Earnings call transcript Q1 2023

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Operator

Good morning. Thank you for attending today's Hersha Hospitality Trust First Quarter 2023 Earnings Conference Call and Webcast. My name is Alicia, and I'll be your moderator for today's call. [Operator Instructions]. I would now like to pass the conference over to your host, Andrew Tamaccio with Hersha Hospitality Trust.

proceed. now may You

Andrew Tamaccio

first and the to Quarter Hersha call on Call. Alicia, we release, today. yesterday distributed XXXX joining Welcome Today's afternoon. the based be to Hospitality will XXXX good you, earnings everyone which morning us Conference quarter Thank Trust First

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

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

Neil Shah

and with of and all thank Thank to good on you, us morning, Andrew, you being today's for you call.

morning this our covering I kick in is Parikh, me on capital Joining Officer. allocation the by portfolio's performance our outlook. things the before Chief will touching off Financial quarter Ashish

will guidance, margin and balance discuss an second our outlook our talk sheet. update our on through provide Ash quarter

on remain continued and potential mid-February, estate. credit continues From or felt challenging real market, half being year. of recovery impact for lodging which recession increased markets, had more by of has while commercial ahead there the when has current volatility that banking economic and cognizant We the every multiyear the spoke back setup of possibility in our And the we point volatility to a landscape fundamentals last a to in positive. outsized this an been for been the sector, sector has market in the confident sector are but

by more our the of XX% than portfolio. nearly urban come driven February in growth growth first year-over-year fruition. in RevPAR led year-over-year signs that have in our Many We quarter the optimism to to recorded XX%

performance Our cash slowest first debt portfolio in generating quarter progressed, our efforts and is million flow driving meaningful seasonally. the in maturities to is cash focus $XXX on our horizon, on access experienced which With we cash revolver nearly no undrawn million significant on as the acceleration and through hand $XXX can flow and operations. historically

for the our portfolio. common were area In at significant Westin our across at season. major Hilton renovation time Philadelphia room executed upgrades a both we spring first quarter, Inns Garden our renovations our several Manhattan and of guest in completed The

first in the in Marriott at our of the phase Helmsman, are restaurant Beach coming and new the the weeks. at completed upgrades Sanctuary and bar, Resort Hotel and close Mystic also opening We Monterey, to California our Spa

had our to financial largely due weaker but projects of These some minimize portfolio's slowest a related those in undertaken first weather markets, strategically were quarter. their results season the to operating we demand impacts which greater than impact impact quarter on was to the across originally forecasted in

year drive and at these With the the Cadillac on the Annapolis above pre-pandemic like cash remainder and newly Hotel organic Hotel. us, properties historical Grove in Beach of our hotels renovated the to return Coconut to Hotel a Ritz-Carlton growth Parrot Villas, performance at and renovations manner the attractive their renovations and deliver and investment Key Club, perform the Waterfront similar and behind expect flow we beyond levels an this for

performance the to With that, I will jump in our quarter.

first growth expansion $XXX in and our disruption renovation. portfolio growth, to RevPAR the ADR under a of for comparable generated of driving $XXX, quarter approximately equates resulting quarter from and X.X% properties XXXX Our occupancy EBITDA XXXX. This first ADR the XX% to for compared an despite hotel XX% RevPAR

XXXX below generated portfolio generated over portfolio basis the on under XXXX. RevPAR points of properties of of XXXX. resulting XX% of subset our $XXX, the million, gain EBITDA $XXX, our under just to XX% ADR Excluding This an occupancy, first quarter XXX increase and of renovation, an XX% in $XX just a

EBITDA the impact XX.X% XXXX. approximately the and in points margin to the The basis season move are renovation greater than the results illustrates of XXX disparity excited we was of completed. with disruption, the spring into projects

with XX% This generating I'll of transition pricing market was I which power performance, RevPAR primarily growth first increase quarter, of the in XXXX. resort of was ahead of our continued nearly its nearly portfolio, XX% As $XXX, to $XXX the to off start XXXX. our performance robust an result as ADR resort of

nearly production, business differentiated by increased high-end, segments. and the Overall resort believe modern leisure and was million $XX.X resorts of offerings than XXXX in margins both We basis from in appeal points. remain for experiential demand XXX our and XX% greater benefit their will the traveler to EBITDA and EBITDA confident

very resorts of located each All renovated And in the in years. we fundamentals growth coming faced estate. for been are our well low thoughtfully dynamics in supply these markets. real long-term on and They've maintained the and of believe premium

X segments These resorts markets from multiple benefit reminder, that from in cater demand generators, aside universities. a markets corporate are to convention and leisure. As our located but headquarters including of all centers, additional travel

