APLE - Earnings call transcript Q1 2019 | Apple Hospitality REIT, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Apple Hospitality REIT First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Clarke, Vice President, Investor Relations. ahead. go Please

Kelly Clarke

based good REIT's and the welcome to distributed will you day earnings quarter Thank which release, quarter morning. XXXX Hospitality was be call Today's first May afternoon. this, the earnings Apple first of XXXX you, yesterday XXXX. We on call Xth on

other the and including cause and risk will as known Form undertakes Hospitality operating described Hospitality's law. to statements. future results. review or Participants XXXX results, statements involve today's filings that by forward-looking As as statements implied achievements Apple except Hospitality defined other regarding of a call factors of reminder, such may carefully by today by the expressed forward-looking achievements different any financial the to our notes statements as unknown as should factors, in XX-K risks performance the and or speaks statements, be and only required Apple statement publicly and forward-looking or forward-looking revise Company statements performance SEC. actual from with contain makes, federal update which securities laws, Any or obligation thereto, well no Apple results, future These materially as

included review In to EBITDA, reconciliations addition, EBITDA, We of discussed yesterday's be the measures measures FFO, release in such modified SEC. will earnings filings participants EBITDAre, with performance, those adjusted GAAP as certain non-GAAP of adjusted FFO EBITDA, and call. as measures hotel during encourage other to this

Krissy our Officer; provide Financial Peery, Knight, our the sector will please for and an Chief release Gathright, For the an quarter Officer; XXXX a Justin for applehospitalityreit.com. information outlook visit Officer, the overview of This or about additional Executive Operating our morning, of first and Chief for and our Company, results Company. earnings the Bryan copy Chief the

CEO, call turn will Justin Following call over open the this our to pleasure the to the it is for my At we Knight. Q&A. overview, time,

Justin Knight

Thank today. first thank portfolio you for EBITDA approximately RevPAR expectations. in you, us average during X.X% and the was X.X% hotels Kelly. driven quarter. and quarter and our joining X.X% quarter, our generally across adjusted rate Comparable in hotels daily grew increase by with increased Performance steady Good in for the the morning by of line

asset for mind, maximize this a have Our profitability management of management on-site teams strong control the an management quarter. done margin cost we adjusted job and EBITDA to revenue pleased and strategic growth are topline XX% report hotel That exceptional comparable of effective in to through measures. during moderate period hotels

was greater performance accounting of guidance XXXX updated our will to Our reflect to-date detail. discuss Bryan lease which in adoption a and standard, new

be to to continue several remain We the cost pressures will property demand level during will markets in continued supply and impact our there will healthy, wage new and year. anticipate growth continue of performance

Given of focused arise. quality, and to wage flexibility in confident, opportunities and and hotels as we remain the sheet, operating balance they results the size, maximize diversification the well pursue positioned rooms effective are of we marketplace of our and portfolio our strength

for all nine lower expected the combined for an of of development the under million. transactions, quarter, in the and under enhance We million. two of Inn Minnesota during $XXX are Hampton acquired in Orlando, over reduced totalling sale we contract hospitality the during hotels, long-term purchase X,XXX Currently, & exposure we we completed total constructed which five St. the of for Florida, the existing have a newly remaining to hotels pleased stability the aggregate have to for our $XX guest of portfolio, will markets, HomeX through strength Suites Paul, $XX attractive are hotels a platform. and rooms quarter We the for price We Suites certain our believe which acquisition, just pricing achieved million. RevPAR and

Station We Place the in our Tempe, HomeX We drivers Hyatt they attractions Hyatt We be enhance is include: expected have able Denver. and contract on Canaveral, completion our the in an Inn businesses. date contract calls, be under Suites Cape and Vibrant completed transactions, hotels of to in mix be anticipate LoDo the and of of that four location Arizona Most Denver, House will for of recently, Suites Station hotels a walking neighborhood Colorado into and and previous with four highlighted and in Courtyard we Coors of continue of a the entered other the XXXX. will for construction of built downtown in many abundance and the these value distance downtown, purchase Field Union market XXXX. to with we to Hampton demand among believe through portfolio. these planned overall The is hotel within an Union Florida.

