HT - Earnings call transcript Q2 2019 | Hersha Hospitality Trust

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Operator

Good morning and welcome to the Hersha Hospitality Trust second quarter 2019 conference call and webcast. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please

now Greg Costa, would sir. like Please to to over conference the Manager ahead, turn go I of Relations. Investor

Greg Costa

you second XXXX afternoon. conference joining Today's call distributed to the Thank yesterday based Hospitality earnings call. good on release be Welcome was the Hersha quarter today. XXXX to everyone second Trust will and Cole quarter us morning which

as remind performance statements performance everyone the forward-looking the with to known that be conference actual like or to considerably proceeding, Prior company's and detailed contain forward-looking financial I call These factors SEC. results, cause risks statements. position. well future are unknown factors any press to within These other that results, financial company's involve would and may or and the today's within uncertainties may filings different positions the from as release, company's

to Neil President call Operating that, my the may begin. over it Trust's Hospitality turn Hersha Mr. pleasure to and Neil, Shah, you now is Officer. With Chief H.

Neil H. Shah

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

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

industry-leading largely environment. Parrot of as choppiness growth Our excludes which the RevPAR Cadillac margins XX.X% markets and with expense our our in despite challenging to line Hotels comparable our reported able X% and growth, maintain market share portfolio offset a in expectations Key gains were we

growth. demand the profit when international and creation negative individual to less demand, are demand. trade wage elevated the transient leisure second from supply by strong growth results in quarter-to-date consumer. slowing impactful slowing job that business This driven dispute are we to However, deceleration and GDP prolonged and seeing with of the we particularly see in trends portfolio levels confirm These while consumer corporate combined confidence, quarter continue appears driving growth, be

RevPAR growth our anticipated but each June, markets. month, in to quarter in flat with with more major flat in challenging uncertainty better meaningfully particular, year sector difficult will to weakness nearly be The outlook. and outperformed than continued was most, the urban market proved our for QX second We caution. proceed looks July, but reducing business looks transient segment with for we we in several our markets. are for June of full QX negative. in

let's by Before walking out our company outlined through our of three delivered in quarter, Our our ROI Two pillars the and renovations catalysts projects outperformance, each seven Last Hurricane for of of Irma. revisit quarter. markets, growth. two three quickly acquisitions, redevelopment Florida three damaged specific catalysts our generating South recent we this

weighted hotels X.X% I as These hotels June to performance well, occurring by their RevPAR First for renovations XXXX, provided since throughout tailwind of seven which in want highlight the second reported average obscured but the the acquired strong was the disruptive XXXX quarter. we a growth year.

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

million meaningful to into experience. recaptured guest with quarter themselves newly have These their RevPAR are $XX while legacy These quarter. EBITDA anticipate sets. leaders XX% but within outperformance where continued have hotels hotels hotel space, event respective hotels. portfolio for comp our established in the The of driver for assets of these these drive second growth basis second marketplace, the XXX We in from rooms, and all activated our posted primary growth weighted as the margin foreseeable growth points their position only future. delivering pillar results not We bars the added our and restaurants average of assets a upgraded we seven repositioned and second created invested of growth

in West, first quarter which Key very on enjoyed in quarter, And softening Beach in our Hotel Club strong are and Parrot season This, in lasted growth, late Miami Both Florida, year following mid-April hotels in on reopened during occupancy demand, the Hotel and finally, Cadillac throughout particularly the Miami in a both Beach Key The portfolio. last pressure on resulting hindered largest high projects, our production but and two and market-wide with among and major the and redevelopment quarter, the second South the the ADR. EBITDA coupled Beach, expense began strong quarter. Villas

openings second in Miami and Caribbean closed value-oriented year leisure last Puerto was Rico to new Beach and in attract traveler third the that South Hurricane quarters The were that drawn Florida, for Irma. hotel

to prior At peak XX% quarter. able generate on hotel Miami demand, year sequential the aforementioned in the despite pressure second growth for in market-wide rate was the quarter, Cadillac, the our above the

Beach. The Art is around the Miami strong projections on December. in But as typically for quarter pace seeing remain and week our on for we Basel soft fourth are and we notable such quarter constructive transient as events holiday November third

