Q2 2024 Xenia Hotels & Resorts Inc Earnings Call

Hello all and welcome to Xenia Hotels & Resorts 2nd Quarter 2024 Earnings Conference Call. My name is Lydia and I'll be your operator today.

Lydia: Thank you, Lydia. And welcome to Xenia Hotels & Resorts' second quarter 2024 earnings call and webcast. I'm here with Marcel Verbaas, our Chairman and Chief Executive Officer, Barry Bloom, our President and Chief Operating Officer, and Atish Shah, our Executive Vice President and Chief Financial Officer. Marcel will begin with a discussion of our performance. Barry will follow with more details on operating trends and capital expenditure projects, and Atish will conclude today's remarks with commentary on our balance sheet and outlook.

Lydia: We will then open the call for Q&A. Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued yesterday afternoon, along with the comments on this call, are made only as of today, August 2nd, 2024, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

Speaker Change: Before we get started let me remind everyone that certain statements made on this call are not historical facts and are considered forward looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K, and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by.

Our comments.

Forward looking statements in the earnings release issued yesterday afternoon, along with the comments on this call are made only as of today August <unk> 2024, and we undertake no obligation to publicly update any of these forward looking statements as actual events unfold.

You can find a reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks, and our second quarter earnings release, which is available on the Investor Relations section of our website.

Speaker Change: The property level information, we will be speaking about today is on a same property basis for all 32 hotels unless specified otherwise.

An archive of this call will be available on our website for 90 days.

Lydia: You can find the reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in our second quarter earnings release, which is available on the investor relations section of our website. The property level information we will be speaking about today is on a same property basis for all 32 hotels, unless specified otherwise. An archive of this call will be available on our website for 90 days. I will now turn it over to Marcel to get started.

I will now turn it over to Marcel to get started.

Marcel Verbaas: Thanks, Aldo, and good morning to everyone joining our call today. Our portfolio delivered meaningful REFBAR growth in the second quarter as we continue to benefit from improvement in corporate transient and group demands in many of our markets, offset by some weakness in leisure demands as the quarter progressed. We also continue to make significant progress on the most impactful project in the history of our company, the transformational renovation of Hyde Regency, Scottsdale.

Marcel: Thanks, Aldo and good morning to everyone joining our call today.

Marcel: Our portfolio delivered meaningful revpar growth in the second quarter as we continued to benefit from improvement in corporate transient and group defense many of our markets offset by some weakness in leisure demand as the quarter progressed.

Speaker Change: We also continued to make significant progress on the most impactful project in the history of our company.

Marcel: The transformational renovation of Hyatt Regency Scottsdale.

Marcel Verbaas: This project continues to be on track from a timing perspective, and excitement is starting to build as we near the completion of most of the major components of the renovation and the relaunch of the property as the luxury Grand Hyatt Scottsdale Resort. Despite a continued strong focus on expense controls by our operators and asset management team, our hotel EBITDA margin in the second quarter was a bit lower than we had projected.

Marcel: This project continues to be on track from a timing perspective, and the excitement is starting to build as we near the completion of most of the major components of the renovation and the relaunch of the property as the luxury Grand Hyatt Scottsdale resort.

Marcel: Okay.

Speaker Change: Despite our continued strong focus on expense controls by our operators and asset management team our hotel EBITDA margin in the second quarter was a bit lower than we had projected.

Marcel Verbaas: This lower margin, combined with grass-fired growth that was slightly below our forecast, caused our adjusted EBITDA rate to come in at approximately $2 million below our internal estimate for the quarter. However, this was offset by its tax benefits, positively impacting adjusted FFO, which Atish will highlight in his remarks.

Marcel: This lower margin combined with Revpar growth that was slightly below our forecast costs, our adjusted EBITDA to come in approximately $2 million below our internal estimates for the quarter.

Marcel: This was offset by a tax benefits positively impacting adjusted <unk> <unk>.

We will highlight in his remarks.

Marcel Verbaas: For the second quarter of 2024, the company's net income was $15.3 million, adjusted EBITDA RE was $68.4 million, and adjusted FFO per share was $0.52. The renovation disruption of Hyde Regency Scottsdale continued to be a substantial headwind in year-over-year comparisons, as the resort delivered particularly strong results in April and May of last year before the start of the renovation project in June. Year-over-year comparisons will become significantly more favorable as the year progresses.

Marcel: For the second quarter of 2024, the Companys net income was $15 3 million.

Marcel: Adjusted EBITDA was $68 $4 million and adjusted <unk> per share was <unk> 52 cents.

Speaker Change: The renovation disruption of hydrogen see Scottsdale continues to be a substantial headwinds and year over year comparisons as a resort delivered particularly strong results in April and May of last year before the start of the renovation projects in June.

Marcel: Year over year comparisons will become significantly more favorable as the year progresses.

Marcel Verbaas: Now that we have started lapping the commencement of the renovation, same property REF for our 32-hotel portfolio increased by 1.8% for the quarter, while REFs increased by 5% when excluding Hyde-Ramsey Scottsdale. For these 31 hotels, occupancy increased by 389 basis points, while ADR decreased by half a percent.

Marcel: Although we have started lapping the commencement of the renovation.

Okay.

Same property Revpar for the hotel portfolio increased by one 8% for the quarter.

Marcel: While revpar increased by 5% when excluding Hyatt Regency Scottsdale.

Speaker Change: For these 31 hotels occupancy increased by 389 basis points, while ADR decreased by half a percent.

Marcel Verbaas: REFR growth was driven by strong results at our newly renovated Grand Bohemian Hotel Orlando, Canary Hotel Santa Barbara, and Hotel Monaco Salt Lake City. Additionally, we continue to achieve encouraging results at a number of our large group-oriented hotels, such as our three Houston hotels, Park Hyatt Aviara, Fairmont Dallas, the Red Carpets and Pentagon City, and Hyatt Regency Santa Clara. On a same-property basis, second-quarter same-property hotel EBITDA was $73.4 million, or 7.5% below the 2023 level, and Hotel Ibada Margin decreased 238 basis points, excluding Hyde Regency Scottsdale.

Speaker Change: Revpar growth was driven by strong results at our newly renovated Grand Bohemian Hotel, Orlando, Canary Hotel, Santa Barbara and Hotel Monaco Salt Lake City.

Speaker Change: Additionally, we continue to achieve encouraging results at a number of large group oriented hotels, such as our three Houston Hotels Park Hyatt Avera Fairmont Dallas.

Speaker Change: Ritz Carlton Pentagon City, and Hyatt Regency, Santa Clara.

Speaker Change: On a same property basis second quarter same property hotel EBITDA of $73 4 million or seven 5% below 2023 levels and hotel EBITDA margin decreased 238 basis points.

Speaker Change: Excluding hydrogen Scottsdale second.

Marcel Verbaas: Second quarter hotel EBITDA increased 1.2%, and hotel EBITDA margin decreased by 100 basis points. The increase in occupancy, a slight decrease in ADR, and a mixed shift in food and beverage revenues contributed to the margin decline for the quarter in comparison to last quarter. Our portfolio demand segmentation continues to revert towards pre-pandemic levels, with Group and Corporate Transient Demand Recovery and Leisure Demand softening a bit during the quarter.

Speaker Change: Second quarter Hotel EBITDA increased one, 2% and hotel EBITDA margin decreased by 100 basis points.

Marcel: The increase in occupancy slight decrease in ADR and a mix shift in food and beverage revenues contributed to the margin decline for the quarter and comparisons to last year.

Speaker Change: Our portfolio demand segmentation continues to revert towards pre pandemic levels with group and corporate transient demand recovery and leisure demand softening a bit during the quarter.

Marcel Verbaas: Same property group room revenues, excluding high-density cocktail, increased 5% as compared to the second quarter last year. And quarter transit demand continues to strengthen, as evidenced by increases in midweek occupancy. Turning to our capital expenditure projects, we now project that we will spend between $125 and $135 million on property improvements during the year, an increase of $5 million compared to our prior estimate. This is driven by an increase in the Scottsdale project, as we have opted to add and accelerate some exterior upgrades. We now expect to spend $70 to $75 million on the Scottsdale renovation in 2024.

Speaker Change: Same property group room revenues, excluding regency, Scottsdale increased 5% as compared to the second quarter last year.

Speaker Change: Corporate transient demand continues to strengthen.

Speaker Change: As evidenced by increases in midweek occupancy.

Speaker Change: Turning to our capital expenditure projects, we now project that we will spend between $125 and $135 million on property improvements during the year.

Speaker Change: An increase of $5 million compared to our prior estimate.

Speaker Change: This is driven by an increase of the Scottsdale project as we have offered to add and accelerate some exterior upgrades.

Speaker Change: We now expect to spend $70 million to $75 million on the Scottsdale renovation in 2024.

Marcel Verbaas: We still anticipate full completion of the project, including the ballroom and pre-function space expansion, by the end of this year. However, we expect to complete the vast majority of the renovation by the end of this quarter. We have made tremendous progress on the project over the past several months and continue to do so during the seasonally slower summer months in the Phoenix and Scottsdale market after completing this spectacular new pool complex and excluded beverage amenities earlier in the year.

Marcel: We still anticipate full completion of the project, including the ballroom and pre function space expansion by the end of this year.

Speaker Change: However, we expect to complete the vast majority of the renovation by the end of the third quarter.

Speaker Change: We have made tremendous progress on the project over the past several months.

Speaker Change: Continue to do so during the seasonally slower summer months and the Phoenix Scottsdale markets.

Speaker Change: After completing the spectacular new pool complex.

