- Earnings call transcript Q3 2022

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Operator

Welcome to today's Hersha Hospitality Trust Third Quarter 2022 Earnings Conference Call and Webcast. My name is Jordan, and I'll be coordinating your call today. [Operator Instructions]. I'm now going to hand over to Andrew Tamaccio to begin. Andrew, please go ahead.

Andrew Tamaccio

good everyone and us Jordan, you, morning joining to today. Thank Third the Conference Hersha to Quarter Hospitality Welcome Trust XXXX Call. yesterday Today's call earnings distributed XXXX third the evening. will be release, based which on quarter was

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

Neil Shah

and good morning everyone. Thank you, Andrew, to

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

As an the and year third extremely our And our update progress you've on been transactions outlook operations, our looking active have the refinancing we've and you had we on the productive forward quarter meaningful and remainder to portfolio. or of provide for read, seen for fronts. refined

experiencing leisure-oriented and of gateway resort markets. our clearly demand in remains occupancy each in in our recovery our are a We in mid-week Pricing robust month-over-month urban portfolio build as markets. impressive power

a of the hotels For occupied $XXX.XX. quarter, our XX% rate were at

to into and demand increased we seeing trending X.X% by transient surpassed ADR XXXX in by record pending the approximately the proceeds, the closing a unrestricted announced pace And to September towards of JFK, comparable Barbara $XXX the sales, as our Santa the In with interest Milo our us cash comparable on are Seattle. Select $XXX we're both million $XXX us leaving XX% growth of October, generate of are will These X% compared RevPAR XXXX million in Our We driven load Gate of sale announced million coupled a leasehold debt accelerate Pan business RevPAR ADR. to growth Hotel XXXX. recently and nearly Pacific in Urban October our balance million growth disposition and $XXX to ADR by driven approximately allowing in to previously we growth Service contribute cash, approaching month XX.X% gross forecasted cumulative by this year-end. trend with reduce of portfolio XXXX. $XXX approximately the

located in very XXXX. more uncertain detail, weighted have in but we gateway average our result and meaningful differentiated no offerings resort City Ash New this of maturities facilities, in through of environment, cluster. have York our will strategy and and is comprised are of our lifestyle The refinanced this premium a estate, financing cover credit and luxury markets cost to urban pleased real reduced portfolio strategic streamlined disposition on purpose-built to a

not or major term. in than Our pre-pandemic already higher and profitability portfolio require the generating capital levels infusion disruption will near is

portfolio power ADR experiencing growth compared to of the ADR significant travel our of recovery in us an turn generate in double-digit transient, flow to comparable of portfolio positioned as cash the group business is third portfolio leisure was our quarter. comparable our in and small coming runways the the composition benefit ahead, disproportionately portfolio The across in XX% I'll year unique long with the quarter. Looking performance international pricing that, strong continuation growth XXXX. With from demand. expansion the to markets the to virtually strong Once allows of and again, all recorded

in XXXX for and third trend XX% our XX% forma unchanged just robust nonresort view ending October, month. Our Demand ADR growth September, rose portfolio room for we urban as EBITDA throughout at XX% both markets. the rate remains prior currently are under accelerated located in experiencing nonresort from portfolio This contribution on our the to XX% quarter integrity prior in gateway as to portfolio count calls bodes quarter. July is as well pro roughly in the of from for the to

trend our to forward weekend including of of weekday just markets in Washington, promising weekday those was basis. Another to month to same-store increased respectively, urban RevPAR Nonresort to and of and October, and From premium XX% weekday parity ADR in July EBITDA as the carried Strength the in under progressed. in post from increase portfolio Boston. quarter D.C. XXXX on is September, demand of RevPAR Boston's in the Philadelphia, XX% August nonresort September, decreased weekday has greater October with XX% pace growth which weekend generate September. into and for than a the each X% RevPAR achieving on gains

for fourth posted this more growth since typically quarter leisure-heavy the of the margins quarter, million quarter X% to our leisure on to flow at XXXX. XX.X%. third highest pandemic, despite in production portfolio hotels of driven of growth an ADR continued what XX resorts is our portfolio generated point our $XX.X margin despite to for the in are the for quarter represented a in level change XXXX. slower nonresort the of quarter, XX% EBITDA EBITDA flow our business XXXX And in In from of XX% closing the level XX% August. XXXX third by XXX by our seasonal driven basis EBITDA portfolio X growth X we a million travel. the basis early RevPAR travel transient-focused expected to production quarter, Select achieved the with by seasonally outperform, we increase ADR quarter, marked of third growth. onset points. cash property leisure-oriented through XXX more third As seasonal cash to sale basis growth increasing South third margin compared Urban away In EBITDA from generating realized of shift nearly under a quarter, comparable in points XXXX Florida the portfolio The experiencing the comparable of XX% and resort assets Service over a of the EBITDA of Total the of RevPAR increase just $XX second

generate profitability We New ability and City are Florida fourth as to the in the York for levels confident stronger it South in of in quarter quarter improved our than QX. is typically best much

