Earnings call transcript Q1 2023

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Operator

Greetings and welcome to the Pebblebrook Hotel Trust First Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure Financial your Officer. my Co-President Raymond now Chief and is to host, introduce Martz, It Thank you. ahead. go Please

Raymond Martz

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

Chief Chief Investment and are our Jon Joining Officer and me our Chairman Co-President. today and Fisher Tom Executive Bortz, Officer,

and But before and are statements filings that implied materially our subject numerous risks quick a as differ many today described comments SEC These our we today. securities results forward-looking considered laws. start, uncertainties, from in our are by statements reminder could of Future under federal to those comments

Forward-looking are duty XX, to April we statements no later. XXXX, them that make effective only update undertake today and we today,

financial on pebblebrookhotels.com. financial discuss We measures call, will our non-GAAP measures today's website, at we provide and non-GAAP on reconciliations these of

results with XX.X% $X.XX, to XX.X% year from finished year for quarter. the the Our our urban from great progress was in of FFO markets. a million year, ago of represented our adjusted outlook per increasing and a first many start a at at a million financial improvement, Adjusted exceeded and $XX.X very $XX.X significant FFO especially ago. Adjusted EBITDA share

most out disruption We're May. XX negatively many coming results until mid financial with cancellations numerous them approximately Los hotels late and flooding to of despite our when rain, to not quarter of pleased storms, knocked winter guestrooms impacted the excessive from and and and our rivers, back in areas into from that demand during Angeles service resorts in

caused quarter. impacted $XX two and restoration million, in approximately Ian $X.XX from share. revenue repositioning significant not higher FFO the by and Our and by adjusted remediation These if the redevelopments five Hurricane EBITDA FFO place and have been about negatively LaPlaya the or taking and issues per EBITDA year-over-year the disruption would of for

room XX.X% outlook, RevPAR spend side, the robust revenue the property of of our XX.X% out same to experience. highlighting top the increased end and increased we non-revenue continue On exceeding

Our the our high at increased Portland, San end markets The showing robust overall most growth Chicago. DC, XX.X% in of comp and Washington the year-over-year Seattle, QX outlook. Francisco,

XXX.X% Our RevPAR the occupancy increase same San XX% rising generated prior hotels XX% to by year. versus Francisco driven at property

has Francisco million versus in $X generated million EBITDA negative 'XX Hotel from million $X.X and San QX of $X.X of improvement EBITDA last year. Our outstanding

a JP Francisco San reach in improvement including January, city full Obviously, significant several March that to Game recovery. and city. demand has this well well, Morgan transit Developers and benefited way groups as improved performed despite from long by as corporate Conference leisure still Francisco, Healthcare

business strong group international slowly improvement quarter? up demand office, A XXX.X% increased Washington convention improving the XX% further the as to have transient federal return as recent bolster administration's second up you solid occupancy to demand? same hotel DC year, if would previous in see a benefit increased from and and a ADR rose Restaurant RevPAR The from announcement the Hotel to shaping Do prior the at you also market. demand encouraging well workers over successful, Do XX%. exhibited XX% as from see during quarter property the year group

Our for is two fully Florida perform extended on Ian. one in by Hurricane of following comparisons few time key of last quarter well, license the were a well year Naples, impacted reports key states was due to perception west primarily focused negative Four Florida still year-on-year concert. in your that open probably as which challenges as market typically during the continue the year-over-year the to business

Margaritaville of climbing increased X% and up occupancy revenues RevPAR X% XX%. and up with ADR X% food beverage by and by

down declined Lauderdale continues weakest to apart growth occupancy ADR market XX.X% was competitors remain down quarterly from outperform its basis expectations. demand being transit our in our points. Key a recovered and XXX group and Margaritaville Fort XX.X% primarily perspective As did healthy. West

expected XXXX more XX.X%. up period RevPAR, than pullback versus XX% ADR up the in in comparable still the with We a West, Key

expect significant overall We these pre-pandemic that with XXXX very to remaining demand levels. price markets in ADR premiums will return

detailed reopening the and last made and earnings release, substantial we've repairing, night progress Also plan. restoring,

beatdown XX%, along hotels We and occupancy, operating a rent QX, high-rise will and apartment In be limited the overall March able in amenities. The in and is services partially beach to to positive this shuttered. opened open as tower resort we April rooms areas remain expect and public progress. XX% services the and in April. achieve the is Gulf with condo XX% buildings occupancy we But return. completely Other

year. the improve to this expect We

We're end restored Rebuilding process. inside house by currently the progress, which quite it's of beach that year. be beach in house forecasting and the reopened to the of the is

we meeting last toured week we our As board [indiscernible]. saw when

XXXX full Our the insurance during recruited not This fourth business BI does assumed we QX initial in have approximately Cloudinary than first year. to million expect slightly carriers amount interruption $X.X represent and to quarter, amount income it of in last the we receive outlook. our business the last for quarter for of more of related

approval which preliminary we amount last business for Philippi. from an the carriers additional for the we the seasonally strongest outlook quarter for this our XX quarter Historically, initial will receive insurance QX year. first Our assumes of million BI,

'XX. billion to EBITDA XX hurricane, higher expect of Before the we for QX generate a approximately little

not complete Today, our hotel been repair, by providers work. FFO and to noted the but EBITDA remediation, should approximately their BI our insurance in received EBITDA. from BI we million has investors $XX be respective It reflected Our necessary and in adjusted model.

to a negative XXXX in and looked quarter, flat haven't down the be is rooms Generally peeking impacted redevelopments in of in negatively April property cancellations out the experienced order prior of attrition same April economic. environment. the was service with in later at the and well. increase speaking, expected to RevPAR period, repositioning related we've so not second been and to weather noticeable far year versus as storm surprises the As five out by RevPAR rooms experienced have we macroeconomic related any or cancellations concerns