Speaker Change: And its food and beverage amenities earlier in the year.

Marcel Verbaas: We are now also nearing the completion of the guest room renovation, with almost 90% of the guest rooms having been renovated today. The remaining guest rooms are still expected to be completed by the end of the third quarter, after which our room count will have increased to 496. The renovation of the public space, including the lobby, lobby bar, hotel markets, and all indoor and outdoor dining spaces, is also progressing as planned, and we expect to complete these components by the end of the third quarter.

Speaker Change: And I'll also nearing the completion of the guest room renovation with almost 90.

Speaker Change: 90% of the Guestrooms, having been renovated today.

Speaker Change: The remaining guest rooms are still expected to be completed by the end of the third quarter after which our room count will have increased to 496.

Speaker Change: The renovation of the public space, including the lobby lobby bar hotel markets and all indoor and outdoor dining spaces is also progressing as planned.

Speaker Change: And we also expect to complete these components by the end of the third quarter.

Marcel Verbaas: We remain particularly excited about our collaboration with Chef Richard Blaise on the restaurant concepts and menus, as we believe that the upgrade of food and beverage offerings at the resort will be extremely well received by resort guests as well as local residents. Given the expected completion of all the aforementioned components by the end of the third quarter, we expect that the resort will be re-launched as the Grand Hyatt Scottsdale Resort in early October.

Speaker Change: We remain particularly excited about our collaboration with chef Richard plays on the restaurant concepts of menus as we believe that the upgrade is food and beverage offerings at the resort will be extremely well received by resort guests as well as local residents.

Marcel: Yeah.

Marcel: Given the expected completion of all the aforementioned components by the end of the third quarter.

Marcel: We expected that the resort will be relaunched as the Grand Hyatt <unk> resort in early October.

Marcel Verbaas: At that time, the resort will be fully functional and highly attractive for our anticipated higher-rated leisure and group segment, with just the completion of the ballroom expansion and a limited amount of exterior upgrades to follow by the end of the year. Given the revenue displacement we experienced in the second quarter and are now expecting in the third quarter, we have increased our estimate of renovation disruption on our adjusted EBITRE in 2024 by $1 million.

Marcel: At that time, the resort will be fully functional in highly attractive for our anticipated higher rated leisure and group segments.

Speaker Change: But just the completion of the ballroom expansion and a limited amount of exterior upgrades to followed by the end of the year.

Speaker Change: Given the revenue displacement, we experienced in the second quarter and are now expecting in the third quarter. We have increased our estimate of renovation disruption on our adjusted EBITDA in 2024 by $1 million.

Marcel Verbaas: While the renovation will continue to displace a significant amount of revenue in Ibida during the third quarter, this disruption will largely be eliminated in the fourth quarter, as the impact of the ballroom expansion on the overall operations and feel of the resort is expected to be minimal. We are thrilled to be nearing the completion of this significant project and continue to be very excited about the earnings growth potential that we expect we will create through this transformative renovation of O'Brien. During food transaction activity, we previously disclosed that, subsequent to the end of the second quarter, we sold the Lorien Hotel & Spa in Alexandria, Virginia, for a sale price of $30 million.

Speaker Change: While the renovation will continue to displace a significant amount of revenue and EBITDA during the third quarter.

Marcel: This disruption will largely be eliminated in the fourth quarter as the impact of the ballroom expansion on the overall operations of a few of the resort is expected to be minimum.

Marcel: We are thrilled to be nearing the completion of this significant project and continue to be very excited about the earnings growth potential that we expect will create through this transformative renovation and rebranding.

Speaker Change: Turning to transaction activity, we previously disclosed that subsequent to the end of the second quarter, we sold the lorry and hotel and Spa in Alexandria, Virginia for a sale price of $30 million.

Marcel Verbaas: While it is a relatively small transaction, we were pleased with the execution of the sale, with the price representing a 21.3 times multiple on Hotel Ibida for the 12 months ended May 31st, 2024. We believe that a successful sale of this hotel amidst a crack in pricing and the ability to use the proceeds in a more accretive manner was a prudent capital allocation decision for the company and is reflective of the value embedded in our portfolio. We will continue to exercise patience as we evaluate any further potential dispositions and possible acquisitions to drive shareholder value in the years ahead.

Marcel: While it is a relatively small transaction we were pleased with the execution of the sale with the price representing a 21 three times multiple on hotel EBITDA for the 12 months ended May 31 2024.

Speaker Change: We believe that a successful sale of this hotel at this attractive pricing and the ability to use the proceeds in a more accretive manner.

Speaker Change: The prudent capital allocation decisions for the company.

Speaker Change: And is reflective of the value embedded in our portfolio.

Speaker Change: We will continue to exercise patience as we evaluate any further potential dispositions and possible acquisitions.

Speaker Change: Drive shareholder value in the years ahead.

Speaker Change: Yeah.

Marcel Verbaas: Meanwhile, we remain pleased with the overall quality and diversification of the portfolio and our internal growth potential. While we don't expect meaningful shifts in the composition of our portfolio in the near term, we will continue to look for opportunities to enhance our portfolio's quality and earnest growth potential if market conditions are conducive, as we have done throughout the history of our company. We intend to continue to manage our balance sheet prudently as we evaluate these potential growth opportunities.

Speaker Change: Meanwhile, we remain pleased with the overall quality and diversification of the portfolio and our internal growth potential.

Speaker Change: While we don't expect meaningful shifts in the composition of our portfolio in the near term, we will continue to look for opportunities to enhance our portfolio quality and earnings growth potential if market conditions are conducive.

Speaker Change: As we have done throughout the history of our company.

Speaker Change: We intend to continue to manage our balance sheet prudently as we evaluate these potential growth opportunities.

Marcel Verbaas: Looking ahead to the second half of the year, we are taking a slightly more cautious stance compared to our expectations last quarter. We estimate that current same property REFRA increased approximately 2.6% in July as compared to the same period in 2023. When excluding high-adherency Scottsdale, we estimate that July REF bar is up approximately 1.9% compared to last year. Despite these positive top-line results in July, we have slightly reduced our estimates for our adjusted EBIT RRE for 2024 as compared to last quarter. This is reflective of both our recent operating results and greater uncertainty regarding our portfolio and market performance in the second half of the year. Atish will provide additional detail on our updated guidance during his remarks.

Speaker Change: Looking ahead to the second half of the year, we are taking a slightly more cautious stance compared to our expectations last quarter.

Speaker Change: We estimate our current same property Revpar increased approximately two 6% in July as compared to the same period in 2023.

Speaker Change: When excluding Hyatt Regency Scottsdale, we estimate that July Revpar is up approximately one 9% compared to last year.

Speaker Change: Despite these positive top line results in July we have slightly reduced our estimate for adjusted EBITDA for 2024 as compared to last quarter.

Speaker Change: Isn't reflective of both our recent operating results and greater uncertainty regarding our portfolio and market performance in the second half of the year.

Speaker Change: Okay.

Speaker Change: Ashish will provide additional detail on our updated guidance during his remarks.

Marcel Verbaas: Despite short-term uncertainty, we remain optimistic regarding our portfolio performance and earnest growth potential as we look ahead to 2025 and beyond. We continue to expect that embedded growth in the portfolio will be a significant driver for future outperformance, particularly as the Grand Hyatt Scottsdale Resort ramps up. And importantly, supply growth is anticipated to remain muted in the luxury and upper upscale segments in our markets over the next several years. I will now turn the call over to Barry to provide more details on our Operating Results and Capital Projects. Thank you, Marcel, and good morning, everyone.

ashish: Despite short term uncertainty we remain optimistic regarding our portfolio performance and earnings growth potential as we look ahead to 2025 and beyond.

ashish: We continue to expect that embedded growth in our portfolio will be a significant driver for future outperformance.

Speaker Change: Particularly as the Grand Hyatt Scottsdale resort ramps up.

Speaker Change: And importantly supply growth is anticipated to remain muted in the luxury and upper upscale segments in our markets over the next several years.

Speaker Change: I will now turn the call over to Barry to provide more details on our operating results and capital projects.

Barry Bloom: For the second quarter, our 32 Same Property Portfolio REBPAR was $185.69 based on occupancy of 71% at an average daily rate of $261.53, an increase of 1.8% as compared to the second quarter of 2023. Excluding Hiram C. Scottsdale, second quarter rep bar was $191.28, an increase of 5% as compared to 2020. This increase reflected 3.9 points of occupancy gain and a decline of approximately half a percent in average daily rate as compared to the second quarter of 2023.

Barry: Thank you Marcel and good morning, everyone.

Barry: For the second quarter or 32 same property portfolio Revpar was $185 69.

Barry: Just on occupancy of 71% and an average daily rate of $261 53.

Speaker Change: An increase of one 8% as compared to the second quarter in 2023.

Speaker Change: Excluding Henry Scottsdale second quarter, Revpar was $191 28.

Speaker Change: An increase of 5% as compared to 2023.

Speaker Change: This increase reflected three nine points of occupancy gain and a decline of approximately half a percent in average daily rate as compared to the second quarter of 2023.

Barry Bloom: As Marcel indicated in his remarks, the same property leaders in terms of rail park growth in the quarter included our hotels that underwent comprehensive renovations in 2020, such as Canary Santa Barbara, Grand Bohemian Orlando, and Monaco Salt Lake City.

Speaker Change: As Marshall indicated in his remarks, the same property leaders in terms of Revpar growth in the quarter included our hotels that underwent a comprehensive renovations in 2023.

Speaker Change: Santa Barbara Greenham, Bohemian Orlando, and Monica Salt Lake City.