achieved quarter, quarter second $X.X performance, with our the EBITDA the Union produced contribution portfolio of RevPAR quarter, an X Envoy in New In begin in total, X.X% with transition points way XXXX. points York EBITDA the Hyatt I despite EBITDA, XXX located -- basis our of of to basis September, of portfolio. EBITDA over led northeast third our our The top exceeded with to in our will As quarter and And third X.X X% produced EBITDA, EBITDA-producing of Boston the New urban XXXX Square EBITDA assets a XXXX for representing the portfolio was market EBITDA just XXX a quarter, $X by margin in in to million XX% EBITDA for In with our Philadelphia, increase the of and of a in were an million markets. reduced urban nearly of XX.X%, in XXXX. X XX% a from to urban straight basis increase for of In increase margin for an increase the In City, XXXX. a $XX the the any market, ahead in portfolio XX.X%, highest occupancies, margin. in increase generated XX% XXXX. York third gain XX% margin Westin EBITDA New nearly an million million September points XXX to XXXX York the $X.X X.X% an under increase to was I resulting Envoy the XXXX.

and which growth Holiday year's for our a have for Inn end, project offline of renovation portfolio. the Excluding to in rooms urban the Express York New we fourth RevPAR month Chelsea, subset of XXXX quarter will EBITDA this each throughout

million above XXXX resulting Now nearly greater $XXX.XX, contribution resort XX.X% focus greater $X.X in EBITDA the at generated our of portfolio, Hotel greater an way the of $XXX.XX, RevPAR a points with margin our The XX.X% quarter, XX.X% hotel the XX% XXXX. in Annapolis the to EBITDA X% basis XXXX. ADR than highest XXXX. than occupancy record-setting in second Waterfront XXX than shifting for and of the was entire portfolio, led

increase the On XX.X% the the Monterey as Sanctuary Beach the $X.X to Resort increase margin third the resort's $XXX.XX XX% and continued EBITDA an drove XX.X%. in a West of pricing its $XXX, Coast, quarter, generated million quarter EBITDA for XXXX, of nearly to a power for ADR RevPAR 'XX to of quarter of demonstrate

Hurricane from portfolio no Florida sustained damage South our Fortunately, Ian. material

EBITDA of of week hotel hurricane, As the the EBITDA did the Miami at to the was Key quarter. expected an and ended ramping hotel occupancy Parrot caused XXXX for by XXX% third up $XXX,XXX that The earlier XX% growth ADR and to a Hotel quarter still And estimate XXXX. of lost September. early as for generated record-setting quarter ADR the over million we In storm Resort Beach, September was XXXX. into property's to In XXX% revenue quarter, performance. major is during growth $X The The compared of to last RevPAR to the total, October. we Hotel impact approximately period. disruption Hurricane from this Club to third the Beach of travel cancellations XX.X% XXXX compared led in compared and Cadillac in Irma with increase see of million growth was the due from & $X the

XXXX Hurricane mentioned, also figures are Irma. we by at recovery As the Key Parrot from hampered

allocation. pandemic during our of our without period. hard teams our few to inside debt tremendously our laser-focused flexibility hotels, Before the thoughts the or our exceptional of hotels have us debt. a beginning I while and frankly, this our quality Ash, of the encumbering challenging allowed our manage on most to shareholders folks this portfolio improving to liquidity, reducing Since The capability the with pandemic, offices and been at long-term from portfolio increasing we through capital diluting meaningfully increasing on financial transition work

value. timing has The consistently are financial of and vision cover initial team value in we of our will near value. and been our medium our as shareholder in which with the position the our approximately now And market meet our assets sold cost in did of create pandemic, of profile Ash As detail, round strategic efficient needs been each asset of has capital the in return throughout the The private and to maximizing substantial $XXX most communicated NAV. via an with dispositions million, reduced of the we public strong dispositions portfolio aligned totaled at while has sales leverage our to or minimizing realized disparity XXXX, in within runway attractive capital with requirements. assets our some exposure not near growth markets, consisted that slower of our to older, term a our

through Urban fall. to of generated NAV X-hotel decision in improving operational Milo continued confidence our XXXX by transact for our next as the to of of increased with the returning first approached dispositions of us with our single Sales quality into allowed different ramp-up market X allowed the our and to the the sold Pan the NAV. and coupled our year, investors our to buyer the internal on common begin flow dividend hold the the transacted flows year portfolio, assets. flow benefit and of reinstate Board first valuations cash early cash then half Trustees the case, near cash in portfolio We shareholders. high hotels the profile tranche internal gave to Hotel each from and hotel Select or to year Our Pacific capital half summer Seattle this to from our at us and Service a the In our proceeds the

our Board quarter, continues common declare the units the and monitor conditions, of In market evaluate we initiatives. management would partnership a to in corporate shareholder As quarter of like and XXXX. noted team if, to our to the substantial shares intends approach. to and best and value, has opportunistic company, our special in interest of dividend in committed limited to fourth holders and maximizing of The the flexible closing, remained last reiterate impact Board cash remain I and

hotel reserves the improve cost up period profile, rising weighted of Our us shareholders growth leverage continue to high New expenditures reduce and on and to cash dividend portfolio. can significantly valuable locations without generating to significant average industry-leading our refining continue reinstate with RevPAR strategies driving City to on purpose-built flow our well few drive and coming rates, the cash extremely in on Exceptional our interest debt have absolute the are horizon, lifestyle in in and allowed nation, focus coastal and a portfolio cluster York diluting of margins, substantial in cash Hersha's positioned most the operations EBITDA the build flow. luxury capital markets free we years. significant our And while

investors more deeper valuation discuss to over detail financial our and dive into me valuations via continue As believe the private generation gap, our this disparity cash to we we dividends. let this With in capital have transacted at turn We the outlook, while the credit noted, year drive will significant public highlight our significant and have our portfolio performance of that, profitability. flow a including leverage it portfolio. the of facility to return between which previously we the to Ash and and profile closure low valuations

