APLE - Earnings call transcript Q3 2019 | Apple Hospitality REIT, Inc.

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Operator

Greetings, and welcome to Apple Hospitality REIT Third Quarter 2019 Earnings Conference Call. At this time all participants are in a listen-only mode, a question-and-answer session will follow the presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Kelly Clarke, Vice President, Investor Relations. Thank you.

begin. may You

Kelly Clarke

good REIT's and the welcome to you day Thank quarter morning. XXXX Hospitality third November this earnings Apple of you, XXXX. We call Xth on

be were distributed filed XXXX will Today's third and on Form which and yesterday quarter call XX-Q, earnings based release afternoon. the

as regarding a results. future statements contain reminder, securities federal will call by As operating laws, today's forward-looking defined including statements

Hospitality factors, implied or achievements involve statements known Apple be These achievements may performance actual results, expressed forward-looking risks from other and different cause which and or of future by to materially performance statements. unknown results, such or

with review Participants SEC. described carefully as Apple well and the our should filings the in notes XX-K thereto the financial statements Form Hospitality’s factors risk XXXX as other and

makes by statements any only the publicly that today, and obligation Hospitality required undertakes revise update or forward-looking as of law. Apple company except as no to statements, speaks forward-looking Any

certain EBITDAre, non-GAAP of addition, call. as EBITDA, during such FFO be performance, modified hotel this and discussed adjusted In will EBITDAre, adjusted measures EBITDA, FFO

encourage of to included measures as the release those yesterday's filings to reconciliations earnings We GAAP in SEC. and measures other review participants with

of please or the release the visit copy additional about applehospitalityreit.com. information a For earnings company,

quarter for Chief sector our as Officer; the Chief third This Chief morning, Justin well Knight, and for Krissy Operating Gathright, as Company. outlook and Rachael Officer, provide XXXX Executive results an the our for our will Officer; an Financial our Rothman, the overview of

overview, for the Q&A. Following will open we call the

time, over the Knight. call to it our to Justin this is turn At CEO, pleasure my

Justin Knight

us joining you Good Thank morning you, Kelly. thank for and today.

with calendar expectations, was performance solid of demand. shifts generally positively across impacted During in our portfolio this favorable quarter of year, the transient and by hotels our line third

on industry that are based our of the during Data. rooms to as pleased report focused as the well our hotels quarter scales Star outperformed diversified overall chain high-quality We portfolio

increased Hotels X.X% basis by quarter and quarter for quarter RevPAR improved by our X.X% by For the X.X% the occupancy Comparable points year-to-date points portfolio, X.X% the increased year-to-date. declined basis for and ADR and and Comparable Hotels XX for year-to-date. by XX

pleased the cost We maximizing hotel for year-to-date remain diligently report quarter despite and XX% EBITDA on Comparable supply adjusted and of margin pressures. approximately ongoing to profitability Hotels and focused are

down approximately the outperformance. and primarily X% year-to-date. Adjusted EBITDAre was was quarter plan EBITDA year-to-date, to down quarter due the for adjusted X.X% X.X% for incentive hotel Total corporate and

in to As challenging and result a as of in period decline as softening second macroeconomic the comparisons RevPAR factors. in quarter primarily for quarter anticipate XXXX highlighted we year-over-year geopolitical more the the and call, potential compared tied our fourth we a same during in to demand some

mid-point. the of RevPAR are guidance, ranges in lower We full-year slightly tightening XXXX our the

we EBITDAre the topline are the the outperformance net and which anticipated metrics, reflect the match shareholder of reducing incentive and higher general Company’s return the guidance to In to and of Company's Company’s for are mid-point addition, adjusted plans. expenses income of components administrative guidance associated with relative

new had our reported third construction of or a or of the which the represents upper points projects more At quarter. upscale of quarter, at upscale approximately second end end within we the what radius, midscale properties upper basis of the five-mile from underway a XX% XXX one decrease

quality our position to some the in brands, supply competitive of teams markets, us management our Although our of within our long-term. locations new of presents challenges over reinvestment, remain the the markets, consistent strength onsite our and

hundreds and our more. industry, in companies owned our their over a the in history intent to attractive underlying than provide XXX have REIT operations. With hotels underwritten XX-year value and the and dividends mitigate volatility in hotel developed of we with the strategy the of lodging time, investors investment more ownership our consistency provide Over has team appreciation Apple to

rooms Hospitality aligned across industry States hotels brands markets. Apple leading are owns Today, and focused XX located XXX XX with and that

to of portfolio diversification the and a wide provides variety Our industries volatility and reduces broad exposure demand generators.

