Q4 2023 DiamondRock Hospitality Co Earnings Call
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Operator: And let our love, yeah, find you a world we can't to know about Like a bridge we'll follow us wherever we go, wherever we go Like a bridge we'll follow us until we meet again Oh yeah, uh-huh, uh-huh Just let it in and let it out, oh yeah, find you a world we can't to know about Like a bridge we'll follow us wherever we go, wherever we go Like a bridge we'll follow us until we meet again Heartbeat that joyous sound whenever we meet, whenever we meet Heartbeat that joyous sound whenever we meet Good day and thank you for standing by. Welcome to the DiamondRock Hospitality 4th quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
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Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.
Good day and thank you were spending by welcome to the Diamond Rock Hospitality fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session that you would need to press star one on your telephone.
Operator: To withdraw your question, please press star 1-1. Please be advised that today's conference is being recorded. I want to hand the conference over to your first speaker today, Briony Quinn, Chief Accounting Officer and Treasurer. Please go ahead. Good morning, everyone.
You didn't hear an automated message advising your hand is race to withdraw your question. Please press star one on one.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Briony Quinn Chief Accounting Officer and Treasurer. Please go ahead.
Briony R. Quinn: Welcome to DiamondRock's fourth quarter 2023 earnings call and webcast. Before we get started, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities law. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those expressed in our comments. In addition, on today's call, we'll discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. With that said, I'm pleased to turn the call over to Mark Brugger, our President and Chief Executive Officer.
Good morning, everyone welcome to Diamond rocks fourth quarter 2023 earnings call and webcast.
Before we get started let me remind everyone that many of our comments today are not historical fact and are considered to be forward looking statements under federal securities laws.
As described in our filings with the SEC.
Statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those expressed in our comments today.
In addition on today's call, we will discuss certain non-GAAP financial information.
A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release.
With that I'm pleased to turn the call over to Mark Brugger, our President and Chief Executive Officer.
Mark W. Brugger: Thank you for joining us today for our Arrange Call and our Outlook for 2024. We are pleased that we will be reintroducing guidance on this call. Let's jump in.
Thank you for joining us today for our earnings call and our outlook for 2024.
We are pleased that we will be reintroducing guidance on this call.
Mark W. Brugger: 2023 was another successful year for DiamondRock across several fronts. The company generated total shareholder returns of just over 16%, as our portfolio of high-quality hotels and resorts achieved total revenue of $1.1 billion, a new record for DiamondRock, as a testament to the success of our investment strategy. Total comparable revenue was 11.3% higher than 2019, among the best of any full-service lodging retail, and the full year hotel adjustment EBITDA was $19 million higher than 2008. Solid results from the DiamondRock portfolio led to full year 2023 comparable revenues increasing four percent, adjusted EBITDA of $271.7 million, and adjusted FFO per share of $0.93 in the fourth quarter. Adjusted EBITDA was $57.1 million, and adjusted FFO per share was $0.18.
Let's jump in.
2023 was another successful year for diamondback across several fronts.
Company generated total shareholder return of just over 16% as our portfolio of high quality hotels and resorts.
<unk> total revenue of $1 1 billion a.
A new record for dime Iraq.
As a testament to the success of our investment strategy.
Total comparable revenue was 11, 3% higher than 2019 among.
Among the best of any full service lodging REIT.
And full year hotel, adjusted EBITDA was $19 million higher than 2019.
Solid results from the direct portfolio led to full year 2023 comparable revenues increasing 4%.
Adjusted EBITDA of 271 $7 million and adjusted <unk> per share of 93.
In the fourth quarter.
Adjusted EBITDA was $57 1 billion and adjusted <unk> per share was <unk> 18.
Mark W. Brugger: All these results are in line or ahead of management expectations provided in our last earnings call in November, where we said we were comfortable with consensus estimates. I'll briefly provide some highlights from the fourth quarter so we can save more time to discuss our outlook and allow time for your questions. In the fourth quarter, there were a few notable trends.
All these results are in line or ahead of management's expectations provided in our last earnings call in November where we said we were comfortable with consensus estimates.
I'll briefly provide some highlights from the fourth quarter. So we can save more time to discuss our outlook and.
Mark W. Brugger: First, resorts, which have been the biggest winners in travel since the pandemic, had some pullback earlier in 2023 as they settled into the new normal. However, resorts found some firmer footing in the fourth quarter, and we believe resorts still have the best long-term setup. Let's look at some encouraging resort trips.
And allow time for your questions.
In the fourth quarter, there were a few notable trends.
First resorts, which have been the biggest winners and traveled since pandemic had some pullback earlier in 2023 as they settled into the new normal.
Mark W. Brugger: Quarterly RepR at our resorts dropped at 87% of 2022 peak RepR in the second quarter, improved to 92% in the third quarter, and improved even more to finish the fourth quarter at 96% of 2022 comparable peaks. On a revenue basis, the sequential performance was even better. The resorts progressed from 92% of 2022 in the second quarter to finish the fourth quarter at 98%, and are down just 2% to 2022 peak revenue The Florida Keys turned a corner, with our three resorts collectively delivering positive REV PAR and revenue growth of 7% and 8%, respectively, in the fourth quarter.
Resorts found some firmer footing in the fourth quarter.
And we believe resorts still have the best long term setup.
Let's look at some encouraging resort trends.
Quarterly Revpar at our resorts trough at 87% of 2022 peak Revpar in the second quarter.
Improved to 92% in the third quarter.
An improved even more to finish the fourth quarter at 96% of 2022 comparable peak.
On a revenue basis, the sequential performance was even better.
The resorts progress from 92% of 2022 in the second quarter to finish the fourth quarter at 98%.
Mark W. Brugger: Elsewhere in South Florida, the Westin-Fort Lauderdale generated 5.8% comparable rep park growth. It is worth noting that our Vale Luxury Collection Resort experienced some headwinds from late snowfall in the fourth quarter, but Repar turned positive in June. Overall, we are relatively pleased with the resort portfolio in 2023. But we are most proud of the efforts of our asset management, working closely with our operators to maintain tight cost controls to keep full year total expense growth at our resort at just 1.7%. That's fantastic, as we look to 2024. We expect our resort portfolio will improve as the year progresses, with various resorts finding their footing in early 2024 so that the overall resort portfolio can achieve a more uniform return to growth.
Were down just 2% to the 2022 peak revenue.
The Florida keys turned the quarter with our three resorts collectively delivering positive revpar and revenue growth of 7% and 8% respectively in the fourth quarter.
Elsewhere in South, Florida, the Westin Fort Lauderdale generated five 8% comparable revpar growth.
It is worth noting that our avail luxury collection resort experience some headwinds from late snowfall in the fourth quarter, but revpar turned positive in January.
Overall, we were relatively pleased with our resort portfolio in 2023, but we are most proud of the efforts of our asset managers working closely with our operators and maintaining tight cost controls.
Mark W. Brugger: Resorts should benefit as competitive pressures from luxury revenge travel to Europe lessen this year. Warnover, South Florida, and the Florida Keys look poised to deliver growth in 2024 after finding their new normal in 2023, while South Florida was an early and robust beneficiary of the pandemic leisure travel trends, and Pete in late 2022, while other resort markets did not peak until mid-23.
<unk> full year total expense growth at our resorts to just one 7%.
That's a fantastic result.
As we look to 2024.
We expect our resort portfolio will improve as the year progresses with various resorts finding their footing in early 2024, so that the overall resort portfolio can achieve a more uniform returned to growth.
Mark W. Brugger: These other resort markets are now finding their new normal several months later than we saw in Florida. For example, the Wine Country and Charleston markets saw Red Park grow at peak months after South Florida's. So it is understandable that comparisons will not likely turn positive until we lap those initial declines later this year. Specific to DiamondRock, I did want to mention that there's a little oddity around the room numbers at the Henderson Resort, which took into its room inventory a number of adjacent condo units that were recently delivered by a master developer. This is good for our long-term profits, but the optics are a little noisy as we get those units into our room count during the seasonally slow period.
Resorts should benefit as competitive pressures from luxury revenge traveled to Europe less than this year.
Moreover, South Florida in the Florida Keys look poised to deliver growth in 2024 after finding its new normal in 2023.
Our south Florida wasn't early and robust beneficiary of pandemic leisure travel trends and peaked in late 2022.
Other resort markets did not peak until mid 'twenty three.
These other resort markets are now finding their new normal several months later than we saw in Florida.
Mark W. Brugger: So overall, for resources, we are positive about the outlook as we expect near-term headwinds on comparisons will reverse as the year progresses and consumers continue to prioritize leisure travel. Let's turn to our urban hotels. We are fortunate to have an urban footprint concentrated in better-performing cities. We have largely avoided impaired markets, such as San Francisco, Portland, and Downtown LA.
For example, the wine country and Charleston markets saw Revpar growth peak months after South Florida is peak.
So it is understandable that comparisons will not likely turn positive until we lap those initial declines later this year.
Specific to <unk> I did want to mention that Theres little R&D around the rooms number at the Henderson resort, which took into its room inventory a number of adjacent condo units that were recently delivered by a master developer.
Mark W. Brugger: Instead, we have focused our urban exposure more on markets like Boston, New York City, Chicago, Salt Lake City, Dallas-Fort Worth, and San Diego in the fourth quarter. Comparable total revenue at our urban hotels climbed nearly 2%, bringing the top line revenue to over 102% of 2019. That's a stat we think compares very favorably among our peers.
This is good for our long term profits, but the optics are low noisy as we get those units into our room count during the seasonally slow period.
