Q4 2020 Apple Hospitality REIT Inc Earnings Call
Greetings and welcome to the Apple hospitality REIT fourth quarter and full year 2020 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
And once you require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note. This conference is being recorded I'll now turn the conference over to your host Kelly Clarke Vice President of Investor Relations you may begin.
Thank you and good morning, we welcome you to Apple hospitality, REIT fourth quarter, and full year, 'twenty and 'twenty earnings call and it's the 24th day of February 2021.
Today's call will be based on the fourth quarter and full year, 'twenty and 'twenty earnings release, and form 10-K, which were distributed and filed yesterday afternoon.
And as a reminder, today's call will contain forward looking statements as defined by the federal securities laws, including statements regarding future operating results and the impact to the company's business and financial condition from and measures being taken in response to COVID-19.
These statements involve known and unknown risks and other factors, which may cause actual results performance or achievements of apple hospitality to be materially different from future results performance or achievements expressed or implied by such forward looking statements.
Participants should carefully review of our financial statements and the notes thereto as well as the risk factors described and Apple hospitality and annual report on form 10-K for the year ended December 31, 2020, and other filings with the SEC.
Any forward looking statement that Apple hospitality makes speaks only as of today and the company undertakes no obligation to publicly update or revise any forward looking statements except as required by law.
In addition, certain non-GAAP measures of performance, such as EBITDA and EBITDA Ari adjusted EBITDA Ari adjusted Hotel EBITDA <unk> and modify the F. F O. What we discussed during this call.
We encourage participants to review reconciliations of those measures to GAAP measures as included in yesterday's earnings release and other filings with the SEC.
For a copy of the earnings release or additional information about the company. Please visit Apple hospitality REIT dotcom.
This morning, Justin Knight, our Chief Executive Officer, and Liz Perkins, Our Chief Financial Officer will provide an overview of our results for the fourth quarter and full year 2020. Following the overview, we will open the call for Q&A at this time. It is my pleasure to turn the call over to Justin.
Good morning, and thank you for joining us today.
Before I begin I want to take a moment to acknowledge the recent passing of Arnie Sorenson.
And it was one of the most intelligent and insightful individuals and our business and of truly good person.
The aspire to make the world of better place and care deeply for friends family and business Associates.
Merit is fortunate to have attracted many great people over the years and I have every confidence of the company will be in good hands, but I personally will miss him and I know other smaller as well.
Challenges brought by the COVID-19 pandemic meaningfully impacted travel beginning of March of last year, making 2020 of the most difficult year on record for the hotel industry.
We are incredibly grateful to work with the best management teams and the industry, who in light of unprecedented challenges effectively adjusted to the new environment and continue to serve guests with care and 'twenty and 'twenty, we were unrivaled and our ability to keep our hotels open and that would not have been possible without their dedication and hospitality and health.
Also want to recognize the efforts of our team members at Apple who have worked tirelessly over the past share our.
And our success is in large part of direct result of their work.
We have developed and refined the hotel investment strategy of unique and its ability to mitigate risk and volatility while producing compelling investor returns throughout economic cycles.
Our strategy is straightforward.
The portfolio of geographically diversified select service hotels affiliated with the best brands.
Work for the best management teams and the industry.
Sisterly reinvest and our hotels to ensure they remain relevant and competitive and.
Maintain the flexible capital structure with low leverage.
While the current environment has created more significant operating challenges and we experienced in prior cycles. This highlighted the merits of our underlying strategy.
At the onset of the pandemic, we shared our expectation that we were in a position to navigate the downturn more profitably than most and would be and are among the first the benefit from a recovery and travel.
With meaningfully lower leverage greater market diversification and more efficient asset level operations. We were first among publicly traded lodging Reits. The returned to positive cash flow and 2020 and are pleased to report adjusted hotel EBITDA of $122 million adjusted EBITDA of $93 million and modified the <unk> of <unk>.
One 2 million for the for year.
Well the booking window of short and we have less visibility into future operating performance and we have and in years past, we're building off of relatively strong base.
All of our hotels are opened and portfolio occupancy was approximately 45% in January and continued to improve in February.
And for our hotels as broad based including the mix of leisure and business transient and small group.
We expect occupancy to continue to improve throughout 2021 with domestic leisure demand driving performance early in the year and business demand led initially by local and regional accounts strengthening as the year progresses.
The increase and travel will be facilitated by a rollout of vaccines and loosening of travel restrictions and the pace of recovery will vary by market.
Our broad geographic diversification has provided us with relative stability through multiple economic cycles. The.
Distribution of our assets across a variety of market types and geographic regions minimizes the impact of regional demographic shifts and provides broad exposure to a myriad of industries and demand drivers.
Over the past year, our limited exposure to large gateway markets and urban city centers proved a significant advantage as these markets were disproportionately impacted by travel restrictions, including limitations on large group of events.
Our portfolio also provided unparalleled exposure to convenient drive to destinations and government regional business and leisure demand drivers.
We believe that our geographic distribution will continue to be an advantage for us in the coming year and are seeing increased bookings from existing demand generators and encouraging the increases in small group and regional business transient.
The assets, we own are perfectly suited to accommodate guests from the current environment. Our rooms focused portfolio has broad appeal and as efficient by design and enabling us to operate profitably at low occupancy levels.
With smaller public areas and larger more comfortable rooms, often offering kitchens and our suite of amenities, we are able to more effectively implement enhanced cleaning and sanitation protocols and provide guests with the private functional space. They are looking for.
The value proposition for guests is further enhanced by affiliation with brands that helped to create consistency and guest experience and ensure that important standards are implemented and provide incremental benefit through powerful with the loyalty programs.
For all of these reasons, our hotels of continued to be attractive during the past year, just as they had been during prior downturns and we feel confident and their ability to continue to have appeal throughout the recovery.
Our management companies, many of whom have been partnered with us through multiple economic cycles have performed admirably. This past year from the onset of the pandemic, we were able to leverage their experience to effectively adjust property level operating models and minimize the losses, while continuing to serve guests with warmth and hospitality.
Ali.
With all of our hotels open we have retained key managerial and sales staff to continue both current and forward looking sales efforts.
Management company above property revenue support teams worked closely with our internal revenue management resources to identify areas of opportunity and the current environment and to ensure we were setting ourselves up optimally for the future.
Our relationship with our management companies has been built over decades, and we have worked to ensure that our efforts are complementary and additive.
