Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to Chatham Lodging Trust Second Quarter 2023 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded.

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

Chris Daly

as Good both Second Jerry. and that Welcome Chatham in to recent forward-looking to of These most Securities Thank are our and statements XXXX morning, SEC unknown, Results other Trust subject statement considered are Quarter comments and note XX-K by Conference Lodging filings. federal our Laws. uncertainties, you, risks today everyone. defined known Call. Form many described Please as

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

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

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

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

Jeff Fisher

Hey, this thanks, with morning, Chris. appreciate I morning us. the on And everyone being certainly good call everyone.

consecutive X% equal occupancy growth industry outperformed we've RevPAR growth by with ADR. and over fifth the increases the for For driven quarter quarter, both the RevPAR pretty in

RevPAR to quarter. than more the XXXX, was for Relative down slightly little just X% a

This of for each Washington impressive impacted year each quarter improved business business in across and make last in sequentially the most loss Texas. quarter one-third quarter to impact X%, the also the is country. third will of and second XXXX of performance of of two-thirds to will Austin, intern and improved XXXX the that key Silicon of and RevPAR with RevPAR comparisons Valley, X%, and this given The its tougher. intern indicator Bellevue, travel business XXXX about month RevPAR of through versus particularly recovery loss fact, month a X% In the 'XX quarter, continues Relative down June.

companies, that in provide us. will growth larger which and year much last tech the next the which should return XX% far XX% year the for rose from not XXXX for off despite up occupancy of quarter said Having loss, outsized intern to beyond interns is in year Portfolio occupancy numbers XX%. next and

Within the June quarter, XX% highest level XX.X% occupancy the the occupancy weekday week pandemic. read in and the was weekday since of

weekday only and week. July That's days XXXX company pandemic over slightly up $X was weekday $X that pushed the was last ADR up the by over point, our all that last weekday the behind ADR's $XXX. business year, June Again, ADR for over ADR over highest be to and looking up Interesting year third since was $XXX. is $X ADR traveler, was the June the last XXXX. operators and and weekend's ADR $XXX. of the continued of at

up X%; Those accounted We quarter. strong in leisure look of over respectively. our Anaheim Destin, X% with can and EBITDA XX% at markets X%. growth the strong three up of tech-driven for of Northeastern course, Outside we coastal our Los with growth DC, Washington XX%, producing Angeles nice three markets, are really the seeing year-over-year tech led XX% markets our and than of our by and Hotels of markets top RevPAR other Florida, our markets RevPAR New producing travel growth each leisure up Hampshire, XX%; remained Portsmouth,

Fort forward. going are flat, but Lauderdale, X% strong with opportunities XX% Portland and up up Savannah,

year. FFO to We delivered $X.XX able by per X% share growth Driven per were and year, our year-over-year over $X.XX, we RevPAR generate the FFO last of growth share per compared growth. EBITDA, last share producing X% FFO FFO to

per consensus estimates share $X.XX share. Our of exceeded FFO of per $X.XX

just tech quarter was Interestingly, and you below margins year the inherent when side of wages expense five and to upside, of performing. Operationally, year XX%, exclude XXXX driver the prior operating to the hotels were year-over-year. flat EBITDA holding XX%, generate were you again second the of and key we able XXXX start XX%. once up last margins levels to flat margins The XXXX those XX hotels, the levels, on shows hourly basis points hotel

good cash were $XX.XX able through, last to up common approximately With XX% dividends million flow before generate we and over CapEx level corporate flow of year.

