, defensive being certain strategy off it’s didn’t whether responsive, year where a

more that real very This years, up, was go well marketplace we the grouped third occupancy the in strategy, way growth quarter, the found government have in it’s in than of create we took with did we we an that working business and quarter. more driven

hotels are are Our hotels corners prime too in best exceptional newly these the New in Manhattan. York, in in submarket built

category scope real economies killing cluster a our outperform. purposed information our having hotels is the of there advantage and So having able hotels of build management and management operating we and scale, revenue brands, real in in being advantage to have

Michael Bellisario

Thank helpful. That’s you.

Operator

Brian from with We will question next our Capital take FBO Myer Markets.

Brian Myer

guys. Good morning,

portfolio? And you actual quantify seeing kind of Just a your what from are couple of quick can you any seeing questions on the labor side, across worker aside minimum can shortages? wage increases, you’re

Ashish Parikh

this Hey Brian, Ashish. is

most higher of the is front other pay and just seeing need of are whether higher We effectively it’s position accretion there desk a type for in or housekeeping, markets to that labor these labor. any because wages shortage

to paying level in rate wage the are like and much due the quantify in to to minimum are addition the pressure the of labor. is in hotel the exactly tighter getting how there increased with well. are governmental policies level tight but that seemingly market which for in place that, have cost where accretion as we additional putting we is of difficulty on wage some portfolio It’s So, finding more hard hotels high

Brian Myer

increasing mean, down from on on is and becoming all South in Zika? detail the I just on that impact or there going non-event Florida, that’s some on hurricane then And still Zika with is an down lingering there

Ashish Parikh

Zika summer stage, this that non-event a is that or No, early pre-hurricane. not this fall did reappear

business of the don’t current and weddings kind any have occurrences of and crises financial everything put significant both significant believe and no time we last group a had been and impact else group hurricane of But has that on on distance there left probably there in between in marketplace corporate since so the such alike is crises. that’s kind in the social it Zika travel, noise a happen services the and and like. the And impact lot

fourth As the first easier were in XXXX in you that remember provide comp Miami in submarkets XXXX. the quarter, of and quarter the will XXXX will quarter quarter the off some fourth first and of an for close double-digits to XX% the

Brian Myer

other lastly, autograph independence then prospect to an brands? and you any other Courtyard some in just you Cadillac you portfolio. one How think analyze about hotels converting And so soft of or are converting the the the do your of the have of independent to

Jay Shah

the of that or to the not significantly conversion the think without but I value consider Cadillac we like courtyard and justified there be catering within and we ADR the the term we brand we approach just capital any hotel service the hard the even -- to it but Jay, up cash when there case decided of capital soft loan of the necessarily even will to independent flow increases This in we suggest able I generate just the that brand you from was we’ll spend. range to the were think And able IRR the analysis taking putting midpoint able F&B additional get lot investment. point a think a I justified the the that there I lower yield hotels, take bank full the that and an revenues a it with IRR conversion that is that with to will there, made be kind we sense manage of through an additional [ph] a think

there would rooms brand think the take justify and judge the soft marketplace think be to you'd converting fundamentals I supply has, independent a not demand marketing fees the into account soft additional and that of would hotel able it the royalties, taking kind franchise, how analysis Now, would whether you or many brand that and I drive. of hotel demand to the

I think we in normally markets. and execution that high and we of where we've been independent hotels very hotels all our to-date kind in run they’re do of demand independent what specific

when a we're considering elements our for almost necessarily of independent hotels we the basis. conversion soft of some about But a think brand. are most candidates it's are to repositioning So think the hotel. that great I case-by-case But those don't a

Brian Myer

Okay, thanks. helpful. That's

Operator

take We'll Bank. Woronka, question our Chris next from Deutsche

Chris Woronka

second guys. revisit the a morning for could. good to Manhattan we just Wanted if Hey,

shifted margins. really you've You on the year. mentioned few And management strategies is front and this wage times question revenue the

As to to growth, more on return does you a come drag it margins? your is there become Manhattan forward, look where starts much if -- not significant rate point a

