Earnings call transcript Q4 2022

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Operator

Good morning and a warm welcome to the Hersha Hospitality Trust Fourth Quarter 2022 Earnings Conference Call and Webcast. My name is Candis, and I will be your operator for today's call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question-and-answer at the end. [Operator Instructions]

I would now like to hand the conference over to your host Andrew Tamaccio from Investor Relations. yours. is floor The ahead. go Please

Andrew Tamaccio

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

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

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

Neil H. Shah

you on thank us for with and morning Good being call. today's

our and the quick touching recap going morning capital strategic with the for forward. our a are and Joining Shah. and outlook Chairman, in our year XXXX quarter discussing accomplishments our the results Financial allocation begin our Chief Ashish of of me I'll Jay on Executive in this Parikh, view before Officer; our portfolio

and at we spoke trends fourth high-end our last leisure volatility, urban driven demand differentiated Ash continuation through as and a a will in despite look in these well of discuss was pickup When travel within the on market markets, continued outlook. take late a the quarter. core by performance guidance, signaling our uncertainty talk the ground, for throughout offerings quarter economic and as first margin deeper positive the balance our October, outlook sheet

$XXX.XX XX.X% Our occupancy ADR of $XXX.XX, portfolio quarter comparable generated resulting the fourth of in RevPAR and for XXXX. of hotel an

outpaced our the coupled ongoing to XX% ADR our XXXX compared environment, expanded of than The our XX.X% and XXXX. revenue rate to drive in of allowed high by to quarter continue all demand our the quality markets with more as portfolio, managers ADR rate

remains Our anticipate as continued rate currently are experiencing throughout integrity power view we occupancy on unchanged robust returns. February growth ADR and pricing as

Our focus resulted fourth to increase to month RevPAR close since the growth quarter XXXX with RevPAR X% driving in for rate in compared a year. out in each on September the

to portfolio. the first As over generated into of the EBITDA, $X portfolio RevPAR And Urban urban performance, for seasonally Overall, October with I RevPAR, driven XX% start the RevPAR portfolio even our strongest transition total, largest onset the Manhattan pulled generating our market will our December October, our pandemic. quarter, demand million portfolio quarter in EBITDA. since urban by throughout with accelerated market $X.X increase production as XXXX QX. of as of XXXX in XX% our of month total our In urban total I for time portfolio, weekday in producing was million for persisted X% EBITDA in the Manhattan. weekday momentum a outpaced or production

Inn Garden for the rate EBITDA Square as by Hilton million driven our EBITDA posted XXXX producing generating in the assets XX% outpacing Hyatt quarter and the and East, portfolio Manhattan's Midtown Our ADR Union two were the growth was production respectively. each for XX.X% EBITDA highest $X.X XX% quarter.

December for growth was Manhattan month XX% X% the Our growth ADR RevPAR over by driven of XXXX. from

there quarter another XXXX with recovery while X% quarter had increase our X,XXX a compared XXXX Boston in XX% XX% to This in driven million for yet basis significant see The hotel is to in as was room XXXX. ADR is XX% $X.X Boston outpaced nearly XXXX. RevPAR the RevPAR by generating to EBITDA, growth encouraged XX% growth. are we nearly December, points by Envoy levels. still strong Manhattan still market our surpassed occupancy below while Now,

quarter. out nearly Georgetown a urban Westin the EBITDA portfolio, trends impressive. XXXX, Ritz-Carlton for growth of EBITDA underway. resulting in our the ADR nearly $X.X refresh XX% luxury million from despite compared in is expansion quarter, our to in disruption rooms project to Rounding generated Philadelphia, posting outperform that Urban continues XX% our are Meanwhile, currently

performance Our EBITDA were RevPAR The in growth. fourth million for the and and drove Hotel respectively. by our Philadelphia contributors Rittenhouse of and strong again, $X.X XX% Once X%, nearly our quarter. outpaced South and driven Hotel Villas Hotel Key $X.X Parrot Beach top Club XXXX by five ADR generating run EBITDA portfolio, continued Florida's the Cadillac resort in million

total $X.X contributor million, was generating the biggest Florida our of over XX% South portfolio. second EBITDA

generated two when For projected both on we at EBITDA to loan assets back XXXX. renovations transformational undertook in achieve these track on are XXXX, of and return these investment the we of assets almost million $XX.X the

