Q4 2022 Chatham Lodging Trust Earnings Call
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Greetings and welcome to the Chatham Lodging Trust fourth quarter 'twenty to 'twenty, two financial results conference call.
At this time participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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As a reminder, this conference call is being recorded.
It is now my pleasure to introduce your host Chris Daly from D. G public relations.
Chris you may begin.
Thank you Vic and good morning, everyone and welcome to the Chatham Lodging Trust fourth quarter 2022 results Conference call. Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our most recent Form 10-K and other SEC.
Filings.
All information in this call is as of February 22nd 2023, unless otherwise noted and the company undertakes no obligation to update any forward looking statement to conform the statement to actual results or changes in the companys expectations.
Can find copies of our SEC filings and earnings release, which contains reconciliations to non-GAAP financial measures referenced on this call on our website at Chatham Lodging Trust Dot com.
Now to provide you with some insight into Chatham is 2022 fourth quarters results allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer, Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer Officer, Excuse me, let me turn the session over to Jeff Jeff.
Thanks, Chris and I certainly appreciate everyone. Joining us this morning for our call before talking about fourth quarter, and 2023, generally I'm going to spend a few minutes highlighting some noteworthy accomplishments for our company last year.
We increased cash flow before capex, nearly fivefold from $12 million in 2000 $21 million to $58 million in 2022, we reinstated our common dividend for the first time since the start of the pandemic.
Last year, we had the highest absolute revpar of the select service rigs, we drove EBITDA margins higher by 31% or 900 basis points from 29% to 38%.
We opened the $70 million 170, Sweet home, two suites and Woodland Hills Warner Center, and we acquired the 111 room Hilton Garden Inn in Destin, Miramar Beach, Florida for $31 million.
Then we went ahead and sold four hotels with an average age of 27 years at a cap rate of 2% and 6% respectively. On 2021 and 19 excuse me 2019 NOI.
Drawn strong result, there complete.
Completed the refinancing of Chatham existing $250 million senior unsecured revolving credit facility with a new $250 million senior unsecured credit facility and a new $90 million unsecured term loan. So we improved our overall liquidity from 199 million.
Ian.
On January one 2000 $22 million to $376 million at the end of the year.
By doing all that we reduced our net debt by $82 million and we reduced our overall leverage ratio from 31% at the beginning of the year to 26% at year end.
Our net debt reduction is second best among all of the lodging Reits since the start of the pandemic.
And for the first time, we participated in the global real estate sustainability benchmark assessment.
Most people say grasp.
Achieving green star status, and achieving a rating 15% higher than our peers, we're very proud of that.
Shifting back to our fourth quarter performance Revpar remained strong in the quarter up 24% over the same quarter last year, driven by ADR growth of 20% and occupancy growth of 3%.
And relative to 2019 fourth quarter, Revpar was up 4% with ADR growing 7% and occupancy declining 9%.
November December February are always our seasonally slowest months of the year, given our strong reliance on business travel in certain of our key markets.
But February is definitely showing signs of improvement as we go through the middle of the back half of this month.
In business travel relative to the past 90 days forward demand trends are encouraging and our tech focused intern programs are planned to occur occur. According to the companies and the conversations that we're having in that regard.
As business travel continues its recovery, we will post outsized growth. So our full year revpar of $124 recovered to 92% of 2019 revpar of $136 and our macro view is that business travel including groups will continue.
<unk> gained traction in 2023 and leisure travel will remain strong, but some of the white hot leisure markets of the past couple of years, we'll give some revpar back as this transition occurs in 2023, we will derive the most benefit and changing demand trends as compared to many of our peers.
<unk>, who really have become more dependent on that leisure travel segment operationally our margins remain high and we should finish 2022 with the highest operating margins of all lodging Reits attribute to our platform, which has delivered outstanding results even at Revpar levels below 2019.
Our fourth quarter, adjusted EBITDA, and <unk> were up substantially and as a result, we saw a healthy increase in free cash flow to $10 million double our 'twenty, one fourth quarter hotel operating margins slipped approximately a 100 basis points in the quarter due primarily to some onetime items that either.
<unk> 2021 fourth quarter or hurt the 2022 fourth quarter. Additionally, labor related costs.
Clothing casual labor adversely impacted margins by approximately 80 basis points.
In the seasonally slower months.
Labor efficiency is difficult, especially when we can demand is higher than weekday demand of course, we're closely monitoring those staffing levels as we move through this year.
