Q1 2024 Host Hotels & Resorts Inc Earnings Call

Operator: Good morning, and welcome to the Host Hotels and Resorts first quarter 2024 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the call over to Jaime Marcus, Senior Vice President of Investor Relations. You may begin.

Good morning, and welcome to the host hotels and resorts first quarter 2024 earnings conference call.

Jaime Marcus: Today's conference is being recorded.

Jaime Marcus: At this time I would like to turn the call over to Jamie Marcus Senior Vice President of Investor Relations you may begin.

Jaime Marcus: Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be 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. In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDA RE, and comparable hotel level results.

Jaime Marcus: Thank you and good morning.

Jaime Marcus: Before we begin please note that many of the comments made today are considered to be forward looking statements under federal Securities laws.

Jaime Marcus: Described in our filings with the SEC. In addition on today's call, we will discuss certain non-GAAP financial information such as adjusted EBITDA, Ari and comparable hotel level results.

Jaime Marcus: You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release.

Jaime Marcus: In our 8-K filed with the SEC and in the supplemental financial information on our website at host hotels Dot com.

Jaime Marcus: With me on today's call are Jeff Russolillo, President and Chief Executive Officer.

Jaime Marcus: You can find this information together with reconciliations to the most directly comparable gap information in yesterday's earnings press release and our 8k files with the SEC and in the supplemental financial information on our website at hosthotels.com. With me on today's call are Jim Risoleo, President and Chief Executive Officer, and Sourav Ghosh, Executive Vice President and Chief Financial Officer. With that, I would like to turn the call over to Jim.

Jaime Marcus: Oh, Gosh, executive Vice President and Chief Financial Officer.

Jaime Marcus: With that I would like to turn the call over to Jim.

Jim: Thank you, Jamie and thanks to everyone for joining us this morning.

Jaime Marcus: In the first quarter, we delivered adjusted EBITDAR E $483 million and adjusted <unk> per share of <unk> 60 cents, which includes $10 million of business interruption proceeds from hurricane Ian.

James F. Risoleo: Thank you, Jaime, and thanks to everyone for joining us this morning. In the first quarter, we delivered adjusted EBITRE of $483 million and adjusted FFO per share of $0.60, which included $10 million of business interruption proceeds from Hurricane Ian. Excluding the business interruption proceeds, our adjusted EBIT RRE was 7% above the first quarter of 2023, and our adjusted FFO per share was 8% above last year. We delivered a year-over-year comparable hotel total REBPAR improvement of 50 basis points, underscoring the continued strength of out-of-room revenue while comparable hotel REBPAR declined 1.2%.

James F. Risoleo: Excluding the business interruption proceeds our adjusted EBITDAR Ari was 7% above the first quarter of 2023, and our adjusted <unk> per share was 8% above last year.

James F. Risoleo: We delivered a year over year comparable hotel total revpar improvement of 50 basis points underscoring the continued strength of out of room revenue, while comparable hotel Revpar declined one 2%.

James F. Risoleo: First quarter Revpar faced headwinds from tough year over year comparisons, particularly in Maui.

James F. Risoleo: Year over year decline in Maui, Revpar had an actual drag up 170 basis points on our first quarter portfolio Revpar.

James F. Risoleo: First quarter red part faced headwinds from tough year-over-year comparisons, particularly in Maui. The year-over-year decline in Maui REBPAR had an actual drag of 170 basis points on our first quarter portfolio REBPAR. However, this understates the true impact of the wildfires, as we would have expected Maui to contribute 140 basis points to portfolio red part growth in the first quarter, given the renovation disruption at Fairmont-Keelani in 2023. As a result, the total estimated impact of the wildfires on first quarter REPAR is 310 basis points.

James F. Risoleo: However, this understates the true impact of the wildfires as we would have expected married to contribute 140 basis points to portfolio Revpar growth in the first quarter given the renovation disruption at bear in mind Kea Lani in 2023.

James F. Risoleo: As a result, the total estimated impact of the wildfires or the first quarter Revpar is 310 basis points.

James F. Risoleo: Revpar was also impacted by unseasonable weather in Florida, Arizona, and California, and unanticipated renovation delays at the singer Oceanfront resort.

James F. Risoleo: Despite these headwinds our first quarter comparable hotel EBITDA margin of 31.2% was 30 basis points above 2019.

James F. Risoleo: RepPAR was also impacted by unseasonable weather in Florida, Arizona, and California and unanticipated renovation delays at the Singer Oceanfront Resort. Despite these headwinds, our first quarter comparable hotel EBITDA margin of 31.2% was 30 basis points above 2019. As a reminder, our first quarter operational results discussed today refer to our comparable hotel portfolio, which excludes the Ritz-Carlton Naples in 2024. In addition, while Lila Ventana Big Sur is included in our first quarter results, it is currently closed, and it has been removed from our comparable hotel set for the remainder of the year after a portion of Highway 1 collapsed in late March. At this time, we expect the resort to reopen towards the end of the second quarter.

James F. Risoleo: As a reminder, our first quarter operational results discussed today refer to our comparable hotel portfolio.

James F. Risoleo: Which excludes the Ritz Carlton Naples in 2024.

James F. Risoleo: In addition, while we live in times of Big Sur is included in our first quarter results. It is currently closed and it has been removed from our comparable hotel set for the remainder of the year. After a portion of highway one collapsed in late March at this time, we expect the resort to reopen towards it.

James F. Risoleo: End of the second quarter.

James F. Risoleo: During the first quarter, our portfolio results continued to be impacted by the evolving nature of demand on Maui.

James F. Risoleo: Our risk management team has reached an agreement with our insurance carriers and we are now including between 18 million and $22 million of business interruption proceeds related to the Maui wildfires and our full year 2020 for guidance.

James F. Risoleo: During the first quarter, our portfolio results continued to be impacted by the evolving nature of demand on Maui. Our risk management team has reached an agreement with our insurance carriers, and we are now including between $18 million and $22 million of business interruption proceeds related to the Maui wildfires in our full year 2024 guide. Turning to business mix, it is worth noting that this quarter we are referring to revenue growth for our business mix segments as revenue per available room as a result of the leap year.

James F. Risoleo: Turning to business mix.

James F. Risoleo: It is worth noting that this quarter, we are referring to revenue growth for our business mix segment as revenue per available room as a result of the leap year.

James F. Risoleo: Group revenue per available room grew 4% in the first quarter driven by room nights.

James F. Risoleo: Our properties booked over 500000 group room nights in the year for the year, bringing our definite group room nights on the books for 2024 to 3.6 million with total group revenue pace up 7% compared to the same time last year.

James F. Risoleo: Group revenue per available room grew 4% in the first quarter, driven by room nights. Our properties booked over 500,000 group room nights in the year, bringing our definite group room nights on the books for 2024 to $3.6 million, with total group revenue pace up 7% compared to the same time last year. In the first quarter, business transient revenue per available room grew 5%, driven by both rate and room nights, and leisure remained steady, with transient rates at our comparable resorts up 52% compared to 2019, including our three Maui resorts. Briefly touching on out of room spend.

James F. Risoleo: In the first quarter business transient revenue per available room grew 5% driven by both rate and room nights and leisure remained steady with transient rates at our comparable resorts up 52% compared to 2019, including our three Maui resorts.

James F. Risoleo: Briefly touching on out of room spend.

James F. Risoleo: Food and beverage revenue per available room grew 2% in the first quarter compared to last year.

James F. Risoleo: Driven by an all time high banquet and catering contribution.

James F. Risoleo: Other revenue per available room grew 6% driven by elevated attrition and cancellation fees.

James F. Risoleo: Food and beverage revenue per available room grew 2% in the first quarter compared to last year, driven by an all-time high banquet and catering contribution. Other revenue per available room grew 6%, driven by elevated attrition and cancellation. It is worth noting that nearly 40% of our total revenue in 2023 came from food and beverage and other revenue, and our 2024 guidance assumes a similar proportion.

James F. Risoleo: It is worth noting that nearly 40% of our total revenue in 2023 came from food and beverage and other revenue in our 2024 guidance assumes a similar proportion.

James F. Risoleo: Since 2017 non room revenue has steadily grown as our portfolio has shifted towards more complex higher end properties, which benefited from substantial out of room spend from both guests and nine guests. In fact, there may be instances that the property teams at our hotels.

James F. Risoleo: Since 2017, non-room revenue has steadily grown as our portfolio has shifted toward more complex, higher-end properties, which benefit from substantial out-of-room spend from both guests and non-guests. In fact, there may be instances that the property teams at our hotels strategically forego incremental room rates as they focus on the total revenue picture. The Ritz-Carlton Naples is a clear example of the positive impact of out-of-room spending. In the first quarter, the resort achieved a REBPAR of $900, which is only half of its $1,700 total REBPAR.

James F. Risoleo: Really forego anchor rental room rate as they focus on the total revenue picture.

James F. Risoleo: The Ritz Carlton Naples is a clear example of the positive impact of out of room spending.

James F. Risoleo: In the first quarter the resort achieved revpar of $900, which is only have I been 1700 dollar total revpar.

James F. Risoleo: As a result of our meaningful expansion in transformational renovation transient rates in the quarter were up 40% compared to 2019, driven by club level rooms, and food and beverage revenue grew 38% driven by outlets.

James F. Risoleo: As a result of our meaningful expansion and transformational renovation, transient rates in the quarter were up 40% compared to 2019. Driven by club-level rooms and food and beverage revenue grew 38% driven by outlets. In March, the resort posted its best revenue month ever, aided by Eastern Weeks Red Park, which was 45% above the competitive set. In addition, the resort was recently named to Travel and Leisure's It List, and we are proud to say that it truly is firing on all cylinders.

James F. Risoleo: In March the resort posted its best revenue month ever aided by Easter weeks, Red part, which was 45% above the competitive set in.

James F. Risoleo: In addition, the resort was recently named the travel and leisure is it list and we are proud to say that it truly is firing on all cylinders.

James F. Risoleo: Turning to capital allocation yesterday, we announced the acquisition of the fee simple interest in a two hotel complex comprising the 215 room, one hotel in Nashville, and the 506 room embassy suites by Hilton Nashville downtown were approximately 530 million.

James F. Risoleo: Turning to capital allocation, yesterday we announced the acquisition of the Be Simple interest in a two-hotel complex comprising the 215-room One Hotel Nashville and the 506-room Embassy Suites by Hilton Nashville Downtown for approximately $530 million in cash. The acquisition price represents a 12.6 times EBITDA multiple or a cap rate of approximately 7.4% on 2024 estimated results. The properties are each expected to rank among our top 25 assets based on estimated full-year 2024 results, with an expected combined REB PAR of $275, TREB PAR of $435, and EBITDA per key of $58,550, further improving the quality of our portfolio.

