Q2 2024 RLJ Lodging Trust Earnings Call
Operator: Welcome to the RLJ Lodging Trust second quarter 2024 earnings call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the call over to Nikhil Bhalla, RLJ Senior Vice President, Finance, and Treasurer. Please go ahead.
Welcome to the R. O J lodging Trust's second quarter 2024 earnings call. As a reminder, all participants are in listen only mode and the conference is being recorded.
Mckeel Bala: After the presentation, there will be an opportunity to ask questions. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad I would now like to turn the call over to Mckeel Bala R. L. J Senior Vice President Finance and Treasurer. Please go ahead.
Nikhil Bhalla: Thank you, Operator. Good morning and welcome to RLJ Lodging Trust's 2024 Second Quarter Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Sean Mahoney, our Executive Vice President and Chief Financial Officer, will discuss the company's financial results. Tom Bardenett, our Chief Operating Officer, will be available for Q&A.
Speaker Change: Thank you operator.
Speaker Change: And welcome to <unk> Lodging Trust 2024 second quarter earnings call on today's call Leslie Hale, our President and Chief Executive Officer will discover key highlights for the quarter.
Speaker Change: Sean Mahoney, our executive Vice President and Chief Financial Officer will discuss the company's financial results Tom.
Tom Barnett: Barnett, our chief operating officer will be available for Q&A.
Nikhil Bhalla: Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what has been communicated. Factors that may impact the results of the company can be found in the company's 10-Q and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the Reconciliations to GAAP located in our press releases. Finally, please refer to the Schedule of Supplemental Information, which includes Proforma Operating Results for our current hotel portfolio. I will now turn the call over to Leslie.
Speaker Change: Forward looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated fact.
Speaker Change: Factors that may impact the results of the company can be found in the company's 10-Q and other reports filed with the SEC. The company undertakes no obligation to update forward looking statements.
Speaker Change: Also as we discuss certain non-GAAP measures. It maybe helpful to review the reconciliations to GAAP.
Speaker Change: In our press release.
Speaker Change: Finally, please refer to the schedule of supplemental information, which includes pro forma operating results for our current adult portfolio.
Speaker Change: I will now turn the call over to Leslie.
Leslie: Thanks, Nikhil good morning, everyone and thank you for joining us today.
Leslie Hale: Thanks, Nikhil. Good morning, everyone, and thank you for joining us today. We were encouraged to see the industry's REPR growth sequentially improve during the second quarter. The Urban and Top 25 markets once again led the way, which enabled us to achieve solid operating performance. Additionally, during the second quarter, we were active on a number of fronts, including acquiring Hotel Teatro in Denver, progressing on our 2024 conversions, as well as recycling proceeds from the sale of a non-core asset into opportunistic share repurchases while increasing our quarterly dividends.
Leslie: We were encouraged to see the industry's revpar growth sequentially improved during the second quarter, Despite a choppy backdrop.
Leslie: The urban and top 25 markets. Once again led the way, which enabled us to achieve solid operating performance.
Speaker Change: Additionally, during the second quarter, we were active on a number of fronts, including acquiring hotel T Arturo and Denver progressing on our 'twenty 'twenty four conversions as well as recycling proceeds from the sale of a noncore asset into opportunistic share repurchases, while increasing our quarterly dividend.
Leslie Hale: Overall, we were pleased with our results. Specifically, for the quarter, we achieved REF part growth of 2.6%, which was driven by gains in both occupancy and ADR. May was the strongest month of the quarter, with 6.9% red park growth, while June achieved positive red park growth, despite the impact of the Juneteenth holiday and several weather-related events.
Speaker Change: Overall, we were pleased with our results.
Speaker Change: Specifically for the quarter, we achieved revpar growth of two 6%.
Speaker Change: Which was driven by gains in both occupancy and ADR.
Leslie: May was the strongest month of the quarter was six 9% Revpar growth well June achieved positive revpar growth. Despite the impact from the June 10th holiday and several weather related events.
Leslie Hale: This quarter, our market share expanded by a robust 170 basis points, underscoring the relatively strong performance of our portfolio. Our urban portfolio continues to benefit from all segments of demand, with growth in business and group demand driving robust REPAR growth in our markets such as Boston, Denver, Los Angeles, San Diego, Miami, and New York, while Atlanta and Austin were held back by renovations in each market, respectively. Relative to segmentation, BT was once again our top-performing segment during the quarter, generating outsized revenue growth of 13 percent, balanced with an 8% increase in occupancy and a 4% increase in ADR as business travelers continue to expand their travel frequency.
Leslie: This quarter, our market share expanded by a robust 170 basis points.
Leslie: Underscoring our relative strong performance of our portfolio.
Leslie: Our urban portfolio continues to benefit from all segments of the man with growth in business and group demand driving robust revpar growth in our markets such as Boston, Denver, Los Angeles, San Diego, Miami, and New York, well, Atlanta, and Austin were held back by a renovation in each market risk.
Leslie: Secondly, relative to segmentation P. T was once again, our top performing segment during the quarter generating outsized revenue growth of 13% balance.
Speaker Change: Balanced with an 8% increase in occupancy and a 4% increase in ADR as business travelers continue to expand their travel frequency.
Leslie Hale: Corporate demand benefited from the ongoing expansion of travel from large corporations and resilient demand from SMEs, which resulted in our mid-week REV PAR growing by four percent. Our group segment had another solid quarter, achieving revenue growth of 5%, led primarily by ADR, which grew by 4.7%. Our group performance was driven by favorable city-wise conditions and many of our markets. Several significant events across our portfolio, such as the 150th Kentucky Derby and PGA Championship in Louisville, as well as our strong in-house group base.
Leslie: Corporate demand benefited from the ongoing expansion of travel from large corporations and resilient demand from the Smes, which resulted in our midweek revpar growing by 4%.
Leslie: Our group segment had another solid quarter, achieving revenue growth of 5% led primarily by ADR, which grew by 4.7%.
Speaker Change: Our group performance was driven by favorable citywide and many of our markets several significant events across our portfolio such as the 150 of Kentucky Derby, and PGA Championship and Louisville, as well as our strong in House group base there.
Leslie Hale: The attractiveness of our meeting space to small groups allowed our second quarter bookings to exceed last year by 19%, with 27% of our revenue activity booked in the quarter. Overall, group booking trends remain healthy, as demonstrated by our current 2024 booking pace of 107%, which increased 100 basis points since the start of the quarter. With respect to leisure, we were pleased with our results this quarter in light of the continuing normalization of leisure rates across the industry and increased consumer price sensitivity. Our leisure room nights were up 2%, with healthy demand coming from markets such as Southern California, New York City, and our drive-to markets such as Charleston and Orlando.
Leslie: The attractiveness of our immediate space to small groups allowed our second quarter bookings to exceed last year by 19%.
Leslie: With 27% of our revenue activities booked in the quarter for the quarter.
Leslie: Overall group booking trends remained healthy as demonstrated by our current 'twenty 'twenty four booking pace of 107%, which increased 100 basis points since the start of the quarter.
Leslie: With respect to leisure we were pleased with our results this quarter in light of the continuing normalization of leisure rates across the industry and increased consumer price sensitivity.
Leslie: Our leisure room nights were up 2% with healthy demand coming from markets, such as Southern California, New York City, and our drive to markets such as Charleston in Orlando.
Leslie Hale: Although we are facing ADR headwinds, we believe that our portfolio is ideally positioned to attract demand in this environment, which also allows us to remain constructive on leisure demand. Overall, we were pleased with our total revenue growth of 3.4 percent, which exceeded our REVPAR growth, driven by a robust 6.5 percent increase in non-room revenues. The strong growth in our out-of-room spend underscores the contribution from our ROI initiatives undertaken over the last several years, which included reconcepting and redesigning F&B venues, food offerings, and operating models.
Leslie: Although we are facing ADR headwinds, we believe that our portfolio is ideally positioned to attract demand in this environment, which also allows us remain constructive on leisure demand.
Leslie: Overall, we were pleased with our total revenue growth of three 4%, which exceeded our revpar growth driven by a robust six 5% increase in non room revenues.
Leslie: The strong growth in our out of room spend underscores that the contribution from our ROI initiatives undertaken over the last several years, which included re concept ing and redesigning of F&B venues food offerings and operating models. This has helped offset expense broke pressures and allowed us in <unk>.
Leslie Hale: This has helped offset expense growth pressures and allowed us to generate hotel EBITDA of nearly $119 million. As it relates to capital allocation, we demonstrated the optionality that our strong balance sheet provides in the second quarter.
Speaker Change: <unk> hotel EBITDA of nearly $119 million.
Speaker Change: As it relates to capital allocation, we demonstrated the optionality that our strong balance sheet provides in the second quarter.
Leslie Hale: We leveraged our pipeline of external growth opportunities to acquire the 110-room boutique lifestyle hotel, Teatra, in Denver for $35.5 million in an off-market transaction. This acquisition firmly aligns with our strategy of acquiring high-margin, rooms-oriented hotels located in hard-of-demand locations within 7-day-a-week-demand submarkets. The hotel sits in a prime location within Denver's CBD, just steps from the Denver Performing Arts Complex and Colorado Convention Center, which recently completed a multi-million dollar expansion.
Speaker Change: We leveraged our pipeline of external growth opportunities to acquire the 110 room boutique lifestyle Hotel T Altra, and Denver for $35 $5 million in an off market transaction.