Barry Bloom: Collectively, RevPAR of these hotels was up 42.3% in the second quarter. Additionally, Red Park grew significantly at our two Dallas hotels, collectively up 19.4 percent, Fitzcarlton-Pentagon City up 14.3 percent, Park Hyatt Aviara up 11.1 percent, Waldorf Astoria Atlanta Buckhead up 10 percent, Wesson Oaks and Galleria up 9.6 percent, and High Regency Santa Clara up 8 percent The growth in these markets is a result of clearly improving business transient and group demand that we are seeing across the portfolio. However, some markets experienced red-bar weakness compared to the second quarter of 2023 as a result of softer group business, including New Orleans, Orlando, and Nashville, while Savannah and Key West experienced softer leisure demand.

Speaker Change: Collectively Revpar. These hotels is up 42, 3% in the second quarter.

Speaker Change: Additionally, revpar grew significantly at our two hotels in Dallas collectively up 19, 4% Ritz Carlton Pentagon City up 14, 3% Park Hyatt <unk> up 11, 1% Waldorf Astoria, Atlanta, Buckhead up 10%.

Speaker Change: Austin Oaks in Galleria up nine, 6% and Hyatt Regency, Santa Clara up 8%.

Speaker Change: The growth in these markets as a result of clearly improving business transient and group demand that we're seeing across the portfolio.

Speaker Change: Markets have experienced revpar weakness compared to the second quarter of 2023 as a result of softer group business, including New Orleans, Orlando and Nashville, while Savannah.

Speaker Change: Savannah in key west experienced softer leisure demand.

Barry Bloom: Despite softening in the Nashville market as a result of new luxury supply absorption, W Nashville continues to perform well relative to this new supply. Despite announcements of several proposed properties, we do not expect them to be online for many years. Future group bookings are strengthening, as evidenced by a record group booking production month in June, and in the second quarter, business transient production was up nearly 90% in room nights compared to the second quarter last year.

Speaker Change: Despite softening in the Nashville market as a result of new luxury supply absorption at W. Nashville continues to perform well relative to this new supply despite announcements of several of those properties, we do not expect them to be online for many years.

Speaker Change: Future group bookings are strengthening as evidenced by a record group booking production month in June and in the second quarter business training.

Speaker Change: Business transient production was up nearly 90% in room nights compared to the second quarter last year.

Barry Bloom: In Portland, our high-regency at the Convention Center continues to perform at a share level significantly above the remainder of the market due to its unique location and has continued to average occupancies in the upper 60% range. Booking each month of the quarter, and excluding Hiram C. Scottsdale, April REBPAR was $200.77, up 6.1% to April 2023. May rent par was $193.81, up 7.7% compared to May 2023, and June rent par was $179.16, up 1% compared to June 2023.

Speaker Change: In Portland, our Hyatt Regency at the Convention Center continues to perform at a show level significantly above the remainder of the market Hewitt's unique location and has continued to average occupancies in the upper 60% range.

Speaker Change: Yeah.

Speaker Change: Looking at each month of the quarter and excluding IMC Scottsdale April Revpar was $200 77 up six 1% to April 2023.

Speaker Change: Revpar was $193 81 up.

Speaker Change: Up seven 7% compared to May 2023, and June Revpar was up $179 16, or 1% compared to June 2023.

Barry Bloom: We continue to be optimistic about the recovery incorporating group rates as we continue to achieve higher midweek occupancies across the portfolio, particularly on Tuesday and Wednesday nights, where portfolio occupancies of approximately 80% continue to provide meaningful rate compression opportunities. We note that compared to 2019, which excludes HMUC Scottsdale, HMUC Portland, and WNASH, In the second quarter, daily occupancy still trailed by approximately nine occupancy points midweek, while Friday and Saturday night occupancies trailed 2019 by approximately three occupancy, While this gap is somewhat disappointing, our continually improving performance in our corporate transient and corporate group-driven hotels gives us confidence that we still have significant growth ahead as our hotels continue to close this gap.

Speaker Change: We continue to be optimistic about the recovery in corporate and group rates as we continued to achieve higher midweek occupancy across the portfolio, particularly on Tuesday, and Wednesday nights, where portfolio occupancies of approximately 80% continued to provide meaningful rate compression opportunities.

Speaker Change: We note that compared to 2019, which excludes time receive Scottsdale, Havent see Portland and W. Nashville during the second quarter Daily occupancy is still trail by approximately nine occupancy points mid week on Friday, and Saturday and Occupancies trailed 2019 by approximately three occupancy points.

Speaker Change: While this gap is somewhat disappointing our continually improving performance in our corporate transient and corporate group driven hotels gives us confidence that we still have significant growth ahead as our hotels continue to close this gap.

Barry Bloom: Business from the largest corporate accounts across our portfolio continues to be significantly behind 2019, while corporate business from small and medium-sized accounts has recovered much more significantly. Again, recent performance in our corporate transient-driven hotels gives us confidence that we still have significant growth ahead. Group business continues to be a bright spot across the portfolio, where we continue to see a reversion of pre-pandemic patterns. For the second quarter, excluding Highman C. Scottsdale, group rent room revenues were up just over 5% as compared to the second quarter of last year. This growth was split relatively evenly, with room nights up 2.9% and an average rate of 2.4%.

Speaker Change: Business from the largest corporate accounts across our portfolio continues to be significant behind 2019, while corporate business from small and medium sized accounts has recovered much more significantly again recent performance in our corporate transient driven hotels, whose gives us confidence that we still have significant growth ahead.

Speaker Change: Group business continues to be a bright spot across the portfolio, where we continue to see a reversion of pre pandemic patterns.

Speaker Change: For the second quarter, excluding hydrogen Scottsdale group room revenues were up just over 5% as compared to the second quarter of last year <unk>.

Speaker Change: This growth was split relatively evenly with room nights up two 9% and average rate of two 4%.

Barry Bloom: We see a continued trend in our mix of group business, with association group business now recovering at a stronger pace than corporate group business and more bookings for future years than the current year. Now, turning to expenses and profits. Second quarter, same property, Hotel Ibida, was $73.4 million, a decrease of 7.5% on a total revenue increase of 0.7% compared to the second quarter of 2023, resulting in 238 basis points of margin decline. Additionally, including High Energy Scottsdale, Hotel Ibidal had $74.1 million, an increase of 1.2%, on a total revenue increase of 4.6%, resulting in a margin decline of 100 basis points. This decline in hotel EBITDA margin for the quarter was the result of several factors.

Speaker Change: We see a continued trend in our mix of group business with Association group business now recovering the stronger paced in corporate group business and more bookings for future years and the current year.

Speaker Change: Now turning to expenses and profit second.

Speaker Change: Second quarter same property hotel EBITDA was $73 4 million a decrease of seven 5% on a total revenue increase of <unk>, 7% compared to the second quarter of 2023, resulting in 238 basis points of margin decline.

Speaker Change: Excluding hydro <unk> Scottsdale Hotel EBITDA was $74 1 million an increase of one 2% on a total revenue increase of four 6%, resulting in a margin decline of 100 basis points.

Speaker Change: This decline in hotel EBITDA margin for the quarter was the result of several factors.

Barry Bloom: Excluding High Regency Scottsdale, room department costs increased nearly 8% over last year, primarily as a result of continued occupancy growth. However, this equated to just a 2.1% increase on a per-occupied room basis. Food and beverage revenue growth slowed to just 2% during the quarter as association business grew significantly more than corporate business, impacting banquet revenues as food revenue grew while beverage revenue declined, putting pressure on overall F&B margins. Cancellation in efficient revenues declined 35% compared to last year, returning to more normalized levels, also impacting market share.

Speaker Change: Excluding Hyatt Regency, Scottsdale, whose department costs increased nearly 8% over last year, primarily as a result of continued occupancy growth. However, this equated to just a two 1% increase on a per occupied room basis.

Speaker Change: Food and beverage revenue growth slowed to just 2% during the quarter as association business grew significantly more than corporate business impacting banquet revenues as food revenue grew while beverage revenue declined putting pressure on overall F&B margins.

Speaker Change: Cancellation and attrition revenues declined 35% compared to last year, returning to more normalized levels also impacting margins.

Barry Bloom: However, other Operating Department income, including parking, spa, and golf revenues, was up 21%. In the undistributed departments, expenses in each of A&G, Property Operations, and Utilities were generally well controlled, with approximately 4.5% growth each, while sales and marketing expenditures were up over 10% compared to last year, as hotels continued to grow their sales teams and see continued growth in expenditures on digital marketing efforts and loyalty programs. According to CapEx, during the second quarter, we invested $35.8 million in portfolio improvements, bringing our year-to-date total to $69.3 million.

Speaker Change: However, other operating department income, including parking Spa and golf revenues was up 21%.

Speaker Change: And the undisputed department expenses in each of AMG property operations and utilities were generally well controlled with approximately four 5% growth each while sales and marketing expenditures were up over 10% compared to last year as hotels continue to grow their sales teams and see continued growth in expenditures on digital marketing efforts and loyalty programs.

Speaker Change: Turning to Capex during the second quarter, we invested $35 $8 million and portfolio improvements, bringing our year to date total to $69 3 million.

Barry Bloom: As Marcel discussed, we continued our significant work on the transformative renovation and upbranding of the High Emergency Scottsdale Resort and Spa Ganey Ranch and are pleased that the project continues to be both on time and on budget. Our increases to budgeted capital expenditures are related to work on the building's exterior and façade, which includes both an expansion of scope and acceleration of timing in order to accomplish that work this year.

