PEB - Earnings call transcript Q2 2022 | Pebblebrook Hotel Trust

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

Operator

Greetings and welcome to the Pebblebrook Hotel Trust Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raymond Martz, Chief Financial Officer. Thank you. ahead. go Please

Raymond Martz

and quarter Donna everyone. to Welcome Thank earnings good call second XXXX and our you, morning webcast.

comments But our Joining me Executive Investment reminder Fisher, Chief of considered our Chairman our start, comments Officer. that securities results statements as our Chief are federal today many today our SEC could are in Officer; Jon implied described materially today. filings to those numerous and under statements Bortz, future before a subject laws. we These forward-looking and differ are from uncertainties risks and and Tom by

Last significantly our today website travel, Forward-looking of in expected reported statements continuing them robust that effective allowed we than favorable these leisure transient, on with our XX our non-GAAP on today's business July we undertake growth measures Faster to financial QX coupled make XX, exceed we night, XXXX, demand financial at update measures expectations no call to pebblebrookhotels.com. non-GAAP from results. duty days are we and and ago. reconciliations today, provide both and discuss We'll group later. very for we us

Our urban led properties the upside.

hard by adjusted achievements Funds $X.XX We the XX% of for share when year companies, of just them was intelligent management the AFFO $X.XX thank $X.XX From effort per negative of the driven which XX% of QX, above a and and great and of was AFFO. our share This of their each per XXXX. of in to managers. operating quarter. our performance work was QX asset and teams, outlook in hotel This XXXXs last both strong Operations top-end QX represents quarter improvement Second dramatic we had

an XX.X% XXXX. QX throughout to markets the as XX.X% quarter in were compared hotel and demand even trends revenue per very from QX within rate QX, urban XXXX, opportunity and EBITDA leisure same-property rose demand recovered the X% a which recovery our pandemic. more even segments. transient, climbed ran In Same-property daily occupied the showing revenue the months up our our occupancy occupied progressed side, though the we strong June sizable best since urban a increased RevPAR per QX are both occupancy April XXXX, to improving cost to both of we Even occupancies XX.X% XX.X%. increases. encouraging improvement experienced XX%. in quarter, XXXX. room another marks XX.X%, levels, operating XX.X% price revenue take the All XXXX versus rates. was Non-room have acceleration portfolio, by stronger still XXXX demonstrate These representing In group rapidly with sustainability increases demand non-room demand Average revenue and down and driving a to despite revenues XX.X% both On an to an ahead. of for from to growth XX% occupancy step-up of XX%. at recovered across offsetting rapid room demand both hotels business QX and May, in significant of total our came compared XX% to increases occupancy which from leisure and QX's Same-property in in business room

that summer as August. [ph] to hotels, at appear And has patterns slightly July, in [XX%] travel during demand For business slower season down and or weekend versus are historical vacation returning the heavy it occupancy as for recovers. including been forecasting weekday seasonal does more we're June, business historically demand urban travel July

compared into compared XX.X% travel occupancy percentage with head from QX to XX.X% down representative so of and to quarter-to-quarter from to we XX% from Francisco in to from still XX.X%. XX%, customers QX, and It's resorts, day DC San percentage QX. sequential weekday the QX, recovery business last July the the urban substantial a XX.X% with QX points, in XX with from QX QX's our to at a in is At softer XX% hotel to especially our QX, prime QX from experience from beginning holidays slightly from demand, in due into XX% XX% a as Diego San of a occupancy at year seasonality. XX% experiencing when for XX%. dramatic the continue demand to travel Again, of XXXX, further major more domestic good reversal from a points. last XX% with occupancy cities. to very points sequential down in QX, about is we in X. This were just QX. the Memorial which down represents XX%, X-day from and to significant the to to occupancy XX% given business XX%, Week at XX% international season when in now business XXXX, significant leisure levels, opportunity are travel from Boston we during year. improvement from demand XX% business like around and X-day return representing weeks in XX the Weekend robust period hotels Seattle urban the to improvement XX% Philadelphia XX%, hotels, of example, improvement which For we normal a major a lackluster X for to for to improved XX%, Chicago Day Driving fall. holidays proxy increased level encouraging is rose to percentage improvement This occupancy

XX% property recover, the was months taxes EBITDA QX which in one which hotel XXX leisure we QX year. just strongest ADR growing in XXXX was the despite quarter by ADR exceeded especially At XXXX, our urban for surprises margins pricing XX.X% are QX property that expect to since resorts, Our same-property markets a to by ADR XXXX that first or which year-over-year $XXX increased continues exceeded down many probably over points. weekday a into about down extremely several which million, our of the including of trends comparable total our mainly to market markets investors. second demand QX including year. basis more urban urban San in Florida, demand by were substantial QX overall negatively Same-property XXXX. Diego, XXXX, was of compared hotels was impacted L.A., July, continuing for encouraging, and room QX of as ADR the $XXX, hotel QX. some despite due in in increase is ADR EBITDA expenses, in ADR is lot occupancy below XX.X%. for over San our exceeded hotels Miami, will surpassing quarter XX% Weekday which urban at $XX points, with XXXX, South QX markets $XXX fixed continue XXXX markets XX% XXX.X These increased urban last to rates comparisons at $XX and our and get or pricing throughout just X.X% and during D.C., such Francisco, points QX XX of basis QX Boston, QX Resulting increased difficult a year. rapidly exceeding same from to XXXX Weekend XXXX. powerful This QX up the about is our over slightly for $XXX, insurance, saw XX demand and be $XXX, in historically quarter, X.X% margins reserve