West off-peak unsustainable to Caribbean demand, and challenging of pricing face Key was X time international This the Europe, and Key particularly XXXX Hotel years in more Parrot the The at limited. and The in an demand benefited record and with even resort EBITDA of extraordinary performances production power comparisons. model, resulted a leisure coupled Monterey, travel, staffing pure XXXX where in off seasons. unprecedented resort, markets Villas from California and X coming in the will and of are

result pre-COVID XXXX be growth But normalized clear, significant for in in do The retracement with comps expected more difficult XXXX. to expect will levels. in XXXX performance not we to

second first continue we XXXX, to the EBITDA one years to to for RevPAR In our generated and expansion XX% driving was largest resort Parrot Key top Parrot in of the The Key of to fact, assets Hotel EBITDA-producing in the $X.X be of EBITDA our and of Hotel anticipate to the quarter growth many first come. XXXX, contributor Villas XX% million. quarter,

disruption, impacted in the Resort the the was coupled and I renovation. weather quarter headwinds This the Century severe flooding resort's by impacted California, economic Beach first As Northern Bay Area performance. with in experienced discussed,

Western extended our the in unprecedented into conditions to and favorable ski of alternative addition, the snowfall travelers U.S. the typical some well In first destinations. quarter drew

time has forward. growth over season. The first property renovation year's completed resort's the phase This next months of will peak renovation for the be will the remaining slow and moving level been scope now in of the winter reposition another for completed,

The X of our EBITDA long-term just Coconut X Ritz-Carlton were million, Cadillac million was market Miami generating on EBITDA remain contributor, Florida's prospects. $X.X Grove the the We The biggest very and South generating top respectively. optimistic $X.X $X contributors, over million. and

our more missing Miami for forecast first EBITDA than very RevPAR by Although XXXX quarter, exceed did internal and X%. the over by bullish XXXX XX%

$X ahead typically EBITDA Annapolis our production generated just under of a the nearly above in $XXX,XXX quarter, of surpassing occupancy what very And levels. Hotel above was the Coast, slow and pre-COVID West for the Waterfront XXXX. points XXX Ambrose Hotel's XXXX quarter, XX% XX% XX% hotel's the On XXXX and was million both In EBITDA is XXXX. basis

markets. after travel quarters in holiday due portfolio. strongest of urban December, York's QX to recovering of With urban QX, to is is the our and business RevPAR in our one surge of are XXXX pre-pandemic typically to strength quarter surpassing urban levels in our October transition urban which that, And the still New in in slowest I'll our as we April portfolio.

way quarter a D.C. the urban led markets one That after our of markets first XX% sign the as in welcome XXXX. XXX%, and D.C., was ahead RevPAR acceleration. laggard Washington, XX% Manhattan And from The XXXX January being of to respectively. urban was progressed, Boston our said, for RevPAR experienced as tremendous March, increased in QX we XXXX. turnaround XX% and being

March of of York note, seasonally in this year, just heading the of the our cluster start a the quarter season is occupancy fourth into season. and in XXXX, is New the great spring City which busier below than was sign much Also of the in holiday XX%

exceed than each entire these as XX% quarter. acceleration these the quarter in RevPAR continues second Thus far that markets of April, to our from up production into April for its in To March. markets expected into the month-to-date portfolio is urban put is perspective, EBITDA first more

has in date pickup demand versus To urban our period for same in XX% been up growth is driven in experiencing particular. by portfolio every time weekday than RevPAR market April, This XX%. with urban the weekday January greater

challenged first in in Performance Philadelphia was quarter. the

to moving product touched disruption had the Westin, did are at attributable much I in performance that earlier, softness will forecasted. pickup improved given this Westin new half the and that confident we of we of the the the that there back we market, the quarter in not was on see While rooms see to we But renovation forward. is the

Hotel Philadelphia in Rittenhouse the named segment in was independent Forbes XXXX, meaningfully international years. will first only drive leisure, coming recipient across which Travel Meanwhile, group and X-star the the and hotel our Guide's

additional acceleration of international open around to increase era We and the by group, continue markets from encouraged globe March aided the restrictions. of in the up from transient anticipate and occupancy are by and pre-pandemic to urban markets return travel an demand April, business as

to corporate the Transitioning front.

the not but dearth We and construction long return coming extremely a low by also the from travel, in fundamentals, to are due only the our for the in international environment business of encouraged financing. sector runways years supply

existing long-term outlook. market's due comfortable the access cash on we to And leverage revolver very on focus are significant are hand, at profile, driving our and in to We our our lower an a confident cash undrawn flow portfolio. concentrating

to The in be debt due term. we these are the near are muted. conditions, to and And market transaction markets unlikely acquisitive

a immediately We in likely today's to which are rate down rate use interest capital environment our of portion is debt, to floating more accretive. pay

remain and will approach. flexible We in our entrepreneurial

in gap closing positioned do trade swiftly our themselves. than opportunities We are private our of shareholders. more right flexibility ever we a without market believe focused present that very diluting economic an outsized on are to financial uncertainty, when discount we to Given and now in that well our the firmly value time act

