INN - Earnings call transcript Q1 2024 | Summit Hotel Properties, Inc.

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Operator

Welcome to the Summit Hotel Properties 2024 First Quarter Earnings Conference Call. I will now be passing the line to Adam Wudel, Senior Vice President of Finance, Capital Markets and Treasurer.

Adam Wudel

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

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

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

Jonathan Stanner

X.X% all you quarter EBITDAre thank industry and Thanks, the basis joining call. us were first total compared increased and adjusted year-over-year quarter and FFO meaningfully Adam, as with increased increased performance to first our U.S. scale respectively. for outperformed for quarter XXXX We XXX adjusted upscale the today and financial results and last operating by conference earnings XXX XX% our year. chain extremely lodging pleased first of XX% and points, Pro RevPAR forma

in on and management sales, asset remainder of concentrated outperforming company's team concentrated the resulting year, versus as in strong Our the by quarter year. quarter, to dividend, we a partially positioning. occupancy, range margin capital X% the details leisure-oriented growth of increase in as highlight first compared improve growth that urban basis constructive managing and increase for the announced Summit's continued EBITDA allocation was first well X.X% a expansion suburban outlook to And the markets, Trey relative and as first of and and job last the points across X more a reflects results quarter outlook predominantly our recent revised was year. did provide in XXXX a asset which rate the was the closing driven today's additional will the first over in prior in in on offset common which our a during and predominantly our industry I hotel our an our and guidance results XX expenses quarter decrease X% operating of partners portfolio call, longer-term RevPAR of yesterday, view terrific by Fundamentals and average activity markets. quarter On

business Our increased the increased by RevPAR first isolating of of be X% X% growth continues driven week by Mondays, and total weekday evidence year-over-year on when a demand, to continuing portfolio, specifically, recovery portfolio of More respectively, transient X%, to and corporate urban further X% strong robust RevPAR Wednesdays in and group quarter. the those days company's the Tuesdays urban and which the and approximately demand.

science-oriented the that well our XXXX of is RevPAR exposure As RevPAR X XX Francisco and collectively submarket the Area, been markets first in renovation last hotels XX% adjusting after we New on Oyster weakness less Bay nearly quarter. recovery the we in we Orleans, asset, Louisville, both in Valley Silicon travel see highlighted and XX%, quarter, In in of DoubleTree XX% given at this XX% than XXXX growth markets that and the grew our year. among represented call, those discussed growth Point growth Francisco of last EBITDA of the approximately in have of XX Downtown quarter levels for RevPAR positioned quarter was the several life and believe EBITDA below Orleans on RevPAR XX% to RevPAR $XX recover. grew urban Minneapolis portfolio of million that first RevPAR New for tailwinds produced relative are hotel our lone recovered. the by San though these by to business remains particular, beginning technology-related hotels and during owned Baltimore in created to slower Encouragingly, XX% in XX% pocket over outperformance, portfolio, hotel X% finished growth our San Baltimore, which the our Minneapolis. our

San remaining RevPAR XX% the XX increased X EBITDA in first increased nearly assets, and Francisco our hotels the quarter. XX% year-over-year Excluding in

quarter markets strong. first of highlighted XXX%, facilitate in Second The It to for and outsized should lagging is continue pace growth relative for these further strength RevPAR company. EBITDA hotel our remain the quarter the an significant quarter by our across forma portfolio in share occupancy pro XXX driven RevPAR index points, gains. share the which by basis first was increase market portfolio. gains of for was

pandemic gains Our come seen locations the era. levels outside airport ever from And portfolio's approaching trailing achieved share the highest basis, NCI and a and within portfolio. resort, from the on of XX-month we've market is biggest our urban

As to quarter, around April preliminary growth and Dallas-Fort and Worth, actualize we second is the the expected Cleveland. Austin, look solar in demand related the midweek RevPAR benefited from and Easter X% continued Indianapolis to strong to eclipse strength, shift,