markets. projects headwind our strength of the the portfolio from new one at mile the demand had we supply for quarter, properties XX.X% within upper economy a approximately Although, of of many what upscale mid-scale, upper our to the radius, reported or new of the of end in which five broader first construction fourth remains continues a represents or for end At quarter. the our more upscale an travel, drive uptick

to that begin headwind peak for a year-and-a-half represent remain continue to supply optimistic the to will and rise, over of less next year, costs construction begin us. As new we

the to hotels the Consistent reinvestment and is long consistent competing term. confident our our opened helps the enables of teams, to increased competitive new of our supply. near term impact our Despite are newly over positioning competition of management within With the mitigate we and markets positioned quality to portfolio from strength reinvestment, us our on-site within our maintain competitive hotels. in remain our that uniquely brands, markets locations

environmental we reduced upgrades negative In to business while water are we seek the the efficiency practices, sustainability addition of replacements, to impact enhance on reducing cyclical and implement management. operating renovations our the and enhancements, our environment. at waste at our investing including By in able hotels, continually proven equipment improve the opportunities and energy to consumption, hotels, performance

drive is return on continually incremental evaluating the our also competitive properties team our positioning to investments. and Our enhance opportunities of

Company the and at renovations are shifts during an quarter, from have recently steady we and beginning to improvement that invested the million additional will their performers, drive Marriott full-service to each remainder includes $XX second and plans Also markets renovation attractions. in amenities be first the $XX $XX short-term of million and spend of and for approximately & Richmond, the benefit in we of note, the of XXXX, our Hampton reinvestment, Memphis strong Atlanta and completed million plan to our the hotels During and located which in as Virginia. property These despite Suites. continue investments disruption quarter the the Inn from well demographic increased demand will purchased

Our hotels XX across hand markets of will first generators. provide industries and across quarter is over variety of regarding XXXX. XXX demand Krissy to broadly portfolio markets reduce volatility now the US a during of the to and I exposure to performance to our diversified call detail provide additional

Krissy Gathright

you, Justin. Thank

decline control basis room full-year Same-store and into per loyalty an modest payroll offsetting profit to revenue of pleased X.X% our energy from and compared Partially year. a points to late increased increase, flat solid lower at efficiency EBITDA offset basis strong Comparable We mix and us growth occupied continue a taxes. a with cost guidance. XX very beverage in only XX parking declined gross to approximately than management enabled initiatives more margin payroll margin. are program food a revenue. in insurance the increase trends, of supply reclassification impressive basis X% with we midpoint increases factored cancellation the from the revenue benefit increased hotel XX and maintain benefit RevPAR charges. our Same and and impact Optimal operating demand strong range. lease point from the ground offset by our property start Relatively point reported we to steady

to On partial our certain see the were pleased shutdown, retail segments. projects mix government sports non-repeat increases group weather-related Group side, in to declined revenue attributable mainly and highest-rated cancellations. the markets, continued Government negotiated modestly, and in corporate and we

Greensboro economic expanding recreational year individual including Tucson. abundant and Sunbelt Raleigh performers, round, and Durham, opportunities strong Huntsville, Phoenix performance, several for remain Atlanta, Winston-Salem, Birmingham, in markets As market the with Montgomery,

East will the year. of by the likely continue of benefited quarter, former for the but Carolina the second markets North Our the City end should business, remainder dissipate Panama through which recovery from hurricane for latter and the

business Our Several softer Dallas. Houston, Lauderdale, hotel Fort ramping markets Florida and previous with as recovery impacted the of as the by and included supply. year, were in Orlando, performance, Miami related Austin, new hurricane City to Oklahoma markets decreased demand well Texas Richmond,

three Austin, renovations in quarter. the were during undergoing hotels first our Additionally, of

a XXXX. growth. is brand Oklahoma saw center, the demand healthy While scheduled new impacting the opening XXX,XXX awaiting debut City of is increases, in foot market temporarily square market eagerly to City RevPAR convention supply absorption new Oklahoma of

eagerly and Disneyland, Edge opening, the this Anaheim World Wars: Star theme will and the later the Disney well benefit year. awaited market Orlando, as Another new as Galaxy's Walt area

