Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the Apple Hospitality REIT's Second Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kelly Clarke, Vice President, IR. Please go ahead.

Kelly Clarke

morning. good and you Thank Welcome to XXXX call. second Hospitality REIT's quarter earnings Apple on will release and yesterday call be the we filed Today’s based afternoon. distributed which earnings XX-Q, and Form

please results, outcome securities laws. risks, subject actual forward-looking include could begin, or Before and call current based to of uncertainties, These to materially that that a assumptions cause defined federal as numerous and statements may as we future achievements by events forward-looking note from or performance on statements the views expressed, those are and implied. today's are result, differ projected

Any today. such SEC, required described including qualified company to obligation The speak on or the the in XXXX our risk and annual report undertakes any as no forward-looking factors except statements update forward-looking are statements, in Form by publicly with of our revise as filings law. XX-K by only

In and with referred addition, Reconciliations in performance measures call. of are filings remarks release those to yesterday’s be of SEC. this during included earnings definitions and will discussed non-GAAP in our measures other GAAP the certain measures of to items

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

Officer, Officer; of quarter This Chief Justin our remainder the Chief an the an of operational Liz and our year. XXXX provide Executive Knight, our Perkins, Financial results morning, for second will overview and the outlook for

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

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

Justin Knight

Good us morning and you thank for joining today.

across strong be rooms future, geographically back though to year-over-year quarter. of optimistic for ADR focused limited with performance And and our in we occupancy, reason drove half we've trends. RevPAR on portfolio the hotels XXXX, recent diversified pleased incredibly the into here move of remained improvements Demand based As into and we our the are visibility today. we've

X%, second by quarter growth still since RevPAR Comparable compared X% to hotels hotels ADR was hotels With down X% XXXX, quarter the and XXXX. occupancy was quarterly highest by improved relative X%, up pandemic. of second increased and was quarterly X% XX%, ADR XXXX onset higher our the the comparable up as to occupancy nearly comparable to RevPAR RevPAR

Continued line $XXX X% continues strong second improvement quarter in a travel hotel fundamental occupancies a hotels driving to adjusted quarter growth for growth continued achieve rate. top enabled consumer of spending, second million, the XXXX. comparable robust, over EBITDA to quarter With us during and allowing shift and be leisure

performance month on and midweek lifting XX%, and Steady for results improvement hotels, the is for our bolstered preliminary our for in business of rates holiday, Xth ADR. performance. portfolio and occupancy July to see despite was travel growth Based in further portfolio of overall weaker July continue occupancy the we around

rate the driven second by first week, RevPAR growth comparable to both Excluding occupancy for year-over-year. quarter, growth was preliminary July portfolio and

increasingly will line we year. as top through have half So we the comparisons progress of difficult the second

remained trends improvement to booking to favorable. and business Leisure in be Forward travel demand see steady pre-pandemic elevated demand. we levels, continues

economic first to point guidance forecasts, hotel guidance of RevPAR adjustments applied midpoint margin. in in comparable year midpoint, resulting the We comparable recent our to increase consensus reflect of hotels the adjusted XXX basis annual XX increase and the to adjusted the performance have point a in basis portfolio at half growth EBITDA

the comparable a pressures Through quarter adjusted hotels labor EBITDA inflationary environment. disciplined and controls, of achieved continued growth and despite a over rate challenging we XX% cost hotel for margin

on guest performance, and satisfaction. management Our monitor focus real hotels with side corporate best at companies share drive or leading industry to incremental team profitability cleanliness to efforts without overall time at sacrificing our our practices, hotels works

to order our portfolio markets, of in our we value line the with hotels year-over-year XXXX. make and more moderate ensure effectively expect reinvestments, quarter In of comparisons compete by experience back dollars the growth As that and we operations the fourth remains leveraging impacted into growth half the that regular year, scale our strategic expense stabilized top their relevant both third we maximize and within and of to move spent.

