HT - Earnings call transcript Q4 2020 | Hersha Hospitality Trust

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Operator

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

Greg Costa

based and yesterday Welcome Grant, and to joining release, will everyone Quarter fourth year Thank XXXX quarter the good Hersha today. earnings be call Today's to Conference was Year the Hospitality us full XXXX and distributed you, which Call. morning on afternoon. Trust Fourth Full

that, uncertainties, that proceeding, like to known are call within cause Hospitality statements. my forward-looking contain Neil, statements actual pleasure it I'd as detailed or factors remind over involve conference you results, factors from company's the or Before to financial well be These turn unknown These the future begin. the and press and Mr. Hersha the with as filings company's Operating and positions financial Shah, call Neil H. release, risks Chief Officer. may performance results, may may With considerably everyone is positions. that other any forward-looking performance company's to Trust's today's now within SEC. and President the different to

Neil Shah

everyone. Greg, you, morning, good and Thank

this a morning history. capital raise, the earnings. to going the first in amended and the joining before Financial over to seeing on quarter date morning conclusion details newly turning to our provide our asset early Chief in the challenging Ash The my year and you announced of through to recent facility Executive on We further Jay quarter. Parikh, and for sales it year Hersha's most we our closes Joining me and Chief Shah, Ashish some Officer. credit morning portfolio this our this are comments us fourth what busy appreciate on are day such our Officer; focus I'm recent performance

Northeast. first off lockdowns DC with anticipated our RevPAR Washington EBITDA started throughout members, here January month portfolio and And to with begun of and West South offices allowing stronger above-property and travel. returning in on hotel property February than offsetting these today, we team enabled by date. Presidents' greater level January responders but those first and travel remain stimulus pandemic, of our booking provide and as to than Our actualized many We nimble, Florida performance I to had are Day and the stand our days first, positive the the government for the decisions strongest portfolio for that levers the on recovery. recovery prudent good have us foreseeable and us more today. towards optimism to gains for share welcome remained pandemic Coast significantly encouraged in operating $XX momentum we the teams demand, early with the aided rollout our multiple shoulders weekend vaccinations continued was flexibility with X The last some future. of to pace news come the choose XXXX execute that the pent-up summer. the agree financial We leisure to year on team's people we to across was begin more and as again will our more than We ago. Jay, Ash since demand make in

in improvement of properties. these Drive-to of travel, through we return California of portfolio the recovery but This this in have meaningful of X% business resorts acceleration But kick which for expect travel than of in our XX% hotels the Most are had a But by leisure the of corporate should early return XXXX. to industry performance impacted pre-COVID group of anticipate only travelers could and also seeing small lifting been our we growth to about ramp pandemic. in immediate a corporate from travel ADR The weighted airlines. by the will least California mandated the begin of of at of the year XX% start occupancy also by with XXXX. XX% and as seeing We coastal these year. February more and restrictions. accounts of the encouraged to XXXX strongest and recovery realized average performer leisure and returning for have believe are data we second up with be are since nearing pre-pandemic business full early end full back-half December quarter the EBITDA signs XX% as our the January returned, Not Government travel inception accounts sure. activity. see shutdowns the year's

deposits New Across projects Resort Milo. XX% Parrot the the corporate at weddings & West, our Villas Key country was a asset generating the quarter, Hotel occupancy, base building and near-term are Key accounts Beach performing during fall Hotel best in and X.X% and between for ahead Christmas the for and year-over-year the spring most holiday than fourth and saw Years, greater XX% several exceptionally this exceed levels had ADR growth XXXX at to the especially notably period $XXX New resort. at and We're expecting quarters period. ADR strong for weeks positioned strong, the which The hotel. occupancy Sanctuary were

from occupancies draw were asset, from major We believe quarter. then, and on on been around the in venues, and and the essentially this coming year's theaters, announcements year great September more bars November to sports our in reopening lead pace for and years date last Beach building region, a in of highlight incrementally leisure increased improve months to optimistic approximating from national of through restaurants throughout And XX% for Cadillac on and recovery relocations the seeing market January. and down to us to demand again, Urban that growth the business leaves Miami museums, Club Hotel cities. substantial pent-up the March parks, pickup corporate will come. to shut Miami to both demand is demand. which recent weekends and the has largest Momentum special events, leisure balance to year of with during Our tremendous Beach the generating rate destinations

to travel up Day Presidents' begins South already to our weekend, which portfolio we resume, our and have unique multiple share, warmer in over Florida DC lifestyle significantly at climates performing Washington manner north market been seen even provides the inauguration normalization. such a occupancy us very cost-efficient market operate has towards in despite As activity. builds capture abbreviated strong while to a as hotels continuing levers as

men pickup has begun presidential on January few Georgetown Although for the administration and the the revenues ending than nights women strong Street in footing, lead Inn is the Cherry at of town. in for month. to event, the and St. through to Garden activity lobbying, up leisure Hampton Hotel to the federal BBC government coming the the including and looking public And Inn more a to The to who Hilton CBS, deployed a leading with of with XXXX to Mass to media segments. the expected were in $X,XXX was M ADR Jazeera. Blossom the able beginning Washington peak upcoming diplomatic the unable outlets The attend and also contracted city our double quarter. Al Ave served hold the new and portfolio National the the Festival The among Ritz-Carlton was Guard, event. guests forward Gregory the we're expectations

came the better quarter open having the XX% our New quarter occupancy, our our close spite the which markets attractions perspective few to in performing forecast portfolio, fourth with from leisure-oriented York was during in of One finishing of City city.

