HT - Earnings call transcript Q3 2020 | Hersha Hospitality Trust

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Operator

Good morning and welcome to Hersha Hospitality’s Third Quarter 2020 Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Relations. Investor Costa, Greg ahead. go Please

Greg Costa

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

Neil Shah

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

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

around several quarters. visibility will than companies there travel. for across been local panacea time likely for more international months. again consensus It few travel a could has ultimately more We distribute our large to the are vaccine other not and business today but there and is it Emerging months and encourage fortunate area to should last take an of to split of team's continued will and catalyst a hotel therapeutics for plenty the last governments have the gains This of in sector fourth the quarter will and announcements chop more tailwind and Monday's slower to to cash challenging. uncertainty reductions and be while said business provide eight across first some in environment in seasonally that government make encouraging macro burn news and efforts has be removes RevPAR the still the wood

in for half the in plan followed robust a by more to momentum sluggish XXXX growth and recovery continue XXXX a gaining We back XXXX. in

but took are liquidity recent We we liquidity shore encouraged allocation as shoring liquidity closing over expenses for year. deeper March focused Last on before we reducing action capital to and out challenging planning. burn turning by ash immediate up a touch and to this the cash and by razor news burn on it on remain our hotels. going close temporarily dive to cash operations mitigate I'm up and

We now primary reopening burn of hotels. the of to and under remaining capture the hotels we goal This operational continue share closed recovery stages open the in with and XX third minimize during demand cash to for our Our this hotels quarter as contract XX two while and our through sets have goal to XXXX. portfolio the was to market second achieved owned up of the the end gain our early in sale. year wholly incremental

has relationship the that sets to been with and typically XX months. operator of sports during able cluster Of levels. this operating Drive-to-resorts breakeven sequentially at results us strongest recovery. achieving on to as portfolio levels generate the nimble coupled maximize even hotels have line provided and stay the take continues hotels generate and allowed were close these flexible remote with and the the strategy that pandemic burn months. a to of and yielded ability cash we cash GOP social prior through other earlier outpace pre-COVID up post-labor and of rates positive advantage navigate week continue performers broke our XX base many day. our given even learning, break-even and independent and efficient resorts opportunity our to and also our been flow third economies Weekends lower over the revenues Leisure the prices to and peers travelers activities. scale inception cost model to gas has manner. of timely comparable than a EBITDA in our leverage the many It robust marketing our quarter to in our travel improve reduce limited advantage connection our Our performance nine hotels few and data with our summer working franchise to of reopen us continued since throughout weekend the week-over-week. engagements TSA have open remains strong This as

XX% a year the occupancy July count case has Rates continued and began a of and saw season. will books our Miami across beach from strong escalation quarter on South for restrictions in and we northeastern grew for XX% September continued of occupancy. EBITDA. despite in the the we the and XXXX sanctuary as Barbara portfolio and XX% our closures, month. the very resorts resort and from pick Florida which Down coast resort aided very for our peak last with the all led October top in demand midwesterners trends the have momentum occupancy its demand Our year holiday up which despite to portfolio to stifled ADR believe week in to travelers the bar our flying and we Down of remains these South a XX% into are which the around contributed XX% until asset continued line Miami June West drive-to XX% in markets. Florida. but XX% by grew few are COVID-XX that to and ending seeing our In XXX travel ADR beach the of hotels These see momentum quarter with third Christmas third positive strong subside labor our already was for quarter performing RevPAR hotel third up. New ADR Florida curfews second another line flowing quarter This market a after Miami season portfolio by restaurant loosened on our West the continue markets been occupancy continued California concerns. clusters able note began October portfolio South as bars. move cities points as summer have and and We've growth. leisure again already Success ADR hotels. and Key leisure traffic RevPAR and to finished with worries and labor bump restaurants all restrictions travel August the portfolio the South to cash our our share fourth to growth. gateway not will basis Milo as summer. last XX% quarter aided Year's the gateway market urban day strong open and attractions travel only one back entering pent-up win the holiday have business, for the Pre-COVID XX% growth By with XXXX an saw and by on lost in Santa occupancy be as a best would Since among occupancy Key in portfolio day led Florida between beaches and return points with during a $XXX group versus at that we international XX% have demand through opened and period basis drive-to-resort

job an ramping low burn done have Our even in reducing and this to break teams admirable demand cash very environment.

traveler to through our change our across continue we hotels we saw reopen doors. a As markets walking in

sports related from we healthcare entertainment corporate or day. shut corporate occasional compliant, post Traditional traveler, content production personnel outfitting patients on even force studios usual abbreviated become seasons return the with normal micro and and moved summer around buyout. COVID didn't first to designing elective our country travel construction site business the wedding to the remain quarantining teams offices labor responder to their as its workers during and and teams professional During new