very the strong XX% The We growth. outlook exceeded ADR driven Coconut XXXX. also Grove upgraded Ritz-Carlton a Ritz-Carlton has and for QX and revenue pre-pandemic XX% achieved by by XX% QX growth in group

earnings and the best-in-class Waterfront the of and generators. regional $X.X by generated demand outpacing with in in respectively, Marriott multiple XX% East demonstrating markets the Mystic Annapolis assets clearly On Coast, the potential and million Hotel XXXX EBITDA $X XX% resort

in significant corporate Hersha, here to an and years. company, cash revolver at a profile on than year front our after the leverage we begin had new a have transformational the On many year undrawn hand, we and strategic for lower with access

constant our While position. our we we and financial portfolio, our are further comforted markets in remain with

and approach. remain While the constantly we entrepreneurial will the debt to our and muted, markets transaction expand We monitor our in footprint. underwrite and opportunities flexible remain actively markets

positioned certainty, right growth time rate environment we our swiftly relatively a the are of particularly flexibility when the and Given to opportunities present economic financial to time low act well uncertainty, themselves. sensitivity economic of in a interest in

our capital worked that our close portfolio. outsized any to right has to value NAV to discount our decisions are extremely market our balance first take diligently off company. for trade the make wanted NAV my our light management look today more financials, I of to moment Our over or is some that call an to allocation leverage in a gap to to still and traded This our a would gap. team significant sheet of impact this that in NAV CEO believe for before we and We as about sensitive portfolio private persists to as size at Ash And comments the the call turning detailed growth. a

we during EBITDA ahead expected, of what full from Our was versus a performance XXXX. achieved definitely from XXXX XXXX only during far many RevPAR but our not most standpoint, recovery peak had

both timeline Although XXXX. recovery EBITDA XXXX resort portfolio XXXX, we quarter markets, was largest EBITDA the quarter and in outperformance expansion estimated XX.X% EBITDA markets in million, of we in the in or in our $XX.X every delivered be of increase XXXX with surpassed fourth XXXX. of sometime urban a our even to the to half the And with comparable latter anticipated of production

a This it high of portfolio resort portfolio. a quality streamlined to outperformance is execution, deliberate and urban and non-strategic of markets, our dispose our but Through a is focused high levered growth assets, result toward a markets. result our of created importantly purpose-built of strategic our work we've mix

also the believe and of recovery. identified pandemic. the held on to markets important positioned of multiplicity continues Our to where properties is it we a located our premium long we estate different fundamentally outperform and portfolio We refined be industry seasonality this before portfolio than understand as generators, to real demand the portfolio in its is that continues are

resort XXXX, made multiple from have we changes generators. since the benefits With our portfolio demand

First, it leisure record which to production. benefited from travel, increase significantly domestic has an led in EBITDA

also portfolio will Second, is our we for which positioned high-end streams to additional demand. revenue to believe in addition purpose-built continue, and demand experiential resort from travel, benefit leisure non-leisure

are convention relocations renovation well in in California in England. significant California, and Similar to convention focused Miami, resorts resort most trends be resorts years, the in are The of to two markets are Annapolis, which past travel apply experienced additional headquarters, on Monterey, its cater of located market case markets which drivers evolving but as universities. The West has of seen our centers, segments corporate more as in that and New market our new including residential center. solely can and the business Key leisure. a influx All and three exceptions notable of

do comprehensive retracement. not XXXX, we We pace and unprecedented particular is XXXX on in these performances but expect in significant in outperform after do is to Key stabilize significantly XXXX resorts Parrot expect to XXXX this and year still project renovation ROI The Irma. moving the that its forward. following Hurricane Beach benefiting from undergoing up will capital an Sanctuary for set property of Resort be growth will level another

reduced decision reliance our markets, our which In on urban to select service we transient. business sell urban portfolio, made our the

globe continue transient urban portfolio the key error expect to for that of markets benefit open group from from restrictions gateway focused aided as up is occupancy and the of and Our with travel additional will growth we increase demand business and the return in runways around and markets markets international long an located pandemic by to accelerates. in U.S. travel

remains despite we the measured job performance certainly But seeing growth. outlook the activity macroeconomic recessionary drumbeat for This see the gains, uncertain. as as recognize constant data, and are production still sentiment indicating is economic hotel industrial forecasts retail ground negative by well. actual we sales and true We what of in on our

generation low experiential demand, segments, broader and especially trends all exceptionally an leisure the is market, see is high-end travel continued of differentiated well travel very cash expand we the setup encouraging. demand for growth in international to our from summary, supply and growth. through as In The the of pent-up it flow positioned including environment travel fundamentals portfolio the in very and benefits across operations from the business

me performance, in updated the our Ash margin let turn financial guidance quarter. that, and detail it discuss to to our With outlook, over more for

