HT - Earnings call transcript Q1 2019 | Hersha Hospitality Trust

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Operator

Good morning and welcome to the Hersha Hospitality Trust, First Quarter 2019 Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Greg Costa, Manager of Investor Relations & Finance. sir. ahead, go Please

Greg Costa

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

Neil H. Shah

us Thank and you you, on thank Greg. today's for Good joining call. morning

are our Chief and Ashish Financial Joining Jay Parikh, H. me Chief this our Officer. morning Shah, Executive Officer

of The first many in with leading the quarter in proved to declines markets be country. challenging sector for the RevPAR lodging the

driven our and However, acquired the we the recently are our portfolio, assets by of hotels. we pleased of performance in ramp-up the legacy renovated XXXX with

our and for the anticipate most April’s year. of the our we us discussed second first on will the remainder for early pace challenging our we be sector quarter the in we the on year-end keeps quarter growth call, XXXX. constructive for accelerating portfolio believe As our results and quarter

during impressive Our RevPAR during and Manhattan was first an our reported which growth comparable portfolio the quarter. excludes growth RevPAR excluding the the Parrot and comparable X.X% Cadillac Hotels X% Key quarter, our portfolio

that which highlight was Our further first for along in of detail portfolio I York. will XX.X% registered growth outlook the quarter items in New our XXXX Manhattan numerous by impacted with

to recent quarter have the our directly investments the acquisition. First, last first results over years several Our - are made linked we

the a growth seven weighted XXXX was destructive obscured X.X%. provided June a EBITDA These CAGR. Our since performance tailwind the hotels XXXX ongoing have as and their year. CAGR recent produced reported we XX.X% Since we average hotels well, a acquired renovations seven throughout the X.X% of acquisitions, strong had in XXXX RevPAR but by these hotels RevPAR

they drive hotels expect continue to competitive throughout this ramp strategy these We outperformance the year. meaningful advantages to our as and of garner cluster

guest upgraded Washington activated results and million Grove and our $XX of newly The in and across our rooms, second independent in at XXXX. into repositioned this to We hotels driver restaurants across added Circle major experience Santa space our hotels. are Coconut asset and hotel our created our bars, event Dupont our portfolio; We hotels luxury Monica legacy quarter the in DC. invested Philadelphia lifestyle

killing category first growth, XX.X% St. margin and Boston the points basis XXX service Mystic XXXX the RevPAR respectively. with select weighted Gregory Metro, we Our resorts EBITDA XX.X% York. a growth Hotels generates in in RevPAR in and led XX.X% Hotel, our New in posted and growth average of Monterey, Rittenhouse and the by and The hotels renovated quarter, which

and quick by our into data markets, Before update Florida we more go on projects. South detail a

the were West, this just prior occupancy last XXXX, range, We levels, and while peak month. in below the ramp Zika disruption hurricanes improvement peak convention prior path peak the XX% The and as which significant as occupancy expected Key center. capture rate margins this this non-stop able seen Villas take management our Key below prior rate and quarter ended and prior Our the remain without flights supported our at ADR initiatives The following to also and the prior continues and that occupancy; quarter and the in revenue a opportunity Philadelphia remains forecasted of EBITDA occupancy of third from in basis from macro growth start-up recorded to saw by as nearly market ADR March implementation results each at Hotel over for were the also and such Cadillac year In points RevPAR compared XX% the the RevPAR to events implementation there date, catalyst growth close for the above XXX distinct first strong closure mid-XX% our period, sequential up demand indicating to place. significant growing our generation LaGuardia, in the and the has quarter Cadillac during resurgence as initial Chicago. in is at is month West Key the with quarter periods. peak XXXXs hotel Parrot performance. levels to of March, property peak with mid airlift on

occupancy, much Cadillac, will topline. With our higher ramp-up market a meets traveler market, in the little of lifestyle stabilize with we the us to and margin asset than better preferences the up assets the to is tastes all growth. the ramp getting will margins high allow end mode and revenue meaningful very quality slower offering drive this Similar the and close the believe upgraded and to peak to

our on margin Ash and will call. both the discuss expectations assets later

was outperforming by portfolio Philadelphia basis first X,XXX cluster performing Our points. RevPAR growth, market in the XX.X% over best our quarter, the achieving

both continuation the having overall performance benefits the Convention to these we of our increase ballroom assets, half renovation properties a in the quarter by capture of was to Inn which Philadelphia grew acquired first year. RevPAR the the X.X% Hampton of and of Philadelphia. outperforming market the this The underwent XXXX. XX.X%, recently Rittenhouse RevPAR online reported the growth, major X,XXX of basis RevPAR by its visitation undergoing points performance at Weston to by quarter Center, quarter. if saw fourth we back hotel’s despite Despite led growth, during our the material while renovations Rittenhouse both first robust rooms Our exclude the were reported XX.X% market from in softness, this with Hampton And Inn