James F. Risoleo: In cash.

James F. Risoleo: The acquisition price represents a $12 six times EBITDA multiple or a cap rate of approximately seven 4% on 2020 for estimated results.

James F. Risoleo: The properties are each expected to rank among our top 25 assets based on estimated full year 2024 results with an expected combined revpar of $275 revpar of $435 and EBITDA per key of 58550.

James F. Risoleo: $50 further improving the quality of our portfolio.

James F. Risoleo: The newly built LEED silver complex opened in 2022 and stands directly across from the $2 1 million square foot Music City Convention center adjacent to the Bridgestone Arena, which is home of the NHL Nashville predators and within a 10 minute drive of Nissan Stadium.

James F. Risoleo: The newly built Leeds Silver Complex opened in 2022 and stands directly across from the 2.1 million square foot Music City Convention Center, adjacent to the Bridgestone Arena, which is home of the NHL Nashville Predators, and within a 10 minute drive of Nissan Stadium, the Country Music Hall of Fame Museum, Vanderbilt University, Tennessee State University, and Centennial Park. It sits on 1.2 fee simple acres in Nashville, Tennessee's Lower Broadway Entertainment District. The two hotel complex has a combined 721 oversized rooms that average approximately 500 square feet with a 75% suite mix.

James F. Risoleo: The country Music Hall of Fame Museum, Vanderbilt University, Tennessee State University in Centennial Park it.

James F. Risoleo: It sits on one point to be simple acres in Nashville's famed lower Broadway Entertainment District.

James F. Risoleo: The two hotel complex has a combined 721 oversized rooms that average approximately 500 square feet with a 75% sweet mix the <unk>.

James F. Risoleo: Properties offer seven separate food and beverage outlets, including areas rooftop at the one hotel, which provides guests with exclusive use of music city skyline and an elevated nightlife setting.

James F. Risoleo: The properties offer seven separate food and beverage outlets, including Harriet's Rooftop at the One Hotel, which provides guests with exclusive views of Music City Skyline in an elevated nightlife setting. Other amenities include a spa, two fitness centers, a yoga studio, and 33,000 square feet of shared meeting space.

James F. Risoleo: Other amenities include a spa to fitness centers, a yoga studio and 33000 square feet of shared meeting space.

James F. Risoleo: From 2000 to 2023.

James F. Risoleo: I spell hotel market had a revpar CAGR of 7.7%, even while absorbing new supply.

James F. Risoleo: It is the number two ranked convention destination in the United States and the Convention Center has continued to set record attendance numbers by attracting larger events with promising definite bookings in future years.

James F. Risoleo: From 2000 to 2023, the Nashville hotel market had a Repar Kager of 7.7% even while absorbing new supply. It is the number two ranked convention destination in the United States, and the convention center has continued to set record attendance numbers by attracting larger events with promising definite bookings in future years. The new Nissan Stadium, home of the NFL's Tennessee Titans, is also expected to generate increased demand as the stadium's dome attracts more entertainment and sporting events with year-round activation.

James F. Risoleo: The new Nissan Stadium home of the NFL, Tennessee Titans is also expected to generate increased demand as the stadiums zone attracts more entertainment and sporting events with year round activation.

James F. Risoleo: In addition, Nashville has the fastest growing airports in the United States with current passenger traffic, 33% above 2019.

James F. Risoleo: The recent one and a half billion dollar airport expansion added six international gates and eight satellite gates and another $1 5 billion dollar expansion is already underway with expected completion in 2028.

James F. Risoleo: In addition, Nashville has the fastest growing airport in the United States, with current passenger traffic 33% above 2019. The recent $1.5 billion airport expansion added six international gates and eight satellite gates. And another $1.5 billion dollar expansion is already underway, with expected completion in 2028. While supply growth is expected to continue in Nashville, most projects are in the planning stages and at the select service chain scale. We believe the One Hotel Nashville and the Embassy Suites by Hilton Nashville Downtown are highly differentiated from the future supply due to their central location and diversified product offerings, which provide distinct value propositions to customers and guests.

James F. Risoleo: While supply growth is expected to continue in Nashville, most projects are in the planning stages and in the select service chain scale.

James F. Risoleo: We believe the one hotel Nashville, and the embassy suites by Hilton Nashville downtown are highly differentiated from the future supply due to their central location and diversified product offerings, which provide distinct value propositions to customers and guests.

James F. Risoleo: With multiple demand generators and no expected near term capital expenditure requirements. We believe the combined properties will stabilize at approximately 10 to 12 times EBITDA and the 2026 2028 timeframe driving additional value creation for our portfolio.

Sourav Ghosh: With multiple demand generators and no expected near-term capital expenditure requirements, we believe that combined properties will stabilize at approximately 10 to 12 times EBITDA in the 2026 to 2028 time frame, driving additional value creation for our portfolio. Due to the timing of the acquisition, the One Hotel Nashville and the Embassy Suites by Hilton Nashville Downtown are not yet included in our comparable hotel guidance metrics, but they will be included starting in the second quarter.

Sourav Ghosh: Due to the timing of the acquisition the one hotel in Nashville, and the embassy suites by Hilton Nashville downtown are not yet included in our comparable hotel guidance metrics, but will be included starting in the second quarter.

Sourav Ghosh: The acquisition is expected to generate $29 million of adjusted EBITDA for our ownership period, which is included in our adjusted EBITDA R E and F O guidance for 2024.

Sourav Ghosh: The acquisition is expected to generate $29 million of adjusted EBITDA for our ownership period, which is included in our adjusted EBITDA RE and FFO guidance for 2024. Looking back on our transaction activity, we have acquired $4 billion of assets since 2018 at a 13.5 times EBITDA multiple and disposed of $5 billion of assets at a 17 times EBITDA multiple, including $976 million of estimated foregone capital expenditure. This creative capital recycling has allowed us to grow our adjusted EBITDA RE and dividend in excess of full year 2019 levels as we continue on the path towards $2 billion of adjusted EBITDA RE.

Sourav Ghosh: Looking back on our transaction activity we.

Sourav Ghosh: We have acquired $4 billion of assets since 2018, and a $13 five times EBITDA multiple and disposed of $5 billion of assets and at 17 times EBITDA multiple including $976 million of estimated foregone capital expenditures.

Sourav Ghosh: This accretive capital recycling has allowed us to grow our adjusted EBITDA R E and dividend in excess of full year 2019 levels as we continue on the path towards $2 billion of adjusted EBITDA R E.

Sourav Ghosh: As we have demonstrated we believe host is well positioned to continue capitalizing on value enhancing acquisition opportunities.

Sourav Ghosh: After adjusting for post quarter transactions, we have $1 7 billion of total available liquidity and net leverage of two three times and we will continue using our size scale and relationships to uncover more acquisition opportunities.

Sourav Ghosh: As we have demonstrated, we believe Host is well positioned to continue capitalizing on value-enhancing acquisition opportunities. After adjusting for post-quarter transactions, we have $1.7 billion of total available liquidity and net leverage of 2.3 times, and we will continue using our size, scale, and relationships to uncover more acquisition opportunities. Turning to portfolio reinvestment, our 2024 capital expenditure guidance range remains $500 to $605 million, which reflects approximately $225 to $280 million of investment for redevelopment, repositioning, and ROI projects.

Sourav Ghosh: Turning to portfolio reinvestment.

Sourav Ghosh: Our 2024 capital expenditure guidance range remains $500 million to $605 million, which reflects approximately $225 million to $280 million of investment for redevelopment repositioning and ROI projects.

Sourav Ghosh: During the first quarter, we started the Hyatt transformational capital program renovations at the Grand Hyatt Atlanta, and the Grand Hyatt, Washington, which we expect to complete in the first half of 2025.

Sourav Ghosh: During the first quarter, we started the Hyatt Transformational Capital Program renovations at the Grand Hyatt Atlanta and the Grand Hyatt Washington, which we expect to complete in the first half of 2025. We received $2 million of operating guarantees in the first quarter to offset business disruptions related to the HIA Transformational Capital Program, and we expect to benefit from an additional $7 million in 2024. More broadly, we have completed 24 transformational renovations since 2018, which we believe provide meaningful tailwinds for our portfolio.

Sourav Ghosh: We received $2 million of operating guarantees in the first quarter to offset business disruptions related to the Hyatt transformational capital program and.

Sourav Ghosh: And we expect to benefit from an additional $7 million in 2024.

Sourav Ghosh: More broadly we have completed 24 transformational renovations since 2018, which we believe provide meaningful tailwind for our portfolio.

Sourav Ghosh: Of the 12 hotels that have stabilized post renovation operations to date. The average Revpar index share gain is eight five points, which is well in excess of our targeted gain of three to five points.

Sourav Ghosh: Of the 12 hotels that have stabilized post-renovation operations to date, the average REBPAR index share gain is 8.5 points, which is well in excess of our targeted gain of 3 to 5 points. Wrapping up, we believe Host is well positioned to continue to outperform. Our successful capital allocation strategy has allowed us to deliver 2023 adjusted EBITDA RE and adjusted FFO per share above 2019 levels, outperforming the other full service lodging RE

Sourav Ghosh: Wrapping up we believe host is well positioned to continue to outperform.

Sourav Ghosh: Our successful capital allocation strategy has allowed us to deliver 2023, adjusted EBITDA and adjusted <unk> per share above 2019 levels outperforming the other full service lodging Reits.

Sourav Ghosh: We are encouraged by the supply picture for our markets and chain scales, which remains below historical levels, the improving international demand imbalance. They continued improvement in business transient demand and increased activity in the transactions market.

Sourav Ghosh: We are encouraged by the supply picture for our markets and chain scales, which remains below historical levels, the improving international demand imbalance, the continued improvement in business transient demand, and increased activity in the transactions market. We believe our EBITDA growth profile, our investment grade balance sheet, our diversified portfolio, and our continued portfolio reinvestment are key differentiators. As we have demonstrated, hosts can and will continue to do it all. With that, I will now turn the call over to Sourav to discuss additional operational detail in our revised 2024 Outlook.

Sourav Ghosh: We believe our EBITDA growth profile, our investment grade balance sheet, our diversified portfolio and our continued portfolio reinvestment are key differentiators.

Sourav Ghosh: As we have demonstrated hosts can and will continue to do it all.

Sourav Ghosh: With that I will now turn the call over to <unk> to discuss additional operational detail and our revised 2020 for outlook.

Sourav Ghosh: Thank you Jim and good morning, everyone building on Jim's comments I will go into detail on our first quarter operations updated 2020 for guidance and our balance sheet.

