Q3 2019 Earnings Call
<unk> and welcome to the hotel and.
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[laughter].
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Or 2000.
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Today's.
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Yeah.
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I'm at a now my pleasure.
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Okay.
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[laughter].
Go ahead.
Mm.
Thanks, very good morning, everyone.
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Headquartered 2019 any.
Oh.
It's always again.
Mind, you want you to commence meet today up you could <unk>.
Federal secure she's.
It was quite know parley P.B.S.C.C.D. students are subjected humorous.
Consistencies that could cause future results to just happened.
You're not obligated.
But the update <unk>.
In addition onto the school, we will discuss that non got financial information such as I have to adjust to leave it all read a comfortable to tell.
Okay.
Oh.
You can find this information together with reconciliation.
The most directly comfortable gap information.
Today's any.
It's amazing I eight people in the B.S.
Yeah, and the supplementary financial information.
<unk>.
Yeah.
This morning, Jim is only office Chief Executive Officer will provide and it'd be if our third quarter of.
<unk>.
The.
I was just between 19.
Michael.
Financial opposite well then provide details commentary enough good quality performance a Catholic position.
Hi Garden.
Falling down remarks, you will be available to respond to your question.
Now I'd like to chemicals to Jim.
<unk>.
And thanks, everyone for joining us this.
We remain focused started creating value for shareholders on <unk>.
Oh friends.
And the third quarter.
<unk>.
Which exceeded consensus expectation.
Expectations for adjusted <unk>.
And adjusted at that though per diluted share.
We grew comparable hotel.
Total wrapped par by 120.
Speech and the third quarter.
And delivered our strongest comparable total rip apart and Red Park performance year to.
We continue.
Successfully execute our capital allocation strategy.
<unk>.
By completing 500 and.
$65 million of asset jail.
Every purchase C. $200 million.
Sock during the third quarter.
And have sold an additional.
$297 million of assets.
<unk>.
<unk>.
We strengthen our balance.
I refinancing $650 million a series Z.N.B.
Yeah.
With the first screen bond issue waited a logging industry.
And it cheap.
Lois affected bottom pricing and the company's history.
Yeah.
In addition.
We increase the capacity of our revolving credit and turn long facility.
Like 500 million.
Two and a half million.
Right.
<unk>.
We made significant progress.
Pipeline of our project.
Yes.
Which we expect more unlock embedded value at several of our iconic in every place for.
I will now discussed.
Comparable revenue.
Okay.
Me by 2019 operational.
Capital allocation.
And our pipeline of or like.
Michael will detail, our third quarter comparable.
Recap are balance sheet.
[laughter].
Should provide.
It's a shipping.
Sort are updated 2019.
Beginning with our third quarter revenue.
<unk>.
We drove.
Probable total read part 120.
Points higher.
Euro per year through relative.
Relatively strong growth in food and beverage as well as other.
<unk>.
Wow are comparable rip hard declined by 20.
It's solidly.
S.T.R.'s 80.
The decline.
For luxury it up or upscale.
And the top 22 posts.
<unk>.
Notably.
Hmm.
Are comparable wrapped part was impacted by an estimated 50 basis.
<unk>.
[laughter].
Renovation disruption.
Related to the.
Transformational capital program.
Adjusting for which.
<unk>.
Free.
Space.
<unk>.
Moreover.
Tropical storms and hurricanes experience during the corridor.
<unk> revenue by approximately $1.2 million.
Which impacted Kabul red par.
I know they're 20.
<unk>.
Third quarter hotel occupancy.
<unk>.
Yeah.
Well he D.R. decrease by 20.
[laughter].
Primarily due to a decline in association group business.
Yeah.
Did you ever buy a week citywide calendar in markets.
Such as Boston.
Seattle.
In San Diego.
We worked closely with our manager.
Partially mitigate this anticipated decline.
Bike growing our corporate group is.
Despite 8.3%.
Yeah.
Additionally.
Yeah.
Strong contribution.
From our corporate.
Top banquet in audio visual.
Switched.
3.8%.
Third quarter trends have revenue grew 70.
<unk>.
<unk>.
Driven by 2.8% growth in room nights.
Pseudo leisure.
Bolstered by significant loyalty program.
<unk>.
Loyal.
Loyalty program redemption revenues grew seven.
Driven by growth in both room nights.
An average.
<unk>.
Are properties benefited from a solid increase in redemptions.
The Florida Gulf Coast.
Los.
In Orange County.
<unk>.
We continue to.
Quarter after quarter from bottom.
Okay.
Which now has 137 million members.
And continues to grow rapidly.
Okay.
Broken leisure.
More than offset they continued weakness in business.
Oh.
Which.
<unk>.
Freighter business cautious.
Yes.
Continued uncertainty about long term U.S.
Trying to trade deal.
Yeah.
Domestic political.
Yeah.
And decelerating global economic conditions.
Mhm.
Are impacting business in Boston.
Oh your expectations.
For U.S.
<unk>.
Not residents.
Fixed investment.
Have declined by 140.
Space.
Since the beginning of the year.
In currently stands at 2.7%.
So.
Which would represent.
It's always.
A business investment growth.
So.
Since 2006.
16.
<unk>.
S discussed last quarter.
Yeah.
We anticipated.
Much of the revenue bad sock.
That's a lodging industry experience in the third quarter.
Yeah.
As our expectations for business transcends revenues have moderated further.
<unk>.
Due to continuing macro uncertainties.
We have revised are outlook for for your comparable constant dollar web hargrove.
Range between down 25 based.
<unk>.
Two down one.
We therefore.
<unk>.
<unk>.
Be down.
20.
The low.
<unk>.
And.
Displayed.
On the high end of our Guy.
Yes.
These assumptions result.
Full year.
Forecasted adjusted EBITDA R.
I've 1 billion.
Hundred and $5 million.
This new one <unk>.
<unk>.
$530 million.
<unk>.
And then <unk>.
Oh, Purdue looted share a one dollar in 75 cents.