Speaker Change: As Marcel discussed we continued our significant work on the transformative renovation and up branding the Hyatt Regency, Scottsdale resort and Spa Gainey Ranch and I'm pleased with the project continues to be both on time and on budget.

Speaker Change: Our increases to budgeted capital expenditures are related to work on the building's exterior and facade, which includes both an expansion of scope and acceleration of timing in order to accomplish that work this year.

Barry Bloom: We continue to be incredibly optimistic about the hotel we'll perform post-renovation. The initial response from both leisure and group guests has only affirmed our confidence in our expected outcome from this substantial investment. We are seeing future group business being booked at meaningfully higher rates than the hotel has achieved historically, with the average daily rate for group bookings for 2025 up over 20% from 2022. In addition, year-to-date group room night booking production for future dates is at its highest level since 2018.

Speaker Change: We continue to be incredibly optimistic about the hotel will perform post renovation.

Speaker Change: The initial response from both leisure and group guests has only further confidence in our expected outcome from the substantial investment.

Speaker Change: We are seeing future group business being booked at meaningfully higher rates than hotels achieved historically with the average daily rate for group bookings for 2025 up over 20% from 2022.

Speaker Change: In addition year to date year to date group room night booking production for future dates is at its highest level since 2018 much.

Barry Bloom: Much of this is the direct result of the expansion of the larger Arizona Ballroom, which will allow the hotel to retain existing group customers, as well as attract new group customers who otherwise could not be accommodated at the resort, and the spectacular guest experiences being created throughout. Initial response and feedback from the luxury travel agent community, a key component of the hotel's refined business plan, has also been very strong, and this channel views the property as a completely new addition to the Scottsdale market that they are excited to introduce to their clients.

Speaker Change: Much of this is the direct result of the expansion of the larger Arizona Ballroom, which will allow the hotel to retain existing group customers as well as attract new group customers, who otherwise could not be accommodated the resort and the spectacular guest experiences being created throughout the resort.

Speaker Change: Initial response and feedback from the luxury travel agent community a key component of hotels defined business plan has also been very strong in this channel views. The property is a completely new addition to the Scottsdale market. So they are excited to introduce to their clients.

Barry Bloom: Planned renovations are currently underway at two of our Texas hotels during the seasonally slow summer months, including renovation of the lobby and restaurant, relocation of the fitness facility, addition of a concierge lounge, and upgrading the heavenly beds at the Les and Oaks Houston and renovation of the lobby and upgrading the heavenly beds at the Westin Galleria Houston. Comprehensive renovations of the lobby and restaurant and the creation of an M-Club at Marriott Woodlands Waterway will take place in the late summer and during the fall. In addition, we are making select upgrades to the guest rooms at several of our largest assets, including Irene C. Santa Clara, Marriott SFO, and Renaissance Waverly in Atlanta. We expect minimal disruption from these changes.

Speaker Change: Planned renovations are currently underway at two of our Texas hotels during the seasonally slow summer months, including renovation of the lobby and restaurant relocation of a fitness facility addition of a concierge lounge and upgrading the heavily beds the lesson Oaks, Houston and renovation of the lobby and upgrading the heavily bands at the Westin Galleria Houston.

Speaker Change: Comprehensive renovations of the lobby and restaurant and creation of an M club at Marriott Woodlands waterway will take place in the late summer and during the fall.

Speaker Change: In addition, we're making select upgrades to the guestrooms at several of our largest assets, including hiring see Santa Clara Marriott SFO and Renaissance Waverly in Atlanta.

Speaker Change: Minimal disruption from these projects.

Barry Bloom: We are also continuing with approximately $20 million in infrastructure and sustainability projects this year, including significant HVAC upgrades at Honda San Diego, Fairmont Dallas, Marriott SFO, Hyatt Regency Santa Clara, Renaissance Waverly, and the Ritz-Carlton Denver. We are excited about the work our in-house project management team has underway and will contribute to future growth throughout the portfolio. With that, we'll turn the call over to Atish. Okay, thanks, Barry.

Speaker Change: We're also continuing with approximately $20 million of infrastructure and sustainability projects this year, including significant HBC upgrades at Andaz, San Diego Fairmont, Dallas, Marriott SFO, Hyatt Regency, Santa Clara Renaissance, Waverly, and Ritz Carlton Denver.

Speaker Change: We are excited about the work our in House project management team has underway and will contribute to future growth throughout the portfolio with that I will turn the call over to Ashish.

Atish Shah: I will provide an update on two items, our balance sheet and our 2024 guidance. As to our balance sheet, it continues to be a point of strength for the company. We maintain a significant unencumbered asset base and ample liquidity. Our next step in maturity is over a year from now, and we expect to address it well in advance. Our current leverage ratio pro forma for the Lorien disposition is approximately 5.2 times trailing 12 months net debt to EBITDA. As a reminder, our long-term target is a leverage ratio in the low 3 to low 4 times range. We expect to move closer to that range in 2025 as Grand Heights-Godsdale Resort ramps up post-renovation.

ashish: Okay. Thanks, Barry I will provide an update on two items our balance sheet.

ashish: And our 2020 for guidance.

ashish: As to our balance sheet continues to be appointed strength for the company, we maintain a significant unencumbered asset base and ample liquidity.

ashish: Our next step maturities over a year from now and we expect to address that well in advance.

ashish: Our current leverage ratio pro forma for the Laurean disposition is approximately five two times trailing 12 month net debt to EBITDA.

Speaker Change: As a reminder, our long term target is a leverage ratio in the low three to low four times range, we expect to move closer to that range through 2025 as Grand Hyatt Scottsdale resort ramps up post renovation.

Atish Shah: Turning next to our 2024 full-year guidance. Beginning with REVPAR, we have lowered our expectation for REVPAR growth by 50 basis points to 3% at the midpoint. Excluding Scottsdale, we are lowering our expectations for REVCAR growth by 25 basis points to 3.75% at the midpoint. Our lower RETPAR expectation is a combination of slightly lower than expected second quarter RETPAR, as well as more muted expectations across the portfolio, including in Scottsdale. As to HFADB.RE, we have lowered the midpoint by $5 million to $249 million.

Speaker Change: Turning next to our 2020 for full year guidance, beginning with Revpar, we have lowered our expectations for revpar growth by 50 basis points to 3% at the midpoint.

Speaker Change: Excluding Scottsdale, we are lowering our expectations for revpar growth by 25 basis points to 375% at the midpoint.

Speaker Change: Our lower Revpar expectation is a combination of slightly lower than expected second quarter, revpar as well as well as more muted expectations across the portfolio, including in Scottsdale.

Speaker Change: As to adjusted EBITDA, we have lowered the midpoint by $5 million to $249 million.

Atish Shah: This reduction is driven by three items as follows: $1 million due to the sale of the Lorien Hotel in July, $1 million due to higher renovation-related displacement in Scottsdale, and $4 million due to lower REVPAR and its corresponding impact on margins. Half of this, or about $2 million, was in the second quarter, and the other half relates to our second half forecast. These three items are offset by $1 million in lower G&A.

Speaker Change: This reduction is driven by three items as follows.

Speaker Change: $1 million due to the sale of the lorry and hotel on July.

Speaker Change: $1 million due to higher renovation related displacement in Scottsdale, and $4 million due to lower revpar and its corresponding impact on margins.

Speaker Change: Half of this or about $2 million was in the second quarter and the other half relates to our second half forecast.

Speaker Change: These three items are offset by $1 million and lower G&A expense.

Atish Shah: Add to the weighting of adjusted EBIT.RE by quarter. We expect the third quarter to be just under 20% of the year's adjusted EBITDA RE and the fourth quarter to be in the mid to high 20% range of full year adjusted EBITDA RE. As to our adjusted FFO per diluted share guidance, we are reducing it by half a cent. We now expect adjusted FFO per share of $1.68.

Speaker Change: As to the weighting of adjusted EBITDA by quarter.

Speaker Change: We expect the third quarter to be just under 20% of the years adjusted EBITDA in the fourth quarter to be in the mid to high 20% range on a full year adjusted EBITDA here.

Speaker Change: As to our adjusted <unk> per diluted share guidance, we are reducing it by half a cent.

Speaker Change: We now expect <unk> per share of $1 68.

Atish Shah: This is due to the change in adjusted EBITDA RE being mostly offset by favorable favorable tax favorability and expected income tax expense. For the year, we have an income tax benefit of $3 million versus prior guidance of a $2 million expense. The $5 million positive variance is due to the release of a valuation allowance on certain state-level income tax-deferred assets.

Speaker Change: This is due to the change in adjusted EBITDA being mostly offset by favorability in expected income tax expense.

Speaker Change: For the year, we had an income tax benefit of $3 million versus prior guidance of a 2 million dollar expense.

Speaker Change: The $5 million positive variance is due to the release of evaluation allowance on certain state level income tax deferred assets.

Atish Shah: Our Full Year Capital Expenditure Guidance has increased by $5 million, and our Interest Expense Guidance is unchanged. Apart from the formal guidance, we want to also provide some color on our outlook for the remainder of the year by demand segment. Business transient continues to drive this part of the recovery. Our negotiated corporate business is still very much in recovery mode, particularly in urban markets.

Speaker Change: Our full year capital expenditure guidance has increased by $5 million and our interest expense guidance is unchanged.

Speaker Change: Apart from the formal guidance, we want to also provide some color on our outlook for the remainder of the year by demand segment.

Speaker Change: Business transient continues to drive this part of the recovery our negotiated corporate business is still very much in recovery mode, particularly in urban markets.

