APLE - Earnings call transcript Q2 2024 | Apple Hospitality REIT, Inc.

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

Operator

Greetings, and welcome to the Apple Hospitality REIT Second Quarter 2024 Earnings Call. [Operator Instructions]. It is now my pleasure to introduce your host, Kelly Clarke, Vice President of Investor Relations. Thank you.

You may begin.

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 today. results, outcome securities laws. risks, are subject actual as forward-looking those include could by begin, our to or obligation implied. Before expressed, and required including call report only except current projected based to of Any or The or update uncertainties the publicly These to materially that of XX-K that a with risk assumptions, cause defined federal as such in any numerous by in company forward-looking described undertakes and statements may Form as we forward-looking statements future XXXX statements, annual achievements speak by events forward-looking note on from qualified no performance on statements the factors our views law. are and revise today's are SEC, the result, differ and filings as

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

and operational For our Officer; XXXX the outlook of of visit Liz about earnings the overview Perkins, applehospitalityreit.com. Officer, an a copy Chief provide our release for remainder please an Executive of our for information the of second This Knight, and company, the or additional year. Chief morning, will results Justin the quarter Financial

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

Justin Knight

our earnings joining morning, us for today you Good second thank quarter for call. and

were to the The of relative we portfolio back of our markets able levels, remain benefit the growth. to cycles supply business X% have of the overall allowing strong. of occupancy fully more is than from during to grow in year-over-year occupancy new growth rate we muted our incremental historical us half hotels XX%. past achieved than comparable move XXXX, in We fundamentals demand into As more and quarter

quarter, While the for are upside midweek continue up to demonstrating grew travel ADR and and as demand, to steady in as RevPAR business quarter opportunity with business the the the greatest come realize hotels we corporate, both resilience of that we the during normalizes. growth of grow result we travel seeing X.X%, were demand leisure a weekdays medium-sized Comparable travel improvement on small for believe occupancy and weekends our able will year-over-year. slightly we

maximizing with assets revenue supporting within their are asset for strong performance profitability Our and intently respective operators growth our together focused is and management optimizing their on the portfolio. bottom-line third-party Expense our teams, moderating, performance our markets. of

a we decline XX quarter, adjusted hotels points. EBITDA basis XX%, comparable the margin of For hotel of achieved a year-over-year

quarter adjusted million and second funds XXXX. the Second X% million, compared $XXX of quarter to was up modified both from operations EBITDAre as $XXX was

comparable XX%,and of perform for second up XX% compared the Our EBITDA as pre-pandemic portfolio XXXX. to hotels levels of comparable the adjusted hotels to RevPAR ahead with quarter, hotel continued up quarter

was quarter Supported of Modified X% yield. by for funds dividend from our performance, provide continue up with second the the second an investors operating to strong to we quarter operations per attractive XXXX. $X.XX share,

relative potential stock Board and cash our to of Directors, with $X.XX an monthly approximately annual our annualized performance totaling common and per price, Friday's uses regular distribution to Based share quarter, the Together the During capital. we closing yield X.X%. of of rate represents $X.XX per other hotels our will distribution share. continue monitor we of on paid our of distributions timing

incremental driving markets, high-growth enhanced activity further creating performance portfolio, has lifting our increased to well-positioned and exposure transaction profitability. overall already Our portfolio

to improvement. prior after Recent course hotels which existing price of is June contract the of Salt acquire attractive proven unlevered construction, last enabled are City garage and portfolio together Suites in meaningful we The X% relationship to year, long-standing from acquired our adjacent costs capital a acquisitions the to strategy, Madison, over the rising the with us the by basis on our downtown development. a our improvements Embassy X and ramping Embassy at parking with an we fixed Suites line quarter secured the complement since of developer, acquired price our and the Through Madison projected completion with investment reflect Lake downtown XX-month our trailing expectations. we excluding during the opened in in approximately upside takeout Hilton operational asset yielding market recently growth despite starter construction Wisconsin, which with upon construction hotels

feel the of Madison positioning hotel. and and to continue good We strength this of about the location overall the market

completion to to our can in the through in Similar purchase achieve We maximize a XXXX. million. have Embassy that for the acquisition We of our returns capital purchase, in is ways shareholders. downtown upon and is developed one that late construction being total additional work returns evaluate Madison, of allocate Motto shares we hotel the acquiring to own $XX continually hotel contract which construction for under opportunities approximately by and contract, relative price anticipate asset we under under a and the Nashville fixed Hilton, for

shares month price, of quarter weighted average price stock the purchase repurchased purchase $XX.XX July, an of share million per X.X the market we with During aggregate $XX the approximately recent pullback at our price a of for approximately and in million.