Leveraging our scale and sophisticated data analytics, we've worked from the onset to establish a standardized operating models for low occupancy hotels and to identify and share best practices, which could then be implemented across our portfolio.
We drove costs down by renegotiated and national contracts with vendors and service providers, while our managers and ensured that we were meeting guests' needs.
Our combined efforts of our 2020 have allowed us to begin this year and a position of strength with momentum to build on.
We entered the pandemic with the young well maintained portfolio and during the year invested approximately $38 million and capital expenditures.
Despite prudent reductions of approximately $50 million to our originally planned 2020 capital spend we have continued to ensure our assets remain competitive within their markets and project and protected during periods of lower occupancy.
Our in House project management team coordinated with regional and property level staff to put important processes in place to ensure all systems continue to operate efficiently.
And our assets were well maintained.
As we welcome the increasing numbers of guests back our hotels already.
Finally, we have always maintained a flexible balance sheet with low leverage similar to the other elements of our strategy. This has helped to mitigate volatility and our performance and enabled us to successfully weather multiple economic downturn and act when the time and it's right on accretive opportunities the <unk>.
Strength of our balance sheet has enabled us to avoid issuing dilutive equity and to benefit from lower capital costs.
In 2020, lower debt obligations contributed to our ability to reach corporate level breakeven earlier than our peers preserving capacity and enabling us to acquire five hotels since the onset of the pandemic.
Most recently, we acquired the Hilton Garden Inn, and downtown Madison, Wisconsin and <unk>.
Really constructed of 176 room hotel is located immediately adjacent to the university of sporting facilities and in close proximity to government business and leisure demand generators.
In 2020, we sold three hotels for a combined sales price of approximately $55 million, including the Hampton Inn, and Tulare, California, which was sold during the fourth quarter for approximately $10 million.
The company's 2020 dispositions resulted in a combined gain on sale of approximately $11 million as we announced last quarter, our Homewood suites, and Charlotte North Carolina remains under contract for sale for approximately $10 million. If the closing occurs the sale is expected to be completed and the first quarter of 2021, and we expect to recognize the.
Gain upon completion of the sale.
Our transaction volume and our industry continues to be low, we expect and increasing number of opportunities as we move through the through the recovery and are well positioned to act and ways that will further grow and enhance our existing portfolio.
Our outperformance during these unprecedented times is a testament to the strength of our underlying strategy and low levered balance sheet and is preserved our capacity to pursue accretive opportunities and the early stages of a recovery.
We remain intently focused on maximizing long term value for our shareholders and are confident we are well positioned as travel continues to recover.
It is now my pleasure to turn the call over to Liz who will provide additional detail on our financial results and performance across our markets.
Thank you Justin and thank you everyone for joining us this morning, and while we began the year ahead of our original expectations. The environment quickly deteriorated in March with the impact of the COVID-19, pandemic, and resulting shutdown and driving industry Occupancies to historic lows.
April put for the portfolio occupancy dropped to 18% and at that time, we estimated monthly cash burn of $18 million before capex, but after G&A and debt service and Occupancies between 15, and 20% without visibility into how long our portfolio would remain at such depressed levels with.
The Swift focus and action of our corporate management company and property level teams, we were able to meaningfully reduce expenses adjust and optimize our labor model at our lowest occupancies.
The determination to keep all hotels opened and after a thorough risk and financial assessment.
Focus on securing the remaining demand and market and began rebuilding occupancy to breakeven at the hotel level and may.
And by retaining key sales associates, and keeping our hotels open and we maintained momentum and continued to grow occupancy through the summer and into the fall, reaching 54% and October benefiting from the return of leisure demand, but also government health care construction disaster recovery insurance Athletics education crew.
And local and regional corporate business.
Our continued focus on property level cost controls and efficient corporate overhead and relatively low interest obligations and enabled us to return to positive cash flow at the corporate level by July and for the year.
Together with the sustained efforts of our third party management companies and with the support from our brands are best in class asset management team continued to implement cost elimination and efficiency initiatives effectively managing labor cost, reducing and eliminating certain services and amenities and renegotiating rates under various service contracts.
These efforts enabled us to lower rooms expenses by 19% year over year on a per occupied room basis, and total property level operating expenses by 48% during the fourth quarter as compared to the same period last year and 44% for the full year, 'twenty and 'twenty as compared to 19 2019.
The corporate G&A was reduced by 34% for the quarter and 19% for the year as compared to the same periods last year.
Having achieved positive cash flow beginning of July and continuing through October we further reduced borrowings on our line of credit to minimize interest expense.
These efforts resulted in impressive bottom line performance for the quarter and full year adjusted Hotel EBITDA was approximately $23 million and $122 million and adjusted hotel EBITDA margin was approximately 17% and 20% respectively.
For the quarter and full year, adjusted EBITDA was approximately $16 million and $93 million and modified SSO was negative $2 $5 million for the quarter and positive $20 million for the full year.
And 2020, the most challenging year ever for our industry, we were able to achieve positive adjusted hotel EBITDA and every month, except for April and positive adjusted EBITDA for the full year.
Taking a closer look at demand trends after rebuilding occupancy through the summer and into the fourth quarter. We did experienced typical seasonal declines and November and December relative to October.
Occupancy declined to 45 per cent of November 40% in December and 47 per cent for the full fourth quarter down 36% to the fourth quarter of 2019, which is a slight improvement to the year over year declines and occupancy we experienced for the third quarter, Despite an increase and Covid cases and.
Tightening of restrictions over that time.
We experienced similar sequential seasonal declines and average daily rates for the third and fourth quarters relative to 2019 down approximately 25% and both quarters, while we.
We certainly would've hoped for continued growth through the fourth quarter. We are encouraged by the increase we've seen in January and February relative to December.
January's rate increased modestly from December and occupancy rose to approximately 45%.
Early trends and February are also positive for the week immediately preceding the Presidents' day holiday almost 60% of our hotels that occupancy over 50% and portfolio occupancy, including all hotels with 54% similar to Occupancies achieved in October the highest occupancy months since the onset of the.
A pandemic.
Saturday of that same holiday weekend, our full portfolio occupancy reached 78% and and high occupancy markets. We did recapture of some pricing power.
And as we move through February and compare stabilized weeks, we continue to see Occupancies increased day over day, while the environment is still unpredictable and we have limited visibility. We are encouraged by the growth we have seen following our seasonally slowest months and are optimistic that we that as we move into the spring and traditionally higher.
