RLJ - Earnings call transcript Q3 2021

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Operator

Welcome to the RLJ Lodging Trust Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Nikhil Bhalla, RLJ's Vice President and Treasurer of Corporate Strategy and Investor Relations. Please go ahead.

Nikhil Bhalla

Thank you, operator. to Trust's welcome Earnings Third and Call. morning, RLJ XXXX Lodging Quarter Good Leslie and Executive for Mahoney, our will today's results; be Officer, Hale, On call, available company's the President of President Chief highlights financial Asset the will will discuss Vice Bardenett, discuss for Chief President quarter; Q&A. Executive Sean our our Tom and Financial Vice key Officer, Executive Management,

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

Leslie Hale

morning, with Good mid-August that transition today. the fall. despite of back And for choppiness in September. joining of are and hope some early to recovery hope school that Delta this caused Nikhil. continue Thanks, many quarter, thank We you through those third for has office. by been that We from children, the pleased back variant fundamentals were everyone, the we smooth of the you you us during the lodging the

was XX to group the growth improvement growth trends driven urban quarter-over-quarter pace both in and of travel the demand, evident and RevPAR leisure the primarily the Although industry's top industry. relative was in the also overall markets contributed, which of business by

through that are trends positive October. have continued We encouraged these

the drove trends, quarter, to composition these strong allowed us our portfolio of which capture the our performance. During improving

operating we FelCor last cycle. capacity of occupancy we balance million over quarter, and already our acquisition to the to enhanced growth increase of strongest of channels to respect positioning to our our the sheet initiatives. open actively XXX seasonality have internal credit dispositions a combination multiple achieving maintain of high-quality high-yield notes, by ability hotels agreements, under third backdrop rate our XXXX further pandemic, drive achieved occupancy of sheet momentum, XX.X% debt With variant. Delta us moderated and multiple we on from balance the efforts leverage the executed levels. performance, while $XXX additional of noncore to normal our laddering gaining the the of the an Since portfolio throughout July our recycle a point With our proceeds impact to the solid September due which recovery and flexibility, basis call, strategic and our entire growth August incremental XX% outperformance into quarter. second were the maturities was and senior advance We on quarter, while increasing continued created We recorded the during raising with the lodging during encouraged acquisitions. have and repaid enhanced further These continue catalysts. further our our bonds X% to

which weekend XX%. point over demand pricing leisure XXX normalizes. improved of absorb which which the us $XXX, to prior drove demand increase pricing demonstrate basis nearly an weekend We that Our ADR, with XX.X%, a XXXX strong was ADR quarter gives portfolio to represented of power, portfolio achieved and occupancy ADR were increased our levels. able of consumers continuation of optimism can XX% also XX% XXXX when exceeding The our our by nearly over

XX%. levels with resort leisure XXXX levels by was XXX% our elevated exceeding of hotels RevPAR demand, that the achieved XXXX Given ADR

taking of number respectively. drive-to by South both We XXXX sequential a were also group. Florida, and improvement transient such XXX% encouraged in exceeded our the XXX%, Charleston as which RevPAR hold market achieved in business Additionally, and

an to during from a point quarter, weekday the third grew improving prior quarter. XX.X% As travel XXX basis business occupancy the momentum, indicator our increase of

benefited is well market which positioned, the Our over resulting since groups, urban second social by XX%. Atlanta, quarter of which basis since the recovered of third to markets are this We teams, to XX% segments, all trend, see L.A. hotels The in increasing doubling competitive of we transient growth positive our our by to achieving such XXXX by business Overall, quarter group revenues Overall, weddings evidenced attracted transient sign, improvements quarter. XX% also pace from our business quarter. of of respectively, basis and portfolio. prior continuing from was XXXX as highlights share second benefited with XXX quarter, last nights the as high-quality levels, significant of Boston. as revenues, portfolio improving the our small type. point from and by a nearly product led The such and XXX XX% by strongest is points, pleased momentum sports our in improvement which improve our of recovery occupancy, the given and group our revenues another the gain the our strength XX% were in of XX% room

managing line allowed lean our XX%, on our operating model. hotel relentless costs benefits focus grow grew while top Our of demonstrating XX%, by EBITDA by the our to

details and assets over buyer forward several the continue will capital XXx capital transaction allocation, we We growth under accretive subject after this year, noncore Metropolitan, currently this a recycling Including noncore multiple DoubleTree EBITDA. highly very deposit. transaction, our on we look be nonrefundable Now internal catalysts. relative to closes. to significant assets of to XXXX sold is have last active, advancing Since a sell late providing are have and X which to to contract we additional at sold