we where results our capital market desirable conditions. given to in shareholders, We for allocation, are most opportunities disciplined believe our the seeking can achieve we approach

desirable highlights maximizing capital the achieve can and shareholders that opportunistically returns. sheet believe in remain be investment ability strategy provided underwriting strength current additional continue flexibility focused opportunities our our balance our investment align activity to and and We we allocate long-term recent our by for Our environment. the value active with to we where on

returns select our portfolio our optimize continually individual existing We and the concentration work strategically performance dispose we assets. markets, to growth potential, on within higher long-term CapEx to to have maximize also monitor of believe assets our needs and manage hotels

hotel of for a Greensboro, beginning million, pandemic, sold XX sale sold on of by Marriott second during Since gain Since room which quarter completed approximately gross combined XXXX, These near-term size of the room the available growing lowered the of gross a including average sales transactions have approximately margins, price Suites position $XX to the approximately resulting balance million. the we of platform us the invested portfolio, $X SpringHill and for the we X in price acquisitions $XX onset new and have a of billion sales near-term while to million, continue approximately we manage strength hotels of CapEx increased and our the from needs, $XXX demographic helped million in and our sheet. benefit have per $X sales have trends. of in maintaining economic our revenue to age

from quarter, XX% any new business At our the not are our the and favorable to During did upper product strength supply. their invested hotels. demand end XXXX approximately at the of our markets a further demand profile we under improve and our portfolio major radius, in to the X and from or our months EBITDA in reducing of limited approximately providing the component drive of expect continued upscale, in also overall variability $XX both The approximately benefit X-mile us first $XX risk the million year, hotels spend remain upside upper new and demand. growth. incremental These with in million construction that impact within during of the hotels our of with key remain upscale capital respective fundamentals reinvestments a our and competitive ability of ensure potential overall to of strategy lodging mid-scale downside we in expenditures, between to second the have $XX portfolio million with XX meaningfully by enhancing renovations

execution We which of remain in the economic cycles. investment and strategy, focused resilient across our proven has disciplined

now provided We balance that and across our additional our to the experience portfolio our call and of quarter and are high-quality of the and rooms-focused stability are strength and flexibility demand team, markets our companies, It generators, by for on of exceptionally performance guidance. our the corporate confident balance pleasure sheet, the financial for turn over annual management the is my future. of during broadly sheet, and hotels, Liz our details brands the we well-positioned effectiveness with depth diversified to

Liz Perkins

Thank and good you, Justin, morning.

quarter to $XXX, to year-to-date of quarter million compared to compared RevPAR XXXX. second and up are year-to-date strong X.X%. up than X% report X%, occupancy and X%, than leisure in through period as second strength hotels ADR X% and occupancy RevPAR up up in the was recovery same With comparable more comparable more the through month ADR second A $XXX, of continued to nearly another business year-over-year our to hotels $XXX of April to $XXX June Hotels our was quarter up XX%, additional XX%, of million of We the the comparable hotels $XXX Easter to slightly, demand, the strongest of XXXX. period was growth Comparable with $XXX, essentially of the holiday, hotels. flat up Because pleased XXXX. quarter strong portfolio June, shifts calendar was demand X%. was total with as quarter same and XXXX during RevPAR quarter brought X% and second for for revenue

resulting the start July for on having holiday Juneteenth with preliminary during ADR flat RevPAR. July as holiday, occupancy results X shift in as month, the of to continued challenging under Xth for month RevPAR performance the year with a the declines June, modest just year-over-year in year-over-year, of X%. The to this essentially of with midweek pressure With show growth impacted Sundays well

Weekend same X.X% year. continues Looking compared last travel to quarter at up leisure trends, during to occupancies were the as the second resilient. be period day-over-day

We weekday same compared during XXXX. occupancies growth quarter X.X% also of second in period with saw improvement to as the of steady the

rate absolute quarter. at achieved improvement pleased demand, and effect for steady has been on have we rate post-pandemic sensitivity to see rates strongest those the combined growth leisure signs than ADR showed produced overall increased weekends came on which the quarter, While growth demand, our midweek the overall lower with weighing of demand during in the

up ADR in June, year-over-year in in up May April, X.X% and but Weekend in slightly was and May ADR and and X.X% X.X% April Weekday June. up was down X.X% respectively.