June only excess to excellent to in an cash-flow able maturing million With between remaining we million now year. were and mortgage. maturity this maturities $XX With all position repay address and $XX a XXXX mortgages of year next the we're

course mindful growth though yield capital on must of opportunities, growth while cost our and place We we assessing in flow projections be potential continue external of pursue acquisitions. of to cash

more rise and a fit into year. certainly With our next brands becoming and to soon year, into the maturing of significant industry, renovation believe opportunities bunch focused there'll that debt acquire in interest portfolio occurring be requirements half rates, we on the hotels some back this throughout in of the high-quality

FFO have one hotels growth moves and can internal recovery XXXX of it the XXXX, ultimate that with portfolio, incremental I approximately of hotels, news existing incremental of needle With in as EBITDA generate acquire of growth. our well per the portfolio to Silicon Valley return is as inherent If growth and two share we upside, good $X.XX. as respect The we substantial the RevPAR intern in Seattle, those or would business with reached growth and and Austin. X% XX the significantly hotels, RevPAR in FFO said,

add include to the will intern another another points per that you and XX If RevPAR basis FFO business, of share Austin $X.XX.

upside current company would XXXX almost alone would seven, share, So increase. which per if for substantial $X.XX per increase our represent XX% use including look almost an as certainly That estimates is consensus share hotels those forward. adjusted FFO look at those all -- you you and

our quarter. year off I we're massive year this Seattle. and posting updating Before hurts minutes coming Silicon what currently current business layoffs of I tech turn especially on over loss last year the profit intern now is want this to Obviously, early in big a Valley Dennis, the spend to everyone big it seeing numbers. results few and the But

into significant and is dollars All about of development. the CapEx big tech investing product talking

point continues to quarter, underlying coming travel China deployments their trends Again, a Seattle better. Francisco, San Korea, getting the to Seattle highest our and approximately at data actually in demand two are pandemic. most XXXX show better deployments San encouraging in was and level second hotels Jose news at of up India. International from Sunnyvale and levels. good with are since over International and the occupancy XX% the with improve

absolute to And we've group lodging an valley. now General an requests business travel QX increase the recently for of see some demand attendee out into fourth hitting late the are in uptick they numbers on hundreds early for demand programs to Electric demand from quarter, fall Apple's grow, that. encouraging are with course. occurring, should XXXX though of seen in continues the down the trends experiencing demand TikTok. We're and in hopefully vehicle are and size, related we

development to Of which operations. in course, opportunity accelerate tech part growth video industries. further. AI relates this significant a remain now Accenture partnership across service just their and AI Every The the to a AI, announced tools company all will developing assessing into of development generative is

a top which tailwind and of in manufacturing huge chip will foot partners. two with additionally, five forever XXX,XXX blocks for of is our accounts a tech. this $X to universities, facility And has Applied our ecosystem Residence support to facility makers, and for Inns. tech plans just been billion announced semiconductor Sunnyvale square innovation months in build a going state-of-the-art And R&D two from one chip facility just Sunnyvale Sunnyvale, The be in be collaborative Materials, reshoring movement investment ago,

Some Digital, of AMD those all include partners NVIDIA and and of Western ours. customers

are and world's greatest We've developing many technologies. owned these And we continually investing evolving, years. the hotels that these for know companies

rapidly. evolve, our As the will our grow these to have and these technologies as will always they earnings hotels, and continue upcycle recover companies in accelerate

like turn that, it over Dennis. to With

Dennis Craven

Jeff. Thanks,

significantly industry industry the growth intern third better second with to X%, be beating in XX%. the challenged loss will the due Our but approximately for quarter by portfolio continue performed trend industry will quarter the again XXXX. than of quarter two-thirds exceeding of performance certainly This the into RevPAR of

our a and the intern year-over-year XXXX. XX% Valley, XX% in the occupancy comprising slightly, occupancy most despite growth down to of where business saw market bit Silicon is of largest little ADR still is EBITDA continuing to opportunity see year growth versus X% versus down off be $XXX, and was $XXX. ADR we the of demand need last quarter XX% to ADR. ADR able most second to and drive loss XXXX

the RevPAR levels. year XX% off quarter. Silicon the was occupancy XXXX about about was million, was XXXX from last levels. in down XX% EBITDA which versus Valley million $X and $X.X in was down $XXX,XXX valley Weekday versus

still but trend. underlying In tech down hides actually in markets, up occupancy X% RevPAR which XX% favorable key to X%, was year-over-year XX% other off Occupancy was to XXXX. Seattle a