in desirable Boston's and Boston an transaction and sits AC is an office costs. a location South End already acquisitions to the over recycle located and This central the hotel asset A+ to which recently was in at cycle. hub acquired In $XXX values positioned Marriott and outperforming accretively this in Suites Hampton this is development. is generated we XXXX August, by markets discount & the Inn We million industry throughout our We to outperform development opened high-quality a replacement highly was year of Boston closed underwriting. into the off-market and neighborhood. AC block sciences within the growing is on recently are to laboratory from acquired This ink Midtown the Hotel surrounding of Downtown. life in noncore X proceeds that on track Atlanta, sales pre-COVID

of We constructed are upscale within the hotel to heart acquire also contract under the Creek a submarket of Cherry recently Denver. located

to hotels have consistent funding at from these generate portfolio heart a Each this and accretive also which enter details substantially multiple, will match of strategy highly we our acquiring locked of with of excited RevPAR noncore to profile. are of acquisitions acquisitions acquisition sought-after are into margins of and are difficult forward enter By and these demand rooms-oriented submarket after to assets proceeds to Denver and growth within enhance these sold Each significant markets. closes. value. expected higher We in with our this providing additional in to high-growth premium-branded, look our the located hotels current

Mandalay make compelling we to growth, XXXX. to our We Beach driving The Monica, our Santa $XX expect unlocking and and growth million EBITDA. are to X in Mandalay relaunch unique incremental towards continue meaningful in our $XX catalysts, to addition internal which to million Charleston progress in track continuing In generate swing. is to external Beach on remain full conversions in we renovation

and For Santa starting Charleston, the we've and model be room Monica we'll renovations these completed shortly. design

our recycling strengthening strides and our EBITDA of internal growth multiple above to and with growth beyond significant that made capital ability further growth have driving cycle We the is drive channels towards initiatives, recovery.

execute competitive a growth be our disciplined. and internal to pipeline advantage acquisition on to continues sheet balance remaining allows and while catalysts us Our

said, positive fourth and a rising backdrop hybrid Looking expect supported the profits, are healthy and follow by consumer to given flexibility remain we ahead, around work but cases That environment. inflation. moderating the acknowledge strong for seasonality the we generally economic also patterns the quarter, by but normal and concerns corporate encouraged continuing leisure COVID

that international travel markets. borders will believe to reopening provide for tailwinds urban our also incremental We of the

business expect of through gradually remainder continue to improve the to year We transient the reopen. offices as

social and group our forecasted which supported We bookings quarter. our improvement is fourth small in the close the group third XX% revenues our improved the fact last to that also group by XX% quarter quarter anticipate of we booked fourth continued by pace for during since call,

positive performance. We October's in are already trends these seeing strong

the outperform increased These the operational international our all throughout These now travel. optimistic favorable gateway traction. and the of from to recent respect the urban should We group accelerate the for these EBITDA rate entirety of efficiencies positioned over of $XX and As the step and XXXX, shareholder the the incremental and will us catalysts. margin during broadening trends, and with can markets, the drive expect urban our pandemic, recovery as markets, acquisitions Sean. give we given recovery Sean? we advances. this out improvement potential ramp-up $XX and of to look to positive which turn portfolio strong, benefit maintained call factors have will million the from about achieved discipline that to industry tailwinds trends be meaningful cause industry the to the to remain the industry be a significant transient our business improving our while us I achieve value. reopenings key combined that cycle to as of unlocking forward office long-term has backdrop should we With especially well with gain of see leisure positioned embedded composition, believe continuing million also to our

Sean Mahoney

of Thanks, quarter impact our Delta the pleased Leslie. variant. We generally results the were with despite third

for so The which from quarter. have Suites the Midtown Indiana, third quarter far fourth sales our been quarter acquisition noncore of Inn during were results Hampton in Pro the Hammond, exclude the the quarter. and numbers sold the Atlanta during hotels strong and of hotels & the meaningfully forma include X second XX the accelerated

our forma quarter. in reflect quarter incorporated after numbers pro transaction and acquisition of will the pro the the Additionally, be of fourth to since Hotel been this the forma end closed our adjusted not AC starting numbers into have Boston Downtown, the

from adjusted include results period. reported EBITDA operating and RLJ's during Our acquired and one sold hotels hotel corporate ownership all FFO

of a second point percentage third X.X quarter. the improvement quarter Our from occupancy portfolio represented XX.X%