Like others in the industry, we're seeing cost pressures impact other areas of the P&L. So it's not just labor, namely utilities insurance and General Hotel supplies Lastly, I wanted to touch on our financial condition, which is extremely healthy as we sit here at our lowest leverage levels.
And over a decade in 2022 alone we reduced our net debt by over $80 million and reduced our leverage to 26%. We ended the year with approximately $380 million of liquidity, including a new credit facility and term loan as such we have the flexibility to acquire hotel.
<unk> addressed our refinance maturing debt over the next couple of years.
And we have 24 unencumbered assets that could serve as additional sources of liquidity.
During the 2023 first quarter, we've already paid off loans amounting to $73 million, including the high rated loan on our woodland Hills hotel as well as two maturing loans.
We only have three additional loans maturing in 2023 amounting to $77 million of those maturities will be funded with the remaining borrowings on our term loan and free cash flow.
Touching quickly on external growth the transaction market has been dormant, but it seems like it's starting to ease up a bit with the significant rise in interest rates and a bunch of maturing debt occurring throughout the industry. We believe there will be some opportunities to acquire hotels that fit into.
Our high quality portfolio in the back half of the year.
So to finish up.
With much during 2022, and we are well positioned to generate generate outsize growth, both internally and externally given the strength of our balance sheet with that I'd like to turn it over to Dennis for a little more color Dennis Thanks, Jeff.
Our portfolio performed significantly better than the industry with fourth quarter Revpar growth of 24% exceeding industry performance by approximately 50% again I think noteworthy as this is a relative indicator potential outperformance moving forward in 2023, if you look at our portfolio for the quarter, excluding Silicon Valley.
Our fourth quarter Revpar was up 3% versus 2019, an ADR growth of 12% offset by a decline in occupancy of 8%.
Good performance and what I think Jeff referred to as generally our seasonally slower period during.
During the fourth COVID-19 of our 37 comparable hotels generated revpar of greater than 2019 and for the year 16 of our 37 comparable hotels were greater than 2019 again, a bullet point with respect to upside in our portfolio as business travel recovers to 2019 levels weekday.
Occupancy in the fourth quarter was down approximately 11% versus 2019, which represented a decline from approximately 6% in the third quarter.
On the flip side weekday ADR was up versus 2019 each of the last seven months in 2022, which bodes well as that business traveler continues to recover in 'twenty three.
Weekend Revpar remains strong up approximately 9% in the quarter versus 2019 Silicon Valley, our largest market continues to grow meaningfully over the prior year with fourth quarter Revpar growth of 45%, but it's still down basically 32% versus 2019 year to date our 2022.
Silicon Valley Revpar for $126 is also still down 32% to 2019 Revpar of $185 occupancy is getting closer to 2019 levels, it's off 8% to 68% versus 74% in 2019. So.
Silicon Valley EBITDA was $17 million in 2022 still below 2019, EBITDA levels of $29 million or approximately 41%.
Fourth quarter air travel into both <unk> and San Jose airports remains well below 2019 levels of 22% and 37% respectively. Given its reliance on the international business traveler as well as a slower return to office Silicon Valley has been and will be.
On the road to recovery than most of the rest of our markets.
One thing to note is that certainly within the last couple of weeks, we have seen and I think she up to this briefly a continued increase in business international business travel coming into our hotels in Silicon Valley and.
In other key tech markets, Seattle, Revpar achieved 2022, revpar of $125, which represents 87% of 2019 Revpar.
At that hotel, our EBITDA in 2022 was $5 2 million, which is approximately 85% of 2019 hotel EBITDA, so that market relative to Silicon valley, performing a little bit better on the road to recovery.
Bucking the slow recovery in our Silicon Valley, and Seattle markets. Austin is performing above 2019 levels are resident in Austin was Revpar was up 8% versus 2019, the TPS was not open yet.
And our two hotels at the domain should have a strong 2023.
Our five highest hotels with absolute revpar in the quarter or <unk>.
Our residence Inn, Fort Lauderdale at $184 or HDI Marina del Rey at $173.
And then our Hampton Inn in Portland at $172 Lastly, our fourth and fifth ranked hotels, where the Hilton Garden Inn Fort Smith, and the residents in White Plains.
Our Homewood suites Maitland.
<unk> portfolio occupancy at 89% in the quarter, we had eight other hotels achieve occupancy over 80%.
Our top five hotels with respect to eight with respect to average daily rate again led by our Fort Lauderdale residence Inn at $230, then our Hampton Inn in Portland, with an ADR of 226, followed by Portsmith Mountain Marina del Rey in our Silicon Valley residence Inn Mountain view all above $200.