And C and Revpar of months, we will continue to see results and proof.
Top performing hotels benefited from a variety of demand generators, our courtyard and Charlottesville, Virginia contracted to provide rooms to the university and ran 100% occupancy for the quarter.
Government and construction business drove occupancy at our time and place suites, and Suffolk, Virginia, which was 93% occupied.
National Guard and medical group business drove quarterly Occupancies at our Hilton Garden Inn, and Homewood suites, and El Paso, Texas, which both ran and the 80% range for the quarter of.
The number of our hotels, and California, and several of our markets and the southeast saw increases in demand as a result of wildfires and storm related business.
We also benefited from medical business related to Covid, the COVID-19 treatment and vaccination and a variety of markets.
Weekend occupancy for our portfolio continued to exceed weekday occupancy by approximately 12 percentage points for the quarter the.
And so the spread was tighter in October and widened sequentially and November and December typical with the business travel trends around the holidays.
Our transient and group breakdown for the quarter and full year, which includes both leisure and business demand was approximately 87% transient and 13% group generally inline with the same periods of 2019 trading of point and group for a point and transient this year.
From a mix of business standpoint during the quarter government and bar were fairly consistent year over year, while negotiated decreased by six percentage points of slight improvement from the third quarter and.
And discount segments increased by nine percentage points, reflecting an increase and leisure as a percentage of our business year over year.
We continued to see production across a number of business segments with relative strength, and industrials medical and government and military business offsetting more significant year over year declines and demand from large technology companies and financial services.
We anticipate the leisure will continue to lead the recovery through the first half of the year, but are encouraged by recent increases in demand from local negotiated and other business and government accounts as well as small group.
As the recovery progresses, and demand is likely to vary broadly by market.
Our broad geographic distribution with significant exposure outside of large urban and gateway markets positions us to be early beneficiaries as for <unk>.
Suburban markets are likely to outperform urban markets and group demand is likely to be led by small corporate leisure and youth sports.
Similar to the third quarter from a channel mix perspective, our fourth quarter bookings show property direct representing approximately 31% of our total room night channel mix up seven percentage points from the prior year.
The brand Dot com bookings are relatively consistent with last year down two points to 35%.
Voice was down approximately two points to 5% Y O T. A was up approximately six percentage points to last year at approximately 17%, reflecting an increase and leisure during the quarter as compared to 2019.
G D S was down significantly during the quarter decreasing approximately nine percentage points to 10% again consistent with limited corporate travel.
ADR for our portfolio was down approximately 25 per cent for the quarter versus prior year, driven largely by mix of business and our hotels and competition for customers and a low occupancy environment.
As has been the case and past cycles, we anticipate rate will continue to be challenged until portfolio occupancies allow for more active management of our mix of business as well as the ability to reduce discounts and pushed bar rates, which further impacts ADR and all segments.
This is typically as we get above 70% occupancy.
We are encouraged by rate improvement over the Presidents' day weekend, where single day occupancy of approximately 78% was accompanied by a 9% week over week improvement and ADR for the full portfolio.
As we have discussed on previous calls right has the ability to materially impact profitability. While October results for the most favorable and the quarter and strong occupancy enabled us to produce positive cash flow at the corporate level November and December adjusted Hotel EBITDA remained positive, but property level cash flow.
<unk> was insufficient to cover all corporate costs.
While our original estimated breakeven occupancies before capex generally applied throughout the year to account for the impact of rate, we estimate breakeven revpar before capex to be approximately $50 based on operational costs and rate and occupancy trends since March.
We expect the Revpar improvement we've begun to see in January and February will continue throughout the year and will likely accelerate as the year progresses, and our industry benefits from the rollout of the COVID-19 vaccine and loosening of travel restrictions.
And as I highlighted earlier, we expect that many of our markets will benefit early from the recovery and we are already seeing signs of improvement and business travel bookings, particularly by mid market local accounts as well as continued strength and leisure demand.
While we are beginning of the year and a relatively good position. We continue to have limited visibility into the timing and ultimate trajectory of the recovery and are not and are positioned to provide full operational guidance at this time.
We do however, expect corporate G&A to be between 28 and $32 million interest expense to be between 75, and $80 million and capital expenditures to be between 25 and $30 million for the full year.
As a reminder of the company paid distributions of approximately $67 million or <unk> 30 per share during the first quarter of 2020 and March we suspended our monthly distributions with our last paid on March 16th 2020.
The company's board of directors and consultation with management, we'll continue to monitor our hotel operations compliance with debt covenants projected taxable income capital improvements and investment opportunities and intends to resume distributions out of time and level of determined to be prudent in relation to the company's other cash restriction.
The requirements and usage.
Turning to the balance sheet at quarter, and we had $1 $5 billion and outstanding debt consisting of $513 million of mortgage debt secured by 33 hotels and $976 million outstanding on our unsecured credit facilities with a weighted average interest rate of three.
9% and.
As of December 31, we had available cash on hand of approximately $6 million and unused borrowing capacity under our revolving credit facility of approximately $319 million and only $55 million of maturities and 2021.
As Justin mentioned, our conservative capital structure had been a key element of our underlying strategy and as a result of that discipline, we entered the downturn and a relatively strong position.
Low leverage and broad geographic diversification and our focus on efficient rooms focused hotels has minimized our use of available liquidity to sustain operations, thus preserving our balance sheet and equity value and positioning us to capitalize on external growth opportunities early in the recovery.
With the continued deployment of vaccines warmer weather and the trajectory of recent results. We are expecting to see stronger operating performance as we move throughout the year. However, due to continued disruption from COVID-19 fourth quarter seasonal declines and limited visibility into future demand and results, we began discussions with our lenders.
And January to extend the covenant waiver covenant waiver period for our unsecured credit facilities.
While we have not yet finalized we continue to be extremely grateful for the ongoing support of our lending group and anticipate closing and the near future.
And the coming months, our company is optimally positioned to grow value organically through improved hotel operations and externally through accretive transactions with approximately $325 million of total liquidity at year, and only 34% total leverage positive cash flow for much of 'twenty and 'twenty and encourage.
The portfolio occupancy early in 'twenty and 'twenty, one we are confident and our ability to continue to navigate the current uncertainty preserve the value of our equity and strategically position ourselves to take advantage of opportunities.
Before opening the call for questions I want to again, thank our teams who have worked tirelessly to optimize the performance and the most challenging operating environment. Our industry has ever faced their efforts and experience have uniquely positioned us for outperformance, we will now open the call for questions.
