Q4 2023 Park Hotels & Resorts Inc Earnings Call

Greetings welcome to park hotels, <unk> resorts incorporated fourth quarter 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference call, please call 1-866-433-4333. Please note this conference is being recorded. I will now turn the conference over to Ian Weissman, Senior Vice President of Corporate Strategy. Thank you.

Friends. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Ian Weissman Senior Vice President of corporate strategy. Thank you you may begin.

Ian C. Weissman: Thank you, Operator, and welcome everyone to the Park Hotels & Resorts 4th Quarter and Full Year 2023 Earnings Call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Please refer to the documents filed by PARC with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statement.

Ian Weissman: Thank you operator, and welcome everyone to the park hotels, <unk> resorts fourth quarter and full year 2023 earnings call before we begin I would like to remind everyone that many of the comments made today are considered forward looking statements under federal Securities laws.

Ian Weissman: Scribed in our filings with the SEC. These statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward looking statements.

Actual future performance outcomes and results may differ materially from those expressed in forward looking statements.

Please refer to the documents filed by park with the SEC specifically the most recent reports on Form 10-K, and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward looking statements.

Ian C. Weissman: In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO and adjusted EBITDA. Confine this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings release, as well as in our 8K filed with the SEC, and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis with a comparable view excluding the two Hilton San Francisco hotels. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide a review of PARCC's fourth-quarter performance and the outlook for 2024. Sean DeLorto, our Chief Financial Officer, will provide additional color on fourth-quarter results, an update on our balance sheet and liquidity, and further details on guidance. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom. Thank you, and welcome everyone.

Ian Weissman: Addition, on today's call, we will discuss certain non-GAAP financial information, such as <unk> and adjusted EBITDA.

Ian Weissman: You can find this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings release as well as in our 8-K filed with the SEC and the supplemental financial information available on our website at PK hotels and resorts Dot com.

Ian Weissman: Additionally, unless otherwise stated all operating results will be presented on a comparable hotel basis with a comparable view, excluding the two Hilton San Francisco hotels.

Ian Weissman: Good morning, Tom Baltimore, our chairman and Chief Executive Officer, who will provide a review of parks fourth quarter performance and the outlook for 2020 for Sean Dellorto, Our Chief Financial Officer, who will provide additional color on fourth quarter results and update on our balance sheet and liquidity and further details on guidance.

Thomas J. Baltimore: Following our prepared remarks, we will open the call for questions with that I would like to turn the call over to Tom.

Thomas J. Baltimore: Thank you and welcome everyone.

Thomas Jeremiah Baltimore: 2023 was a year of outstanding accomplishments for Park as we executed on our strategic objectives, exceeded our operational goals, and meaningfully strengthened our balance sheet, while delivering sector-leading total returns for shareholders. Our strong operational performance was broad-based, as we witnessed ongoing strength in Hawaii and an acceleration in group demand across several of our four markets, including New York and Boston.

Thomas J. Baltimore: 2023, it was a year of outstanding accomplishments for park as we executed on our strategic objectives.

Thomas J. Baltimore: Seeded our operational goals and meaningfully strengthened our balance sheet.

Thomas J. Baltimore: While delivering sector, leading total returns for shareholders.

Tom: Our strong operational performance was broad based.

Tom: As we witnessed the ongoing strength in Hawaii.

Tom: As well as an acceleration in group demand across several of our core markets, including New York.

Tom: Boston.

Thomas Jeremiah Baltimore: Denver, and Chicago, which helped to drive REBPAR growth of nearly 16% versus 2022 in our urban hotel portfolio. On the capital allocation front, we remain laser-focused on targeting the highest returns on our invested capital.

Tom: Denver, and Chicago, which helped to drive revpar growth of nearly 16%.

Tom: 2022.

Tom: Our urban hotel portfolio.

Tom: On the capital allocation front.

Tom: We remain laser focused on targeting the highest returns on our invested capital.

Thomas Jeremiah Baltimore: Having strategically invested nearly $300 million across our iconic portfolio and expected returns well above acquisition yield, we also took advantage of the spread between public and private market valuations. Buying back nearly 15 million shares for $180 million in 2023 at a significant discount to net asset value. In addition, we returned over $450 million of capital to shareholders in the form of dividends, with dividends from operations totaling $1.38 per share, or an attractive 8.5% yield based on our most recent share price. I'm also incredibly excited about our relative position in 2024.

Tom: Strategically invested nearly $300 million across our iconic portfolio had expected returns well above acquisition yields.

Tom: We also took advantage of the spread between public and private market valuations.

Tom: Buying back nearly 15 million shares.

Tom: $180 million in 2023 at a significant discount to net asset value.

Tom: In addition, we returned over $450 million of capital to shareholders in the form of dividends.

Tom: With dividends from operations totaling $1 38 per share or an attractive eight 5% yield.

Tom: So in our most recent share price.

Tom: I'm also incredibly excited about our relative position in 2024.

Thomas Jeremiah Baltimore: The investments we've made in our portfolio the last two years, along with the repositioning achieved by the effective exit from the two San Francisco hotels, combined with the current backdrop of a healthier-than-expected U.S. economy, strong convention and group activity in our key markets, and the ongoing resilience of leisure travel create a favorable setup for parks. Fruit and capital allocation remains a top priority, as we anticipate continuing our initiative to sell more non-core hotels with net proceeds used to reduce debt and reinvest in our core portfolio, with an expected disposition target of $100 to $250 million this year. Furthermore, we will continue to strengthen our balance sheet by extending maturities. All while maintaining sufficient liquidity to opportunistically acquire assets should capital market conditions improve. Turning to operations,

Tom: The investments we've made in our portfolio the last two years.

Tom: Long with the repositioning achieved by the effective exit from the two San Francisco hotels.

Tom: And with the current backdrop of a healthier than expected U S economy.

Tom: Strong convention and group activity in our key markets.

Tom: And the ongoing resilience of leisure travel.

Tom: It is a favorable setup for park.

Tom: Prudent capital allocation remains a top priority.

Tom: We anticipate continuing our initiatives to sell more noncore hotels with net proceeds used to reduce debt and reinvest in our core portfolio.

Tom: With an expected disposition target of $100 million to $250 million this year.

Tom: Furthermore, we will continue to strengthen our balance sheet by extending maturities.

Tom: While maintaining sufficient liquidity to opportunistically acquire assets should capital market conditions.

Tom: Turning to operations.

Thomas Jeremiah Baltimore: As we previously reported, I am incredibly pleased with our results for both the quarter and full year 2023, which exceeded expectations. So far, growth increased 4.1% for the fourth quarter and 8.7% for the full year, or 50 basis points higher than the midpoint of our full-year guidance. Including the impact from renovation, primarily at Bonnet Creek and Casa Marina, DREFBAR increased an impressive 6% and nearly 11%, respectively.

Tom: As we previously reported I am incredibly pleased with our results for both the quarter and full year 2023.

Tom: It exceeded expectations.

Tom: Revpar growth increased four 1% for the fourth quarter and eight 7% for the full year or 50 basis points higher than the midpoint of our full year guidance.

Tom: Excluding the impact from renovations, primarily at Bonnet Creek and customer Arena Revpar.

Tom: Revpar increased an impressive 6%.

Tom: Nearly 11% respectively.

Thomas Jeremiah Baltimore: Total REPAR growth of nearly 5% in the fourth quarter was supported by an 8% increase in food and beverage spend, driven by solid banquet and catering in our urban and resort markets, translating into an incremental $3.5 million increase in EBITDA in the fourth quarter, with respect to groups. We saw a continued trend of accelerating performance throughout the quarter. Comparable group revenues for the fourth quarter were up nearly 9% year-over-year, for a sequential 12% improvement over the third quarter.

Tom: Total revpar growth of nearly 5% in the fourth quarter was supported by an 8% increase in food and beverage spend.

Tom: Driven by solid banquet and catering in our urban and resort markets.

Tom: Translating into an incremental three and a half million dollar increase in EBITDA and.

Tom: In the fourth quarter.

Tom: With respect to group.

Tom: So a continued trend of accelerating performance throughout the quarter.

Tom: Comparable group revenues for the fourth quarter up.

Tom: The 9% year over year.

Tom: For a sequential a 12% improvement over the third quarter.

Thomas Jeremiah Baltimore: Well, here's four results. This was the first quarter since the start of the pandemic where group revenue surpassed 2019's quarterly results. Looking ahead to 2024, we expect Group revenue to remain very healthy, with Group revenue up 13% year-over-year.

Tom: Well Q4 results represented.

Tom: Represented the first quarter since the start of the pandemic for group revenue surpassed 2019 quarterly results.

Tom: Looking ahead to 2024 weeks.

Tom: <unk> group to remain very healthy group revenue pace up 13% year over year.

Thomas Jeremiah Baltimore: And total group revenues forecasted to exceed 2019 levels this year, given by a material pickup in group demand at our Bonnet Creek complex in Orlando, where our meeting space expansion project was completed recently, coupled with strong citywide calendars across several of our four markets, including Chicago and Honolulu. New Orleans, San Diego, and Miami, all of which are expected to produce double-digit increases in convention room nights in 2024. Focusing on a few key markets. New York continued to benefit from an impressive recovery of both group and leisure demand, which when combined with a nearly 9% decrease in hotel supply since 2019, translated into a material increase in compression room nights during the quarter. Specifically, our Hilton New York Midtown recorded 45 sellout nights in the quarter.

Tom: And total group revenues forecasted to exceed 2019 levels this year.

Tom: Driven by a material pick up in group demand at our Bonnet Creek complex in Orlando, where our meeting space expansion project was completed recently.

Tom: Coupled with strong citywide calendars across several of our core markets.

Tom: In Chicago.

Tom: Lulu.

Tom: New Orleans, San Diego, and Miami, all of which are expected to produce double digit increase in convention room nights 2024.

Tom: Focusing on a few key markets.

Tom: <unk> continued to benefit from impressive recovery of both group and leisure demand, which when combined with a nearly 9% decrease in <unk>.

Tom: Hotel supply since 2019.

Tom: Translated into a material increase in compression room nights during the quarter.

Tom: Typically.

Tom: Our Hilton New York Midtown recorded 45.

Tom: Sellout nights in the quarter.

Thomas Jeremiah Baltimore: Almost double the same period last year, and most notably, the highest quarterly revenue in a property's history. Rounding out a great year for the asset, which grew REVFAR by over 30% versus 2022. Boston also delivered a very strong quarter, with our Hyatt Regency Hotel benefiting from better-than-expected group demand.

Tom: Most double same period last year.

Tom: And most notably the highest quarterly revenue.

Tom: Property is history.

Tom: Rounding out a great year for the asset which grew revpar by over 30% versus 2022.

Tom: Boston also delivered a very strong quarter.

Tom: But our Hyatt Regency hotel benefiting from better than expected group demand.

Thomas Jeremiah Baltimore: Helping to lift rates with ADR up 10% year-over-year or 12.5% above 2019. Turning to our resort portfolio, although excluding disruption primarily from the Casa Marina and Waldorf-Bonnet Creek renovations.

Tom: Helping to lift rate with ADR up 10% year over year.

Tom: Our 12, 5% above 2019.

Tom: Turning to our resort portfolio.

Tom: Excluding disruption primarily from the custom arena and Waldorf.

Tom: On a creek renovation.