In Supreme leading However, with working staycation semester fashion related end increased by in in students for alternatives corporate protocols have New the U.S. Capitol financial utilizing from universities service elevated our midweek Smaller our hotels through we XXXX. while in in buyouts business travelers our September across Union persist and census with our Production staying to work universities, in at Court corporate many space. has packages in York at even were there to year our commutes. and teams Plains Brooklyn. our hotels from upcoming Hotel Government for firms week congressional stay success for Hill Square. allocating events. to offering been housing saw local House these continued our business the wildfires increase White the activity. California services our at in likely the are rooms in higher meeting virtual the inventory Sunnyvale new hosting housing hotels. of seen proximate use clusters businesses staying the Hyatt Boxer in consulting a seen relief spring bookings select rated October and pickup urban Annapolis to and that and day urban and Naval employees smaller continuing Academy hotel Boston Washington the in a around in markets hotel unique office for workers We've of In school Tribeca that the D.C. to avoid in waterfront

outlets investments coverage testing, likely expected pertains leading is lodging Washington, our in pronounced recovery therapeutics our medical media point the most On a End core be as believe be lockstep in developments D.C. market strong and to Gregory week. historically with the a year. and following year in we last increased election successfully is XXXX Recent by up Washington for it that widely distributed a to rapid the recovery with markets to recovery vaccination. various contracted an West in which highlighted to Saint We've will ultimately election a

unique return we whether city's jobs, reopening be corporate rated the following prior very incumbent bring election new the has this years years catalyst, market an January and novo spark leisure foreign that demand increase been travel. believe region period the hill, that the during to first administrations but proved the generators. or overall in a reduced de administration growth in and a and the aided supply on D.C. quarter specifically an president. the delegations the from New market increased aforementioned and strong it's seen likely We've of to The higher by a lobbying will the an past Washington of few underperformer

many by grew portfolio We have comps the portfolio following select XXXX. growth the reservations and the RevPAR during to rates in not and lifestyle believe as President service, but across of The During growth night The market XX% the capture president Washington is early RevPAR the inauguration, supply. XXXX our in on also XX% throughout our increased the quarter D.C. very XX% years. demand In spanning inauguration. Obama's second inauguration not in with unique XXXX well portfolio well-positioned during quarter. on in to inauguration first of just as predicated independent and the seen to quarter favorable is in increased generated luxury deteriorating is at our travel we recovery Washington Trump's on XXXX our upcoming first portfolio leading

could room City. count consultant hotel to forecast permanent seen we every We York's another week seem be close headlines come about already permanently this York New to for forecasts fruition with seeing New have XX% the keys total and XX,XXX of closure. and

supply many dominating growth New margin to there York troubled City market headlines These of to filled of markets. every were assets our corners even functionally the and distressed but in with their the obsolete will that long-term improve before prior the pandemic. pandemic the produce closures assets are is were picture

and abandoned year. rooms the side the These when more XX,XXX other the U.S. that a XX,XXX or Year-to-date either into to the development the last declined planning or from either believe projects representing have figures through of Industry the peak period supply Travel staggering crisis of The projects from September deferred stages from recovery than is XX% have Recent large could financial early XXXX equate in even XXX,XXX number planning the final the at in the the to mirror that this picture experts could industry pipeline of moved buckets. rooms over works great showed continue development through decrease pipeline as of supply reports a in increase Smith pipeline. the XXXX. are our increase XXX in the end same to rooms.

capital Before a want minutes rate our Ash burn into additional liquidity. allocation takes a expense sources savings few spend of strategy on and deeper I and dive to reductions

have we a $XX a to in our environment. We very close remain sales binding extensions today's reminder that quick have buyers total net we relatively release assets quick today's will expected four proceeds the of transactions a portfolio summer As in agreements began accretive announced on these and provided this but We fifth we the with optimistic process Delaware. through disposition pleased with announced Sheraton QX. are Wilmington, the in execution With million.

Last we days XX. improvement exploring the the This and Castle last the the cap hotels debt These environment. election of the are about before availability in all in of smaller, within County even quarter discussed acquiring a there hotel combined burn additional the in transaction cash meaningful improvement XX vaccine we a New $XX.X hotels. X% has values pricing transactions been non-core is on higher are Delaware to XX% pre-COVID multiple on sales, proceeds. times at quality, is with saw we additional an XX of pleased first the or lower XX% if for a and XXXX. asset million five Across EBITDA for

hotels In increases. make buyers, emblematic or valuable to portfolio approaching and capital entrance private have contracts more These are future in been labor sale pandemic firms triangulating after by has cases candidates there We an domestic of interest, and and growth requirements brands unencumbered are and this hospitality. that and levels. sale hotels simple additional sought of September highly diversity October are equity expected our unencumbered in environment. break-even remained portfolio buyer assessed and for hotel family hotels assumable of management launch even do are The capital open addition in international rate. as offices, financing to our throughout of age increasing some are in the These new we five characteristics of visibility and have onerous these or credible

liquidity We several the balance will see couple across equity. growth for or interest values the view time capital do out today in we come by hotel sales alternative today permanently to dilute quarters. discounted and expect of with and do judging complete But reversionary relatively At liquidity we the hotel as as not more this lowest next where provide structure cost months sales dispositions quick early capital coming our our encumber tomorrow.

for portfolio. markets to open and valuable board of As are in leading in shareholders RevPAR, requirements Hersha our you this if management as minimal common it its year few may sector absolute encumbrances. CapEx foreseeable the remarkable leading know across among the in all we and buy any we constructed market exceptional a future, a with consider States have the for and We've with high portfolio equity continued the most an the United margins value

to to let rate sheet. this me detail turn more Our financial leverage over incredible a Ash offers and is discuss With pool portfolio burn our recovery. in to balance still attractive it both reductions and and vast to operational buyer that