Two one dollar and 78.
Yes.
At the mid point.
Yeah.
Our new.
Adjusted asset vote for diluted share.
Right.
C Penney higher than our prior.
<unk>.
Primarily due to our share repurchase.
<unk>.
<unk>.
[laughter].
Steeped in mind that are revise guidance now includes a reduction of $2 million.
<unk>.
For the sale of high regions, He Cambridge and the shared in San Diego.
And it reductions of approximately two and a half million.
For the impact of the tropical storms.
In Hurricanes and the third quarter.
Yeah.
<unk>.
Michael will provide further detail on or even a.
In his.
Just.
<unk>.
Shifting to total group revenue pace.
So.
Because I had discussed last quarter.
There are four year 2009 total revenue.
Is essentially flat.
<unk>.
I mean, a record year for group in 2000.
Our fourth.
Quarter total group revenue Pacers up 1.1 per se.
And we have approximately 99.
I've our group.
I spoke for 2000.
<unk> 20.
Mm.
Shaping up to be a better year for group.
<unk>.
Slip total group revenue.
Nearly 4% ahead.
Yeah.
Of the same time last year.
And with more than 65 per cent of our rooms on the ball.
While we expect to see continue pressure on business transaction.
If the current macro uncertainty.
Having a healthy total revenue pace.
And group business on the.
<unk>.
Provides us with a solid.
Heading into next year.
Considering the.
Current macro environment.
Yeah.
Our managers continued to focus our group revenue.
We hold monthly group pace discussions with both property management teams.
Senior sales leadership at a corporate level.
We also provide feedback.
Are implementing group.
And promotion.
Yeah.
Who drive additional group demand.
<unk>.
To increase closure.
<unk>.
We believe these incentives have helped ensure a.
Fun additional group.
Yeah.
Moreover.
Citywide cow convention calendar is more favorable for our portfolio in 2020.
It's.
Relative to this year.
Markets with better citywide demand in 2020 include.
Boston.
Washington D.C.
The boss Angela.
<unk>.
Chicago.
Okay.
Denver.
In San Diego.
Yeah.
Additionally.
Hmm.
Miami is hosting superbowl 54.
And is expected to outperform the industry.
[laughter].
[noise].
We expect.
Notable year over year declines in city wise in Atlanta.
Okay.
Which hosted the superbowl this year.
San Francisco.
<unk>.
In Philadelphia.
Asked to capital allocation.
Mm.
We close on the previously announced sale of eight.
Yeah.
For a total of 500 and.
Six $5 million.
<unk>.
Snoring to third quarter.
<unk>.
And sold two additional.
Hyatt Regency, Cambridge.
And the shares in San Diego.
For a total of $297 million.
Quarter Red.
<unk>.
And.
Yeah.
We have sold approximately $1.3 billion.
A low red par.
Sorry.
Capital intensive.
This year.
<unk>.
After taking into consideration.
Decimated capital, we would have to spend on these assets.
The combined even a multiple.
Kept.
On trailing 12 month.
<unk>.
We'd be 14.1 time.
<unk>.
6.3%.
Respectively.
<unk>.
We continue to take advantage of.
Hmm.
The current market conditions.
<unk>.
Oh, no stress to refine our portfolio of icon again every play sport hotels.
And key markets.
With strong demand generators in high revenue generation.
<unk>.
<unk> Opportunistically <unk> divesting got lower read part.
Higher capital.
He says.
On the share repurchase.
Yeah.
We bought back $200 million of.
At an average price of.
$16 and 51 says.
<unk>.
Sorry, the third quarter.
Are buybacks.
<unk>, the third quarter total $400 million.
<unk>.
Or 23 million shares.
On a year today basis at an average.
$17 in 36.
<unk>.
<unk>.
We have bought that an additional.
$14 million.
<unk>.
<unk>.
<unk>.
Quarter and.
Yeah.
And have approximately.
$586 million of capacity.
We have been actively investing in value enhancing R.O.I. projects across our portfolio.
Mm.
We are constructing a 160.
<unk>.
Premiums select service.
H.T. by Marriott Hotel.
<unk> excess surface parking.
As a western Carolyn in Phoenix.
<unk>.
We expect.
Spent a total of approximately $36 million on this.
<unk>.
Which remains on budget.
No one schedule.
Yeah.
We complete construction by late May 2020.
<unk> open around mid year.
[laughter].
Mm.
We have also be gunsight.
19 below.
Yeah.
At the end as.
Which will be added.
To the $11.
Owned or rented within our hotel.
Or something.
The existing bill us in the rental program.
<unk>.
Achieve a red part of approximately.
<unk>.
$1700.
<unk>.
And exhibit strong demand.
Throughout.
Yeah.
We expect to invest a total of approximately 52 million dollar.
Into complete construction by.
2020.
<unk>.
This expansion was not a part of our underwriting when we acquired the asset last year.
And we are pleased to be.
Mm.
Capitalizing on another opportunity.
Create value for our shareholders.
<unk>.
Lastly.
Hmm.
We have continued to focus.
Enhancing the value and profitability of our portfolio.
So.
Through utility in water savings are a wide.
Yeah.
An important part of our award winning.
An industry leading.
Corporate responsibility.
Year to.
We have underwritten and improved over $19 million to be invested.
Energy and water saving sustainability.
Yeah.
And over the four year period ending 2018.
Yeah.
We completed over 650.
Right.
Sustainability attributes.
Totally $210 million.
<unk>.
We recently published.
Our.
Corporate responsibility they.
Available on our website.
Well you can see additional information.
This is important.
[noise].
Program.
In aggregate.
Yeah.
<unk>.
<unk> to invest $170 million in these value creation.
<unk>.
And she.
<unk>.
Cash cash.
Yeah.
And the range of 11, 13%.
Now to an.
On the one hotel South Beach.
<unk>.
Which we acquired earlier this year.
The hotel.
Forming.
Better than our underwriting <unk>.
And the Beach club.
Oh, I project as well under way.