Thomas Jeremiah Baltimore: REFR for the fourth quarter exceeded 2022 by over 6%. But, once again, due to sustained demand in Hawaii... Specifically, at the Hilton Hawaiian Village, REVPAR increased 5% driven by increased group room nights and ADR improvements from continued domestic leisure strength. Total air available seats into Oahu grew by 11% over 2022 during the fourth quarter, with domestic improving by 5% and international available seats increasing by nearly 30%.

Tom: Revpar for the fourth quarter exceeded 2022 by over 6%.

Tom: Led once again by the sustained demand in Hawaii.

Tom: Specifically at the Hilton Hawaiian village Revpar increased 5%.

Tom: By increased group room nights and a.

Tom: Our improvements from continued domestic leisure strength.

Tom: Total error available seats into a wahoo.

Tom: Grew by 11% over 2022.

Tom: During the fourth quarter.

Tom: Domestic improving by 5% and international available seats, increasing by at least 30%.

Thomas Jeremiah Baltimore: Although still pacing 28% below the 2019 level, we saw particular strength at our Hilton Waikoloa Village, which achieved a 22% increase in REVPAR during the quarter. Driven by exceptionally strong group demand, group revenues were up more than 145% over 2022, including increased demand from several groups relocating their programs from Maui to Big Island during the fourth quarter. Even without the benefit of the still-recovering international demand, both hotels reported

Tom: Although still pacing, 28% below 2019 level.

Tom: We saw particular strength at our Hilton Waco, lower village, which achieved a 22% increase in revpar during the quarter.

Tom: By exceptionally strong group demand.

Tom: Group revenues were up more than 145% over 2022.

Tom: Increased demand from several groups relocating their programs for Maui.

Tom: Island during the fourth quarter.

Tom: Even without the benefit of they're still recovering international demand both hotels reported record profits.

Thomas Jeremiah Baltimore: 2023, with Hilton Hawaiian Village's adjusted EBITDA up 15% over 2019. $188 million, while Hilton Waikoloa Village seeded 2019 by 12% to $56 million, despite having 600 fewer rooms. Looking ahead to 2024, Park remains well-positioned to generate solid year-over-year revenue gains driven by tailwinds from our ROI investments. The ongoing strength of our resort markets and an acceleration of group business transient demand in markets, which stand to benefit from a strong convention calendar. At the Urbana-Creek-Orlando Complex.

Tom: 2023.

Tom: With Hilton Hawaiian village adjusted EBITDA up.

Tom: 15% over 2019.

Tom: 188 billion.

Tom: <unk>.

Tom: While Hilton Hawaiian village stated 2019 by 12% to $56 million.

Tom: Despite having 600.

Tom: We're rooms.

Tom: Looking ahead to 2024.

Tom: Spark remains well positioned to generate solid year over year, revpar gains driven by tail winds from our ROI investments.

Tom: The ongoing strength of our.

Tom: Resort markets and an acceleration of group business transient demand in markets, which stand to benefit strong convention calendar.

Tom: At our Bonnet Creek Orlando complex.

Thomas Jeremiah Baltimore: Feedback from meeting planners has been incredibly positive. 2024 Group Revenue Forecast will be a record year for the complex, with revenue on the books pacing over 30% ahead of 2023, and hotel-adjusted EBITDA forecasted to exceed 2023 by over 20%. While Group Revenue Pays versus 2019, currently ahead by 30%. At Casa Marina in Key West.

Tom: Feedback from meeting planners has been incredibly positive.

Tom: 24 group revenue forecast to be a record year for the complex.

Tom: Revenue on the books facing over 30% ahead of 2023.

Tom: And hotel adjusted EBITDA forecasted to exceed 2023 over 20%.

Tom: While group revenue pace versus 2019 is currently ahead by 30%.

Tom: The Casa Marina in key West.

Thomas Jeremiah Baltimore: Momentum has been building since the hotel fully reopened its rooms in mid-December. [inaudible] Property Forecasts Generated Full year RIPR growth in excess of 70%. Collectively, we expect renovation tailwinds from both the Casa and Bonnet Creeks to add approximately 150 basic points to the full year 2024 DREF part of our overall portfolio. In Hawaii... We anticipate Hilton Hawaiian Village to have another strong year driven by healthy domestic travel, while inbound tourism from Japan is expected to improve throughout the year. The latest forecast from the Hawaii Tourism Board suggests a material increase in airlift direct to Honolulu from Japan.

Tom: Momentum is building instead of hotel fully reopened its rooms in mid December.

Tom: Revenue on the books.

Tom: 2024 up 65%.

Tom: <unk> forecasted generate.

Tom: Full year revpar growth in excess of 70%.

Tom: Collectively we expect renovation tailwind from both the Casa and Bonnet Creek.

Tom: Bad enough.

Tom: At approximately 150 basis points.

Tom: For full year 2020 for Revpar.

Tom: Through our overall portfolio.

Tom: In Hawaii.

Tom: We anticipate Hilton Hawaiian village to have another strong year, driven by healthy domestic travel well.

Tom: Inbound tourism from Japan is expected to improve throughout the year.

Tom: The latest forecast from the Hawaii Tourism Board.

Tom: Just a material increase in airlift director Honolulu from Japan.

Thomas Jeremiah Baltimore: The visitor arrival is expected to increase 50% this year and exceed 2019 levels by 2026. Between the two properties, we are forecasting our Hawaii hotels to deliver low single-digit REBPAR growth in 2024. Partially impacted by phased room renovations at both resorts, which Sean will discuss shortly. We are very bullish on the future outlook for both markets in Hawaii. Japanese travel should continue to build over the next 12 to 18 months.

Tom: Visitor arrivals are expected to increase 15% this year.

Tom: And exceed 2019 levels by 2026.

Tom: Between the two properties, we are forecasting a y O hotels to deliver low single digit revpar growth in 2024.

Tom: Partially impacted by space room renovations at both resorts.

Sean M. DellOrto: Sean will discuss shortly.

Sean M. DellOrto: We are very bullish on the future outlook for both markets in Hawaii.

Tom: Japanese travel should continue to build over the next 12 months.

Thomas Jeremiah Baltimore: We anticipate increased domestic airlift to both islands, which is up over 15% in 2019, should help to support ongoing strong domestic demand. Additional growth drivers in 2024. This includes strong performance across our urban portfolio with Boston, New York, Denver, and Chicago expected to deliver REPPAR growth in excess of 5% on average, as both group and business transient demand trends continue to improve. In summary, 2023, we accomplished some key objectives that have set us up to deliver solid growth, Tailwinds from Recent ROI Investments, and a meaningfully true balance sheet. Additionally, continued strength in Hawaii. A Well-Positioned Urban Portfolio.

Tom: We anticipate increased domestic airlift to both islands.

Tom: It's up over 15% 2019.

Tom: It should help to support ongoing strong domestic demand.

Tom: Additional growth drivers in 2024.

Tom: <unk> strong performance across our urban portfolio.

Tom: Boston New York.

Tom: And Chicago.

Tom: Expected to deliver revpar growth in excess of 5% on average.

Tom: As both group and business transient demand trends.

Tom: Menu to improve.

Tom: In summary.

Tom: 2023, we accomplish some key objectives that have set us up to deliver solid growth.

Tom: The tailwind from recent ROI investments.

Tom: Meaningfully through balance sheet.

Tom: Additionally.

Tom: And you had strength in Hawaii.

Tom: Well positioned urban portfolio.

Thomas Jeremiah Baltimore: Supported by strong convention calendars and encouraging momentum in our group business, we have optimism in our outlook. With that, I'd like to turn the call over to Sean, who will provide further details on our performance, as well as additional details on first quarter expectations. Thanks, Tom.

Tom: Supported by strong convention calendars and encouraging momentum in our group business gives us the optimism in our outlook.

Tom: With that I'd like to turn the call over to Sean who will provide further details on our performance.

Sean M. DellOrto: As well as providing additional details on the first quarter expectation.

Sean M. DellOrto: Thanks, Tom.

Sean DeLorto: Overall, we were very pleased with our fourth quarter performance. Q4 REPFAR was $178, with occupancy up 150 basis points to 71%, and ADR increasing nearly 2% to $251, or 15% above 2019. Q4 comparable hotel revenue was $619 million, while comparable hotel-adjusted EBITDA was $171 million, resulting in a comparable hotel-adjusted EBITDA margin of 27.5%. Q4 adjusted EBITDA was $163 million, and adjusted FFO per share was $0.52.

Sean M. DellOrto: We were very pleased with our fourth quarter performance.

Sean M. DellOrto: Q4, Revpar was $178 with occupancy up 150 basis points to 71% with ADR, increasing nearly 2% to $251 or 15% above 2019.

Sean M. DellOrto: And for comparable hotel revenue was $619 million, while comparable hotel adjusted EBITDA was $171 million.

Sean M. DellOrto: Resulting in comparable hotel adjusted EBITDA margin of 27, 5%.

Sean M. DellOrto: Q4, adjusted EBITDA was $163 million and adjusted <unk> per share was 52 cents.

Sean DeLorto: Turning to the balance sheet, our current liquidity is over $1.3 billion, including approximately $350 million of cash, while net debt currently stands at $3.4 billion. We're down over $500 million versus where we stood a year ago. With net debt to adjusted EBITDA lower by 1.5 times to under 5.2 times following our effective exit from the two Hilton San Francisco hotels. Overall, our balance sheet is in great shape with just over $700 million of debt maturing through 2025, or less than 20%, including our $650 million 7.5% corporate bonds that come due in June 2025. With respect to balance sheet priorities, we continue to evaluate options to push out impending maturities while using proceeds from potential asset sales to de-lever and provide further financial flexibility. Furthermore, I'm delighted to announce that S&P Global recently upgraded Park Hotels' corporate credit rating by two notches, elevating it from a single B rating to double B minus.

Sean M. DellOrto: Turning to the balance sheet, our current liquidity is over $1.3 billion, putting approximately $350 million of cash or net debt currently stands at $3 $4 billion.

Sean M. DellOrto: We're down over $500 million versus where we stood over a year ago.

Sean M. DellOrto: With net debt to adjusted EBITDA lower by one five turns to under five two times.

Sean M. DellOrto: Following our effective exit from the two Hilton San Francisco hotels.

Sean M. DellOrto: Overall, our balance sheet is in great shape with just over $709 of debt maturing through 2025 or less than 20%, including a $659 seven 5% corporate bonds that come due in June 2025.

Sean M. DellOrto: With respect to balance sheet priority as we continue to evaluate options for pushout impending maturities by using proceeds from potential asset sales to delever and provide further financial flexibility.

Sean M. DellOrto: Furthermore, I'm delighted to announce that S&P global recently upgraded park hotels corporate credit rating by two notches.

Sean M. DellOrto: But a single B rating, if that'll be minus.

Sean DeLorto: This marks a significant advancement for the company and reflects the agency's acknowledgment of our dedicated efforts over the past four years to strengthen our balance sheet and credit metrics. Turning to capital expenditures, we substantially completed several strategic projects in 2023, including the $220 million full-scale renovation and meeting space expansion at our 1,500-room Signia and Waldorf Astoria Bonnet Creek Resort Complex in Orlando, as well as the $80 million renovation of our Casa Marina Resort in Key West. The $85 million complete renovation of the 1,021-room Tapa Tower at Hilton Hawaiian Village. The $11 million complete renovation of the 455-room Riverside Tower at our Hilton Delones Hotel and the $5 million renovation of the 30,000-square-foot Grand Ballroom at the New York Hilton.

