Q2 2024 Chatham Lodging Trust Earnings Call

Operator: Greetings and welcome to the Chatham Lodging Trust second quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Daly, President of DG Public Relations. Please go ahead.

Operator: Greetings, and welcome to the Chatham Lodging Trust 2nd Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Greetings and welcome to the Chatham Lodging Trust second quarter, 'twenty 'twenty four financial results conference call.

Speaker Change: At this time all participants are in a listen only mode.

Question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Chris Daly: I would now like to turn a conference over to your host, Chris Daly, President of DG Public Relations.

I would now like to turn the conference over to your host Chris Daly President of D. G. Public relations. Please go ahead.

Chris Daly: Please go ahead. Thank you, Brock.

Chris Daly: Thank you, Brock. Good morning, everyone, and welcome to the Chatham Lodging Trust second quarter 2024 results conference call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. Such statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of August 2nd, 2024, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statements to actual results or changes in the company's expectations.

Chris Daly: Thank you Brock.

Jeffrey Fisher: Good morning, everyone, and welcome to the Chatham Lodging Trust 2nd Quarter 2024 Results Conference Call. Please note that many of our comments today are considered forward-looking statements defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of August 2nd, 2024, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statements to actual results or changes in the company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliation to non-GAAP financial measures referenced on this call on our website at chathamlodgingtrust.com.

Chris Daly: Good morning, everyone and welcome to the Chatham Lodging Trust second quarter 'twenty 'twenty four results conference call.

Speaker Change: Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our most recent Form 10-K and other SEC filings.

Speaker Change: All information in this call is as of August 2nd Twenty-twenty Board, unless otherwise noted and the company undertakes no obligation to update any forward looking statements to conform the statements to actual results or changes in the company's expectations.

Chris Daly: You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. Now, to provide you with some insight to Chatham's 2024 second quarter results, allow me to introduce Jeff Fisher, Chairman, President, Chief Executive Officer, Dennis Craven, Executive Vice President and Chief Operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Thanks, Chris.

Speaker Change: You can find copies of our S E C filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at child, Chatham lodging Trust's dotcom.

Jeffrey Fisher: Now, to provide you with some insight to Chatham's 2024 2nd quarter results, allow me to introduce Jeff Fisher, Chairman, President, Chief Executive Officer, Dennis Craven, Executive Vice President, Chief Operating Officer, and Jeremy Wenger, Senior Vice President, Chief Financial Officer. Let me turn the session over to Jeff Fisher.

Speaker Change: Now to provide you with some insight Chatham Twenty-twenty poor second quarter results allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer, Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer, Let me turn the session over to Jeff Fisher Jeff.

Jeffrey Fisher: Jeff? Thanks, Chris, and I certainly appreciate everyone joining us this Friday morning for our call. I understand our time slot does conflict with one of our other peer lodging reads.

Jeff Fisher: Thanks, Chris, and I certainly appreciate everyone joining us this Friday morning for our call. I understand our time slot does conflict with one of our other peer lodging REITs, so for anyone who ends up listening to our replay, if you have any questions or follow-up items, of course, feel free to call me, Dennis, or Jeremy.

Jeff Fisher: Thanks, Chris and I, certainly appreciate everyone. Joining us this Friday morning for our call I understand our time slot does conflict with one of our other peer lodging Reits. So for anyone who ends up listening to a replay if you have any questions or follow up items of course feel free to call me.

Jeffrey Fisher: So, for anyone who ends up listening to our replay, if you have any questions or follow-up items, of course, feel free to call me, Dennis, or Jeremy. Before I get into our strong quarterly results, I want to provide an update on some key corporate initiatives that we have been undertaking. First, we've been quite active solidifying our balance sheet over the numbers of maturing debt. In just the past three months, we've repaid approximately 280 million of maturing debt. And as we sit here today, we've only got 30 million of maturing debt over the next year. We have no liquidity issues whatsoever, to be clear.

Speaker Change: Dennis or Jeremy.

Jeff Fisher: Before I get into our strong quarterly results, I want to provide an update on some key corporate initiatives that we have been undertaking. First, we've been quite active in solidifying our balance sheet over the past year. In just the past three months, we've repaid approximately $280 million of maturing debt. And as we sit here today, we've only got $30 million of maturing debt over the next year. We have no liquidity issues whatsoever, to be clear.