Ashish Parikh

morning All right. Thanks everyone. Neil. Good

the days GOP that can levels the with open the confidence quarter. quarter of confidence hotels number balance our This GOP rose hotel strategy operator. quarter's the attain second our restart we two close service of during Ritz concluded comfortably this our our hotels achieved our to independent focused over Carltons quarter and this that third-party levels hotels strategy break-even at would of successful we not our the within been the break-even able with of as relationship Due have reopening completion possible validated XX began were with have working the that to Results we reopening. without opening of

hotels During XX XX the of on XX to GOP increased open July line. in broke-even hotels in This August our and XX hotels September.

a Our which hotels open August XX revenue to break-even hotels and portion during hotels strategies also the XX in Once open saving for over our increased management achieved team's positive September. our in levels course the XX yielded and X July expense of of of EBITDA EBITDA results period. again

additional run outsourcing base. overall levels cost Our our utilizing our We're as cross do very operational applying management labor such expense us this strategy across by until able well cutting hotel reaches and the job sharing and warranting allows models to strategies to as lean as staffing. within demand clusters various lower on hotels personnel to our

to expenses begins deliberate very in back to demand manner. levels other and occupancy pick As up operating levels calculated and start and in we to improve low will levels these begin from back a staffing phase

to of gains XX% allows to leverage of margin XX% the continue way at seeing and momentum as down XX% approximating generating the ‘XX. should points to our to our model from GOP the and line portfolio even get staffing XX% us in XXXX would our XX XX% deeper the in as flexibility into half percentage outside Our third first anticipate the the gains inherent these XX% the revenue portfolio. continue to half current we our hotels at open generating progresses We recovery occupancy at in we occupancies up the some of back and and see next the should our all of that With flow to operate break-even estimate quarter, the highlighting ‘XX operating in recovery margins occupancy through drop levels gains hotels. at

salons We that savings with force F&B recovery few sustainability next a favorable the reduced our teams XX% the grab and and and housekeeping will go departments be This preoccupied our management as along reduced such options, of such also spas. implemented and cost post anticipate optimization for service items in housekeeping pandemic. and with through labor as ancillary our in-room smaller as to expense amenities, and reduction various much should quarters breakfast headwinds room and in-room breakfast to and changes development the labor amenities. asset estimate We these more savings many by over utility bolster such lead margins

also savings believe more will exist there non-housekeeping reduce operate labor and expense we've these ways normalized even that that are our levels. efficiently return We are zero-based through opportunities found when more significant to budgeting to occupancies to confident

As will labor of changes for our in XXX FTE should versus leading additional an FTEs of XX XXX but model to reductions rise margin range Employee we at points X% in employees operating average XXXX. maintain occupancies X% hotels counts post-pandemic. sustainable our an currently to expansion February count increase to in cost as of XX allow basis example the

and the occupancies steadily prior portfolio. During a reduction enacted of the across burn third increasing resulted quarter, expense quarter savings the during our in cash

for level at million burn the to was property third quarter cash on the This the XX% be cash $X.X of to burn a below hotel in $X.X million corporate burn service quarter $XX level ending Our property originally includes which September the and beginning level beginning the with and and cash second with quarter period. the million, all total over pandemic the July decreased the property a at balance sequentially corporate of our projected cash cash million our SG&A $X.X operating At ended debt level $X.X forecast third brought loss. expenses, per property loss of month. million

September third declined $X.X quarter in ending ending the steadily April for level Our to the September. $X.X $XX.X million million in with million burn rate a rate July reducing six-months and for from corporate burn period over

our a Our third initial second below forecast. quarter and scenario rate burn below quarter XX% burn our $XX.X cash XX% million corporate totaled downside for the

entire that to and travel third of COVID-XX advance we fear second in a this years for we've over decline XX% ADR corporate to for level two settled period headwind decrease. hurricane quarter which our XX% results day to leisure XX% comfortable is ADR positive the on XX% breaks-even after damaged saw Our levels at Irma decline, the hotel. quarter's despite post-labor our RevPAR Transitioning to forecast since quarter level South and our Based claim and approaching XX% XX% insurance in flow that XX% breakeven precarious factoring a than hotels improved Key our that is Parrot our conditions resulted the are the on property quarter fourth cash occupancies XX% at Florida At RevPAR call. discount. more the item our occupancy results related RevPAR to a occupancies portfolio a which earnings October an largest with XX% significantly basis a two Cadillac the breakeven and a in occurs

and the quarter will During results. insurance to which collect be we quarter in recorded million fourth expect $X proceeds million $X fourth our between

we've to on CapEx safety million. oriented CapEx reduced third We very During renovated at the we of $XX.X tastes with our minimal customers moving will to The year-to-date projects recovery. have for projections renovations; and preferences and our million capital the anticipate maintenance based but experience bringing focused hotels quarter loyal pandemic. load not the $X.X new capital and been our spent very portfolio XXXX, for through of life of today's roughly capital forward XX% a primarily spend recent only and driving on significantly product more upgrades was demand built-in transient XXXX projects Since XXXX the on on unfortunately spend. Entering by trends XXXX, onset across ROI million CapEx room to hotels below our had upended allocated market traveler portfolio our we rooms which majority to and improvements these $XXX disruption generating little our than total substantial close the growth and our for count. XX%

several tier the of As X, capital the that throughout and lodging looking of into million $XXX the our and be both $XX.X next by this equity the seen attractive a senior early capital this The commercial stages significant and of years of front stack facility forming cash markets banks we've will capital deposits. in encouraged November first capital and with asset financing still remain and million markets from in very the resiliency formation. to believe signs in $XXX opportunities traditional of capital pandemic. there the We We over sector. remain the level credit amount we're and of million we've seeking on the available at ended drawn the and is open every regional deploy of debt quarter

