Q4 2019 Earnings Call
[music] greetings and welcome to the Chatham Lodging Trust fourth quarter 2019 financial results conference call at this time.
It's kinda sorta listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded and it's now my pleasure to introduce your host Chris Daly President Daly Gray public relations. Thank you Mr. daily you may begin.
Thank you Debbie good morning, everyone and welcome to the Chatham Lodging Trust fourth quarter 2019 results conference call.
Please note that many of our comments today are considered forward looking statements as defined by federal security laws. These statements are subject to risks and uncertainties spoke to known and unknown as described her most recent form 10-K, another FCC filings.
All information in this call is as of February 26, 2020, unless otherwise noted and the company undertakes no obligation to update any forward looking statements conformed to statement actual results or changes in the company's expectations.
You can find copies of our SEC filings earnings release, which contain reconciliations to non-GAAP financial measure measures referenced on this calls on our website <unk> Chatham lodging Trust dotcom.
Now I'll provide you some insight into Chathams 2019 fourth quarter results allow me to introduce Joe Fisher, Chairman President and CEO.
Dennis Craven Executive Vice President and COO, Jeremy Wegner, Senior Vice President and CFO, let's turn of the fish or the session over to Jeff Fisher Jeff.
That's great. Thanks, Chris Good morning, everybody I'm glad you're on the call here today as you know we reported our first quarter fourth quarter results and Revpar finished above the upper end of our guidance range and adjusted EBITDA NFV FFO beat consensus and the upper end of our guidance range due to the Revpar.
As well is slightly better than expected margin performance. As a reminder, we had a very tough fourth quarter due to the comps and significant revenue. We earned in 2018 in that quarter from the gas explosions and north Boston as well as a huge quarter in San Diego within the four.
Fourth quarter Revpar was down 5% in October 2% in November and 7% in December given the very unusual fourth quarter comps certain metrics such as overall revpar and margin performance are really not indicative of our current operating environment, especially as we look forward into this year.
So I'm going to spend a few minutes talking about what the current trends are that were seeing in our portfolio and the overall operating environment.
Market share was up yet again, getting almost 70 basis points for the quarter, which is very encouraging given the amount of new supply, especially new brands that have been introduced into some of our markets. We continue to drive other revenue, which was up $1 million or 31% in the quarter led by a 27.
<unk> percent increase in parking revenue.
We firmly believe we have the best in class operating platform as you've heard before and our collaborative efforts with island really have paid off over the last couple of years.
We're perfectly positioned to quickly rollout revenue enhancement and expense saving initiatives properly assess their impact and then decide whether to move forward with those four tweak or canceled initiatives as we analyze those initiatives together with the island people. This is further.
Supported when you look at some full year operating highlights for 29 team first we minimize the operating margin erosion to only 40 basis points. Despite a 160 basis point decline in Revpar.
I think this is pretty impressive and I don't think you'll see those kinda results as you look across the peer group second we gained Revpar index of approximately 60 basis points and last we drove other revenue up 3 million or 22%.
This kind of environment those are the kind of metrics that you ought to be considering and that we continue to push as very important priorities for 2020.
Looking at our financial results for the full year, our adjusted EBITDA and FFO per share finished at the upper end of our initial 2019 guidance range. After taking into account the sale of two hotels, which was not factored into our guidance. Despite the 1.5% decline in Revpar adjusted EBITDA was only down point.
Four per Se. This performance was driven by our overall superior operating margins as we said on the corporate side, our overall leverage declined to 34.1% from 34.7% as we use proceeds from the sale of two noncore hotels at a six cap as well.
Lets proceeds from a small amount of accuray equity we issued back in early 29 team. We also commenced our first ground up hotel development and 29 team.
Going somewhat against the grain of our peers. We've also been net acquirers of assets over the last three years, we have acquired approximately $200 million of high quality hotels and are in the midst of 65 million dollar development. We have funded 225 million of this growth.