Speaker Change: Before I get into our strong quarterly results I wanted to provide an update on some key corporate initiatives that we have been undertaking first we've been quite active solidifying our balance sheet.

Speaker Change: Bruce a maturing debt in just the past three months, we repaid approximately 280 million of maturing debt and as we sit here today, we've only got 30 million of maturing debt over the next year we have.

Jeff Fisher: No liquidity issues whatsoever to be clear, we patiently addressed this large wall of maturities through the issuance of debt asset sales and free cash flow. Additionally.

Jeff Fisher: We patiently addressed this large wall of maturities through the issuance of debt, asset sales, and free cash flow. Additionally, through the refinancing, we've added exposure to floating rate debt, and with rates expected to decline, we will be able to grow FFO. In fact, based on current borrowings outstanding, our FFO increases $2.6 million, or 5 cents per share, for every 100 basis points decline in SOFR. With interest rates expected to decline as growth opportunities arise, we'll then be able to lock in longer-term borrowings at more historically attractive rates.

Jeffrey Fisher: We patiently addressed this large wall of maturities through the issuance of debt, asset sales, and free cash flow. Additionally, through the refinancing, we've added exposure to floating rate debt, and with rates expected to decline, we will be able to grow FFO. In fact, based on current borrowings outstanding, our FFO increases $2.6 million, or $5 per share, for every 100 basis points decline in SOFA. With interest rates expected to decline as growth opportunities arise, we'll then be able to walk in longer-term borrowings at more historically attractive rates.

Speaker Change: Additionally, through the refinancing we've added exposure to floating rate debt and with rates expected to decline, we will be able to grow F. F. O. In fact based on current borrowings outstanding Alright, if F O increases $2.6 million or five cents per.

Speaker Change: Sure for every 100 basis points decline in sofa with interest rates expected to decline as growth opportunities arise. We'll then be able to lock in longer term borrowings at more historically attractive rates.

Jeffrey Fisher: Second, as we disclosed last quarter, we're opportunistically marketing a handful of hotels for sale. We still expect to realize somewhere between $40 million and $80 million of proceeds from the sale of a portion of them or all of them. Not sure if any of the deals will close in the third quarter, but we are pleased with the progress made today.

Jeff Fisher: Second, as we disclosed last quarter, we're opportunistically marketing a handful of hotels for sale. We still expect to realize somewhere between $40 million and $80 million of proceeds from the sale of a portion of them or all of them. I'm not sure if any of the deals will close in the third quarter, but we are pleased with the progress made to date. We're also excited to announce earlier this quarter that for the first time in two years, we acquired a hotel, the brand-new 148-room Home 2 Suites by Hilton Phoenix Downtown for $43.3 million, or approximately $293,000 per room.

Speaker Change: Second as we disclosed last quarter, we're opportunistically marketing a handful of hotels for sale, we still expect to realize somewhere between 40 million and $80 million of proceeds from the sale of a portion of them or all of them not sure. If any of the deals will close in the third quarter, but we are.

Speaker Change: We are pleased with the progress made to date.

Speaker Change: We're also excited to announce earlier this quarter that for the first time in two years, we acquired a hotel they're brand new 148 room home two suites by Hilton Phoenix downtown for $43.3 million or approximately 293000 per room, we are.

Jeffrey Fisher: In the first time in two years, we acquired a hotel, the brand new 148 room, Home Two Suites by Hilton Phoenix Downtown for $43.3 million or approximately $293,000 per room. We are really excited about the hotel. It sits in the heart of downtown Phoenix, strategically located across the street from the Footprint Center, which of course is home to the NBA Phoenix Suns. And the WNBA Phoenix Mercury, a block away from Chase Field, which is home to the Arizona Diamondbacks and mere blocks from the Phoenix Convention Center. Those three venues alone bring 5 million annual attendees to downtown Phoenix.

Jeff Fisher: We are really excited about the hotel. It sits in the heart of downtown Phoenix, strategically located across the street from the Footprint Center, which, of course, is home to the NBA's Phoenix Suns and the WNBA's Phoenix Mercury, a block away from Chase Field, which is home to the Arizona Diamondbacks, and mere blocks from the Phoenix Convention Center. Those three venues alone bring 5 million annual attendees to downtown Phoenix. Additionally, downtown Phoenix is a vibrant, growing 1.7 square miles that drives incredibly diverse demand for hotels into its urban core.

