Q2 2021 Xenia Hotels & Resorts Inc Earnings Call
<unk> the mix and the performance of our individual assets.
As of May 24, all of our hotels and resorts were open and operating we have been pleased with the ramp up and market acceptance of the hiring C. Portland at the Oregon Convention Center as.
As we anticipated there are significant needs demand in Portland over the summer months with the hotels been able to capture.
For the quarter portfolio performance exceeded our expectations, particularly due to strong June results, which continue to be of a result of strength throughout the leisure segment and specifically in our drive to leisure markets.
Capable of occupancy was 48, 9% and an ADR of $216.3.
Continuing to build on the strength, we've seen in March when leisure demand of spring break filled many of our hotels.
And our results continued the sequential growth trend as occupancy increased to 49, 7% with an ADR of $216.18.
Driven by increased corporate and group demand and healthy leisure demand over a very strong memorial day weekend.
The layering of strong leisure vacation demand with fully openings throughout California that the significant growth in June occupancy to 55, 5% with a modest decline in ADR to $213 <unk>.
We have 13 hotels achieved 60% of greater occupancy for the quarter, including 5 that exceeded 80%. These include the practices in key West Birmingham, Charleston, South Carolina, and Savannah, continuing to reflect the number of our leisure focused hotels in drive to markets.
In terms of profit 32 of our 35 properties achieved positive hotel EBITDA for the quarter up from 17 of the prior quarter with 7 properties exceeding results compared to the second quarter of 2019.
Without a doubt operating hotels on the current environment continues to be challenging.
Overall, the management teams of our hotels have done an excellent job of managing expenses and are continually evolving environment with numerous cost headwinds from the cost of food operating supplies and labor.
Our hotels continue to experience challenges in sourcing labor of our management teams continue to implement innovative programs to attract and retain labor in order to satisfy the needs of our hotels guests.
The markets, where supplemental unemployment has ended we are seeing modest increases in interest and applications.
For the second quarter departmental expenses declined 44, 9% compared to 2019 slightly exceeding the 42, 1% decline in revenues, while undistributed expenses often considered to be largely fixed in nature declined by 28, 8% led by significant declines in administrative and general and sales and marketing.
Got it.
Total payroll on employee benefits expenses declined by 46%.
Our individual hotels, the performed well on the top line achieved some remarkable performance on the bottom line with 12 hotels, achieving EBITDA margin greater than 30% for the quarter.
This compares to only 2 hotels exceeding 30% EBITDA margin in the first quarter.
As we expected leisure booking windows of lengthened over the summer months of guests as guests are booking earlier in order to assure they can stay of the choice of the property.
This lengthening of the booking window has enabled many of our hotels to achieve significant rate increases.
Our hotels continue to open restaurants will provide modified housekeeping services in response to guest demand.
Services offered continue to vary based on property needs specific locations and demand patterns.
Guests continue to expense days beyond the typical profile with guests blending business and leisure states anecdotally on our property visits we continually see significant increases in guests using video conference services on our lobbies and other public spaces to conduct business meetings, while on vacation.
We continue to support and see results from our brand management companies marketing to this new and unique segment.
On the corporate transient side, we continue to see improvement of volume, we're particularly pleased to be seeing growth from larger national corporate accounts with volume of improving each month.
Corporate transient business from large volume of accounts grew over 90% from Q1 to Q2.
Tuesday, and Wednesday on Occupancies, each increased over 13% from Q1 to Q2.
Okay.
Group production grew by 133% from Q1 to Q2, the sequential improvement in each month this year.
<unk> sports teams, including NHL, NBA and MLS business continue to be notable on the group segment during the quarter as deduce related business.
Smaller association of quarter means of notably improved and we continue to see significantly more inquiries for business. The second half of 2021 and for 2022 with lead volume for all future days, increasing of our 15 largest group hotels by over 50% from March to June with again sequential improvement each month.
The largest increasingly needs by far from the corporate segment with lead volume of nearly 75%.
For the.
Half of 2021 group revenue pace versus 2019 is down approximately 45% with rate down just 3%.
