INN - Earnings call 1 2023 | Summit Hotel Properties, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Summit Hotel Properties, Inc. Q1 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Wudel, SVP of Finance Capital Markets and Treasurer.

Adam Wudel

Thank you, Tanya, and good morning. that by Stanner, Properties and statements and Officer, Conkling. Please today Executive and Chief as joined comments Trey Jon our securities Officer, Executive note defined am by Summit considered laws. President Hotel Chief Financial today federal I are of forward-looking many Vice President our risks These to both and filings. and statements are unknown, SEC known uncertainties, subject as described in

update make today, undertake we that today later. to May no XXXX, statements only of are Forward-looking as we X, and duty them effective

You to referenced filings website contain call, can Hotel our earnings and Stanner. SEC our Jon Summit find copies non-GAAP of Properties' release, which CEO, President at on on reconciliations www.shpreit.com. Please welcome measures and financial this

Jonathan Stanner

than rates broad XX% power we continue having year in across February. average month as the XXXX and easier of an quarter compared quarter out on benefit a of forma of from our our XX% XXXX XX% pleased conference influence to each X% rate we last to portfolio and average of high-end quarter to were year, growth quarter the XX.X% March by driven RevPAR the Overall, pro for RevPAR January increase despite being first earnings first which Adam, occupancy you exceeded and $XX year-over-year our joining increase over quarter. in Omicron the more in was thank and us portfolio. Average first in expectations Thanks, call. of with surpassed as for increased nearly comparisons variant increased growth last in all our the pro X% pricing performance forma levels today by our for

the company for ADR the highest in highest the the portfolio pandemic. history March since of and the fact, of onset the RevPAR was our In drove

first growth particularly segments, up notably, and night in suburban driven to urban XX% basis travel XXXX points is XX%, to and at base, business nearly continued our growth reflecting collectively as and which of are negotiated of meaningfully compared quarter business booked first that midweek non-leisure While make the the seeing XX% demand much group we in a XX%, benefits weekday Weekday year Room much in year's approximately our last the quarter group last and leisure RevPAR leisure-oriented The increased the and while rates metrics in revenue XX% were was ADRs weekday basis. recovery year-over-year of and increased urban to from XX% to baseline. negotiations. Not last increased most concentrated RevPAR levels. higher, by surprisingly, our remained RFP the business demand, segment quarter. of grew increasingly during all during albeit being weekend year, off XX% XX% rates XXX exceed higher a to within compared continue markets. RevPAR markets of respectively, as negotiated recovery the robust demand suburban on segment portfolios, our grew transient compared

into of to expect We the continue second positive many these trends quarter.

year-over-year was deceleration this RevPAR down some portfolio. last within and compared of with last year-over-year June the and month we of year's strong high holiday month and leisure-oriented May NewcrestImage by the results. increased the April year-over-year, pace softness single in the in in while around more XX%, to March in again to and negotiated of RevPAR trending to up driven Easter April in a return the to preliminary our line approximately strong growth Revenue second segment digits on strongest typical attribute slowed essentially first growth with X% basis, in While trends half in patterns rate in year, of is the both more earlier slightly market seasonality much the the half difficult a comparisons. RevPAR occupancy

We're portfolio higher NCI as XXXX, the approximately compared the RevPAR basis RevPAR in rates the legacy grew points In period were were results to XXX of than recapture quarter. quarter XX% the markets our and a create business particularly clusters XXXX. are portfolio year to same sales line and encouraging across plans First the bottom to numerous our for up little results. portfolio improving strategic into operational ownership now over show of a beginning top in

a index point basis quarter year. finished of quarter NCI last fourth RevPAR portfolio example, first For the from XXX the in the improvement at XXX%,

basis upside alone. portfolio over XXX last While increased in absolute the remains. the index still in months portfolio market metrics additional has RevPAR legacy the just X share lag XXX points, NCI by implying points basis

during markets year. Texas the by portfolio, And which Dallas, negotiated demand. RevPAR RevPAR the during XX% from driven and performers respectively, quarter accelerating corporate midweek and XX%, first quarter. XX%, XX% highlighted respectively, NCI by strong and were strongest XX% quarter, event growth special Group last the the the group travel Within and increased RevPAR generated Houston and grew of

process. May, and the for is with July year, pace June quarter stabilization year midweek second same revenue the RFP weekday XX% of for the Full and first X combined benefiting pace several accelerating many months following reflect hotels, As period traditional up newer last which mentioned, of of a I operating portfolio pace even compared to of continuation week the demand for the NCI in higher. the the these are trends from

it ramp operational EBITDA to the and continue we to RevPAR towards expect positive, generate better XXXX, newer hotels throughout drive continue the outlook initiatives and for growth performance outsized as to portfolio Our stabilization. and remains extremely our

to collectively and the quarter than quarter to the initial first expected in year. exceed hotel include Inn first NewcrestImage Onera our recent dual-branded RevPAR are acquisition Steamboat, and of EBITDA, collectively Residence Fredericksburg, of outside of XX% the the These combined expectations the above tremendous full XXXX $XXX, Tucson, with portfolio, Embassy XX% a Suite assets underwriting. last year hotel Our our nearly Element generate above had which continue Brickell AC more