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

Ashish Parikh

and Neil, good morning today's everyone call. Thanks, on us to joining

the Let portfolio. by discussing me margin begin of our performance

As pressure. permanent. I've were to will intended long necessity. pandemic achieved that many to And out and of us and With numerous staffing technology our not the changes headcount models protocols, be mentioned were nor offerings staffing wage a these we've term allow long-term our borne offset deployment, current before, reduced sustainable in modified efficiencies of era

guest Staffing We remains operate this offering accustomed we normalized while to. these at can and environment. XX% a that maintaining pre-pandemic our the customers high-quality approximately our to levels, headcount be of experience now at grown hotels have consider

costs rising other insurance items these as managers approach, all But risen. taken laser-focused asset with line also portfolio-wide almost with strategic such a expense to our have along steps are control property Wages, and utilities, and on we've mitigate measures.

be Hyatt We new have recently profitability looked and into and leases and the and improved Square third the profitability flow during operational these and Tribeca forecast, our quarter, drive both. at third-party in immediate our tenant Garden and measures to at Hilton at Based leases cost-cutting in Union in from growth also place cash and restaurants on bars anticipate margins. our should we entered

significantly X of we're undertaken quarter, that were move the XXXX impacted recorded EBITDA model portfolio. of our renovations These flows. and margin forward, industry-leading franchise X margin EBITDA first just margins continue our to will over confident As company with X%. and close while affiliated basis operating portfolio exceeding throughout and loss the our our by alignment cash GOP by generate points results growth comparable management we basis In points

anticipating generated that to been basis have still compared achieve of We and XXXX generated XX% Neil that portfolio nondisrupted within points, these enhancements also investments in for GOP as our the result EBITDA the respectively, a growth driven mentioned, completed in pleased that are our As that be slowest approximately assets and EBITDA the margin portfolio's able meaningful XXX were quarter higher growth seasonally to range quarter. margin we're to these pleased within of we and and the portfolio XXX will XXXX. growth as for confident have were

XXX had the in and as strong story respectively. basis of margin and points EBITDA translated points, resort Our XX.X% quarter and of particularly basis GOP margins a markets XXX growth XX.X% to first margin

portfolio the As XXXX, have will our while of look the to we will year, remainder still margin anticipate performance accelerate. comparisons markets margin urban resort forward we to strong the

caught spend up. in outyears One in in CapEx. final years, note fully CapEx the get to CapEx to related $XX we approximately reducing spend few million significantly and after we After $XX XXXX in XXXX project million last CapEx the and lower a anticipate spend

We the that anticipate XXXX. growth disruption assets similar a growth improvements until will of not in confident at each in to renovated up fashion do the leading this additional and the years to fourth the asset generate quarter year at portfolio our we've experienced to are

Moving on to sheet. balance the

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

quarter interest quarter X.X was end, XX% debt despite rate our hikes Fed, with our weighted or average approximately X.XX% hedged. the continuation of interest the either of of life weighted average As first fixed outstanding maturity rate is of And a approximately to years. from

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

to net to this basis. on allowed XXXX Our we strategic TTM activity debt achieve X.Xx the as goal a us ended at quarter EBITDA in

nearly reduced first we the profile, XXXX cash our hand We in approximately in of capacity. $X.X compared debt environment. save with million revolver million $XXX in to $XXX undrawn result a rising addition quarter despite million to ended were the interest on quarter to expense our able As rate the in

no super All large regional liquidity banks with is national of our issues. threat held cash of with or

close, in held our as As to deposits, imminently. accruing short-term was XX% likely cash time approximately and interest mature above of quarter these of move deposits X% higher

cash the $X.X income Approximately X% in we quarter. generate a XX.X% to variety held restrictions. total, our interest was capital, on accruing able cash maturity In with in no the working of were remainder reserves considered in of X% and approximately the to million accounts between was

Neil As current rate this on is the likely to environment to far to in we're use accretive. time are immediately more our expensive floating our reduce hand be mentioned, at debt, acquisitive and which interest cash unlikely further most rate