During months XX approximately and capital expenditures spending comprehensive million invested of $XX $XX we [ph] total of Planned to million projects, X XX our renovations year, million the first various $XX XXXX. the during of a anticipate in hotels. include we at capital to

third-party the through noncore we independent net New lease. City to quarter, are hotel operations hotel that a transitioned During in York triple a

property term. will of non-hotel agreement, result this hotel property a and considered the XXXX, excluded the room our be lease lease from May is and As during a effective counts

performance, While day not for to the operations to overall us agreement hold expenditures deposit a capital and security beneficial corporate and We to financially to are tenant. our responsibility additional level the day and ongoing both consolidated material guarantee. the of terms transfer

the In should control addition, right we reserve not regain the third-party under operational the to obligations lease. fulfill

as opening increase the will year up, and we deal Overall, market volume be transaction anticipate to quiet relatively still progresses. the while seems

growth. potential to continue numerous we markets business generators We with acquisitions anticipate seeking hotels where opportunities future demand and multiple friendly underwrite

combined We industry to shareholder value incremental us sheet growing our experience, conditions portfolio drive when enhancing our by which balance optimal. positions have with available relationships tremendous transaction are and deep capacity and

University of heart social announced, in a million premier side district, the previously The key the renovated In east $XX medical approximately on newly of the Cleveland. we district per for Circle University XXX-room or Cleveland the June, Circle acquired $XXX,XXX educational is hotel the Courtyard and

$XX leisure attractions hotel be heart Nashville of we contract Hilton near to Downtown Hall million. of XXX by Arena. Downtown, including well-known the During estimated for the a Bridgestone entered be a also Fame and of Nashville, The the for with will in an Music the Country quarter, purchase in developed located Motto into guestrooms approximately

travelers. be and XXXX. leisure We this and offerings particular landing experience development in will both great This first and be hotel curated the bar anticipate for brand's the guest currently dining will and Motto providing an flag for our under are ideal location, flexible we rooms, spot overall business believe complete

of we distance Embassy Suites the which Terrace University The within XXXX. the Downtown, be Madison contract the Wisconsin, the Community also Monona completion of on Center, early Construction is State Wisconsin. of and have located under Madison, the Convention Capitol walking heart in for & will track in in hotel at

we ability of are shareholder the in As to drive also potential mindful repurchase are dislocations there acquisitions our through incremental our underwrite when opportunities, the value we of shares market.

comply of shares pursuant program, share to shares During quarter, transactions XXX,XXX million. per repurchased market the were $X written purchase approximately approximately The repurchased to Rule approximately trading XXbX-X. plans we $XX.XX in purchase price an average including share a of at price repurchase for aggregate open the under with weighted intended

this approximately under our strong We operating in million program. our Supported payments. remaining [ph] led dividend by we performance, $XXX post-pandemic have have tiers

closing on Based $X.XX During the paid distributions quarter, distribution of $X.XX stock yield per annualized our share price, X.X%. totaling we approximately represents an per share. Wednesday's of annual

and Directors, will the and distribution Board monitor capital. relative uses rate timing with Together of to of performance our hotels continue we our our to other potential of

enter we year, second strengthen our limited of with of half fundamentals favorable growth. continued business the the and As remain the and near-term supply demand

has to And Nearly over providing greater portfolio us X to construction any benefit supply incremental ability time. activity our under half demand. acquisitions combined with radius, us produce dispositions new do our profitability and of margins better positioned meaningfully and not the mile to within from a have hotels drive

mitigating significant for an strategy create designed asymmetrical downside profile, upside. was risk while providing opportunity risk Our to

rooms portfolio diversified demand is Our wide generators. broadly upscale of of variety focused markets a hotels across and

broad proposition brands Our provide with are managed the a hotels of with value and industry-leading the industry, management strong some best consumer franchised by companies in appeal.

a Underlying the portfolio a our with portfolio reinvestment a financial strategy, extensive effective dedicated strength experience. flexibility, corporate industry sheet balance leverage of management consistent and was team and with in low

our our specifically, are trajectory I outperform optimistic well-positioned am confident value about in continue and we any and maximize While to portfolio reason industry have to environment. be macroeconomic shareholder to the of we

the turn It our detail during is now for and the sheet, Liz, additional to balance on my call performance over pleasure financial operations quarter. to

Liz Perkins

you, morning. Thank and Justin, good

our of pleased the up the million up revenue are million total period XX% report was than of and same hotels year, the $XXX for and XXXX, another the X% quarter compared Comparable of We hotels. for to portfolio half first as $XXX to for quarter more strong respectively.