$X.X Austin $X.X months. million versus from versus of business. off loss $X of intern was ADR of was slower the $XXX summer RevPAR And XXXX X% last was down quarter million quarter, the is in to X% Second Austin EBITDA again XXXX EBITDA second year, the the off the quarter XXXX. due second in quarter. million and seasonally The in

So lost that it's certainly there. more difficult intern replace revenue to

up been RevPAR to approximately would interns X%. the Excluding X% have

our at in the in with outperform and coastal up XX% hotels our Hampshire driven growth RevPAR Garden top other market, by Hilton New in In to XX% Maine in continue XX% quarter, Portsmouth, and Exeter.

LA years of Portsmouth Washington Los generate comprises in of in kind to RevPAR Portland area standpoint our hotels X% the the with in quarter. RevPAR of ago. represents five of quarter. three RevPAR us growth All X% DC From were so Angeles second grow quarter. X% and of which XX% a our EBITDA leisure able where certainly we the hotels or meaningful three grew reminds saw we EBITDA was

Hotels grew Again, RevPAR. three all DC

saw back Springfield some to we the Suites RevPAR business office Embassy in finally XX%, seeing return and travel Our grow as market. in are

the As office. TSA just starting the and in of a to to early return is headquarters there, really reminder stages moved in Springfield pandemic its

of interestingly Dallas York portfolio Our our digits. the continued higher and to Residence RevPAR RevPAR the of highest And growth in growth the was produced quarter hotels low edge greater Foggy of X%. quarter. RevPAR $XXX, the our in enough, the markets markets, Bottom both Last with Inn, single for in top seeing all second New

Hilton RevPAR five $XXX. Residence Gaslamp Inn, Garden Our Foggy Marina Hampton Residence $XXX del Bottom, Inn, the our Diego Residence were and again, Inn, our list, with by our Rey hotels followed RevPAR had which of in with And quarter, Lauderdale, Inn San $XXX. Portland, the was all Fort of RevPAR over then with highest top and ADR absolute

of high post-pandemic quarter. hotels RevPAR XX of A our second XXXX higher achieved than the comparable XX

our of the higher than Additionally, hotels, comparable ADRs XX levels. XX XXXX approximately achieved portfolio of or three-fourths

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

employees hotel levels. kind being quarter of of the close $XX levels, incremental essentially more environment, this at For operating of stabilized generated XXX And by these point, represent over was flow-through to wages flat our In pretty a maintain X% of We was staffed by represent, approximately most hourly offset hotels. we're last approximately XX%. fully This total a million year. challenging hotel margins year. holding reduction primarily pre-pandemic would were up to we've compared that XX% we year-over-year, to able revenue headcount flat. would at about to last At if GOP

in last five less Seattle, XX% services you at Valley that XX% amount Operating the over profitable, Silicon of If in our hotels given very look quarter versus required. the and margins year. operating margins our on business, were

Inn, Our then Embassy its the Savannah. Suites quarter our fifth, straight Suites the Gaslamp What's in Inn, Hotels, portfolio, lead our by GOP Hill and Spring and the notably in our were out was Residence Residence our top of our producers Sunnyvale two sixth five missing Springfield, quarter followed then Bellevue.

$XX gap a GOP renovation XXXX. of to the quarter the million $X in million business, costs the make of approximately expect quarter hotels. spend of respect hotels. we in to the our loss to with CapEx, hotels three five $XX So producing total six were top up huge tech-driven and includes about million That spent in With despite at intern our

be have During quarter. Courtyard, done end to the of the expected of third third renovation which commenced quarter, by Charleston, the we the the Summerville, is

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

Jeremy Wegner

Good morning, everyone. Dennis. Thanks,

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

which certain were able margin While 'XX. points hotel brand due we've impacts seen QX, XX.X% EBITDA in increase of of QX cost a of XX on reinstatement and the number the margins in only from solid and of XX.X% to key to items, a GOP basis line and we our down standards, generate of margin respectively inflation were XX

plan excellent execute in remains on debt sheet to to are we continuing balance maturities. our address and condition Our