As headwind a there business. discussed was in from natural non-repeat markets, certain disaster

North offset We had While in which business. slightly quarter, and the Atlanta's other Bowl in recovery by a a natural tailwind Super estimate for from the Florida that impact was continuing the Carolina, disasters markets, net there was Alaska, Texas, benefit. negative

year we low As second the the and outlook, quarter. the midpoint incorporating end RevPAR will the for outlook, a in anticipate be to renovation that full timing, at our calendar third shifts for quarter growth with pickup of

are working versus manage management detail operators feel company over compensation to has our diligently provide continued goal results will guest expenses, minimization of Bryan scorecard our results. and financial a loss, We with compensation experience. to that asset of quality while on team Our the drive to and management providing achievement still aligning of metrics turn management traditional balanced our additional the arrangements. with more to will margin the better I continue call now strongly

Bryan Peery

X.X per of quarter $XXX to the and of quarter an $X.X million, per Adjusted the same management finished share of quarter. increase due for XXXX. for the performance-based of Krissy, year-to-date G&A incentive Company's FFO quarter, on results debt and weighted good of million, outstanding Summarizing, remainder share, a quarter of the and with ongoing XXXX fixed costs. to compared from $X.X of first rate The was effectively We X.X%. XXXX outstanding a expect the the remaining -- for $XXX and to morning. similar costs. $XXX of continues transition period X% debt incentive was XX% in transition credit management years. of assuming our we improvement our and in rate these to year was with the plan of period the would first last compared plan increase quarter was facility. million maturity debt and under year. in performance EBITDA similar flat an the XXXX was primarily average to the Total $X.X expense the under our compared of Weighted increases years X% current $XXX was million flat X.X came an with of $X.XX same average -- of average term availability the modified of some million rate Thanks, million, our of revenue first average billion

of adopted includes on to cumulative Justin reclassifications other to In liabilities equity, resulted reclassifying XXXX on year. leases, the interest at difference adjustment expense on of the a four January leases. balance our first we mentioned, operating million in finance sheet amortization Xst end ground financing finance leases which related ground $XXX this roughly leases. couple – an leases $XXX of of million and statement of $X lease $X.X new based we in side. the four of the standard quarter, definition to shareholders' and the recognized in new assets income quarter This in results expense to related and effective a the increase has of The accounting on million in financing a million from

$X.X – recognized expense straight-line to lease expense. amortization $X As operating have leases rent ground operating we million classified be continue million in would in of non-cash and leases, expense cash and as instead lease of intangible

$X.X million. guidance their hotels, maintained Adjusted percent RevPAR provided of adjusted roughly is, estimated estimated our the the hotels from EBITDA EBITDA X%. nine and net EBITDA we this between a and comparable RevPAR $X of XXXX million of decreased $XXX adjusted increase $XXX Current Based for $XXX EBITDA between change hotels' change performance results and modified operating the negative adjusted guidance million. million to a effect the completion February. Comparable of And accounting in $XXX for comparable year hotels For margin sale and to acquisition and the change hotels between date, X% margin is Comparable of plus the full and hotels lease adjusted our of two change, XX.X% EBITDA. million. March, to between million XXXX accounting and portfolio increased hotel we the of XX.X% in on and FFO and for have XXXX, income

that earned the the well New based our on closing per joining us million. price approximately Annualized paid the listing a fourth of $X York is shareholders and $X.XX during can positioned this During This increase Thank represents have shareholder in an continue $XX are share and against Company we long-term, share quarter, X.X% dividends. yield our on common distributions meaningfully per period, $X.XX or of our $XX.XX. of of morning. to to May anniversary strategy effectively X you operate month Exchange Stock value. billion our the annual total Believe for over over we the

for now open questions. will call up We the

Operator

question Markets. Austin first ahead. from Our go comes Instructions] KeyBanc [Operator Please you. Wurschmidt Capital with Thank