$10 29 of our 37 hotels achieved fourth quarter ADR higher than 2019.
We continue to see an average length of stay approximately 15% to 20% longer than our historical levels, which translates to incremental GOP because theres less required housekeeping, then I think you've heard from others that.
Certain of the brands have started to rollout new operating procedures with respect to required housekeeping services for the quarter total hotel revenue of $70 million was up 23% compared to last year's revenue of $57 million and we were able to generate incremental GOP flow through.
Almost $5 million for flow through of 35%.
Our employee head count remains down approximately 25% to compared compared to pre pandemic levels.
And admittedly, we are still probably a bit understaffed there.
Since 2019, our hourly wages have increased approximately 25% so.
<unk> cost increases there in the quarter casual labor was up.
Approximately a $5 million or 50% over last year and reduced margins by approximately 15 points.
On a per occupied room basis at our comparable hotels across where approximately up 4% relative to 2019.
Our top five producers of gross operating profit in the quarter, where our Gaslamp residence Inn, which was also the highest producing GOP hotel in the first three quarters of the year, followed by our Silicon Valley to residents in and then our Hilton Garden Inn Fort Smith courtyard, Dallas downtown and then our Springhill suites Savannah.
With respect to capital expenditures, we expense approximately $21 million in 2022, and as we look ahead to 'twenty three we expect to spend approximately $36 million.
Which includes $22 million of renovation costs at five hotels.
With that I'll turn it over to Jeremy.
Thanks, Dennis Good morning, everyone. <unk> Q4, 2022, Revpar of $117 represents a 23, 9% increase for Q4 2021 revpar of $95 and was down three 7% from our Q4 2019 revpar of $122 Q4 and Q.
One are typically the lowest revpar quarters for our portfolio given the drop off in business travel around the holidays and the start of the year and lower leverage levels of leisure travel given the concentration of our leisure focused properties in markets, where summer is the peak season.
In Q4, we continued to see business travel below 2019 levels and leisure travel above 2019 levels. Although we believe business travel will continue to recover and then at some point leisure travel could plateau or begin to decline.
As we stated in our earnings release January 2023, Revpar was $92 and Revpar through the first few weeks of February was $113. So absolute revpar levels are low for the first few weeks of the year, our portfolio of generating strong revpar growth relative to 2022 and business is starting to pick up a path.
Early January as is typically the case for us.
We expect the seasonal recovery to continue throughout the balance of Q1 and into Q2 just to provide some color on how the seasonal rebound has played out in the past in 2019 March Revpar was approximately 15% higher than February 2019 Revpar.
Our Q4 2022 hotel EBITDA was $23 3 million adjusted EBITDA was $20 4 million adjusted <unk> was <unk> 20 per share and cash flow before capital was $2 2 million or SAR.
Is $10 million and while we are starting to see cost increase due to a reinstatement of certain brand standard wage increases and increase in staffing levels and increased utilities and insurance costs, we were able to generate a solid GOP margin of 39, 9% and hotel EBITDA margin of 33, 3% in Q4.
Our Q4 GOP margin of 39, 9% was down 120 basis points from our Q4 2020.
GOP margin in our Q4 hotel EBITDA margin of 33, 3% was 250 basis points higher than our Q4 2021 hotel EBITDA margin, primarily due to property tax refunds of approximately $1 million.
For the full year in 2022, we benefited from approximately $2 million of property tax refunds and also benefited from assessment reductions related to pandemic related performance declines.
Given the cost pressures the lodging sector is facing as we saw in Q4 with GOP margins down 120 basis points. We believe margins are likely to decline slightly in 2023, if that trend continues but we are proactively taking measures to mitigate cost increases where possible and the ultimate impact on margins will depend on Rev.
Par growth.
Over the last several years Chatham has taken a number of steps to strengthen its balance sheet and as a result, we now have the lowest leverage in most liquidity we've ever had in 2020 to Chatham reduce its net debt by $82 million or 16%.
Since March 31, 2020, we have reduced our net debt by $331 million or 43% and.
In Q4, we replaced our $250 million revolving credit facility that was scheduled to mature in 2023 with a $350 million credit facility that consists of a $260 million revolving line of credit and a $90 million delayed draw term loan <unk>.
Including all extension options are the new revolver and term loan have a final maturity of October 2027.
In early 2023, we used $75 million of term loan availability three paid two maturing mortgage loans and the construction loan on our home to Warner Center.