RevPAR QX by by RevPAR incorporated to this which X% outlook approximately and outlook EBITDA million. approximately redevelopments XXX to X% $X.X QX basis disruption property same $X.X will increases the and total million these points, revenues same from Our approximately negatively adjusted by ongoing estimate we property impact

continues of After XXXX portfolio in out the narrow X.X%. XXXX X.X% pie the improved on property from down midpoint and our EBITDA. XX% of has the and versus the impact gap to outlook the to same adjusting EBITDA 'XX QX and same based to our just in of revenues Our QX renovations, down down fourth quarter property

hotels remediation in balance have are costs, We some expenses increased and year. our of in that were affected property insurance unfortunately plus one-time to the of the persist cleanup energy the for and storms likely which LA to QX related by the

some Our as of operational revenues continue property EBITDA these our well to despite challenges. improve as

which Shifting significant investments completely dollars repositioning to redevelopments $XX and plan, in investments of will million The we discuss capital improvement represent approximately during later. five the our of these majority John quarter.

target to continue investing XXXX. to portfolio We $XXX million $XXX million the into during

side, generating investment sold of are retail the Avenue, $XXX.X active. Portland, in the properties very Coral in hotel a quarter, We proceeds. million three parcel in Gables one On we Michigan Chicago, a on

our million parties. night's to also and sell last in contracts to third highlighted expect $XX.X Monaco $XX.X the see million we for Seattle -- the we to Seattle for release, earnings As

to sales net net held sales proceeds as repurchases. and in our used are potential be subject from completed and The for both We being expect conditions. later quarter, our intervened cash reduce to prior additional the closing asset second share debt to normal

have of share million a we Since discount capital price $XXX.X reported of repurchase X.X utilized have X our at the more we million additional we an late average than we of XX% of capital at February, $XX to million range. common an the midpoint X% last an when October million outstanding common of representing common shares of $XX.XX. existing in repurchased or year shares shares, repurchases, price comprising commenced NAV $XX.XX, then share average to over Since

increased common roughly $X per by our shares share. repurchase These NAV

As worse additional future repurchase a progresses. on preferred our securities, reducing share neutral to proceeds and portion the while we additional depending how our properties, evaluate we will no and or will performance basis. on reducing the net use so do common a than debt If proceeds of only repurchases, on our outlook we debt how best our leverage some and the including sell utilized we economy

note, turn the Jon? to Jon. over On like that to call I'd positive

Jon Bortz

I'd our growth experiencing. provide where been like some the coming is rest to and trends we Ray. we color seeing, trends our are Thanks, have on and of year, cost booking I'll the QX pressures from, demand and discuss the this for pace

February, two any the provided we and mid-quarter yearend performance demand different. just last update month with hasn't earnings and trends. and our last reported It's March months since been First, trends, a been through we

continues travel improve demand Europe in conventions industry overall international levels, back Asia recovery demand in and We to early at go. the haven't days. group seen travel trends long getting with recover of any last related pre-pandemic in XX Business to our and with on continues in way its to the inbound transient, both stages to is a normal, closing changes to

with though upgrades norms. higher year, less on last than than exuberance healthy, was remains splurging travel and Leisure when historical suites

recovery With in have properties benefited the the most. continuing travel, business our urban

impacted points to first XX.X%. XX property ADR RevPAR market bringing an Omicron year X.X%, our of urban versus increased or a Our increase strong climbed hotels an quarter occupancy urban for last XX.X% over same and

level comes cities, group with with Yet growth. the spend travel more Non-room with stages higher and in of at go. ways a this increased demand business revenue to non-room international XX.X% growth the and driving in was recovery higher of even early with and that leisure prices

We total have significant revenue and opportunities. occupancy

below level. was occupancy XX% market urban our over As XXXX XX points, the occupancy or still

at Chicago, international will most The leisure and are the will first this later quarter. of lead be urban completed normalize recovery, the Ray Portland, and three Seattle. as indicated, recovered to But that it levels. quarter business be travel as in included Francisco, second DC, Washington Some recovered San cities after of higher redevelopments

continuing Diego, Boston, Los and We in saw Angeles. improvement San

particularly continuous XX.X%. in We're a we're the Our points continuing XX last experienced XXXX still XX.X% February business grew with RevPAR drive or uniquely point the in travel. in which travel, the increase quarter, occupancy below Bowl And up negatively Due helped occupancy. West by throughout impacted quarter. properties leisure also XX% and tough QX in LA or Yet year. that a to XX entertainment Super heavy comp in against recovery rains we still LA

strong had market, convention robust downtown in was four the redevelopment, two first though impacted negatively the Diego, Hilton heavy very rains. benefiting of San Solamar. was the calendar, never-ending a from it properties by and under quarter too our Gaslamp In We

or points, indicative or a Gaslamp XX of Embassy Comparatively As of and market by occupancy occupancy points, XX%. Hilton while our XX%. XX%, lost or Western result the by disruption, occupancy as Suites points grew Solamar of And lost occupancy or almost strength, XX.X the grew X of X.X this points our XX%.

back its points or XX% Gaslamp better and below of way a with it Western San level higher two still a rate market, year. segmentation. With nine XXXX than group convention calendar the Diego is climbed overall The nineteen's due best-performing occupancy, but all higher next the to urban XXXX to XX% is and half embassy and an XX% even our has is ADR higher.

