RLJ - Earnings call transcript Q2 2018

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Operator

Welcome to the RLJ Lodging Trust Second Quarter 2018 Earnings Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Nikhil Bhalla, RLJ’s Vice President of Finance. Please go ahead.

Nikhil Bhalla

Operator. you, Thank Lodging RLJ quarter earnings XXXX Welcome Trust call. to second Ross On for and Bierkan, Chief call, the Executive highlights President key our today’s discuss Officer, quarter. will and will Hale, President Vice will Management our the Leslie be Operating Mahoney, Asset Tom Officer, Sean Financial Chief company’s our our of operational Chief financial and Executive available results; Bardenett, Q&A. discuss Officer for

from the that are what may that the on company’s GAAP made found night. numerous to reports I statements. statements to to Factors helpful subject differ press been may with in to be other Ross. this last The results we located obligation had release call materially the review from measures, no update communicated. Also, reconciliations may lead results and the call company Forward-looking in it company’s of the actual uncertainties filed to forward-looking can the over our to company discuss and risks impact SEC. XX-Q the be will undertakes as certain turn now non-GAAP

Ross Bierkan

demand, of strong The be investments, our robust Nikhil, accretive debt RevPAR performance respect And We driving We economic accomplished economy the in busy growth with optimistic RevPAR to significant business relevant quarter. spending all backdrop highly this benefiting healthy. remain X.X%. productive accelerating second solid consumer translated which and sale or had worked July. and strategic a into everyone. positive and both diligently These wide good and which to We overall resulted as advanced from of to delivering industry lodging trends while factors in operating fundamentals and a reduction our Thanks, ultimately is in industry. corresponding continues growth growth. industry are asset morning initiatives, with of several the including we economic results

this was Fourth overall some year Additionally, July landing industry’s this the late Wednesday the June. of performance on of of demand Easter into further and by the and amplified quarter, timing pushing

the the second industry or holidays. was performance the of While primary the in stronger segments. in quarter the quarter strong beneficiary demand timing and across group segment all was the

As X.X% in our expectations. portfolio, was to it RevPAR our with line relates our growth

would to markets we limited related relative continued corporate Similar industry disruption, and in growth the in RevPAR our our transient made also significant the X.X%. our our in industry, respect both with thrilled is RevPAR With renovation we key strength and group a Overall, ability low portfolio South non-top saw experienced mirroring our significant initiatives, our from I increase tailwinds. have portfolio. we’ve and our broad-based value been unlocking mix date group industry, to leisure revenues to growth a segments, saw we benefit several which trends; the the however, a Excluding achieved Houston, across our progress Florida markets. strength these to XX to in the such and of execution am solid as

result ahead aggregate each that at These taken $XXX asset sale. As stated total, multiple of approximately We’ve have balance million down we’ve trailing XX an approach to non-core or In our we in a compelling sales had of delevered opportunistic objective planned, have highly sheet of align of EBITDA, we XX-month with indicated. X.X accretive XX multiples. times. from to an valuations of assets our initially aggregate position times leverage sold methodically generated four well paid at proceeds we objective debt the thoughtful times the the asset with for are

accretive the XX the remains the XX strong. appetite strong For buyer by represents property by pipeline advantage resort-oriented remaining this $XXX example, times. the expand for of multiple nearly the investor recently which we maximized hotel our for We a taking asset highly Embassy to Hilton. Suites million, candidates, With opportunity of assets, sold as Napa value Valley entitlements our interest for by a of to disposition robust and rebrand in the approval securing keys Curio creating of

stages under of various $XXX recent in contract line prices at pipeline the assets generate several is our $XXX combined two that proceeds of two will hotels hotels in that including million The valuation million. have a will with these be sales. We sale to in

over months these few updates the provide expect We they deals to as materialize. further we’ll next and close

other key Our on remain objectives track.