leisure recovery through increase occupancy of hotels $XXX, of XX% up second of RevPAR travel XX%, comparable X% up hotels second occupancy Year-to-date, was up ADR RevPAR $XX, June, period was over up ADR enabled nearly in and X% X% and XXXX. to the quarter X% same quarter XXXX. demand a with in achieve business of to and X% XXXX. compared comparable strength up quarter us the during Continued to

travel disruptions, useful As the are quarter were or generally performance RevPAR believe second with in Having to where year comparisons moved levels XXXX comparable relevant. cases portfolio XXXX. to for by more stabilized during a heavily and impacted above Omicron-related reminder, most prior the past the first our quarter comparisons XXXX we at

XXXX. largely result, we a As to transitioned from have away comparisons

shoulder elevated to April, in April, be XX% demand. of June. quarter. travel last of X nights occupancies average Leisure were travel during demand leisure weekend July, May and weekend continued year-over-year weekday the June in and indicative gradually business respectively. with to XX% XX%, continued in improved weeks and Increased and strength XX% occupancies XX% strengthen XX% have occupancies May Midweek the in supporting continued improvements to business and in

quarter, first bookings mix, XX% of slightly XX% bookings OTA In quarter. channel room the in XX% summer second terms to increased travel. likely driven quarter leisure by the at in brand.com the night same-store for from increased

a bookings Property showing travel at and in in the continued up the second from direct XX% GDS quarter XX%, moved second first bookings and remained XXXX, line demand. XX% quarter to during the with first to the quarter quarter compared X.X in strength business

quarter, second XX% XX% quarter segment the XX% XX%, XX% the Looking period in XXXX, remain same which up Group Other still slightly elevated at to but period to our in the down from seasonally XXXX. strong remained in negotiated discounts And segmentation, was the is to far same-store quarter. at increased mix, second XXXX. at same the to in of stable and

Turning slightly in just to to when the our challenges first period for expenses. XXXX Total room the understaffed. hotels being occupied temporarily but payroll down $XX our quarter, for associates hotels was to in same same-store the meaningfully resulted rehiring quarter, under per

to we third result higher levels level. pre-pandemic will of cost for occupied half of full part continue quarter comparisons employees reflect utilization year-over-year and staffing will and per wages labor fourth While anticipate to contract rooms more relative elevated the in in XXXX, that stable time higher and back

to associates and continue our and top rate asset. necessary to profitability efforts cleanliness sustain positive work to retaining initiatives better with levels the maximize will celebrate long-term growth productivity to talent. of and attracting to high conducive us maintenance and a environment uphold and support our We balance position efforts to train of service, These the

hotels comparable adjusted adjusted on Strong and XXXX, $XXX periods and in EBITDA labor X% XX, X X% rate cost XXX points $XXX hotels a inflationary was for same for same and of XX.X% up the and challenging and environment approximately hotel to quarter, XX.X% growth achieve the XX a million of respectively. June at in us respectively. to down enabled year-to-date for margin and strong ended focus June, the controls million the hotel months EBITA the through points periods XXXX, basis quarter basis to Comparable

long-term we grow we will expansion our that As believe to on our rate. have ability portfolio and the largely calls, for be industry stated on conditioned past margin

So we expect quarters. expenses in increases significant operating more to and and staffed, moderate with to down seen inflation growth relative recent coming appropriately have figures we the hotels near-term

and with of as year-to-date XXXX, respectively. X% $XXX of for MFFO and the same compared was and EBITDAre $XXX for nearly and million second Adjusted quarter million $XXX was million, respectively. to the periods X% to million, period same up the was year-to-date quarter up XXXX, XX% X% $XXX the

as X.X%. June issuance debt outstanding and secured and comprised million secured weighted costs is our XXXX, debt, approximately on total by own rate facility. balance unamortized. Looking of debt billion value level credit X.Xx interest trailing of XX fair sheet of XX in EBITDA adjustment $X.X approximately our $X.X excluding average debt with outstanding had at approximately months hotels, in our $XXX property billion we XX, outstanding a Total

of were our million $X availability approximately debt quarter, had our the facility hand approximately was total X.X of debt of million. And weighted end cash on $XXX hedged. of average outstanding the revolving our fixed At years. XX% maturities We approximately or credit under and