Sean M. DellOrto: This marks a significant advancement for the company.

Sean M. DellOrto: It's like the agency's acknowledgment of our dedicated efforts over the past four years.

Sean M. DellOrto: And our balance sheet and credit metrics.

Sean M. DellOrto: Turning to capital expenditures, we substantially completed several strategic projects in 2023, including the 220 million dollar full scale renovation and meeting space expansion at our 1500 rooms, Cigna and Waldorf Astoria Bonnet Creek resort complex in Orlando.

Sean M. DellOrto: As well as the $80 million renovation of our Casa Marina resort in key west.

Sean M. DellOrto: The $85 $9, a complete rooms renovation of the 1021 room Tapa tower at Hilton Hawaiian village.

Sean M. DellOrto: $11 million, a complete rooms renovation of a 455 room Riverside tower at our Hilton New Orleans hotels.

Sean M. DellOrto: And the $5 million renovation of a 30000 square foot Grand Ballroom at the New York Hilton.

Sean DeLorto: In total, we spent nearly $300 million in capital in 2023, a third of which were targeted ROI projects. In 2024, our total CapEx spend will be approximately $230 million to $250 million, of which nearly 60% will be focused on guest-facing areas, including renovations for nearly 850 rooms. Key projects this year include a multi-phase room renovation at Hilton New Orleans Riverside, where we will renovate all 1,167 keys in the main tower over the next few years, with 250 keys targeted for completion in 2024. In addition, we will also launch phased room renovations at both of our Hawaii hotels, including approximately $45 million to be spent at Hilton Hawaiian Village, where we will renovate nearly half of the 796 rooms in the Rainbow Tower this year, while adding With the balance expected to be completed in 2025, we also plan to renovate nearly half of the room product in the 400-room Palace Tower at Hilton Waikoloa Village for a total investment of $31 million, also adding 11 kitchens.

Sean M. DellOrto: In total we spent nearly $300 million of capital in 2023, a third of which were targeted ROI projects.

Sean M. DellOrto: In 2020 for a total capex spend will be approximately $230 million 251, $250 million of which nearly 60% will be focused on guest facing areas.

Sean M. DellOrto: Including renovations for nearly 850 rooms.

Sean M. DellOrto: Key projects. This year, it's really a multi phased rooms renovation at Hilton New Orleans Riverside.

Sean M. DellOrto: We will renovate all 1167 keys in the main tower over the next few years with 250 key targeted for completion in 2024.

Sean M. DellOrto: In addition, we will also launch phase to room renovations at both of our Hawaii hotels, including approximately $45 million to be spent at Hilton Hawaiian village, where we will renovate nearly half of the 796 rooms in the Rainbow tower this year.

Sean M. DellOrto: While adding 26 key.

Sean M. DellOrto: With the balance expected to be completed in 2025.

Sean M. DellOrto: We also plan to renovate nearly half of the room product and the 400 room Palace tower at Hilton <unk> village for a total investment of $31 million also adding 11 keys.

Sean DeLorto: But the balance of the room is expected to be completed by early 2026. Renovation displacement in Hawaii this year is expected to be approximately $8 million, placing a nearly 180 basis points drag on Hawaii REVPAR performance for a 40 basis point drag on total portfolio results while negatively impacting total portfolio margin by 20 basis points for the year. Turning to guidance, we are establishing full-year 2024 REBPAR guidance of $185 to $188, for a year-over-year growth of 3.5% to 5.5%, while hotel EBITDA margin is expected to be between 26.8% and 27.8%. With respect to earnings, we are forecasting adjusted EBITDA to be in the range of $645 million to $685 million, and adjusted FFO per share guidance is forecast to be between $2.02 to $2.22. Additionally, with respect to full-year hotel adjusted EBITDA margin, which is forecast to be down 50 basis points at the midpoint. Prior comparisons will be impacted by last year's favorable property tax appeals and other non-repeating items, which will negatively impact margin by approximately 40 basis points.

Sean M. DellOrto: For the balance of the rooms expected to be completed by early 2026.

Sean M. DellOrto: Renovation displacement in Hawaii. This year is expected to be approximately $8 million.

Sean M. DellOrto: Are you seeing in nearly 180 basis points drag on Hawaii Revpar performance.

Sean M. DellOrto: A 40 basis point drag on total portfolio results, while negatively impacting total portfolio margin by 20 basis points for the year.

Sean M. DellOrto: Turning to guidance, we are establishing a full year 2020 for revpar guidance of $185 to $188 or.

Sean M. DellOrto: Or year over year growth of three 5% to five 5%.

Sean M. DellOrto: All hotel EBIT margin is expected to be between 26, 8% and 27, 8%.

Sean M. DellOrto: With respect to earnings we are forecasting adjusted EBITDA to be in the range of $645 million to $685 million and adjusted <unk> per share guidance is forecast to be between $2 <unk> to.

Sean M. DellOrto: The $2 22%.

Sean M. DellOrto: With respect to full year hotel adjusted EBITDA margin, which is forecast to be down 50 basis points at the midpoint prior.

Sean M. DellOrto: Prior year comparisons will be impacted by last year's favorable property tax appeals and other non repeating items, which will negatively impact margin by approximately 40 basis points.

Sean DeLorto: The first quarter had an exceptional start with REBCAR growth up 13.4% in January, and positive trends continue in February, with the preliminary REBCAR forecast to be up over 8%, for a pickup of over 250 basis points of year-over-year growth relative to our forecast at the beginning of the month. We have witnessed solid performance across much of the portfolio, with outsized gains driven by our urban core, including New York, Chicago, New Orleans, and Denver, while we expect RETPAR in Hawaii to increase by 10% through the first two months of this year. Additionally, renovation tailwinds at both Casa Marina and Signia Bonnet Creek are translating into solid red part gains at these properties, with results in January and estimates for February projected up 20% and 19%, respectively.

Sean M. DellOrto: The first quarter has had an exceptional start with revpar growth up 13, 4% in January.

Sean M. DellOrto: <unk> trends continued in February with preliminary revpar forecast to be up over 8%.

Sean M. DellOrto: Or pick up of over 250 basis points of year over year growth relative to our forecast at the beginning of the month.

Sean M. DellOrto: We have witnessed solid performance across much of the portfolio with outsized gains driven by our urban core, including New York Chicago, New Orleans in Denver, While we expect Revpar in Hawaii to increase by 10%.

Sean M. DellOrto: Through the first two months of this year.

Sean M. DellOrto: Additionally, renovation tailwind that both Casa Marina and Cigna Bonnet Creek are translating into solid revpar gains at these properties with results in January and estimates for February projected up 20% and 19% respectively.

Sean M. DellOrto: Looking ahead to March we have tougher year over year comparisons, especially on the group side, which witnessed exceptionally strong performance last year.

Sean DeLorto: Looking ahead to March, we have tougher year-over-year comparisons, especially on the group side, which witnessed exceptionally strong performance last year, while the Easter Countership is an additional headwind to March performance. Consequently, we currently anticipate low single-digit red park growth for March to balance out the quarter, yielding expectations for Q1 red park growth in the range of 6.3% to 7.3%. Turning to the Q1 dividend, given our positive outlook for the year, we recently declared a quarterly dividend of $0.25 per share, which is a 67% increase over the $0.15 quarterly dividend paid last year and translates to an annualized dividend yield of 6.2% based on recent trading levels.

Sean M. DellOrto: While the Easter calendar shift is an additional headwind to March performance.

Sean M. DellOrto: Consequently, we currently anticipate low single digit revpar growth for March to balance out the quarter.

Sean M. DellOrto: Expectations for Q1, Revpar growth in the range of six 3% to seven 3%.

Sean M. DellOrto: Turning to the Q1 dividend given our positive outlook for the year. We recently declared a quarterly dividend of <unk> 25 per share, which is a 67% increase over the 15th quarterly dividend paid last year.

Sean M. DellOrto: And translates to an annualized dividend yield of six 2% based on recent trading levels.

Operator: As we stated last quarter, we expect to resume our targeted payout ratio in the range of 65%, 70%, with just an FFO per share for the full year, which, based on our current guidance, would translate into an incremental top-off dividend at the end of the year. This concludes our prepared remarks. We will now open the line for Q&A. To address each of your questions, we ask that you limit yourself to one question and one follow-up. Operator, may we have the first question, please?

Sean M. DellOrto: As we stated last quarter, we expect to resume our targeted payout ratio in the range of 65%, 70%, but adjusted <unk> per share for the full year.

Sean M. DellOrto: Based on our current guidance would translate into an incremental top off dividend at the end of the year.

Speaker Change: This concludes our prepared remarks, we'll now open the line for Q&A.

Speaker Change: Each of your questions. We ask that you limit yourself to one question and one follow up.

Speaker Change: Operator may we have the first question. Please.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue.

Speaker Change: Thank you as he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Floris Van: You May press star two to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question is from Floris van <unk> with <unk>.

Floris Gerbrand Hendrik Van Dijkum: And for participants using speaker equipment, it may be necessary to pick up your headset before pressing the star key. Our first question is from Floris van Dijkum with Compass Point. Please proceed. Hey, good morning, guys. So pretty, pretty impressive.

Floris Van: Please proceed.

Floris Van: Hey, good morning, guys.

Floris Van: So.

Floris Van: Yeah pretty pretty impressive.

Thomas Jeremiah Baltimore: As I look at this, I still see a $47 million hotel EBITDA gap in your results. Just curious as to when you think that the portfolio is gonna exceed 2019 levels, and the 47 million, obviously, you know, your hotel EBITDA relative to 2019 levels. And maybe you could touch on specifically Hawaii Village, because that asset is just, it's a gift, I guess, that keeps giving. It's within touching distance of getting to $200 million of EBITDA, and despite the disruption that you expect in 2024, I mean, 6% EBITDA growth essentially puts you over the $200 mark. Is it possible within the next calendar year to be able to achieve something like that? Floris, that would be great.

Floris Van: As I look at this.

Floris Van: We'll see a $47 million a hotel EBITDA gap in your results.

Floris Van:

Floris Van: Just curious as to when do you think that the portfolio is going to exceed 2019 levels than the 47 million obviously.

Floris Van: Our hotel EBITDA relative to 2019 levels and maybe if you could touch on.

Floris Van: Specifically, Hawaii village because that asset is just it keeps it's a gift that keeps giving because it's within touching distance of getting to $200 million of EBITDA and despite the disruption.

Floris Van: That you expect in 'twenty four I mean.

Floris Van: 6% EBITDA growth essentially puts you over the 200 Mark is it possible.

Floris Van: Within the next calendar year or two to be able to achieve something like that.

Floris Van: Floris great it's always.

Thomas Jeremiah Baltimore: It's always good to... talk with you. As you know, there was a lot to unpack there. Let me, on the Hawaii piece, I think, as Sean put it, as he noted in his prepared remarks, Hawaii has been a phenomenal and really strong performer despite the fact that the Japanese traveler isn't back. Depending on, I think last year about 600,000 visitors versus, so if you look over the last 30 years, I think about 1.5 million. You know, 50, 60% plus or minus below normalized levels.

Speaker Change: It was good.

Speaker Change: Talk with you as you know there was a lot to unpack there, but let me on the on the Hawaii piece I think as Sean put as he noted in his prepared remarks.