Ashish Parikh

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

in the portfolio During the Select the the XXXX. remaining of that Sunnyvale, Urban the sale asset company completed the only quarter, of fourth closed Service Courtyard August

to Hotel South JFK Milo Courtyard Santa and the Seattle, In Hotel Airport joint of venture Barbara, interest Pan addition Pacific Gate the Boston. in sale our the

these proceeds asset the And total, unrestricted of $XXX XXXX – proceeds. sales in generated by approximately while in In million, net million $XXX debt million. approximately from gross cash our cash nearly generating $XXX during proceeds total dispositions reduced completed

our dispositions, with our conjunction refinancing credit a comprehensive In strategic we completed over facility.

of credit consisted of term one revolving an in facility facility the $XXX over at term a million The August SOFR. matures and XX-month has and the option X.X% August million XXXX line year-end, applicable to undrawn extension of XXXX. $XXX credit loan As adjusted

of million to a $XXX fixed we the As swap rate our approximately new used existing part an X.XX%. of at refinancing, loan term hedge of

XX% our the year-end, and of interest fixed or outstanding in recent rate. of surge either debt hedged, despite is As

approximately quarter fourth was undrawn rate in with our to X.X year million years. $XXX million We revolver. addition $XXX cash the average with weighted life-to-maturity in a Our on weighted hand average interest X% approximately closed of

reducing a times pandemic, financial of additional creating has the and leverage with to of onset EBITDA. the three debt Since four flexibility times management goal our focused been to on stated

to us we ended times this over allowed debt XXXX in three activity refinancing achieve goal EBITDA and with just basis. transaction on Our to the year as TTM a

save compared of a environment. in profile, expense interest in our fourth reduced third rising the As result to quarter, able debt despite $X.X rate were to the the million quarter we

fact, deposit. we on via quarter In able the in in reserves interest were million our generate income $X.X to cash short-term

Moving the of on our which cash of opportunities upcoming flow forward, to how cash deposits, we which debt additional will downs additional similar additional evaluate be will as on advantage significant hand, using pay depending include rates uses increasing able we preferred could in – unfold or year. take the generate optimal

the renovation deck we for And hotel portfolio, CapEx to expect we lifecycle come. in this With begun this on project years a renovation the a at will to Neil year. Beach noted, and requirements million before of investment Monterey compared have spend we approximately our in in significantly as significant cash million refreshes selective few XXXX improve $XX Sanctuary $XX million Resort portfolio flow this disposition up the XXXX, assets capital which in to $XX that internal did meet due return our pandemic major required to investments, our and to not the our only of As

and refresh after a our As rooms quarter the Marriott the quarter a the attempt these Manhattan year ago, impact to previous public we’ll including this hotels, space seasonally undertaking both of complete receiving Garden in the areas public renovations that slowest in few we the of years, in for Western years And a where our Mystic portfolio. of Hilton first of upgrades. at is full renovations majority at results renovation Philadelphia, our the the restaurant of are are at will quarter the first complete a which Inns completing few the year,

the to outlook. transition portfolio’s that, With and our I’ll performance

offset closings million the by portfolio. which generated the only the consolidated I property Our This is than quarter. quarter, our earlier, was discussed our million following despite in portfolio the EBITDA $X of for count urban production left strong a $XX.X reduced prior in pickup

point In reduced more the increased as a quarter, our interest and increase exceeded efficient of quarter. margins Our resort expense corporate XXXX portfolio growth. was a and basis fourth EBITDA XX.X%, cash flow, fourth urban million balance $XX of comparable within to our a margin XXX GOP projected XXXX Both sheet. in markets result range and for to EBITDA however, quarter-over-quarter XX% the the

urban the quarter remarkable XXX surpassing basis is growth EBITDA our points during XXX of achieved basis XXXX to horizon. of our quarter, basis the hotels in with realized Meanwhile, quarter urban has margin EBITDA growth fourth of Quite resort the quarter points year each loss After quarter a the expansion the margin of margin sequentially XXXX in This marks and to compared compared points hotels by for XXXX. first on first of a of in margin growth EBITDA for the more the fourth the recovery XXX up portfolio urban hotels from XXXX. XXXX.