It was completion anticipated by your Red.
<unk>.
We expect to spend approximately $7 million.
Yeah.
And they cheat a low.
<unk>.
Stabilized yield on.
<unk>.
Finally.
<unk>.
We have made significant progress.
Some the Marianne transformational capital program.
With work underway.
Yeah.
<unk>.
Are expected to be completed on 13 of the 17 property.
<unk>.
As we have previously disclosed.
<unk>.
Three of four Marianne transformational capital.
Yeah.
<unk>.
You are Marianne downtown.
And the San Francisco Mary out Marcie.
Are now.
With the final.
Santa Clara Mary.
Completing another week or so.
And additional nine projects are underway.
Importantly.
We are close to completing nearly.
Pretty.
Yeah.
Of the total.
Send by your N.
Isn't.
And are currently under budget.
The program.
The timing of the Marianne transformational capital program.
Mm.
It's highly beneficial to our shareholders.
Completing these renovations.
Say low red part growth.
<unk>.
<unk> minimize the impact of the disruption.
And leaves us wealth.
Into achieved meaningful.
Yeah.
Rep for index.
And accelerate either the growth at stabilization.
And when you read park.
Thanks.
Additionally.
<unk>.
We are benefiting from operating profit.
He said support even.
And they low red part growth.
As we negotiated for.
Protection for the disruption associated with the.
<unk>.
Mm.
Moreover.
We have negotiated increase priori returns that are investing.
Which will reduce incident management.
Yeah.
And further.
Or long term either the.
Yeah.
Overall.
Oh.
We are well positioned in the currently challenging operating.
Heading into next year.
Oh.
Both the city, why condensing calendar and the holiday calendar shift in our favor.
Importantly.
What leverage at 1.7 times net debt to adjust.
<unk>.
Yeah.
Our investment grade balance.
Isn't as best shape.
And we remain laser.
On driving near and long term.
Oh you.
Par.
<unk>.
What's that.
I will turn the call over to.
<unk>.
<unk>.
Good morning, everyone.
Hmm.
We do Liberty J.C.D.V.D.R.
$312 million.
And it just it episodes per day each year.
35 cents.
<unk>.
[laughter].
<unk> was approximately $12 million higher than me.
<unk>.
I nearly do you do a.
And the timing of approximately nine and a half million.
Corporate other expenses.
And the third quarter after the fourth quarter.
[laughter].
He's where expenses related to the reason I grew up reading that.
So he as well as the office.
We just now taking place in the fourth quarter.
<unk>.
Note that certain costs related to our office move will be reclassified has an impairment in the fourth quarter and therefore added back.
Oh.
Finally interesting coming third quarter exceed our expectations by approximately $2 million.
<unk>.
Huh.
And the third quarter declined by 85.
[laughter].
Put that in.
20 basis point declining comparable rest part was typically result, any greater than 100 basis point decline comparable eat it down in March.
Yeah.
Excuse me normal Spanish.
Moreover.
Year over year uncomfortable you become marking a parish.
Negatively impacted by 30 when.
[laughter].
I mean, one time benefit.
From the sale Marianne centralized purchasing.
And the third quarter of 2000.
Right.
Finally, the receiver.
I think $2 million operating profit guarantees for Marianne.
And it'd be comparable hotel, even done margins by 20.
Yeah.
Overall expense grosses, primarily driven.
Hmm.
By increase waiting.
<unk>.
Yeah.
Which.
Faster and the third quarter than in the first in the second.
<unk>.
We collaborate.
Managers and a variety of internal initiative to driving silly revenue growth.
Improve productivity.
Decrease operating.
Mm.
For example.
These costs improved by 40.
<unk>.
Drillable.
I'm supposed to tell the sub inflation.
Yes.
That you initiated served partially offset increases in wages and benefits.
Disorder.
[laughter].
Continuous decelerating this low unemployment.
<unk>.
Yes and make.
2%.
This quarter was driven by internal.
Okay.
Brands, approximately 40% of our margin outperformance is driven by benefits related to the Mary I start with.
Yeah.
These include reduced age related to loyalty and rewards program.
Mm.
And lower groovy trendy and travel agent.
<unk> increase scales.
Combined system.
Lower tried generate comes down.
Yeah.
Well, Jim details are comparable read.
Formants by.
[noise].
I didn't invite additional color uncomfortable read part of marquee.
<unk>.
<unk>.
<unk>.
I Amy.
Florida Gulf Coast.
Now we can Philadelphia.
Okay.
Well, we achieve read part increases ranging from.
Per se.
17.
0.6%.
Or worse performing Marxist quarter with.
<unk> evacuated.
And there.
<unk>.
No clue, you're doing hurricanes.
<unk>.
Well as New York.
Orlando.
Seattle.
In San Francisco.
Overall.
A third quarter comparable red or <unk>.
Rescale segments and.
Top 22 host.
60.
<unk>.
Looking at the 2020.
Mm.
We feel optimistic about degree business and several of our key markets.
It's.
It's getting with Miami, we expect special events, such as the Super Bowl in the return to deal to music festivals based on.
Helped create compression in the first half an ear.
<unk>.
Phoenix, we have a strong 22 2020 group.
Yeah.
And the Finnish and continues to help us on the market and then compare just said you shrunk <unk>.
Washington, D.C. also had a stronger citywide counter next year with one additional event.
By double.
<unk>.
But it isn't election year, which may impact date and session and overall demand.
<unk>.
Flirted Gold coast has a strong 2020 drew pace water supply of new direct competitors is not a major.
<unk>.
Don's days are enrich cards in Naples are therefore likely to compete out before the market next year.
Well, Los Angeles will still feel the impact.
Hi.
<unk>.
Citywide you're expected to be up next year and our property to tracking me healthy grew.
<unk>.
Younger we also have salads, we pay any <unk>.
If I can accelerate.
Finally.
<unk>.
So you're going up or better city wide next year.
Jim mentioned were pleased to be young at 2020 with a salad days degree in business on the.