Yeah.
At this time, we will be conducting a question and answer session.
The ask the question. Please press star one on your telephone keypad. The confirmation tone will indicate your line is and the question queue you.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary the pickup your handset before pressing the star games.
One moment, please while we poll for questions.
Our first question is from Awesome Force movement with.
With Keybanc. Please proceed with your question.
Great. Thanks, everybody.
One of the focus on the external growth side, it's something you guys have been commented.
The comment that on quite a bit here and I'm. Just curious you know Justin you said transaction volume still remains low, but how much have you seen maybe activity pick up and the last month or two.
And do you feel like you have enough visibility today.
Move forward with with the deal or are you more reluctant I guess given still the the uncertainty around you know maybe business travel.
More broadly.
It's a great question. Thanks for thanks for joining us today Austin we.
We are and as are others and our space are continuing to become.
I think.
The more confident and the trajectory of the recovery.
In terms of the total deals available and we're still seeing limited supply and the market.
The brokers.
And who historically this time of year with half of them you know of a large number of assets available for sales and have very few.
We have had a number of conversations with individual owners who are contemplating.
Contemplating selling but I think thinking about timing.
And the types of assets that we own and the types of assets that we would be interested in buying and.
Are now cash flow positive at the property level of largely.
And so they're in a position.
And to be more likely to trade.
I think our positioning.
Around those improves as the year progresses right now.
Owners are still receiving.
You are benefiting from a significant flexibility from lenders.
And some government assistance.
And as those things for and often as we move further into the year I think we'll continue to see an increased number I think it's worth highlighting as well debt.
We continue to see significant interest from potential buyers in the space of.
I think given the relative position of of our publicly traded peers of the bulk of that is coming from private equity and there were significant funds raised in advance and and we're in this unique period, where early opportunities may actually trade up.
And just because of the imbalance of supply and demand.
And with fewer assets and the market and more buyers who are looking for assets.
And this has the shapes up.
We think the window of opportunity will be extended.
And I think I've highlighted in past conversations with you and in past calls that our expectation is that as we progress through the recovery.
There will be assets that come to market for a variety of reasons.
And one of those that will will cause we think continued.
Our inventory and the market available for for purchase is that.
Some point.
The brands will mandate are returned to their capital improvements programs and.
And those who have depleted from the reserves and.
Utilized those funds to cover of short term.
And shortfalls from a debt service standpoint.
We will be more likely to bring assets to market at that time.
So I think long way to the answer a short question, but near term, we think there will be selective opportunities.
And I was likely there's lots of the opportunity will be better.
Country sell assets short term.
With the acquisition opportunities increasing as the year progresses.
Oh, that's a lot of interesting comments, there I wanted to kind of focus on the piece about the supply demand imbalance in terms of net.
Number of transactions and capital on the sidelines, that's waiting to be deployed. So then when you think about you know executing and maybe on the disposition side.
Here earlier in the year or before really volume ramps up and redeploying that.
Your low leverage model and interest rates, and all time lows and and presumably the financing markets for hotels and.
Improving do.
Do you feel like Youre able to compete with more levered buyers on larger transactions or are one off relationship type deals still more attractive to you.
The well.
Just from a product quality standpoint.
One off deals continue to generally be more attractive to us I mean, as we look at them.
The larger portfolios available and our and our owned there's there's a stark difference generally speaking between the portfolios zone by publicly traded companies and those held by private equity owners.
And then beyond that there are smaller portfolios that are high quality that are owned by owner operators and they would also be attractive to us, but but as we look for assets that are good fit for our portfolio the.
<unk> of the opportunity that we think exist and individual asset trades the right as we've highlighted in the past we continue to underwrite any and all deals that come to market.
And you know at appropriate pricing, we would be willing to pursue portfolio of transactions as well.
And I do not see us.
And there's been disadvantaged and the current environment.
Relative to higher leverage.
Private equity firms the the desired return the dose groups are seeking.
And availability of debt for larger portfolios to those groups.
It creates a mismatch we actually.
And as some of our peers have demonstrated have access.
You know as a publicly traded company two two relatively.
Inexpensive.
Financing should we see an opportunity worth pursuing.
Got it and that's very helpful and thank you I will hop back in the queue. Thank you.
Yes.
And our next question is from Anthony Powell with Barclays. Please proceed with your question.
Hi, This is Allison on for Anthony do you guys have done very well and generating demand related to COVID-19, and a variety of markets. So when do you think that business starts to moderate or go away and how quickly could you replicate that business. Thanks.
And we have benefited you kind of universally.
And from Covid related business I think that you know as we progressed, even through 'twenty and 'twenty, where we were seeing influx is of that business and certain markets for certain hotels. When we saw that you know pull back. It was a direct result of cases coming down and business and things of being more open and it being.
Safer to get out and about and I think we were seeing compensating demand and.
So as you know as we look forward.
And we would be hopeful that that same debt that same pattern would continue that you know as cases increased like we saw in 'twenty and 'twenty, we would see increases and traveling nurses or vaccine deployments and you know as numbers came down people would be say feel safer ticket out and travel whether for leisure or business.
And so you know I don't know the exact timing, although we are encouraged by and you know back of the vaccination deployment and and you know the anticipation that a large number.
Americans could be vaccinated and and we could reach herd immunity you know mid year. So I think that as you've heard others you know.
Others anticipate for the back half of the year, we would see a pick up and both leisure and some regional and local business travel.
And at that time, you may see COVID-19 related business pulled back, but there'd be offsetting demands.
That was very helpful. Thank you.
Thank you.
And our next question is from Danny Assad with Bank of America. Please proceed with your question.
Hey, good morning, everybody.
The list you mentioned in your prepared remarks debt you.
And that Apple lowered room expense by 19% on a per occupied room basis, which is very impressive considering you know to limited service portfolio.
Can you help us bucket the different components of that expense cut and then how much of that will be sustainable as the recovery from zone.
Oh, that's the million dollar question Danny and.
And so across the rooms department, we saw decreases in expenses pretty universally I mean wages certainly you know our teams continue to be very efficient we've had managers earn.
Leon and even during the fourth quarter pick up chefs and so hourly.
And wages, we're able to be well controlled but you know guests supplies cleaning supplies comp services.