So overall for our resorts.
We are positive about the outlook as we expect near term headwinds on comparisons will reverse as the year progresses and consumers continue to prioritize leisure travel.
Okay.
Let's turn to our urban hotels.
Mark W. Brugger: Looking a little deeper, the Dageny-Boston, our biggest repositioning in 2023, was a key performer in the quarter, generating top-line revenue $870,000 above our operator budget, with 233 basis points of stronger EBITDA margin growth. In December, the Dagny's RepR index to the competitive set increased 15 points to a 110% index premium, surpassing our penetration last year as a whole. And we'll discuss this more when we move to our 2024 outlook. There were other stars in the, such as our Kempton Phoenix increasing total RABPAR by 34%, Marietta Salt Lake City increasing total road power by 9.8%, and our Westin San Diego increasing total REPR by 7.2%, of course. Group success bolstered overall urban results.
We are fortunate to have an urban footprint concentrated and better performing cities.
We have largely avoided impaired markets like San Francisco, Portland, and downtown La.
Instead, we have focused our urban exposure more on markets like Boston, New York City, Chicago, Salt Lake City, Dallas, Fort Worth and San Diego.
In the fourth quarter.
<unk> total revenue at our urban hotels climbed nearly 2%.
Brian the topline revenue to over 102% of 2019.
That's the stat, we think compares very favorably among our peers.
Looking a little deeper the Dag me Boston.
Our biggest repositioning in 2023.
Was a key performer in the quarter generating topline revenue $870000 above our operator budget.
Mark W. Brugger: DiamondRock's group room revenue for 2023 surpassed 2019 by more than 3%. We had positive contributions from a number of our hotels. The Westin Fort Lauderdale was up 23%. The Westin Boston was up 2%.
With 233 basis points of stronger EBITDA margin growth.
In December the <unk> Revpar index to the competitive set increased 15 points to a 110% index premium.
Mark W. Brugger: The West End City Center DC was up 18%, and Hilton Burlington was up a whopping 70% on a small basis over the course of the year. We saw group momentum within the portfolio continue to build, and Q2, group room revenue, in Q3, it was up 3.8%, and a Q4. It was up nearly seven, compared to the prior year. 2023 Group Room Revenues were better by 13% on nearly 4% higher rates. Worth in room group, room volume, and Group Room Rate also improved sequentially throughout 2023. As we look out to 2024, DiamondRock's group story is a major reason for our optimism and gives us the foundation to reintroduce guidance today.
Surpassing our penetration last year as the Hilton.
The initial results from the data we have exceeded our expectations I will discuss this more when we move to our 2020 for outlook.
There were other stars in the fourth quarter.
Such as our Kimpton Phoenix, increasing total revpar, 34%.
Our Marriott Salt Lake City, increasing total revpar by nine 8%.
And our Westin San Diego, increasing total revpar by seven 2%.
Of course.
Group's success bolstered overall urban results.
<unk> group room revenue for 2023 surpassed 2019 by more than 3%.
We had positive contributions from a number of our hotels.
Mark W. Brugger: Our group revenue pace is up 21% versus this time last year. Our urban portfolio is particularly well set up for 2024, with a very favorable geographic footprint that leverages some of the best group markets, a key advantage for DiamondRock. Markets like Boston, Chicago, Washington, D.C., San Diego, New Orleans, Denver, and Fort Lauderdale are all expected to have stronger citywide calendars in 2024 than they did last year.
So western Port Lauderdale was up 23% the west of Boston was up 2%.
Westin City Center DC was up 18%.
And the Hilton Burlington was up a whopping, 70% on a small base.
Over the course of the year we.
We saw group momentum within the portfolio continued to build.
In Q2 room was flat to 2019 and Q3 it was up three 8% in.
Mark W. Brugger: And Phoenix and Fort Worth are also within striking distance to see gains. We expect our urban hotel portfolio will deliver slightly stronger growth in the second half of the year than in the first, because of the Citywide calendars and on the books event. The main driver behind this timing is a significant shift in the convention calendar in Chicago and, to a lesser extent, Washington, D.C.
And in Q4.
It was up nearly 7%.
Compared to the prior year two.
2023 group room revenues were better by 13% or nearly 4% higher rates.
Mark W. Brugger: In Chicago, the citywide demand was fairly bunched up in 2023, with peak activity in Q2. In 2024, the Citywide Room Nights are steady after Q1. This means the Q2 citywide room nights in Chicago are lower than last year, but that the Q3 and Q4 activity is much stronger, almost two times stronger. In Washington, D.C., the group room nights are up each quarter across the year.
Growth in room group room volumes.
And group room rates also improved sequentially throughout 2023.
As we look out to 2024.
<unk> Group story is a major reason for our optimism and gives us the foundation to reintroduce guidance today.
Our group revenue pace is up 21% versus this time last year.
Mark W. Brugger: But most significantly, in the second half of, up over 100% in Q3 and up 36% in Q4. Before turning the call over to Jeff to get into more details on the financials and a balance sheet update, let me provide you with our, We are pleased to reintroduce based on current trends. We believe that the lodging industry is likely to experience red part growth in the range of 2 to 4 percent. With that backdrop, we expect DiamondRock to have similar Red Park growth.
Our urban portfolio is particularly well setup for 2024 with a very favorable geographic footprint leverage some of the best group markets. This year, a key advantage for <unk>.
Markets like Boston, Chicago, Washington, DC, San Diego, New Orleans, Denver, and Fort Lauderdale are all expected to have stronger citywide calendars in 2024 than they did last year.
Mark W. Brugger: But with the advantage of another 50 to 75 basis points of higher total revenue growth as our focus on outside the room spend initiatives bears fruit. Although January RepR was up 5.4% for our entire portfolio, we expect the first quarter to be lumpy and that the strength of the portfolio's results will be weighted towards the back half of the year because of the layout of the city-wide convention calendars in our markets and the Increasingly Beneficial Comparison for our resorts, on the expense side. We have been hard at work managing expenses at our property. On the positive side, we believe some of the difficult culprits will be much easier to catch in 2024, as hotels are fully staffed to their new but more efficient levels. Giant property insurance increases are largely behind us. Real estate tax increases will greatly moderate this year, and Cost Pressures will lessen from improved supply chains and lower inflationary pressure.
In Phoenix and Fort worth are also within striking distance to see gains.
We expect our urban hotel portfolio will deliver slightly stronger revpar growth in the second half of the year than in the first.
Because of the citywide calendars and on the books of.
The main driver behind this timing is a significant shift in the convention calendar in Chicago.
And to a lesser extent, Washington DC.
In Chicago citywide demand was fairly bunched up in 2023 with peak activity in Q2.
In 2024, the citywide room nights are steady after Q1 in Chicago.
This means the Q2 citywide room nights in Chicago are lower than last year.
But that the Q3 and Q4 activity is much stronger.
Two times stronger.
In Washington DC.
The group room nights are up each quarter across the year.
Jeff: However, wages and benefits, the largest cost category, are likely to increase mid-single digits. And while other cost categories are moderating, some are still likely to increase above inflation. Accordingly, if DiamondRock's portfolio generates rapid growth in the middle of the 2-4% range, we expect the company to generate adjusted EBITDA of approximately $275 million and adjusted FFO per share of $95 million. I turn it over to you, Jeff
But most significantly in the second half of the year.
Up over 100% in Q3 and up 36% in Q4.
Before turning the call over to Jeff to get into more details on the financials and a balance sheet update.
Let me provide you with our outlook.
We are pleased to reintroduce guidance.
Based on current trends, we believe that the lodging industry is likely to experience revpar growth in the range of 2% to 4%.
Jeff: Thanks, Mark. Recall that in our third quarter earnings commentary and follow-up, we felt RevPAR would be in a range of flat to down 100 basis points. And we were comfortable with the then full-year consensus estimates of $270 million of adjusted EBITDA and $0.93 per share of funds for my operation. Operating and financial results were in line with or slightly ahead of our expectations. In the quarter, comparable REVPAR contracted 60 basis points from the prior period, and total REVPAR increased 30 basis points, both in line with our expectations. Moreover, full year adjusted EBITDA was $272 million, and FFO was $0.93 per share.
With that backdrop, we expect <unk> to have similar revpar growth, but with the advantage of another 50 to 75 basis points of higher total revenue growth as our focus on outside the room spend initiatives bear fruit.
Although January Revpar was up five 4% for our entire portfolio, we expect the first quarter to be lumpy and that the strength of the portfolio's results will be weighted towards the back half of the year because of the layout of the citywide convention calendars in our markets and increasingly beneficial comparison for our resorts.
On the expense side.
We have been hard at work managing expenses at our properties.
On the positive side, we believe some of the difficult culprits will be much easier in 2024 as hotels are fully staffed to their new the more efficient levels.
Jeff: The 30 basis points of total RevPAR growth in the quarter stems from a 2.4% decline in our resorts portfolio and 1.8% growth in our urban portfolio. It is important to highlight the steady improvement we saw in our resorts. Comparable total revenues at the resorts declined 8% in the second quarter of 2023, 4.6% in the third quarter, and just 2% in the fourth quarter.
Giant property insurance increases are largely behind us.
Real estate tax increases greatly moderate this year.
And cost pressures will lessen from improved supply chains and lower inflationary pressures.
However, wages and benefits our largest cost categories are likely to increase mid single digits.
And while other cost categories are moderating some are still likely to increase above inflation.