Mhm.
<unk>.
The pressure on business transients dickert macro certain people.
<unk>.
Moving on to the balance sheet.
<unk>.
Down to the third quarter yeah.
Begin with we achieved in upgrade of or corporate credit rating Triple B. minus.
Don't eat.
<unk>.
The S. and P. global.
<unk>.
Refinanced their here E.D.N.B.
Featuring in October 2021.
<unk>.
March 2022, respectively.
<unk>.
<unk>.
The first remind enlightening industry, where the coupon at three in three.
<unk>.
Which is the lowest affected tenure bond breaking in.
<unk>.
And again mentioned last quarter's call.
You for refinancing determines totally billion.
And expanded a revolving credit facility by 500 million.
You want and a half a million dollars.
<unk>.
In aggregate.
Yeah.
We complete over $3 billion a bank financing.
Capitalize on low borrowing costs.
<unk>.
Yeah and extended are weighted average that mature you.
2.7 years to 5.7 years and reduce their weighted average interest.
Yeah.
My 3% to 3.9%.
Within appropriately down.
It's funny to fix ratio of 26%.
<unk>.
In addition, we have eliminated debt maturities until 2023.
Maintaining you bounce.
Mm.
<unk>.
Sure.
Schedule with no more than.
You can only 7% of our.
<unk>.
And an enterprise value sharing in any given year.
Yeah.
We ended the third quarter was $4.4 billion total.
You $2 billion cash.
Definitely did quarter and.
Repaid our theory D.N.B. bonding completed $297 million of.
So.
As a result.
Pulled dad is currently approximately $3.8 million.
Jesse cash balances approximately 1.6 billion.
Providing us with approximately $3 billion <unk>.
Between the availability into already.
Yeah.
A quarter and ER leverage ratio was approximately 1.7 times is calculated under the terms of our credit facility.
Slightly lower pro forma <unk>, that's quite a quarter at.
In addition to the $400 million a by that's completely year to.
Recently regular.
Quarter cash dividend 20 cents per share.
Which represents the yielding.
I percent on the current stock.
<unk>.
[noise].
Turning to guidance, let me take a few minutes in detail the assumptions underlying of together 19 guide.
Yeah.
To begin with we continue with respect to receive a total of $23 million are operating profit.
Yeah.
<unk>.
Huh.
And not transformational capital program.
<unk>.
Approximately $3 million in.
We should be receiving the fourth quarter.
<unk>.
Yeah.
Jim.
Yeah.
We revise their Kabul radford bags to arrange it down 25 base.
[laughter].
Down one.
Yeah.
Indicating that we face year over year <unk> in sports scores.
<unk>.
If the midpoint of our.
<unk>.
We expect the fourth quarter benefit from the lowest amount of renovation disruption in 2000.
Mm.
As well as is better.
<unk>.
Yeah.
<unk>.
[laughter].
We expect comparable even down margins to be on 20.
The low end.
<unk>.
<unk>.
The high end of our.
Yeah.
Which essentially implies unchanged.
Despite slowly.
Like little wrap our.
<unk>.
<unk>.
He full year forecasted adjusting <unk>.
1 billion.
$505 million.
Okay.
1 billion.
$530 million.
And adjusted S. over share.
Oh, the dollar 70.
Hmm.
There's $1.78.
So they're revising or did you guys in 19, adjusting D.V.D.R.U. range to a new made point of approximately $1.580 billion.
Yeah.
Downward adjustments $2 million.
<unk>.
Previous.
That's.
The sales or the Hyatt Regency, Cambridge and share in San Diego.
Tropical storms and hurricanes and the third quarter.
And the changing comfortable wrapped part guidance.
You suggested.
Yeah, you buy a profit.
Million dollars just the main.
<unk>.
He were offset by approximately $5 million at lower or bring other expenses in the fourth quarter.
A certain costs relating to our office move where we read classify as an impairment and therefore added that he could.
With regards to <unk> 19 disposition and.
Lower I run rate by approximately $58 million.
[noise].
Which includes <unk> in approximately 30 million dollar.
Sailed the height, Cambridge and share in San Diego.
Oh.
Well, it's a previously used to.
Disclose 27 million dollar.
<unk> net assets.
Pleading the first three quarters of the year.
Include we are pleased and we do have delivered another quarter.
Capital allocation.
<unk>.
Into a further surrender their balance.
<unk>.
We anticipated much of the <unk>.
By the logging industry and the third quarter.
Tightening our assumptions in guide.
The incremental impact.
Macro uncertainty in the fourth quarter.
We are well position for 2020 with a total revenue pacing <unk>.
Oh percent higher than the same time last year.
With more more than 65% of a rooms on the.
Where's that will now be happy take.
<unk>.
<unk>.
Ensure that we have time to address questions from.
As many of you as possible.
Let me yourself to one question.
Okay.
<unk>.
Yeah.
No.
Why not.
<unk>.
<unk>.
Yeah.
<unk>.
Huh.
Well I guess.
<unk>.
Okay.
Again.
Hmm.
Oh.
Oh.
Yeah.
<unk>.
<unk>.
<unk>.
<unk>.
[laughter].
Yeah.
<unk>.
Yeah.
Yeah.
Huh.
Yeah.
Okay.
Mm.
[noise].
Hi, good morning, everyone.
<unk>.
Morning.
You mentioned that they marry a capital plan is under budget and it seems to be going a bit faster than any originally guided too because you just update assign.
The total.
The <unk> the spend over the last couple of years and will there be.
Less renovation disruption in.
20 and 21.
Relative to this.
<unk>.
So.
This this is definitely going to be or because you're just <unk> Anthony.
Hmm.
You'd have to 19 <unk>, she was priced about $225 million.
For 2020, it's about 200.
Mm.
And in 2021 is 175.
When you talk to think about right sort of the operating profit guaranteed just sort of a measurement disruption.
You'd have to 19 rate, we talked about it we've got $23 million robbery guaranteed that we.
<unk> will receive.