Through the issuance of equity and proceeds from the sale of hotels.
Shifting gears to 2020, our revpar growth range of minus 1.25% to plus.
0.25% is reflective of a flat revpar environment across the U.S. further impacted by above average supply growth in the upscale segment.
Smith travel is projecting revpar declined 1.3% for the upscale segment versus flat for the entire industry. Our guidance does not factor in any material adverse impact on lodging demand due to the Corona virus, although we have experienced I revenue loss of approximately.
$200000 today, this year and that doesn't account for the unknown loss in demand.
At the midpoint RF <unk> guidance is down nine cents or 4.9% compared to last year. Our margins are down approximately 120 basis points, driven primarily by an approximate 5% increase in rooms labor and benefits on a per occupied room.
Basis as our industry continues to experience the effects on labor pricing as a result of historically low unemployment.
As mentioned on our last call, we're continuing to roll out housekeeping efficiency programs aimed at improving our productivity Hilton's also rolled out some similar programs being first to do that and we're investing dollars to reduce our energy usage, where the return on investment is worthwhile and we're enhancing our risk management broke.
Grams to reduce losses or minimize premium increases.
As you know we try to be conservative in our approach. So hopefully there's some upside to our estimates because we remain focused as I said on maximizing revenue and minimizing margin erosion Chatham still generates the highest operating margins of all lodging reads and we're going to maintain our position at the top into.
2020.
In 2020, we'll continue to explore asset sales with the intention of using those proceeds to invest in acquisitions or development, having said that the acquisition market is pretty thin due to buyer seller pricing expectations.
We'll have a look at a few value add opportunities as we stated previously and we may develop one or two more hotels over the next several years if their returns generate the proper risk adjusted return compared to buying an asset of similar quality in that same market.
Additionally, we've talked about our initiatives and adding value by converting existing space.
And our hotels to a higher revenue generating activity and now we are working on and are about to convert some existing space in our residence Inn in San Diego Mission Valley, and our residents and Anaheim Garden Grove and do a further.
Income producing assets in this case similar to our Savannah conversion.
Small bars being added to the lobby of the hotels offering minimal food service enough to meet our local beverage requirements like a law requirements, but with our experience in our success in Savannah with our bar that is call.
All toasted barrel, we are further encouraged by looking at other.
Hotels and trying to roll out similar initiatives toasted barrel. For example, produced revenue of $350000 and profit of $85000, a noteworthy 24% margin and a return on our investment to fit out what was otherwise.
Just a pretty much empty meeting room.
[laughter] excuse me.
ROI on that was over 20% just in year one.
We're pleased with that result.
Our annual dividend is expected to remain at a $1.32 cents per share a level maintain since mid way through 2016 and represents a very attractive today, 7.9% yield we remain comfortable with our current dividend and excluding our development spend were producing positive free cash flow after dividends.
And Capex in 2020 of course, our long term goal.
Is to increase free cash flow and our strategic efforts are aimed at driving incremental cash flow as I've said wherever we can as we look forward to 2021 and the opening of our L.A. development, our free cash flow will increase with that I'd like to turn it over to Dennis.
Jeff Revpar for the fourth quarter declined 4.9% $218 with average daily rate down, 4.1%, a 157 and occupancy down 80 basis points to 76%.
Looking into our sixth largest market starting with Silicon Valley, which is by far largest market contributing approximately one fourth of our EBITDA revpar was down 4.2% to $158, but to the hotels were under renovation during the quarter.
When you look at our guidance it assumed a decline of about 7%. So excellent performance was a little bit better than expectations there.
San Diego represents our second largest mark largest market in Revpar was down 19% pretty much in line with our expectations for the quarter as both of our San Diego hotels face really tough comps in the fourth quarter due to significant border patrol demand any huge convention calendar in downtown San Diego.
Washington, DC market experienced revpar gain of almost 3% $232.