and continues this best capitalize to to market international. education. previous believe strategy, preferences Philadelphia see positioned late record XXXXs. Philadelphia The more Last on healthcare also agnostic to with both second its We bullish travelers since year-over-year, shatters incoming are quarter added leisure to domestic sector our is and to complement as convention shaping to segment term and clearly strong is attune and clustered up visitation that tastes growth to and has robust the notable with this Philadelphia was the this our on city the best the bringing results quarter We fundamentals the and group and for city's June. in less city effectiveness. continues in and the be nearly decade year, technology May testament demand, experienced Philadelphia, when a remain softness calendar. expand down first develop on calendar of foundation long X% in innovation is growing its events the quarter, market Boston jobs the events to

on the premier lead market XXX The as us in However Boston's capture during points. robust RevPAR hotels contribution. market quarter. of outperforming growth, the basis leisure corporate our the limited again position also Envoy cluster to group first portfolio LNR X.X% one the RevPAR with by and registered Its growth allowed demand XX.X% the

bar the rooftop restaurant which we We success XXXX. the and look in drive F&B out of to continue outlook revenue higher with expanded

a with In X.X% first addition, segments on ADR compression related our Brookline Courtyard during quarter, during focus drove the bar growth periods.

comp Rico occupancy to in up on this South at related the hurricane looks South our Graduation Miami, demand portfolio the maintained able for Weekends. with quarter robust hotels conventions Boston XQ Despite set. slightly more Despite facing Puerto and Marathon and Beach Florida, the XXXX, came We cluster and in market peer demand, should portfolio its to back the continue the second were broader on market, tough of RevPAR online with in Envoy maintain last a positive rate, Caribbean. The softer array historically quarter. and in Boston Miami Florida our Irma in growth for specifically a strong but and around lost XX.X% a outlook outperform year our

Carlton in guest the top which Commodore was best of making driven index. Grove completed and and the its our and all peer rooms in in renovated we generating XXX% Our in where its performer our RevPAR Coconut Ritz region, quarter RevPAR new of RevPAR the repositioning launched the ADR bar sets a growth the with suites it performing Isabelle's X.X%, fourth asset and restaurant

our in tough We continued the portfolios quarter are market. in this the result gives in year-over-year Miami pleased a by and us confidence clusters our facing positioning comp performance

hampered of major will South be but the to return openings by near XXXX. in destinations Florida's leisure continue term reacceleration aforementioned intact, delayed reopening remains and its performance the to in following late Miami conventions

with However, market suites a International Airport two international events of Beach we the Washington past future high XXXX. years and highs. and exacerbated shut experienced the best in several have have Zika demand faded, attention domestic the and are what to was additional visitation nearly upgraded and holds by flights RevPAR down. from and with Miami recently related to been over weak redeveloped convention quarter for The XXXX calendar the of in nonstop sluggish hurricane Memories the continues Miami traditional that Convention excited another region left and and profile and are the growth attract DC hit attracting headwinds generators record West continues markets Miami XX our government Center and Key hotels. comps is

outperformed which attracting upscale XXX holistic ADR growth positive However, transient half rated St. lifestyle a driven slightly and RevPAR upgrade upper by the hotel's by hotel customers our by generated XX.X% following portfolio RevPAR basis first X.X% Gregory during to of growth, the generated market XXXX. points, our group The the Hotel an offer. bolstered and transformation growth underwent higher comparable

The of supply one market. positioning new soft city April year Easter remain continues remain enter the the and leading second our we in last cluster and session, long quarter to in markets Nevertheless confident of major versus hotels. just the convention fundamentals DC, in the out the our of while with with market, three term Congress for resulting market the shift will has to

Valley Silicon first robust the Our and our from San West performance captured in quarter. portfolio assets Diego Coast

this we Regency room Monterey offset Santa in Los in this market However, Barbara. the of where weather severe also and by softness had Angeles quarter; Seattle opening the in was increased disruptions X,XXX Hyatt supply and

growth Our two drive to continue X.X% significant corporate combined the robust Sunnyvale quarter. average accounts occupancy growth. LNR our weighted as ADR and at these mid-week businesses during Apple register was largest of assets RevPAR Google hotels first Amazon, and

most calendar, growth. group Diego generated March, another and in in San disruptions ADR notably growth, which aided Courtyard, all will by travelers. quarter. and strong Angeles affected convention cause robust weaker May weather and of Our particularly RevPAR QX a across significant Santa drive conventions, for occupancy to January by were X.X% Monica is and a helping calendar, segments related new compression first supply downtown the during quarter Los

Ambrose weekends. hotel's XXXX public space market RevPAR by X.X% Hotel the base base growing customer an mid-week our driven our share, to Reviews leisure X.X% over capture ADR renovation quarter, and in the by led continues the However, first have growth. increase to in corporate in following

leading cluster fundamentals Pebble destinations city our a in fewer impacted down, on to RevPAR City first as also robust the and compression by market more wides Beach and took the the shut especially mid-week have horizon The quarter June. QX, Monterey loss. more compared should XXXX. was of place shift, snowstorms first New with Open weather suitable to registered to resort government X.X% no Easter the U.S. the travel that during four Demand quarter, Barbara soft major a coming holiday in the York in Our in were Santa much

