SHO - Earnings call transcript Q3 2017 | Sunstone Hotel Investors, Inc.

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Operator

Good morning and thank you for standing by. Welcome to the Sunstone Hotel Investors Third Quarter 2017 Earnings Conference Call. At this time all participants are in a listen-only-mode. Later we will conduct the question-and-answer session and instructions will be given at that time. I would like to remind everyone that today's conference is being recorded today, Tuesday October 31, 2017 at 09:00 AM Pacific Daylight Time. the Finance. to turn President Reyes, now Corporate of will presentation Aaron over Vice I ahead, go Please sir.

Aaron Reyes

of earnings Jake, By made have copy now you, available you third Thank and should all good yesterday. received which and supplemental, release morning everyone. our were quarter the

on If do them have you can a you website. copy, yet access not our

described release, we I you in evaluating would factors risks this XX-Ks statements forward-looking statements. contains subject filings begin, SEC, like to that forward-looking with press differ We those Before our which actual that uncertainties from and in and other those could caution including call projected. consider those XX-Qs, results to remind our materially are the to everyone to cause

non-GAAP FFO EBITDA, including We also financial note information and adjusted that adjusted EBITDA margins. contain adjusted this hotel may call

Marc Executive are Accepted call We with are President accordance Investment call supplement that we on a Financial go Officer. Robert to would After Springer, the us to that, Chief as Bryan like the Please Hoffman, over providing Chief prepared Arabia, today to to answer I in John. remarks, information be available turn Officer; information will and ahead. Officer; Accounting John Giglia, With Chief our Operating Chief Principles. questions. Generally and your With Officer;

John Arabia

recent guidance, Afterwards, the third morning impact and our of quarter portfolio. Harvey review impacts will includes and including our hurricanes discuss Today, earnings our our happy operating the I Halloween. third will Irma various Good additional financial results everyone highlights, color Bryan of provide the of provide updated a balance storms. review and on sheet results which on

our that it there aware by were underlying third in moving performance business. assess the made challenging more you of instances our some various As likely in pieces to now, are quarter,

our consistent portfolio the look better our remains impact, August. largely outlook our for in spoke we for overall unanticipated when results, business third we expected view than adjustment early quarter As with our the performed we across and hurricane

of our or previous delivered repositioned hotels against two meet aggregate Our expectations. in once our portfolio while reminder continued the to outsized growth exceed

growth growth Our of third XX above our offset decline increase by in portfolio X.X% in came quarter by in daily comparable average the expectations. of basis driven high resulting focus a occupancy. This X% guidance RevPAR rates, in FFO a range, points end RevPAR revenue stronger the share anticipated combined across diluted than with and organization, EBITDA a cost ancillary exceeded adjustment per our and that containment on continue adjusted

a of comparable XX Our contraction comparable result third level hotel in property quarter revenue increase a EBITDA increased and X.X% portfolio in as X.X%, a by EBITDA point margins. hotel basis

results strong third quarter were largely ramp two Beach performance up repositioned Resort. hotels, Wailea and of driven Boston by Park the our and Plaza Our continued recently

hotels excess these underwriting. posted a two second XX% exceed continue For materially to row, of RevPAR in in growth the and quarter combined our initial

XXX be well of this to with growth continue an which of by driven basis in increase Boston with to operations the quarter of Plaza RevPAR of points. pleased rate and high expectations even XX% X% We growth relative occupancy our Park performed

an In quality higher the from strong of and department, XX% during the hotel mix revenue addition business. the food benefited a quarter to generated beverage and rooms the performance in in

expansion basis posted half first point and margins the points. strong XXX the to Turning brings profitability, hotel XX to together quarter a an margin with improvement this basis in year-to-date

progress with hotel and seeing making business is we're XXXX. what great far future for the booking we’re forward, so Looking pleased

to Resort Beach quarterly also Now turning to Wailea results, the continued expectations. for exceed Hawaii,

index that how pleased impressive hotel closing and more rate progress renovation final as even the is the corners one hotel Wailea hotel by the the the properties. RevPAR basis growing quarter, During the and Well, the is ADR lapping nearby of perhaps we with growth performing on of nearly gap work. X,XXX of in nearly margins generated the hotel XX% quite expanded was has are points made

positive addition, guest rankings gain up momentum the we market. in continues moving to the In make and feedback in TripAdvisor continue great progress to

off guest a While hotel XXXX ahead the this believe holiday gotten post-repositioning, great XXXX. we drive as start important has will gains product renovated experience season the well we position to the into through and incremental improved look

on, hurricanes, Harvey the discuss let's Now, portfolio. impact our of and Irma

as hurricane-related mentioned As effects certain isolated ripple experienced we that short-term across Texas of and travel I to the hotels portfolio, the disruption the hotels in call, disruption. other Florida at in well our due weather-related beginning as