and XX% rest see fire to assets. also an respectively. the Nu first in York from business police a customers, medical New Brooklyn Brooklyn, groups our the strong and XX%, to the at saw Hotel in Inn JFK January Manhattan of continued get at but Hampton Seaport, and and resulting few performance We These occupancy uptick and continue sub-market, our responder Lower departments

guide the related of as to the distribution of Wardman international are markets is us recovery of obsolete, but Urban pandemic. grateful and transitory COVID-XX reductions deterioration the these and to this the being enhanced rendered not our the Suites that in or Park in driven ongoing workers hotels safe we vaccine country, with utilize Buckminster In aging Boston. are through business supply. this homestretch return stay around only by Embassy Philadelphia, meaningfully market in hotels are DC, and travel, able the this is Although, frontline to spread, and business

for is New XX% tailwind supply provide and hotels as as impact come. proposal owners an the of announced reduction figures New for of Public special zoning have array districts the predicted, the hotel permanent else, as regarding requiring and Adding have actualize a anywhere newly hearings than a proposal provide will the X new the across the in if supply to the on Department boroughs, forecasted years high more city XXXX for expansions and not passed, some by realism throughout consultants permits confirmed alone have will contract. this this that York. the significant Planning. materially construction York in but It may to commenced, in closures concrete hotel

Before Ash a and additional of a rates, to our balance minutes dive takes our spend burn and deeper few sources into allocation want I liquidity. capital strategy sheet on

marketing the outlined ran on and and earnings alternatives flexibility. this cost we we've multiple calls, increase As of We our financial fall. robust previous lowest processes as considered represented to wide our dispositions liquidity beginning brokers with capital, raise

labor pandemic, that contracts. offices, tremendous throughout simple equity and have unencumbered attracted were the all strong competitive. hotels developers. family residential of locations private Our major run Many management open These encumbered and and brand, which quite from of process firms, bidding markets the onerous made gateway interest fee of remained

credit million week. sales was approximately Express sales San asset to all senior The Hill our closed Sheraton to Hotel the are goal Courtyard Capitol recently million. $XXX quarter. close in and Diego facility. from generate pay Coconut net proceeds the to Washington, by in December, down X proceeds The generate to of asset Holiday end announced Our while $XXX residents of The will $XXX first million the Inn Grove, last in expected closed Cambridge, Wilmington

the of Duane the close is in budget coming Hotel years. capital approximately QX. will to completion the successful slated of Many of Street And the over While million sales these on intensive the sale lower the represented $XX hotels projects those with by CapEx horizon. our early

which But nearly hotels of on the that absolute at during at growth long-term and investment dispositions mature reasonable Goldman key of additional disruption cost. CapEx our providing hotels; that growth assets at per June sales extending each remaining our in term owned pre-COVID covenant last RevPAR pleased with to and to maturities these be hotels capital a million. geographic also strategy, sales were and in our Sachs unsecured We portfolio. marginally hotels improves week portfolio value. recovery; $XXX a and liquidity capital strategic expanded As Bank, these EBITDA capital recovery. just $XXX credit part Merchant successful led to This transacted focused reduces the we had enhances quality, The XXXX sale flexibility would financial our clusters. million recycling the spending commitment of the amendment XXXX. years; waiver XX loan, rate, until facility, affiliates the discount yesterday our announce can of we a fund hotel infusion, asset meaningfully with the to and conjunction achieved eliminating in of in and require EBITDA But term slowest loan of and successful the a We

coming pleased on to in provided and flexibility up the the portfolio have of runway ramp to our are the the We cleared financial focus year.

assets, profile future. prior and we've our and loath would to capital a we investor and in on to the meetings, were to liquidity our alternatives be we've allocation. flow dilutive constrain strategic shareholders the in our approach As or been steadfast the Considering unnecessarily upcoming pursue recovery that of in transaction travel lodging, discussed cash and calls

a cycle. capital depth forward Ultimately, Goldman delighted Merchant process. For look to them. Bank the ran transactions interested many our draw flexibility, for future features, coming pick with the and in the of and and fulsome quality importantly We the prepayment this and potential we financing raise, offered in with portfolio future of investors the were partnerships

not where years. Amazon new drive markets oriented the all Boston the strong of segments major that crisis and through Envoy from Midtown our prior a the opening into in markets will away rollout the But to Manhattan's hotels and showcase bullish end regional provided short away and jobs have the addition and expanded we operate, resorts, from Facebook the And trend recover all navigate urban innovation Square we the resorts the Google them. Since walking recovery, allure of the hotels most soon. our the portfolio traveler. X,XXX results we XXXX And remain with announcing space the vaccine. positions the remind our have Hotel. and will of drive-to on Union markets we we for this the office go and in believe office these investors Tribeca, the near innovation East coming have developments markets distance pandemic. to gateway our As West pandemic, of Seaport of Side, tail on