Driven by strong gains that are Tysons residence Inn, where revpar grew 9% that hotels benefiting from a great renovation earlier in 2019, it's bringing back corporate guess as well as the de flagging. The hotel that was in our comp set in the past that we're gaining some additional market share.
Three northeastern coastal markets in New Hampshire in Maine saw Revpar declined 8.4% better than our expectation has an 11% decline two of those three hotels aren't New Hampshire hotel saw a huge gains last year from the north Boston gas explosion demand.
[noise] something to note is that these same hotel revpar advance, 18% last year. So it's pretty impressive that we were able to hold onto a chunk of that gain Houston, which is our fifth largest market continues to struggle with revpar declining 12% to $83 and that decline was right in line with our expectations for the quarter new supply.
And our market and tractors over 20% room supply. This has significantly impacted our performance 2019, revpar full year Revpar up $93 is $25 below the all time high of $118 in 2015 for those same for hotels.
In Los Angeles, Revpar was down 4% with Revpar at our resident in Anaheim down 7% in the quarter.
Again related really to demand related to Disneyland being down this year.
Parking revenue was up $400000 or 22% in the quarter.
We continue to roll out additional parking charges that at hotels and where we were allowed we were we were able to increase parking parking revenue and other hotels.
Looking ahead to 2020, we expect parking revenue to flatten out on a year over year basis, most likely over the second half of 2020.
Payroll and benefits represented approximately 38% of or overall quarterly operating expenses and 22% of our quarterly revenue on a per occupied room basis payroll and benefits rose, 3.6% with payroll related costs inclusive of overtime and casual labor of 4.8%.
Benefit costs were actually down 50 basis points in the quarter.
Year to date payroll related costs represent approximately 37% of our operating expenses and on a per occupied room basis payroll and benefits rose 3.1%.
Payroll related costs were up 4.9%, while our benefit costs were actually down 2.2% for full year.
Wage pressures remain our biggest concern and are due to historically.
Due to historical low unemployment rates, which is obviously driving hourly wages higher but also causing a shortage in the qualified lodging labor workforce. When we can't hire sufficient employees, we have to bring in casual labor, which is more expensive and less productive in the fourth quarter casual labor was zero point $3 million actually down one.
$1 year over year, but when you look at our year to date results casual labor was $1.1 million for the portfolio up about $400000.
A reduction of benefits is generally a triple to better overall claims experience on both our medical and workers comp plans as well as planned modifications that helped reduce premium cost again, a huge benefit to our platform of island is the ability to work with them as our operating partner to maximize plan design Copays networks et cetera.
Lastly, during the quarter I guess acquisition costs were down 1.8% in the quarter and 3.2% year to date really little impact on our quarterly margins, but for the year. It aided our margins by approximately 20 basis points on the supply front industry, new supply sister rise approximately 2% in 2020 and upscale supply.
As suppose to increase almost 5% both increases similar to growth in 2018 in 2019 in our market tracks as measured by Smith travel New supply peaked at 5% in 2015 and has declined each year.
Through 2018, but it did ease back up to almost 3% in 2019, excluding the four Houston hotels were just supply is is significant overall the impact on new supply in our hope on our portfolio compares favorably to the overall upscale segment.
On the operating side or biggest opportunity is increasing the efficiency of our housekeeping departments were communicating with our customers to understand the services that they value most on daily basis. So that we can spend our time performing tas most critical to our guest satisfaction, we're using that knowledge to customize our guest service model, we're sharing those experiences with our.
Brands, who are also rolling out programs as well.
We do expect to spend over $65 million on payroll and benefits in 2020.
And our rooms department will comprise about 60% of that expense so to the extent that we can get some favorable results out of these housekeeping initiatives those should accrue to our bottom line.
Working more efficiently will allow us to improve employee satisfaction and offer competitive wages to our employees and hopefully reduce overtime casual labor and employee related claims working better and more efficiently to improve our employee retention without sacrificing guest experiences would be a model change that could certainly benefit us down the road.