2020 that number drops down to 16, ending clicks up to 19 80020.
Mm.
[noise].
Got it.
Thanks, and you also mentioned that you're seeing more redemptions from from Bon.
[noise].
What's the redemption mixing for for you and and to those redemption.
Revenues continues to increase in future years.
<unk>.
[noise].
Yeah look I mean, I think yourself by yourself Marianne International talk about Bon.
Yeah.
Yeah.
20% or something like that last quarter.
I'll tell you that we saw in our loyalty program.
Oh, 7.1% it was certainly a big strong contributor to the business and particularly in a market, where we really need to train we need given week calendar.
Yeah.
The the dollar impact west year over year was about 3 million.
Hmm.
<unk>.
<unk>.
<unk>.
Thank you.
<unk>.
Mm.
Huh.
Yeah.
The morning, everyone.
<unk>.
<unk>.
<unk>.
<unk>.
How are you guys.
If it all changing or revenue management strategies heading into next year and then.
How do the group paste numbers.
That you provided how does that compared to the same time last year.
Oh.
Yeah I.
I wouldn't say that.
Where.
Making any material changed for revenue management strategies.
No.
He said.
Finally, a dynamic pricing model.
Right.
And.
You know.
<unk>.
It's something we think about a weekly basis.
Quite frankly.
I didn't mention it might comments that.
You know we're working.
Very closely with our managers.
Our hotel portfolio both at the property.
Act.
<unk>.
Ooh.
Say more keenly focused.
Springtime.
On group.
I'd given the fact that we are.
Don't see some weakness in business transmitting travel.
So.
Oh.
Nothing really <unk>.
Yeah.
<unk>.
<unk>.
From the way, we manage a before.
Yes.
The difference in.
Exchanges, sometimes the.
Yeah.
Oh.
Hmm.
Additionally, you ask the question of what is our.
Group.
Booking going into 2020, this year relative to last year.
Mm.
Last year at this time, we had about.
Two per cent of our business on the.
<unk>.
This year we are at.
Five.
Yeah.
Please.
His dad gyms comment typically.
<unk>.
The high end and eight now we've gotten a coming up.
One other thing I would add to it.
You know Marianne is really out.
Yeah It has reservations.
And we're working closely with them to really maximize revenue.
Oh.
<unk>.
Caught a hotel by hotel.
Hi.
You know, making certain that.
They have different room type stuff in a room locations different room.
These are priced appropriately it's just one more lever that can be.
To enhance revenue.
Yeah.
HM.
Thank you.
[noise].
[noise].
<unk>.
Yeah.
<unk>.
Oh.
<unk>.
<unk>.
Good morning, everybody.
We've heard a lot.
Positive.
<unk>.
Your team, but others.
Pays for next year.
I think that's all fine and good.
The problem this year has.
<unk>.
It's been.
Hmm.
<unk>.
<unk> on international it's.
Mmm.
Supply.
Yeah.
I I guess I'm just.
Trying to get how much confidence you have.
Based solely on this optics.
<unk>.
Okay.
We we were.
With a.
A a very weak citywide calendar.
And 2019.
Yeah.
And you know are under performance.
Two or three was directly related to weakness in association.
Which we anticipated I think they is the number was down.
<unk>.
Mmm.
Yeah, 4.3%.
Oh for us in in the core.
So.
Did have a meaningful impact 4.3% room nights.
For us.
In a quarter on the group side of.
Mm.
You know.
<unk>.
You raise the issue of.
<unk>.
Okay.
As we think about the business obviously.
We think about our.
Starting with.
Association.
Corporate.
<unk>.
Business transit.
Yeah.
<unk>.
And then we are always have supply to deal with as well.
So.
You are correct.
And saying that.
I have been a headwind, particularly in the top 25.
<unk>.
Where we are strongly represented in 22 of those 25.
<unk>.
You know I pay grade encourage made that we were able to handle the out perform S.T.R.
And the third quarter.
In the top 22.
Market segments as related tapper upscale and luxury.
We actually picked up about 30 patients.
It's been 10 yield.
In the quarter so.
You know we are we're we're really focus on on gaining market share and.
Mm.
No.
Mmm.
Maximizing revenues.
Through each category and you know when.
A group isn't there then we'll turn.
Mmm.
When Association group isn't there will turn to corporate group when business transit isn't there will turn to.
You know supply is is going to tick along in 2020.
<unk>.
<unk>.
Respected we see 2020 is the p. here for supply.
And that's helpful.
I could just follow up.
With another.
Other question.
When you have these massive renovations.
Completing what.
What does spend your experience with <unk>.
Advisers scores.
<unk>.
How.
What do they get.
What do you do to.
<unk>.
Change a momentum once you.
But.
Yeah.
Oh.
Of course, if hotels in.
Let's say not optimal conditions.
Your trip advisor.
Scores and and ratings are are going to be impact.
I think they.
The example that I can point to.
That.
From my perspective.
<unk>.
I think the poster child.
I wonder renovation.
You can do for a property is that <unk>.
<unk>.
You know prior to.
Hmm.
Prior to.
I renovation the hotel was very tired it hadn't had any investment for an extended period of time.
I had gotten to the point, where you know me <unk>.
Taking groups to the.
I, even though it's a it's a great physical assets.
Free bones over six out of rooms.
Sprayed indoor.
Sprays, great outdoor meeting space.
It had a spa, which was underwhelming it had a golf course, which was underwhelming.
And.
You know by renovating that asset and a manner that we did we've seen.
<unk>.
Turn around and.
Outperform.
And then incredible.
And next year you know.
The group pasted that properties as well and we're seeing.
Very strong leisure booking.
Also.
So when.
What a hotel.
Completely renovated they you know.
The trip advisor ratings and scores get wiped out.
<unk>.
When it comes back online it's rewrite.
At a higher level.
Okay.
Thanks I appreciate.
No question.
<unk>.
<unk>.
Right.
<unk>.
Yeah, you want to goes.
Yeah.
So you're rich.
Yeah.