Comparable Our XX% is EBITDA producing Hotels from hotel both of adjusted total highest than and X% gateway market, just less U.S. from under high-density the XX% our categories. which EBITDA. XX% EBITDA urban of More than our comes Los over suburban global Angeles assets assets overlap top from markets

low-cost fees. the Wi-Fi, We strong. From hotels loyalty free without value breakfast, free or amenities free a is points, guest our access reasonably and other and to members incremental offer destination or fitness our or standpoint, amenity proposition parking, typically loyalty priced facilities for resort

periods guests, by it value our during proposition and control. consistently this leisure focused on relevant becomes business expense increasingly is where While recognized are travelers

and which unemployment well tremendous travel and located and enhance wages branded relatively portfolio, appeal. on performance value. focused play and is amount driving increasing, shareholder focus We role low, a our will key propensity that hotels of portfolio concentration to transactions has the overall acquisitions, high With place young broad to average rooms pursue the dispositions, of of our capital reinvestments a continue and in all market of

year As make earlier we current the this hotels potential highlighted sales dynamics nine attractive market sold by to us.

a pleased we for hotels under to additional to three that sale report and disposition reverse explore both we inquiries. broker transactions to contract through We have opportunities response additional and continue are

our maximize the strategically markets, and over relevance assembled improve so that time. could we flexibility able these, optimize value to our concentration our were and We like certain we quality we opportunities our portfolio in purposeful overall CapEx portfolio. of and Through and as spend, structured reduce are

to individual and have only of encumbrances, sale. of X% management Over terminable We contracts are are whether on XX% negatively with our or on encumbered sale properties of leases management our valuation contracts, impact avoided our leases. or which readily financing, long-term intentionally properties cross-collateralized ability limit land land might dispose

to equity investors, assets owner industry brands private of a our large of size and attracted local The regional wide and small with range investors. leading potential even makes including groups, them operators, alignment

the pursuing creation. transactions, key two acquisition downtown Richmond an of in opportunistic us long-term approximately for of hotel value and independent boutique completed in These October, characteristics to flexible $X million. enable we be determinants both In

and our for plans its is independent intention full hotel currently room are developing will we renovation repositioning. It that the remain and

plan During the hotel. in independent XXXX, quarter Midtown Renaissance an to first New convert hotel our of York XXX-room to we

While for with amenities, the capital losses to been York New is an our will new technologies, use Richmond our operating test greater independent that an asset on has conversion and us to hotel particularly a to Renaissance customer model acquisition as mitigate flexibility services, the in it property and intent for us. reinvestment our manage of methodologies, to challenging allow

full-service only New union only only in our the market, hotel three our portfolio. hotels our in remaining York This is asset one and of

work limit during existing to team We the the with management will transition. disruption

the the team hotel's given new market year, to However, it we challenged next and forecast current base. customer brand be a establish to works for contribution expect as

From continue price have total million. We of a $XXX in for the on expected and contract timing six completion projects hotels for to XXXX that under purchase expected track remain development perspective, under acquisition currently a XXXX. are for

capitalize years and portfolio a to in sheet with the in position significant dislocations three relatively our debt both time to be balance patient next flexible just no we over allocation, allows X.X opportunistic Our capital to maturities to are on approach a market the us net in we young to work and be from to as times EBITDA, time.

over portfolio and we our shares, both September, months repurchased XX acquisitions. and million in million asset our over optimize $XXX in have $XXX paid total the Over in dividends sales through ending

to responsible business as election growth accompany expectations, As volatility that we pricing GDP and in both to the will property capital supply uncertainty slow typically we to and With continue continue our will cost conditions warrant, be XXXX, and approach added enter ongoing level the and years nimble pressures. allocation. and

in for are expectations coming We year. our cautious the

periods growth during confident as periods strong well results to economic during in However, of of outperform as we ability are uncertainty. drive our to

demand Together of to cycles management premier XX our above across and business data third-party and that we shows in best-in-class our believe company. analytics the and with Hospitality results experience, outperform drivers. average will times contraction Our with average we brands locations hotels last Apple of years strategy above two peer chain affiliated continue and clearly combining with of for drive managers asset

now on It's Krissy call pleasure to operations. my give to turn the over to more detail

Krissy Gathright

Justin. you, Thank

calendar our recovery the quarter year. be growth hotel of comparable of RevPAR highest for third the storm With to expected favorable continued and we benefit the business, the shifts

was did we experience negative than offset natural While it recovery a more modest by disasters. business Hurricane from XXXX September, Dorian impact in from

basis We XX estimate that was the quarter. net lift from points in recovery business approximately the

related As the fourth and we anticipate more with will gas non-repeat Boston communicated comparisons recovery to business. the business from tougher explosions disaster be decreased previously, challenging quarter area that

markets third trends, the around are the hotel of basis points In supply/demand half October, business markets estimate approximately X%. about our in flat quarter, XXX is these from the approximately RevPAR comparable growth non-top in reduced the from quarter. the declined representing XX RevPAR top fourth of with was in X%. Consistent markets a industry our for EBITDA benefiting impact Our markets dynamics. markets RevPAR year-over-year essentially outperforming, growth outside our XX favorable more top was for hotels while XX In the