We intend to use the remaining availability under our term loan to repay a $16 million mortgage that matures in may 2023, and available cash to repay $20 million mortgage that matures in July 2023.
Over the course of 2023, we will continue to closely monitor the mark.
To consider opportunities to refinance a $40 million mortgage that matures in December 2023, and potentially address a portion of our 2020 foreseeing best maturities.
Our undrawn $260 million revolving credit facility provides a valuable source of liquidity that increases our flexibility to address our remaining debt maturities with a reasonable leverage solid liquidity strong operating performance sizable portfolio of unencumbered hotels and meaningful free cash flow, we are well positioned to refinance our remaining debt.
Charities when needed.
As a reminder, my reminder, our reported 2022 Revpar figure does not include results for the home to Warner Center that has been in operation for less than a year and our reported 2023 Revpar figures will include Warner centers results. Starting on January 24, 2023, the one year anniversary of its open.
<unk> date two.
<unk> 2022, Revpar, including Warner Center with $90 in Q1.
<unk> hundred $38 in Q2, $151 in Q3 $118 in Q4 $124 for the full year.
This concludes my report.
Operator.
Quick question.
Thank you.
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One moment, please while we poll for questions.
Take our first question from the line of Anthony Powell with Barclays. Please go ahead.
Hi, good morning.
I guess a question on margin. So I think Jeremy you said that margins could continue to decline.
This year, if those trends continue I just wanted to drill down on that.
27% Revpar growth in the fourth quarter, but GOP margins were down.
I guess it should be up in the first quarter, given the easy comps, but how should I think about the revpar growth needed to maintain margins throughout the year and I know there could be.
One time issues staffing up and whatnot. So just more color there would be great.
Look I think our plan is not to give guidance at this point I think you would need.
Revpar growth in the.
In the double digits for the year to get to flat.
Margins, though.
Okay is that mainly just incremental wage growth insurance costs taxes, maybe what's driving that kind of requirement on them.
The GOP side. It doesn't include taxes, although property tax.
Likely to go up meaningfully and will impact EBITDA margins, but on the GOP margin side.
Both wage increases given the inflation, we're seeing and also kind of a recovery of staffing levels again in the pandemic, especially through the first three quarters of last year staffing levels were very low with the hotels a member can continuing to see large increases in other costs as well things like utilities are up.
Based on kind of our internal estimates up about 13% next year or so and then on the property insurance side I think those are.
Are expected to increase over 20% as well so yes, there is a lot of.
Of cost pressures.
Yeah. Anthony this is Dennis I mean, I think that that add to what Jeremy was saying I mean, obviously I think you've heard from other Reits as well.
We're all kind of in a process, where revpar growth year over year is pretty strong in the first quarter given the.
<unk> comparison, but I think as <unk> heard from most people.
Typically you would see some pretty good expansion in a plus 20% revpar.
Scenario that I think we saw in the fourth quarter and in fact in our operating margins as we indicated in our release, we're down approximately 100 basis points or so so I think it's certainly a challenging environment from a expense standpoint at the moment.
Okay, and maybe on Silicon Valley, and I think you talked about how the training business should be back of this year.
What about other business.
Product launches things like that what's your conversation like.
With the Big Tech firms in Silicon Valley in terms of just overall business volumes.
In 2023, Yes. This is Jeff Hi, Anthony.
I will tell you that.
Our team.
Certainly were not surprised but not overly encouraged by November and December .
The lack of activity generally in Silicon Valley.
And that continued into January for the other kind of business travel and then all of a sudden in February .
Things have really started to perk up.
And overall bookings in the market.
And the two hotels, specifically in Sunnyvale, which are the ones that really drive our results as you know.
Really started to look way better and we've seen international travel, particularly for example, with Samsung from Korea, and otherwise it was non existent through.
Through the entire pandemic all of a sudden booking substantial rooms.
Starting later in this month, so we they and we feel way better and this is some real time.
Week by week information I'm, giving you relative to that the interns.
And one reason why we're not giving guidance at this point in the year as we want to see that.
Are those contracts actually signed.
Conversations are being had.
Round, what the volume is going to be there.
So.
I think over the next 30 to 45 days those conversations should be finalized as well and we'll feel a lot better.
About how 25% of our portfolio roughly based on old numbers should perform for the rest of the year, but it is significant and team feels much better about the level of business activity there.
Got it so I guess you should you should know by the first quarter earnings call kind of the plan for the interim business is that is that fair.
Without a doubt that's the plan.