Atish Shah: And this is translating to recent increases in our second half forecast for our hotels in Burlingame and Santa Clara, California, Houston, and Dallas, Texas, and Philadelphia, each of which historically has done healthy levels of business transition. Next, the group segment continues to be strong while group revenue pace is up only about 1% for the second half, excluding Scottsdale.

Speaker Change: And this is translating to recent increases in our second half forecast for our hotels in Burlingame, and Santa Clara, California, Houston, and Dallas, Texas and Philadelphia.

Speaker Change: Each of which historically has done healthy levels of business transient.

Speaker Change: Next the group segment continues to be strong while group revenue pace is up.

Speaker Change: Only about 1% for the second half moving Scottsdale. This is primarily due to a tough comparison over a couple of months, which were quite strong last year.

Atish Shah: This is primarily due to a tough comparison over a couple of months, which were quite strong last year. Second half group rates are up over 2%, and our hotels continue to have strong near-term booking activity. For instance, in the second quarter, group revenue production for the third quarter was 5% higher than last quarter. As we look further ahead, Group revenue for 2025 is starting to shape up well. As is typical this far in advance, about one-third of our expected 2025 group revenues is currently on the books.

Speaker Change: Second half group rates are up over 2% and our hotels continue to have strong near term booking activity for instance in the second quarter group revenue production for the third quarter was 5% higher than last year.

Speaker Change: As we look further ahead group for 2025 is starting to shape up well.

Speaker Change: As is typical this far in advance about one third of our expected 2025 group revenues is currently on the books.

Atish Shah: Pace, excluding Scottsdale, is up in the mid-teens percentage range, and our pace, including Scottsdale, is even higher. Last, leisure demand continues to normalize, but there are properties and markets that are starting to maintain their business levels, such as Charleston, South Carolina, and Mount Brook, Alabama, and other markets which are ramping post-renovation, such as Santa Barbara. Leisure is not as large a part of our demand mix once we get past the summer, and leisure comparisons are smaller hotels and key leisure markets, which get much easier starting in the fall.

Speaker Change: Pace, excluding Scottsdale is up in the mid teens percentage range.

Speaker Change: And our pace, including Scottsdale is even higher.

Speaker Change: Lasse leisure demand continues to normalize but there are properties in markets that are starting to maintain their business levels, such as Charleston, South Carolina and Mountain Brook, Alabama.

Speaker Change: And other markets, which are ramping post renovations such as Santa Barbara.

Speaker Change: Leisure is not as large a part of our demand and excellence, we get past the summer leisure comparisons that are smaller hotels in key leisure markets kept much easier starting in the fall.

Atish Shah: As to the expense picture, we continue to experience moderation in expense pressure relative to last year. Our second quarter margin was impacted by lower than expected ADR. The second quarter margin decline is the greatest quarterly decline we expect this year.

As to the expense picture, we continue to experience moderation in expense pressure relative to last year, our second quarter margin was impacted by lower than expected ADR. The second quarter margin decline is the greatest quarterly decline we expect this year.

Atish Shah: We expect margins to be positive in the second half driven by Scottsdale, and even excluding Scottsdale, we expect a more modest margin decline of less than 25 days. Before I wrap up, I'll add that we continue to be well-positioned for opportunities to evolve the portfolio in the years ahead. And despite the slightly softer top-line outlook for this year, our current guidance for adjusted FFO per share reflects 9% growth over 2020. We expect our rate of earnings growth to further increase as we look ahead to favorable dynamics, including more limited U-Hotel supply, moderating expense growth, and further strengthening business transient, business, and transient, and hotel demand, which drives the bulk of the company's profits. As we look ahead, we remain confident in the longer-term earnings power of the company. And with that, we'll turn the call back over to Lydia to begin our Q&A. Thank you.

Speaker Change: We expect margins to be positive in the second half driven by Scottsdale, and even excluding Scottsdale, we expect more modest margin decline of less than 25 basis points.

Speaker Change: Before I wrap up I'll add that we continue to be well positioned for opportunities to evolve the portfolio in the years ahead.

Speaker Change: And despite the slightly softer top line outlook for this year, our current guidance for adjusted <unk> per share reflects 9% growth over 2023.

Speaker Change: We expect our rate of earnings growth to further increase as we look ahead to favorable dynamics within more including more limited new hotel supply.

Speaker Change: Moderating expense growth and further strengthening the business transient.

Speaker Change: Business in transient and group hotel demand, which drive the bulk of the company's profits.

Speaker Change: As we look ahead, we remain confident in the longer term earnings power of the company.

Speaker Change: And with that I'll turn the call back over to Olivia to begin our Q&A session.

Lydia: Thank you. Please press star followed by the number 1 if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to speak. If you change your mind or your question has already been answered, you can withdraw your question by pressing star followed by the number 2. Our first question today comes from Michael Bellisario with Baird. Please go ahead, your line is open.

Olivia: Thank you.

Olivia: A question on the program number one if you'd like to ask a question and it's related to <unk> 19 at your conference.

Speaker Change: Can you just remind me of your question related.

Speaker Change: You can withdraw your question by pressing star followed by the number of key.

Speaker Change: Our first question today comes from Michael Bellisario with Baird. Please go ahead. Your line is open.

Michael Bellisario: Good morning, everyone.

Michael Bellisario: Morning. Good morning. Barry

Michael Bellisario: Good morning.

Barry Bloom: Barry, first question for you on booking channels. What are you seeing with loyalty redemptions? What does any change there, maybe historically, tell you about demand and demand patterns? And is there any change in loyalty bookings that is affecting RevPAR and margins at your hotels and across the portfolio?

Gary: Gary first question for you.

Speaker Change: <unk> channels.

Speaker Change: Seeing with loyalty redemptions.

Speaker Change: What does any change there maybe historically tell you about demand and demand patterns.

Speaker Change: Is there any change in the royalty bookings is that affecting revpar and margins at your hotels and across the portfolio.

Speaker Change: Yes.

Barry Bloom: Good question. So we have relatively few hotels that are significant redemption hotels. In those hotels, we are seeing lower redemptions this year than we had seen in previous years, but one of the reasons we've continued to drive occupancy in those hotels is because we want to make sure we're getting redeemed at the premium redemption rates. We've not gotten a lot of insight from the properties as to why the redemptions are down. There's some conversation about people having used up and spent a lot of their points historically, and our hotels that have been High Redeemers continue to be High Redeemers within their various brand families.

Speaker Change: Good question. So we have relatively few hotels that are significant redemption hotels.

Speaker Change: In those hotels, we are seeing lower redemptions this year than we had seen in prior year.

Speaker Change: But one of the reasons.

Speaker Change: We've continued to drive occupancy in those hotels is because we want to make sure we're getting.

Speaker Change: Redeemed at the premium redemption rates.

Speaker Change: We've not gotten a lot of insight from the properties is to really why redemptions are down there are some some conversation about people, having used up and spend a lot of their points historically.

Speaker Change: And our hotels that had been high Redeemers continued to be high redeemers within.

Olivia: There are various brand families.

Barry Bloom: And then just a second question, just on the, I think I heard you correctly, the better business transient outlook for the second half of the year in a handful of those markets like SFO and Houston and a few others. Can we kind of dig in there a little bit? What customers, what types of industries are you seeing the pickup there, and how much of it is rate versus option driven? Thank you.

Speaker Change: Got it understood and then.

Speaker Change: Second question just on the I think I heard you correctly, the better business transient outlook for the second half of the year.

Speaker Change: A handful of those markets like <unk> in Houston, and a few others.

Can we kind of dig in there a little bit what customers what types of industries are you seeing that pick up.

Speaker Change: And how much of it is rate versus occupancy driven thank you.

Barry Bloom: Yeah, we certainly continue to see continued growth in small and medium-sized businesses, but in some of these larger markets, whether that's, and I think it's part of what we saw in Q2 and we look forward to seeing continue through the year, is in some of these more major markets, whether that's Houston or Dallas, or San Francisco; we're seeing more Santa Clara as well. We're seeing more significant increases than we have historically in the larger corporate accounts. So thinking more of Fortune 100 accounts, and consulting and accounting firms are showing greater growth than they have thus far in the recovery from the pandemic.

Speaker Change: Yeah, we certainly continue to see.

Olivia: Continued growth in small and medium size businesses, but in some of these larger markets, whether thats and I think part of what we saw.

Speaker Change: In Q2, and we are and we look forward to seeing continued through the year.

Speaker Change: Some of these more major markets like Houston or Dallas San Francisco.

Speaker Change: We're seeing.

Speaker Change: More Santa Clara as well, we're seeing more significant increasingly have historically in the larger corporate accounts. So thinking more fortune 100 accounts in the consulting and accounting firms are showing a greater growth and they have thus far in the recovery from the pandemic.

Speaker Change: Okay.

Barry Bloom: Is that pickup primarily demand, then, not just rate?

Speaker Change: Is that does that pick up that's primarily demand than not just rate.

Barry Bloom: The pickup is primarily in demand, but again, where that business is coming in on Tuesday and Wednesday nights in particular, hotels are able to compress their non-corporate rate or non-large corporate account business. So, as you know, last year the increases that we got as an industry across the largest negotiated corporate accounts were not terribly significant, large volume account business that lets the hotel compress and drive rates from the non-negotiated account.

Speaker Change: The pickup is primarily in demand, but again, where where that business is coming in on Tuesday, and Wednesday nights in particular hotels are able to compress their non corporate rate our non large corporate account business. So as you know.

Speaker Change: Last year, the increases that we got as an industry across the largest negotiated corporate accounts were not terribly significant.

Speaker Change: But we do rely and are looking forward to and part of what we've seen is that as we are able to fill with more.