Austin Wurschmidt

morning, Good everyone. Hi.

if referenced is are is Justin, concentrated markets supply impacted? characterize just already new Or being the in curious markets you new in you'd supply you challenged? seeing the really that uptick

Justin Knight

The number number in new of we supply. the markets impacted quoted in we that that being highlights have are by total the an fact increase

at supply as in roughly across be increase we our portfolio, If you averages. with line percentage to continue national look a

the past However over so that uptick that the strongest last producing that the and the about other in is But this and not levels And into highest -- those new calls the market the several years supply. quoted in past supply seeing now performance, have talked for in that's number growth is -- they're the of markets from we that and indicative have other be ground quarter and once delivered. we've longer the are taking coming in we're factor RevPAR markets markets that the in produced more It's I've shows to seeing I best that conversations, markets and have are -- is increased playing this actually in it. the that our supply the are to -- the completed projects, is past. highlighted and already

portion in projects supply So under absolute tracking increase completed, are projects the to longer the picture, because they are not that be it -- driven believe we're reflected those we is the the an but uptick, that take of by in construction, number. longer

Austin Wurschmidt

I have sold. actively originally potentially now then And remaining Are with or it. assets negotiating, seven buyer Right, about sale the road? contract guess the got original nine Thank you. were that under with you been marketing a the that still down the

Justin Knight

replace That's of portfolio, and were portfolio looking a market at we assets, terms with or entirety but relatively actually our strong are to value And the question. prune will greater that on continuing volume, to opportunities options to total least We looking years realize the of several be exclusively. continue have good for appear We're original assets think -- and to from our value. explore find the part transactions. we're sale portfolio portfolio based to optimistic continues to we opportunities for the to at the relative that through because our in monetize continually past to transaction not to that of

Austin Wurschmidt

grow So your as anything should as horizon that reinvestment? that exposure about think help sales the Hyatt we there think the I scale Is we brand you've time. materialize, could to gain talked on brand in how about you potential over wanting near-term? mean, the to to about

Justin Knight

assets be the XXXX. have two we construction Look, and under that in delivered will are

underwrite Hyatt but exclusively. of not We a continue to assets, number

families. Marriott within and We continue Hilton see opportunity to the brand as well

Austin Wurschmidt

Thanks the time. Great. for

Justin Knight

Thank you.

Operator

comes Please from Maher ahead. FBR. Bryan with Our question go next Riley B.

Bryan Maher

sources, for to while, quick ton a sources using doesn't it you're what we've and you Yeah, others? are like from good acquisition which understand morning. construction buying are What that results? the at just you've seem noted targets, the but stood hotels yielding acquisitions of of identify questions. Couple best doing And

Justin Knight

value be think should incredibly pay the From in only not portfolio. through on ton is acquisitions we I a reality And total. there be of our read that feel added being mean, standpoint, selective. Well, a meaningful we're I in to acting we're is today's to environment acquisitions doing where the

to If a of been been at directly that now, developed continue decades in the use brokered service the those acquiring. brokerage portion nearly players -- developers sources we of through And have we period deals, select space you within mixed, that The We're community and long-standing existing and fortunate with portion come with have an a operators. relationships. over are active number and look relationships to deals. time existing have deals from relationships that us that to addition have the strong source we're to a the deals the them acquisition for standpoint we've of two and

Bryan Maher

can is say deal rate, broker let's save has much for non-broker How the How a better much or experience a typically an you acquisition on cap your been? versus deal?