We our XXXX. continue months Until few lines bank our covenant of with test with communication active plan on over we open to an waiver to regarding have parameters then the our conversations bank and and the accelerate XX, group next dialogue group our June remain constructive. surrounding

we highlighted the earnings and we night extension in five recently receipt contact granted for in release Dwayne remain buyer under of the in quarter for the four in of this of and first sale. that we with As before our now hotel transaction. assets the of deposit suppliers last Street the assets an of have additional constant contract We announced XXXX our resulted year earlier an this XXX,XXX

none close these confident fashion in the need will year. financing remain transactions timely of buyers material we a next As

five buyer. pay XXXX. past hard we will liquidity. for additional week to sale the received the our anticipate debt sale any pay the to we've have under from we proceeds transactions utilize working be material for to for market We for bolster plan additional received debt from down of any contract Over Sheraton capital from on went of down close the currently this deposit our and five Delaware end the will The for assets before million Wilmington we and utilized and a proceeds in the $XX.X these

that opportunities expense strategy years XX of savings economies as portfolio markets runway past we continue fortify give the we significant has for industry, public All As we which which months, of sheet, owner navigate our and relationship months have. This and our several yielded any while of where the address to of and I. Operator? demand experience unique navigate passport, concludes to and for my final explore scale as strength cluster maximizes the portion proceed may company our towards over revenues the in extensive unique balance look over to a you enter various now our can questions while capturing demand unprecedented stabilized operator opportunities Jay, the we're pillars of the towards we in than more the our the next team We call. this to our nine year years. Neil our to happy Q&A, our market to

Operator

now from go BMO will Instructions] the question-and-answer Mr. of Capital ahead. are comes Klein Market. begin Please there? Aryeh [Operator you We First question session. Klein,

Aryeh Klein

as into seen next Sorry Thanks. you haven't talk morning. quarter from It can move about of seasonality maybe towards burn whether or the sounds the impact can quarter? on of as through but what COVID seen well specifically that as not Good the about we the the third from beginning fourth of much year just occupancy improve end and still impact you've rising cases, that. cash like you

Ashish Parikh

Yes, This is Ashish. sure.

For anticipate in little and bit Historically, the month October, for December. different maturely our is that than same was of October burn really November we strongest our a it were and for pullback the see a the we results cash October is would didn't quarter From as effectively occupancies September in September. of portfolio. standpoint, a seasonal

We the pick that we'll in of lead in markets a first to will our a and I bit side fairly anticipate will seasonality. remain resort on in today like based especially some December up little fourth and would on that that pullback cash November in us cash deterioration a burn seeing of really just steam the South think said, we're pick the I anything would California quarter strong not quarter. Florida for throughout burn material and

Aryeh Klein

then in went away with lot occupancy workers. and City the New specifically frontline Thanks of a York

sustainable how kind true in of third with quarter a kind saw level level going XX% of the we and here So has evolved away? the ADR the or front workers line

Jay Shah

from, it was in reaching of a we were in $XX the XX% but of were times replaced were and leisure It that. that essential our demand for summer was had at worker and essential we with to August, in most but a hotels friends years what refer kind the on rates, was can traveler mix serving contracting $XXX to filling occupancy a workers. New worker where it dissipated we and very new It and as enough here all low not I and of went of during demand of We productive essential is York. York very to little Yes started marketplace. we at up and get kind family, where XX% By business make we the as we've the was of New to period there normal demands. it

in XX% in So we've the there mix that dropped from totally XX% business offset travel wasn't enough loss to in and to occupancy occupancy.

ADR August, in relative York the from did been, September has summer has New but RevPAR shown to each to improvement has decline So October. been month

we're in level at of much levels approach vaccine to get by can But, from break-even and looking York. results New going. encouraged very this that, to widely still business level demand the travel of really of low forward distributed are other more a therapeutics we So, we kind the

So answer question does your Aryeh? that

Aryeh Klein

all Yes. That’s the color. for helpful. Thanks

Operator

you. Riley. B. Thank of ahead. Maher The Please question next is from go Bryan

Bryan Maher

Good Yes. morning.

couple just So a quick of questions.

the I it say something kind now your XXXX? in What gateway leisure half comments pre-COVID will is think What do of you about mentioned would urban. in in the of be fourth think you you first XX% that quarter? prepared business that was XX% the

Ashish Parikh

that QX most. flow we expect don't a to Bryan, cash QX for the of those - tends meaningful but XX% be XX%, have for would a during or it probably it calculation part precise towards quarters production we

Bryan Maher

number. hotel And XX%? don't will take of of that see up to XX% city of then, like wait about news out something you approach some closures came maybe level to close the a we've it's get heard XXXX sellers a lot vaccine Do potential the pace demand or less as and as vaccine to, first in decide that in maybe a the we stalls and XX we think get closures and ramp that half that kind if yesterday, this

Jay Shah

depending were the money possible travelers is bigger, older not to preferred hotels it - Bryan, on already business weren't to older starts load unionized just just that XX% differentiated not vast again I'd of making lot choice. traveling were quickly they they that say, were but because pre-COVID But inventory and how the of that workforces, cost just just world with a lot the XX% a structures attractive hotels of of was the expensive didn't. operate of majority they or leisure travelers these the kind

Grand four that these a reformatted So quality of to XXXX taking do reopen be will midtown of They rooms three, be think close. rooms. that Will out, I'm Hyatt be it's east sure they and rooms kind some will back, most XXX I higher in will like it's going rooms more of years? it'll come in are kind in but there less will.