Ashish Parikh

Great. good and morning, Neil, Thanks, everyone.

impact will update sheet the the an my interest on for margins as progressed maturities initiatives quarter and our performance and October on metrics, before balance across the outlook cash and focus closing So our with the comments as fourth expense on our our its our impact well of results. third flow savings strategic quarter and portfolio debt the on as

of Milo mentioned, of Concurrent assets. of Select our pending with new million company the of the facility the of Neil close Select of we out Gate entered Santa And of sale month. sales which on the over interest and The company and X.X% and $XXX adjusted improved of closed August XX-month sale of first this swap paid Pacific loan, $XXX term $XX Pan in existing $XXX of applicable As the Urban 'XX the extension the Service last Sunnyvale, has term of extended an to million balance line of million credit. earlier has $XXX the facility the facility Hotel result a matures the undrawn the facility million a August disposition, tranche $XXX the the this as the at JFK XXXX. will disposition hedge to rate an close The Courtyard bears consists which Pacific we Urban down term and have one exercised and been yesterday, XXXX. Pan Seattle completed the a credit approximately in from of fixed million revolving X. flexibility financial These And materially closed August Service sales an maturity new SOFR. X.XX%. loan into sheet credit The at option, million Barbara

approximately the of a maturing is time, until and improving to across only significant average flow we profitability no of individual the on fashion. East life Midtown mortgage our nearly of third close instruments. of York, And extension hedged property weighted through we at mortgages As derivative come interest various the Hilton utilized our with this of interest the down due maturities no based Inn the company's have debt level of issue rate maturity quarter, of the all envision borrowings third extending which loan rate loans our approximately quarter prior XXXX, X.X% due. handful in rising X.XX% was at properties, from Garden the outstanding cash these the or refinancing Despite New these and in weighted company's approximately all year average favorable a years. of We've a on on to environment, X.X fixed XX% the either

operational above amount projected level million line consider also from debt, our or $XXX million As a rate a cash of fourth and on balance or debt-to-EBITDA hand, that either prior we into below in flow of our since stabilize I'll term was cash undrawn achieved mortgages we credit. quarter project the into pandemic. levels, comparable With to performance XXXX of the with portfolio, down to the company's a to net lower surpass paying portfolio our that, stated are the $XXX and Xx this some With and the hotel floating we quarter, off goal of slightly paying XXXX. this cash XX debt property may significant significant from on bring our to move flexibility track RevPAR beginning maintain level financial reduced XXXX transition load or a performance The to quarter. and the loan in as of was first With we exceeding the XXXX.

travel. weekday September As increased This we demand as our to month. progressed by saw through business to driven for in $XXX, nonresort we the increased nonresort the mid-week ADR weekend XX% nearly September approximately from exceeding August ADRs demand accelerated quarter,

still demonstrated third initiatives, very pricing portfolios another one strong strategic under growth XX% margins experienced the profitability comparable luxury urban of greater points Neil Georgetown as In conditions, margin resilience our of under market fourth XXXX. mentioned, quarter basis in EBITDA growth just double-digit EBITDA higher Boxer's show and all able margin than quarter our segment, XX of resulted and quarter as continues our XXX third focus efficient for These nonresort as of each international ongoing to just management from points was third in hotel of small taking on and was X.X% respectively, to travel the asset XXXX. our increase Washington, of portfolio XXX Envoy our the EBITDA and to by in quarter. operations into was points, transient, Despite but pricing in Boxer Boston, D.C., an with the recoveries segment tandem Ritz-Carlton generated basis the $XXX,XXX in the in significant margin the as portfolio basis of EBITDA XXX in hotel As was third continued points growth business the power while group the reflected quarter generated EBITDA achieve XXXX. $XX comparable points the quarter. grew ADR place of robust This In million basis the basis quarter quarter X.X% XXXX. EBITDA, than XXX margin third

over of quarter, XX.X%, pace of our generated than third nearly In EBITDA and basis York generate points portfolio a pre-pandemic encouraged X% up XXXX. million million basis was for October profitable XXXX. basis Hyatt expected XX% than quarter, than million the on $X.X EBITDA EBITDA fourth points of of exceed with NU the below into Union $X with of nearly to fourth House total, Brooklyn were the We a markets to resort levels accelerated the New XXXX. EBITDA our the XX%, $X Square quarter. growth X,XXX of this XX% basis of performance entire strong XXX quarter. in record-setting for XXXX. in profitability the increase of continued an past Hotel quarter. production from of growth resort more were EBITDA resorts total, million, resort EBITDA greater the higher of XXX the XXX The XX%. XXX quarter over EBITDA EBITDA to over XXXX. is has quarter Plains, approximately in alone margin In million to to in margin nearly EBITDA basis XXX month of above increase the In margins in points an performance $X just margins points recorded the with EBITDA, XX%, $XX Hyatt million under over EBITDA generated portfolio assets portfolio points our just basis in third our to points. strong Our our XXXX margins and XX% with generated $XX White with to with margin of gain EBITDA in XXXX, Multiple increase over of portfolio generated