OTA during occupancy, and the room will and Our on will was believe largely and GDS rate Weekend in Wednesdays night, midweek support midweek mix both Same-store lagged property bookings brand.com have leisure quarter-over-quarter the rate post-pandemic. XX% bookings and respectively, channel mix. stable XX%, at XX%, recovery night of our remained representing with Monday relatively direct strongest that growth, ADR continued quarter. We bookings more ADR significant which of XX% and the come for at $XXX improvement quarter. XX% achieved occupancy followed was future weekday where came from which $XXX Tuesdays we by growth growth

Second XX% and Group remained represented negotiated the segmentation second was occupancy with largely quarter XXXX. was quarter same-store XX% the of XX%. segment of XX%, represented of Discounts consistent at mix. Bar mix. our strong our

Turning first X.X% in as hotels growth occupied of in growth payroll X.X% quarter of decelerating in of total growth the operating for second was our from to hotel expenses year-over-year up driven expenses. with improvement year-over-year quarter. quarter expenses, basis XXXX. for increased to quarter, expenses. by to second quarter Comparable on The the a driver first decelerating hotels, total same-store for hotel rate $XX to the from XXXX, XXX-basis the occupied a the year-over-year expense X.X% in by first room declined quarter, growth room a also second in growth expense per but of the A in per X.X% largely the X.X% X.X% total the quarter. operating compared deceleration significant point Total was

overall coming near-term incremental are remained growth with increases will quarter stable with total in positioned stabilizing With contract turnover that in at down. drive and the be modest market we productivity. per and and XXXX. labor, X.X% XXX during wages, level to saw property relatively the better numbers labor room less anticipate labor second we lower was in on Contract down of We occupied reliance the more during cost payroll line quarter inflation

expense enhance a our due of to over other efficiency expense favorable hotel April We X appeals. management by growth renewal in X% will Also time. decreased property with a continue total companies to and the nearly year-over-year property and to year-over-year successful property work deceleration, decline insurance taxes our taxes, contributing with operations to insurance

of same to period comparable XXX period for year-to-date, the down the million X% growth for for we million Adjusted a hotel the year-to-date, are $XXX basis XX.X% points comparable of same quarter result, X% As of points XX compared quarter, up to with million respectively. quarter only EBITDA less of XX.X% the $XXX and adjusted X.X% XXXX. the through hotels million XXXX. to than XXXX, and as EBITDA growth, achieved same X% over down our of pleased as hotels year-to-date With $XXX compared year-to-date, and hotel EBITDAre RevPAR $XXX XXXX, especially basis margin coming period adjusted $XXX and for and to approximately the up the we occupancy was was rate X.X% was and of MFFO and up respectively. million, $XXX million the period and X% same quarter

Looking our at balance sheet.

million and adjustments billion debt, a of June property-level net XXXX, our interest weighted and hotels cash million, fixed comprised our were outstanding end, credit average unamortized excluding of in EBITDA, outstanding average by of weighted maturities hedged. our or Total X.Xx availability had XX, of of on of and approximately trailing our $XXX under debt $XXX $X.X was total billion cash, As issuance quarter debt fair secured outstanding $X approximately hand credit had of value with of XX% X.X we approximately approximately X.X%. costs was our unsecured approximately outstanding debt We rate XX-month approximately debt million, debt total $X.X revolving At XX years. approximately facility. on facility

line basis term the pay balance we XXX the July unsecured amended capacity company's set leverage our loan to to on million range million by maturity closing, depending on million with XXX $XXX the to in July, facility the certain credit. in credit be additional year. maturity facility revolving extended to ratio. the down X date $XXX date extended margin a Subject loan our incremental to million, The which for XXXX, an of facility, $XX the conditions, increase increased points, In term the rate may the XX, the facility, was on of company interest used funded resulting $XX our and at of funding spread to

from approximately We later year have pay of funds intend loan we or under matures borrowings credit operations a to this million that $XX mortgage revolving facility. using that our off

price common during for With quarter, price market in share pullback repurchased the X.X of stock $XX.XX price approximately purchase of weighted aggregate at average approximately an we shares a the our approximately $XX.X million million. purchase per

X.X aggregate approximately purchased market purchase shares purchase approximately year-to-date we repurchased through at total additional the weighted an XXX,XXX for July, July In to an approximately price share a shares, per bringing average $XX shares of of $XX.XX million price million.

we end share As under of our the of remaining July, had approximately $XXX program. million repurchase

year million. and to comparable by the XX outlook income points our hotels EBITDAre midpoint. the net Decreasing EBITDA Increasing full to previously decreasing $X guidance, hotel basis comparable compared RevPAR Turning for million, by XXX XXXX, provided points. by basis at the by change hotels decreasing margin is adjusted updated $X adjusted as company

and of the developments million, RevPAR following to and hotel $XXX change take account it X.X% environment, For EBITDAre hotels or does the any EBITDA million. on our hotel is adjusted to in and full any margin hotels will our the take changes million acquisitions unannounced account dispositions. income business of $XXX into not year $XXX view be in million nor into XX.X%, XXXX, This operating in or $XXX the based between unanticipated does outlook current comparable results to XX% adjusted ranges: of comparable we anticipate net X.X%,