Jay Shah

when it's it demand dynamics I Manhattan’s look you got is operating think Jay. XXXX when a where Chris. when comes demand environment, This been like at challenging X.X% a you growth. you to at Manhattan, take look Manhattan

of and expecting we're in be XXXX So to north X%.

based is just there is element your strategy So has to of all market growth you're determine that -- matter the got Manhattan the a a you moment absorbing supply. hold that think you an that of despite in kind there tight does, are things When on I of in where demand supply of kind the and time. at

you new And the the be 'XX. you'll As Like had. 'XX the supply rate Neil without rate mentioned, and driven we kind occupancy we is absorbed. start more an have year will and happen have And and before for to this which of have and driving strategy in and current again Because the that, grouped is Because with time all. at until in the coming really you year being. expect up you have today. there that's heads no can no growth go actually beds

kind you with rates, is having growth. of with to supply incremental flow rate. driving starting through not have et that that margin that occupancy coming the creates is right going now a hard strategy the are leads much more ADR going introductory you think this cetera, yield to not et have time everybody in It's not, cetera, to I when and

But on. basis. to take make and what you're of kind on very measure rate. is that's even look think starting out strategy we And market and got York some revenue X% New be hay we moderate. supply able something a see are a X% into 'XX on I the to go should like as trends that supply a we're zero management in the And 'XX, at you've getting growth weekly demand X% below you it years against look doesn't or focused demand where if get to So we growth coming in that attraction to still staying

long pretty So confident time. York, a we've for New I feel there really been in

basis it return I the the just despite demand going we're is standpoint. our know entire based there, strongest on the the so city. markets strong on the is rate you to asset well As But an the in still think when country pretty from comes very supply. good doing a for growth quite back profiles be one demand It's of

Chris Woronka

that obviously operating is that’s for everyone of of is -- and anything firm you to next bookings can advance guys groups comp minuses. that then else of to the make can come is I out South feel and if pluses a lot pieces that Florida, or you the for there comp moving But there. there kind Great. look easy, back? market point you easier. on is there but any gets been And question you know sometimes actually kind Is confident year there the

to? you firm anything can there point is So

Jay Shah

we're our portfolio. of portfolio, With not that heavier a way group

in portfolio a the going a the function marketplace. hotels metric easier So at group in kind the of crisis point confidence. anything to look help box is in comps compress anecdotal at you supply that will It’s Miami Beach of Miami more other and bigger new give seeing us were Zika we're significant there other with the prior to some years. of that less our can it's of hotels some more Beach able than of some around events not in the it But be that

convention end some busy but XXXX, have benefit. convention book. is in The center of has to the XXXX reopen of the very bookings counter on gets year, some this they that So going the towards end

of the data the is group, probably as it the of end you couple in year find quarters toward you bit but can next good anecdotal. So on get a more little

Neil Shah

delta. it’s negative demand But on to a X.X%. when is so growth had some consensus to share supply for supply like you but of in had demand expected about on moderate you average growth X.X%, And of in the if X.X% XXXX of the market. stats going X.X% outlooks sort supply market take growth to is be an Chris growth Miami had demand can we And demand helpful, about XXXX I supply just

got delta have there of positive you X.X%. a So

up So convention I is deeper think into the fact we there, will be I think XXXX Miami strong, throughout ramping traction and very the entire will occupancy demand strong I Miami in pricing this period. that despite look remained think get center as just some good

Chris Woronka

appreciate color. guys. very Okay Thanks all the good,

Operator

Crow We’ll Raymond Bill with to go next James.