XX% Group markets. of RevPAR our is almost

performing outpacing Boise, contribution of Washington, XX Phoenix, D.C. Richmond, Diego, and our our primarily including of supply Some Denver, Five Chicago, top the Oklahoma result Rogers Seattle quarter, as markets more Nashville, markets impactful San in RevPAR EBITDA of included declines a and experienced top City, Dallas, Beach, Norfolk/Virginia demand.

in we share Virginia. options. an started to renovation to expanded, lobby Richmond, existing our and area October, We Marriott The provide food will and are beverage excited extensive that dining and full-service enhanced in transformed be outlets gathering of

of rooms to rooms three addition number renovation total to a added, be In guest new existing the XXX. bringing inventory, of full rooms’ will

pacing nights followed ongoing quarter renovation the to Richmond are Marriott, with completed double-digits the The of completed XXXX year, room second the a from fourth full end rooms the compared headwind for in quarter XXXX in at the this the be by XXXX, a first in the remainder be XXXX. group quarter, last a the first year production to quarter. group portion up time scheduled year After of with of of renovations on is the in books slower by a expected tailwind to

almost slightly anticipate by in Portion the than absorbed more XXXX, our be and displaced other half attributable rooms rooms of Richmond We hotels being displacing and beverage. food with million to in market. $X the fourth of the of quarter will revenues of those revenues remainder

our year especially loyalty growth, hotels with the share pleased hotels the over programs the share our portfolio market of XX% quarter, are with were We gaining improvement showing with combined. nice Marriott during when branded our prior

an Consistent with decline. weekend mix modest weekday of RevPAR was Group business growth to a mix improvement continued increased segmentation, industry flat, for both revenues business X% corporate calendar focus base shifts increasing and our and strategic and on group Aided markets, during As supply the impacted quarter. negotiated transient around from outperformed representing increase. year-to-date the our trends, trend by growth. the RevPAR

on guidance our Turning control profitability, our line asset operators, XX% team helped total rooms. during comparable strong management EBITDA X% of continued quarter. just same-store for costs payroll us to expectations assisted occupied In solid with a cost our by part the the margin year increased hotel full trend, under produce the and of to

we continued turnover labor productivity, Our enabling reduce began our positive to increase wages, management produce years decrease costly on-site two competitive unnecessary results, systems to which expenses. ago, offer implementing operators and overtimes

At are the positions. key to with fill and working open time, in positions operators talent, our invest especially strategically we to in quickly same leadership

less occupied is increases Outside the of increased for share, same-store our this trend. ultimately payroll a costs, driving guest winning profitability. the operating for satisfaction, consistent proven and than with controllable year-to-date long-term, also strategy to expenses rooms, Over market X% be in

in Notably, our utility costs. lower are resulting efforts sustainability focused

impact. and focused Our operators our performance our enhancing intelligence on asset the help analytics revenue continuously team management business areas are our greatest teams of and strategy to

revenue positioned profit dynamic winning are to and strategies market well We conditions. implement in

detail call I turn results. over will additional financial provide Rachael now on to our the to

Rachael Rothman

and Krissy you, morning good Thank everyone.

percent RevPAR adjusted year-over-year. margin midpoint. be flat RevPAR we now the previous of of called full range positive As full XX hotel Justin to We guidance The outlook. RevPAR year for year narrowing are our at mentioned, basis and points, below the for adjusted just comparable points XX a XXXX RevPAR midpoint basis comparable to flat negative in year expect EBITDA our our hotel EBITDA

reduction Correspondingly, we year million range full at hotel million adjusted to high million. the basis are midpoint $XXX reducing full lowering EBITDAre the EBITDA end We're and the margin our by five-basis midpoint. XXXX point percentage the $XXX adjusted to our narrowing for at year XX $X points at comparable by a

company's million. relative top associated $XXX of administrative guidance outlook the calls midpoint the general expenses of million prior income the for are Our for and to net of plans. shareholder company’s $XXX which with outperformance to and line EBITDAre and reflect We're components adjusted to reducing incentive return guidance anticipated higher the company's match metrics,

and unwavering underpinning have to compensation the the As shareholder with is executive return. past, executive the incentive-based team's the management absolute alignment total shareholders and approach board's goals team. to to core in between its the highlighted of XX% compensation of our of our we commitment our Full tied relative

shares basis. Year-to-date, our have our outperformed on relative peers a

holds will rate. outperformance and recent anticipate continue year to prior with our organization, our XXXX G&A our realignment this Assuming run within the leadership combined we outpace

highlighted we in As past, expected low metrics our roughly and efficient of the both our have operating our end the XX putting enterprise X.X% basis is at with total of G&A of points platform, revenue, value peers.