expected of quarter. the We third G&A to of the capture the are pacing in by synergies corporate $XX majority the vast million end

of XXXX. Additionally, we points points are synergies to year-end margin progress making towards XX by basis realizing to basis XX pressure offset operational

we As strategic we regarding our our initiatives, that great each market will confident value drive remain and incremental well of success to responded to has continued make announcements shareholders. the of for we execution progress, continue are that pleased our

our with as strategy inception, our from work Now, the in we done high wavered leading all I never my affiliated margin, or I the hotels extremely tenure, Since we’ve industry. have commercial back in strongest brand of platform families. dense lodging rooms create look am of proud in the over environments driven investing to a urban

enhanced mix. last by several the growth markets our refining by in our high diversification Over and improving markets, two our new presence long-term entering business years, portfolio strengthening our we have

blocks opportune well that RLJ initiatives, the progress, positioned. an team Given has is me pass our we’ve is all sustainable made the place, growth excellent the time significant momentum have and for baton. and the we now to this for in building With long-term place, in in executing

this for and than a along month. is been part will the organization this has I Directors enjoyed to very take the a of great this incredible entities. from plan I worked more She As and later Board the Leslie aware, reins and ready of our beginning, with have time I’ve years Hale honor benefit transition together you’re enjoyed XX-year month. and and have to this and many RLJ dynamic thoughtfully. have of retiring later to with it career predecessor privilege be been its

be and guiding the our success commitment ever Our from has that than I’ll built. excellence, execute upon underpinned am for review capital that, more create outsized will as allocation, sheet management foundation balance success over detailed to I be our our continue the and team, disciplined and with to financial will to which principles beginning the operational prudent of future will a the shareholder more they operational call confident Leslie? Leslie of in turn long-term. over value And highlights. Leslie the

Leslie Hale

are The that leadership. your mind, in retirement has chapter CFO. RLJ you know will industry experience and who him the thank dedication for this look bench Ross, addition value to and deep in to take team again thrilled few the and have Sean shareholders next for commitment excited Sean His and Many wishes leadership, like working Thanks, just and to decades. all forward. of ago, welcome you strength RLJ maximize and for to for two days the past RLJ, I’d a team your as knowledge. as we you him with moving best we’re over Sean while entire to financial a seasoned bolstered here. joined with opportunity the we REIT broad RLJ With miss to Mahoney your executive our outstanding forward

influenced RevPAR X.X% in led the to of quarter shift, of to month holidays relates April due positive which which of the Day from Storm the RevPAR Wednesday, then RevPAR results. tropical X.X% by of on was benefiting of followed hampered growth with a Now, We the flat X.X%. strong growth the growth our which as in the quarter. Fourth benefited second timing operating over in to the weekend. in May demand resulted results solid impact posted it by Memorial The the Easter largely June falling from Alberto, July of

days the This corporate was revenue trends all segments. Leisure growth evident quarter, to again weekends of Monday Wednesday. from business through improve. peak increased saw strength a During demand revenue in generally our we strong continued once outpacing remained and contribution with demand in weekday travel

the segment, top strength saw than we positive our drove seven we northern strong across overall all California. our our RevPAR XX% contribution of growth Houston, our in of of New in saw segments XX Florida, The group and markets notable is with performance less Although South in revenues. York group strength

Our top-performing RevPAR which market growth this of strong was Houston, achieved quarter XX.X%.

Our calendar basis us a strong XXX market points. to outperform the hotels quarter, by which the hotels, CBD our during led especially citywide benefited from

X.X% hotels Florida RevPAR in outperformed robust XXX South Our of the growth and overall achieved points. market basis by

group West which to of by demand In X.X% quarter, corporate the continued market, the the RevPAR our year, recover our South continues hotels significant, solid achieved performance. Key during results last New have and from strong would with strength X.X%. leisure, drove combined from Florida overall market, growth hurricanes n our York, Excluding increased RevPAR in the

pace Our strengthening hotels group demand. a benefited in from strong corporate

multiple demand softness years the by market. encouraged are driving we ahead, this look ADR after fact is stronger now we growth in that As of

Jewish we While expect in by recent travel following to constrained positive the to days. trends York, the quarter third we the on holidays be peak encouraged are New due

Our market Northern of renovations X.X% properties. growth California achieved of despite RevPAR three significant at largest

our Excluding RevPAR a hotels, robust would increased X.X%. have these by

benefited we renovations of continue created by and During the half demand activity, year. a the from the performance will strong our citywide compression, corporate constrain although quarter, improved saw to during second

hotels Chicago generated soft saw in California market which not extended being driven citywide. significant production, RevPAR performance X.X% business our our hotels. the significant at growth enhanced was did delivered citywides an our that market, positioning the the achieved the at in group overall are We corporate growth benefit stay increase RevPAR growth, quarter XXXX. hotels the several of from during hotels. citywides market in our second in hotels DC to while Northern in and some our X.X% despite demand our In by repeat

an Looking hotels the by being ahead, the second renovation and in one stronger year. under calendar expect last driven tailwinds citywide of we from half performance improved