The team really has taken a look at every line item and every expense across the hotel not just and rooms and found ways to be more efficient I mean, we've spoken from the beginning around you know really looking at the value proposition and what's most important to guess right now the brands have certainly been.
Supportive and flexible as we offer guests.
What's necessary, but in a safe way that meets their needs and so.
We and the fourth quarter did see a slight increase per occupied room and wages, specifically relative to what we saw and the third quarter. Although that's not you know.
Two unexpected when you have holidays, where people are taking paid time off and in light of the anticipated.
Seasonal increase and the new year and following the spring and summer and we certainly didn't want to furlough or lay anyone off. We you know we saw the declines in November and December that sort of increased our per occupied room cost relative to the third quarter of short term and so didn't want to make drastic cuts.
Got it and then my second question is just in terms of channel mix.
How do the metrics that you mentioned just earlier in the prepared remarks out of those compare to the channel mix, we saw and the Oh eight or nine trough like specifically I'm curious to know as to where O T. A mix might of peak last time around.
Oh.
I don't you know I would have to go back and look and see what visibility we had to channel mix and.
And for our portfolio at that time, and I would anticipate that O T. A business you know has increased between that time and now universally.
And you know I think we had started to gain and.
And some momentum and and and regain some of that share and and redirect some of those bookings back to direct channels and later on and the cycle or this past cycle, but I think that we would find that OTR business is a greater percentage and.
Currently than it was then yeah and and two that this is a very different cycle, but and the last one.
Looking back at the last cycle the there was still.
The significant amount of business transient even during the the.
Depths of the downturn.
And we ended up doing more of.
Adjusting the mix of our business, taking specifically more government business and a number of markets and and other segments that had slightly lower rate.
And enabled us to build base I think you know what what's unique here and.
And so we've seen really outsized performance and what appears to be a significant pent up demand on the leisure side, which is driving short term.
The OTT numbers for us.
But it does as Liz highlighted in her prepared remarks, we're beginning to see a transition and the increased number of bookings from some of our more traditional business transient accounts, which we see as a good sign as we move through the year.
And look to continue to build occupancy across our portfolio.
And just and how much control you have over like or managing those channels for like are you do you owe anything in terms of you know contractually to the to the Otas are are you able to shut them down as kind of business transient recovers more if it is going to recover more quickly.
The controls you have over that the Chi.
Channel mix and we certainly can influence a channel mix. It it gets it gets easier as the Occupancies increase and and the revenue management systems can preference highest rated and most profitable business and you know.
We've had significant development and.
And the revenue management systems over the past cycle and especially in recent years and said that they're set up to quickly adapt to changes in demand. So we do have control, but you know I think that it gets easier the more demand and there is to sort of make it makes manage and preference so and the current environment. We.
The most channels open and taking the business. That's available you know as I mentioned in my prepared remarks, once we get to 70% occupancy or so and there's relatively strong demand and market. Then we can start really preference preferencing business.
Thank you.
Okay.
And our next question is from Brian Bittner with B Riley of Securities. Please proceed with your question.
Good morning, guys kind of kind of circling back to the acquisitions discussion earlier, you know jud.
And as you sit here today and based upon what you're seeing from brokers and and the others and do you guys anticipate though of being a net acquirer of net of district of.
Of the dispositions this year and if so to kind of what level of as measured in and out of the tens or hundreds of millions of dollars.
Hum.
And I mean, it's of great question.
Sure.
And the grief and an enviable position right now because we're unique and that we can be opportunistic I think it's early and the year.
And to determine exactly how things will play out.
Now as we pursued.
The sale of assets within our portfolio, we've done so only when we saw it.
Attractive pricing.
We haven't needed to sell assets to reposition of our balance sheet and like I think.
And it's fair to assume that we would look at dispositions and the in the same way.
As we move throughout the year I highlighted the potential supply demand imbalance, which could create motivation for us to to more seriously look at potential dispositions from our per player, but I think.
As the year moves you'll see us.
Begin to shift focus.
And towards the back half of the year towards.
Towards acquisitions is as we expect.
And so we expect most of the opportunities will begin to materialize as the year progresses.
Whether or not we're we're net buyers or sellers this year.
Difficult at this point.
I think if.
If you look at what we're likely to do over the entirety of the cycle. Our expectation is that we would be net acquirers of assets.
Over the entirety of the cycle, we really see this as the unique opportunity for us to build our portfolio and us as being uniquely positioned given the strength of our balance sheet.
To do that and a way that benefits our shareholders.
Great and the you have a track record of.
And kind of being the takeout.
Fire on some newly developed hotels have you seen any existing relationships or new relationships you might have come across.
The hotel builders currently who may be you know kind of desperately looking for a take out when the property gets its the O and the next couple of quarters.
And you know, we have and Havent seen desperation at this point, but certainly and I've highlighted this in past calls early in the cycle of our takeout has greater value for developers, who generally are not able to borrow as much.
Absent our takeout.
In terms of loan to cost on.
The new development deals plus given market uncertainty I think there is.
The increased value as they look at potential development deals and having a firm takeout price, reducing their risk to really the risk related to manage and construction costs.
Generally early in the cycle, we're able to sign up good deals.
And taking advantage of lower construction costs.
And.
This incremental value that we provide developers early cycle to negotiate really good pricing for deals, which then puts us and a great position as the cycle progresses to add to our portfolio.
Attractive.
Pricing relative to.
The market pricing for existing deals and les.
Yes, I think you'll.
You'll see us as the year progresses begin to look more seriously and those types of deals.
But short term.
Okay.
The bulk of our focus is going to be on existing deals.
Looking at as a potential buyer and seller.
Great and then just last for me you guys put in place and <unk>.
Yeah, I I forget when exactly what the thinking was maybe the third quarter. What was the thought process. When you put that in place more to just be having it there and it's the liquidity safety net or as a more aggressive acquisition opportunities used later down the road I mean, what was your thought process. When you put that in place and that's all for me.
Okay and.
And to be Super clear our safety net is our strategy. So you know all of our safety net as having assets that have lower volatility higher margins and having a strong balance sheet coming into this so really our view relative to ATM is for that to be a tool to use on offense and I'd highlight.
And the past that really as we look at potential acquisition opportunities.
The math is easy for us and we're able to pursue opportunities when we see you.
And one.
Ability based on market pricing for specific assets to generate incremental value for our existing shareholders I think.
And to the extent, we tap our ATM it'll be around specific opportunities that we see.
Available to us and the market.
And thank you Justin thank.
Thank you.