mitigate competitive supply. within help on impact positioning properties our new continually enhance Through the Our of the our incremental we positioning return in maintain evaluating investments. opportunities to reinvestment markets competing competitive our drive is team and consistent our of and hotels,

the $XX remainder Year-to-date Marriott to at through phase the million Krissy an projects Richmond. in additional to $XX million reinvested spend various in renovation full-service properties, XXXX, scheduled which plan XX company our renovation the during the of million first $XX September, including hotels, approximately at mentioned, as approximately includes our of

closing remainder for Through indebtedness $XXX we X.X% billion rate form the returned approximately with Friday's The have weighted-average third in September million shareholders quarter, XXXX. price, of had of X.X% a of as end of of dividends approximately a to year, the combined outstanding represented we total and yield. our current over $X.X interest of the of dividend this last

and total comprised approximately is of outstanding issuance unsecured debt our hotels million secured property-level in credit and indebtedness adjustments, costs debt $XXX XX million fair outstanding value $XXX unamortized facilities. on by Excluding

million. facilities The September on $XXX our undrawn capacity unsecured at approximately credit XXXX XX, was

five interest we positioned opportunities September to to approximately maturity Our of effectively debt increase flexibility at the XXXX of XX%, and operate strategic long-term, rate We total XX, our years against Weighted-average marketplace. four to maturities value. debt X.X%. in fixed-rate and weighted-average is well provides was pursue requirements believe a to strategy financial and at the the over total are years, capital effectively weighted-average are that continue debt fund meaningfully us we which capitalization the shareholder

call morning, us for for you and now this Thank will questions. joining we the open

Operator

Instructions] question Anthony you. proceed [Operator your with with Powell from Barclays. Thank Our first Please is question.

Anthony Powell

Hi, good morning everyone.

Justin Knight

morning. Good

Rachael Rothman

Anthony. Good morning,

Anthony Powell

Good morning.

and the you on the at by maybe were those some been about major you reasonable next put Hilton to to Justin, that's X% Marriott and relative you X%. Marriott, two how do mentioned year. those X% may perform cautious that there Could your you Hilton of comment think guidance for guidance Are and industry at out brands, X% to numbers targets? you

Justin Knight

companies with early begun individual a specific the management budgeting Hilton of our have appreciate the guidance and and us I process data. our various give question. Marriott in just tremendous to to their Thanks. It's of company. continuous conversations We’ve speaking amount are dynamics to for markets.

sense for consistent releases year. the with our their how and play out is next think things tone appropriate I in might

now we getting remarks tried and There as at I signals going it's look, certainly my in somewhat was to highlight the to what look I that we're are forward, mixed think meaningful things But that where well note economy. things as important to growth. see portfolio, there that we that going markets less are we our incredibly number and a other going have well. look are of we across continue And Krissy are highlighted we as

despite drop-in And performance of have stable other in new demand, supply. some then increases because where we markets we've seen

saying now, we around is numbers a the in generally similar next national So find last we year right of saw brands markets this individual in into I are kind something with – very those you'll think performing to the but with year broader line being go what range numbers. what national as year what this

Anthony Powell

that it. any in trend Got or you the And do of continue? at is year expect non-top there to reason expect Should XX the to outperforming? the all markets next change that

Justin Knight

It will be interesting.

traction, have up, XX and outperformance markets markets. particularly portfolio, that trend could case benefit outside the reason that's would the is of think well. our gateway a travel, in a macro adjust seems that because changes, feel the strong we wars of diversity I for a clear impact think we the absent That impacted to on trade balance, as the of significant top and has I foreign which dollar which in

benefits because relative our the I perform portfolio. that we've that And extent but those think well, on have remember markets, as exposure to exposure outperformed a well. of basis, of outside to gateway it's they we important do our to markets

Rachael Rothman

And the supply be XX well. still year as growth markets to outside of in XX relative markets elevated top is top the next to projected

Anthony Powell

quarter, growth pretty quarter. supply every What Got drove reduction that or And the pressure? it. you metrics supply this about that decelerated competitive meaningfully change Thanks. talk that in

Justin Knight

the we had What happened several in calls individual earlier. projects a past highlighted had over period to past be the saw some of weren't taking in that that delivered. number that of been construction time, those replaced same longer they appears development projects to the were have pipeline projects of been We've and the for is at quarter delivery pace

positive moved the of see of future. starts struggle keep that with see some construction in some the of statistic costs in beginning pipeline. that's an see the Remember there slow We It and to been construction and increasing number a number. supply terms and we with volatility the to markets indicator. in up near soften So, to beginning that ability a in calls up down, new with we period we've reporting of a has to – already highlighted as continue the number we've now but that time, has for been

Anthony Powell

you. Thank

Justin Knight

you. Thank

Rachael Rothman

you. Thank

Operator

KeyBanc with Markets. Wurschmidt Austin Please Our next question Capital is from proceed.