Jeff: We are optimistic we can continue this improving trend and pivot to growth in 2024. Moving on to profits, Comparable Gross Operating Profit, or GOP, was $94 million, or a 36% margin on $261 million of comparable total revenue. This means our asset managers were able to keep same store controllable operating expenses to just 3% growth despite 110 basis points of higher occupancy from the prior period. In fact, the growth in controllable operating expenses over the past three quarters has averaged just 3% despite a 150 basis point average rise in occupancy. Hotel-adjusted EBITDA was $65 million with a 24.7% margin, and corporate-adjusted EBITDA was a little over $57 million. Hotel adjusted EBITDA margins were 500 basis points lower than fourth quarter 2022.
Accordingly, <unk> portfolio generates revpar growth in the middle of the 2% to 4% range.
We would expect the company to generate adjusted EBITDA of approximately $275 million.
And adjusted <unk> per share of 95.
Turn it over to Jeff.
Thanks Mark.
In our third quarter earnings commentary and follow up we felt revpar would be in a range of flat to down 100 basis points and we were comfortable with even full year consensus estimates of $270 million of adjusted EBITDA and.
At <unk> 93 per share of funds from operations.
Operating and financial results were in line or slightly ahead of our expectations in the quarter comparable Revpar contracted 60 basis points from the prior period and total Revpar increased 30 basis points. Both in line with our expectations. Moreover, full year adjusted EBITDA was $272 million and <unk> was <unk> 93.
<unk> per share.
The 30 basis points of total revpar growth in the quarter stems from a two 4% decline in our resort portfolio and one 8% growth in our urban portfolio.
Jeff: For a few reasons we discussed in our prior earnings, First, the property tax headwind in Chicago was over $6 million, or a 242 basis point margin impact. Second, our insurance costs were $2.2 million higher in the quarter due to unfavorable industry conditions last year, and this accounted for an 80-basis point increase. Finally, we elected to accelerate the one-time purchase of new brand-standard bedding at our Westin-flagged hotels to obtain discounted prices. The $1.5 million bedding expenditure negatively impacted the margin of the quarter by 55 basis points.
It is important to highlight the steady improvement we saw on our resorts comparable total revenues at the resorts declined 8% in the second quarter of 2023, 446% in the third quarter in just a 2% decline in the fourth quarter. We are optimistic we can continue this improving trend and pivot to growth in 2024.
Moving onto profits comparable gross operating profit or GOP was $94 million or 36% margin on $261 million of comparable total revenue.
Jeff: Collectively, these items explain about 375 basis points of the margin change from the fourth quarter of the prior year. The group segment remained a bright spot in the quarter, with group room revenue up 4% on gains in both room volume and average daily group room rate. As we discussed in the call last quarter, both of our Chicago hotels had difficult comparisons in late 2023 due to a shift in citywide calendars compared to 2022. Overall, comparable full-year room revenues in the group segment were $21 million stronger in 2022 and exceeded 2019 by $6 million. However, group room nights were still 10%, or 78,000 nights, below 2019 results.
This means our asset managers were able to keep same store controllable operating expenses to just 3% growth despite 110 basis points of higher occupancy from the prior period.
In fact, the growth in controllable operating expenses over the past three quarters has averaged just 3%. Despite a 150 basis point average rise in occupancy.
Hotel adjusted EBITDA was $65 million with a 24, 7% margin and corporate adjusted EBITDA was a little over $57 million.
Hotel adjusted EBITDA margins were 500 basis points lower than fourth quarter 2022 for a few reasons, we discussed on our prior earnings call.
First the property tax headwind in Chicago was over $6 million or a 242 basis point margin impact.
Jeff: 2024 is shaping up to be strong. Our group revenue is pacing up 21.4% compared to the same time last year. Our footprint continues to serve us well. In our largest group markets, the Westin Boston's group revenue is pacing up nearly 8%, and the Chicago Marriott is up over 30%. Outside of our two largest group hotels, the strength of our group revenue pace is broad. Group revenues at the Worthington, the Hythe and Vail, Westin Fort Lauderdale, and Westin San Diego Bayview are each up over 30%, and our Westin DC is up 80%. We believe the strength and breadth of our group structure for 2024 is a key point of differentiation for DiamondRock. Turning to capital allocation, there were no acquisitions or dispositions during the quarter, and we did not repurchase any shares. However, we continue to explore dispositions, the proceeds of which can fund equity repurchases, ROI projects, or fund external growth. Maximizing shareholder value is the singular focus behind our capital allocation decisions.
Our insurance costs were $2 $2 million higher in the quarter due to an unfavorable industry conditions last year and this accounted for an 80 basis point impact.
Finally, we elected to accelerate the onetime purchase of new brand standard betting at our Westin flagged hotels to obtain discounted pricing.
The $1 $5 million bedding expenditure negatively impacted the margin in the quarter by 55 basis points.
Collectively these items explain about 375 basis points of the margin change from the fourth quarter of the prior year.
The group segment remained a bright spot in the quarter with group room revenue up 4%.
On gains in both room volume and average daily group room rates as.
As we discussed in the call last quarter.
Both of our Chicago hotels had difficult comparisons in late 2023 due to a shift in citywide calendars compared to 2022.
Overall comparable full year room revenues in the group segment were $21 million stronger in 2022 and exceeded 2019 by $6 million. However group room nights were still 10% or 78000 nights below 2019 results.
Jeff: We remain committed to having a flexible balance. Our leverage is conservative, as demonstrated by the low net debt to EBITDA ratio of 3.9 times trailing for the quarter results. Our liquidity is strong with $122 million in corporate cash, $102 million in hotel level cash, and a fully available and undrawn $400 million revolver. Importantly, our current liquidity is 140% of our debt maturities through year end 2025. We have provided REVPAR and adjusted EBITDA guidance ranges in our press release. As Mark said, it is our expectation that total REVPAR growth will be approximately 50 to 75 basis points better than our forecast. In addition, we have provided preliminary ranges for corporate expenses, interest expense, and income taxes, as well as our available room count.
2024 is shaping up to be strong.
Our group revenue is pacing up 21, 4% compared to the same time last year.
Our footprint continues to serve us well and our largest group markets. The Westin Boston Group revenue is pacing up nearly 8% and the Chicago Marriott is up over 30%.
Outside of our two largest group hotels, the strength of our group revenue pace is broad.
Group revenues at the Worthington the heightened Vale.
The Westin Fort Lauderdale, and Western San Diego Bay few are each up over 30% and our western DC is up 80%.
We believe the strength and breadth of our group set up for 2024 is a key point of differentiation for Diamond rock.
Jeff: As Mark indicated, we expect the second half growth to be stronger than the first half, owing to an evenly distributed convention calendar in our urban hotel segment that last year was more concentrated earlier in the year, and a resort segment that should improve as we move through the year for the reasons discussed. In the first quarter, there was about $2 million of unfavorable impact for work at Hotel Champlain in Burlington and our Westin San Diego.
Turning to capital allocation, there were no acquisitions or dispositions dispositions during the quarter and we did not repurchase any shares.
However, we continue to explore dispositions the proceeds of which can fund equity repurchases ROI projects or fund external growth math.
<unk> shareholder value is the singular focus behind our capital allocation decisions.
Jeff: Later in the year, we expect approximately $1 million of impact from renovation work at the Bourbon in New Orleans. In total, the displacement and disruption is consistent with prior years on the expense side. We expect labor-related costs will remain the dominant industry headwind as we put rising staffing levels, the hard insurance market, and property tax interruptions in the rearview mirror.
We remain committed to having a flexible balance sheet or.
Our leverage is conservative as demonstrated by the low net debt to EBITDA ratio of three nine times trailing four quarter results.
Our liquidity is strong with $122 million in corporate cash $102 million and hotel level of cash and a fully available and undrawn $400 million revolver.
Importantly, our current liquidity is 140% of our debt maturities through year end 2025.
Mark W. Brugger: Thanks, Jeff. We believe DiamondRock is well positioned for the future, with a high-quality portfolio that aligns with some of the best long-term trends in travel. Our portfolio is the least encumbered of any full-service public lodging reach and commands a net asset value. We also have a Fortress Balance Sheet that gives us significant dry powder to take advantage of acquisition opportunities that should emerge this cycle. Even better, one of the things that I think is a little bit of DiamondRock's secret sauce for superior future performance is our extensive list of ROI projects. There's a fuller list in our investor presentation, available on our website. I'll just hit a few. The Dagny Boston, which converted only six months ago from a $30 million investment, should outperform for the next several years as it ramps up to its full potential. The Hilton Burlington will convert this year to a lifestyle resort named The Champlain with a specialty restaurant led by a James Beard nominated chef.
We have provided revpar and adjusted EBITDA guidance ranges in our press release as Mark said it is our expectation that total revpar growth will be approximately 50 to 75 basis points better than our revpar forecast.
In addition, we have provided preliminary ranges for corporate expenses interest expense and income taxes, and our available room count.
As Mark indicated we expect the second half growth will be stronger than the first half owing to an evenly distributed convention calendar in our urban hotel segment that last year was more concentrated earlier in the year.
In our resort segment that should improve as we move through the year for the reasons discussed.
In the first quarter, there was about $2 million of unfavorable impact for work at the hotel Champlain in Burlington, and our Westin San Diego late.
Later in the year, we expect approximately $1 million of impact from renovation work at the Bourbon in New Orleans.
In total the displacement and disruption is consistent with prior years.
On the expense side we.
We expect labor related costs will remain the dominant industry headwind as we put rising staffing levels are hard insurance market and property tax true ups in the rearview mirror.