QX QX, of Key half June. occupancy its but the slowdown continued In back saw the towards from West, upward impacting in trajectory market

levels. gain to among Key However this market as leading high a in surpassing its ADR indicate to set the the potential. the [indiscernible] forecasted and should continued comp prior the Parrot results month and the with share These hotel peak for is property share RevPAR en take during quality continue Keys achieving route reestablishing to lifestyle itself

slower from our and this the this at up EBITDA are mode stabilization asset production these a lower periods will very hotels $XX topline. in but million is of the around Similar $XX a expectations to slower to experiencing little ramp in like million stabilize We summer. Cadillac, ramp two than the margins much maintain demand

here our beginning the on markets, focus clusters versus now will Philadelphia. in their respective of outperformance I

the was best RevPAR portfolio consecutive for our quarter, growth. second performing cluster achieving Philadelphia Our XX.X%

quarter RevPAR half major by the growth Rittenhouse generated of capturing business and first after this XX.X% led group transient was XXXX. renovation performance which Our the its during completing

Westin the the which quarter. revenue RevPAR Philadelphia, yielded the Up ADR initiative growth, XX.X% led management our for XX.X% block at to generation

achieve with Philadelphia. business underwriting to we of Now expectations continue for in strongest asset ownership, well-located our in in its submarket this third the year

delivered rate Philadelphia peak also growth RevPAR around capturing in nights. Hampton occupancy X.X% impressive compression and on periods Our convention

as term and have the to as city's continue to allows and on have points we And advantage in us growth market innovation healthcare QX in outperformed in by basis capitalize QX, We foundation the expansion XXX Philadelphia operating established complements conviction the this technology on already of and clear Philadelphia in points education. our its fundamentals X,XXX long respectively. basis

assets city to to XXXX, be and market. by Despite which the Boston, this our portfolio and cluster X.X%. quarter a one the in second RevPAR softer performing Envoy, convention the of the strong in year again, continues in calendar our growing outperformed June The demand acquired we was in best

the growth growth driven operate RevPAR efficiently During X.X% by generated basis by to were period, the able hotel XXX margins ADR exclusively and points. we growing

increasing quarter, Rooftop at the we additional in the strong revenue during weather inclement season. growth expect has XXXX with continued Envoy. We XX%. Rooftop in the the resulted quarter generation And F&B for year-to-date expanded by in with temperate and Boston's along demand remained significant of second capacity the this new revenue during the this our over the third Even asset quarter stabilization of

single the the the new positive success transient with demand environment higher markets Celtics half Cambridge. Holiday quarter. Inn to This in nights the digit and Boston the Express playoff the mid growth supply demand Courtyard in back hotel in urban clearly few the Bruins fundamental at Boxer, growth. was and of corporate than led one The compression of increased offsetting country Brookline falloff any

major market Washington versus of market. in DC supply in enter three middle with resulting out for headwinds the Easter to two the convention another The weeks experienced one April, of of the shift year quarter session new last and Congress full continuing

to portfolio half comparable generated Gregory of the growth growth and growth RevPAR hotel's underwent XXXX. upgrade to by XX% XXX the gain share the offering. bolstered and following basis market which holistic transformation a basis upper outperformed our points, The hotel St. first driven occupancy of XXX our positive However, lifestyle points by upscale an RevPAR slightly during by generated Hotel continued

for market overdue the quarter last booking stronger the transient Florence midterm stronger due DC elections, The in without back and long strong anticipated past of of window in booking the corporate September, are Washington IMF the shift quarter. years is third in of in back the our in in fundamentals beginning few comp will market holiday to comp Jewish the the poised Hurricane the is return challenging portfolio robust a half believe pace November a the believe easier demand one a leading half very leading been that lodging but we to weaker September DC markets rebound group and in With for of October year. looking year, the to looking than have of the and an us be for

we the Coast, West face new in of supply. mixed on Out results the had

growth, on U.S. our was asset XX.X% Monterey second around benefiting from near Our the compression the growth Sanctuary Beach ADR generating June. RevPAR in Resort performing during best quarter XX.X% Open

rate experiencing despite following space X.X% growth to growth business both market hotel's points quarter, the and share, capture and Angeles, leisure XX%. of from market continued driven our delivering bolster inclement and to Hotel Los the X.X% XXX the basis occupancy new continue by weather growth renovation in RevPAR occupancy Down supply and ADR to Ambrose Reviews guests. throughout in public XXXX