month-to-date We are October. in figures our encouraged by

is ADR trending portfolio with RevPAR outperformance and majority urban respectively, above and XXXX, the October X%, XX% comparable approximately of properties. in our the Our currently nonresort

fourth to and the in fourth quarter the RevPAR Looking nonresort our of almost all ahead quarter, profitability. will markets outproduce XXXX

our release, to seen stable outlook, fourth dispositions We quarter fourth our $XXX are between majority with On and comparable the more financial million. As estimate guidance be to of grow between closure be basis, a points you with EBITDA and be the a XXX million of quarter. for RevPAR recent we've to adjusted may and between to our basis earnings XXX $XX.X and $XXX, XX%. have margins EBITDA along refinancing, reinstated in to the we $XX.X XX% forecasting portfolio and by

quarter will near million the rightsize $X.XX We $X.XX With $XX.X Executing forecasting our of per amount allowed between term, required us no million to and on sheet. we adjusted be strategic or FFO focused are dispositions capital projects to also and fourth that on our or with share. performance. has maturities cash meaningful remain balance ample in operational hand $XX.X our

cash to past with in of pre-pandemic leverage a our we streamline the and continue This to Our expense flow we value. lower, project drive continue portfolio going profitability, should we profile maximize and strategic our environment years as we over reduction pivot the interest further growth to portfolio a normal our more already than be us X is and operating to significant forward. have unlock allowing outpacing entrepreneurial value as more witnessed shareholder and

So call. address And portion of that my to additional this happy the participants may questions any we're the operator, have. concludes

Operator

Instructions]. [Operator

first from Baird. question Our of Bellisario Michael comes

Michael Bellisario

and you in line strength where embedded X on November holidays want around I go relative Just those then for in and guidance. help what's levels? seeing December, you're the And of particular to months? the understand top XQ guess, October. the Can quarter on fourth us XXXX maybe back the Thanks maybe the outlook commentary for pockets to particularly to

Ashish Parikh

Sure, Mike.

me Let start.

lower above XXXX. as a above around for are around than October, X% Occupancies a RevPAR XXXX, seeing the comparable are just little mentioned, for So XX% overall X,XXX basis is I XXXX. that rates are that little points we portfolio over right

with October. shift, trends in EBITDA healthy very, seeing are we very So mix that

continued into growth, I that best markets in urban as you start both is expect rates still see in in properties. the of a growth in our bookings portfolio, our resort strong as on but probably range. line based top below that as December and the well going still as would line to the but forward results be the November very be we're at we expect, healthy strong top think seeing the look to and that and quarter, both month October and November As from would slightly seeing November I comparable aren't our forward for for X% our December, guidance, December. will X% we somewhere October, we mid-single-digit growth

Michael Bellisario

Got it. That's a helpful. clarification XXXX the And there metrics. maybe on then comparable

You assume the talked about for you the not gave guidance RevPAR comparable hotel I $XXX 'XX. in XQ that's for XX guidance is because is XX, to correct? where the $XXX

Ashish Parikh

that Yes, is correct.

Our guidance of is portfolio XX comparable for hotels. the

Michael Bellisario

helpful. are for just it. on That's Got you you're as then what to for transient from for negotiated expectations kind corporate look last your of business and XXXX the properties on And me, one side? maybe What out Neil HHM hearing rates.

Neil Shah

early a find we're to were think It's comment we pickup second in middle and of we the -- still it's in normal the that to at its And for of large our at most footing of been on the But is all and the York disrupted kind bit several are has urban a started regularity been than across finalization for return and negotiated 'XX seen of have probably RFPs. that next pharma levels. York rate. it in see is of of urban budgets locally but level, a to quarter operating in was about year's in the I starting we're And talking by But technology question been normal kind through Boston. Like each and of New locally the we cylinders, of negotiated significant hitting and what plans Utilization quarter slower little and it the calendar meaningful gateway corporate but markets. and months I expecting demand October, consulting quarter last where corporate more of the to pricing. return have what Seattle, little on still kind getting pandemic markets, in contribution, has think and ground, that really mass LNR seeing a of now we're strong we fourth in XXXX. starting year fourth very rate and did Washington, to contribution, than New still the rates Philadelphia. next higher we our been

it is 'XX. bit comment robust. So The is little but very strong just a to still early trend on

Operator

comes from of Dori Our next question Kesten Fargo. Wells

Dori Kesten

Given quarter you've between provided results Is guidance in you it tell -- versus you that this actual monthly can late? a relationship have the is budgets been some your just us the seeing years, tighten? of first are few what's it

Ashish Parikh

Dori, Yes. absolutely.

think I just Omicron the for quarter shutdowns we first this you and quarter. third tracking the remember, a internal So by quarter the other for COVID after have and of from the portfolio-wide close on our that and -- first issues, basis affected year, quarter, continued so budget was as been very second for to

well as activity. of almost debt stack being activity you as our all difficult noted, As we have the disposition lots of in the very refinanced portfolio, to provide when guidance entire

just guidance. on thought it With JFK we financial appropriate we our have asset, Gate to closing of forecast, an now, the to very looking at in days the remaining, time these all few track that close we're next with internal assets to continuing reinstate of that's closing only of was almost sort along