aligned loan of extended X, existing million million facility, $XX In July, maturity $XXX term date and years term amendment million and to an which other the by into X to loan of loan term maturity entered we the the the XXXX, the $XXX broader August facility. our with

most this lender We continue the for environment. agreements the demonstrated to and importantly, help as Valuable mitigate impact supportive and interest by rate swap further grateful current long overall of low be recent levels our standing amendment. relationships leverage

economic year-to-date more hotels on annual performance adjustments the X%, to our the comparable a favorable made outlook anticipate portfolio low both of be slightly RevPAR between back to end. we XXX and the a following high for and We to consensus half and have the for our year, given Shifting basis our now guidance. points higher growth view X%

hotel XX.X% end. XX%, points an of our XX $X million, both Comparable and provided EBITDA of of previously Adjusted and million to the a hotels basis guidance on low be range. low the EBITDAre be the decrease adjusted on and to between million $XXX and end $XXX on high-end between margin $X million high increase

previously million our on and $XXX provided of and million, low Net a million between decrease $XX capital the relative $X to high-end expenditures on guidance, end income $XXX to million to and be the million. million $XX $X be between and

of in general of of reduction administrative shareholder of associated adjusted primarily income expenses incentive return a net which outperformance midpoint anticipated our with guidance plan. higher EBITDAre our are and for the components is a metrics, The and result relative

that hotel operations been margin exclude property, and Hotel adjusted acquired EBITDA January X, XXXX, hotels Note as of change January non-hotel hotels to as were our have and owned and X, New a XXXX, properties the comparable include dispositions asset since hotel if leased York RevPAR third-party. hotels exclude held-for-sale XX, where assets one comparable guidance

our change, lack comparable continues the metrics and visibility some broader for our Our macroeconomic of continued XXXX booking short-term to outlook hotels, window for given reflect due range to hotels, uncertainty. and key a other RevPAR of

actual the portfolio's encouraged comparisons performance of back of broader As economy. in we'll for our period We're changing top line trends guidance expect the hotels business, given the a performance to strength the in related assess in half reminder, by and over challenging more and of the fundamentals recent strength consensus we to be XXXX. the our for views same and continue the context of year to

any As confident for macroeconomic environment. through are we we XXXX, move well-positioned are we

Our proven resilient differentiated cycles. strategy has through economic

strong use Our to transaction. liquidity which is opportunistically pursue balance sheet ample accretive intend with to we

in a in business that us competitive And supply favorable Our found products benefit investments, maintain dynamics capital over good consistent condition, assets demand. with the ensuring of market. continue our we advantage allowing from we to with our be fundamentals are believe other to incremental

concludes our And that prepared remarks.

be for happy us answer Justin have that and morning. may any I will questions now this to you

Operator

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

Austin Wurschmidt

on morning, everyone. bit to a midweek wanted Thanks and I good start off comments. little travel the

a month the what July your a Your What ability and kind a your to weeks. of sort about that and are demand drive was little because demand upside component following big midweek kind thoughts I like weakness accelerated does latest out believe in right? of commentary about to each optimism and around soft felt that some the both and bit say midweek pricing power, there's due strength months started of commentary this that holiday sustainable of through the holiday then and respective in lot April

Justin Knight

correct. saw we July were timing part you're than in the is of it of meaningfully the different first trends week. So, holiday. that The after that week the And

midweek, as we As holiday Xth travel. to portfolio were know, a operations greater occupancies. normal, that the dependence softer. of become we with push you following particular see week as we business midweek And our on July more have unable was And for result,

the we for highlighted line remarks in was the saw weeks, and which If only with weeks in Liz those the you growth the in her look peel of quarter, significant. that that week out first performance at July, remaining was

meaningful and year-over-year RevPAR. without essentially growth in performance, flat week the with So

travel. the and think move of a good reason, continued feel it for continue return we the occupancy mistake a as to at business We've midweek to be conclusions travel. would I that And month business look into about whole draw growth to in year-over-year about August and good as see

Liz Perkins

And, we little and rate been a to seen perspective XXs low approaching growth Austin, midweek are occupancies from in what the nights. incremental where related high from we We've have bit to on your Wednesday those a rate, nights Tuesday, had started on on XXs XXs are see question the seeing.