Sourav Ghosh: Starting with business mix overall transient revenue per available room was down 6% compared to the first quarter of 2023, driven by tough comparisons, including the evolving nature of demand in Maui.

Sourav Ghosh: Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our first quarter operations, updated 2024 guidance, and our balance sheet. Starting with business mix. Overall transient revenue for available room was down 6% compared to the first quarter of 2023, driven by tough comparisons, including the evolving nature of demand in Maui. Unseasonable weather in many markets and unanticipated renovation delays at the Singer Oceanfront Resort. Combined, we estimate that the renovation delay and Maui had a 440 basis point impact on transient rest part in the quarter.

Sourav Ghosh: Seasonable weather in many markets and unanticipated renovation delays at the singer Oceanfront resort.

Sourav Ghosh: Combined we estimate that the renovation delay and Maui had a 440 basis point impact to transient revpar in the quarter.

Sourav Ghosh: However, leisure rate is still strong.

Sourav Ghosh: Transient rates at our resorts remained resilient at 52% above the fourth quarter of 2019 and resort food and beverage outlets revenue per occupied room grew over last year.

Sourav Ghosh: However, the leisure sector is still strong. Transient rates at our resorts remained resilient at 52% above the first quarter of 2019, and resort food and beverage outlet revenue per occupied room grew over last year. Golf revenue continued to grow over the record levels set in the first quarter of the last two years, despite the impact of our Maui Golf program.

Sourav Ghosh: Golf revenue continues to grow over the record level set in the first quarter of the last two years, despite the impact from our Maui golf courses.

Sourav Ghosh: Looking ahead to holidays in the second quarter for Memorial Day weekend transient room revenue pace for the overall portfolio is up over last year and up high single digits excluding milk.

Sourav Ghosh: We are still outside the primary booking window for July 4th, but thus far we are encouraged by strong bookings and San Diego, Houston, and New York.

Sourav Ghosh: Looking ahead to holidays in the second quarter, for Memorial Day weekend, transient room revenue pace for the overall portfolio is up over last year, and up high single digits excluding mail. We are still outside the primary booking window for July 4th, but thus far, we are encouraged by strong bookings in San Diego, Houston, and New York.

Sourav Ghosh: Business transient revenue per available room was 5% above the first quarter of 2023, driven by an increase in rate and room nights as business transient demand continued its slow and steady recovery.

Sourav Ghosh: Business transient revenue per available room was 5% above the first quarter of 2023, driven by an increase in rate and room nights, as business transient demand continued its slow and steady recovery. Seattle, Boston, and San Francisco led room-night growth, and both New York and Boston are within 2% of pre-pandemic demand. Turning to Groups.

Sourav Ghosh: Seattle, Boston and San Francisco led room night growth in both New York and Boston are within 2% of pre pandemic demand.

Sourav Ghosh: Turning to group revenue per available room was up 4% in the first quarter driven by room night growth in San Diego, San Francisco, Orlando and milk.

Sourav Ghosh: Notably group room night volume reached 96% of the first quarter of 2019 levels led by corporate and small groups.

Sourav Ghosh: Revenue per available room was up 4% in the first quarter driven by room night growth in San Diego, San Francisco, Orlando, and Maryland. Notably, Group Room Night volume reached 96% of the first quarter of 2019 levels, led by corporate and smurf groups. For full year 2024, we have 3.6 million definite group room nights on the books, representing a 17% increase since the fourth quarter and putting us ahead of the same time last year.

Sourav Ghosh: For full year 2024, we have $3 6 million definite group room nights on the books, representing a 17% increase since the fourth quarter and putting US ahead of same time last year.

Sourav Ghosh: Group rate on the books is up 4% and total group revenue pace is up 7% over the same time last year.

Sourav Ghosh: As Jim mentioned, our banquet and catering contribution per group room night in the first quarter was at an all time high coming in approximately 1% above the prior record set in the first quarter of 2023.

Sourav Ghosh: Group rate on the books is up 4%, and total group revenue pace is up 7% over the same time last year. As Jim mentioned, our banquet and catering contribution per group room night in the first quarter was at an all-time high, coming in approximately 1% above the prior record set in the first quarter of 2023. We continue to be encouraged by the ongoing strength of group business as evidenced by the strong pace, lengthening booking windows, and double-digit citywide room night pace in key markets such as Nashville, New Orleans, San Antonio, Seattle, and Washington, D.C. Shifting gears to margins, as expected, margin declines year over year were driven by increases in wages, benefits, and fixed expenses, as well as impacts from malware.

Sourav Ghosh: We continue to be encouraged by the ongoing strength of group business as evidenced by strong pace lending booking windows and double digit citywide room night pace in key markets, such as Nashville, New Orleans, San Antonio Seattle, and Washington D C.

Sourav Ghosh: Shifting gears to margins as expected margin declines year over year were driven by increases in wages benefits and fixed expenses as well as impacts of Mali.

Sourav Ghosh: Despite these headwinds our comparable hotel EBITDA margin was 31, 2% in the first quarter.

Sourav Ghosh: Representing a 30 basis point increase over 2019 as a result of our continued efforts to redefine the operating model.

Sourav Ghosh: Despite these headwinds, our comparable hotel EBITDA margin was 31.2% in the first quarter, representing a 30 basis point increase over 2019 as a result of our continued efforts to redefine the operating model. We expect year-over-year margin comparisons to improve as the year progresses. Turning to our revised outlook for 2024, the midpoint of our guidance continues to contemplate steady demand in travel and low supply growth. Our expectations for the year are driven by improvements in group business and a gradual recovery in business transient.

Sourav Ghosh: We expect year over year margin comparisons to improve as the year progresses.

Sourav Ghosh: Turning to our revised outlook for 2024, the midpoint of our guidance continues to contemplate steady demand in travel and low supply growth.

Sourav Ghosh: Our expectations for the year are driven by improvements in group business, a gradual recovery in business transient.

Sourav Ghosh: Softer short term leisure transient demand and a continued evolution of demand on Maui as the island recovers from the recent wildfires.

Sourav Ghosh: At the low end, we have assumed slow group pickup and softer leisure transient demand and at the high end, we have assumed a faster recovery at our Maui resorts and increased group pickup.

Sourav Ghosh: softer short-term leisure transient demand and a continued evolution of demand on Maui as the island recovers from the recent wildfire. At the low end, we have assumed slow group pickup and softer leisure train demand, and at the high end, we have assumed a faster recovery at our Maui resorts and increased group pickup.

Sourav Ghosh: For full year 2024, we anticipate comparable hotel revpar growth of between 2% and 4% over 2023.

Sourav Ghosh: We expect comparable hotel EBITDA margins to be down 80 basis points year over year at the low end of our guidance to down 30 basis points at the high end.

Sourav Ghosh: For full year 2024, we anticipate comparable hotel REVPA growth of between 2% and 4% over 2023. We expect comparable hotel EBITDA margins to be down 80 basis points year over year at the low end of our guidance to down 30 basis points at the high end. Notably, we expect comparable hotel EBITDA margins to be up 10 basis points at the midpoint versus 2019, despite an estimated 20 basis point margin impact from Maui.

Sourav Ghosh: Notably, we expect comparable hotel EBITDA margins to be up 10 basis points at the midpoint versus 2019, Despite an estimated 20 basis point margin impact from Maui.

Sourav Ghosh: At the midpoint of our guidance range, we anticipate comparable hotel total revpar growth of three 7% and comparable hotel revpar growth of 3% compared to 2023.

Sourav Ghosh: At the midpoint of our guidance range, we anticipate comparable hotel total REFPA growth of 3.7% and comparable hotel REFPA growth of 3% compared to 2023. This 100 basis point reduction in our REFPA growth midpoint is driven by lower than expected first quarter results underperformance in Maui and softer than expected short term leisure transient demand. That said, the strength of out-of-room revenues allowed total REPFAR to decline only 60 basis points relative to our prior mid-term.

Sourav Ghosh: This 100 basis point reduction in our Revpar growth midpoint is driven by lower than expected fourth quarter results underperformance in Maui and softer than expected short term leisure transient demand.

Sourav Ghosh: That said the strength of out of room revenues allowed for total revpar to decline only 60 basis points relative to our prior midpoint.

Sourav Ghosh: We expect our comparable hotel EBITDA margin midpoint of 29, 6%, which has improved 30 basis points from our initial guidance and is now only 50 basis points below 2023.

Sourav Ghosh: We expect a comparable hotel EBITDA margin midpoint of 29.6%, which has improved 30 basis points from our initial guidance and is now only 50 basis points below 2023. We estimate the Maui wildfires will impact full-year comparable hotel TREVPAR by 90 basis points, REVPAR by 130 basis points, and comparable hotel EBITDA margin by 20 basis points. We also expect a 50 basis point impact from property taxes and insurance.

Sourav Ghosh: We estimate the Maui wildfires will impact full year comparable hotel revpar by 90 basis points Revpar by 130 basis points and comparable hotel EBITDA margin by 20 basis points.

Sourav Ghosh: We also expect a 50 basis point impact from property taxes and insurance.

Sourav Ghosh: In terms of Revpar growth cadence for the year, we expect comparable hotel revpar growth to be flat to low single digits in the first half of the year based on the drivers I just mentioned.

Sourav Ghosh: We continue to expect mid single digit comparable hotel revpar growth in the second half of the year as a result of strong group booking pace less renovation disruption compared to the second half of 2023, and the diminishing year over year impacts of the Maui wildfires, which occurred in August of 2023.

Sourav Ghosh: In terms of REVFA growth pace for the year, we expect comparable hotel REVFA growth to be flat to low single digits in the first half of the year, based on the drivers I just mentioned. We continue to expect mid-single-digit comparable hotel revenue growth in the second half of the year as a result of strong group booking pace, less renovation disruption compared to the second half of 2023, and the diminishing year-over-year impacts of the Maui wildfires, which occurred in August of 2023.

Sourav Ghosh: Our revised 2020 for full year, adjusted EBITDA midpoint is $1 billion $670 million.

Sourav Ghosh: $35 million or 2% increase over the prior quarter.

Sourav Ghosh: Our revised 2024 full year adjusted EBITDA RE midpoint is $1,670,000,000. 35 million, or a 2% increase over the prior quarter. This includes an expected additional $8 million from business interruption proceeds related to Hurricane Ian, $20 million of business interruption proceeds related to the Maui wildfires, an estimated $62 million contribution from operations at Wittsfels in Naples, which is up from $60 million in our prior guidance, and $6 million from operations at Alila Ventana Big Sur, a decline of $10 million compared to our prior guidance. As a reminder, Ritz Carlton Naples and Alila Ventana Big Sur are excluded from our comparable hotel set for the full year 2024 forecast.

