Q2 2022 Hersha Hospitality Trust Earnings Call
[music].
My name is Harry and I'll be coordinating your call today.
You'd like to ask a question during the Q&A session. You may do so by pressing star one on your telephone keypad.
I would now like to hand, you over to your first speaker, Andrew So much Gary.
Director of Investor Relations to begin Andrew. Please go ahead.
Thank you Harry and good morning to everyone joining us today welcome to the Hershey Hospitality Trust second quarter 2022 conference call today's call will be based on our second quarter 2022 earnings release, which was distributed yesterday afternoon.
Before proceeding I would like to remind everybody that todays conference call may contain forward looking statements. These forward looking statements involve known and unknown risks and uncertainties and other factors that may cause the company's actual results performance or financial positions to be considerably different from any future results performance or financial positions.
Factors are detailed within the company's press release as well as within the Companys filings with the SEC.
With that it's now my pleasure to turn the call over to Mr. Neil Shah <unk> hospitality Trust's, President and Chief operating Officer, Neil you may begin.
Thank you Andrew and good morning to everyone join.
Joining me. This morning are Jay Shah, our Chief Executive Officer, and Ashish Parikh, our Chief Financial Officer.
When we last spoke in late April we were excited to share that we had entered into a definitive agreement to sell seven of our urban select service properties outside of New York for gross proceeds of $505 million. The closing of this transaction is anticipated to be completed in two tranches with the sale of six assets to be.
<unk> imminently, while one hotel will close later due to the timing of the <unk> loan assumption process for the asset.
With the divestiture of our select service properties complete we are sharpening our focus on our portfolio of luxury and lifestyle hotels, which have continued to achieve historic pricing power and have generated excellent operational and financial results as our second quarter financial results show.
Additionally, we are retaining our exposure to New York, which we believe is at the beginning of a very strong and extended recovery.
We recognize the tremendous value and upside in both portfolios.
As a result of the sale of our select service portfolio, we are improving our operational metrics and significantly increasing our go forward pro forma asset quality ADR and revpar.
As an example, while second quarter Revpar for our comparable hotel portfolio is still a four 7% below 2019 levels comparable hotel Revpar for the go forward portfolio was 1% above second quarter 2019 levels with EBITDA margins growth 179 basis points above.
Our reported comparable hotel portfolio and 414 basis points above the 2019 period.
We intend to use the proceeds from the sale to provide liquidity for significant corporate debt repayment, including paying off the junior notes in full and a recast of our credit facility, which are sheesh will cover in detail.
Our resulting credit profile will provide significant financial flexibility as our gateway markets recover and we continue executing on our strategic initiatives.
With that I will turn to the quarter rate integrity was broad based in our portfolio as every sub market grew ADR during the quarter.
For our comparable portfolio, we drove 12, 2% ADR growth versus 2019 levels in the quarter.
Excluding our urban select service portfolio. The growth is even more notable as comparable portfolio ADR was up 17, 2% versus the comparable period in 2019.
We have strong conviction that the pricing power. Our revenue managers are driving is not only sustainable but has runway for continued growth.
Particularly in luxury and experiential hotels upper tier customers are price inelastic and have fewer alternatives.
Property level cash flow more than doubled to $46 4 million from the prior quarter.
We began the second quarter on strong footing with portfolio generating $15 4 million of cash flow in April driven by continued strength in our south Florida cluster.
We were very encouraged that our cash flows remain consistent at.
At roughly $15 $5 million per month for May and June driven by the resurgence of our urban non resort markets.
Non resort contribution improved sequentially from 59% in April to 72% in June resulting in approximately two thirds of our portfolio wide EBITDA driven by our non resort assets nearly double that of the prior quarter.
The second derivative of this extended recovery will be driven by the urban markets that have been slower to recover as compared to the resort and leisure segments.
Our assets located in some of the strongest coastal gateway cities in the country are at the nascent stages of recovery and are positioned extremely well to benefit from long runways in the business travel Convention group and international channel recoveries that continue to build.
