Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Chatham Lodging Trust First Quarter 2023 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Public DG President, Daly, Relations. Chris sir. Please go ahead,

Chris Daly

filings. most are welcome Thank and as Lodging Chatham Please securities that comments laws. our and by are described as results and you, Good morning note uncertainties today XX-K our and of to Melissa. These to many forward-looking Trust federal unknown, Form other recent call. statement defined the SEC conference everyone, considered subject first risks statements XXXX quarter known both in

information is the XXXX, undertakes any All call or unless the expectations. otherwise the no update changes X, this of May results company's conform in as to to to noted, company forward-looking actual in statement and statement obligation

contains on non-GAAP this reconciliations referenced on You website our measures to filings find can of which our financial call copies chathamlodgingtrust.com. SEC at release and earnings

Now first XXXX Vice Operating Fisher, Officer; Chief the Officer. and Vice to quarter introduce President Financial some President President results, Dennis and you provide Jeff insight, Wegner, Senior to Executive and Jeremy Chief Executive Chairman, me Chatham and with Craven, Officer; allow Chief

over the me to session Jeff Fisher. turn Let Jeff?

Jeff Fisher

and I good afternoon being appreciate the this Chris afternoon us. certainly call with Thanks on everyone.

Western performance, special awarded recognition to Woodland to fruition. the Award give I and our that several from we Center, project who highlight International, California Island, years were EPCO, hard to Warner bring Hills over Just that addressing our HomeX before highly to spoken the and about quarterly Development Brand worked at Hilton wanted for Suites that incredibly Chatham, we've teams

lodging growth meaningful growth all over larger some fourth XX% was business exceeding growth, share with strong of XX% RevPar driving the traveler, consensus markets, doubling FFO $X.XX RevPAR per our more $X.XX, expected performance estimates and best in our higher the than amongst very to in was reliant Turning more which companies. EBITDA growth of the on the quarter, driven of to by than quarter, in

that in growth our approximately of basis Valley both to hotels. impacted Silicon similar was XX%. to Relative RevPAR attributable was was at growth XXXX, points the approximately and ADR by occupancy RevPar performance four Our result X% adversely and to about due XXX off

Florida So excluding leisure up of to than and Silicon first up Anaheim look XXXX. in Maine, that XX%, producing Lauderdale with and can with less those a RevPAR to remains RevPAR trend X% Relative the Valley. of continues XXXX, almost across our of Fort quarter. X%, was four strong XX%. the We even X%, at compared indicator all approved up country, Destin, each Leisure encouraging RevPAR strong Portsmouth, XX%, recovery markets up XX%, up its Savannah New XXXX X%, X%, in hotels, up months key the business travel down an up travel XX%, Hampshire, and Portland, growth XX%,

at quarter XX% growth the XX% by almost evidenced finished XX% up the year-over-year and of Occupancy about levels off pre-pandemic XX%.

well the see continue to of obtaining on U.S. the as return to due and work We restrictions loosening traveler our improved as portfolio international across entering business travel visas. the

as the in encouraging versus XXXX. and approximately travel Weekday versus weekday approximately up was of first the only was slowest ADR and improved the year. month is quarter XXXX, down it approximately quarter versus versus each An year for up best business historically the quarter. and first quarter last the of RevPar X% X% in occupancy XX% of was Weekend entire XX% occupancy XXXX. our Weekday indicator the pattern given is strong first XXXX remains

month demand month. continuing the to by into quarters, second we business we respect with confident are As as and we see third more to outlook build move the travel

going Washington Silicon really the as following pick many Taiwan, up to in Microsoft, Hotel. companies Apple, our China demand from of call, world's the layoffs. and of XXXX. Google, our Korea, largest in Offsetting significant since time the such our Bellevue, some the corporate tech programs For intern recovery we're reduced and is be Meta, to Japan, XXXX hotels their meaningful first starting programs also pandemic, Since T-Mobile see this last in and have Valley meaningfully

