RLJ - Earnings call transcript Q2 2022

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Operator

Welcome to the RLJ Lodging Trust Second Quarter 2022 Earnings Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the call over to Nikhil Bhalla, RLJ’s Senior Vice President, Finance and Treasurer. Please go ahead.

Nikhil Bhalla

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

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

Leslie Hale

morning, hope everyone’s Thanks, Nikhil. great I us a far. everyone, joining for Good so summer having today. you thank and

exceeded being quarter tailwinds lodging solar demand, portfolio quarter second travel, momentum fundamentals into citywide strengthen strong business continuing robust urban benefiting from our lodging July. These performance expectations summer ramping as second stronger and throughout the attendance acceleration, fully Our open. with markets fundamental demand to rolled with the

portfolios boutique whose covenant of our backdrop, positive quarter of operating significantly execution Nashville. delivering three lifestyle expected to power, advanced quality tangible to relative into to further second XXXX execution quarterly generate surpass authorized we improving Accelerating our to strong of of strong levels. our meaningful Directors conversions, overall ability was which increased recently repurchases. in high quarter financial sustainable and XX% capital recovery growth we these acquired pricing throughout XXXX. XXXX positioning led strategic in June and strong notably, We portfolios initiatives materially results, for successfully The possible our of our strengthened industry was to sheet. all each made a create share RevPAR our Board our has than confidence successfully June market demonstrates our demonstrates number exited markets the an value flow. by dividend, a initiatives, ability recycled our addition recently accretively as cash better XXXX our We the levels, waivers. In Most our a free hotel balance Against ADR with completed of high We ADR demand with achieving month achieving XXX% of sequentially across shareholders. our

outperformance travel, stronger greater was and in driven our robust urban by demand, business expected quarter than leisure particularly this attendance citywide markets. Our

achieving growth July, quarter, Our urban a allowed which robust the our high of to XXXX represent XX% significant of urban us hotels, in strongest rate RevPAR momentum EBITDA which drive this of levels. This June XXX% had XXXX ADR up June. demand in with improved achieving to The carried new XXX%. into of two-thirds step

of ahead in our full see that the drive markets the ability to an to of of room ADR is Our exists new rate. highs urban indication recovery one

the during Group open with This consulting a company were such strength demand a results, of D.C., bookings, accelerated travel allowed markets of of financial such sources of a hybrid from work as quarter. each month achieving momentum are high of weekday from revenues in markets. leisure evidence of to urban with as exceeded as be as emerge quarter, group pace the and from in driving a XX% increasing a the our improvement Boston, the of The which year. to and services, by of watermark. well last during over fully June benefited of recovery citywide, the underlining SMEs citywide Further technology XXXX These improvement second levels. Orlando a the our transient XX% many greater and driven that small- of of second RevPAR which the primarily from corporate in Our the which and increase with transient venues rapid first many XXXX first medium-sized Miami, beneficiary the and XX% Group accelerated core demand, in groups, robust, segment. of markets significantly improves business transient XX% broadened return year and demand materialize return second by is materially short-term, were by quarter, traditional positive this major first urban the quarter, significantly during attendance, not which this XX% business quarter, environment. recovery social open beyond demand recovery as the is industries, achieved which demand our as by the business ADR from new revenues growth business are increasing weekday new Washington, demand, from returning quarter, with XXXX driven also the continues trends quarter but substantial

Notably, leisure urban in expected, bolstered exceeded by leisure of Key and robust demand that our Charleston demand. revenues and Miami, by key an driven our ADR XXXX second as in XXXX was XX% XX%. leisure XXXX. during of emerging of leisure quarter, above quarter Finally, our ADR West, the leisure average the strengthening second the by exceeded is markets was

EBITDA on of points As operational only XXXX. XX current we were and demand basis XXXX portfolio the headwinds, our which throughout inflationary despite quarter, below second controls, achieve which enabled margins, improved maintain materially EBITDA hotel tight to XX%

allocation, cycle. the to million disposition expected advantage internal the Charleston that in multiple to profile into stock the which meaningful very external we debut discount from our Mandalay respect stages share accretively $XX a throughout executed took Beach, the capital and and or underlying during at price, Monica, on track our year. repurchases of Santa dislocation on active objectives this proceeds final of are growth value. with In of and half We are remained to entered and we Now second overall particular, enhance conversions of the redeployed

outperform We also a hotel. to sits Downtown demand Nashville, our hotel generate the RevPAR and market X-day-a-week a This of that acquisition average yield is portfolio the lifestyle and X projected are is With location X% NOI times both positioned with we Nashville, a X.X%. in our a stabilized hotel The believe development a cycle. into within to submarket. our underway, expand top unique Nashville of to Bullseye throughout footprint hotel significant boutique growth

capital authorized the increase covenant free will our all our lastly, flow recently reflects allocation per exited successfully we economic which can quarterly that waivers, sustainable cash which board of And, phases our confidence Additionally, financial our flexibility. cycle. generate to of our portfolio throughout this $X.XX enhance dividend further our share,

continue we We return seek investors. to a dividends total provide view as important component to an of

highly increases Our allocation, shareholders. believe underscores our our disciplined to capital dividends in balance commitment also optionality only provides. approach tremendous Furthermore, to but the not demonstrates we the deployment returning strong to validate recent capital sheet our capital

second fundamentals markets. of Looking year, should ahead, we the be that of the by will believe which urban remain half strong during recovery driven lodging the

demand. benefiting macro from environment. expect urban urban in gives in continue to despite hold, confidence group the the markets The that is their taking improvements uncertainty further current transient in and demand us We to trend ramp recovery business in markets