Speaker Change: This acquisition firmly aligns with our strategy of acquiring high margin rooms oriented hotels located in heart of demand locations within seven day, a week demand submarkets.
Speaker Change: The hotel sits in a prime location within Denver, CBD, just steps from the Denver, performing Arts complex and Colorado Convention Center, which recently completed a multi million dollar expansion, we expect the property to achieve a stabilized yield of over 10% and should benefit from several ROI opportunities.
Leslie Hale: We expect the property to achieve a stabilized yield of over 10% and should benefit from several ROI opportunities which were not included within our underwriting. We also advanced our internal growth initiatives, which are allowing us to unlock meaningful growth that is embedded in our portfolio, including our conversions in Charleston, Mandalay Beach, and Santa Monica, which collectively achieved 10% REPR growth during the second quarter and over 16% during the first half of the year.
Speaker Change: Which were not included within our underwriting.
Speaker Change: We also advanced our internal growth initiatives, which are allowing us to unlock meaningful growth is embedded in our portfolio.
Speaker Change: Including our conversions in Charleston, Mandalay Beach in Santa Monica, which collectively achieved 10% revpar growth during the second quarter and over 16% during the first half of the year.
Leslie Hale: Our conversions in Houston, Nashville, and New Orleans remain on track for delivering this year. The Hotel Tonell in New Orleans was recently completed and is already ramping well, achieving nearly 26% rep art growth during the quarter.
Speaker Change: Our conversions in Houston, Nashville, and New Orleans remain on track for delivering this year.
Speaker Change: The hotel to now in New Orleans was recently completed and is already ramping well achieving nearly 26% revpar growth during the quarter.
Leslie Hale: And the conversions of the Wyndham and Renaissance hotels in Pittsburgh to a courtyard and autograph, respectively, remain on schedule for delivery by next year. And we look forward to providing an update on our Boston conversion later in the year. Additionally, this quarter, we accretively recycled proceeds from the sale of a non-core hotel into the repurchase of $5 million of shares.
Speaker Change: And the conversions of the Wyndham and Renaissance hotels, and Pittsburgh to a courtyard and autograph respectively remain on schedule for delivery by next year, and we look forward to providing an update on our Boston convergent later in the year.
Speaker Change: Additionally, this quarter, we accretively recycle proceeds from the sale of a noncore hotel into the repurchase of $5 million of shares.
Leslie Hale: And finally, we increase our dividend for the third quarter to $0.15 per share while remaining well covered. Turning to our, Although the current economic backdrop is showing signs of moderation. We are optimistic that Red Park growth will continue throughout the balance of this year, largely driven by demand, with urban markets expected to continue to outperform the industry. Our current view is rooted in the continued improvement in business travel and strong group demand, as well as muted new supply, particularly in our footprint.
Speaker Change: Finally, we increased our dividend for the third quarter to 15 cents per share while remaining well covered.
Speaker Change: Turning to our outlook.
Speaker Change: Although the current economic backdrop is showing signs of moderation.
Speaker Change: We are optimistic that revpar growth will continue throughout the balance of this year largely driven by demand with urban market is expected to continue to outperform the industry.
Speaker Change: Our current view is rooted in the continued improvement in business travel and strong group demand as well as mutant new supply, particularly in our footprint.
Leslie Hale: That said, we expect price sensitivity for the leisure segment to persist, dampening our growth expectations relative to the beginning of the year. As such, we are adjusting our full-year guidance to reflect our current outlook. Relative to this backdrop, we expect our urban assets to benefit from the continuing improvement in business travel, as well as urban leisure demand, which remains stable. Our second half should benefit from strong citywide and several markets, such as Boston and Chicago, and our strong booking pace, which is currently tracking double digits ahead of 2023, and the continuing ramp-up from our conversion.
Speaker Change: That said, we expect price sensitivity for the leisure segment to persist dampening our growth expectations relative to the beginning of the year.
Speaker Change: As such we are adjusting our full year guidance to reflect our current outlook.
Speaker Change: Relative to this backdrop, we expect our urban assets to benefit from the continuing improvement in business travel as well as urban leisure demand, which remains stable our second half should benefit from strong citywide in several markets, such as Boston and Chicago and a strong booking pace, which is currently tracking.
Speaker Change: Double digits ahead of 2023, and the continuing ramp up from our convergence. We are seeing these dynamics play out in our July performance.
Leslie Hale: We are seeing these dynamics play out in our July performance. Longer term, we remain optimistic about the trajectory of lodging fundamentals, which over time should benefit from growth in all segments of demand, given the ongoing consumer preference for experiential travel, especially against the backdrop of an elongated period of limited new supply. I will now turn the call over to Sean.
Speaker Change: Longer term, we remain optimistic about the trajectory of lodging fundamentals, which over time should benefit from growth in all segments of demand given the ongoing consumer preferences towards experiential travel, especially against the backdrop of an elongated period of limited new supply.
Sean Mahoney: Now I'll turn the call over to Sean Sean.
Sean Mahoney: Thanks, Leslie. To start, our comparable numbers include our 96 hotels owned at the end of the second quarter and include the acquisition of the Hotel Teatro in Denver, which we acquired during the quarter, and exclude the Residence Inn in Merrillville, Indiana, which was sold during the second quarter. Our reported corporate adjusted EBITDA and FFO include operating results from all sold and acquired hotels during RLJ's ownership period. As Leslie said, we are pleased to report solid second-quarter operating results, which were in line with our expectations and demonstrated the strength of our high-quality, urban-centric portfolio.
Sean Mahoney: Thanks, largely to start our comparable numbers include our 96 hotels owned at the end of the second quarter and include the acquisition of the hotel T. Arturo in Denver, which we acquired during the quarter.
Sean Mahoney: And exclude the residence Inn in Maryville, Indiana, which was sold during the second quarter.
Speaker Change: Our reported corporate adjusted EBITDA and F. F. O include operating results from all sold and acquired hotels during our O J as ownership period.
Speaker Change: As long as Lee said, we are pleased to report solid second quarter operating results, which were in line with our expectations and demonstrated the strength of our high quality urban centric portfolio.
Sean Mahoney: Our second quarter red part growth of 2.6% accelerated from the first quarter and was driven by a 2.1% increase in occupancy and a 0.6% increase in ADR. Second quarter occupancy was 76.7%. The average daily rate was $205 and REPAR was $157.30. As noted, our business transient and midweek outperformed; second quarter business transient REPAR grew 12.7% above 2023, including ADR growth of 4% and occupancy growth of 8%. Red Park growth remained healthy in our urban markets, such as Boston at 10% and Denver CBD at 6%. Indianapolis at 27%, and Los Angeles at 7%. San Diego at 24%, Miami at 19%, and New York at 9%.
Speaker Change: Our second quarter Revpar growth of two 6% accelerated from the first quarter and was driven by a two 1% increase in occupancy and a 0.6% increase in ADR.
Speaker Change: Second quarter occupancy was 76, 7%.
Sean Mahoney: Average daily rate was $205 and Revpar was $157.30.
Speaker Change: As was noted our business transient and midweek outperformed.
Speaker Change: Quarter business transient Revpar grew 12, 7% above 2023, including ADR growth of 4% and occupancy growth of 8%.
Speaker Change: Revpar growth remained healthy in our urban markets, such as Boston at 10%.
Speaker Change: Denver CBD at 6%.
Speaker Change: Indianapolis at 27%.
Speaker Change: Los Angeles at 7% San Diego at 24%.
Speaker Change: I am at 19% and New York at 9%.
Sean Mahoney: Monthly REPAR growth during the second quarter was down 0.2% in April, primarily due to the impact of Passover, and up 6.9% in May and 1.2% in June, which was constrained by the midweek timing of Juneteenth. Total second-quarter revenue growth of 3.4% outpaced red part growth by 80 basis points and benefited from 6.5% growth in non-room revenues. Monthly total revenue growth was 0.7% in April, 6.9% in May, and 2.
Speaker Change: Monthly Revpar growth during the second quarter was down 0.2% in April.
Speaker Change: Primarily due to the impact of Passover and up six 9% in May and one 2% in June which was constrained by the mid week timing of Juneteenth.
Speaker Change: Total second quarter revenue growth of 3.4% outpaced revpar growth by 80 basis points and benefited from six 5% growth in non room revenues.
Speaker Change: Monthly total revenue growth was 0.7% in April.
Speaker Change: Six 9% in May and two 5% in June.
Sean Mahoney: Looking ahead, we expect the operating trends from June to continue in July, where REVPAR is forecasted to increase between 1.5% and 2%. Turning to the current operating cost environment, inflationary pressures continue to normalize during the second quarter on a per-occupied room basis. Total hotel operating cost growth was limited to 5%, underscoring the benefits of our portfolio construct and our initiatives to redefine our operating cost model. We remain encouraged by the improving trends in our more controllable variable operating costs, which only grew 4% above 2023 on a per occupied room basis, drilling down further into hotel operating expenses. Fixed costs, such as insurance and property taxes, were the most significant driver of the increases in hotel operating expenses, increasing 16% during the second quarter.
Speaker Change: Looking ahead, we expect the operating trends from June to continue in July where Revpar is forecasted to increase between one 5% and 2%.
Speaker Change: Okay.
Speaker Change: Turning to the current operating cost environment inflationary pressures continue to normalize during the second quarter.