And our next question.
Is from Neil Malkin with capital one Securities. Please proceed with your question.
Hey, good morning, guys good morning.
First of all and.
And I talked about your you're currently working on extending your covenant waivers.
A lot of of the other peers have called out the acquisition flexibility or increase thereof.
I've seen that and yours and you called it out this time of last time, there do you guys have the.
The capacity to do acquisitions without.
Some sort of capital event.
It would be the first part of and the second part would be you know.
Because you will come out from under the the waivers first.
Would you be willing to get more aggressive if you see more visibility of the portfolio.
On existing deals I'm, just kind of near term levering up a little bit.
Good morning, the all related here. Your amendment question, our first amendment and you know we did have a carve out for acquisitions and utilized that you know we were able to execute the forward commitments that we had and so you know since the beginning of last year.
We've closed on five hotels, including Madison, which we recently closed on and so we had a basket we used the basket and so you know we did have the flexibility and the first you know with the first amendment.
And I'm going into and extending the covenant waiver period, and so it's a little bit early for me to give details as to what will be included.
We anticipate being able to provide more information and the near term, we're close to finalizing everything with the banks, but conversations are going well and we are and a relatively good position as we have those conversations and I think that will reach them.
And you know reaching agreements that that's helpful for everybody.
And.
And and looking at our relative position and can answer the second part of your question should we see the market free up and a meaningful way, we have a tremendous amount of confidence that we could access the debt markets and advance of a recovery and the angry.
And to pursue specific opportunities.
Don't think that now is the time for that.
And to take on incremental leverage and store cash absent the you know.
On the open market with the ready ability to deploy it and we think it would be kind of.
The productivity at this point of time.
Okay.
Yeah and I appreciate your comments.
The second one is.
Do you have of.
I guess can you quantify how much your transient demand was down from 2019 levels.
And I'm, just trying to get a sense for like.
How that sort of pent up demand from the leisure side comes back and you know this year is the vaccines.
<unk> and proliferation continues herd immunity people will get more comfortable.
And you have the.
And ridiculous amount of stimulus.
Pumped in the peoples.
The bank accounts.
It just seems like theres going to be a <unk>.
<unk> strong amount of transient business, especially close to your I guess water adjacent or approximate assets.
So.
Can you just maybe talk and you frame that up in terms of.
And if leisure was down like 50% from 2019 levels and.
And could it go to 75 or was it down like 70% from from 2019.
How do you think about that and how do you expect that the play out.
Transient and general or leisure transient.
Leisure sorry.
Leisure transient.
Across the portfolio of both leisure and business transient when you look at our occupancy were down and we were down for the quarter 36 per cent and year.
Year over year and for the full year 40 per cent and so for them. It's just broad transient perspective, while we do think leisure probably outpaced business.
This past year.
Broadly for the.
And the industry is significantly down and there's there's there's pent up demand you know quantifying the leisure component at leisure has been first to travel and they've been eager to travel and we seem to get an indication you know even with the President's day recently the stairs, there's a desire to get out I think.
Your more traditional warmer and.
Summer leisure months, you know that's a good indicator that there's some pent up demand there.
Quantifying it it's a little tricky because we don't have perfect visibility into why people travel and and broadly we have a mix of demand generators and our markets and so you know even looking as we have historically at weekday versus weekend patterns gets a little tricky with people being able to work remotely and reasons for travel blending.
Sure and.
Just curious how you guys thought about that last one is and.
And obviously, you just happened, but the unfortunate passing of Arnie.
And do you guys you know and.
Any read throughs anything you might be concerned about risks opportunities in terms of how you negotiate.
And in terms of some of your strategy. How you look at your brand communities you're on brand proliferation supply ran standard is anything that you maybe are thinking about that would have implications.
Vis vis the relationship with Marriott.
Going forward.
Hi.
As I highlighted in my earlier remarks I think.
And you know personally.
I had and I have.
A number of people within our organization had good relationships with the army directly and we're going to Miss him tremendously.
That said Marriott is an incredibly.
The strong organization.
With a wealth of really talented and experienced people.
We've worked with both Stephanie and Tony for many many years now.
And each of them bring kind of a unique.
Perspective to leadership and Marriott with Stephanie having tremendous amount of experience on the customer facing side.
And Tony obviously, having a wealth of experience on the development side I think actually there.
And they're very well paired for leadership.
And that's not mentioning even.
The dozens and.
And dozens of is probably a smaller number than the number of actually of individuals within the Marriott that we have a very strong relationships with the we've developed over.
Over the decades.
We see a myriad of P and in good hands and and.
In terms of our ability to interact with the company.
I don't think we see any significant change.
Okay. Thanks, guys.
Hmm.
Yeah.
And our next question is from Pilar and <unk>.
Battery wood.
Janney capital markets. Please proceed with your question.
Hey, good morning, Thanks for taking my questions and.
Congrats on the team.
On the successfully navigating and such a difficult year. The commentary thus far has been very helpful and very very positive.
The couple of follow up questions.
And on my hands, and I and I wanted to go back to some of the commentary on February and the real time trends if I could just interested if you could provide a little more color on what's driving the sequential improvement February versus January and December.
How much of any seasonality how much of that is incremental demand or new demand versus what you saw at the tail end of 'twenty and 'twenty and then are you starting to see the booking window extend at all as more demand is coming in.
And good morning Tyler.
I the the change in the booking trend.
I think it's still a short window, we still don't have a ton of visibility.
The improvement in February we believe is and increase relative to previous months and seasonality you know, we typically begin to see.
Occupancy and rate pick up even from January and January from December and and normal healthy years, and we're seeing that seasonality play out some here still obviously at depressed levels due to COVID-19, but you're starting to see that increase so we're happy that while we did start to see.
Seasonality take hold coming off of October and November and December were starting to rebuild and.
The trends that might be out on.
On the margin different debt, where debt we're encouraged by of related to forward looking bookings and it's it's a small number because we don't have a lot of on the books as we sort of moving to the month, but what is picking up and is small business regional and.
Sort of corporate account travel and so we're seeing more of that on the books for the next couple of months.
You know again small numbers, but but an improvement specifically, which at this time of year. We would expect you know of business slows down in November and December and with the holidays and then going into January and February you start to the business transient pickup and in normal times, we're starting to see a little bit of that it's just not your large corporate accounts it seems to be more.
You know local and regional accounts.
Which is what we would've expect grid.
Great and then.