In trends the the far seasonality this quarter fact, third seeing as of from strong quarter evidence second we normalizes. continue are into

RevPAR- July. and markets in our leisure-oriented elevated Specifically, remained

of travel. We to expect leisure to leisure benefit are the from urban remain and should markets emergence since continue especially healthy, fully open

Our business from July transient improved revenues further June.

year. the expect continue remainder We to travel corporate throughout of to the strengthen

upside growth ideally in hotels. ramp urban is to benefit which of group including that of uptick with acquisitions, conversion groups currently the for current continue our finally, portfolio urban their this Our to third markets. remains could recovery incremental us provide as further in shifts for the recent in should remainder to the demand the unique our to booking growth, footprint, to tracking ramp at believe the quarter drive improve the centric confidence of quarter XXXX well XX% recovery that the pace our continue we with international They urban is extremely positioned post-conversion the with of providing positioned trends in year. phase catalysts recent or Overall, several recent quarter, And, booking up levels, during markets.

And Our footprint significant over efficient Sean. portfolios our strong provide capital turn positioned environment. this allocation. sheet our in throughout will value now finally, Sean? fewer to balance to significant which call drive with continues to inflationary We that this allow cycle. overall FTE respect us is well to the positioning will I believe with optionality

Sean Mahoney

the since our and the We was of were strongest excluded remaining our the exceeded hotels quarter June, gap the numbers which the month was for second Leslie. in pleased which Colorado, forma with expectations pandemic. during the the narrowed significantly of XXXX sold quarter. Westminster, our results, sale through accelerated to Thanks, Pro Suites XX SpringHill which start

pro quarter, pro the third be numbers in our the reflect and have into not will transaction end announced of since been numbers in forma Additionally, acquisition our Nashville, to recently after adjusted closed forma quarter. the incorporated our this starting

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

second and quarter approximately over and of portfolio first daily demand was average Accelerating which XX% also occupancy of XXX% quarter from grow urban levels. the second second XXXX ADR from $XXX XXXX. with as the quarter. XXX% of of month benefited allowed generated we Growth Our of of power quarter, to XX.X%, was quarter the XX% markets, $XXX, rate was strongest throughout quarter, a of the XXXX. represented the was June in our which strongest pricing

demand, Diego, XXX% by or Manhattan, Austin, our markets, levels, in exceed pricing encouraged key significant to Orleans. were are markets the robust XXX% markets, benefited most from as ADR in San and demand RevPAR leisure and In a was in these as at XXXX in in such seasonally in XXXX. XXX% continue continued urban to New allowing and We power fact leisure XX% that strong above our XX% markets Louisville, in our

levels, over XX% XX% This RevPAR in at improvement urban and second of Our XXXX beginning sequential quarter June. primarily than XX% markets. in in of XXXX expected of of May, in accelerated of our the April, stronger the from and XX% by we was XXXX outperformance XXXX was driven quarter was

segmentation. to Turning

of from as improved leisure during strong, levels. resorts corporate of travel second XX% by XXXX. pricing and returning revenue allowed evidenced RevPAR, group and The our group XXXX which significantly quarter, group to both increasing XXX% the remain XXX% demand achieved our citywide of Our XXXX quarter power achieving

levels. XXXX are operating The led levels, trends our we represents quarter of during million, XX% portfolio transient, XX% point from encouraged which business XXXX the growth the achieving Finally, quarter. $XXX.X first an to increasingly quarter BT which of EBITDA represented improving achieve improvement of second revenues of by with basis the X,XXX second hotel

We our levels. with are operating quarter which basis points despite only of revenues were of drive strong the ability XX.X%, of XX XXXX, encouraged below approximately to comparable margins XXXX of XX%

quarter million hotel was XX% EBITDA Our in and million of and margins May, highest pandemic. forecasted the margin and with generated of June, of from represented in $XX.X in XX.X%, June, $XX.X April, and and be throughout the power. profitability which represented $XX.X million continuing EBITDA levels in the hotel XXXX line demand results to strengthened July are the which Preliminary pricing benefiting improved

we forecasting in XX% of which occupancy at resulting levels. $XXX, and RevPAR approximately of approximately July, For ADR of will are XXXX $XXX, be XX% of

levels. expected to XXXX operating are margins at while expected XXXX July exceed to our ADR to XXX%, is levels be line our in Importantly, with continue

EBITDA the per bottom $X.XX. to $XXX FFO line, million quarter adjusted Turning was second and our share was adjusted

with while the Underscoring approximately the comparable XXXX. expenses, costs On lean current which of better of operations, our continued period quarter, costs containment second operating our total quarter footprints were the XX% suites limited our environment operate smaller and a longer as of operating fewer remains Leslie initiatives portfolio length XX% maintaining operating are F&B labor quarter operating FTEs to we remain current focus, remain of a of basis, inventory. in of our representing below Within hotels in As the given relative cost vigilant and XXXX. benefits, rooms stay with comparable our demand our in model, for second appropriate positioned below throughout environment. result represent quarter accelerated XX% mentioned, that the wages required second

than approximately quarter of are environment levels, is second that encouraged labor operated approximately with occupancy was the we we fewer our operated at pre-COVID. While with FTEs XX% improving. Overall, hotels XX% XXXX

extended additional the so basis of create allow credit during by been have our over share capital our line We credit on on points. million of revolver, extension sheet agreements period, our corporate further covenant far corporate the waiver $XXX under interest to $XXX repaying XX and to a which is and a secured lender facilities, transactions our April cost remaining the Amending these the program, repurchasing managing our our two, maturity share credit period the costs X-year year. first $XX our on lower million stock XXXX. strong term active of very to will outstanding the credit relationships and of our repurchases loans options loan, million favorable balance on flexibility which testament reduce corporate execution covenant accomplishments These The repurchase waiver profile. this include of exercising and to exiting