I think as I transition to our market performance in the second quarter, Let me stay on our non resort portfolio, which turned in its best performance since the onset of the pandemic urban Revpar increased 17% from April to June and the portfolio generated $31 $6 million of EBITDA.
More than triple that of the prior quarter.
There is no doubt that a significant portion of the urban performance was leisure driven as the summer months are usually much lighter on business transient travel, but the midweek strength in our urban markets is very encouraging and this portfolio is particularly well positioned for continued growth as all indications point to increased business group and <unk>.
National travel in the coming months.
We were able to drive rate growth in our urban markets as compared to 2019, our urban ADR of $277. In June was five 6% above June of 2019, even as Occupancies continue to recover to well below pre COVID-19 levels.
Among their urban markets. We're most encouraged by performance in New York City in the second quarter.
New York was our highest EBITDA producing market generating $9 $4 million in EBITDA for the quarter.
Our Hyatt Union Square Hilton Garden Inn, Tribeca, and the New Hotel Brooklyn exceeded 2019, Q2, 2019, EBITDA, while the Hilton Garden Inn 50, <unk> Street came in just below 2019 levels.
In total our Manhattan portfolio drove 90% of 2019 EBITDA.
As we've noted in the past New York City has historically been the market leader in occupancy okay.
According to New York City, and company's June travel outlook, New York is expected to welcome 57 million visitors in 2000.
2022.
More than double the 22 million visitors from 2021.
This number is projected to grow to nearly 64 million visitors in 2023.
This study along with the actualizing results on the ground today fuel our confidence that New York will revert back to prior levels over the next few years, which will further drive rate.
Pricing power was especially robust in Manhattan, which in June drove ADR growth of 14% compared to 2019, despite occupancy still trailing pre pandemic levels by 600 basis points.
During the last cycle, we had record demand for hotel rooms in New York by year over year mid single digit supply growth resulted in a very challenging operating environment for owners and held down rates.
Based on what we're seeing in New York, We believe that is about to change.
According to our detailed internal analysis as well as third party studies approximately 10000 keys may be removed from the hotel inventory for the foreseeable future if not permanently by way of demolition re sizing or alternate use conversions.
In our view this reduction coupled with the new special permit laws enacted by New York City City Planning Commission.
Resulted a net supply reduction of 1% to 2%.
Now as the cost of construction and financing continues to rise supply should be limited to the low single digit range for the foreseeable future.
These positive supply trends multiple channels of pent up demand returning to the market and pricing power in the highest occupancy market in the country significantly improve the operating environment for current New York Hotel owners in this next cycle.
We believe New York is in the early stages of a long recovery period, and we are very optimistic about the growth potential of this market moving forward.
As mentioned previously we feel strongly.
That incremental growth in business travel will provide a significant tailwind to our portfolio and amplify our growth thesis.
While there is speculation as to how business travel will look as we move beyond the pandemic and what impact the macro environment will have on corporate travel.
That remains that more people are traveling today than at any point since 2019 and that all indications from our corporate accounts industry publications results on the ground point to the growing demand for business travel.
According to the G. BTA is June coal in person meetings are a priority for companies one budgeting for corporate travel with 80% of travel buyers feeling more optimistic about a recovery versus earlier in this year and 84% of travel management companies reporting increased bookings from the prior month.
Airlines travel agents and credit card companies are reporting more robust booking pace for the fall and this time in 19.
The return of the business traveler, who is historically less price sensitive coupled with price in elastic upper tier leisure demand.
Well for continued ADR growth as gateway urban markets compress.
With that I will shift the focus to our resort portfolio, which once again continued its stellar performance throughout the quarter with occupancy just shy of 75% and revpar growth of 36, 5% to the second quarter of 2019.
The resort portfolio generated $15 8 million in EBITDA, an increase of over $7 million or 80% growth over the second quarter of 2019.
Our properties in Miami and key West once again benefited from the unique market dynamics, we are witnessing in south Florida.
The parrot key 74% occupancy and $497 average daily rate resulted in a 368 dollar revpar, which surpassed the second quarters 2019, revpar by 59%.
