Q2 2022 Xenia Hotels & Resorts Inc Earnings Call
Hello, and welcome to today's Xenia hotels, <unk> resorts incorporated second quarter 2022 earnings Conference call. My name is Bailey and I will be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you would like to ask.
Your question. Please press star one on your telephone keypad I would now like to pass the conference over to our host Amanda Bryant Vice President of Finance. Please go ahead.
Thank you Bailey good afternoon, and welcome to Xenia hotels, <unk> resorts second quarter 2022 earnings call and webcast I'm here with Marcel Burbach, Our chairman and Chief Executive Officer, Barry Bloom, Our President and Chief operating Officer, and a T Shaw Executive Vice President and Chief Financial Officer, Mark <unk>.
Bill will begin with a discussion on our quarterly performance and long term grant opportunities Barry will follow with more details about our recent operating trends and status of our capital expenditure projects.
<unk> will conclude our remarks with an update on our balance sheet net full year guidance. We will then open the call for Q&A.
Before we get started let me remind everyone that certain statements made on this call are not historical facts are considered forward looking statements. These statements are subject to numerous risks and uncertainties as described in our ever report on Form 10-K, and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our.
Got it.
Forward looking statements in the earnings release that we issued this morning, along with the comments on this call are made only as of today August 3rd 2022, and we undertake no obligation to publicly update any of those forward looking statements as actual events unfold you can find a reconciliation of non-GAAP financial measures to net loss.
And definitions of certain items referred to in our remarks in this mornings earnings release, the property level or below information will be speaking about today is on a same property basis or <unk> 32 hotels. This excludes Hyatt Regency, Portland, Oregon Convention Center and W. Nashville.
Archive of this call will be available on our website for 90 days I will now turn it over to Marcel to get started.
Thanks Amanda.
Good afternoon, joining our call.
Momentum in our business picked up meaningfully since our last earnings call in early May.
As I reported this morning, Revpar grew 2% in the second quarter as compared to 2019.
Mark in the first quarter since the onset of the pandemic our quarterly Revpar exceeded the same period of 2019.
With a strong leisure base iron levels of corporate transient and group has allowed our properties to grow revenues and profits above our expectations.
And the second quarter net income was $26 million.
Adjusted EBITDA was $88 $6 million and adjusted <unk> per share was 57.
As demand continues to recover and what has historically been the seasonally strongest quarter for our portfolio.
All of our properties generated positive.
Revpar for the quarter was $186 75.
With a 2% growth over the same period in 2019, reflecting a substantial sequential improvement from first quarter.
When revpar was $90, 5% below 2019.
The Revpar growth was primarily driven by strong results in the months of April and June .
That was fueled by substantial ADR growth throughout the quarter.
Average daily rates increased 16, 6% offset partially by about 10 points lower occupancy as compared to the second quarter of 2019.
Revpar growth exceeded 30% with four of our top 10 markets.
We continue to be pleased with our operator's ability to control costs in this inflationary environment.
Second quarter Hotel EBITDA margins improved 365 basis points as compared to 2019.
Fitting from the combination of robust rate growth and favorable expense controls.
As a result same property hotel EBITDA for the quarter exceeded the 2019 level by 15%.
While our adjusted EBITDA came within 1% of the amount we generated in the second quarter of 2019.
Yeah.
Like many of our peers, our portfolio of premium hotels in top 25 markets and key leisure destinations.
From a rapid recovery in leisure demand in recent quarters.
However, we believe we are in early innings of a multiyear recovery and overall market demand.
And our portfolio remains well positioned to experience the tailwind improving corporate transient and group.
Near term trends remain favorable and while visibility remains limited we are not seeing signs of a meaningful slowdown in demand.
Yeah.
We are off to a solid start to the third quarter, which historically has been the seasonally weakest quarter for our current same property portfolio.
Preliminary revpar for the month of July was approximately 157 logs.
Driven by occupancy of approximately 64% and average daily rate of approximately $247.
July estimated revpar was approximately 4% below the result achieved in July 2019, and.