and expectations was results Rate at operational to currently during were the outlook and of While quarter with for the updated the continued modest, quarter. quarter midpoint second improve the the growth demand in XXXX line first provided second at during our in consumer following leisure the takes previously those pandemic. sensitivity impact we've of increased increase leisure rates percent which price as into coming mix, the business transient than lower consumers from account seen a is of the the and in

to just for in better and The pullback updated with in end year hotels pressure shift XXX-basis in growth our for lower with anticipated full and demand. RevPAR leisure-oriented range primarily demand growth, ADR year-to-date, originally fixed business pullback adjusted The than growth on growth, guidance due resulting a a EBITDA. decline conditions operating X% Despite we transient variable with bottom-line relatively the the performance. the of assumes in full move comparable months. end slight year, our in bottom-line low Despite and of continued strongest high range we rate strength as strong leisure performance improvement past reflects the expense point range macroeconomic positioned with strong continued rate confident some steady the reflects fundamentals greater in growth in continued we well leisure are expectations are

challenges which value basis Our share value. with on in sheet enabled incremental per environment, the a put drive for despite our optionality put meaningful to and up recent us margins. from pressure acquisition drive are balance provides shareholders Modified operations has activity incremental to to on us continue year-over-year, operating

Our economic equity are value be improve to uniquely constructive. environments preserve to market transactions conditions value differentiated positioned strategy cycles, more has through when through in proven resilient opportunistic and challenging enabling us

works performance portfolio and diligently of answer while be to any further to to shifts happy shareholder staying to us market team questions you maximize opportunities our for enhance returns. this We advantage morning. the would have Our existing of that take ready now

Operator

Instructions]. [Operator

comes first Wells Dori Kesten Our with Fargo. question from

Dori Kesten

are talked versus of transient half the for leisure that versus your expectation return that you And June, more to what's now business a eventually year? second In in should spread. rates the you the 'XX? spread about expectation Where normalized

Liz Perkins

relative We are XXXX. to that still spread meaningfully behind

a we see we weekends, post-pandemic to like points but a midweek. rate growth and had switched been as the We're We shrinking maybe it than on We'd trends from higher as have there. flip-flopped. gap, not that where XXX we'd complete seen were basis certainly reversal in like quickly perspective midweek

would not still gap sensitivity that weekend the obviously That price we too, have pre-pandemic relative spread upside preferable. way and rate. continues. But be shrink between midweek can to which occupancy leisure, As

Sorry, I apologize.

Justin Knight

upside remarks, And our basis. where highlighted that's on in a as we the biggest go-forward we prepared see

Dori Kesten

based guidance, the your guess, potentially would choose $X.XX new to your change need monthly level? then And on you current from Okay. dividend or, I to

Justin Knight

No.

in I my than of for think coverage I given remainder remarks, adequate year. more the highlighted we've have we anticipated what prepared the

Dori Kesten

And to that pause much the but your may is just extent acquisitions where progress how there your stock of medium-term? Just are on in price on pipeline you trading? potential sense near a trying a last there stock close get of your a is given to one, improves

Justin Knight

interesting. It's

remarks, in deals I into others I strength see are investment think a overall continued ever pricing. adjust terms assets to we meet in a And consideration number seller significant capital, sellers with in are us ready, deals unless we rather my operations, expectations. as think That of in we're wide And as have. we think it's meaningful debt. of potential most take trading unlikely said, We strategic underwriting number acquisitions our more that where aggressive assets. mentioned we the bid and continued you price as poised those and sellers. front. overall on cost of the And a I we're as were with in space, current choosing discussions shift hold prepared of many our than become to would we've in see to criteria I environment, similar those of In Certainly, the

recent sense. to to to very and position from more. Vegas stable portfolio the XX% We're meaningfully we standpoint. our But yielding attractive DC, the line, shares. also our assets. incredibly incredibly and the up achieving incredibly performance per at acquisitions up flexibility the in portfolio we're almost and pursue not make over strong, top platform see those and additive pleased the in X% lifted performance certainly is the towards our value to with date. on share you love acquisitions tremendous yields quarter, an one in well A we our ability as a a growth Las the of pleased overall We'd during was repurchase with would to which quarter, They've was price have recent saw quarter. be during key, of have been pivot

Operator

from Austin comes KeyBanc with Our Wurschmidt Capital Markets. next question

Austin Wurschmidt

good in here about you to supply of of give guys for ADR? plays shift softening to in the do is data, the you here how of from What in I guess any pause improvement drive maybe out rate additional position. you economic or And pace upside of happen see some needs as think a to and does the sort accounts that that a pretty corporate mix midweek

change suggest pace? you're the You good, demand that seeing of still really but just wondering looks in that if sort of any booking