Speaker Change: On a par occupied room basis total hotel operating cost growth was limited to 5%.
Speaker Change: Underscoring the benefits of our portfolio construct and our initiatives to redefine our operating cost model.
Speaker Change: We remain encouraged by the improving trends in our more controllable variable operating costs, which only grew 4% above 2023 on a per occupied room basis.
Speaker Change: Drilling down further into hotel operating expenses fixed cost such as insurance and property taxes were the most significant driver of the increases in our hotel operating expenses, increasing 16% during the second quarter.
Speaker Change: We expect the year over year fixed cost growth to moderate by 500 to 600 basis points during the second half of the year as we lap the most difficult comps.
Sean Mahoney: We expect the year-over-year fixed cost growth to moderate by 500 to 600 basis points during the second half of the year as we lap the most difficult comps. Looking forward, we expect the hotel operating cost growth rate to moderate during the second half of the year. During the second quarter, our portfolio achieved hotel EBITDA of $118.6 million and hotel EBITDA margins of 32%. We were pleased with our operating margin performance, which was only 245 basis points lower than the comparable quarter of 2023, despite continued cost pressures.
Speaker Change: Looking forward, we expect the hotel operating cost growth rates to moderate during the second half of a year.
Speaker Change: During the second quarter, our portfolio achieved hotel EBITDA of $118 $6 million and hotel EBITDA margins of 32%.
Speaker Change: We were pleased with our operating margin performance, which was only 245 basis points lower than the comparable quarter of 2023, Despite continued cost pressures.
Sean Mahoney: Turning to the bottom line, our second quarter adjusted EBITDA was $109 million, and adjusted FFO per diluted share was $0.51. We continue actively managing our balance sheet to create additional flexibility and further lower our cost of capital. Early in the second quarter, we addressed our 2024 maturities. Today, our balance sheet is well positioned, with $400 million available under our Corporate Revolver. Our current weighted average maturity is approximately 3.1 years, and 88 of our 96 hotels are not encumbered by debt.
Speaker Change: Turning to the bottom line, our second quarter, adjusted EBITDA was $109 million and adjusted <unk> per diluted share was <unk> 51.
Speaker Change: Yeah.
Speaker Change: We continue actively managing our balance sheet to create additional flexibility and further lower our cost of capital.
Speaker Change: Early in the second quarter, we addressed our 2024 maturities.
Speaker Change: Today, our balance sheet is well positioned with $400 million available under our corporate revolver.
Speaker Change: Our current weighted average maturity is approximately three one years and 88 of our 96 hotels are unencumbered by debt.
Sean Mahoney: We ended the second quarter with an attractive weighted average interest rate of 4.75% and 71% of debt either fixed or hedged. As it relates to our liquidity, we ended the quarter with approximately $770 million of liquidity and $2.2 billion of debt. With respect to capital allocation, Consistent with what we have demonstrated, we intend to invest in projects to unlock the embedded value within our portfolio, and selectively pursue acquisitions, while also remaining committed to returning capital to shareholders through both share purchases and dividends.
Speaker Change: We ended the second quarter with an attractive weighted average interest rate of 475% and 71% of debt either fixed or hedged.
Speaker Change: As it relates to our liquidity, we ended the quarter with approximately $770 million of liquidity and $2 $2 billion of debt.
Speaker Change: With respect to capital allocation.
Speaker Change: Consistent with what we have demonstrated we intend to invest in projects to unlock the embedded value within our portfolio selectively pursue acquisitions. While also remaining committed to returning capital to shareholders through both share repurchases and dividends.
Sean Mahoney: During the second and third quarters, we have been active under our $250 million share repurchase program; year-to-date, we've successfully recycled disposition proceeds towards the repurchase of approximately 0.5 million shares for $5 million at an average price of $9.66 per share. Additionally, our board recently authorized a $0.05 increase to our quarterly dividend to $0.15 per share starting with the third quarter. Our dividend remains well covered and supported by our free cash flow.
Speaker Change: During the second and third quarters, we have been active under our $250 million share repurchase program.
Speaker Change: Year to date reached successfully recycled disposition proceeds towards the repurchase of approximately 0.5 million shares for $5 million at an average price of $9 66 per share.
Speaker Change: Additionally, our board recently authorized a five cent increase to our quarterly dividend to <unk> 15 per share starting with the third quarter our.
Speaker Change: Our dividend remains well covered and supported by our free cash flow.
Sean Mahoney: We will continue making prudent capital allocation decisions to position our portfolio to drive results during the entire lodging cycle while monitoring the financing markets to identify additional opportunities to improve the laddering of our maturities, reduce our weighted average cost of debt, and increase balance sheet flexibility. I would now like to provide additional color on the assumptions underlying our updated outlook. Our revised outlook incorporates the second quarter sale of the residence in Merrillville and the acquisition of the Hotel Teatro and our second quarter actual results.
Speaker Change: We will continue making prudent capital allocation decisions to position our portfolio to drive results during the entire lodging cycle, while monitoring the financing markets to identify additional opportunities to improve to ladder our maturities.
Speaker Change: Reduce our weighted average cost of debt and increased balance sheet flexibility.
Speaker Change: I would like to now provide additional color on the assumptions underlying our updated outlook.
Speaker Change: Our revised outlook incorporates the second quarter sale of the residents in Mirabel.
Speaker Change: And the acquisition of the hotel Tatro and our second quarter actual results.
Sean Mahoney: As Leslie mentioned, the continued normalization in industry-wide weekend and leisure ADRs led us to update our prior guidance ranges; for 2024, we now expect comparable REPAR growth to range between 1% and 2.5%, comparable hotel EBITDA between $382.5 million and $402.5 million, and corporate adjusted EBITDA between $346.5 million and $366.5 million. An adjusted FFO per diluted share to be between $1.45 and $1.58, which incorporates shares repurchased to date but no additional repurchases. Additionally, our outlook assumes no additional acquisitions, dispositions, or refinances.
Speaker Change: As Leslie mentioned, the continued normalization of industry wide weekend, and leisure Adr's led us to update our prior guidance ranges.
Leslie Hale: For 2024, we now expect comparable revpar growth to range between 1% and two 5%.
Speaker Change: Comparable hotel EBITDA between $382 $5 million and $402 $5 million.
Speaker Change: Corporate adjusted EBITDA between $346 $5 million and $366 $5 million.
Speaker Change: And adjusted <unk> per diluted share to be between $1 45, and $1 58, which incorporates shares repurchased to date, but no additional repurchases.
Speaker Change: Our outlook assumes no additional acquisitions dispositions or refinancings.
Sean Mahoney: We still estimate 2024 RLJ capital expenditures will be in the range of $100 million to $120 million and now expect net interest expense will be in the range of $93 million to $95 million, which reflects the impact of higher base rates on our available rate debt compared to our initial assumption.
Speaker Change: We still estimate 2024 R O J capital expenditures will be in the range of $100 million to a $120 million and now expect net interest expense will be in the range of $93 million to $95 million, which reflects the impact of higher base rates on our variable rate debt compared to our initial.
Speaker Change: Assumptions.
Operator: Finally, please refer to the supplemental information, which includes comparable 2023 quarterly and annual operating results for our 96 hotel portfolio. Thank you, and this concludes our prepared remarks. We will now open the line for Q&A. Operator.
Speaker Change: Finally, please refer to the supplemental information, which includes comparable 2023 quarterly and annual operating results for our 96 hotel portfolio.
Speaker Change: Thank you and this concludes our prepared remarks, we will now open the line for Q&A operator.
Operator: Thank you. We will now be conducting a 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 in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. First question: Michael Bellisario with Baird, please go ahead.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: Like to ask a question press star one on your telephone keypad, a confirmation tone will indicate your line. This is a question queue. You May press star two if you would like to remove your question from the queue. Okay.
Speaker Change: I can speak for equipment and may be necessary to pick up the handset.
Speaker Change: We're pressing the sarkies.
Michael: First question Michael This area.
Michael: Are you with Baird. Please go ahead.
Michael Bellisario: Thanks. Good morning, everyone. Good morning, Mike.
Michael: Thanks, Good morning, everyone.
Leslie Hale: First question on your guidance kind of focused on the second half. What's the macro backdrop that you're assuming, you know, at the low end versus the high end? And sort of what are the risks that you're baking in, in that, in that range? And then what would need to happen to be at kind of the high end versus the low end?
Mike: Good morning, Mike.
Michael: Just first question on your your guidance kind of focused on the second half with what's what's the macro backdrop that you were assuming at the low end versus the high end and sort of what are the risks that you're baking in in that in that range and then what would need to happen to be at kind of high end versus low end.
Leslie Hale: Yeah. So, Mike, you know, the way that we sort of thought about our range is that clearly, there are signs that the economy is slowing. More signs came out this morning. We said that if the Fed was successful, that obviously travel wouldn't be immune to being impacted. The signs of it are affecting largely on the leisure side, and obviously, we're seeing it in rate. Our original range assumed at the low end that the economy slowed down.
Speaker Change: Yeah. So so Mike you know the way do we sort of thought about our range is that clearly there are signs of the economy is slowing more signs came out. This morning, we said that at the fed.
Speaker Change: Was successful that obviously travel wouldn't be immune to be impacted are the signs of it is affecting our largely on the leisure side and obviously on a were seeing it in rate, mostly driven our original range assumed at the low end of that the economy slowed down our current rate.