Diego demand and Our supply Los flat to all led weaker select international service and hotels to corporate San Sunnyvale, results. and negative Angeles, in new with face slightly

as strong. a demand year from In market very date but to demand X.X%. challenging most of June the increased was Seattle supply perspective, market Seattle, remains

the However, is Seattle city on many openings XXX,XXX ADR in notable submarket. Pacific. is to online continues Convention a Hyatt occupancy has new quarter, help supply feet office square impact a continues first Center. third from stabilize in will which just in lease Tech continues as Lake again, the come XXXX Apple, XXXX. expansions the we Google demand CBD With growth of the following the impact Facebook all and the Apple's to be market at Uber, the supply city, as in half nearly supply South as XX% remain to have big-box in the which disruptive our XX% Seattle, such recently should strong room a and to in space growth few announced very away positive fundamentals of expected of rate for quarters Pacific near have as blocks prolific have growth. lost the significant companies of the announced Pan our there Pan Union of new But no year-over-year absorb such that last nearly the recently in Most

portfolio robust City our quarter remained the XX% occupancy. second in during Occupancy York as New registered

quarter, primarily throughout loss growth the driven quarter. cluster's for compression by X.X% many RevPAR industry against with X.X% our periods of pricing This difficult this compression growth consecutive result during high-rated year, second However, we registered around we during our comp. rate was peak RevPAR overlapped and Manhattan Day. challenging typically a Last year, up and the during a These quarter. conferences impacted bumped environment events Memorial strategy graduations, much timing of peak the in which second

Supply in RevPAR second has level XXXX. will confidence demand in in expected, an international pressure but XXXX a in there Uber, XXXX. Supply recent continue will coming been quarter elevated we X.X% prevent ADR Google, deceleration and do and the West the the in which Facebook and accelerating and to Downtown quarter-to-date by in corporate and in in us we Midtown announcement corporate market demand believe remains and Amazon years. remain But growth give

X.X% non-comp Key a headwinds of our Florida year the quarter, to portfolio South face Last regard loss but the quarter. a beginning comparable Cadillac in Florida as were comp up this in tough we felt our properties, discussed RevPAR this and We well. Parrot South realized hurricane of X.X%. We

room Miami third the Bowl less challenging this Our the during Beach be of Convention completed lapped Game including XX% to in the recently expected one international Super comps Coconut second attracting term low Center XX.X% to in was and nearly by on in Grove are summer, thesis hurricane in we increase RevPAR BCS hampered by our nights is the region remains performance hotel while Championship spot points our XXXX quarter environment and at demand profile for events a quarter. a redeveloped growing the quarter. said, XXXX In where high of more Despite related Florida XXXX. convention seasonally and occupancy XXX intact. a basis in supply generated That reacceleration repositioning South the have Near by and year-over-year. Ritz-Carlton the the bright alone, growth, continue operating new will

capital on comments quick Two allocation.

First, are stock XX% at not although to NAV, trading did we we focused on reducing discount we believe our this as purchase that we a quarter remain any leverage. over

or dispositions acquisitions not any time. Second, at targeting we this are

shares is our believe for term environment, to of rather team we In in and repositioning focus driving over owns shareholders. focus deal-making operations management Our return or to outstanding results. quality deliver total we XX% long than a are today's committed required our

outperform environment, sets forecasted our slower year. the is and We quarters, expect and market of choppy resources embedded meaningfully focused this our our projects. two redevelopment our every gaining market this all coming competitive Florida markets nearly portfolio acquisitions, renovations to recent share and growth at in our EBITDA the realizing growth but start In on expecting the are than of from South

that, me our for in over our turn and updated With margin discuss it sheet guidance let the detail performance, Ash to balance to year. more

Ashish Parikh

good and everyone. Neil Thanks morning

which to amongst face XX.X%, EBITDA margin one challenges, was highest As second we peers. we in the remains these our And was drive pressure that able have resulted quarter discussed, our fundamentals growth encouraged the greater margin in in remain to than the of anticipated. portfolio

and to points with limit allowed operating and management Our basis on of growth expense focus costs us flow-through. control XX GOP a initiatives margin XX.X% aggressive our drive asset

the increasing EBITDA growth flow With believe assets continue markets resiliency model our that expenses if X% fundamental the growth, drive and in profile muted business cash of near to results labor our even RevPAR X% the of occupancy term. above to we driven will remain in and most

operating yielded of to time, to unique for management in adjust costs our several last ability control steadily our us quarter work flexibility expansion years. with the clusters. Our unique directly staffing companies been real have several increasing to that providing in strategy model This margin labor us affords