<unk>.
Just a really quick question on four Q. guidance.
I'm doing the arithmetic correctly it seems like the.
Implied range there from top to bottom is something along the lines of.
Negative one and a half.
Deposit of one and a half.
So correct me if I <unk>.
I'm not wrong.
You know what what would.
Mm.
Drive you know the low inverse the high and kind of given the number of days left in the year and then I've got one follow.
After.
Yeah, let's just say that.
<unk> a little bit on the high end is one.
Oh.
On the loneliness one.
Okay.
The main.
Yeah.
[noise].
Okay. So anyway.
Any.
<unk>.
Factors kinda driving that range at.
<unk>.
Yeah.
Yeah, you can point it out I think they rate December say it is.
But quarter setting up the.
The yeah yeah.
Right, we're going into it with with 1.1 understand repaid room.
Right.
December in particular with what Hanukkah movie cause it to the back half of the month really creature a nice clean December .
So.
I think we feel like you know you don't.
I believe a lot I get to that level.
But.
Nonetheless.
A couple a couple of other elaborate on that rich.
I have reference in my comments that we have 99.
Ah Argh.
Yeah.
Total revenue page on the books already.
Hmm.
And that we saw.
Refers to pick up in total group rather than pays for Q.
<unk>.
Are few for both games.
Are currently standing in 94%.
So we have a bit of room to go into.
Really.
Drive revenues.
As a.
At the properties in order for from a group perspective.
We're hoping way to see another pick up in corporate group like we didn't.
<unk> with the higher up.
<unk>.
Two other points with respect.
Or.
Give.
<unk> at our numbers.
Number one.
It's going to be the law.
Renovation disruption quarter from the marriage transformational capital program, whereas just pay about.
Then.
And renovation disruption to four.
And lastly, you know.
We were getting an extra week in December relative to where we were last year.
Given the fact that hynek is at Berkeley on top of Christmas.
It's.
Okay.
That's helpful. And then my follow up here you know if it's if you take a step back.
[laughter].
In a host to school.
Something along the lines of Threebillion.
Dollars.
Just over the past three.
<unk>.
I know some of that some of that's opportunistic some of that.
As part.
Sort of a targeted strategy of.
You know selling what you don't want to own into the next cycle and and and all that makes sense, but how how far along do you think we are.
Isn't that process and you know when when do you.
Sort of think we're gonna have.
The team on the field that we want so to speak.
You know at the end of that process is is there a widow.
Sort of handicapped out at this point in time.
I would say I think we're very far longer.
Yeah.
You know the there was a.
They're very unique reasons why.
Be elected to.
Oh.
<unk>.
Sheraton San Diego.
Oh.
Yeah.
And the higher Cambridge.
<unk>.
I'll come back and.
And talk about in a minute.
Right.
You know you'll look.
Some of the assets that we were told.
Yeah.
I've described.
Hmm.
<unk>.
He challenged.
And that was really a focus on.
Yes, that's it we sold in New York City.
The two w.'s and the western Grand Central.
You know, we made a decision to exit.
For the most part all of our international.
<unk>.
And we sold our Europeans is that they beat position you may recall, we also so.
The.
<unk> Mexico City.
You know, bringing coast to be much more of a U.S. that for a company we have very little international exposure today.
With three hotels in.
Brazil into in Canada.
The rest of the assets and opportunistic was the sale of the the marquee.
A lot of the other assets.
Swear really those assets that you know.
We're in.
We're generating very low red car and markets that we gave you as dynamic.
Yeah.
And.
I had high cap asked me.
And I would tell you that I think that though the shared in San Diego.
All right into that category.
The height, Cambridge does it.
And.
You know.
We evaluated each of those hotels on a standalone.
Taking into consideration likely future.
Catholics needs.
Each property and derived to hold value.
And.
You know, we had one buyer for both of them or not at Liberty to disclose the buyer due to the confidentiality.
In in our documents.
Yeah.
I bet, we have one buyer for both hotels.
What's that allows us to do was really to exit.
And in San Diego, whereas you know.
We have.
Re really terrific assets.
<unk>, they Manchester Grand higher which is.
1600.
Yeah.
And the.
Yeah.
San Diego marry a murky, which is 1300 rose.
Coronados Island, Marianne So we had keen insights into that market.
Yeah.
Yeah.
Yeah.
Really understand the dynamic of.
Of what makes that market tech and.
You know where.
We're a demand comes from and where demand goes into what properties.
Sheraton.
I don't think we have another hotel in our portfolio like.
From that perspective that.
Hey.
It's just functional.
In two towers.
<unk>.
And it's.
Dot market rotation that I would say, it's probably thirds here in San Diego.
As we think about it that's probably you know they the toughest asset that we had.
We're happy to be able to accept that and we.
But we consider to be a very fair.
<unk>.
Yeah. The other hotel they said that we've talked about from time to time.
<unk>.
As the shark in in new.
So.
You know we continue to explore.
Market for that asset.
I look at other alternatives for that property, but.
You know in general I think we're in very good shape.
Thanks for that.
<unk>.
Drunk.
Good morning.
[noise].
Yeah.
You know.
Morning, you know one of the one of the.
A big surprises I think this year has been kind of a continuation.
And the strength of the out of room revenues, especially on the.
I guess ancillary and see.
You know can you maybe share with us.
You know how impactful that that's been <unk>.
Huh.
Relative to your initial.
Expectations and then.
<unk> tale to that how how long do some losing that slavery.
Dean's continuous we look out into the.
Yeah.
I think they're they're.
<unk>.
Obviously, a number of different components, when we talked about is Hillary revenues Chris.
<unk>.
And we.
Gene increases.
And all.
Mm.
And we're going to continue to drive them.
Because.
We think it's really important that you.
But.
But.
Yeah.
Why we realize redcar if they.
A marker for.
Overall performance.
Total wreck or is a very good indication of how you're running your.
And.
Really speaks a lot to profitability.
Yeah.
So.
You know we continue to.
See.