Sourav Ghosh: This includes an expected additional $8 million from business interruption proceeds related to hurricane in $20 million of business interruption proceeds related to the Maui wildfires and.

Sourav Ghosh: An estimated $62 million contribution from operations at the Ritz, Carlton Naples, which is up from $60 million in our prior guidance and $6 million from operations ethylene love and ton of Big sur a decline of $10 million compared to our prior guidance.

Sourav Ghosh: As a reminder, Ritz Carlton Naples, and allele of antenna are excluded from our comparable hotel set for the full year 2024 forecast.

Sourav Ghosh: Our adjusted EBITDA and <unk> guidance also includes an estimated $29 million contribution from the one hotel Nashville, and embassy suites by Hilton in Nashville downtown.

Sourav Ghosh: Turning to our balance sheet and liquidity position our weighted average maturity is four three years at a weighted average interest rate of four 7%.

Sourav Ghosh: Our adjusted EBITDA and FFO guidance also includes an estimated $29 million contribution from the One Hotel Nashville and Embassy Suites by Hilton Nashville Downtown. Turning to our balance sheet and liquidity position, our weighted average maturity is 4.3 years at a weighted average interest rate of 4.7% after repaying the $400 million Series G senior notes in April. As Jim noted, we currently have $1.7 billion in total available liquidity, which includes $231 million in FF&E reserves.

Sourav Ghosh: After repaying the $400 million series G Senior notes in April.

Sourav Ghosh: As Jim noted, we currently have $1 $7 billion in total available liquidity, which includes $231 million of assets.

Sourav Ghosh: <unk> reserves.

Sourav Ghosh: Our quarter end leverage ratio adjusted for post quarter transactions was two three times and we have $1 $3 billion of availability on our credit facility.

Sourav Ghosh: Also since our last call Moodys upgraded the company's issuer outlook from stable to positive.

Sourav Ghosh: Our quarter-end leverage ratio adjusted for post-quarter transactions was 2.3 times, and we have $1.3 billion of availability on our credit facility. Also, since our last call, Moody's upgraded the company's issuer outlook from stable to positive. Furthermore, in April, we paid a quarterly cash dividend of $0.20 per share, demonstrating our commitment to returning capital to stockholders. As always, future dividends are subject to approval by the company's Board of Directors.

Sourav Ghosh: Further in April we paid a quarterly cash dividend of <unk> 20 per share demonstrating our commitment to returning capital to stockholders as always future dividends are subject to approval by the Companys Board of directors.

Sourav Ghosh: We will continue to be strategic and opportunistic in managing our balance sheet and liquidity position as we move through the remainder of 2024.

Sourav Ghosh: To conclude we believe our best in class portfolio and balance sheet uniquely position <unk> to capitalize on opportunities for growth in the future.

Sourav Ghosh: We will continue to be strategic and opportunistic in managing our balance sheet and liquidity position as we move through the remainder of 2024. To conclude, we believe our best-in-class portfolio and balance sheet uniquely position hosts to capitalize on opportunities for growth in the future. With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

Sourav Ghosh: With that we would be happy to take your questions to ensure we have time to address as many questions as possible. Please limit yourself to one question.

Speaker Change: Thank you.

Speaker Change: At this time, ladies and gentlemen, we'd be conducting our question and answer session.

Sourav Ghosh: If you would like to ask a question. Please press star one on your telephone keypad.

Sourav Ghosh: A confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Operator: Thank you. At this time, ladies and gentlemen, we'll be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press star 2 if you would like 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 start button.

Operator: And to facilitate enough time for people to have an opportunity to ask a question today, we do request that you please limit your questions to one person. We appreciate your cooperation with this request. Thank you. Our first question is coming from Michael Bellisario with Baird. Your line is. Thanks. Good morning, everyone.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before.

Michael Bellisario: Pressing the star keys.

Michael Bellisario: So there is enough time for people to have an opportunity to ask a question today, we do request that you. Please limit your questions to one person. We appreciate your cooperation with this request.

Operator: Thank you. Our first question is coming from Michael Bellisario with Baird. Your line is nice.

Michael Bellisario: Thanks, Good morning, everyone.

Michael Bellisario: Jim One long question for you on on National.

Michael Bellisario: Could you walk us through the timeline for this deal maybe how your cost of capital and view of the value evolved, especially given how much the capital markets have moved in the last three to six months and then just lastly, how youre thinking about the continued ramp up of these properties given that they're both less than two years old. Thank you.

Michael Bellisario: Sure Mike.

Michael Bellisario: Nashville is a.

Operator: A market that we have had our eye on.

Michael Bellisario: For a number of years.

Michael Bellisario: It is a market where I would say we're underrepresented given the dynamic that is occurring in Nashville.

James F. Risoleo: Nashville is a market that we have had our eye on for a number of years. It is a market where I would say we're underrepresented, given the dynamic that is occurring in Nashville. Years ago, we did a 50-50 joint venture with White Lodging on a higher place. We were one of the early ones in Nashville, and that property has continued to outperform all of our expectations. I think we refinanced it two or three times along the way.

James F. Risoleo: Years ago, we did a 50 50 joint venture with White lodging on a a hyatt place we don't want any early wins in Nashville in that property.

James F. Risoleo: <unk> has continued to outperform all of our expectations I think we refinanced it two or three times along the way.

James F. Risoleo: So.

James F. Risoleo: We have been scouring the market and are actually.

James F. Risoleo: So, you know, we have been scouring the market and actually reached out to our friends at Starwood Capital and Crescent before the one hotel and embassy suites even opened when it was in the construction phase. You know, we're not much of, not terribly keen on being a developer, but that was one deal that I really wanted to see if we could participate in when it was coming out of the ground. And that was a non-starter for the development team.

James F. Risoleo: Had reached out to them.

James F. Risoleo: Our friends at Starwood capital and Crescent.

James F. Risoleo: Before I had the one hotel and embassy suites, even opened when it was in the construction phase.

James F. Risoleo: We're not much of that but not terribly keen on being a developer but that was one deal that I really wanted to see if we could participate in.

James F. Risoleo: When it was coming out of the ground and that was a non starter for the AR for the development team. So we.

James F. Risoleo: We've been following it for a long time.

James F. Risoleo: It came out very strong.

James F. Risoleo: In 2022.

James F. Risoleo: I was hoping for a partial year and it had a revpar of $185 and.

James F. Risoleo: So, we've been following it for a long time. It came out very strong in 2022. It was open for a part-year, and it had a REB PAR of $185 and EBITDA of $8.7 million. And, you know, to proceed in a cautious way and really not, having a clear view at that point in time with respect to how the macro picture was going to play out, whether we were going to really have a hard landing and end up in a serious recession or whether the Fed was going to engineer a soft landing, we elected to just watch the property over 23 and keep the dialogue going.

James F. Risoleo: EBITDA of $8 $7 million and you know to proceed in a cautious way.

James F. Risoleo: And really not.

James F. Risoleo: Having a clear view at that point in time with respect to how the macro picture is going to play out.

James F. Risoleo: Whether we were going to really have a hard landing and end up in a serious recession or if that was going to engineer a soft landing we elected to.

James F. Risoleo: So just watch the property over 'twenty, three and keep the dialogue going so obviously you know our cost of capital is a a fluid metric we look at it over time and it adjusts from from time to time and as.

James F. Risoleo: As we engaged in this transaction.

James F. Risoleo: So obviously, our cost of capital is a fluid metric. We look at it over time, and it adjusts from time to time. And as we engaged in this transaction earlier this year, the equity markets were in a different place. And, you know, so that's tick one to your question.

James F. Risoleo: Earlier in this year, you know that the equity markets were in a different place and.

James F. Risoleo: So that that's ticked one to your.

James F. Risoleo: Your question.

James F. Risoleo: Secondly, we wanted to make certain that the property was going to perform as anticipated in 2023.

James F. Risoleo: I said had a revpar of $257 and the out of room spend was very very strong.

James F. Risoleo: Secondly, we wanted to make certain that the property was going to perform as anticipated. In 2023, the asset had a REB PAR of $257, and the out-of-room spend was very, very strong to result in EBITDA for $23 of $37.7 million. So, our underwriting this year has us at $275 red par and $42.2 million of EBITDA.

James F. Risoleo: To result in EBITDA for 23 of $37 $7 million, so our underwriting this year.

James F. Risoleo: As I said 275, dollar revpar and $42 $2 million.

James F. Risoleo: EBITDA and we think Nashville is really just getting started as a market honestly. It's a there are so many good things are happening in Nashville.

James F. Risoleo: It is a market of the future.

James F. Risoleo: And, you know, we think Nashville is really just getting started as a market, honestly. There are so many good things happening in Nashville that it is the market of the future. You know, it's the number two convention market in the United States behind Orlando. They've just completed a $1.5 billion expansion of the airport, and they're immediately starting on another $1.5 billion expansion. Oracle just announced that they're moving to Nashville to be closer to the center of healthcare tech.

James F. Risoleo: The number two convention market in the United States behind Orlando.

James F. Risoleo: They've just completed a $1 5 billion dollar expansion of the airport and they're immediately starting on another $1 5 billion dollar expansion.

James F. Risoleo: Oracle, just announced that they're moving to Nashville to be closer to the center of health care Tech.

James F. Risoleo: You know Amazon is.

James F. Risoleo: Developing a a significant presence in the city as well I think they're going to have about 5000 jobs in Nashville. The demographics of the city are very positive you have a lot of demographic inflows.

James F. Risoleo: You know, Amazon is developing a significant presence in the city as well. I think they're gonna have about 5,000 jobs in Nashville. The demographics of the city are very positive. You have a lot of demographic inflows into Nashville. The tax environment is very favorable. It's a favorable business environment. You know, the asset itself, it's unmatched.

James F. Risoleo: And.

James F. Risoleo: Into Nashville.

James F. Risoleo: The tax environment is very favorable it's a favorable business environment.

James F. Risoleo: You know the asset itself.

James F. Risoleo: It is unmatched I mean, it is a it is a main and main location is literally right across the street from the music City Convention Center, a $2 $1 million facility.

James F. Risoleo: I mean, it is a major and main location. It's literally right across the street from the Music City Convention Center, a $2.1 million facility. And that facility for 2023 and 24 on the books exceed 2029 nights, all over 1 million citywide room nights. And, you know, the pace in 24 is 19% over 23. The pace in 25 is 10% over the same time last year.

James F. Risoleo: And that at that facility.

James F. Risoleo: For 2023, and 24 are on the books exceed 2029.