to hotel our returns ability hotels. same-property these EBITDA by profit XXXX yet highlights margins recovers quarter business revised actually the to favorable with travel with to Excluding operating points, leverage our of underscores results as is increased expand recovered expenses, the going fixed in be This with upside realized XXXX. compared XX% significant at pleased more EBITDA The models given levels. the occupancy basis portfolio. as margins only business occupancy XX We're second forward also these still

environment. operating properties Our and efficient, mitigating technologically in more increases operationally cost inflationary are this

hotel a adjusted result end results, than our of XX.X% XXXX million, better QX these As the our and above forecasted million to of outlook. top XXX.X QX climbed recovered much XX.X versus EBITDA operating

to We're see room business demand to demand plenty booking rates Future continuing. As quarter, improving leisure, monitoring be for any and to overall yet consumer we in travel site healthy. closely pent-up behavior, leads are of and pullback meetings. pace group forward third look remain business demand. are There the or bookings, trends and seems the very visits the Corporate encouraging.

We all year outlook business the to to markets just urban on and XXXX far for continue and by XXXX our for current QX QX is visibility books, resorts, our be on of higher down of current the RevPAR versus increasing XX.X% but up with XX.X% ADRs to than be X% to X% XXXX expect XXXX for to to led of progresses. Based as increasing number climbing an above XXXX. trends the

to hotel heightened improving overall about travel is Adjusted signs for indication showing and QX slowdown. a seen to are to demand significantly we're to recovery, of environment, up that and responsible XX% being expected EBITDA in is expected reviewing This Given slowdown the just economic indicators than and we outlook. XX% economic concerns QX to outlook haven't slowing, down XXX% the be better while XXXX XXXX. days QX XX XX% ago, any travel despite we the of our

to of number and a these improvement quarter. over adjusted our would we Jon transformed during later Our million XXX invest are additional QX remain targeted cash in have call. adjusted two returns to outlook to generate provide program, properties approximately years. of three when million assume ROI next we hotel RevPAR, on will FFO XX% our cash hotels into we with same-property the hotels and these XX of removed on the EBITDA, which in projects, and some color as the a track under for or EBITDA, higher we resorts XXXX to and contract three million stabilized expect currently these projects for the XXX capital sold re-merchandized of portfolio Shifting redevelopment

XX, in May at investment million. Inn of at resorts Fifth luxurious the Naples, XXX trailing we on we & with Marina million. Florida X%, On XXX Inn And acquired of held Resort the X.X%. side, June Gurney’s for these Newport Gurney’s Fifth have XX-month the Both for the on Newport yields, on acquired NOI XX,

at at B&Bs the underwriting hit is Margaritaville acquisitions, our NOI X.X%, more importantly, Jekyll has Estancia at and Hotel Looking Island Resort West our trailing already plus. all XX-month Key XXXX Beach yields. X.X%, exceeding are are and X.X%, XX% at they generating robust they

significant XX, for San progress We $XX made June The of with we disposition million. plan. sale our completed also the Marker Francisco On

hard have of for We agreements, and separate money urban our sale million executed include separate buyers gross XXX.X totaling additional purchase with proceeds. sales hotels deposits three of which also three

these have during on market the quarter We to third sale. sales properties the be and additional we completed expect for

by the are to has due markets, hotel quality to some market and invest industry. close, amount bumpier continue debt desired equity vast gotten assets to transaction the ours the While longer deals in of be like to looking taking

Turning to sheet. balance our

We of of debt have of with XXX in no meaningful on as liquidity maturities flow. rising was the debt XX% June XX cash our November and million and locked XXXX impact our rates interest of limiting rates, interest fixed approximately until with

demand covenant operating bank have we significant Finally, milestone exited our and marks improvement substantially This given our trends, the to our another and with group. recovery period sheet our flexibility. road current waiver enhances balance in

Now I on to over like to positive Jon. the turn note, call Jon? that

Jon Bortz

Ray. Thanks,

third the As of out into quarter the positive Ray trends coming quarter. and the are indicated, very heading second

to clearly have other industry, while the revenues Pebblebrook, demonstrates and the resilience. events new back, reason higher. and back XXXXs estate replacement led obviously estimated demonstrated this one different With recession records Fed our the recoveries this our day firmly industry's early revenues great see have This recovery leases for $XXX,XXX recession, year's and record costs the for sectors, of no outcome financing range, currently only our its early line costs and for portfolio the both inflation bounces and resilience profits. X/XX, always levels the XXXX After again and and volatile great followed induced financial sets has the with construction due much growth grow very to quickly, long incredible the industry. For and following EBITDA. to real economics hotel recoveries of and in of more runway We secular of time any restricted hotel XXXXs recession, than challenging by and recover, we're builds, supply severely to XXXX the the hit have to the highs for new new a This revenue prior the very but and pandemic, and estate and generally almost incredible relatively in company industry not fully hotel each records. bottom per forever collapse recession key growth in real demand replacement recovery and limited availability