Looking ahead to 2022 group revenue pace continues to increase steadily at the end of June group revenue pace for 2022 was down about 33% compared with our position at the end of June 2018 for 2019.
With rate up approximately 2%.
I would now like to turn to a review of our capital projects in progress for the year.
In the second quarter, we spent $4.6 million.
In 2021, we continue to estimate spending approximately $40 million on capital expenditures. This includes the development of the Regency court of new Alcoa of social venue at Hyatt Regency, Scottsdale, which is well underway and the restaurant and lobby renovation at the Ritz Carlton Pentagon City, which is just beginning.
We expect to renovate and reposition the restaurant and lobby of Waldorf Astoria, Atlanta Buckhead beginning in Q4 with completion early in the first quarter of 2022.
In addition, we have recently made the decision to move forward with the significant renovation of the Guestrooms and guest quarters of the search out during the same time period.
Although originally not planned until 2023, we believe the providing a comprehensive renovation of the hotels of the market at 1 time will significantly enhance the hotels market position and ability to continue to attract high on corporate group and leisure traffic.
As we have mentioned previously we continue to review opportunities for substantial internal growth within our existing portfolio we.
We are pleased to announce the we intend to engage in comprehensive hotel renovations of Canary Hotel and Grand Bohemian hotels, Orlando that will commence in Q4 of 2021 in Q1 of 2022, respectively.
The renovations of both hotels will consist of significant upgrades of the guestrooms lobbies and bars meeting space restaurants, and rooftop pool areas of.
The Grand Bohemian Orlando, we were making significant modifications and enhancements to the 20 plus year old design, resulting in a lighter and more contemporary looking field ex.
<unk>, we will work to enhance the property of existing men's training design with more contemporary design features.
Each of these hotels has been and continues to be a market leader and we expect these enhancements to ensure their premium positioning enabled the hotels to attract additional business and positioning of the food and beverage offerings at the top of the respective markets with that I will turn the call over to Ashish.
Thanks, Barry and we'll provide an update on our balance sheet overall.
Overall, our balance sheet of stronger than it was pre pandemic, we have left NASDAQ more liquidity and extended maturity ladder.
We have achieved this without increasing our share count and without increasing the risk of future dilution.
As a result of the successful high yield offering we completed in May our liquidity increased by approximately $300 million.
Since the end of the first quarter.
Our liquidity of over $1 billion at present.
It reflects approximately $500 million of unrestricted cash and a fully undrawn $523 million line of credit.
We continue to have a well diversified balance sheet at on attractive weighted average cost of debt of just over 5%.
The average duration of our debt is 5.3 years up from about 4 years pre pandemic.
And we have no debt maturities for the next 2 and a half years.
As Marcel mentioned, we have amended our corporate credit facilities and May we have already announced the details around those amendments.
Overall, we are pleased as the amendments provide the company with more operational and transactional flexibility.
And they reflect the continued positive the relations we have with our bank syndicate.
As we look to the second half of this year and into 2022, our outlook continues to be positive.
From a corporate profit measures perspective, and assuming a continuation of the demand trends we have seen in recent months.
We expect adjusted EBITDA and adjusted <unk> to be positive going forward.
More importantly, since the pandemic began the moves we have made and the moves we havent made have positioned the company to manage through a variety of near term scenarios.
Andrew eventually return to growing the long term shareholder value no matter the exact near term trajectory of the recovery.
Our portfolio is positioned superior relative to other high end lodging portfolios.
On a branded hotels that are located in higher growth markets.
And are not overly focused on either of citywide convention demand or international inbound demand.
And that have shown strong recovery momentum to date will allow us to drive relative outperformance.
And with that we will turn to our Q&A session.
Andrew May we please have our first question.
Thank you.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.
At any time of your question has been addressed and you would like to withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble our roster the firm.
First question comes from David Katz with Jefferies. Please go ahead.
Hi afternoon, everyone.
But.
Yes.
So alright good.
Look I think at some point we have expected.
And that there might be.
Some set of just stressed opportunities right.
And when we've had discussions in the past about it not necessarily with you but.
As the recovery wore on and there would be opportunities the bubble up.
For a variety of reasons is that still.
Fair way to think about it or is this just not kind of be this distress just not going to be of driver here.