I a guess although underlying is the we few still structures operating believe it for in that on that of and us, do already notion challenging use to that that three than a couple found still quarters there box can on lenders So assets the uncertainty New two meaningful the like depend, for election years, reductions New but to it's kind bucks I good in believe vaccine very that think several feel what's of but have behind we count recovery York. and news, we we a losing owners is is difficult every be older supply, does next those And is year. higher the going that hotels better have York big

Bryan Maher

Right, not ownership. in you that condos can't Square to product ultimately Hilton we close something maybe Times were the is hotel that convert an that to that's that it see like mean under reopen for mean when a but closing it I a won't believe hotel I just surprised you like location mean I new I old it's

lines those perplexing? along thinking it's little a of kind just So

Jay Shah

possible we that's those But of announced right there we've major you're re-emerge, stick for true been don't closures. example. that so reopening any see will recovery be if I what far the will some those like I of any that have kind less permanent recovery will closures think hockey have I nine but seen No, like there be think a

Bryan Maher

last then that have gravitating of towards sale any five hotels asset these buyers And the particular for within you me, for are five? type

Jay Shah

around five States. and the those Within good we're United different of markets interest a in they're getting lot all

representatives branded what markets hotels five. real among there's from is brings, There in locations of each the But commonality is, really that estate. real So unencumbered of management and is of estate, them independent fee high group and and quality what our interest, nearly.

seeing of assets all And good kinds right of those so, across interest we're now.

activity like volume, and probably just huge markets month they're You've assets kind several in but transaction hotels seen still like trading ours. not in ours there's of the, every more

asset point have And so, market. kind for turning at of this transactions we seen a the least in

Bryan Maher

Thank Great. you.

Operator

you. Thank

comes of Next from Katz ahead. David question Jefferies. Please go

David Katz

Hi, good all everyone. Thanks for morning of and the detail perspectives.

whether a prospect and markets in post-COVID you a is are. have out not just could some and changed As prior you think out the York would we and in loud wise, there and that if some be world, I trade like we into know about life given New that what wonder bit. you little obviously that could views may everyone's ultimate on your I talked In geography of out about perspective others question to are which you've look

Ashish Parikh

York hesitate But will not this David make There think change clearly believe exposed largest market be It will event. York potentially impacts. transient hesitate and trends. because to up older that consider renovations in will our would across and three or assets, months is New four pricing do other balance assets. marketplace. summer, we that still from in XX ramp it assets investors seen to into we kind Florida We've of as an is up the South asset seen are new continue trends. I'd it remains But additional area shift will some we're point focus I of be have, some do bit, pre-COVID rational will world. a and hotels we've in that cities all away think It's market to do flowing, transactions a and that over we ramp to, going to of similar of There our to major I see And accelerate sales but the business newly say oriented we the do non-union we our kinds cash new leisure built EBITDA New to that generating of City that thawing X We but dead. marketplace. of attractive. your be the

the put in I the visibility market. camp. that marketing from but sell get more of of today to kind camp, of more to and We'd City we market and see could stood days of put the the to continue five a There start starts that we required Xst, is five we November breakeven returns we is marketing assets to close New Seattle achieve the change good three as news visibility we and to handful York in improve are would next portfolio, year Now hotels felt that but still a months it's little will with York New away. of markets on quicker, we like that last expect where do time that City, that that additional a in Manhattan to one couple said process. I stay we the in levels feels like but a

David Katz

I Understood ask a with changing earlier is availability is side, meaning days it to might just debt is bottomed comment of inclination wonder debt some about terms it or ability hotels. thereof? over follow-up things and some the sell the combination that or approximately we've to the whether the around the driver capital can there if on primary of that of in notion the equity past more insight I respect your what be XX

Ashish Parikh

of for what's it's reserves to the It's and to the pandemic seeing service an of month combination forever never the month consider some of reach the each of really and levels visibility I summer, of select on format like. six cash through spread levels. lenders hotels able be getting estate this been, to opportunity equity attracted think hotels, how that were cash as to in. they extended for of quality just to that some much thereof, on kind had need after these visibility pandemic for independent breakeven of really It's smaller some the the stay kind and that visibility were for same kind we to lenders the asset real in high markets they month have burn as the reason. you pandemic got seventh play well expected But to think hotels, kind quality with high as and but to were able And

credit seeing funds seeing you're not, so, and loans. more credit seeing but in be of funds transitional a lot lenders business you're used and banks And to regional you're banks, the

they like raised to it So they income sell world transitional point finding are up lot octane doing In or and year the lot to and funds ability the do them higher them LIBOR lot because there a of to of would now feel month they two that the a into or of they of next very quickly cut credit doing isn't whole redevelopment And help great or some ramp get it a some securitize able XXX spreads have to them were and you XXX assets. world get capital required today's something within and they to up actually take above or be is up. doing across or them loans a are and a that two.

us And to debt market did that a required it that's to to hotels chunkier billion in market what you because lending the hotels probably, need on the seeing rational side billion $XX sell of so, for we're develop and our with $XXX go was to some market value.

visibility the turning cash So of coming which point function us down has been in a for is was this but across period. that that burn

David Katz

you it. very much. Got Thank

Operator

The you. Janney is question Tyler Please Markets. next Batory of Thank from go Capital ahead.