Hilton a of on In York fundamentals in addition hindered New the was Garden loss Despite LNR weak positive term positioning Midtown contract. the our large quarter, our market. and by we long a remain of non-repeating in East the first

it capture to is environment like current operating single RevPAR periods, believe maintain submarket coupled our limiting quarter. capability when we us strategy to demand the outperform while this leading us during and operational unique purpose growth our This losses and peaks was this in Our allows environment. built the with cluster alignment also is digit Hersha past low it to market margins difficult offers

bit first, wanted a over turn I I to margins to our updated call Before, touch and the to dig Ash deeper capital two on allocation. briefly more guidance, into topics;

in impacted to In with shares several price material capital Following use are of in these of opportunistic our remain our million delever. We portfolio opportunities years harvest do first We to at expect first hotels, with at $XX.XX. in renovations $X.X attractive. free any portfolio hurricane growing our now as we consider at purchased the we average and purchase at of XXXX average cash upgrading, the quarter weighted flow quarter a mode. changes similar buybacks. stock We of South not an we recycling along Florida transformative extremely XXXX price. levels last acquired existing portfolio We do

improve to and award sustainability. keep $XX over quick energy achievements topics, our for winning the saved million It Please report through initiatives expense margins. generate so. sustainability outlines from growth will savings to-date be coming help and Second and that or year-over-year approach look our topic, program. over environmental material, and our to details our a out social efficiency and ESG we’ve EarthView next XXXX alleviate Since out annual week recurring that

also have impact. environmental positive had We a

Sustainability our members of energy XX% in others have emissions thousands team and that on And ranking to just a make and XXXX; foot meaningful Global XX% results Real-Estate reduced have communities. in in the of square environment gas by neighborhoods to Hersha impact XX% important, countless cities contributor inspired We per greenhouse our use and all our the our participants since mobilized on Benchmark. we top by as and

last to legacy our of demonstrates during Our hotels in outperformance. finally portfolio’s across efforts repositioning our across and at the clear the energy and us The that properties success Armed Hotels last let year. and investments offices with expenditures, Key this enable each the of at and Ash in turn outperformance capital in growth and me we year early year, stage two the Hersha, acquired that, confident to people detail over it of our years, our the achieve at driven the discuss meaningful that ROI the last field Parrot capital two updated our goals. strategy. capital set support recycling With our up years for the hotels and performance, campaign our quarters incredible the effectiveness stated of ramp the our programs are will more EBITDA several we to margin Cadillac in for our guidance focus

Ashish Parikh

Thanks Neil. morning Good everyone.

this affected pressure margins. of quarters comparisons fundamentals As or previously this encountered mentioned, several following put difficult faced exsanguinous added of on operating headwinds that quarter our year-over-year markets consecutive demand our growth and

portfolio quarter, a we but result, our hotels. points during compatible most XX our As XX of the reported basis challenging registered basis of the points portfolio margin of loss, margin if exclude for remainder our we our market Manhattan growth

X.X% transformation, the in growth renovation. Down quarter, by benefits multiyear performance XXXX points drivers. Circle our XXXX that during to St. first legacy Hampton generated quarter points over of And basis and Dupont to basis reposition XXXX a led Our the bolstered Rittenhouse following the is basis for assets these testament in environment margin with our XXX margin Inn, allocated labor the of highlighting we maintain aggressive to growth Washington ability asset of street growth, initiative. XXXX hotels. in the performance to from our enhance combined first $XX to seven occupancy in very Gregory ADR margin of our a quarter in our and million our challenging of strategy significant at lead growth. in management is to tailwinds growth points margin and XXXX generated by margin primary driven force basis our growth DC, their renovation In led full-rooms management The points and boosted of growth

year improvement also by of the growth first at highlighted the and continued XXX margin Envoy Envoy yielded hotel points up XXXX, the quarter, acquisition of this margin the rooftop Waterfront Hersha quarter ramp acquired points Boston in assets installed Annapolis sockets for the at the initiatives drove our during of in the the our margin bars since end the to led we of the expansion of management and basis quarter at XXXX asset revenue Hotel; newest our portfolio. XXX the Continued notably market. restaurants from at in the newly success improvement while our basis Indianapolis,

quarter, are by wages and benefits, our higher on South property I increased driven costs Florida property As in last primarily operating touched and and higher seeing California we expenses at insurance growth Hotels taxes.