Okay.
Good afternoon, David.
Well from our perspective, and I mentioned this on our prepared remarks, we do think debt over time, there should be more properties coming to the market on more opportunities on what we necessarily see today I think we're seeing the early stages of debt literally bid some more of properties being out of market.
And I think part of it is people still need to really understand where the long term trajectory is going with some assets on.
And we talked about it a little bit as far us.
Having a little clearer direction on where things are kind of go certainly a number of lenders that have been willing to be very accommodating in the short term of may change over time as well.
And I think we're still kind of on the early stages of that so you are seeing some transactions happening debt clearly hasnt been discussed the cyber transactions and you just havent seen that much of that but I think of we're still really early on on this part of the cycle of ROI from our perspective. It certainly makes us the <unk> patients on wafer at us better opportunities materialize.
So if I'm hearing correctly.
Should we get later this year and into next year is when those kinds of things start to present themselves as that.
Is that fair.
Well, it's obviously at some of my points.
It's hard to say what are you going to stay ahead of the large number.
Crest situations I of new thing Youre going to see more of products hitting the market, which will presumably creates on more opportunity because currently or if youre on the situational on a good amount of capital chasing a relatively small number of our interest in deals where the pricing ends up being pretty aggressive so we think thats.
And like I said, we are.
Currently underwriting transactions doing and analyzing all of them work and we'd have periodic sales months ago.
<unk>, where we're willing to be patient and willing to the way for those deals that are absolutely on strategy for us and the can meet our return requirements.
Right.
And can we just double back and if this is repetitive I apologize, but I just wanted to make sure.
We have what is your sort of.
Steady state target leverage range that you'd like to sit in.
Yeah.
Yes, the long term, David we've talked about sub 5 times so through the cycle. So we have been running the company kind of low 3 of the low 4 times debt to EBITDA range.
Over the last 5 years and I think that is the appropriate range for our business on a long term so wed like to GAAP sub 5 times certainly as soon as possible and then long term.
Kind of low threes to low fours is the right leverage range for us.
Perfect.
Got it okay. Thanks very much.
Youre welcome.
The next question comes from Bill Crow with Raymond James. Please go ahead.
Yes, thanks, good afternoon guys.
The any difference you're seeing in the September cancellation rate relative to August 2 months of.
A month ago in other words.
Any impact from the Delta variance or just simply more cancellations, because we're transitioning into business.
From leisure.
Hey, Bill we have not and obviously, we're watching it very very carefully we had on a couple of smallish cancellations.
Over the last week for kind of 2 weeks out so obviously, keeping a very careful eye on that but certainly not seeing a deep cancellations in the September at this point.
What do you watch on from a larger group of events calendar basis to kind of the.
Harbinger of.
<unk>.
It's not the Alice we Didnt hear of great things about that is.
As you look into September October November.
Give us a few conferences that you're watching.
To be indicative of trends.
Yeah. So in large part right. We don't have a significant number of city wides in on.
The portfolio in general, which is not in those market and those types of properties.
But we have a few of.
The guests without without divulging exactly who the arm of properties are at a few bellwether groups. So we kind of look at within each segment. So we're obviously focused we look very carefully at the pharma business, which when.
When it materializes as very strong business for us and we work we're watching that very closely because they often have the ability to make decisions to book short term, but whats the half they can push business off even in normal times, depending on when the new product launches and things like that sort of being very careful on that.
We're looking at.
Business, where the where you have of large a relatively large number of international attendees in general and our internal forecast, we have washed much of that out of the hotels of washed much of that out because we know that international tenants is certainly not assured at this point, so if that gets to particularly challenging points. When we saw this in the early days of course.
It is well companies may cancel their meetings, if theyre not going to get the international attendees. They want on that goes for both corporate group, but thats, particularly note of notable I think for larger association groups. The draw internationally I think those are 2 good examples of the things we're keeping a careful on.
Okay.
And then finally from me if I could 1 more just.
The incremental change on the ability to hire at the <unk>.
Operating level over the last month or 2.
Yes.
I think I mentioned this in the prepared remarks skin markets where the.