Pick up.
In food and beverage.
And a d. revenues.
Mm.
Across a portfolio.
We have a better cap for.
Cancellation fees, though nothing cancellations or higher but due to.
Automated system.
Mmm.
We are.
So.
Continuing to see a ramp in.
You know spa and golf revenues.
<unk>.
Well.
Continue to see that through the course of 2020.
After finishing his I talked about it'd.
Before you know.
<unk>.
We've read on the golf course and be done this fall and it's really paying off.
<unk>.
And.
You know as we think about.
Higher rated.
Corporate group customer.
You know they also bring a higher.
<unk>.
And banquet.
So.
<unk>.
Those are areas that were focused on.
Obviously, a another area.
Of.
Ancillary revenues continues to be resorting destination.
We are.
Continuing to focus on greater capture at our property.
I'm, making certain that.
<unk>.
Any feed that were charging is transparent.
So the customer.
And that there is a.
Solve it value proposition receive.
On a case by case.
<unk>.
Okay.
Yeah.
Gray color and just as a follow up.
Up.
<unk>.
Marianne based on our.
Kinda now small the numbers, including your portfolio.
You know some of their brands have been lost share in the last couple of years.
Maybe as a result of the integration, but now.
Just starting this quarter certainly looks like they gained relative share.
Do you guys.
It was or wait for you guys to.
Handicap that are under right that would you assume that.
Marianne brands continue to gain.
Relative share.
Oh.
<unk>.
Yeah I.
[noise].
I would hope so.
That don't continue to gain share, we gained 30 basis points and share quarters read.
And we're very excited about that actually.
You know Marianne is working very hard.
Q.
To improve their share 10.
Yeah.
I think they realize that they have.
An issue with Sheraton across.
The system.
<unk>.
And.
You know they are also.
I'm going to reinvent the W. bread.
Which I think are probably the two.
When it comes to.
The market share share from area. So they are.
<unk>.
They are a undertaking got for.
Two.
<unk>.
Yeah.
Two.
<unk>.
<unk>.
Those too.
Brands going.
You know.
I talked about Bon voyage.
I talked about 137 million members.
Right.
And what we've seen in terms of pick up and redemption.
Yeah.
I you know it's.
<unk>.
<unk>.
<unk>.
Clearly going to be.
A big impact going.
And I think it will.
<unk>.
It will help.
Across the system.
Mm.
<unk>.
Pains in market share.
You know it just goes without saying now there's a two programs are integrated.
Right.
The S.P.G. member now has access to all Marriott properties and the old era rewards from ever now has access to.
All of a legacy star would.
So.
We saw it.
It's all pick up in our portfolio.
And the third order and.
<unk>.
Let's see what happens next.
You mean, a couple other.
The data.
You know each other.
And blow up 4% as well.
And you know the other the other thing and <unk>.
You know Jim touched on this in his.
No.
How.
<unk>.
How we get a large percentage of our business with Marianne.
In aggregate in for us to outperform the top 25 market there 2022 market, so meaningfully I'd be really.
Two.
Yeah.
In particular Marianne done throughout the course.
Okay.
Very good thanks, guys.
[noise].
<unk>.
<unk>.
<unk>.
Mm.
Okay.
Hi.
Thanks.
I just wanted to go back on the.
Dispositions it sounded like your towards the end of the program, but it'd be interesting just to hear any thought to have on the current.
Financing environment, if the Sun had been in any changes there and then just as a point of.
Clarification.
You mentioned multiple of 14.1 time.
The asset sales.
<unk>.
Could you.
Provide that multiple without including the contracts that you would have invested into the properties such you.
<unk>.
Yeah.
Mm.
I think it's 11.3 times.
Yeah.
So.
Yeah.
And the.
So if you look in our.
<unk>.
On page 33.
We clearly lay out.
And.
We've done this quarter to quarter, we clearly layout the methodology.
<unk>.
That we use in determining would be avoided cap access.
It really is a a component of Ah argh build up to our whole value we look at.
The.
Oh.
<unk>.
Aggregate cat backs, when we think about.
Yeah.
The reserves on the property.
Hmm.
As a.
For for either the and then we look at the <unk> funded cab.
The marker or cap.
Yeah.
Those.
Those amounts are discarded back.
Over a tenured time frame, which is the way we do all of our whole values utilizing a discount rate of eight.
So it's a real number it's in the.
<unk>.
Closer.
Okay.
<unk>.
Thoughts about the financing market any with respect to the fancy market.
God bless.
I'm just on the equity side.
So that gives you talked about before right private equity has been the marginal buyer.
Today for for the <unk>.
<unk>.
We've done it well I sort of the market in general.
They're hitting today with a record amount of dry powder.
Yeah capital.
Yeah.
The light.
Yeah.
They they're not yet.
Thing on a <unk>.
Yeah.
<unk>.
They have a head scratcher, but.
<unk>.
Record low interest.
Yeah.
As long as that might need to hold up off onto it.
Asian like they make for a pretty healthy back up with respect to transmit.
<unk>.
Are you seeing any kind of increase in L.T.V.'s are.
Yeah.
Now we haven't but he you know interestingly enough.
Danny had the market is sort of slow down.
You need to C.N.B.S. market continues the whole pretty tightly s.
L.D.C. into the past year.
<unk>.
Without.
Hmm.
Yeah.
[laughter].
<unk>.
Yeah.
<unk>.
Yeah.
<unk>.
No.
Barley.
And with.
<unk>.
Yes.
Great. Thanks, I wanted to.
<unk>.
The balance sheet.
You worry invest.
Great and then.
With these assets.
And.
Yes.
That's very strong balance sheet.
So.
<unk>.
<unk>.
<unk>.
Plan.
For that and you know.
Yeah. So.
Yeah.
I'm kind of Underlevered is ER.
Is there.
A potential that you want to.
By something.
So that you and you want.
<unk>.
In addition to do that.
Are you just trying to be.
<unk>.
And.
Going into.
So.
Learned about a down.