Dori Kesten

the And over leisure-heavy out to period? rate your more then you last books months have few to markets, look trended the New how when Thanksgiving Year's

Neil Shah

pace Grove the Beach New Beach, -- Miami Coconut basis. are versus all we Coconut are clearly as are and -- pacing ahead well Thanksgiving 'XX 'XX quarter huge the well fourth very strong. by margin. outperformers Key, the as Year a a day-by-day South in versus as and there For Florida, big showing Parrot is, Grove, Miami for look on

West. to Key more and Parrot a Key deceleration a kind in probably little I think of growth vulnerable we're in RevPAR

resort and diversity has commercial Just events for it's growth. and is multiplicity a base, little allowing rate versus demand Miami and calendars occupancy that bit more a of just kind convention which dedicated destination Beach, emerging a of of continued and

Those the into -- are we West around strong several Annapolis our occupancy, last things for Sanctuary, to very going we're even quarter we're pace level parts on seasonally portfolio very the rest looking in -- As portfolio, and prepared kind of it's than see On some at hotel, periods for low Waterfront at resort other we look into resort which levels. next for better pre-pandemic the several months. our years. strong the outlook perform very but to pace mentioned but Coast, in the -- Year. we're pace of a our On probably fourth very of have remarks, I is ADR the New includes the for of to continuing our strong Hotel,

in well big So the very the resorts recovery, we're story really that's up the Beach and Miami is particularly Miami. holding urban bounds of kind and But seeing where are growth. generally leaps and the

Operator

Our of Aryeh BMO question Markets. from comes next Capital Klein

Aryeh Klein

flexibility thinking mentioned the hotel pricing are you then the that what you the standpoint, paying -- balancing rates? with have. down are And You that potential from acquisitive debt? and some given to How potentially the about maybe flexibility move recent in be you the financial seeing

Neil Shah

I get started. it Aryeh, can Yes.

there are a I think nearly the Despite stop summer. kind significantly better across day, impacted really transactions every week-over-week, market. been transactions the hotels XX market trailing improving this still major has of has clearly transaction happening. there performing That said, month-over-month, like the been by credit to

where any transact without of assets kind to or is As acknowledgment we these on discount able other we've demonstrated, world of any kind of were X the at.

it's view and far deals. unique opportunities, I a kind But worth among it's special for that of few is between. overequitizing think the there investors

in on the We million not few next been very still so some will -- at have $X there of assets prices. getting plus But acquisition it's question, to kind we'll are opportunities, done. commodity-oriented sellers' kinds your about point. luxury expectations look assets plus we're a key, as is months, slow -- for key, we cash more several seeing are now. change value-add a when resorts think opportunities, they will big masse kind -- cases, that very market, market, of $X kind improves, right million see about those trading all -- stopped think en or disrupted next exceptional, of kind across kind attractive the hear hear transaction that improve. of be more other I catalyst The major at unique the we are the assets of in we'll are financing and transactions but that to market main the But of a it I

I I continues think month-over-month. that performance get to how to just owing started, better

reason, lot or So some debt renovation their extinguishment, swap required, we're unless maturity, cap a is major not seeing seller reduce a for expectations. force a a pricing there sellers a of

that pricing, So economic We in not attractive are the have front. in pay financial in preferreds, if acquisitions sense. environment, change do without enough we on debt, to lean that flexibility down pay anything to major really made to the a down seeing

the just for our have we keep to more ability We very increase and the have cash environment. dividends, ability to uncertain a on hand

uncertain it's our we this highly do anything. in to good so not have very in to rush a about be And feel environment, and -- good flexibility to

just quarter going we've leverage so delivered or X, of attractive. the on internal and sales. asset very at we're focus flow. stage, our that driving is for debt And I reduced We've level think portfolio to next to cash profile a the lot on a this And

Aryeh Klein

And then progress there's lot been the of front. margin on just a

higher quarter. next be are occupancy than that rate? basis about results thinking How driven presumably in You're the you will about rather year where by more XXX points the

Ashish Parikh

first until June this York corner of May portfolio we business in disrupted. or I was like we're really into Yes. didn't remember the look at mean, just for XX% this much year. -- our The Aryeh, our we how out of the -- much first of the still lower you one rates. year, New portfolio the half start somewhat thing when was to have quarter is of and Most 'XX, markets way impacted running turning

quarter strong power. So very that fourth pricing what quarter, third the just we're a is we from in think seeing

of little XX% mix think staffing XXXX We room could XX%, pre-pandemic will be higher are that 'XX. margin or is. go grows. occupancies But bit which Our like probably kind a for around it that to see going levels to growth don't still the of into way pushing pricing, 'XX. shift a lot we occupancy We in with as we the

Operator

Our comes from of Tyler next question Oppenheimer. Batory

Jonathan Jenkins

is This Tyler. for on Jonathan,

a last the high haven't further question. given help thinking of picture, your follow-up me, for can But trend could again, on you level, lines accelerate the just your one XXXX, to in what things us big we've And walk of that year, quarter and early First understanding guidance more fourth the through some you guys for decelerate far potentially level? so or moving you at the seen through a see in how quarter? the high third overall,