Hurricane back of and and incremental storm of the in property. was Even number witness a incur for low operational to rooms damage quarter hotels and both service, operational by levels that as fourth service of open hotels business efforts. open of Huston result to and demand quarter, remained Harvey Renaissance The remained the in to no the generated rooms Irma to sustained related with recovery of the our storm. number outperformed expectations elevated out modest two Huston end the November. both third Orlando due at during the during be and Our should with Hurricane the damage hotels continued a material of In

in the loss biggest for witness was transient Edge related weather to portfolio and Hotel impact damage hotel order physical related and storm The on beverage disruption. XXth. West, on This hotel was reopened Orlando & only sustained Irma. on September which our partially evacuation demand closed Our mandatory September Oceans Xth, following with business partially and during connection increased minimal Florida, Key profits which Hurricane the food Marina in offset a

given of portfolio, not All remarks. XXth the at of calendar of would in Jewish gear. the the growth anticipated the looking had the impacts challenging season of year and And transient guidance year-over-year as quarter rest Bryan will the the his discuss online closure that expect hotels year full of quarter the the slowly financial return third into back kicks on shifts in in of demand most be and September. we to rooms high holidays the the fourth the we until terms October were the

expectations results costs the XX some Alternatively, beverage also them hotels our were low. hotels York, hurricanes, New a exceeded Francisco, and or quarterly Portland, of albeit of our taking Chicago, and at met However, some expectations. certain in Food their San our clean encouraging the challenging short-term provided forecast. Washington we our consideration, exceeded more quarterly and in and exceeded Baltimore, growth Overall, boost. RevPAR more experienced Houston, RevPAR met into either DC, XX or loss including markets performance LAX. our up operating Operations Westchester of which profits

enforcement quarter the with beverage banquet cancellation in the the for we the increase which of X.X% of quarter fees relative X.X audio-visual to came in increase portfolio performance. to and prior see a Our marks collection healthy portfolio, sales generated in continue a food and contribution Similarly, room and the in in year. higher positive in sixth favorable now across and trends attrition quarter straight the in third group

last As in enforcing and I the but mentioned not and travel call, our generally fees. revenue turns collecting result attrition the in our being patterns, cancellation changing this is increase related more the of the operating of diligent on partners result

since total room nights as XXXX. group fact, cancelled been year-to-date In it's low our as

in saw gains wage While uptick we and we particular, in productivity performance this marginal comparable to offset EBITDA operating benefit are as than also costs expenses top quarter, wage more in In with average pleased portfolio an stronger line higher points were by XX led which of margins. our increases and decrease basis rates. were

stable. let's generally about which recent in remained greater So talk detail group trends booking

of strong dip up year, our Our prior in third was quarter third year see as the for the rooms pick the up meeting picked to in did quarter. group the the same as year. group XXXX, We in per compared attendance XX,XXX more in the group period portfolio

quarter increase the the largely historic quarter other and block was room actualized hurricanes. the last attendance resulting and due cancellation in XX average, prior below third from group point the to disruptions the was However, slippage at On of XX% year basis XX%. average which decrease travel our quarter weather-related XX% respective from a flight the of to third

future and in portfolio. the quarter periods group our increases our throughout operated the outsized booked our portfolio group to continued current the In slipped, growth moderated our XXX,XXX contributions higher hotels our production While contribution portfolio. than summary, as see combination in pricing of in room In of Wailea at growth the our within more third in mix across anticipated deliver attendance spend, nights. our of and quarter reposition of repositions quarter, approximately in and resort in heeded group stronger by earnings by driven room did we balance a generally groups our further XXXX, favorable of

ramps from investments of leveraged and recycling. selective up continued and the we the In our hotels, capacity Oceans Furthermore, well as contribution the stabilizes. Edge increase investment hotels to our benefit earnings balance benefits position addition through also earnings two of recently to us and sheet material capital low repositioned expect

area the had not the but limited is Renaissance Before ensure gratitude I team, well all difficult like in over safety to that I Kew also to hard our residents and at reopened and Troy no that equipment our it helped to members Oceans That members the associates, team’s hurricanes during manager in turn Edge on hotel at and the take entire Jason, personally guests soon entire to like our to the to the preparation, to call our Bryan, finally These providing their the of as difficult I possible. team made the help minimize worked thank worked an like get the West Lubos, provisions hotel. thank need. and Mike, and also condition protecting team in to emergency and our In circumstances. Orlando sacrifices the all make general GM fact the our as And for a the repair Marriott and entire to only others of damage that team to for general being hotel gentlemen doesn’t plate, I’d in on team our incredibly incredibly and particular, to through incredibly also the despite they needed time despite Kew hotels their hurricane utilities and hotel recognize moment guests West team personal thank acting stage hotel. Simon, would extend at manage and to with shelter to damage Bob, including of I’d days and only his Chris Houston the much want Bob our hotels. our it two humanly manager Renaissance but to and very took for the to two area also incredible own hotel not they Bob, did quickly Orlando and

cost all approach cynical it's name-calling some employee petty to I these in easy seem the think to Washington that all late. at very with the and of be days win

it like in and remind is world. actions With to types by all go Bryan. these selfless teams, displayed caring in this these together to over the they’re involved. Bryan, Again, of to I’d now people However, call they we’re that us the our all extend I’ll turn significant thanks ahead. that, please good and