Speaker Change: Large volume account business that lets the hotel compressed and drive rate from the non negotiated accounts.

Michael Bellisario: Thank you. That's all for me.

Speaker Change: Thank you that's all for me.

David Katz: Our next question comes from David Katz with Jefferies. Please go ahead.

Speaker Change: Our next question comes from David Katz with Jefferies. Please go ahead.

David Katz: Hi. Good morning, everyone.

David Katz: Hi, good morning, everyone.

David Katz: Thanks for <unk>.

David Katz: Taking my questions I wanted to just talk about.

David Katz: Leisure in the portfolio and some of the commentary it does seem as though leisure or at least for the moment right is.

David Katz: Thanks for taking my questions. I wanted to just talk about leisure and the portfolio and some of the commentary. It does seem as though leisure, at least for the moment, is slowing. Obviously, that may not bode well for an ideal opening in Scottsdale, but does it inform any other strategies that you can pursue or any other deals that you can make? Obviously, I'm thinking more disposition-wise or anything you can do in that context to deal with or approach leisure time slowing a bit.

Speaker Change: Is slowing.

Speaker Change: Obviously that.

David Katz:

David Katz: May not.

Speaker Change: Bode well for an ideal opening in Scottsdale.

David Katz: It.

Speaker Change: Does it inform any sort of other strategies that you can pursue or any other kind of.

David Katz: Deals that you can make obviously I'm thinking more disposition wise or anything you can do sort of in that context.

Speaker Change: Sort of deal with our approach leisure slowing a bit.

Marcel Verbaas: Yeah, thanks for the questions, David. You know, as you know, our portfolio is very balanced and able to really play with all demands. We've obviously spoken on this call already quite a bit in our prepared remarks about where we're seeing strength coming on the corporate transient and group side that is really offsetting some of the weakness that we are seeing to a certain extent on the leisure side. Now, when you look at our leisure markets, and I think Atish pointed it out in his remarks, we do have a few markets that are holding up fairly well on the leisure side, and we have some markets where you are absolutely seeing some softening.

Speaker Change: Yes, thanks for the questions David.

Speaker Change: As you know our portfolio is very balanced and being able to really play with all to ultimate end segments and we've obviously spoken on this call already quite a bit.

Speaker Change: Our prepared remarks about <unk>.

Speaker Change: Where we're seeing strength coming on the corporate transient and group side that is really offsetting some of the weakness that we're seeing to a certain extent on the leisure side.

David Katz: When you look at our leisure markets.

Speaker Change: <unk> pointed out in his remarks, we do have a few markets that are holding up fairly well on the leisure side and we have some markets where you are absolutely seeing some softening.

Marcel Verbaas: But even in some of the markets where you're seeing kind of a more, kind of a greater softening, for example, Orlando is absolutely a softer leisure market this year than it was last year. And, you know, some of that probably has to do with Universal opening up a new park next year, which generally kind of drives more demand into that year and a little bit of a slowing going into that. That's not really what's impacting us in a market like Orlando, for example.

Speaker Change: But even in some of the markets, where you're seeing kind of a more.

Speaker Change: Kind of a greater softening for example, Orlando is absolutely a softer leisure market this year.

David Katz: And then it was last year and some of that probably has to do with universal opening up a new park next year, which generally kind of drives more demand into that here in a little bit of a slowing going into that.

David Katz: Not really what's impacting us in a market like Orlando for example.

Marcel Verbaas: We have our Grand Bohemian Orlando downtown that is a really corporate transient-driven hotel that is doing very well coming off of its renovation. And some of the softness that we saw in Grand Cypress was more just about some group business that was down there as compared to really suffering from the leisure demand that's pulling back. Now, if you translate that to, you know, kind of the second part of your question as it relates to, first, Scottsdale and kind of the rest of the portfolio.

Speaker Change: Our Grand Bohemian Orlando downtown that is.

Speaker Change: Really corporate transient driven hotels, it is doing very well coming off of its renovation.

Speaker Change: And some of the softness that we saw in Grand Cypress was more just about.

Speaker Change: Some group business that was down there.

Speaker Change: As compared to a really suffering from the leisure demand thats pulling back.

Speaker Change: Translate that to.

Speaker Change: The second part of your question as it relates to.

Speaker Change: Our first Costco in kind of the rest of the portfolio.

Marcel Verbaas: You know, Scottsdale, as you know, a very big component of what we're doing there is the expansion of the meeting space. And historically, it has been, you know, very much a group-oriented hotel where this additional ballroom space will do all the things that Barry highlighted in his remarks as far as being able to take bigger groups as opposed to having more flexibility in what type of groups we're taking. So the group strategy is a very big component of that.

Speaker Change: Scottsdale as you know a very big component of what we're doing there is the expansion of the meeting space and historically it has been a very much a group oriented hotel, where this additional ballroom space. We will do all the things that Barry highlighted in his remarks as far as being able to take bigger groups as opposed to having more flexibility in what type of groups were taking.

Speaker Change: So the group strategy is a very big component of that and.

Speaker Change: The other side of it.

Speaker Change: <unk> is not a.

Marcel Verbaas: The trendy leisure market is a very consistent high-end leisure market that does extremely well, particularly in the seasons where there is a lot of compression there. So, it doesn't give us any real concerns as we're completing that renovation and as we're getting into next year. So, we still feel very good about that and, really, like I said, don't have a lot of concerns about any overall slowing in leisure impacting that in any significant way.

Speaker Change: Trendy leisure market is very consistent high end leisure market that does extremely well, particularly in the seasons, where there is a lot of compression.

Speaker Change: There so it doesn't give us any any real concern so as we're as we're completing the renovation and as we're getting into next year. So we still feel very good about that and really like I said don't have a lot of concerns about this any overall slowing in leisure.

Speaker Change: Impacting that in any significant way for the rest of the portfolio.

Marcel Verbaas: And for the rest of the portfolio, you know, as I pointed out in my remarks, over time, we've always looked at how we continue to upgrade the quality of the portfolio, the earnings growth potential, but we feel really good about the balance that we have in our portfolio, and we didn't shift to just a leisure-only strategy. We're still very focused on the bulk of our business, which is really corporate transients and group and leisure as the third component.

Speaker Change: As I pointed out in my remarks over time, we will always look at how do we continue to upgrade the quality of portfolio the earnings growth potential, but we feel really good about the balance that we have in our portfolio and we have we didnt shifts with Yoplait leisure only strategy. We're still very focused on the bulk of our business, which is really corporate transient and group and.

Speaker Change: Leisure is the third component.

David Katz: I'm not sure that I fully understand the sort of outbound international versus inbound international travel. I guess I had thought that this was going to be a little better summer for that than perhaps what it's turned out to be. Is there anything more to it than, you know, just the cost decision or the value of the dollar as you see it?

Speaker Change: Understood and.

Speaker Change: I'm not sure that I fully understand the sort of outbound international versus inbound international.

Speaker Change: National travel.

Speaker Change: I guess I had thought that this was going to be a little better summer for that than perhaps what it's turned out to be is there anything more to it than just the sort of cost decision or the value of the dollar as you see it.

Marcel Verbaas: Yeah, we obviously see the same things you do as it relates to kind of overall market data. And certainly, international outbound travel has been very strong still, it appears.

Speaker Change: Yes, yes, we obviously see the same things you do as it relates to kind of overall market data and certainly the international outbound travel has been has been very strong still it appears one.

Marcel Verbaas: And I think overall, everyone was expecting maybe that would be a little bit weaker this year and see that balance shift in a different direction a little bit. Our portfolio isn't driven very heavily by inbound international traffic. You know, we have very few assets where that's a meaningful component of our portfolio. So even though we see kind of the overall trends in the market, we're probably not in the best position to have to take a very strong position.

Speaker Change: I think overall, everyone was expecting maybe that will be a little bit weaker this year.

Speaker Change: <unk> seen it balanced shift in a different direction, a little bit our portfolio isn't driven very heavily by inbound international traffic. We have very few assets, where that's a meaningful component of our portfolio.

Speaker Change: Even though we see kind of the overall trends in the market, we're probably not the best position to have to take a very strong position on that.

David Katz: Understood. Thanks for taking my questions.

Speaker Change: Understood. Thanks for taking my questions.

Aryeh Klein: Our next question today comes from Aryeh Klein with BMO Capital Markets. Please go ahead; your line is open.

Speaker Change: Our next question today comes from Ari Klein with BMO capital markets.

Aryeh Klein: Thanks, and good morning. Maybe just following up on the leisure comments, just from an out-of-room perspective, you know, what are you seeing on that front? And even beyond leisure, are you seeing any kind of impact, you know, elsewhere, whether it's, you know, a group or BT or something?

Ari Klein: Thanks, and good morning, maybe just following up on your comments.

Speaker Change: And out of room perspective.

Ari Klein: What are you seeing on that Brian and even beyond leisure is that are you seeing any kind of impact.

Speaker Change: Elsewhere, whether it's <unk> or <unk> or anywhere else. Thank you.

Barry Bloom: Yeah, I think in particular on Leisure, we've been, I wouldn't say surprised, but encouraged that outlets are still busy, generally across the portfolio, and that the consumers seem to, compared to certainly pre-COVID, they seem to eat and drink in the hotel more frequently, meaning our in-house capture, in general across the portfolio, is better than it was pre-COVID, in restaurant and bar pricing, but we feel pretty good about And what we're seeing in ancillary areas like parking and spa and even retail in some of the properties where we have them, that has held up pretty well.

Speaker Change: Yes, I think in particular on leisure we've been.