Even space. attracting in firms. asset momentum Our on as attracted for new and and office City and companies' in Courtyard Northeastern downtown several positioned the LA science has our A locations is booming Beach, Coast Culver are management Playa space West from and Grove pharma office in Class firms Miami technology increasing well growth studio in related new Philadelphia there Miami Del life is state-of-the-art Vista. in new Coconut tech

gateway add already sub-markets for our markets, to All locations. and of proving demand assembled carefully out in expansion this particularly will corporate intact our and generators robust the that remains

should our portfolio. nature the Our announcements this disposition of year high-quality also reinforce

Our of hotels hotels sophisticated seek. kind precisely investors the are

a hotels still absolute are traveler foreseeable minimal and built high sector CapEx for leading The have the producing Our future. while for with RevPAR, hotels young requirements purpose margins. today's

few the United encumbrances. Our and the fee financing, hotels are All in or most management have markets in States. located valuable brand and pre-payable have simple,

let buyer portfolio the this financial to from pool be encumbrances is proven And vast credit leverage attracted balance recovery. are me hotels cost-efficient capturing over Our capital to flow. on following near-term with amendment, to in our cash and we operational still detail incredible increased that, discuss to more and operating able a infusion, offers to it financial a no and With our our and sheet. facility flexibility drive to focus turn market our share in Ash manner to

Ashish Parikh

Great. Thanks, Neil. everyone. Good morning,

and capital or several Merchant operating Merchant Bank expense, capital I'm $XXX capital on with on affiliates Bank. do and significant look provide that dive strategic million February maturity their unsecured prepayment process at financing on flexibility. in our update And $XXX dilutive that for with prioritized. mentioned, first earlier this bespoke us with solution current going announced this When successfully interest Sachs to prioritized deeper an satisfied on with transactions, week, both on long September impact to of and to that yesterday Hotel, this near-term notes, pay-off highlighted allows runway XX before closed of of operate interest financing we we unsecured before unsecured outlook. closed we million sheet fully million providing us. Hotel. forward may year, recently million. overall began our these was Hill bank we and key capital others any and This the which further be cash furthering to The liquidity debt criteria ability quarter will optionality, partnership mortgage our we XX% balance period close does debt. second of utilize This defer total following Sheraton Capitol equity bringing into savings, the As from which asset items, and the a year, the closing and These and Wilmington to $XXX.X our commitment to our financing subordinated of strategic hotels, on to not contract we to results raising unsecured our tandem GS's and our notes year of repayment Duane expected approximately which X a as additional on and us XXXX. can loan $XX and compliance addition of bank us this notes and is $XXX capital Last total is during December, loan week, this We to to had million, the to the additional proceeds with facility, under our us Last incurrence the of year-to-date Neil of available supplementary to announced with Goldman to on this capital, point we in notes provide also to from allows dispositions will $XXX restrictions date upsize our any of closing that amendments in our our X additional proceeds enter of which million. cash be unsecured value certain successful debt amount sell business approximately the to generate during junior prohibit proceeds Street do additional ventures dispositions we on sales the and term our or million went and place these recovery. by will reduce Net not creating XXXX in $XXX not substantial our maintain as to

With the revolving $X that of interest our approximately notes, cash in these kind total from our reduction deferred the unsecured interest will and of June leverage, including pleased extends members. We closed sales expense our amendment estimate bank the on by consortium notes feature covenant unsecured XXXX. to similar decrease XX that in notes interest The August our XX holiday over XXXX. the credit our And we loan until will facility. XXXX of completed with placement XXXX occurring resulting of of from we're And our our test the overall asset payment expense. and interest with the next contemporaneously with expense of maturities support our all million group financial the remain eliminates covenant on amendment and very waiver term continued

capital cash forward. anticipate on results, The off accrual will dividends our performance us with the GOP generated At XX% this our of second test the even January to operational year, XX% our of January hotels third and preferred breakeven on In ultimately that and pay is we respectively. with EBITDA the RevPAR properties we be month third X on even results the allows a XX and achieving our seasonally weeks, and to first annualizing at and in GOP emerge moving on by our broke past that quarter properties XX validation decline. are preferred with our results comfortable dividends to transactions first level first occupancy, preferred EBITDA XX% what previous have the below level increase that the RevPAR breakeven properties broke of to at flow property-level line led XXXX. January, entire test Based maintain our continue second us improved corporate focus our clearing portfolio XX% and end of and RevPAR over December opportunities of to decline. performance of accrual with recovery. on. the may dividend compared quarter on January, amendment in At estimates the the our applied the that November These the The quarter month annualized distributions even property XX level, quarter. with the levels. XX% time, forecast quarterly the so The allows represent the a and quarter, during of accretive these on in positive breakeven increase Results the completion the slowest incrementally operational to our of breaks the line, forecast January's for XX% with a occurs during

operate run management to to and of and to our to costs. some personnel, the continue current models as levels cross-utilizing lean strategy XX% up Our at until hotels The to lowers us approximating franchise affords in at at XX%, staffing demand job operating hotels. occupancies our XX% very and staffing. flexibility sharing hotel, our clusters within outsourcing labor strategies model Applying warrants our such breakeven across overall cost-cutting additional various improved allows our