growth. St. our basis in Boston, Washington labor basis which continues XXX coupled XX to grew XX e-commerce resulted margin which basis by driven by X.X% margin and basis reestablish our increased points savings reduced Boxer, generated itself points Gregory, margins on the it margin as circle. points labor points the of in which and DC, boutique of the Hampton with generated growth amenity by led growth expenses And portfolio In Inn, by and XXX the XXX portfolio independent offering upscale basis margins market-leading ADR points down growth in and of as DuPont

to Capitol of in collection but monitor growth expenses real ancillary recently able costs also instilled basis revenue independent fellow and asset, able to only adjust to Hotel which not XXX growth. Hill to through was Additionally, the time drive labor points margin was control led initiative,

quarter legacy reposition these allocated assets and In performance in $XX basis to XXXX, XXX enhance we million led to of and their seven growth of points first the our margin for hotels.

bucket occupancy growth by The One the as margins leader in itself quarter. of firmly the the Coconut was market grew and driving notable best established Ritz-Carlton which topline performers points. the to basis ADR hotel in gain has XXX to the this continues and in second Grove, share achieve

revenue has and the the year repositioned at to restaurant tailwind Our in bar Isabelle's substantial last Commodore and F&B their end and ramp-up were of thus a provided XXXX. far

the margin from in following margin the Plains in newly both room significant and momentum points basis flow-through. growth basis expense of resulted XXX quarter Additionally, growth, White positive our growth quarter second their respectively coupled Hyatt renovation House Marriott first their implemented At XXX holistic controls and points in Mystic assets, continued XXXX. with revenue generating

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

stabilize are substantial will our their continue incurred will to marketing critical to recognize at expenses next remain will though ramp. over even investment operating and reestablishing than closed Cadillac, ramp-up such, complete being assets to stabilization continue a mentioned, that these the significant assets and hotels. And these we and our to rebranding Neil over be these earnings, impact the result. margins operating After properties. at our by months work to The follow the short-term And the full revenues to these remediation the is driven as encouraged be topline these staffing, drive period. topline our expertise Parrot as stabilize XX rate ability slower and by year to in of we margins Key As a for

ran we Parrot prior second the comparing equivalent quarter basis basis when quarter the our XX.X% we hotel's Cadillac second And approximately that margins When than came in performance in EBITDA with lower points XXXX we quarter second quarter at below revenues. best a in of X,XXX X,XXX the higher margin with Key, peak XXXX, level at were same the points revenues. roughly XX% compared EBITDA margin, on

next discussed free forecast limited initiatives years, are our As asset our related the management last we the continue and disruptions us driving quarter, us over of majority focus cash and funding to to large capital allowing flow. behind few renovation on

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

out CapEx to projects very for of XXXX million anticipate out or our $XX total but we we $XX versus of in million million disruption. be capital excluding renovations to XXXX, in maintenance XXXX, order As including range into operational capital a number look in $XX resulting of spend, the deposits rooms with limited

large-scale and to that With dividend which at currently cash reduce increase ratios the ratio, targeted one further the payout renovations, our XXXX remains spending the sector. continues the of to CapEx payout stabilization of assets have and us in is XX% free approximately undergone flow lowest in reduction for allowing

active also a to term. with more the environment debt accommodating interest in appears We forecasted rate market what the be been near in

with strength debt Square on During of the the the a rate our maturity. XXXX advantage quarter, interest refinanced we a fixed took X.XX% as Union debt Hyatt we at the of market existing of

the XXXX matures at In Tribeca rate fixed July X.XX%. refinancing our addition, now we on Inn of a completed Garden week, Hilton in last debt which

quarter progress the of refinancing to have if XXXX these you and our on maturities several on efforts of earlier. We third our not on updating call, started forward look

with flexibility hand business we and our to execute of to revolver million improve of continue take to cash capacity our have plan and financial ample as refinancing on the they $XXX With and arise. opportunities advantage near-term maturities, these our

I XXXX, earnings presented guidance in release the will updated finish we published which year with full our for yesterday.