With that I'll turn it over to Jeremy Thanks, Dennis Good morning, everyone for the quarter, we reported a net loss of $2.4 million or five cents per share compared to a net loss of 0.2 million or ones that per share in Q4 2018.
Our Q4 2019 results included $2 million of losses related to our share of onetime items, which occurred in the joint ventures. These items include a 0.8 million write off of deferred financing costs associated with the refinancing of the innkeepers JV debt is 0.2 million dollar loss associated with the sale of the Hampton.
Then Willow Grove, and Innkeepers JV and is there a point 9 million dollar impairment of the residents in Lexington in the Innkeepers JV.
The primary differences between net income in AFFO relating to non cash costs, such as depreciation, which was $12.8 million onetime gains or losses, which are $1.1 million and our share of similar items within the JV is which were approximately $2 million in the quarter.
Adjusted FFO for the quarter was $15.3 million compared to 18.4 million in Q4 2018.
Adjusted FFO per share was 32 cents compared to the 39 cents per share generated in Q4 2018.
32 cents of AFFO per share for the quarter was ascent above the high end of our guidance range of 28 cents to 31 cents. Our Q4 2018 AFFO per share benefited by approximately three cents from demand related to the Gaslink business and the Boston area.
Adjusted EBITDA for the company was $25.9 million in Q4 down from 28.9 million in Q4, 2018, which benefited by approximately 1.5 million from the gasoline business in Boston.
In Q4, our two joint ventures contributed approximately $3.3 million of adjusted EBITDA in 0.9 million of adjusted FFO.
Fourth quarter, Revpar was down 1.7% in the inland portfolio and 4.8% in the innkeepers portfolio.
The Innkeepers JV is revpar was impacted by fire at the West and Morris town, which would put in the proper property being closed for 18 days.
In November we Cisco successfully refinanced the $850 million of CMBS on the Innkeepers JV with a new 855 million dollar loan priced at LIBOR, plus 282, with a seven year maturity inclusive of extension options.
In December the Innkeepers JV sold the Hampton Inn, Willow Grove for $11.25 million Chatham receive $2 million of cash distributions from the Jvs in Q4.
At year end, our net debt was $580 million and our leverage ratio was 34.1%, which is down from the 40% area, where we have generally operated in the past our balance sheet remains in great condition and provides us with the capacity to complete our Warner Center development project and pursue additional investment opportunity.
As of the become available.
Transitioning to our guidance for Q1 and full year 2020, I'd like to note that it takes into account completion of the renovation of the residents in Sunnyvale too in quarter, one commencement of the anticipated renovation of the residents in Anaheim and residents and new resell in Q1 and commencement of the renovations of the residents and Holtsville and.
Residents in Washington, DC in Q4.
2020 does set up better for us.
On the renovation front as it will be only renovating four hotels in 2020 compared to six in 2019, the number of rooms under renovation is down 32% this year.
We expect to spend approximately $23 million on our 2020 capital plan, which includes the renovations that I mentioned as well as other planned capital expenditures on our existing properties. This was down approximately $13 million from our spend on existing hotels in 2019.
We expect to spend an additional $30 million associated with our Warner Center development in 2020.
As a reminder of the quarterly Revpar results. We reported in 2019 included the results of the courtyard, Altoona and Springhill suites, Washington hotels prior to their sales and did not include the results of the residents and Somerville or courtyard Dallas downtown prior to their first full year of operation.
Excluding the Revpar of the courtyard, Altoona, and Springhill, Washington for the full year and including the Revpar of the residents in Somerville inquiry, our Dallas downtime for the full year 2019, Revpar would have been $122 in Q1 hundred $43 in Q2 hundred $46 in Q3 hundred 18.
As in Q4 and $133 for the full year.
We expect Q1, 2020, revpar to be down 2% to down half a percent and we expect full year 2020, revpar of down 1.25% to up 0.25%.
January Revpar was down 80 basis points February revpar is projected to be flat.
In March Revpar is projected to be down approximately 3%.