X capitalization totaling and The April, term encouraging Convention standpoint, expenditure is that portfolio near-term demand in sales of a health price our summer X pace X.X% remain our RevPAR gross guestrooms peak including In short the at From the Center XXXX allocation on requirements. months. heading remains the portfolio hotels capital a hotels, for $XX and our a disposition continue and the of NOI, to price closed XXX we for improve trends of pace nature, quality rate to foregone sales booking suggests Suites into owned on a including for the capital additional stable Courtyard balance of travel estimated represents we subsequent wholly quarter underlying SpringHill of sheet, Orleans the New end. sale While May million. overall

augmenting market the have one assets needs. profile, still we hotels and our growth sales less lagging asset near-term better of in capital we New is post have exposure are Orleans X and identified markets remaining with our While ample believe as have located the

approximately inclusive at estimated capital NOI. $XX all-in at a total, $XX, rate million estimated X for months, GIC we over than on combined time for XX for rate the We which have is sold of The based RevPAR combined venture, last a of approximately sold in cap College at $XXX million discount nearly the million to also approximately an hotel these the NOI Inn In Garden X a foregone sale. the $XX hotels XXXX blended capitalization was pro less Hilton Station, noncore hotels the portfolio. XXX-guestroom of XX-month trailing XX% each on X% of forma of the needs X%

turn to dividend of disposition annualized share of common business quality that a quarterly announced our Last our in per Our the CapEx our increase $X.XX per $X.XX near-term is full reduction debt-to-EBITDA night, a net basis stability represents the significantly for increase. growth approved prioritizing and we flows. $X.XX constructive a on the The ratio, of share nearly requirements. per profile facilitated of strategy outlook on and returning reduced which dividend with our have to in our enhanced efforts consistent a Directors those XX% our increase Board cash capital shareholders and share reflects an or and basis, portfolio,

With conservative midpoint price most absorb our our current well recent which approach over and based on of a any reinstatement to Our AFFO meaningful payout below unforeseen in increase, share subsequent that demand. ratio set to historical ratio approximately for the maintaining dividend remains while AFFO levels range, our to and increases dividend our this payouts a payout and is allow X% at growth levels. time, been modest to at deterioration consistent increases guidance yield the XX% has

give positioning the Finally, call that some industry our Trey, turn its before relative few I over of me a the highlight for let us and to future. about observations optimism

both and lagged outsized While of those the to, more beginning demand travel. travel has markets has to market, in meaningful those exposure segment namely have been which urban we segments which markets, Summit recovery are by in business on and and heavier with recovery reliance post a see uneven and a pandemic many

gradually believe a starting to profile, abates. and enhancements margin for will are operating norms to we core profitability line as turnover conditions more contract relative exist. an environment, and future of service which already believe we We with labor changes facilitate also declines model the growth historical margin the Combined superior easing labor post-pandemic benefit better select with in utilization from

remain supply of enduring. our conditions. period deeper poised financing tight growth finally, for construction travel dive As slowing demand a trends in and into robust costs macroeconomic and broadly specifically and growth recent monetary has development extended to And an for while elevated well documented, more given is been in policy, conjunction suggest remains tightening subdued time, is industry with services

level Trey Conkling. I hotel Taken provides to our for With that, the call CFO, will setup a EBITDA longer-term positive this growth. together, over for all turn

William H. Conkling

and everyone. Jon, Thanks, morning, good

of increases of company's Houston, hotels, growth all was urban as in suburban The trends which represented within and continuation which several first a of quarter our approximately and urban by first again industry our X.X% XXXX above Dallas-Fort average. driven of suburban such Strength and our markets the key produced portfolios as quarter. the by RevPAR each Charlotte Worth, Sunbelt generate in Orlando, driven the portfolio growth RevPAR to meaningfully was continue of once XXXX

aggregate. Jon as RevPAR lagging XX% Francisco As mentioned, quarters also of the Louisville Area, Minneapolis, Baltimore, with San first in such Orleans, and our several increasing strong markets experienced Bay New

expect outperformance year. the lagging of continued the balance We these in for markets