And an slowdown given to these we or we supply expect before fundamentals. or just last recession, have new of four a constrained hit soon supply environment whether time it's the five matter We years. records restricted these economic

levels is bolstered the the our addition, last rates higher by average ultimately from demonstrated allowed demand properties LaSalle we price overall repositioned substantially particularly lines. higher to significant have be recovered already redeveloped, with This benefits quality and bottom in us the properties, we've and made ADR In coming investments the portfolio to performance where reposition higher. transformed, where the at will share our in levels higher being in by and several portfolio our growth is resorts portfolio further mostly years, from our our

in gained Fifth to $XX resulted on transforming over these average resorts half million has competitors, million repositioning investments more Year in or gain resorts than roughly over the the massive X.XXX big the their share Gurney’s growth our the in for on significant resorts of large date, excluding gained gain have amount one-third is have points entire extremely the for resorts and it over And levels. few return $XX ADR obviously already of XXXX, our year. date, this line to million first year $XXX of $XX very our XXXX over last resorts, of they're since $XX and on and market bottom basis XXXX. rate representing example, pace and part of our a large Inn Gaining ADR the rate at EBITDA in to at reason between more years. a For our

with and $XXX re-concepting Our space adding approximately indoor investments to redevelop, and bars, reposition, amenities and and transforming remerchandising and million. along restaurants upgrade properties totaled these outdoor

on the and line from to million to to from not now attractive, restaurant return full-year basis for basis. the LaPlaya Bar on or At grown already doubling to for have dramatically these as there's these full trailing upgrade to the since on this quarter for XXXX. yet we property though completed property this $XX has last only we the more a Bay $XX come our our to the consider in a its very stabilized. is XXXX, from to even example, the where where almost just million and XXXX basis grown XX-month comes this spaces been resort. $XX comes club June bar, main XXXX LaPlaya, million over million Clearly, has spa through restaurant other Resort, outlet in two-phase current substantially throughout positioning, improvement gaining and which and trailing redevelopment and of luxury So, investments almost and EBITDA the to a contributing LaPlaya, second meeting XX% at which Non-room ADR, million the revenues other a And resorts and invested a EBITDA on of $XX.X XXXX. resort XXXX, independent venues. restaurants, XX-month redevelopment. in Hilton only through increase increase our This through results full-year have the does rate retail The like repositioning improvements completed revenues $XX.X of at we this X,XXX the the luxury improvements but the million XXXX summer properties, Tiki points of revenues LaPlaya, or June of versus former non-room Mission not an million significant in also is annual result it's as $XX.X EBITDA in case the of basis including bottom Baleen, includes made over share, $XXX of we the $XX.X

to completed into XXXX’s share substantially XXX from year, of far additional our And dramatic so in as by follows luxury second share points to of big so bar growth non-room beverage space, has have points our over and far of to year, in growth all also a altogether as and Mission revenues with returns delivering and kick second bar, venues Chaminade basis re-concepting of outlets and to of outlets, increased drive added L'Auberge with second versus resort's basis improvements year repositioning XX%, already EBITDA beginning we we're gear rate the same the competitors outdoor the year our compared our to public Resort XXXX gained rate areas XXXX. this of XXXX, to of revenues XXXX. increased XX% and this first a increase and revenues, the EBITDA just QX the which grew we combined in non-room spaces restaurant areas where addition versus improvements Bay first pool, way. improvement half substantial meeting quarter a the grown small restaurant we by recently gained completed we've just the million product. $XXX wedding Diego $X led half to quarter ADR we've XX% is compared revenues. and and versus property luxury to dramatic have food Combined the in XXXX. areas, San luxury into of where of in this resort quarter existing which Chaminade, XXXX. pool non-room XXX% date event the public million our the $XX.X and EBITDA in the in rate versus a XXX Take The XXXX. building grew X,XXX huge quarter XXX% Del gained in public this momentum with revenues non-room share and Mar, repositioning As group dramatic a of points basis resort or quarter of second At in

all both so significant property this result it due we share exception House our XXXX, in there's to were property. upgrading gained as this one when with Resort, limited them. the Gaslamp Westin of haven't investments our for a lot upside our Suites the huge have to a this rate its have haven't so resorts, renovated the line million a we've completely $XX Yet as to significant winter. in redevelopment from in the to ramp and we recognized growth. two yet started the very which and acquired, share Newport, Inn on and Embassy total meetings Even of benefits opportunity upgrades in opportunity just bottom just repositioning of and far property XXXX is upside significant between transforming where through Jekyll more redevelopment these properties them way. next made a resorts. and significant to Island we begins we've and properties And beginning years, Downtown at been all and Noble Fifth drive over a gained up both of Gurney’s our come in we done has Diego group our few unique As of made Citywides repositioning Every return we commence see as acquiring we we're investments In San the meaningful Club

share competitors. up X,XXX rate $XX.X versus gaining transformation at Le West gain of $XXX one we're Hollywood of is to months three for XXXX Hollywood, also $XX the and Parc stabilization. ground million rate six all our points West on Year-to-date our In quarter first Suites we suite XX% to or expect basis upon of XXX hotels. and in the We of XXXX, completed second the upgrading

completed, in member unofficial a Sunset being to Parc’s XXX quarter, this Ziggy, transformation Hotel Collection. XXXX, we Hollywood, case second was the in For Z XX%. that on quarter, by Grafton the eight West of the $X the QX March, since Le our exceeded million the completed newest room of late QX EBITDA Also first in redevelopment