Leslie Hale: Our current range bookends the low end of our original range, and it assumes, you know, obviously that it's largely rate driven, and that's baked into all of our guidance. If we think about it from a standpoint of segmentation, clearly, leisure has been widely discussed.
Mike: <unk> bookings are the low end of our original range.
Speaker Change: And it assumes obviously that it's largely rate driven and that is that's baked in all of our guidance. If we think about it from a standpoint of segmentation clearly leisure has been widely discussed we're seeing the same thing that everybody else is seeing in terms of the consumer booking through discount channels as well as booking.
Leslie Hale: We're seeing the same thing that everybody else is seeing in terms of the consumer booking through discount channels as well as booking, not as early as they were before and booking later, and that's obviously translating into rates coming down on resorts, weekends, however you sort of cut and look at it. If we think about it from a BT perspective, the midpoint of our range still assumes that BT grinds forward from a standpoint of who's booking, the frequency, and the length of stay. We're still continuing to see Monday and Tuesday, and Wednesday move forward. The GDS still demonstrates that national counts are continuing to increase and that SMEs remain strong.
Speaker Change: That is looking as early as they were before and booking later and that's obviously translating into rates coming down on resorts weekends. However, you sort of cut and look at it.
Speaker Change: If we think about it from a BT perspective, we are our mid point of our range still assumes that BT grinds forward from.
Speaker Change: From a standpoint of who's booking the frequency the length of stay we're still continuing to see Monday, and Tuesday Wednesday move forward. The GDS sale demonstrates that national accounts are are continuing to increase and that Smes remains strong what's different for us relative to our guidance is is that.
Leslie Hale: What's different for us relative to our guidance is that we previously assumed that the rate between, the difference between the rate of BT and Historically, the gap between BT and group was about 10 to 15 points ahead of group. Today, BT is 20 points below group, and we thought that there would be some convergence on that. Our new house view is that that gap remains.
Mike: We previously assumed that the rate between the difference between the rate of BT and group would converge and what do I mean by that is that historically.
Speaker Change: Historically, the gap between BT and group B T was about 10 to 15 points ahead.
Speaker Change: <unk> of the group today BT is 20 points below group and we thought that there would be some convergence on that are not our new house view is that that gap remains. An example of that is that our BT rate grew by 4% in second quarter group rate grew by four and a half.
Leslie Hale: An example of that is that our BT rate grew by 4% in the second quarter; the group rate grew by 4.5, you know, this quarter. As I look at the group side, you know, our current midpoint of our range assumes that, you know, we actualize our group pace that we outlined, but that the end-of-quarter strength that we saw in the second quarter isn't as strong in the back half, and so that's what we're sort of seeing at the midpoint of our range.
Mike: This quarter.
Mike: As I look at AD at the group side, you know our current mid point of our range assumes that you know that.
Mike: That we actualize, our group pace that we outlined but that the end of the quarter fourth quarter strength that we saw in the second quarter isn't as strong in the back half and and so that's what we're sort of seeing in at the midpoint of our range and so if you think about that sort of pluses and minuses on the bottom is.
Leslie Hale: And so if you think about that sort of pluses and minuses, on the bottom end, it would assume that, you know, demand on the leisure side is weaker than we originally thought, that leisure, I mean, that BT sees some degradation in demand, and that group doesn't materialize. On the top end of our range, you know, it assumes that BT has some convergence on the rate side with group, that urban leisure outperforms overall leisure, and that group is stronger. That is the way that I would picture it. But I do think, you know, that we've right-sized our range based on the current fundamentals that we see, you know, overall.
Mike: Then it is it would assume that you know demand on the leisure side is weaker than we originally thought that leisure I mean that B T C. Some decoration and in demand and that group doesn't actualize on the top end of our range.
Mike: Soon that BT has some convergence on the on the rate side with group that urban leisure outperforms overall leisure and that group is stronger as a way that I would would picture of it but I do think you know that we've right sized our range based on the current.
Speaker Change: The minerals that we see you know overall.
Thomas Bardenett: That's helpful to bookend it. And then maybe for Tom, just on the reduced weekend and leisure rate outlook, is that broad-based across the portfolio for what you're seeing? Any particular channels, stronger or weaker? And then is there any directive on your end to your operators in terms of revenue management to try to group up more to offset some of that leisure demand and pricing sensitivity? And that's all for me. Thanks.
Speaker Change: Got it that's helpful to bookend it.
Speaker Change: And then maybe for Tom just on the the reduced weekend and in leisure rate outlook is that broad based across the portfolio for what you are seeing any particular channels stronger or weaker and then is there any directive on your own to your operators in terms of revenue management to try to group up more to offset some of that.
Speaker Change: Leisure demand and pricing sensitivity and that's all for me. Thanks.
Speaker Change: Sure Mike.
Thomas Bardenett: If you think about leisure markets where we're seeing price sensitivity, there are a couple of things that I would say. When you look at South Florida, Key West, Orlando, when you look in general where leisure is shifting. The other thing that we're noticing, because we have some hotels in Fort Lauderdale, is the cruise industry is doing very well. For instance, passenger volumes are up about 31 million in 2023, surpassing 2019 by 7%.
Speaker Change: So if you think about leisure markets, where we're seeing the price sensitivity is a couple of things that I would say you know when you look at.
Speaker Change: South, Florida key West Orlando, when you look in general where leisure.
Speaker Change: Shifting.
Speaker Change: And the other thing that we're noticing because we have some hotels in Fort Lauderdale is the cruise industry is doing very well for instance.
Speaker Change: Passenger volumes up about $31 million.
Speaker Change: 2023, surpassing 2019 by 7% so there's a movement to crews and what were finding on weekends as it's harder to get rate, even though demand is there you are having to make sure that you're priced appropriately to be able to to get that demand. Another example, we were with them in a mess.
Thomas Bardenett: So there's a movement to cruise, and what we're finding on weekends is that it's harder to get rates. Even though demand is there, you're having to make sure that you're priced appropriately to be able to get that demand. Another example, we were with Marriott the other day, and we were looking at redemptions, and redemptions are down.
Speaker Change: At the other day and we were looking at redemptions and redemptions are down. So we're trying to think through how to make sure. We revenue manage the weekend knowing that it's a little bit different in regards to who's coming and when they're coming and Leslie even referred to when they're booking.
Thomas Bardenett: So we're trying to think through how to make sure we revenue manage the weekends, knowing that it's a little bit different in regards to who's coming and when they're coming, and let's even go as far as to refer to when they're booking. To your point, we are absolutely changing and shifting to make sure that we're loading a little bit more groups on weekends. You can see that not only is the group up in demand, but it's up in rate as well.
Speaker Change: To your point, we are absolutely changing and shifting to make sure that we're loading a little bit more group on weekends.
Speaker Change: You can see that not only group is up and demand, but it's up in rate.
Thomas Bardenett: And the focus has been on making sure that we're booking more, whether it's SMURF or weekend groups, special event groups, everything we can do. The small group that Leslie referred to, though, is corporate groups. So we're still at about 50% of our group is corporate, and that's where we're seeing not only BT but the corporate group continuing to kind of grind forward. And that's helping us in banquets as well, AV, and room rental.
Speaker Change: And the focus has been on making sure that we're booking more whether it's smart for a weekend groups special event groups everything we can do the group small group that Leslie referred to though is corporate groups. So we're still at about 50% of our group is corporate and Thats, where were seeing not only the BP.
Speaker Change: But the corporate group continuing to kind of grind forward and that is helping us in banquets as well a b room rental and so from a profitability standpoint, we're focused on the right types of groups to drive profitability and hopefully that helps you answer a little bit that adult it's not completely broad based but it's definitely in pockets where rates were.
Thomas Bardenett: So from a profitability standpoint, we're focused on the right types of groups to drive profitability. And hopefully that helps you answer a little bit. It's not completely broad-based, but it's definitely in pockets where rates were a little bit more significant year over year.
Mike: We're a little bit more significant year over year and the thing I would add to your two to Toms comments, Mike is that.
Leslie Hale: And the thing I would add to Tom's comments, Mike, is that, you know, obviously, as we've talked about before, 58% of our business is booked between zero and seven days. We're now starting to see more skewed to zero to three within that range. So it gives you a sense of how short the bookings are and how resume management has to be thoughtful, you know, as we go forward.
Speaker Change: Obviously as we've talked about before a 58% of our business is booked between zero and seven days, we're now starting to see more skewed a zero to three within that range. So it gives you a sense of how short the bookings are and how the residue management has to be thoughtful as.
Speaker Change: As we go forward.
Michael Bellisario: That's all very helpful. Thank you.
Speaker Change: That's all helpful. Thank you.
Operator: Next question, Gregory Miller with Truist Securities. Please go ahead. Thanks. Good morning, all.
Speaker Change: Next question Gregory Miller with true with Securities. Please go ahead.
Gregory Miller: Thanks, Good morning all.
Gregory Miller: So this is a related question on your foliar outlook. Given the guidance cut, I'm curious about your conversations with your operators in terms of when they start to see this degree of fleasure softness. And I mentioned that, especially relative to your foliar guidance that was reiterated last quarter and with no clear adjustment at June NAREIT.
Gregory Miller: This is a related question on your full year outlook.
Gregory Miller: Given the guidance cut I'm curious about your conversations with your operators in terms of when they start to see this degree of leisure softness.
Speaker Change: I know you mentioned that especially relative to your full year guidance that was reiterated last quarter and with no clear adjustment at June NAREIT. Thank you.