to before of like the growth margin impact on of the normalized XXXX pandemic. currently XXXX would an the with performance we year last forecast XXXX that I compared representing levels basis in reiterate maintaining annual to

margin continue will baseline. XXXX We measure that performance in against to

at over remains talent capital, staffing some the of challenges for experienced strong. industry although abated, past have human years two Look the competition the

are roles costs and more the positive we filling elevated. earlier longer pandemic, side, in but retaining generally the employees On than remain labor quickly

impact able our offset of been In of model operational through and benefit in and efficiencies changes, were increase close driven management we broader model RevPAR company. achieve which affiliated of part able the operating with addition the to to to with staffing growth, inflation revenue we our that ADR and have and much franchise alignment

changes over intended the sustainable at and years, result not are are the were term and our the look new be the made technology permanent, staffing longer that be sustainable over few efficiencies staffing many models uses over pandemic we of achieved a to the of while As error we past offerings we to long pleased protocols we of or long-term as many term. of

our we customers environment, our cash Looking offering are high the to guest to a level hotels that that we be ahead, experience industry continuing margins now returned able and flows. normalized accustomed maintain to while have will leading more generate at to

of be urban markets. As by our we move margin into growth recovery, in will the the portfolio’s the next acceleration leg much our driven of

quarter portfolio increase points the occupancy below variable While we are basis additional was additional profitability higher to the urban market We anticipate performance, occupancy. group demand. managerial still international urban staff very our significant meet pleased hotels, and will an we by flow majority The only this revenue travel. X,XXX with return through have our XXXX our business fixed transient fourth – to additional of and of of in and and aided returned labor a will the to resulting our require labor as have additional demand

for our has basis. the first XX% full year to highlighted. through lowest EBITDA renovation internal historical the exceeded contributor of ongoing the despite portfolio, on forecast, seasonally disruptive Performance approximately XX% quarter to that ahead a work mid-February I accounting XXXX, is Looking our although for

were with February results our comparable is by X.X%. RevPAR And to January date, XXXX January encouraging portfolio our X%. ahead Our of of XXXX February month approximately ahead RevPAR by very

for healthy pickup quarter. remainder the of And see a we in pace our the continue booking to

versus results comparing meaningful results long and our our XXXX it comparable as against remains relevant as provide to is of results. plan current Our comparable XXXX XXXX instead

to meaningful markets, at XXXX. January was RevPAR be portfolio we these this look our find versus all stakeholders. up our we time, And over January up XX%. XX% was As of our to comparable don’t results And our our at results, of over for portfolio urban comparable

economy to adapt the the vary time. cash at on allows than levels, with and far. positioned positive to While current pandemic. coupled flow improving burden for to analysts to in is low nimble the ground forecast the real steady historic portfolio flow our have XXXX been results and This significantly, relative us broader higher interest economy and thus sheet before And our margins balance cash drive stay

and to down to while maximizing maintain investments corporate activities debt all between lower a or our noted, through value striving As remains view of shareholder acquisitions, we will of is the committed closing Whether in and capital market our pay lens gap shareholder NAV through flexibility. Neil that value. public leverage and management portfolio, value,

So this to concludes my have. that happy address you portion of the call, and any we're questions may Operator?

Operator

from you. B. Instructions] the Maher, Bryan our line Riley Thank first So question Securities. comes [Operator of

Please open. ahead. now is line Your go

Bryan Maher

you morning. York in some year, refinancing state of current other New and seeing opportunities likely there? that problems are to that And and those Good be relates is happening owners markets, the you're debt Are the there your any in your potentially appreciate as thoughts that markets what this be might Great. already I rates. market comments, thorough. hearing particularly of We've that guys given to Hersha to interest the City all that very market? exposure particular, for thinking in there it capital with relative been any later where maybe