And approximately 16% higher than July 2021.
Great growth continues to be impressive.
As our estimated ADR exceeded July 2019 by approximately 18%.
Okay.
Midweek demand improved steadily after the fourth of July holiday cost business traveled in units in the early part of March.
We continue to be well positioned to benefit from a diverse set of demand drivers.
Even if the summer travel season winds down over the next month.
We've been pleased that our properties have been able to pivot to capture substantial leisure demand in their respective markets.
However, pre pandemic revenues as a majority of our hotels were primarily generated by corporate transient and group demand, particularly after labor day.
We expect that improving demand small group or corporate transient on top of continuing strong leisure demand.
Will enable our operators to drive occupancy gains in the months and quarters ahead.
Okay.
So where are the greatest opportunities for growth in the portfolio.
Let me highlight two key areas.
First we have meaningful growth left in our same property portfolio.
Same property hotel EBITDA in the first half of 2022 was down 7% as compared to the first half of 2019.
Seven of our top 10 markets as measured by contribution to 2019, EBITDA have yet to fully recover back to 2019 levels.
Which is reflected with a greater dependence on corporate transient and group demand and the hotels, we own in those markets.
Six of our larger corporate and group focused hotels, namely Marriott San Francisco Airport I agree to Santa Clara, our two Dallas hotels and are two weapons in the Houston Galleria markets.
We are collectively more than 20 million are behind in terms of hotel EBITDA in the first half of 2022 as compared to the first half of 2019.
These takes us out generated approximately 30% of our same property hotel EBITDA in 2019.
Significantly above the approximately 18% of hotel EBITDA generated during the first half of this year.
While 2019 did not reflect peak earnings for every market. It is a good starting point to assess opportunities for recovery and growth in the back half of this year and into 2023.
Importantly, our hotels in most of the markets that have lagged. Thus far are currently experiencing good pickup in both group and corporate transient demand.
Yeah.
We believe this momentum will help us continue to close the gap to 2019.
The second significant driver of growth for our portfolio is represented by our two most recent acquisitions.
As previously discussed we expect W. Nashville, and Hyatt Regency, Portland to generate between 40 and $45 million and hotel EBITDA annually upon stabilization.
Both properties are building their books of group business. In addition to corporate transient and leisure demand.
Hyatt Regency, Portland has already started to benefit from citywide and events at the adjacent Oregon Convention Center and the Motor Center.
The hotel's group basis steadily improved throughout the year.
With almost 60000 group room nights actualized and on the books for 2022 at the end of the second quarter.
Okay.
Profitability of Revpar improved significantly in the quarter with all sell achieving occupancy of approximately 68% in June the highest level since opening.
Although the pandemic has cost stabilization to be delayed compared to underwriting when we acquired the hotel in late 2019.
We remain confident in our belief that the hotel will reach the stabilized EBITDA, we expected upon acquisition.
Okay.
Meanwhile, W. Nashville, this seems to perform well and in line with our expectations.
Revpar exceeded $250 every month during the second quarter a.
Significant upside remains as the outstanding food and beverage facilities are optimized from an operating perspective.
In corporate transient and group demand builds.
Okay.
Well that was a unique offering for groups with 18000 square feet of meeting space and what isn't very rapidly growing markets.
Yeah.
We believe this is an important element to achieve the optimal demand segmentation segmentation mix to drive maximum profitability.
We continue to expect that the hotel will deliver between 13 and $15 million of EBITDA during our ownership period this year.
While its eventual recession may slow the rate of recovery in the lodging industry in the short term, we remain very optimistic about our growth prospects in the years ahead.
We believe our strategic focus I'll add in a multitude of demand generators to drive portfolio performance.
As well as a balanced mix between group corporate transient and leisure demand will continue to serve us well in the next phase of the industry recovery.
With that I will turn the call over to Barry who will provide additional details on our second quarter performance and an update on significant capex projects. We have scheduled for this year and early 2023.
Thank you Marcella and good afternoon, everyone.