And as a falloff can you talk a little bit about capex spending and and.
And 2021 your expectation in terms of how much you're going to spend and and.
And what exactly youre going to be spending the money on.
Yeah.
That's a good question, we are Liz provided guidance.
And her remarks that there would be in and around.
The $30 million or less and it's our expectation for this year.
Roughly half of that will be spent on specific projects.
General and maintenance and or technology, our brand initiatives.
And then the other half of the expectation would be spent on full cycle renovations.
And we.
We've had the opportunity over the past year to do a deep dive on our entire portfolio and I.
To really meaningfully assess the needs of our individual assets and to develop a.
What I think is a very robust plan around renovations and renovation cycles on a go forward basis and the.
And what you can expect over the next several years is consistent with what we've been doing and the past and that's focusing.
Our spend around.
Assets, where we are prioritizing the assets, where we feel we can get the.
Best return on our investment.
Improving our market positioning through the renovations and then.
I think.
Consistent with past practice.
Ensuring that the money that we spend on the individual assets is focused around those.
And those elements of the assets that are likely to have the greatest guest impact.
Okay.
Very helpful. That's all for me. Thank you. Thank you.
And as a reminder for anyone has any questions you May press star one on your telephone keypad and the next.
Question and from Floris Van <unk> with Compass point. Please proceed with your question.
Hey, guys. Thanks for taking the question of just some of them I want to ask you a little bit more on capital allocation.
One of the key ways, how you create value for your for your shareholders and as you think about deploying capital.
Maybe walk us through your thinking on whether to go for resort hotels versus your small metro versus your suburban which is the bulk of your portfolio of today and and also how you think about some of the government initiatives such as the minimum wage of the inquiry.
Minimum wage and how that impacts your thinking on on certain locales.
Two very good question so the.
To clarify for those who might be listening, who might think differently I am assuming that you. We you speak of resort, you're speaking of resort markets recognizing that our investment thesis around investing and select service hotels remains unchanged.
You know the that being said I of course, I think our broad.
The game has remained unchanged and that's that our expectation is as we pursue acquisition opportunities. We will continue to look for the.
Look to diversify the portfolio providing exposure to them.
A number of different demand generators, and ensuring that we have exposure to for.
Heidi of different market types, and what you saw and what you've seen over the past several years is that we've specifically targeted markets where.
For the strong leisure demand certainly not exclusively but that's led to acquisitions like <unk>.
The acquisition of of the hotel that we now own and Portland, Maine.
Were a significant driver for total operations operating performance of that hotel as summer leisure travel.
You'll continue to see us do that selectively.
But not exclusively and and I think it's fair to assume that we will look for opportunities and high density suburban markets expanding our exposure there and the at the appropriate time, we will look will look for opportunities and urban markets again as well.
My thinking is that urban markets will underperform and lag and the recovery broadly speaking.
And especially some of the large urban markets.
And the pricing may take a little bit of time to adjust to the two of the discrepancy.
But we certainly haven't changed our thinking and.
Around wanting exposure to those markets as well and.
In terms of minimum wage.
And when we assess when we assess acquisition opportunities we're always looking.
At the long term potential for cash flow production from those assets I think theres the tendencies, sometimes from and Investor perspective to think more of topline and revpar performance than than the.
That in combination with a potential margins from those markets.
And what we've done incredibly well historically is matching.
The the topline and Bottomline profile of the markets in order to maximize margins for our hotels.
Ultimately generating stronger cash flows for our investors I think looking out across our markets, we were seeing pressure on wages before the downturn.
And in most cases, we're paying at or above the the.
The minimum wage.
And that's being proposed of $15.
Our hope would be that as.
And increase of the minimum wage gets rolled out there would be some regional.
Consideration for how that might occur, but we're not banking on it at this point and are taken into consideration.
Wages.
The current where they currently are and where they might be as we look at the potential acquisitions.
Thanks, and maybe if I can have one and one follow up on that as well as you think about deploying capital.
And obviously you have a number of different brands are largely and the upscale and upper mid scale segment.
As you think about.
Putting more capital to work or are there specific brands that you're talking of are you targeting and the brands that you already have.
The exposure to or are you thinking about maybe adding onto to maybe some of your embassy suite exposure.
And because of the the increased our ability to generate EBITDA per key.
For hotel relative to the some of your other.
Brands and your portfolio.
A good question I think broadly speaking, we continue to be exclusively focused on Hilton and Marriott and Hyatt branded select service hotels.
We consider embassy of select service hotels, the technically it's categorized as <unk>.
And as upper upscale and we do that just based on the operating model of Eaton.
And similar to the operating model at our other select service hotels.
And we love Embassy is the brand we don't love it more of them, we'd love for the other select service brands within.
Within those larger brand portfolios and and.
We will.
Look in market to own the best asset within the broader brand family. So yes I think.
While the individual brand is obviously important so too is the quality of the individual product.
And the location within the market.
And we will take all of those things into consideration as we look at future acquisitions.
Thanks, Justin.
Thank you.
Yeah.
And our next question from Lukas <unk> with Green Street. Please proceed with your question.
Thanks, just one left for me so asset values seem to be holding up better than that initially here just now just a few months ago.
All of which makes me think that supply could come back quicker than we previously thought as well. So I was just hoping you could provide an update of what you think the replacement costs and for the current portfolio on a per key basis, and then just maybe talk about the potential re ramp of supply growth.
A good question you know ultimately and I think sometimes we forget this but <unk>.
Investors invest and real estate generally speaking.
To.
To get a cash return on their investment and so while it's true that we haven't seen material.
Shift and price shifts and pricing for existing assets.
I'm not confident that that alone is sufficient to alter.
The thinking of the individual developers most developers.
Developed with the expectation that they may need to hold for some period of time and and absent a compelling.
IRR for investments that there will still be.
Our governor on development, if only a governor provided by lenders who will be specifically looking at the the cash flow potential for individual investments.
As we look at construction cost.
The.
The.
The information we have is a little bit noisy on that on that front, we do think.
There's likely to be and.
And adjustments to construction costs over time.
The two has been less material than what we expected.
Coming into this and part of it there's noise in the system right now I highlighted the fee.
Debt.
There is an imbalance in terms of fewer assets on the market and a lot of interest of fires impacting pricing, but equally relevant is the fact that they're there.
There's been significant government aid provided to a large number of owner operators in the space and the banks have been reasonably flexible and the near term of shipped any of those things could change the dynamics and as I highlighted and response to one of my earlier the earlier questions that I received.