Got it thank you.
Yeah.
Thank you we'll take our next question from the line of Ari Klein with BMO capital markets. Please go ahead.
Thanks, and good morning, maybe just following up on Silicon Valley. It sounds like it's moving in the right direction, but obviously still meaningfully lack lagging from a portfolio construction standpoint would you prefer to have less concentration to the market and could you maybe look to sell something there knowing that prices are probably not ideal but.
There is an opportunity to reposition capital.
Market.
Well this is Jeff Hi, Ari look.
I think there's two considerations are way more than two but short term and long term.
Long term, we've had a lot of strategic conversations with our board and otherwise just generally about how California feels.
And we're kind of more concerned about legislative initiatives.
Things that are occurring on that front that diminished value, perhaps over the longer haul. So I think repositioning capital as youre, describing and cycling it into some markets that have a little better long term view and growth frankly is a good idea.
In the near term.
These hotels have great upside and someone's going to really take advantage of US frankly, if we're going to sell these hotels right now.
Of course, there is multifamily opportunity and.
Actually I'm going to take a visit out there and speak to some of these.
These owning official relative to how that may pan out.
In that regard because.
Very big numbers that are being paid as you probably know on a per key basis somewhere around 500000, a door and more.
For apartments in that market. So it will take a look at that too.
We've always said these hotels are very well positioned in the market and with the visit some visibility on this foreign travel coming back which has always been a big piece of our business that's been nonexistent.
Together with the interim business.
I think we're sort of going to hold them for the very near term without a doubt.
Sorry for the long data.
No I appreciate it and then just maybe on flexibility overall with leverage.
Improving.
And the balance sheet in good shape.
For 2023, do you expect to be a net seller net acquirer net acquirer how are you thinking about the balance there.
We really do believe after just talking to our friendly owners and developers.
We've kind of established yard known for 20 years 30 years in some cases that there will be some deal activity in the back half of the year and I also think that our friends at the various p/e firms that have frankly been buying a lot of things during the pandemic.
Might not be as aggressive as they have been given the interest rate scenario. So.
On a relative basis, I think that bodes better for hotel Reits.
So, yes, I think we're net acquirers.
Okay, and just lastly, just to follow up on the interim program have they given you a sense of just what the volume could look like maybe relative to this past year.
This is Dennis.
We're still in negotiations with that.
Obviously, not the only hotels that get this in term business. So as we've kind of work and I think Jeff talked about the timeline over the next basically 30 days.
We are negotiating with them on volume and rate.
So still kind of up in the air at the moment. The good news is it appears as the programs are on both in Austin.
And each of Austin in Silicon Valley and Bellevue.
<unk>.
I think all of the tech companies, we've referred to in the past that we've had.
Austin, our hotels, so it's encouraging at the moment, but still negotiating and I think as we've talked about we'll know in the next 30 to 45 days exactly whats under agreement and what our volume is yet so as soon as we're able to talk about it we will but we're.
We're encouraged at the moment.
Got it thanks for all the color.
Thank you we'll take next question from the line of Tyler <unk> with Oppenheimer. Please go ahead.
Oh, Hey, good morning, Thank you just.
Follow up again on the cost side of things when you talk about margin could decline year over year of this year can you give more detail on what's in your budget in terms of year over year increases for wages year over year increases for insurance and then utilities as well.
Yes, I mean, I think Dennis I'll chime in and Jeremy can chime in as well I think for just a general labor assumption, it's essentially hey, we're averaging kind of 5% a year since 2019, we're expecting another 5% or so in 2023, and I think Jeremy already mentioned with utilities being up.
13%, 14% and property insurance up over 20% year over year. So I think the biggest item from a year over year perspective is property taxes, which Jeremy alluded to in his prepared comments.
We benefited to the tune of I think around $2 million in 2022.
Debt.
From refunds. So I think those are your big ticket items, Yes, I think the other thing to point out on the on the labor side, it's not just the 5% wage inflation. We're assuming here. It's also the fact that brands are requiring us to clean rooms more often now so there is an increase in staffing levels as well so while wages are going up 5%.
Dan.
Housekeeping cost per occupied room or going up more like 12%, 13% for the year.
Okay, Okay, so given that commentary.
Sorry, Tyler I think as you look kind of to 2023, I mean similar to what you've heard from other companies. Obviously first first quarter Revpar growth is going to be really strong with second to fourth quarter moderating kind of.
Two obviously much lower relative to first quarter.
And I think as Jeff talked about we should given kind of our reliance on business travel.