The second quarter, our same property portfolio occupancy was 69, 8% and average daily rate of $267.72, resulting in revpar of $186.75.
On an absolute basis. This marks our highest revpar quarter since the start of the pandemic.
Building on a very strong start in April revpar for the quarter ended up 2% as compared to the second quarter of 2019 as.
As Marcel mentioned in his remarks portfolio drove an average daily rate increased 16, 6% in the quarter as compared to the same period in 2019.
On a monthly basis results during the quarter exceeded our expectations April continued the strong occupancy trend that occupancy of 72% and an average daily rate $280 62 sets. Both post Covid records, reflecting occupancy down 9.8 points to 2019, while rate increased by 18, 3% if I can.
<unk> strength in leisure business, and strengthening group business, particularly our large resort hotels.
May is a seasonally slower months for our portfolios in April and achieved occupancy of 69% and ADR of $264.98 and occupancy decline of 9.1 points compared to 2019 with rate up 12, 8%.
June occupancy of 68.3% reflects historically lower levels of group and leisure business, which was offset by continued strength in individual corporate business and a decline of 11 point when occupancy points to 2019.
However, ADR was $256 97 up 18, 8% the largest monthly rate increase over 2019 achieved to date.
Okay.
At 32 same property hotels, all but four achieved higher average daily rates in the second quarter of 2022 and they did in the second quarter of 2019, we've.
We've been pleased to see resilience in leisure pricing and continue to be optimistic regarding corporate range, particularly as we achieve higher midweek occupancies and sellouts in a number of markets on Tuesday, and Wednesday nights.
And to be proud of the work, we and our hotels have done to identify opportunities to maximize rate and ensure we are providing the right mix of amenities and services to satisfy our guests.
As noted demand in the quarter was broad based.
Portfolio benefited from very strong leisure demand along with a buildup of group business and corporate transient.
In the quarter, our group business benefited from solid in the quarter for the quarter bookings and strong rate growth, resulting in higher group's revenue.
Group higher group rooms revenue as compared to the second quarter of 2019 I'm.
These were high quality, reflecting healthy corporate group demand, particularly in our large resource and we saw a notable improvement in citywide conventions, which benefited our hotels in San Francisco, Dallas, Denver, Portland, and New Orleans.
Corporate transient demand continued to recover with Monday, Tuesday, and Wednesday, Occupancies building through the second quarter.
Although still down in the low to mid teens occupancy point range compared to 2019.
Monday, Tuesday, and Wednesday night, Occupancies, we achieved in the quarter, representing an improvement of more than 10 points from the levels. We saw in the first quarter Cooley.
Truly indicative of an acceleration in business travel has continued into July .
We remain optimistic on the recovery in corporate transient, which will be of increasing importance as we look beyond labor day and into next year.
Early indications from our operators suggested negotiated corporate rates could increase in the high single or low double digits next year.
Now switching to profit second quarter Hotel EBITDA was $86 $5 million, an increase of 15% on a total revenue increase of two 4% compared to the second quarter of 2019, resulting in 365 basis points of margin improvement.
Hotel EBITDA margin grew significantly during the quarter as the blow through run rate and our operators continuing success and effectively managing expenses.
For the quarter departmental expenses declined by three 7% compared to 2019, our undistributed expenses declined by one 7%.
The labor remains challenging in select markets. Our operators report that they continue to fill open positions and there seems to be increasing availability of labor.
In markets that are nearly fully recovered our operators report that open positions are in line with pre pandemic levels.
Wage increases seem to have stabilized in the mid single digit range from as compared to last year, which is in line with our initial expectations.
For new Capex during the quarter, we invested $14 $3 million and portfolio improvements, bringing our year to date spend to $21.8 million.
At Park Hyatt <unk> resort Golf club and Spa the renovation of the golf course began in the second quarter is expected to be complete early in the fourth quarter.
Also planning for a significant upgrades resort spa, and wellness and entities, which will be branded as a mirror of all life in bound spa upon its completion in the first quarter of 2023.