$XX is cash. draw which As Houston. of repay In X.X the availability fully maturing subsequent Chatham’s the used in QX, lower final X EBITDA despite levels. the X.X And of significantly Courtyard under net fact the is our debt-to-LTM pre-pandemic was June to Hyatt the of delayed million is generally the term not Pittsburgh Place, on to times loan loan than recovered the EBITDA $XX.X million dollar our with times, which the we XX, available on loan to QX, area, pre-pandemic leverage, we that repaid end to

remaining maturing of repaid debt, or Year-to-date only $XXX through million have we leaves which with us million XXXX. in of $XX July, debt refinanced

over approximately QX CMBS The remaining million million to of is to a the million this X% of area. cost our be expect and course of $XX would maturities. $XX access We our XXXX address of $XXX in mid portion market of financing proceeds, raise the the to XXXX maturities to which likely

together to cover $XXX We from maturities. facility total QX expect of the our million liquidity our will with our enough credit all revolving provide XXXX undrawn financing planned activity proceeds debt

requirements about pretty provide to Quarter-over-quarter going not some well volatile noisy color last utility few the could different around staffing we're the pandemic one I While like potential drivers would provide expenses comparisons and both point, over think recovery it, from due at levels, guidance been demand how franchisor have on as QX. in the pricing. performance to and this and revenue years to as

higher RevPAR. and our our back If XXXX both $X you than those QX to of each look XXXX, in was QX years RevPAR approximately

of provide context QX general for for may RevPAR RevPAR think that $XXX. our So QX versus about might how to expect we some what

from of the Seattle On pressured we side, the that for as Austin with quarter requirements minimal housekeeping loss higher the and Valley, 'XX. interns QX the and third in Silicon benefited expense be for in quarter business RevPAR two-thirds will margins

hotels Additionally, into our going than will the incremental QX. headcount year-over-year to summer staff QX more fully impact

expense, QX also increasing to QX about versus income of activity is both interest loan likely the term financing our increase net on In by interest SOFR due planned $XXX,XXX of to and expense. interest our impact

and complete, ultimate Although the of rates of exact depend amount increase interest on transaction any in financing the of amount at the expense time will we execution timing.

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

Operator

the session. with question Please question-and-answer Instructions] [Operator first will begin from is We now Our Ari BMO. Klein go ahead.

Ari Klein

Thanks, and good morning.

I looks it which your flat hourly side expense the like positive. On wages were was a thought year-over-year,

the Just that grow moving to how talk about maybe of forward. that or sustainability you're expecting

guess I there. like overall sounds staffed maybe almost headcount is you're As -- fully

Dennis Craven

have mean, summer Dennis. just I the Hey, last listen, hourly an as a as from were certainly, wage back Yeah, I -- we run Ari, tight is to I to a perspective. of this schedule. as from we provide that of many last because full years but And and occupancy higher probably possible going several them people wage think think able up, we think I the pressures were down. a occupancy, hearing you're come It's retain lot levels labor even still -- people market, ramped

absorbed plus over going So good that increase helped certainly a wages, years. there. in last workforce. stabilizing I we there's terms but increases in listen, yeah, certainly inflationary mean, on the be of we've pretty to feel And XX% three the

continues So it's hopefully moderate significant back expected to that as here. to increases work the the labor pool come

Ari Klein

out for CMBS timing year, think maturities we a And next addressing the a mentioned year just there on sheet, significant How year. will which market of amount Jeremy, but portion tapping then of you this should and next there's this about balance later those? still the year, some maybe the Thanks. the address

Jeremy Wegner

year, we're Yeah, doing facility. I remaining in by this revolving think sort what maturities after the planning the be will of on we do backstopped balance all of the credit

take of to X.X% to So money rest right X.X% I no with of think it the and money there's our gun kind probably we'll -- replace head away. out

are year then. more higher to by we'll don't we need in probably hopefully pay doing than be CMBS. want to lower any rates rate think But in I on So And sooner start before the QX next that. we case,

Ari Klein

And one, Silicon just last on Valley. not Got it.