However, our these of we core ability cost peers believe margins the in pressures. to one of differentiators our grow face that from is the mounting

ecommerce and the and providing expense ability Beach to this directly several Resort is whereby our to we of for third into portfolio party travel to expense we in OTA strategy our scour base lease a recent rent, quarter, we restaurant us increasing One in model of EBITDA Oysterette, or change control methods, prior on lease but improve to the Our percentage to for been to catering we upside drag us have are This and operations. from potential restaurant level believe years. allow our creative as also margins similar affords on structure loss capture deterioration reduce volatile but contribution through operating this the structure. levels the this lease control approaches able continue Monterey. type marketing example our us reduce our of helps whether companies limit time, positions, limit our Wood the Sanctuary as approach allowed entered of stay various margin model, to nimble be our recently reduce and commissions. We innovative labor Salt adjust real continue strategies work ways the at with unique flexibility we to agent contribution collected steadily Kitchen to successful will seeking ways line participate operating outsourcing for in costs to our of and staffing by in to risk us that operating Despite that management to margins

minute to and at moving performance the Parrot Cadillac capital expenditures, I Before Key. our to spend a margin want on

As Neil slower mention, even above a than in theory, result. margins stabilize there line our these rate assets and as continue will to at such be top

the that assets performance in quarter well of our the provides that these of same When year XXXX a equivalent ramp-up with we hotel's performance level and our and slightly below on XX.X% continued the Key comparing for quarter margins EBITDA best are margin us prior these basis first of came remainder first remain peak margin, first The EBITDA in see XXXX points the the confidence compared XXXX, assets additional the when to believe XXXX. forecast with intact we lower revenues, reaffirm XXXX ran of beyond at we basis the our approximately growth and in quarter Cadillac first XX.X% at quarter Parrot quarter roughly points than lower revenues. the in we'll

of forecasted We hotels stabilized are as to get gap for ability in XXXX our close confident year progressively accelerated our RevPAR more shifted XXXX. this few our our us next CapEx looking planned especially over strategy these in the showcase We fundamentals to clearly growth we organic for to in demand and two potential. a years, renovation, margin robust South with number Florida and allowing

XXXX. quarter, $X projects, allocated versus in first quarter first of $XX million the to we the During capital million

CapEx in of flexibility out we in very XXXX, as our $XX on this We or $XX.X and line million XXXX $XXX rooms As of million range anticipate $XX significant maintained total ample we million of ended operational in order limited under the quarter million of in look with to of renovations cash with number out a financial to hand credit. resulting million CapEx versus spent capacity $XX be disruption. maintenance in we inclusive

XXXX below payout operation, XX%, stabilization the lowest of our charge forecasted in ratio. the With our solid with in one along dividend ratio of payout and be coverage target is sector, below the XX% fixed the to

the We current and this property. allow and are financing are of data expense majority us our our also out the refinancing taking should of advantage later on negotiations, year. interest level of debt maturing reduce property several further new at are these our the strength to extend markets Based pieces that

newly back reduction CapEx substantial to of in and up online, transformed the flow, EBITDA. finish and along to Xx our the second and a Xx believe a XXXX, to assets XXXX pay coming attainable continued debt of ramp downs range with guidance South assets EBITDA acquired continue leverage cash full our in with spending With we Florida free is quarter this times across growth, next We debt and the calculated from I’ll sales year. for organic few property through years. target

are we forecasted guidance So maintaining year all provided following a challenging first full for metrics. quarter, our

and rear results significantly March it portfolio a the driven was headwinds last York of or a confident that for in holidays we the side we As faced the view spring markets February, month numerous quarter. present quarter weakness approximately which York up March March that that of the the we timing April the lack currently strength of a compatible On is X.X%, has year Florida, we boosted calendar been remain monthly from constructive discussed, in up our and continue limited to is X% weakest when during the in same quarter several of breaks first view weather and benefit holidays assets a the the portfolio difficult however mirror. shifts that markets. York of and growth in The now to where in shift as witnessed trending respectively. month, drove The in RevPAR our our portfolio to many basis our January, at We to we results our XX.X% extended the New New monthly see first results the the weekly related and the primarily disruption up X.X% made witnessed by industry the in X.X% New of Passover was Easter South few and such compression limiting industry.

more and second in West we're New the Boston strength York, Coast broad and to during at addition Philadelphia, based consistent In looking quarter. the

margin quarter. $XX the and of flat X.X% EBITDA As points growth to $XX for such, we growth of million million and range RevPAR XX second are forecasting X.X% basis an between portfolio with to comparable

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

Operator

question you. from will [Operator Shaun come And America. first Instructions]. Bank of Kelley our of Thank

Jay H. Shah

Shaun. Hi

Unidentified Analyst

Hey is for about on Danny guys, that. this sorry Shaun,

on be but seems maybe you people bit can March – break it sorry like where that generally little was like exposure. relative So and a last you so touch it's I I is start but more of little going and year, relative period know, know just early, little expectations with [ph] do lot a your a like know a lined it up a we don’t maybe bit you to was and longer you speaking spring than know term, just urban the bit bit have short resorts disappointing to of to so little and can a balance

so for does April looks So guys? far you how

Ashish Parikh

start, me Let Danny.