Justin Knight

A lot depends. of it

at work the the we just sellers have say, actually asset $XX,XXX instances a key. for traded HomeX and an assets seeing under older is The our an been development to The that Canaveral looking have preference market we with Residence more many a under have where We with example, that And the pipeline, anticipated in there that's that competitive. in brokered it Homewood Inn acquired key. for we paying versus recently. for Cape because just you're have substantial XXX,XXX $XXX,XXX process -- realized that and per for relationships. assets bought whom Suites Cape Hampton have key with a Residence Suites payoff found traded about our a a key long-standing that the doesn't that in recently I'd we've We traded was a we're $XXX,XXX Inn in So & Inn and mean And But, the neighborhood. and the Canaveral, keys PIP deal directly brokerage brokered, the property contract is values. under that there. generally specifically, there's contract lot, in

really think development And we've the able side. so, been on to meaningful I leverage is relationships where value into our

Bryan Maher

seeing your shifting comment been different so some experience are But have talk in heard little Admittedly, you those because you're in gears, companies far. a quarter, a lodging made uptick this many comments And we're other from can which F&B, is REITs. just out-of-room what think the of there, we've than decline spend? has in prepared I that full bit about a you on of what reported seeing decline service our -- modest an

Krissy Gathright

room morning, F&B, in group Good the competitors night me, well rooms market, previous -- to Yes. in the attributable less that our the Actually challenge as that Richmond, decline Bryan. full they in had quarter, service of of Marriott was so under less And Virginia. their excuse majority had year. fewer some was city-wide, the night the in it was there first their part of -- room as renovation were in,

more with. was to compete there So, inventory

related So to the some rainy group. impacted were remarks, majority of in hotel. mentioned shutdown, weather we early as that markets But certain cancellations related government I group our that the some decline prepared as the partial did sports that season as have to particular increased also, of in was the well

was of mix, We F&B rest a a that with that did the change for decline little of bit year. -- the a expect at to continue there little be less revenue. that So, not bit in

Bryan Maher

total your And remind business? year-over-year is of just And for shaping us, typically up business kind XXXX group can that's percentage XXXX? how on of what a you a lastly basis over your as

Kristian Gathright

the the would in night XX% be and our It's to and to between was We quarter, up quarter XX% that year-over-year. -- third In second fairly down. flat typically room to expect first No. mix. it of pick

Bryan Maher

Thank you.

Justin Knight

you. Thank

Operator

Anthony Powell Barclays. with Our ahead. go next from comes Please question

Anthony Powell

everyone. morning, Good Hello.

Justin Knight

Morning.

Anthony Powell

you of development up how your morning. Are Good for yields? in deals. has that of How ramp recently? more RevPAR that conservative kind new the expectations? on environment? being targeting kind more over you has changed just Are how Question of past moderate kind given higher the changed couple your -- of Just underwriting years, growth

Justin Knight

our hasn't methodology reality, In changed.

markets they're times underwrite deals performance to in that line specific our As deals, past, changed deals look the anticipate stabilization. to of acquisition we be slower our underwriting you you just to NAV development as But we overall accretive we if And better growth of anticipate dynamics have and our continue have as as in at a And somewhat. in where at process. highlight market new EBITDA that from those to performed existing look to will standpoint. how relative upon assets, part

Anthony Powell

Got it.

Okay.

of between lot share market larger And quarter between the the brand transfer here so, -- a of families U.S. talk some in about there's this shifts

some that of centered but group, did you your think I on see in was that portfolio? of any

Kristian Gathright

Good morning.

we than that which our of grew So for hotels market and consistent. slightly would percentage did trend that -- our hotels. individual largely There of that hotels. half overall market Hilton in it terms a was gained geographic a Marriott, portfolio. gains for between of versus we say have our market goes consistent and will or it I Hilton grew our dynamics half our in -- the majority of individual we hotels share we portfolio when share, of a caveat pretty our down a portfolio, slightly share We of Hilton share saw lot hotels. is there diversified shifts, we most break over into If hotels our larger actually saw But geographically more that -- markets Marriott are see was a large part the fairly

relative market share was the So, alarming in see continue brands. overly we that. that trends But to we monitor individual didn't to do of terms between anything

Anthony Powell

Okay. Thank you.

Justin Knight

Thank you.