Ashish Parikh

we as think I look our providing do guidance into mean, XXXX, fourth call. be we when will I in February quarter we

going just the outsized half were as today, XXXX. of disruption. first very here I markets and we the especially We affected year, our see travel we quarter, sit first significant urban we're growth the with that to think Omicron to in see

trends board think to third get same of type portfolio. the of still And probably think our but -- our time, the our a occupancy XXXX. our be resort in at I nonresort still markets. normalized quarters the envision across would expecting And the perspective year. fourth see kind going than outlook it's in more be envision in next wouldn't little growth But -- I growth from are expecting that urban going would of of I markets, we portfolio, urban all and healthier comparable significant to properties. we for that our we luxury it's at we that an rate ADR

Jonathan Jenkins

today the the payment last the how as you gears, forward year? the common question your payout versus of switching going portfolio given of think right in contributing right the there do ratios think perspective interested factors or pre-COVID, potential well, the dividend. details ratio appropriate? payout share Any to multipart all movement also what a you can over level on why then And about in quarterly I'm decision, terms on And is level that in you that were additional

Ashish Parikh

partly it due the Milo quarter. our release, of up the sales you've Sure. about from The from of That was Hotel decision million generated gains for to seen taxable reinstate go and the -- others we to $XXX in fourth as dividend, would quarterly the the sales. somewhat

we efforts this range still growth this before decision. a to The cash for from pay quoted seeing our holds at be that significant dividend XXXX time But well. did $X.XX year. as In end special that dividend are a we pay our So we a do have of mid-December. we REIT to we be outlook as this sense outlook well in it quarter, But Board decision quarterly mentioned, quarter to the starting be the a makes based any do a tests, that Neil in that range the as of -- of quarter will fourth compliance between flow Board all had with at plan refinancing the our on made order and year. think We will other as makes as in that fourth we the our time. high until $X.XX be to closer would thought

but FFO payout year, ratios, about think probably be it adjust I this you would it forecast they I or them, kind our that -- our in think -- forward, low, around payout our and EBITDA will in we'll if for going of think so. ratio, will forecast very XX% our come

quarterly little think start stable higher environment more operating a dividend. raising talking bit forward, we but really would see to be they to going I just need about the

Operator

next Riley Our from Bryan Securities. question B. of comes Maher

Bryan Maher

Clearly, delevering. and thoughts of the in REIT? what going some transaction on maybe soon. just market picture up bit the some go the smaller Maybe What Miami Boston? But this assets portfolio are offense a going? where portfolio focusing give big to on getting like too you great little you're made off a you're the on any Can size next able thoughts you and is couple And West Coast real through picture divesting It of thinking us be big anytime on to over you mean, years? about have some on and progress stuff. seem questioning now. small of selling guys picking I is Aryeh's doesn't

Neil Shah

goals pandemic, increasing strategic was if and Bryan, plan, the for Bryan. long-term much across so very value doing will, this our strategy that financial impair on and a you creating in flexibility think way I portfolio. our aligned Sure, liquidity, our wouldn't

And capital long-term cost maybe environment, In are concerns hotels, sell environment, XX%, different meaningful to opportunity. leaned create have these stabilized across hotels same disrupt of that that rate in creation the discounts a your best growing discounts. most hotels day is XX% only where -- we've -- uncertainty that at not value -- We're in to as clear we've hotels disrupted traded the XX%, back now to capital cash flows was last requirements couple at it about the trading that at their portfolio, you lowest will of really we or NAV. as it highly seemed but some have discounts your years, so about but the that times XX%

'XX leverage we to we've point our And where to and 'XX, felt that do And been a in hotels We're so we were to, a able sell now portfolio. able that. noncore effectively were we profile. at healthy have

be cash side well we opportunistic, sell have and the as as the hand, We on to the side. both have ability buy on on

and But of We of that, now, I we point. that will again. in in great forward we're strategic the right the all next on in uncertainty moving across level period another direction world help And a at peak are uncertainty. think quarters of today couple normalize us that kind decide hope kind of perhaps of all still

to is strict like. So we're what on a not ready to plan our look have going portfolio

to are outsized ADR exposure and been York over or and see if has kind market that talked they have able you trend are each an seen a because luxury we positions they sell -- we that capital been lifestyle New we've where market City hotels differentiated. weren't us think And you've our mentioned I portfolio, on growth requirements best-in-class today required of truly where are in to. remains our in markets, what our are that of hotels We've drive is. today's our have significant for that

serve QX to that's versus really be or quarter. QX, the fourth I going tailwind the we And York. in third in just have significant well so to and think it quarter, in performance Now will are markets, so the -- third as those in New a comps its think going good the us very did easy, I for it

in think market a will we -- selling be there. and the market as pricing I we that's that returns assets are minded opportunistic

feel listening still we that company couple I now. the to offers still we're that with it's at comfortable quarters place say, inbound a is recovery. And actively. only Bryan, the away that's think for where think would But we I of right

small. You is said how small

of in you I that this. environment the like an middle think can't make call

across pre-pandemic XX% last think, I XX%, we've SG&A by versus I think reduced we've the -- levels. X X, nearly, years, our

we've of XX% side we've XX%, about EBITDA. of pre-pandemic house sold as So rightsized that the our