I you're some quarter. back you've based then with in next -- you year? the about on thinking about should yeah, to mentioned business number trends intern I made and come think or business that are about positive also think think expecting seeing. lost the Do Jeff, you conversations of the in had that that? of of some up talked tech higher XX% how the third quarter, you how goes the you companies intern Is you

Dennis Craven

mean, chime with in XX% we'll the XX% say, Dennis. XX% I'll or is in, right I whether But that, but the that XX%. we basically we're it's in replacement, I of be certainly the last can this listen, provided quarter. of to that Jeff XX% answer Yeah, can't range and pleased range coming middle think

a So good that's all sign.

intern year. with are programs, from think this years. just respect prior they are, programs down there to happening I intern significantly It's

to housing able or absorbed by the to in other market. Seattle especially and be So Sunnyvale

So nothing and for matter we've owned part has year. going it. there's know long been back, magnitude concrete they're any for of the it's of these we that. we've the hotels intern discussions just of had, a And to time, next business come a been But

Ari Klein

Appreciate the color. Thanks.

Operator

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

Anthony Powell

business was But Hi, I on there. I Austin a on total contributor EBITDA expected total the revenues basis basis. of another a mean, morning, the is I that. what about percent guess, comes an or big everyone. on surprised intern question annual business. I good from intern being statewide have should

of magnitude throughout business the the understand to portfolio. the Just

Dennis Craven

sorry, hotels, five the I intern around to pre-pandemic for around $X back million total -- total intern Anthony, not EBITDA was guess, go Austin. revenue, you including was If levels,

So XX% EBITDA of around $X.X margin it's million. kind was a

about You Austin. another of millions -- sorry, of had couple million of for a or revenue,

So of $XXX think revenue million $X the million to opposed was order pre-pandemic, it on $XX where kind to would of as play I on a stabilized million year. want in magnitude we basis and almost taking last of

Anthony Powell

Got it, understood.

just about And in think next this back Okay. talked half deals going I the year, some acquisitions, early maybe doing year. you to

above how close of debt cost on for account X%, X.X% line that? cash your doing like Your cash you and your line, on Just that seeing Are that curious capital in in of when on yield is cost the it seems are about, to when CMBS. you're underwriting acquisitions acquisitions?

Jeff Fisher

Anthony. hi, Yeah,

look, in and being know, on as excess they're better a just So there's certainly part yield, the excess few has between of deals complex X%, from to you very in some of changed bit comes positions our done, little the neighborhood. and that thing one is have ability expectations certainly a few We're the in sellers. a yield on and hotels we've other and far now of got of frankly, But that manage X%. of that in cluster working

it's from in a in marginally to and said, place and with an the is island return. excess So don't of of come matching that -- that's we're that in But an use, acquisition, and at the able hotel, from interested X%. of And really I Dennis of for, hospitality we're maximize, we're not return not [ph] worry, as doing special as flow and capital, cash cost certainly that almost capital, looking the at anything that may to matching kind of accretive. least simply the on opportunity funds said, sale recycling

Anthony Powell

strike Maybe you've the writer Got that Los impact weeks? of recent one any on you. in it. Angeles, strike seen actor the and Thank more

Dennis Craven

really any haven't we impact, any, material Yeah, real Anthony. seen

has a little there We strong. hotel performing so bit are the edge been very Valley on the and

Anthony Powell

right. you. All Thank

Jeff Fisher

Del I airline, is pieces related only one related. would I Marina -- say Anthony as to that entertainment there add I think of largest opposed business of our would thing the Rey, is as FedEx to

continues. business that So

Anthony Powell

Thanks. it. Got

Operator

Thank with you. Please is from [Operator Tyler go Instructions]. The next Oppenheimer. question ahead. Batory

Tyler Batory

morning. Good Thank you.