Bryan Giglia

morning financial the activity that you, with quick of Thank additional for on I’ll finally, outlook an with then and recap some And revised sheet provide the a occurred start good our year. in John, quarter. and the color balance third on I’ll everyone. finish update the of

we of debt on X.X XXX ended nearly million and and sheet, quarter the preferred balance the consolidated to hand with third securities. of cash billion unrestricted Turning

fund complete to investment. While our million used retain cash discuss for which future a cash shortly, we of portion million this capital estimate to will anticipated that investments catch be we and up of XXX between will XXX dividend and I will

maturity in weighted and a of has place of current term rate X.X debt X.X%. average weighted to a Our average interest years

as XXX variable approximately XX% collectively over total We now our debt million the XX that debt have is a EBITDA rate our Our XX and XX% XX% debt EBITDA of percentage nearly unencumbered. at stands the of trailing hotels now of unsecured. of and period months generated is

facility hand, August an credit and debt $XXX we have undrawn In addition maturities million cash to before no XXXX. on

credits. and there the several expenses quarter, third one-time During were non-cash

all excluded two some information provide from wanted and we these non-cash While are routinely to adjusted FFO, items adjusted that are each. There charges EBITDA on the during recorded additional were quarter.

Huston in million approximately assets during XX.X book quarter. two the wrote approximately of we resulting expense of million our down to a value net value XX a a million XX new from non-cash First,

horizon reduced a long-term our the of decline despite a value owning this our oil Both for and we primarily line estate, the hotels adjustment these Over of quarterly Since the we impacted us expected and investment uptake hotels a each Because experience hotels consistent charge in financial recent performance and gas book weak in our relevant relatively hotels expected our be to real both an quarter. few should operations years which operations oil declining industry. for new strategy supply publish let record the value. are with combined have last to prices. not in with supplemental, in these with imperilment by

The reviewing the lease, approximately lease simple a from acquire non-cash in it purchase inception we reclassify quarter other LAX interest we bargain interest. the After was a expense that operating capital because lease. recorded should as of the year's embedded have recorded capital XXXX been of lease at ground concluded the the of have prior to a fee Courtyard this to million to X.X charge lease

we we present lessor. around interest adjustment made where included credits Hyatt Going recognize the to continue forward, these also actual capital adjusted were adjusted the recorded will non-cash capital in present to lease be during in September the adjustments lease an that to cash we way ended for building the EBITDA these Chicago's FFO. same made will several the XXth. and These There period payment the non-cash

million approximately net of have of was the Prior level projections, realize value or to taken tax of this non-cash leases a release as realize of losses benefit operating at allowance level XX.X will to operating benefit First, After now the our taxable there a allowance, income of of related subsidiary. release whether the uncertainty we be we remaining their historic the evaluating high previously to operating able losses confidence reach valuation the will you future exploration. prior their not to NOLs. we we a to and that of net the performance recorded our

asset credit as non-cash of was liability and differed expenses back applicable. considered remainder a was other and both FFO prior quarter is now to and remote sale are all credits the from gain, recorded the a EBITDA added related have been that The during potential items a realized, the as adjusted as X non-cash these gain to adjusted million

release. full the Now supplemental, Edge. our at full turning XX reflect on year be well guidance expected fourth page in found quarter fourth a the to earnings to We've of as operations as XXXX quarter the can updated Oceans adjusted and previous full year guidance, our impacted reconciliation hurricanes our

to the the expect as hotel ramp is up fully a pre-storm now we levels. the While slow quarter operational, in fourth hotel returns

was to fourth For continues This growth hotel quarter, prior we Edge, to exclude RevPAR in year. and the expect portfolio the between X.X% guidance X.X%. RevPAR the comparable open XX which reflects and comparable not portfolio Oceans

and quarter We to and XX expect fourth between FFO adjusted $X.XX be adjusted XX diluted million million share and between EBITDA $X.XX. be per to

to year, RevPAR full the comparable and For grow between portfolio we X.XX% X.XX%. expect