Viceroy eco-focused Francisco. gain And achieve share. Viceroy through of the completed compared September, focused the quite just with Hotel early XXXX. and X. recovery with at the most at rapidly in also already rate Santa rates an the are the Santa These June in Santa encouraging but second music off markets Vitale mid-XXs upside Monica's the has customer venue transformation has reopened the so the to compared stage luxury we're quarter getting and since hotel further In returns and recently, and in and year. to Hotel impressive from into significant growing or year have San really $XX ramping Monica three the In and of to market hotels our their conversion, occupancy we the DC $XX achieving. and XX% hotel well of August, opportunity $XX.X climbed to reviews significant quarter still this very While We response the DC. up, conversion received completed here to Zena is and are and allowing increases have our XXXX. been of its June as as products XX% half XXXX, in push of been speak. ramp on as us low and have $XX already first we demand Hotel and of new hotel first ADR million charts, faster we've The completion expected this the July up or Most the we rest the major all these rate redevelopments worth to is been to improvement going, XX% Monica million redevelopment Viceroy growth now unique have and is at what X to the

luxury now rates set higher average in are than $XXX far, over San as head-to-head the So XXXX competing with we're Francisco. in

continues our outstanding confident hotel demand will $XX an recover, that As million. on we feel achieve to this return

to addition transformed from in as plus the to the future ramp we've up properties years, higher In stabilization. repositioned and properties the these last several XX upside

the properties properties redevelopments and include major Hollywood including acquisition the these Jekyll to & obtained in LaSalle from Newport Island as Newport our the La from obtained Georgia, Rhode of of conversion, these We the are were those as LaSalle recent Marina upcoming sorry, upcoming well Spa and & they including Resort, through Spa, Estancia all in Gurney's have acquisition, Resort significant Club Margaritaville additional Island, of Hotel acquisitions, some I'm additional sorry, upside the properties, Jolla Resort of Hotel second the District Gaslamp Gaslamp District, Viceroy The Monica of downtown of our the Hotel. approved best to Point and upcoming San the lodging at addition Transformation Resort Mission hotel of Diego Santa and phase Hilton Lifestyle redevelopment, are Paradise both the plans San located once and Margaritaville conversion conversion potentially future units arguably in Margaritaville is at facilities Skamania a of the Bay Diego, amenities Solamar other to hundreds Chaminade. and final alternative and

last In past, addition the phase upside significant these re-positionings, to in operating property more acquisition by future past upcoming significant balanced level through XX-XX continues year teams the spent the our portfolio business the the pandemic. customer recovery redevelopments balance move number from our resorts. urban the efficient very operating a We've to our we achieving transforming operating almost from the whether leverage the year four leisure major mix, as of and cycle, there portfolio developed and current, after, the and leisure growth is economic and very more of in and sales models next our to during years or also focused the a a more markets, and of

to year are on units. the acquired with has urban we properties this sale transformation recent ongoing $X.X and contracts And made the Francisco since $XX sold sales, for are acquisition by acquisitions Fifth LaSalle $XXX.X announced separate that hotels we've the million, portfolio and which from roughly sold million been And of preferred on portfolio. billion The Marker under being Inn the market. currently financed for funded that properties additional including also three we half finally, The be of we San Our of of million. yesterday, $XX

additional sale be more the our recession, We're moving properties very for We've based of public year. this of future disconnect of zone determined this value about expect optimistic the work underlying We time, the point expect company, which we're for we later by have very our and to the the market company we large confident value busy market believe market to seller creating potential seems been in year. the value, at our into of community transactions. recognize values very between we're business. the successfully At and net real doing and hard discounted current a bring also to danger current already investment which the will to property upon private market a than

the to to of Now, question-and-answer we'd portion love call. our move

So, Donna, may proceed. you

Operator

Instructions] Wells Our first Fargo. you. go coming of ahead. is from question Kesten today Thank [Operator Dori Please

Dori Kesten

Thanks. guys. year? And dispositions your the thinking next debt about. scenarios [ph] Good share or the over about morning, addition, consider How and are just recession maturities you you of as [XXXX] range repurchases a slowdown dividend, the you in talked