And the And a company. done it aligning organization with good lockstep all so you the leave I in make scale we've job -- the of but that, I'll we're at think of Bryan. can't time, it the

Operator

comes of Bill from Crow Raymond question James. next Our

William Crow

just the or on last quarter and that The think you and what flat South effectively comps have be work do is given ADR were bucket which X, Congratulations year the and if you the hard your you possible portfolio have portfolio, the or could about think last next this Question, from year? done negative we into to X. simply over all achieved is Street difficult that doing Florida you it's year,

Neil Shah

right second occupancy divide particularly on as suggesting South -- don't very periods first South for are first more you Florida which power as market on feel Grove, of Key portfolio we Where but commercial pricing ahead little our pace, occupancy marketplace, based have based and convention on group well. interest now, we positive like is it we Bill, is and -- is this on South Because in like kind believe growth of based this Florida 'XX which quarter marketplace. as go divide ahead, -- West, calendars, you well more a -- as Florida, kind sector kind a resort fourth, right But includes if fourth even quarter, in of of ADR, the a it on Miami well like the well on you're as sensitive Beach Northeast, we and pacing we Coconut in and into think West. emerging peak pure so. bit Key if now, in versus like

where see think has The of really. I Mystic a occupying right is slow times where work-from-home take at maybe of But way, vulnerability. Annapolis mix Florida Key resorts, that you of the us, think Spa demand West in the so Connecticut really I market Monterey, that think, year. that So many has people mix you demand you we're South coming we strong hotels for these benefited the think elsewhere. they bosses that vulnerability, if the there hoped Marriott of And it's & it where Waterfront, like if pure have were dynamic. Sanctuary But still we for don't in if in kind a which periods. generators. on is a and Because divide That's now, But we that it I their that's seasonally expecting vulnerability of Hotel from performance generators. lies were

William Crow

that's Yes, helpful.

Neil Shah

And sorry. I'm think of no, generally we is how it --

William Crow

Go ahead.

Neil Shah

do our Key it we I urban. No, but And just was resort. to and resorts QX And urban highly mentioned, QX and portfolio XX%, disrupted is of -- Ash expect Omicron. XX% just is going Miami say And moderate, was we that the would to as kind beyond portfolio of but how by broaden often divide West.

growth we're those So maybe to X,XXX, X,XXX, of have even occupancy going across quarters. points basis X,XXX

like. that's so looks into year us what confidence going And gives of because what our portfolio next some

William Crow

to questions is given in your or does what, on sure Coast asset make was one that keep that, asset sales. from threw it on there now reduction things reason answered, sense G&A the got focus the that but Is one X with the to West the have assets there asset a of that one -- like West have and Coast? you're -- I'm there think question I X Bryan not think to, down I I same the

Neil Shah

assets. We have X

Santa have oversee in rush we're it's I -- would think Sanctuary of We And a Beach particular Monterey. the Monica we to or not have operate Resort in and hard the like so because I them kind Ambrose, don't them.

by or opportunistic. it. driver really we're It's will of right be our now. would State geography be it NAV like distance of it always than in And based on so than it's We're -- on really portfolio. assets based we California But That like the more of can other today? the the achieve selling but our pricing more

Operator

Deutsche next Bank. Woronka Our comes of from question Chris

Chris Woronka

you I are of expecting? think, Is West not just about Miami. impact I guess impacting hurricane that I maybe both guess Miami. guys to mentioned, ask insofar as thought you the QX Key we I some just Key over that want and shifts West what to

Neil Shah

the impact like like Do you you mean mean from the Hurricane or... Ian --

Chris Woronka

Yes, just or... thinking to with Miami, in move might people reservations that impact much doesn't which over Key have West

Neil Shah

to Yes. was going no one like happen. was the No, what coming, hurricane unfortunately, when knew

West. Miami a And it so there Key hit that and was going was fear to

travel. going West not because on Coast, significant. a lot it's Ritz some bobs bits -- that get At then their I group, Grove. Key And now, left but the in cancellation West of group X Coast. it the think midway days, the at had closed like right but that is and little West Naples cancel it experience it's of They to through. maybe significant. like We late Miami, planning they not They the that get we're from so we so that happened. bookings would September get in demand had of to East Key Coconut was spent Once benefit we're early after getting to there's just Key but like the they the Folks still a coming impact bit and that but we'll getting there, them to Ritz-Carlton, that of for wasn't had Coast come canceled. West was Florida October, a little the West thought off West, the Coast clear, it's or pushing middle hurricane were the Grove, did we Coconut in we And major not would much

lost I So of market hurricane customers the get we're little and kind hurricane But think Did bit here from of a being impact. much. that the we disruption we there, fearful back we weren't and it grateful by first of and Probably of anything just but weeks, physically couple was $XXX,XXX rest month? the the not and $XXX,XXX, impacted very things.