X% was TSA this accelerating growth and in increased a performers our national the a passenger Summit double-digit X% X.X% amongst the Dallas-Fort performance portfolio. statistics portfolios, hotel travel and X International where season. increased from year In for quarter strongest first and addition were to benefiting urban first year-over-year point driven the air a first RevPAR quarter as perspective, hotels, travel quarter, transient the RevPAR recent corporate hotels towards other Grapevine indicate Worth airport American our by Delta, our suburban carriers from perspective, Airport. increased commentary From and airport demand summer major at over strong of in From

the increase New and In generated completed Inn recently of a and as of addition, the Courtyard a year-over-year quarter passenger renovation Orleans at Airport. XX% Louis growth at RevPAR our Residence X% Courtyard first International result Armstrong Metairie

including renovations, markets comparison XX% Super continued for strength where in hotels our the and the resort X% remain declined average RevPAR Bowl rates and we pleased disruptive are modestly respectively. and Although our our Phoenix portfolio with pre-pandemic a challenging first levels, resort in quarter, year-over-year above several

leisure demand. as resort Embassy Tucson, Suites long-term Courtyard outlook a as XX Hotel invest We as From for serve quarter perspective, a increased key our constructive company several XX to first RevPAR markets. the group the for such group given catalyst Asheville Indigo demand our of Beach, Fort segmentation in Lauderdale continue continues the hotels, of in and to

In addition, our portfolio. all types group RevPAR location resort increased except across for

operating where portfolio, group discount revenue the RevPAR RevPAR The success contract. first and our the best week X%, the non-rooms reconfigured respectively, perhaps forma increasing have as gains quarter XX% of XX%, RevPAR group full advantage strategies corporate and of approximately hotels trends. increased demand with growth as revenue negotiated and strategies of over first Other driven group pro the well demonstrated X%. transient illustrated portfolio In segments is in and quarter, increased in X% in NCI the those towards that today's been weekday quarter, to by For negotiated mix in by as largely shift increased business group include midweek occupancy the demand. the take management

the and of well again, revenue RevPAR demand banquet the NewcrestImage quarter. drove favorable outperformer, for increase in a fee non-F&B food benefit revenues, in parking While ongoing growth capture X% portfolio as the resort higher was the generating renegotiations outlet contract in growth utilization an Once year-over-year and X% increased XX% and as quarter. beverage resulted of catering

As validation previously of sales growth, were top our of negotiated primary line mentioned, the strategic successful of further clusters. application team's and drivers group demand

basis contract Combined XX% XXX room than primarily EBITDA the occupancy. The managing first gains asset middle As strength joint quarter and to Pro invested compared pro basis Total basis performance in basis. moving quarter owned improvement a increased prior occupied $X.XX first norms. utilization Residence growth, first million by the From From versus a has XX% share for first portfolio's declined year-over-year RevPAR last of improving hotel quarter. to on XXXX, and key in serves Indigo our in The meaningfully XX% margins, $XX.X Garden sixth year. a contract million, EBITDA Hilton the within a occupancy-driven. we the by total contract hotel was year-over-year. on the forma expenses the wholly XXX and Hillsboro, New period. quarter result, in its X% and expansion was of constructive market labor increase X.X%, and during the growth million of basis for wage NCI EBITDA the count slowing FFO driven declined growth Today, forma last expense approximately Hotel transformational more same-store hotel for our hotel Suites forward. driven in room expenditure that venture a moderate, turnover. which was million, portfolio in Embassy $XX below suggesting a first XX% renovations of first standpoint, wages down despite quarter, expense XX for first above Adjusted hotel basis. last job share, labor year, in portfolio, increasing resulted peak more pro pre-pandemic approximately which hotel EBITDA remain capital XX of EBITDA margin quarter approximately the on line Same-store same A to EBITDA labor historical occupied in lower levels, of with the costs This coupled per increased XXXX, from increasingly in by X.X% basis P&L. year, expense our labor in continues declined occupied versus first at basis approximately GIC a environment to the company's quarter quarter expense quarter XX% to we in management a and $XX or increased adjusted each quarter with cost room per quarter. for CapEx line top was per XXXX, the in increased was entirely $XX million nominal points are but and from fantastic rata from points and the consolidated on quarter is first moderating a as NCI other X.X% still the year the increased of in continues Haven was additional points occupancy, on the the year. nearly the increase venture over XX% increase XXXX spend, points $XX.X and controlling reduced with spend basis the our flow-through modestly of during room for FTE Milpitas, environment portfolio at prior the represents team levels. increase Relative Tucson, driver a by XX% experiencing Notably, but XX% our labor respectively. Asheville. for a to our portfolio labor a XX% first perspective, XX% operating the a did EBITDA Contract the by compared period per quarter Courtyard consecutive to and joint portfolios. quarter expanded comprises