cluster RevPAR California Southern of growth Our positive X.X%. achieved

and group this at While corporate in by activity citywide hotels. non-repeat demand the especially our Diego, San region, our a in offset was some in LA strong hotel weaker saw business

non-repeat renovations Marriott a respect second RevPAR the declining further at with amplified which in were resulted Downtown these to during by our business, headwind were some market, us quarter. headwinds XX.X%. the our by for Now, project Louisville

results While by for our are of second books weigh convention the group already the the half, have center Marriott continuing XXXX. renovations to base reopening that look on and we at we’ll encouraged the strong we our this in the hotel, forward month during the

declining X% was government supply to business a Denver, in affected year. our our citywides Denver, decline downtown Finally, business In X.X% weaker hurt year last In and new Austin would among have is X.X%. and performance some non-repeat Louisville, were Denver; to addition including and non-legislative by and which respectively. Austin saw in by with generate Austin, primarily RevPAR since the our quarter significantly RevPAR we soft, increased solid markets our XXXX hotels from which this a demand, continue were

XX portfolio. markets the non-top speaks our RevPAR As our X.X% increases the at Lake Atlanta Salt Orlando Tampa, and performance ahead X.X% with we many look City, of of respectively, achieved and a X.X%, our diversified top of markets, benefits which X%, outside of seeing to of industry

Now, a basis are operating which the points to labor in margins, respect lean solid prior portfolio with second combined in margins, operating insurance year. over margins high model we with taxes our during our of generates our quarter while XX% our margins resulted increases declining EBITDA XX generated market, and the in tight by

strong of of Our and our debt $X.XX a quarter respect of EBITDA share net our we robust results With million the unrestricted million we of times. adjusted billion balance corporate have strengthened with for million X.X to our of with $X.X basis year, in our a or quarter. FFO million by debt per sheet. further the debt aggregate adjusted subsequent a sales, solid cash, asset on which $XXX and out our of outstanding represents balance this stated ended of approximately this by translated $XXX approximately results in objective million our to sheet, operating $XXX debt-to-EBITDA paid We $XXX nearly down $XXX the into for year. million, financial quarter the ratio quarter. XX% we reduced debt position In and recent reported $XXX reducing

remains Our strong. liquidity position

dividend, an seek our to we important shareholders. We which return capital we have priorities provide component our support of total to view deployment cover our ample a capacity as and

the year, and schedule renovations For full on budget. our on remain

on impact continue We growth. points XXXX renovations expect to approximately RevPAR of to have XXX basis our

in are margin during portfolio with our to operating our margins, taxes our tight a quarter high XX% respect generate declining resulted which the solid while we combined second EBITDA margins lean labor insurance by of increases Now, our margins market, year. basis in model the operating and over points XX with prior generated, in

and adjusted $X.X balance $X.XX reported per outstanding quarter. debt subsequent reduced ratio XX% unrestricted year, times. Our balance year. the results X.X on debt-to-EBITDA in the debt debt basis further million, $XXX of recent quarter. of sheet, aggregate we $XXX into operating of ended which to adjusted $XXX our in corporate quarter million million respect approximately solid With have our or stated by objective million position a our translated With our asset sheet. of represents net We results and FFO $XXX In million $XXX we to with strong of financial we strengthened percent our quarter EBITDA $XXX for paid for share million nearly a sales, of robust a of debt by and our of this reducing the approximately billion cash, this down the

remains Our strong. liquidity position

total which we shareholders. the as return seek ample capacity our have important our provide to of and capital we dividend, We deployment to our component view an priorities cover support

full the and renovations year, remain budget. our on schedule For on

We renovations impact growth. of approximately XXX XXXX continue to on have RevPAR expect points basis our to

Now, to Adjusted to $XXX we full-year in between million. guidance $XXX is million Napa. expected to terms $XXX is million. are of updating is hotel EBITDA for million sale EBITDA account the $XXX expected our to Embassy be the to between RevPAR be of our unchanged. outlook, guidance Suites

our expect As XX.XX% the be quarter pleased hotel range. we expect we two we assets positioned additional momentum the the guidance, color execution priorities. recent for hotel million; we performance full-year asset the at of the during the EBITDA XX.XX% key our respect for to well to incremental under are In enthusiastic additional of second our third and continue nearly to of approximately sales outlined sales are this million year. are million our we $XXX come we generated assets EBITDA are we seeing about achieve full-year make of on progress in million from EBITDA. quarter, hotel with to of with the $XXX XXXX contract to we Notably, of we midpoint and EBITDA our summary, that with to earlier $XXX to goal our adjusted $XXX

are We target objectives sheet our achieve balance well. to on as

key achieved of paying $XXX our goal well have only million long-term objectives stated time achieving from our corporate Thank and to you. executing away both and to realizing already We and our debt operational maximize $XXX,XXX to our remarks. we position and synergies. RLJ ratio for net are remain underway of down We are value. four concludes prepared targeted on focused growth our of shareholder debt-to-EBITDA This

now will We open the Operator? lines for Q&A.