Leslie Hale: Yeah, so Greg, I think your point is well taken with respect to, you know, there are initiatives that we will put in place in conjunction with a softening economy. And so Tom mentioned on the revenue management side, you know, certainly, you know, grouping up contract business, et cetera, to make sure that we build a good revenue base. Importantly, in this type of environment, we are, you know, aggressive on monitoring costs within the business, particularly wages and benefits, which are 40% of our total costs.
Speaker Change: Yes, so Greg I think.
Speaker Change: I think your point is well taken with respect to as you know there are things the initiatives that we will put in place.
Speaker Change: In conjunction with with a softening economy and so Tom mentioned on the revenue management side.
Speaker Change: Lee grouping up contract business etcetera to make sure that we build a good a good revenue base.
Tom Barnett: As importantly in this type of environment is to make sure that we are aggressive on monitoring costs within the business.
Speaker Change: Particularly wages and benefits, which are 40% of our total costs and so making sure that those costs are flexed accordingly.
Leslie Hale: And so, you know, making sure that those costs are flexed accordingly to the new revenue outlook. And so I think that's an asset management initiative as well to help mitigate some of the impact of the softening economy, which is reflected in the guidance.
Speaker Change: Two it today to the new revenue outlook and so I think that's a that's an asset management initiative as well to help mitigate some of the impact of the softening economy.
Speaker Change: Which is reflected within within our guidance ranges and I'll just remind you Greg when we were at NAREIT. We were a week after the best month of the year in May and so as we just talked about the booking window. When you are coming off of a pretty significant growth month.
Thomas Bardenett: And I'll just remind you, Greg, when we were at NARIT, we were a week after the best month of the year, May. And so, as we just talked about the booking window, you know, when you're coming off of a pretty significant growth month, we were encouraged, and then obviously, we ran into Juneteenth, which was a shift in regards to what happened that week with BT and had to bounce around it.
Speaker Change: We were encouraged in that and obviously, we ran into June teams, which was a shift in regards to what happened that week with BT and had to bounce around it but I would say weekend really it's starting more in June and July where you're starting to see the sensitivity when you look at Friday and Saturday.
Thomas Bardenett: But I would say weekends, really it's starting more in June and July, where you're starting to see the sensitivity when you look at Friday and Saturday. Even in the quarter, when we look at, you know, rate sensitivity, it's more on Friday and Saturday, where most of our Red Park growth is midweek. So, we are reacting quickly, and we're making sure that all our management companies are very aware of the revenue management strategy.
Speaker Change: Even in the quarter when we look at you know rate sensitivity, it's more on Friday Saturday, where most of our Revpar growth is mid week. So we are reacting quickly and we're making sure that all our management companies are very aware of the revenue management strategy and the good thing is our booking window is pretty short so we can.
Thomas Bardenett: And the good thing is that our booking window is pretty short. So, we can make some things happen quickly versus having to, you know, not be able to pivot, you know, when things are a job. Yeah, and I think that...
Speaker Change: Make some things happen quickly versus having to not being able to pivot.
Speaker Change: When things are adjusting and I think the thing I would add Greg is that what we said on our last call was that as we moved into the summer that we would have greater visibility and here, we are with that visibility and able to reflect that in a thoughtful way are within the guidance that we've provided.
Leslie Hale: Yeah, and I think the thing I would add, Greg, is that what we said on our last call was that as we moved into the summer, we would have greater visibility, and here we are with that visibility and able to reflect that in a thoughtful way within the guidance that we've been providing.
Greg: Thanks, Paul and ask my follow up this is similar to the Mikes question and it's about the channel mix.
Speaker Change: Past cycles, when there has been some softness the Oh jeez ive taken additional share and I think about this also from the perspective of your net revpar.
Thomas Bardenett: and I think about this, and the Leisure Softness today that the share of demand from the O... Well, the way I think about it, Greg, is OTAs are an additional avenue, and they certainly lean towards the weekend when you look at the percentage of total. What we have seen, and these are all the reports that we've seen from Marriott, Hilton, and Hyatt for our premium brands, that the percentage is remaining the same. What I would say, though, is because you are needing to rely on that based on filling the house, if you will, going back to my comment earlier about redemptions, we definitely need to turn on the valve, but we're not seeing an increase in OTA.
Speaker Change: You anticipate.
Speaker Change: Just given the leisure softness today that the share of demand from the Oh geez.
Speaker Change: Is increasing or will increase for weekend demand in your overall.
Speaker Change: Well the way I think about it Greg is otas are an additional avenue and they certainly lean towards weekend.
Speaker Change: When you look at the percentage of total what we have seen and these are all the reports that we've seen from our Marriott Hilton and Hyatt for our premium brands that the percentages are remaining the same what I would say, though is because you are needing to rely on that based on filling the house if you will.
Speaker Change: Going back to my comment earlier about redemptions, we definitely need to turn on the valve, but we're not seeing an increase in O T. A.
Thomas Bardenett: The other thing that I would say is we make sure when we're pricing ourselves, we're thinking about what our best available rate is because many of our discounts, whether that's AAA, AARP, everything related to leisure, are properly positioned. When you think about trying not to give up too much of a rate, you can get people buying a discounted rate further out, but position it off of a bar rate that is reasonable so that people are still paying a decent rate coming in. That's where the demand continues, but you've got to vacillate on what rate you're getting further out as well as that closer-in booking. I think OTAs are going to be consistently around the same price.
Speaker Change: The thing that I would say is we are making sure when we're pricing ourselves we're thinking about what our best available rate is because many of our discounts whether that's AAA AARP everything related to leisure is properly positioned. So when you think about trying not to give up too much rate you can get people buying.
Speaker Change: Discount further out but positioning it off of a bar right that is reasonable so that people are still paying a decent rate coming in that's where the demand continues but you've got a vacillate on what rate you're getting further out as well is that closer in bookings and so I think otas are gonna be consistently around the same I don't see it as grow.
Leslie Hale: I don't see it as growing, but I would say that we are making sure that we're spending some digital marketing to enhance the ability to make sure the demand continues. The one thing I would add, Greg, to Tom's comments is that on the leisure side, we're seeing our leisure risk and the adjustment driven by ADR, not by demand. Demand and leisure remain healthy.
Greg: But I would say that we are making sure that we're spending some digital marketing to enhance the ability to make sure. The demand continues and the one thing I would add Greg to Toms comments is that on the leisure side, we're seeing our leisure risk adjustment driven by ADR not by demand demand in leisure remains healthy.
Speaker Change: And so with a healthy demand that would lead you to believe you didn't have to have a significant adjustment to your channels to a more discount channel right. Because the demand is there. It's just a function of the pricing sensitivity from the leisure customers driving it and the last thing on channel distribution.
Thomas Bardenett: With a healthy demand, that would lead you to believe you didn't have to have a significant adjustment to your channels to a more discount channel because the demand is there. It's just a function of the pricing sensitivity from the leisure customers driving it. The last thing on channel distribution, Leslie made a comment earlier, GDS is up. That's a direct relationship to national corporations. The other channel that's up is property direct.
Speaker Change: We made a comment earlier GDS is up that's a direct relationship to national corporations. The other channel that's up as property direct that's related to how many people are putting in groups in in rooming lists and then the other thing that I would also point out when it comes to channel is were really making sure we're monitoring.
Thomas Bardenett: That's related to how many people are putting groups in and making rooming lists. And then the other thing that I would also point out when it comes to channel is that we're really making sure we're monitoring the ability to, you know, put our payroll against where we think there's an opportunity to grow market share. Leslie mentioned we were growing market share to 170 basis points. Well, there's national corporate, then there's local corporate negotiated. We're seeing growth in local corporate because our payroll is finding business that's in the local market that we're negotiating to make sure that we're taking share midweek, which is where the most growth occurs.
Speaker Change: The ability to put our payroll against where we think there's opportunity to grow market share as we mentioned we were growing market share to a 170 basis points well Theres National corporate then theres local corporate negotiated we're seeing growth in local corporate because our payroll is binding business that's in the local market.
Speaker Change: That we're negotiating to make sure that we're taking share midweek, which is where the most amount of growth is.
Speaker Change: Okay I appreciate all the color.
Gregory Miller: I appreciate all the color. Thanks, that's all.
Speaker Change: That's all for me thank you.
Operator: Next question is Tyler Batory with Oppenheimer and Company. Please go ahead.
Speaker Change: Next question caller Batori with Oppenheimer and company. Please go ahead.
Tyler Batory: Good morning. Thanks for taking my questions. There is a lot of interesting commentary here.
Batori: Good morning, Thanks for taking my questions.
Leslie Hale: Leslie, you made note of the gap, the rate gap, between business transient and group. Can you explain that a little bit more? Why is there such a big gap? Why hasn't it converged like you expected? I'm assuming there's some mix that's going on maybe that's impacting that, but if you could go more in depth and explain that comment some more, that would be helpful.
Speaker Change: Interesting commentary here.
Speaker Change: I see you made.
Speaker Change: No the GAAP rate gap between business transient and group can you explain that a little bit more why is there such a big gap why hasn't it converge like you expected I'm, assuming there's some mix that's going on maybe that's impacting that but if you could go more in depth and explain that comment some more on that would be helpful.