Our right six resorts softness Coast in despite West rains and Key all West, resorts. in impacted have and year-over-year well perform the heavy quarter, the of our continuous negatively the

RevPAR, while the year-over-year. excludes the resulting gained XX.X% of our in XX.X% growth X.X% On declined property resorts occupancy by ADR basis, which same X.X LaPlaya, or points down

the The the ADR group demand channels. lower lower the West some driven and in return demand in recovery rated decline expected, decline some were occupancy to segments. from from trends by rated gains and resulted the in As Key

While healthy rate. a group throughout increased rate at

our QX higher Our XXXX XX% or QX premium for property at remained resorts than same XXXX. ADR $XXX

XX.X%. recovery grew increases of Our non-room revenue primarily quarter non-room substantially and revenue in of resorts versus also group drives a taken substantially transient. of and spend This the result that our the price was higher we've

rest pays it our the up was March representing good. XX.X%. and pace Total the was a up including for year, with and X.X% to QX year, up on Turning at were the X.X% revenue the versus up looks books pretty X.X% on and revenues In of for group room QX nights year-over-year basis, were X.X% rate QX group last of growth. rate transient end group

revenue paces ahead For entire nice rest year X.X% and room last group of year, paces by the including XX.X%. ahead by a up through by XX%. strong the QX ADR of is Group QX, group

by total in year-over-year current the looking the the and in for remainder further by pace this year, group see certainly and not then year. are revenues at do up encouraging and up QX revenue of the room of is and QX pace the or transient the QX. is considering for total are the year. Factoring This rest later ahead total of weakest total room ADR pace which is about an yet in recession the by nights X%, concerns XX.X%. It slowdown in our improves year, we economic X.X%

should business on challenging the we're it's of business, in environment. we as However, it's and demand the very can a Outside remember cost good not the that cancel positive quickly it experiencing well. can meaning hotel all until trends, turn books

in While we generally believe of and six and property significantly following is over rate this benefits wages last inflation, teams growth our the we've months. the normalizing restaffed year,

been staffing challenge will through total so last a And costs September. and remain year have versus

year's and believe recover, we'll higher also expenses recover. margins In business spa addition, later experiencing expense like property and EBITDA. as pressures, beverage this related energy, increases leverage restaffing last and costs higher significant water, insurance. food significant marginal drive Despite have services significant in other success in operating and services lap we're that time, the after volumes also At year, we this to these we to

also and significantly further prior property reducing addition, the some our assessments. year positive In of side, in on markets, one he success had

significant reduction was tax in that property true result, QX. we achieved a As up a

have costs expense markets other this help ups We increases categories. reductions prior-year some property assessments on reduce will and to success These market likely further related years. in accrued the expect other taxes to of in in and these over coming true

transaction market, selling over numerous had indicated, In the XX last great Ray months. the success properties have we as

due both diligence hard have buyers have properties deposits additional risk. money at and with two who Seattle, have completed contract under We in

over Assuming two property date million. close, $XXX sales sales total these will to

course, not they are Of regardless done, sales until are the contracts. done of

continue buying we a are result, High-quality and as to well-located highly And community. we the market. properties like own additional to properties be bringing desirable to

probably challenging debt and debt property smaller can made be market because to we seeking for more these the While continue because been to by markets, types surrounding most of several and of who market the regional buyers the smartly work frankly banks, challenges. continues have transaction events out difficult hotels they will overcome recent

of this I Finally, sorry, the this and We you major the final first wanted of completed year's redevelopment to Viceroy phase the final repositioning redevelopment the Santa phase, earlier update month. on -- projects. Monica,

attractive Santa both of areas ago, that the lifestyle renovation at is Monica now property we and travelers. years level business have Following the public a two luxury highly in the to leisure

position in to renovation are end improving a a to we believe complete and San expanded larger hotel a We of next is seeing bar $XX higher-end and Hotel, vibe. that with of substantially a transformation with event now to new in some our Hilton improved venues, the rate Gaslamp lifestyle restaurant, expect we $XX a supply and higher indoor-outdoor market great and into Diego drive a and dramatically shrinking and be the demand. month, By whole in improved

location center, to San probably Diego for in the to property downtown to entrance location hotel property's to annual convention us the the and main coupled non-room ADR or entrance to higher return best the should with on better the revenue and $XX District. $XX closest higher This investment. well allow the and as Gaslamp the being drive our cash of benefits substantially This a has achieve premier it as repositioning XX%

Hilton. the In the our complete transition from district expect just we of redevelopment Hotel into two blocks to Gaslamp Hotel Solamar Margaritaville July, and

and substantially cash expect a excited and to Between dramatically this revenues, our annual typical non-room about total we rate stabilized yield incredibly investment. higher expect at Margaritaville. are on higher We property increased share drive revenues to above XX% this beverage, and at and return deliver gains significantly project we the rates food,

sciences and expansive hub. expect late expansion group two-phase at the phase Jolla, we customers a event and appealing XXXX, resort its outdoor business social June and first in growing our guestrooms, complete of well and to of luxury this more to and of as involves La the travelers the At renovation including be resort. acquired we life bathrooms, surrounding its as transient as in large including a heavy venues area the repositioning property will of corporate a many upgrading Jolla this This leisure resort La Estancia that already complete an phase from both

and as and meeting second new renovation includes redevelopment And event shop. venue ballroom pool the of phase starting this late commence it lobby, We'll phase the of coffee pool and This this creating second of space, Cabanas, repositioning adding and involves expanding the complex. entire main year. the part restaurants, bar, new pool complex, the including a upgrading a high-end

of Club renovation historic the the Finally, of main we're completing large the cottages. and upgrading buildings, of which guestroom a of three comprehensive resort, in major building Island all the a includes Jekyll including process

also public meeting locating complexes, outdoor cabanas the the area rent, Expansion renovations pool high-end It the property's and of and we venues. expanding space retail to includes upgrades. for of store, both numerous complete addition and including upgrades property’s

resort We total yield attractive unique believe and luxury deliver very double-digit a a repositioning resort regional stabilization, our this investment. upon will on grand cash as historic

addition expect commence late the of current complete and upgrading these Newport In Resort to year. Island this Harbor projects, to we redevelopment

represents years. last we major and redevelopment the the properties project two portfolio strategic purchased the involving in This our LaSalle in last plan

returns, over properties In cash share several and yields major during projects projects addition, years. to throughout are the at we expect These you and stabilization. XX last very our know, completed redevelopment portfolio repositioning as upon as these achieve we've the gaining attractive demand