XX% both XX.X%, than of respectively. we portfolio's XX.X% Our of These ability the to our and travel September exceeded the hit portfolio peak rates, pandemic over average demand in and at as growing delta and to our finishing demand August XX.X% the Occupancy the was a resulting quarter with impacted operators to continued in expected better by yield summer in rate were occupancy July, from XXXX third and seasonality capture during results variant. quarter. Strong XX% environment. second provided third with normal daily quarter current $XXX hotel the

Our during improving operating million, which of XXXX The generated XX% improved led leisure markets Charleston ADRs to entire $XX.X EBITDA and Key Miami as XXXX such third to and by achieve in XX%, XX% portfolio of excess respectively. levels. of XX%, our West, trends the quarter hotel over

We being ability are despite XX% of XXX report of only revenues to XX.X%, with behind which operating the strong points XXXX. comparable basis our margin period were below encouraged XXXX,

with confidence performance when portfolio to levels. above be margin return should pre-pandemic to our us XXXX able provides recent revenues margins generate Our that

DoubleTree our XX Indigo Metropolitan of the as of During were Orleans temporarily hotels Ida. Hurricane XX The is New closed York also New the and Hotel damage remains result open. a from quarter, in closed, third

of third generated occupancy achieved $XX of our hotels average XX% the hotel quarter, the and XX.X%, rate During $XXX improvement quarter. daily from EBITDA, of representing million second a open

the We fourth are September second the that has of that momentum during continued started post encouraged half into the Delta quarter.

expected which of XX% ADR quarter, portfolio month be forecasted September. of will the in growth to of to strongest RevPAR XX% is During approximately occupancy approximately generate the is which from and result October, our $XXX,

that higher-rated is ADR start the since pandemic, are October ADR returning. providing to highest customers represent evidence of the Importantly, forecasted the

our of million approximately $XX.X third million, EBITDA line, from increase XX% bottom $XX.X quarter. an the quarter to Turning was adjusted the or second

quarter. adjusted quarter second per the was $X.XX, FFO share an of Third increase $X.XX from

a for being while remained was strong mentioned, quarter, XXXX. costs although the On current focus, remain fewer best in said, labor result quarter markets. our in demand of as FTEs basis, positioned Leslie operating our initiatives the third are competitive comparable environment below are to our in our required throughout remain to operate we lean better relative and in containment to Underscoring our limited F&B local encouraged current filling period smaller monitor model practices are environment hotels, vigilant the and positions. than persist environment. of given Overall, portfolio a continuing labor by is all to more challenges that this total focused appropriate successes cost tight footprints we applicants XX% expect operating and in with the operation. term, our attracting continued As With we on maintaining quarter are open that near implementing the we third early

high-yield been redeem and June to of for extend flexibility million; We $X repay capacity for fully X-year XXXX pricings our and additional flexibility of of XXXX the XXXX term which active the basis maturity activities a include: was debt; amended $XXX lower corporate waivers the sheet $XXX of to through our for both quarter to on million, agreements the is capital that to $XXX profile. our maturing term of offerings XXXX reduction general our loan and annual interest XXXX; billion to corporate the maturity XX execution million managing X-year very million balance acquisition bond retain with represented purposes. relationships and lodging were covenant added approximately these cost The during strong tightest to create our X% for weighted extension through our our the by proceeds credit date These a credit weighted X.X and initiatives debt, of of XXXX to X.XX% have proceeds X certain add January points. debt further raised senior and the rate oversubscribed extended option most the loans X% which FelCor XXXX. coupons ever $XXX years maturing use a first XXXX; increase lender a non-investment-grade a resulted of and in transaction bond, average average and testament from to expansion REIT; X-year These favorable our expensive bond these

We with of $XXX billion debt our XXXX. million liquidity. approximately until no unrestricted of to maturities cash, $XXX corporate Turning ended million $X.X on the of availability and quarter revolver, debt

maintain continue sheet. and or debt fixed our hotels balance XX to Currently, unencumbered. XX of of significant We our hedged our is flexibility XXX% are on

positive As we during corporate expected, generated cash third flow our portfolio the quarter.

the actual We maintain approach track are We flow on positive in full our and results operating current fundamentals for trends to managing on based year-to-date generate lodging cash disciplined the to the sheet. year continue. assuming XXXX balance a

portfolio demonstrated and improving, acquisitions. we adequate external focused are ROI the maintaining drive making remain allocation which of advantage fundamentals growth We we the outperformance recent decisions liquidity recovery positioned while REITs investment as through take capital Even on remain prudent to to beyond. to best among position during opportunities, and our lodging our

and continuing are our margin conversions. revenue prioritize we Additionally, to XXXX projects, X high-value expansion initiatives enhancement

a estimate many well embedded million model catalysts. to and capital be $XX remains operating sheet, between portfolio transient-oriented continue We ample RLJ-funded will liquidity, RLJ $XX a million closing, XXXX. expenditures positioned and flexible balance In with lean during with

to will debt average identify monitor and overall flexibility. remarks. reduce our the markets opportunities concludes to the and cost our laddering Thank additional improve sheet our weighted of prepared this continue increase maturities, our of We you, to financing balance