Our revpar guidance does not reflect any additional adverse impact from the krona virus outbreak because it's too early for us to know what the magnitude or duration of any potential impact is likely to be.
We expect hotel EBITDA margins decline approximately 120 basis points, which reflects the continued to increase on labor property tax and property insurance costs.
Based on our Revpar and margin outlooks, we expect adjusted EBITDA to be between 123.1 million and $127 million in 2020 $125.1 million midpoint of this range reflects a 4.5% decline from the $131 million of adjusted EBITDA, we generated in 2019.
On a full year, our full year forecast for 2020, corporate cash DNA is $9.3 million.
On a full year basis. The two jvs are expected to contribute 14.9 million to 15.5 million of EBITDA and $6.2 million to $6.8 million of AFFO.
On a full year basis, we expect FFO per share to a $1.72 to $1.80 with the midpoint of $1.76 in 2020.
I think at this point operator that concludes our remarks, and we'll open it up for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask your question. Please press star one on your telephone keypad a confirmation Tom will indicate your line is in the question can you May press star too. If you would like to remove your question from the kit for participants using speaker equipment and may be necessary to pick up your hands that before pressing the star.
One moment, please when we pull for questions.
Our first question comes from the line of Anthony Powell with Barclays. Please proceed with your question.
Hello, Good morning, everyone.
Hi, Anthony.
Just one Corona Byron's question one of your peer said that they had a decent amount of China business in their Silicon Valley properties is at the same case for you and what's your outlook for the.
Impacted there was a particular properties for parameters.
Yeah, Anthony we certainly have a little bit of China business in our hotels in Silicon Valley also in our Bellevue downtown location, even have a little bit in one of our Houston hotels.
Certainly the impact for US I think we quantified what has been about $200000 a little less than that through the end of February we are seeing a little bit of attrition, but I think one thing to note even when you look at our portfolio.
The impact even in Silicon valley isn't necessarily.
Ninetys related guests staying at our hotels it might have been that they were staying at other hotels in the market that have now cancel their trip and therefore, you have a little bit more vacancy that people are trying to fill in that does filter through.
To our hotel, so even though for us the impact hasn't been significant at this point.
I think there there has been a little bit of a drag on the overall market, especially silicon Valley.
Got it and that March 3% expected decline is that just due to tough comps or is any of the corners impact and that margin number.
Certainly we have a little bit of we certainly are a little bit.
We are reflective of a little bit of occur on the virus impact, especially stuff that we know that has canceled.
But we do have a major renovation ongoing at the Sunnyvale two location.
For the for the full year that that renovation or that hotel.
As far as down about 9% for the full year and actually impacts our full year revpar by about 90 basis points that renovation alone. So.
Thats the main driver behind Silicon Valley.
Okay.
All right and the could you update us on how the the Charlton in Dallas after the ramping and what you expect them to do this year.
Yes, I think if you look at the Charleston assets actually I think it certainly had a good last three or four months of 2019, and we've got some good business going in early 2020.
If you look at our Revpar change for Im just pulling them up here the resins and Somerville.
In 2020, our Revpar is projected to be down about 6%. The courtyard Somerville I think is projected to be down about 6% in that market.
Two hotels, let's we hope that we outperform that but I think when you look at certainly theres been two new.
Hilton products that have opened up.
There recently, so we are feeling some supply and that market our courtyard Dallas downtown our 2020 projection is revpar growth of about 9%.
So that hotel continues to ramp I think as we've had a full year to prepare for convention related business and establishing the right relationships that hotel is going to continue we think to outperform.
In 2020.
All right maybe just one more for me you mentioned the Hilton isn't it had introduced some new efficiency initiatives can you go into detail about what those were thank you, yes, similar to what we're doing where they're looking at the stays of guest.
And if it's more than a single night their tayo, either tailoring guest expectations for how often there.
You know, making a clean in the entire room.