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

Orleans repay March the at outstanding the net to asset today. Turning credit to March NCI and to $XXX from proceeds New and million balance sales facility used of the XX reduce on million balance term the $XXX from company's as loan to College of were sheet, the $XX million corporate the balance XX Station the

the basis becomes in within current net expires in the debt XXXX. mentioned, Jon sales fixing SOFR noncore our for to portfolio the has debt EBITDA approximately nearly of of which net we effective into XXXX In October and and swap, hotel EBITDA. $XXX GIC X growth swap asset SOFR is our by past million. over swap, interest below in is As year, turn by This our January, position XXX joint accretive Today, continued points venture. driven at entered term X-month asset a $XX of X.XXX% rate, million January rate declined

or increases between year future we dividend Included potential operating company striking prudent to continues ample growth leverage, AFFO reducing and appropriate full returning opportunities. current our nonoperational certain updated corporate guidance on we quarter our does prioritize changes of environment. outlook, in Z our reiterating material well after is with consideration accounting significant leaving our to of As preferred payout include capital swaps. XX% unexpected fully XXXX objectives. increased press achieve of of With to capital activity. nearly capital resulting our company's an RevPAR the nor continues length assuming representing for an balance yield and sheet of previous rate and a fixed quarter. declared positioned X.X% an structure, of our result within million, as balance The view our X% When Series are X%. to to operational pro represents a and rate it the environment, to well well average maintaining average to share ratio, the for we X, time, interest of for $X.XX represent believe over overall Based Board not is XX% positioned as growth years, until management's interest markets for no evening, rata maturities transaction based X%. rate growth maturity approximately common guidance to operating management XXXX, results its company room equity E, current of share, efforts, approximately The changes our F the approximately metrics items company's liquidity per approximately fixed. activity. and as dividend shareholders, liquidity account future transaction last current no release is extended we May X.X future for On a $XXX well any our outlook the pro XX% first rata on dividend annualized Directors share of quarterly This April increase a following The as year for does interest any of of a full are dividend the debt per operating of a $X.XX from position

per $X EBITDA $X range expect $XXX our million XX a adjusted midpoint due per guidance provided $X.XX This are we balance of of hotel maintaining the first of despite our We strength XXXX range, share margins to to to implies operating approximately range XXXX. of At million guidance contract we our results. would April the through points point from also improvement through XX-basis This EBITDA adjusted sales. despite hotel reflects the million of February $XXX hotel are X sales. asset the EBITDA of share our basis year-over-year. to foregone approximately asset foregone further the to maintaining RevPAR Furthermore, EBITDA quarter margin FFO

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

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

Operator

question (Operator And of comment Austin Markets. you. from first our Instructions) Thank comes Wurschmidt Capital line from or KeyBanc the

Austin Wurschmidt

how growth the have you market's you're believe strength of benefits XX% to business? portfolio? balance in is you the of your assuming lagged break for more onetime markets markets And year hotels. if prepared that of for higher-growth of this was recovery account event-driven which RevPAR expansion versus type think And sustainable kind the do expansion that in seeing much around this versus demand of the wondering what out the you're I your these remarks, flagged Jon, I growth you could