we to diluted not Edge does $X.XX $X.XX. XXX for full full full million our outlook and lingering be and expect operating for but that between year insurance under with adjustments, rest the the higher We our the relatively estimates for collect year interruption business through unchanged we the the outlook kept of remainder seeking respect are from any environment policy. storm guidance. have excluding FFO year EBITDA Hurricane Oceans include and following the XXXX We impact, This year of guidance storm to and per between reflects adjusted to adjusted cautious remain to million, existing year be related revised Irma XXX updated the and share proceeds

the increased reflect and remainder have quarter our adjusted our the in we our forecast FFO does travel the EBITDA for assume results, While third business acceleration of meaningful to year. midpoint not adjusted of range

in the quarter to our distribution expect for dividends first of our dividend be undistributed dividend $X.XX expect with remaining the midpoint and share. fourth between requirement to up Now be we a we our on declare taxable Based dividend will outlook in quarters would of to range the guidance X.X%. $X.XX per equate quarter current our to yield the paid generally prior fourth with the a turning approximately Combined equal that income. catch Consistent practice to dividends. years, three

the board up now approved With outstanding Jake, our quarter. dividend, dividend be call the turn of from this like on the Directors preferred to I'd to already go Separate approve common has ahead. questions. to amount series it will later over quarterly Board our distributions of final routine please will catch both the securities. Our and declared that,

Operator

go with to we'll And Instruction] [Operator first Barclays. Powell Anthony

Anthony Powell

yield Ocean 'XX longer Edge, stabilize XX.X you to you forecasted to it you And Irma forecast to of acquired When you next million X% between EBITDA think Hurricane and XX.X How takes X%? does get change million. that year? do

Bryan Giglia

Hi, Anthony, were slower back will pre-strong the disruption fourth ramp the condition. get if the hotel at happens catch to which next on up to year EBITDA that determine back we reflect behind Oceans up will quarter anticipated rate it's Bryan. did Edge, operations the or Depending the the where quarter adjust and to With ramp up. fourth its we in

a be. that what the the need of little but statement until that going point. determine to up little changed October storm, to for will the did after city away a same We to Please West slow Key been following make the bit of more storm, remember ramp that visitors rate the has time is up end was stay to

season entering are the high We now.

working very update tell, be time we’ll So, And a business velocity an few to there during will be too that of but that filing, understand and still the next the on to weeks again it's this to be that on the claim interruption call. next amount and ramp. we the important are timing will have the will early

Anthony Powell

the the at Francisco, Thanks booking alter house a job and next citywide calendar in a strategy you’ve ’XX to plan lot. in group. you good market? that do How of done And San improves year in in

Marc Hoffman

Anthony. Yes,

you huge where city talk impact? said you next want also about XXXX year the me we think has to right or mean I XXXX

Anthony Powell

I strategy do plan both, yes. I of really? citywide improvement you change the How guess given guess both the in booking years

Marc Hoffman

Yes.

for citywide rooms, that XX% a Francisco XX% specific room behind year currently to So, associated also XXX,XXX with us, XX%. that more day are nights impact higher on affect increase XX, next that’s up room XX. a for books conventions rooms citywide is number in of of a it's nights still The are San the citywide but X,XXX

the focused books, XXXX, in for hotel. very the of on And we’re of has weekday peak We year are placement we nights which city want where currently in history in in be the Currently to the right XXXX the million and X.XX the ’XX, is and the any room internally the on weekend. ever between place city.

So, compression, we that is feel about transient remember thing we rate the that one and city to with hotel do between is better and than group. our the

So RevPAR. placement we in maximize and very XXXX, picky very, if anything to rate be will about

Operator

hear we’ll Next Street Green Hartwich Advisors. from with Lukas

Lukas Hartwich

demand John, economy growth. seems seeing yet in improvement touch I you just -- on hoping the to improving, was hotel be could not and we’re an

just you hotels? curious, driving in seeing I’m what improvement we is So, Why do any think that? aren’t

John Arabia

It’s I a a question, answer. great had Lucas. great wish I

As talked in change overall not looking details think of are there within hotels or past, large. levels for current any about business. we’ve of in our most the constantly is ascertain whether I To along just by muddling own in we’re as the environment

you of where acting two would quarters much of versus row a group later we of later are significantly fact You in terms but elements very are that’s know something production the and various in know a looking stage has we’re stages the moderated there that not the support at. that in the and cycle cycle in

to the pretty are remain to in business view are as visual has food know that or beverage tell fundamentals. short-term but there whether reacceleration in been It relatively hopes not of strong audio in early should case. it areas bookings and not. prepared there unfortunately banquet and our quarter We conservative be underlying happens too is also or the hope operating robust. still you I been our quarter have we've the On that the for the actually other spend such hand,

Lukas Hartwich

quick EBITDA but a then last bit, as and In up down was one. just a quite Huston, helpful That’s bit was RevPAR quite well.

disconnect curious the there? kind just was So what

Bryan Giglia

pieces Bryan. hotel. that of There business one is that cancelation a in of Hi, was charge was for Lucas. the This contract

Lukas Hartwich

Perfect.