We expect this world class facility will perfectly complement the five star five Diamond hotel experience and attracting new demand segment to the resort.
During the quarter, we substantially completed the restaurant lobby meeting space and rooftop renovations at Kimpton Canary Hotel Santa Barbara.
And he didn't planning the guestroom renovation, which is expected to occur in the fourth quarter. This year and first quarter of 2023.
We also began work on the comprehensive renovation of Grand Bohemian Hotel, Orlando, which will continue into the second quarter of 2023.
As a reminder, this will include renovation of the Guestrooms and putting substantial tub to shower conversions meeting space lobby restaurant and bar and a rooftop pool, which will include. The addition of a standalone bar and entertainment zone.
We also commenced renovation of bathrooms at Marriott Woodlands Waterway Hotel and Convention center, including the conversion of bathtubs to walk in showers and approximately 75% of the Guestrooms.
Additional projects are planned to commence this year include renovation of the meeting space and lobby, including the addition of a Starbucks outlet and Fairmont Pittsburgh.
Renovation of meeting space, a royal palms resort and Spa.
And the renovation and reconfiguration of suites at the Ritz Carlton Denver, which will result in the addition of three keys to the hotel.
We've also started planning work and a comprehensive renovation of Kimpton Hotel Monaco Salt Lake City is expected to commence in the first quarter of 2023.
With that I will turn the call over to Ashish.
Thanks, Barry I will cover two topics. This afternoon first I'll discuss our balance sheet second I'll discuss our full year guidance.
As for our balance sheet, we have the flexibility needed to grow the company and create long term shareholder value.
We exited from covenant waivers on our corporate credit facilities. After the end of the second quarter as such the restrictions on both paying dividends and repurchasing shares have now lapsed.
By way of reminder, we paid an annualized dividend of $1 10 per share prior to Covid, which reflected a payout ratio of approximately 65% of funds available for distribution.
While we have Nols, which should offset to some degree the requirement to pay dividends in the near term we continue to monitor the trajectory of the recovery is that may enable.
Reinstatement of its modest dividend over the next couple of quarters.
As to share repurchase this is a tool we utilized in the past drive shareholder returns by way of reminder, since our listing in 2015, we repurchased $80 million of stock at an average price of about $15 per share.
We currently have about $95 million remaining on our share repurchase authorization.
As to the overall leverage level on a trailing 12 month basis, our net debt to adjusted EBITDA was approximately five five times as of June 30th.
Turning to our liquidity at the end of the second quarter was approximately $675 million as compared to.
Approximately $625 million at the end of the first quarter are.
Our liquidity reflects approximately $225 million of unrestricted cash and approximately.
And $450 million Undrawn on our line of credit.
We continue to have a well diversified balance sheet with no debt maturities until 2024.
Turning to my second topic, our guidance, we have provided full year guidance consistent with prior practice our guidance reflects current business conditions and does not anticipate any meaningful changes in the economic environment or any additional COVID-19 related impacts.
Looking forward, we continue to believe our hotels are well positioned to capture business transient and group demand as they more fully recover.
At the midpoint of guidance, we expect revpar to be down approximately 5% from 2019 levels and adjusted EBITDA of $266 million or about 10% lower than 2019 the.
The greater variance in adjusted EBITDA reflects changes in portfolio composition, and the recovery potential of certain of our properties.
At the midpoint, our guidance implies a slight decline second half revpar compared to 2019, which reflects the transition from a leisure driven recovery to one that is more broad based and likely to be slightly more gradual.
We expect both continued ADR and margin growth versus 2019.
Our guidance reflects improving corporate transient demand as the year continues.
And group demand continuing to build.
Turning to group more specifically group room revenue pace is strengthening with 2022 pace, 18% below 2019 levels at the end of June .
This compares to 2022 group revenue pace of down 23% at the end of the first quarter.
The second half of 2022 continues to look better as well for the second half group rooms revenue pace is about 18% lower than 2019 second.
Second half group pace.
Pace was down 21% at the end of the first quarter. So that reflects an approximately 300 basis point improvement in pace versus a quarter ago.