XX So it to March, off basis by – bring probably XX overall about we – down Danny resulted points. March I at we result did was in look were when portfolio think our

I our than lodging everybody weaker in certainly was throughout it and So portfolio. moved think anticipated

compression March mentioned, and these the kind to. industry a across was of usually just traditionally biggest we just be effectively through year's last the board we of an from April, last with impact you – leads extended leisure compression of the properties lacked see but we the this the of saw power standpoint but even with occupancy, in markets that it that not a the just I snowstorms shift, from lot As the We having What all Manhattan, we weaker from just compression see. was from the didn't early really week still extension in period. the spring going holiday to in break at really saw know way April pricing break the and knew we we that spring saw that March was

Unidentified Analyst

and thank one Ashish maybe Great, question. just more you

of target prepared property mentioned You about range. leverage you help your get to sales your remarks calculated to end the towards

that out specific a So but maybe meet not list? are to that assets, to hotel should asking there make criteria you call any any

Jay H. Shah

a a generally assets We significant Neil. fully is not of effort dispositions for look will ROI stabilized, requirements the we this CapEx have that the or particular where general generate are criteria. Danny, at in new that it do asset on significant believe supply confronting disruption. That's significant

We quality bill. profile that portfolio is very to are portfolio well. EBITDA across that in today as our our of upgrade we and few look assets terms as generally trying fit growth But there

across the sold than confronting of our fully three stabilized last those and that in $X four had, we're we over nearly billion have in assets mature, half hotels, new their to were we’ve years, portfolio, sub-market, that supply We so and and more will return you a from. we left put into we would today that new on of get kind What we believe required are are assets didn't CapEx the, our that it. with that in great capital are get portfolio can believed benefits targeted

and up before and year is assets And transactions we'd like of remainder the assets ramp kind to really stabilize so considering that we acquired that we're that allow on. the we chose we mention quarters, the and we starting last a as portfolio and that that several of that last capital program And profile bear. our had it portfolio growth to we put in $XX better our coming see a to sub-markets recycling across result legacy to million existing assets and portfolio than believe into of that's those any our

handful we that end a and year the consider next asset a not focus. year of we of sales, as think right but I may is this towards now

Unidentified Analyst

Understood, thank much. you very

Operator

will Crow The from Bill Raymond of next question James. come

Bill Crow

as out to to know to on and goal your when do you you you’re I same a guess Hey, think and just below Xx, But Xx sell I just that line, guys. morning EBITDA. know internal is Ashish figure good hesitant budgets. get trying internally Starting you I'm Xx leverage to at look got good you if you've along ramp kind can assets here of

Ashish Parikh

Sure.

to a of it event XXXX You know end top as get that end do of sort to but of the at look kind we of range.

weren't range. we know you then into accelerate us sales that sales if and Just going to bring would any further to do the asset just asset

Bill Crow

supply. last my a York end So a politically Xx perspective. was New doesn't some some changes, is XXXX, the on new much zoning enthusiasm and ago the positive turn do shiny was supply performance based the that's that Neil, is it question city York is by and took would had City investor But that towards and helpful. of perspective and that as hoped and on year certainly a decelerating it New what seem as of okay that

So to the are the as we today, of prospects into and look year we XXXX? where what's balance out this

Jay H. Shah

Sure.

you are projects know lot as delays pretty delivering York. as on been You a think I Bill, in aware of just New there's well,

– the we believe a forecasting year tick are XXXX we X.X% growth. new have fair basis they are to in year getting last that we’ll to or X% about growth, decelerating a X.X% of we it we kind In the in kind and X%. open XXXX something next environment, new basis, at after opens and we rolling when years we in significant all New supply So of supply two down couple decelerating But just City. neighborhood anticipate York then mid see supply as last that trying That a your is year that basis we is of of your of mentioned and of look had supply on still are in set push across XXXX historical couple where continue. a three closer It’s because XXXX if growth expect been in when when for rate it a expect or years hotel clearly kind on supply, kind hotels we supply you in get their – of up. share in to growth and to quickly comp averages nice is difficult cycle

reports of kind history On shatter the right is is that last side, for – be very change Visitation of last, seen innovation very, the residual even land strong very is great It’s XX% record hotel in and attract by the strong. market M-X development. value without is years I've The to does Manhattan corporate technology and and demand particularly that across of noticeable But significant continues supply think demand markets XX% have investment a seen a just year-over-year development. continues and appreciation the we've of across very diminishing. real because strong available in market market, Gap]. kind to of still It zoning like demand dollars. [Audio will to there, reduce several the the I ones and particularly as sectors. acceleration the

this it's supply think supply in I new lot it's service So a the market. kind new great decelerating, rates push marketplace, have group little recovery we significant rates. that or of kind but was the anticipating. to harder to down does it makes of select all And a of see There bit a and of it's was bring lot are that we yet challenging a

Bill Crow

helpful. That’s

there why to metrics yesterday, Let York just and in think growth of I X.X% big the number the spread. update. call – the out logic are, me X.X% trying supply that kind figure XXXX, very the XXXX in is using. and numbers New such data I'm got you which that just is for They a different I in you're than