Speaker Change: We're really excited about the hotel it sits in the heart of downtown Phoenix strategically located across the street from the footprint Center, which of course is home to the N V. A Phoenix SUNS and the WNBA Phoenix Mercury a block away from Chase field, which is home to the Arizona Diamondbacks.

Jeff Fisher: In addition to the Footprint Center and Chase Field and the Convention Center, Downtown includes 11.5 million square feet of office space and a 28-acre bioscience core which is currently comprised of 1.6 million square feet of space occupied with plans, because it is growing rapidly, to essentially double that space in the coming years. Also, there are numerous museums, theaters, and many wedding venues and other event facilities that immediately surround this hotel.

Speaker Change: And mirror blocks from the Phoenix Convention Center, those three venues alone bring 5 million annual attendees to downtown Phoenix. Additionally, downtown Phoenix is a vibrant growing 1.7 square miles that drives incredibly diverse demand for hotels into.

Jeffrey Fisher: Additionally, Downtown Phoenix is a vibrant, growing 1.7 square miles that drives incredibly diverse demand for hotels into its urban core. In addition to the footprint center and Chase Field and the Convention Center, downtown includes 11.5 million square feet of office space and a 28-acre bioscience core, which is currently comprised of 1.6 million square feet. We have a wide range of space occupied with plans because it is growing rapidly to essentially double that space in coming years. Also, there are numerous museums, theaters, and many wedding venues and other event facilities that immediately surround this hotel. We're in a great location.

Speaker Change: It's urban core in addition to the footprint center in Chase field in the Convention Center.

Speaker Change: Downtown includes 11, and a half million square feet of office space and a 28 acre Bioscience core which is currently comprised of 1.6 million square feet of space occupied with plans because it is growing rapidly to essentially double that space.

Speaker Change: In coming years.

Speaker Change: Also theres numerous museums theaters and many wedding venues and other even facilities that immediately surround this hotel we're in a great location switching gears back to our second quarter operating results. It was a successful quarter by almost every metric for us.

Jeff Fisher: We're in a great location. Switching gears back to our second quarter operating results, it was a successful quarter by almost every metric for us, with REVPAR, other operating profit, and operating margins coming in at the top of our guidance range. RevPAR growth was a strong 4% in the quarter, and that's despite a sluggish June due to the timing of the Juneteenth holiday. Our second quarter RevPAR of $151 exceeded 2019 second quarter RevPAR for the first time since the pandemic.

Jeffrey Fisher: Switching gears back to our second quarter operating results. It was a successful quarter by almost every metric for us, with RevPAR, other operating profit, and operating margins coming in at the top of our guidance range. RevPAR growth was a strong 4% in the quarter, and that's despite a sluggish June due to the timing of the Juneteenth holiday. Our second quarter RevPAR of $151 exceeded 2019 second quarter RevPAR, the first time since the pandemic, and if you pull out the five tech-driven hotels, RevPAR for us is up over 10% compared to 2019 levels. As we've said, business travel continues its steady growth across the country, and that certainly was proven out this quarter for us.

Speaker Change: With Revpar other operating profit and operating margins coming in at the top of our guidance range.

Speaker Change: Revpar growth with this was a strong 4% in the quarter and that's despite a sluggish June due to the timing of the June teens holiday, our second quarter Revpar of $151 exceeded 2019 second quarter Revpar for the first time since the pandemic and if you pull out the five.

Jeff Fisher: And if you pull out the five tech-driven hotels, RevPAR for us is up over 10% compared to 2019 levels. As we've said, business travel continues its steady growth across the country, and that certainly was proven out this quarter for us.

Speaker Change: Tech driven hotels Revpar for us is up over 10% compared to 2019 levels.

Speaker Change: As we've said business travel continues its steady growth across the country and that certainly was proven out this quarter for us occupancy was up every day over last year and by that I mean average second quarter 'twenty 'twenty four Sunday occupancy was higher than 2023 again.