Leslie Hale: Yeah, sure. I mean, you know, Tyler, I think the historical relationship was that BT was your highest-rated business, then Group, and then Leisure. I think the new normal has shifted, right, as we know. Leisure was strong to come back, Group was second, and now BT is still ramping back. Your highest-rated customer is just now coming back in kind of the last 12 to 18 months, plus or minus.
Speaker Change: Yeah sure I mean, I think Tyler I think the the historical relationship was that BT was your highest rated business than group and leisure I think the new normal is shifted right. As we know leisure was strong and to come back group was second and now BT is still ramping back.
Speaker Change: Back.
Speaker Change: Your highest rated customer is just now coming back in the kind of the last 12 to 18 months plus or minus.
Leslie Hale: And so it's been slowly grinding forward as we figure out the new normal between BT Traditional and, I would say, Bleisure. All of those things are, you know, playing into a role. I think also just Leisure has been so strong. And so that sort of has shifted the dynamic. We're not suggesting that BT is going to get back to the same historical relationship. We just know it should do better. And so whether closing the gap means completely or incrementally, you know, our general house view is that it should do better on that. And so, you know, that's how I sort of think about it.
Speaker Change: And so it's it's been slowly grinding forward as we figure out the new normal between BT traditional and I would say bleser all of those things are playing into a role I think also just leisure has been so strong.
Speaker Change: And so that's sort of have shifted the dynamic we're not suggesting that BT is going to get back to the same historical relationship. We just know what should do better and so whether close the gap means completely or incrementally and our general House view is that it should do it should do better on that.
Speaker Change: And so that's how I sort of think about it. The last thing I would add is you have to also pay attention to your best available rate remember over the last couple of years, we've been talking about dynamic pricing.
Leslie Hale: The last thing I would add is you have to also pay attention to your best available rate. Remember, over the last couple of years, we've been talking about dynamic prices. And we've seen growth in the amount of demand that's going into that category because the national corporate accounts weren't coming back, but you had more SMEs who didn't have a discount or a fixed rate going into that category. And so that's where the pricing power was, and the demand still has shifted.
Speaker Change: And we've seen growth in the amount of demand that's going into that category because the national corporate accounts Werent coming back, but you had more smes, who didn't have a discount or a fixed rate going into that category and so that's where the pricing power was and the demand still has shifted so your best available rate has been the highest rate that we.
Leslie Hale: So your best available rate has been the highest rate that we've had. And therefore, now that you're getting more corporate customers coming back, you're seeing that demand come with increases that you're getting on the national negotiated rates for those companies.
Speaker Change: Had and therefore now that you're getting more corporate coming back youre seeing that demand come with increases that youre getting on the national negotiated rates for those companies.
Tyler Batory: Okay, some clarification questions, too. Rough numbers: what percentage of your overall mix? Would you categorize it as leisure? And what's really your definition of leisure? I know it's a little bit of an imperfect science here, but is it just weekend business? Is it coming to the resorts? Just trying to get a sense of being as particular as we can in terms of what you're trying to communicate in terms of leisure travel trends.
Speaker Change: Okay.
Speaker Change: <unk> questions too rough numbers, what percentage of your overall mix.
Speaker Change: Would you categorize that as leisure and what's really your definition of all these I know, it's a little bit of an imperfect science here, but.
Speaker Change: This is weekend businesses are coming to the resorts I'm, just trying to get a sense of being as particular as we can in terms of what you were trying to communicate.
Speaker Change: So the leisure travel trends.
Leslie Hale: Yeah, so we'll tag team on this one Tyler. I would say that historically, our mix was 20% group, 80% transient. Of the transient, it was 55% BT, and 45% leisure. We think today that that transient mix is probably 50-50.
Speaker Change: Yeah. So so we'll tag team on this one I would say that historically, our mix was 20% group, 8% transient of the transient it was 55% be T and 45% leisure we think today that that transient make is probably 50 50.
Thomas Bardenett: And then when you break down, obviously, if you look at transient on the weekends, pretty much it's all leisure, and that would be anything that's booking on those weekends. I would also say you can look at rates that are discounted rates that would travel midweek or weekend would also be in the leisure category, Tyler. And so we look at things that I was just mentioning, AAA, AARP, where you can code to leisure. So we define it based on what the people are saying, whether they're there for business or pleasure.
Speaker Change: And then when you break down.
Speaker Change: Obviously, if you look at transient and weekends pretty much it's all leisure and that would be anything thats booking on those weekends. I would also say you can look at rates that are discount rates that would travel mid week or weekend would also be in the leisure category Tyler and so we look at it.
Tyler: Things that I was just mentioning AAA AARP, where you can code to leisure. So we define it based on what the people are saying they are there for business or pleasure right and they can also look at markets that are that are you know index to leisure as well so there's lots of different ways to cut it on time.
Leslie Hale: And we can also look at markets that are, you know, indexed to leisure as well, so there are lots of different ways to cut it.
Tyler Batory: Okay, all right, perfect. Okay, that's all for me. Thank you.
Speaker Change: Okay, Alright, perfect. Okay. That's all for me. Thank you.
Operator: Next question is Dori Kesten with Wells Fargo. Please go ahead.
Speaker Change: Next question Dori Kesten with Wells Fargo. Please go ahead.
Dori Kesten: Thanks. Good morning.
Dori Kesten: Thanks, Good morning, you've been talking more about acquisitions over the past few months has your acquisition pipeline and growing or would you describe it has more stable at this point and then sort of a follow up are there are there are certain markets that you think would benefit from more clustering of your assets.
Leslie Hale: You've been talking more about acquisitions over the past few months. Has your acquisition pipeline been growing, or would you describe it as more stable at this point? And then, just as a follow-up, are there certain markets that you think would benefit from more clustering of your assets?
Leslie Hale: Sure, in terms of pipeline, our team is always underwriting, Dori, and we're always having conversations. We focus on off-market transactions that generally take longer to curate. What I would say is that, as we talked about on our previous call, we're very much focused on assets that have unique situations, and so that's a smaller subset of our overall pipeline, and I would say that's generally stable.
Speaker Change: Sure in terms of our pipeline our team has always underwriting dori and we're always having conversations we focus on off market transactions that generally take longer to two two.
Dori Kesten: To curate what I would say is is that as we've talked about on our previous call that we're very much focused on assets that have unique situations.
Dori Kesten: And so that's a smaller subset of our overall pipeline and I would say that's generally been stable.
Leslie Hale: Okay, and then you're bringing in Sage, who's a well-known operator in the U.S. but particularly knowledgeable about Denver for Hotel Teatro. Is getting to the 10% stabilized yield more of a top-line driven thing, or does it lean into greater efficiencies?
Speaker Change: Okay, and then you're bringing in stage.
Speaker Change: No longer an operator in the U S I'm, particularly knowledgeable about Denver for a hotel tower.
Speaker Change: Is getting to 10% stabilized yield at more of a top line driven thing or does it lean into greater efficiencies.
Speaker Change: I think it's all I think it's all of the above I think that that the upside is largely baked in in the operating side of the equation, both top and bottom by bringing in an institutional quality manager by using aggressive asset management and as well as looking at all of the unique opportunities for ROI all of that is driven on the operating side.
Leslie Hale: I think it's all of the above. I think that the upside is largely baked in on the operating side of the equation, both top and bottom. By bringing in an institutional quality manager, by using aggressive asset management, as well as looking at all the unique opportunities for ROI, all of that is driven on the operating side, whether it's a function of bringing in Sage, who is obviously the dominant player in this particular market and has subject matter expertise and clustering capabilities there as well, in addition to our natural lens on how to add value to a hotel. All of those things are operational based, top and bottom.
Speaker Change: Whether it's a function of bringing in Sage who is obviously the dominant player in this particular market and it has subject matter expertise and our clustering and capabilities there as well in addition to our natural lens on on how to add value to a hotel all of those things are operational based top and bottom.
Leslie Hale: Okay, and then the app that you sold in Indiana this quarter, I might be wrong, I'm just guessing it's from the original White Lodging portfolio from, I can't remember, 05-06. The portfolio has changed quite materially over the last 15 years, like RLJ has. Can you just remind us how many of those original hotels from back then are still within RLJ today?
Speaker Change: Okay, and then the asset you sold.
Speaker Change: In Indiana this quarter am I might be wrong I'm, just guessing it's from the original white lodging portfolio.
Speaker Change: I can't remember over five or six here the portfolio has changed quite materially over over the last 15 years like Oh Gee, how can you just remind us how many of those original hotels some.
Speaker Change: Some back then are still at in our all day today.
Leslie Hale: Yeah, I don't have a number to give you Dori, but what I would say is that we did a lot of heavy lifting in 2019 where we sold a lot of assets and so reduced the number of assets in that portfolio. But by and large, we're generally pretty happy with our overall portfolio, and what I would say is that we just have a handful of non-core assets out of a portfolio of 96 assets.
Dory: Yeah, I would I don't have a number to give you dory, but what I would say is is that we did a lot of heavy lifting in 2019.
Dory: Where we sold a lot of assets and so reduce the number of assets from that from that portfolio, but by and large you know we're generally.
Dori Kesten: So pretty happy with our overall portfolio and what I can say is that we just have a handful of non core assets out of a portfolio of 96 assets youre always going to have about them and in their portfolio and so we have a handful of noncore assets. You know this is really kind of brick and mortar are you know in our portfolio not stick built assets.