Operator

comes with from Baird. Please go Amanda Sweitzer ahead. question next Our

Amanda Sweitzer

guys. morning, my question. taking Good for Thanks

Justin Knight

morning. Good

Kristian Gathright

morning. Good

Amanda Sweitzer

year? this Can higher initiatives some this to talk drive you other quarter. fees revenue you parking mentioned about any that expect management growth You

Kristian Gathright

continually opportunities do our continue where there regular to that continue and to weren't we there we the benefit so. additional markets on parking, surveys, updated to -- some before parking found the for year, were charging found should through of that we see is So of part we market because as we focusing are we're rest and

on of that lot fees. very initiative of for a We and started had late and portion especially our is are hotel. considering manual collection work year very a a early also of success it still last We that to cancellation great process continuing

would above expect year, last to average there. we of throughout the moderate early growth some but we still because we're efforts So our go that as year, seeing

increased terms our opportunities Revenue Director of we're is hire we're new Strategy deep the demand is basis contribution. to to we when of actually a don't profit direct and sure management identifying channels. success channel promoting recently then need shifts brand.com And did In are -- the it business revenue and of that it. key other our higher rooms area highest OTA was And have we make on initiatives, with nights some -- XX around partners in to -- OTA management from for for this focus taking yielding brands with we us. business doing seeing the actually there, dives good points that all on first, revenue the we we And we're -- when it efforts We're strategically portfolio XX business really that combination that, need and the seeing both business right driving mix he really it. in driving

also then margins. our into plays that our and in which helps on commission So, improvement

increase hotels some some product implementing upgrades We're actually are opportunities, margins. working looking generate that part are revenues are success to improvements of in in some we're as you'd and that those our we're renovations, success call we our what And to always of So, for and areas our sweet of and the offering to able being additional on. finding that shops, able by in our having pantries, the market. a being better our we

that few on. things are we're the those working of So,

Amanda Sweitzer

this success still you that of Or have think quarter. initiatives that? the And management That's cost labor in you labor driving of a rest sustainable for is do there result then been that the else anything that the containment you some your is some of year? of And can you management helpful. level Is front mentioned doing? guys

Krissy Gathright

asset our management our incredibly and result be still working it So, teams, our of to operators absolutely, a efficient. is hard teams,

we So, indicated the really right we level of we're utilization that year, from because comes had we on What provides terms move initial seeing focused in some we a the lot see system that operators that the the And -- lot efficiency. are of will of is in contract in continued off, labor. a and throughout contract continued in seeing savings see hours, upfront reduction our previously, better are as reductions with better now implementation. of we benefits reduction we -- some labor when

are continued in reductions seeing We overtime.

number, put hospitality accommodation, look the at and earnings, -- projected you and they If out for in much statistics, in year increase wages average March, from in government projection actually Star, hourly leisure hourly hourly you X.X%, it the that get was February, this In the X.X% was average a the end, increase was X.X%. average wages.

or with some some of our continues increases to we But pleased mitigate to to type work a a service Green of are really service. operators' with So, efficiency the markets. of light choice programs. offer donation housekeeping Choice We're able wages full lot having continuing loyalty or the these in ability do are continuing their and to on to in programs housekeeping very economy The good well. as success increase versus are touch charitable our being also these points guests

So, we're initiative going on to as to continue work well. that

Amanda Sweitzer

That's Thanks me. again. it from

Krissy Gathright

Thank you.

Operator

question Please comes with Donnelly next go Jeff Our ahead. Wells from Fargo.

Jeff Donnelly

if that little your sense? bit some there has curious the the in has months? the benefit do question on maybe of of I headwind seen of there could a market that's Marriott's others revisiting something coming guess, for to on guess, on out you products, in you What's forms, I'm that, of just is and share side, I loyalty. curious, your integration RevPAR your is index some but a some different been I owners focus, I if on a mean, by reverse in lot might I'm that. group the be a that way, morning, your think revisit little for brand, XX growth bit for creating presented the Good Krissy, a for think you've some folks. Marriott comments headwind hotels could follow-up you to

Krissy Gathright

Jeff. Hey!