Operator

Instructions]. [Operator

question Please question. first comes Barclays. the from line Powell Our Anthony your with from proceed of

Anthony Powell

everyone. Hi. Congrats, Good morning Sean. Congrats, Ross. Hi, Leslie.

Leslie Hale

Thank you, Anthony.

Ross Bierkan

Thanks. it much, appreciate Anthony. very I

Anthony Powell

year Yes. later sales the this with asset year? your sales right sales, in of announced close terms maybe to to extra upside you're or for a the And targets your of seems generating for previously of it terms targets the or either the high contract, early the middle in on asset year. potential more in like What's even just next end the

Ross Bierkan

Yes.

feel about We We backdrop, good the feel And pace. also we still. economic about good target. are the on

well. is all So

think that the some willingness of non-core do opportunistic demonstrated in addition the identified assets we've to that to merger. the I sales at closing we a

And so Suites good Napa. Boston, of and the outside was most now, example, Marlborough, Embassy a recently

we So million feel target. what we ahead And of QX we by to here. of might as achieving million assets the I our sure we all want good a But don't non-core think this other our year said some skies of XXXX. possibly end of result to about $XXX get and for those, exceed $XXX

Anthony Powell

includes assets right? that non-core Knick, the by QX the And XXXX

Ross Bierkan

we're ability approach. find and to New we've for asset. experienced asset, or and Yes. buyer an the requires buyer York in a strategic sellers an The a special Knick demonstrated special right And City, it is a

Knick the is ramping, is a market and Fortunately, the up firming bit.

in So the the also value still side value the recognize is the this And some working degree, owning we public asset we community. on staring we Markets private to that time animal compelling, but very between good feel and and our on. are still it's in point something is about time, Capital arbitrage and spirits are the at

Anthony Powell

I DC outlook better the impact, and over markets? other Francisco go XXXX citywide relevant that San you could the Louisville all all and And the citywide in Thanks. were North markets Chicago, for, guess, but

Leslie Hale

I Centers geographical encouraged what about are Anthony, say to Convention and we We like our back got that We Miami. perspective, are XXXX, in by from online think San is, would three footprint. Francisco. we exposure coming Francisco San Louisville, our

XXXX from inauguration, fourth. way obviously the that's But and to think And of have the our quarter of like have first I in going don't think think, it's of sort we we think Super is headwinds about early to up. kind we but I too going shape kind think – headwinds how so the Bowl shape, early obviously, how But clearly it's the we to about geographical and overall, footprint. don't to

Anthony Powell

just holiday you from weekend operators Maybe, than around those business your improve that right. one All performance of in can weekday. We've bit also this softer or weekend lagged heard time and expected, markets? have that been more kind from a periods periods What and holiday your me. others in do the you the

Tom Bardenett

is, able And July, a week we and back did Yes. good Tom. were in there We news is first to pent-up This were some from in recover of see July. demand the softer the that.

restrictions putting we So July for the that first be to felt accommodate able rest on about good of week. to

holidays, And us. going see as you forward that, had that ahead positive where try periods had front, that periods. idea do about not where fact consecutive trying positive demand continue trying in are regards group special we premium, our all future we part a to in In corporate is of it, shifts encouraged that forward, out, at special the at opportunities, put which focus were for corporate Thursday to we've better specifically to going and two news on weekend and to thing a quarter question, of even gives what of transient, in and in getting on we're two regards for some a shoulder strong mid-week, The RevPAR midweek that group the two unsatisfied is other it's strongest holiday putting ads dates very signals pretty really think, were to your that's other is where I the look quarter you That the for the when here. which we gains, accommodate to mid-week. to those to and and Monday to

Anthony Powell

Great. right. lot. All a Thanks

Operator

comes the Our SunTrust next Gregory from from question Humphrey. proceed with line your Robinson of Miller Please question.