As we on with lodging industry the expectations. portfolio. were mostly bottom shown have our quarter throughout second have and consistent pleased outperformance But we forecast less the along our discussed, trends underperformed than top to line

demand for our booking business driving confidence on in transient pace, than see consumer we weaker trends to overall forecasted leisure quarter. strength continue Based the are current but

a have tensions the time third which For XX softening we and first of carried top declines amid RevPAR outlook for business deterioration seen indicators XXXX, trends since we in and market. the global several majority of the several the markets showed key saw rapid into have trade quarter in June,

basis we growth While outsize year, conditions three months. market anticipate do high-end to our is of do not back reduced while the the to points. points for in lost we which we worsen basis half at growth, make portfolio margin XX X.X% up between the plus now the RevPAR We over expect EBITDA XX and maintained to EBITDA not X% forecasted past growth minus of comparable

forecasting are range adjusted million. full to We now our $XXX.X and between guidance $X.XX EBITDA between FFO year to we and and million $XXX.X be per be share $X.XX

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

Operator

comes ahead. Jefferies. first Katz [Operator Instructions]. Please David And question our with from today go

David Katz

everyone. Hi. Good morning

Neil H. Shah

you? are How David. Hi

David Katz

I am okay. you? How are

Neil H. Shah

must smiled when I am notes. good. I the I read title of say your I

David Katz

fact, Yes. mission Then accomplished. degree, to then some the

of the the night's it about trajectory And $XX million we engage. Parrot We it. of target XXXX. that the last focusing on questions to of and getting and report? had should a context Cadillac, about a to We look, the in few million read toward think $XX around kind aim How been right. Key You

Neil H. Shah

somewhere still Just these great in and we $XX EBITDA. started $XX hotels to of have it million stabilizing get million between confidence David, it, on

the slower of third in delay a that quarters. quarter the achievement think second I quarter the and stabilization by couple of ramp may

from This of there to able growth. to million center, town And we in to lapping getting is, so those our $XX two be hurricane a may accelerate will we that of EBITDA really year, $XX have be no ultimately, of need million events fully at these concern comps booked and convention expectation I about assets. all but the think we more more

in be XXXX of to will there meaningful our EBITDA. into perhaps so And level stabilized growth hit and XXXX

David Katz

Got how we of weakness I of sounds one it. seeing we at areas bit to you order are in the And And is of on there? total of the in what like holistic trying look I that sitting little if those in market Pacific the think guess guidance some a then part are how EBITDA included it are think those the take adjustment in also? those based. view South of Pan reduction or are and hotels magnitude today today underwrote? guidance is, EBITDA a more the is, the Florida but And take are you the Annapolis, of know, versus being do we about question

Ashish Parikh

bucket, Pacific, were been acquisitions was, recent to and RevPAR, Pan on expected Pan Pacific. being as down this XX% they at perform would the whole Pacific that Annapolis, the Seattle year. X.X% a has we up The continue We worse include and that despite than very growth Seattle David, was well. margin had Pan

Our face than of rate in hold weaker expected. ability was the we supply big-box to

And so have Pan lost we the Pacific. at rate

little clearly Monica. Most continues hit Ambrose of has the a But the not has if Envoy little our have. The Santa not Westin a The above. to our expectations. The in recent clearly hit at above. Annapolis expectations, if expectations, acquisitions perform

XXXX that again driving We had We XXXX, acquisitions confident tough as tough and into Seattle and remain the will weakness keeps into So turn this about. next quarter, assuming we had that first recent year. believe growth significant second very and going year we for quarter. a in

stabilize a and the bit it and We to third significant are hopefully fourth year in then in again hoping return growth next will Seattle.

David Katz

may the turn directed think ask be whether as of How middle at asset It just an what maybe about be the to economy And we How straight those? do context bit the for have do sensitivities think the than which we more that may be in point? context better Ashish. out It but company one the to how may a down leverage? divest variability? about ask can thought a I if And turn about right. there about be All may to we moderate a out some And more have decision also could expect. the you in the worse. we some at

Ashish Parikh

that was look David. have the at our portfolio seen. Sure If that continuing go out what we and had a of Yes. there. growth think was few we to no look and the if out any down of been have we to significantly environment assets moderate, leases. at and In have have When that our years that assets we portfolio we to next at to to most we of sell X% liquid type RevPAR assets, over type I the general, portfolio similar has for land almost

have paid of worth terminate almost almost encumbrances. of We sold the assets. management to billion contracts. no We $X nothing any We

All repayable. debt really of our is

standpoint, So on from we our could turn whenever speed want. that we

I think sell else. assets quicker could anyone than we

David Katz

appreciate I it. Thank you. that. Got

Operator

ahead. from comes go Powell Barclays. next Anthony with our question Please And

Anthony Powell

call urban Good Hi. markets, to Nassetta grow last impacting growth upscale Hilton the continues question guys. in wave risk brand hundreds Chris hotels. of of your lifestyle beyond? with Moxy of week, another The talking new of supply say, the morning and on XXXX Marriott growth, supply the a What's brand. launching about