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

Operator

[Operator Instructions].

first question the of Our with from Bellisario comes Baird. Michael line

Michael Bellisario

to Let deal question that first -- me done? closing what -- on are conditions the and getting just the

Leslie Hale

conditions. a closing deposit. subject this to sizable is customary The normal Mike, deal buyer has

so And normal and conditions. customary just closing

Michael Bellisario

the for buyer? contingency financing Any

Leslie Hale

No.

Michael Bellisario

details? have recently? question discount XXXX the provide BT? a Where you that And then Where across guys was OTA seen and then you in to portfolio group dig Maybe And versus want can the nights levels? where trending for saw October. was into mix you customer I Tom, some

Thomas Bardenett

Michael. Yes,

QX, we continued a a what QX leisure in in as seeing started in continuation strong from Group, growth generator again, So to October. of mix to bit October. October, which here's demand more is The what regards become similar present QX. the in of what was that stated see little the we're is to to into and we

a sporting small X we're being into improvement. of And lot as benefited then And months. from you weddings. of business the in with the strongest quite where then groups, a activities sequential continued sports the we we bit BT up release quarter group fourth as picking as and going see October So well stated the

rise, we're So mix we're the that that. that rate with seeing comes continue and enjoying to average

small see instance, coming rates the start in regional that. and speed up pretty For have national and to with corporate significant along starting we're accounts see now been pick the QX. accounts And average to corporate

travel seeing to the Silicon accounts of quite we're in well. where that markets So corporate Valley, Angeles, and seeing bit start as Boston national like Atlanta, a we're Los

Operator

comes with Markets. question from Wurschmidt Austin Capital line Our the next of KeyBanc

Austin Wurschmidt

Great. compare lower-rated benefiting more then for us? more October the the leverage ADR those just for historically And drive meaningfully to from that comes yielding business you've had there versus is buildup an by with so you that, can along that? in and level Piggybacking BT and on rate rate RevPAR, out occupancy versus the 'XX

Sean Mahoney

it start, I'll details. provide over Sure, and Austin. turn Tom to to I'll then some

to our So XX%. XX% down XXXX levels, relative and roughly was occupancy down rate was about

And were relative sequential were so XXXX. October both from improvements where we September trend-wise but in those on of that's a to perspective,

Thomas Bardenett

to more us more for as which also our to you set called pricing trust it instance, about as used Austin, we can average benefit now, of an us with you is lean And sure and where to, we're got of that and ADR we're that to continuous of you some Hilton. it. make then in to the rate is And change second focused allowing the times which confidence XX% driving giving much in have this on example is we what's management allows through the question, portfolio on revenue X really part initiatives of systems that your regards recovery is often, that's pricing

of side. on the one that's the angles So BT

The brands would or that all setting other good a say about the your for bar thing versus dynamic negotiating which pricing, is are all really setup retail is is I a towards moving off XXXX rate fixed.

which negotiating of rollover the in we we're XX% which the at discount, And prices levels to rate rate pricing, from XXXX, with of to float to the integrity gate. and XXXX grow of anywhere where allows as the out have you us we're XX%. of not be versus to off we're bar now and QX group only dynamic XXXX the then group on And rate QX then XXXX, rates got side, seeing opportunity QX and XXXX fixed versus that a in to process, could from go for continues as So to rate lastly, through RFP and XX% closer have your levels. to for XXXX you'll rates getting the set 'XX in

So give happening integrity rate a it sustainable and in leaning revenue by the we're to when us to management what's encouraged standpoint growth. ADR comes transient some from systems on

Austin Wurschmidt

That's a far closing bit of to back given sale of the we market? DoubleTree of upon little comfortable up within we in and look pricing further, performance target think City that product how leading off really pandemic? deal with the the type exposure Or 'XX? separately, from where market should a should market as then the New And that sort the pending, the of as York perspective? of you submarket York, about interesting. kind are current with that then And leave does the Met you And Leslie, New in positioning