Gregory Miller

very Thanks Patrick. on line much. I'm the for

incremental question see from our the those Can quarter-to-quarter? to incremental major the through you one today? grow on you savings believe be Do further What operational that background And end. will somewhat highlighted? you XXXX? the you how are Thanks. synergies synergies synergies steadily the provide Just lumpy? opportunities Or from will build

Ross Bierkan

Yes.

So, to with time particularly best side, be that. that XXXX everything, where opportunities timing throughout by over of up will of we’ve the the integration of be scale. the – those as contracts and think it's FelCor regarding the variety come IT contract on benefit been and the we answer focused be XXXX very your To from XXXX, able and and practices will the question mostly on since a to end of based we'll end

from forward. put that there was with area we there together side, procurement was as come procuring think at revenues purchase again RLJ focused into in standpoint, also we committee be benefit the And we as quarter-by-quarter a tail we XXXX, put and we those we’re primary In come really now as fantastic energy, and a energy scale, the regards on but XXXX, that the benefit is in are best that synergies a to contracts again side. going under up, on together side. borrowed the practice then that contracts and up On will

the to and instance, when that we've of more is that And which tried opportunities in revenues we an and do get at aggregators. like some ancillary to that. opportunities. money, into FelCor For parking Midway, an assets pure that example put airport opportunity groups instance, would be to was profit with you have contract make hotels other Spothero, can ParkWhiz also to for

to So of executed. it's quarter-by-quarter, of, to answer be the bulk and be based come will XXXX your it question, but in continue up, contracts on more how be able I to think,

Gregory Miller

I you. the great. Hey, appreciate color. Thank

Operator

line with proceed question. of Wes Capital Our next Golladay question comes Markets. RBC Please from from your the

Wes Golladay

through as everyone. Good maybe Can FelCor? maybe, more the a the Prop Yes. you through specifically margin for progression us you we the of the walk on specifically of reset move more year? on hit comp, California XX Do pressure, start insurance morning, to some and easier taxes

Leslie Hale

say, fourth have Wes, we on And I quarter. points going from would of a really So, basis that every think to impact taxes think, don't XX full insurance obviously as basis points reminder, that it's quarter, that about last for year. I said in impact year. benefited we the have XX we to I true-up sort and the – us would a

necessarily fourth going of we're sort in quarter. not of the that So to get benefit the

in pressure still it's to XX, we be quarter. on Prop side. fourth have from not necessarily be going to It's tax going the some but So still the

So I year. expect quarter pressure every to see would this

Wes Golladay

from the doing I particularly aggressive are guess, taxes appeals tax lot – Okay. front. another you, moment? Are a the at accruing market? county also of And home And was heard we being for the you in aggressive industry that on your Atlanta then that was

Leslie Hale

But consultants our to given say, us sort always tax taxes market appeals. benefits relative appeals And on scenario But We perspective which appeals. don't we still side. why would as the those are the had is budget in we – aggressive do on the every benefited Wes. portfolio, year particular. last a We would of haven't of for from of kind aggressively our we of of any I we Atlanta, we true-up on we across budget haven't say sort that – I fourth taxes, in those quarter worst-case

Wes Golladay

major noticeable the noticed target seems of understand push a operators, it are industry, in Has higher-rated the the select picture, the margin have markets like this been at big then rate, moment? business. uptick improving is And enough. a for fair things change? behavior Okay, still Or this maybe you at

Ross Bierkan

side, Yes. out profit of on I always plans. those get preservation year, the then revenues decline. pull can average beginning the At moment talk we the if budgets margin The things about I’ll answer we that. rate put the side. can approved A and couple of

if comfortable So have act where that variable they fixed with targeted we and are benchmarking take that around automatically that can from side, and doesn't per tackling, and variable declining, it a the another management looking those CPOR. minutes know feel expense we that's at would larger the of, intensity we property. management. and and what expense, have and And somebody some companies labor we supplies revenues to on and place room that management scale, on call, of our look we at blocking the fact opportunities. operating we But can task force the And I

to peak management some On And the on revenue at encouraged to strategy to bankable that rate get looking we're have is the RevPAR. we side. side, what night try we average higher opportunities are always drive

some the of companies that, at implementing software we're are, room configuration. to management attaching our examples we're that And of our

thing yield an business the want to better actually I to the that from at significant but peak can Marriott strategically OTA rate is, that some portfolios add margin business, and seeing our can As not peak at the on And average Resort, much of down would the website, in lot opportunity And to last means, and yielding, the to exist. different drive where we rate an and as and though to you having have that rate the the you business. example would Beach strategic are is where room allowing Mandalay is good only you side don't night on ability try we have that even at get have to we're in incentives for because us. configurations, around the night, you the a standpoint, happen OTA then if that Nick on OTA configurations Hilton average opportunities which have pretty drive of be desk

question. that So an to you of your couple of gives example things answer

Wes Golladay

for right. All That’s Yes. all lot a detail. from That’s me. if the

Operator

[Operator Instructions].