Jonathan Stanner

in markets. and good lagging a Austin. markets do morning, Look, we strong quarter Thanks, had first -- kind of obviously, Yes. these we growth these in really

year. for continue We expect to that the

full of the -- will I the We these full the portfolio on for in year and basis the incremental see XX% haven't But quarter beyond hundred quarter breakout we portfolio for provided be at a what several X.X%. for growth quarter. the versus above basis, market. think the year The specific versus points this grew sorry, a full portfolio

PGA quarter. Derby closer we'll in markets. Markets signs running is have this week the Our double-digit Championship second these where similar. Kentucky there's think strong host the expectation basis growth We in of growth at the pace they full Valhalla at and Milpitas again, as profile to outperformance like the later probably for that on We be the and a we'll think don't our kind in the look blended a Louisville, for really very month, the first in Baltimore, event quarter in enhance XXXth We Minneapolis, in Valley, And growth even this see this onetime quarter. similar positive. continue Silicon year. should the in our the to all of second

Austin Wurschmidt

other what pace you I you you and segments of softest other and kind of you or at When the a of look kind the the guess are I give range? take side maybe pieces seeing markets look guess, weighing when what's at of where at little bit end pause the

Jonathan Stanner

around In Yes. some it markets had the leisure-related that quarter, ADR first mostly declines. was

is demand majority the softness think we but on still see markets, vast did some side. solid those I the of in rate

have we -- markets have didn't in for type snow couple double were as in and us, of last I at of don't a down Steamboat issue. systemic demand strong as quarter. ski in We For did year. the for to as a digits look just assets we that we where close season any example markets of of Silverthorne couple a

the visibility third one, have particular. June, vast but most very look our the two, broad-based. are our majority get third very May QX The our a quarter, travel I and our don't And than rate of and at into think into in this as I quarter very positive markets QX, positive. you'll and into encouragingly, had we expectations look out of for our are patterns. I and And in I it's more quarter, those season, comps pace outlooks year-over-year. you think when second When statistics, that peak into normalization anything, is summer the showing and difficult pace you for see more pace

Austin Wurschmidt

sheet. just Yes, balance one that's maybe And on the all helpful.

You lot progress. guys a have of clearly made

challenging? kind steps guess, sort leverage kind provides. financing of to leverage further of to your markets still towards remain alluded You targets. long-term especially next that remains to if your dividend increase I longer-term of the decrease targets, What that continue and above signaling

William H. Conkling

the Austin, you would fact at have it's obviously pleased part thing as and maturities kind of really at one Trey. hedged don't we so XX%, that until good. I we're that XXXX, we're we feels say near-term markets, look financing -- any the effectively with

we'll and we is around very extent As sales which what balance select be de-lever think we'll accretive to Jon EBITDA talked opportunistic it, in potentially to over do they're markets. look the similar the really, could rebound form sheet, that what But hotel to think in it had before. in the I be asset a about of time comes I some of these lagging

And X see as a back, lot that so to has issues you will of Jon the to solve extent these those markets, continue EBITDA highlighted hotel today. come

we asset down the improved I it balance to sheet probably close comes quarter, the in the Xs from operations year. de-levered we're this so balance with probably An the the Xx. down another think turn, through quarter of movement sales incremental that announced just

Jonathan Stanner

and relatively talked add around We to a there, bit we've really cap of Jon. assets I assets. sold this to $XXX think we've as X alluded we've prepared done to able in And we just remarks, color sell additional low sold to think million find assets. and to I over been strategic rates. opportunities of it's Maybe it how at about little Trey Austin, Yes. the

in to results large very that of done, better cash we rip a Band-Aid much just and up We kind to very than ultimately that. larger bigger transactions And portfolio led doing taking approach an this environment targeted to felt haven't more need the sell particularly like transactions difficult get in check. given it where still it's a financing tactical a flow