Ashish Parikh

think you data don't Yeah, accurate new have now, We supply. the and of our, all York how they have of I in known about PwC along. cycle been just our have overstate in we I that for me New right you've kind don't supply Lodging data forecasts Bill, talked but front metrics this right before, to know I all

brand their being that driving unit are growth on valued take and lead from they think companies are pipelines. I

just to the relative You construction delays before and significant, we've been of investors, the is accuracy in past know supply of is we’ve overestimated to deliver has going with the build. kind of me my kind what very how think Greg some other new colleague much showing all even our of because of in but I shared and forecasters

in maybe Investor all in kind of consultants other bit you of maybe for ’XX, know we’ve then that next to Deck of sub-X% just that give and we’ll might So put our to of again, next forecasted and the industry years falling XXXX little confidence view ‘XX. versus to more sub-X% from in the XXXX off to supply show how a the couple

Bill Crow

Thank helpful. you. the commentary always As is

Operator

The Bellisario Michael next Baird. of question from comes

Michael Bellisario

everyone. morning Good Thanks.

follow-up be also kind Just in commentary on portfolio some additional too, of helpful. your would a York New but broadly

on you're read and in the Just both then demand your what then summer helpful. on saw first you the booking give front, international your time will me early seeing be quarter that and real also what leisure travels,

Neil H. Shah

Neil. this Michael, Yeah is

think big demand a side, I international would of much picture I not the On change. say

and we other know which there it's the really and we deeply it’s hand are pretty dig in is that. kind demand our But quarter, our of know, outperforming. so we into, of coming influences countries as many on you dig existing, every this where You do of into kind hotels and from the

the very is Great companies, say any coming was we have of growth a sure. X% so of had you to future But you different But I significant mean to another the and our reason us. end is the many customer international draw from managers of our in travel decide gateway easy a need at be that demand it’s what tool day the major hesitant revenue I instead I from some hard our But the to But international another classified the of channel, too it that growing this business. our of at business X%, markets in a year international to segment kind wouldn’t these It’s part just would foreseeable Britain of conclusions We wind our star we of continued of but XX.X% for just year is this rate it's tail from grow X.X% a it, much think we for traveler China brand X% have kind contribution. may I some contribution. some for get significant Manhattan decelerated industry it, know is conclusions that I and for biggest year. that, online give growth data of XX% year-over-year. of to there that from for few our kind of the by points, and attractive for draw of sometimes groups it’s us clearly markets, U.S., channels, it many, come it's of in down because to across how our from X% about quarter, you very a secular agents. It's a it. for get see. it's it being international, to to

for lot international clearly I lots to a kind very see X% markets Lot growing nearly think international have of flights several markets for over and and those international in our of but that of been demand us opened obviously quarter. terminal years. Sunnyvale contribution. of last like XX% continue has Diego Philadelphia added across of new the this is continues to driven, just increasing. growth, most Philadelphia get Diego was and international corporate their of it significantly the and San are it San last business several we years

Jay Shah

Michael? Is enough information that

Michael Bellisario

expect you that's more I a mentioned going Yeah, the a that or then very the little just that QX or comment perspective? qualitative cadence sense to is quarter at of the challenging be maybe you of Ashish quantitative least you. is thank and gears Kind guess give guys from the I throughout switching helpful weakest quarterly year kind bit, a maybe year. could RevPAR you of of us think that most

Ashish Parikh

Yeah, absolutely.

difficult the the you comp that that years. for based had market two So know most the on is primarily

remediations, Florida hurricane So in the last a saw to with New X% you at as we print came we quarter. and XX% positive then year due for York saw

cadence sit get as you shift really for for we quarter second and we're quarters is may and into but three, discussed guide call know as four. that Things quarter we Our X.X% here it it, today, further the that we on as is the looking well. two, first the at X.X% to

most a as go that backdrop fundamental for will be market. the think our and sort You know first difficult year know we through of better with easier quarter do the the comps we just you

Michael Bellisario

helpful. Got it, you. Thank that’s

Operator

of question Maher next come FBR. Riley from will B. The Bryan

Bryan Maher

quantify and of York that know many it you your questions, some done those given advantages been as of particularly out maturities and and morning, refinancing can you have comments, upon answered a maturities? the can debt already. are how touched relates you that for you of Can you much push prepared how at debit, New you in the can far out Ashish, moment. good talk But Yes, the my the kind bit markets extending to get current you little this

Ashish Parikh

absolutely. Yeah,

So, comments to I level year. was that have up maturities asset in Bryan coming this we really my two referring

side. terms know the know this For will out, discussing be now we between four five on right lender, those you as and are this with years asset are looking we you the extending at

of going most you and interest will still You as or to at well. of of same financing be interest be type it know are only kind better rates the know the level

to be with five years potentially four say that brought can extension know years safe maturities definitely you So think it’s I the five and and options least at out years.

Bryan Maher

you into that debt coming a think level. there and potentially Is know kind other due next you any know macro get you also XXXX uncertainty some before can year more that’s at know XXXX we you in of year election and address year, you this an

Ashish Parikh

that Yes, that we loan be term end of something year. XXXX the the have yes, we working is by on is certainly facility it the and refinanced are likely to

Bryan Maher

you. Thank Okay.