Okay.
The rate story on the group side is quite positive rates for the second half are up 10% versus the second half of 2019.
The other items that we provided guidance on in this morning's release have not changed much since last quarter interest expense is unchanged from prior guidance and reflects interest rate hedges expiring this fall and roughly 15% of our total debt cash.
Cash G&A expense guidance is up $1 million and capital expenditure guidance of down $5 million as our estimates each 10 timeshare.
To wrap up the company continues to be well positioned for an extended lodging recovery no matter. The exact trajectory, we prepared the company well with high quality, well located primarily branded hotels and a healthy liquidity and balance sheet to be able to grow in the years ahead.
That concludes our prepared remarks today and with that we will turn the call back over to daily for our Q&A session.
Thank you.
If you would like to ask a question. Please press star followed by one on your telephone keypad.
If for any reason you would like to remove your question. Please press star followed by two.
As a reminder, if you are using a speakerphone. Please remember to pick up your handset before asking your question.
The first question today comes from the line of Dori Kesten from Wells Fargo. Please go ahead. Your line is now open.
Oh, Thanks, good morning.
I know you said you haven't seen a slowing in demand yet, but where would you expect to eventually see that slowing is it more on the leisure side.
Okay.
Well it certainly wouldn't be on business transient and group, where we continue to see stronger results I think it is.
There was anything that you might see but again, we've not seen it is in the.
Leisure demand in fact, our drive to markets continued to be as strong if not stronger than they were in the summer of.
2021, so we view that as very positive thus far.
And how is the the.
The quantity of hotels at your underwriting changed from last quarter.
How is your forecasting things.
At all if you look out several years.
Okay.
It hasn't changed too much on any one of those categories and we haven't.
Clearly the current environment doesn't lend itself to be overly aggressive on acquisitions, when we're looking at actual capital users.
As Peter pointed out we have no longer we no longer have any restrictions as it relates to that relates to repurchasing shares. We also have some debt that even though we don't have any maturities until 2024, we do have some does if we could be paying off especially after.
With some of the hedges that are expiring that since he started off so there are various potential uses of our available capital and I'm still includes potential acquisitions to the extent that we find interesting opportunities I wouldn't say that's the.
Volume has changed very dramatically over the last quarter, we could see if you look at a number of potential opportunities clearly haven't found anything that we think really hits all the all the marks for us here over the last few months.
So as it relates to the longer term underwriting.
Although we remember that we.
To be pretty bullish on the longer term growth prospects not only for for our portfolio, but also for the lodging industry overall.
Going into a period, where we expect supply increases to be relatively muted. We do expect that group business and corporate transient who will continue to build.
Even though that might be a little bit more gradual in the short term rates do get some hiccups. If there is a recession calling.
We still are very bullish on the longer term prospects.
Okay. Thank you.
Okay.
Thank you.
The next question today comes from the line of David Katz from Jefferies. Please go ahead. Your line is now open.
Hi afternoon, everyone. Thanks for taking my question for all the <unk>.
All of the remarks and perspective that I really wanted to just go a little farther and get a sense for you know what.
The discussions.
Discussions are like with respect to assets that may be for sale.
You know what how are the underwriting processes changed given you know.
That we're all trying to contemplate whether there is something out there recession wise or not and what the intensity of it is.
You know how to go to those discussions get around that uncertainty.
Well clearly we haven't gotten around to it on the acquisition side since we Havent bought anything upset right.
Brian .
While it's still working around it but youre seeing it.
And just what you're seeing in the FERC, Germany for sure David is obviously the.
The debt markets that have changed pretty dramatically over the last.
Four or five months, if you will.
So that does change some of the discussion as far as who's out there potentially buying assets. Obviously the people that are higher level. All of this are probably not us cant be as aggressive in the current environment.
So that is the most immediate impact as you look at us whether it's on the acquisition side, where maybe you have a little less competition potentially looking at some acquisitions, but you balance that with.
No at least having a little bit of caution in the short term when you're underwriting actual assets.