Neil H. Shah

there are developers. that new that stable financing maybe attract the capture lenders out anything's construction and there possible. low brands share, business. and If yes, Anthony, does economy if end more we has remains see reacceleration, remained market If get some back into debt can very the

peaking like kind just It declining is performance we today, possible. of growth. So see lot see where feels where a supply we in are markets, of it we

the that generally away Most construction the lenders in we to past urban are in are construction. change. from But market that speak shying been lenders construction could have

in Anthony. is something it impactful wave next start to a meaningfully not it think It's hotels possible, we the urban build are and will two built. very to asset be could get trade XXXX, what markets years. year for, can to again you three But it in markets going an able to be below that is So XXXX you the our strong think and for you could. If

Anthony Powell

similar markets these that concepts concerts that question either next urban or them having and Thanks. leasing RevPAR releasing And impact few medium they short there guess, think are as these in Are you evolve or lodging Sonder apartments And maybe are outlook? a years? any There I the term there. how are, out buildings term over on stays. your do like out

Neil H. Shah

that that of lot making and these few has years to And across a in Yes. that's even push like it's benefits competing some lot not four regimes It's of had Airbnb alternatives. the field. last I not kind or a creates the regulatory there to And is the of markets. source of of But is it or I something them think these, or Alfred supply urban a that it there -- in is still net I market but bunch kind playing as markets. think harder or Sonders Stay think the rates of entered it's clearly are that of an getting and some alternative We is accelerating three rely years on another like of supply. good net, kind a out kind something harder harder, last

can had leasing actually parts there even a these our conversations a opportunity of have they things. for a ton with provide folks money and some of about We If and hotels is it of that. couple raising good they and are

corporate sole So to only primarily think as don't as the We it's of an demand an one for an alternative but right hotel right it's consumers, as the now, we think of on alternative real market for supply challenges owners well. we the now. be But choppiness still it explore drivers in alternative, front. it and main is not the market

Anthony Powell

Great. Thank you.

Operator

go from comes question next Michael our Bellisario ahead. Baird. Please And with

Michael Bellisario

everyone. morning Good

Neil H. Shah

Hi Michael.

Michael Bellisario

over you embedded thinking terms ADR, dig we the sense on and and Cadillac? progressing? where have of guys you bit maybe deeper are us underwriting of in the then margin? stabilized share a market year in ramp-up assumptions you are maybe give little that missing the that occupancy Can you on how Can a about And

Jay H. Shah

Michael, this is Jay.

mean year underwriting at the which at I are X,XXX to the and I can sort Let where close we me been had on we the going an we in about And were and have the of be originally little by Cadillac from the to hotel. in XXXX. year its that XXXX bit little the last by talk against were of When we was And peak doing Cadillac, we this XXXX bit about, to our short anticipated occupancy are about competitors had on talk time was points. a basis occupancy falling stabilized performance. a most

actually two. Our ahead XXXX of XX% rate is quarter

the performing rate. on hotel is So

We are last in rate in stabilized close to $XX-plus were we where of ahead year. the

thesis the positioning so hotel on And the is still intact. of the

I are occupancy with here that we two it's and struggling quarters think three. the in

remarks, his mentioned came underwriting. very quarter our Neil first much with line in in prepared in the

set comp underwriting position new performing comp hotel Our at which is XX% at of to set XX% set. is higher our the a

three, rest think some in So I think [indiscernible]. and getting see Beach back in other demand, on I climates has to continue to just what two the the think travelers headwinds quarter quarter on the I and the of supply happened creating for have warmer we only market the alternatives but is additional in that destinations in the softness that the not

underwriting in more are looking that compression imagine we would and quarter. a we closer marketplace, the to to into I get there season lot fourth again the lot a be is back We think when in going

quarter ability there to when demand, quarters, I might is the soft set and have comp the the against think penetrate second broader market. in our we overestimated these third two

Michael Bellisario

year, assumption is occupancy, what year? it out? relative XX% for for stabilized years guys call to XX% are that forecasting this that two Or that is your you And the