Hotel Boston, L'Auberge has Resort Key Western Downtown Significant at Embassy, and Chaminade made Lodge, Marker already Diego Skamania Bay West, San Mission San Mar. W. one The Del progress Gaslamp been Suites Resort, Francisco,

indoor Bar and out-of-room outlets, revenues drive these re-concepting also outdoor indoor and upgrading outdoor EBITDA. expanding generally and creating involve and of and to greater projects all merchandising spaces Restaurant and and All significantly spaces, event

portfolio combined beyond major acquisitions, during in and in several of that organically years these top-line great last our dispositions a with through confident with now to our ahead. the a bottom-line years the grow industry's projects. We're growth We're dramatic the reshaping and many position

As in investment the the years. LaSalle we significant and improvement of achieve the acquired payoff two acquired transaction very we the gone repositioning resort last and dollar of into dramatic and we in hard the work the that's those properties properties

take be Q&A. Donna, remarks. proceed you now That your to prepared our may with happy completes We questions.

Operator

coming first Please Citi. ahead. Instructions]. from [Operator question go Smedes is Rose Today's with

Smedes Rose

on pressures, just some Jon, I versus thanks. sort you the you talk a Hi, wage more relatively kind the level, in was seeing across the of on year? just kind side, what there? increase pressures about bit maybe maybe the more of the little line cost is I it's X% sort managerial hourly are workers and maybe side. At So, the with if hotel of just inflationary? Like wondering mentioned board? Or that could the around? on of little detail lower-skilled similar a for guess, you more a And of,

Jon Bortz

so I wages will managers X% when cost at the vary portfolio. biggest up generally, cost they'll year I to throughout within range, they're think It's the market. the for the growth probably point, Yeah, pressures think, look running, and think don't at pressures, similar and benefits in run are X% this we I this portfolio in by pretty the and

the increase due Filling restaffing are benefits costs lot So, contract, open people. is contractors, third-party from providing and to who the the off within get to of trying a portfolio. getting in positions, wages really

achieve be we frankly, able that to able be year growth And continue the this and and accommodate, believe going forward. that to to to believed, we'll occupancy

it's the growth in about staffing up. or rate wages It's from increase volume So, in the about benefits. not of really

Smedes Rose

side what still that pay? could the increases quantify just it's the relatively then of I'm And percent But your expenses. sure you're overall seeing small a in terms to you you're on having of insurance piece of kind just

Raymond Martz

We're with renewal negotiation carriers, in with which Yes, all process Smedes. of June our our insurance is our one.

a So, tough be it's going to market.

costs. I is the as Katrina. country, can of be be since throughout probably This difficult this we touched well the to the all on occurred going quarter, think as renewal that's second most inflationary last because storms

costs So, significantly. going to are go up

headwind, the the want it negotiate going we frame different going to deductibles is against to a some and them, maybe areas do parts headwind in and be best but we're do to the work ourselves, adjustments some our insurance of through going a We higher be year. to how and it up evaluate certainly don't to is but for stack take for to us other

Jon Bortz

of the breaks freeze pipe fact those each that rains of huge from on sort we’ve of damage damage And or the the what and but of a that Whether had lot and the renewal, within West of it LA rooms the within over portfolio. more four not the led comes that really to a big six in up it's down Smedes, significant that hits our the prior on in in out Northeast inflicted experienced water, weather-related and the smaller to properties, deductible the one terms we lot weeks. we've of to had had of heavy Coast and adds of They're each course some themselves properties. events

Raymond Martz

of our casualty But XX% me about the costs in is it's and $XX million X.X% that, that's is about are overall for And the there. property year a so perspective, expenses number. put side total about insurance of just

Smedes Rose

guys. Great. All you, Thank right.

Operator

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

Shaun Kelley

of where think we we there. If think I Ray, together, Jon, to thought rewind was would of pressures follow-up everyone. I when kind put going evolve morning, we SMEs maybe good post-pandemic. things Hey, these how all

pandemic about was what learned think the things terms about talked earned be to I like oftentimes we done or in staffing on efficiencies side. during improvement framing able the of margin

today inflation Fast to landscape, and around and a pressure, you of forward things about. the of some just has lot shifted to talked years the multiple the cost narrative

two than us about little from update are would you or or call Is too talking stabilized help about, to framework worry the margins basis, of that, margin basis you be us a Should things than bit concerning you basis were? a to just XXXX? than we should it, were in XXX basis XXX a set of kind be too like I we on were, on how aggressive things where that terms thinking think So, lower we other let's much thinking Maybe basis we ago possibly points really level years how where where points helpful. really could equal? better all basis being XXX be worse will if to they about maybe XXX help

Jon Bortz

-- have that Yes, previously to talked in model XXX taken. we XXX operating points about basis cost to cost sure. Well, reductions been the the have

technology, So, efficiently more with Shaun. people, actually more operating that's fewer using operating occurred,

have So, had tells out costs be we taken today, not model, would that those you, worse it the which of been the case.

So, We of of profits. a we a world think don't world margins. think of of

We we opposed expenses expense a portfolios. growth forecasting revenues. in margins to in and our look non-room increase impacted at And margins forecast get as dramatic by

to we an revenues As will are as per margins, the doing our non-room actually with our percentage lower re-merchandising that portfolio, and key. that it will increase we the but the increase categories redevelopments our within profit example, of