of question. question from James. your comes Bill the Raymond next Our proceed Crow from with line Please

Bill Crow

Ross, do on has people in Northeast which you. you Thank timed here congratulations. more in Great. in Florida been up so three do, years. the Hope what the many two,

Ross Bierkan

Thank you, Bill.

Bill Crow

of questions here. couple A

identified FelCor think at think you've deal you the the when of assets. I asset the portion and FelCor also our of different focused been selling But looking or on number – you portfolio. significant buckets two I a below was really were announced, sales, of RLJ

with Just where do stand effort? we that

Ross Bierkan

not Yes. Thanks, the continue RevPAR lower opportunities. is pricing, as We growth, our at to approach we to I pretty look portfolio, slower to seen, our but as a And do Bill. thoughtful take like think, and optimize firesale markets you've just we goal stuff. recycling

contract is of doing the we we're under RLJ asset. So a the – one two say, legacy assets that are work. And have we would in fact, I

say, continues a through of pretty having the to time. of in done portfolio out ability XX% going thoughtful of one and recycle the our to over there, we're merger is So minds, the the process bottom, of it be benefits the

Bill Crow

right. Right,

know think we not change? be the two EBITDA, you've about helpful impact if is, as given will ones. going answer questions incremental asset sales I pending that aside XXXX, could XXXX What's I'm have you the ask this but this. to the setting guidance, two on one been Okay. the to completed Number

Leslie Hale

total in asset asking you the sales? terms EBITDA of Are the for

Bill Crow

would Well, in of this year. already as to XXXX, is through roll obviously, it it some Yes.

that? So on what’s incremental the impact

Leslie Hale

to EBITDA Bill. $XX the at it’s about that we’ve $XX look identified, we assets of million If in aggregate, seven million

Bill Crow

On full basis? a year

Leslie Hale

full year a basis, we On assuming that that we seven the assets sell identified.

sort incremental that’s an of was which Napa, opportunistic $X in thrown you If million.

$XX roughly So million.

Bill Crow

next for little headwind like the amount good has is, And What’s Louisville line starting other for been, obviously, of year stars then better. bit the feels time. considerable a question that for are up asset? It to for expectation you the all

Ross Bierkan

the go been we’ve the we back now. easily trying to the renovation are is at knife We’re room is we lobby and can and we perfect that see our XXXX our of while a on and under that rooms to Obviously, to looking kind are timing group as been we’ve compare numbers has the we been XXXX, under encouraged. Center Convention reconfiguration speak to What and do standpoint. get comparable, when those pace a down

So of we and XXXX going into where in we’re be our results on we based feel the year. like our of pace number regards would ahead target at

XXXX. We on in Louisville conventions starting books. that been a couple in, Centers wake also in that put to business have Convention are up, and hotel the got some We before coming see the not

get be significant we’re the we you to is to think grow encouraged don’t what our hotel, we which we walk And spaces a business, ballrooms really first have opportunity our use to that’s that Marriott be walkway over amount group encouraged the ancillary see, connected Convention continue is the thing to room have there. and therefore, going for you the the can are we a where of use at our hotel we’re own So of by Hall peak in and from you to exhibit two Exhibit business try us to able only benefit hall, to sneak we that. which that to we our is, Louisville Convention Center, from to did in that, Center, and the see about addition when

we’re So time we XXXX. as we’re think frame. have a year into look at that we And that we encouraged as to going good go

Bill Crow

year, Is you of think? double-digit a that RevPAR kind growth

Ross Bierkan

we want whatever we say, year, just let’s this lost Well, back.

Bill Crow

with it Thank leave I’ll that. right. you. All

Operator

of Please Jeff with line Donnelly the question. proceed from comes your Wells question from next Our Fargo.