<unk>.
I'll turn.
Okay.
I actually think about what you're likely to be with your balance sheet.
[laughter].
At these levels.
All.
No leverage.
So low.
Yes.
Thanks.
Well.
Robin.
Yeah.
We certainly.
Yes.
Okay.
There are not wishing for a downturn.
[laughter].
<unk>.
You know we.
[noise].
I have.
I've been very active on the capital allocation.
<unk>.
And.
You know we.
We.
Do you.
Uh huh.
We outlet.
For.
<unk>.
Capital today.
No one is.
Yeah.
On the acquisition side.
Which I'll come back and talk about and embedded.
[laughter].
The second is investing in our portfolio, which.
[laughter].
No.
Oh.
We spent a lot of time talking about that are in connection with.
Oh, the Marriott transformational capital program.
As well as the.
The sustainability ROI projects in the a and the other ROI projects that were undertaking and.
It's something that we.
We continue to mine the portfolio for to look for other opportunities.
Threed shareholder value.
[laughter].
And the third is obviously share buyback.
Sure.
And.
No.
Sure My back said today.
Uh huh.
Equated to 400 million.
Plus a little more in the third quarter. So.
<unk>.
<unk>.
As we think about.
<unk>.
Capital allocation going.
<unk>.
We will take a.
A measured approach.
On.
<unk>.
<unk>.
When and what.
Ah to continue to buy back stock.
Based on.
No.
Our view of the of the.
Of the macro conditions in the world.
Right.
And our view of the operating cadence of our business as we.
Yes.
As we think about getting into the budgeting.
As for.
So.
For 2020.
On the acquisition front.
[laughter].
You know.
In the last call I've talked about acquisitions, having a high bar.
Uh huh.
You know given the.
Okay.
Frankly, given the uncertain macro.
Yeah.
But there.
May very well be.
A a transaction or more than one transaction that makes sense.
<unk>.
So.
Yes.
Hi.
It doesn't depend on starting with a wouldn't market the asset might be located in.
You know what the demand drivers.
I was the pricing is.
Yes.
And what we think we can't.
Okay.
[laughter].
Going forward from a asset management in there.
<unk>.
Proving.
<unk>.
The operating performance.
But I would.
Take care of property.
So.
<unk>.
I think you know there were a lot of things on the table.
You never say never too.
To anything.
But by no means are we in any rush to.
Hi, good all this money.
<unk>.
Yes, there is and how you should say rather there's no read through.
What we get on the financing other than.
It was capitalizing on was probably the one of the best Fancy environment, We see no I.
Yes.
And you can lead to Jim's comment earlier, we don't break you never know where you're headed but if you.
[noise].
We had if we had a couple of maturity coming up and if you went back and you look at kind of what happened in last Darren downturn married International bond spreads grew out of thousand.
Thanks for almost 18 months.
[laughter].
So it was.
You know sort of certainly felt like as a pretty prudent time to what it really push out the maturity schedule and clean up the balance sheet.
[noise].
He has for whatever market's going into the next couple of years.
That makes sense I guess.
Maybe.
Just.
Yeah.
Hello.
He is.
Is there sort of the.
Target leverage ratio that.
See I realize at any given point you.
[laughter].
We are evaluating.
<unk>.
Share repurchase or an asset or two out there that you might want.
<unk>.
Bye.
What should we think about.
Yes.
But you.
[laughter].
Sure.
Your.
Your.
Leverage range.
<unk>.
Yeah.
I don't I don't know that it's changed from.
We've talked about in the past.
And you know.
We are thinking about leverage in the.
In the range of two and a half.
The three times.
<unk>.
Okay.
Debt to EBITDA.
But.
'cause that leaves.
Pretty substantial.
Yes.
Uh huh.
Potential.
In terms.
Yeah.
<unk>.
What.
<unk>.
What you could do with share Repower.
Yeah.
Or acquisitions right.
Yes.
Yes.
We are now to get to.
I have three.
<unk>.
And that's.
[laughter].
That's right at about two to doing that they know the dry.
[laughter].
Okay.
Okay.
Alright, great. Thank you very much.
[noise].
Thank you.
My final question.
Yeah.
I.
Yeah.
<unk>.
<unk>.
Andrew.
Yes.
[noise].
Yeah. This is David I'm for Lucas I'm, just two quick ones.
Three on San Francisco.
[laughter].
First off just curious whats your expectations are for that market next year.
[laughter].
And given your comments, Tim on a weaker citywide calendar.
[laughter].
And then the second one is just.
I'm curious whats your anticipated for your two Hyatt hotels.
In that market with the new.
[laughter].
Grand Hyatt opening up at the.
Thanks.
Yeah, I'll talk about the.
Okay.
The two.
Its first.
<unk>.
Yeah.
Yeah.
Oh.
They are the Hyatt.
At the.
Ill.
Yes.
Ill.
<unk>.
Obviously in intermodal hotel.
Oh.
We see it not impacting.
<unk>.
Either of our properties in any material way.
Going forward I mean, we have.
A lot of.
He's had burlingame.
[laughter].
It's really.
Oh, it's more toward a group house I think the idea at the airport is gonna be transient.
And a union square is a unique hotel.
In a unique.
So.
<unk>.
Next year, we're probably looking at San Francisco Revpar performance.
Doing that have to 3.5% somewhere in that Ray.
<unk>.
Sure.
So for me thanks, guys.
[noise].
Yes.
[noise].
[noise].
<unk>.
It's time I'd now like.
<unk>.
Uh huh.
No.
I got <unk>.
<unk>.
No.
Closing.
Mark.
Thank you for joining us on the call today.
Yeah.
We really appreciate the opportunity to discuss our third quarter results.
In 2019 outlook with.
I look forward to seeing you and they read and talking with you in a few months to discuss our full year results.
As well as providing you with 2020.
<unk>.
Have a great day everyone.
Thank you.
Yeah.
Ladies gentlemen.
Yes.
Today's teleconference you.
You may now disconnect.