John Arabia

do held sizable hotels market. relative that business and our over to up have certain the for fairly And held cancelation our in have us. you were we business from remember, had provisions -- there If Huston two piece a hotel that several well the accrued us of -- actually up contract went hotel past away quarters

So, those are actually related. fairly

Operator

from hear Jeff will Wells Donnelly we Now, with Fargo.

Jeff Donnelly

just first a question, Maybe John.

And opinion, you reimbursement looking implemented I'm think market? has influence just it's travel, much I'm does hurdle to pricing behavior to I occupancy profitability, that just of Marriott your owner hurdle. it. a to extent the in at what curious, thinking for about been all in call how how integrality, something do guess you transitioning I beneficial more hotel the to award phased RevPAR, that see as curious rate the you're above? the

John Arabia

think conversations terms consequences, these changes too early making making longer and a programs unintended of Jeff. conversations, are about been of any I final has that on participating having in some cancelation to guest attrition and tell, Jeff. Those have for that of for however Marriott others do change the to ongoing, too negative some are discussions determination apply remove early we and cancellation far tell don’t made. those but been certain and in we windows

Jeff Donnelly

to And we worst ramp through to but the from of guys the curious, are you benefit thinking back you I first the you're right about in if district, materially back half. planning guys certainly How I'm center just years necessary convention the of that gotten the as past just than of heart maybe over kind kind I'm out? of Francisco. the the think San not some flow. San strong maybe you kind Moscone. switch We've just gears XXXX? curious, move Francisco how know

John Arabia

been the performance city. margin San comes bookings we're got, Francisco constructive to for there of in I the it on incremental XXXX. say into bit have seems wouldn’t that San the little more out we Francisco. yet On woods It necessary when

the think uptick noticed city that investment I that from has in is and directionally towards enthusiasm the community, have an correct. there been We

earlier, city I real into XXXX compression. said of there going do in the a the feel having positive XXXX. had win city the be earlier, is like amount to Mark should is and Mark incrementally where we banner year said said come and enormous moving about As But like

Jeff Donnelly

And renovation undertaken. of have sure the if I just versus Can you've bit I bigger Plaza like of talk but curious renovation? one. know maybe RevPAR they last been more projects one those to sense season kind you this, a have LA, some sort maybe Park they post not a pre-renovation looked give to am of versus little of perform concerning handy, about the a with has index assets just details of there you maybe kind but just of I was any how expectation? us have versus little

John Arabia

replicating I'll our what I let's achieved, to to RevPAR example would over just less which We we in XX that set portfolio. that moved XX%, for back points than were get call in And to house it XX% other we have. you roughly me XXXX end -- of some XX index gap. XX fairly by specific of the achieved me below Jeff, ADR that best that for is really rates versus success with so RevPAR the have worst tell or meaningful or Seasons Four currently the the very on you in And about numbers -- was excuse versus meaningfully, moved house closing that not which the hotels terms in street. a ADR the Wailea, in as move. you tell the high buying you but best talked and know excuse the financial us has we

Operator

from Now Raymond Bill with Crow we will hear James.

Bill Crow

of all start big came I'm down with happen a to just read it get monetarism whatever it? if want wondering, can Key there. couple down weeks the for the I'll call annual West. of one ago best you you John, of a or on that

John Arabia

more Fest and see XXs. in prior We Fantasy to it teams, started originally XXs. prior Fantasy off in was did we Fest, Keys. forecasted Fest, past the from occupancy to And but built in the literally the we were weekend hotel, building reopen was hurricanes, for So, low returning than the time that see occupancy then did up lower Fantasy to this to we we had people

say incrementally market the are its the progresses would was I as gets that continues back So that on same hopeful and season feet. that positive as we

Bill Crow

just It of seems particularly different sheer want I'm front wondering, if heading a supply and on perspective year the narratives like there is has been to the outlook a couple of give on next 'XX you supply and 'XX where for generally?