Jeff Donnelly

and Leslie, Ross, in the future wish the anybody. the didn’t letting to floor. not same Sean, I of in you new success forget and all to endeavors I echo, best me success you, very anybody Hopefully, out, welcome role Let

you dispositions, do. have said do point, what on market a dispositions lead market last contemplated the to on further disposition than done you maybe the plan? guess, exactly – the will you disposition guys – you to exactly push guys what because devised said you On year know, of going when you’re strengthened, strength that has originally I you the contemplated you have little might perhaps on think you’ve beyond You

Ross Bierkan

any time through I the it. program is we and to for better between a No we’re right say take an sale But the Yes, feel aggressive. see said, asset the sacred. create mean, question, good value private value is opportunity a I disconnect, arbitrage everything going an at not or it’s on pretty like we Jeff. although necessarily, And is not a price. at a probably – would certainly look we’re recycling market public. already shareholder

we’re so And to not intentionally necessarily expand it. looking

Jeff Donnelly

Square negotiate And or to then on growing the are indicator this how look but curious market public look don’t an and I think is spirits it at it? analyst say at a in of Nick, Lexington or you that is just other the you call, certain for as I W or look kind Knickerbocker, in the – want York, Union I’m maybe asset of agree are concerning about you there sales transactions yardsticks do know to you just value New the we

Ross Bierkan

this the we’re It high-end market is assets seems the that the seen is the and comps impressive of I generating of have A say you’ve like comps. bipolar comps, months cash the asset couple asset, there’s per definitely that towards any flow. we over comps, would and settled in lower special no less key on skewing been there last set But nature because so of trades income. very a of specific no, haven’t where it XX

that us, doesn’t those. and to discount And so apply we

Jeff Donnelly

It’s a…

Ross Bierkan

Jeff. ahead Go

Jeff Donnelly

sorry. sorry, no, No,

Ross Bierkan

As had the we of quarter Knickerbocker, really earlier, strong we the ramp quarter two. a in with stated

taking to and shape. is about expectations Our three quarter are in asset we’re going where be four and positive, excited continue to this

Jeff Donnelly

rooms Are just color. on California break been such to direct will see exposure or – impact one that our Northern you great those question the guess able last of San big the the your and That’s and think either – from Center Convention may investors. it’s a Francisco And I that out for because on benefit you reopening proper? between focus just outside EBITDA basis just an be of

Ross Bierkan

Yes.

a CBD. couple hotels So we of in write-down the have

before The knife. our other And September in encouraging sales thing had rooms up year. force we’re right Union comes this is, in, Marriott the we’ve under of Square finishing the

move of the Jose kitty-corner year near And Milpitas the getting we’re a been one Residence have to location the from they’ve courtyard are And in Inn into demand couple San JW other being similar under and which encouraged bridge renovation we lot under Palo Tesla really there. areas over assets about and where start Marriott higher-placed the the Union Marriott great then of that Square And to Alto. you keys. the by literally, growth great area, and is that you opportunities of XXX some assets Emeryville. and really this Northern higher-housed, XXX is outlying brought that’s to asset in was is in So that this about knife start Keys benefiting year California and the the Oakland, a

assets the airport, regards be So to then to a with the compression our Embassy really citywide. because benefit hotels are San going Suites. located lastly, Francisco couple out of footprint the we’re our And have the we encouraged we think are the in feeling of two where

waterfront. reimage them of Francisco of lobby in San at did and one year a have We in South just complete the that last the

that outlying So into compression we’re encouraged our footprint see the pushout that should areas.

Jeff Donnelly

you. Thank

Leslie Hale

XX%. it’s a think we about kind of Jeff,

Jeff Donnelly

Thank Okay. you.

Operator

from of next KeyBanc Our with proceed from questions. your Wurschmidt question Capital comes the Please Markets. line Austin

Austin Wurschmidt

Hi, good morning.

what the forward sort of are your approaching goal on latest about if sorry the sales any and you to repayment, moving the But buybacks that with debt I I guys into been proceeds – so on on today? table talked has this are guess but – of XXXX of of had teed bit little use a are you up asset And late. asked, kind thoughts additional hop and

Leslie Hale

and on from we’ve durable From sort at think strengthening you Austin, know. first what capital allocation, about as thought recurring been is, as around been sort management. focused of there, risk say our balance benefits sheet allocation. capital I our would of has we’re And looking creating we our

be acquisitions. will at we So looking

long-term at a makes to asset will at growth. As proceeds ROI a do look it. incremental that that at we’ll from it. we time can opportunistically really on the And driving also to be paying going extent in the that possibly And have sense, reinvesting warrant we sustainable we’ll accretively market we’re the debt extent the focused allocation, portfolio if it the at our buybacks, conditions we – I’m possible to stock sorry, look it perspective. look look at We’ll down