Neil H. Shah

this Bryan, Neil. Bryan. Sure, is

You just thawed XXX, higher credit we a country. transactions, and ago. say, New lot there points that that market were basis December, LTVs bit New in interest expense is were they quotes particular, are some market do or ago. asked in year one in do a are and will out November, the than think York, of between. there providing on be and a hospitality. York, there in cost year definitely in – We are be think significant New they It's there major absolutely, are And currently York has not are XXX every but will kind than – only since there few that of for hotel far about the but there of the lack lower October, opportunities – out that lenders financing levels the very

any there coming has up. clearly is owner, maturity anyone, a for So a who challenge

have they they or a cap maturity expiring, a that's and a a don't swap major If issue. have just

for that still are feel I books. were whether the of late that and would say a until the buyers spreads the opportunities by credit transacting I really markets on in in, and anything next an brokers quarter potential real two, next was done, could I more I haven't influx start REITs deals or the like huge were there the there think for of moving think sellers more is appearing now across time opportunity other or distressed opportunities. whether and buyers – come seen cash, There But quarters couple may good all or ALS be a get levered to yet. January, conviction lower willing enough. whether all were realistic in on But and to to we or we are find the the equity that have leaning question some be at transaction able do

So we're out there looking.

New a very In in our annual is XX% a performance. We mentioned But strong very of XXXX nearly very have XXXX, it for we're remains versus but EBITDA, strong. and York it there EBITDA it. grateful outlook are strong markets. or other on XXXX, Demand very – and You think an significant very frankly, XX% we very do of a for our was fundamentals performance, New low. basis. New York we're York Supply position is in

existing markets markets we in our other markets existing to look likely portfolio, is We can also resort there's regional exposure. take at. other at that think a portfolio, in urban there's new more we some where other additional probably are we that so, And destinations get look and our there

look continue So opportunities. long various but markets answer, Bryan, we'll various that's a to and at

drive just growth year. yet anything are existing with going this year. growth we exposures, our reinvest think this portfolio opportunities to our – is impressive And incremental very compelling, seen but to the be that's we haven't in organic we're to again, We market highly seeing our very

So the have so. and but flexibility have capital do and make to to we we we don't feel deals, acquisitions like do

Bryan Maher

XXXX, for We're elsewhere? margin helpful. on have going thoughts or And might that's can still taxes Ashish. just In your thinking estate And That's in it seeing up where most to it that our pressure? Thanks. coverage are you companies, quick Is Any items real the follow maybe great. to for push continuing all higher. across us expense labor me. would a give you be be you're

Ashish Parikh

Sure, the I forecast we greatest do operating the single Bryan. year. up that single on Yes, digit in so to our range labor is expense think, be mid the for side,

– that on certainly So that margins. puts pressure

is hedging – of I gone think few mild we areas generally have other pretty up winter. – we at prone markets, look always those are we're insurance last as in lot hurricane in years. a the some going expenses, where it property with that and concerned yet. to significantly we're utilities, of Natural are down wildfire except We're expenses are seeing prices we costs Insurance which gas would the line because seeing in not do. markets be effective

Our through up year. could those increases is this mid-year, hearing significant locked pretty that insurance be but we are

it's are you're are insurance, forecasted like So looking going taxes York average, in five backwards XXXX, a and point. utilities, this up, in be XXXX, than New to lower XXXX and still property property at XXXX even taxes our but markets year where

some of the So are and takes. puts those

Bryan Maher

Okay, thank you.

Operator

you. Thank

of question of Woronka next line comes from the Deutsche Our Chris Bank.

go Please open. is ahead. line Your

Chris Woronka

we if kind see there's component have trade these for rates? reasonable to there it's down the opportunity think I seems the we get triangulate back mean, plays levels. drill what higher And rates – it Or that peak that you've good as rate on I I to mixed we a to to prior I the back at wanted Hi, recover, occupancy we end negative that to see to occupancy mean, occupancy, think, at you particularly kind do guys. mean, that, little how bit going be rates? be a about Yes. to shift right? I if of really do get going closer know I to we expect is that, is but, same everything, of morning occupancy talked into year-on-year.