Austin Wurschmidt

everybody. morning good Hi,

Justin Knight

Good morning, Austin.

Austin Wurschmidt

versus are tagging are that still you have sense any projects supply to recently of guess percent completed hotels lease-up does if there. under reported year. a because Anthony’s in it seem curious last lowest I to that I the question of what ago your quarter think Just exposed kind fourth the at are on level projects the you maybe year construction I'm certainly since

extent you moderate see that is seems said, over to that should as So, decreasing, the it pipeline we like the time.

Krissy Gathright

Well, tell that cases, individual takes percentage comes In demand absorb what on in some cases of the absorb it that obviously the can might supply. it in the take markets in the depending have market, that I six first some the months two I when don't exact all that, market market, to an into you, is supply years the supply you the supply. but to market for

moved But we've what year supply seen favorability increase in course terms the that has between in gap we as a increase in have through the is supply and the the the of demand. of slight the

So overall, future, absorption. positivity a seems seen we look at in in to And it we've more fairly the little of terms out of the least for that. near terms as bit be consistent

Austin Wurschmidt

then And Great. you've guys $XXX pre-fund Appreciate million to are thoughts or be pipeline there. got. used the under you Thanks. in you seemingly with three million to the lined contract, going so that's have $XX the over acquisition of dispositions up that proceeds highlighted

should or I as we do to – view deals And you the today what So, continue one-offs? so? million for can portfolio to remaining best guess assume execution or $XXX additional dispositions fund really

Justin Knight

question last start So, the I'll with first.

market properties than continue for We a see portfolios. for larger to individual stronger

will next In years. under over use two we be again, have proceeds, delivered terms of contract the pipeline remember currently of that the

XXXX transactions source have to XXXX. into we depend both from But as And continuing so, use particular to at are to Near the currently and of market will sale fund market potential and we under out term participate the likely on be we acquisitions. the contract. somewhat round proceeds looking go funding underwriting that this assets sale are specific in conditions

assets we of today's sufficient the in with payout likely think us our do be But dividend a net with need to the have. I more to the cash that's balance attractive both to of us to environment, potential we shareholders. the maintain demand to – strength given like being sustain to for mindful be for And see flow sellers, assets, that

Austin Wurschmidt

six your proceeds are are So, that response than or months share on be mind it that that acquisitions? in funding less geared pipeline sounds attractive to ago. maybe And more like buybacks three based potential towards to that new likely

Justin Knight

did share only quarter. across increased we that And we've for buy hospitality seen during something not the That's in our the We space. volatility prices, company, some but monitor. shares

on and conversations We in calls be highlighted we'll program shares. our look our to that potential I've – our opportunistic our for look continue investors. and where to basis have purchasing compare past in highest look capital generate and we and we them shares a purchase deploy we feel the acquisitions, in in from past at as to a can returns place, a relative relative we of

Austin Wurschmidt

Thanks everyone.

Justin Knight

you. Thank

Rachael Rothman

Thank you.

Operator

from Our Bryan Riley Please with Maher proceed. next B. FBR. is question

Bryan Maher

morning Good Yes. everyone.

So, But just seeing to little been seems on focused pay It supply the more a for? acquisition really it fine. anything the and that's that willing that a Can new little bit bit? function not that have on a you the builds of more you're existing fact is you thoughts. like elaborate on you're the guys in

Justin Knight

in calls, that at that contract we trades assets under we on Canaveral the is comp even past been to for assets that have sign pricing up that in continues to case example, recently get in to meaningfully the we those of pricing calls. of to for the our be Sure. Pricing have the interested continues able have we where acquired would deals the that Denver look highlighted be that buying Cape currently had assets we particular markets. past reason of other in is new continuing And relative assets to markets elevated. better. and be the for or types as asset in to for we in development some purchase or trade We’ve highlighted couple I've

meaningful advantage of that being at active assets we in portfolio market. same trades and see the additionally we're design long-term up those older to comparable for assets signing deals the on beneficial as those new that products. And discount – We're participants we in as a our pursue

include they the sort. which for and amenities feel adjust that We to things to and things facilities as the layout rooftop significantly exercise competitive good rooms, of or hotels about larger whether very be like the type that room some cases, the it's in of by the and rooms that competitive the of having a building those hotel advantage designs have that configuration particular investment. ability marketplace, the in and type will of ensure offers, bars And