Leslie Hale: You're always going to have a bottom end of your portfolio, so we have a handful of non-core assets. This is really kind of brick and mortar in our portfolio and not stick-built assets. This was an asset that we dealt with unencumbering so that we could execute a transaction, and we were able to get it done in an accretive fashion. But I would say, by and large, just a handful of assets that we have left that we consider non-core from that portfolio.
Dory: You know this is an asset that we.
Dory: Dealt with unencumbered <unk>, so that we could execute a transaction and then we were able to get it to get it done in it in an accretive fashion, but I would say by and large just a handful of assets that we have left.
Speaker Change: That would consider non core from that portfolio.
Speaker Change: Okay understood. Thanks.
Operator: Next question: Floris Van Dijkum with Compass Point. Please go ahead.
Speaker Change: Next question.
Speaker Change: Floris van <unk> with Compass point. Please go ahead.
Floris van Dijkum: Morning. Question on capital allocation. Maybe, Leslie, if you could talk a little bit about the balance between new investment and share repurchases. Obviously, you returned some capital by a higher dividend. How do you see that in light of, certainly, where your share price is trading today?
Speaker Change: Good morning.
Speaker Change: A question on capital allocation.
Speaker Change: Maybe let's see if you could talk a little bit about the balance between.
Speaker Change: New investments.
Speaker Change: Share repurchases, obviously, you returned some some capital by a higher dividend.
Speaker Change: How do you see that end and in light of.
Speaker Change: Certainly where your share prices is it's trading today.
Leslie Hale: Thanks, Floris, for the question. You know, I think this quarter really represents a perfect example of what we've consistently said. You know, our balance sheet gives us the optionality to pull more than one lever at a time, but you're always looking for the right window to be able to do that, and the volatility this quarter gave us the ability to do that. As you mentioned, we were active on a couple fronts.
Speaker Change: Ah Thanks, Laura for the question I think this quarter really represents a perfect example of what we've consistently said.
Speaker Change: Our balance sheet gives us optionality to pull more than one lever at a time.
Speaker Change: But you're always looking for the right window to be able to do that and the volatility this quarter gave us the ability to do that.
Leslie Hale: One, we obviously recycled the asset that we just got through talking about and took those proceeds and bought back shares accretively and on a leverage-neutral basis. We also continued to invest in our portfolio, and our conversions have been very successful. We're on a cadence of two per year, and then we increased our dividend as well, as well as executed on the acquisition of Tiatra. When you actually look at the capital allocation between the dividend and the buyback, it's pretty equal to what we paid for Tiatra, so it was about a well-balanced allocation. You know, we may remain constructive, and we are going to be disciplined about it, but we do recognize that in this climate, buybacks, you know, remain very attractive.
Speaker Change: As you mentioned you know we were active on a couple fronts. One we obviously recycle the asset that we just got to be talking about and took those proceeds and bought back shares accretively and on a leverage neutral basis. We also continue to invest in our portfolio and our conversions have been very successful and we're on a cadence of two per year and then we increased our dividend.
Speaker Change: As well as well as we executed on that on the acquisition of <unk>. When you actually look at the caliber the capital allocation between the dividend the buyback, it's pretty equal to what we paid for Auntie. After so it was about a well balanced allocation. We may remain constructive and we are going to be disciplined.
Speaker Change: About it but we do recognize that in this climate that obviously buybacks.
Speaker Change: We remain very attractive.
Leslie Hale: And then maybe if I could follow up on the cash, obviously you've got $375 million of cash still left on the balance sheet. Remind us again how much you plan to spend for the rest of this year and in terms of conversions and then potentially what you have in the pipeline as well.
Speaker Change: Great and then maybe if I could if I could.
Speaker Change: Follow up on.
Speaker Change: You know the cash obviously, you've got $375 million of cash still left on the balance sheet.
Speaker Change: Remind us again, how much you plan to spend on a.
Speaker Change: For the rest of this year and then in terms of conversions and then potentially what you have in the pipeline as well.
Leslie Hale: Yeah, I mean, Floris, so the $100 to $120 million of CapEx that we talked about for the year is inclusive of ROI conversions, etc. We've spent a little more than half of that year to date.
Speaker Change: Yeah, I mean, Florida, so the $100 million to $120 million of Capex.
Speaker Change: That they were talking about for the year is inclusive of Rois conversions et cetera, we've spent year to date, a little more than half of that.
Speaker Change: And so you would expect us to spend the balance of that.
Speaker Change: Of that of that capital during this year I think when you look sort of long term and as we've talked about historically on the liquidity that we have provides us the optionality to pull the right lever at the right time and we've done that.
Leslie Hale: And so, you know, you would expect us to spend the balance of that, you know, of that capital during this year. I think, when you look, you know, sort of long term, and as we've talked about historically, the liquidity that we have provides us the optionality to pull the right lever at the right time, and we've done that. I think on past calls we talked about being an all-cash buyer, and that has positioned us as an enviable position when it comes to acquisition opportunities.
Speaker Change: Think on.
Speaker Change: On past calls we've talked about being an all cash buyer has positioned us in an enviable position when it comes to.
Speaker Change: With the acquisition opportunities, obviously, we are going to be disciplined on that today, and we're going to be cognizant of the cost of capital elsewhere within our options, but I think our liquidity is a competitive advantage today and so I wouldn't view it as what we have to spend I view it as what what what liquidity, we have to provide us optionality.
Leslie Hale: Obviously, we are going to be disciplined on that today, and we're going to be cognizant of the cost of capital elsewhere within our options, but I think our liquidity is a competitive advantage today. I wouldn't view it as what we have to spend. I'd view it as how much liquidity we have to provide us with optionality.
Rob: Thanks, Rob.
Operator: Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Chris Woronka with Deutsche Bank. Please go ahead.
Speaker Change: Once the ban if he would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Next question comes from Chris work with Deutsche Bank. Please go ahead.
Chris Woronka: Hey, good morning, everyone. Thanks for taking the questions. So Leslie, I want to maybe follow up on something you mentioned earlier, which was that the booking windows are, I think you mentioned kind of trending towards the lower end of the historical range. I guess if you look back, and you know, 2020 is not gonna be the right example, but maybe further back. Is that indicative of, you know, is that kind of like the first shoe and then we just need further demand weakness? Or do you think that the shrinking of the booking window can be transit?
Chris Work: Hey, good morning, everyone and thanks for taking the questions.
Chris Work: So what I wanted to maybe follow up on something you mentioned earlier, which means that the booking windows are I think you mentioned kind of trending towards the lower end of that.
Speaker Change: Historical range I guess, if you look back in 2020 is not going to be the right. Right example, but maybe further back.
Speaker Change: Is that indicative of you know is that kind of like the first shoe and then we just see further demand weakness or do you think that that booking window shrinking can be transitory.
Leslie Hale: I think that, you know, historically, I think on a sort of pre-COVID basis, it was about 51% booked in the zero to seven days, and now we're at 58% in the zero to seven. So, you know, I think we're kind of a little bit in a new normal. Technology has improved, you know; transparency has improved. I don't really see it as a canary in the coal mine at all. I think it's just a behavioral issue.
Speaker Change: No I think that you know historically I think sort of pre COVID-19 basis. It was about 51% was booked in the zero to seven days and now we're at 58% and a zero seven so I you know I.
Speaker Change: I think we're kind of a little bit in a new normal technology has improved transparency has improved so I don't really see it as a canary in the coal mine at all I think it's just behavioral and you have to be able to revenue manage around it which I think that you know we are pretty sophisticated and understand how the market you know I understand that.
Leslie Hale: And you have to be able to revenue manage around it, which I think that, you know, we are pretty sophisticated and understand how the market, you know, understand how the consumer behaves. And so, from our perspective, we just have to be nimble and respond to it. I don't see it as a canary in the coal mine.
Speaker Change: Got a consumer behaves and so from our perspective, we just have to be nimble and respond to it I don't see it as a canary in the coal mine.
Leslie Hale: Okay, fair enough. And the second question is just kind of, if you were, hypothetically, if you were to see further weakness develop, hopefully, you won't, but are you prepared to go back to the brands that gave you a lot of flexibility during COVID? Would you ask for, do you think they're in a position to give you a lot of flexibility? And also, are you guys able to, you know, you're running pretty efficiently right now, as far as I can tell, are there still things you would look to do if REVPAR softens from here? Thanks.
Speaker Change: Okay fair enough and so.
Speaker Change: Second question is just kind of if you were hypothetically you know if you were to see further weakness develop hopefully you won't but are are.
Speaker Change: Are you prepared to go back to the brands. They gave you a lot of flexibility during COVID-19.
Speaker Change: Would you ask for you do you think they are in a position to give you a lot a lot of flexibility and also are you guys able to you know you're running pretty pretty efficiently right now as far as I can tell are there still things you would you would look to do with.
Speaker Change: If if revpar softens from here thanks.
Leslie Hale: Yeah, I would say that we appreciate that the economic backdrop is showing some signs of softness, but we do still continue to expect a soft landing.
Speaker Change: Yeah, I would say that you know we appreciate that there that the economic backdrop is showing some signs of softness we do still continue to expect a soft landing.
Leslie Hale: Keep in mind that we learned to navigate and operate in a zero revenue environment through COVID, so there are lots of tricks in the bag that we have today that we necessarily did not have five years ago. And so we think our ability to navigate the current environment, even if it softens further, is at a higher degree today than it probably ever was. And so we feel pretty good about being able to navigate in this environment. And I don't think we have to go back to brands.