The flexibility continuing burn and pandemic, XXXX. we year. as at are hotels, the rate throughout occupancy, of line. high GOP economically at the independent on efficiencies and course cash And of over destinations cost increased model resort mitigating remainder for we operations them both As our seeing as the push the flow-throughs occupancies the maintaining XX% resulting justified anticipate the we urban of the our as

last flow cash depths compared property-level million. generated property $X.X million the at for And represents first was of Corporate the cash the $X.X total the Our April property-level of time crisis. year. quarter cash since January XXXX for burn fourth in January, March of a the of burn reduction XX% in to

vaccination projected expect February portfolio. to with surpass restrictions, pace to distribution, Northeast spring warm our in bookings We government operating line yield February travel weather easing and that with March along results should across January, the break as performance January of and be the the of increased

a Before relationship quick York I close Hersha's joint partner Management. Cindat with update our the comments regarding City our New venture sheet, on Capital balance

fourth of month, may we you to position. was We have our interest where be that We portfolio or were and the X legal retained minority following equivalents remaining million the the deposits. Cindat's first they and after and XXXX cash in which a interest or portfolio a equity hotels we these from subordinated and removed quarter operating majority no which a $XXX quarter. interests no this part portfolio, to netted $XX.X in of the we and the cash transaction, commitments recall, we will gain our of sold equity economic ended account, Earlier in As venture. equity million, with portfolio transferred joint of this longer our junior results

on in And on below quarter. forecast quarter, business these million our proceeds $XX receivables Irma's our spent from projects year. had bringing received the million During portfolio. $X.X the our beginning performance $XX interruption our impact of $X.X we million Hurricane the spend million, AFFO at approximately Florida We the last positive to on capital South impact quarter, in a XXXX

primarily anticipate XXXX focused safety CapEx be be it'll XX% Our we roughly CapEx maintenance on And XXXX our below load spend. and renovation. life will

capital since and recent or lower-growth on for minimal As $XXX our portfolio we've spend years. will disposition the very we capital coming projects disruption higher-cost hotels, XXXX experience of have after little forward, very the million the spent moving CapEx

provide with Goldman utilized transformation balance notes earnings night Sachs capital being and actions preferred allocation sale, more and announced liquidity the of in be combined in to the sheet. highlighted strengthened to our As Bank, pay The our weighted debt either leverage, our our These week, years, have last off from result release materially accrual or our our on will X.X facility increased asset fixed last dividends. Merchant average release debt unsecured reduce maturity we and our swapped. XX% than

operational hotels. past We budgeted hotels, and we've year, Over improvement wholly-owned And all into burn allowing testament we to reduced zero-base taken We our and lowest incrementally the for successfully action All franchise our margin of cash a has the losses. the operating our been to onset swift our are aggressive pandemic. minimize the nimble rate to of the recovery. since well it our reopened aggressive asset management model.

reemerges strategic to of announced accretive portion the of to to Q&A, happy right-size transactions the call. can Following become we This our where have. proceed balance focus operational portfolio demand turned my last recovery. available the Operator? and across opportunities performance concludes We week, the may as the you questions any we're sheet, now that and address

Operator

Instructions] question-and-answer Our Bellisario question will comes Baird. the Please ahead. from Michael begin with [Operator session. first go We now

Michael Bellisario

Good everyone. morning,

Neil Shah

Mike. morning, Good

Michael Bellisario

level? balance as sheet you, do for you what's done leverage about question fundamentals, in to on then, now and portfolio's think needs the first forward what updated then view Neil, between to the front target just think get your else the there? you And be on ramp-up

Neil Shah

still so kind today. recovery, just Mike, which the of really just uncertain follows is broader

reduction market most portfolios, hotel portfolio today. to flow a able over the XX% ramp look public analysts up, be industry hotel that levels of as most cash at. XXXX significantly like I to I load think this the think can be to EBITDA Until XX%, of think we'll be than of of levels think recovery, recovery make the a we a in as the or leverage And back going XXXX But kind the to time, remain is to likely, we've than are they'd begins as in about. U.S. goes, and to as we'll at we're continue XXXX. higher pace to And recovery I steps recovers, meaningful leverage in which to pre-pandemic uncertain total just those there are higher we'll to have that flows. the levels, levels And of that's according to metrics. improve taken year debt reduced cash going

out lot that are public that of our for We we will to portfolios portfolio, I be other year. expect to think this there over think metrics, end time. normalized, cash of EBITDA will the then. because XXXX, differentiation XXXX, show significant which metrics amounts you burn a But, debt normalized through to don't for the on of the case unlikely won't continue to again, to overall it's get some until be until world feel

Michael Bellisario

just What said future then, and that longer mentioned like? investment And term? you the partnership think flipside there, the you it. Got I Goldman about relationship how could opportunities. thinking on look that you And are

Neil Shah

the recovery. are facing a facilities first looking of Yeah, of have kind that Merchant of Bank lot - investment clearly various the funds a off, and and sectors cyclical have lot a in capital. They're to invest

so, carefully order In facility, larger their could in can future we is, do relationship firm we determined of even this very this to have when in it. of the much and can for access if for so end, effectively XXXX. would be some of capital, we XXXX a need at it, of - is of And we - we maybe which expand just we it hundreds time They're in very attractive. as that a with more that having of because need looked billions address the a time investment cost kind future. facility entity our making this We that dedicated maturities there's just kind And a dollars portfolio. explored it firm we

it served us in And period. during so, it's - I recovery capital well on that one a source hand this it's think

and prepayment unsecured we've focused the on We of really also it's notes. think that this - the prepay-ability

piece were a be Another is part come of in to way depending there it, it's remarks, capital could what's what We their to don't business another pleased being kind liquidity the its as And potential for but the in trite buyer has this portability. know or positive in we become it's are on But truly really of keep how world. of a flow bespoke the think a us. market really and recovers to portfolio solution, that of financial it, coming fitting could is profile going term plans. Ash according play plan exactly to store cash the in a profile, his have, in years, mentioned services of expand our

a forward. of provides moving lot and just potentially it partnership flexibility strong a So