Austin Wurschmidt

not buybacks But is necessarily today? priority a top Is fair? like it sounds that

Leslie Hale

you we that think, hand, are and make have at we we NAV. to proceeds where I will at trading Austin, got time that decision the at the in look or relative to

in You’ve are what point to our thoughts on at at fundamentals time. look that

the So back. it’s be would say not of hard today it’s we point buying priority a today that because to that time it’s

to things our We initiatives. relative to have more strategic do

Austin Wurschmidt

thoughts back we then reacceleration other on the where the of from there. here? will quarter’s before still one things Appreciate expect bit. of that fair. the year are in follow-up And just could that couple we results the the see be Or XXXX? Should little market a there a That’s Louisville this for quarters get in worse half bottom

Ross Bierkan

continue do knife we’re is this we Marriott two parts Louisville? Inn the down we the Marriott we a in CBD to What as look at Louisville, will And area, the have Yes. two under end obviously, to our of and of example, Louisville our Downtown year. give take you To an the at adjacent the Residence which there.

the same available. those will having rooms difficulties expect we than of amount So be results –

you in pretty strong In up going year addition, to be Louisville had last we’re quarter look that at fourth QX it if against.

encouraged end of in But year. that market is year. near comping will other launch. then, exposure phenomenal, great the we’re this Ford be forward those those of significant And I this XXXX. expect comps we that we last be for against in are or had that amount Louisville a similar against against not in have of a will would The – And numbers the was out results those we remainder the plant. that to year Obviously,

Austin Wurschmidt

Great. Thanks for the time.

Operator

Lukas Advisors. of question. Street proceed Our next Green question with comes Please from from the Hartwich your line

Lukas Hartwich

morning, bit everybody. market? fundamentals you about little the Thanks, health of talk in the Could Houston a good

Ross Bierkan

Sure.

So Houston us. is an for interesting year

came Gallery If with rate. because this Houston, are at bullish in three, at quarter gallery had great you quarter the and that Houston they one CBD citywides, most the gates And always year, on we our And of two usually opportunities in been and the area. then, citywides health the to look have out you pushes as in results the when We look very markets we’ve the of came of we as compression been dominant as of which of we’ve pretty out area, out two. average because of well markets strong quarter. top

demand Hurricane had in obviously, four. what we’ve about you And markets we’re in quarter really we in into month was look outsized happened were the Harvey, tough Then, comps out quarter September be So try if is to some replace at against. going encouraged that you of that July. up to of we to as if some and both it what figure year, just demand well how done think last four because as going

transition XXXX put to of might what have kind property to try to that the XXXX non-hurricane give how at took and outlying that quarter opportunities year look knowing point the projections better feel we’re what is place in that So a that based we four to there encouraged complexing and the we gas time. between gain hasn’t with encouraged on really focused we’re doing and replace. us line as out focusing where like projections our this level at idea areas a at we’re perform also this to to And on the way of and at are was But we’ve Downtown this that. been we’re from have, We fact outlying the if we White and our in Interstate. and in the folks gap our areas we and in back Oil Lodging now. gallery with its is into pushed and would was looked

that – it, it’s comps were but hopeful we’re we can replace oversized. also some So of those

Lukas Hartwich

in That’s are cap a helpful. just And of right sense Do that where rates then follow-up. a you quick have now? market

Ross Bierkan

be Houston believe seller off They’re this cap and getting that actually say is to buyers if people that bit Houston two to persuade transact And Yes. most over – a bit. transaction mean years there going here the out recovery reversed they little trough to have to dip. that that do to starts the as – performance. it Lukas, to pull the they going pay a little a back are the understand and because rates of poised have run are to would in three going a off they’re I a can’t decent to next aggressive price may have crawling into

have don’t I in the over six little rates you, cap Houston compressed probably but number the an last So would bit a say I months. for actual have

Lukas Hartwich

Thank sense. That you. a Great. lot makes of

Operator

turn we the the like have gentlemen, and to and back of call Ladies session closing the end to remarks. would reached I question-and-answer for management

Ross Bierkan

asset with third And at Well, forward are you in to available us. questions. talk And the you to regarding very end being look certainly staying you the we’ll quarter. have we follow-up any if and thank you to touch sales, we for of Thanks much.

Operator

concludes This today’s conference.

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

RLJ Lodging Trust (RLJ) 8 Aug 182018 Q2 Earnings call transcript