Jay H. Shah

what year. for Well, this projecting were we it's

to not that hit in we certainly getting able from pretty I this to are to a quarters hit XXXX. will behind And standpoint, we would us year are feel that going think underwriting comfortable EBITDA now. that couple value. I on that of an stabilize our put

Michael Bellisario

from piece on came That's $X million Florida. sounds And $X the from? you the other topic, million like million It $X guidance South reduction. came where together same helpful. then just Can the

Ashish Parikh

at it that viewpoint, from the million in we $X.X when so quarter. of look Michael, million $X was about or second Sure. the

and you mentioned, South bit We as leeway up the have, a about to really tensions, potentially, we fourth just took bringing Florida we for between what just markets, Brexit, in low-end are that South Florida. down realized it the and is $XXX,XXX some the as effect. about our probably he the we that's conservatism well, QX remainder ramp from quarter things of QX So trade in down seeing

Michael Bellisario

That's helpful. Thank you.

Operator

with Instructions]. Bank. [Operator Woronka Please ahead. next comes Chris Deutsche And from question our go

Chris Woronka

Good Hi. guys. morning

Neil H. Shah

Chris. Hi

Chris Woronka

guess the weakness always you Morning. and for made I side sounds of being commentary of you talking have to as me corporate I kind more of little leisure of wanted about strokes, of of lot on is, painting weakness. South that a more transients. bit things on, kind broad being question helpful that are source a a I in you think the about with ask like and it Florida

you do So do you, in can you of help corporate? actually us think? else, what and And are that South kind of Florida, we hotels Or square about is how those corporate more say than it's leisure that? everywhere

Neil H. Shah

of kind they things. two are Chris, different

supply of those much South bigger weakness any a up being in Seattle, the and quarters, New West leisure in York. demand leisure of there But have seen are new that in Coast I in that mean kind the in quarters weakness customer hick Florida market is demand, for we in the the from we kind in and Miami. shows competing seeing region. it is place And low in corporate of more

the don't by did the corporate and at had driven year of out so transient achieve the not what in the believe for laid initially expectations And will had the demand. for and that second beginning we is that City we for we us, third quarter we York achieve quarter New we

weakness Angeles same of seeing markets Coast We that even West in some Sunnyvale, we Los in a as well and bit. kind are in saw

And in macro we so to But this major that, a of in we is think little hotels do is have market that addition that the kind a that headwind. summer. weaker ramping

Chris Woronka

are in somewhat estimation booking nature, but you a change? we up is all? Or is your Okay. windows short compressing? that in seeing follow fact just to Helpful. in And that second I impact confidence at then on Does know half term transient -- just always it seen your have any is,

Neil H. Shah

a that transient to one we few very window, booking companies used the be of The portfolio. Absolutely. had

with this side, of the So the booking we price. a that year supply now booking a to come to at does window feeling minute group that has kind okay something are it's alternatives wait the are oriented kind think much you more tighter the windows But pretty well. will of and There are lodging it even I the consumers sure like find as rooms booking is on think other I of potentially used again of and last for until window portfolio. and terms feel it in in giving new better of kinds

Chris Woronka

one Helpful. one Okay. And just for last me.

it just looking things convention of have and You last we DC as years I heard have now getting about that. it the people and changes. were couple like if looked seems like you in the out. a at greater DC seems for positive calendars confidence But know minute talked at it on

level worry confidence not seeing and what the again, you uptick? guess, I about So would make

Neil H. Shah

that of kind bottoming last been tough you and said it's chuckled was when out have I feeling as Chris, year year because Yes. we DC well. like this pretty been

We have ramping is the to clearly up. Gregory, which of St. benefit

our And on quarters. the so right strong well even But couple Annapolis, are third seen that as does significant and coming have growth market. boost and our our quarter marketplace booking for of hotels independent service the in a some into us select the existing, fourth in hotels we the And in our now. bookings give

get this any some can't We actually worse. positive numbers. purely on, based So isn't it pace hey, have

Ashish Parikh

off Neil be But pace share quarter In by pace. Chris, pace me we our are some jump room transient right might because now. strong DC, pretty performance to. and is forward just be as in for slightly was numbers in referring by nights will rate going design, the let that third some to I seeing

rate. close are in to We $X.XX

as waiting off transient of in. to speaking, the But And holding impacts so, that a come currently in pace transient sometimes is up think are pace you demand for but generally slower rate. rate, from I last slightly year

off nights but slightly in we up So are room in rate.

a forecasts even is and very variance But hand the in our lot pace third On by it's looking pretty and positive. for driven September. pace quarter our the and strong is August Washington other group

up so transient group business is And And interestingly, pretty Washington. looking slightly. in our is there good pace,

And look little an parts this kind these of pace three a these know, a these of been segments quarter of for different three so the at any for entire when while. business you in one you different take segments, mix, haven't seeing positive we

coming of that's from. some for And Washington optimism where our is think so I

see relatively We positive. of change some right demand. third into be return Again, cautiously, at but this could to starting seems very the to stable quarter it look to we are and looking Washington now,

Chris Woronka

Okay.