Parrot key generated $2 9 million and EBITDA for the quarter of 127% increase to the same period in 2019.
While the late summer and early fall are typically slow season in key west we have seen continued strength at the parrot key and expect continued outperformance throughout 2022, especially to close out the year.
The Miami Beach market turned in another outstanding quarter as the Cadillac recorded 80% occupancy at a $283 ADR, resulting in a revpar of $226 for the quarter, a 66% increase to 2019.
The hotel generated $3 3 million of EBITDA of 158% increase from the second quarter of 2019.
The Ritz Carlton coconut Grove drove nearly 50% ADR growth and over $1 million and EBITDA of 148% increase to the second quarter of 2019.
As noted on our last call, we expect to see very strong momentum in the South Florida markets moving forward driven not only by the traditional leisure traveler, but also by the uptick in future business travel related to the influx of financial and technology companies that have relocated to or open new and significant <unk>.
This space in the market during the pandemic.
To give you an example of the evolving South Florida demand tentative 2023 convention in major group events in the Miami market are expected to drive a 51% increase in related room nights from 2022. This.
This would represent a 30% increase to 2019 levels.
Compression from convention in small group events, and large group events and the ramp up in international demand has begun but theres a long runway for growth on Miami Beach and coconut Grove.
In California, the Sanctuary Beach resort continued its robust performance posting an ADR of $572 for the quarter, an increase of 49% to 2019, leading to revpar growth of 29% for the quarter.
The resort posted EBITDA of nearly $1 8 million for the quarter, an increase of 73, 5% to the same period of 2019.
The hotel Milo in Santa Barbara generated just under $1 $5 million in EBITDA in the second quarter, an increase of 80% of the second quarter of 2019.
In closing I want to reiterate that robust performance across the travel sector.
As a clear indication that the lodging recovery is underway and accelerating and there is a long runway of value creation ahead in our exceptional portfolio of hotels.
During the first half of the year, we took significant actions to transform our portfolio.
And to right size, our balance sheet by the sale of our select service portfolio.
As we move forward with our coastal luxury and lifestyle portfolio and our purpose built New York City cluster, we are extremely well positioned to benefit from the tailwind of the return of business traveler.
And international segments, while also enjoying the unprecedented pricing power of our differentiated experiential hotel offerings.
With few capital expenditures on the horizon over the next few years, we can focus on hotel operations to drive high absolute revpar on industry, leading margins, resulting in significant EBITDA and free cash flow growth in the coming years.
From a strategic standpoint, our public market valuation continues to be significantly discounted to private market values for our assets as evidenced by our hotel sale transactions in both 2021 and 2022.
As property performance continues to accelerate we will close this valuation gap through our continued focus on both operational excellence and strategic transactions.
With that let me turn it over to ash to discuss in more detail, our financial performance and outlook as well as meaningful improvements to our financial flexibility and credit profile.
Thanks, Neal and good morning, everyone.
So let me start with a brief discussion related to our new credit facilities.
With the close of the first tranche of our urban select service disposition.
We will use the sale proceeds to pay down approximately $416 million.
Of total debt and to recast our revolving credit facility.
The debt reduction includes the full payoff of our $150 million of junior unsecured notes and all Pik interest accrued on the note.
The new $500 million credit facility will consist of $1 $400 million term loan.
And 100 million dollar.
Undrawn revolving credit line.
The facilities bear interest at two 5% over the adjusted terms sofa.
The $500 million credit facility matures in August of 2024, and has $1 12 month extension option.
Which would result in an extended maturity to August of 2025.
The company will utilize an existing swap to hedge $300 million of the new term loan had an approximate fixed rate of 395%.
This swap is forecasted to save the company approximately $10 million of interest expense over the life of the new term loan based on this forward sulfur curve today.
Following the refinancing approximately 72% of the company's outstanding debt will either be fixed or hedged through various derivative instruments.
This new financing will also allow us to reduce our weighted average cost of debt by over 50 basis points.
Down from nearly four 7% prior to the refinancing to approximately four 2%.
The new weighted average life to maturity of debt will be approximately $2 seven years.