Operator

Jefferies. question of Katz David next The comes from

David Katz

good everyone. morning Hi,

Jay H. Shah

David. Hey

David Katz

morning. Good

there's you the what you if missed and to to there, wanted million I delineation maintenance about $XX $XX made a within million. ROI that? ask and apologist some or I So detail, growth but between Have I consider out CapEx

Ashish Parikh

Yes David, only we looking are for this at, you I’ll year get that number.

around are million we maintenance of $XX CapEx. $XX million CapEx, only looking of $XX think between I million $XX to at maintenance million yes and

David Katz

assets got I is private the those of area. and of looking asked service take strategic you of the there’s know know from million some $XX you if still, portfolio to the know some in at million; a there the some you valuations I $XX limited removing And to more you of possibility. but that a and robust, New the seemingly know that's question. just within a newer to sort the about portfolio discussion thought is bigger context of or from newer assets it. maybe focuses lot any With out know able bigger is portfolio away there bites question being seemingly speaking, market leverage the broadly of York,

Jay H. Shah

in when luxury select that believe location gains sense our are are secure at decision term We'll a just the financial service right investors. willing Inn balance sheet did service lifestyle possible. service district. the of we portfolio last it’s for located it David, this We we to on do just when opportunistic kind are of are to to absolutely and don't don't hotels consider for time. in and to well urban Hampton makes an and new when it enquiries We so. in take You hotels, it's We assets, limited We focus as know the as but think we either selling to there hotels long continue reinvest hotels, downtown year. the necessarily inbound take can select on – or investments, sale great

across we So about minded about and about have you our in the time that's the focusing we I years. the more that why a economic at selling or something it's we just don't inbound feel of enquiries, were levels, very are know throughout we this talked as We lot concerned liquid mentioned we our portfolio, are hotels. free concerned CapEx. take flow to But very to we concern company assets it's only and leverage so space about but market that the at can the assets continue for to absolutely just a we more for If not growth leverage kind accelerating environment, open if level next were our don’t, we growth of our of that kinds about several warrant cash this profile time delever sale. of our

lot to than over are we the including cash flow a all $XX only to where year portfolio. You differential It for have. needs That expect know spent, reduce CapEx more spending and ever will of the free was capital million $XX million. the next years. across million we CapEx maintenance year and so we $XX to portfolio last to very $XX have be all producing delever of million across years, of several we leverage several going our This spent our next we limited we

feel we and portfolio. very time comfortable position this our at that so with And

David Katz

quarter. great Thanks,

Jay H. Shah

Okay, thanks David.

Operator

will question Powell of Barclays. the from And next come Anthony

Anthony Powell

brands service. brands We MOXY, do everyone. noticed over MOXY for like see morning of good the a in impacting like urban like lot you How and model markets this that true traction gaining be development your Hi, years? few pipeline these to the community seem next to

Jay H. Shah

Yeah.

– lower or distribution our one brand close a the an think a some They to talking in younger York already. smaller have been pipelines often clearly but brand, price or or our it, open same they broken be and talking whether are hearing brand's the to up new developers there room travelers about pipe MOXY’s hotels know I we've ground to were the seen of mottos yet, time we've are do New kind have of – MOXY different impact. There’s off positioned a don't offering, open in point, officially and it's any it about we travelers. markets. about leisure kind impact their trying generally a think at that some focused brand on bolster several Garden – of of are You it know Courtyards Inns, we like. talk They in you does Hilton coming that of terms believe if any more and is there's of so can

not on there is kind top So but it's of impact. right of us,

lead does I years our in to the out think over ago. that three growing supply. market definitely four was That's it came AC Marriott brand kind of and new

kind and the for in and back Marriott of attracting of is in focused. New and dollars. seems in have equity its debt of York has lot development think Marriott of the does a of wind I very terms coming lot really both a most like years financing pipeline City new it brands

in portfolio happens Hilton the and less very couple supply Manhattan oriented market York ring for Our has of to new Hilton New next and years. the be

we to still them but of be do early competitive the their of relief, a kind gives just of but to it them where expect an cycle time. over across – getting grow impact and it's country, So us are and expect that units little bit in of kind does do have we they

Anthony Powell

A you that of seems a best. take you like in quickly, How New was XX of maybe could similar to you of competitive threat ago Center and see floors your question, expand lodging this actually York. Airbnb the do both to pretty it year do your than Airbnb is at real offer It announced a more just as becoming model so model threat and units. when a regulatory hotel, believe or New Rockville a deal were down outside to generally York develop and or a to wins

Jay H. Shah

Rockefeller I Airbnb supply. just hotel deal it's know one Center new at on You is mean hand the interesting.