Mark W. Brugger: We are excited about that. In the Florida Keys, we are in the final permitting process to build a high ROI marina. And in 2025, we plan to expand our Lake Tahoe resort by adding 20% more rooms and building new group meetings. And finally, our most exciting project. We are working diligently to transform the 77-room Orchards Inn into the cliffs at La Berge de Sedona, with a new mountainside pool and restaurant with some of the best views of the Red Rocks in all of Sedona.
With that I can turn the floor back to Mark.
Thanks, Jeff.
We believe <unk> is well positioned for the future with a high quality portfolio that aligns with some of the best long term trends in travel.
Portfolio.
Leased encumbered of any full service public lodging REIT commands a net asset value premium.
We also have a fortress balance sheet that gives us significant dry powder to take advantage of acquisition opportunities that should emerge this cycle.
Even better one of the things that I think is a little bit of <unk> secret sauce for superior future performance is our extensive list of ROI projects.
Mark W. Brugger: This should allow us to double the property's revenue, and it will become one of the true gems in our portfolio. To wrap up, these continue to be exciting times at The Rock.
There is a for a lift in our investor presentation available on our website I'll just hit a few.
Mark W. Brugger: And while we believe that this will be a good year for the travel industry, we are encouraged by the prospects for 2025 and 2026, as the economy is likely to reaccelerate against a backdrop of exceptionally low hotel supply. Our well-balanced portfolio is ideally suited to the most dynamic trends in travel over the next decade. And we are happy to lean into our strategy focused on the data that supports that traveler preferences will make hotels and markets like ours fail in Boston, New York City, Sedona, and Marathon Key.
The <unk> Boston converted only six months ago from a $30 million investment should outperform for the next several years as it ramps to its full potential.
The Hilton Burlington will convert this year to a lifestyle resort named the Champlain, what the specialty restaurants led by James Beard nominated Chef. We are excited about this one.
In the Florida Keys, we are in the final permitting process to build a high ROI Marina.
And in 2025, we plan to expand our Lake Tahoe resort by adding 20% more rooms and building New group meeting space.
And finally, our most exciting project, we are working diligently to transform the 77 room Orchard Zip.
Operator: Smart Capital Allocation for Long-Term Outperformance and NAV Growth. At this time, we'd like to open up this call to any of your questions. Thank you. And as a reminder, to ask a question, you need to press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again.
Into the cliffs at La bears to Sedona with a new mountainside pool in restaurant with so the best use of the Red rocks and all of Sedona.
This should allow us to double the property's revenue.
And it will become one of the true gems in our portfolio.
Operator: Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from Dory Keston from Wells Fargo Securities. Your line is open. Thanks. Good morning.
To wrap up.
These continue to be exciting times at the rock.
And while we believe that this will be a good year for the travel industry. We are encouraged with the set up for 2025 and 2026 as the economy is likely to reaccelerate against a backdrop of exceptionally low hotel supply.
Mark W. Brugger: Can you talk about the quantity of assets you deem of interest and relatively small experiential opportunities that are in your pipeline today? And just given your comfort in providing guidance, is it fair to say that you may be more acquisitive this year with perhaps fewer uncertain variables? Morning, Dory, it's Mark.
Our well balanced portfolio is ideally suited for the most dynamic trends in travel over the next decade.
And we are happy to lean into our strategy focused on the data that supports that traveler preferences will make hotels in markets like ours.
Mark W. Brugger: Good questions. I think the acquisition pipeline and our acquisition team, led by Troy Forbay here, are always looking at deals. We have focused on off-market transactions, as you know, over the last several years. Those transactions kind of go on their own timeline based on the individual owner's circumstances.
Boston, New York City, Sedona, and marathon key smart capital allocation for long term outperformance and NAV growth.
At this time.
We'd like to open up the call for any of your questions.
Thank you and as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please sometime we compile the Q&A roster.
Mark W. Brugger: So we continue to maintain an active pipeline of those deals. Given our cost of capital and the discount to NAV of our stock, they have to be exceptional deals and continue to need to be exceptional deals to be able to do them. We are actively looking at things now, but we need to be sensitive to our cost of capital. We certainly have the dry powder and the balance sheet to do interesting deals, and we would hope to find one or two transactions this year. Okay, we've talked in the past about your likelihood of selling a large urban box. Do you think the price you'd receive today would be fair?
One moment for our first question.
Our first question comes from the line of Dori Kesten through Wells Fargo Securities. Your line is open.
Thanks, Good morning can.
Can you talk about the quantity of assets you would deem of interest can be relatively small experiential that are in your pipeline today and just given your commentary and providing guidance is it fair to say that you think you may be more acquisitive this year.
Perhaps fewer uncertain variables.
Good morning, George its mark.
Good questions I think.
Thus the acquisition pipeline and our acquisition team led by short for Ray here Theyre always looking at deals that we have focused on off market transactions as you know over the last several years.
Mark W. Brugger: And is there enough, I guess, capital out there interested in acquiring upwards of $100 million? Yeah, so we've seen some bigger trades, like the Biltmore and some other big trades over the last six months. I think our opinion is the debt markets continue to improve, and their rates will be much lower next year than they are this year or the end of this year. So you're likely to get someone to stretch and pay a bigger number for a bigger asset if you have a little bit of patience. So our overall view is, while we may test the market, more likely that those transactions will occur either at the end of this year or sometime in 2025. Okay, and Jeff or Briony, where are your NOLs today?
Those transactions kind of go on their own timeline based on the individual owners circumstances. So we continue to maintain an active pipeline of those deals.
Given our cost of capital and that discount to NAV of our stock.
They have to be exceptional deals.
You need to be need to be exceptional deals.
To be able to do them. We are actively looking at things now, but we need to be sensitive to our cost of capital. We certainly have the dry powder in the balance sheet to do interesting deals.
We would hope to find one or two transactions.
This year.
Jeff: And should we expect dividends to return? I guess what pay should we expect dividends to return over the medium term? Your earnings outlook for this year looks pretty similar to when you were paying out 50 cents annually. I'll pick the NOL piece, and I can defer to Mark on the dividend.
Okay, we've talked in the past about your likelihood of selling large urban box.
Do you think pricing you'd receive today would be fair and as there are no capital.
Capital out there interested in acquiring upwards of $100 million.
Jeff: That's something that we discussed with our board. But on the NOLs, there are about $140 million of NOLs remaining at this point in time. On dividend policy, we actually have a board meeting next week, and we'll review the dividend regularly with them. I think where we are now in looking at other alternatives to capital, while we think about modestly potentially increasing the dividend, the focus really is on other uses of the capital that might drive the stock price. Okay, thank you. Thank you.
Yes, so we've seen some bigger trades, the Billboard and some other big trades over the last six months I think our opinion is the debt markets continue to improve and that rates will be much lower.
Next year than they are this year or the end of this year.
So that you are likely to get someone to stretch.
For a number for a bigger asset if you have a little bit of patience. So our overall view is while it may test the market more likely that those transactions will occur either at the end of this year or sometime in 2025.
Okay.
Operator: One moment for our next question. Our next question will come from the line of Smedes Rose from Citi. Your line is open. Hi, thanks.
<unk>.
<unk>.
Where your where your Nols today and should we expect dividends to return I guess, what postini. Thank you Vince return over the medium term.
Mark W. Brugger: I guess just following up on some of your last comments, Mark, about uses of capital, and you mentioned your perception that the stock is below NAV and stuff like that. So why not have a more kind of robust share purchase program at this point? No, it's a great question, Smedes, and it's something we're actively talking to the board about what the right level of that is.
Earnings outlook for this year looks pretty similar to when you were paying out that difference.
Surely.
I'll take the NOL piece and I can defer to mark on the dividend that's something that we discuss with our board, but on the Nols is about $140 million of Nols remaining at this point in time.
Okay.
Our dividend policy, we actually have a board meeting.
Next week, and we'll review we review the dividend regularly with them I think where we are now in looking at other alternatives for capital.
Mark W. Brugger: You know, we wanted to make sure we had plenty of balance sheet capacity for all maturities for the next couple years, but as the debt markets have opened up and got much better and rates seem like they're going to head south, you know, we're more comfortable using that balance sheet capacity. So that'll be something we have a conversation about at the board meeting next week. Okay, I just wanted to follow up.
Think about modestly potentially increasing the dividend the focus really is on other uses of the capital that might drive the stock price.
Okay. Thank you.
Thank you one moment our next question.
Our next question comes from the line of Smedes Rose from Citi. Your line is open.
Hi, Thanks.
Just following up on your some of your <unk>.
Comments, Mark about use of capital and you mentioned.
Mark W. Brugger: When you talked about Dagny gaining, I guess, relative market share, you mentioned some of the Breitbart index gains. Is that on the same competitive set from when it was a Hilton or when it became independent? Did they change the set that you're competing against? And that's a relatively consistent set. I mean, there's always renovations going on at Pure Hotels. So there's a little bit of noise in that
Your perception that the stock is below NAV.
So why not have a more robust share repurchase program at this point.
No. It's a great question Smedes and that's something we're actively talking to the board about what the right levels that is.
We wanted to make sure we have plenty of balance sheet capacity for all maturities for the next couple of years, but as the debt markets have opened up and got much better rates seem like they are going to head south.
We're more comfortable using that balance sheet capacity that so that'll be something we have a conversation with.
Mark W. Brugger: I should mention that we did take what we thought was a risk mitigation strategy at the hotel to put some groups in there. I mean, some of the contract business in there, which will benefit us more in the winter months, which is the lower demand season. And that was something we wanted to do consciously as we ramped up from the brand conversion. So we would not expect to command a premium for the full year 2020 or 2024 versus our time at the Hilton. We think that it will take a couple of years to close that gap, and that's really the upside performance of the asset as well. Okay, and then just one final question, it sounds like you're building maybe 15 rooms or so at the Lake Tahoe asset. What are you sort of thinking about in terms of the cost per key there? Justin, do you want to go ahead and take that one?