Upon the closing of the seventh asset the buyer will assume the existing $39 $1 million of MBS mortgage debt on that asset further reducing our outstanding borrowings.
Generating an additional $30 million of cash from that point.
As we move forward this new reduced debt load and lower interest rate is forecasted to reduce our interest expense by approximately $5 million per quarter.
The new facility reduces pro forma net debt to approximately four five times upon the closing of these asset sales on the LTM basis.
The reduced interest expense and tenor of this new debt provides us significantly higher financial flexibility to continue to execute our business plan as we move forward into an extended recovery forecasted for our portfolio.
With that I will transition to our performance on the quarter.
Comparable Revpar achieved 95, 3% of 2019 levels in the quarter, the lowest spread since the onset of the pandemic, while our comparable portfolio EBITDA exceeded our 2019 second quarter EBITDA.
The strong rate environment and pricing power of our differentiated assets, coupled with our continued focus on operational controls and aggressive asset management strategies.
Drove very strong operating margins during the quarter.
Comparable GOP margin was 49, 1%.
Which exceeded the second quarter of 2019 by 282 basis points.
While hotel EBITDA margin of 38, 7% was 236 basis points higher than 2019.
Our highly rated and efficient luxury and lifestyle hotels in urban markets emerged as margin meters for the portfolio.
This is an extremely encouraging trend for the portfolio moving forward.
Boston led the way with GOP margin and EBITDA margin of 56, 9% and 48, 2% respectively.
Its outpacing 2019.
This performance was followed closely by the Manhattan cluster, which drove 55, 2% GOP margins and 42, 5% EBITDA margins up 238, and 308 basis points respectively.
In total the GOP margin for our non resort portfolio of 49, 3% outpace 2019 by 29 basis points, while the portfolio EBITDA margin of 39% was on par with 2019 levels.
We anticipate significant continued expansion of our non resort portfolio margin as these assets have the highest growth expectation for the back half of the year and into 2023.
Our south Florida cluster demonstrated terrific growth compared to 2019 against again this quarter GOP and EBITDA margin growth of roughly 500 basis points.
The portfolio driven by the Cadillac and parrot key overall.
Overall, our resort portfolio continued strong margin growth performance with GOP and EBITDA margins up nearly 1100 basis points, each compared to the second quarter of 2019.
Excluding our urban select service portfolio that is held for sale ADR growth for the quarter increased to 17, 2% above 2019.
This flow through to GOP, and EBITDA margin growth, which expanded 448 basis points and 414 basis points respectively.
Overall revpar growth for this portfolio was on par with second COVID-19, while absolute EBITDA production was 12% higher than second quarter and 19.
Based on July results and our forecast for the remainder of the third quarter, we're seeing some similar trends for Revpar and EBITDA generation for our portfolio in the third quarter.
Just a few closing remarks on our outlook for the remainder of the year since 2019, our portfolio has undergone a significant transformation as we've traded strategically selected assets to maintain operational flexibility.
And the timing of our most recent transaction allows us to realize disproportionately higher debt paydown relative to the reduction in EBITDA.
This sale also allows us to focus on our current portfolio of higher quality and luxury and lifestyle asset with stronger revpar and margin growth potential.
Month to date still.
Still update in July we've seen continued strong trends in our portfolio and have not witnessed any signs of deceleration in trend based on macroeconomic volatility.
Revpar and EBITDA for the quarter is expected to be above third quarter of 2019.
We have some cash flow recovery, one and there is a more fluid credit market available.
We had discussed.
Earlier in the year selling in Seattle.
That's a great example of a market that has hit its.
Kind of inflection point, a little bit earlier than we might have suspected towards the beginning part of the year.
But just kind of on a quarterly basis for Q2, we were up 50, 657% versus.
Sure.
Versus 2019 versus 2021, so we're just kind of we're getting we're starting to mobilize and inflect and so I think we're happy to kind of continue to own these assets and look at sales next year.
And.
I think in terms of capital allocation, whether we look at acquisition opportunities. It's again, it's kind of the market is a little bit uncertain right now I think before we consider acquisitions, we're probably going to be discussing.