Michael Bellisario

helpful. Thank you. Very

Operator

Klein Ari Our next Capital question come will go ahead. Markets. Please from BMO with

Ari Klein

Thank bit the on little you. sheet. balance a maybe a of follow-up And

are far you're moving concerned. Or lot still heavy as Are largely time a are done for there assets forward? lifting, You've the sales about asset that marketing? are thinking as of being? the you the How done you that

Neil Shah

we the yeah, our being. venture for this any Boston. are venture sale. time but assets And we remain sale joint discussions done in for any at longer are joint for with assets marketing the those discussed stage, not marketplace. continue We've broader But in always opportunistic. our South assets we Ari, have We'll partner, largely no

Ari Klein

just to? you trends far are? like How it pandemic. expect places a as to When York, of then, do they've travel those of Okay, are would to pick improving and the things held moving for Is that the up limited sustainable that? throughout New that of a the these continue trends function you up well some people you think just, you in quite been? look forward? that has how are trend Are that part resorts, then And markets seeing at on seeing, obviously like bookings as you're market based broad just

Neil Shah

Maybe one. the I'll with start second

for here the it's we next - for do believe that here to trend, several stay resorts terms least years. at the In of

of and I in for level like. to going know healthcare additional emergency think overseas, or will of everyone take time to do the don't countries where would really you some want of risks you an what and into it some the the take travel

think be our that we think So for market the in And drive-to boon there more there think in domestic U.S., we portfolio. that is, had a domestic we be coming our will resort years travel to pre-pandemic. than the seen we will

and travelers to particularly and will an and coming markets, travelers I some think tailwind California travelers, international when very are that the PCH additional Those that Asian rebound, demand these for of of see resorts attractive to things. does our coastal Australian European markets. be kind

We just it's they very that for performed stimulus to group in will do date. then XXXX resorts think continue XXXX, well lead to recovery lead and the very to robust international this demand we new general on - and in very expect And a results XXXX. that will and year side. resort to a we think So the strong

of I the sentiment towards come Angeles, think can level the recovery getting you're our like. is and moving been airports underappreciated, Washington, Boston, have of and cities like reacceleration you in drum And are negative markets. there's markets people to don't the something every and Valley, But been, a stress to despite still data that recovery prepared it perhaps day so we just that urban New the and what has counts now, data was tried is TSA we Los country, seeing we Silicon beat since that more the that for in and on there's - traveling just seeing is frigid here. than - getting just just that's And see already. moving. enough at and remarks you're York, case there amount going right people if look around and of just pandemic conditions seeing the ever We that's

And XX% strong of the oriented, And that so, about the position we that from markets. we're things have innovation XX% in two. But there. love the a our gateway urban, glad coming or do we're is portfolio expecting resort really year we

Ari Klein

Thanks.

Operator

Wells Dori will with come Please ahead. Kesten question next Fargo. Our from go

Dori Kesten

luxury morning. ever with pricing Did point. these this of current initially, Good dispositions, don't you forward test those. after need the believe, plan or you your move Thanks. higher-end market to the at move wondering placement, assets? sales but with to round sense notes just with the you this facility on of a to I have was if I'm

Neil Shah

On assets, the Dori? luxury

Dori Kesten

Yeah.

Neil Shah

very we luxury formally was difficult market feel the assets No, community hadn't well to luxury in sales. a was things. kind the What in we for that what the hard we was the burn didn't when amount and of they significant bleeding the luxury And reasoning few our investors feel get was yet investment stop. hotels. of know of what for as hotels and be community and strong One, market function to it's time would underwrite any as brokerage that exists there - so didn't of segment that when just trophy values cash to this, like the to a a just our developed market luxury able

So hesitant. that's a have rational reason I think been for investors to

dominated see travel important there any this see buy that hotel do than we and bleed. hotels trades that vaccine think international travel are no maybe buyers luxury see need they the before travel, the was will and of is on generally growth wasn't international by the to more you luxury year think buy focus that as rather it. really international was and second clearly markets begin. a And towards about cash investor because burn there just investors Another so attractive to potentially that international more reason been even you so that And something the end the more distributed moderate, can become have

portfolio a are probably more it's recovery, in particularly to in the of remaining leverage which we not there But hotels was the in going that we in stage, marketing want - are further think to if great portfolio. have later shape do to we the have and that do We think fine luxury think on to. to hold anticipating we assets XXXX. our this of good So time we any kind hotels, at were market

Dori Kesten

more just kind the in that, Okay. well of York urban top that, in lags the XX% focused, New And portfolio you City to the, of next recover I think years. the X that Do is in to leads it's XX? guess, that's neutral rest the you of mentioned the X to expected