On the board meeting next week.
Okay, and then I just wanted to follow up.
Could you talk about that.
<unk> gaming I guess relative market share.
And you mentioned some of the Revpar index gains is that on the same competitive set from when it was a hilton or when it goes independence they changed.
Set that you're competing against.
So that's a relatively consistent set I mean, theres always renovations going on at pure hotels, so theres, a little bit of noise in that.
Should mentioned that we do we did take a what we felt was a risk mitigation strategy at the hotel to put some group and there have been some of the contract business in there, which will benefit us more in the winter months, which is the lower demand season.
And that was something we wanted to do consciously as we ramped up from the brand conversion.
So we would not expect to command a premium for the full year 2024 versus our time at the Hilton We think that that will take a couple of years to close the gap and that's really the upside performance in asset as well.
Justin: Yeah, we think we're probably all in about 425 a key. For the 14 incremental, we're reutilizing an existing building that has been out of service for some time and then building about six of those in a new purpose-built building in addition to adding some meeting space. Okay, so pretty small in the world capital.
Okay and then just final question it sounds like Youre building, maybe 15 rooms, or so at the Lake Tahoe asset what are you sort of thinking about in terms of the cost per key there.
It does seem like you want to take that one yes.
We think we're probably all in about four 425 for the 2014 incremental or re utilizing an existing building that has been out of service for some time and then building about six of those in a new purpose built building in addition to adding some meeting space.
Mark W. Brugger: You're about a $7 million project. Yeah, it's a small project, large relative to the scale of the resort, but small in the end. Okay, thank you.
Operator: One moment for our next question. Our next question will come from Austin Wurschmidt from KeyBank Capital Markets. Your line is open. Thanks. Good morning, everybody.
Okay, so pretty small overall capital.
Yes sure.
We have a $7 million.
A small project.
Large relative to the scale of the resort, but small in the aggregate.
Great.
Thank you.
Thanks Pete.
One moment our next question.
Operator: Just wanted to start off with the group pace of plus 21%. Curious, first off, how much is on the books today versus this time last year? And what is your guidance assumed for REVPAR growth for that segment as you see that kind of ratchet down through the year on the PACE front. Jesse, do you want to take that?
Our next question will come from the line of Austin, where Schmidt from Keybanc capital markets. Your line is open.
Thanks, Good morning, everybody just wanted to start off with the group pace of plus 21%.
Curious first off how much is on the books today versus this time last year and what is your guidance assume for Revpar growth.
Jesse: Yeah, happy to. So, as we sit here today, I think we're sitting with about 530,000 group rooms versus 450,000 last year. So, we're sitting in a significantly increased position on a relative basis. We obviously think that's going to tail off in the year for the year, just given space availability concerns. But I think the goal is for us to sort of shift segmentation about two points into the group category.
For that segment as you see that kind of ratchet down through the year.
On the pace for us.
Just you want to take that yeah happy to so.
Worse as we sit here today I think we're sitting with about 530000 group rooms versus 450000 last year. So we're sitting in a significantly <unk>.
Increased position on a relative basis, we obviously think thats going to tail off in the year for the year, just given space availability concerns, but I think the goal is for us to sort of shift segmentation at about two point into the group category. So it was about 28% for us last year.
Jesse: So, it was about 28% for us last year, and we're hoping to end at about 30%. And I think what we consider to be, you know, equal, if not maybe more significant, is that we're seeing that PACE increase spread throughout the portfolio. So, it's not just driven by good years in our big group boxes.
And at about 30%.
What we consider to be equal if not more significant is that we're seeing that that pace increase spread throughout the portfolio. So it's not just driven by good years in our big group boxes, our resort portfolio that makes up a much smaller piece of this segmentation is also up about 20% as we've really leaned in to kind of re.
Jesse: Our resort portfolio, though, makes up a much smaller piece of the segmentation, is also up about 20% as we've really leaned in to kind of reorienting our sales teams and trying to drive some incremental demand into those resorts, as we saw leisure demand tail off a bit last year. And then what is your assuming within the RevPAR guide for the group segment for growth this year? Probably at the top end, it probably ends up being about two thirds of the growth. Got it.
Orienting, our sales teams and trying to drive some incremental demand into those resorts as we saw leisure demand tail off a bit last year.
And then what are you assuming within the Revpar guide for for the group segment for growth this year.
It's probably at the top end it probably ends up being about two thirds of the graph.
Jeff: And then last quarter, you guys highlighted about a $4 million lift you expected from DAGNY. Did I hear you correctly that you expect other disruption this year to fully offset that amount, or are those, you know, kind of apples to apples comparisons? Just wanted to clarify.
Got it.
And then last quarter, you guys had highlighted about a $4 million lift you expected from the Dag knee.
Did I hear you correctly that you expect other disruption each year to fully offset that amount or are those kind of apples to apples comparisons just wanted to clarify.
Jeff: Yeah, you heard that correctly, Austin. I would say, typically, every year we have about $3 to $4 million of disruption and displacement. But you're right, you know; we do expect to get a lift at the DAGNY. But you know, as we always are looking at ROI projects in the portfolio, there's always some noise that comes up. And it's the assets that I mentioned that'll be in the first quarter and third quarter. Last year, the DAGNY was predominantly a second and third quarter impact. Got it.
Yes.
You heard that correctly, often I would say typically every year, we have about $3 million to $4 million of I'll call it disruption and displacement.
But youre right, we do expect to get a lift to the <unk>, but as we always are looking at ROI projects in the portfolio. There is always some noise that comes up.
Assets that I mentioned that'll be in the first quarter and third quarter last year. The Dag NIE was predominantly a second and third quarter impact.
Jeff: So I guess between, you know, I guess the dagging offsets a little bit, but with group, then does that imply that repertoire growth for sort of the leisure, you know, BT type segments is in the low single digit range for the full year? Am I thinking about that correctly? Yeah, Leisure's on the lower end, and the group's on the high end, you know, kind of what you think about the revenue breakdown for the year. So the group is clearly going to carry the Red Park growth. They're going to carry the weight of it off in 2024. Thanks for the detail.
Got it so I guess between.
I guess the day I've said, it's a little bit but with group then does that imply that revpar growth for sort of the leisure BT type segments Youre in the low single digit range for the full year am I thinking about that correctly.
Yes, Lisa is on the lower end the groups on the high end kind.
Kind of what you think about the revenue breakdown for the year. So the group is clearly going to carry the revpar growth, they're going to carry the weight of it in 2024.
Great. Thanks for the detail.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Mike Bellisario from Baird. Your line is open. Good morning, everyone.
Thank you one moment for our next question.
Our next question comes from the line of Mike <unk> from Baird. Your line is open.
Good morning, everyone.
Mark W. Brugger: Question on the South Florida performance and commentary that you guys gave, what was the driver of that improvement? Was it just comparisons to last year? Did you actually see a sequential acceleration in demand and or pricing in that market? All of those, really. I mean, the comparisons got easier. South Florida peaked first and was the most robust, so, you know, you kind of think about the lapping effects helping it. But Damien was better than we anticipated and certainly in the keys as we moved through the fourth quarter. So we were very encouraged about his performance. At the Weston, we did layer in some groups there.
Alright.
Question on the South Florida performance and commentary that you guys gave what was the driver of that improvement was it just.
Parison to last year or did you actually see a sequential acceleration in <unk>.
Demand <unk> pricing in that market.
So all of those really I mean, the comparisons get easier South, Florida peaked first and most robust.
Just kind of think about the lapping effects, helping it but demand was better than we anticipated and certainly in the keys as we move through the fourth quarter. So we were very encouraged about the performance.
Mark W. Brugger: But, you know, I think the Florida Keys story is a very encouraging one. Got it. Okay. And then.
The western we did layer in some group.
There but.
I think the Florida key stories are very encouraging one.
Mark W. Brugger: Follow-up just on inbound international travel to your major markets. I mean, where do you think that's at for your portfolio today versus pre-pandemic levels? And what are you seeing in the booking curve that would suggest improvement in 24, or at least could you quantify that improvement based on the bookings you're seeing? Thank you. Yeah, Mike, it's hard to give the specific data because we don't track it for the individuals.
Got it Okay and then.
The follow up just on inbound international travel team to your major markets.
Where do you think thats at for your portfolio today versus pre pandemic levels and what are you seeing in the booking curve that would suggest.
Improvement in 24 or at least could you quantify that improvement based on the bookings you're seeing thanks.
Yes, it's hard to give the specific data because we don't track it for the individuals we do see on the macro data. We believe that last year, we probably under index, particularly in the high end traveler that went to Italy.
Mark W. Brugger: What we do see on the macro data, we believe that last year, we probably under-indexed, particularly the high-end traveler that went to Italy. And this year, at places like Sedona, we would expect to benefit from as much international coming in, which is really coastal positive, but more of the domestic travelers, particularly the well-heeled domestic travelers deciding to vacation in the United States versus their kind of revenge trip to Europe. And, Mike, I would just add that, pre-pandemic, if you just did a market-by-market analysis for us, we were kind of at mid-single-digit exposure. It's not a guess-by-guess analysis, but just exposure to geography.
And this year at places like Sedona, we would expect to benefit from.
As much international coming in which is really a coastal positive but more of the domestic travelers, particularly at the well heeled domestic travelers deciding to vacation in the United States versus their kind of revenge trip to Europe.