James F. Risoleo: The Knights.

James F. Risoleo: All over $1 million.

James F. Risoleo: Citywide room nights and.

James F. Risoleo: The the pace in 'twenty four is 19% over 23, the pace and 25% 10% over over same time last year or so are there just a lot of really positive things that are happening in this market and.

Speaker Change: No Theres, a theres been some talk about new supply and you.

Speaker Change: We spent a lot of time in the market I spent a lot of time myself in the market and.

James F. Risoleo: So there are just a lot of really positive things that are happening in this market. And, you know, I know there's been some talk about new supply. And, you know, we spent a lot of time in the market. I spent a lot of time myself in the market.

James F. Risoleo: Really to wrap our hands, our head around what could possibly happen I will tell you that a lot of the projects that were.

James F. Risoleo: And really, to wrap our heads around what could possibly happen, I will tell you that a lot of the projects that were planned are still in the planning stage because the developers are finding out that it is costing more to build than they anticipated. And when you layer higher construction costs on with a higher cost of debt and lower proceeds from a construction loan perspective, the deals just aren't getting done. As a matter of fact, there was a Ritz Carlton planned for quite some time, but that transaction got completely pulled by Ritz because, you know, the site was tied up, and, you know, nothing was happening on it.

James F. Risoleo: We're plan are still in the planning stage because the developers are finding out that it is costing more to build than they anticipated and.

James F. Risoleo: And would you layer higher construction costs on with.

James F. Risoleo: A a higher cost of debt and in lower proceeds from a construction loan perspective, the deals just aren't getting done.

James F. Risoleo: A matter of fact, there was a ritz Carlton plans for quite some time and that.

James F. Risoleo: That transaction got completely pulled bye bye rich because as you know this.

James F. Risoleo: Site was tied up in you know nothing was happening on it. So no there will be some select serve come come online in the marketplace.

James F. Risoleo: We've taken that into consideration in our underwriting but in terms of.

James F. Risoleo: Full service upper upscale and luxury hotels, if and when it happens, it's probably three or four years out a best case scenario. So.

James F. Risoleo: So, you know, there will be some select services come online in the marketplace. We've taken that into consideration in our underwriting. But in terms of, you know, full service, upper upscale luxury hotels, if and when it happens, it's probably three or four years out, best case scenario. So. That's how we're thinking about Nashville.

James F. Risoleo: That's how we're thinking about Nashville is a market. We don't have an exposure in it's a market we wanted to get into and we follow this asset for a long time.

Speaker Change: Thank you.

James F. Risoleo: Our next question is coming from Shaun Kelley with Bank of America. Your line is life.

Speaker Change: Hi, Good morning, everyone. Thank you for taking my question.

Speaker Change: Jim Suraj and I apologize I joined a little bit late so if there's some piece of prepared remarks. It's a repeat here then my apologies, but hoping you can just dig in on what Youre seeing on the leisure transient softness came up a couple of times.

Operator: Our next question is coming from Shaun Kelley with Bank of America. Your line is live. Hi, good morning, everyone. Thank you.

Operator: It's a market we don't have an exposure to. It's a market we wanted to get into, and we will follow this asset for a long time. Our next question is coming from Shaun Kelley with Bank of America. Your line is live. Hi, good morning, everyone. Thank you for taking my question.

Shaun Clisby Kelley: Did I heard just some examples you could gave when you started to see that behavior shift.

Shaun Clisby Kelley: Is it continuing into April just any any kind of sense by market or behavior that you can see right now that would be great.

Shaun Clisby Kelley: Sure Sean.

Shaun Clisby Kelley: Where we started really seeing it as the short term leisure transient demand and I Wanna specified demands because in our prepared remarks, we talked about how rates for leisure has still surprised us to the upside we are effectively for our portfolio for Q1, 52% above 2019, and if you recall.

Sourav Ghosh: Sure, Shaun. Where we started really seeing it was in the short-term leisure transient demand. And I want to specify demand because, in our prepared remarks, we talked about how rates for leisure still surprised us to the upside. We are, effectively, for our portfolio for Q1, 52% above 2019. And if you recall, that's kind of where we were in the prior quarter as well. So, the rate is not letting down. It's just short-term transient demand. The reality is, we thought we started seeing that really, March is probably when we did.

Sourav Ghosh: That's kind of where we were in prior quarter as well. So the rate is not letting down it's just the short term transient demand.

Sourav Ghosh: The reality is we thought we started seeing that.

Sourav Ghosh: Really March.

Sourav Ghosh: Probably when we did and part of it is are we suspect is really being driven also by the poor weather that we had in Q1.

Sourav Ghosh: And part of it is, we suspect, is really being driven by the poor weather that we had in Q1. And going into April, obviously, you have the user shift. We have a significant portion of our portfolio is resorts, and Q1 does extremely well for all our resorts. So, the user shift is a little, I would say, not as impactful for our portfolio. However, what does happen with the timing of Easter, it does shorten the time that the resort can really drive rates and demand.

Sourav Ghosh: And going into April obviously, you have the Easter shift we have a significant.

Sourav Ghosh: A portion of our portfolio is resort in Q1 does extremely well for all of US also the Easter shift.

Sourav Ghosh: A little I would say not.

Sourav Ghosh: Not as much impactful for all our portfolio. However.

Sourav Ghosh: However, it does what does happen with the with the timing of Easter. It does shorten the time that the resorts can really drive rates and demand.

Sourav Ghosh: So therefore, you know April sort of in the short term pickup is certainly slower however rates are still holding strong what I can tell you with what data we have available as of right. Now we don't have the full month of data yet but April is trending.

Sourav Ghosh: So therefore, you know, April's sort of short-term pickup is certainly slower. However, rates are still holding strong. What I can tell you with what data we have available as of right now, we don't have the full month data yet, but April is trending effectively flat for the portfolio. But remember, that includes Maui.

Sourav Ghosh: Effectively flat for the portfolio, but remember that include Maui, If you exclude Maui were actually closer to slightly above a 1%.

Sourav Ghosh: For April so overall things are still looking very strong and you know when we look at the start of the second half of the year. What I will say is the group piece is looking extremely strong for the second half and that's what really gives us confidence.

Sourav Ghosh: If you exclude Maui, we are actually closer to slightly above 1% for April. So overall, things are still looking very strong. And, you know, when we look at the sort of second half of the year, what I will say is the group piece is looking extremely strong for the second half. And that's what really gives us confidence for the full year because we picked up 421,000 room nights for the remainder of the year, and 60% of that was for the second half. So clearly, we have tremendous confidence for the second half, and the overall total revenue pace is actually close to 9% for the second half of the year.

Sourav Ghosh: For the full year is we picked up 421000 room nights for the remainder of the year at 60% off of that was for the second half so clearly have.

Sourav Ghosh: Tremendous confidence for the second half and overall total revenue pace is actually closer to 9% for the second half of the year.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Sourav Ghosh: Our next question is coming from Ari Klein with BMO. Your line is life.

Speaker Change: Thanks, and good morning, maybe just going back to Nashville, and that now that that acquisition has been done.

Operator: Thank you very much. Thank you. Our next question is coming from Aryeh Klein with BMO. Your line is live. Thanks, and good morning.

Operator: Thank you. Our next question is coming from Aryeh Klein with BMO. Your line is live.

Speaker Change: How are you thinking about future M&A, and perhaps which markets are of interest are there Nashville types of markets that you're not in that you'd still like to get into and then maybe just on the overall M&A landscape with rates seemingly higher for longer has there been any shift in the market have you seen assets called or anything like that.

Aryeh Klein: A couple of questions there already.

Aryeh Klein: Let's talk about the M&A landscape first so you.

Aryeh Klein: I think there was a.

Aryeh Klein: A fair amount of anticipation among the brokerage community that we would see a pickup in transaction activity as the fed moved to lower interest rates.

James F. Risoleo: A couple of questions there, Aryeh. Let's talk about the M&A landscape first. So you know, I think there was a fair amount of anticipation among the brokerage community that we would see a pickup in transaction activity as the Fed moved to lower interest rates. We haven't seen that happen yet because of where the Fed is sitting. However, I believe that there are some owners out there who will be sellers now because they just can't afford to wait any longer. And, you know, for a lot of reasons.

James F. Risoleo: We haven't seen that happen, yet because of where.

James F. Risoleo: Where the fed is sitting however, I believe that there are some.

James F. Risoleo: Owners out there who will be sellers now because they they just can't afford to wait any longer and you know for a lot of reasons I mean, they haven't invested in their assets over the course of the pandemic.

James F. Risoleo: They may have loans coming due and they're gonna have to refi them into a higher interest.

James F. Risoleo: Interest rate environments. So we're hearing a little bit of chatter.

James F. Risoleo: I mean, they haven't invested in their assets over the course of the pandemic. They may have loans coming due, and they're going to have to refinance them into a higher interest rate environment. So we're hearing a little bit of chatter that we might see a more active M&A market in the second half of the year. That said, we don't sit around and host events and wait for marketed opportunities. We really prefer to continue to work with our longstanding partnership relationships that we have.

James F. Risoleo: That that we might see a more active M&A market in the second half of the year.

James F. Risoleo: That said, we we don't sit around and at home and wait for marketed opportunities we really prefer.

James F. Risoleo: Two.

James F. Risoleo: Continue to work with our long standing partners relationships that we have and that's how we got the Nashville deal done.

James F. Risoleo: You may recall that.

James F. Risoleo: We also bought the one hotel South Beach from Starwood capital So.

James F. Risoleo: We're very happy that.

James F. Risoleo: And that's how we got the Nashville deal done. You may recall that, you know, we also bought the South Beach hotel from Starwood Capital. So, you know, we're very happy that Starwood Capital and Crescent have the confidence and faith and host as an owner to give us this deal on an off-market basis. And, you know, we're talking to a lot of other folks out there.

James F. Risoleo: That starwood capital and crests and to have the the.

James F. Risoleo: The confidence and Peyton and host as an owner to do.

James F. Risoleo: They give us this deal on an off market basis and we're.

James F. Risoleo: We're talking to a lot of other folks out there and.

Speaker Change: I'm hopeful.

James F. Risoleo: Certainly not assured but hopeful that over the course of the year that we'll be able to get.

James F. Risoleo: Additional transactions completed.

James F. Risoleo: We're in a unique position and we're going to take advantage of the position that we're in we don't have to go to the debt capital markets to get a deal done.

James F. Risoleo: And, you know, I'm hopeful, certainly not assured, but hopeful that over the course of the year, we'll be able to get additional transactions completed. You know, we're in a unique position, and we're going to take advantage of the position that we're in. We don't have to go to the debt capital markets to get a deal done.