rate release. X of various near-term X in net prior sales for the close hotels sale are operating XXXX sales $XX a X and land $XX when in last is XXXX. announced generate to vacant proceeds, million price the of million represent expected expenditures. and continue side, gross of parcel The disposition the hotels of expected X.X% sale the second nearly the factoring the quarter's of a capitalization are expected capital income the we or of towards the on needs all in of X.X% capital deferring closing close we end quarter, On million to sale the hotels work of vacant parcel to The $XX The land deferred the total. combined to earnings to the to in later

announced common share, per portfolio quarterly increase a maintaining CFO, that, rate. the dividend to to prudent prior an The payout of dividend Trey and Finally, high-quality while reflects Conkling. from last performance our of ongoing our week, our $X.XX turn recovery over ratio. With strong I XX% the will we the a increase call increase

William H. Conkling

and Jon, everyone. good morning, Thanks,

remain XX% largest $XX recapture suburban low assets, first strong It's future our Weekend momentum or location to disposition types growth overall strong portfolio, location This of of of the our urban driven the hotels. Summit's of during the portfolio second hotels highest again all in urban year. XXXX potential last recapture validating type, our QX assets. Most quarter. urban recapture portfolio to moving versus average first growth the X Minneapolis negotiated strong portfolio's of growth. approximately While for rate portfolio pro XXXX RevPAR company's XX%, XX% respectively, continued Chicago and our given XXXX The first and levels company's by experienced assets, segments, which translates X urban RevPAR below of XXXX. The see growth, forma levels, subset creating XXXX XX%. in within weekday XX% urban the RevPAR exceeded forward, growth opportunity we urban experienced by also an quarter, quality of the suburban rates RevPAR XX% increased and the outsized QX levels our our outsized in quarter suggest a strengthens constitutes suburban key year-over-year XXX% worth generated premium to XXXX, to portfolio the profile with the those XX% growth demand. RevPAR quarter Similar pack noting group notably, versus generated further the suburban first which in RevPAR experienced RevPAR for growth count, the urban and RevPAR

be prior perspective, retail levels of average the $XXX XXXX continues contributor to on or largest demand versus a the the segment nominal first XX% gains and quarter XXX% with room driving forma levels. XXXX $XX year-over-year our of also XX% key in approximately assets was comprises growth which suburban a continues RevPAR largest While pro producing count are or XXX% XX% a year. portfolio, QX RevPAR, to rate urban night RevPAR the equal that of and segmentation thrive, growth our portfolio resort to of of From

increased room the As the and points, Jon growth prior XXX basis in year, quarter, driven meaningful respectively, mentioned XX%. rate segments, basis experienced throughout exceeding increases earlier, average midweek which points versus contribution XXX by and with we coupled negotiated night group

the on SpringHill an increase XXXX. Inn, growth, completion XXXX margins Courtyard by We the Orleans Creek, of a XX% EBITDA are XXX quarter Portland per below operating negotiated Suites, more Downtown. Hilton environment exceeded portfolio capital to demand first nearly a relative the And in our the the quarter, to and portfolio a for $XX.X the XX% same-store Hyatt Downtown, increase compared renovation $XX.X standpoint, for as quarter, quarter company CapEx and for forma last Orlando our other trends of reduced pro our a particular, our And optimized the year. of services. Today, in was basis food first XX% Cherry operating FTE compared $X.XX to from accelerate. Pro basis. to for for basis flow-through a or increased rata the and points well count sustainable Omicron $XX.X transformative Garden New when the XXXX. million Dallas, sustained at amenities a to quarter first guest encouraged quarter beverage $XX.X in million continues levels at at further XX% approximately was more EBITDA the necessitated from Staybridge business indicates million, Metairie, first year. of Place, staffing increase first Drive EBITDA was and Milpitas the first quarter million expenditure on spend ongoing and by with levels International which midweek consolidated last a hotel invested approximately Residence staffing Suites, and Inn, limited adjusted at year. From model EBITDA second XX% as as pace normalized driven despite renovations approximately the million, travel the FFO Hotel labor was is same-store last $XX.X in quarter hotel the XX% we Adjusted share, quarter

related quarter RevPAR first incurred Our When an these the quarter. $X net to net renovation XX% approximately displacement the additional renovation portfolio to of nearly growth the points basis displacement, for transformative million increased renovations. during during adjusting XXX

and company We age continue portfolio, relative our profitability drive to to and of positions the the market quality share. ensure

Turning the balance to sheet.