Although, this they a Bellevue, Valley $XX in of are hotels XXXX, decline across million between year XX% $X.X intern fully million expected $X.X from to to in revenue last in we'll return about revenue year. Silicon approximately four XX% and in to million and see our Washington

we up million. Thankfully, least be and expect able loss to related of able half at EBITDA are importantly, XX% the to intern and make to $X most of

recent and particularly ongoing Valley by week is basis. than work expected in trends stronger are Silicon occupancy So week on a

debt we positive related points intern to very be it margins and post-pandemic to through the business over the expense double CapEx year grew amortizing feel basis million flow EBITDA first of quarter high replace. Good of should $XX from free to year we the Operationally, million and $X about us this before to about XXX that corporate XX%. last our and controls So cash a flow year. allowed able to piece last

on here leverage which over in a levels touch our as is decade. at to our healthy financial lowest want condition, I extremely Lastly, we sit

later the with at X% During on we'll $XX of hotels paid May maturing loans, loan X.X%. our our interest another debt Funded term that million Hills by maturing of repay as free and this term about an $XX with the is have X, two XXXX Woodland that, currently million cash year. on after off we'll loan maturing remaining debt $XX with well mortgage only two average first flow and replacing rate amounting for borrowings we've million, loan secured the loans, our including high as already quarter, the Hotel, rated

in quickly bit. seem been $XXX to capacity on ease unsecured facility. like up external the excuse does million starting transaction full Touching a have growth, me, we it's dormant, our credit And it has but market

in opportunities interest of half occurring that the to With some our portfolio we the bunch be fit the in industry, hotels debt back and acquire there'll year. rates significant rise into the maturing a of quality high throughout believe

increase We acquire of we hotels, to want it XX to hotels respect the course, like and little With turn more for FFO Dennis stay on Dennis? over to color. EBITDA it or continue moves I'd two significantly extended segment. the our can focus, further growth. a that, and With needle to with to one

Dennis Craven

Jeff. Thanks

Our for portfolio significantly performance better quarter. first performs industry XX% than with second RevPAR growth the of again industry consecutive approximately exceeding XX%, quarter by the

this moving a the the in performance relative impact indicator potential of of business Excluding is forward XXXX. intern pretty

at If occupancy of portfolio XX% almost ADR excluding decline for Silicon quarter quarter slightly growth XXXX by a our X%. in versus of first the on you Valley, up RevPAR was look our offset

levels market XX%. our XX%, grow RevPAR XXXX over to meaningfully market meaningfully prior the our XXXX with and over points. growth of first down off Valley XXXX Occupancy continues than still largest quarter RevPAR remains in That below of last XX% quarter hotels Silicon approximately higher of levels XX well up XX%. XX% those percentage fourth year year growth of the quarter still for was by four

million EBITDA over first levels quarter, first in Valley last EBITDA XXX% was year, the Silicon up is though. which $X below quarter still XXXX

quarter. XXXX. still into best are Seattle grew XX% in quarter. that though quarter other the off San XX% both encouraging hotel RevPAR trend. XX% pandemic, an Again, in tech at Fran versus this since their markets, XX% level air and San First It key grew still is the the over Jose about levels. below at remains In approximately EBITDA airports international travel XXXX

really both in quarter recovery was exceeded X% Residence ADR. the our Beating XXXX for lower time off Austin levels. well this Silicon pandemic in March versus air deployments and RevPAR travel and our up XXXX First with since in markets, international Inn, Seattle Austin XX% was and versus XXXX and Valley Seattle gains do occupancy only to the first continues international

in RevPAR was at open not will Towneplace XXXX, Towneplace year-over-year. our I Austin that XX% was Suites up but Our Suites, almost say

our Hills with $XXX of HomeX, RevPAR Our the and our both RevPAR Suites on XX%, five Hilton RevPAR over our Marina those occupancy hotels with had and were RevPAR in highest Spring Inn Suites, del Woodland Lauderdale then Residence Spring – in Hill Rey $XXX. with by and and $XXX, Savannah, absolute Hill over followed also Fort Savannah of Garden quarter