Robert Springer

It's Robert. chime in can a I that bit. on

is, see supply I about themes out with to supply continuing track we that and market-by-market markets a think to that is expecting X% obviously growth new example, think I about Portland, that's hotel the you we meaningful depends meaningful use on has that as I'll as XXXX supply. Manhattan Philadelphia Orleans, consistent. I new certain refer an about as include fairly where which your in get for we supply. well as It commonly example. to at other the Other expecting with markets market issue continuing just are is got received supply. it growth sticks new these, supply market New we a to supply markets talked new that Manhattan. expect remained as X% and meaningful or think are at tracking been Obviously, look expecting In

the in of by in really Our really business is it impacted supply. as district Conshohocken, so much hotel get as doesn’t central Philadelphia actually

tracking at on But meaningful that. So, while look we portfolio-wide particularly if submarket, Philadelphia XXXX it's that seeing that not directionally but depends supply you should Philadelphia our on it supply you is growth our basis, and in are X.XX out it, between average, to as call X.X Western in growth. be there how slice somewhere maybe Obviously, it it slightly it and below supply X% weighted dice correct.

Bill Crow

Robert color. the supply Any peak perspective thanks after you won’t And from think the growth ’XX? that markets until for

Robert Springer

mind have mind. that and to good, comes to comes don’t that Not not

Bill Crow

sales finally real Can from about John including the over clearly long-term estate you would would bucket the for relevant you Houston. the I me, just And have focused other in talk on still Okay. you prospects put you assets guess near-term? that some

John Arabia

Sure.

relevant asset Our to when strategy would all into of at I the you estate fit bulk and look long-term clear think our very the a take with it categories. those is real value,

in still However, of number hotels there rooms a total total measured effort. hotels, maybe are our

So continue estate. say we after time into portfolio to to form the short And real long-term way rate relevant sell that methodically shape continue to or assets concentrate that to would some descriptor. will fall in

We have of call close I’d XX the in that. and $XXX million to assets sold rough months it and numbers anticipate past

Operator

from Smedes Rose hear we’ll Citi. from Now,

Abhishek Kastiya

exiting any looked on or you for would Abhishek markets? to next months? over Smedes. or to there in primary Hi, or new this be enter is markets consider maybe completely secondary Are XX And markets that any those that X you

John Arabia

external you in know done the well and even know past. more though evidenced past roughly become the of that assets distant hotel as You years exhausted team $X over and we’ve have by Robert billion has tires acquired kicked literally on one not in so difficult growth three due fact diligence

form would think likelihood relevant of low, predominantly more real the we fall or near-term say the shape do relatively long-term would but in I fall one into that acquiring estate as in would anything primarily markets. acquire and let’s something is say those

Abhishek Kastiya

the it add on other lot opportunities like would seeing still And factors? are for market dependent you more and acquisitions? of value Or be

John Arabia

deep expertise I Wailea think same Resort, the we successful. be of did, above. I very Park evidenced both have been projects we we that Boston believe by those the do Plaza. deep dive as Beach will fact It time, successfully that but completed At have the repositioning to

expertise have in that believe I house. So we the

just our only look really would almost enhancements, meeting type. a requires say that will that at Oceans and capital. no that, up other And was However, investment take some not operational when you I Edge, opened a that be than property

So will it depend. really

Operator

next with Bank. from hear Deutsche will And Chris you Woronka

Chris Woronka

missed I earlier. out Can a you overall -- give guys for if group Apologize, XXXX? pace it group

John Arabia

Chris, it's not you guidance John. pace the XXXX today provided pace, is would into we moving stand portfolio for I provided XXXX tell as our Unfortunately, however, positive, XXXX. we've on group or yet

Chris Woronka

getting the you few guys changes by I question Then new Avendra, Avendra is ago, sold you is, two any owner? with just great. now Okay to guys second anticipate years guess itself a owner. Do new a efficient

John Arabia

or existing comments that, Avendra, that, should the clients lends don’t BuyEfficient happy than to owners but made any we other Marriott have ask of than to have would you on about has benefits That that incremental other the Avendra. nor public

Chris Woronka

the just point outside the I of And hotel not fair sheet were of Is are have bucket enough. that? in theoretically balance that, if happen to into held noticed, sale being marketed? Okay could something on Huston, XXth. as looks they those move there September would a it on for Or like they

Bryan Giglia

by whether it's goods are criteria not something put to for There Chris, sale. into Bryan. Hi held several or actually determine

you have and evaluate of transacting have is be frame whenever may have a You so, in in we loosely market criteria a to a market into certain those be meet we the it something if marketing held likelihood out shopped time then would that quarterly in and within we and or to to basis taken for move sale.