Neil H. Shah

Ritz-Carlton answer. and make for exist if sector the on like if down question if it break to call you think look Chris, portfolio But your rate drive trying of the your you're the fourth XXXX in that the assets that's – Grove, group our of and really transient of I has a of meaningfully and like your you – bit driving little obviously, the for And – now the kind a year more to you pick were positions think in market to you that's take this a occupancy. up at dollar and ADR. example Like XXXX, in group pick ability thematic can I Coconut confidence very to started that we'll up. increasing market that million to back year assets, get if leisure first by best really hotel quarter up the asset quarter, lot kind we of year XXXX. an a enjoyed was group of occupancy and as business the in is occupancy starting the the in but half on then group our have to it And

ADR to us push even And higher. allowing that's transient

we're to in year group. that this group XX%, able the Annapolis. pre-pandemic. XX% segment situation just ADR higher that fill we for than same the And We're So seeing as in based transient on ADR project is even higher

drive transient able higher travel are in last of than we business comes and QX now the from we get year. XX%, to autographed back Hotel, and government were Waterfront XX% we're legislators As ADR back QX base that XXXX

very the continue draw where are you and group and box transient. group we premium customer adding these high differentiated aren't in to side are to on opportunities very a kind portfolio big drive these of those because – hotels, both are there's a rates the ADR on able where – so, And at

to to XX% like this occupancy, the we're the like much of XX% do York in used environment we pushing through City, XXs rates. and we New running but XXs, cities, January December, markets higher kind In where urban run in where

I in marketplace. a function is think less the there – of is that supply

Our in differentiated in right is the high locations. portfolio quality

our And pace But look that markets quarter, And able February, get building high first in this our you and to as as we growth we're half today pace we January, December. of beyond and ADR second drive are continue the all not throughout urban our occupancy. ADR visibility of is very second in year. and the through as remains so sharp to

throughs But is were And and driving as going they last occupancy because you leased will remember, primarily aren't F&B. reopening. and some restaurants like will be portfolio some of year so have be flow our to we bars this, there

we so, ADR and relative year. significant to across growth margin And expecting are XXXX growth this

Chris Woronka

Okay. helpful. guess, question. Neil. then of Yes, on the, to last thank, kind And just super Bryan's Super, follow on I up

something If way at the else, to York New you markets. whether of see Is it's equity table? a opportunities that that's some year, you point about a this somewhere situation the and do acquisition understand as look or where is looking to the on comments further that potentially use at different kind might deleverage balance sheet,

Neil H. Shah

until of today reflects our sheet. cost on equity NAV, and capital of equity is million cost We a have – couple we to cash would our our issue of but the balance unlikely hundred

line We capacity. $XXX million of have

having that in two Miami assets two calls in New a two or in we've asset They very as or three identified in one Manhattan. We Queens have hotels our and are and Manhattan one portfolio that recovery non-strategic are XXXX, for good one us. in in York, in in past

And so, back potential the quarter the as to those the of sales up consider in we two and half next across ramp are expecting them or year.

have Chris. – of if that have was equity, plenty the we without we we to liquidity issuing think question, acquisitive be So

really what XXXX. years, three only was not demonstrated going be what probably last we've done, in would it but common issuance the think, I equity so, we've to really back, five our across And last I think,

XX been years. it's So

of And you we've and now is very times a non-strategic liquid portfolio portfolio recycling couple to instead be then same attractive, the we way we've even the our our very demonstrated a and transformed with recycling achieve have can will consistently is the – on market. and know assets that end you since highly – sale attractive

NAV would being So And sell we think stock recycling hard are kind be for as still common would very so equity. we hand, on reflected from price, short-term it mid-term cash our of hotels. far it us to be of our that's in away

Chris Woronka

helpful. Thanks guys. Okay. Very

Operator

you. Thank

Our next Baird. Choy from of question comes Josiah

Your line is all open. Please ahead. go

Unidentified Analyst

taking at thanks to high better Hi, balance first on in level, one question. forward? a the you for guess guys I'm place. just best do create shareholder value think the for going sheet ways a Mike. How my I is that of now the

Neil H. Shah

it, – demonstrating think we’ve the our step questions portfolio. in Step different balance capital organic number sheet opportunistic. the in composition, number there’s demonstrating earlier some we of – profile being the talked acquisitions. to a short and of segmentation the earlier earnings I growth marketplace, at looked term, growth our with shape, Mike, quality, is think of two with of we And the the one. about that from the it’s good portfolio of this this lot of uses think – in opportunities – is We the

We’re – also the what to in the existing returns. reinvest portfolio, meaningful for portfolio always looking throughout opportunities drive to our

slow and we’re then a is had now getting the of nine lot That’s it transformed the from seasonally across upgrades. creating kinds we’ve in balance to and of in kind hotels timing seven of it that. achieving a And done quarters last value Annapolis South that on Florida and the Mystic growth function sheet and those nearly five years, we’ve of

see a opportunities our we And so throughout lot of portfolio.