William Crow

housing, in to folks. lot questions. Key a of labor keys of in want the other besides to was I prospects sufficient to and coming staff on West use done it for seem here. we hotels. use couple work I some touch in back be the damage the what force morning good Key damage quantities your And In topic am more curious way able are around Hey, term a to like to done labor was of a just West

Neil Shah

them just is Bill today of a our XX% with I’d market in been temporarily. say friends and are is family third relocated there still and team with members concern, of outside our that touch and elsewhere or we have all staying or at the of hotel a

reopening closer that so a hotel, a is lot we said restoration is activity right to concern that And on. now activity of get there the going as

work worst the all these see point the force of the where at all homes sides State of of to apartments resources probably at of being it. it and housing traction Florida work there being are done from a cleanup of is of you that’s is put the quickly, you FEMA the have the So lot and the debris on today But done of like of roads. all the

year in there going by as market well that think remember you be first as that be do quarter we there hotels play of to accommodations back that Sandy will available New a so will lot the next on And hotels New York and with is will after kind City folks DM government did hotel close offerings York of paid in per dislocated the the a something and of in provide them. post to probably

that think at is And well, about have this concerned great that as on and our you we’re so don’t but moment. see will on I clarity a we mind, it is but it something bit

William Crow

need you RevPAR to Okay. of anticipate York sort the Sticking with next What year? and labor do New cost growth in increases. expense other offset you

Ashish Parikh

this is Ashish. Bill, Hey

continue really RevPAR I think offset. at on to X% growth we and being to breakeven margins X% look to between

William Crow

in specifically. New in York, York Even New

Ashish Parikh

Yes.

William Crow

to also And being that portfolio. that other any give shift the force I could -- if finally any am flexibility workers about able great ability guys guess is but unionization. the would an note and us become you to from talked here efforts you making your is a threatened be bigger update Okay. is have, of one then you you to with wonder on role I by just that

Jay Shah

is this Jay. Bill,

handful work I we have heard I haven’t as we’ve is of before that any We for that generally we mentioned do really have a we unit minimum B&C, a we that do know And and being have non-union what operations beverage a have catering sort hotel got to you, lot have are of tell will we roles don’t detected I banquet the owners in that but and food had That negotiate -- of we in work I said unionization or put particularly don’t seen terms able have we operations. been of of any think collective period in attractive utilization playground hours. hours activity, or being X shifts than or pretty are associates broad rather minimum think fortunate on other which X being like bargaining. Manhattan have and terms cross is

we wouldn’t with you avoid pretty And don’t where not we generally had some having got good work take these our care experience rules that a associates, them. lot bargaining collective that vulnerability but something we of the hotels, needed think that’s of and really has of

is to into I have these agreements. these be if to entering down are of think come on bargaining culture we really were we have you and to are you collective the But very the when lookout that things leaders strong properties the good certain for there.

can not -- agreement think, even can are very you you the the have address we hotel lot are haven’t fact had of say the with of much. again than a almost that think a make non-union, fortunate I at specific that or we to way that with collective union needs environment that collective doing that it But but union of a a is owner. and help very but point are other deal some it things really that anything familiar bargaining the as times the I we bargaining, is in to provisions union I this think of commoditized we

William Crow

That’s all you. Thank me. from

Neil Shah

strategy the Bill, have mention very similar been just we union and that to our markets in always would the I growth in. we pay is part the of wage benefits operate

what across them happy an the so end day year deducted the we of increasing work fees very see with other being two that’s compensation that that’s any And last growth and owner and from with to employees members our team or in the you directly feel it. keep our wage providing similar without

William Crow

Great, color. appreciate the Thank you.

Operator

with take Anthony will Powell our from next Barclays. We question

Anthony Powell

Hi, is just more from me. one

out going you weak now? brands mentioned underperformed relative due are to courtyards do some brand to brands that the was underperforming of that just running us expectations right being You also or markets your or your your there give outperforming expectations in and and services review rather anything quarter the else your of there

Jay Shah

by at our marketplace. No, kind just all most business oriented because them I name they of hotels in Coast the mentioned West were Anthony, not

transient oriented business a we that business was urban because they weakness we and category for as travelers. and and of that saw our lot we in in the So late those saw August in in Loss very early particularly business had courtyard markets of the something oriented Sunnyvale Angeles in were killer Santiago, weakness September hotels hotels, kind in

believers we in so have very in from West encouraging brand we big quarter. the quarter courtyards even October recover courtyard on but and the markets even Boston is in seen the are Coast quite well expect we other And to fourth the them there, and or everything felt pain the fourth for in

Neil Shah

portfolio, hotels to continue Hilton. a we Marriot most have but our In of of balanced mix, and have pretty brand terms our we are with branded

independent. go various the profile some branded or of pleased brand on the have of in EBITDA have mix with, leads that we partners. very depends location, very Hyatt and mind hotels. hotel And public's XX% size we We that the generated independent the from one the we the is asset of IAG is portfolio us the feel as with to But well, of our with purely be brands to continue and and quality that and assets going comfortable that

Anthony Powell

Great, thank you.