Speaker Change: Hawaii has been a phenomenal and really strong performer and despite the fact that the Japanese travelers and back.

Pending on.

Speaker Change: Last year of about 600000 visitors versus so if you look over the last 30 years I think about one 5 million. So you still.

Speaker Change: 50%, 60% plus or minus below.

Thomas Jeremiah Baltimore: We do think, as we noted, that we'll get back to, you know, one and a half million visitors probably in that 2026 timeframe. So, you know, it continues to provide, I think, incredible tailwinds for us. There's nothing like Hilton Hawaiian Village.

Speaker Change: Normalized levels, we do think as we as we noted that we will get back to you know one and a half million visitors.

Speaker Change: Probably in the 202006 timeframe so.

Speaker Change: It continues to provide I think incredible tailwind for US there is nothing like Hilton Hawaiian village.

Thomas Jeremiah Baltimore: When you think about 22 acres and five towers, you've got generations that continue to go there. It's not ultra-luxury, and so it appeals to the masses. It's got, obviously, a long history with Hawaii 5-0. So it is special, to answer your question as to whether or not we will eclipse 6% or 200 million. You know, I don't know whether it's this year or next year, but I certainly think it's in our future. As we said in our prepared remarks, we're probably looking at low single digits this year, given the fact that we're going to try to complete half of the renovation of Rainbow Tower this year. If you look at Tapa, and huge credit to Carl Mayfield and his team on the design and construction side, I mean, we were picking up $75 in additional ADR from that renovation. We expect we'll do something comparable, if not more, for what we're planning. Obviously, at Rainbow Tower.

Speaker Change: When you think about 'twenty two acres five towers, you've had generations that continue to go there.

Speaker Change: It's not ultra luxury and so it appeals to the masses.

Speaker Change: Scott obviously, the long history with Hawaii five O. So it is special to answer your question as to whether or not we eclipsed 6% or $200 million you know I don't know whether its this year or next year, but I certainly think it's in our future.

Speaker Change: As we said in our prepared remarks, we're probably looking at low.

Speaker Change: Low single digits. This year, given the fact that we're going to.

Speaker Change: Try to complete half the renovation of Rainbow tower. This year, if you look at Tampa and huge credit to Carl Mayfield and his team and the design and construction side I mean, we were picking up $75, an additional ADR from that renovation.

Speaker Change: We expect we will do something comparable if not more for what we're planning obviously, a rainbow towers. So we are very very bullish as we as we look out in Hawaii.

Thomas Jeremiah Baltimore: So we are very, very bullish as we look out in Hawaii, at Hilton Hawaiian Village. But, you know, let's also not forget Hilton Waikoloa, which had a phenomenal year, up 146% in group revenue last year, despite the fact that that property, again, had half the inventory that it had pre-spun. We're generating, I think, $85,000 in EBITDA per guest room. So it just continues to be a phenomenal performer.

Speaker Change: Hawaiian village, but let's also not.

Speaker Change: Forget Hilton like Aloha, which you know had a phenomenal year up 146% in group revenue last year. Despite the fact that that property again has half the inventory that it had.

Speaker Change: Pre spin.

Speaker Change: We're generating I think 80000 $85000 in EBIT EBITDA.

Speaker Change: Per per Guestroom. So it just continues to be a phenomenal performer our asset management team working in conjunction with our operating partners out there.

Thomas Jeremiah Baltimore: Our asset management team working in conjunction with our operating partners out there, the strong leadership that we've got at Hilton Hawaiian Village, Debbie Bishop and her team just do a phenomenal job, so very, very bullish on Hawaii as we look out. As you know, we're also working on entitlements for a sixth tower. So we think there's even more upside in Hawaii as we look out. It would be impossible, and I emphasize impossible, to replicate what we have at Hilton Hawaiian Village.

Speaker Change: Strong leadership.

Speaker Change: But we've got at Hilton Hawaiian village, Debbie Bishop and her team just do a phenomenal job so very very bullish on Hawaii as we look out.

Speaker Change: As you know we're also working on.

Speaker Change: Entitling us six tower. So we think there's even more upside in Hawaii as we look out it would be impossible and I emphasize impossible to replicate what we have at Hilton Hawaiian village.

Thomas Jeremiah Baltimore: And that also does not include the 1,000 units of timeshare that we don't own. But at any point, you know, you're looking at guests from 10 to 11,000 or more, you know, on site at the village. So it is truly iconic and special, and I'm not sure there's another REIT asset across any of the sectors that generates the kind of EBITDA that we do at Hilton Hawaiian Village. So very proud and very bullish, and grateful for the hard work there. You know, regarding your question across the portfolio and the gap that exists, It's pretty interesting when you think about... the fact that, take January as an example. In the fourth quarter, we said we were up 16% in the group, but if you look at just January, Urban was up 20%, and Resort up 10%. If you think about our group pace, our group pace in January was up 29%, February up 26%, and it's broad-based, as we noted. Chicago was up 38%, Denver up 34%, San Jose in business out there close to Apple, and others up 35%.

Speaker Change: Also does not include the thousand units of timeshare that we don't own but at any point you are looking at guests did tend to 11000 or more you know an onsite at the village. So it is truly iconic and special and I'm not sure. There's another REIT asset.

Speaker Change: Any of the sectors that.

Speaker Change: That generates the kind of EBITDA that we do with Hilton Hawaiian village, so very proud and very bullish and grateful for the hard work. There now regarding your question across the portfolio and that the gap that exist, it's pretty interesting when you think about.

Speaker Change: You know the fact that.

Speaker Change: Take January as an example.

Speaker Change: Fourth quarter, we said we were up grew 16%, but if you look at since January urban was up 20% a resort of 10% if.

Speaker Change: If you think about our group pace, our group pace in January up 29% fed.

February up 26% and it's broad based as we noted of Chicago was up 38% Denver up 34%, San Jose and business out there close to.

Speaker Change: And the others of 35%.

Speaker Change: New Orleans up 52%, New York up 21% and despite the fact that we finished last year up 31% for the year. So you really see the urban group come back and you're also seeing obviously the.

Thomas Jeremiah Baltimore: New Orleans up 52%, New York up 21%, and despite the fact that we finished last year up 31% for the year. So you're really seeing the urban group come back, and you're also seeing, obviously, the tailwind of the upper-up scale. And so as we look at our portfolio, obviously, as Sean noted, March will soften, but very, very bullish as we look out for 24 and beyond. Thanks, Tom.

Speaker Change: Tailwind of the upper up scale and so we as we look at our portfolio.

Speaker Change: Obviously, we as Sean noted March will soften, but very very bullish as we look out for 'twenty four and beyond.

Speaker Change: Thanks, Tom.

Dany Asad: Our next question is from Dany Asad with Bank of America. Please proceed. Hi, good morning, everybody. Good morning, Danny.

Speaker Change: Our next question is from Danny Assad with Bank of America. Please proceed.

Danny Assad: Hi, good morning, everybody.

Good morning, Dani Tom.

Thomas Jeremiah Baltimore: Tom, I just wanted to unpack a little bit your REVPAR guide, especially in your prepared remarks. You guys mentioned that the renovations would be adding, you know, 150 basis points to REVPAR. So it just feels like, you know, the two to four that you're kind of, you know, implying if we compare it to, you know, the six to seven that we're going to do in the first quarter. Is there a touch of conservatism in the rest of the year? Or kind of what's driving that, you know, that, like, how do we think about that decel relative to the first quarter? A couple points of clarification, Danny.

Danny Assad: Tom I, just wanted to unpack a little bit your like the Revpar guide.

Danny Assad: Actually in your prepared remarks, you guys mentioned that the renovations will be adding 150 basis points to revpar. So it just feels like the two to four that you're kind of implying.

Danny Assad: Compared to you know.

Danny Assad: The six to seven that we're going to do in the first quarter.

Danny Assad: Is there a touch of conservatism into the rest of the year or kind of what's driving that you know that like how do we think about that diesel relative to the first quarter.

Danny Assad: A couple of points of clarification, Danny we're three and a half to five and a half and guidance revpar.

Thomas Jeremiah Baltimore: We're three and a half to five and a half, and Guidance Red Park, so obviously a midpoint of about four and a half, and then we're looking at about 150 basis points of tailwind coming out of Casa and then obviously coming out of Bonnet Creek. Admittedly, obviously, January and February are very, very strong based on the trends that we're seeing. There will be a decline in March for all the reasons that we pointed out. Group is going to be down, and, of course, you've got the Easter shift will clearly impact it. So yes, there's January and February, but they don't make a year.

Danny Assad: So obviously, a midpoint about four and a half and then we're looking at about 150 basis points of a tailwind coming out of cost and then obviously coming out of Bonnet Creek.

Danny Assad: It may.

Danny Assad: <unk>, obviously January and February very very strong based on the trends that we're seeing there will be a DSL in March for all the reasons that we pointed out.

Danny Assad: <unk> group is going to be down and of course, you've got the Easter shift will clearly impact so.

Speaker Change: Yes, there is January.

Speaker Change: In February we don't make a year.

Thomas Jeremiah Baltimore: So there's certainly conservatism built into that. But look, we are very pleased. I think you are seeing, as I said previously, you're seeing now, you know, we had obviously the pent-up demand from leisure coming out of the pandemic. You're seeing, obviously, group, and urban, really beginning to gain momentum, and that shouldn't surprise anyone. Also keep in mind, when you look at our portfolio and take New York, I think, as a great example, you've got a 9% reduction in supply there. You've got a lot of people that were selling and sort of writing off the city. We were not in that camp. You've only got three large hotels that can handle large groups.

Speaker Change: So theres certainly conservatism built into that.

Speaker Change: But look we are very pleased I think you are seeing as I said previously you're seeing now we had obviously the pent up demand from leisure coming out of the pandemic Youre seeing obviously group urban really beginning to.

Speaker Change: Gain momentum and that shouldn't surprise anyone also keep in mind when you look at our portfolio and take it take New York is I think is a great example.

Speaker Change: Got a 9% reduction in supply there you've got a lot of people that were selling and sort of writing off the city. We were not in that camp you've only got three large hotels that can handle a large groups. We look at New York and see more upside not less so we see real tailwind in that market in particular.

Thomas Jeremiah Baltimore: You know, we look at New York and see more upside, not less. So we see real tailwinds in that market, in particular as we look out. And obviously, we think we're incredibly well-positioned there. That's great.

Speaker Change: <unk> as we look out and obviously, we think we're incredibly well positioned there.

Speaker Change: That's great and then on Andy.

Sean DeLorto: Dany, real fast, I'd also add that there is a headwind of a 50 basis point renovation impact on REBPAR this year, most notably in Hawaii, which we pointed out, and I would also say that's concentrated in the back part of the year. So, as you think about, as you go through the rest of the year, and maybe some of the conservatism and thinking around that, clearly we're going to have a little more impact, disproportionate impact, in the back part of. Got it, got it, thank you. And then if I could just follow up, you know, your outlook for total REF PAR, let's call it the hotel revenues outside of the, you know, HGV portion of it, is about 50 basis points ahead of your REF PAR outlook.

Andy: Any real fast I just I'd also add that there is a headwind of a 50 basis point renovation impact to Revpar this year.

Andy: Most notably in Hawaii, which we pointed out and I would also say that's in the let's concentrate in the back part of the year. So as you think about as you go through the rest of the year and maybe some of the conservatism there thinking around that.