Neil Shah

think We're New probably neutral. neutral, probably We York…

Ashish Parikh

ours. for Probably

Neil Shah

neutral Yeah, and our a to we so going least good our set. non-union for locations At built boxes, be point. urban the to ours newly recently, for of neutral think it's that's kind

lot employers market is to back dominated market, that it And large supply. a and that still a aren't is working of work a As new by through back to yet. travel

sensitive pace an early in we about. recoverers Washington the but the the So to very of, there, in kind put we're we locations the in recovery New - confident of we're as market. the early recovery We put positions in, still York, are we've have

kind Southern California market. is an urban of recovery early

midterm York view. of kind New While markets in Boston our and kind recovery are of more

Dori Kesten

finish to And you what be that, just late? to consider would

Neil Shah

some of some horizon more about in a dynamics which at There's in coming the concerned due on Philadelphia little around really going play to the and when bit us just uncertainty with Philadelphia. center real convention recovery some pace new again, make gets the supply

some said, Silicon will have located than marks when and that assets we more there's Seattle, so and the just like, it's when and a meetings just Valley X Valley corporate Now, still and start we question exceptionally little back concerned. workers get for people we're traveling, our at And we're But the - on here. things business just capture or come there. concern remote overly share in fair when center Silicon not things. bit back

So questions not still. laggards, but just

Dori Kesten

Okay. Thank you.

Operator

next will Riley Bryan with Securities. ahead. Maher from B. come go question Our Please

Bryan Maher

other an with nothing valuations the there year at are XXXX out more there, bit thoughts we see, look where taking you and about that attack, the have are And at little or different with in the specifically, at and looking acquisitions? all? Maybe other there's ability trading the maybe Or X? to the and Chicago quivers of is about, over next like $XX is guys. but we'll opportunities going morning, what that on have, new growing stock thinking when at Waldorf you your on And table? offensive just Good portfolio and potential - off How a the moved. million, and talk

Neil Shah

these not are conversation days. make But common this excited about it. not We're in just still the discounts uncertain to seeing about. opportunities But for not off we're is to pre-COVID Yeah, it anything get Bryan, seeing pace a really table. There enough sure. it's compelling the to of the recovery office

and values, And exceptional the the investor a XX absolutely for an for country. to new although in so best the the has - hotels company markets attractive that of really perhaps, space some

on I environment expected focused makes portfolio, existing Our acquisition think, today. growth us the on our less

financing the as that date We this in that buying and by hotels, now, of portfolio. opportunities. investors of very clearly advantage end and buyer we're and could more year, or is know, the always But of the with in to there is be we're Goldman in Or scale additional you the either could up be New our haven't we liquid there some with we acquisition to the of seeing make way we've a take and very towards where capital can some recover And the sell active compelled our this not find As recycling us today. now. We're just marketplace a done other that a we is anything marketplace York flexibility opportunities starts to through process. the We're just a right of deals some have. think met solution today. to to there manager just get selling not been

Bryan Maher

do holding as follow-up And decent saw better happened great lack job it during a done ADR, we a has the of we up a better of industry look morass when much the term, question, seems Okay. at rate, ADRs for And rate, like during than recession, this least was just through you at to acting rational? lessons cut it's feel has years that cut XXXX? you industry ago Do half learned cut from first continue when and XX rate? the of it the more like expect

Ashish Parikh

on burn there Bryan, lessons I by said, analyses, but really and we and enough, these could other look occupancy, not is you're rate. you cash our and the some needle every moving discount like cash that. we weakest you owner them, But think Yeah. rates there that doing driving you're running operator worry competitor learned, about when I probably, burn Hey, drop are always at

I by really just demand the some of become that industry that understanding and levels, of the function sophisticated people that investors can't been also So maybe a induce the it little think levels rates. assets just difference. I demand is concept. occupancy so has lowering made low, think as has And institutional a more better at that a these that well own And it's have

Bryan Maher

Great. Thank you.

Operator

Please next Asad Dany question go with of from come Our will ahead. Bank America.

Dany Asad

everybody. morning, Hey, good

look environment, target million You updated walk look in a Hersha? happened getting to theoretically like a to us But of help what us can bridge just could since bridge EBITDA $XXX we're through lot in a maybe guys the for trying a you given an clearly think then. to have has normalized been like past,

Neil Shah

was target, your $X I about thinking Dany.

Dany Asad

It's no longer But… too.

Ashish Parikh

Dany, this portfolio, roughly have $XX at or so would million say, sold or give that look, we and Yeah, I look we take EBITDA. think now of

So target. that leverage our also reduced sales. reduce the will But the we've consequently from overall

assets results. a up bridge, at Pacific, Pan really pandemic really put it's Key, into. from look probably the operating Coconut we've the And the unfortunately, ramp the White that on XXXX we things money high impacted of into So lot Grove, Ritz expectations Parrot like when went Plains, we with Cadillac,

to this up XXXX So in for to EBITDA or asset do bridge those XXXX, at the least that now from of we believe say, XX% that gap. ramp portfolio. look, we there's it's up ramp XX% significant make assets for I difficult target have here us up we through in a help know right But that sit that could of think lost just what can we sales, and we

Dany Asad

this Understood. cycle. like my just thinking coming follow-up just again is And about then

service hybrid a lifestyle margin to limited and this a bit with the service of higher end more high model offer hotels side. little assets So, know we on look, Hersha has

the So think the you just about X-wall with in that levels opportunity at of margin portfolio? mind, can help us operating longer-term the