Justin Knight

grow markets in occupancy, in we move terms future would we booking would patterns a the we we're as are I about strong markets data and of typical saw again, assuming conversation growing in margin playing continue little to midweek. economic Remembering, and on we we different to that's the market the I recent And based visibility booking to mentioning. it's types. into continue probably the guests yesterday I'd lot say that continue to that impact especially better be have diversified, some seen have past feel earlier, highlighted to very hotels. overall, incredibly how out. we think we've our at to We've And to certainly had the in different performance. are what meaningfully we a pace, reasonably rate, said, that has That are of have worth good and because position able on that what for anticipate we exposure an rate. yet

an annual A and we basis, portion which of to our corporate contracts, on tend enter will negotiations those renew on accounts. fixed-price shortly around very accounts

we certainly of favorable months. With several over will next the ourselves watching to significantly meaningfully us in that for standpoint. a those from the be an assuming backdrop discussions, that's in economic reasonably we a see backdrop strong pricing higher negotiate And better position occupancy,

Liz Perkins

in are negotiated move brands put the I demand we to That accounts to continue better will as as corporate rates, compression of from and season, well. corporate as more our midweek. position and percentage approach as be we think to to bar to side off extent we improve, also a able of drive to RFP And focused continue be local the us rate which, should the to fixed to realize continues versus well

Austin Wurschmidt

in analyzed, was today upside if that having contracts percentage where fixed versus in differently Have were I with you you position rate that done would what price the of guess, it bar, the the place? have

Liz Perkins

we challenging to dug not bar, various the would was supply have corporate percentage and in negotiated night throughout if imagine, to versus a business to where, you be relates No. hotels to rate, your all that and the do. of as have manage it and said, have to off delta seen able multiple a what our as bar negotiated over accounts I with compression manage a rates year. mean, a would analyze XXX static and discounts the been mix can demand to of that percentage as in position best of being we negotiated of That it puts using on us and given in

Austin Wurschmidt

fair. that's me. one just then last No, for Understood. And

how the you but to piece provided of of versus revision, lot much weekend detail, the guidance as you it a leisure far As would attribute weekday?

Liz Perkins

to The revision the rates, rates. versus midweek Dori's demand Similar as And growth it at but a of just over the premium around you world. that shrunk absolute at remarks that some post-pandemic recognizing shift than rates little it you predominantly effect We've at different spread coming relates bit. midweek weekend net a in weekend prepared price some lower beginning, second gap quarter, used rates. the what basis the -- between sensitivity both leisure what to is of question given in rates on midweek of XXX points growth leisure is from in to is very we're mentioned. still probably the and RevPAR, be and The rate-driven, lower to also particularly

think big both related of really ADR. I the your portion to questions. net And directly was of revision a the of effect so, And guidance it's

Austin Wurschmidt

I thoughts. appreciate helpful. That's the

Operator

with from Securities. comes question Jay next Our Kornreich Wedbush

Jay Kornreich

like the hotels kind the outperforming there's and and upper outperforming looks upper at your the top upscale top markets in both upscale at assets. the also portfolio of end, a It trend the mid-scale end, lower XX lower of end

the the up you're the I'm So, can working a really the And curious, maybe working seeing those the between to it that just lower-end, talk at up just Or you on is about that scale? divergence lower X? Is markets? scale? customer there is XX top weakness chain

Justin Knight

what you're it our seeing Really, than most driven. of in asset is is market-driven portfolio category more

individual markets. lower portfolio When reasonable heard the And heard -- pairing trend, so, weaker of in our our that customers, have we ends. look assets we while at weakness similar seen end a generally stronger at what with not of that to least in weaker you've have with we of performance assets mix to both at there's markets relative of performance portfolio assets, or absent

Liz Perkins

And look if performing of mentioned. they upscale upper Justin driven that's the and assets, full-serve at Marriott being Houston as really, is were quarter. our properties our market-specific, you by one our top markets for

increase, benefited from also there storm-related demand corporate and business. see to continued we've We

more that is the like a HomeX, is look all, It's that a Orlando And to our chain related negative be down. And the which impact upper when outperforming. scale improving meaningfully. issue. that seems at upscale market in of where underperformed. helped suites upper or Just issue It's HomeX less mid-scale, to it look the number to all home again, you has

Jay Kornreich

then context. just Okay. follow-up. one And very That's helpful

As the at just I I'm little look looks monthly worse wondering then strong to compare each quarter release, the progresses. April a in performance in it the does how as month it like that bit and started the half quarter? of of the the any are into for your thoughts flat terms in what potential for year second forward assuming that upside? And RevPAR expectations initial trend holding going maybe July? your versus leading I'm