So, we can. are focused on operating as efficiently as we

growth. on environment over To and impact revenue both the think macro expenses has say, and comment, up expense obviously about I'd an of go your sort time profitability, growth general

tough we So, I be make the year. a describing that talked pressures on Ray and about going macro more don't it. do really think -- were mitigate efficient about we then insurance. We do way, go about as, think and to and operating you micro don't we up how costs it how it down. It's the

premium. our were probably where went ago probably in down row in XX% four we a year a seven XX% There years to years

down, things go too. does and up So, energy these

has again, will it seen Natural that'll at be bring gas there down. oil go and natural down these stays up. re gas If have But things lower back energy come move again. all We rates around. and contracting

of just I really operating of margin XXX other took models areas. to in you But we permanently. growth So, the points costs it can't XXX perspective, a can comment out I that there's from on basis tell

the did industry We is, continue restrained in to the so will broader last through ramp get recession, believe as macroeconomic again, probably being That years, is we sort up that whatever slowdown would as of that margins than it next five cycle, thing my or back whatever at in with an at three forecast. cycle. we as particularly to a we this peak be higher supply that peak for

Shaun Kelley

heard couple that's sort But not And one I out the rate normalization the on we've asset obviously of into you've of the a of certainly like or of you kinds think of maybe that. West. Newport? about the other in called Coast think first markets typically, then markets, market on Georgia, Can help off specific. maybe And maybe us East, some some you think just either resort a of these Key of acquired

some is the seeing pressures similar what in you winners? specific Are a and just magnitude some assets different to on? But stuff appreciate broadly, behavior a there's pandemic really those property going that, we're renovations think big consumer of I

Raymond Martz

premium high it seeing that premium some the got not there's we really last pricing a We're behavior, rooms, to in levels demand and would from pressures impact I before. year, a Were and come markets. from of in those suites year the some change from would say, even general in reduction

splurged year people inside As a on being or for after two. themselves

airlines little terms it's So It's board. of are a the that's the about premium pretty talking them different interesting, across general than customer. seeing, what the in

the with of demand see is to we our it resorts, high-end number the at overall high in terms customers. luxury continue consistent But of

some seeing rates. not more pressure we're driving higher pricing premium are really But elsewhere. So, also properties. our number slightly we group at We're seeing rooms resort fewer of at

group by surprisingly, our a large So lower different at are rates. Not than our rates, segmentation. right? our transit actually and that's And resorts

come other leisure than And generally markets. rates the also rates those and they other at they lower with come transient in so, profitability. But revenue

on some for Key in trends we've market. some a West. impacting more is example Even rates up normal, Key So that's impact the That's perhaps side. customers But good the biggest West high-spending leisure customers. rated that demand the and is our we're the seeing lower the on swapped held out

Shaun Kelley

Understood. Thank you very much.

Operator

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

Bill Crow

Good morning.

slowing yet it just On time the of consumer? or little in given uncertainty of new And things, a a appears the start to to it the thinking down what slowing expense the be side macro? bit process about reversing is maybe even hire maybe

Jon Bortz

a fill mean, I we're right not may becomes now. available, I if doing or Yeah, that's may we think it. Where what position

people, is volume. really more of gets to level, dictated may it and at it food the by then banquet that They And, probably when beverage, the level, business. when at think particularly work I and hours hourly every there's course, multiple just the work, week, catering. get or manager those hourly be of level may and would properties and not they many comes

So, yes. is the general answer

cautious operators going volumes. we here. are as volumes, level, to what macro the see a what more we like about picture is industry. continuing look to greater our further actually We on additional from our impact its about property going And Until to and be at with the of get talking adding is be clearer staff greater

Bill Crow

follow-up One more question.

have You in this on space. insight others than the topic more probably the

to rely just the last tend and your and I which guess particular, directed that writers, you. happened how was heavily? So, Los on assets And disruption market, in strike on time wondering the to entertainment threatening is that to writer’s go guild But assess fairly that to I'm in in XXXX. Angeles, the you

Jon Bortz

very to history, think different at has I in get we've morphed three weeks, they it's depend the in upon whether short, on obviously, the the strikes past, And compared development they tend Yeah, volume And long. many or seen strike historically, have quickly. least, it's weeks, to content, it's directions. four and really settled do if weeks, so they two going I The mean, to short pretty impact Bill, little these whether market. that,

impacted. is of And music, a course, not

months and other the Most is production some written. of on is next three today, going entertainment. that's forms on to to And go six probably over already going

they doesn't how likely just upon to as how much have I it we're going have it's plays That's strike really depends to short-term. to out. do long in if then said And the going be. why So impact it see

Operator

The question Floris Dijkum next Point. go Van ahead. coming is Compass Please with

Floris Van Dijkum

if for Thanks, line, question, question Kudos your all your because Portland? of asset now expect towards have mix a urban have the that changed at fund But guess obviously in And you almost markets of taking urban more -- essentially issues resort helps it more redevelopment margin, XX%. we talk guys. get recent resort my the could then your maybe versus heavy perhaps slightly I I you sales pipeline. has at regarding over some about the those are -- political Seattle. are like got that sales

see I do think And you trending XX% that were forward? how at you before.

Tom Fisher

the question. Tom. Thank you is for This

think thing, I and are to it type indicate necessarily investors. a of our continue do. it I assumption we locations going safe urban we're think return relates it's I relates some as of that at to the markets. to as mean, we to But look will adjusted that, don't risk we what

at friction and look the from earnings look other on, things that that we of sell. influences to political the some going so, are certainly are of an cost and where And we to some when perspective, going or perspective

could transaction you've the markets But to I But it are looking think got overall market be because in be Potentially. terms you right what want you suggested? sell careful in now, that something. if to of actually you

that a are assets maybe thesis, of think I for. have are look the looking to You marketable. looking offer investment at at we certainly that upside buyers have those smaller types are that got strategic investors that what's to And

Floris Van Dijkum

we over heard be of in terms in mean you And obviously, just Is easily total as what $XXX or pretty are that a talk that you And transactable? well? Portland, people much market asset the that's than have that about seeing make nice does but value, it less own does that that in liquid. more million assets might

Tom Fisher

I on you is than more can easily hit that given over -- certainly million. today threshold Well, transact terms in can necessarily of, But we the less the think today's I in you I much is that the is $XXX much think see certainly, than more market markets. it would something say nothing $XXX million is capital easy you challenging head

these I think with equity who lenders investors there cash can later deal is and that relationship or all at of a million. and some have. investors on look number that been a successful that finance close is have many of $XXX or There it all we we