We've current evidence public our portfolio market valuation. market the of further And spoken of $X about significant and individual this per our is value assets. balance the of disconnect of approximately valuation public share and our cash in gap

provided to in first financial several continued booking see We the the have our quarter again through our end second looking XXXX, of once the continue we the a of remainder pace and quarter. the has to in pickup April, ahead in guidance. of acceleration experienced for of And quarter markets the

and is plan XXXX comparable starting start XXXX versus XXXX results quarter current only utilize the comparables Our with to when comparable providing results second our relevant to and meaningful.

progresses. unfold to forward, will varies move how forecast economy we As as the as year the

and and But international the we with we growth other our including significant we which on the high environment those in for remain a went long-term forecast prospects runway years, supply optimistic markets, next notably, periods remaining the our return to the sector about the most low of differentiator few downturn deliveries over and business when into horizon. travel is supply the

corporate mitigate floating operational through flexibility. of Due maximizing leverage activities can value to further within maintain costs well our shareholder all we profile low will to we portfolio. significant to striving leverage lens review continue driving low as liquidity, on reducing our focus cash and as our and while to debt flow And exposure rate a

Our will remain are and to nimble, opportunities us present quickly. prepared we liquidity to themselves, strategic allow act as

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

Operator

[Operator Instructions].

The comes the from Klein of Capital first BMO question line Markets. with Aryeh

Aryeh Klein

other some were March? Can maybe but bit think weaker, headwinds, end when was little you the the I you it What mid-February it sounds as that well. obviously guidance, like softer you was softer a markets I more QX There do results? the between through guess, provided maybe What renovation of initial unpack on suppose? changed were

Neil Shah

our was impactful, mid-February markets. all properties, some renovation absolutely. it March in of our Yes, weaker Philadelphia corresponded California, handful the doubly They was of -- was Northern of with a particular. then and so Thanks, significantly kind from and Aryeh. it of It was but in

the fact, Monterey kind to addition crisis was significant the resort really just the a on It had -- was on rain in It really, more our Monterey seen, -- than California, was and was XXx Northern tech, impact been in something what the -- just it disruptive In the rainfall. of hadn't -- in more SVB of travel. prior at that was amount weekend impact quarter. was and it was it

softness -- had That some impact. there we from was the week, the valley. also an in economic the just During headwinds

On things got glad because much one significant period that go renovation weak this -- impact. into we during hand, pace the we're the is quarter, looking as second we done a the better had but

of group of kind expected on market didn't bookings also citywide year. there The there of have The as Philadelphia. develop for was the that were of lack good Philadelphia in was but first a Second in. leisure corporate -- the we primarily But come and aware conventions was that half group backdrop just softness didn't this and anticipated some knew we side, softness. Philadelphia just didn't

remains The come a April this pace has little very but slower look to bit to is continue out Philadelphia, as other And adjust we try more we convention as again to staffing soft in the the a to a and here as month, has year up Philadelphia starting market been models back. adjust further office fundamentals market return expect mixed. across recovery, which forward. May our strong to have are we but to Northeastern been we calendar a particularly next or picks of we relative to good look do our laggard markets, a X back in the that have to

Cadillac, really the talked came XXXX markets. about and that also But we to XXXX. ADR relative expect [indiscernible] ADR and as performance us strong than actually in I'd So to to higher as a January how came in we well South very mention fruition. that those had led Miami it X at Florida, well December was pretty

compared expectation we budgeted to our ago. year, years But the to So still compared for strong compared strong lost ADR. several to prior quarter,

So were big the drivers. those

I'd our a up and been that of that of a bars, this were also years closed staffing just mention restaurants now. was that we lot amenities and we quarter have -- all for opening many the

the And margins. you -- be so pretty don't a expenses have if are that significant in can come can on additional there revenue pretty have impact

So Is that it I Aryeh? that helpful, in put area.

Aryeh Klein

or then, the you mentioned And next. year CapEx elevated absolutely. this Yes, Ashish,

For what can color little just where projects, -- you bit they some upcoming on entails of are. provide they what are, a the

Ashish Parikh

Sure.

-- That project remaining then clean the the I go I everything that up expect May. by rest in we done be we should mentioned, of think launching. restaurant end Mystic as of fairly through are finishing really Marriott last QX. the is Mystic QX, a QX and we the the calendar And as

be Resort, the In Beach guestroom start at lot quarter. finishing bungalows be of did up and will QX, renovation. We which work Miami the some of Sanctuary first as Hotel the in the for Winter we We're up doing fourth quarter. at the work all actual will during the a in exterior well, Haven

the Express, are XX-year As more we primarily And in year, plans X-year these Chelsea. really product refreshes. JFK, Garden into at it's Holiday next look or improvement Hilton Inn hotels like

Operator

next Batory Tyler of with Oppenheimer. line The the comes question from

Tyler Batory

on side? you're more question you talk QX QX perspective ones do My which perhaps little on be a in then the is a RevPAR market outperformers, and little from the on be bit which first what bit think guide. markets bit softer might could a more optimistic little Can you a markets