Similarly but to as it's there. like, as some see what improvement we've we're seeing So overall, not quick trends. business said trends, we're to positive continuing we'd about still

certainly us that optimism. gives So

really As week, bounce back we and back. positive impact feel think about nicely. sort and that the for rebounded much month so overall, Xth holiday normalized that that of the a portfolio of again, coming on and week overall, fell transient Tuesday, it a performance July it's did then business results fact fact did just that our for we with for We trend the it our

forward, positive management indications companies look to which up, are daily as from August a in bookings looking we average have the we As and is August fall forward, our look for better.

we still remain the approach week, the to continuing XXs, you are But as encouraging. back, then nights, week are -- high it's of see have we, to July and week, growth you're which So and Wednesday it Tuesday, I moderated. and Xth think looking encouraged. you XX is results have low on interesting, at occupancies It's we rates bounce

Austin Wurschmidt

year, ADR? and Thank I it ADR towards between and second I back is you. growth And quarter, guess, more kind guide does the little all what in in RevPAR me. -- in of June, what that's balanced margin ADR maybe softening RevPAR Or RevPAR guide? So, is is assume still? a more little driving become bit half the a of for weighted the the it heavily occupancy

Liz Perkins

starting year, the projecting balanced. have off. where business leisure. built to you're see More balanced. or back, look travel see pullback to grow overall, certainly an continue Yes, mean, the come cut you occupancy at sorry in back. continue to I back as demand you Austin, half in seeing that you're more we're to we ability some growth Yes, come assuming of And but well, to meaningful how not when rate,

Austin Wurschmidt

Great. Thanks, Liz.

Liz Perkins

and on variations end high Certainly from low that, … the but

Operator

from Fargo. The ahead. with next Wells Please Kesten go question comes Dori

Dori Kesten

morning. Good Thanks.

are second occupancy your As current the still to half, you with continues in rise comfortable levels? your staffing

Justin Knight

When think, across we with, market, hotels, Generally, there greater levels have portfolio, some that adjustments we have to of comfortable to should the as and to the we've standards. re-staff staff. occupancy margin, And, largely brand variations able our I lead are to gains that given productivity we yes. feel been utilization our overall on obviously look made been existing by incremental

our it's blend. trick for The a portfolio is

within certainly that so see And rebound in to been that more now significant occupancy beginning that we those have markets. some markets increases portfolio, and obviously in have to are slower just

into We the that will to see expect that moderate we be And to accommodate by move we back overall but we large we've growth hiring half as reason, being demand, for the year. begin portfolios the and highlighted stable. of incremental our to expense

Dori Kesten

of of Okay. of And, out And have But there? interest history acquiring are today? mean, what's a there you I portfolios. interest any your level

Justin Knight

to our that with us for continue individual portfolio. existing significant is we debt think the larger governor and I most underwrite assets portfolios,

currently And so fits as and we that we look focus market the or portfolios provide our to portfolio at that product larger well owned. portfolios, we're with that narrowing looking those concentration

a in happen transactions we're So there. of interested I the think potential that most subset

be bulk XX the we In the that happen individual portfolios we next through change. But the smaller continue either overall as certainly assets involving think, several or to certainly transactions and the the that will be to months, the involved could near-term, of I than in transactions in continue transactions, that that will move bulk hotels. assume less smaller we market of

But those when groups also financing could supportive larger as more the Generally challenges financing portfolios to looking of drive higher speaking, the them. environment at in of at the are larger market is some portfolios refinancing cost. to market market come

uniquely And that think pursue for reasonably think our would available. interest we I we're portfolios be So, are There to there. become to positioned be I as continues they those good our number a of fits portfolio. feel

Dori Kesten

you. Thank Okay.

Justin Knight

Thank you.

Operator

from comes Batory Please question next The ahead. go Oppenheimer. Tyler with

Tyler Batory

details is What travel focus of weekend you comments, mix days. you morning. the would And like? good look could percentage then more ballpark Hey, power you been in leisure What your travel my right lot prepared strong. And be provide pricing be couple of Any does continues questions. leisure consider like? There's what travel to taking additionally, now? leisure the mentioned you a look of on can in Thanks to on transient for past that? that

it's And I leisure vacation. if than resort one different I could demand, peers on hotels. drivers just some that you may have larger in will more, most of squeeze partially assume assuming your that people I'm and also have But

about So I talk travel, in if you be you. Thank think leisure just would what really mix too. could helpful, your drives leisure that your