And Mike I would just add on and I think pre pandemic, if you're just in a market by market analysis for US we were kind of mid single digit exposure, it's not a guest by guest analysis, but just exposure to geography, I think we're sort of mid single digit exposure of our demand was from international sources.
Jeff: I think we were sort of in the mid-single-digit exposure range. Our demand was from international... understood. And then maybe just zoom in there on the group bookings.
Got it understood and then maybe just zoom in.
Jeff: Can you tell if you're seeing more demand from international groups coming to your gateway markets? Presumably you can track that much easier than the transient traveler. And that's all for me. Thank you. Yeah, I mean, I think we don't necessarily see a lot of groups that are completely international, right?
On our group bookings can you tell if youre seeing more demand from international groups coming to your gateway market, presumably you can track that much easier than the transient traveler and Thats all for me. Thank you.
Yes, I mean I think we.
We don't necessarily see a lot of groups that are.
Jeff: You have attendees that are coming in from international destinations for domestic, you know, group-oriented business. So it's not it's not necessarily a stat that we honestly parse through when we get rooming lists from groups and typically doesn't have a destination for the consumer. So hard for us to quantify. Thank you. One moment for our next question. Our next question comes flying from Dwayne Finningworth from Evacor ISI. Your line is open.
Completely international right.
<unk> that are coming in from international destinations for domestic group oriented business. So it's not it's not necessarily a static that we honestly parse through when we get roofing less from groups that typically doesn't have a destination for the consumers.
Hard for us to quantify honestly.
Thank you.
Our next question.
Our next question comes from the line of Duane <unk> from Evercore ISI. Your line is open.
Operator: Hey, thanks. For the resort markets in your portfolio, where would you expect the highest growth rates to be this year? You clearly sound a little bit more upbeat on Florida, but as you look across the portfolio, what do you think would outperform and what would you expect to lag on the resort side? Yeah, sure.
Hey, Thank you.
For the resort markets in your portfolio, where would you expect the highest growth rates to be this year. I mean, you clearly sound a little bit more upbeat on Florida, but but as you look across the portfolio what do you think would.
Will perform and what would you expect to lag on the resort side.
Mark W. Brugger: So I think in our prepared remarks, we talked about South Florida, and we were encouraged by markets like Charleston, which have been terrific. We would expect that to pull back a little bit this year. What other markets have they kind of gone through that with wine country, Sonoma, we're seeing some pullback continue there. So we expect those to be on the lower end of the gross scale to give you kind of give you a barbell on the resort portfolio. Okay, thanks. And then just to follow up on the prior questions on acquisitions. Should we assume that a big disposition would need to happen first? And if you get that done, how would you be looking to shape the portfolio? You know, where do you feel that you're under-indexed?
Yeah sure. So I think in our prepared remarks, we talked about South Florida, we were encouraged on markets like Charleston.
Which have been terrific.
We would expect that to pull back a little bit this year.
Certainly what other markets.
Go through that with wine country Sonoma we're.
We're seeing some pullback.
Continue there so we would expect those to be on the lower end of the gross scale to give you kind of it can be bar bell the resort portfolio.
Okay. Thanks, and then just on the just to follow up on the prior questions on acquisitions.
Should we assume that a big disposition would need to happen first.
And if you get that done how would you be looking to shape the portfolio, where do you feel that you're under indexed.
Mark W. Brugger: Great question. So Jeff went through our balance sheet and our capacity. We feel like we have excess dry powder right now, so that's not the hesitation. It's not a dry powder issue.
Sure Great question, So Jeff went through our balance sheet, our capacity, we feel like we have excess dry powder right. Now so that's not that's not the hesitation is not a dry powder issue, we have a very attractive balance sheet and we have.
Mark W. Brugger: We have a very attractive balance sheet, and we're sitting on cash and a completely undrawn revolver, and our metrics are excellent. So it's not a capacity issue. It's really an opportunity issue, and when you think about what kind of opportunities, given that we think we traded at a significant discount to NAB, would be accretive to shareholders at this point, it's going to be more of the kind of things that we think are our core capacity. So we're looking at things where we think we can put in our estimated best practices, where it might be an owner operator who hasn't kind of kept up with the market on moving rates or may not be efficient in labor practices and other things that we can bring to the table. Those are the inefficiencies.
We're sitting on the we're sitting on cash and a completely undrawn revolver and our metrics are excellent. So it's not a capacity issue, it's really an opportunity issue.
When you think about what kind of opportunities given that we think we traded a significant discount to NAV would be accretive to shareholders. At this point, it's going to be more of the kind of things that we think are.
Our core capacity. So we're looking at things, where we think we can put our estimates with best practices, where the it might be an owner operator, who doesn't hasn't kept up with the market on moving rates.
Or may not be efficient in.
Labor practices and other things that we can bring to the table. Those are the inefficiencies were unlikely to buy a a luxury asset that's well run and.
Mark W. Brugger: We're unlikely to buy a luxury asset that's well run in a competitive process. That's just not going to be accretive for our shareholders. So we think the best acquisition opportunities and the best accretive opportunities remain the kind of assets we've been buying, which are these really expensive, experiential, differentiated assets, generally markets that are incredibly hard for new supply to enter. And we think that the consumer and the traveler today, and over the next decade, where the outsized growth is going to be, is where you can provide something that's really a unique and differentiated experience for that traveler Great, thank you.
The competitive process, that's just not going to be accretive for our shareholders. So we think the best best at acquisition opportunities and the best accretive opportunities remain the kind of assets. They are buying which are these really expensive experiential differentiated assets generally markets that are incredibly hard for new supply to enter.
And we think that the consumer in the traveler today and over the next decade, where the outsized growth is going to be is where you can provide something thats really unique and.
And differentiate the experience for that traveler.
Great. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Chris Woronka from Deutsche Bank. Hey, good morning, guys. So, Mark, I appreciate all the color so far. Can you maybe talk a little bit about how you're thinking about summer this year?
Okay.
Thank you one moment for our next question.
And our next question comes from the line of Chris <unk> from Deutsche Bank.
Your line is open.
Hey, good morning, guys.
So mark I appreciate all the color. So far can you maybe talk a little bit about how you're thinking about summer. This year, you kind of hit on it a few minutes ago, but last year I think there was a little bit of a <unk>.
Mark W. Brugger: You kind of hit on it a few minutes ago, but last year, I think there was a little bit of a surprise at how much domestic travel went outbound, and maybe the expectation is you're going to get more inbound this year, or maybe you think folks are going to stay home. But just any kind of confidence can you give us? Any kind of, you know, what things you have right now for summer that make you feel better?
Surprise at how much domestic travel went outbound and maybe the expectation is youre going to get more inbound this year or maybe you think folks are going to stay home, but just any is there any kind of confidence you can give us any kind of.
Bookings you have right now for summer that makes you feel better.
Mark W. Brugger: Yeah, I think the fundamental thing that makes me feel better is that, unlike last summer, what we've done this year is to really take the group and not rely on that short-term experience showing up. So, to the extent we can put a group in there, we're putting a group in there. And then, as we talked about in the prepared remarks, a lot of the strength and certainly our strongest quarter, based on the current bookings, is going to be Q3. So, we feel good about our positioning, but we are taking a little bit of a defensive stance that we're trying to group up where it makes sense to group up and not be reliant like we were last summer on a lot of short-term both leisure and corporate travel. Okay, great. And then obviously, a strong, strong job on the cost front 23. And, you know, sounds pretty, pretty benign for 24.
Yes, I mean I think the.
The fundamental thing it makes me feel better is that it's going to be our strongest group quarter. So.
Unlike last summer what we've done this year is to really take the group and.
And not rely on that short term transient showing up so to the extent, we can put a group in there we're putting a group in there and then as we talked about in the prepared remarks, a lot of the strength and certainly our strongest quarter based on the current bookings is going to be Q3.
So we feel good about our positioning but we are we are taking a little bit of defensive positioning that we're trying to group up where it makes sense to group up and not be reliant like we were last summer on a lot of that short term, both leisure and corporate travel.
Okay, Great and then obviously strong strong job on the costs were <unk> 23, and it sounds it sounds pretty pretty benign for 2004, you did mentioned labor I guess do you have any labor situations any union markets, even though you wouldn't be union any markets later in the year that you are keeping an eye on for.
Mark W. Brugger: You did mention labor, I guess you have any labor situations, any union markets, even though you wouldn't be union in any markets later in the year that you're keeping an eye on for, you know, for a reset next year. I mean, we're always looking at the market to make sure that our wages are staying competitive with the set, whether they're union or non-union hotels. You know, last year, the story was really the L.A. story, but there are some, Chicago got, you know, that was a relatively mutually win-win agreement, I'll call it their negotiation, and we're optimistic that we have that in Boston as well coming up. But there's nothing that's on the radar now that we think we'll be talking a lot about as we move through the year or that makes us particularly nervous Okay, I appreciate that.
For a reset next year.
I mean, we're always looking to market to make sure that our wages are staying competitive with the set whether union or non union hotels.
Last year. The story was really at the La story.
Are there other ourselves Chicago got that.
That was a relatively.
Mutually win win agreement I'll call it their negotiation and we're optimistic that we have that.
In Boston as well coming up but theres nothing thats on the radar now that we think we'll be talking a lot about as we move through the year or that makes us, particularly nervous on the expense side in 2024.