X.X and rate interest our is years, X.X%. Our average weighted average weighted maturity is

refinancing strategy from We balance successful prudent are risk. the to interest sheet mitigate execution benefiting our of and rate

agreements, current fixed debt second the protect the swap hedged quarter, have As until end valuable us no we is and our of interest rising maturities the environment. which under debt rate XXXX from of XXX% or of

flexibility in XX XX remains to hotels balance our our of continue unencumbered. We sheet maintain significant on

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

We Now, $XX at our share to program X.X under we credit period. amendment million capital quarter, share repurchases during allow where repurchase average active the the $XXX million corporate share share. during of approximately turning price allocation, program agreements a second new $XX.XX approximately the for previously an our announced of to we per repurchase million shares repurchased and waiver were

sustainability to lodging quarterly $X.XX starting share, demonstrate and recently repurchases dividend. strength fundamentals Additionally, share as The combination the our increase commitment $X.XX per balance dividend our in the to sheet, our our approved mentioned from capital and the the board shareholders. quarter before, of with of the third increased an to of dividend healthy of return the confidence

managing continue disciplined to our approach to We sheet. a balance maintain

estimate decisions capital lodging a will portfolio catalysts. operating expenditures $XXX liquidity, cycle. have embedded remain transient-oriented allocation closing, sheet, million remains prudent be a approximately In many focused as results balance with well portfolio recovered, RLJ positioned with position we to We Even drive fundamentals and on our to making model still entire ample the during XXXX. during lean capital RLJ flexible

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

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

Operator

we’ll comes Capital from time, session. [Operator question be Austin of with line At first a this Instructions] question-and-answer the Wurschmidt conducting Markets. Our KeyBanc

may You proceed with your question.

Austin Wurschmidt

for Yeah. Hi, the taking good questions. morning, everybody. Thanks

the see your seen you on talked So Leslie, urban of momentum portfolio, in particular. that hitting that And, the you it in rate guys July have levels. of XXXX significant you’ve I across opportunity you sort XXX% think, hit you suggested markets rate about

looks or back And do understand, through segments So we can see year? track what opportunity like? upside? are could driving of you the where half us that you kind that Maybe of really help upside the most think the just that what have

Leslie Hale

Sure, Austin.

the obviously, of in that, And and look of But only the by relatively both that for BT, acceleration urban did from of revenues at group was when the return is the leisure. think group in at BT was at well were standpoint it general, and quarter XX%. driven second you the obviously, XX% pace. I

have fully rate the a higher incremental giving management lastly, above we back. us Those conditioned on side, back has despite confidence combination rate, urban, fact a That is rates. got in that give out the we that are that levels BT price of been more And and customer that today, to in come So things recovery of in rate. inventory, we’re is are our then, in the in perspective, perspective. and how you’ve sensitive lease not was drive upside there’s upside really confidence all rate managing XXXX and we’re of yet. the demand BT in right? us that our revenue have a ability drive the terms And courage couple of our the smarter to mind keep coming consumer your So the on both on on rate from things we to ability

Austin Wurschmidt

like to said So just it has following-up month-to-month, that that, that the first think was mean, I revenue of XX% how specifically went BT XX% you component? I on this then and quarter, BT trended mean, in in on I quarter, July,

Leslie Hale

We’ve seen the sequential side, and improvement throughout all our the Austin. portfolio, segments revenue on

Austin Wurschmidt

you’ve with Got I for But it. point certainly for market the on Nashville one that fits And recent the time. some certainly has purchases then just some a been acquisition. the Nashville supply mean, done. of talking

deal. management of did to curious you Or easily just to speak that you how What how I’m see? do so, get if how to you And asset could types that X.X%? think? kind to underwrite you underwrote X% of you opportunities And conservatively

Leslie Hale

let would So me on talk supply. – question say about I your

can’t you at I demand the years of the national RevPAR market, you supply, the Xx at as It’s side important in ton has market. per that’s last growing XX years. at have think grown demand Nashville about has There’s that that been the for so when X% well. just the annum for into think a supply understand look last that. to at XX to coming demand look

market, powerhouse. in as expect a campus demand think we you you’ve hub, are significant year and about a an alone. group regional multiple We expansion, X% is got know, it’s another When all drivers market. It to to corporate the there, in grow Oracle’s X% this the that the that Amazon’s Nashville building entertainment

urbanization this in a airport tremendous the X-day-a-week Downtown, particular going a in XXXX the in underway, which location volume today, ahead asset that market that that’s Bullseye market. is has that’s reflected passenger was is rate. so and demand the sits that’s levels, in then place And demand there’s a There’s taking of lot on expansion of and is

So some and coming on Nashville. there we outstripping supply significantly in think into that there’s demand lot that a the we’ll while continue incremental market, going is do that to is

the same why all an conservative terms ahead bidding of have. In mind keep you conservative. of deals in this our that are in that transaction assets compete their underwriting we did, processes. to market that conservative which current recent off expect take us. And generally for the side, we relatively we And, we’re are expect underwriting, could a don’t underwriting natural trajectory, is was Again, because [ph] to our underwriting and the – we our nature we generally reflect in

Austin Wurschmidt

the for Thanks time.

Operator

Our Michael the Baird. comes from next question line with of Belisario

You may question. proceed with your

Michael Belisario

everyone. Thanks. Good morning,

Leslie Hale

Good morning.