Resort. at have Sanctuary projects the new Gregory, the starting Ash mentioned, the great restaurant or and right St. now at we doing some Beach at Mystic work we’re the Western

EBITDA. some So to great existing opportunities reinvest the to there’s incremental drive portfolio in

at We look downs of pay debt. also

today do have is financing or fortunate about capped financing north a are is X%. floating But we primarily XX% to capital of fixed to rate, have XX% floating and of We our rate structure.

today. world’s always capital so uncertain the for us. of that’s So use But easy

We’re to we’re of paydown seeing relative that there to are debt. a what in not out yet. just But the opportunities rush do

our I I know and some investors our about of have back. that our – have asked some bought some peers preferred know of

to at what at that. that kind the of consider preferred in a relative good rate Ours in – But Perpetual at flexibility. we financing down for discount today Maybe would issued debt very feels towards of good through reinvesting the meaningful X.X%, very paper. is debt in we able effort, doing feels lean X.X% acquisitions, So it. that to where was covenants looking our like trading with portfolio really If we’re But to X%. not a lodging. paying at [Ph] X.X% made range. more it’s were is extra or and right the it it costs today floating with we’re buy all go we size now no sense

Unidentified Analyst

you then of interest again And your that. think one follow-up, guys for Thank can you JV how going us you. just quick you forward? remind Got

Neil H. Shah

absolutely, Yes, Joe.

Boston. investments with partner to We’re two at joint South time, down venture both this in one

we happy But up. to liquidate those months in the those continue interests We’re to assets potentially as look months next assets. would with to XX those well ramp XX as urban

it’s think story. cleaner a I

generated EBITDA it’s one I a simplicity JV historically our the look of was those point XX% from just think at almost standpoint, years. are we’ll We from exit in But portfolio. our next to few

Unidentified Analyst

all Got you. for me. That’s it. Thank

Operator

Thank question you. Tyler comes Oppenheimer. Instructions] Our next [Operator from of Batory

now Your go open. line Please is ahead.

Tyler Batory

you. Thank morning. Good

basis we bit urban a the resort there of markets given compared you you’re given side growth potential more more, your a put in I side. XXXX. the versus side me. margin to I when growth you compared on then just the resort end the it on margin range. for of urban rate that could for point XXXX, points And But with decline margin at are in basis XXX sounds may opportunities thinking expectations potentially? things finer put And year-over-year. expressing your little with question out or XXX perhaps for thinking you to points that maybe you’re higher mean, for opportunity multi-part on on on be of XXXX, more wanted performance versus still in a there’s some like the one you look expect Just XXXX, side resort margin

Ashish Parikh

Tyler. Sure,

Let me start a with there. couple of stats

XXXX standpoint to So we the margin do ran XXXX. the about you when mentioned EBITDA EBITDA did at we resorts. We from our in mean, higher resort for going XXXX, not from basis we the XXX I than up points resorts look margin XXXX. anticipate

that food of offerings. with was just positions, that some protocols, think beverage and I open

think be XXXX XXXX. backtracking still no, some head that XXXX are is margins. we there where resort for So on the significantly actually side of versus we will But

the the disruptions markets. all these quarter York the The you in coming urban have is entire come urban that markets, past first when once more to renovations growth that’s think you with in be going We urban get to and Philadelphia markets really think started like the the really disrupted, Boston performing, all but through markets about that DC, you back when New of QX, started almost they were likely year.

to XXXX margin the in urban some those we momentum, the portfolio in and not up that growth over start resort the in is really whereas portfolio. as So build ramp think back

Tyler Batory

specifically this quick things. Okay. on labor a And follow-up side and just to the of topic

where pre labor? I’m base ideal contract interested share is COVID staffing of or you Just are on remind maybe versus levels. and your And employee levels labor us versus what also

Ashish Parikh

XXXX where where Generally, in to to on we I on the Well, back managerial we but were wouldn’t side. to we side. say the want managerial be are back to XXXX, at want

expect We’re back. still and XXXX come don’t those some levels positions to below of we

XX%. the On to we’re property level, about XX%

we of XXXX still below are Looking levels. forecasting markets most to at XXXX, these occupancies for occupancies in be

staffing that from too question, today. So another are that there go we levels I not our up was Tyler? hope, anticipating much to part where

Tyler Batory

I’m I’m now labor, of is just labor base a contract contract sure I’m how with just right sure I’m the your if not percentage COVID? that pre employee – follow-up compares having and what offline.