Operator

take next Kelly, We'll of America. Shaun Bank our question from

Unidentified Analyst

commentary this wanted George Washington is December last thanks for some has touch on October the has and I year. taking been tough on been November guys strong, there Sean to election travel to business Hi [indiscernible] you looking for DC, comps mentioned my question. pretty from around but lapping

your on for views XXXX? So balance the wanted to get into market the and of QX

Neil Shah

well been benefit to the we and quarter, with November, developing we're has some growth the being going from October session year. last fourth In market. in think Congress in unlike

quarter. be quarter as expecting it strong fourth expect, in So we're hope if to together December the we a

significantly comp outlook the As to remainder we obviously look going tough the the year, be of and XXXX a convention the quarter the inauguration also is for calendar good. year the is with for of first but into prior the XXXX,

expecting for we're in so market the market XXXX. us moderate to a And be growth

Unidentified Analyst

sort recently on there, dynamics a helpful. you as well have relative can Westin to of wondering just update supply-demand Thanks moving as an just lot, ramping expectation? if how you that's Philadelphia, to And acquired provide is

Neil Shah

Center this fill growth X.X%. of Philadelphia very it's Philadelphia growth, in supply Center year first concentrated supply look a a invested Philadelphia assets the it's are encompasses from said, standpoint. The City. have we about it that in in fortunate I at demand think we're That year. in environment Philadelphia, actually next beyond supply supply City RevPAR little pretty challenging assets. kind been to deliveries Very for to numbers And being had when you of But

And pricing year. traction the expect market so in a though coming lot the we don't in of

some And see Rittenhouse next The opening In It the we Four facility Complex, in which Square. destination. restaurants. it hope positioning adjacency comp actually to rooms year have retail XXX has It's Seasons of have. XXX square has is we Philadelphia in location feet city. with the primary a to expect town. And that that year. of of Westin don't the is we next sort hotels peer the sort ways almost of locations business to opens the at unique to on office center another supply forward in us in use the Seasons. looking its million think mixed we're gives Rittenhouse I will and business the Liberty going that that a transient rate. the the and going X is located The we're opening Four very high it the impact of And of are it's

difficult city location have not when it XX% pretty Rittenhouse at but luxury exceed it's be strong in B set A to is like another and in minus we to Their Rittenhouse, XX% property helpful that will comp Sometimes location, our plus, it by to a good the it's city. certainly the the comes a location. property ADR ADR

strong would avoid in rates to pretty a complete So I drive think very suggest Their over they'll drive to for have a of be order able that. that disaster that rates. investments strong million to hotel an at key in they $X investment

going get be to they it's to even don't So think if oak they're rate I hold [ph]. going I think

locations dynamics transient corporate in very A know here well. mentioned concerning. be and home supply plus the I Philadelphia the we It luxury. happens the invested market, as And we've the is before So both our to in

we being we’re significant haven’t our growth year. the pretty be nor supply. going forecast where a said, is firm negative positioning little we're of underwritten today. But concerned to able I So we here to the That think it ADR about less for coming with hold do impact

Unidentified Analyst

the taking for questions. Thanks Great.

Operator

session. the and like turn any to closing time, At or this this Ladies the I’d to for company gentlemen, concludes today’s remarks. back question-and-answer additional conference

Neil Shah

does that I it. And think,

I Jay, any and work and to keep In be will may Ash get Thank anyone year. all follow-up We’re we’ll you. for that through and to continue and the have. meantime, questions it Bennett this available here continue

Operator

this gentlemen, appreciate your We discussion. and concludes participation. Ladies today’s

Hersha Hospitality Trust (HT) 26 Oct 172017 Q3 Earnings call transcript