Where theyre no longer getting supplemental unemployment, we have seen increases the number of applicants and ultimately the number of hires so when that happens we've gone in immediately with job fairs, and and we are seeing more of than what we would've seen of month prior it's not.
Exponential, but it is notable and has helped fill the ranks of a number of our hotels, particularly in the Sunbelt markets, Florida and Texas.
Great. Thank you.
The next question comes from Dori.
Kirsten with Wells Fargo. Please.
Please go ahead.
Thanks, Good afternoon, everyone.
Similar to the follow up question to Bill's Labor question. So if we were sitting here today.
Barry underwrite pre Covid model.
How many ftes will you have that the demand levels and then just compare that to what you actually have good day.
Yes, so 1 of the things that we.
Coming into this as you know by virtue of our property optimization process, we have developed.
I always kind of within traditional.
The operational levels kind of target on FTE metrics and then we went back last year in the in the depth of Covid and particularly us.
Hotels were closed looking at whats staffing models would look like at every occupancy decile of of that to get back to that.
Sure.
What I can tell you, we're very reticent to put that number out there in total and obviously it changes every day on our hotels as they as they hire employees on the employee <unk> things like that.
We are it's very fair to say that we have no hotels on the portfolio that wouldn't take more staff if they could get them right now and I think they are clearly trying to balance of couple of things.
1.1 of which is.
Sure.
Is making sure that we're not increasing the overall wage model over time by hiring more employees today than we can comfortably take on and changing the entire wage structure of of our hotels and quite frankly of our industry. That's 1 too, but we're also balancing and I'm always trying to balance to ensure that we.
Don't get staffing ahead of where demand levels are because in this environment, we want to make sure that we have not we're not overstaffing again thats not to say we wouldn't take more.
Employees in any of our hotels, our managers are constantly looking for more and better employees, but I think to put an FTE number that is really a challenge and quite frankly across the portfolio given the variances we have between outperforming hotels and hotels that are still way way way.
Off in terms of their business levels, it's a tough number.
To make sense of on in the portfolio as the whole.
Yes.
Okay. Thank.
Thank you.
The next question comes from Bryan Maher with B Riley FBR.
Go ahead.
Great. Thank you 2 questions from me 1 on the food and beverage I know, it's not up to the level of debt.
You would expect or hope for it was above what we were looking for can you give us a little bit of the dynamic of the leisure traveler.
And is there potential over propensity to spend on ethane.
How does that dynamic working relative to what you would normally see with group using a lot of F&B.
Yes, it's great question, Brian and it's obviously different in.
It's a different kind of expense so I'll put it in a couple of buckets 1 in our resort hotels, we're seeing significant.
On the toolbar expenditures in and food and beverage that sort of pool bars, there literally at the pool, all day and a lot of these cases and are buying food and beverage from us. Similarly, we've seen something we've not traditionally experienced in the resort hotels, either which is the propensity of guests to stay on property and the non property more times rather than go out property.
Some of that has to do with difficulty.
The difficulty in getting reservations things like that but our kind of 3 restaurants in our resorts are doing better business as they have ever done on that.
Just the not just because we have more leisure guests and therefore more people on the restaurants. They are just in the restaurants more on their eating 3 meals a day, sometimes in the property over multiple days. So we're seeing that on we're also on the food and beverage on the banquet food and beverage side, where we have had banquets. The banquet spend per group room is fairly comparable to what.
It has been historically, we're not seeing significant Ah reductions on that at all and then the last piece, which is the universal across the portfolios, we're seeing unbelievable business in our markets or cafes or coffee shops, not in the restaurants per se, but in the grab and go outlets. We've always had the volume of those.
Is is in many cases double or triple what it would've been in a typical year again leisure is driving a good bit of atherectomy knock on wood, they're not having the same kind of breakfast at a corporate travel would have we're not capturing the M&A.
Banquet.
And a and a banquet breakfast related from meeting, but all of those are or what is helping us sustain.
Higher levels I think that even we might have expected, but those pieces. If you think about if you think about those of those are also part of what is driving what we consider to be.
Profit departmental profit in food and beverage probably better and again, what we would've expected of our underwritten in this type of environment.