the a a here. more July. unpack in June bit deceleration I impacting year-over-year want is intern business looks that. a look into on basis, your of some to know little at commentary RevPAR When Just and like we

a that to in can helpful, about more much portfolio, maybe performance intern how ex out, and kind talk overall? business just you this RevPAR If kind is just a little lost be going of of bit the on drag of if you QX it's quantify

Dennis Craven

Yeah, by and five generally yeah, those Dennis. XXX I'll our hotels but this start, basis RevPAR mean are add, points. anyone to Tyler, if impacting about is I

So it's a impact. significant

it will given be a But amount the I the more think replace at last June. kind year. took having like third just XX% least quarter through that that, of said to that recovery, we in little business, difficult lost

I to all-in-all, able think to it's pretty be where a So are as be noteworthy we portfolio.

Tyler Batory

us step bit leisure of numbers provided talking peers about and a the Okay, -- some that business, some of little slowing you -[ph] more.

of being, as not in much issues Some kind pricing terms of having power.

a little weekend seeing what commentary pretty seem Just leisure your on bit shuffling of you're you markets, ADRs, the the more some talk some in about of there. optimistic

Dennis Craven

characterize Yeah, think, listed I only each I we quite with about he what of would money he the and primary there. one -- on honestly, was as in I prepared markets up table kind that left our, the Portland, wasn't think mean, comments out leisure some of Jeff's we talked separately,

have what noteworthy and you've the given, seen up with REITs already would including I is, been. RevPAR have other decline. pretty think Florida, some I reported really that Destin, up of it X%, XX% significant think probably Fort the other even Lauderdale, But ones from So

assets it slightly in locations, think, the of testament are I also compared markets kind only previously. just So to but a markets those some the white-hot just not again, different of to the

Jeff Fisher

they probably some especially have to hotel And leisure compared reported. pullback, numbers that are are look These were service specifically Yeah, of or -- that being another and It's business. already prove general at kinds other -- XXXX, what select just you resorts fly-to advertisement, I certainly for frankly the these not even of out, locations it these are markets. a five-star REITs are. report handpicked the resort, look not in three-star full-service in or four for mean,

flow resiliency the definitely hotels. that the model cash these we the and of get out are we So with of pleased

Tyler Batory

terms we have Silicon of terms that mean, on And some helpful. trajectory business then are business I a the more future in slow. of travel, of the travel, Okay, -- I corporate your hotels, of, kind that's mean, seeing maybe okay, travel? what in little being about you kind exclude Valley talked of opinion if recovery, what's your bit peers

Dennis Craven

I mean, listen, which XX% the a think, portfolio, including occupancies I to the weekend fairly our weekday the even as our Valley, portfolio, occupancies XX%, in comparable occupancies Silicon for second for weekday were, entire quarter, quarter.

So I continues think in terms our been pretty it of our edge higher. customers, to markets it's and stable, and

think I nights the -- markets RevPAR used Wednesday were So for be of the it that RevPAR a we're now portfolio, and the that that of year highest us for Monday, our becoming they're lowest in, and Tuesday, week. continuing for our week, our to nights ago

XX% portfolio, So to underlying general is XX% and growth it's XX% XX% or that even from including to even encouraging. think I for is if Silicon overall and our occupancy, Valley, occupancy strength continued

Tyler Batory

to going Appreciate it am there. I great. detail. Okay, leave the

Dennis Craven

Tyler. Thanks,

Operator

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

Jeff Fisher

do And see some as to into here all especially as that on We've again, move growth other Well, substantial on last you perhaps forward at relative specific of in be kind than and that upside does table we I pretty focused any quarter, as business. call. as good we that, really little That of QX go not earnings. a kind being certainly next and the all year. bit commented of out for thank we won't set indicate what year, the trend for

So talking look to appreciate we soon. again and that, forward to will you

Operator

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

You may now disconnect.

Chatham Lodging Trust (CLDT) 2 Aug 232023 Q2 Earnings call transcript