Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Summit Hotel properties fourth quarter 2019 earnings Conference call.
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I'd now like to hand, the conference over to your speaker today, Mr., Adam what else Senior Vice President of financing capital markets. Please go ahead Sir.
Thank you Liz and good morning, I'm joined today by Summit Hotel properties, Chairman, President and Chief Executive Officer, Dan Hansen, and Executive Vice President and Chief Financial Officer, John Scanner.
Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws.
These statements are subject to risks and uncertainties, both known and unknown as described in our 2019 form 10-K and other as easy filings.
Forward looking statements that we make today, our effective only as of today.
Where we 26 2020, and we not undertake no duty to update them later.
You can find copies of our ESG filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call.
On our website at Www Dot s., each p. reach dotcom.
Please welcome Summit Hotel properties, Chairman, President and Chief Executive Officer, Dan Hansen.
Thanks, Adam and thank you all for joining us today for fourth quarter and full year 2019 earnings conference call.
I'm pleased with our fourth quarter performance, which drove full year revpar growth to the high end of our expectations.
For the fourth quarter, we reported pro forma Revpar decline, 0.2%, which was driven by a 1.1% increase in occupancy offset by a 1.2% decrease in right.
Same store portfolio posted revpar increased 7.3% in the quarter, driven by 1.6% increase in occupancy and a 1.3% decrease in right.
The majority of the difference between the performance of our pro forma portfolio and same store portfolios in the quarter is related to a softer fourth quarter and the Portland assets, we purchased in our joint venture, which was generally in line with our expectations at the time, we closed on the transaction.
For the full year pro forma Revpar increased 1%, which was driven equally by occupancy and rate increases of 8.5% and our same store portfolio posted a revpar increase of 1.1 person driven by a 0.6% increase in occupancy and a 0.5% increase in right.
Revpar growth in our portfolio outperformed the industry's full year revpar growth of 0.9%.
Meaningfully outperformed top 25 markets, which reported revpar growth of negative, 0.5% and the upscale chain scale, where revpar declined to 0.2% last year.
Pardon or competitive sets declined to 0.7% and 29 team.
Our pro forma portfolio finished a full year with a 114.8 Revpar index, which represents a 170 basis point increase in market share and we gained over 250 basis points in market share during the fourth quarter, our best performance of the year.
Our continued gains in market share show the benefits, we derive from high quality renovations are terrific locations and our creative revenue management strategies, we utilized throughout the year.
Despite the top and bottomline challenges that persist across the industry. Our intense focus on asset management kept our operating margins in check as operating expenses increased by just 1.9% on a per occupied room basis for our pro forma portfolio in 2019, which led to GLP margin contraction of Jeff.
65 basis points for the year.
Hotel EBITDA margin contracted 78 basis points for the year. However, excluding a nearly 7% combined increase in property taxes and insurance pro forma hotel EBITDA margins contracted by just 34 basis points.
We had several hotels in various markets exceed our expectations going into the year and have seen particularly good results in hotels that have been recently renovated as a capital we invested allowed them to gained significant share even when adjusting from the easier comparison created by the previous years renovation disruption.
Our Marriott hotel in Boulder had another strong year. Following a comprehensive renovation in 2018, we continued to benefit from better group demand and penetrate key corporate accounts well managing through the significance of Blackrock in recent years.
The hotels, 14.1% Revpar gain outperformed the Boulder sub market increase of 2.8% and its competitive set decline of 1.8% ending 2019 with a revpar index of 152.
Adjusting for renovation disruption in 2018 to hotel would still have posted a revpar increase of 7.7% a remarkable 950 basis point increase in market share.
In Louisville, our two hotels posted combined revpar growth of 13.7% during the year following the reopening of the Kentucky International Convention Center.
Which drove a 27% increase in citywide room nights to the market.
We successfully shifted away from lower rated airline crude business, while increasing production and in the higher rated group in retail segments.