be know hotels will requirements; the it collected; all will they going the fully is cost burdens life to – taxes safety it other have have will will have. they be that regulated; You

has this That suites that the impact economy. because some think actual Manhattan. that's competitive will are kind some that shadow where is felt product, kind was channel kind hotels supply. in when, drag right focused on some in supply. of an distribution to it or hotel focused less apartment more they I there more our open, and stay I It's in hotel to on and was potentially And then a case, corporate are inventory condominium be the think defensible think model, or so but of going an and effectively near kind performance, is bigger a buildings was it in a have just ways do impact and becoming more when starts but truly but kind less of kind as competitive, of AKA of I actual of on sharing particular Airbnb They little of and of they buildings bit of with understandable impact we hotels extended

influenced Because they back wins markets distribution think business regulatory clearly that apartment and their strategy model wins across the the they into and their the U.S. you think at now in has getting most directly. I for companies know more hotel not are buying are clearly regulatory are, sharing I the

Anthony Powell

you you bit it’s it’s more kind companies. to So pay need – just and believe status thought phase sharing these do that the or of of you in overall the you in kind a a what's couple new than economy and something that a of threat of it or more Do to overall maybe of years is competitive your of ago a mind. that attention

Jay H. Shah

to I customer mean – buildings the might a they You like develop, some set if a truly It this for have Center, we in just, it opportunities. RXR new or it right loyal brands that then it's in have ways and be can they for a so be our in brand may Rockefeller with for us able certain know mean look that hotels of we I that base have. that to at some certain ways it's improves we just consider property deal

but have has change channel hotels. true wins out, frankly three kind the kind wasn’t think of of a couple points at a for it's it's were us a of regulatory another today It that of price that independent or We the ago. extended we as brand used net-net I all it's inventory part less for our kind putting consider. stay distribution a kind model, Airbnb if hotel to a than or of it been, years two, concern was But of productive

Airbnb see. we’ll As evolves

tell. a just a little it’s early I think to

Anthony Powell

it, you. Got thank

Operator

from Woronka our [Operator Deutsche Chris And next comes Instructions]. question of Bank.

Chris Woronka

guys. Hey, good morning

this that are sell the bigger debt or comment, were think is and I should reduce that the your into price last gains, You going or did any you you you mentioned guys few that more was of looking function I some or back, proceeds I these end, might When those in asset we think know recycled you're the for to years partially taxable tags comments you year. a tax at pretty next with about fair? from situation lower with prepared we guess some high potential cycle you selling sales proceeds if have would hotels imply further when

Jay H. Shah

it portfolio has maybe less the than but that mean been, ever from gains I Well, is perspective, unclear. younger so

and significant benefits, to so think have that underperforming if sell less I had our focus kind we be were where today to our we would significant may can would we we hotels selling hotels multiples some trading either or of would there hotels on relative what it multiple we're before. but sell XXx that At multiples. be than games, probably it hotels, are level that

Neil Shah

right. your, asset to similar it’s We do Chris like sell to start were XXXX, if good we'd distributions of you things you a to you taxable at know But good problem $XXX can to that’s about a gains. and And million assets, limit gains sales, had sell question. I'll with from gains we certainly so other them know special have.

the if would look we right it, if dividend. component, really a sell I the sense at the and We by out we it’s defer is right if that it of to So think gains would it capital time. asset asset as game always regardless as, the it distributing sell or special recycling can by makes

Chris Woronka

from reduce you is dividend. because tax debt any sell if or but the comes you right, understood. you – hotels, relief take give not further EBITDA no right, more, I relief reduce Right, my guess leverage question would reducing some you if further with out, leverage, you tax would XXXX the

Neil Shah

correct, is that that Yeah, is correct.

XX% You us. you enough could then down do that so leverage income to and hit a still distribute of enough taxable the pay

Chris Woronka

showing favorite that as enough. want performance of on guys branded is of I full. of your all wise. first you quarter big of independent and hotels for the disparity mainly STR to of between the seeing and RevPAR hotels that's your follow-up because kind in Is just because any fair a outperforming markets lot data you cases a the Okay, branded hotels, independent case And our Are the the are well? in lot breakdown

Jay H. Shah

But our our other faster faster, they brand growing point, clear so distinction. and in this hotels. are are of these margins growing have coming competitive an absolutely – would rates those the make are able push and At they are it faster like, distribution generally off less be independent and to channels faster, hotels they we supply growing can't

they growth already, are our is through are pretty rate them that necessarily are occupancy occupancy on so not in kind share. bottom all and line. compression unique know so high these they XX%, – hotels They've of independent to is and our our already of You all markets are high and XX% of flowing at that gaining

distinction as think I National show a as not may of our be, might. Data portfolios So, performance not Star may clear

Chris Woronka

Okay, guys. good. Thanks A very

Operator

question-and-answer like And any for this to management over remarks. I turn closing back concludes our conference the session. would to

Neil Shah

more morning. for to your you. questions Thank to all a this you With time no we’d like take of moment thank

will or catalysts out two questions can exceptional growth and results, free we Ash our team I drive for performance more call years to Thank any trajectory. answer to please recognize several Jay, last further our convenience. are we company We feel that you. this specific quarters hope and confident If come, help our at the investors your

Operator

now is concluded. Thank today's presentation. conference for The you attending

disconnect. may You now

Hersha Hospitality Trust (HT) 30 Apr 192019 Q1 Earnings call transcript