Mark W. Brugger: The last one is just kind of on the acquisition disposition. You know, I hear you on expectations of lower rates. That may be up for debate a little bit, but I guess the question would be, we're also hearing about more distressed or semi-distressed stuff kind of hitting the market. I mean, I assume that that's a good thing if you're a buyer, but you mentioned some non-core sales, maybe not necessarily the best thing if you're a seller. Any thoughts on how it could play out?
Okay.
Last one is just kind of on the acquisition disposition.
I hear you on expectations of lower rates.
May be up for debate a little bit but.
The question would be we're also hearing about more distress or semi distressed stuff kind of hitting the market I mean I assume that that's that's a good thing if youre a buyer, but you mentioned some noncore sales maybe not necessarily the best thing if youre, a seller or any thoughts.
Sorts on how it could play out.
Mark W. Brugger: Yeah, I mean, I think what we're seeing in the marketplace generally is the stuff that's of quality is getting pushed another year. The lenders are working with people. I think the consensus view, and again, it could be wrong, but between both lenders and owners is that if you have a quality asset, you're more likely to get a higher price in the market at the end of this year or next year. And I think people are working towards that timeline versus bringing things to market now. There's not a lot on the market now.
Yes, I mean, I think what we're seeing in the marketplace generally the stuff thats up quality is getting pushed another year. The lenders are working with folks I think the consensus view again, it could be wrong, but between both lenders and owners as they have a quality asset you are more likely to get a higher price.
In the market the end of this year or next year and I think people are working towards that that timeline versus bringing things to market now there's not a lot on the market now.
Mark W. Brugger: The worst is first is certainly a motto for now. The stuff that is coming, and I would say the distress that's in the market are really pretty terrible hotels that have things that are unfixable, generally. We're not seeing quality assets come to market right now that are distressed. We're seeing people who say they would be motivated if they could get a decent price, but we're not seeing the kind of assets that we own. We're not seeing those come to market under distress terms. Okay. Hey, very good. Thanks, Mark. Thank you. Please take a moment for our next question. Our next question comes from Lina Flores Van de Koon from Compass Point. Hey, good morning guys.
Worst is first is certainly a motto for now the.
Stuff that is coming in I would say the distress in the market are really pretty terrible hotels.
That have things that are unfixable generally.
We're not seeing quality assets come to market right now.
That are distressed.
We're seeing people that they'd be motivated as they can get a decent price, but we're not seeing the kind of assets that we own we're not seeing those come to come to market under distress terms right now.
Okay very good thanks Mark.
Thank you one moment for our next question.
Our next question comes from the line of Floris Van <unk> from.
Compass point your line is open.
Hey, good morning, guys. Thanks for taking my question.
Operator: Thanks for taking my question. Marcus, I listened to you and Jeff talk a little bit about, you know, the attractiveness of your shares, and obviously, you haven't bought back stock, unlike some of your peers, but you are also weighing some opportunities on the investment side. Maybe you could talk about your leverage ratio and how comfortable you would be to see that leverage ratio trend a little bit higher? You're pretty modestly levered today. I think it looked 3.9 times or somewhere around that level.
Just.
As I.
Marcus I listen to you and Jeff talk a little bit about.
The attractiveness of your shares and obviously you haven't bought back stock.
Unlike some of your peers.
But but also weighing some opportunities on the investment side, maybe if you could talk about your leverage ratio and how comfortable would you be to see that leverage ratio trend a little bit higher youre pretty pretty modestly levered today I think it was three nine times.
Mark W. Brugger: How would you be comfortable operating up to five times and then with the eye of reducing that with asset sales or potential equity down the road? Well, Jeff, why don't you start off by telling me a little bit about capacity, and then I can chime in, maybe at the end.
Somewhere around that level.
How would you be comfortable operating up to five times, and then with the eye of reducing that with asset sales or potential equity down the road.
Well, Jeff why don't you start off just talking a little bit about capacity tightening maybe yes, yes, Florida right now we're about three nine times debt to EBITDA, we have about $525 million of liquidity, including our revolver.
Jeff: Yeah, Flores, right now, we're about 3.9 times, you know, debt to EBITDA. We have about $525 million of liquidity, including our revolver. You know, we certainly do look at share repurchases, as you suggested. It is a leveraging event, and so we just try to be mindful about striking that balance between getting a good return on investment but, at the same time, recognizing that it does push up your leverage, and historically, that can weigh on your evaluation. You know, over time, it's one thing I think we try to put a lot of effort into. And something that we regularly discuss with our board is, "Where is that appropriate ceiling on leverage?". And, you know, Mark can speak to this, too.
Yes, we certainly do look at share repurchases.
You suggested it is a leveraging event and so we just try to be mindful about striking that balance between getting a good return on investment but at the same time recognizing that it does put a push up your leverage and historically that can weigh on your valuation.
Over time, it's one thing I think we try to.
Put a lot of effort into and that's something that we regularly discuss with our board is where's that appropriate ceiling on leverage.
Jeff: But I would say that, historically, the lending community and trying to maintain a good relationship with them, they're, I think there's comfort with you going up to around the level that you spoke to around five times, because you could probably go through a pretty severe downturn and still not run afoul of your credit agreements. And I guess, however you think about it, I think we do have capacity, but it's also balancing against the opportunities that we'd like to believe are coming down the road, either in our ROI opportunities in our portfolio or potential. Yeah, I would just add that Jeff did an excellent job describing that. But yeah, five times is probably the high end of where we'd be comfortable going. Again, if you model down the great financial crisis, you'd still be okay in that situation. We do have dry powder; we think having low leverage is a core strategic move. But if you never use your dry powder, it's not really that valuable.
Can you speak to this too, but I would say that historically, the lending community and trying to maintain a good relationship with them. There I think there is comfort with youre going up to around the level that you spoke to around five times, because you could probably go through a pretty severe downturn and still not run afoul of your credit agreements.
And then I guess, how would you think about I think we do have capacity, but it's also balancing against the opportunities that we'd like to believe we're coming down the road either in our ROI opportunities in our portfolio or potential acquisitions.
Yes, I would just add that Jeff did an excellent job describing that but see at five five times, probably the high end of where we'd be comfortable going again, a few model down the great financial crisis, you would still be okay in that situation we.
We do have dry powder, we think carrying low leverage is a core strategic move, but if you never use your dry powder, it's not really that.
Mark W. Brugger: So yeah, we would, if we found great acquisitions, we'd be willing to lever up a little bit. Hopefully, cash flows, we're optimistic that cash flows in 2025 and 2026 will be pretty good. And that growth alone would de-leverage the company.
Valuable so yes, we would if we found great acquisitions, we'd be willing to lever up a little bit.
Hopefully cash flows we're optimistic that cash flows in 2005 and 26 are pretty good in.
Mark W. Brugger: But right now, you know, we can continue to maintain a fairly conservative and prudent capital allocation strategy. The debt markets are getting better, so that does make us a little bit more aggressive. And if we find great opportunities that we think create value for shareholders, we're going to do those deals. We're just not seeing a ton of those at the moment, but we continue to work hard to try to uncover them.
And that growth alone would deleverage the company.
But right now we can continue to maintain a fairly conservative prudent prudent capital allocation strategy.
The debt metrics are getting better that does make us a little bit more aggressive.
And if we find great opportunities that we can create value for shareholders, we're going to do those deals.
We're just not seeing a ton of those at the moment, but we continue to work hard to try to uncover them.
Mark W. Brugger: Thanks, and maybe my follow-up for you guys. Obviously, you've done, you know, a bit of investing in your portfolio, and I, The Cliffs of Sedona, I think, are going to be on my bucket list. It sounds like once you guys are done there as well. Can you just remind us what percentage of your EBITDA has been touched since 2019?
And maybe my follow up for you guys, obviously you've done.
A bit of investing in your portfolio.
The clips of Sedona, I think youre going to be on my bucket list. It sounds like once you guys are done there as well.
Can you just remind us what percentage of your EBITDA.
Has been touched.
Since 2019.
Mark W. Brugger: I know I was thinking about it because we've probably touched on, I'm estimating here, I'd say probably... 40% of our www.thevenusproject.com some work done at the end. If I can circle back. I would guess in the last six years we've put about a half a billion dollars into our portfolio, something like that. So we've invested fairly significantly both to maintain our assets in first-class status but also to make sure we're maintaining them to brand standards and creating assets that customers want to return to again and again. So we look for ROI opportunities. We've done a number. The nature of our assets lend themselves to do that. So whether that's taking the JW Marriott in Cherry Creek and converting that to the Clio Luxury Collection or taking a Marriott in Vail and making that a Hythe Luxury Hotel, you know, that's the nature of having these experiential hotels. It gives you more of those kinds of opportunities.
<unk> 2019.
Think about it because we've probably touched trolley 15 assets in terms of up branding types of different types of renovation products.
<unk>.
I'm estimating here I would say probably is about 30% to 40% of our EBITDA.
It has had.
Some work done at the <unk>, if I could circle back to you for us on that so.
So I am not disputing.
I guess in the last six years, we've put about $5 billion into our portfolio and hope to like that so we've invested fairly significantly both to maintain our assets at first class status, but also to make sure we're maintaining them to branch centers and assets of customers want to return to again and again. So we look for ROI opportunities. We've done a number of the nature of our assets lend.
Themselves to do that to whether that's taking the GW Marriott Cherry Creek, and converting that to the clear luxury collection or taking a Marriott and Vale are making the highest luxury hotel.
That's the nature of having these experiential hotels. It gives you more of those kind of opportunities so probably a touch more than a number of our peers just because there's more ROI opportunities to reposition these kind of assets.