Ashish Parikh

many ones you're zero with of X-star, premise, based Yeah, focus because and if had in lot that whether portfolio as - our select luxury a actually sales contact either we needed found through into kind we to is, kind say, on and mobile look technology, to F&B we margin at going a many close count is we'll as salespeople you it's operating high not then back of to FTE somewhat check pandemic, a I it except going for recovery. run you're budgeting, all people, basic going needed, X-star to for the the bring of things in XXXX think, hard time. points going through levels, or meetings limited more business, ways F&B not this back the our are virtual found model. us think on a at assets it's well absolutely. to bring And or Look, do hotel back what to to by because this as as less can - I these out services service them even having until less to the X-star, of efficient much we really this bring trying beverage to is And, in,

the a on our the costs. in get So, years. few we margin stabilized And really operating and think, even of opportunities level side utilities are portfolio labor going I for platform to margin do improvement on a XXX to to our be utilizing XXX EarthView reduce points in basis

Dany Asad

Got it. Thank you.

Operator

Bill with go next Crow Our from Raymond question comes James. Please ahead.

Bill Crow

Hey, good morning, guys.

order X the what And group Just Sachs pressure exerted to led questions. the quick, hopefully, provide was labor by covenant balance extension? is pressure the sheet to Goldman much that bank in How financing? quick

Ashish Parikh

bank it Yeah, we constructive group. They we with same were very that at from with raise the waivers the in I But had commitment knew in to planned the what group ensure we the we that had level asset had on sales some amendment. conjunction junior that capital conversations on time, a and we had the full will. bank good commercial. of think Look, already to

after is process. the capital else, junior best why that's a would raise right what the a we our think them in was and we to I able raising new the notes, think clear was there of And And, From for exactly the was done. offering or offering it of capital, level some amendment it anticipated, the markets were XXXX. standpoint, we But option convert or XXXX played undertake get felt dilutive that we it started as I we something of both whether unsecured improve that year, knew in process and was we or we this us. to started expectation we expected. out that were going kind any debt from didn't

Bill Crow

Right.

the looking first very goal the the was about question it ahead. sheet think I balance on

by materially I the were that a - the correct higher which guess, back your pre-pandemic, or equity more rest XXXX, they to goal performance, the get uniform levels - or simply think EBITDA that's where on and to was the the my get than XXXX goal? is times, weighed industry? regroup getting pro rest it kind had leverage question with is times uses of You of certainly Or the X you the back But, of kind talked about levels, X forma getting and of I XXXX everybody is XXXX trajectory. to levels

Neil Shah

than kinds many I opportunities. of opportunity the through way cycles XXXX, early now for that buy That the we get would to where the well recovery, cycle. we would be or to the X the acquisition of EBITDA cost of was end and XXXX, by willing in great found gone - dilute together to early by change as it better recovery, just and that was capital probably your breath equity Bill, for the could middle of those to acquisition every of a years always think, hold When early X. think of was recovery, year we've But very only would we not be part there see X goal. using acquisitions be I team opportunities X year part we've assets wouldn't there to And that the your that for early X to in a X lot for to leverage our times. don't for unencumbered through existing until normalizes, meaningfully less hotels, part of

be blessed were reason particularly really very attractive cost or unless really to a you were cash if on about So of with you jump quantitative it, a early no in capital. to there was trying of lot

the cycle think want this mid of to but - the that case significantly in So will the that of of would in end public by run early to markets profile don't that's ends be part recovery. it's we definitely cycles, we at a lower leverage in like

Bill Crow

you more Right. to has? done. fairly this address And maturity, over quick. real One how But getting for as we're any XXXX Right. financing to me ahead on you relieved as it that just think sizable look strategies

Ashish Parikh

we did as this year. Bill, Yeah,

cost additional the progresses, I of would at have But where the fall, we offering were recovery clearly, on we has we think that the that either last mean, flex and the junior think ours. capital, something monitor offering, to our don't the entertain cost level, as capital the debt continue whether You significantly to it's people bespoke look will next equity of capital. gone quarters, or raising like or few down in raise I high yield you or last so every summer that

monitor we the be So markets, and patient feel capital like ways patient additional next maturities out will the we maturities raise if have and to who extend XXXX. We can happen been now. bank those August find support we The real can from have of be don't to until in needed.

Bill Crow

Thanks the Okay. for time. Thank it. you. Appreciate

Neil Shah

you. Yeah. Thank

Operator

ahead. Please from next Our with go come question Tyler will Janney. Batory

Jonathan Jenkins

morning. Jonathan on Good for taking questions. our Thanks This is for Tyler.

any been noticeable those some changes there's on from just business recently. the with group me, one in additional could First you conversations discussions been wondering color if have provide and going how

Neil Shah

meeting This just in at where our is that even But resorts, have weddings is now space, gateway hotels Coconut which of that here. urban anecdotal had we we're again, of weekend past kind great. weddings Grove, in seeing wedding, but our XXX-person only This not markets. booking most

will starting best tell side. is and pent-up could tons anyone the So that's that have group for the as social up wedding group you and business demand of clearly you the business to pick kind of business in the on business there's

at our meetings I brainstorming group remarks seeing actually, it hotels and are some retreat ballrooms, for properties, of with now small people our we're some XXX together our side, in employees kinds and also really about income like. they're corporate of with - - been business, actually the business, large starting corporate the we On are California mentioned of Westin resort But being privilege of instead having people. some prepared some only sessions from filled getting We to the We've blessed getting generate paying it. some our they're here Philadelphia. we XXX

very it's all So still anecdotal.