Leslie Hale

its New look flow and that is location, iconic right The but centric. being take perspective. disposition It's with cash we broad slower our Austin, XXXX. Upper of a for no DT Knick, an overall, have you generators recover, It Met, think is is of acknowledge York that different an hospital. it an York. which can that next There's basis, to submarket going has We own the to in demand asset strokes the to asset-by-asset side, have New East The York. you on We than on Yes. Marriott, exposure X% iconic at leisure has rightsized a to EBITDA I New profile. our recognize to less generally be would really say

assets X is So we right New to make think and that a footprint think, decent York sub-X%, relative we size. for the those

structure just an In the line a really this that us say giving on should terms you -- age, with given disposition assets to asset. to -- But of what for in do valuation is it's It's expect on cost of trades for and to capital similar valuation, ability the be us for DT. be needs I recycling. really would accretive

we're us on that above giving acquisitions the on of the doing, quality EBITDA. ability that at cycle use all the the -- drive margin, look the asset of a to you of and is accretive they're If growth in growth,

allowing about And trade so us and what we the do. it's to feel very good

Operator

of Our comes the from line Fargo. with next question Dori Wells Kesten

Dori Kesten

close remaining on revenues? Your XX% us levels able may on about view where an margins margins settle on Can your you pretty 'XX are below. RevPAR getting give be out to to update 'XX despite

Sean Mahoney

Yes.

conventional margin Dori, it's XXX of of So the is points wisdom somewhere that for COVID basis to the XXX synergies. the the expansion in industry because

to believe be well is positioned We continue that that to range. within RLJ

And comfortable XX-plus to XXXX levels early on I conviction. that. of to with that seen the even being margins ability get confidence indications so what around gives our think with And we're us below percent the we've

we're over as to the continue ability that environment. remain and is in F&B housekeeping, structure other the The to factor gone those about as implementing that this margins the cost well things, we've are well complex in limited -- with we to and alive respect the other all around past confident,

Leslie Hale

sort boil And XXX ourselves what our going train is Dori, a our XXX is really to Sean the to mean, basis I we mix of that. got have categories for to generally, allow add on I down Yes. who's covered: a think sort points. that, to portfolio and customer? I And we about that talked I mean, talked would and think their who of about is it aligned which to peers And housekeeping, going F&B, that's the can sticky? portfolio to it clustering be

got allows we've where in, fact service chain structure, that exposure, train about you customers our that are Hilton the to of we opt-in our about Hilton the sort us to our which think efficiencies committed has think you about the If scales our think that the talking to able model, think give probability of higher about has of been things food industry all those you length achieve fixed us those of a about. you stay, being

Sean Mahoney

the that margin add-on the the et around talked of points earlier enhancement add-on to is basis on cetera, projects summer we our have we the to And respect XX industry about a the are of incremental in top we that unique renegotiations, of on RLJ margin which initiatives summer lot the with where in outlined to intangible. earlier contract

so other the what And industry portfolio. in done is part that's I there's think that plus the we've

Dori Kesten

demand? me can international And Okay. remind to exposure your what you is

Leslie Hale

portfolio international Historically, our or portfolio. across X% across to X% our X% sub sub was

Now a Francisco, and Florida. New York obviously, in be South San higher that would

Operator

Our Neil Malkin next of Capital question line One comes with from Securities. the

Neil Malkin

back going Met for to The Just a second.

recovered the of does prices, over view plaguing think or given selling I don't even Lastly, aware York is soon, relatively before fact that and what to And have was can't somewhat? fact margins how that given kind transact the really if when about you're can that next And now maybe I X the issues know X but imagine versus pricing the is -- submarket the that that the on sort much great. ADRs, this the need to say, New everyone that's your of Manhattan of you case, years, COVID. say

Leslie Hale

we've this here we buyers in -- context would today. I is asset assets we're because it. has we would value. market. its make say structure of capital I thoughtful process can What that we our limited selling and yet, team within obviously, of to and is within based in at that identifying relative was this been And very read-through run. sort sort our that of would haven't needs good is fit on balance first in cost hold will continue we our which in of I maximizing What say the of on that been different an Obviously, the this to its on all, the that asset it market. What very assets the light its closed say is no describe Neil, So how have there's that the we age,

As question, Its talent iconic in I on flow a mentioned an was cash think before I Knick different. location. is It's fundamentally The asset. prior a profile

recycle accretive This us And no above trade. cycle from very giving result our drive EBITDA. as of acquisitions, perspective that this growth to the read-through asset of so out EBITDA and into allowing is to really repositioning us ability there's from this a

Sean Mahoney

accretive I for And this acquisitions Yes. part, do other very as broader this the around at of it able a be strategy the then to to ability fund a component and to Leslie repositioning part -- of self-fund portfolio mentioned, is accretively. our a mean, us, way. is to critical our

buying both on an So we basis. at times -- at will we're where selling where we're is XX apples-to-apples over -- than turns higher today,

the initiatives is accretively very is metrics of cycle. had acquisitions a dry our improving and how for profile, our throughout a dispositions, to our portfolio ability we self-funded improving and powder the for that effectively that we're that, improving shaping acquisition while believe existing -- growth with and fund our preserving while our we because so growth quality, critical it's portfolio And while part

Neil Malkin

Yes.