This shift in segmentation contributed to an 8.9% increase in rate during the year, which outpaced the competitive sets combined growth of 2.4%.
Revpar growth at our hotels outpaced the overall Louisville market, the downtown Submarket and our respective competitive sets, gaining 580 basis points of market share on average.
Our for Phoenix hotels posted a combined revpar increase of 9.8% for the year compared to the Phoenix market growth of 4.5% and the competitive sets combined increase of 3.3%.
Phoenix hotels ended the year with an average Revpar index of 125.7, which represents a year over year market share gain of 630 basis points.
The courtyard and Springhill suites in North Scottsdale drove much of the growth during the year costing a combined revpar gain of 16% following comprehensive renovations in 2018.
Additionally, the renovation at the courtyard included a new indoor outdoor bar experience, which drove a 28% increase in non rooms revenue during the year and it just one of the many examples of how we continue to find ways to uniquely reconfigure existing space to enhance overall returns.
As expected our San Francisco hotels had a strong year posting a combined revpar increase of 8.5%, which outpaced the overall market by 425 basis points and represents an average market share gain of 357 basis points versus our respective competitive sense.
Outperformance was driven by favorable year over year renovation comparisons at the holiday Inn Express Fisherman's wharf and the four points San Francisco Airport with significant increases in convention business due to the reopening of the renovated Moscone center that resulted in a 41% increase in citywide room nights.
And so most of the 2019 Super Bowl Atlanta posted predictably strong performances Revpar at our four hotels increased 7.8% for the full year.
Which outpaced the Atlanta markets increase of 3.4% and the competitive sets increase of 5.6%.
While much of the growth was driven by the Super Bowl and the first quarter, a robust convention calendar that produced a 12% year over year increase in citywide room nights as well as strong group and corporate demand trends drove revpar growth in the second third quarters.
We continued to make progress on our capital recycling efforts during 2019 as we completed the sale of 10 hotels for an aggregate sales price of $168.4 million, including the previously announced sale of our two hotels in Birmingham, Alabama that closed in the fourth quarter.
In addition, we closed on the acquisition of five hotels and land for future development for a total purchase price of $276.9 million through our joint venture with GE I see.
During 2019, we invested $59.3 million into our portfolio and items ranging from common space improvement.
To complete Guestroom renovations, including comprehensive renovations at our core hurt in downtown Fort Worth, Texas and are Hampton Inn, <unk> suites hotels in downtown Austin, Texas, and the Heber City Submarket of Tampa, Florida.
Over the last six years, we ended invested nearly $300 million into our portfolio and the 72 hotels that we own today have an average effective age of approximately 3.2 years continued proof of our commitment to provide the most updated offering and the best in class guest experience.
While much of the attention of our industry is focused on today's challenging fundamental operating environment I want to be sure is a great work at summit to expand on the operating platform for long term growth does not get overshadowed I'm extremely proud of the progress we made as a company in 2019.
Our market share gains in expense control on issued initiatives exemplify the outstanding work of our best in class operating team.
We further demonstrated our ability to thoughtfully recycle capital by selling 10 hotels with lower Revpar lower margins and lower growth pot growth profiles and redeploy those proceeds into five assets located in significantly higher growth markets with higher revpar and margins at better going in yields.
We acquired these assets through a joint venture with one of the real estate industry's most respected investors, which not only will enhancer overall return on those investments, but also provide another validation of our investment strategy in the platform we built at summit.
In closing I have never been more optimistic about the future of our company and the team we've assembled with that I'll turn the call over to our CFO John standard.
Thanks, Dan and good morning, everyone.
For the full year 2019, we reported for pro forma hotel EBITDA of $215.4 million, a decrease of 0.3% from 2018 and margin contraction of 78 basis points to 37.6%.
Margin contraction was primarily the result of rising labor costs of 4.7% increase in property taxes, driven by recent investment activity, a 20.5% increase in insurance expense and approximately 35 basis points of displacement from the renovation activity Dan just described.