Michael Belisario

more one can the just then XX of Leslie days, And optionality color it XXC also relative some give that the about background how deal, brand. and to came the that and just last for the on that’s you estate you kind if think any going maybe there, just when you value brand together, given with everything Nashville, in market got kind and on on how us plus real comfortable how you property? for of have the you

Leslie Hale

Yeah.

was to for able in and we of given that was deal first buyer in bed, use transaction, again, beginning us that actual terms longer of and on that able the say This to the our at parts on jump my fell of and, will complicated a a and some debt as was the a out balance the of the were part, in take to prior Mike, take on those team we transactions, jump And, off quarter. we focus few bit little had I’ll were coming market these solve. there we I’d was here. curate. said there property deals So, a that is before, together we’ve sheet,

market the at RevPAR advantage gave yield that on in that we most Nashville the with attractive, have are too we’re happened which jump look Obviously, that the we think take if very as getting accretive at is window portfolio our being recent us as to and well that it’s trades underwriting excellent. basis that the in a so asset. the asset of this overall And you to, unique fact and

in not us market averages a that clearly we’re and portfolio Our today. is expanding into

fits it and we of with we’ve the own to brand, asset. a been all, the brand. The itself quality as growth high in core. And into buying. asset As brand within what a the young first is room-oriented a of kept this core relates It asset what it keys. lifestyle division It’s market. to continues is XX-C be XXX of a lifestyle a

And at distribution, market, look a the we submarket, we asset, looked at so with we operational upside associated at believe the asset global our when looked this asset. at we capabilities. we we the look And at look as management there’s core and

an that’s and our are familiar think with not standpoint, branding those and right the what sort of of from kind attribute For about spot our or – fits a the curio about who between of where – fits between it lifestyle. tapestry. think asset an sweet wheelhouse that within it we And autograph, suite

the about I’ll combination on distribution, So on more the we add upside. drive global the of branding. feel color to asset management good some incremental operational very our the that able let being and brand Tom

Tom Bardenett

Yeah.

So comes ability good district. their demand compete avenues. this we different with that of about really you the amount if the there’s morning, of impressed were from heart entertainment X-day think market. What in significant to we’re Nashville, a was really And close And to Mike.

started ramp before brand, and on it’s and Avenue of know Leslie’s particular Fourth between we as when very almost this comfortable, happened at in we at opened now. feel the XXXX. look And independence actually opportunities, we city an just to autograph, a Alley, asset in for to their there’s U.S. finalist we you it attribute itself. award it what’s look XXXX, for see And Alley, this as when point, So row Bankers won COVID Printer’s that rate

very funded amount to the that going a quite great billion that’s there’s the the of condition. the Obviously, XX going brand over riverfront Leslie location, not in about only asset, We city ops the of happen Oracle the And then the mentioned [ph] development be to Leslie where feet riverfront by significant is the and as development be Amazon for its area but So commitments most and new new significant. that’s going the square it’s strong in to importantly, feel mentioned, parks. the center and million near excellence. campus,

So coming begin to with. in being us towards addition already a great it’s all to location

high midweek. obviously brand for group and benefit footage pretty then weekends, we’re business There’s is the opportunities And a on the high So market. we asset square the from within itself. which great leisure

we’re So in at as can brand where we as think with it. and do pleased pretty the with we’re well location we the what

Sean Mahoney

last the short-term encumbrance point Mike, optionality. contract provide then, on management will in is the us with And It with optionality. is a encumbered by that core a

excited itself the optionality We’re relationship, about within but embedded core the contract has it.

Michael Belisario

Got it. what’s What’s Thank And of for California, a there. just lagging fundamentals? We’ll seeing latest get Thank on like really And ground? provide you is again, your turned you. the forward are on on it one maybe that basis. go terms then you. just there? in What update assets the looks question, just changed more rate Northern around

Leslie Hale

continue. there. improved overall, provides at I’ll mean, are But, XX% faster XXXX I But let and in and citywide we’re BT stands in taking there issues rates about addressing and address improve structural quarter-over-quarter the is RevPAR pace ramp color. about as at some XX% some the recovery XXXX levels, mayor of we and well, expected. XX% Tom the improvements encouraged Yeah, by have social the actions to we what up by seeing levels. And been than and

Sean Mahoney

all from which in XXXX gone in X just way and or the rates so. XX% of rate we’ve market the month, perspective, is last within market, months in market the up jumps Mike, improved every until the improving actually so basis a rate it is over X,XXX points the before, was the And Tom,

on really the rate, in issue So the which accelerated. was is trajectory earlier of XXXX an

think, sign extensors[ph], has the everybody’s from we happening more details happening a talking around is is the meaningful as Francisco, And know, to that’s starting all there’s Amazon, come now I as Chevron. actually what’s the back. inventory I’m that Microsoft well and the Mike, demand improvements Salesforce so ground, supply in good So, San on reopened as

what’s a regards look in Dreamforce going happen we’ve robust So attendance you’re part in When XXXX And even standpoint, about a where XX,XXX last that in And in even had the which more know going wise, attendees now event. a starting of positive XX% to look to weeks, much levels. the had at in national occupancy, corporate else compression. got we see is X-day think mid-XXs from X% anything a event. calendar, importantly that’s fact, than we’re only When a more I improving we’re always we’ve at ADR levels. San urban future when in we about Francisco, citywide the a to be leisure, is XXXX XXXXXX And which so we’re the we expect mix, city of to when in is And to creates going. below about bigger plus. around X XX% big at we the is

our business. movement, IT Facebook, tech then at looking corporate are picking like stay So continued up are extended companies assets in Valley, it’s starting different faster, to which companies and and we’re project that even primarily companies we’re and business, seeing travel because of Silicon again, growing project CBD, is as the

we’ve Lastly, what year-to-date, is through about Northern Cal. today international, I think when deployments been this Mike. is it’s watching we San in And And only look Francisco, May. the when at

recently, deployments most about passenger at was in volume. of But XX%. May, XX% We’re it year-to-date and international a

levels total look And I you’re growth. XXXX international. back to see day, at there’s XX%, the of at some of the about So deployment we know when starting end that,

just So things see we back can fall, mentioned. go we positive start to into with if all that we the uptick, the think demand that there’s