James F. Risoleo: Even post Nashville, we're sitting here at two three times leverage we have $1 $7 billion of available liquidity.

James F. Risoleo: The investment grade balance sheet is very important to us we certainly intend to maintain our investment grade rating that said.

James F. Risoleo: Even post-Nashville, we're sitting here at 2.3 times leverage. We have $1.7 billion of available liquidity. The investment grade balance sheet is very important to us. We certainly intend to maintain our investment grade rating. That said, with a leverage ratio of roughly three times, we have the ability to acquire another $1.1 billion of assets this year. So that is our focus. We continue to want to elevate the EBITDA growth profile of the portfolio.

James F. Risoleo: With.

James F. Risoleo: A leverage ratio of circa three times, roughly we have the ability to acquire another $1 $1 billion of assets this year.

James F. Risoleo: So that is our focus and we continue to want to elevate the EBIT growth profile of the portfolio.

James F. Risoleo: Told many of you who were at our Investor Day last May.

James F. Risoleo: That we are on track to get to $2 billion of EBITDA.

James F. Risoleo: We told many of you who were at our investor day last May that we're on track to get to $2 billion of EBITDA. And I just encourage everyone to watch us and see what we do.

James F. Risoleo: And I, just encourage everyone to watch and see what we do.

Speaker Change: Thank you.

Speaker Change: Thank you art.

James F. Risoleo: Our next question is coming from Smedes Rose with Citi. Your line is life.

Speaker Change: Hi, Thanks.

Speaker Change: So Rob I just wanted to circle back I know you talked about this a little bit in your opening remarks that the on a comparable basis your EBITDA outlook declined by over $20 million.

Operator: Thank you. Our next question is coming from Smedes Rose with City. Your line is:

Operator: Hi, thanks. Sourav, I just wanted to circle back.

Smedes Rose: And you know.

Smedes Rose: So you that included some business insurance you know it turned out to be a lot more which is great, but I guess I just wanted to understand of that about $22 million decline. How much did you think was isolated or sort of realized that they were in the first quarter and how much is.

Sourav Ghosh: I know you talked about this a little bit in your opening remarks, that on a comparable basis, your EBITDA outlook declined by over $20 million, and that included some business insurance. It turned out it's going to be a lot more, which is great. But I guess I just wanted to understand, of that about $22 million decline, how much did you think was isolated or sort of realized, as it were, in the first quarter?

Sourav Ghosh: Coming through the balance of the year and maybe related to your.

Sourav Ghosh: A one point reduction in sort of Revpar forecast.

Speaker Change: Yeah sure thing I, just wanted to clarify and maybe I'll just quickly walk through the bridge from our prior guidance to this guidance.

Sourav Ghosh: And how much do you think it's going to be in the second quarter? And how much do you think it's going to be in the third quarter? And how much do you think it's going to be in the fourth quarter? Coming through the balance of the year, maybe related to your, you know, one point reduction and sort of red part forecasts.

Sourav Ghosh: Because on a comparable hotel operations.

Sourav Ghosh: It's actually a $13 million decline, which is a result of the change of one point and two our midpoint, so going down from the 4%.

Sourav Ghosh: Yeah, sure thing. I just want to clarify, and maybe I'll just quickly walk through the bridge from prior guidance to this guidance, because in the comparable hotel operation, it's actually a 13 million dollar decline, which is a result of the change of 1 point to our midpoint, so going down from the 4% to the 3%, so it's 13 million dollars, it's not 22. So, let's start off with a billion 635, which was the previous guidance.

Sourav Ghosh: To the 3% to $13 million is not 22.

Sourav Ghosh: So I think it will start off with 1 billion 635, which was our previous guidance you take out $13 million of comparable operation and which is pretty impressive. If you think about it because typically a one point decline in revpar would equate to $30 million of EBIT declined so you're developing only 13 million from there you have two.

Sourav Ghosh: You take out 13 million from comparable operations, and which is pretty impressive if you think about it, because typically, a 1 point decline in REVPAR would equate to 30 million dollars of EBITDA decline. So, you're deducting only 13 million from there. You have 20 million in comparable BI from the Maui wildfires, which you'll be adding to that. Then you take out 10 million for Ventana. Maybe that's where you're getting the 2223 because the 10 million is moving to non-comp from comp.

Sourav Ghosh: $3 million of comparable B I from the Maui wildfires.

Sourav Ghosh: Adding to that when you take out $10 million for Ventana, maybe that's where you're getting the 20.

Sourav Ghosh: 223, because the $10 million moving to non comp.

Sourav Ghosh: From comps so that's a little of Encana, taking out 10 million of EBITDA, you're adding 2 million incremental for Naples, because our forecast went from $60 million for the year to $62 million, and then youre, adding $29 million for the for Nashville, The one hotel and the embassy suite and then another $8 million of beer.

Sourav Ghosh: So, that's Alila Ventana taking out 10 million of EBITDA. You're adding 2 million incremental for Naples because our forecast went from 60 million for the year to 62 million. And then you're adding 29 million for Nashville, the one hotel in the Embassy Suite, and then another 8 million of BI for the rich Naples. Really add that up, and you will get to billion 670.

Sourav Ghosh: For the rest of Naples, so that if you.

Sourav Ghosh: Really add that up you'll get to the 1 billion $6 70, So hopefully that helps bridge it from our prior guidance in terms of where that one point decline I would say its two third in Q1 and about one third in Q2 and as I mentioned earlier, our second half is looking very strong.

Sourav Ghosh: So hopefully that helps bridge the gap from our prior guidance. In terms of where that one point declined, I would say it's two-thirds in Q1 and about one-third in Q2. And as I mentioned earlier, our second half is looking very strong. So we have a ton of confidence in terms of our group for the second half, and that confidence has improved. Our total revenue page for the second half is now slightly over 9%, and a lot of that is Q3 that's driving it.

Sourav Ghosh: Have a ton of confidence in terms of our group for the second half and their confidence has improved our total revenue pace for the second half is now over slightly over 9%.

Sourav Ghosh: And a lot of that is Q3.

Sourav Ghosh: Driving itself.

Sourav Ghosh: That's sort of how it plays out hopefully that makes it clear.

Speaker Change: Thank you.

Speaker Change: Thanks Keith.

Sourav Ghosh: Our next question is coming from Stephen Grambling with Morgan Stanley Your line is life.

Operator: So that's sort of how it lays out. Hopefully, that makes it clear. Thank you. Thank you. Our next question is coming from Stephen Grambling with Morgan Stanley. Your line is:

Stephen Grambling: Hey, Thanks, just a follow up on that so.

Operator: Thank you. Our next question is coming from Stephen Grambling with Morgan Stanley. Hey, thanks. Just a follow up.

Stephen Grambling: You know theres a lot of moving parts in terms of bridging that guidance.

Stephen Grambling: And some of that includes B I. Some of it is the core some of the B is covering some of the disruption what do you think is the kind of right recurring EBIT down.

Stephen Grambling: In the year to build off of as we think about longer term.

Stephen Grambling: Sure. So if you think about the 1 billion $6 70 that we have guided to for the year. The way to think about long term run rate you would take out $38 million of B I right. So it's effectively the 10 million that we already had in the previous guidance plus the 28 that we've put into the guidance you'll pick up the 30.

Sourav Ghosh: Sure, so if you think about the $1.6 billion that we have guided to for the year, the way to think about the long-term run rate is to take out $38 million of BI, right, so it's effectively the $10 million that we already had in the previous guidance plus the $28 that we have put into the guidance. You take out the $38 million, and then you will add $10 million for Alila Ventana. You would add $13 million for Nashville so that, as Jim mentioned, we're expecting about $42.2 million this year.

Sourav Ghosh: Eight.

Sourav Ghosh: And then you will add $10 million for Leila Ventana, you would add $13 million for Nashville, So that as Jim mentioned, we are expecting about $42 2 million. This year, we already have 29 million isn't there. So that's where the 13th coming for for Nashville, and then you would add another about 46 million call it for Maui.

Sourav Ghosh: But for this year, our estimated Maui EBITDA is about $114 million and if you add the 46 that sort of gets you back to where we were pre fire. So when you add that all up I would say it comes to a pretty even a billion seven in terms of sort of ongoing run rate.

Sourav Ghosh: We already have $29 million in there, so that's where the $13 is coming from for Nashville. And then you would add another about $46 million, call it, for Maui. Because this year, our estimated Maui EBITDA is about $114 million, and if you add the $46, that sort of gets you back to where we were pre-fire. So when you add that all up, I would say it comes to a pretty even $1.7 billion in terms of sort of ongoing run rate.

Speaker Change: Thank you.

Speaker Change: Thank you.

Sourav Ghosh: Our next question is coming from Bill Crow with Raymond James Your line is life.

Sourav Ghosh: Perfect Good morning.

Sourav Ghosh: Everybody.

Sourav Ghosh: Jim It seems like the four seasons Orlando interesting resort to look at it. It seems to me correct me, if I'm wrong, but it seems like.

Operator: Thank you. Our next question is coming from Bill Crow with Raymond James. Your line is live.

Operator: Perfect. Good morning, everybody.

William Crow: That asset in particular benefited from pent up inbound international demand and maybe what might be called aspirational splurge spending over the past couple of years I'm, just curious how 2024 shaping up.

James F. Risoleo: Jim, it seems like the Four Seasons Orlando is an interesting resort to look at. It seems to me, correct me if I'm wrong, but it seems like that asset in particular has benefited from pent-up inbound international demand and maybe what might be called aspirational or scourge spending over the past couple of years. I'm just curious how 2024 is shaping up relevant to 23 and, maybe more generally, is scourge spending kind of coming down or cooling a bit?

James F. Risoleo: Relative to 'twenty, three and maybe more generally as splurge spending kind of coming down or cooling a bit.

Jim: Yes, I would say that.

Jim: I don't know if I want to say that it's called me down or.

James F. Risoleo: Calling a bit.

James F. Risoleo: The ADR is likely to be.

James F. Risoleo: Though it's, yes, I would say that. I don't know if I want to say that it's... Cooling down or, you know, cooling a bit. The ADR is likely to be lower this year in Orlando than it was in 23, but it's still meaningfully above where it was in 2019, so we're not seeing a reset really backwards by any means. And one of the other things that will impact us a bit in Orlando this year is some disruption associated with our Condo Development. So we are steering guests away from a certain side of the building during times of construction.

James F. Risoleo: Lower this year and Orlando than it was in <unk>.

James F. Risoleo: 'twenty three but its still meaningfully above where it was in 2019, so we're not seeing a reset.