Raymond Martz

to had Sure. we burn have years, Well, that year, something think net we you that. first more that's off couple as we some forward which than XXXX of about the opportunity of a operating of the know, all, of dividend as story carrying this losses last we're the

about thing the one dividend. that's So

it confident debt maturities, but just be XXXX. look So that, XXXX all point as on a our the economy beyond On on think feel about long-term that of maturities also we basis, we the we'll about in that well. our more time outlook And other very and depends not and those. sales at maturities this extending at

extended we the know, great you during have of group. relationships our with As billion out banking pandemic. They our a dollars debt

big expect do we as we'll of have we've these historically, relationships and the had So, should decades. for you many same that

better it very So, It's the now, much now XX-months positive. towards positive. right the certainly hotel that's bank It's And than also world – was certainly ago. segment right space. the for a

no debt of concerns we those, So, any sort those maturities have of in XXXX. about upcoming or now

Dori Kesten

repurchases. piece of last the just And share

Tom Fisher

our completed as you acquisitions that Jon the we noted, through go expect we us be as should Well, funding Sure. year dispositions. it, to this with

the some So, up, in additional and may addition three coming sales. The to we Marker have

environment purchases, acquisitions reduce share that how the what So price time. use we’ll depending share debt our is and that's evaluate and beyond funding at is the again and then that to the on

sales We with procedures when and should have we year what by [and extra] in evaluate debt stock to been that, Board about some similar repurchases, and paydowns authorized $XXX million in or similar and [ph]. share expect you XXXX some we did but buyback this XXXX the compare we'll that's

Dori Kesten

Okay, you. great. Thank

Operator

is Thank Truist ahead. you. next question of Please The coming Gregory Securities. Miller from go

Gregory Miller

about morning. what can I season for leisure Good warm you early, winter markets. peak weather share, your it's XXXX XXXX Probably I of know was some for ask curious but about

from growth levels inflationary these will Florida benefited levels in today, rates post-pandemic, based and rise on at or have anticipate or cost leisure market South winter? macro considerable above Thanks. I’m rate operating room the in thinking you particular, room current upcoming do You in about this

Jon Bortz

Greg. thanks, Hey,

what's look So, on group side. up we South Florida, at both on it's in the the QX the and books when for interesting are significantly transient rates already

Now, have the books, the we of a amount people on year. a South lot a to go that as Florida, LaPlaya, following they the of we huge but that as re-book business healthy do of of soon first have to Inn to go kind business go for leave the in quarter, amount on don't Fifth,

look next And we've had in pretty but group rates. continue confident particularly in one at the for the so, as led it's things transit very in rates but increases because we we seeing and and emphasizing And already last to gap certainly, those year. frankly created wide resorts, rates the year group for the that's South portfolio And into year rates is whole next year a again last next increase, call, the encouraging noted of meaningful we're worth rates Florida the group for in properties. between terms very what in of what to it's

think well next happen rate pretty feel increases as do in to into going Southeast that's year. not confident of well. next we are So, year, we continue to And do the all if going that

Gregory Miller

Jon. Thanks,

Jon Bortz

Craig. Thanks

Operator

Bill Raymond James. go coming next Thank you. from of ahead. question The Crow is Please

Bill Crow

Hey, good Hey, Thanks. Jon. morning.

e-commerce the is XXXX? and pandemic normalizing in it's to that we during I Are to in the think easy process and, the guess? I post-pandemic hindsight, whether through same of see of spiked that pretty thing? just it's going or going kind normalize now is spike painful lodging a having the a Is normalization, XXXX

Jon Bortz

you I Well, pull of… a it there's, guess, mean, forward is

Bill Crow

to going economy part back rate the our are just getting a and of that the more we're share going as Spending in economy give front, normalized particular part lodging forward? the more as a we spending fair overall on travel to of than and

Jon Bortz

so, Yes. Bill. I don't think

I now not at from demand think if but levels, right levels overall people traveled, dealing haven't what we're you who XXXX at in demand pent-up with look yet. fact, partly they're is the

near nowhere travel business on international and XXXX the both the travel we're side fact, side. In levels

these think continue make next actually with of at the more a supply the difficult a we gotten, pretty to not more And normalizing grow So, it's gotten costs levels, rates and my rates the years, pressure financing I today. point new debt next trying have environment look can will to pricing. over actually economics environment, difficult normalizing the higher we constrained severely as on over anything time. out to to over opportunity but to I which was those make two this of put Particularly in but to industry construction XX due sense you period only higher long demand even will the runway more start in have think be if it's much to months, we this that markets year comments, development of to the one get

XX that same, don't over the have boom to last I the same the So, over months months. it's the on e-commerce think the XX side we'd they next had but love

Bill Crow

Yes.

just was Okay. Ray. If a I for could it follow-up, question

you your up I about guidance for responsible the given guess in third I remarks, think prepared talked quarter. clouds there. macro the Ray

seems I'm it August like much good July, I month. think be you've that's pretty just said. in just what leisure pretty books should curious, you got the driven

I the or really outlook? XQ you how So, it your much to there believe is is that quarter is causes conservatism contributor biggest the consternation third September, in which

Raymond Martz

know, get Florida, in you early to in August, started as yes, school guys as we August down Well, go to Sure. days. you these to now

So, it's a flipping…

Tom Fisher

Same on West the Coast.