Leslie Hale

assets CBD, the only a that assets recovering thing X X at we at CBD remind other of And points I rate not would outside have kind growing of ahead the Mike, are are Right. the our that assets X in balance – are CBD. just is of or you, in the are faster and of

Michael Belisario

Thank Helpful. you, all.

Operator

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

may question. your You with proceed

Dori Kesten

morning. Good Thanks.

out [ph] recycling in upscale the Your have? few more lower bit been lefties of a should end have markets, last you the few boutique our hotels incremental high-end expect in urban very acquisitions remaining we

Leslie Hale

going is as before, dispositions What portfolio portfolio – XXXX lower we default. of that prune say, said active have then as I continue Dori, have we’re to our continue end selling programmatically today. be we’re basis, to of to we to and assets, a forward not would on be sit that But going will that we’ll sort always And, opportunistic. And when you managers you’re more appropriately. here anything your by a

year. net side neutral be on of We expect to this sort buy the sell

Dori Kesten

underwriting in Okay. of just general and changed the pace your in today And the giving and late credit the markets uncertainty in I’m anything markets has recovery operations economy? urban of just

Sean Mahoney

Yeah.

So sort called of Dori that’s capital. way underwrite we always long-term to

about influence the And that so, we that long-term rates. part hurdle swing when our hurdle would doesn’t of adjustment. of rates, as But, the thought is we would and require about something benefit underwriting, low this think so an whether our ourselves environment our obviously as permanent, assess not rate we’re that we be historically, giving short-term more the interest

to just this to – back returning going averages we’re what be. long-term so was And are

Dori Kesten

Okay. Thank you.

Operator

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

may your proceed You with question.

Neil Malkin

Good everyone. Thanks, morning.

apologize. kind you about And a from to as year, can position. said, you a you might toward reimposing about landscape. the lot like, I on like into expect this – neutral And go itself financing side, be you’d opportunities next sounds time you of a to the cash you entering that feel we’re if of about going had said acquisitions, especially The And your misheard of can dispositions additional year, more end Do hit of desk? year? think question lot advantages who you think your of is, kind when at the pips a acquisition I start are this present opportunities see very are difficult the more probably and given flow on strapped, guys office? brands teams’ seeing kind of cash you underwriting Thanks. owners hit I

Leslie Hale

for do prior we transactions of Neil. constructive capital think of or of that positive. think and to picks be do acquisitions, moving, in some were of So we’ve cash that we environment would of comes the think gotten around far, awarded, determined? creating on of deals refinancing that how up, interest say a capabilities that whether those the come seen What volume in transactions advantages rates because back and where is are and not of We done, initiatives, different remained will markets I thus things, out I we matter discipline come backdrop volume really that they’ve we’ve two fundamentals – opportunities One, or the is forms, are out is healthy things debt all brand against terms the much to buyers have those described that. current you what assets. – not remaining because

helicopter capital that growth tools So advanced little up our let raise advantage value take All quarter value this into unique to We of We we’ve around market. and number the second we’re the ability windows we on to optionality want to at But, have general, find we asset a me a acknowledge active and balanced We internally, available the these But benefits, going of a the said the so deploy and But were buybacks. in against this being very to showed given acquisitions, capital at that. the to on right right? creation. and tools attractive windows find fronts, be read saw just day, then we advantages have on and We’ve strong to on roads you different us did sheet a a that just the creation like have accretively bit provides, the that seen that leverage that buybacks basis could we dividends. neutral thoughtful to lead constructive a cash like attractive and backdrop. our we stock something do optionality. current found balance We the allocation that we’ll we in us as tools. in just quarter. continue of balance our we be buyer think that those gives demonstrate sheet leverage have we levels. we’re all that end before, And back still having I very derive

in We have debt very little XXXX. that’s maturing

sheet. down a we And having is quality so balance end redeployed growth not them for this that happening, can do market asset the think – there to think spectrum, that growth on asset-by-asset, We leverage sales and our our about – all when – transaction you high high relative in end although, be what’s it’s are the spectrum, to relative finance market-by-market. betters can and of that On assets have you markets one better, bring market.

the or on and intensive But, to forward. spectrum, were end, already in on If high assets lot on We’ve On the find those assets. capital markets that homes. of that assets growth they quality capital you sort that are pause. are a the were that’s the continuing are seen of expect market other we the other sidelines needs the to move have spectrum, of end lagging that

know And rate are a on on to knows. resorts of We of how to some because are day service be degradation, recovery to we’re so the that consumer it’s going that, environment select of X%, whether sort that But environment shoots urban happening transaction post-labor is to of seeing, at what X%, level the going recognize rising sort the green obviously, have market price look lower interest X% of I we’ll see do the value, unfolds. trends is impact any and X% of the to that there. who and end

us, be we So, And, for acquisitions. of on because going thoughtful to we’re opportunity our balance think sheet. to continue there’s