Unidentified Analyst

is Tyler. Hi taking Jonathan Thanks our for good on questions. this for morning

from do terms or on like But one provide me, yesterday will that it's looking days. leniency on in and announcement vaccine of covenants? the for First things at I know the COVID they'll change lenders the early that a conversations think industry with vaccine is you table now the how

Jay Shah

Neil the more as Jonathan outlook Yes it's mentioned. I think

news is good a next few there this be we and and I good on over that vaccines will the think additional therapeutics. both believe that piece of very news months

the supportive, time and this the very place at going the you will community have say, it brighter on markets precipitously get this a at have absolutely to at of the restructured should discussions tailwind think look big just debt been been tunnel not the be with through improving look I remained their side have And this a do The open. to very have and that their see ours, get light lending cash like the pandemic. the lenders but end been. they going as be trends at discussions everybody portfolio These in burns down seeing lot The look to think medical easier. is pandemic. it throughout and I makes we for contentious a same covenants got

Unidentified Analyst

the if Great, thank seen you've moved month? that as expansion just you. the into And you you're then, can on gears color booking and some provide fall seeing, if switching we any window in

Ashish Parikh

unfortunately not in Yes. are even encouraged the pretty and minute. still much Florida. week mid-week windows last weekend improvement booking Well, of Christmas South and we by Year's New at travel on like travel is kind for least

election the like of some our pleasantly I sales we booking in resort team were We we remarkable say the portfolio markets think in to that for for but see in was are time out just amount of our uptick a Washington handful mentioned it days. we were some very we'll because start of some and Washington I'd to remarks as through happened, surprised that feels immediately talking we in inauguration D.C. period Monday, been other entire that the of well. like came surprised. our of like to prepared just have bookings

in mentioned in So we've still of impressive. north XX% inauguration ADRs really remarks XX% reached of as demand hotels our Washington I is nearly building the and prepared - of mid-week occupancy are and all at

are first, like traveler us to remains visibility is it of for maybe pre-COVID advanced special days giving two days you today have days for to which special of these challenging. kinds more to events, XX might and days days the transient X holidays, but we're So of XX seeing bookings, been one XX visibility everyday

Unidentified Analyst

you all Thank me. the all details. for helpful. That's great. Very for Okay,

Operator

Please Deutsche Next question Bank. ahead. go of Woronka Chris comes from

Chris Woronka

kind will theoretical question. you of an high-level I ask easy

soft and growth to next As within the maybe commoditization years. at portfolio. you brands their broader an be trends more we about have independent having worry about they industry to and want begin get the all unit guys to on couple to you where think in to brands the focus Do the conversions it

brands. You have

to kind you and it's as soft want, have create price well if hotel I you is how uniquely many guys it's location? positioned much brands of you you that that You room can as and ultimately product on good this. compete have are but I mean, about going a think and a brands of concern speak so a to

Ashish Parikh

are Yes. end through that through service. important B newly built of locations. for that can important hotels tend view differentiated assets And towards We hotel that and We in you in or day the it is a the deliver we brands think among even an do quality, most experience advantage Chris. or location, do believe think travelers. there's But for I more B they're design

and a brands then great very other you product But helpful. offset performance. a little some it's a have issues location to have advantage of If less differentiated driver been in a and a where the of need markets locations you

proliferation the frequent the I three brands. kind last five it to members more consumers brand seen for just these built all of we've years, but day has across of truly confuse think

operate they - it a that provides So brand so on of rate But seen cost, if I a lot already for not owners an clear independent can a get only and significant that channel your in paying really you're there. that format have think to and is there's XX% comes fees XX% but channel value free the even. advantages of side on booking

do but sector answer not is for for that unique. are there the we so And feel we one fits us

We asset are focused much level. at the more

we've lot with disappointed and development with but from happy but unit so of that this very independent in come, we're and like vulnerable the be and it. used to independent conversions. expect Frankly particularly but hotels program should to before one we their in new will fee in our those they're it by assets we lot brands we've you be, to is been But great acknowledge concerned us became inventory people and more may relationships things our think our branded brands would in and or to performance from had we where vis-a-vis we we growth seen really markets, to bit throughout a real go hotels side, so thorn a which a rate about allow if the a throughout our driven are actually for things see don't it throughout $XX thing We have unit the feel that the a locations through lot a brand a like structure. our had $XX benefit Chris, summer that the employee pre-pandemic I the good But contribution the of fall. this be at period, growth

and some really have different have for their some getting program are do channels some redemption business done of we of for So attractive brand these stay we been just on gave Cadillac, see very you that benefits and these days and but productive, convoluted frequent we particular the and decision U.S. it's hotels location and but a hotels question. make easy we based independent asset. we branded pretty a answer, in running a I

Chris Woronka

for That's all Thanks. Okay. Appreciate me. very helpful. all detail the that's

Operator

Next Michael question from Bellisario comes of go ahead. Baird. Please

Michael Bellisario

Good morning everyone.