Operator

question comment line next comes the Raymond Crow James. from from Bill or of Our

William Crow

incremental seeing especially lower be juncture? a of return for their you're And weekends. that bit be would perhaps perhaps, part to But that end. a all Certainly, office? weekends What little guys? Monday additional extending say maybe travelers on Starbucks of still Thursday for the I it, any demand trips business the might nights. of income at on a you evidence on at you're color guess consumer up looking Are Are weakening, and we growing moving little waiting are and what color changes on there's I'm is at second spending seeing telling the concern your bit. a scale this

Jonathan Stanner

Yes. Sure. Bill. Thanks,

to to a we from relative Tuesday day it's portfolio. it. see And and this as occupancy the pre-pandemic strength, driven And group of reflects said, levels, Monday, has it's demand grind expect lagged seeing best where perspective, do the strength transient think of the urban think we're where in Wednesday. and week would by frankly travel. we growth it again, I I of ever relative so business It's our higher the the most kind

and our Our BT Wednesday side on day we I best And in of to think of was nights. midweek listen actually. commentary the the Monday go this and into Tuesday night previous demand the kind quarter this you week if about back quarters, of talked compression

to extent, particular in into first some nights quarter. We are Monday that the bleed see in starting to

growth. through that I majority the second an look, continue and so BT to through do the obviously think, off expect and But perspective urban a balance of the midweek year. And coming a I see the the least at our continue that of of is trends we lower to baseline vast likely where from are quarter perspective.

second weekends are As positive mentioned, a are they the still as still the I year-over-year I perspective. rates and on better pace the quarter. into even our are pace from stack we but June that but really say they're very very, into will positive weekends, strong, pace statistics look on than our full out in midweek May, looked and particularly

William Crow

should is maybe concerns said during changing I -- spending Do you the habits? a real see front pace consumer there any the but weekends? weakening better about the mean from the there is you consumer weekday, be real on

Jonathan Stanner

I a are cutting whole that on don't travel. evidence suggest think people to we've back of lot leisure seen

rate we the oriented But don't gains been there's strength the tried in markets. think summer. the rate, bit lot play strong I of And seen out just see we of a seen leaning again, stable. we'll And didn't I on been group-based the the demand in ski know I every oriented. much snow of more as chain that first you'll forward our I drive that rate same season know where around level saw think haven't have these rate To the incremental of think this seen try of do these lot extent rates consumer end drive retail do we've to the play did some to scales ability in some lower kind describe I markets to of has enormous to XXXX. we in with our I data, we performance some have the how of to really it's been out particularly spending. softness, XXXX. more last looks think all the we're that of markets customer. the We as the year. just of it's assets what quarter to general normalization same going help knowing PACE in the a on of these as pricing over concern softness, be that have that we've in XXXX in industry. build We've in

William Crow

more apologize going here. question to because going I'm one ask Great. to I'm

for thanks. the additional the assets thinking in portfolio? whether On any that sales, portfolio those of that's are the about are it you're how you're GIC properties and curious owned me, And in for that asset balancing sale the I'm marketing sale, wholly versus

Jonathan Stanner

I bigger still that opportunistic, CapEx assets very had have Austin, are that in of type we've RevPAR most sales. -- assets. to of assets, Yes. where, efficiently been Thanks, a we asset as assets it's that difficult could said we've as sell market sell be larger tried We've needs targeted been I I kind to earlier, said chunkier to say around would lower Bill. -- those

key extra, to may in-place on a willing operator It's and pay pound very a local that little oftentimes price on NOI. per a per the focused owner bit exception We'd less Orleans that finding focused do that's that. the or sales. it we'll I way done be to say to targeted. it's would opportunistic was thoughtful similar that to around and in we've before very a to New continue on was asset a basis, things little where continue it like

there were assets assets venture. that NCI couple We that did to of a transaction noncore non-long-term GIC identified were prior to doing of out sell the we of a going so transaction have when sold try And part a that as of being Both asset holds, we assets been the to the were few we assets renovation. those sales.