X.XX%, XX, previously robust including an asset from pack of overall XX% XX% term XXXX points of X senior X QX The term options debt of resulting July the debt pro and rate. million perspective, the Our at increase pro the the our average In X XXX of an remains to GIC extends rata March, balance we $XXX of total $XXX X-month million entered company's venture both facility, exercised interest preferred position company's rate outstanding. When consideration of From sales expected date at XXXX. available fixed. late swaps rate share second rate fixed approximately interest of in forma interest at and our inside securities, will million sheet X-month fixed current announced XXXX, our balance the pro years, an liquidity the the to is rate credit in and risk maturity. rate on revolving fix X.X% quarter. is maturity SOFR X indebtedness subsidiaries $XXX pack September pro fixed of swaps including first interest on SOFR swaps the basis into close X to coupon extension management positioned, the for approximately nearly quarter. In joint March, after the have to our is date effective a which approximately The nearly X, swaps interest XX% end of sheet rata well of rata XX% rate first

that available March We maturity have fully X X a XXXX, remaining options extension extended nearly X-month years result now. from in of

for For all of whole, the sheet company's debt accounting a we the no available balance maturities options. as have when extension fourth XXXX, until quarter

Board a the pending as changes on key all an range across X% our previous or share, The from we view first the yield per midpoint not results outlook represent on annualized range to of are dividend leaving time, the XX% EBITDA to opportunities. Included current quarter. full as XX, million ample including management's well of share our represents returning to Directors as room company's future we increases to to mentioned, $X.XX does capital RevPAR for be the share. a essentially a resulting include to $X.XX growth flat The Jon a metrics, $X.XX in As transaction to per and corporate year liquidity release continues April material leverage nor continues any operating of as of based per increased reiterating last approximately metrics ratio, of This operational an assuming of translates our an XX%. current payout of growth certain $XXX.X for prioritize on XXXX AFFO striking current declared well EBITDA year-over-year. $X.XX X%. dividend of for quarterly and margins nonoperational adjusted full guidance markets environment. increase environment operating to is range RevPAR evening, common dividend capital company dividend any representing hotel items. operating balance year press over guidance for implies and activity. Based guidance reducing range guidance no between RevPAR does unexpected quarter reiterated maintaining to our adjusted FFO account it changes future The shareholders, our The appropriate $XXX.X This prudent million outlook, to

$X.X rata costs $XX interest $XX.X of Z from F range Series We to to $XX expect be deferred $XX distributions capital to million. preferred amortization million, to E and pro rata pro expense, dividends the million excluding and to financing Series to approximately be Series million, million preferred $XX million expenditures be

the Summit payable may As to call the during covers venture, cash joint previously distributions the we'll nearly your GIC expense, mentioned, year. And income open any given the annual of increased with excluding questions. XX% now size Summit fee G&A of corporate promote earn that, to the

Operator

question Deutsche come [Operator Woronka from Instructions] And our first Chris Bank. of will

Chris Woronka

you of top on mentioned of getting think just that prepared I part of guys back margins the a higher or number hotel kind of So line range, in potentially of as guidance flat. to Is level more comments function get back labor FTEs occupancy? dialing are as being to good the enough offset to costs stabilized we you actually kind flatlining or the

Jonathan Stanner

Jon. is this Chris, sure. Yes,

I would margins think things. XXX I of a close in a up combination of points it's that quarter. first out were One, the point to couple basis

we're RevPAR ability year. one, to to rates you So driven of, to portion, a a to continue the at rate think the being start having as primarily I and growth. combination healthy not It's growth alluded to, least push if a by off

there's our of better and to continued reliance on shift we FTE help while ultimately margins. think do ability labor the do forward that across we think count to our we traditional we're opportunities going to think labor more contract then a some should generally contract And normalized portfolio, FTE a at generate reduce

can So we we're hopeful the the quarter. continue to pleased progress, in were have we with first results again,

Chris Woronka

soft there. And year come kind a can more of the to a that levered And of looking that one third of that of look kind and you you for bread at Okay. I there's of that do drop should skinny -- like those owners core stress then already, out service How of service mean, prioritize brands is, opportunity then the buckets I select some into do some next CapEx terms that you highly we're have, being rebranding the maybe in available? might butter turnaround how the or as your all option something different think and full become some story, your get needs for versus follow-up, something out there? at guys of you waiting question that

Jonathan Stanner

I'd and similar that's making it at risk-adjusted for all Yes. look appropriate sure through the Chris, look, a we're we fairly lens, return. say solving just

just the because flowing wouldn't there assets. stabilized buying deep between be out, and buckets you laid turn look cash all we that them in little buckets underwrite bit wouldn't the profile just risk of an So at. opportunity differently that a different is those We any a renovation traditional of

are we So hopeful transaction -- you to you alluded question, market the as fairly months. in has the been the X over last quiet

we back sales know. pressured more be see particularly We about, I that do I whether just of progress, we in expect generated activity, think half in. half environment pushed CapEx of the refinancing into risk activity the How transaction get year. some higher to meaningfully the be is there more don't we're do brand-mandated you'll to back from the year much that actually to But distress rate think the going as or comes it's going more given that's

for So some we're generate the the in hopeful half back that year. of will us opportunities

Operator

back And would no to I turn like now closing the to call for questions. showing remarks. Jon further I'm

Jonathan Stanner

Have you Great. conferences. Thank to our We industry first Well, look of seeing many joining of quarter and and events today our call. for at next months many conference nice several again. all joining a you day. you forward over thank us the

Operator

this today's participating. call. Thank for And concludes you

now disconnect. may You

Summit Hotel Properties (INN) 4 May 232023 Q1 Earnings call transcript