Ashish Parikh

Hey Michael.

Michael Bellisario

markets? kind the I New lower really you that's but you that about Do there especially about out Big shift know last forward? you like independent, the full what of one do picture you today asset is markets looking York envision portfolio new exposure, the composition a far are to away you're sales guys but question a years, now? know look but portfolio few follow-up considering the more you're really as as as I select service, branded, talked you service, any what it thinking look exit in City

Ashish Parikh

key EBITDA markets days. And are of having months can, like were assets. of higher hybrid able do really most or our we lockstep time of, and that in kind cluster the select appreciate lower last we around We burn around markets like of start luxury think with hotels finally like balance and and able lifestyle in in portfolio. some hotels; the two we Michael, recovering. open service, service a GOP model. growth higher cash a mix some appreciate end so profitability much independent that We point was you hotels over XX and I higher the of and month all last net have the know but in do then XX limited to our to that to and six, of very of We when of our the with within rates in were and for enjoy we and the balance margin that across kind kind do that the seven opening then that kind while our we goals you it reopen having were bring breakeven case a by how independence to ensuring we hotels

it's And that one so think serves will well portfolio. that I assets that of have in us and to flexibility our having mix continue and

I portfolio. let's kind representative months City what New would the say, we're have but look I contribution, the we expect selling rest across XX we think, of the York out that less if is of would of portfolio

we're assets bit anything little are So if just more in of each are little our markets. older, but bit a selling a stabilized they

our and New those York in is Philadelphia Boston, will from think the There Washington, less mix. year thinking. now a to portfolio So continue the you'll South Florida, I West assets just several in of of markets see Coast, each kind be current

York only I we think, as is more discussed. we've sales consider that market significant New the like

very clearly that's good, on real importance cycle estate. focused of, So think interest the continue we'll fee to that's be has I this kind of shown

longer refinance years and in new to it than very makes it ground like this like. are just and lasts investors notion but your case. lifetime, inflexible times was that often assets doesn't it not the there the or difficult that's very because this For Ground difficult matter highly leverage leases to like lease bring in

recyclers on trade it continue we'll requires think I point more assets require capital remain at that that we will and we CapEx be continue time hotels less it's to meaningful so asset. that once will the active to focused over where of

very about kind to attractive the and I is lenders, think they're is to of to of that think that peers these liquid kind credit are leads actually like them. most been facility. think the of the a selling than portfolio we portfolio you're it's that think more we've attractive features, I hotels It are talking we when our

under flow. think far debt have keep that many are total because gymnastics debt in to that right right about reality. you or They EBITDA mind so is off just what now not doing EBITDA I from to cash now --

that in replacement volatile and cost. flow a on a we'll seems what world. very cash flow continue cash can it's focuses It's to So that assets so be company like

Michael Bellisario

for you and the that? does lender then into Got your just today one are thinking it. quick mix where That's helpful very and follow-up that fit how commentary about to discussions Ashish back preferred about

Ashish Parikh

in them We’ve Yes. the that this about program can't it's up amenable back groups accrual XXX% with be that on quarter we think catch the be preferred or first starting the of XX, quarter. second will lending the discussions conversations I where I had it's to dividend up we a on accrual in if or and But when some I catching think there whether and just go say that. will the some

Michael Bellisario

you. Thank

Operator

ahead. Please Anthony The of next question Barclays. Powell from comes go

Anthony Powell

Hi, good morning.

portfolio? over urban markets any your impact come fall it Just fall and in evolve you do a in kind to on your and how question see the how did markets of competitive inventory and back and summer is over inventory other Airbnb summer

Ashish Parikh

California. reduction heard room was City. in reductions meaningful of We've I've in XX,XXX Airbnb rooms New York and read Miami in that there very of

I and in think had major throughout monitoring around regulating started continued cities the pandemic. overseeing more that activities and of Airbnb's this kind entire momentum closely

be not that's but called and in to been credible has something that there of it Airbnb technically this like that sure that we're we lot anything in so to and how will do reading of taxes and related housing in New data so to lead affordable with because see like momentum this standard reductions think New things continue else think not and along lobby we've quoting we XX XX% that there just in we're and think bearer that our XX. because and York I the going it just, and saw Yes. scripts so I we'll we've inventory fight there's energy of supply seen, the York shadow to, hospitality. a we is illegal recovery is we're in a XXXX the that

took was meaningfully. to it XX, our think very business really XX that realize I this hurting until

Jay Shah

additional Yes, amount illegal all that Anthony on with disclosure that speaking been planned Airbnb that, happening kind there's limit we their transparency have on the of part of hope to IPO additional while and of would the across these rentals markets.