Speaker Change: We wouldn't say surprised but encouraged that that outlets are still busy generally across the portfolio and that the consumers seem to.

Speaker Change: Comparing to certainly pre COVID-19, they seem to be seem to eat and drink and the hotel more frequently.

Speaker Change: In ancillary areas like parking and spa.

And even retail and some of them and some of the properties. We have that has held up pretty well in fact, very well I mentioned that.

Barry Bloom: In fact, very well. I mentioned that some of those departments and other operative departments combined were up over 20% in Q2 versus the prior year. We feel pretty good about that out-of-room spend. I think that Barry did highlight in his comments as well, a little bit of a shift in the mix of the group business with associations just, you know, being a bit stronger than a corporate group at this point, which does impact the additional spend by so much, certainly the bankrupt spend in food banks.

Speaker Change: Of those departments are there.

Speaker Change: Other operating departments can block combined were up over 20% in Q2 versus prior year. So we feel pretty good about that out of room spend.

Speaker Change: I think a very good highlighted in his comments as well.

Speaker Change: A little bit of a shift in the in the mix of the group business, which associations.

Speaker Change: Thanks, David.

Speaker Change: It was stronger than corporate group at this point, which does impact.

Speaker Change: Yeah.

Aryeh Klein: And then just on the expense side of things, I guess what has changed there from your perspective versus your prior expectations, because it does seem like some peers are softening up on the expense pressure side of things. You know, I guess what's embedded in the same store expense growth for this year, and do you think that moderates as we look ahead to next year? We do think it moderates and

Speaker Change: Thanks for that and then just on the expense side of things I guess, what has changed there from your perspective.

Speaker Change: Prior expectations because it does seem like some carriers are seeing softening on the expense pressure side of thing.

Speaker Change: I guess, what's embedded on our same store expense growth for this year.

Barry Bloom: We do think it moderates, and Atish mentioned that we do expect it to moderate for the remainder of the year. I think we – big picture, and I went through some of the detail in the remarks, but I think, big picture, that we're like – we're driving occupancy very well, which means we're servicing more guests. And I think – I feel much better when we look at the preoccupied room expense growth as opposed to the raw expense growth.

Speaker Change: We do think it moderates and teach mentioned that we do expect it to moderate for the remainder of the year I think we.

Speaker Change: Big picture and I went through some of the detail in the remarks, but I think big picture.

Speaker Change: That we are.

Speaker Change: Like we're driving occupancy very well, which means we're servicing more guests and I think I feel much better.

Speaker Change: When we look at the <unk> room expense growth as opposed to the raw expense growth.

Barry Bloom: And I think that's obviously kind of proof just in part that a lot of this is occupancy driven. But I think there's also – and I mentioned it – that part of our strategy and part of the hotel strategy of driving occupancy is at a higher cost, particularly in sales and marketing, where we're utilizing – where we have more salespeople on board across the portfolio. We have – we're doing more paid search and more digital marketing, and we're doing more paid search in part in certain markets on OTA channels, which is an expensive channel.

Speaker Change: And I think that's that's obviously kind of proof testing part that a lot of this occupancy driven I think there is also and I mentioned it that part of our strategy and part of the hotel strategy of driving occupancy is at a higher cost, particularly in sales and marketing where we're utilizing.

Speaker Change: Where we have more salespeople on board across the portfolio, we have we're doing more.

Speaker Change: Paid search and more digital marketing and we're doing more paid search in part in certain markets.

Channels, which is an expensive channel.

Barry Bloom: But in those properties that are doing that, the goal is to make sure that we're filling the hotel and driving enough business into the hotel to support the overall operation and grow the bottom line, even if it's at expensive margins.

Speaker Change: But our but in those properties that are doing that the goal is to make sure that we're filling the hotel and driving enough business into the hotel to support the overall operation and grow bottom line dollars, even if it's an expensive margin.

Speaker Change: Thank you.

Jack Armstrong: Our next question is from Jack Armstrong with Wells Fargo. Please go ahead.

Speaker Change: Please go ahead.

Jack Armstrong: Hey, good morning, everyone. So Nashville had a kind of tough quarter from a leisure perspective. Did the W continue to gain market share in that environment? And are there any updates on the new restaurant concept there or any other out-of-room spend?

Speaker Change: Hey, good morning, everyone. So Nashville had kind of a tough quarter from a leisure perspective. The W continue to gain market share in that environment and are there any updates on the new restaurants, offset there or any other out of room spend drivers.

Barry Bloom: Yeah, no update on the restaurant concept. We're working on some, we think will be some pretty exciting ideas that hopefully, we'll be able to share in the near future.

Speaker Change: Yeah, No update on the restaurant concept, we're working on some we think we think it will be some pretty exciting ideas that hopefully we'll be able to share in the near future.

Barry Bloom: For W Nashville, we actually held up fairly well relative to the comp set in terms of leisure in Q2. We did very well, as I mentioned, in the corporate transient, but we had a challenging time on the in-house group side. It's really the first time we've experienced that. We had some turnover in the sales department in the months leading into the second quarter, and we were not able to really recover from that.

Speaker Change: For W. Nashville, we actually held up.

Speaker Change: Fairly well relative to the comp set in terms of leisure in Q2, we did very well as I mentioned in the corporate transient.

Speaker Change: But we had a challenging time on the in House group side, It's really the first time, we've experienced that we had some turnover in the sales department in the months leading into the second quarter and just not and we're not able to really recover from that having said that and.

Barry Bloom: Having said that, and I mentioned earlier, that production in June and what we're first hearing about July for future dates is that we're back on track in terms of driving group business into the hotel in a way that we've talked about before, I think, is much more meaningful than we had originally anticipated in our underwriting.

Speaker Change: I mentioned earlier that production in June and what were firsthand about July for future date is that we're back on track in terms of of driving group business into the hotel in a way that we've talked before I think is is much more meaningful than we had originally anticipated in our underwriting.

Jack Armstrong: Okay, thank you. That's helpful, Keller. And then, just kind of based on your take on the macro environment and the slowdown you're seeing in Leisure, are you assuming the stabilization in Scottsdale might be pushed out a bit, or do you think the group booking space that you're seeing is for 25 should keep it on track with the original underwriting?

Speaker Change: Okay. Thank you that's helpful color and then just kind of based on your take the macro environment and the slowdown you're seeing in leisure are you assuming the stabilization in scottsdale might be pushed out a bit or do you think.

Speaker Change: Group bookings pace that Youre seeing is for $25 to keep it on track with your original underwriting.

Marcel Verbaas: I'm really not seeing anything at this point that would cause us, like I said earlier, to change our view of where this will stabilize and how this will stabilize. So, leisure is obviously an important component, but group is really the most important component as we kind of build up the occupancy there. And then, again, because of seasonality in the markets, really make sure that we take advantage of how frothy those first essentially five months of the year are to really drive the increased rates and everything that we're looking to do as a result of the renovation.

Speaker Change: Really not seeing anything at this point that would cause us to like I said earlier two to change our view of awareness will stabilize on how this will stabilize so leisure is obviously an important component but.

Speaker Change: Group is really the most important component as we kind of build up the occupancy there and then again because of the seasonality in the markets.

Speaker Change: Really make sure that we take advantage of how frothy dose versus essentially five months of the year or.

Speaker Change: The increased rates and everything that we're looking to do as a result of the renovations so.

Marcel Verbaas: Overall, the global softening of leisure demands, I mean, certainly, you know, the stronger the leisure, the better, but at this point, we're not, we're not seeing anything that gives us any pause on how we think this asset will play out.

Speaker Change: The stronger the leisure into better books at this point, we're not we're not seeing anything that gives us any pause on how we think this asset will stabilize.

Speaker Change: Yes.

Jack Armstrong: Okay, great. That's it for me. Thanks.

Speaker Change: Okay, great. That's it for me thanks.

Tyler Batory: As a reminder, if you'd like to ask a question today, it's star 1 on your telephone keypad. Our next question comes from Tyler Batory on behalf of Oppenheimer. Please go ahead.

Tyler <unk>: Our next question comes from Tyler <unk> with Oppenheimer.

Please go ahead.

Tyler Batory: Hey, good morning. Thanks for taking my questions. I wanted to ask about the group business. I know you said you're pacing up 1% for the second half. What are you seeing in terms of quarterly bookings? And then can you talk a little bit about the citywide calendar in the second half of this year as well? Yeah, why don't I start on that?

Tyler <unk>: Hey, good morning, Thanks for taking my questions.

I wanted to ask about the group business I think you said you are picking up 1% for the second half.

Tyler <unk>: What are you seeing in terms of in the quarter for the quarter bookings and then can you talk a little bit about the citywide calendar in the second half of this year as well.

Atish Shah: Maybe Barry, you can talk about the citywide calendar. So in terms of production, I think I should refer to production being strong in the second quarter and being up 5% for the third quarter relative to last year. So we continue to see, you know, healthy levels of near-term business. And similarly, for sort of in the quarter, for the quarter activity, that continues to be good. So, you know, while our PACE numbers, you know, up a percent, excluding Scottsdale, are not, you know, that strong for the back half of the year, again, we're seeing good levels of activity, so we have, you know, confidence in that, and So that's that's really important, you know, our and then Barry if you want to add it.

Tyler <unk>: Yes, why don't I start on that and maybe Barry.

Barry: Aqua citywide calendar so.

Barry: In terms of production I think referred to production being strong in the second quarter being up 5% for the.

Barry: Third quarter relative to last year. So we continue to see healthy levels of near term business.

Barry: And similarly for sort of in the quarter for the quarter activity continues to be good so.

Barry: All our pace numbers.