Liz Perkins

Very good question.

certainly third we see as had performance month-to-month and And throughout throughout we unanticipated fairly quarter, think the second April from the the a assumed of quarter. holiday together, guidance when expectations consistent really, result in put an initial perspective. quarter. met across to a and leisure I the benefited shift. as we Easter pullback we We started And really, rate were moved

And so, that's really where we underperformed.

generally If quarter for day-over-day occupancy we speaking, look rate the you occupancy a and prepared degradation from performance about where if our mentioned month, in that our think the and at we to you perspective. in, continue performance occupancy held see remarks throughout

related of to that that. nuanced things And holidays like some and is

Juneteenth our and we sensitivity general, expectations our as guidance. consumer, in is had that leisure wasn't from today which we're You the as June well. that really just quarter move throughout where impacted seeing we the But baked price quarter, the into underperformed originally and what through

Operator

Riley next comes question from Bryan B. with Our Maher Securities.

Bryan Maher

And for me X today. questions

mix for You business touched groups versus weekday type of bit or of more drill on upon weekday Are business swapping a of can little you kind weekend. down the bit the little that a you other? seeing this But give business? any color come travel. us business larger little more out has can you Are and heard robustly there? than that? And small a mid-sized And business we've travel back

Justin Knight

part medium-sized us. So, the as that and has question, early start certainly, travel the base improvement saw seen in of with that in that continued, pandemic We've we meaningful small- meaningful has business well. That your for and continued and be in I'll to is corporate second robust travel. trend a improvement

look small, we second And a was midweek corporate as medium-sized business, mix saw well a larger at so, the growth during it when you quarter, accounts. that the of as

pullback nights. shoulder but margin stayed guess otherwise, that likely when with consistent. relatively mix replaced leisure business those cases, between we've we we I And on at of some nights, on believe on nights, terms really has travel that seen look In the most trend group, shoulder in in

in improvement quarter meaningful historically to rate our see with Tuesday, As a Liz among nights continue be occupancy, continued performer highest occupancy growth as and Monday certainly, which the Wednesday, to were continued well. during highlighted, strong

Bryan Maher

when stressed opportunities, you And new believe And towards opportunities? those probably builders, the jacking attractive then those construction of acquisition which you asset a sale such you it's the the do price got developers pressures not inflationary end Are up I you past on financial by you've maybe see may couple seller are the maybe it over there. pricing, a an a the owned was had better the takeouts as or stick fixed to your institution? and few seeing years, as still skew of of dollar have that with the at

Justin Knight

by exacerbated Those of meaningfully increased meaningful borrowing developers. increases pandemic. a in I increases during further blew think the costs, construction costs which number were for budgets certainly

We think like convention center. we that be a The capital, it you we super And future from underwrite off north high location in Embassy, a $XXX about for to the us. I of to wonderful a to deals and at quality block a incredibly we're us deals, downtown, feel that replicate work would assets the limited properties highlighted, As difficult I the price. just that's away which acquired challenged asset that Madison block good believe developers. don't find key. think And the we as development

I of we highlighted see most remarks, our supply in my to new limited markets. continue prepared in

higher. I think development wanting meaningfully being that they're is new of markets. that given growth not most because developers increase deals terms develop. the their rates interest underwriting of for have more costs. meaningful a to in think And challenged in I operating in ceased It's construction fundamentals slower

have development that under result, deal I selective excited be we a in contract about deals. currently the think we'll As up development signing We're Nashville. in future

of having we yields in the I least exploring. buying to going opportunity current values. been able assets, at to acquisition been think for I exceptional below But future recently of on Vegas, we're significant really the their acquisition of that where of focus be us. existing strong And we've development achieve portion that a has our think a assets, built case currently into asset believe, that's an replacement

Bryan Maher

found developers, Well, to want have never they to develop if I cease can.

that So what is it is.

Operator

[Operator Instructions].