Versus doing a quick run through making the bad cleaning the bathroom, replacing the towers, if if if if if fast.
So it's truly trying to reduce minutes in those rooms on stayovers for share.
Okay.
All right great. Thank you.
Thanks Anthony.
Thank you. Our next question comes from the line of already Klein with BMO capital markets. Please proceed with your question.
Thanks, and good morning.
Hey, maybe just hey, maybe just following up on that last question can you talk little bit about incremental opportunity on it.
Expense savings from the housekeeping initiatives in 2020, and then there seems to be a little more margin pressure in 2020, despite the revpar outlook being somewhat better than 29 can you maybe what are you looking for on the waitress side this year.
Yes, I think Theres two things there one is certainly the the impact on margins I'll take the second one first the impact on margins is influenced a little bit on.
You know just a flattening out of that other revenue increase.
But secondly in addition to labor you have labor, but in the third point like many others, we have seen a pretty good increase in property taxes and insurance.
Especially on the property and and liability insurance side, which I think for us as a company. Those two line items are up about four.
For a little over 4% year over year now hopefully we can fight some of the property tax stuff and bring that number back down.
But at this point, we've got about.
An impact on our margins of about 50 basis points between our property taxes and insurance line items to our overall margins.
On the housekeeping side listen I think we spend we are projected to spend over $65 million on labor and benefits in 2020.
So with 60% of that being in the housekeeping Department. So when you look at kind of a 35 to 40 million dollar spend and housekeeping.
I think we are hopeful that we can eke out.
Where we normally spend it might be 16 18 minutes in a stay over room, if we can knock that down into.
12 minutes or 13 minutes, those things Anna and little bit here and there. So it's too early to quantify our initial rollout results that we've done in the handful of hotels and we started in the fourth quarter, but I think as we kind of move through on our next call uneven probably the one in August will have much better handle on.
The success of those initiatives, but Hilton is doing something similar in March I guess as others were probably fall in line.
To try and battle. This this cost increase that that's hitting us all.
Okay, and then just on a on the supply outlook in 2020, or where are you expecting the most supply pressure.
Crushing market.
Yeah, I mean listen I think the we I talk briefly about Anthony's question, certainly within our Charleston market the impact for the next for 2020.
We're going to feel it a little bit we didnt know those hotels were coming.
So it was expected and when we bought the hotels. This is just going to be one of those years, where we have to absorb it we still are seeing some decent new supply and our silicon Valley markets.
As well mid to upper single digits in.
In 2020, so we continue to absorb that.
Alright, thank you.
Thank you. Our next question comes from the line of Brian Hi, with armed with B. Riley. Please proceed with your question.
Good morning, guys, a couple of quick ones for me.
Staying on that property tax and insurance discussion I mean, it almost seems as though.
Listening to your call and certainly other hotel reads that that we covered here that hotels are almost targeted municipalities as it relates to jacking up property taxes.
When and how does that ever get mitigated and what can you do other than just is there anything else you can do besides just simply you go through the prices of fighting then and how long does that take to resolve certain client.
Yeah, I mean listen I think if there's a reason why there's lots of property tax consultants out there getting.
Commissions, and making pretty nice livings.
Doing that as a career because it's a never ending process I think.
For you know as the cycle ramps up in the in the jurisdictions typically are kind of two to three years behind in the.
In the cycle. So as you get kind of late cycle. They are trying to increase at the most.
And by the time, the cycle might turn a little bit theres still trying to increase.
The property tax value. So it's a constant game that you have to play certainly when you're looking at when we look at acquisitions and development cost and everything like that it's a major factor and underwriting and some of these jurisdictions that have actually killed quite a few deals that we've looked at when you. When you start going through the process of assessing what is going to happen.
On to your property tax number so.
It's just a game I'm not sure Theres any way to to really get ahead of it.
Okay, and then moving on to your discussion regarding cost containment opportunity you are a little coins.
You know your discussion on health and providing some relief there.