first achieved higher hotels XX of XX XXXX. quarter our and of achieved XX than XX comparable our higher comparable hotels XXXX RevPAR ADR than

to XX% than longer our should work levels. length arrangements due longer remain continued the average environment. come work stays, that today’s approximately see It’s pandemic-related from of but to an long-term flexible basis down more stay historical We a in exist on

of up million, which For the almost XX%. better to million compared flow incremental were same our generate approximately quarter, last for percentage last through revenue quarter. through than is total much $XX of flow revenue $XX We to of fourth $X the of through flow growth million of year’s as quarter able GOP hotel XX% was an XX%

able We expenses are and operating still control headcounts. to

XX% XXXX, headcount year our are levels. Our first remains that to quarter XX% pre-pandemic last increased wages essentially approximately hourly similar since wages versus hotels. hourly approximately same quarter at period. over last flat the year And through employee our our four below And have

the to our Our Courtyard, the Residents Inn straight our fifth and Silicon Suites X in Lauderdale, were Residence downtown, of Spring in Dallas Valley lead Inn our Inn GOP by Hill quarter then Gaslamp producers top then followed five quarter the portfolio, Residence and our Fort Savannah.

$XX renovation at expenditures, XXXX million and approximately cost total of spend in about five to quarter respect $XX $X capital to expect With the in we includes hotels. million spend that million

that’s Bottom haven’t renovations A completed Inn, of at as at for locked in-person just renovation despite couple New we are to and (XX:XX) our and another And dormant approximately back years York, in Foggy [indiscernible] June, as in titbit, already XX% RevPAR the White meeting just last up early so quarter a we our come travel Holtsville, Inn at to year-over-year, Foggy starting Bottom. our the Residence yet. still During most that’s meetings as market of extra Inn hosting Residence please quarter, up being life. Plains well directly we for under if pretty business email the Residence actually was indicative reminder, been an

it turn that, With Jeremy. over to I’ll

Jeremy Wegner

everyone. Dennis. Good Thanks, afternoon,

million, EBITDA $X.XX and million. adjusted XXXX was cash share capital $X.X QX flow was hotel EBITDA per $XX.X $XX.X Our million, adjusted was was before FFO

in While to able the were of XX.X% of items, to seen certain margin line we reinstatement brand we cost generate hotel standards inflation solid and increase have due margin key EBITDA QX. GOP of and a a of XX.X% on a of number impacts

GOP our QX to of margin it margin and QX of XX.X% basis was essentially points higher XX.X% XXXX equal Our XXX QX XXXX GOP XX.X%. our was margin of GOP than

Chatham to balance result, now the ever we’ve has a have Over the number lowest had. liquidity years, several as steps of most sheet, taken leverage and and we last a strengthen its

recovered fully Chatham’s X.Xx is generally the X.Xx, pre-pandemic area which our leverage, was that XX, of EBITDA is the debt-to-LTM EBITDA not which despite As in pre-pandemic Xx March to net below significantly is to levels. fact

we use We use QX, delayed maturing the of In the Warner remaining to availability the loans term to loan in loan under repay loan two our our construction matures repay mortgage in repay draw and Center. $XX July million in delayed $XX and HomeX, million May that term availability to XXXX. million use draw a a mortgage of that matures intend $XX available cash to XXXX mortgage

course mortgage $XX million to the in Over continue of closely potentially to and debt consider to markets monitor maturities. a our a XXXX December we’ll that portion opportunities debt of matures address XXXX, refinance

flow, and maturities $XXX remaining liquidity, to hotels With that increases flexibility undrawn strong address source when provides meaningful are liquidity debt sizable remaining facility free a solid million Our operating our our leverage, our reasonable to performance, refinance of revolving of cash well valuable credit positioned maturities. needed. portfolio unencumbered we debt our

year As HomeX, figures reported been in of QX, date. had XXXX in not January since did QX, $XXX was reminder, Center’s RevPAR Warner on starting in QX, full Center include $XXX less year our include including operation the a for and Warner XXXX for anniversary than the XX, it Warner RevPAR $XX our a its results reported in figures and one in XXXX RevPAR, for QX, the XXXX, $XXX Center opening year. $XXX results

line portion for call. the please questions. my Operator, This the open of concludes