Operator

Kelley will we with hear Bank from of America. Shaun Now

Shaun Kelley

easy front, in think all I hard to. first of thanks all track been sometimes of stuff towers all that, lose it's up to personal on work our of done that’s the ivory the John, comments all for the kind

because And to lodging markets. across overall when how question off up some and that sectors broader reminder REIT look the then one kind have concern is there of and season covered led just So ground. performance for -- guys CBD earnings that around, of you thanks here the But plenty the stacked there. we relative

your think core look I mean I we at clearly buckets. we when look at it in portfolio two

underwriting you then the core. continuing got got well properties that the ramp and You renovated to your kind extremely are above

we is then CBD drivers. As different bit different having your little just are portfolio kind little markets may level think the about core, be and

core whether kind can kind environment I'm whatever or versus you or stack out it's like in baseline operating now to about the would are or seeing And numbers that for up this now? how just stack broader think you up RevPAR performance? XQ you how right us the us like, the we there So, do think curious expect about help industry

John Arabia

industry meaningful maybe example, the Chicago is that think clearly late on be Yes, very REITs generally is pound kind not reporting. what other of of on real pound for is company. hotel and notably the from some the dissimilar significant important modeling of point, stated earlier or just portfolio The just rest just so Boston its without to performing Wailea, as I are growth generally you’re and are which I said Shaun, along as our and hitting an some what difficulties. New of in York modestly seem well And underperforming concentration to for had publicized doing urban

I made, the you comment So, with can't disagree whatsoever Shaun.

Shaun Kelley

that I you the 'XX whether looking? to in that kind San looking San company little specific mix it's out 'XX? anything different forward looks leave of your Francisco, side little a of renovation Chicago so Fran's maybe in we've one exhausted mean can and highlight you out, but or reason geographic or portfolio Any you'd on that initiatives differently are investors performs are

John Arabia

a have do pretty Diego appears we year a year. asset in that will have sizable it next San that Yes, good

the to speak positive. on weeks continue little believe and we Wailea deliver so the overtime. will in despite it, into And will that to company Boston gas fact that have yet the few bit the after be to hurricane come ramp provide We to is then acquired Edge to finally unfortunately Wailea believe incremental the best that us earnings hit while a the Oceans to more and should We for appears tank 'XX.

that’s I So would generally highlight.

Operator

Allen And Morgan will Stanley. next we Thomas from hear with

Thomas Allen

what color and expectation. In a on the the San us more just little that you press highlight Can your you New bit Thanks. York release, think City, Francisco markets that? outperformed drove Portland you give

John Arabia

for reposition fairly still quarter, had they although those in more to our slightly had over things. different assumed those better and and expectations, turn our Yes, low happen expectations fairly than to the we I'll our expectations of it other a couple some slightly guidance into better the hotels. details, we whole And for Marc. And in of in to that of than negative come just and -- underlying going cases hotels negative forecast. all With in particular, remember, host growth for our RevPAR this general quarter

Marc Hoffman

based to the be to city while performed from has the hotel eclipse solar San the plus the also some resulted were with better. absorb small is In with particularly benefited through weekends. Francisco, hotel Yes, you. group over short-term Houston honest in In it New market better better holiday Portland, came And short-term from that pick five demand. as much market the we demand hurricanes. on which from that benefited softer, and again hotel had the did that York, its was benefits then up Jewish then from And that helped of the group market the business

Thomas Allen

to there you a a way is then -- do quantify to think business displacement there And is actually the Houston? hurricane way in

Bryan Giglia

up we the In third quarter, Bryan. that of business. $X.X think from million hotels picked It’s Houston in we the about two EBITDA combined,

some into in Orlando beverage. also. whether be group for and actually the travel hurricane loss that transient, teams we during but and is rest of some very is of it'd at while That portfolio quarter of food business San that which That it's had the XXX,XXX because time time, had our Oceans had in that and lost we’ve group related is quarter, hurricane yet of for Edge we what being some with quarter obviously have to difficult the revenue business And EBITDA. additional that the built about the the of we of offset in had the then crews short of other then see the will did one so rest continue of October, but third the crews, lose week Looking then of whether some business. the construction that boxes, some by had Diego and fourth nature business some period term

Thomas Allen

the you that that of neutral? impact, net out of the Edge but kind rest that So the should the into of we kind Houston, read Orlando, Diego, San of it hurricane call Oceans the the impact

Bryan Giglia

loss, negative we in a For to result Houston, pick what it couple it's don’t know dollars. if due up impact talking Fourth we’re slightly not. the the yet group but thousand the third positive or hundred quarter, of of will quarter,

Operator

with Now onto Dijkum Floris ahead Boenning. moving Go please. van

Floris van Dijkum

hotels, is comment difference your Marriott don’t performance there but as quarter you hotels. again on Could you any I maybe was Hilton many some have specifics there as around branded -- Marriott between last talk and your could know the Hilton in of you that? If about if -- hotels a the significant

John Arabia

No, brands. hotel performance I was wouldn’t have would more it specific do take with driven anything it I say the that factors. specifics by to

Floris van Dijkum

mind? sticks in that Anyone your up

John Arabia

a Orlando last difficult the quarter had third of Houston two expectations. did Orlando than hotels phenomenal from Well, no, had for a memory. fairly -- example better poorly just Renaissance to year although a comp