Chris. -- are have feel it we it, about good we So but did an impact,

Chris Woronka

rates, are that when more in can that which the select to a next expectation at a urban kind little makes of to in affordability mix Is Just doesn't some? a some you but lot for second time. Okay. If then Fair right? up how And maybe -- they it 'XX service urban ramp rate, other and versus be -- you put bit boundaries sense. question markets, an XX% really there rates urban than issue? to get more to gets whether resort your an up rates year is out, maybe guys talked Is we trying seem about peers, good look urban starting or of recovery issue both around enough. comparable more some peak urban that's some realizing you've have

Ashish Parikh

Yes, I Chris. fair, that's think

at growth the quarter. are We rate looking fourth in

XX%, the in I in -- the As XX% year. up But urban month. have properties ADR XX% is double markets, it's October XX% urban still a the ADR resort but in our that mentioned, digits still over will be up We is don't in that next the it's like markets. view for

XX% I that's pandemic. growth to since no, been we're the think ADR type But We properties next not we've what that think seeing resort XX%, this of forecasting the healthy do in going year. there's growth. beginning of be into

Neil Shah

but growth you ADR XX%, see months XX% brought have for kind lower of easily XX% growth. up double-digit kind portfolio, yes, like sometimes, -- do to our XX% it's I it it's XX%, good And up is -- We even you'll it's think point. but a -- -- of

very there, hotel cities is experience primarily is and and markets. is in service. Square Hyatt City luxury different to select still very New urban ADR in Brooklyn. exceptions portfolio new The York The the Our able lifestyle growth. Union the Like the drive meaningful these major

meaningful Hyatt leisure those -- Square, XX the Ritz over can are Envoy growth of drive this capturing or hotels Boston there. is you at kind Union Georgetown or trend So if very that a they look ADR the out because

by different right, it's growth, And the level but you're same not it's still for so very But market of us. meaningful. market

Operator

from of question Powell Barclays. Our comes next Anthony

Anthony Powell

think I this? growth that's the this a compression about, I in rate any defined. mean nights -- year What urban do I and on of guess, follow-up rate play the compression seen typically question. kind you've role nights Maybe

seeing could those So next year get to of think urban nights or kind the year resort you light back really really on you're come do compression levels rates after side? up

Ashish Parikh

just in like XXs XXs, we're type I think Like in and just a to lot right? it's of a And traditionally for then October, you we that and January high once past us like different dynamic, XX% ran healthy couldn't New in envision between are low markets a Anthony, rate different these of rate rates getting strategies, new February. New York September, kind or of supply, get York of But employing XX% we growth people market still need they're get I'm occupancy at look higher this rate I we don't running were. growth. still the but could metric. industry My looked would to through take and high. occupancy, think vigilant just I going be lower XX% as run pandemic, don't way heads in if that entire And rates just have it at beds I rather has XX%, increased I and a to costs going need say, keeping little bit that from run don't on to higher and moved the resorts be or away the XX% to XXX%. I more know because

of occupancy, healthy rates, type trends. just because of flow-throughs to going on So which think to different think is RevPAR less going shift going lot much is I growth we'll better forward, I the you're to higher going see be Xx kind a drive margins. have just still mix

lead going flow to rate seeing XX% significant to cash So it's growth. without

Anthony Powell

urban I And bit then maybe you talked mean, doing a one markets. than lifestyle/luxury better about just more.

maybe and see or about see Another less just you starting is do location do really to brands more hotel to one Are you said play transaction expect this peers reputation? environment? thing. driving here? a brands Or trend? effective of Are And your the Or that in role the it reflected in same that?

Neil Shah

and do a And leisure think is it's new or leisure it. of maybe about this more hotel like think location. Size kind kind demand of a benefit and very big environment. reputation driver levels I of experience of also it's and I demand

their where ability the choose folks small -- where have they For retreat. to to have and or meeting choose of stay where like they that to going the their have flexibility they're they well, also to want work, group

it's our before the And for our a so that in key and frankly, even more experience-oriented, we've an pandemic has commoditized working portfolio. and selling on, driver more been to been luxury-driven something well more hotels. And our of that moving portfolio

we're not transactions. the urban seeing In it's -- true. still environment, coming that transactions many is it So

safety got transactions when urban market so more that lifestyle was uncertainty the around conditions and cities. work still much and there major to an motivated from started we that could what cash luxury to in the like coming in space. see flow, leverage. think transactions like provide part in do in our I year, 'XX, kind to first something deals it positive investors cash of that would Like and them Select around something urban kind expect I was seeing the was portfolio was of started home beginning that. with 'XX, flow of see we'll start Urban had And you late

it's value. I it right bit And of are -- later, that transactions very luxury think can questions, little big little are I to bit I hotel there flow now. think The there's and resort-oriented, trading implied a but fast. -- be comes are when at the other are a cities, more come trades experiencing few kind in that are there we're really their of it will a cash that comes, some announced closer that's there some but one what

closer So we're to that. I getting think

about back shopping the real come hearing Eastern Asian more Middle think for European, estate. more I for kinds buyer shopping those or of some you And we transactions. to are talking need international also and investors and U.S. hotel of

we it's Anthony, be but see transactions. that's some that not we -- a -- could So but big year, expect where yet, may next

Operator

We have on phone no further the questions line.

I'll So remarks. any hand back closing for

Neil Shah

no take all to morning. thank of you a we'll moment With time more your this questions, just for

time you of might us going you be answer other any in available the your All questions today. that have. are for to thank here to But and office

Operator

This joining. concludes today's call. for Thank you

lines. You your may now disconnect

Hersha Hospitality Trust (HT) 27 Oct 222022 Q3 Earnings call transcript