With our board returning some capital to shareholders.
And so I think the next big capital allocation decision really centers around the size and.
Regularity of the dividend.
Okay, Great. That's all for me. Thank you can detail.
Thank you and our next question is from the line of Dori Kesten Wells Fargo Tore your line is now open.
Thanks, Good morning.
Can you differential between where you think your portfolio to be.
2019, EBITDA by year end.
Yes, right now we're looking at by year end.
Probably around 60 40 mix still for this year.
<unk>.
For leaning towards resort because resorts have been driving.
Our activity for the first half of the year more than what we would anticipate in say 2023.
That will flip to urban 60 resort 40.
Which is based on 19 and based on this portfolio it would be around 60 40 urban resort.
But performance continues to we continue have great. It's the growth is in is coming from.
At the end of the year, the big growth is coming from the urban side, although the resort sites continue to hold their own.
Right.
What.
2019 EBITDA.
Where where would you expect your resort portfolio versus where you would expect your urban portfolio today.
Yeah.
Okay.
EBITDA, yes.
Sure.
We haven't provided that level of detail our outlook, but generally speaking we're still.
15% down on topline in major urban markets versus 19, while were up 15%, 20% and major resort markets.
Our.
We are getting we are capturing great flow through into our profitability is a little bit better than that in the urban markets, but.
But George I am sorry.
Sure.
We have not provided an outlook for the rest of the year.
And and so we're not we don't have that information with it with us right now.
Okay.
My last question.
Margin.
Over 1008.
For the first half of the year is there.
Hello, everyone.
<unk>.
Yes based on what we're seeing currently we do feel like it will hold to above 1000 for the rest of the year.
Okay. Thank you.
Okay.
Thank you and our next question is from the line of Michael Bellisario.
Of bad macro your line is now open.
Thanks, Good morning, everyone.
Good morning, Mike.
I just want to go back to your.
Comments from I think two questions just on dividends you mentioned.
That sort of next in the queue.
Where do buybacks fit in kind of how are you thinking about.
Z for your portfolio or more broadly, especially in light of all the changes in the last call. It three four months in the capital markets in the transaction market.
Yeah.
We have not.
Made major adjustments to our NAV.
Calculations I think when you speak to people in the transactions market today, They will tell you that.
That deals and trades arent happening without a 10% to 15% reduction in sellers' expectations to reflect the change in the credit market.
Because we are not in any way.
For sellers or have any kind of non core assets that we're really looking to jettison, we're not sellers in a time, where there is that wide of a.
Bid ask spreads so we consider our NAV to be relatively stable since the early part of this year.
We sold the seven assets very close to our private market value and our view of NAV on those assets.
So the discount to where we trade versus where our private market value of our our view of NAV is still a pretty wide, 30% to 40% kind of discount.
We'll see how the world, which is across the next six to 12 months to see if we.
I have to adjust our expectations.
On value, but right now we believe that the <unk>.
Cash flow that these assets will generate in the.
The attraction of kind of lodging real estate among commercial real estate alternatives across the next several years.
Will lead to good values and values returning to lodging. So we haven't adjusted our expectations, we're still trading at a meaningful discount to our NAV and in that environment, it's very difficult to consider.
Acquisitions, and so we do think about returning capital to shareholders and at this stage, we're not thinking as much about buybacks, we think that.
A.
With the sale we have significant.
Significant gains that we do need to.
For tax purposes.
A special dividend and what will likely be talking about with the board is weather.
It's a meaningful sizable special dividend.
And starting of any kind of regular dividend or whether we will continue with just the special dividend. This year and then consider other alternatives next year.
But thats for board discussion, but our mind is more there today, then additional dispositions or acquisitions right now.
Got it that's helpful color. Thank you and then just switching gears on labor.
You just maybe provide an update on where you're seeing wage growth and where head count is really just kind of the puts and takes on labor and what has changed in the last 90 days or so.
Yes sure Mike.
We're seeing as we look at our current labor rates to 19, we're still in that sort of 15% to 20% higher.