Despite these challenges operating expenses were very well contained in the year, increasing just 1.9% on a per occupied room basis.
This is particularly important as we continued to operate in a low revpar growth environment, and we believe our business model is particularly well positioned to mitigate margin erosion.
Adjusted EBITDA Ari was $185.3 million, a decrease of 5.7% from 2018 and adjusted FFO per share decreased 7.5% to $1.25 per share both primarily driven by timing of 2019 transaction activity.
In the fourth quarter, our pro forma hotel EBITDA decreased 5.9% to $46.4 million compared to the fourth quarter 2018.
As a result pro forma hotel EBITDA margin contracted by 218 basis points to 34.7%.
During the fourth quarter, our adjusted EBITDA, Ari decreased 9.1% to $40.9 million and adjusted FFO per share decreased 14% to 26 cents per share again, driven by disposition activity within the year.
As Dan mentioned 2019 was another active year for selling as we sold 10 hotels and bought five hotels and land for potential future development in our recently formed joint venture with GE I see.
The cumulative sale price of the 10 hotels sold during the year represents a weighted average cap rate of 6.7% on the hotels trailing 12 month that operating income, including estimated capex for brand mandated Pip items.
The average trailing 12 month revpar of $102 for the 10 sold hotels is 20% lower than our pro forma portfolio.
And hotel EBITDA margin of 32.3% is 530 basis points lower than our pro forma portfolio.
The purchase price for the five hotels acquired in 2019 represents an average cap rate of 7.9% on 2019 actual results.
These hotels posted a combined 2019 revpar of $159, which is approximately 25% higher than our pro forma portfolio and average hotel EBITDA margin of 47.5%, which is nearly 10 full percentage points higher than our pro forma portfolio.
These statistics are all property level figures do not include any fee income we will earn as the joint venture is general partner and asset management.
Our balance sheet continues to be very well positioned with approximately $365 million of current liquidity.
No maturities until the end of 2022, and an average remaining term of more than four years.
As of December 31st we had pro rata outstanding debt of $954 million with a weighted average interest rate of 3.95%.
On a pro rata basis, our current pro forma net debt to trailing adjusted EBITDA Ari is approximately 4.8 times.
Subsequent to quarter, and we modified our existing seven year term loan, which lowered the interest rate to 150 basis points plus LIBOR based on the company's correct pricing levels, which represents reduction or 40 basis points.
We expect to realize approximately $900000 of annual interest expense savings as a result of the transaction and all other terms remain unchanged, including the maturity date.
Today more than 87% of our hotel EBITDA is unencumbered as we continue to assemble a highly flexible balance sheet.
On January 30, Onest, we declared a quarterly common dividend for the fourth quarter of 2019 of 18 cents per share or an annualized 72 cents per share.
The annualized dividend results in an attractive dividend yield of 6.4% based on the closing stock price as of February 20, Onest any manageable AFFO payout ratio of approximately 60% at the midpoint of our 2020 outlook.
In our press release, you will see that we provided full year 2020 guidance for adjusted FFO of $1.15 to $1.27 per share.
Pro forma and same store revpar growth of negative 2% to positive, 1% and adjusted EBITDA, our guidance of $177.6 million to $190.4 million.
As a reminder, we faced particularly difficult comparisons in our portfolio in the first quarter is our hotels in Atlanta were significant beneficiaries of the city hosting the 2019 Super Bowl as well as a strong citywide convention calendar.
Convention pace in San Francisco is all well behind also well behind in the first quarter, creating meaningful headwinds in two of our three largest markets.
Our guidance range incorporate the softness we have seen year to date related to the current a virus, but does not make any forward looking estimate on its effects across our portfolio.
We've incorporated capital improvements of $50 million to $70 million on a consolidated basis, which results in capital improvements of $45 million to $65 million on a pro rata basis, and as we expect to invest approximately $10 million of capital into hotels owned by the joint venture.
This capital expenditure or activity is forecasted to result in revpar displacement of approximately 40 basis points for the full year 2020.