Ashish Parikh

than just that XXXX. housekeeping, availability I contract to. labor know more are using markets, we did of not lot some have generally we the with a don’t I Yes. others. contract probably use than in today We offhand. we try But more that in labor

Tyler Batory

you Thank the That’s for detail. helpful. for me. Very Okay. all

Operator

Thank you.

Our of final question from comes Barclays. Anthony Powell

go is line Your ahead. Please open. now

Anthony Powell

the guess question. taking question. Thanks I another good Hi, margin morning. for

this Is forward? compared RevPAR necessarily need I pre X%. but that that year, think it to Over people to guess, margins X% going say run, used maintain how what what it the do the COVID? growth was long was think I And to to not you case? you still is

Ashish Parikh

look of from, mean, X% to right? a to be that to would I all you tough get good coming Anthony. it’s margins. think consistent X% I baseline, coming is it’s at it where If have from occupancy, think I

even if if it’s X% ADRs. it X% occupancy, push in you can growth. primarily at you to I think more think I Yes, of ADR margin balance that or definitely But makes I certainly you could occ think a have have the challenging. the

Anthony Powell

coming opportunity I rates Right. I lot guess And guess. – it XX% I think a you guess that Is and margins kind levels. whatnot midweek up leads midweek of follow-up travelers pushing for business doesn’t who the to push you’re my that peers are second really below of the to in that’s back and hotel main really And and occupancy XXXX or harder make case growth? it gaining if are I most occupancy, if

Ashish Parikh

and can Yes, if you push of that your it maintain it make rates because But does occupancy. rates harder.

labor. You’re back really just variable bringing

you’re managerial not from back XX%, going you’re If XX% any bringing to staff.

back You’re really housekeeping. and agents a few desk bringing

on the is the those flow driver too at what And isn’t for RevPAR. of make sales really occupancy we’re looking backwards So lot absolutely that bad. But on [indiscernible]. this us year shouldn’t a that’s room cost be to associated the of going the is the incremental with go

Anthony Powell

one more Thanks. quick one. Maybe it. Got

pricing outlook to it’s expectation What pretty the seeing robust worried talked on is about you needs if right balance What’s your the year? the And think remained this the of now? there I sorry, of leisure you about be are year. there’s your for And – leisure throughout but before. rest updated pricing? What

Neil H. Shah

pushing the the in West, bit from our mentioned into Villas pretty both Leisure Key in Sanctuary not we still Resort. quarter ADR the backwards that little gone this and resorts, Key quarter, are Hotel in forward the Beach held we And Parrot of couple have RevPAR as fourth growth on a we pace seen in markets. has softness pricing, we at fourth look & our – ADR the two ahead, quarters have close we have In time. a and They first in cases. those even retracement XXXX. into of projecting and

so are ADR assets base our but keep are right you push drive made portfolio of and example with we is And to the the Annapolis, pushing a you have if majority vast the able able assets, business. it to And of business I it. leisure to significant it’s ADR, hard in with just certain of transient mix,

at And business various this premium to of pay But economy willingness base two, ago, that portfolios are of is that growth. differentiated if the end function specific in are luxury it of three than in coming in growth ADR seeing asset a for customer to that years to in ADR continue our that we is the I being that kind is of of is and the And we it an have ADR various higher think all being they push And to are a level levels [indiscernible] demonstrating and target past. able than hotels. more in sectors assets.

as in Anthony. what seeing well resort our share urban both Thanks, We so seen We’re lifestyle the space. the can hotels, far. as in space we’ve only

Anthony Powell

Thanks. Understood. Yes.

Operator

Thank you.

As there this remarks. at Shah Neil over to closing time, the will for are back no additional conference pass waiting I questions

Neil H. Shah

to quarter time. everyone people the Well, time couple may your us between. meetings that your at in the look offline. to of the forward thank today some you speaking We calls you other for I first a throughout ring But in not Great. there’s after know if to day and for today all the coming weeks. end investor take today. thank a But give of feel free

Operator

Ladies this conference concludes and Have a Hersha Hospitality Trust gentlemen, today’s great call. ahead. day

disconnect lines. now You may your

Hersha Hospitality Trust (HT) 16 Feb 232022 Q4 Earnings call transcript