Ashish Parikh

feel be to Ambrose will and I looking would Sanctuary. the at markets, of point that markets positive the we Tyler, Boston, sort I'm and our be West we're Yes. at XXXX Sure. comparing this Coast think

[indiscernible] propelling remain and which Washington, Florida than higher D.C., Annapolis that South XXXX market. is will and really significantly

I New below be still slightly and that Manhattan. -- markets will slightly XXXX, think York

be because XXXX really which from a 'XX New point the believed think quarter. 'XX, York approaching 'XX RevPAR story. NYC of We amazing would more at fourth are everybody exceeded I We is in RevPAR, this

second As international XXXX we in to continue third, to believe see continue more quarter, RevPAR. we'll we in business transient more do exceed

to that is we think above mentioned, probably one are I quarter. 'XX the now be projecting Neil market in as second the Philadelphia

Tyler Batory

close remarks, the gap. private discount that prepared the And I working to about you to values, Okay. then know in market talked Great. the

NAV think the portfolio the XXs. in or net the asset in for you about past, had value I a talked low

was think I before. that

the a perhaps these market made right trying accurate a how key just in You've that of price I number, now? is little you're bit sales be mean, for about number to update private portfolio here. valuation maybe terms could asset more of thinking kind really of a the determine any to per what

Neil Shah

there's interest the -- Sure, When around Tyler. forward about markets we place in have a curve. kind kind not where the in think moved are I question Tyler, we're of so enough of a still and consensus there's quickly, rates real -- value.

lot And a so there's not of transactions just today. happening

on we year. We year, end West -- then last more $XXX,XXX sold of the what of $XXX million we at we hotels. portfolio urban Coast kind select first. per the the of those sold sold sold -- And We we key. commoditized towards And the assets

didn't year we think as the what We that to same have to of that competitive as be today. that lower-quality assets growth in the remain we required more and -- last assets we sold portfolio profile that ones the to felt capital were our portfolio, have difficult going

we of environment at believe think worth of has $XXX,XXX portfolio I stabilized per today, normal any Where around kind a rate. is market this so key. we're that a trading And and today don't

we I we to keep think of quarters, in focus feel and term, -- just driving short we the like we the on results couple have. -- best So the our driving it's cash flow the are next have hotels in from

through more but things to the today, strategic either rate are realizing or the opportunities see a of acquisition there's the or value the where lending like for value going on as transaction you when on consensus transaction lenders refinancings world kind that, through able and as very more that's kind create And can to activity, close to some of is I finding think to trading expect we assets stabilizes, the of right environment little when real company. be, interest gap lot be side again,

that at a considering very world But we're remain the the We has open. very remain happened we several months, what heavy very trading last clear not so across in surprising. discount. that And

Operator

next The the comes Wells question Kesten Fargo. line of from Dori with

Dori Kesten

that guess that? have guess point? costs that And I out recession year a forecasting you won't your figure I at labor do progresses? Or trying FTEs your is this reduction as a I'm if to warrant you're think in assumption likely the likely stabilized

Ashish Parikh

forecasting sort more labor are pre-pandemic similar to we expense in to of be growth Dori, level.

let's on counts hourly actually say, X%. So several maybe now X% an to properties. are the in of we FTE But of basis, mode reducing our right X% at

our in have as we prepared discussed it's optimal don't that we we the positions though brought remarks, that feel we may As like the feel staffing them have right probably back time. We are There anymore. we need model.

this So is to it's I FTEs, but probably think lower our at overall hard less wages forecast view point.

Dori Kesten

were prior would you How And peak? when would you international international demand hotels returned? at of it forecast your And Okay. much travel. has to return that noting

Neil Shah

granular We at get XXXX we of at York we're we basis, still pretty international City can think asset-by-asset I off -- levels probably -- an about when in look where particular, our of when on hotels we XX% look New contribution.

So we've XX%, but go. we made have to XX% up

When from we a that, of contributing we've click the within kind seen of kind travelers into good Europe. double recovery

of like fact, even other are up slightly. In is actually still and down. significantly Europe, But Italy U.K. Germany, XXXX to France the parts

X%, of kind less today, of New travel. been -- at travel in runway travel And significant And in notably, travel, international And XX%, X XX% most than then it's -- international nearly X%. a that that no is the Asian pre-pandemic. there ahead. is That accounted has York Asian for

for -- visas And to a process get that to are we of our impediments is instantaneous visa it's here. continue. to which return time some of in kind expect very be to going terms not some travel an there be today, to or because taking going It's long people friction