Floris Van Dijkum

follow-up as buyers it mentality seeing buyers higher I'll what's maybe did two cost, the upon are And my question, assets of on if right guess, I in the in Seattle. a the and in you assets? these when Are and Tom, you're of remain gummed all now. that touch sort obviously But lending very can up looking well. cash difficult the and markets what accept buyers, your refinance to and presumably years' and much view to -- of willing your and the lower, based spread the are how buyers time on rates for waste

Tom Fisher

have comment for it being how at I expensive depth. we strategic. continues and like debt their is, within that tell debt as is can't there it that what lenders can All recognize there I this, number relates necessarily their for that, fit based that plan. will And think still structured potentially just just to relationship you a There that but may today, buyers. it confidentiality groups is assets have characterization be look competitive say, recognizing of more I'll I to they that lenders relationship reason strategic on Yes. a are of the

Floris Van Dijkum

Francisco some that's you stories Are the of as to well, the a that dynamics that favor does demand term? feed your be It supply working longer converted. that of And seeing of more that may should in heard be, San because I've sort hotel in sale of going be recently that?

Tom Fisher

to done predominant, very from because from picture of has markets. these and think off urban two, someone the very markets. say as supply in of some that some I political that can't wouldn't But a it's number next and one three seeing construction get be financing five of recovering own John over we But course in challenges. certainly years. just what in markets. promising, that can a indicated overall, I going perspective, One, to before, of its Looks we're difficult, terms the the think these a that's climate and

Operator

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

Michael Bellisario

everyone. Jon, And price? expectations, Maybe markets, more markets in in quarter? then the that little actually or what was in dig morning urban up volume more, drove good your bit to but really Thanks, stepped you a looks it bit things urban like relative little March. that talked wanted about a to your upside industries or what

Jon Bortz

increase as back was compression the and in And as as in I and mean, price. back, the it modestly transit recover, city which I higher than winds corporate from continues growth tend remains they the it to quarter-to-quarter think more urban volume and healthy price markets in The was those comes more rates. to March, drive come markets.

say, For many those The us a gradually lot minimum as is, including coming markets describe pretty a I of users you could now, back know, people large work. guess have, a days three of tech markets. prevalent and They're San like Francisco market the Boston. back week these getting I don't and in markets I'd Seattle, for to them, and Portland, in like

comes overall more beneficial from that's more that to seeing tech some those particular weighted think broad-based I business. is markets. and heavier markets seeing industry recovery think travel those the is our BT, I perspective, But industries. a an In just little be a our group we're pretty we're need So, and to from in happens business coastal of

Michael Bellisario

prior tying transactions. then on question the to the just urban to together, maybe And that topic of

right more of sort sales, had hotels XX of look these us through get understand like? portfolio? the these presumably, hotels, what's ideal maybe what's hotel size It more the maybe the could of months some And help out more prospectively some asset you As of after old? gets urban what,

Jon Bortz

reason selling be Part a we're we market. not because, want is don't to the in particular of

Tom As said, we're investors. risk-adjusted return

we reallocation more concept with higher. going to to do has to the the so, where believe returns capital are of be And selling places

we've as today capital stock. portfolio. the we by more that out we've so reallocating those back think indicated And far and our some new basis going of a and doing, proceeds been buying value creative buy properties to than reallocating that's what on been share, per And for

of been what quality And on below the of is, think the basis. will levered general, where back quality, are XX% our a properties the properties, market any of at current have and alternative portfolio have been on what are but the which attractive of risk-adjusted today has basis, a is. plus XX% the focus at low is buying a returns. our gross where upper combination that's the lower discount use we less rest quality a discount not upscale, the So selling assets, selling don't individual I'd property say we've anything because capital lower in we and

than sales lower half we're cash more and build net using using, we're that have And the to of proceeds effectively debt. gross

Operator

Fargo. Kesten is from The ahead. next go question Please of Dori Wells coming

Dori Kesten

that cash, for effectively repurchase Just pay more in that you proceeds shift make a to sales what would that follow-up to to holding on would need utilizing that, stock, with environment down? see macro you the of retaining

Jon Bortz

negative it having in to the meaningful see I that's happens I business. depend negative slowdown think would we what would operating stock. impact need say upon a still then, actually to significant the economy the even on would a And

to So two fear than of it's we react stock back then so weigh with that, returns. the guess has what those to of already in again, to the proceeds. things, I we're terms to downturn, going even again, risk-adjusted do from negatively If were it more a

But liquidity is liquidity, our huge.

almost million we have liquidity. of So, $XXX

obviously until material that. turn don't have with liquidity deal maturities to were more And so, if things any late And we bad, next got of year. to severely, we've plenty really

Raymond Martz

we going liquidity more example. than had pre-pandemic in have the We

Dori Kesten

year expectations of the are And spend out bit prepared Thanks. you've as room progresses this you room outperformance the in your remarks. to spend expect a would versus touched for on your What continue? and

Jon Bortz

continue We to from cost coming group, they're And with grow back, as do level really of a RevPAR. of those And increasing group non-room coming normal back well expect than to that taken at the revenue. Pricing again, as to out as higher areas. to mitigate portfolio. increases room more rooms two try performance it's to we've group come segmentation percentage increases the really its back of getting the

than the of So, we the quarter, second think rest any of do RevPAR, and we company. grow outside really they'll don't faster the outlook for have

outlook a specific have non-room don't we revenue. So, can share we on

Dori Kesten

Thanks. Okay.

Operator

question is Evercore ahead. Please Pfennigwerth from Duane [ph] next coming of go go The ahead. you. Thank ISI. Please

Unidentified Analyst

for morning and good Hey, This thanks on Peter is Duane. everyone.