A little more impact disproportionate impact in the back part of the year.

Speaker Change: Got it got it. Thank you and then if I could just follow up.

Speaker Change: Your outlook for like total Revpar, let's call it like that the hotel revenues outside of the HDD portion of it is about 50 basis points ahead of your Revpar outlook, how should we think about the incremental growth that flows through from that to the bottom line.

Sean DeLorto: How should we think about, you know, the incremental growth that flows through from that to the bottom line? Yeah, I would say that on the whole, you probably have, from a total revenue standpoint, well, let me just back up and say, from an out-of-room spend or additional to REBPAR, total REBPAR, about 30 to 50 basis points. I would say it's balanced.

Speaker Change: Yes.

Speaker Change: Yeah, I would say that on the whole you probably have some.

Speaker Change: From a total revenue standpoint, well, let me just back up and say from a from an outside the room spend or additional to Revpar total revpar about 30 debate 50 basis points I would say.

I would say its balance you've got more kind of outlet revenue coming through.

Sean DeLorto: You've got more kinds of outlet revenue coming through than banquet and catering revenue, certainly in the first part of this year. That's a little bit lower flow-through than you might see for banquet and catering. We're not counting on as much cancellation, which is obviously a full flow-through. So on the balance, I would say that I wouldn't count on a lot more incremental flow-through from that incremental. 30 to 50 basis points

Speaker Change: Then banqueting catering certainly the first part of this year.

Speaker Change: That's a little bit lower flow through than you might see the banquet and catering we have we're not counting on as much cancellation, which is obviously a full flow through so on the balance I would say that I wouldnt count a lot more flow of incremental flow through from that incremental.

Speaker Change: 2030 to 50 basis point add to Revpar.

Speaker Change: Got it alright, thank you very much.

Smedes Rose: All right. Our next question is from Smedes Rose with Citi. Please proceed. Hi, thank you.

Speaker Change: Our next question is from Smedes Rose with Citi. Please proceed.

Smedes Rose: Hi, Thank you I just wanted to ask a little bit about.

Thomas Jeremiah Baltimore: I just wanted to ask a little bit about what you're layering in for wages and benefits expectations for 2024 across the portfolio, and maybe specifically if you could talk about those assumptions in Hawaii, if they're meaningfully different from the broader portfolio. Yeah, Smedes, as you can imagine, there will be some negotiations, and we certainly don't want to forecast where we think those negotiations will end. I think if you look sort of last year, wage increases were in that sort of 4% to 5% range. But, you know, to forecast anything beyond that would really be inappropriate at this point.

Smedes Rose: What you're layering in for <unk>.

Smedes Rose: Wages and benefits expectations for 2024 across the across the portfolio and maybe specifically if you could talk about.

Smedes Rose: Those assumptions and Hawaii, if they're meaningfully different from the broader portfolio.

Speaker Change: Yes smedes.

Speaker Change: Smedes as you can imagine.

There will be some negotiations and we certainly don't want to.

Speaker Change: Forecast, where we think those negotiations will will end.

Speaker Change: If you look sort of last year.

Speaker Change: Wage increases were in that sort of 4% to 5% range.

Speaker Change: But.

Speaker Change: To to forecast anything beyond that.

Speaker Change: We would really be inappropriate at this point.

Speaker Change:

Thomas Jeremiah Baltimore: Look, we have enjoyed, I think, very strong relations with our partners. We've got a labor piece, if you will, and I think we had a very successful outcome in 2023. And, you know, we would expect something similar here in 2024 and beyond as we look out.

Look we're we've enjoyed I think.

Speaker Change: Very strong relations our relations with our partners.

Speaker Change: We've got labor piece, if you will and I think we had a very successful outcome in 2023.

Speaker Change: We would expect something similar here in 2024 and beyond as we look out.

Okay, Okay, so well.

Thomas Jeremiah Baltimore: Okay, okay, so we'll... We can see it on that front, but it sounds like in your guidance that 4 to 5% is what's kind of factored in, at least for right now, until we have better. Yeah, I think if you look at overall expenses, we're probably in that range. That's probably the better way, I think, to look at it right now.

Speaker Change: Wait and see on that front, but it sounds like in your guidance at 45% is what kind of factored in at least for right now until we have better information.

Speaker Change: Yeah, I think if you look at overall expenses were probably in that range is probably the better way I think to look at it right now.

Speaker Change: Okay, and then can I just ask you you mentioned.

Thomas Jeremiah Baltimore: I'm hoping to execute on sales in the range of $100 to $250 million. Just broadly, what sort of EBITDA would you expect to sell in that range? I guess either it's a multiple or an absolute dollar amount, or kind of how should we think about that, which I think is not an accident to guidance. Yeah. A couple things to keep in mind, Smedes. We have disposed of nearly 42 assets, sold or disposed of 42 assets for just south of $3 billion.

Speaker Change: Oh, I'm going to execute on sales in the range of $100 million to $250 million.

Speaker Change: Broadly what sort of EBITDA would you expect to be selling.

Speaker Change: In that range, I guess, either multiple or absolute dollar amount or how should we think about that which I think is not built into guidance.

Speaker Change: Yeah.

Speaker Change: Things to keep in mind I'm just means we've got if you think since the spin.

Speaker Change: We have disposed of nearly 42 assets to sold or dispose of 42 assets for just south of $3 billion.

Speaker Change: Last year, obviously, one one asset sale and then another small kind of leasehold interests that we ended up selling as well.

Thomas Jeremiah Baltimore: Last year, obviously, one asset sale and then another small kind of leasehold interest that we ended up selling as well. So we've set a target of $100 million to $250 million. Tom Morey and his team have done an exceptional job every year.

Speaker Change: So we've set a target of 100 to 250 million, Tom Morey and his team have done an exceptional job every year.

Thomas Jeremiah Baltimore: Certainly a desperate seller, so we'll be disciplined, we'll be thoughtful about it, and we will look to recycle that capital. We're confident in our ability to be able to sell assets.

Speaker Change: We're not.

Speaker Change: Certainly a desperate seller, so we'll be disciplined and we will be thoughtful about it.

Speaker Change:

Speaker Change: And we will look to recycle that capital we're confident in.

Speaker Change: And our ability to be able to see.

Speaker Change: Sell assets I think we've we've continued to demonstrate that.

Thomas Jeremiah Baltimore: I think we continue to demonstrate that. But we'll use those proceeds, obviously, and recycle that back for ROI projects. And we'll use it also for reduced leverage, which could be opportunistically to buy an asset if something were priced right, or to buy back shares. I mean, that's really been the playbook that we've used, you know, the last several years.

Speaker Change: But we will use those proceeds obviously and recycle that back for ROI projects.

Hum.

Speaker Change: We use it also for.

Speaker Change: Reduce leverage could be opportunistically to buy an asset if something were priced right or to <unk>.

Speaker Change: Buy back shares I mean necessarily been the playbook that we've used.

Speaker Change: Several years the other comment that I would make is keep in mind, our top 25 assets.

Thomas Jeremiah Baltimore: The other comment that I would make is to keep in mind that our top 25 assets really account for about 90% of the value of the company. So out of that remaining 10%, to answer your question directly, you know, that would be a small portion of that 10%, as we sort of look at, if you want to kind of frame it, and between that $100 to $250 million. Thank you.

Speaker Change: Really account for about 90% of the value of the company so that remaining 10%.

Speaker Change: Answer your question directly that.

Speaker Change: That would be a small portion of that 10% as we sort of look at it.

Speaker Change: You want to kind of frame it.

Speaker Change: And in between that $100 million to $250 million.

Speaker Change: Thank you I appreciate it.

Speaker Change: Okay.

Charles Patrick Scholes: Our next question is from Patrick Scholes with Truist Securities. Please proceed. Great, thank you. Good morning, everyone. Morning, Patrick. Give a little bit more color on the strength in groups. What changes have you seen as far as the composition of these groups and related to that, you know, propensity or lack of propensity, but it sounds like it's propensity to spend outside of the room? You know, what types of groups are sort of shifting in, and what are being shifted out? Yes, Patrick. It's Sean.

Speaker Change: Our next question is from Patrick Schultz, who truly securities. Please proceed.

Patrick Scholes: Thank you good morning, everyone.

Good morning country.

Patrick Scholes: More color on the strength in groups.

Patrick Scholes: What changes have you seen as far as the composition of these groups and related to that propensity or lack of propensity, but it sounds like its propensity to spend outside of the room.

Patrick Scholes: Types of groups or sort of a shifting in and what are being shifted out. Thank you.

Patrick Scholes: Yeah.

Sean M. DellOrto: Yes, Patrick it's Sean.

Sean DeLorto: I think you're continuing to see, I think, for one, groups are getting bigger, as we kind of naturally thought as we came out of the pandemic. We started with small groups and have now gone to larger in-house groups. You have now gotten to the point where convention is, I think, the leader in the clubhouse.

Sean M. DellOrto: I think you'll continue to see I think for one groups are getting bigger.

Sean M. DellOrto: As we kind of a natural thought as we came out of the pandemic. We start with a small group has now gone to larger in house groups. You now have gotten to the point where convention.

Sean M. DellOrto: I think that leader in the clubhouse, we look at this year in terms of growth. We've talked a lot about are the convention calendar is being in our favor and a lot of our markets with Chicago.

Sean DeLorto: We look at this year in terms of growth. We've talked a lot about the convention calendars being in our favor in a lot of our markets, with Chicago up strong, 65 percent, D.C. up almost 50 percent, and Honolulu up 30 percent. And so down the line, between New Orleans and San Diego and other markets, they are also kind of either flat or slightly up to about 20 percent up. So, again, all across the board, I think we're seeing conventions being a lot stronger in this.

Sean M. DellOrto: Strong, 65% D C up almost 50% I'll lose up 30%.

Sean M. DellOrto: So in down the line between New Orleans, and San Diego.

Sean M. DellOrto: Other markets are also kind of either flat or slightly up to about 20% up. So again all across the board I think we are seeing convention being a lot stronger in this so I think that's leading to larger certainly room blocks.

Sean DeLorto: So I think that's leading to larger, certainly, room blocks for us. I think corporate still remains strong through this year, and I think that certainly leads itself to, again, just getting bigger, and they're outperforming. We're seeing rebounds up.

Sean M. DellOrto: For Us I think corporate still remains strong through this year and I think that certainly leads itself to again, just be getting bigger and they're outperforming we're seeing rebalanced up I think that's contributed to some of the strength we've seen in January and February So you.

Sean DeLorto: I think that's contributed to some of the strength we've seen in January and February. So more are showing up than we anticipated, and that's leading to better, certainly, F&B spend. I would say the characteristics, I think, kind of leading, aside from just the size of them getting larger, I think it's just more getting into your more traditional, whether it's professional, or technology. The more traditional groups we've had in the past are kind of coming back.

Sean M. DellOrto: You know more of show are showing up than we anticipated and is leading to better certainly F&B spend I would say the characteristics I think opinion, leading aside from just the size of them getting larger I think it's more getting into.

Sean M. DellOrto: More traditional as professional technology, the kind of the.

Sean M. DellOrto: Kind of the more traditional groups you've had in the past are kind of coming back in and importantly, too as you think about some of the success recently here as we're picking up things.