No additional acquisitions dispositions equity raises or debt transactions beyond those previously mentioned are assumed in the full year 2020 guide.
With that I will turn the call back over to Dan.
Thanks, John in summary, we are pleased with our fourth quarter and full year performance and our continued ability to identify and execute on opportunities that we believe position our portfolio for future outperformance and with that we'll open the call to your questions.
As a reminder, ladies and gentlemen to ask a question you will need to press Star then one on your telephone keypad.
To withdraw your question press the pound key.
Please standby, we compile the Q and a roster.
Our first question comes from the line of Michael Bellisario with Baird. Your line is now open.
Good morning, everyone.
Good morning.
Dan to given the more challenging outlook today, how are you thinking about.
Incremental capital investment today, and then has anything changed in the way you're underwriting potential investments whether its.
Acquisition development deals Mezz loans.
Whatever maybe.
What I'd say is that our ability to shift a capital investment.
He is very flexible I mean, we've invested.
Roughly $300 million over the last six years and our portfolios our portfolios in really good shape.
Theres, probably 25% of our Capex budget that is fairly easy to push off and.
And maybe another 10% that.
We can push off without affecting our team's ability to deliver the same high quality experience we have in the past.
Beyond that we would have to start to take a look at some fairly draconian cuts to push anything more off which we can do again, our portfolios in great shape.
But a lot of that is fluid a lot of our projects are in planning and lot of that money gets spent a later in the year. So that gives us a lot of flexibility.
To move that around.
On.
Your second part of your question I believe on like acquisitions.
We've always at least specifically over the last couple of years been underwriting higher amount of Capex.
Needed for many of these hotels one of the.
Strategies, we've had over the year been kind of trying to find things that are brand new were broken and those broken assets tend to have capex needs that kind of go beyond what would just make them competitive and the more comprehensive renovation as we've outlined and some of the prepared comments I think produces great returns. So I think it it is a big.
Part of our thought process, but the takeaway really should be that we've got a lot of flexibility on our capex for the year.
Got it that's helpful. And then maybe one more for John on guidance, what do you guys.
Underwriting for total expense growth and kind of same store hotel EBITDA growth in 2020.
Sure Yeah, Weve underwritten between two and a half in 3% operating expense growth for for the year that translates into to roughly flat same store EBITDA.
The growth year over year, and our margin implies EBITDA margins contracting between 100 200 basis points at the high and low end of arranges.
Thank you.
Thanks, Mike.
Our next question comes from Bill Crow with Raymond James Your line is now open.
Thanks, Good morning.
Let me just follow up.
Mike left off the.
I would have to 3% expense growth that you're assuming what does that what does that equate to for labor and benefits.
We just added labors clearly at the higher end of that Bill.
We've got labor going somewhere between four and 5% on the other headwinds I think as we mentioned in the prepared remarks are really in insurance and property taxes, and thats offset by lower growth are holding some of the other expenses across the piano flat for the year.
Adjusting for.
For some of the tough comps properties and in January that it was there anything encouraging we heard from we've heard from some of your peers that.
We saw an acceleration in demand.
November December and really read through January up until some of these corona by Roche headwinds came along are you see them and where you see live.
This is Dan I'll, John I, probably share this question a little bit.
As as demonstrated in our results were very pleased with with Q4 I think.
Our revenue management team did did a great job strategically finding opportunities.
Yes.
I would say so far this years, particularly in January it's been spotty and I think theres properties, we have that coming up renovation that are are able to compete very nicely with the.
Properties in the competitive set and we continue to gain market share as we have in the past, but I wouldn't say that there's anything that would stick out.
From a.
Broad based demand perspective that I would point to.
Yes, I think the other thing that I'd add Bill is certainly November and December performed better as as you know as we've talked about and I think has been fairly consistent across the industry and our January for us never set up, particularly well from a comparison perspective, and we've we've talked a lot about difficult comparisons in the first quarter, but it certainly held true in January markets like Atlanta.