I think on previous just up question. the following

put room a we for to weather in had? is or impact how some XQ, because maybe West on resulted the weather number quarter, resorts mentioned much You that way Coast there a that that the Did revenue effect cancellations that saw the in of and weather. out that of

Jon Bortz

our Yes. resorts I because on certainly non-room have pretty mean, has good levels. it spend an did impact revenue at leisure

go coast. which to rooms are place when the just about what to -- wasn't go It's pleasant side. is you winds. impacted. it's beach have certainly to, shocking a don't way Southern that people of hard or California XX-mile-an-hour not And even It's work it properties would raining is the the leisure our as a then that that your really lot on were raining So, been it's with

rains. near had We Santa flooding Cruz at Pacific Northwest the in business impacted And heavy along the that negatively Skamania. with

or like five-week I didn't above it degrees. think four- XX a period get where had they

in And terms saw the probably the so be customer estimate just bookings. leisure we volumes the this call. bookings it hard it of cancellations much it, negatively to in the more It's And in But portfolio. se, impacting was. material per throughout it mention pretty it and to And there. than again, was to was how it enough enough was

Unidentified Analyst

That included your song.

Jon Bortz

Evidenced song, by our yes.

Unidentified Analyst

you wages do or that about put And then a of to to as that. How a volume into is hours there for year-over-year, are maybe in being way that up up increase well. number Okay. equation? X% mentioned kind year-over-year much Thanks anticipate you quickly, staffing given the X%

Raymond Martz

rising to are as low is mean... I off is are well. that hours going where in finished we go XXs. to are 'XX, be Look, up we occupancy a the in which Last the hoping still XXs, Yes. that's we well mid because occupancies of year, will function low

and are cost revenues higher will our we So, and go going up. hours result will are making as that up climb go because up

of we combined less we hourly, markets. positions, as than But properties operations, that's our still management And a indicated have at John less changes retooling managers, certain fewer the combined we earlier, pre-COVID. have in FTEs function made, had clustering overall,

there. where that's about overall, cost better we So feel the

is But part open of more that all segmentations just are and this this operating.

we having. last the catering EBITDA side bottom as have adds didn't over line. really much some that from ultimately now are the adds group have been but We we with also on That two years the hours,

Unidentified Analyst

you. Thank

Operator

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

Gregory Miller

the to I'm weakness Francisco. for morning. Good given like some off hotels, San convention challenge in in shifting business to for at due forecasts. house box strategy, Thank to at and that hotels you. big with Moscone? to I'd Bureau XXXX start your and the appears get much curious pace group so be conventions to large Visitor's And your expectations

Jon Bortz

Sure.

So, on going it's that to to I the of second think is what we pretty you going hard rooms indicate XX more is half year like, because we look fewer is tell this is so like, what indicated the to can't worse. better haven't look group Greg, and books

nights market. fact couple going the next a they're that for XXX,XXX room down of a of year that to So, is challenge be more

it's short-term group recovers, sell a strategy. for It's As not it to convention conventions at them new and typical both the center.

And the in the the boxes and, year for in bigger group group, air future in market. frankly, the

process. indicate place. there's director we're in of in their Greg. really to it's search things there'll thing that existing including to they're involved two need a and that not travel do marketing, not it's the SF are strategy process is hands, they is be part One in sitting the retiring. happening, actively which not part. new I market, ownership they're Hotels on a their of on that's think other the their It's, There's so And

to that strategy what's will is hotels in past. in benefit big with currently don't selection as but hotels market, strategy, a the in market always bad it along of And think market, GMs individual, it's about great the the that owners the we members I some and energy passion who helpful. don't board, in the will are has which will our available that'll the market, hotels involved I and of generally bring all spending as booking think be of that knowledge in the Pebblebrook, the mean time this be

and focusing should where on them their effort. sell So, they that, we business a would today be certainly can putting as is positive they view it because

annual open smaller or are put it expanded, The conventions renovated focus? a city. three previous really two was being that to what need mid-size more humongous in difficult other easy, into at to Moscone the and up to is these have was on was the or to same that able time, order as opposed it was conventions area Because in they to effort which I think corporate

drive And some that rates buyer probably from perspective. unattractive people find a

be help in drive year this that's future So business marketplace. rotation other that they'll over doing the to years and

Gregory Miller

apologize season? of my ball the think for start recent in it curious. of a the prepared what to As but, trying will a to I'm I'm remarks tourist I of sort given follow-up appeal it's peak the look I demand the will think the recover? XXXX take the know will the from very about like Naples hear year. particular apply It or couldn't Ray perspective visit you I fully next crystal rate but well to market? years modeling Naples, by few your regarding of

Jon Bortz

storm. two not the sand basically back was for the about because dump, think, beach. it's ones, And it over back their the of to interesting, there's I get added I reached down driving mean, program correctly property every do to on this while And time. process before and our were regardless, we were they there. dump full And underway the they remember think, monster Yeah, restoration there, beach out basically six-week actually these Sam, beach feet surprisingly, few of a back forth course, and a goes my I $XX I we replenish million guess, that's, to the I monstrous but and golf to already where trucks, if beach, years,

of, the be completely And six and of terms of courses all storm all market replenishment with directly and going than program into we are a open, we should the reopened beach, of open, be case, the will better in open, to today new outside complete than rebuilt as because of the golf beaches weeks, will think of the replenished, property. All indicated, that's I stretch perspective. the of it'll whole that beach So, normal. from here, amenities this buildings, so what Vanderbilt in stretches first with the are all, be looks on within outside along the those our we it, I frankly, think fully itself, all product amenities, like rebuilding. had And better the I be house think, beach the reopened the

annual is a of large come for of market. to sort an who number people Naples the itself retreat

thing this market had market Irma back is in good quickly. that five and is And experience bounces after our years the we ago the the so, pretty

ramp but best see, the already going for them know and the everything year. months, to and takes has that more I it'll way the started year. significant prepared the latter is it just of When ramp back up think next think accelerate to needs towards obviously in than up, market I So, marketing. part again, don't I really And to I was we're the frankly, XX to Naples this it's pre-hurricane. wait but operating the And have do

Operator

is Ari ahead. question go Klein The next coming BMO Markets. Capital Please from of

Ari Klein

resort up earlier. talked a Thank little and you, about were on just good Maybe that a morning. the bit following little rates bit

year-over-year thinking about those think you are How moving guess range? XX%. rest you that kind I of we through declines, Do off level down were they fire, excellent even? mentioned you of think the decline in Do forward the I the year?