That several why a said, seen kind propensity portfolio we deals long The that there of the our continue acquisitions. period cycle investment cycle, with today well are an that while there from possibility attractive strategy more in relatively as broad might've incredible in last for our it high find select underwrite highlighted we it's explore a than a And peak I of as consistent to the equally that's open remarks, we significantly based time, and years. continues demand these our to demand of approached others be as my And as we as not on has the quiet. And and that deal think been service been the to past exists find dispositions underwriting. range it's for that buyers. assets. it market in a potential quality select I as deep comes of over you've But was

Bryan Maher

Right.

at more considered tier doing service where or management cities bunch hotels of after finding grow yours. to we going has when or Ashford they're also than that they've select the companies although Apple anything think of say towards other shifted like, to who So vehicle sheet maybe gears of is stretched second a and a Is kind that their advantages what hotels acquire, would pricing board a full-service balance as let's currently? and you're than much has Trust,

Justin Knight

we flexibility. to and one underwrite those our assets I us portfolios. of in We've are be been that limiting are that the to debt management my or that, whether larger individual criteria in order is long-term assemble number of it we there important cross-collateralized as consistent encumbrances, portfolio remarks highlighted in and maximize in our contracts that saying both portfolio, certain

our the manage portfolio look over we we those the those consider are into take As portfolios pricing time, as that portfolios. at things consideration of and larger we

Bryan Maher

the guys in to of it do And Okay. get to you do and upscale hotel, to those there market? York, a product labor in costs New position that and type gears independent where or name kind is shifting you down then like want that Renaissance have any upscale way for

Justin Knight

not model, to roughly too distant operating historically. from brand is terms we gain that be of where think our us to I independent, of the Recognizing future. additional But consistent in The name reasons one the in is transitioning they'll it with away will expectation an the announce operated has for flexibility.

model, is challenge at in – the look United entire labor I As States. of to we our know operating the your across don't for reducing response costs to related question, part second labor us a

more difficult hotel than manage union some ways, it's heavily new So any of other nuances hotel, competing to low and while there a is there in are where markets unemployment labor we are with particular to York New it and some not incredibly the our fact is this that see in supply.

in fortunate amount the at are a New that market. experience to So, I think an we hotel of tremendous that York has have operator

driving ensure at of to-date has also it in outside labor experience, benefits helping benefits that to line as the we we very employees that And has been that exceptional effective particular have we both channels, us as hotel. but that labor top market bottom and there. effectively interacting at amount with at manage and I brand think a us, look tremendous And line. we of look Highgate

Bryan Maher

about you. good me, you for last near seems you supply the what country, like the talking we're when everybody's going commented a you guys just driving higher, is and how on? up, rate then something industry heading new else is just the for do think record but we Why occupancies on which it all it in And Great. is for industry it employment wages it simply have know that having problem an or not running in

Rachael Rothman

I’ll that start go There are into of – I want a different to answer that. lot that. factors

we what's and protect happen different have – and additional market. we this additional occupancy, to operators we that to our or worked consistently us we to little in the markets But to mix One shrink that going look with strategies and bit more sure on decent as to, the corporate started allows to are as slow not at implemented, base the reliant which year adjusting individual order group transient had and we've on be see implementing and may the make in on the dynamics at to base. less strategy. may hotel looked a And and last mix depending layer down pickup, transient on that supply/demand we of implementing then, strategies in we started shift

And then higher occupancy, we're able bit in that rates then negotiated then rate individual we're some that, in side. be whether on the then cases doing – of to, a remaining with But the sacrificing strategically we're where on markets, in to inventory. drive it to group the or allowed able if so to build

on So, one is a side it strategic initiative.

And, Other stronger seeing Marriott that as to have continued our pickup in in the are seeing rate, have with are get a as although hugely grow redemption occupancy full you an higher it's Starwood increase continued business areas a higher some and when we cases redemption not get hotels comes business. reimbursement. material, integration, you to programs their the loyalty are brands we in – in

incremental. in some the In full when the redemptions come and aren't hotels cases, it's

night, it's occupancy. a in, a then But comes building not business that incremental you're when getting rate. the lower peak you're So, when

mix it's shift there. of in some So, also,

occupancy look has industry as on I that's at some where on able we're those well that by earlier where softness to coming. breakdown rate stronger able, RevPAR rates weekend. at most day been look is leisure. we're that compress, if stats, We're of higher mentioned of day assume still – overall the, is to And if we're you been than still weekday growth mid-weeknights, in, nights has a weekends and our have growth drive in able majority seeing weekday to our you additional that As we

often management having business And marketing discounted business we're drive Then teams, to with to business. our additional the into with hotels. our work that strategies is