At this time than what our overall in house wages, where in 2019 staffing levels are approaching 80% of 2019 as our occupancies start getting pretty close and most of the markets.
To 2019 levels I think that if we look out maybe a year from now maybe by second quarter, we'll probably 85% maybe 90, but we don't really see us see our portfolio the need to exceed that based on efficiencies that we've garnered through the pandemic.
And then what does that translate into kind of just your high level long term view of margin upside versus 2019 levels is it still the same as it was previously.
Yes. It still is I mean, I think that we are.
We're seeing better ADR across the board, which is helping sort of bring that to.
To keep that range to $1 50 to $2 50, but we have been.
Exceeding the 200 basis point range for the last few quarters. So I still think we have a lot of confidence in that.
Great. Thank you and our next question is from the line Eric Field of Jefferies. Eric Your line is now.
Yeah.
As you've been following the company for a while so you know all of what we did to these assets in 2017 and 2018 and these assets to be fair, we're ramping back up after major.
Transformative.
Upgrades in 2019, so we would be highly disappointed if they did not stabilize that meaningfully higher levels of profit. So we do expect our resorts to continue to do that they will stabilize well above 19, and we believe that the urban markets base.
Based on the level of ADR growth that were achieving without.
Really reaching compression levels of occupancy gives us confidence that we're going to stabilize urban well above 19 and likely before we all thought at the start of the pandemic, we're not willing to go that far yet, but we used to talk about.
Highly urban portfolios, taking until 'twenty four 'twenty five 'twenty six to recover and I think.
What we're seeing on the ground in 'twenty two gives us a lot more confidence that that can be done earlier.
Thanks, and maybe a follow up I mean, I think earlier I think some commentators are saying that the transaction market was undervalued.
Current resort performance given there was some doubt state.
Stability.
You seem pretty.
And about these resorts holding up and they've continued to do well. So do you think the transaction market.
So maybe.
Recognize the stability of these cash flows that that you wouldn't have as youre generating.
Our properties.
I mean, I would say that there is probably right now like this.
The transactions that are still getting some interest today are probably more on the resort side because capital does believe.
That that is a sustainable.
That is a sustainable kind of demand not only from domestic travel, but when international travel returns and win group and conventions and major events start occurring at these resort markets. So I think that is the view today and.
And and and and it's a view that I think we share.
It doesn't give us the.
It Hasnt allowed us to have the conviction to to buy a lot of resorts at a time like this because it is still a question I think in our mind and it depends on the resort market that we're speaking of I think we've always held to this view of trying to have a multiplicity of demand generators and.
And as you know our resorts are part of our gateway clusters, there couple of hour drive from.
San Francisco, or la or Miami, or New York City or Washington.
And and so we believe that those at least those resorts are going to continue to grow and continue to be a great asset class for investors. The urban side is where is where there's just been very very low sentiment through the very beginning of this pandemic and just now I guess the cash flows are.
Covering to a level that <unk>.
Investors were starting to get pretty interested in at the beginning part of this year, but then the recession and the.
The dislocation of the capital markets I think in the credit markets.
Has discouraged a lot of transactions, but I think most of the brokerage community believes that 23 is going to be a very big year for urban asset transactions, because thats where.
That's where the puck is going as they were.
Thanks, So maybe more of a quick one what's your view on auto portfolio size.
But you're still talking about maybe doing some more sales.
Yes.
<unk> is giving the smaller as you do that so I'm curious what's your view on.
Kind of a minimum telecom EBIT account that makes sense.
Given given your platform.
Yes Anthony.
I think we've spoken about this topic before.
We do not have an ideal idealized kind of view of it I think there's been a lot of debate on on where at what level. There is diminishing returns.
In the hotel ownership in hotel management, and whether Theres any significant cost of capital advantage to scale and the like but as we've discussed there are certain cost of running a public business that you do need to.
You need to have assets and EBITDA to be able to to offset.
We are.
And so I would say that we are not at the optimal size for a public platform.
But we believe that we can generate significant value at this size for shareholders.
And that's what we're very focused on.