Thomas Jeremiah Baltimore: And importantly, too, as you think about some of the success recently here as we're picking up things like Tom had just briefly mentioned, but Apple has been a big contributor now in the short-term pickup in our market out in the Bay Area. So it's been encouraging to see a place like Juniper, Cupertino, and then to some extent, San Jose, picking up some short-term group business as I think these technology firms are coming back more and bringing people back to the office and bringing people together to kind of train and kind of ultimately get back to normal business. Patrick, the one thing that I would just add, I agree with everything that Sean outlined, but just the natural need to bring your people together, whether that's for training, whether that's for celebration, you got to think this is, it sort of makes sense.

Sean M. DellOrto: Things like Tommy just briefly mentioned, but Apple has been a big contributor now in the short in the short term pickup in our market in the Bay area. So it's been encouraging to see places in Cupertino.

Sean M. DellOrto: And our Juniper Cupertino, and then to some extent San Jose picking up some short term group business as I think these technology firms are coming back more in bringing people back to the office and bringing people together to kind of training and kind of ultimately.

Sean M. DellOrto: Get back to get back to normal nor business.

Speaker Change: Hey, Patrick.

Patrick: Go ahead go ahead to do the one thing that I would just.

Patrick: I'd, just add I agree with everything that Shaun outlined but.

Patrick: Just the natural need to bring their people together, whether thats for training whether thats for celebration.

Patrick: You got to think this is it.

Patrick: Sort of makes sense, everybody was sort of focused initially on pent up demand in leisure, but as youre getting back to people back in the office the need to be together.

Thomas Jeremiah Baltimore: Everybody was sort of focused initially on pent-up demand and leisure, but as you're getting back, people are back in the office, the need to be together, and what's really pleasing, and city-wise, obviously, being the leader in the clubhouse here, but you're also seeing it on the group side, the in-house group side. So very, very encouraging as we look out. Thank you. And my follow-up question actually has to do with looking out. Any initial observations or perhaps statistics that you can give on how 25 is pacing at this point? Thank you. Yeah, I would just say 25, Group pace is about 97% of 2019 levels as we look at right now, with a very strong increase in rate, a near double-digit increase in rate. Yeah, I'd say pace is 10% right now.

What's really pleasing to see as it were.

Patrick: All expected it but we're beginning to see it accelerate in its broad based.

Patrick: City Wise, obviously being the leader in the clubhouse, either but Youre also seeing it on the group side.

Patrick: The House group side, so so very very encouraging as we look out.

Speaker Change: Thank you and my follow up question actually has to do with booking out any initial observation or perhaps statistics that you can give on how 25 is pacing at this point.

Speaker Change: Thank you.

Speaker Change: Yeah I would.

Speaker Change: I'd just say 25.

Speaker Change: Group pace is about 97% of 2019 levels as we look out right now.

Speaker Change: With rate very strong increase in rate.

Speaker Change: Near double digit increase in rate.

Speaker Change: Okay, 10% right now.

Sean DeLorto: Yeah. You say pace, just to be clear, that's a revenue pace for next year versus 2024? 10%. Yeah, as you look out, same time, same kind of timeframe for 2025, you're up 10% for revenue. Okay. Great. Sounds good.

You say just to be clear that's a revenue pace.

Speaker Change: For next year versus 2024 10.

Speaker Change: 10%.

Speaker Change: Yeah as you look out same time same kind of timeframe.

Speaker Change: Only 25% or up 10%.

Speaker Change: Our revenue based yet.

Speaker Change: Okay great.

Speaker Change: It sounds good thank you.

Speaker Change: Yeah.

Our next question is from Duane <unk> with Evercore ISI. Please proceed.

Duane Thomas Pfennigwerth: Our next question is from Duane Pfennigwerth with Evercore ISI. Please proceed. Hey, thank you. Good morning.

Duane: Hey, Thank you good morning.

On on group revenue pace I, just wanted to try and ask the question a different way what percentage of the group revenue that you expect to generate this year.

Thomas Jeremiah Baltimore: On group revenue pace, I just wanted to try and ask the question a different way. What percentage of the group revenue that you expect to generate this year is on the books? And if you have it, how does that percentage compare to this time last year into 2023? Duane, I would say what we have relative to the forecast, 78% is relative to what we have forecasted on the books already. That compares to 74% last year. As you think of the first half of this year, right now, we're 90% booked for what we're expecting for the first half. That's super helpful.

Duane: Is on the books and if you have it how does that percentage compare to this time last year into 2023.

Speaker Change: The Duane I would say.

Duane: But we have relative to forecast 78%.

Duane: Is relative to what we have forecasted on the books already.

Duane: That compares to 74% last year.

Duane: As you think of the first half of this year right now we're at 90% booked for what we were expecting for the first half of this year.

Speaker Change: That's super helpful. Thank you and then just Hawaii I guess a longer term question, it's obviously off to a strong start.

Thomas Jeremiah Baltimore: Thank you. And then just Hawaii, I guess a longer-term question. It's obviously off to a strong start. I think you've commented in the past, like expectations for the year. How should we be thinking about Hawaii in its entirety for the year? Well, we said in our prepared remarks, sort of low single digits for Hawaii, just given, as Sean noted, obviously we've got the coming off of a strong year, but we've got the renovation obviously in the back half of the year. Now, you know, we're up.

Speaker Change: I think you've commented in the past like expectations for the year, how should we be thinking about Hawaii.

Speaker Change: In its entirety for the year.

Speaker Change: Well, we said in our prepared remarks.

Speaker Change: Low single digits for Hawaii, just given as Sean noted obviously, we've got the.

Speaker Change: Coming off of a strong year, but but we've got the renovation obviously in the back in the back half of the year.

Speaker Change: Now we're up.

Thomas Jeremiah Baltimore: 10% and, So far, it's doing well, but we clearly would guide you more to that low single digits as we think about for the year. Great. Very clear.

Speaker Change: 10%.

Speaker Change: <unk>.

Speaker Change: So far it's doing well, but but clearly we would guide you more to that low single digits as we think about for the year.

Speaker Change: Great very clear thank you.

Speaker Change: Okay.

Dori Lynn Kesten: Thank you. Our next question is from Dori Kesten with Wells Fargo. Please proceed. Thanks. Good morning. Hi Dori.

Speaker Change: Our next question is from Dori Kesten with Wells Fargo. Please proceed.

Dori Kesten: Thanks, Good morning, a door.

Dori Kesten: Hi, I know you just laid out your 'twenty four capex plans, but can you give us a sense of what's on deck for 25.

Thomas Jeremiah Baltimore: I know you just laid out your 24 CAPEX plans, but can you give us a sense of what's on deck for 25? And just, should we be considering 25 a year still with net, you know, renovation tailwinds? Yeah, it's a...

Dori Kesten: I guess should we be considering 25, a year still with net.

Dori Kesten: Renovation tailwind.

Dori Kesten: Yeah.

Dori Kesten: Yes.

It's a great question, obviously, we would be.

Thomas Jeremiah Baltimore: It's a great question. Obviously, we would begin Rainbow Tower, obviously a key tower in Hawaii, expect to finish that next year. I'm sort of in the queue as we're working on Royal Palm. Obviously, in Miami and South Beach, bullseye real estate, about 393 keys.

Dori Kesten: Again Rainbow tower, obviously, a key tower in Hawaii expect to finish that next year.

Dori Kesten: Sort of in the Qs, we are working on Royal Palm.

Dori Kesten: Obviously in Miami in South Beach, Bullseye real estate by 393 keys.

Thomas Jeremiah Baltimore: So our design and construction team is working on another transformative renovation for that asset. Santa Barbara is another one that we're working with our partner and adding, potentially going through the entitlement process, but adding another 80 keys there as we look out and clearly continue the renovation of New Orleans, but also be in the queue as well. So just a few of the assets, but we are really focused, Dori, laser focused on spending money where we're making money. And you can see already the benefits that we're getting, and really, we think candidly better than acquisition yields and what we can get in the marketplace. Okay, and I may have missed this, but how apprised are you kept on the plans for your two former San Francisco assets at this point? The question again, Dori: I'm sorry, you broke up.

Dori Kesten: So our design and construction team are working on a another transformative renovation.

Dori Kesten: Certainly that asset.

Dori Kesten: Santa Barbara is another one that we're working with our partner, adding potentially going through the entitlement process, but adding another 80 keys there.

Dori Kesten: As we look out in.

Dori Kesten: Clearly continuing the renovation of New Orleans, but also be in the queue as well so just to.

Dori Kesten: Few of the assets, but we are we are really focused laser focused on spending money, where we're making money and you can see already the benefits that we're getting.

Dori Kesten: And really we think candidly better than an acquisition yields and where we can get in the marketplace.

Dori Kesten: Okay.

Speaker Change: Mr. <unk> you kept on the plans for your chance former San Francisco assets at this point.

Speaker Change: The question again, I'm, sorry, you broke up.

Thomas Jeremiah Baltimore: Oh, I said, how informed are you being kept on the plans for your two former San Francisco assets? Again, we have the receivers in control. As a courtesy, I know that Sean occasionally and other members of the team are reaching out if they have questions or if there's anything we can do, but the reality is that we're not involved in the day-to-day. We have no economic benefit and no economic risk moving forward.

Speaker Change: Oh, I said Hello, apprised are you being kept on the plans for your coupon or San Francisco assets.

Speaker Change: Again, we have.

The receivers and control.

Speaker Change: As a courtesy I know that Sean occasionally and other members of the team are reaching out.

Speaker Change: If.

Speaker Change: If they have questions or anything we can do but the reality is that we're not involved in the day to day and we have no economic benefit and no economic risk moving forward and and I think given how San Francisco has played out I think we would all agree that that was a.

Thomas Jeremiah Baltimore: And I think given how San Francisco has played out, I think we would all agree that that was a very wise and very prudent decision, while difficult, certainly the right decision for Park and for our shareholders. Okay, thank you. Power Next. How are you doing?

Speaker Change: Very wise and very prudent decision, while difficult certainly the right decision for park and for our shareholders.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question is from Jay Kornreich with Wedbush Securities. Please proceed.

Jay Kornreich: Hi, good morning.

Anthony Franklin Powell: Just to follow up on the strong start to the year, you know, Red Park growth in the fourth quarter was about 4%, yet, you know, January jumped to 13%, and February was up 8%. I'm just curious, you know, what caused this kind of upward hockey stick level of growth to start the year? And is this something you first saw, or did it kind of come by surprise?

Jay Kornreich: Just to follow up on the strong start to the year.

Jay Kornreich: Revpar growth in the fourth quarter. It was about 4% yet you know January jumped 13% February was up 8%. So I'm. Just curious you know what caused this kind of upward hockey stick level of growth to start the year and is this something for Sao or did it kind of come by surprise at all.

Speaker Change: Uh huh.

Thomas Jeremiah Baltimore: I see it as a pleasant surprise. As we pointed out, obviously, the group was up 16% in the fourth quarter. We saw a sequential, I think, about 12% increase between the third and fourth quarter. So, and I think we've all been talking about and expecting, obviously, that Group and Urban would really begin to accelerate. So, I think it's a natural progression.

Speaker Change: I see it as a.

Speaker Change: Oh.

Speaker Change: And surprise as we've pointed out obviously group was up 16% obviously in the fourth quarter, we saw sequential I think above 12% increase between third and fourth quarter.