On the disposition side, we talks we have talked consistently about that we're a company that looks through.
To CRO, which it's quality of its portfolio over time, both through acquisitions and dispositions. So that certainly could still include some some dispositions on the lower end of the portfolio. They are the same things we've done before as it relates to the way of assets with significant capex needs coming up at our assets that we think have kind of an optimized from a permanent as spansion Stan.
So we're continuing with have some of those discussions and.
Potentially looking at doing some more on the disposition side, but nothing dramatic and I'll, just particularly at a few smaller assets that we're considering that.
As you're thinking about selling goes you clearly look at your potential buyers through a little bit of a different lens, where you just have to make sure that you're very confident about their source of equity and their ability to close on transactions.
Hi, I understood and just as a follow up.
Assuming that you.
Could get around the current circumstances are there particular markets, where you'd prefer to lighten up.
Hmm rather than acquire and you know just given your sort of market updates would be really helpful.
Not necessarily we're not necessarily looking at markets, where we absolutely want to lighten up you know I think we've as you know we've done a lot of heavy lifting over the last few years to shape the portfolio to where it is today.
I wouldn't say that we look at our portfolio I'll say I would really want to get out of this market.
I do think that there might be some opportunities to sell some sell some assets in our current environment that are so, particularly attractive for because of some of the shorter terms you've seen.
As it relates to strong leisure demand in some markets that people really want to get into that may not be absolutely.
A law firms strategically important asset for us, but that being said.
No nothing specific as it relates to any kind of reshaping of the portfolio.
As it relates to markets, whether on the acquisition side or on the disposition side.
Understood Thanks very much.
Thank you.
The next question today comes from the line of Bill Crow from Raymond James. Please go ahead. Your line is now open.
Okay. Thank you very much hey, good afternoon guys.
Two questions first of all if you could just.
If you could fast forward a little bit to the first quarter of 'twenty, the ring and I'm not looking for guidance, but it's just a really interesting setup with with omicron this year, but but offset by really strong leisure demand.
I'm just wondering how you think that quarter might play out fundamentally for the industry.
While we thought it would be excited then we at least gave guidance for the rest of this year Bill so.
We.
We always have.
Okay.
[laughter] as you've as you've noted I mean visibility is obviously still relatively limited then there is a lot of macro.
Yeah.
A lot of macro forces going on that could obviously.
Things differently as we get into next year, but I think as you pointed out some of the things that will be impacting this year versus last year on crown really hit hard in January of last year.
Most properties Werent really prepared for it as from a from an operational standpoint as you recall in the first quarter. It was much harder.
To drive that type of margin improvements that we were able to drive here in second quarter, just because demand slips. So much in the early part of the first quarter versus what your expectations were so overall, that's that obviously sets things up better for the first quarter of 'twenty Crazy that did for the first quarter of 2022.
And as we pointed out we are expecting is continued kind of a gradual recovery of the corporate transient.
And group side that hopefully will offset.
Some of the historic strength that you've seen in leisure ear.
And over the last few quarters.
Alright, and then my other question is really on seasonality in Nashville, and I ask that because.
I assume summers the big season from a tourist perspective, but with all the new supply opening up I'm. Just wondering if we were to look at it.
And how the seasonality in demand plays out if you could just kind of give us roadmap.
Of what to expect.
Yeah.
We're still learning obviously, what what the seasonality it looks like and I think we were actually quite frankly very surprised in Q2 by this hotel's ability to attract short term corporate group to the hotel and in a way that we had not expected when we closed on the tail at the end of March I think summer has been.
Interesting period for us because that group business doesn't really want to be there in the summer. So we've certainly seen and.
Work to pick up even more leisure business in and really do a good job of marketing and advertising the food and beverage amenities, which are largely outdoor focused I think we're optimistic about Q3 in the same way as it relates to corporate demand, which we think that this hotel is set up very nicely for as well as group demand.
Which we expect to be significantly different in Q3 than it was.
And into Q4.
It has been in.
Early Q3, so far so I think we're still learning the market and I think what we're really learning is how this asset can.