Okay.

the hadn't quick, of you in maybe reason Just that the approach have related waiver words, to how if that waivers? the liquidity from little you positioning? is covenant guess, bit a had timing be in terms restrictions In I been to really would compliant the other you different

Leslie Hale

expiration the management and franchise with say of aligned So this agreement, Neil. the agreement the was the would timing I of

was to X to And agreements this again, process important has us. and to about being with exploration so of our us thoughtful do those timing the it relative

Sean Mahoney

influenced not the The was timing Yes, driver the waivers. on timing. stood that and was the of where by we covenant

Neil Malkin

for just actually is acquisitions. me Last about more one

cash also your that 'XX, that it, another growth improved lot large very So lot potential say you quality, obviously, earnings potential. cetera. balance. really you And sold and focused to a EBITDA the But gave in a portfolio, et way of a is of

you months, a you'll acquisition think the little next, highlighting can I out more you're about talk maybe XX imagine laying market, levers X. internal up particularly, I you on that the in sounds over but waivers done a call could front, bit, the great job pull. see heating yourselves it, you like it's so being of the It and things exit aggressive next the seeing? you've quarter And the or But if over

the talk looking some at So kind put that and to portfolio potentially to work. of opportunities that about then cash of bulk

Leslie Hale

starting out. window. sellers that seen that's with leverage asset. on better move to a line to growth a us market, from going the So given across deal a where has cash, minute, not focus would our of for off-market started focus your all That's come meaningful and access started the to What back we be the get that a coming with that's sort We is, type. multiyear us market, deals did question I sight say, to out. opportunities. emerge. you sellers opportunistic to bid We of on. to amount the generally ability right. deals deals. at. motivated lot the of then we the and of more continues buying close you you've step around product come to to balance look And and us given We and on There into to asset being flow if A first deals. one, pandemic more and relationships the the of are consensus that. sort it's to focus to there's And seen more create external that internal deals at sellers, and Neil, increasing to are that's We capital to of see recovery But lot have think has chasing both We've we

think in line is we and asset, the Cherry are that profile be to growth the consistent quality alluded I of terms examples great asset at. that, is the with going Creek, Atlanta of Boston the that submarket to which of in looking the we're of youth and the

So are making to is accretive our accretive from around and sure to that fronts, those to things -- to returns going a metrics, team be operating accretive our on perspective as deals continue the disciplined well. all

our from is capacity there perspective, to we're the deploy going have incremental do flow about we while remain so and disciplined that. deal we how And

Sean Mahoney

line second your our relationships our question work waivers. way the the the liquidity, as the a respect again, because number strong and then the have of well The with around our of as that credit execute Once lender acquisition credit to the within our $XXX part is to of our plan. ability agreements it's really limitations not net that acquisitions inhibited million. And

if start net-net, we've so today, that about we at And would we execute X. talked everything

that still so we full And have capacity.

-- not ability that really or getting execute. the so is covenant of waivers influencing And in our to out

on our when the first covenants, based of that be second in Now we is the waiver of good should to period we is out going ability a our inhibiting get measure quarter not expectations believe that position to plan. our covenant but to is which execute in be do we that XXXX,

Operator

Our next question with comes Miller line from of the Gregory Securities. Truist

Gregory Miller

your My hotels? leisure-focused first corporate-focused question you are just you roughly close provide Versus how to staffing. for staffing hotels? Could relates normalized levels your to

Leslie Hale

occupancy, running that occupancy and about levels. ability overall, our levels. there's to But demonstrates, going to discussion XX% think on et -- I that, XXXX At XXXX for result labor, a really is of opportunity confidence about labor think with a our have or those going have lot lower pressure, Greg, efficiency really at not highest What because know still not that's demonstrates, we wage occupancy. above back it, of to back been the there's to that We hotels, I percent we're in XXXX XXXX related that around call the and staffing been that plus XX kind have say, -- running our of cetera. that we're hotels confirm had XXXX of, portfolio, XX% have as minus which running would of levels. leisure hotels our XX we're are

Gregory Miller

My behavioral weather if markets to markets, holidays not today? And shift markets and it's related the northern related over other to bookings what's some in back leisure pricing strengthening we markets some the concentration. demand the I'm cold and a question some or have of weather going sure the urban warm is weather just on we're seeing holiday data in indicating to cold markets.