Jeffrey Fisher: Occupancy was up every day over last year. By that, I mean average second quarter 2024 Sunday, occupancy was higher than 2023. Again, each day of the week was higher. Additionally, our highest occupancy day of the week is now a midweek back to more of a normal pattern in the midweek Tuesday night. Our occupancy for the key weekday, business travel days was 85% on Monday, 88% on Tuesday, 84% on Wednesday, and 83% on Thursday. Sunday is our now our lowest occupancy night again, but it was still running 76%. Second quarter occupancy at our tech hotels was 78%, only 300 basis points off 2019 levels, and that gap compressed 100 basis points from the first quarter.

Jeff Fisher: Occupancy was up every day over last year, and by that, I mean average second quarter 2024 Sunday occupancy was higher than 2023. Again, each day of the week was higher.

Speaker Change: And each day of the week was higher Additionally, our highest occupancy day of the week is now a mid week back to more of a normal pattern of midweek Tuesday night, our occupancy for the key weekday business travel days was 85% on Monday, 88% on Tuesday, 84% on a.

Jeff Fisher: Additionally, our highest occupancy day of the week is now a midweek, back to more of a normal pattern, a midweek Tuesday night. Our occupancy for the key weekday business travel days was 85% on Monday, 88% on Tuesday, 84% on Wednesday, and 83% on Thursday. Sunday is now our lowest occupancy night again, but it was still running 76%. Second quarter occupancy at our tech hotels was 78%, only 300 basis points off 2019 levels, and that gap compressed 100 basis points from the first quarter.

Speaker Change: Wednesday, and 83% on Thursday Sunday is our now our lowest occupancy night again, but it was still running 76%.

Speaker Change: Second quarter occupancy at our Tech hotels was 78% only 300 basis points off 2019 levels and that gap compressed 100 basis points from the first quarter and.

Jeffrey Fisher: Importantly, occupancy in our competitive set at these same hotels was up 8% to approximately 70% in the quarter, underpinning stronger fundamentals occurring in those markets, which we've always said is necessary for us to drive ADR growth in our hotels. Our second quarter rip part gains were brought based across most of our largest markets and other encouraging sign with our tech focused hotels and Silicon Valley and Bellevue leading the charge with a rip part gain of 10% in the quarter. Tech companies are doing some intern programs this year. We expect to derive about $500,000 of intern-related revenue this year, not at the level as pre-pandemic or 2022, but with the intern programs active, the market is compressing, as evidenced by the continued growth in rip part.

Jeff Fisher: Importantly, occupancy in our competitive set at these same hotels was up 8% to approximately 70% in the quarter, underpinning stronger fundamentals occurring in those markets, which we've always said is necessary for us to drive ADR growth in our hotels. Our second quarter red part gains were broad-based across most of our largest markets, another encouraging sign. With our tech-focused hotels in Silicon Valley and Bellevue leading the charge with a revenue gain of 10% in the quarter, tech companies are doing some intern programs this year.

Speaker Change: Importantly, occupancy in our competitive set at these same hotels was up 8% to approximately 70% in the quarter underpinning stronger fundamentals occurring in those markets, which we've always said it's necessary for us to drive ADR growth at our hotels.

Speaker Change: Our second quarter Revpar gains were broad based across most of our largest markets. Another encouraging sign with our tech focus hotels in Silicon Valley in Bellevue, leading the charge whenever I pod gain of 10% in the quarter.

Speaker Change: Companies are doing some intern programs. This year, we expect to derive about $500000 of insurance related revenue. This year not at the level of pre pandemic or 2022 but with the intern programs active the market is compressing as evidenced by the continued growth.

Jeff Fisher: We expect to derive about $500,000 of intern-related revenue this year, not at the level of pre-pandemic or 2022, but with the intern programs active, the market is compressing, as evidenced by the continued growth. Moreover, interim, Market demand is starting to feel like it did before the pandemic in the Valley. Bellevue produced the strongest growth for us with rev power up 14% over last year and now sitting less than 6% below 2019 levels. Special corporate production there was up 27 percent, and all the companies that you know we're all familiar with like Amazon, Microsoft, tick-tock, et cetera have been putting business in the hotel. Additionally, we've got a nice group of eBay interns at the hotel this summer.

Speaker Change: In Revpar.