Mark W. Brugger: So probably I've touched more than a number of our peers just because, you know, there are more ROI opportunities to reposition these kinds of assets because they are not standard boxes in our portfolio. Thanks, guys. Thank you. One moment for our next question. Our next question comes from the line of Anthony Powell from Barclays. Your line is open. Hi, good morning.
They are not standard boxes.
Often in our portfolio.
Thanks, guys.
Thank you one moment for our next question.
Our next question comes from the line of Anthony Powell from Barclays. Your line is open.
Mark W. Brugger: We haven't talked a lot about corporate transients on the call yet, so maybe you could tell us where it ended up as a mix of your revenues in 2023, where that was versus 19, and where you're seeing kind of that business going forward. Yeah, corporate transients, it's a tricky one. It's obviously the hardest kind of what we'll call the post-pandemic new normal.
Hi, Good morning, we haven't talked a lot about corporate transient I'm call yet so maybe you could add.
Tell us where it ended up at the mix of your revenues in 2023.
Where that was versus <unk> 19 in where you're seeing kind of that business going forward.
Yes, corporate transient it's a tricky one it's obviously the one that's been the hardest kind of post pandemic, new normal, it's probably down about 20% from where we were at a pre pandemic level on deposit side special corporate rate negotiations have been up year over year and the small corporate so called the non special.
Mark W. Brugger: It's probably down about 20% from where we were at a pre-pandemic level. On the positive side, special corporate rate negotiations have been up year over year, and small corporates, so-called the non-special corporates, but corporate travelers, that's actually penetrating and above 100% of what it did in 2019. But the big special corporates, you know, a lot of the big consulting companies and the ones that generate, you know, hundreds of thousands of room nights a year, a lot of those are down 30, 40, 50% from where they were in a pre-pandemic world. And we're seeing that heal gradually and slowly.
Corporates, but corporate travelers, that's actually penetrating or at above 100% of what it did in 2019, but the big special corporates a lot of the.
The big consulting companies and the ones that generate one hundreds of thousands per room nights a year a lot of those are down 30%, 40%, 50% from where they were in a pre pandemic world.
And we're seeing that heel gradually and slowly and.
Mark W. Brugger: And, you know, what's built into our guidance is that it continues to get a little better every quarter, but not a big upshift in the level that we're at today. What markets does that decline in consulting and whatnot hit you the most? It's broad-based. I mean, you know, in New York City, we benefited from supply contract contraction and some other things that have offset it. But special corporate, it permeates the entire United States; obviously, the top 25 markets are probably more attuned to the big special corporates.
Whats built into our guidance is that it continues to get a little better every quarter, but not a big up shift in the level that we're at today.
Alright, what markets does that decline in the consulting and whatnot and where does that get you. The most.
It's broad based in New York City, we benefited from supply contract contraction and some other things that have offset it but special corporate it permeates the entire United States. Obviously, the top 25 markets are probably more attuned to the big special corporates.
Mark W. Brugger: But whether you're in Boston, Chicago, Miami, you know, it's going to impact all the major markets in the United States. I think the good news is that the small business traveler is really, the overall economy is $3 trillion bigger than it was in 2019. And business travel, generally, has correlated with the growth of the overall economy in historic terms.
But whether you're in Boston, Chicago, Miami, it's going to impact all of the all the major markets. It States I think the good news is that the small business traveler is really the overall economies three trillion dollars bigger than it was in 2019 at business travel generally kind of historic terms is.
Weighted with the growth of the overall economy. So we saw that correlation happen with the small business traveler, which is great.
Mark W. Brugger: So we saw that correlation happen with the small business traveler, which is great. But there have been fundamental changes in the way that big special corporates travel, the number of days they travel, whether they travel on Mondays and Fridays. So, you know, some of that's going to have a lasting impact. And as business travel evolves, and it always evolves, and the general economy gets bigger and bigger, yeah, we'll probably get back to 19 levels, but not on an inflation-adjusted basis.
But there has been there's been fundamental changes in the way that big special corporate travel at the number of days, they travel where they travel on Mondays and Fridays.
So some of that is going to be a lasting impact as the business travel if all of a sudden it always evolves and the general economy gets bigger and bigger it will probably get back to 90 levels, but not on an inflation adjusted basis.
Mark W. Brugger: Got it. And maybe one more from me on some of the deals you've done. I know at Lake Austin and the Kempton Fort Lauderdale, there are some, I guess, issues with acquisition with managers or whatnot.
Got it and maybe one more from me on some of the deals you've done.
Bake offs at an attempt in Fort Lauderdale, there are some I guess issues at.
Mark W. Brugger: Can you talk about how those have progressed and maybe talk about how Chico Hot Springs has done relative to. Yeah, so Chico is our most recent acquisition. We closed on that in August of last year, and it came, we also bought the adjacent ranch. So if you just take the Chico Hot Springs, we bought it on ACAP. I think this year on budget for just the Hot Springs Resort, it's about an ACAP.
That acquisition, which managers or whatnot can you talk about how those are progressing and maybe talk about how.
<unk> Hot Springs has done relative to your expectations.
Yes, so a chico's our most recent acquisition we closed in that in August of last year. It came we also bought the adjacent ranch. So if you just take the Chico Hot Springs.
Bought it on a cap I think this year our budget for just the Hot Springs resort, it's about an eight cap.
Mark W. Brugger: So we feel great about the acquisition; we're excited to figure out what we can do with the extra 600 acres of land that we have. So that continues to be a very interesting asset for us. On some of the other ones, Fort Lauderdale, the Kimpton we have there, we redid the roof and added kind of a called roof hotspot.
So we feel great about the acquisition, we're excited to figure out what we can do with.
The extra 600 acres of land that we have.
That's continues to be a very interesting asset for us.
Some of the other ones.
Fort Lauderdale, the Kimpton, we have there we redid the roofing added kind of a.
Mark W. Brugger: So that took a lot of last year and that transition. So that continues to ramp up this year, we think we'll see significant growth. It is a little under our 100 rating. And then Lake Austin, we think is the, you know, it's the only hotel that will ever be on Lake Austin.
Call Bruce hotspot.
So that took a lot of a lot of last year and that transition. So that continues to ramp up this year, we think we'll see significant growth.
It is a little under a 100 underwriting and then Lake Austin, We think is the its the only hotel that will ever be on Lake Austin. So we think it's.
Mark W. Brugger: So we think it's, you know, a truly kind of a once in a career opportunity to own something in that location. And, But there was some transition as new systems got implemented, which we talked about on prior calls, but we remain optimistic about the performance of that asset over the next couple of years. But there's been, you know, it'll be a longer ramp than we originally had to run. Okay, thank you. Thank you. Please take a moment for our next question. Our next question will come from the line of Bill Crow from Raymond James. Your line is open. Hey, good morning.
A truly kind of a once in a career opportunity to own something in that location.
But there was some transition as new systems get implemented, which we talked about on prior calls, but we remain optimistic about the performance of that as sort of next couple of years.
But theres been there it'll be a longer ramp than we originally underwrote.
Okay. Thank you.
Sure.
Thank you one moment for our next question.
Okay.
Our next question comes from the line of Bill Crow from Raymond James Your line is open.
Operator: Thanks. And Mark, I'm curious. The TSA screening growth year over year has been running about twice the growth or maybe more than twice the growth of the hotel domain. And I'm wondering how much of that we should attribute to business travel shifting from a four or five day-a-week travel environment to, you know, one, two, or three days a week. Is that the primary driver? Is that still outbound international? Or how should we think about that relationship? It's an interesting question. To tell you the truth, we haven't really contemplated it that much.
Hey, good morning. Thanks.
Mark I'm curious the TSA screening growth year over year.
It's been running about twice the growth or maybe more than twice the growth of hotel demand.
I'm wondering how much of that we should attribute to business travel shifting.
Or five.
Day of week travel.
Environment.
One two or three days a week.
Is that the primary drivers thats still outbound international or how should we think about that relationship.
Mark W. Brugger: I mean, we're looking at the demand generators that are coming into our individual hotels and tracking those patterns, and we look at employment and, you know, which obviously TSA throughput tracks as well. We're seeing employment go up, and the passenger loads go up, but not corresponding to the demand at the hotels. I kind of have to noodle through that one and look a little deeper and get back to you. All right, fair enough. I appreciate it. Thanks. And I'm not showing any further questions in the queue. I would now like to turn it back over to Mark Brugger for any closing remarks. Thank you. Well, first, before we conclude, let me just shout out that it's National Hospitality Workers Day. So we send our appreciation to everyone that works in the hospitality industry for taking care of customers and making it such a great industry. We appreciate our investors and analysts for tuning in today and today's call, and we look forward to updating you next quarter. Take care. Have a great day! Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day! Sign in
It's interesting question Tayo truth, we haven't really contemplated that much I mean, we're looking at the demand generators that are coming into our individual hotels and track those patterns and we look at employments and.
Yes, it's obviously TSA to throughput.
Tracks as well we're.
And we're seeing them claimants up in the passenger loads up.
But not corresponding to the demand at the hotels.
Have to noodle through that one and look a little deeper and get back to you.
Alright fair enough appreciate it thanks.
Thank you.
Okay.
And I'm not showing any further question in the queue I would now like to turn it back over to Mark Brugger for any closing remarks.
Thank you well first before we conclude let me just shout out that its national hospitality workers day. So.
We extend our appreciation to everyone that works in the hospitality industry for for taking care of the customers who are making it such a great industry.
We appreciate our investors and analysts for tuning in today in today's call and we look forward updating you next quarter take care have a great day.
Thank you for.
Your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.
Okay.
Thanks.
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