No we're not only at a difficult Super Bowl comp late in the month in early in February yet it very difficult convention calendar comp little was a market Minneapolis, where all markets, where we had really challenging comparisons to what was a fairly strong both January in first quarter of 2019. So I think we definitely saw the strength in November and December I think we always knew going to Joe.
Anywhere we are going to have a challenging comp year over year.
Just one more for me.
Could you comment at all about the acquisition pipeline for the joint venture and whether some of these headlines that in New York City of mortgage defaults has got your attention.
Sure Bill it's Dan.
I think anytime there is a headline on anything that is displaced.
It does raise our attention.
Our partnership with Jesse.
We're excited about.
Trying to be is.
Active as we can underwriting and identifying opportunities I don't think theres anything that has risen to the level that there's an immediate need to be acted upon we do spend a lot of time underwriting as weve telegraphed before I think the ability to transact.
There there will be limited by our balance sheet and.
The sale of assets to fund our portion of any further acquisition so.
I would say.
All these developments are always interesting, but I wouldnt say, it's created any sense of urgency for us.
Okay perfect. Thanks.
Our next question comes from Austin, Wurschmidt with Keybanc capital markets. Your line is now open.
Hi, good morning, so kind of in a similar vein as bill was just driving at.
You mentioned being in that seller in the near term to build capacity.
And reinvest in the joint venture or otherwise, but I'm curious if any of this volatility in the capital markets of late has bled over in any way and transaction market from what you can tell or or caused some skittishness from potential buyers.
Yeah, Hey, us and as John look I think in part it's too early to tell this is all kind of happening real time and I'm not sure. We've seen a tremendous amount of trades, yet that would reflect any type of gapping out in cap rates, it's still feels like their strength on the sell side.
We talked about a lot about last year I felt more like a sellers market I think one of the shifts that we did see last year as there was at one point, probably a portfolio premium I think today sitting there where we had more success in 2019 selling assets was a little more targeted one or two type of smaller portfolios to local buyers but.
It's certainly something that we'll keep our eye on both from the sale and the buy side I don't know that we've seen any any significant.
Stress or dislocation in the markets, but again. This is this is all kind of happening real time and I'm not sure. We've seen a lot of trades to justify any type of gapping out a cap of cap rates at this point.
Okay Fair enough I know you guys aren't giving quarterly guidance anymore, but with the headwinds you mentioned early in the year. I mean is the low end of the full year range reasonable guidepost early in the year as we think about kind of the trajectory of how the year might play out.
Yes, hey, often as John.
Look again without giving first quarter guys. All I would say is.
Even pre some of the noise that we've seen over the last couple of weeks with with the virus I think we always knew the first quarter was going to be the most challenged on it that was a lot of that was driven by Atlanta and the Super Bowl comp in the strong city wide calendar, we had the first quarter and some of that was was driven by San Francisco and in the Bay area with a difficult citywide comparison those markets are obviously going to feel the.
The effects of the virus, so I'm not sure that fully answered your question, but I think without a doubt we always knew going into via the first quarter was going to be the most difficult were also coming off of a 2019 first quarter of 3.3% Revpar rose. So we really did have a strong year in the first quarter of last year.
Okay. Thanks for that and then just last one for me a little bit longer term.
Question, but you know you talked about investments in the platform, Dan and I'm. Just curious if you sit here today, how much you think you could scale the platform without really adding.
Too many additional resources.
Great question, we spend a fair amount of time structurally trying to make sure that we have the capacity to grow and I think I can sit here today and say that we could be 50% bigger without having to add any material resources.
Beyond that I think it would we would have to kinda reevaluate, but our level of intensity on whether it is revenue management asset management purchasing design construction.
It's there there is a significant amount of work that goes into drive this extra value.
I do think we've got capacity and given the right opportunities it and the right backdrop, I think we could scale and take advantage of.
Nick opportunities very quickly.