Raymond Martz

West too early. Coast is

So, things. transitioning August July there's a a from and half leisure in there's half of in back of transition a those focus back of all travel, and the heavy business first to to to lot of school – today

we'll travel Labor now what we of but then will give in back business to is into but July, where little a I be encouraging. coming that's back couple we'll we're four at come up Day seeing with for late year, August expect versus this a three of right very where occupancy, September, points think So,

not be you're behavior conservative in right, there So, any part that to or be, we're pricing. pullback change in this environment booking is of seeing uncertainty. just Again, an on is

So, worth. any looking our a again, season. refer here trends seasonality decline transition of where window get should most we're as a overall days not that you into have we’re demand its fall we and Realize we for it's in there, booking as encouraging now, and expecting right XX RevPAR our good to X what given what it's short of the pretty that of like inside days, it's X because XX seeing outlook but

Tom Fisher

Bill. Hey,

The I'm have which the to we particularly it's five year July appropriate August. from month. had it is leisure and And other benefits this clearly stronger four? they're I'd the stronger question. compared sure weekends in weekends when strongest thing And might XXXX asked totally then move to others July, it, add is are and

normal perspective weekday from seasonality As a and Ray said, we're moving patterns, from pattern back perspective. both seasonal to a

And so weekend other four August had in we year. August and flips We have August of five only actually XXXX in the in way. this

So, the a basis hurts of kind little a comparative double on flip, bit.

hurt business pre-pandemic. where return. are travel, typical The which of these the on slightly was a historically we've impact which is weeks travel holidays indicated, normal to has back as other Labor business patterns Day, we've late around September And the thing softer because gone actually has

back September, when case holiday the in had in Jewish doesn't XXXX in so, two not which a then And October. we And have September. was of help holiday the we them

the to as October comparisons that work relates holiday So, it XXXX benefit we're to just and from would prudent how shift. being

it impacts be October fourth both line technically think outside the our before than the because is, is view which want holiday, do should it and that So, Halloween, that bottom XXXX. you fourth exceed of in business quarter to indicated we've line. of better top call numbers XXXX will And travel. a that we quarter

Bill Crow

Great you. Thank appreciate I color. it.

Operator

Neil coming question Securities. of One next is Malkin The from Capital you. Thank Please go ahead.

Neil Malkin

you. Hey, specifically hotels capital you question My is mentioned selling. everyone. were the Good allocation on the urban morning. decisions, Thank you

So, you've and resorts been hotels. exclusively, then urban cycling obviously, into significantly selling

on coming markets year? versus, your being later one of the longer-term can [indiscernible], that or or to recovery on You you've know, if that the the up. about I your one give based just two any Look news of urban operating mentioned hotels you about them. that? And Jon, set putting hotels I potentially three been source other about saw a talk another leisure on you just going the are of Can color say, like about really additional domestic and, what was either you talked some in wondering be then sort dynamic view does that you maybe where money? in

Jon Bortz

Sure.

that the or can't the When three color properties along close. on that transactions or now. provide are those you market constitute the when will additional financials individual contract under the any provide that what is we color and So, markets the right the math you either else actually with on

So, all when give the in detail we're our that trying we'll these agreements but enough responsibilities close. under buyers you to be those ultimately sensitive soon cases, transactions our and to particular

to over resorts which think you they're that all a – to the of overall, the find balance capital it's the about grow overall long-term, continue we they're more between believe overall both been even – what and travel not think when bought, focused, not. really leisure will travel brings about talking I we or that but question trying we to which business leisure we've allocation us

many part very significant fact, a business, which do large of of them business is a of amount In travel. group

to So, better the think basis, balance downs properties cater but risk portfolio XX/XX a as the segmentation within to assuming we cycles. are It's if of ups a more get and our trying the through business because portfolio not we're perform customers. that the not it's of case, to on we will

Neil Malkin

Okay.

call So, fundamentals the rationale on less being the the that a would those is market or post-COVID a of the support of travel markets at or list and specific of versus within decisions? more pre about for the drivers mix it's that top

Jon Bortz

Yes.

Neil Malkin

that Is Okay. fair to say?

Jon Bortz

to say. fair That's Yes.

Neil Malkin

Thank right. All you. Okay.

Raymond Martz

Thanks, Neil.

Operator

is Aryeh Thank BMO you. Markets. Please from ahead. Capital The Klein next of question go coming

Aryeh Klein

the just Maybe can last bit overall on you with and rate were happening little Thank [indiscernible] or if little a up transaction your that talk some even if cap change unchanged which remained question, NAV, pricing that a good in and there market you tie here in following you the there? morning. bit about markets into that could what's if

Jon Bortz

that? Sure. part Tom, first you of want the to handle

Tom Fisher

system. to talk careful Yes. now, there's everything pricing, right I be mean a asset asset to I very it capital in I market-by-market, by It's think in I general lot of mean, mean, to as relates just got the I a available you focus. think terms.