Neil Malkin

BT. more going guys much it recovering the you obviously, back ahead side, a of of Other terms think Appreciate to sort are like remaining portfolio. the overall maybe recovery in there’s quarter, one, I And, business fulsome kind of of seems you. answer. or just focused group of inflection transient BT, thought Thank this

potentially, accelerating? BT And, get in numbers me to we back if think, to actually I like, it however demand do We’ll a was XXX% asked over in confidence get but want feel comes. BT I you term, X you you permanently that slightly terms or BT, words. don’t in not have that Austin, share, levels quarters. have do it know, how chance made about the X the there is don’t to next you other But impaired somewhat, of or near XXXX the back to

Leslie Hale

at pace we push beyond. That, about the to starting are I we’re look beyond the going my prepared broad confidence remarks, levels companies nature think, actually data, we think have XXXX BT I I BT SMEs said, get that back at travel. expanding look yes, is say, of Neil, and when Yeah, the are mean, to is our to how we ramping, of we it. traditional, I in traditional as

a thing in have of other internal that’s their you up until all and the keep think more had I that lot authority, mind been to still companies on that restrictions recently, travel lifted.

these be seek not approval days. to people So were to travel having able to

out our is And so still our when of we pace, feel production that acknowledging lot – look it seeing short, And about strong transient that. booking good very remains a recognizing and we at window at of positive, we’re XX% a We XX%. the our on And in at been XXXX third pace for has – quarter, average side. our we’re about strong look perspective. at the group levels from a quarter year,

is customer. who’s is and the wheelhouse. group the to reality driving improving. in that group that what wise from is But to for midsize what of relative to have benefit still fairly on mind book that is, small the continuing is we also key take bullish keep group the you expect my while it books, the right we to our quarter city The group And traveling in already side. attendance when in group now BT right So thing within is that’s pretty we person

And remain acknowledge us point think strong. generally We on expect an a that I so, gives post-labor-day. demand be see basis. that we acknowledged that as expect that there to BT And But percentage there. sequential a there’s back, get the is that think we think, is it pent-up materialize going will back key absolute a overlap XXXX we confidence we half that, relative seasonality to to improvement. of that about to is will the We when year will continue to inflection levels,

BT levels. will we’re very we’re add overall, some confident encouraged nuggets. look by the all to Tom XXXX So And data, when other we let that. at that I’ll back get

Tom Bardenett

Yeah.

would the the So the current only at July, compared the I add increasing versus is window would that to BT. always we’ve September, But starting is when environment, I it’s I look about Neil. Leslie think short, booking thing booking point better be, July I then see a look have as August I when in the we in actually to said, we story. When where for started same that August when at window

when and So monitoring out. look the about going I to been that XXXX improvement, XXXX, already we’ve portfolio compared on month is the XX prior look days into BT. TravelClick October, can at at you in then, our see potential data, we And to what’s and when October, it’s think you books XX-days what outpacing Neil,

it indicators the BT is leading So that gives coming us back.

even services at goods is and life So higher travel the a national consumer little corporates, sciences clip. government and services, to bit tech, starting

well. into we fall as encouraging the that’s so go as And

Sean Mahoney

just you And then, for a data couple around points about asked of lastly, group.

the in Leslie XXXX second mentioned, XX% was levels at group of as So our quarter.

third expect of in We it the quarter. levels to be at XX% XXXX

XX% the have definite already books. on quarter third of we our of Just that books

the amount, exceed the the booked for in that, quarter, significantly we we if quarter. so same And will

been forecast, of it’s our confidence book light And so, in ability our trends, our it’s our the a for would year, pre-COVID year, from a standpoint a the booking normal around in we to in of over $XX group hit little year. significant million

So this year, the the we’ve first through million far already half of $XX booked year.

be short-term trends is so, strong leading our And continue there. recovery on which the group, to

So, to have expected even confidence to months BT, the and trends significantly would recover X than we summarize have the ago. are group quicker we

Neil Malkin

you. commentary. all Yeah. Thank Appreciate the

Operator

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

question. your with proceed may You

William Crow

looked emerge how changed you seen from pricing I party. you by at after some until Good think, maybe opportunity? it first those was noted you you’ve really thanks. of up the Leslie, morning. being said wanted that you tied acquisition got that another Yeah, one And, when opportunities second Nashville

Leslie Hale

were out other I but that the the I’ll maintaining trust broken was And, it that, on our was it I believe trends the the use a that that sure our pricing topped you should was did. deals long deal, our recently Nashville mentioned. deal. would said due Bill, sort before of Having say diligence right. discipline. we before at did and make that to and we buyers that leave due other Yeah, opportunity diligence

market, in. we’re in the continue around or to jump not says come And it’s going disciplined so, I back back when we’ll say but mean we he to back be whether

William Crow

between just loyalty points? could If that something buying core more and Nashville market one which have asset. do Okay. have or that environment weekend does on there thrives which of really like seems should utilization acquisition, out those say, Hilton, long a program a sort the for what of because the you in and I to Marriott, pricing a Hyatt loyalty question valuation guests of push assets? not or think like the material great there that a these material differences there and with leisure But Is a the in brand sort market be might given a sounds be difference the

Sean Mahoney

to as well of light think of rooms’ We it’s if way the I a of ability and incremental But, about that to in in it see a to expect capture share, frankly for wouldn’t only I that Yeah, be we location asset, the Because hotel question. huge difference. in so sort thought XXX location, the the significant great able we keys. underwrote and wouldn’t the see difference as valuation.

upside for the our and way the structure, share there. revenue practices put management about was location much also the thought our mentioned, I think, that some ancillary cost but asset come But and in within revenue in team around as of to management market, as some our really well driving we in, place best-in-class market. Leslie around, particularly also as the underwrote it the is is ability and

the asset us to going allowing also So we – on to allow value deal. is management on that sauce side are we the think special is create

William Crow

more one Final might non-core assets fit can bucket? into and existing this, but if for missed many Okay. I sorry, of us your portfolio, me, how tell you

Leslie Hale

year. would good a it’s heavy we Yeah, more the and XXXX. have in done X% earlier Bill, of did year little we than say, we pretty non-cores last a feel amount this I lifting and a that over about less tremendous And, some bit, bit fact

end your But have we as by XX always have you’re got have definition, whittled down. So again, we a bottom assets, portfolio. of before, I mentioned to

answer your less for but questions X%. so, And to about than us

William Crow

it That’s you. for Great. Thank me.