Thanks for the question.
Thanks Austin.
Our next question comes from the line of Wes Golladay with RBC capital markets. Your line is now open.
Hey, good morning, guys.
Looking at the city Wides for the balance of the year, excluding the first quarter, how do those set up.
Yes, Hey way West that John I think we see better citywide calendars this year in Chicago, notably Portland in Kansas City, Obviously, San Francisco is the weak spot I think second third quarter are strongest quarters from a city wide perspective first quarter being the most difficult comp, which we again have talked about.
Quite a bit on the caller I'd.
Okay, and then going back to the expense and EBITDA did you call for flat EBITDA growth. This year with the expenses two and half a 3% just wanted to clarify that and if so what is the revenue in SMB driving to the revenues this year.
Yes, I would say flat to slightly down from from a same store EBITDA growth perspective year over year based on expense growth of two and half to 3%. So that obviously implies united rooms revenue new growth exceeding rooms revenue growth for the year.
Okay. Thanks, a lot of guys.
Thanks Wes.
Our next question comes from Neil Malkin with capital One your line is now open.
Good morning, guys.
Good morning.
There's been a lot of increase in loyalty.
At the brand as they pushed.
To do more direct booking et cetera could you just talking about the economics generally.
About what it looks like.
From a total I get gas acquisition or net revpar impact from.
I guess booking through brand dot com or the hotel web site versus a loyalty member doing the same thing versus <unk>.
Sure at West This is Dan.
Yes, there has been some talk of clearly and continues to be talk about acquisition costs and rising and.
Relationship so the brands and we in particular at some of that.
Strong relationships with the brand and its challenging right now this type of low growth environment, but we're hopeful other recognize the value of the partnership with the owners and we have at productive conversations with all of them, some clearly better than others.
But there is this dynamic where.
The continued growth of loyalty program brings in members through the loyalty program that can book at rates lower than what they may have booked at by not being loyalty members. So I think the thesis by the brands is that that continues to drive incremental reservation contribution.
That is simple as that I think we could we look at Ares reservation contributions from the brands.
Very pleased with it in general I think that.
The loyalty programs are clearly what they're putting all their money behind and I don't know that we'll know for certainly.
As the years ago by how much that will really have driven profitability. There is additional cost involved in that and.
There it sure does feel like we're bearing part of that but it's not a simple equation.
To to look at that but but I could say after after having said all that that acquisition costs clearly have gone up and it. It's one of the things that adds to the challenging environment for us.
Okay. Thanks for that and then.
Just.
In the context of.
Leverage the JC portfolio and then the.
Mezz loan purchase options you have.
Just given the low rate environment, a lot of capital out there and I've heard from several brokers that flex service assets.
Sort of non post the market very hot.
What's your appetite or willingness or our interest too.
Really ramp up the disposition program too.
Bring down from leverage and create liquidity for.
Potential Gee I see investments and the.
Eventual takeout.
Of those.
90% purchase option.
Sure, it's Dan, but clearly we have a bias towards dispositions, we have telegraphed in over the last basically the whole cycle that.
Weve.
Have a range that we like to stay in and when we get to the top end of the range you should expect more sales and at the bottom Mick and other Ngs is should expect more more buys. So we're clearly at the high end of our range and.
Feel like as described earlier, it's still is a very strong sellers market.
With the current environment and challenges and volatility.
Apps is slow things down a little bit kind of remains to be seen but no no issues for us and whether we're interested in selling and I think we've we've been a capital recycler.
Since the very beginning when we went public if you look all the way back to our IPO at 65 assets. We now have 72 and there is only five of the original hotels that are left so.
We have clearly been at a leader in recycling of capital in this environment, while more challenging shouldn't be any different.
Okay, and then lastly from me.
I know that Theres with typical group events, there are cantilevers nutrition.
Costs associated.
What is the strategy or your view on that.
Or policy with companies that have have or potentially will cancel.
Group event.
Because of the current of buyers fears are you are you sort of lay them off because of the exit.