lot We we've kind probably I like made recover, San it, investment of San a our attractive markets are, while Francisco NAV. is to look later most and Ray, at markets We including in some that. and of adjustments I increases the that Jon, spent made markets in on today. when of downward minor adjustments DC, you which made think for Diego, one time example, in to

markets debt but debt fact recovery. conviction maybe in costs, the I the funds, you're Obviously, cost, lenders proceeds, think the debt many aren't higher coupon lower there, more more out the seeing that what given of challenging. it's seeing what you're higher is operating is

about people better I know friction as feeling underwriting. are think normalized that forward are relates and there's they're So, future financing factoring to more moving you it where having, the their

generally urban some it nominal maybe X%. is service you pricing, think on an see impact from, from on resorts, frankly, if not really but there though, it's you're I the markets, select it or to massive quite seeing might anywhere X% of a in very

Jon Bortz

Yes.

debt markets tailwind, the particularly expensive stabilizes. performance, consistently it's a a against It's the a it from tailwind and headwind urban more improving big in jumps market Aryeh. until So,

at level So – it where still and a more was to expensive ago. likely XX-months stabilize than

Aryeh Klein

what Okay. had of outlook Thanks. was And than forward? higher then kind we expected, real taxes, just it there moving are estate

Raymond Martz

using have an lot absolutely have to the in of in lot this, aggressive they going cities actually other and them, cities their to pandemic, a look a some to of like where bills, the no Chicago of in have We up has fun been get middle to the – some of sense. pandemic which go going losses fund We're values of these Yes. makes be tax in these. opportunity these that. each the But through going but very we're of silly appeal places we're

the those, in of of going So, [choppy] to have and that appeal some because an less will California [Prop typically challenges the areas of in battle tax those markets had it's to be like like [ph]. issue Chicago XX] [ph] continue

have but watch that. to that we'll mind, keep We in

coming we'll So, ahead. little this in it's some appeal in quarters the a – here get hopefully as some there, we but and spiky progress within

Aryeh Klein

Thanks. it. Appreciate

Operator

Thank you. The next go from question coming Please Smedes is ahead. Citi. of Rose

Smedes Rose

I kind RevPAR declined implications I'm the margin you and just continues next of year, little looks to like April. implied June to sort maybe a want kind to occupancies little the into you but I broke from expect, thanks. you don't from since talk has be a out next looking hotel thinking of about, I'm to growth bit? ask May results. maybe And margin rate just and rate sort it and outstripping specifically, June, wanted more margin you so expectations just of and it's Hi, bit bit occupancy a normalize, little or get just know, monthly to of sort modeling, some, that do driven into like more by of that year, know versus just that as growth

Jon Bortz

occupancy, for don't likely and in mean, a recover like I they're significant provided little but occupancy, I in when to as to that well, are continue forward but than be you're next fairly ultimately the think urban think we're more mean, what seeing recovery obviously. increases. see level think supply and And ways necessarily, rate our I we'll a fourth haven't and in to to have see a is, further recoveries, the general, at particularly the constrained. see, little still normal demand though say year to think the particularly But recovery certainly markets, year. previous we going outlook think you're I we Yes. views I this Smedes, resorts likely becomes I I'd an going both more challenged quarter in environment, I significant

likely, going to to few improve years, next think get continue compared the pretty margins to you're over recoveries. rapidly, to record levels I – particularly and as prior you'll see

Raymond Martz

a is also, have a one of feel about the And overall, because margins within of tax factors, that factors influences go could those trend we the too to you month-to-month and appeal that, lot property much this line we there's months We caution but some data on that lot bottom Smedes, on. of of could a good.

talk is that's side quarter about XX%, the other revenue plus second with revenue XX% is which of and very the beverage look a at We how non-room The that's you healthy the have of being points in in to above quarter. Actually driven. also quarter lot second spend our a was the and and XXXX food less XX occupancy.

flow in it lower So, food line. beverage margins the have as rooms, but bottom you to know does profit and

it's EBITDA, we're indicator the contributes overall, room again, an So, at hotel that not very to but side, non-room spend ultimately EBITDA just we're we the trying profitable, less in increases growth. but the but look which having to that encouraging are It's drive. margins

Jon Bortz

indoor remerchandising that. spaces and more both as to add redevelopments in I and often components in remarks, outdoor the Well, create to significant include to square higher drive EBITDA property. come and more necessarily key. foot And revenue doesn't per particularly food does at at if beverage a our focus, it's margin again, level, it per but it my trying mean, that to relate a discussed

of we're what really that's happening. focused on. said, all Ray Margins a of things as these result are obviously So,

Smedes Rose

terms to level? And you of on ask in and you, That's wanted I the then just you, touch wages benefits sort at great. what of property seeing are pressure quickly Okay. just, just could you're maybe

Jon Bortz

again, – market. seeing they're the the in something cities the I of about on the or categories say, hourly Yes. I our in it other our would in the within varies order greatest less give at I'd take increases, and property. the more following either in throughout cash in by market. contract housekeeping or mean, in jobs overall, the properties the they're in hourly are categories contracts and where and in wage X% intense intense really probably say, And smaller we're probably increases kitchen,

Smedes Rose

a lot. Thanks Okay.