Thanks, and then maybe from Marcel as you think about acquisitions. It seems like everybody wants the J.
After the hotel does your sunbelt leisure drive too.
Your thoughts about going after.
North of our urban assets, if you could pick them up at a significant debt discount.
Any of the repositioning of those properties or wait for an eventual recovery. How are you thinking about the 2 different buckets to volume.
From our from Arbor side of it as you know we've always focused on having our strategy big primarily top 25 markets key leisure destinations. So youre absolutely correct that a lot of the hotels and resorts of people are particularly attracted to these studies are the type of assets. Then we have also bought over time.
As you know.
<unk> never said, we don't want to be in gateway markets.
There is a time and a place to invest in those type of markets and we absolutely felt over the last 5 years or so.
But not of great setup and those type of.
Those type of markets because of many factors that we are well aware of so over time, we absolutely will continue to look at those type of markets on.
The challenge of course.
The New York is obviously a poster child for this is that the even if you buy of hotel, where you feel that the our discounts the replacement costs might be pretty attractive, it's still a very difficult operating environment and some of those market site.
We're clearly looking for opportunities, where we can drive.
Long term value increases, but also.
Make some operational cash flow and be able to really affect those cash flows and on some of those markets. This is really tough to accomplish so.
We will contain the look us kind of a wide variety of markets.
The good thing about our strategy has always been on will continue to be that we can be pretty opportunistic within that strategy.
And we will look to the 5 deals that are actually the on strategy for us on.
And again to drive the character of our kind of recurring profit.
Over the long term.
Yeah. Thank you.
The next question comes from Ari Klein with BMO capital markets. Please go ahead.
Thank you.
Just on the services Brian.
Are you thinking about bringing bringing some of those back you mentioned kind of the modified services in certain hotels in markets and what if any customer pushback.
<unk>.
Okay.
Thanks, Barry I appreciate the question.
So obviously, our hotels follow the leadership and direction from their brands and as you know Hilton has come out with a pretty rigorous standard on housekeeping on a formal standard housekeeping here and still working through that as is higher so let me start by saying that.
And our hotels in general complied with.
With the brand standards, what we have seen is in some cases some of our hotels of move to where we would call. The modified housekeeping model, which is really where we're we're getting in rooms. Most days on particularly in the resorts that have heavy heavy usage and have lots of use of of towels on lots of people in them and lots of <unk>.
<unk> generated the startup making sense to go into rooms every day and do what we call the light touch cleaning, but we're really taking care of the garbage taken care of towels, but not necessarily doing the clean 2 of historically do every day and that's gone a long way towards increasing guest satisfaction in the hotels and resorts of implemented that system.
I will tell you that most of our hotels if the guest wants housekeeping on daily basis on hotels are not necessarily declining that opportunity that our hotels are obviously in the business of satisfying guests. So even though the standard may be to go in that room every second or third or fourth day, depending on what each individual brand in each.
The company is kind of set as the standard of we're doing whatever it takes to satisfy those guests in terms of what they want.
We've seen what's interesting is that when you look across the portfolio on our highest guest satisfaction scores are in properties are actually achieving the highest average daily rates.
So in those hotels I think we're obviously doing a good job of giving guests what on what they want and what they expect particularly on are paying rates that are excuse me in excess of what they have historically.
Hope that helps.
Yes, no. Thanks, Thanks for that and then just.
You talked about a little bit earlier in the <unk>.
You've seen in July can you maybe provide a little more granularity on what youre seeing in some of the early on our business oriented markets that are.
Maybe on a little bit slower to recover and how that's progressing.
I think obviously July ended 2 days ago, or 3 days ago, and we're still sort of filtering through the information to understand what it really means in terms of on the portfolio. So I think we would probably if we can take a pass on that from now until we can really sort through.
What the trends really are and in which markets are seeing that.
Performance, we can certainly as.
As we noted obviously rate has moved significantly across the board in the portfolio in July over June, but I think getting in the individual market conversations probably we're not ready to do that today.
Okay. Thank you.
The next question comes from Boston, where Schmidt with Keybanc.
Please go ahead.
Great. Thanks, and good afternoon, everyone.