Jonathan from comes Jenkins with question Oppenheimer. next Our

Jonathan Jenkins

consistently just impact about recently some second more how June on and provide in the July Liz, trended has color softness you holiday of the additional you the Can talked half in July. holidays around the guidance And and demand a holidays. regardless August? forward? sounds of assume the Does a the softening leisure sensitivity in over the it as softened leisure has demand your into further follow-up, quarter like price and going

Liz Perkins

Good morning.

trends much first impacted in for had similar of July that to Xth of impact quite to been second week, we because July, that it later following the -- weeks, think a week Where really first on So, unfortunately, in of trends on as little of impact travel. were up seen week. the saw week we related historically way hit in that, week we've with X I not holiday CrowdStrike The cloudy whereas growth the well. seeing. lot immediately the as what July, some and and impact business And potentially of had bit week. we last some the with rate X impact travel, that we occupancy was pick week, The of the or growing limited the that overall RevPAR a some as both last-minute

was that So, the the I was we is something and the July noisy just July mix guidance the looking of of from. in year, of and our a around the massive that months do given the -- leisure at was over felt overall quarter. little to for bake think booking price thinking half last consistency noisy. But too And to sensitivity the about prudent thinking draw and shift was about conclusions especially position X trend back that

of average And the looking they're daily at up. bookings through August, Xst still

standpoint, from perspective. up materializing daily or noise We've an flat still a So, bookings from night demand the been with average are from in up even a room perspective. July, occupancy

to good I demand. felt we've it's have strong. So, where meaningful. demand pullback, we still weekends some And on we'd Overall again, seen strong demand-wise, not continuing the is assume reasonably think even with

And from degradation we driven line that guidance primarily the by mix perspective sensitivity and really leisure did rate updates so, look as assume, the are top and shift. we with the forward,

Jonathan Jenkins

a on as that. Maybe helpful. Very Okay. follow-up

or relatively for talked growth. if pre-COVID You near-term, updates potential a levels? guys the industry there's to stabilize in around recent for industry the curious, think across the you I'm about being And rate industry the the at in margin profile rate overall profile the have for margin dependent of environment on that the growth past muted given

Justin Knight

guidance basis. growth with our certainly, a on a and we've the go-forward in portion expense pleased baked think into that been I of quarter

a been some overall I beneficial workers market labor, pullback benefited stabilized our contract think from has we've somewhat, savings. to The that's has of able from away and provided which And inflation. job some us shift been we've in us. to

we business provide percent our the towards a important of mix that midweek, increasing it's be costs benefit to note those to to reduced there's given as margins to guests. to likely services well shift continue think I to as coming from travelers, business

guests weight And able are saw achieve that meaningful services rates related among on the we we've mix provide also the and the ADR impact a to the to been to The the a guests expensive given pullback benefit shift during been or that has that of in rate our that less was absolute as so lower quarter midweek. margins. those fact we at look portion

Jonathan Jenkins

softening color. the last a for if more few ago? how appreciate maybe future, many given you on I could, into for refi? industry transactions potential Can And for rates, trends, seen talk I months the seemingly heightened about assets demand currently but little one as And pipeline, look you have the today you then in in acquisitions. expectations are increasing at me, you that industry recent any shift lower a versus looking

Justin Knight

It's interesting.

and/or very but have strategic of to to significant overall continue dollars-worth our exposure, into mentioned like to a have portion would Allowing pipeline. We billions would have exposure where be a earlier, We've strong limited the portfolio. we further fit of greater quality I enter us that our assets. year-to-date And of as of underwritten portfolio. enhancing for a markets

focus are capital, we because to be volume. a should likely actual and our available. in most to consideration I And think as potentially That see cost single transaction would not is they be the the further important we shift trading, we said, acquisitions. hotels it's well-positioned about real, the think bid-ask spread towards continue shift of

of in clear, possible portion said, approach in a our where groups portion pay down to in than rather that deals said, those in in sit to balances cases, to for refinancing, we'll improve. part to think today. especially the as for That will of for on are calls, is performance many it's operating these And been forced assets months. that many past adjust owners assets debt alternatives coming they come market would as ownership continues assets expectation refinancing. especially to the the see the assets, prefer reinvest That the those order better And I've pricing assets of that I on pricing given a dollars down

Operator

from Daniel next Baird. Our with Hogan comes question

Daniel Hogan

rate resolution Can on of Or New terms in just to then guidance? run where it York to give you further process be the would there adjustment whole? be made Are to of how the about thinking need terms some you And just color on expecting that? a performance? property, is you're in

Justin Knight

make timely payments has the from LuxUrban failed very importantly, So to beginning.

our we as would beginning, petition for from at that received We was to rather account payment April, and how And those from about it we receive March in last anticipated than might we a them. so, as payments, for we future have, we cash some thought for the accounted received about payments date. remove accruing

since, been in visit and we will date to We to core have court a have opportunity here awaiting an shortly. with them state,

them We million have in over filed the with lease. addition petition against have for our in approximately from to the terms to asset of consistent $XX the -- XX removed million them suit damages,

worth than that's today. the more company Importantly, much is

think And we're amount. related full that expectations I collect terms to of in ability realistic to so, our our