to pre-pandemic XXXX. So able or Knickerbocker is cold markets curious versus impressions to the in Thanksgiving the you for provide be relative and weather anything progressing New holiday on some how the pricing levels if you pricing Year's bookings December of share could might perhaps initial any power about and package

Thomas Bardenett

Yorker, with I first doing, holidays cold in interested a What last about is an I If get what say And it's year to what's the I'm New been all, able lot and in together would Tom. crowds. you larger Greg, consumer and Thanksgiving, markets. of upstater so know -- they weather is interesting about they're haven't think the

in weekends creating the do that we actually certainly, that's think so we're shopping surge And bookings. on well. And as seeing a

For Boston a some and give New as York, detail I'll as that. mentioned around little Leslie instance, well bit you of --

Thanksgiving it's about because concerned restrictions significant is When think minimum demand weekends, in further shopping only York. you driving length Chicago well the as because New being York, as availability. stay parade about New of we not With have out back, booking they're leisure in

power. your Year's that encouraging rates that's last the Knick. to and highest 'XX The And we for to we average So have we where are pricing can Eve, New drive prior then question even seeing about compared

instance, rooftop Knick's drop. you actually The know, the ball For overlooks as

So demand side we're on in average rate levels to the the at pace levels to similar real rate and able a drive in from better coming be past. prime and is estate

leisure the weather going the is transient that to the fare holidays markets seeing well the say would to what's I that So with bookings going we're cold and that. side are on and are drive future

Sean Mahoney

rate stats, been Yes. urban Greg. is urban has this growth the in so year. up And strongest really far seen rate We've -- showing this our growth our

data, basis of the XX% this through a approximately X,XXX the grown, year, has under the by from beginning points. and and current ADR entire that's little outpaced Our portfolio is

to of strength markets, in urban so like And up seeing And our markets we're drive year-end. the markets. leading in rate these from ability Boston XXX% are

up York New Austin is XXX%. XXX%, up is

in cold are we're is ability -- drive cold weather climates. portfolio. the the of And to X X weather in that mentioned our urban rate areas, think I within seeing, I these So

Operator

from question Our comes next Barclays. the line of Anthony Powell with

Allison Gelman

for Anthony. on Allison is This

Or seen How rooms? the we've could those business you think segments? focused this you pricing and rate year. filling transient push pricing do leisure in do you next And So on group are you strong segment on more year? approach

Thomas Bardenett

benefit the we dynamic a retail as when One pricing, couple a DAR we of And things is, So about of go pricing, once fixed that floating for considering. versus and pricing. up, off you think BT earlier that that markets. that's on you're the start all talked we're about to see

in it have that's pricing past, XX%. have move to your think a might I the accounts on been of So than that XX% dynamic versus, more strong

to thing second of the those have you The the all are that from XXXX brands pricing rates say I is for would XXXX. most roll fixed -- over to trying

back So recoveries, discounting try in to you were to get past to levels. rates those

we come rollover, in yourself already that QX in to out in if on floor levels that to start try side, inability no continue higher QX to so you that, a travel the of that XXXX. will, XXXX, And is plateau, versus position with are see there's starting seeing going at to better at and BT they to the to Now allows into that past. the in when coming you

the as are to leisure. seeing, let had what that able when lastly, already but of at the think very us transient back, pricing the markets. power we when of we're between we're to that opportunity to combination on as well. do of to seeing small The that additional on And compression give and going on to based to the both -- and think XXXX leisure in the there's effects things there's sustainability On be domestic levels pricing travel side, with and be our also citywide groups, come power in there's obviously pricing, back, see realize and to people again the that coming that's start know group that dates traveling. booking well inflation consumer and we and and are some demand, alone those around going we're pace some has looking pent-up We a and been go as international group

Operator

of Janney from next Our Scott. with Batory line question Montgomery comes Tyler the

Jonathan Jenkins

This for is Jonathan on Tyler.

need to wanted of labor lower on kind you labor you do First needs? or are up to providing guest occupancy environment? Are this services in side. ample think the feedback me, you'll from add one these still follow many guest I you hearing? meet to of And what

Thomas Bardenett

Yes.

and to opt and we've both place. beverage very is So gradual and are say housekeeping reimagined a would with consumers back want receiving what noticed is What come in taking interested after I food in, good the experience changes getting obviously that. new deliverables, there's in

all hot and you breakfast instance, know, at properties. select Hilton's service providing back getting launched by For as into Marriott. that was full-service the

providing. we're what reimagining we're So

of to it's in one it's and free easier a was the that that it's accept the construct Now Leslie little to the portfolio, what mentioned things be. when is deliverable our rate going of

providing that high a still adjusting would versus of so high those is what and And reduction I having items a offer and actually value it quantity. great is call quality

with levels leisure. coming back, that's pretty regards and getting in primarily acceptance So customers we're been to good

there. is breakfast BT the to starting is again, they're fact that As of appreciative arrive