Barry You mentioned the group lead volumes were up 15% between March and June and sorry, if I missed this but is that based on sort of on room night.
On demand or a number of inquiries and I'm curious if those trends continued into July kind of of the sequential improvement.
On the 50% of it was actually lead volume.
From where it was at the end of March to the end of June. So we've so obviously that's been coming business. It doesn't reflect necessary what was booked which is heart, which is harder to look at in process and we are still we're still processing July data. So there's really no update on that at this point.
Got you and so what percent I guess of revenue is on the books that you typically target for.
Either of the back half of the year or 2022 can you give us just some sense at this point.
Yes, so for 2021.
Hi.
For back for the for the full of second half of the year at the end of June we were down 43% in group room nights with breakdown about 3%.
But it does vary by quarter Q3, the revenue pace is down about 50% Q4 revenue paces down 35%. So we certainly and we've always kind of net.
Known and seen that the group business for this year.
Continues to be backloaded, literally not just quarter by quarter, but but month by month with the exception of December which obviously, there's always an outlier.
Got it and then anything for 2022 at this point that's worth noting.
No we talked about being down.
Right now compared to 2018 for 2019, so on so compared to a more normal year.
Now room nights are down 33% rate is up 2%. So in there is we also see there in Q1 and Q2.
On kind of Q2.
Down less in Q1 is down.
So again, we are at.
Which gives us a lot of confidence that this is this is all going to to fill in at some point of just a matter of when it fills in.
No. That's very helpful. And then Marcel you talked about kind of continuing to evaluate ROI investment opportunities and I'm just.
Just curious with some of these new projects that debt.
The 2 new ones that you announced and as you think about additional spend I mean, how do we think about kind of the pace of spend as you get into 2022 versus what you have planned for this year.
We don't have an exact number to talk about there yes, but.
On a number of <unk>, we expect to be hired on where we are of this year.
As you know last year deferred on a good number of projects.
Some of those kind of enrollment of this year, but being at about $40 million.
For this year as far as like kind of the the low watermark for us historically, so we certainly expect it to be low with more normal go on into next year, but it's all of it early to talk about that because we don't want to get too far ahead of ourselves as we continue to work through some of the potential ROI opportunities.
That could swing that could swing of debt side, I don't really want to guidance.
Too far ahead of ourselves.
Sure.
Fair enough. Thank you.
The next question comes from Michael Bellisario with Baird. Please go ahead.
Hi, good afternoon, everyone.
Good afternoon.
Barry first 1 for you just on <unk>.
Overall, maybe can you dig a little deeper here what are you seeing by segment or you're really just seeing ADR increases from leisure transient travelers of any impact from more loyalty redemptions at your resorts just any more detail on the segmentation breakdown for ADR would be helpful.
Yes so.
No question that the primary driver of of ADR is on the leisure side because of our hotels as you know are primarily being.
Our primarily capturing leisure guests at this point in fact on what we've seen in the a little bit disappointing is that.
Because we're not necessarily getting to peak occupancies were actually absorbing a lower redemption rate from the programs and we would if we were getting those occupancies up into the the 80% of nineties, where we might typically have been during a peak demand period. So there is actually some downward pressure on the actual retrans or paying that you see in the AUM.
All right because of the blending of kind.
Kind of the contracted if you will on <unk>.
Redemption rate from the brands and we're getting substantial on redemption demand, particularly at the resorts.
1 of the interesting things is we are we are seeing improvement.
Month over month in corporate rate some of that is due to just.
The.
The customer that we are getting but it's also a lot of those rates are driven off of the best available rate of our bar and because the bar rates.
Because we've done a good job on the hotels of maintaining a higher bar rates.
Where corporate demand is choosing of stay with us we're actually producing a pretty good corporate rates because we've kept that bar right at a higher level on many many of the of the kind of not necessary. The very top accounts. The second tier accounts are all price at a discount off of bar and we're seeing production, we think in line with with the where the rest of the market.
Is on those.
Got it.
And then just.
1 from Marcel just back to the transaction market.
The way you are kind of underwrite deals today.