Justin Knight

and diversification somewhat Portland, that on vacations. certain we travelers like Beach hotels assets, the certainly that backwards raise a work any assets, Maybe feel to I'll or given our of portfolio of business percentage varies we'll broadly vacation, maybe, certainly and own in broad them, start we with address leisure those greater have that of types have Virginia But extent by leisure chime our are travelling them. can questions, speaking able see for in the hotels, our people free Liz, And the speaking, of to we Maine, travelling includes be to in. But the that to market. we who

speaking, of family tend of be tremendous outside team sports and that like travel our those related And drivers that, we of a to events, But other with for categories. major outside see weddings, the But a leisure significant business. are demand biggest broadly there associated of number amount leisure portfolio.

across on I our we're think, occupancies. goers, vacation partly, leisure dependent for perhaps, portfolio, and because seen travel, we've solely stability demand not in at Looking

think and demand weekends, Looking I reflecting and strength X X together on there. months, at past continued the the or

in in obvious drive us levels. occupancies a it push to relatively and to meaningful growth to weekend put them push rate. recovery with in see to Those up worked and travel, I've we trying we in July. the saw quarter have early And we and leisure continue to the the I'm so propped even occupancies three. pre-pandemic first improvement at beyond that even the which remember weekends, continue stable the your other quarter position was from specific into to Obviously, question variations our what past as now held looking market-to-market, RevPAR backwards

Tyler Batory

ballpark your transient corporate? maybe just you consider Yes, of guests would versus the that percentage leisure

Justin Knight

around skews we into leisure significantly, split, estimate than is heavier even more a that, which right portfolio. And I think, weekend the still to been our have as of continues think was to occupancies I makeup maintained XX-XX the business that I think of we've higher shift the pre-pandemic. moved Yes, mix a our But in portion year. be influenced by that

Tyler Batory

me. all that's Okay, you. for Appreciate Thank detail. that

Justin Knight

Thanks.

Operator

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

Anthony Powell

guess morning. supply a on question good Hi, growth. I

your going to that 'XX, deals As Is to do coming it's up of in able the next you're I your limited like helpful. Motto in guess. you back pretty seems broadly we it it growth [indiscernible] across in or Nashville, do 'XX pick supply to like couple markets But think years. markets? may developer most some just know, be What

Justin Knight

I remarks don't that new under a mile mean, radius have I roughly prepared highlighted XX% our we still supply of markets X have that any our construction assets. in within of my

that pushes And of beyond out time a then to start markets completion, from portfolio construction. kind roughly our that set. roughly pre-pandemic of in for the our years, framework the had where what potential of exposure. saw generally in supply or And of meaningfully so new XX% assets I the XX, given think that those I you all have couple XX% of markets, think other we we'll below under one two

on and to a X unpredictability better of uncertainty in continue most equation, supply out meaning some standpoint supply, cost estimate that today, higher on to come position of to will the and of time, challenges. we several. which there we significant continue back pre-pandemic. happened of But at were labor believe As costs, from groups Certainly, up a period run look and hedging, of the they impediments the are months, were developers availability has than had to think, that be those have GCs I a just based short based and over to chain XX be looking some

of meaningful -- on of cost the costs. and in it a significant And the the a supply construction cost component be new that today that portion growth is to think limiter I individual a continues increased of financing markets.

in higher the costs extent than what it's are points a at inflated the inflates, levels. that cycle, cost, limited pandemic it costs available, is financing comes to to So already and at that has further and pre more it been other still are

more to developers assurances effectively or a a costs extent the above And projects. position takeout priced because the to what obtain is at And do our to projects. markets some justify you more financing. construction importantly, they provides of their think, where reasonably tends that in I makes it very and It can the least, of control manage number cost construction also, limit takeout attractive, in cases, on puts the

to are the muted. or we continue foreseeable think that will way have located mistaken well be outlook of shaped to we for. be looking the there reason, be an for the that our Obviously, our seek future new that are markets construction to to guests I because supply. anticipate continue see and supply the those out new in amenities I won't that And best think within that be any incredibly markets up, we is that shouldn't And assumption stretched that and assets for are expectations will be

think terms supply foresee us into anticipate side. our coming position pullback be benefit importantly, for the in be and meaningful And the I a business than were But that Liz by I large, prepared the demand, puts more also the foreseeable a both better pandemic highlighted in a in of in way the and better were from future should And to us growth. overall as there meaningfully economy. a a leisure position near-term, we we that extent in to we'll in a in we meaningful to much incremental and downturn both position don't though, in put remarks,