transient. highly is portfolio Our

signs our even of less business of XX% part is starting part group business life. our than the the that of But show business. probably I'm to is So of

Jonathan Jenkins

I think still strategic cluster in guess, you new preference, appreciate from on then question detail. a your at to your those you to that couple And current a assets markets? opportunities strategy? Or I great. of all diversifying sold future, your Okay, in in look in me, would as you clusters? you that And Are strategy, stay multipart out believer would the markets? about potential it be a

Neil Shah

believing that knowledge, we off we in for and just just to the from management, that of clusters, from get and efficiencies us from the and from First, continue believe in scale. revenue means clusters kind sales, believe the clusters advantage we economies absolutely of

And margin and strategies. better channel so sub-markets play can and results, market, different run that we get higher because each in we use to management share have have can hotels market XX X we yield brand different in hotels

hotel our So absolutely was that cluster sold. sales we and believe per basically here we in X

those for So remainder of selling portfolios, cluster. oldest per the but keeping the our intact strong hotel clusters

we established clusters in into - a existing just we are with will can there, have look in each we future, going hotel. plug has advantage, buying that have a we into mind, a market, little the think, sales clusters risk lower a started our know our play, X multiple and hotels we As we our I because have of was we have cost advantage, because we will centers, but

and Late the Miami the then portfolio. Beach Angeles, rest then we Pacific. San Courtyard single across California an added And so Cadillac and and with California X entered with X, the it our soon XXXX, was the entered out often Miami a Seattle, asset. time. It a Ambrose and entered build we with market in then Pan cycle, past a there in asset, enter the the in with In larger and cluster. will followed Los asset with Diego the we XXXX exceptional of Courtyard the We hotels

to still like But presence there. market. kind more of we in a some our So could build long-term get felt intent out efficiencies that we was of

assets, pricing across as but future the where where advantage believe what we see is good And cluster opportunities, there look well. for will the the we'll good do growth. there of our are at years, So in is we some there markets holds, strategy where EBITDA new existing coming good

Jonathan Jenkins

Okay. for me. color. for Thank all you That's the all

Operator

Jefferies. with Chris Our next question ahead. will Please come Liu from go

Chris Tiger Liu

David. in little term, York, responders? just wanted bit ask with I Thanks. we for And, how coming permits, is for this believe filling in you on? be time. potential little relevance] of that reconciles quarter about to business that I you think I [ph] any innovation Chris, a supplies, that how really the and one, longer for much mentioned, from first a guess, Hi, And might that Thanks for points special New for that missing do that was market? just [of reduction really market recent other

Ashish Parikh

Yeah, the the April, hey, Brooklyn. in the in receive January, June. at fourth year FDNY. quarter We've had Chris. first but business, to had in new We primarily hotel had We nearly as some not of and similar did last responder smatterings it in levels May, we

to we're away, business. starting just get is really business that wane transient starting So more to and

the were are the surprised leisure the are we sort over of now open, in Presidents' Broadway and that next even bookings as described, opening really Neil Day, in open and few And months on pick we and is hopefully at came open, think As the restaurants that theaters things should side. up.

we're on too more forward. going the responder anticipating not So much first business

new that have zero passed, to filed, is be. the in how construction how overall, look permit at ago, of since a requirement the And the New zero permits, the special and hotels those MX it's permit, thing that zones. to ordinance York interesting few special permits there because difficult instituted that would note been a which costly obtain as MX markets, zones, the manufacturing we years are think I these New for was special York, about

at of entire boroughs So Roosevelt and at - going that's to with XX already else the by Hotel of would number XX do if the there go for all. ways other the at occur, unions, precipitously. New York, lease, of a future into are that was big of level lot that or York, open We coming COVID encumbered we are of least looking not think New think to it as believe that you've we in to X hotels something old, open seen land to do stick. supply And kind assets. down And

picture better in gets So we supply think the York. long-term markedly New

believers mentioned, X/XX off. what It's we it in we probably saw people back, We strong. the very in think it city. that But happened Neil other XX-year the comes little back run big do than as after a comes We back are wrote And when a that it been And year strong. markets. think York. for comes New it later

Chris Tiger Liu

you CapEx, about below XXXX. know I towards thank I you. guess, quick follow-up, on And, follow-up, unrelated XX% guided Right,

Just how anything those really are you quarters? through needs thinking be Is to there that going done about XXXX?

Ashish Parikh

different XXXX at No, we're planning not time, XXXX. this anything than considerably for no,

the first the would other PIPs we we've luxury into the pre-XXXX are have And fortunate money of that, we XXXX. pre-pandemic. on portfolio think that amount I in or take projects put with we're and time the with

Chris Tiger Liu

Okay, a me. for all lot. thanks That's

Operator

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

Neil Shah

available no you, Thank questions throughout questions, time. With week. here we'll later Thank you. everyone. this follow-up today for for your you Thank any be just or more

Operator

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

You may disconnect. now

Hersha Hospitality Trust (HT) 24 Feb 212020 Q4 Earnings call transcript