Produce.
Some decent revpar growth relative to the industry.
Even in those second third and fourth quarters.
But I think as we saw in the fourth quarter and.
In terms of margins certainly theres a lot of a lot of cost pressures in there. So I think just to keep that in mind.
Yes.
And how are you thinking about the interplay between occupancy filling that back and re.
Just perhaps given the difficult environment out there in terms of operating costs going up I mean.
More sense to lean a little bit more into the right side of things can potential flow through there or.
Maybe if you want to build back the occupancy a little bit a little bit more to get back to where you were in 2019.
Yeah, I mean, it's market by market, obviously Tyler.
I think in my prepared remarks talking about how many hotels that had ADR up relative to 2019. So certainly it is.
It always has been a supply and demand issue. So in markets like Silicon Valley and in Washington D. C. It's more hey, we still haven't recovered enough as a market from an occupancy perspective to really drive rates.
But end markets, such as Austin, Texas and the northeast.
Los Angeles, I think ADR growth is paramount. So in general we believe our ADR growth is going to be stronger than our occupancy growth and 2023.
Okay, and then last one for me I'm interested in the trend that youre seeing so far in 2023, I understand there's seasonality each year out of a ton of business travel, but I'm really curious on the leisure side of things markets like Boston and Youre down in Florida overall.
What are you what are you seeing.
Any indication that things are starting to soften a little bit.
Well I mean I think it's.
I hate to say it but it's market by market, whereas our Fort Lauderdale residence Inn, even relative to 2019 and last year is still doing well <unk>, a little bit of a laggard compared to <unk> 19 and <unk>.
Last year, but if you look to the northeast Portland, and Portsmouth outperforming still relative to last year and in 2019, so even in the winter, yes, even in the winter so.
I think of.
What we would call more of our leisure markets Destin is probably the laggard of the five or six hotels again savanna high leisure really still doing well relative to last year and 19. So.
For the most part leisure is still carrying the carrying the weight and I think as you've seen that in a lot of the peer companies reporting as well.
Okay. That's all for me thank you.
Thanks Tyler.
Thank you for taking the next question from the lineup Bryan Maher with B Riley Securities. Please go ahead.
Good. Thanks, most of my questions have been asked and answered, but maybe you could yes, given the backdrop.
What we're hearing for second half opportunities when people go to refi.
As you think about your market and your product.
Deep of an opportunity do you think that can be my suspicion is it's probably not going to be as relatively deep as maybe gateway markets like New York and others.
But how are you thinking about the opportunity pool. There are as you approach the back half.
Yeah.
Well I think the good news for us.
We've only got 39 hotels.
So we acquire one or two hotels, it really moves the needle.
Really really pushes our <unk> substantially.
So it's hard to predict.
Where and how much volume there will really be but I don't want to get overly excited.
I think youre right.
There'll be selected opportunities. We're picky as you know generally very picky about the kind of assets that we want to own and we want to continue to increase our focus on the extended stay segment, obviously at 60%, which still trying to push that a little bit higher.
As an overall mix so that even further narrows the field just a little bit because we're primarily hunting for residents and homewood suites talent place suites and home to suites. So.
So in that in that way.
We'll continue I think to put up the margins in the results.
Seed for the most part others.
So we'll have to see how it plays out.
Okay, Thanks, and Thats, either dead horse on the leisure component, but it was pretty profound on one of my covered companies. This week.
When you think about your leisure ish properties in aggregate and Revpar. This year do you think that that ends up being kind of flattish for the year or maybe down low single digits.
Yes.
I'm not looking for down really in those hotels and.
Actually I think will be up.
Across the board are all together when you look at those five hotels or six or so that really comprise what we might or do call leisure for our portfolio I think it will be up I don't think theres any huge pullback happening.
Particularly in the kind of hotels that we've got there.
They are not ultra luxury resort hotels.
But overall I think thank you Ken.
Pretty low single digit growth for those were.
Much higher growth for things they are still recovering like silicon valley and the rest of the BT focus so that's right.
Great I appreciate the feedback.
Yeah.
Yeah.
Thank you.
Yes.
Ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call Black.
Floor back over to Jeff Fisher for closing comments over to you.
No Sir.
Thank you and we really appreciate everybody being on the call. This morning.
Look forward to providing some more color and continued good results in better news as we move forward through the rest of the year for our next quarter conference call. Thank you.
Thank you.
Gentlemen. This concludes today's teleconference. You may disconnect your lines at this time.
You for your participation.
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