Neil H. Shah

year. Chris, in it an but last seems had like long there ago Florence impact lost on hundred September grand at few least really was DC Hurricane in so We that.

couple look, of are kind better calendar So and of and we have have then seasonal a and a our calendar convention in seeing it we we pace. adjustments

Ashish Parikh

we And of shutdown. at year, back-end the beginning the in the the elections government we also, the of last had and had then year midterm we

which of just from one long to headwinds finally over be year. benefiting in comps some DC, last line we been it's the those So weaker of seem

Chris Woronka

color Okay. all Very helpful. guys. the I appreciate

Operator

from go Riley comes Maher with question next Please our FBR. ahead. B. Bryan And

Bryan Maher

up? a pace? X% trend already prepared on steady at think with going expense? of bit, seeing costs And also around changes morning. Are X%. But you any little been property or Is comments gears questions is just my Good mentioned us labor you your Most asked it what up it trending I Is Can trending shifting answered. that and down? Is tax what's in have you there? there? the it tell

Neil H. Shah

significant of which sort in these wage a few in urban the to of for last years. now of seems lot for markets, don't X% Sure. $X at Bryan, to We been think we minimum a year at A have few stabilizing increasing point. this the seeing jump X% the lot next years. it's be that was

in jump, behind York up already Seattle, and LA gone the places So and big well $XX especially us. to New you is like it's

stabilizes. that think we So

in a really have We of controls at not place looking side lot belt-tightening filling on of that certainly things. doing put expense positions

if digit a are usually we are for to year, of three to in Overall, most sort seeing growth taxes, taxes single two Property markets. low years not property behind. rates mid

single few not So case the as year NOI we but high flatlined we well. growth ago. level looking in going to as more type and any of become years They you have those at down also certainly a not are a a little [indiscernible], EBITDA digit assessments are not where rates stabilizes were seeing

Bryan Maher

actually are calls portfolio, X%? back your many don't your getting would then buy liquidity I to inbound if it comment disagree are of debt to pay selling what just people And to right. And as All RevPAR your X% relates which the assets? you your any down to going with, to on assets of hangout to any continues kind few at thoughts a think

Neil H. Shah

like shown will the the hotels, we inbound the we CapEx that for of the several hotels. as we we number portfolio, on York Bryan, lot years, New the cannot take across hotels, last hotels, years, opportunity. we do without when achieve hits on get feel the a the have on waiting it or few And without on disruptive the on entire portfolio, select inquiries City independent service on individual

And have a couple so over of we the last sold couple assets. of years,

hotels in it's this the But pressures to have time, we competitive market. continue that have a conversations. just We concerns sold have about at we

We or sold in reinvested have hotels that capital. the needed

And generally so outperform existing at markets. shape this are good in can their and stage, our hotels

And so just focused for growth. pretty are driving that we the time being, on EBITDA

if it we a a aggressive like more four be be was got that market a absolutely we view. on got segment, was asset. it particular the If an lot particular a market. to and three, would could going changing we it If for years, market geographic consider worse worse, was If sideways felt

feel flexibility. to sense it a gotten begin as I we like markets in makes are it maintained we this in year, So But as the hasn't think disappointed assets. of where have level that we major urban to level growth selling

change impact amount EBITDA significant to make that to really a on pretty To debt leverage of kind metric, now. right on sales drive of it's an

we so the look And off as another we year and think having then grow EBITDA progresses. are better take the

Bryan Maher

That's me. all Thanks. Okay. for

Operator

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

Neil H. Shah

further to throughout are a for at With day can questions office. answer your to no this if would we we like we questions, today, more everyone thank all take morning. moment And any the time the here

call. do please So

We will speak to you soon.

Operator

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

You may at disconnect this have good lines a now your time and day.

Hersha Hospitality Trust (HT) 31 Jul 192019 Q2 Earnings call transcript