Operator

your Capital comes Markets. of Instructions] Thank BMO proceed [Operator Klein with line Our question. first Please the Ari question you. from with

Ari Klein

in bit lot backfilling worse add of think somewhat extent, have the Valley and Silicon It business. context maybe mentioned Can if And about back with a recently the potentially took quarter. and maybe that Thanks has talk quarter a market to and and challenges. talk like looks there? the It’s can just fourth then layoffs good XXXX what banking? that a Maybe it To step about relative a little first bit afternoon. some little obviously any, you of RevPAR the I color gotten market? intern they little versus a you the bit you

Dennis Craven

Yes. can Dennis. I Jeff I’ll and Ari. mean, in is start chime This

sit fourth only is you quarter between I of of sequentially really kind job October announced today, the we kind the and if you’ve from think the to of think $X,XXX quarter, plus XXX cuts. now here look first I difference as had

the in not short-term, So, movement. given say surprising just all sequential I would quarter-to-quarter the

Sili if important in which Sili the international in think the travel, four X. and talked at weeks, as which hotels February, the Valley, which Mountain look by you came the is I is XX% XX% actually that, the February think San last looking thing, of of see about And And in this talked couple we just of View, are think in only time as at XX%, even XX%, continued I to to some at second X. – Mateo, improve. really at occupancy I basically trickling you’re XX% about just started Silicon Jeff recently we along, we week of kind

So, up, four as each with XX%, eight of at look from is just if occupancy only in basically are as mean, market four but broadening continuing. those hotels talked ago. rates essentially has better. about, $XX hotels April from the I is or Jeff market seven to sit wise, those on occupancy And corporate well, encouraging. the in And here rates to at $XX not international, gotten just XX% weeks you demand average demand

it’s good trend. So, a

the even done of least last And they’re I on last we’re bunch we’ve there historically took a And encouraged feel, as which do pre-pandemic we through what trend. we a had are we what a from that business months, about operators worked though, at that almost demand Our three positive double think basis. seeing perspective. by year, believe, intern was

a of lost chunk I that to of, think if that good able not we’ll be offset EBITDA. most

Ari Klein

Thanks. the Jeremy balance just And on maybe then sheet.

in Could a that market. doing the as of those? things guess it? do challenge think of kind this You option? the year, refinance plan I What you mentioned I it’ll How the year. Silicon you’re how there? some look guess you approaching loan next term at of some you’re that’s difficult it an of due debt There’s lot coming be to delayed Valley

Jeremy Wegner

much there. we mean, of and than more as have credit very we very, lot Yes. low Look, I overall borrowing serve properties unencumbered need leverage that a based the facility,

of rate So in levels. to probably performance unlikely on properties the given I debt Valley think Silicon put the we’re fixed longer-term a bunch

So we’re just to on likely debt other assets. put

a the So, rates have Spreads been bit. coming down week. little kind on of depend

six I probably today’s a in it. on think market, debt has new handle

increase an asset, So probably be But the on could Valley less won’t the there’s I at put cost certainly on, down, depending overall, to which come what’s plans. we’re some refinancing to on they on world. rates our in really Silicon going going some in debt so point on that have likely unless think impact

Dennis Craven

is this Ari, Dennis.

love necessarily since I forward, market is – of not there that running either. been end big tech again between years XXXX, are component. all higher, as of crisis, of kind were as world above listen, XX% think they ago. through thing layoffs that’s it’s and a layoffs Valley, I just would the Silicon many financial mean, have having obviously think look one RevPAR certainly probably company a fact add you Just certainly well in be not come late as The XX%, occupancy since of numbers on want the I the it but in their we where employment just continue to And the because we’re still to four tech and the I is to

to or the rate whether one. with The doing XXs. come than continue hotels is well, better hotels, cycle owned every We’ve be since back. demand it these Innkeepers prior is to Chatham going rise with to and continue will are And the late

So, of It’s back. coming. the I timing question that think it just of is growth how a comes

Ari Klein

Appreciate the Thanks. color.