Can best penetrate the market both in line with our original business plan, but also additional opportunities, but we think that the hotel up well for success.
Okay.
Okay, Alright, I appreciate it thank you.
Thank you.
The next question today comes from the line of Ari Klein from BMO capital markets. Please go ahead. Your line is now open.
Thanks, and good luck.
I appreciate that there are some moving parts between leisure business in Europe , and how that would cover but how are you thinking about occupancy moving forward and getting back to 2019 levels. It seems like in the back half of the year.
Back to more normal seasonality, but at the same time, you do have business travel.
Yeah.
Yeah.
Yeah.
It's a good question that I mean, the way, we thought about and what we provided and it's embedded in our guidance is in the second half, we expect occupancy to still be kind of off.
Two 2019 by high single digits to 10% sort of 10 points.
So that gives you a kind of a short term perspective on what's embedded in our guidance I think you know over a longer period of time, we obviously expect the recovery to be.
Full and complete both in terms of corporate transient and group.
So while it might take a little bit longer.
We feel confidence that the.
The business has come back based on what we've seen thus far.
Got it got it and then maybe just on the Florida keys.
Zero. This was I think 3% in the second quarter versus last year is that just tough comps.
In a market that David and.
We anticipate seeing declines.
Sure.
Yeah, It's a market that's performed incredibly well for us and for others over time, we like the hotel. We have there are a lot the the Hyatt centric.
<unk> continued to perform well and in <unk> and through every month of Q2 and now into Q3, we've been really impressed with the ability to continue to drive rate there and the resilience of that market in terms of people that want to be there and our.
Really.
Want to be.
In the property doing things, where we're actually we.
We are doing some infrastructure work at the property in August September So we will see.
By our own design, a little bit of a impact to where the hotels ban and the growth year over year, but long term and strategically we feel really good about the market and it's a market that the people of have long enjoyed being in and quite frankly, it does suffer.
Suffers I worded it has the great benefit of.
Constrained supply and when people want to go there they are willing to pay terrific rates to be there and that's been the case over.
Many years.
And I think coming into this year a lot of the questions. That's part of the year whereabouts. There was a market like that does it actually have the potential to go down this year versus where we were because of the massive growth that it has gone through over the last few years. So we're actually quite encouraged about the fact that we're continuing to see a very healthy.
You can see the Nike our ADR in that markets.
I haven't really seen any kind of setback in the market are still very bullish on the longer term.
Got it.
Thank you.
The next question today comes from the line of Michael Bellisario from debt. Please go ahead. Your line is now open.
Okay.
Good afternoon, everyone.
Barry I wanted to ask on your markets that were not up versus 2019, Dallas, Houston and Denver to it looks like it's all occupancy driven but what's the mix of business there today versus where you want it to be and then <unk>.
Any signs youre seeing on the ground that are those markets may or may not close the gap versus some of your better performing markets at least over the near term.
The mix in those markets actually not substantially different from what it's been historically in terms of.
The actual components of a business, it's resulting in lower occupancy I think in each of those cases.
In Q2, whereas Marcel.
And I both mentioned some of the markets that has citywide outperformance those markets all had relative citywide underperformance relative to prior years, which impacted each of those hotels.
Denver has had a very strong come back in the in July in particular and.
No Dallas, and Dallas, and Houston are markets, where our hotels rely really heavily on in house group business and we're in a.
Seasonally softer period here in the summer, but I think we have.
Much higher expectations, as we get past labor day and get into.
More definitive corporate travel and the return of group demand at those properties.
Yeah.
Got it and just on the group topic I know you gave volume and <unk>.
For the rest of the year, but what about in a contractual F&B and other out of room spend that groups are booking today are those effective prices up more or less than the ADR figure you quoted earlier.
They.
Theyre up around around the same range.
Our operators have gone through.
Every one of our hotels, obviously in terms of not just restaurants, but in particular looking at refocusing on on banquet pricing and we've seen really good commitments from groups on food and beverage they may not be committing to it upfront when they sign a contract when they get on property that are typically the largest and most.