But Japan, we are China, all pick very starting just slowly. up. it do improving to see Thailand, India

until but We it benefit to levels back third to from don't quarter that, expect we're well second, we get probably to into XXXX. really pre-pandemic expect

Operator

comes The Raymond next question Crow Bill line of James. the with from

William Crow

I answerable markets. Florida, think were may operate to and the to rest and [indiscernible] And start Philly uncertain interesting your that by question, the an growing but be that you even really be it's it Northern reasonable the in preface not first of the And are markets? company what I'll the of outliers rest quarter think backdrop? Neil, based is South maybe prospects California, do that you but back the that the this not the macro chances of maybe markets appears in how on and recession what that a how think coming to expect those to do ahead it

Neil Shah

D.C.? Bill, expectations of you just to New like be urban clear, the mean I kind the recovery like York, -- more markets our around guess, Boston,

William Crow

Yes.

quarter Your the And however it. of to guidance But activity missed in weaker. of pricing resistance in you've here just wondering I Street for maybe situation the on in a levels second row kind maybe expectations. aggressive, a is if sort mine fairly you want are I'm look quarters think Philly not this at X a is little of Miami, bit canary coal in the where

about heal. start other are You likely weather those more things some I'm markets just in California. of wondering markets to as Northern opposed to those talked to whether spread to

Neil Shah

we're that weakness or of markets. leisure-oriented most kind seeing challenges I is on the weakness think in ADR significant or the

is is level that, that XXXX of Some It just we as more -- that come of was some was up. overearned. a alternatives just sustainable believe, wasn't

and of daily likely -- is push consumer. in than can't further kind to in of we markets. some we the I you just got these people with in people, suspect ADR But more and There less believe -- conversations of mean, uncertain. some that are is XXXX also even [indiscernible] it

income student cards And They They money. little paying disposable and their have their their less kind less and of loans. are they higher travel homes with. have for interest credit rates a to

the we've side, where what so price sensitivity. seen far more we're leisure seeing some on So is

is March, still. and On the look of locally we still XXXX May, strong Corporate are pace rates out kind very negotiated higher are markets April than higher significantly the urban to L&Rs XXXX. as way across than June, and

pressure So seeing that on pricing not there. we're much

-- stage. And was -- we're But seeing for that if you this but if big at are a prepared we there point, demand. to in just not your just pullback

McKinsey, As than we expected to that kind continue to are were firms, users, properties through utilize they in consulting at the rates our and levels higher corporate travel go of at our continue major Deloitte, the past. our

In financial and as In lot continued Citadel. we're to are driving York also in other Citi we our They've of services, and outlook New strong and our and do pace seeing hotels. work with travel in very markets. Manhattan a in well in JPMorgan Boston,

second not at We're least seen this there on guidance haven't because and So we comfortable uncertainty of level as the just third yet that provide of weakness kind there. we quarter -- fourth to is we're to quarter. enough side, out out the not corporate look

look well there can recession? you but just occupancy slower, It -- of we because corporate the of be as very come. in and to Will that demand is lot has as still continue today, bit kind But the be to see -- the will believe could go, it in to a our kits. slow normalization recovery that these of of a recovery we forward yet recovery little levels from

bit But point, to Bill, it your a unanswerable. little is

are uncertain it's world. an -- We

September, throughout we see As November October, last momentum the saw December and -- our year ended, we year, really in portfolio. started to good

in fear a go it, even performance to X% almost -- strong you merged very hard had third of saw April. X and it's rates to month then recession, of that of believe discussions impact hard be expect. March and we we But X markets. and of It's our not would there not seeing the to to to into months January, collapses, performance In on kind kind X% a an collapsed, where interest March, from X bank have like one resort

remain we quarter. nimble at But But And if and in the the outlook seeing like today. of for our this we that we model we've we'll kind make feel willing need tough cuts stage, cost to. now the of we've for what to kind business reflected are rightsized

Operator

The of line next question with Jefferies. Katz comes the from David

David Katz

but or whether was anything could be side, point? ask the landscape of or that kind sold we either circumstances that sell to You And the at the potentially the that's covered come under side climate which some of expecting maybe and on discuss in should I the just a refinancing be may table off interest. the hoping some whether buy M&A to might drive already, -- could unlikely properties there lot this opportunities or market I

Neil Shah

the Yes. are market And now, stand willing to is interest transactions really just lot David, of world is buyers be right we sellers' isn't now, part conviction. I right cooled. a the like there think at where where on where have sellers to

versus X% I issue. It's year it's capital and is for return it it shooting for that requirements, just of and Like that ago, level equity also X% a borrowing today. is to private up their think at you're a us, just -- at aren't today it XX% is cost equity. sellers there

see where the in spend equity you There, where think private sellers. is to to markets. seeing debt starting we're you're have willing done real-time I get transactions some