The credit conditions really arent supportive for for meaningful M&A of large transactions on the buy side or the sales side.
But there is real increasing visibility on free cash flow and profit growth.
And so we're focusing on what we can control you.
You need a really good environment for M&A, but in the meantime, we can drive great free cash flow deliver strong shareholder returns try to close more of this gap.
And then see how the world looks in a couple of quarters.
Alright, thank you.
As a reminder, if you'd like to ask a question. Please press star flip on your telephone keypad now.
And our next is from the line of Bill Crow with Raymond James Bill Your line's now open.
Thanks, and good morning.
Three quick questions for you first of all can you just remind us.
Prospective size the special dividend.
Hey, Bill.
Right now I mean look we we haven't discussed this with the board, we still need to work through it but.
And as a proxy I think that we would look at just looking at our gains from these transactions about $200 million, we have Nols, we can utilize.
I think that.
To take it should be at least the special should be somewhere in the range of.
Probably 25 to 50 is not out of bounds at this point.
Okay.
Thanks for that.
You haven't got ceilings, Neil about how the resort portfolio might perform next year relative to 2022, we're getting about 19 for a minute just looking at the tough comps that we're facing.
Yes.
Yes.
Is that it will be positive.
Okay.
But in certain markets and I think it might be a little bit it might be tougher.
On the ADR side like I think like a market like key West for example was the only.
Asset in South, Florida, where we had.
Where we had any kind of level of retracement in Q2.
And we were down.
10% to 12% or so on Revpar there.
It was.
The main driver of it wasn't what kind of overall ADR or overall kind of leisure demand. It was not having a airline crew in the hotel that we had the prior quarter last year.
I mentioned that because <unk> is a very small market and it can move very quickly in these assets can move with.
With our.
Our new contract a new convention that new group in town and and so our outlook for the rest of the year for key West is in Q3, where we are right now forecasting to be down a bit compared to 'twenty compared to 21, but in the.
The fourth quarter, we expect to to be meaningfully above our.
Our 21% in Q4 all of this we're way above 19, obviously, but just a market that.
A lot of people look to as being a real beneficiary of.
The pandemic travel patterns.
Even a market like that is it still not significantly down and still has quarters, even coming up that will be up meaningfully now.
Now I'll contrast that with Miami Beach, where compared to.
We shared in our prepared remarks, all of the kind of meaningful outperformance versus 19, but even versus 21 were still up on Q2, nearly 20% at the Cadillac <unk>.
Versus 'twenty, one still up.
Nearly 32% at the Ritz.
Rich Carlton coconut Grove.
'twenty one was very strong years for both of those hotels so.
We are still have some occupancy that we're going to gain at these hotels next year as international demand comes back and group and convention comes back.
<unk>.
But having kind of low to mid single digit growth from our resort portfolio in 'twenty three.
As is.
Is where my head is at right now.
Yes.
Perfect I appreciate that.
Finally for me and maybe this is for Ashish.
Congratulations on the improvement of the balance sheet, we're always going to ask for more of course.
What I would suggest is your debt lateral looks a little like a step stool.
You've got an awful lot in a short term basis is there any flexibility.
To extend maturities.
Over the next year or two if we get this this ongoing recovery in EBITDA.
Yeah, No absolutely look we've got the credit facility that with the extension option is three years out so that when you think about that.
The $500 million facility.
Now roughly 60%, 70% of our total debt the remainder of it is really.
Single asset mortgages.
With cash flow, improving and with our they are almost all balance sheet loans that we have very good relationships with we feel very confident and I feel very confident will be extent, we'll be able to extend those mortgages out as well.
Alright Thats it from me thank you.
Thank you and we have no further questions lined up for today. So it's my pleasure to hand back to <unk> for any further remarks.
Well thank you.
No more questions I would like to take a moment to thank everyone for their time, we know everyone has an extremely busy day.
And weak, but feel free to call us whenever you free up Jay Ash and I are all here.
For any further follow ups.
Thank you.
Thank you everyone. This concludes today's conference call and you may now disconnect your lines.
Okay.