Anthony Powell

maybe And Thanks. one RevPAR. Yes, on

it maybe Was understand What like your travel, X preset, kind in So certain up of and percentage kind business than upside markets, gains better we guidance the by RevPAR of point. took the through outlook? what original so was can here? go you leisure travel your driving

Liz Perkins

slightly We midpoint. the have above been

You we as were we at slightly ahead QX, reported know, that time.

performance think pullback, coupled point of as macroeconomic year. the consensus trends see in are we in I holiday indications plus think And trends I we the pushing increase I again, as week, see the confidence and least incremental from continue July, view And the encouraging. consensus was think that gave quickly out earlier in at year-to-date us to to strength midpoint. not a continue Xth some at post, slowing, our given to forward, July

strong that see optimistic continue we're So performance. we'll to

Anthony Powell

All you. right. Thank

Justin Knight

Thank you.

Operator

next with comes Michael ahead. question Baird. Please The from go Bellisario

Michael Bellisario

morning, you. Thank Good everyone.

Justin Knight

morning. Good

Michael Bellisario

big and maybe the Just all want be over do [indiscernible] you the on be when to for interesting point, standards at might more 'XX. side this really just would be to the rooms that Or the picture to Are much many into It's hours focused you brands come stay brand to quantified back? the but will calendar come extras think it look you maybe out can hear back how on not your need what as 'XX, brand 'XX? flip pushing as But we happy color. how you but focus on directionally, think next we'll cleaned year? the

Justin Knight

our Interesting or are absent speaking, we services consumers hotels. the those on today, as with with further question. amenities improve increases at the in the conversations brands Certainly, how references to ongoing significant experience Generally about to of for basis hotels. have dialogue an

brand today and sit of brands, by the the we're advisory on think, having and majority conversations know, large, as number I you a of with we boards. that

extend portfolio. related beyond conversations these specifics to our own So

assets. hotels, condition And and emphasis The of the I be an the more and much attention to to focus the need as repairs think and industry in paid reinvestment greater has for maintenance. around the tended

So reinvested I having near-term, consistently. see in think for areas, position XX those XX much us portfolio in that very focus a on put our likely meaning months, we'll continued business, in more in good the next which to the our

still had large, to trend offerings, day really that pre-pandemic adjustments housekeeping than dinner are assets cleaned We in furthered but the of maintain significant By an their condition, -- for would industry, returning to good who a expanding more amount have guest a guests I that models. room in pre-pandemic. going order will like begun and attention we're think, to accommodations that every housekeeping as in that making satisfaction. be very And have or

to I to position. we little And given I on part the near-term our will, or impacting is good I of likely we're very So, hotels, movement a for ability brand be pressure think focused, in because see very that think the position our drive of how profits.

Michael Bellisario

dollars on the just Okay. More broadly, development can Nashville? Helpful the you And of development And math deals. us then question what a there. your on commitment kind asset type development take remind targeting And at how you're a Thank of just over to you. big stabilized of you Cleveland? like second do excess then secondarily, buying you return a point? this are like willing deal

Justin Knight

our we equal functionally, to could part is be the and that to your bit and acquisition, We a be to return in prior tend of the in development look tend overall in in acquisitions we acquisitions to has market conservative because on achieve that acquired total, underwriting operating years. outperformed, at deals target new that of growth to return conservative answer Technically, our properties new assets stable large, question we and development the by the we been were have So the out that's more underwriting our result more we first a that And deals. existing little complicated. when

markets, underwriting in our incremental of up market into specific risk, the to project. That's consideration case, target theoretical related [indiscernible]. incremental the XXX% the do conservatism me borne certainly are taking we're a overruns the same, risk more or on Those And other your about result Oh, market not ends we of But every a take than yield. being remind in cost risk function the remember by any total taking. developer. was? what question But then for

level contract, think, Generally a of speaking, delivery number slightly than to we pursue pipeline current that higher scale the appropriate currently we have period. in extent under given with of X-year were an doing, size deals, to over be we're the of I portfolio. scale that. the that given the of of smaller our To five X the a X deals than to development terms deals we to Like week could were three would have deals

not of about on for obviously, a valuation, attractive go-forward have disposition today's capacity we we that some And Though, or given line we deals with remembering us. to would point certainly that at the raise. under intend operations those at of as equity basis, on think acquisitions, our to least and funding have, fund excess the development again, ample and utilizing hopefully, bulk be we deals, cash potential proceeds, from contract, credit. But