Can you get a little bit more granular on that and how far behind how do you think Marriott is in giving you really.
I don't have any knowledge on what marriotts doing as far as rolling out those initiatives.
Other than to say that Hilton is you know this is something Brian I think you know we've talked about for a little over a year that we've been trying to work through a plan to rollout.
We can properly trained our employees I think Hilton has been.
Certainly pretty aggressive on that front as well and doing stuff quite honestly very similar to what we're doing.
I can't really speak for what Marriott is intending to rollout to its to its managed hotels.
Certainly I think we're all.
We're all facing the same issue, which is rising labor and a lot of times as guest expectations for what they really need on a daily basis. So I.
I think as the as technology continues to evolve and and guest expectations, especially with kind of the younger travelers who have the do not the start of on there on their door a lot of the time.
I think we'll be able to continue to tailor those experiences and hope.
Make.
Housekeeping, a little bit more efficient.
And I.
I think you can switch that into two things, which is one employee morale, but also I think you can then afford to pay.
Continue to pay competitive wages to your housekeeping Department.
And then just lastly from me on the Warner Center Development you guys have.
I'm sure you do but can you share.
What kind of level.
You get on that property when it opens up.
Well, we haven't share yet that yet so we're still over a year from opening the hotel, but I like the question.
Listen I think Brian as we get towards the end of the year and we are topped off in working inside and pretty have a pretty good understanding of the when we're going to open that hotel, which we still expect to be.
Late second quarter of 2021, I think we'll start to to put that in I will say.
Without disclosing 80 ours and all that stuff. We you know its 65 million dollar investment.
We've talked publicly that we expect to be able to ramp that to a pretty.
Pretty nice return over the first you know a ramp of a couple of years that we hope to get to 200 basis points spread over where we could buy assets.
Generally speaking so I.
I think for that purpose at least will give you kind of where we think.
The cash flow will be as it ramps.
Thanks, Thats all for me.
Thank you. Our next question comes from the line Tyler Batori with Janney Capital markets. Please proceed with your question.
Hey, good morning, Thanks for taking my questions.
So a question on the other and non room revenue growth there pretty significant.
In 2019, you talk a little bit more about what that might look like in 2020 and beyond them how much room. There is left to grow that.
Yes, I mean I think through.
If you look at how we modeled at Tyler I think and what I think I spoke to in my prepared remarks, we expect that to kind of flatten out on a year over year basis over the last half of the year. So I think you can continue to see similar type increases maybe not on the overall percentage wise, but you know to the tune of three to 400000.
Dollars a quarter over the first half a year.
Just in terms of parking revenue alone and that again like so that probably flattens out a little bit more in the second half of the year.
We did benefit a little bit in the fourth quarter, we did have a new breakfast or no new tenant and some of our restaurant space at our San Diego gas lamp hotel. So we did start to collect some rent on that hotel on that space, but the main the main driver certainly the the parking revenue.
And like said, it's kind of three or $400000 a quarter for the first couple of quarters at 2020.
Okay, and switching gears, a little but you know them a pipeline for dispositions and acquisitions. It doesn't sound like much has changed there. So just wanted to confirm that and also curious if you guys. Thank you might be a net seller this year or maybe you can get a couple of deals across the finish line from the acquisition perspective.
Yeah. This is Jeff how are you I think that that you will probably.
The pretty quiet on the acquisition front, we really look at development.
On a very selective basis, as we said as just given us a much better yield in today's environment.
And with our knowledge that we gain through operating hotels in markets that we have great great familiarity with so the Warner Center development as a good example of that so maybe we sell one or two hotels and maybe we add one more development opportunity.
So what we're doing here that would kind of follow on to our next year opening for Warner Center, but but I think thats, probably the most realistic expectation for you to have.
All right that's all for me. Thank you.
So.
Thank you we have no further questions at this time I'd like to turn the floor back over to management for closing remarks.
Well, thanks, everybody for being on the call and we look forward to talking to you when the next quarter result spot.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.