You said you underwrite more deals how much of that is there is 1 more deals to the underwritten to get the deals look more attractive to you and that's why you're underwriting more and then 3 how much of it is you now have more flexibility to spend money and invest post bond deal and maybe that's the reason why you're looking at more deals can you maybe break those 3 down price.
Yes, clearly on.
Based on the way you're asking the question I think you somewhat no to answer that's the combination of all 3 of your rationale we are definitely seeing some some more properties hit the market Theres no question about that.
Clearly when.
The short term focus was much more on.
Reducing monthly loss of and having monthly cash burn.
You look at things of low with differently than when you are starting to stabilize from an operating perspective.
And obviously you start turning a little bit more from from DFAST towards offense. So that's certainly a component of it.
And as we as we think about.
The attractiveness of potential acquisitions.
Some of them become more attractive so they are not dealing with short term cash flow of losses and those type of thanks.
But on all being assessed.
We are we're being fairly cautious on the weight of our underwriting things of that were just maintaining the really disciplined approach and potentially adding assets.
You mentioned.
We mentioned earlier, having the flexibility now under our.
Under our credit agreements, which obviously changes thanks, a lot of it too but that doesn't mean that we just feel like there is this money burning a hole in our pockets.
We were very active coming into the pandemic. We've got a number of hotels that we are very excited about the growth that we can still get out of those so.
We really feel like.
We're not.
We're not behind on the game, if you will because we were so assets coming into the vendor of a kind of so many opportunities to grow coming out of this as a result of that.
We would love to find some interesting opportunities that we think are going to be good drivers on good drivers for growth for the portfolio going forward.
Certainly with the track record that we've had over the last couple of cycles on a pretty optimistic we'll find those opportunities funds.
We're going on by signing a lot of discipline, that's what about governance.
Got it and then just at the follow up there given what's happened over the last 18 months or so any change in your view or at least maybe how you underwrite branded versus independent hotels today.
No really not.
The thing, we feel we feel strengthens and our and our overall strategy that we have coming incidence.
We like being affiliated with some of the biggest grants at the business on ways we can.
Talk many times about some of the benefits, we see in working with our stronger brands.
Certainly the way that they were able to react to the pandemic on the way that we think that will be very helpful. In building back of the customer base on both of the group side on the corporate side going forward will be will be very important to our portfolio.
No we feel good about obviously the geographic diversification that we had on that certainly help us if you think about.
On the occupancy that we have that is actually as our on our entire portfolio.
And we don't have anything close anymore on we're able to open everything now as quickly as we possibly could and I. We feel we feel very good about that overall strategy on how it sets us up both in times when things arent. So good like we've obviously seen here recently.
The recently and I'd also during a recovery of price.
We really don't see any kind of recent strength.
Trade from the strategy and are very happy with that.
Got it thank you.
The next question comes from Tyler <unk> with Janney capital markets. Please.
Please go ahead.
Good morning. This is Jonathan on for Tyler. Thanks for taking the questions. Just 1 quick 1 from me today, Barry I wanted to follow up on the on the rate discussion.
Any additional color on your expectations for corporate rates moving through the fall and then the next year and I guess the crux of the question is how sustainable do you think those higher rates that you were talking about.
Or in the media in the near term.
I think thats really probably of a question best directed at the brands, who lead the large majority of those discussions from the very largest corporate accounts I think we are certainly.
The feedback we're getting the talk of the feedback we are providing is that.
The discounts off of bar seem to make a lot more sense nestle.
Necessarily then then taking.
Low rates in the market that we don't take potentially taking low rates in our market. The markets. Many many multiple markets. The we didn't on exactly what the supply demand equation kind of look like on your typical business pattern for next year.
Okay, great. Thank you for all of the detail that's all from me.
This concludes our question and answer session I would like to turn the conference back over to Marcel for boss for any closing remarks.
Thanks, Andrew Thanks for everyone joining us today.
We.
Are certainly very optimistic of what the medium and long term growth prospects look like for our company.
And aren't closing our eyes. So some of the shorter term challenges and I'm sure we and many other people in the industry of what we're dealing with but we feel very well positioned with our portfolio and look forward to continue on to update you over the quarters.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Thank you.
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