You have banks and that loans books want to off get their like. the

And so I on think side. that some transactions you'll see

equity pandemic, you seeing actually We've these we're from at firms months equity some heard control you prices. trade but can't REIT buy of these first private the some because private also to those prices, get can similar X stocks that like

where some today. think activity we're And seeing so I that's

through today. year, more for As the forward they'll equity more think around lending, having refinance forward to I be when through may the a to that investors do of think it's we curve acquisitions just able move certainty matter they bit little catalyzing, a with

be like feel to real we this other that's X XXXX, But lodging of the next, a to pretty class. the to X we better continue towards going as in nearly the is next any very than or say, asset into of are slow looking in fundamentals end -- transactions estate and this year term On space months, think the market. longer the attractive. So

were XXXX We're next to quite periods to at X.X% kind those to XXXX, valuations be has or prior new space. and those went attracted to of time hospitality our X% a years. standstill. where bit, of it XXXX to going lot up of a that's XXXX happened were days, times the investors supply for like nationally Supply several to near come When in

being so as We have Until to And assets. comes, were. come. a it's hard seller that of don't need think we expect that any for for though, it to of us capital

debt the We refinancings to have down to in portfolio. hand on pay done cash get and enough

strong -- our most have growth all hotels of nearly good, nearly expected We today.

on sell so not trade major And willing the side. assets we're discounts to to take

There as shock to look On see demand the buy hasn't think opportunities. our forward, as and -- been will sector. side, we this hand, for I that going the we is develops a on be year one

the come So it's existing to been to are pretty debt -- owners. if so paydowns is there down just a but it's unlike very significant significant like going even the last several is downturns, X%, yield X%, painful for and shock, interest lenders liability require rates and

dispositions. So be kinds going we're going CapEx-driven lender-driven we're of to and dispositions, see to

us, As They than ever are are these that we doing, the from projects they more are disruptive. expensive you've heard -- they've been.

owners will last is and to more we'll And come assets market. -- to this the to continue see happening which when brands do when year, year those happen it, push across

think spread, later there will meeting into this think So in we're very kind opportunities. but just the today, There be a we I of acquisition XXXX, year there. and bid-ask significant be will not of

Operator

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

Chris Woronka

weekend is you occupancy it's I'm guess the especially need mean, but basically talking if a has comment very wall, to triangulate resort bit rate offset of hit about of So lower some with properly, loss hotels. markets, commentary bullishly that some -- markets, to this I mean, you're little And a the saying I of Is I I in expenses. certain strong. trying in urban a positions bit. up pretty about FTE little then this reducing square

versus you're little there where staying bit flat? a a kind is be mean, or FTEs granular way more cutting on to them or why I you're growing still you get of cutting where would

Neil Shah

markets, in it's think Chris. I

And it's think is meaningful to resort it margins. I in been. the ADR impact harder that push on a has than markets,

of see -- definitely where as so And ADR to the so resort on that at markets are looking model lead tighten deterioration much margin doesn't we those all business our side. to that lower can we

now. softness as focus we're weakness. bars, Philadelphia only it's some this hotels and this level seeing market the the that we got still quarter, forward markets, opened really we as of in up right and the on That's urban staffed the On is look -- quarter, it's fully second we really throughout seeing that as our as restaurants staffed we

even in we and kind -- comments or really Coast group on our kind business. on growth Boston FTEs delivering in government Philadelphia. West think that's expecting of urban is of are so and group in the small corporate terms In corporate, were that at and in focused the markets in I D.C. And on Ambrose, -- New York, markets of those X

continue areas, in little Florida, and California bit a today. we in those but we'll to And Philadelphia so grow are in Northern cautious more in

Chris Woronka

-- half -- you're kind Okay. helpful. then doing out I to But that putting see we're of do look think you into as into Very you in guess I we'll still the And half? not it's back annual I back year-over-year otherwise, not economically everything mean, follow-up, or and as guidance. thinking and a the know growth in your the likely positive RevPAR

booking cancellations transient there is tough answer up, [indiscernible] anything particularly anything out And yes, there the I But point. like trends are suggest you at the know it's windows way that now, very in to QX shrinking just or this it that? see are for

Ashish Parikh

it's back and our by at reliance really the the Florida, go lot drives year the it's we that markets. EBITDA. primarily for that Chris, on into have majority of portfolio, QX a mean, least our of the half urban South driven I as we of

recovering XXXX, wasn't QX a business because quarter. urban travel. in group lot QX markets The was it just there really still BT there. think there didn't no was just about in So of most these starting And that -- the was back. or you perform second of as well coming still were just international

it's we overall the continue resort just market. a get as have we'll to us, the we you And that think stronger on profile about we're the year, the resorts dependent as where really really So think for acceleration than for not of past April. remainder urban markets