Speaker Change: So and I think we've all been talking about and expecting obviously the group an urban wood would really begin to accelerate so I think it's a natural progression.

Thomas Jeremiah Baltimore: We just sort of got the pickup a little sooner in terms of its acceleration in January and February. As Sean noted, and I noted earlier, obviously, Apple and Cupertino's a great example of, we got some short-term business there. Obviously, you had some one-time events, like the Sugar Bowl in New Orleans, but again, New Orleans was up north of 50%.

Speaker Change: Just sort of got the.

Speaker Change: The pick up a little sooner in terms of its acceleration in January and February as Sean Sean noted and I noted earlier, obviously Apple and <unk>.

<unk> is a great example of we got some short term business. There. Obviously you had some one time events, the sugar Bowl and New Orleans, but again.

Speaker Change: New Orleans was up north of 50%.

Thomas Jeremiah Baltimore: Look at San Jose, obviously, at an event, but up 35%. So you're really starting to see that those business travelers really get back on the road. Again, that need to connect, to be together, build those relationships, that need is never going away.

Speaker Change: At San Jose, obviously at an event, but up 35%, so you're really starting to see obviously that those business travelers.

Speaker Change: Really get back on the road again that need to connect to be together build those relationships that need is never going to go away. So really this is a natural progression and given the fact that you should think about our portfolio we've got such.

Thomas Jeremiah Baltimore: So really, this is a natural progression. And given the fact that, if you think about our portfolio, we've got such a small and certainly below the long-term average in terms of supply impact, that's gonna continue to benefit us as we move forward. New York, again, you're taking supply out of the market. There hasn't been, I think, a permit approved since 2021.

Speaker Change: So it's small.

Speaker Change: Certainly below the long term average in terms of supplying impact that's going to continue to benefit us as we as we move forward New York again, you're taking supply out of the market. There hasnt been a I think a permit approved since 2021.

Speaker Change: So we look at New York and <unk>.

Thomas Jeremiah Baltimore: So we look at New York and are very, very bullish. And obviously, we had a great 23 and are very encouraged about 24 as we look out, just to give another example. Chicago, again, we knew there was gonna be very strong citywide, almost a record, and up 65%, close to about 780,000 room nights. There is also strong group business in January, which also gave us an additional tailwind there. So it is a broad wind.

Speaker Change: Very very bullish and obviously, we had a great 23 and are very encouraged about 24 as we look out just to give another example, Chicago again, we knew there was going to be a very strong.

Citywide almost near record and up 65% close to about 780000 room nights as we look out there, but but there was strong group business in January which also gave us an additional tailwind there. So it is broadband.

Anthony Franklin Powell: Okay. Thank you very much. I'll stop. Powell and Barth.

Speaker Change: Yeah, Okay. Thank you very much I'll stop there.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Our next question is from Anthony Powell with Barclays. Please proceed.

Anthony Powell: Hi, good morning.

Thomas Jeremiah Baltimore: Hi, good morning. I guess a question on your remaining, I guess, California exposure, two hotels in San Francisco, two in Silicon Valley that Sean talked about, and one in downtown LA, the Hilton Checkers. I think all the gap versus 19 is at those five properties, so maybe talk about what you're seeing there, and are those hotels still core to your portfolio? Yeah, and it's a great question.

Anthony Powell: Hi.

Anthony Powell: I guess a question on your remaining I guess, California exposure.

Anthony Powell: Two hotels, the San Francisco, you tune in Silicon Valley that Sean talked about and one downtown L. A the Hilton Checkers I think all the gap versus 19 is that those five properties. So.

Anthony Powell: Maybe talk about what you're seeing there and in all of those hotels still core to your portfolio.

Speaker Change: Yeah, it's great it's great question.

Thomas Jeremiah Baltimore: I would say, look, having 3% exposure in San Francisco, and look, it's important to have a diversified portfolio. And I would respectfully submit that those groups that say, I'm going to be leisure only, I'm not sure that's really sustainable, or those that are going to be, I'm going to focus on urban and group. Having that diversified portfolio, I think, is really showing a significant benefit to us. So as we think about San Francisco, as I've said, I certainly expect that that market is going to come back. I just think that it's going to be elongated and pushed out.

Speaker Change: I would say look having 3% exposure in San Francisco.

Speaker Change: And look it's important to have a diversified portfolio.

Speaker Change: I would respectfully submit that those.

Speaker Change: Those groups that say I'm going to be leisure only.

Speaker Change: Not sure that's really a sustainable or.

Speaker Change: Are those that are going to be I'm going to focus on urban and group, having that diversified portfolio. I think is really showing significant benefit to us. So as we think about San Francisco I've said.

Speaker Change: Certainly expect that that market is going to come back.

Speaker Change: Just think that it's going to be elongated and pushed out for.

Thomas Jeremiah Baltimore: For the two assets that we own there, obviously, the JW Marriott and also the Hyatt Centric, certainly assets that at this point, we continue to expect to hold. As we think about San Jose and Cupertino, again, two attractive assets. Downtown LA, I think, is a different story.

Speaker Change: For the two assets that we that we own there obviously the <unk> Marriott.

Speaker Change: And also the Hyatt centric.

Speaker Change: Certainly assets that are at this point, we continue to.

Speaker Change: <unk> expect to hold.

Speaker Change: As we think about San Jose in Cupertino again, two attractive assets.

Speaker Change:

Speaker Change: Downtown L. A I think is a different story there in a different complex challenging situation not dissimilar to what's happening in San Francisco, and we will continue to evaluate that submarket and see what we do in the future.

Thomas Jeremiah Baltimore: They're in a different, complex, challenging situation, not dissimilar to what's happening in San Francisco. And we'll continue to evaluate that sub-market and see what we do in the future. Okay, and thanks. I think, Tom, you also talked about acquisitions. If the capital markets just cooperate, can you maybe expand on that? What do you mean by the capital markets?

Speaker Change: Got it and thanks, Ed I think Tom you also just talked about acquisitions.

Speaker Change: If a capital markets cooperate can you maybe expand on that what do you mean by capital markets is it equity debt capital and remind us what your target leverage ratio is right now.

Thomas Jeremiah Baltimore: Equity, and debt capital, and remind us what your target leverage ratio is right now. Yeah, I mean, look. We've always said from the moment of the spin that we wanted to be leveraged kind of three to five times. You know, we'd certainly like to be closer to four times. I think, in the context of capital markets, it's really beginning to get a rerated EBITDA multiple and getting our stock up and something closer to net asset value. In the worst of times, you know, we didn't do a dilutive equity raise. We're not going to do one now.

Tom: Yeah, I mean look we've we've always said from the moment of the spin and we wanted to be leveraged kind of three to five times.

Tom: We'd certainly like to be closer to four times I think in the.

Tom: Context of capital markets, it's really beginning to get a re rating.

Tom: EBITDA multiple and getting our stock up and something closer to net asset value.

Tom: I think even in the worst of times, we didn't we didn't do a dilutive equity raise we are not going to do one now.

Thomas Jeremiah Baltimore: We've been, I think, passionate and laser-focused on recycling capital. We've sold assets. We've used that to reinvest back in the portfolio and to buy back stock and reduce leverage. I would say that we would be anchored by those same goals and principles.

Tom: We've been I think passionate and laser focused on recycling capital and we've sold assets, we've used that to reinvest back in the portfolio and to buy back stock and reduce leverage I would say that we would be anchored in those same goals and principles.

Thomas Jeremiah Baltimore: But we're always looking opportunistically, and if there are unique situations that are creative, we certainly are going to continue to underwrite and explore. But we'll see. We'll see how the year unfolds. But we certainly want to be on offense at the appropriate time.

Tom: But we're always looking opportunistically and as there are unique situations that are accretive.

Tom: Certainly you are going to continue to underwrite and explore but.

Tom: We will see we will see how the year end.

Tom: Unfolds, but we certainly want to be on offense at the appropriate time right now and last year was a great example of that buying back 15 million shares.

Tom: The average price of $12 of inside of that was a very prudent decision for shareholders in our view.

Thomas Jeremiah Baltimore: Right now, and last year was a great example of that, buying back 15 million shares at an average price of $12 or somewhere in that range was a very prudent decision for shareholders in our business. Thank you. (inaudible) There isn't a lot to buy in the market these days, and it sounds like you have what to buy. What is your assessment of the market at the moment? Is there a bid-ask spread issue? Underwriting conviction should be better, I would think, but, you know, I'd love to hear yours.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Speaker Change: Our next question is from David Katz with Jefferies. Please proceed.

David Katz: Hi, everybody.

David Katz: Thank you for taking my question.

David Katz: We've been hearing obviously from peers and other sources right.

There isn't a lot of.

David Katz: There isn't a lot to buy in the market.

These days and you know it.

David Katz: It sounds like you have you have what to buy.

Speaker Change: It is.

Speaker Change: Is it.

Speaker Change: What is your assessment of the market at the moment is there a bid ask spread issue.

Speaker Change: You know underwriting conviction should be better.

Speaker Change: I would think but I'd love to hear yours.

Thomas Jeremiah Baltimore: Yeah, I would open, David, it's great to talk with you, first of all, but I think, you know, also keep in mind that uncertainty is the enemy of decision-making. I think part of what we're all waiting for is to believe the Fed tightening cycle is over. I think we all expect that at some point, whether you're in for three reductions this year in interest rates or the Fed funds rate, or is it four or five or six, you know, I certainly think people are looking for that to re-rate and certainly would expect, obviously, the debt markets to continue to open up. Banks are, you know, got their own regulatory challenges, but there's certainly plenty of private capital, private credit capital in particular out

Speaker Change: Yeah, I would I would open David great Great to talk with you.

Speaker Change: First of all but I think you also keep in mind that uncertainty as these as the enemy of decision making.

Speaker Change: I think part of what we're all waiting for we believe the fed tightening cycle is over.

Speaker Change: We all expect that at some point whether youre in the.

Speaker Change: Three three reductions this year in interest rates or as the fed funds rate or is it four or five or six.

Speaker Change: Certainly I think people are looking for.

Speaker Change: That to re rate and certainly we would expect obviously the debt markets to continue to open up banks are.

Yes.

Speaker Change: Got their own regulatory challenges.

Speaker Change: But there's certainly plenty of private capital private credit capital in particular out there.

Thomas Jeremiah Baltimore: So, you know, deals are getting done, albeit at a slower pace, but I think in the second half of the year, as we get better visibility, you'll begin to see that open up. There are a lot of people out there who believe that, you know, there's going to be tremendous distress. I think you'll see, in my view, probably more of that on the office side than I think you'll see on the lodging side, and there'll be some assets that need to be recapitalized, but, you know, this is not the GFC and what we saw back in that period of time, and, you know, we'll continue to be thoughtful. We'll continue to reinvest in our portfolio. Again, we think we can generate higher yields there, and, you know, if the gap remains between our share price and NAV, we'll recycle capital and buy back shares. I mean, we're definitely not going to look to raise equity in this environment right now, given where we're trading, and we're hoping that our continued outperformance will get noticed, and that we'll begin to see that rating in our stock price.

Speaker Change: Deals are getting done, albeit at a slower pace, but I think in the second half of the year Youll begin as we get better visibility you begin to see that open up.

Speaker Change: There are a lot of people out there who believe that.

Speaker Change: There's going to be tremendous distress I think you'll see in my view, probably more of that on the office side and I think you'll see on the lodging side there'll be some assets that need to be recapitalized, but.