I put we be sense would question. And work opportunities. from you done, time, brands, power And of stacks scale, data. you really that's great focus of in leveraging their Marriott scale, lot of There's that of to of legacy is week in has to been and much they've the an early And of heavy all still the been there. the see that. of that resources there to a a Marriott very a a hotel of sense with on folks, the a this integration time I platform have when but there now able partnership of opportunity the Starwood very to of terms lifting much had terms done. And in spending the think There is second of, with to the of be is terms into that able starting us the crossover in some just the said. what very, guest give terms -- -- spend part go conversations. encouraged. with great a lot We just lot analyzing Obviously, a toward former

going loyal look there's encouraged are are of early and is continue Starwood the shoots they are -- that guests very in And to do but the we very, to that, as moved definitely we year We by into especially we elite. were this monitor So, results, green opportunity some think forward. an there.

the travel points. going to up Property -- XX Starwood loyalty their And in to to option XX of that miles, be find you have the quiet a a they markets, would get to to miles, So able often Marriott. now

on are service especially Starwood that from good some And legacy terms a of the numbers, stat, hotel. seeing they're -- really terms we in in much hotel We wasn't just product. are with redemption that to growth coming that as over least Marriott at seeing of side, select Starwood

So I'd in -- not the are too we past. the prefer much about And dwell on the very encouraged future. opportunity I

Jeff Donnelly

remain two into the last that allows costs, you two been the to construction robust. to Or costly and and developer hotel continue years has on had looking continue? you. at could the call look just years lower least side, Because, so to we seeing probably guess at the you construction financing if get, and at what starts way in And for think guess, to so? you in put do you guess got It's hat development, what in pretty or will, it's cash you few starts development sort putting the a of Justin, are when flows, maybe yields and shake still on useful. elusive outstripping. I the of what the to simple that out I Thank allow pipeline? continue. implicitly for construction really would if a more the meaningful projects would I we construction your one that more last I and decline next of the industry it see edge starts economics Or of think

Justin Knight

that I at being again, supply challenge the than are remarks. I as longer is to total look Interestingly, expectations part, for stay meaning some associated assuming Our construction pipelines, cycle. than earlier we the economic slowdown. look extent, the because did and dynamics a we with financing. the lease my see number longer the that in To of highlighted we consistent they that as they developments by pipeline begin new that's in and do projects And in earlier times at times, think inflated in brand

strong development existing continue more shift an focused and cycle the is think it of time urban justify incremental we're and service the to But pencil, generate an markets density they're developers, in or part deals of development or generally I suburban early to able had be that make select if to where they -- rooms we they where look at higher in markets. in challenged. number we of those And the that this or those began saw you RevPARs increased to to settings, see, less We urban as to deals investment. -- continue sufficiently continue talk said,

Hilton and the of come the brands, more from of development Some the though, cost by leading way offset as has Marriott models. well efficient the

one is a when look for Homewood boxes. box obviously of HomeX, their there the those of you were expensive leading efficient is family, seeing likewise existing, Hilton true pipeline a and we much that's and within as assets growth, than more given fewer brand Hilton So example, for which have is significant at which brand that new less

service, to picture markets didn't as urban XX what terms that new for RevPAR then XX less So I developing select current the really in to begin move product, expectation dynamics, driving urban cheaper scale to new and these the development is And to brands and think next continuing our markets, two that in down higher we of Overtime cheaper supply assuming the deliveries continuing product it saturates are now the And dramatically. months well. things, brands historically. where within months you're see outside exist be to and of absent see to improve expensive markets develop. seems numbers development right

Jeff Donnelly

That's me. it Thank folks. from you,

Justin Knight

Thank you.

Krissy Gathright

Thank you.

Operator

no the are comments. I would further closing questions. floor for to like turn to There Justin over

Justin Knight

you the our and morning. as long-term. forward everybody with talking Overall, travel the to of with Thank during -- look thank joined stay take we're one hope we're well-positioned We you. We'd value us maximize us to pleased you'll performance of and soon. to steady remain like the at to the hotels our quarter you who this again shareholder portfolio that confident over to that opportunity

Operator

you Thank conference. for participation. your today's concludes This

Apple Hospitality REIT (APLE) 9 May 192019 Q1 Earnings call transcript