protect our occupancy it's bit we labor our but lower so from So, it's going in standpoint. can again, a that a manage to going little hotels rate, effectively to, come

to. your you supply There other from you alternative accommodations. you also could have lodging that things impact point are multiple I supply, have regular mean, I have

skews management But are you, XXX% to highest revenue often have drive You me the you versus on hotels highest focused that let rated, where towards setup occupancy have rate. that to assure channel. are in drive our business profit but we to systems the can driving RevPAR we

operating XX pleased Year-to-date the the And both we’re growth up and has up our we in up shift been XX extremely brand.com on being have our flat basis of brand.com still a to of OTA channel able points seeing points. being basically and increase efforts brands being helped with contribution, costs. which basis with slightly hotels

basis So that's XX a points shifts. channel

So…

Bryan Maher

right, All very Thanks. is thank helpful. That you. color

Rachael Rothman

you. Thank

Operator

Bellisario is Robert next with Co. from & Michael Our W. question Baird Please proceed.

Michael Bellisario

Good morning everyone.

Justin Knight

morning. Good

Rachael Rothman

morning. Good

Michael Bellisario

aren't you bit, Justin, maybe but out projects on you the what delayed about are timelines you still time, to you potentially? and pipeline might get that timetables, mentioned then the talking pushed your little specifically have touched development are your the brands why I that seeing cause a all in projects longer on with but openings. know

Justin Knight

a into we’ve It's question. built a we've good cushion that given. To timelines extent initially some the

than on deals have, the for did taking one in time I longer And record think track point given more realistic at of so, timing we they expectations deliveries.

over delays But risk the that on sheet sensitive such are somewhat we're the and past seen for years these structured with remember, that. few that. projects a And associated including to not being overruns, for costs We balance developer are that takes delivery. push projects developed our are any have those specifically

regardless delivery. some have we the of of timing So, protection

couple of terms in portfolio, with groups. impact are of to a In partnered our we us

have we look have under they're that and at contract deals with currently good track record groups a that for we you consistently us. the have If that delivered

Michael Bellisario

Got XXXX guys relative it. spend about you maybe are are guys That's spending And XXXX. you helpful. just to thinking maybe CapEx about directionally, how for then thinking what

Justin Knight

from of on are Interestingly, in year-to-year. our this and skew and CapEx and to have somewhat which we next in redesign franchise, There occasions when it's in partially CapEx an year full-service number spend is be relicensing that and in bathrooms guest’s number significant full the extensive as essentially complete the well The in renovation, we've that impacted end the given that scope an our food Virginia. We renovation of remodel involves outlets investment including Richmond, and Marriott of renovations relatively be this as highlighted of total beverage year by past a tend and PIP projects, will larger our here calls. lobby consistent and rooms.

in while X% we some may sales X% portfolio ours. service that a reasonable relatively to like And to the side, for in range. skew higher. move total And, average we've years of feel continue investment that we our select higher, marginally will like so, projects that young been Historically,

Michael Bellisario

Thank you.

Justin Knight

you. Thank

Operator

from Securities. is next Our with proceed. question Capital Please Neil Malkin One

Neil Malkin

good Hey, morning guys.

Justin Knight

morning. Good

Rachael Rothman

morning. Good

Neil Malkin

in the performance compared Do Hey, know those share gained – it's taken hard I just of of your actually hotels. feel to to I stability or given rhetoric from have quantify, your performance. but that those, of, guess types share you full-service or kind some hotels

more costs the with given now prudent or focus Just businesses cut on be T&E. to their

Kristian Gathright

the the of, so haven't cut to, you anecdotally a cases, broad upscale, the that the charging coming increased our Well, need some saying that's seen hotel. at to upper chain past down in saying potentially and hotel in rate are a we we a a, little they're an on cases, of it's accounts And in out field an but from we lower we're upscale them we're looking or a need hotel has or same rate bit where scale, the not there in their rate. hotels an cycles, to upscale necessarily we particular back speak pullback And that charging. that even hearing if what move shift, seen the focused more little economy to is an is rates a of bit upper upscale have and rate had when from, couple hotel charging, more and cost to

package We see that fees. can But able or in implement to do of environment an amenity then back no are type parking, type because companies free where destination, other kind cut be compelling and provide, amenities of more we cost to offer, breakfast, we're free controls. starting the our particular product

the provide we the from the are And definitely But systemic where we particular hotels hotels in we for to we here midst of to right have But, as to we anything three reduce yet, hotels circumstances the to, accounts we're now. we out of making that heard we down for haven't as there isolated season the haven't we're of and budget hotels. the And course part, our our but keep heard, are value or heard cut most haven't sure to in number have, preferred we're to as five obviously ground some to reiterate we're going able of saying hotels. going of ear any, there's that.