Operator

question Bellisario line with Baird. next from the comes The of Michael

Michael Bellisario

me Two from questions today.

the but First, And property of year taxes, headcount just the you for progresses? the do other insurance, margins be talked I know might that on expenses already, might that expectations year. about throughout a the about year? what items and as headwind to utilities, what some

Ashish Parikh

Yes.

cost adjustments. go they up imagine would that cost just we more the of at us, living -- type For of of

year. is where heavy that is half as a areas insurance much, are or the an to built going to We've pretty wildfire adjustments the aren't markets models. that for go cognizant feel think though impacted area I insurance be we into in but not areas going Florida that we through back our parking-prone of

the weren't X It's years. -- or X last over affected we

from last So have had manageable. little in growth ours a claims, should Properties impact and that a years hearing be staggering the big you're more have few hurricanes numbers. had pretty some

contracts. an lot and actually And And come are down. a area have a we've utilities of lot done they of of hedging where fixing utilities

our rest we January. advantage the from any costs is of level on gas that that of increases the So the don't we're for took down we anticipate significantly, at and today in utilities year. Natural

Michael Bellisario

in And be Got then on focus any that analysts the with property-specific a a you should information more gave of Helpful. lot think performance supplemental, details. for investors that? rationale those at a you what the closer two, -- taking And in lot it. guys This was numbers? new was, areas and one, look

Neil Shah

across years renovations last to property-specific portfolio we help kind X several think last of model been significantly we the and and Michael, can community investment that transformed detailed providing an investors across the like then understand better disclosure -- seasonality this highlight the see portfolio has that X felt like would asset-by-asset you -- and to the I more and issues on I of through. so think the years basis

help this the individual performance the to understand that little we helps our investors existing made idea. we hotels it our profile predict has dispositions will added upgrades but better know for that the investors we've basis, level transformative our think all that more. portfolio. new think, -- on And and We've also was a of disclosure an value created I spent hotels growth our a ultimately, of bit

Operator

line of next comes . question the The from

Unidentified Analyst

than see where to prices Yes. stock of done you if more wondering I little at higher lot stock they a that sharp if wondering you was back can about what to ago, today. discount a your the are price. little talk I you used value. significantly drive in and And be was buy about a can can shareholder comment years

Neil Shah

our along for And hesitation a bit Board on discussed buyback that. we policy. a [Indiscernible] side, stock front, with of dividend buyback with on couple that reasons our quite the

gives forward average us and to may has to or It below on a impact year our good really and level allow profile. we leverage back come just is the peer of that pretty to And flexibility ahead. a in stock. buy a couple whatever to years us One, as reduce leverage our time, coming look significant X so just the more across spent effort sales last leverage to we much lot have

two and leverage one, -- so So constrained using excess it's for that back -- our and levels cash flexibility by just of kind stock. buying would financial be

remember. our We reduced below second bought we have meaningfully XX% were X is across reason that equity when because that NAV. the of levels at the to last before back stock bought our years, The X our the we of you cap we pandemic back partly trading float nearly

price. and recently probably stock I'm And March we or equity we from it's of the sure because impact that our think so something early I March, significant not was it index led small-cap And in -- removed our cap. were February a to were that on very

drop it have back. would Usually for weeks volatile. of bit come We it it X, collapsed, time, takes time an weeks. of world later, stabilize But the X from X little you got in X to a SVB more expected and when kind even to index, this to

many for harder today liquidity and like. it so just equity for cap take And make shrinking to will and stock from in investors that the we're a the positions we hear that time them our

date, the use right to determined reasons of X that has, our the not those Board our main And are capital. it's so why

towards immediately right rate floating off we're flexibility. It profile point our now, and more financial to be between will paying discussion leaning continue X%, reduces our that X%, meetings. is a that accretive, debt But leverage doing increases Board our at

is the that most on. important be we the today's believe flexibility environment, should market we For focused thing financial

Operator

questions further Instructions]. been [Operator No have registered.

back conference this I'll the for closing pass management time, at to So remarks.

Neil Shah

office. few going Thank you. please be in take around you to to you us. this any of the call to your in your moment be for We here a would all Thank we If in questions, like But anyone months. And thank morning. to can further if We're reach meantime, on But out you. again a the speaking time. do has forward time please helpful. for thank look we

Operator

concludes participation. conference call. you Thank today's That for your

You may now disconnect your lines.

Hersha Hospitality Trust (HT) 27 Apr 232023 Q1 Earnings call transcript