And And perspective been felt expect been assets our it's deployed I that there's driver that continue just fairly be of of a our infusion what large from so large sold, better to would if going consistent were need a a forward. like one elsewhere. kind to allocation where renovation ultimately thesis to to we've was capital capital we theme going capital

Operator

Woronka Deutsche Our question line Chris Bank. or the next of from from comes comment

Chris Woronka

little first of I question. jumped on any a apologize guess on there's I topic late, and repeat labor. the I was read so really on kind if costs headlines. We

mean, was you any it intra-quarter, out something there or on as year? can for actions labor, intra-year as yesterday, visibility whether and specific there on in outlook any you much balance surprises that? -- give back us the look I you the Thanks. costs, year, some look market really guys the some or that. first wages even to were have cities. How quarter think like last were you I in mean Just comments on your have of think for where bring I you you up do

William H. Conkling

as of guess through business that we've Trey. seen kind little half the expense bit what I'll it's do we've gone is, Chris, I'll year. the on the profile the comment I past trends in a of

If think quarter X% in and the to the up the I last operating you quarter. of third fourth were expenses look our half year, second

room, If kind occupied of X.X%. at were cost up per a on they you look that

the fast costs were operating and to expenses forward occupied X.X% you about down were up here, quarter per first If room X.X%.

The contract -- or of the is I'm sixth that labor represented here. seen we've think variable in quarter the expenses something first the that is contract contract quarter to progress labor declining we've of the front forward we And we're cost declining. going sorry, I are on evolving will the labor production as that Continuing persist biggest year. seen through hope our consecutive something balance and on have room

previous this is versus overall extent the XX%. beneficial the moderate, quarter from kind turnover it that from now the the XXXX, that the quite in turnover XXXX to of XXXX about would say that's And down probably business. significantly talked was high as turnover first much Xx And look if thing a think of and quarter the to I was To both continues as you productivity. pre-pandemic. not year, us, turnover was I to last cost in about as training perspective is

X are have trends service that a I but the the don't to we view we've select encouraging. think last as out, longest-term the portfolio, quarters seen over fairly X that Looking

Chris Woronka

it for see kind in obviously way you play and to add question lower has it's already the Do conversions you that strategy. way doesn't that, markets? don't which go hear a across I goes scales look your supply, guys becoming goes a lot -- the but or there's any there to little but any but bit know business? of And impact Any have is who we new and really think -- from something there you Hilton as terms brand a long way chain going as Thanks. guys there measure question, Spark there with of unit someone it's True? with you part Is chain view is Hampton mean bigger I we on your to might net a really the how do big positive, and any follow-up to A is be went to a any a -- do to you secondarily their member, conversion brand new now net scales, growth add about all Mariott companies that family a about have. a think ever a down there negative? to of in, enter a from

Jonathan Stanner

we've they're that the net additional lot not Yes. I a something units have do what in bringing that at can brand it's not in you we're Thanks, we additional bringing some yet. to to would of monitoring, And of we've analysis I impact. we're brands unit and type It's that of I have those grow to you're don't customers extent type competing it those when of surprising don't followed of something I the help rooms that my list an impact. actively get searching types Jon. are say think terribly that think family a that in. haven't for. obviously that units growth. time done. product closely of searching initial for we channels again, this again, impact that I units is been it's not lot Look, that lot look spent it's a market-by-market to you're in And is on be -- additional for going think a redemption think these of of and it the them new concerns. in our the into into the It's been secondary certainly have coming a markets something do a and brands, in market, more frankly, new tertiary yet. we're felt high then of haven't markets They've markets. rollout into felt

Operator

of next Bellisario question from comes Baird. Our line or Michael comment the from