Speaker Change: Our percent excluding hospital is not.

Speaker Change: That strong for the back half of the year again, we're seeing good levels of activity. So we have confidence in that in the right profile continues to be good.

Speaker Change: Up over a couple of percent so.

Speaker Change: That's really important in our guidance.

Speaker Change: And then Barry if you want to add anything.

Barry: My calendar, yes.

Barry Bloom: Yeah, on CityWise, we've talked about this before, that our portfolio in general is not heavily reliant on CityWise as it relates to the portfolio overall. Some of the properties where we do enjoy traditionally big citywide business would be Portland, obviously, where we're next to the Convention Center. And the setup there, we've long known, is a little bit soft for the second half of this year, but the hotel has worked hard to try to offset that with in-house business.

Barry: <unk>, we've talked about this before that our portfolio in general is not heavily reliant on citywide so as it relates to the portfolio overall.

Speaker Change: Some of the properties, where we do enjoy.

Barry: <unk> Big citywide business would be Portland, obviously, where we're next expense centers set up there we've long known as a little bit soft for the second half of this year, but we the hotels worked hard to try to offset that.

Barry: Indoor bit with in house business and Thats, certainly one of the pluses of.

Barry Bloom: And that's certainly one of the pluses of CityWise, understanding citywide business and knowing kind of where those gaps are. So we've done a good job of filling them. Dallas, we participate in some citywide events there. We're a Q3 and Q4, both down a little bit from prior years. But again, they were also quite a bit down in Q1 as well, and we were able to perform very well through that in Dallas. And then the other markets are relatively little important as it relates to how much compression we get from citywide business and or whether we tend to not fill when citywides aren't in. But other markets where we do participate in citywides are Nashville, which has a good setup for Q3 and Q4 as well.

Barry: Of.

Barry: Understanding <unk> business, and knowing kind of where those gaps are so we've done a good job of filling that Dallas, we participate in some citywide there were acute.

Barry: Where our Q3 and Q4 are both down a little bit from prior years, but again.

They were also quite a bit down in in Q1, as well and we were able to perform very well through that in Dallas and then the other markets are relatively little importance as it relates to how much compression, we get from from citywide business, Andrew or whether we.

Andrew: We tend to not fill when citywide and other markets, where where we do what we do participate in city wides.

Andrew: Our Nashville, which is a good.

Andrew: A good setup for Q3 and Q4 as well.

Andrew: Okay.

Tyler Batory: Um, a quick follow-up on the leisure.

Tyler Batory: Follow-up on the leisure time. Discussion here. In terms of your channel mix, have you increased using OTAs or other discount channels more to drive business? I'm not sure if that's something that's impacting the cost structure too. In some hotels, where they really believe that driving occupancy is the best overall strategy, it's going to drive the most ancillary spend and keep the building busy. We have hotels that are definitely using more OTA marketing than they have historically, and it is a lower-revenue, higher-cost channel, so that certainly is one of the factors that this has had some impact on marketing.

Speaker Change: Quick follow up on the leisure.

Speaker Change: Discussion here in terms of your channel mix.

Speaker Change: Have you increased using otas or other discount channels market to drive growth I'm not sure if thats impacting.

Speaker Change: Impacting the cost structure too.

Speaker Change: Yes.

Speaker Change: In some hotels, our they were they really believed it driving occupancy is going to be is the best overall strategy thats going to drive the most ancillary spend keep the keep the building busy.

Speaker Change: Yes.

Speaker Change: We have hotels are definitely using.

Speaker Change: More OTI marketing.

Speaker Change: Marketing than they have historically and it is a it is a lower.

Speaker Change: Revenue higher cost channels. So that certainly is one of the one of the factors that this had some impact on on margin.

Barry Bloom: Okay, um, and then just the last question for me, um, you know, I'm trying to think about what 2025 might look like from an EBITDA perspective. I know you can't give guidance.

Speaker Change: Okay.

Speaker Change: And then just the last question for me.

Speaker Change: I'm trying to think about what 2025 might look like from an EBITDA perspective, I know you can't give guidance.

Tyler Batory: I know you can't give guidance. One thing at a time; we have got to get through 2024 first. But, you know, with your portfolio, I think there are a lot of moving pieces with some of the acquisitions, with some of the renovations, some disruption. So if you could kind of run through some of the potential building blocks on the EBITDA side of things, just to try to help us frame, you know, a starting point, if you will, for now.

One thing at a time, we got to get through 2024 first but yes with your portfolio I think there's a lot of moving pieces with some of the acquisitions with some of the renovations disruption. So if you could kind of run through some of the potential building blocks on the EBITDA side of things just to try to help us frame.

Speaker Change: Starting point, if you will for next year.

Speaker Change: Yes.

Tyler Batory: Well, I think one thing to refer to is, you know, the slide in our prior investment investor deck that bridges to the future, and obviously, it doesn't do it by year, but you have some major components. One being Scottsdale, where we expect $20 million of EBITDA lift between now in stabilization plus disruption. So getting that back, that's a big piece.

Speaker Change: Well I think one one thing to referred to us.

Speaker Change: The slide in our prior investments.

Speaker Change: Investor decks.

Speaker Change: Bridges to the future and obviously, it's up to by year, but you have some major components.

Speaker Change: One being Scottsdale were.

Speaker Change: We expect $20 million of.

Speaker Change: EBITDA lift.

Speaker Change: Between now.

Speaker Change: Now at stabilization plus <unk>.

Speaker Change: Disruption so getting that back.

Speaker Change: That's a big piece, obviously the newer assets.

Atish Shah: Obviously, the newer assets, W Nashville and Portland, are big drivers. And then finally, you know, outsized growth and some assets in the portfolio, particularly those in Northern California, which still have a lot of recovery potential and have certainly shown strong signs of recovery this year. So, you know, those building blocks are there.

Nashville at Portland.

Speaker Change: Big drivers and then finally outsize growth in some assets in the portfolio, particularly those in northern California.

Speaker Change: We'll have a lot of recovery potential in <unk>, certainly shown strong signs of recovery this year. So.

Atish Shah: And I think as we get closer to next year, and certainly in the beginning of the year, we can highlight those with more specificity as to how each one of those is shaping up for next year. It's just a little bit too early, given that, you know, our hotels are just now starting the budgeting process. So, you know, getting into a lot of detail on that at this point.

Speaker Change: Who knows those building blocks are there and I think as we get closer into next year and certainly at the beginning of the year. We can highlight those with more specificity as to how each one of those are shaping up for next year, It's just a little bit too early given that.

Speaker Change: Our hotels are just now starting the budgeting process. So.

Speaker Change: Yes.

Speaker Change: Getting into a lot of detail on that at this point is really tough for us to do.

Barry Bloom: Really tough for us. Obviously, we're a long way from 2025, and Atish did highlight some of the positives as we go into next year. It's a little earlier than we normally like to speak about kind of where the group pace is shaking out, but we're seeing some very encouraging signs there. And the one piece that we can look out ahead, and Atish pointed out, there's about, at this time of year, like every year, probably only about one-third of your group's business for next year on the books.

Speaker Change: So obviously, it's been a long way to answer the question.

Speaker Change: <unk> 25.

Speaker Change: We.

<unk> highlighted some of the positives as we go into next year.

Speaker Change: Little earlier than we normally like to speak about kind of where where group pace is shaking out, but we're seeing some very encouraging signs there.

Speaker Change: One piece that we can look out ahead, and then Ashish pointed out there was about at this time of year like every year, there's probably about only about one third of your group business for next year on the books.

Barry Bloom: But our pace is very healthy thus far, and especially when you think about some of the things Atish talked about with the booking pace and what we've seen over the last couple months. We're very encouraged about what the hotels are able to put on the books for next year. And that's even outside of what we expect to get from Scottsdale, which is showing some very encouraging signs, particularly on the rate side. So, we've talked a number of times about how we look at the setup for 2025 and beyond as being very positive for us, and we continue to feel that way. Okay, Barry, I hope so.

ashish: Our our pace is very healthy.

Speaker Change: Thus far in especially some of when you think about some of the things that you just talked about with <unk>.

Speaker Change: The bookings based on what we've seen over the last couple of months, we're very encouraged about what the hotels were able to put on the books for next year.

Speaker Change: Even outside of what we expect to get from Scottsdale, which is showing some.

Speaker Change: Some very encouraging signs, particularly on the rate side. So so we are.

Speaker Change: <unk> talked a number of times about the we look at the setup for 25 and beyond being very positive for us and we continue to feel that way.

Speaker Change: Okay very helpful. Thank you.

Lydia: Thank you, we have no further questions, so I'd now like to turn the call back to Marcel Verbaas for any closing comments.

Speaker Change: Thank you we have no further questions. So I'd now like to turn the call back to Marcel Lavage for any closing comments.

Marcel Verbaas: All right, thank you. Thanks, Leigh Ann. Thanks, everyone, for joining us this morning. I know it's been a busy week of earnest calls in our space, so we thank you for joining us and hope you enjoy whatever is remaining of the summer, and we'll speak with you over the next few months. Thanks again, and we'll look forward to updating you in the future.

Marcel Lavage: Alright. Thank you thanks, Elliot and thanks, everyone for joining US. This morning has been a busy week of earnings calls in our space. So we thank you for joining us.

Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.

Marcel Lavage: Okay enjoy whatever is remaining of the summer and we'll speak with you.

Marcel Lavage: Over the next few months thank.

Marcel Lavage: Thanks again.

Speaker Change: We will.

Marcel Lavage: Forward to updating you in the future.

Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.

[music].

Speaker Change: Yes.