Operator

Thank you.

Riley Bryan with your Securities. Maher line next comes Our from of B. proceed with the Please question question.

Bryan Maher

afternoon. good and Thanks

You Francisco back San were the the we’ve travel mentioned think you been calls, starting and Seattle numbers the in and and come other hearing in international comments, encouraging. prepared I said on to your

For rest to your or Asia, include kind Coast, out travel we on markets which markets should about is think of now we’re just world versus of hearing West ramp? does into how or really from inbound that international the those starting

Jeff Fisher

business Asia, Residence Silicon I our of Inn. in Most breakfast ago, doing Valley is that the the staying engineers clientele weeks hotels. in there our two we’re was still appropriate for

pretty darn least And for at seems us so business strong. that

Bryan Maher

ticket you can that on big markets as having get probably big $XX segment York year, needle. then barrage stay acquisition that’s kind your with But hotels And market, million you know of just move Okay. the sense the hotels market, as they that refinancings I not we easier you million, service $XX relates do gateway the characterize New that million, other the problems, Jeff, later to hotels about like this and going opportunities? would front, think and a see to it the or in hotels how two one say, are to we’ll or extended happen? refinance $XX to of full of

Jeff Fisher

expect just across a the happen. happens call to other quite debt the It’s of Every a time I about and you’ve every time obviously back oncoming speculate, I of the be There’s board. the been to mean, been select maturing. around it we there going it debt, the it lot seems time But pandemic service distress, cycles for think we to never all to hotels like there’s hard a too. way long we’ve and the speculate of through, beginning and we GFC tell. should it lot

on XXXX extended hotels if are of top EBITDA not numbers. stay think I closer, way

But we mean just see there within of because it’s a what not to anything or group, might as it may of acquire that acquire. won’t like so balance their may sheets much what to owner less doesn’t you dependent the be issues really upon like. really status and probably So, frankly, look there’s

Of account pandemic? back non-recourse of loans like? anyway, course, had kind appetite FF&E reserve they put during calls the et but capital all What’s what look What they’re in, cetera. to money their does have their

optimistic of the opportunities down So, kind road. cautiously we're very about

Bryan Maher

making Jeff, thanks old. thanks and it. for Appreciate right, All feel me

Jeff Fisher

intended wasn't way. It that

Operator

Thank you.

comes Tyler proceed question question. your of from Oppenheimer. the next with Please line Batory Our with

Jonathan Jenkins

questions. taking Thank Tyler. you. Good Jonathan Thanks this is for on afternoon, my for

recent any or given pockets more Valley weakness that me, of volatility the calling for demand of worth market, seen? maybe flowing out are of on color one Silicon First additional outside macro any the some trends, there we've

Dennis Craven

Hey, Jonathan, No, our is of to I about major coming that, with markets, I mean, Dennis. outside if talked life think, as you look this is I Washington, D.C. especially at finally. back

You fire. Diego well. years leisure Los of has pretty a Rey really is Dallas, del is in strong calendar, killing doing Texas to pandemic, back traveler. now just early it's Marina really just been It on the with especially was San it. know, more the convention driven Angeles, business

So, say I and is else outside of, everything pretty good. Silicon would Seattle, Valley

is XXXX which versus only not at two it's and good year-over-year, another XX% but our the related occupancies to growth well. Austin, as tech domain, market, high still run hotels Even been able XXs%,

pretty encouraging, very So, else. much everywhere

Jonathan Jenkins

leverage prepared Jeremy, appreciate Any profile the can That's the you leverage switching great. forward? on you gears provide marks. And on the then that the strong thinking capital about color color. you're how I structure, updated moving profile in highlighted

Jeremy Wegner

add a kind little Even time. EBITDA levels. capacity at have to current over we think leverage I of

to taking that give well. as and be three that. more five times, four Valley, buying should comfortable leverage capacity EBITDA quarters, we'd us So as And Silicon then something especially I like recovers, think

Jonathan Jenkins

for Excellent. Okay. That's much very guys. all you Thank me.