And we intend to be opportunistic and and act on them.
Act and ways to take advantage of of the changing market dynamics.
Okay.
And the did you ever and estimate for the replacement cost of the current portfolio.
And it's clever Lucas could you you know we Havent published one of those for.
And I think at this point.
Two two.
The leverage my earlier response, we.
We don't see a change and replacement value for our portfolio as a result of the current pandemic.
That may change over time, but as we look at.
Transactions were that we're contemplating as the selic contemplating or that we've executed against is the seller.
And underwriting new asset acquisition opportunities and cap.
Cap rates on 2019 numbers.
Our relatively close to where they were before and.
And obviously there of discrepancies and depending on the quality of the portfolio.
But for portfolios or individual assets.
And similar quality to the quality of debt that we own.
There is.
Pricing is in the neighborhood.
From where it would've been pre pandemic per day.
Got it thank you.
Thank you.
And our next question is from Dori Kesten with Wells Fargo. Please proceed with your question.
Yeah. Thanks, good morning, everyone.
I apologize.
And I apologize. If this has been address can you talk about how brie and costs may be reduced for the next few years versus prior levels some of it that.
And anything it's been kind of semi permanently put in writing and just how these savings are bucket in.
Sure.
I think as we look at brand costs overall, and certainly franchise and our management fees paid to the brands.
And have come down materially year over year, but.
<unk>.
Proportionate to the the decline in and.
Rate and occupancy, which they're tied to I think our expectation is debt.
The percentage.
That we had coming in in terms of.
The other fee as a percentage of revenue that we had coming into this is likely to stay constant coming out of it.
And where we see greater savings on the brand side is around.
Allocation.
Given that both of all of the major brands that we operate with.
And I have reduced their corporate overhead and certain services that they provided in the past that they charge for them and in most cases, we've replaced those services.
Either within the house services or outsource.
Services at lower price points. So I think you know.
And that and the adjustments that we've seen in the near term and are likely to see over the longer term in terms of.
The brand mandated.
The services and amenities.
And.
Potentially even.
The cost of renovations over times those of the areas, where we anticipate seeing the greatest savings.
Okay. Thank you thank.
Thank you.
And our next question is from Michael Bellisario with Baird. Please proceed with your question.
Good morning, everyone.
Good morning morning.
Two questions first on the assets out there you guys completed in December and California can you provide some details around that process and pricing metrics and then I'll.
So any shift in your view that.
Maybe or the.
Dennis of smaller portfolio of sale, our sales credit card versus your continued one off disposition strategy.
Sure.
The the two Larry asset was one that we had contemplated selling pre onset of the pandemic.
And had explored the opportunity.
And with a variety of brokers and and even.
Begun having conversations with some potential buyers in terms of pricing.
On 2019 numbers the.
The pricing equates to a sub nine cap on trailing 2019 numbers pre pip.
And just above an eight cap on.
On the trailing on 2019 numbers rather.
Moving the pit so.
In line with what we would've expected for that particular assets.
And had contemplated as we interacted with brokers and before the buyer for that asset.
The local owner operator.
And so distinct from the.
And that the Charlotte assets that we have under contract and.
And I didn't even lower cap rate, but where the buyer intends to repurpose the building for multifamily.
Hi.
And remind me the second part of the question of in terms of the portfolio as we look now.
We're seeing greater interest.
In portfolios and I'm really quite frankly, a private equity who raised a number of the private equity groups. You raised the tremendous amount of money early anticipating that there would be a large number of distressed assets that would come to market are looking now to deploy those funds and and.
I think we're having more interesting conversations.
And with groups that would be interested and small portfolios than we were.
And three six months ago and.
And I think that.
Their interest paired with the some loosening and the debt markets I think bodes well for a smaller portfolio of sales as we move through the year.
And and and I should highlight is the fact that again.
Looking across our portfolio of the bulk of our assets individually.
Our cash flow positive at the asset level.
Which as these groups are looking to invest.
Simple simplifies somewhat the math that they have to adapt to work through in order to pursue and acquisition.
Right understood and then back to a prior question on Capex, the $25 million to $30 million range.
And maybe why are you spending so little capex and and maybe what does the duty of relative market share on a go forward basis and I guess really the question is why are you spending more when disruption would be lower than your competitors might not be as well capitalized and might not be spending the money.
And that's a super good question I mean, I think I highlighted.
Earlier in my remarks, the the primary reasons that we don't need to right now and I think what you've seen from us.
The throughout the cycle is that we've been cautious and prudent and.
And the deployment of capital to ensure that we do so and a way that debt.
That creates.
Creates a clear trajectory towards our ultimate profitability.
In the near term.
<unk>.
While we're focused on a lot of things the bulk of our focus is on improving operations and ways that enable us to exit the waiver period and gain even greater flexibility around how we allocate capital.
And because we came into the the pandemic with a very well maintained relatively young portfolio.
And because some of our assets of run lower Occupancies.
And the the pandemic.
We are and are positioned to manage our capital expenditures and.
And ways that we think preserve capital and put us and are better positioned near term two to gain greater flexibility and.
Over time, I think it's reasonable to expect that we would get back to more normal levels and if we were to see a more significant increase or improvement of performance. We may revisit that as we move through the year, but but I highlighted we've been intently focused around ensuring that our hotels are well maintained.
And and which we think will lower the long term capital expenditures.
And we've.
We've had constructive conversations with the brands around the scope of future renovations, which I think will put us in a position to do more with less focusing and really our attention around.
Those items within the hotels that have the greatest guest impact.
And it's worth noting debt when we renovate hotels, we typically keep our keep our hotels open and can do them with relatively little displacement of timing them with seasonality and so you know I think we will continue to be able to optimally timed them and I don't know that and we're gonna Miss of window 10 minimize displacement of our disruption.
Got it understood. Thank you thank.
Thank you.
And we have reached the end of our question and answer session and I'll now turn the call over to President and CEO, Justin Knight for closing remarks. Thank.
Thank you.
Really appreciate you being with US on this call today I know a lot of you have a busy day there are a number of companies for reporting.
We look forward to talking to all of you again, and the not too distant future and as always I hope that as you have an opportunity to travel and you'll take the opportunity to stay with us and one of our hotels have a great one.
And this concludes today's conference and you may disconnect your lines at this time.
And for your participation.
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Yeah.
Yes.
And.
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