Speaker Change: Keep in mind that we learned and to navigate and operate in a zero revenue environment through Covid. So there are lots of tricks in the bag that we have today that we necessarily have you know five years ago, and so we think our ability to navigate the current environment. Even if it's an softens further is that a higher degree today than it probably ever was.
Speaker Change: So we feel pretty good about being able to navigate.
Speaker Change: The gain in this environment and I don't think we have to go back to the brands.
Sean Mahoney: Yeah, and then, Chris, with respect to efficiencies, we do think the second quarter is the high watermark with respect to year-over-year cost increases. And the reason why we believe that is really, you know, you can break it into two buckets. The first is the fixed costs, which are primarily property insurance and taxes. Our property insurance renews in November. We would expect to have a successful renewal there, and there'll be an ease of premiums, you know, as part of that renewal in November, which will have a benefit in the fourth quarter.
Chris Work: Yeah, and then Chris with respect to efficiencies, we do think the second quarter is the high water Mark with respect to the year over year cost increases and the reason why we believe that is really it.
Chris Work: You can break it into two buckets. The first is the fixed costs, which are primarily property insurance and taxes, our property insurance renews in November and we would expect to have a successful renewal there there'll be an ease of premiums.
Chris Work: As part of that renewal in November which will have a benefit to the fourth quarter. In addition, we didnt have any any property tax adjustments.
Sean Mahoney: In addition, you know, we didn't have any property tax adjustments this quarter or last quarter, but you would expect us to be aggressively fighting for, you know, to make sure we're minimizing property taxes, and we think that becomes less of a headwind in subsequent quarters, and so that's why, in my prepared remarks, I said I expected fixed cost increases to weigh that 500 to 600 basis points. The second item is wages and benefits.
Speaker Change: This quarter or last quarter, but you would expect us to be aggressively fighting for.
Chris Work: To make sure we're minimizing property taxes, and so we think that that becomes less of a headwind.
Duane: In subsequent quarters and so that's why in my prepared remarks, I said I expect the fixed cost increases Duane that $5 to 600 basis points.
Duane: Second item is on wages and benefits our wages and benefits.
Speaker Change: Theres opportunities there so they were up sort of in the mid single digits this quarter.
Sean Mahoney: Our wages and benefits, you know, there's opportunities there, so they were up sort of in the mid-single digits this quarter, but this quarter reflects a shift, you know, back from a higher contract labor percentage to more, you know, full-time employees. We had a roughly 25 percent reduction in contract labor this quarter, and so what that has shown up in is an increase in the benefits side, which was up in the low teens in the quarter, but what the quarter doesn't have and where the opportunity is is that you get efficiencies with a full-time employee versus a contract labor employee that we'll be able to see in future quarters, and so we feel good that, you know, that will have much better year-over-year comparability on our operating expenses relative to what we saw in the first half of the year.
Speaker Change: But this quarter reflects a shift.
Speaker Change: Back from a higher contract labor percentage to more full time employees, we have roughly 25% reduction in contract labor this quarter and so what that has shown up and is an increase in the benefit side, which was up in the in the in the low teens in the quarter, but with the quarter.
Speaker Change: Doesn't have and worthy IV opportunity is is that you get efficiencies with a full time employee versus the contract labor and employee that we'll be able to see in future quarters.
Speaker Change: And so we feel good that that will have much better year over year comparability on our operating expenses relative to what we saw in the first half of the year.
Chris Woronka: Okay. Very good. Very helpful. Thanks, Leslie. Thanks, Sean.
Speaker Change: Okay very good very helpful. Thanks, Lesley Thanks, Sean.
Operator: Next question: Chris Darling from Green Street, please go ahead.
Speaker Change: Next question, Chris Darling with Green Street. Please go ahead.
Chris Darling: Thanks. Good morning. A question for Tom, probably, can you speak to what you're seeing on the ground across the Bay Area and, maybe, if you could delineate any comments between, you know, Silicon Valley relative to San Francisco proper and the East Bay?
Chris Darling: Yeah. Thanks, good morning.
Chris Darling: A question for Tom probably can you speak to what you're seeing on the ground across the Bay area and maybe if you could delineate any comments between you know silicon valley relative to San Francisco proper and the East Bay.
Tom Barnett: Sure Good morning, Chris I'll start with the good news, let's go to Silicon Valley.
Thomas Bardenett: Good morning, Chris. I'll start with the good news. Let's go to Silicon Valley. We have definitely seen a little bit more project business come back. The back-to-office has helped. We're seeing a longer length of stay because we've got quite a few Hyatt houses out there, Chris. And so we've seen a return from either Tesla. We have some accounts that have actually had 14, 15 rooms for 28 to 35 days.
Tom Barnett: We have definitely seen a little bit more project business come back the back to office has helped we're seeing a longer length of stay because we've got quite a few hyatt houses out there Chris and so we've seen a return from either a tesla.
Chris Darling: We got some accounts that have actually had $14 15 rooms for 28% to 35 days and we hadn't seen that last year. So we're seeing a nice increase the other thing that I think we're seeing in Silicon Valley, where we spent a little bit of capital we've seen a nice uptick in our Palo Alto, which is close to the Stanford.
Thomas Bardenett: And we hadn't seen that last year, so we're seeing a nice increase. The other thing that I think we're seeing in Silicon Valley, where we spent a little bit of capital, is that we've seen a nice uptick at our Palo Alto office, which is close to Stanford University. And we're seeing business come back to us, knowing that we put the capital in. And that's kind of been a helping
Speaker Change: University, and we're seeing business come back to us knowing that we put the capital in and Thats kind of been helping causes well when you go closer to the area of CBD, We will work towards the airport and what we are seeing there is we're getting international contract business and we're seeing more.
Thomas Bardenett: When you go closer to the area of the CBD, we work towards the airport, and what we are seeing there is that we're getting international contract business. And we're seeing more AI business from consultants come to the airport location. And we have an embassy at Waterfront, and an embassy at South. And those areas have been growing their share, in addition to seeing some volume increase. But when you get to the CBD area, that's a whole other game right now.
Speaker Change: AI business from consultants come to the airport location and we have an MSA waterfront and embassy itself.
Speaker Change: And those areas have been growing share. In addition to seeing some volume increase when you get to the CBD area. That's a whole another game right now we all know that the year was set up where the first half was going to be better than the second half. We are encouraged that 2025 will be better than 2024, we've got some special events that we're leaning in.
Thomas Bardenett: We all know that the year was set up where the first half was going to be better than the second half. We're encouraged that 2025 will be better than 2024. We've got some special events that we're leaning in on, like the NBA All-Star Game, as well as the, there's a sailing event that takes place in the summertime. But we do have a little bit of a harder setup for the fourth quarter this year, as well as third quarter, because it's citywide.
Speaker Change: Like the NBA, all star game as well as the.
Speaker Change: There was a selling event that takes.
Speaker Change: In the summertime, but we do have.
Speaker Change: A little bit of a harder setup for fourth quarter. This year as well as third quarter because of citywide and everybody's kind of talked about mosconi as being you know this is going to be the tougher a year between 24 versus 25.
Thomas Bardenett: And everybody's kind of talked about Moscone as being, you know, this is going to be the tougher year between 24 versus 25. And that gives you a pretty good idea, if you will, of Northern California.
Speaker Change: That gives you a pretty much round the basis, if you will of northern California.
Chris Darling: Okay, thank you for that. And then just another quick one for me, shifting gears, maybe for Leslie, do you kind of have conversations with various individuals in the market about the transaction market, any change in buyer and seller expectations, you know, in this slower kind of demand backdrop the last couple of months that you could speak to?
Speaker Change: Okay. Thank you for that and then just another quick one from me shifting gears.
Speaker Change: Maybe for Leslie as you kind of have conversations with various individuals in the market and thinking about the transaction market any change.
Leslie Hale: Buyer or seller expectations, you know in this slower demand backdrop for the last couple of months that you could speak to.
Leslie Hale: No, Chris. I think not much has really changed since our last call. You know, the volume remains constrained, but it's marginally better. There's been some activity pickup around BOVs and sort of soft conversations. But I would say that, you know, given the fact that debt is available but expensive, the general perspective around rates coming down, low levels of supply, and people's focus on TTMs, there still continues to be a gap and sort of bid-ask, you know, but we will see how that sort of shapes up in the back half of the year. But, by and large, that really hasn't changed since our last call.
Leslie Hale: No Chris I think not much has really changed since our since our last call. You know the volume remains constrained to marginally better as activity pick up around <unk> and sort of soft conversations.
Chris Darling: Okay, understood. Thank you all for the time.
Leslie Hale: Thank you. I would like to turn the floor over to Leslie for her closing remarks.
Speaker Change: But I would say that given the fact that that is available but expensive the general perspective around rates coming down a low levels of supply and people focus on Ttm's. You know theres still continues to be a gap in sort of bid ask you know, but we will see how that sort of shapes up in the back half of the.
Speaker Change: A year, but by and large that really hasn't changed since our since our last call.
Speaker Change: Okay understood. Thank you oftentimes.
Speaker Change: Thank you I would like to turn the floor over to Leslie for closing remarks.
Leslie Hale: Thank you everybody for joining us. We hope you have a great rest of your summer and that it includes some level of travel.
Leslie Hale: Thank you everybody for joining us we hope you have a great rest of your summer and that would include some level of travel.
Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
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