And the good quality corporate groups are way out spending what they originally committed to and their contribution is as Pat or in excess of where it was in 2019.
Okay.
Got it and then just last one for me just on the 8.1, maybe for Tuesday, $8 1 million of non comp EBITDA could you provide the split between Nashville, and Portland on those.
Yeah.
Yeah.
And three national importance.
Okay.
Thank you.
Thank you.
The next question today comes from Tyler Battery from Oppenheimer. Please go ahead. Your line is now open.
Good afternoon. This is Jonathan on for Tyler. Thank you for taking my questions first one for me is on Capex, but the Grand Bohemian innovation underway in the planning stages of the Kimpton Salt Lake.
Is there any large scale renovations that might be on the table or do you think the portfolio is in a good place. Once those are completed and I guess, maybe if you could just remind us the quality of the portfolio given the capex you've spent over the past few years.
Okay.
We have a long track record of continually improving the asset so while we're not prepared to talk about them today, we've got <unk>.
Number of projects quite frankly that we're looking at and planning for further into 'twenty, three and 'twenty four some of which we may be I will talk about.
<unk>.
On our call in November , but we've continually reinvest in the portfolio.
And we think we do think the portfolio is in really good shape in part because we do really high quality renovations, we've talked before about us using our own in house project management team to manage our projects, which we think lets us deliver those projects that had a good cost with a lot of really good control over the decision, making and what we're doing in those properties, but capex is letting us.
It's clearly an ongoing process.
For us and we continue to reinvest in the assets, including assets, where we have done a comprehensive renovations.
Yeah, I'll just add to that I've spoken about in the last few quarters in our prepared remarks, and I believe that some of the questions I've answered to that we are continuously looking at what are there some outsized ROI opportunities within the portfolio to an <unk>.
As we you mentioned for example, groundbreaking in Atlanta, as we really dug into it as projects.
We looked at do we do a more limited room for innovation Warburg limited renovation of that asset, but we strongly believe in the long term potential of the property I feel like the type of renovation that we're doing at that asset now has really taken it to the next level that should provide some very strong our wives for us. So similarly, we're continuing with a look at some additional.
Easily.
Going back to your other part of your question.
Lately, we believe we are at an extremely high quality portfolio and if you walk through all of our assets are not going to sell this asset it makes a ton of money.
Wherever really good.
Really good team that has stayed on top of these assets.
Clearly, we're looking to spend more in the range of what we historically did that this year.
As we get into next year and then some various point as we start talking about some of the opportunities we have going into next year and what our capex spend it looks like for next year. There may be a couple of other things that we'll talk about where we believe we can drive some very strong rois.
Okay.
Okay, great. Thank you for all the color there and then switching gears to the guidance can you provide some color on the mood to issue the guidance and why that makes sense now.
This quarter compared to maybe next quarter or last quarter.
Given the seemingly swirling macro backdrop, that's going on right now is it a sign of confidence in the recovery or more clarity any color there.
Yeah, that's a good question.
Definitely a sign of a little bit more confidence in the recovery.
And.
Or just a view that we should be providing a little bit more.
And visibility on what we're thinking.
So that that's really.
The chief driver of the timing I think our view was also that we would revert to the type of guidance, we've been providing before so full year guidance.
And.
The other piece.
Is that the ranges on the guidance if you look back to.
Where the types of ranges, we provided back in mid year 2019.
They were much tighter so I think.
Embedded in our guidance is our view that there are.
Generally speaking a broader range of potential outcomes, which is why in the guidance, it's quite a bit much wider than it was.
At this time.
Very helpful. Thank you for all the color guys. That's all for me.
Thank you.
There are no additional questions waiting at this time, so I'd like to pass the conference over to Marcel to Das for closing remarks.
Thanks.
It's been a long day for everyone water people reporting today, we appreciate it.
Joining us for our call today and look forward to updating you again next quarter.
Okay.
This concludes today's conference call. Thank you all for your participation you may now disconnect your lines.
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