Operator

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

may You proceed your with question.

Chris Woronka

this the earlier, a morning, you’re noted work, morning. pretty we some out hourly more pretty seeing think a front. still Leslie, maybe is or you hours an what is That’s there on Could good detail you interesting report wages on us to as it’s employment bit I improvements got there. labor suggesting tight give else, Hey, that everyone. something things because are

on be color any that’d great. So

Leslie Hale

obviously Tom the we’re give mean, the small but this, at in it Yeah, of on boots that, relative seen some on footprint of mind, ground? keep I given a a nature advantage and our comments what I’ll let portfolio about you’ve

Tom Bardenett

Yes.

get high numbers know, would say, level improved. hiring I absolutely has is from into what Chris, the we before standpoint, a you So,

we than positions quarter did open in first less quarter and have We down. is turnover X, and

per retaining later, as are $X.XX levels. levels. look to higher items room, and minutes I XXXX, we in what years towards XXXX When XX% prepared line And But occupied impact FTEs, three room earlier contributing as line in overall mentioned been we’re saw than retain. productivity, that. at basically a XX% to to in employees, be. hours earlier. of compete mentioned we I wages wage remarks, at occupied I positive retention, thought compared as and about on then in we’re regards track occupancy In now at those we hire to expected, that his are regards per And that to down have Sean would I movement which and think the think are So X it rates, we

as have and brand. services departments, the the about different at items thinking that we housekeeping, various of locations, around the earlier around it’s we’re or property, having proximity whether scrutiny with whether we the it’s that a talked that shared lot synergies well about all and So we’re each as F&B, productivity

that’s end that environment do still the So productivity make and tight than an at more all-in-all, And contract are our use a think monitor the that labor wise But going day, us market. think improving we have we we very protected. to of margins we sure help we’re it’s labor with we’d to to like.

Chris Woronka

And Tom. I some requirements, Thanks, in July, full maybe a and Marriott of the side, we exposure that, of they you is, implemented? change there guys follow-up the what changed kind heard from Yeah. any service, is level some noticeable just service to on that have think, Marriott

Tom Bardenett

of have products. think asking the know look consistent implementation. our they’re a we Chris, adhere they XX% portfolio full But about that service to right And select service Marriott to they see details, And do. we the have Yeah, trying we about is in, methodology when and expect. to what us what the to versus consumer within all it’s they’re you’re do comes do so

for D&D trainable, are weekends customer And are properties. than it, the us if weekday, service put XX%, door. They’re so you because more most world take they that will. more And again, about And is if light I do stays, not. sign customer and their consumers many the to about on select want or asking in will when ask cleaning a interesting, to instance, have our rate kind think, of what’s the I think times

than to and hotels then brand point. enters type And where we day. service productivity clean, do side, In So we are this of regards to service full flex that it the residents less it on Marriott have impacted the lot have to a full asking of you service hasn’t do courtyards within you know. we on every

Chris Woronka

Great, Great. thanks.

last Just or as potential have few, the up, plans or means and any assets that very environment? increasing one, costs, conversions X presumably going you’re guys you strong in pricing there is in based wrapping to budgets like a are demand maybe which on change next start that of at a and the disruption anything scope

Leslie Hale

giving look, that. that on more forward as the on year, to going and that And final that to the X entering are I stages conversions excited we color look their X Yeah, call. fact the we’re we’re about we expect to the we we of fall. before, mean, next we And do for conversions, pace in were relaunch per said

costs we from we generating say In holding these the were in I general, terms cost that conversions, up, related can recognize absorb of et we’re is cetera. scope, of that inputs what incremental the than returns chain, supply have that, the on obviously, would more scope, gone but

which base, the the leisure so, And is believe is, on from so conversions in we have your haven’t the fall be doing backdrop in a I has the perspective. what scope launching they’re of those pricing we and very no, change significant structurally strong. say that are a is do We that changed what believes will would X customer And we to projects. that had launching

backside on the renovation. bit disruptions your a will little asset when expect that But do the we And and by again, temporary, definition, you out if are you’re know, there to higher. all, originally a what that’s And get benefit have actually assets so the of we you than better before rates comes what of renovating for, disruption planned clearly than higher in these underwrote. we and

Tom Bardenett

Yeah. disruption XXXX over the thing the is would mitigate to the add, in And excess we sequence reason one one Chris, did the why is we years any the conversions, of having I year. just way risk several

knife of thoughtful under out the were us per we how to converting. have very so to ramping assets allow couple roll the we to sort at And were time wanted in same we year a

thinking allowing the And that think, that risks articulated that us so on early to is mitigate well. as strategic I you

Chris Woronka

great. Thanks. Okay,

Operator

Oppenheimer line Tyler of Co. from comes the question with next Batory Our &

You your may question. proceed with

Tyler Batory

question. morning. Good my Thanks for taking

increase, from the level on view perspective see capital your your that in dividend allocation future? here might what’s payout to the one right the the me the dividend but see decision, to understand and on the grow Just topic, what need on updated nice you I to board