James F. Risoleo: Really backwards by any means.

James F. Risoleo: And one of the other things that are that will impact us a bit.

James F. Risoleo: In Orlando this year is some disruption associated with our.

James F. Risoleo: Condo development. So we are hearing gas away from certain side of the building during.

James F. Risoleo: Times of construction and so that that is going to be an impact on orlando as well, but but all in all I you know we've had a.

James F. Risoleo: We still continue to have a I think by resorts in the quarter that drove over $1000 Adr's and.

James F. Risoleo: And so that is going to have an impact on Orlando as well. But all in all, we still continue to have, I think, five resorts in the quarter that drove over $1,000 in ADRs. And we're not seeing a real slowdown in the affluent customer. There has been a shift that we talked about last year with respect to the international outbound versus inbound imbalance. That is still occurring. I think over time that it will right itself and correct itself.

James F. Risoleo: We're not seeing a real slowdown in the affluent customer there has been a rotation.

James F. Risoleo: We talked about last year.

James F. Risoleo: With respect to international inbound versus international outbound versus inbound imbalance.

James F. Risoleo: That is still occurring I think over time that will write itself and correct itself.

James F. Risoleo: I think that you know going back to Orlando for a moment the four seasons in the in the quarter had an ADR of over $2000. So people are still they still want to go too.

James F. Risoleo: Orlando, they still want to stay at the four seasons and.

James F. Risoleo: You know, I think, going back to Orlando for a moment, the four seasons in the quarter had an ADR of over $2,000. So people still want to go to Orlando, and they still want to stay at the Four Seasons. And, you know, what we have working against us a bit is a strong dollar. It's not weakening, but it will likely weaken once rates start to come down.

James F. Risoleo: Well, we have working against US a bit is a strong dollar you know it's not weakening at all it will likely weekend once rates start to come down and you know that's keeping the.

James F. Risoleo: And, you know, that's keeping the international traveler away from the United States right now. I mean, there was a fairly significant uptick in tourism in the first quarter. You know, as we all try to wrap our heads around the soft leisure demand, we talked a lot about weather in three states, Arizona, Florida, and California, and it was meaningful. I mean, we lost group business at the Phoenician over the course of the waste management open because of the rain. Now, we dug into this a little more. And, you know, we tried to answer the question, where do these people go?

James F. Risoleo: The international travel or away from the United States right now I mean, there was a fairly significant uptick.

James F. Risoleo: It.

James F. Risoleo: In the in the first quarter.

James F. Risoleo: As we all try to wrap our head around the soft leisure demand.

James F. Risoleo: We talked a lot about weather in three states.

James F. Risoleo: States.

James F. Risoleo: Arizona, Florida, and California, and it was meaningful I mean, we lost group business.

James F. Risoleo: The Phoenician add over the course of the waste management open because of the range.

James F. Risoleo: Now we dug into this a little more and.

James F. Risoleo: No.

James F. Risoleo: We.

James F. Risoleo: Try to answer the question, where do these people go well you know I mean, the demand didn't just disappear people didn't just stay home.

James F. Risoleo: We found out that.

James F. Risoleo: As an example.

James F. Risoleo: <unk>.

James F. Risoleo: International outbound.

James F. Risoleo: You know, I mean, the demand didn't just disappear. People didn't just stay home. We found that, as an example, international outbound to the Caribbean in the first quarter was 135% of where it was in 2019, and REBPAR in the Caribbean was up 17%. So, that's just a longer way of saying that our belief is that the consumer, the affluent consumer, is still healthy, they're still spending money, they're still prioritizing experiences over goods, and we're just not seeing the reset back.

James F. Risoleo: To the Caribbean in.

James F. Risoleo: In the first quarter was 135% of where it was in 2019 levels and Revpar in the Caribbean was up 17%. So that's just a longer way of saying that our belief is is that the consumer the affluent consumer is still healthy they're still spending money there are still prioritizing experiences over.

James F. Risoleo: Good.

James F. Risoleo: And we're just not seeing the reset back.

James F. Risoleo: That's helpful. Jim you were one of the louder voice and some of your peers I think everybody talks about it but.

James F. Risoleo: Kind of project.

James F. Risoleo: About outbound balance would correct itself the suburbs has the has.

James F. Risoleo: Does the change in currency values.

James F. Risoleo: That that's helpful. Jim, you are one of the louder voices among your peers. I think everybody talked about it but kind of projected that this inbound outbound balance would correct itself, you know, this summer, with the change in currency values and maybe some of the outbound activity you saw in the first quarter. Has that kind of... You know, reduce your conviction on that call?

James F. Risoleo: And maybe some of the outbound activity you saw in the first quarter is that kind of.

Speaker Change: Uh huh.

James F. Risoleo: You know reduce your conviction on that call.

James F. Risoleo: I would say that.

Jim: It's going to take longer than we anticipated.

James F. Risoleo: Yes.

Jim: We just it's just very difficult to.

James F. Risoleo: To wrap your arms around that you know one of the other things that we as an industry are dealing with through U S travel and H L. A is a is working with.

James F. Risoleo: I would say that... It's going to take longer than we anticipated. Yes, you know, it's just very difficult to wrap your arms around that. One of the other things that we as an industry are dealing with through US travel and HLA is working with the State Department to see what can be done to shorten visa wait times. I mean, visa wait times in the US are still running at 400 days.

James F. Risoleo: You know, and that is a discouraging factor to many people. As they are looking to come to the U.S., a corollary to that is in Canada, you can get a visa 40 days out. So there is a program in place to try to break that legal logjam and to hire more people to do the processing necessary.

James F. Risoleo: The state department to to see what can be done.

James F. Risoleo: To shorten visa wait times, I mean visa wait times in the U S are still running at 400 days.

James F. Risoleo: And that is a discouraging factor to many people.

James F. Risoleo: You know.

James F. Risoleo: As they are.

James F. Risoleo: Looking to come to the U S.

James F. Risoleo: It is a corollary to that is in Canada, you can get a visa 40 days out so there.

James F. Risoleo: There is a program.

James F. Risoleo: In place to try to break that logjam and to hire more people to do the.

James F. Risoleo: The processing necessary.

Speaker Change: Yeah that'd be great. Thank you appreciate it.

James F. Risoleo: Yeah.

James F. Risoleo: Thank you. Our next question is coming from Duane funding worth with Evercore ISI.

James F. Risoleo: His life.

James F. Risoleo: That would be great. Thank you. I appreciate it. Thank you. Our next question is coming from Duane Pfennigwerth with Evercore ISI. Your line is, Hey, thanks. Most of my questions have already been asked.

Speaker Change: Hey, Thanks, most of my questions have been asked but just on the Naples rich can you remind us.

Duane Pfennigwerth: What seasonality is for that asset historically I know your guide implies about 50%.

Duane Pfennigwerth: The full year contribution in our in the March quarter.

Operator: Thank you. Our next question is coming from Duane Pfennigwerth with Evercore ISI. Your line is: Hey, thanks.

Duane Pfennigwerth: Does that align with historical seasonality, what what did <unk> typically represent you know historically, if there's such a thing as a quote unquote normal year. Thank you.

Duane Pfennigwerth: Sure Duane so yes, you're right. We did about 32 million of EBITDA from operations of the Vets Naples, what you will see when you see the 42 million in the income statement that are really include the $10 million of the eye that wasn't in our previous guidance. So for purely from operations was $32 million that's about 50%.

Operator: Sure, Duane. So, yes, your estimate is right. We made about $32 million of EBITDA from operations of the Rich Naples. When you see the $42 million in the income statement, that really includes the $10 million of BI that was in our previous guidance.

Duane Pfennigwerth: I would say Q2 was about 25% Q3 is relatively.

Duane Pfennigwerth: I was close to zero and then Q4 is the remaining 25% that's sort of how it breaks up for the year and yes. It is pretty consistent to.

Sourav Ghosh: So, purely from operations, $32 million, that's about 50%. I would say Q2 is about 25%. Q3 is relatively close to zero, and then Q4 is the remaining 25%. That's sort of how it breaks up for the year. And yes, it is pretty consistent with prior levels in terms of seasonality.

Sourav Ghosh: Prior levels in terms of seasonality.

Speaker Change: Okay very clear thank you.

Sourav Ghosh: Okay.

Sourav Ghosh: Thank you. Our next question is coming from Robin Farley with UBS. Your line is live.

Speaker Change: Thanks, most of my questions have already been addressed but one I was just.

Operator: Thank you. Our next question is coming from Robin Farley with UBS. Your line is:

Sourav Ghosh: Looking at your commentary about the increase in revenue in the quarter the different parts of revenue per room. It sounded like the biggest increases coming from.

Robin Farley: He said the other revenue up 6% from the cancellation and attrition fees. So I'm just wondering if that was.

Operator: commentary about the increase in revenue in the quarter, the different parts of revenue per room, and it sounded like the biggest increase was coming from, I think you said the other revenue up 6% from cancellation and attrition fees. So, I'm just wondering if that increase was an unusually high level. Is that something you'll be comping next year that we should be thinking about or should be thinking about as one-time in nature? Thanks. Yeah, Robin, clearly attrition cancellation.

Operator: That increase was an unusually high level is that something you'll be comping next year that we should be thinking about or thinking.

Operator: Thinking about it as onetime in nature. Thanks.

Robin: Yeah, Robyn clearly attrition in cancellation revenue now is coming in higher and I wouldn't say that's necessarily.

Operator: Stomach thing we were expecting thing the attrition in cancellation revenue needs to go back and welcome norm, we had in our previous forecast for the Euro approximately 57.

Sourav Ghosh: Yeah, Robin, clearly attrition cancellation revenue is coming in higher, and I wouldn't say that's necessarily a systemic thing. We were expecting the attrition cancellation revenues to go back more to normal. We had in our previous forecast for the year, approximately 57 million or so for the year. And now we have, you know, close to $71 million forecasted for the year. It's not across the portfolio, and part of it is that our managers are frankly doing a much better job of collecting those revenues, and contracts are tighter.

Sourav Ghosh: A million or so for the year and now we have you know.

Sourav Ghosh: Closer to $71 million are forecasted for the year.

Sourav Ghosh: Not across the portfolio and part of it as our managers are frankly doing a much better job of collecting those.

Sourav Ghosh: Those revenues and contracts are tighter. So it's just been you know sort.

Sourav Ghosh: Sort of a trend that we're seeing and we may.

Sourav Ghosh: Actually stabilize and go to a higher level, but it's not a systemic I spoke about our portfolio or anything that would suddenly jumped out one a one time basis in Q1.