Neil Malkin

then be just trends fourth of of year versus till general, of has high-level terms And give in guests type view great. group leisure the And group maybe what, would just small that. like looked pace, heading in the now. of business your high-level Appreciate in short-term commentary on then any notable of the beginning versus a very the could from into you sort segmentation quarter the,

Kristian Gathright

Yes.

at declining And we at and as slightly factor booking our seeing. the XX we into that the our booking little booking but most degradation XX, because shortening be calendar window. calendar year, So, the bit essentially have any XX, as window. out seen as we days estimated of into part, the continues to our and booking the outside we essentially look like if disaster in just and that up. the with usually comps. midpoint a short haven't – That's forecast our going the decrease gone And is we're able We we're as shifts window, to you shifts, flattish. of and we said, pick outlook, for start I The to we're material we recovery the look of out pace went window environment beginning somewhat

all In hotels for slightly I me, that with. group that for as transient. But that? – on as And and transient, moved group well a quarter, in our hotels job the I in year. corporate that positive that more spend But is with year, consistent third was consistent we're group excuse of been good pretty missed a still it of and particular throughout majority – down actually our terms of we're we've smaller segments, leisure-driven – then to smart in did continuing group seeing bit, overall, as negotiated, mentioned as different And growth actually encouraging. which fairly business type really some leisure or was do transient as our anything trends, the there pick the the up year-over-year. a and call, Is push has – group has in it

Justin Knight

I think that certainly covers that.

throughout wage will it's to not be important cycle. growth. of chain The economic have And the to that we much date, specifically And Those remarks to our trends. trade challenging as back feel, beneficiaries my you while a that, incredibly own. in and to your we're then and highlighted the note, been types for that I as increasing scale earlier down to unemployment, think assets have in Demand those of environment. fact has are this low demand, we we factors we we've I for more going relatively going comment. economy strong, strong been this continues see in

Neil Malkin

correspond setting sort internal negotiate systems. go can that And to based Thanks. typically kind in some does you you to new that switch? I with light. just part then existing brand you you terms Maybe around which GDS us give when said codes, of maybe least – you're systems imagine – or only that's how color the some one of switch spend retain me. up business independent last how of can corporate when you or And think to seems then for going going million, you work Renaissance independent. or I have $X signage. so it more just computer just But of a at Maybe do

Justin Knight

group management the with branded the highlighted within and hotels are which number. that of extensive budget question. have to transitions of significant and pieces also portion some both earlier, hotels things system funds in that I to a experience several has and captured are currently this the that are fortunate, signage. we the has working market. managing A city, related transitions We're managed be independent and branding good rooms by the items in There related and for to that It’s again, sort,

times working relying away brand heavily within that with recognizing in moving transition now the that group we're from who as a the programs that replacing be on sort. going has to as and with type done guests this challenge experience ensure several effectively is always We're loyalty And their of to particular of guests possible, market smoother different city.

Neil Malkin

Thanks.

Justin Knight

you. Thank

Rachael Rothman

Thank you.

Operator

[Operator Our Wells with next Fargo. Instructions] Dori Kesten question from is

Dori Kesten

morning. good Hey

Justin Knight

Good morning Dori.

Dori Kesten

your compared in to expectations occupied room as for increases per in XXXX? are XXXX cost What labor

Kristian Gathright

through going are now. the right we process budget Well,

still line labor so, it's there. costs would consistent, the we're our say this been really pretty with and I year. thus have And expectations early been in far

margin, in gone managers, through any on, potential aren't markets good individual We are fairly the might of giving we a point it with as increases guidance overall expecting we've We're most to like anything deep we or terms cost of our where at have focused or large that. this And done dive we've while looks part, see additional consistent. pretty risk. for

Justin Knight

Or reductions.

Kristian Gathright

point. this at reductions Or

Dori Kesten

portfolio an sales? you Have in increase for inbound seen calls

Justin Knight

constant. relatively been That’s

in we fact prior I've time. been and have say the for been portfolio increase still some have periods. for fielding portfolios for individual highlighting the are be I'd been would than So, smaller assets, that inbound they or

inquiries So to have of million And $XXX over the generally, $XXX has specific cycle. in the changed remained potential the number range. million that buyers the

Dori Kesten

Okay, thank you.

Justin Knight

you. Thank

Operator

would We remarks like our over I turn session. closing have back for concluded to question-and-answer Justin call the to

Justin Knight

Thank thanks us always, you'll take at our great look we joining We a next you that hotels. as morning. of stay week, for NAREIT and the you of you day. conference to seeing travel, Have at this to and the opportunity with hope one many as us forward

Operator

Thank you. conference. today's This concludes

this at your disconnect participation. lines may time your and you thank for You

Apple Hospitality REIT (APLE) 5 Nov 192019 Q3 Earnings call transcript