Speaker Change: Listen this is not the Dfc and what we saw back in that period of time.

Speaker Change: We'll continue to be thoughtful we will continue to reinvest in our portfolio again, we think we can generate higher yields there and the.

Speaker Change: The gap remains between our share price and NAV.

Speaker Change: We will recycle capital and buy back shares I mean, we're not we're definitely not going to look to raise equity in this in this environment right now given where we're trading and we're hoping that our continued outperformance will get noticed.

Speaker Change: And that we will see begin to see that rating in our stock price.

William Andrew Crow: Thank you. Thank you. Our next question is from Bill Crow with Raymond James. Please proceed. Hey, good morning. Good morning.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question is from Bill Crow with Raymond James. Please proceed.

Bill A. Crow: Hey, good morning.

Bill A. Crow: The two W. Two W hotels in Chicago and interested in because.

Thomas Jeremiah Baltimore: The 2W Hotels in Chicago, I'm interested in them because... W seems like they're really trying to rebuild the brand and it's a very different product type than the traditional W's. Do you have any immediate plans to either reinvest in those properties or divest those properties? Yeah, it's a great question, Bill. Look, we know, obviously, given the work that Marriott's doing, that they're trying to reinvigorate, if you will, and I think to elevate the W brand, and we certainly support that. We're not sure that either of those assets are what we would call pure Ws as we move forward.

W seems like they are really trying to rebuild the brand and that's a very.

Bill A. Crow: Very different.

<unk>.

Bill A. Crow: Product type than the traditional W. Do you have any immediate plans to either.

Bill A. Crow: Reinvest in those properties or divest of those properties.

Speaker Change: Yes, it's a great question Bill look we.

Speaker Change: We know obviously given the work that Marriott is doing it there.

Speaker Change: Turning to reinvent if you will and I think to elevate the W brand and we certainly support that we're.

Speaker Change: We're not sure that either of those assets are what we would call as pure w's as we as we move forward.

Thomas Jeremiah Baltimore: We're actually in discussions about repositioning. And, you know, we think a soft brand play may make the most sense there. I'll stop there, but we are carefully exploring our options and ways to create more value with those two well-located assets. Great. And then the other thing I wanted to ask you about was, I look forward to your event down in Orlando. I'm wondering what the one or two things are.

Speaker Change: Actually in discussions about repositioning.

Speaker Change: And we think a soft brand play may make the most sense there.

Speaker Change: I'll stop there but.

Speaker Change: We are carefully exploring our options and ways to create more value with those two well located assets.

Speaker Change: Great.

Speaker Change: And then the other one I wanted to ask you about was Oh look forward year event in Orlando I'm wondering what the one or two things.

Thomas Jeremiah Baltimore: You're hoping the street takes away from that event. Yeah, it's a great question. I could not be prouder, Bill, when you see just the magnitude of the work done and the complete transformation of not only adding 100,000 square feet of space suspended over water for the Signia ballroom, but then to see the event lawn and to see, obviously, the additional ballroom that we added adjacent to the Waldorf, and now the ability to be able to layer in groups and accommodate multiple groups, and to have a few hundred thousand square feet of meeting space there You know, Bill, you've heard me say this before, I mean, we're right next to the Four Seasons, which is a fabulous asset, the best in the market, and I'm not sure what was paid for it, $1.3, $1.4 million a key, and we're trading at $250 a key, maybe slightly above that. I think we're pretty good value, so I think that's something else I'd like and hope that shareholders take away. But we hope you can join us, and we look forward to seeing you.

Speaker Change: You are hoping the street takes away from the event.

Speaker Change: Yeah, It's a great question I could not.

Speaker Change: Be prouder Bill when you when you see just the magnitude of the work done in the complete transformation of.

Speaker Change: <unk>, not only adding 100000 square feet over a suspended over water.

Speaker Change: The Cigna ballroom, but then the CV event lawn and to see obviously, the additional ballroom that we added adjacent to the Waldorf and now the ability to be able to layer in groups and accommodate multiple groups.

Speaker Change: And I have a few hundred thousand square feet of meeting space there and in.

Speaker Change: Our renovated golf course that that complete experience.

Speaker Change: And to have really a world class resort 350 acres.

Speaker Change: Bill you've heard me say this before I mean, we're right next to the four seasons, which is fabulous asset best in the market.

Speaker Change: I'm not sure what was paid for at 131 $4 million a key.

Speaker Change: We're trading at $2 50, a key maybe slightly above that.

Speaker Change: Think we're pretty good value, so I think thats something else I'd like and hope that that shareholders takeaway.

Speaker Change: But we hope you can join us and we look forward to seeing you.

Thomas Jeremiah Baltimore: Great. Thanks, Tom. Our next question is from Chris Darling with Green Street Advisors. Please proceed. Thanks. Good morning.

Speaker Change: Great. Thanks, Tom.

Speaker Change: Our next question is from Chris <unk> with Green Street Advisors. Please proceed.

Chris: Thanks, Good morning, I just have one follow up question on guidance.

Chris Darling: I just have one follow-up question on guidance. When I look at what's implied by the 2024 outlook, I calculate expense growth for the year between 5.5% and 6% at the low and high ends, which is just a $10 million range, it looks like. Can you help me understand what gives you confidence in projecting that relatively tight range of outcomes? I think it's a matter of, as you think through going, you know, just the various ins and outs that happen when you think about elevated growth on the high end with room production as well as out-of-room production versus kind of, you know, the other side of it.

When I look at what's implied by the 2024 outlook.

Chris: Its related expense growth for the year between five five and 6% at the low and high end, which is just a $10 million range. It looks like can.

Chris: Can you help me understand what gives you confidence in projecting that relatively tight range of outcomes.

Chris: Okay.

Chris: Yeah.

Speaker Change: I think it's a matter of as you think through going just the various.

<unk> announced that happen when you think about elevated growth elevated growth on the high end with room production as well as out of home production.

Speaker Change: This is kind of the other side of it I think ultimately you're going to cut cut expenses as well as your lower revenues.

Sean DeLorto: I think ultimately you're going to cut expenses as well as lower revenues, and ultimately, so I think we'll get generally comfortable with it. I'm not sure quite that much of a range, but I think certainly I feel pretty good about our guidance. I mean, it is at the higher end of 5% nominally.

Speaker Change: Ultimately so I think we get generally comfortable with it I don't not sure quite that much of a range but.

Speaker Change: Certainly I think feel pretty good about our guidance I mean, it is at the higher end.

Speaker Change: <unk>, 5% nominally when you think about the adjustments for the fact that we're lapping we're adding in a bunch of expenses because of reopening cost of this year relative to last year as well as.

Sean DeLorto: When you think about the adjustments for the fact that we're lapping, we're adding in a bunch of expenses because we're reopening CASA this year relative to last year as well as lapping some of the things that we've had to our benefit in Q3, which are one-time in nature or ultimately a prior year tax appeal in Chicago. Great. That's helpful. That's it for me.

Speaker Change: Lapping some of the things that we had the benefit in Q3, which are onetime in nature or ultimately a prior year catastrophe appeal in Chicago.

Speaker Change: About 100 basis points.

Speaker Change: Lower call. It high floors. When you think about kind of what kind of a more run rate kind of growth prospects.

Sean DeLorto: And our final question is from Keegan Carl with Wolf Research. Please proceed. Yeah, thanks for the time, guys. Just wondering if we could kind of dive in a little bit more to your expected contribution from Hawaii in the first quarter of the year and then full year of 24. It'd be really helpful.

Speaker Change: Great. That's helpful. That's it for me thank you.

Speaker Change: And our final question is from Kian Karl with Wolfe Research. Please proceed.

Kian Karl: Yeah. Thanks for the time guys. Just just one for me just wondering if you could kind of dive in a little bit more into your expected contribution from Hawaii and the first quarter of the year and then full year 'twenty four it would be really helpful. Thanks.

Sean DeLorto: Well, the thing is, as Tom noted, it's kind of a lower single digits for Hawaii. It's really broken out. I mean, Hawaiian villages, I would say, are more kind of in line with the portfolio performance if you kind of adjust for the disruption we expect in the back part of the year. It's really Waikoloa that has, you know, paces down 30 plus percent for the year, and so we expect kind of a negative growth pattern for that, you know, not like mid-single digits down, but certainly it's a That said, I think, you know, and I think it's probably back half of the year, you know; it's more we see the group down for Waikoloa on top of disruption.

Kian Karl: Whereas I think as Tom noted, it's kind of a lower single digits for Hawaii, It's really broken out in the Hawaiian village is I would say, it's more in kind of in line with the portfolio performance. If you kind of adjust for the disruption we expect in the back part of the year, it's really white collar that has paces down.

<unk> 30 plus percent for the year.

Kian Karl: And so we expect kind of a negative.

Kian Karl: Growth pattern for that.

Kian Karl: Mid single digits down, but certainly gets a drag towards Hawaii overall as a market.

Kian Karl: That said I think and I think it's probably back half of the year, it's more we see the group.

Kian Karl: Down for why Colella on top of disruption. So I think we certainly expect that it's better performance in the first half of the year, we certainly thought <unk> would be a little bit softer coming into the year and it's performed really well. It's picked up short term I think there are some benefits still from Maui displacement, we're seeing for the first half of the year Airlift is positive.

Sean DeLorto: So I think, you know, we certainly expect that it's better performance in the first half of the year. We certainly thought Waikoloa would be a little bit softer coming into the year, and it's performed really well. It's picked up in the short term. I think there's some benefits still from Maui's displacement. We're seeing for the first half of the year airlift positive into that market. It's up 5 percent domestically, and then 50 percent up from Japan on the Big Island. And Honolulu, while it's down a little bit domestically, it's up almost 100 percent for the first half as we look kind of forward bookings for airlines. So I think we feel pretty good about where, you know, we'll kind of go for the first half of the year. I think it's just the back half of the year that kind of softens a little bit for that market.

<unk> into that market.

Kian Karl: Up 5% domestically.

Kian Karl: And then 50% up from Japan is the Big Island and in Honolulu, its while its down a little bit domestically, it's up almost 1% for the first half as we look kind of forward bookings for airlines. So I think we feel pretty good about where we will kind of go for the first half of year I think it's the back half of the year that kind of softens, a little bit for that market, but I think going forward if somebody asked it.

Sean DeLorto: Going forward, you know, if somebody asked about the 25 pace, Hawaii's up another 25 percent, Honolulu's up another 25 percent, and then Waikoloa's up 55 percent in 25. So I think you're going to have a rebound here as well as you get into 25 for these aspects of it. Thanks for the time. I appreciate it. We have reached the end of our question and answer session. I would like to turn the conference back over to Tom Baltimore for his closing remarks. Appreciate all of you taking time today; look forward to seeing many of you at the city conference next week. Safe travels. Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Kian Karl: 25 pace, Hawaii is up another 25% on lose another 25% and then <unk> is up 55% and 25, so I think youre going to have a rebound here as well as you get into 'twenty five for these assets.

Speaker Change: Got it thanks for the time guys.

Speaker Change: I appreciate it.

Speaker Change: We have reached the end of our question and answer session I would like to turn the conference back over to Tom Baltimore for closing remarks.

Thomas J. Baltimore: I appreciate all of you taking time today and look forward to seeing many of you at the Citi Conference next week safe travels.

Thomas J. Baltimore: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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