Jon Bortz

in it's the at look mean, to it's some week. on probably We books we the at at of flattish. and the lower bookings, the and we be guess of what have probably resorts less going But to desirable point. are days hard I this fill dates can Yeah, is predict my rates, as shorter-term

say to where are probably be I'd to So, I mean, to would they they I now. similar going anticipate, if guess, I had are

we down, RevPAR and flat, will is bottom-line rates as up. rate revenues from the resorts at up said be But urban probably big roughly for will from year, in with for displacement from would big be probably coming total the the the in year and redevelopments, why well. up flat will growth that's the have be earlier our big And growth in be rates we and non-room is coming occupancy in think resort the and revenues occupancy

Quarter-to-quarter out. of kind look at play hard would anticipate. way the we to the expect to really that's broader is we year So

Ari Klein

think rate. corporate prior some But and occupancy And somewhere think to about and that about talk it's also, the return of benefit on comments business, resorts. Ari also, side, I about group the of also to will our that important the

we are occupancies were where 'XX. down Our in to still

points we an So XXX were have even about in rate as in premium example, first the our they though basis a quarter were where below, occupancies 'XX.

it's doing as that's ability hitting and from the gain to But So, though an rate also have are that's happens perspective. they will well, grow occupancy, there, resorts perceived that, we recovery more the are really more even cylinders upside from and we here. all a

Jon Bortz

to going some come back wholesale. that's And international of like that business

Some and non-room down to come of occupancies back lower it's and at those it's rates, going still fill to more but profits. that periods, business drive going revenues ultimately off-season produce

Ari Klein

the would And up somewhat Thanks. you to be Would moderate? looking out headwinds expect second wrap there you on projects, major headwinds, further renovation kind the And a then the is those the just half? as you similar of first half meaningful lot year. of that impact to these to XXXX then of expect in in a

Jon Bortz

Yes.

the impact no of second So, it little renovations. half is really the to year in from

done parts. We with are really the impactful

not time. mean, the some pull-in it'll generally, I of impact pool minor phase is some business. room rentals for impact of The But area. meeting really have biggest the areas on some have service the period public it's leisure, space of the on second Estancia that and having a

going period that we Newport the that actually do renovation. And money are over Harbor X.X-month loses to

impact it impact So, it all revenues. but those on lost, have bottom the may on much at line. be won't Obviously, have an will

we So, the passed I think it with second are pretty quarter.

Raymond Martz

our next we other after heavy note quarters major year to thing this And be of here. actually our a on lot of lifting redevelopments will this couple is done Ari,

which only is Next have evaluating then still the potential the ones are Apparently, projects that paradise major two in we Newport and the process. point conversion year, we

rest been So, renovated or of the the has either portfolio redeveloped.

to good as us puts and a that beyond. we're So 'XX position going in

Operator

Powell Barclays. Our go Please of from for is ahead. coming question final today Anthony

Anthony Powell

morning. good Hi,

expense X% to occupancy that still next have figure maybe on staffing. downturn Just add in assume hotels to push we and from me you a would escape actually and leverage incremental your to staffing be one of What staff, year, your You growth when out able margins. more we and try have to

Jon Bortz

it cetera. more of you need, volume to does That point matter always you every dealt the whether out mean, et case, is it's just release. occupancy, or occupancy terms are, with, in we going always volume of has people The overall I outlets. the the have, more our where that whether housekeeping, be to it's it's in be

you have hours we occupancy, of mean, going in But be we So, don't at obviously assume But step points, probably should some it. certainly our it's but category. I had to that, overall, have them function. every if five a lease, we're we're they'll more more

Anthony Powell

recreation and that? Coast, the you're a bit he from like in markets, some desirable maybe how terms or your again, And maybe that's thinking looks asset He about just rank just supply-demand of talked could given so changed discuss major rewrite them sale, prior the yet. maybe on of West the about, markets Thanks. you've Coast in West one I kind still of if sorts like of more times,

Jon Bortz

to resort and certainly zoning think not the next perspective. don't markets, that years are limited added think, we country going the I gets of or five markets, most Coast. them be a to all, tends approvals fairly the most, over think because from limited of benefit a growth, urban the supply bias on I in Well, the the ever hotel markets. relatively had having There's the supply I resort category, a around to to all three don't particularly restricted to vary West first of

attractiveness look in And of XX was be As attracted proved I cycle. that those markets, we And in that I markets the markets of risks a successful. very early the think to brought list lot we're risk-adjusted return underwriting. think have different a that at last our a to we bias I that think us

And so that's people pay. the but other to one what piece of it, part are return depends willing upon

is drive tell earlier hard disposition dynamics well we side, the to our really strategy we It I as that want here. you, a set be longer we said both as, on want to And as says don't it's on So, will to the be future that have on of here. a decision-making no acquisitions.

Operator

the Bortz for to comments. Thanks, this Thanks, I'd like Mr. over At time, turn everybody, back participating. to floor Donna. for closing

forward days, Hopefully, updating call. a long found much. you further so if you're to you you obviously, keep if still to there. and XX Sorry questions, certainly that we have you look informative, and free us feel in to give Thanks very

Operator

gentlemen, today's and event. for you Ladies participation. your thank concludes This

You this time enjoy may your at day. disconnect your lines and

Pebblebrook Hotel Trust (PEB) 27 Apr 232023 Q1 Earnings call transcript