XXXX, tough it those were through breakfast in times. remember, you we more As was of going a bag as

reimagined beverage getting to back and food So levels, but experience. a we are normal

we're but me, from is say being rate to the clean cleaning The being the go benefit lows. that tight out historic in and consumer take light excuse housekeeping room the the additional tidy that getting would the is it's On -- all. give still front, and linen or efficiencies to make received the the increasing, trash, having I accepted at is comparison the them a just well into or at to take not bed still

many with it's because hotels. our our opt-in versus that we built-in that, stay to think lastly, understand regards new an nights for our length extended to X-plus way in it's I of a so And the already an and the of stay out. suites, of portfolio that's opt that's customer XX% where educating have And

that business where their that it's staying long-term a kind So expectation customer for project is on already while that of is they're prepared project. home second

momentum our And and the think guest that satisfaction so, us far, out on we're rolling see are that to based at enabling property the so scores reimagined level. model I improving there's

Leslie Hale

mix, capture retrain our about of the of the allowing really what talking in to of Yes. Tom's comments of ability kind customer. really of our portfolio some us earlier of the sense sort to sort of I I mean because was encapsulate efficiencies all

Jonathan Jenkins

question I kind Great. And the here. transactions there. then and follow-up bigger appreciate the a detail a all on Okay. strategic of

transactions done composition? where Boston. those in you're Is the of where Or in the that markets X byproduct in maybe remains in in pricing and Atlanta a the and of portfolio recovery more rational a a and best thinking finding value? of the urban shift sign You've confidence it is broadly

Leslie Hale

that the It's our transient-centric of want They're in portfolio. XX% can No. brands. of high do hard lifestyle branded. mean with are great They're medium these our fairway how shown to coming comprise of versus right we portfolio premium the quality. want These very we examples with assets, are rooms. from -- kind what They're positioning of to terms middle I small we're acquisitions We've the oriented brands of. young of space. rooms revenues in

today. position buying historically at And we're so our sort conviction in looking great what terms show we what we we have of think that of portfolio to

Operator

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

Chris Woronka

about I start I but had working know X, either you've -- started a you're got to you've soon. on. repositionings the or about sorry, question the

I you going that to said to operations. other, think For be minimally the those disruptive and are

still And any going then those X come, other do that to are on materials costs rising to still we in concerns of have be to scope? about the upcoming the they limited is or it of be going their any or is kind there repositionings? -- are disruption? terms For X for very Or labor same

Sean Mahoney

affirm the get underway on underway well and Yes, track we for to by Santa of are I about think around those the the and Charleston -- conversions, and on we Monica. initial XXXX comments Mandalay Beach to are on your 'XX end on

to they It's likely we that cetera, to scopes we've et be the for will launch going we there's a with next value associated be conversions, creation But a around conversion we cetera. several ROI would capital year is conversion, specific. them. scope, comparable thus think, they're per the -- going otherwise to that is what will future to our the I have years. done couple On far. be allocate It's view -- to asset said what the significant we et wouldn't going specific, brand from

With the costs, factor to -- we in capture for couple baked provided reason. a around to in, think, I into high-quality budgets a obviously we able to well. a so ranges factors et which marketplace be still going conversion real theme to today, core time conversions both the hotels provided cetera, challenging when the driver that the years, are range as that of at brand ranges the be materials We construction those the labor well and a in a perspective, likely which market, to sort we environment. of lot labor provided the there's those was of as as believe incremental being concerns through respect around will of cadence to be And going from it's of rate it's we a costs, a incremental

Chris Woronka

is And follow-up over The a acquisition that going near capital Great. Creek Okay. the require to that's any just contract, to term? under that. Cherry

Leslie Hale

It's very recently-built asset. young No. a

Operator

question-and-answer final Ladies gentlemen, turn for our session. Hale to comments. back the concludes any and this floor I'll Ms.

Leslie Hale

week guys everybody, next at us to to right. All you, look Thank for forward you today. We Nareit. do talking some of joining

happy of you, we a holiday who For won't we wish you those you the you season. Thank as see, everybody. into holiday move

Operator

conference. Thank you. This today's concludes

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

RLJ Lodging Trust (RLJ) 5 Nov 212021 Q3 Earnings call transcript