And in circumstance or earn how are you looking at that.
Our attrition fees were up a little over a million dollars last year. So clearly it's been a positive for us I think each one is a little bit more of a case by case basis.
Okay, you want to maintain strong relationships, but.
As evidenced by our increased last year, there are definitely opportunities, where we can get some some cancellation revenue.
Thanks, guys.
Thanks, Dan.
Our next question comes from the line of Chris Woronka with Deutsche Bank. Your line is now open.
Hey, good morning, guys.
Dan I want to ask you as you look back last several years and I guess this would go for stuff you've acquired as well as your existing hotels has the impact of supply Ben you know better worse than you expected about as you expected or not as bad is there any way you guys kind of internally measure that auto.
On a look back basis.
Yes, we've got a pretty scientific method, we've used and we came up with its been much worse.
And in all seriousness, the proliferation of brands and the blurring of lines and the similarity between offerings as one of things, that's creating a lot of frustration out there.
Just exacerbates some of the challenges, we have and pushing rate so clearly.
We've been I Miss Miss.
Really missed the continued.
Hi at higher into supply over the last couple of years and have been quite frankly surprised because many of the the projects don't seem to make sense on paper. So there is a whole new group of new developers and I believe that good projects and good market that can add value and and and.
Habit.
More modern and clean and vibrant and authentic offering will still makes sense.
But I do think Theres a lot of supply that has been approved and started and constructed that is going to struggle.
Yes, I think I clearly felt like we would not have had as much supplies. We've had over the last couple of years. This year in particular so.
Yeah, it's been a much worse than expected to start call them. It back to the original question.
Okay. That's.
That's helpful. And then yes, I know you guys have a few hotels and resort markets and you obviously have a select service focused orientation for your portfolio I mean based on kind of what we're seeing out a top 25 markets versus resort markets suburban airport et cetera does that make you lean in.
More towards wanting through acquiring resort markets with your with your capacity going forward.
Chris It's Dan it actually it doesn't.
I think we underwrite every hotel on its own.
If there is a dynamic into growth potential because it isn't there resort market or were close by clearly we can underwrite that and something that is maybe outside of that doesn't have that maybe has to have be put under a little bit different lens.
As we look at everything is there a unique set of demand drivers that we hopefully identify along with operational drivers and I think we've been successful with finding opportunities.
Even in some of these markets that have had.
Exceptionally high supply I mean back to your first question.
Albeit higher.
Supply in a market like Austin, Texas.
We've performed very well. So there are there are markets, where despite supply you can manage through it.
And have some great total returns and I think thats. The the dynamic that we focused on not specifically, which time to market. It is but there is an entry point and a balance of both operating.
Drivers and demand drivers that I think get us to a level, where we have a high degree of confidence to move forward on an acquisition.
Okay very good thanks, Dan.
Thanks, Chris.
Our next question comes from lineup Bill Crow with Raymond James Your line is now open.
Thanks for the follow up.
Success in appealing the real estate tax increases given.
Industry dynamics right now.
Hey, both John.
Yes, again I'm not sure how much of its change just from kind of the recent industry dynamics, but I think we appeal almost every single property tax bill that we get we.
We do have success doing it we particularly had some success late in the year last year in a couple of markets, particularly when you we've got as acquisitive as we've been and transaction oriented as we've been.
Obviously that obviously often comes with a reassessment and that's almost always challenge some level. So we have had some success again, it's probably too early to say, that's really driven by the more recent dynamics in the industry, but.
We're pretty active and challenging reassessment as they come in.
Okay. That's it just curious.
Thanks Bill.
And I'm not showing any further questions in queue at this time I'd like to turn the call back to Mr. handsome for closing remarks.
Well. Thank you all for joining us today, our goal of creating long term shareholder value through opportunistic capital investment and relentless asset management remains unchanged and our portfolios in the base shape shape ever and well positioned for the future I look forward to talk and gel soon thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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