Tom Bardenett

Tyler. Thanks,

around would increase portfolio We at our your room free a it I set think unfolds, increase level that increases we future recovery our was to recognizing board thought showed all confidence – to commentary the allow the right. generate the also the appreciate a when phases it’s as point ability sustainable to just think, cash decision. flow. of for frame that for in for to the through the But like of dividend, us, economics I wanted

the views for Our market – for our lodging dividend going future What’s the influences dividends, income, around where’s And the which finally, payout. then, forecast be of our expectations fundamentals. taxable payout? is dividend to outlook about what

of those influence will payouts. things So all dividend our

those a around to all things dividend X of of thought decision driving think of like that factor percentage long-term is in opposed and I the as practice. FFO what usually byproduct variables, of setting the the

Leslie Hale

high The you margin think and that would the think our our nature only the about for thing path dividend forward add path the lodging I pretty as is that to I forward the the macro of raises profile, trends portfolio, is trends clear. unfold

Tyler Batory

Okay, leave Appreciate there. I’ll the detail. it for you great. it. Thank

Operator

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

You question. may proceed with your

Gregory Miller

morning. Good Thanks.

Do anticipate have quick average? Just similar that margins on above or below the you to couple at XX your ones a stabilization [ph]. hotel portfolio EBITDA this

Sean Mahoney

rate service their of because portfolio asset, margins it hotel the the just offered hotels, fact that nature to capture that our generally margins is can levels that we for higher boutique select was higher. the by be are little the but offset with going we underwrote to a be say, Greg, in we’re of line in going service lifestyle market that that the to that’ll be be a than, for going

be would to we margins in net-net, expect line. So

Gregory Miller

this X acquisitions? your or will more anticipate time one Okay. national you And same that require the the then hotel. managers asset from post-pandemic follow-up warrant other considerably on Do than

Leslie Hale

view in converting general the –conversions Monica this two that mind, of of of the Hotel. or Santa asset kind Keep of we’re converting tapestry said before, The mine within framework. is I is that for materials sort sort curio, as our that those hotels lifestyle No. fits Infinite were

is think do incremental So, the assets operational have. but to we management experience there that can time not fits framework. no, again, to bear upside team any that I it beyond think, as other we hotel, this bring But our within a that

Tom Bardenett

is. our really conversation, lot through understanding we during the dialogue Greg, And of identified that good process, a diligence upside just where due

it is outdoor asset lot an the ceilings square do and There’s Division. feet think dedicated what X,XXX people of type city. of this so there’s And at we And that arms keys, your can where typically we a group and X,XXX space quick looking premium of think into specialty get then rooms Management around we with meeting along dig we best practices square transient high about in when where That’s that XXX terrace all demand. And overlooking about we in. there’s specifically, accountable they’re hold would we mixes, the pretty market, go just you dive because of to the mix, there’s you footage of Asset that. and details high suite

want, And to be deciding so business now what picking choosing brands. you and to the compared positioning wise, it’s lifestyle you other and where independent want

Gregory Miller

Okay. Thank you, all.

Operator

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

You question. your may proceed with

Anthony Powell

good morning. Hi,

one for me. Just

urban? Hawaii, like pandemic the urban, So have West, all are four or focused Key more you would of different resource or your REITs deals and from public they which intentional even you’ve better done the on adding is California since really and that other you consider in more

Leslie Hale

Over way we’re manifesting demand is Creek, got throughout as to getting that on X-day-a-week Nashville look based of it. It’s evolving trends, to and et in probably cetera. about strong and would think way consumer and share is component, leisure. Cherry that. that XX% markets. leisure the being XX% a move But, will example perfect segmentation BT, itself. leisure time of the at fair the these weekend just are exposure how that trends Anthony, I I very XX% BT XX-XX our market remind group our on So, side able of the really split transient, was We and think the I’ll week, were XX% demand you it’s the about transient. and XX%

upgrading are that Monica, we got demand X-day-a-week about I were again, demand making that on as that drivers. we Santa that. assets as as mentioned And you multiple House, so Mills are converting a on those what sure and looking if at obviously, conversion perspective and as from we’re Mandalay, And And doing well. think leisure well

portfolio. that think at So you the I overall look

focused have our is our thesis. we core We X-day-a-week sure leisure, very of investment making adding are XX but demand we’re on

Tom Bardenett

last all would that thing I are the I thriving would say they’re to markets. these Anthony, add is growing markets,

growth is significant irreplaceable as the Cherry and then corporate for Creek think assets there’s as Midtown in there; If sciences in an you about entertainment very a of area Downtown; market. where in Atlanta, well life seaport Moxy we’ve a amount purchased in just Boston in its location high end

new compare the to lifestyle the on We’re if block, hotels are kid will there. all existing you that the

average rate growing retail aspirational have continued opportunities and because a we with there. it’s with going in Ohio that because So market

really that’s is focus markets growing well. So it that just another we component thriving on and as

Anthony Powell

you. Okay. Thank

Operator

question-and-answer today’s Ladies would session. this I closing Hale have to end back turn like call reached Ms. we and to gentlemen, Leslie of remarks. the for over

Leslie Hale

is that everybody guys that travelling. forward you the labor We to [outside the] of remainder on the excellent – Thank summer is [ph] hope seeing day. us. We of weekend everybody. look for joining great other everybody you, day your a Have

Operator

conference. today’s concludes This

time. Thank rest your of your you for the You at lines day. participation. may Enjoy disconnect your this

RLJ Lodging Trust (RLJ) 5 Aug 222022 Q2 Earnings call transcript