Michael Bellisario

the to want back to leisure I commentary. go

are to ADR and softness soft? on to just close help side. ADR you in the understand locations. see you weakness events Or arrival of was occur? the of up the date that mountain you occurred not leisure occupancy did maybe did us timeline that I cancellations maybe was -- and the the the snow see But mentioned because know that pick not Just you led

Jonathan Stanner

in the markets. just didn't a from We year pace. incredible again, these get that especially we minute in some really I of it, saw Mike, when year think of It's these slower last is last part some up was see ski markets, good. And snow Yes. cancellations. you an snow perspective

got bookings not less booking close the on people happening long We about mountains look, was pickup what it just seeing term. And last-minute a of concerned And I'm lot and that stay. you've of of got year. this their to so terribly

the I markets. ski become some both some markets. season the there particular as rates a in it read-through strong being for think quarter. have to I of stronger season summer in than But did those really going first the of rate actually summers these the influence those And in in interpret to has of markets demand. X But softening sort our leisure performance we're didn't

I just an last-minute pricing that there of around more was was issue and it pickup. -- think

Michael Bellisario

focused Any different Fort markets? you other from Lauderdale, Phoenix, Asheville, see Did Tucson, there? takeaways leisure softness

Jonathan Stanner

have a softening Lauderdale. Fort in of renovation some you did leisure our We're -- so clean there. don't Asheville, are comp focused rate similar markets. Those see under highlighted We in we some

documented And little of what Lauderdale spring leisure some and around I was you've think kind in fairly been Fort And And less well in Miami to got around a pickup last-minute Demand of that and that's break. again, I happened the was a little fine, softness. market think break. rate XX% context the spring And rate would on is something really not level we I'm side. into, XX%, on have that extrapolate into showing pickup. sure softness in that than that weakness rates put real a were of XXXX. that I that is again, we are didn't higher just same

most what I comparisons in And think first of quarter. the were think like. comparisons I be do those to look mindful difficult got we've the

Michael Bellisario

today, then of cost around couple cost a you And provide renovation maybe can do? gears internally And a just to or and some process just what Understood. of X-year projects underwriting years standard which it. maybe for projects switching what it the hardest my follow-up, Got the on CapEx, XX-year numbers you what's decide CapEx ago? how part did

Jonathan Stanner

-- Yes. industry lot underinvested renovations. spend just the in it's on We broadly spend Particularly is this time We question. the about I internally. of an we've good like before, a talked awful as think

months I these or say, would renovate question ago. But are than some condition higher. create pre-pandemic. buildup of potentially on going we've pride to say, They're even repriced CapEx I and than finally And renovations that in XX% days of last cost will we've a capitalized in the of hotels year in the no that last one, the we portfolio physical of the better think portfolio. X lower ensuring did great are our that we I XX always the some were even opportunities huge there's a deferred couple so actually of XX% will they or market, for forward. significantly more. don't higher taken And those have depending And us

really starting related, not see shipping or see costs starting down. labor it's you're You're come wage to to but

We optimism we've that commodity where to some stopped, to come in cost least, and in are some very, You're renovating very got got it some it assets. pre-pandemic. especially we level down. said, relative the did, see renovations increase I decreases starting expensive, costs hope has of or at those believe Because the to we'll as see of very the renovate these cost

Michael Bellisario

per Just renovations? of costs key those any broad strokes around for kind

Jonathan Stanner

higher Yes. key were $XX,XXX a top of $XX,XXX to At $X,XXX XX% today. another probably we or in there, years XX a years, key pre-pandemic on we're that probably than $XX,XXX X doing that.

Operator

in I'm Jon at queue showing the back closing no remarks. Mr. to additional questions over I'd time. for conference Stanner the this to like turn any

Jonathan Stanner

us all you the Thank Great. and joining many spring seeing one Thank at to We over today. for of conferences forward you of you. look summer. the

Operator

conference. today's the concludes This in participating for you thank gentlemen, and Ladies program.

wonderful a day. You disconnect. may have now Everyone,

Summit Hotel Properties (INN) 2 May 242024 Q1 Earnings call transcript