Michael Bellisario

one to market? where today then the relative do in you Where it. is going Got just on basis think select are service And Nashville. trading hotels your follow-up be to

Justin Knight

the good of price, and will That Meaningfully the hotels that count But service comparably property marketed lower. meaning purchase given we what key development, less up. keys key still again, potential some remembering select we're in anticipate highest finalizing line number the approximation puts be think under actual is still for we where a the we've over I and same to we've disclosed, and the mean, XXX,XXX of well area. us [indiscernible]. than

I heart and with Downtown, generators. really to we the proximity the market, in demand good in -- location, major of bases good very about is So Nashville about the close our within which think feel very incredibly

Michael Bellisario

Helpful. Thank you very much.

Justin Knight

you. Thank

Operator

go Chris [Operator Instructions] comes Darling The question next Green Street. ahead. from with Please

Chris Darling

Thanks. Good morning.

X% previously to call bid it, the back you about XX% spread. talked to going a, Justin, ask transaction market,

to Your close. it beginning spread that comments sound like make is

to So quantify be you changes you the seeing? is accurate in any that for way might

Justin Knight

It is.

fundamentals in assets. we've I improved been transactions. cap specific rates, it our in think been cases while has movement a slight that movement offset seen Interestingly, the in increased for by and most has driving interest

corresponding we're put and where So competing where sellers conversations of have to a willing adjustment seen in for about points potential with be we would valuations haven't assets. us at in said, really transact, price marketplace, a sellers That which to position people large terms serious at is least, a the in by fewer happen. with transaction might

always the portfolio, the as the acquisitions, we've anticipate But anticipated And importantly an growth to been has as the looking assets, where on near-term think achieve underwrite we look pursuing yields case, comparable recent transactions. as achieved potential yields, to at I in hotel future way growth our we to excess portfolio. CapEx. need generally, or the less larger of near-term rate where of for in anticipate larger be our we to we're

contract, just at under renovation. full out they're of the Looking had that the Cleveland have we and examples, projects I in we recently a two asset come closed on think great

hotel growth needs way where to And I will increase think we a near-term close go-forward market a to a meaningful basis. see on that will repositioned And it's been be effectively it think share CapEx so, zero. we for that in enable market in

Chris Darling

the thinking then Got Hilton level speak of have you it. your And and concepts your just of newer concepts? of those with some that Can about introduced some switching helpful. partners to gaining some all to brand are Marriott maybe And That's very discussions there? gears you interest any of new exposure in in pursue recently. development

Justin Knight

of there for So, is, we've demonstrated Motto few are well, that I And certainly concept meaning there. them new exist. a very Hilton, interest technically guess, that

tier Spark brands, whether space, the are -- Speaking that announced, any it's of that extended actively that new deals tier, in brands the lower have not stay lower currently specifically pursuing the or we to though. been

brands have how the of existing relates positioning that other portfolio. We assets about product conversations new regular and it our the to with within

think But ability flow invest upscale while in strategy to we drive and potential, it's been been rate achieve we're strong in the the can successful to I space where we very space. likely model track upper generally our and us. midscale has product balance to margins. I our for think that And and speaking, with best the feel cash

Chris Darling

me. you. Thank all for That's Okay.

Justin Knight

Thank you.

Operator

back turn any the Knight Justin This to concludes our question-and-answer session. for I remarks. over closing conference would like to

Justin Knight

joining always you you opportunity day, the that with today. to the to is you look forward appreciate great at of on we hope you our And as take near-term one case, the a us us stay Have of with road. travel, many meeting as the We and will hotels. we in

Operator

The concluded. for conference presentation. today's Thank attending now has you

may disconnect. You now

Apple Hospitality REIT (APLE) 4 Aug 232023 Q2 Earnings call transcript