Conshohocken, was tough the beverage. in something RevPAR XX% D&C. hotel and we West the I Philly of great like quarter up third comp a our year of with think last in food In had our because

just were say a would I specific it's brands anything than that So, the market doing. more

Floris van Dijkum

mistaken significantly hotel a think Right, outperformed but and the Marriott Conshohocken in RevPAR? by X%, Marriott terms about was Hilton of right, your if not I I’m

John Arabia

but between outperformance Hilton on Marriott on Wailea Renaissance, heavily is real and the the DC Yes, really Wailea… driven and

Floris van Dijkum

it. Got

John Arabia

quarter. RevPAR XX% through a growth Over the

Floris van Dijkum

out question tax that -- was there with And on gain, X your for earned that, other part had one it. that --was Is sold. that previous asset Got million dissipated? I the that of reason

John Arabia

it that to is deemed the earn to potential now based exposure remote. with implication, a no so was be No, liability on it have a is cash non-cash, gain was differed a would there but out a

time gain at the of a gap was a that’s the from piece differed. why And so of prospective sale,

Operator

we And questions Sachs. will from Grambling take Stephen with Goldman

Stephen Grambling

still there it's for Any to Starwood from number coming merger Marriott but move kind expectations And follow-up any core to-date. the the up your down related realize expense that peers of maybe are horizon? as on some on early, or alluded contributions have reason could the of I limited year? inflation

what you your are expectations? Thanks. are So seeing what and

John Arabia

side. was I cost think the question on the

And wages those there rise, and is is where mind, the comes remarks, markets, we're competition overall and to later we've and associates say mentioned New benefits. little benefits on tell, for anticipating too growth. some mind, all York that seen early was early bit type then a on we question pick particularly up certain markets but prepared that's And in Particularly second comes too of cycle -- has I in the supply benefits. Marriott tell. in benefits seen I we're wages seems managers we've Chicago As just events question to to incremental inflation been it in seeing where I result of to from still Starwood, think to think the would

Operator

Go Scholes SunTrust. And with Patrick please. ahead

Patrick Scholes

out are have able your called John, similar earning if weakness? a you to you this inbound weakness number that in so, And weakness? peers season, in of international. Are quantify fellow seeing

John Arabia

unlike Not really, now not, international our generally is And actually Francisco. York, that San Oahu. be a XX% it it in roughly domestic or XX% have a market, markets bit we believe New the little then travel would

there, noting and significant so our a seen we've in tourism, believe So slight up take, that stands for I portfolio. up Canadian

Patrick Scholes

or long-term Key on you of have And hotel. thank of West is government the Okay, just that How redevelopment sort say, relief then the contract, that contractors? much business you.

John Arabia

Zero.

Operator

And FBR Maher our next question will come with Markets. from Bryan Capital

Bryan Maher

gain give you Just something kind the like potential really of at out of guys on confidence Huston. be doesn't with level RevPAR a your sound It Houston way. strong specifically you? that long for already people that there properties that. Couple you Is they tail of earlier to leaning on questions will come don’t there highlighted are have tail reported of the that have for follow-up Thomas' a

John Arabia

in there. our in difficult various as sizable mentioned tropes actually we more anticipated And of remarks, quarter. than the be piece in year. expected. we last of year we Again, knowing hotels contract quarters business away we prepared mind wins actually will Houston were better by Keep fairly even tail did in two the business a that third bullied think we at this there Yes,

outperformed So from of as have I collection we we last believe taken couple I year. I more launch this we my outperformed believe year

Operator

for follow-up Barclays. Looks Anthony like, a have with Powell we

Anthony Powell

market inflation. that year-to-date relevant market does bleeding? supplied in and do to long-term Just your you fit How stop EBITDA term? down And estate do the interim one real How can cost high difficult is view you there for what growth into with roughly long the me. XX% strategy? Chicago

John Arabia

happy a within -- it that is city it however and bit Chicago little had the folks sit. we a we are great to city city a it number continue more phenomenal is It Anthony. issues develop who other made city in make that debate, a taxation with challenging. of the Long-term, issues one where It’s and particularly

after Our you doesn’t Ohio tone that’s good I Embassy ton can That’s question. think that But at and do cyclical. could internally. that a is something State very just engine a know debated be ton Suites be mean will little

Operator

call and question the conclude session. that over Arabia our to I'll remarks. turn closing John answer And for back does

John Arabia

Thank have and and you much everybody a very very care. safe wonderful Halloween. Take

Operator

conclude your ladies for this conference thank now you today. and We With does gentlemen, that, participation do and disconnect. you may your

Sunstone Hotel Investors (SHO) 31 Oct 172017 Q3 Earnings call transcript