Sourav Ghosh: So it's just been sort of a trend that we're seeing, and we may actually stabilize at those higher levels, but it's not a systemic issue across the portfolio or anything that suddenly jumped out on a one-time basis in Q1.

Sourav Ghosh: And in that bridge that you built earlier to kind of what's.

Speaker Change: Recurring and nonrecurring would you say that I guess that kind of roughly 14 million increase in your original expectations.

Sourav Ghosh: So in that bridge that you built earlier, to kind of what's recurring and not recurring, would you say that, I guess, that kind of roughly like 14 million increase in your original expectations, you're saying we should assume that that cancellation stays at that level? Or, or would you say that something that would come out if we were thinking about it? Yeah, it's difficult to exactly predict.

Robin: You're saying, we we should assume that that cancellation stay at that level or where would you say that.

Sourav Ghosh: Something that we're.

Sourav Ghosh: We're thinking about yeah, it's difficult to exactly predict.

Sourav Ghosh: What it will be for the following year, but it seems like thus far attrition and cancellation is going to be at that elevated level at least based on what we're seeing today.

Sourav Ghosh: Yeah, it's difficult to exactly predict what it will be for the following year, but it seems like, thus far, attrition cancellation is going to be at that elevated level, at least based on, you know, what we are seeing today. Okay, thank you. Thank you. Our next question is coming from David Katz with Jeffreys. Your line is live. Hi, everyone. Thanks for working with me. I appreciate it.

Speaker Change: Okay. Thank you.

Sourav Ghosh: Sure.

Sourav Ghosh: Yeah.

Sourav Ghosh: Thank you. Our next question is coming from David Katz with Jefferies. Your line is nice.

Sourav Ghosh: Okay.

David Katz: Hi, everyone. Thanks for working together I. Appreciate it can you just talk about the deal market a little bit.

Operator: Thank you. Our next question is coming from David Katz with Jeffreys. Your line is:

David Katz: Are there assets out there that would be sold but not for the cost of capital.

David Katz: Is there still some.

David Katz: You know some sort of sellers posturing with respect to price that needs to adjust itself.

David Katz: What are the gating factors for.

David Katz: There are more active deal trading market to start to occur.

David Katz: Yeah, David I think the.

David Katz: The limiting factor is really the cost of debt, it's not so much the availability of debt right now because they see MBS market.

Operator: Yeah, David, I think the limiting factor is really the cost of debt. It's not so much the availability of debt right now because the CMBS market, for those buyers who... Need to tap CMBS financing, is wide open.

David Katz: For those buyers who.

David Katz: Need to tap.

Operator: The MBS financing is wide open.

Operator: And there's been a a lot of volume Ah Ah occur this year across multiple.

Operator: Asset classes in real estate.

Operator:

Operator: But you know the.

Operator: The cost of debt is still such that it is.

Operator:

David Katz: Precluding private equity firms.

David Katz: To underwrite to their hurdle returns.

James F. Risoleo: And there's been a lot of volume occur this year across, you know, multiple asset classes in real estate. But, you know, the cost of debt is still such that it is precluding private equity firms from underwriting to their hurdle returns and concurrently with their underwriting give the seller the price that they're looking for in the asset. So I think that is the biggest gating issue. And you know, that puts hosts at a really competitive advantage. I mean, I've talked about it before.

Operator: And concurrently with their underwriting give the the salary of the price that they're looking for in the asset. So I think that is the <unk>.

James F. Risoleo: Scaling issue.

James F. Risoleo: You know that.

James F. Risoleo: That puts hosted a really competitive advantage I mean, I've talked about it before we do not have to go to the debt window to get a deal done and.

James F. Risoleo: No.

James F. Risoleo: I think there will be opportunities over the course of the year.

James F. Risoleo: <unk>.

James F. Risoleo: Where you have a certain private equity firms who might.

James F. Risoleo: We do not have to go to the debt window to get a deal done, and you know. I think there will be opportunities over the course of the year where you have certain private equity firms who might be coming up on end-of-fund issues with respect to certain assets that they have to trade. They've waited, they've waited for the Fed to cut rates, but they're out of time. A couple of deals that we did in 2018 started with one at Hotel South Beach.

James F. Risoleo: It might be coming up on our end of fund issues with respect to certain assets.

James F. Risoleo: That they have to trade.

James F. Risoleo: <unk> they waited for the fed to.

James F. Risoleo: To cut rates at but the other out of time.

James F. Risoleo: Couple of deals that we did.

James F. Risoleo: In 2018 has started with the one hotel South Beach that was an end of fund issue.

James F. Risoleo: That was an end of fund issue with Starwood Capital. They had to trade that asset. Same with the 4 Seasons Orlando, another instance where that deal was at the end of fund life as well. I can tell you that neither owner of those assets really wanted to part with them because they're just terrific properties.

James F. Risoleo: With the Starwood capital they had to trade that asset.

James F. Risoleo: With the four seasons Orlando Ah. Another instance, where you know that that deal was it the.

James F. Risoleo: And a fund.

James F. Risoleo: Life as well so I can tell you that are.

James F. Risoleo: Neither a owner of those assets really wanted to part with them because they are just terrific properties and you know I hope, we're going to be able to find some additional opportunities in that vein as we.

James F. Risoleo: I hope we're going to be able to find some additional opportunities in that vein as we work our way through 2024. Thank you very much. Thank you. The next question is from Chris Woronka with Deutsche Bank. Your line is live.

James F. Risoleo: Our work our way through 2024.

Chris Woronka: Thank you very much.

Chris Woronka: Thanks Keith.

Chris Woronka: Our next question is from Chris where Ranke with Deutsche Bank. Your line is life.

Chris Woronka: Hey, good morning, guys. Thanks for all the all the details so far wanted to kind of ask about Hawaii Maui. I mean, you guys have used I think he used the term evolution of demand just can you give us a little more color on kind of what's happening or are you guys seeing reservations come in and cancel or you're seeing just the bookings.

Operator: Thank you. Our next question is from Chris Woronka with Deutsche Bank. Your line is live. Hey, good morning, guys.

Operator: Windows.

Chris Woronka: Closer in just trying to get a sense for how much visibility do you think that you had is getting better or it's getting worse and what are some of the factors around that thanks.

Chris Woronka: Yeah, I'll I'll start Christian I'll, let Rob jump in and add.

Chris Woronka: Additional color he he might have on it but we.

Chris Woronka: We are obviously very close to the.

Chris Woronka: What's happening on Maui.

Operator: Yeah, I'll start Chris and I'll let Sourav jump in and add what additional color he he might have on it. But, you know, we are obviously very close to what's happening on Maui. You know, and I can't describe it in any more specific terms other than to say that the man continues to evolve, on the island. And, you know, I think that... When the wildfires occurred, devastating wildfires occurred, those folks who might have been new to Maui, and maybe they were staying down in Wailea, in one of our two terrific properties, using the Andaz or the Fairmont Keelani, you know, they just said, they listened to the governor, and the governor said, stay away from Maui. Travelers took the governor at his word. Now that that language has been tempered since.

Chris Woronka: You know and I.

Operator: Can't describe it any more specific terms other than to say that the men continues to evolve.

Operator: On the island are you now.

Operator: I think that.

Operator: When the wildfires occurred devastating wildfires occurred.

Operator: Are those folks who.

Operator: Mike might have been new tamale.

Operator: And maybe they were staying down and when you layer in one of our two terrific properties, usually the andaz or the Fairmont Kea Lani.

Operator: You know they just said they listened to the governor and the Governors said stay away from Maui.

Operator: So.

Operator: Travelers took the governor and his word now that that language has been tempered since.

Operator: You know the clean.

Operator: Cleanup continues on the west side.

Operator: The good news is that.

Operator: They just place residents are are really moving into.

Operator: More permanent.

James F. Risoleo: Uh, you know, the, uh, the cleanup continues on the west side. Uh, the good news is that, um, the displaced residents are really moving into more permanent homes and apartments.

Operator: Homes and apartments, we we like that we'd like to see people get out of hotels and move into there.

James F. Risoleo: Move into a home and and and start their way back because so many people have lost so much they lost everything as a result of these wildfires.

James F. Risoleo: We like that. We like to see people get out of hotels and move into their, um, move into a home and start their way back because so many people lost so much; they lost everything as a result of these wildfires. So the Hotel Association and all the hotel owners on the island are working together to put a marketing plan in place. One of the other factors that are still out there with respect to the island is the fact that air capacity, the number of seats, is down around 19% over the first quarter of 2019, and that's consistent with where the capacity went post the wildfires in August of last year.

James F. Risoleo: So the Hotel Association is and all the hotel owners on the island are are working together.

James F. Risoleo: To put our marketing plan in place.

James F. Risoleo: One of the other factors that still is out there with respect to the island is the fact that.

James F. Risoleo: Air capacity the number of seats is down around 19%.

James F. Risoleo: Over.

James F. Risoleo: The first quarter of 2019, and that's that's consistent with where are they at capacity went up post the wildfires in August of last year. So it's a bit of a chicken and egg situation right now.

James F. Risoleo: We've got to get.

James F. Risoleo: People back to the island, we have to you know.

James F. Risoleo: <unk> to sell.

James F. Risoleo: The beauty of Maui and the experiences that they can get a even if it's not on the west side, if it's an why lay up AR and.

James F. Risoleo: So, it's a bit of a chicken and egg situation right now. You know, we've got to get people back to the island. We have to, you know, sell the beauty of Maui and the experiences that they can get, even if it's not on the west side, if it's in Wailea, and, you know, we're confident that once that starts happening, the airlines will increase capacity, and the recovery will commence.

James F. Risoleo: And we're confident that once that starts happening that the airlines will increase capacity and the.

James F. Risoleo: The recovery will commence.

James F. Risoleo: Okay.

Speaker Change: Okay I appreciate all that color Jim Thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we have reached the end of our allotted time for questions and answers. So I will now turn the call back over to Mr. <unk> for any closing comments you may have.

Speaker Change: Well. Thank you again for joining us we appreciate the opportunity to discuss our quarterly results with you and we look forward to seeing many of you on the road and certainly a NAREIT in New York.

Operator: Thank you. Ladies and gentlemen, we have reached the end of our allotted time for questions and answers. So I will now turn the call back over to Mr. Risoleo for any closing comments he may have.

James F. Risoleo: Well, thank you again for joining us. We appreciate the opportunity to discuss our quarterly results with you, and we look forward to seeing many of you on the road and, certainly, at NARED in New York. Have a good day.

Risoleo: Have a good day. Thank you.

Risoleo: Thank you everyone. This concludes today's conference and you may disconnect. Your lines at this time, we thank you for your participation.

Operator: Thank you, everyone. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Operator: Okay.