Dennis Craven

Thanks.

Operator

Our Powell question. comes Instructions] Anthony your proceed of Please question line with [Operator Barclays. you. Thank next from with

Anthony Powell

the the are good these in to of still you a brands or Thanks. more a extended-stay A seem lot around market? would the brands, long-term, that energy something the of lot extended-stay look upscale brands extended-stay new mid-scale that's on focused Hi, question have on more afternoon. major of segment, into you

Jeff Fisher

conference. this certainly how at it's upcoming It all going announce I NYU to out. Jeff. shakes interesting Marriott the will is that to Anthony, Hi, be believe see theirs

we're not like because opportunities a Obviously, we HomeX going roundup we're everybody to be with there'll very any performance business. full the of Residence upper Homewood of bunch We our foreclose in opportunities other in more And So do happy look or and look, extended-stay. the Suites. – those other brand than some a of Inn we mid-scale mid at of that brands. and is a

finance proven I anything, you little the if a the a business those of get believe. lead perhaps as brands would to as it's able think certainly developers model, also bit, many truly not might overplayed but So deals there's construction to

much how see be really built. we'll interesting. It'll gets So

Anthony Powell

brands mean, at I still even that would be business points? So low is sounds you're worried ADR it even too price attractive, not like these lower the or, model

Jeff Fisher

Inn in to involved what work but to all, to Homewood, It could the just XX% be, or can close yet numbers RevPAR get RevPAR cost. deal, in really a excess depending is or a the Residence well $XX out pretty your RevPAR $XX on weigh the – is margins not of prove if GOP depends service or construction is model Those like you in line. first are we're going on at really excess be them of HomeX’s

Anthony Powell

Got it.

in more the did year? June? a Silicon XQ one that on last guess comparison? remind And So you Was I QX us, and business. that more in is that that impact when of is terms to the interim start Valley year-over-year Can Okay. the or

Dennis Craven

the It's the bit of mean, basically May, Anthony, year really of July August. week trickle June, and them year, are a every bulk last each. interns of really, last the in in and I June, some

essentially in it, August. it's June, of So of it July a two-thirds and third

Anthony Powell

impact So of seeing quarter. but back you I the I we'll start know this that comp on some I get I it, guess… mean guess,

Dennis Craven

Yes.

Anthony Powell

be. could you June, In

right. All Okay.

Thank right. All you. Okay.

Dennis Craven

Thanks.

Operator

our back gentlemen, turn and the final for and session, I'll to that floor any Fisher Mr. Ladies you. question-and-answer Thank concludes comments.

Jeff Fisher

as lot certainly moving with spent there the excitement into big this like next Normally, of, ball for I appreciate that two we particularly with, and we ago, because mentioned Well, we'll bit in there's the couple amount but being teams, see companies by of and a meeting every around, in with being that's was be good weeks I as that XXXX, the about knows I that little weeks Journal amount say you that everybody incoming three I of would And they of on generated four you, just everybody the call. time already name certainly I or business of this news pick just of about read for our I up year conclude time, a team. and to the extensive business always, had will and will hotel, I and sales talked in AI Silicon tell the startups Valley, a three example, it's years Business funny, ago lowest read or funded Valley Silicon in Valley. Silicon do kind

that week nine. or was And eight number that

approval be certainly in does another and for those that through our cycles vertical with there but of good years exciting more Silicon are round XX think Valley. those there's on a a And talking our normal the that's of year week, why So through and and as indicated, exposure bad we XX, and business be in lot developments future arenas. the Dennis of there. There's in XXXX. to a there, plenty as further lived flight like there company in coming that folks to financing we've in will in in move continues still many we times helicopters In times, like of a funding business to different I

And you will is than next will to that, So be not talk more time. fine. we all with and lost Thanks.

Operator

This you. conference. Thank today's concludes

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

Chatham Lodging Trust (CLDT) 4 May 232023 Q1 Earnings call transcript