But been still -- of to fact and may a taking over. the take we'll guidance, with costs played be with in time have accounting back that out to expectation near-term, the an perspective, an we we take bit in and the before with that. updated unhappy From there possession to we're you Certainly, we there that continue consideration the have keep continue asset, on taking are able associated hotel future be LuxUrban. transition conservative, how may will into be of things

a asset We taken that out important little interesting piece also them bit. It's next conflict an I over still are of now. you up our our time significant has business. with the of only it's lessor has while remind play will how not the be to right think see to that recently, a And immaterial portion the it overall things

Liz Perkins

later the where we we've hotel this the would as with to at date the make of way guidance the the fact versus did to year the possession regain original we assume second the Now that one later assumption, revisions transition X, proceed this that of update, look given had did possession you hotel. we quarter regain

So that's accounted for.

is liability in well. there also, some transition and there mentioned, Justin as assumption As

disconnect is the between date. part see of can accounted later And we've today, we and for. QX takeover QX the that anything So, earnings

So benefiting not hotel. the operations from from

Daniel Hogan

channels. Got just that the one more And color. it. Appreciate then on

and that you're I would were for And to expectations original your numbers, higher those signal seeing? the gave discounted but other guess, I With OTAs what you customer you, know terms what channels, of those preferences for in XQ? just than

Liz Perkins

not fairly given strong were OTAs in the but up for bit different materially, a leisure-oriented quarter. have They line. assumed, dramatically that than were quarter, so would it what much was little we not

more ADR. I surprised night was where around mix around and room less again, think, we got

Operator

Our comes question next from Compass Dijkum, Floris Point. Van

Kenneth Billingsley

and to it's you're Tennessee, Obviously, This both are question Could them mix, of wanted falling segment but is In those Carolina occupancy. the Tennessee issue, specifically looks North Ken a Billingsley market it an you a seeing segments? from talk standpoint, X positive EBITDA on Carolina. ask for RevPAR. and just North Floris. about I like rate in

Liz Perkins

convention primarily driven challenged reputational Memphis. and been is has little perspective a perspective, in been bit the has weaker calendar a by market a there. from Tennessee post-COVID and That safety world

North have performance. look Tennessee the quickly. driven at to really that's I'll So Carolina,

Kenneth Billingsley

portfolio how at on do of use Short-term improve, the it. looking I'm improve look identify that you saying And some try because and FFO that these you're to capital and EBITDA. other specifically, obviously, assets options? that short-term talking the you capital? buybacks and deploy to decision markets markets you balance to comments acquisitions do your stock earlier, As assets. to NAV you long-term would about, or X improving be versus through up, to like at not you've in were But prioritize looking And call growing how versus you you assets trade versus the the I are maybe on that the your discussed your on wanted as to follow out

Justin Knight

other to all prioritize answer growth is question metrics. actually EBITDA simple. We kind of the pretty that above So,

to we're growth have in long-term, EBITDA So, focused to we growth. likely I the near our of the both see we're portfolio. found NAV look that at value and more overall But extent growth, on

capital There's growth a As weigh large think of terms asset likely an simple dynamic purchasing acquisitions and allocation calculations. versus for between different buybacks, portfolio stabilized trajectory. I using do and so individual share we slightly options we a developments in

think capital, you've price, that we meaningful recently, is shares. As in there value seen believe given the And in I deployed seeing share our pullback opportunity. our

in utilize we point sale how is proceeds dependent dynamics see we any the very think I from on the from time. much asset proceeds at -- sales market So, in

Kenneth Billingsley

buybacks safe mean, formulated? is be assume that Or be to it's to consistent sector a right it you stock now? still I given kind maybe of And trading would whole would there's little maybe going on that the more still say bit

Justin Knight

share our And say we're I assets the that for pricing we've that underwriting. has in the by price that would pullback similar been seen pullback not a certainly matched impacts in our preference.

and extent to I what changes. could in strategy. given the think seen mix the think I recently, We're I that our shares. adjust in continue think But see we've we to value

Liz Perkins

of really Carolina a rate so X% East trouble occupancy back things. Still perspective. about was a on had occupancy at year-over-year, Carolina a grew of North a question, really Yes. in couple lower from more healthy rate, but rates. combination the it's Beach actually Circling

a So have a that. government HomeX is in was Carolina what quarter. that which really North we Also, softer East, had Fayetteville driving

Operator

Knight to There Justin for are over would like at the time. I comments. no further turn to questions closing floor back now this

Justin Knight

to take hotels. please, making we a an the to traveling, We our We for you visiting us great road. day. stay always, as to of earnings us this this to with of you're And one appreciate you'll time morning join call. with many you extent look in on forward Have hope the opportunity

Operator

teleconference. today's concludes This

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

Apple Hospitality REIT (APLE) 6 Aug 242024 Q2 Earnings call transcript