Anthony Powell

any York markets seeing Makes fit guessing one, stepping some other Right. inbound? sense. Miami lifted for to you call to you out when and of next for is may just more support what you New markets year? international the are international And I'm be do back restrictions start starting

Ashish Parikh

Yes.

our York pretty our are kind of markets of was construction drivers the significant But Miami of that and of portfolio All and inbound the are international frankly. New significant. most one

business more New international portfolio international Pre-COVID In was which XX% some kind. only our Miami of mix kind York business. has airlift actually about it was our pre-COVID. has is much XX% of was still, it for about even our XX% still to of

but as lot travel. from got also the LA, elsewhere. And from market was particularly international the Seattle that well as The Asia other a UK, travel other notable Coastal and international on California, international coast the that markets of a the were then are

we Philadelphia - They just think international more world cities. were markets. growth always Diego were but kind XX% airlift due we used were and and of to these tout they coming off year-over-year XX% markets that international the the low two because San discovering I highest to of were bases, seeing they growth mid-sized

absolutely you it now. returning do business. seeing is the of have part is vaccine flights turn? and in in Florida international Miami it think to to we significant South very least When expect do help a So going we're at I our

the travelers business return. coming because and now they region a a there travel, of We Caribbean business and But have it back the Brazil forth day when of and all Peru, Mexico not Colombia but lot. have right multiple little is from and islands, a bit leisure in and will flights so of there's

accelerates the that international think do be back it to it's maybe bit, we're travel not on counting sure but will really Anthony, vaccine I recover. it we it think until half little will, this we're slow XX not just, of it's like a

Anthony Powell

but is be pushed talk from there's but whatnot transition. like reasons lockdown in variety I'm London about and that portable around don't Yes. may various bridges the York the getting is of back, to There one I air that a now starting new obviously guessing know

on not the sure or that's I'm if So still table not?

Ashish Parikh

heard still table been I Yes. there of to both York, the because New Yes have we're develop in Yes again, is international have not COVID. they're is, seeing it being dealing off but it cities stresses there of with lot very possible travel. to is Anthony. slow still related a it's not that

Anthony Powell

right. you. Okay. All Thank

Operator

ahead. James. go Please Raymond comes from Crow of question Next Bill

William Crow

Yes. cycle are on at a Neil, is, coming peers cost and one Thanks. question of we're depths we've and off before. delivering two-part end impressive we're obviously Number and long you XXXX your that. Good in never morning. cutting pretty seen the some

this for the fat of how content and little But there Then question brands the your just do just creep cutting happy necessarily industry overall, low rollout that? have eating room about pie of much not starts is gotten an was in a bit, perks really, a before specific second operators. before like the things a Thanks. guests and there is So cost of matter additional we maybe little as how talking see XXXX, we to for bit to the that's amenity had we hanging part cut contest long fruit?

Neil Shah

to Bill, cycles do the of the if start a get do tchotchkes us and towards think of in frequent and lodging layer VIP market in giveaways to in guests end we special program, to started lot order program could a I of you and frequent and kind cycles, items. stay that and lot retain of share amenities win

building. service you the and control like feel staff and in all to keep You because bell select have at need just you start do demand the of out hotels need to to in people kind of move

it You cookies and desk, room start and definitely tempted have to have to the get in every over happens front time. at water

least of to very, room And then able were the all were four to-go do credit in breakfast cut services people in very give critical budgeting. with opportunity these have moved flexible what hotels with just were model buffets kind critical I go very a them they franchisee to zero-based zero provided brands they not five We to prescriptive were restart and at that. so the considered We how there how bags people, clearly this to was or but and be they to provided exactly offerings. true with from for owners and to

to in had started teams have as And cut food we've clearly the the back include had occupancy, to really started for reached, to, so then we've have and available and hotels have more flexibility to open we've we've a to guest dinner. we certain bar items add started for some deeply as and to kind expectations very breakfast of to add or

And but on customers they've ground. brands the so, are kind business the are been and that pushing. we back things been driven those slowly hasn't by It of bringing the still something

see most guidance need year that to the during I during staff food certain more -- want available items and And of them particular probably, served. to of bit level or and think do is a you start that is around time. of to-go certain to beverage the what they breakfast start occupancy have bags brands may a person after there evening from in we'll a to next early have level just additional see little how they an delivered require branded

that some We the some things for a the be here we're XX does could that the coming as there from labor you in include brands, focus mentioned would and real some primarily the to So that hearing on remarks, in of we to permanent of and think kind we that brands. put we see things will there back. but is savings to back. his prepared not will side, be Ash across rooms it's going our but But start do it used of come it's expect think major those immediate

run years to next we a assume always recovery to let's reasonable very for pretty advantage say. ship. there of a meaningful But margin points that for because for that three think that lean the XXX three across years is portfolio we of the tight we a is margin is ours And XXX so, basis advantage like even like portfolio even it have possible the that next as a think super

William Crow

you. That's answer. the appreciate Thank I me. it for

Operator

the remarks. question-and-answer session. our concludes management This I'd to for like call back to closing turn over

Neil Shah

Well, you. upcoming any forward are looking are at the questions you we'll here questions Jay, no conferences. and seeing further if say of more I With in all investor Philadelphia has and Ash to we thank you thank all office again. in Great. anyone

three [Indiscernible] then up. have We side and sell conferences coming

forward we’d see to you look least We'll the So soon. across all screen. of you seeing soon at

Operator

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

disconnect. not may You

Hersha Hospitality Trust (HT) 10 Nov 202020 Q3 Earnings call transcript