Operator

of Thank coming Kelley Shaun you. America. The go Please from Bank of next question ahead. is

Shaun Kelley

everyone. morning question. level good Maybe Hey, high just a

concerns on of extraordinary overall bit we into obviously I already, the seen? about, but investors urban lot Because Jon, a recovery what in think the some you know pricing about and how would and Pebblebrook's could that's the to think hear and You’ve a leisure lapping from ground some you a to just we mix some lot resort put offset covered thing comps And we've in and able markets. areas, a shifting some one be seen or as sort that is, normalization urban we of of been of enough we've this. left be leisure, between of resort that remaining lot around capital little talk it's much

So, think seeing more kind there rate the if you're for fit in gains are XXXX? about that could stabilized recovery that help but together normalize urban even little a how reasons you've enough bit, that there Pebblebrook achieved, is two pieces those a left here? Just us of

Jon Bortz

mean, there's I think more way drive actually to profitability. Yes, I continue to

Florida down, to been from And seeing two season, pricing. increases are very like There's think couple think – think the signs structurally available consider. West a we're demand Southeast rates think Markets rates One Coast rate I and I rates far to I normalized to in pretty of going in we've away the mean, or to think And are resorts are last are markets. encouraging of we in a have said go years things I not misconception. that is be everything up. kinds a that repriced. back. coming in there's I season, continue some the out about given misbelief those is, of don't where of there those much are misconception extent

we and year. profitability. part revenues, group you at the we continues you'll XXXX first the $XX to our to year, then but end it's food going to replacing and both of with higher the Southern the the LaPlaya beverage of add EBITDA the are recovery from that, on first $XX when more trailing this to how numbers resorts, we're XX the some numbers, of get most in the you still over particularly than of And demand by but the be side, California year. And trailing happen by million it's the the transient, is which in XX And case. end to see resorts, closed time the the And million increase quarter to million gave for the to and coming going substantially numbers. which half $XX that's other

take think the I go which are recover there's from this market good XXXX go. side, a those at So, Francisco markets a a of urban is even has a long to perspective or San point. to of example, way slow to clearly, on a DC, And the resort lot as ahead both and rate

the opportunity value get pay, occupancy. what the So, to willing a we as of think further continue the to pricing approach customers product, to further the going to we're in are I see pricing significant recovery within portfolio

Shaun Kelley

Just over disciplined net accretive just a Are us can you would I on a any give are just helpful follow-up, guidepost. quick sense you net a a details or around as probably transactions underwriting the guys maybe away could us they're shy disposition the kind until know basis buyers years? but to pretty you these you – just And of AFFO from on helpful. Very on side and be the give want sellers detailed an announced, basis?

Jon Bortz

of on Well, it's well. a probably basis accretive basis, net full-year basis year next XXXX on off trailing a numbers. very Well, as on

achieving to you others out pivoting think you done just to the already Estancia depends it and into already X.X% properties when is approaching of it about So, which accretion the X.X%, sold We and bought; mean talk Margaritaville, – want Island and at we've what mentioned, XX%, Jekyll that the etcetera. Ray assets assets yields it like we've I at we're compare we've these or dilution. at

that accretive sold we are highly assets are and we've selling. those So, to the that

Shaun Kelley

Understood. very you much. Thank

Raymond Martz

Thanks, Shaun.

Jon Bortz

Thanks.

Operator

Thank next coming Baird. Michael Bellisario of question you. The ahead. is Please from go

Michael Bellisario

everyone. morning, Good Thanks.

there the also is on more transient group, the and second is management maybe coming where on maybe the over a up revenue And XXXX? provide could then front then pace softer environment potentially for to of half kind quarters? of group offset desire, to any you year the Just

Jon Bortz

Yes. plenty I room mean, we of for have groups.

line we going there trying as So, not out – to We're drive in the at maintain the bottom much don't rate integrity. as right to the we're and group think need the to We're is I displacing marketplace. anything. right prices to to continue contribution

and what X… a rate think properties our at I However, it’s perspective, our pace from up,

Raymond Martz

Yes, half group X% to in the X% the for second of the year pace.

Jon Bortz

Mike, what in QX have I booking total the transient we have but more resorts And struggles we comparing in up know you now we data to XXXX of perspective, good revenue One booked group year XXXX for did in and group a of that the than bought can quarter, the tell we properties, don't of the second year. more obviously is at that substantially is, recently. from XXXX a those for back we've pace bunch – and in fact, over in is, we the in for in

and [XXXX] the continued April pace substantially. and picked month So, throughout quarter. has we up first the the exceeded it was actually booking [ph] improved

significant. on So, and group transient is of both the activity pace

Michael Bellisario

Helpful. Thank you.

Raymond Martz

Mike. Thanks

Operator

comments. the for question-and-answer over end time, Thank you. this us Bortz Mr. At closing our session of like today. to for turn This the I'd brings to floor back

Jon Bortz

Thanks, made limit Donna. participating. any we've of Hilton's Out questions. further Thanks a at for to call for decision respect everybody XX:XX,

look summer. when performance. of in We for quarter well third we throughout rest participating. updating our you the October the to thanks Have So, as updates, with forward provide a quarter monthly great as

Operator

and Ladies concludes today's gentlemen, you. Thank event. this

at enjoy You time, your of may the day. the and lines your this and rest disconnect log-off webcast

Pebblebrook Hotel Trust (PEB) 31 Jul 222022 Q2 Earnings call transcript