Jeffrey Fisher: Market demand is starting to feel like it did before the pandemic in the Valley. Bellevue produced the strongest growth for us, with rip part up 14% over last year and now sits less than 6% below 2019 levels. Special corporate production there was up 27%, and all the companies that we're all familiar with, like Amazon, Microsoft, TikTok, etc. have been putting business in the hotels. Additionally, we've got a nice group of eBay interns at the hotel this summer. Bellevue produced rip part gains of 13% in the quarter driven by top account production from the likes of Google, Broadcom, and Sure Fox.

Speaker Change: Market demand is starting to feel like it did before the pandemic and the valley Bellevue produced the strongest growth for us with Revpar up 14% over last year and now sits less than 6% below 2019 levels special corporate production there was up 27%.

Speaker Change: And all the companies that you know, we're all familiar with like Amazon, Microsoft tick Tock et cetera have been putting business in the hotels.

Speaker Change: Additionally, we've got a nice group of ebay and turns at the hotel this summer.

Jeff Fisher: Bellevue produced REVPAR gains of 13% in the quarter, driven by top account production from the likes of Google, Broadcom, and Surefox. Second quarter REVPAR of $183 is starting to get closer to 2019 levels, roughly 18% short of that number. REVPAR at our two Sunnyvale hotels gained 8% in the quarter. And this market, too, is showing good underlying fundamentals, with occupancy of 77% for our two large hotels there, with a competitive set occupancy of 67%, so still room for growth in the set in Silicon Valley and certainly room for growth, I mean, in Sunnyvale for those two big hotels, and the normal accounts in the area are producing good midweek corporate demand.

Speaker Change: Belvieu produced Revpar gains of 13% in the quarter driven by top account production from the likes of Google Broadcom and sure Fox second quarter Revpar of $183 is it starting to get closer to 2019 levels roughly 18% short.

Jeffrey Fisher: Second quarter rip part of $183 is starting to get closer to 2019 levels. Roughly 18% short of that number. Rip part are two Sunnyvale hotels gain 8% in the quarter, and this market too is showing good underlying fundamentals with occupancy of 77% for our two large hotels there, with the competitive set occupancy at 67%. So still room for growth in the set in Silicon Valley, and certainly room for growth, I mean in Sunnyvale for those two big hotels. And the normal accounts in the area are producing good midweek corporate demand. Sunnyvale rip part of $144. It's still, however, 28% below 2019 levels, so that is the market that suffered the most from the pandemic and has the delayed return to office policies, etc.

Speaker Change: Of that number revpar at our two Sunnyvale hotels gained 8% in the quarter and this market two is showing good underlying fundamentals with occupancy of 77% for our two large hotels, there with the competitive set occupancy.

Speaker Change: At 67%, so still room for growth in the sad in Silicon Valley, and certainly room for growth I mean in Sunnyvale for those two big hotels.

Speaker Change: And the normal accounts in the area are producing good midweek corporate demand Sunnyvale Revpar of $144 is still however, a 28% below 2019 levels. So that is you know the market that suffered the most from the pandemic and has you know.

Jeff Fisher: Sunnyvale's REVPAR of $144 is still, however, 28% below 2019 levels. So that is, you know, the market that suffered the most from the pandemic and has, you know, the delayed return to office policies, etc. shows the kind of growth that we're having and good prospects going forward in Sunnyvale for us. San Mateo Rep Park growth was 4% in the quarter and less than 6% shy of 2019 levels, so it is gaining back strong there as well.

Speaker Change: The delayed return to office policies et cetera, certainly has a cut a revpar, but it shows the kind of growth that we're having and good prospects going forward in Sunnyvale for our San Mateo Revpar growth was 4% in the quarter and less than 6%.

Jeffrey Fisher: Certainly has cut the rip part, but shows the kind of growth that we're having and good prospects going forward in Sunnyvale for us. San Mateo rip part growth was 4% in the quarter and less than 6% shy of 2019 levels, so gaining back strong there as well.

Speaker Change: Sent shy of 2019 levels, so gaining back strong as they are as well.

Jeffrey Fisher: Operation AGLP margins of 46% finished at the top of our guidance range, and I will add we absorbed approximately $700,000 of one-time non-recurring expenses that brought down our margins by 85 basis points. So, just to finish up here before I turn it over to Dennis, in conclusion, we're essentially in great financial shape, having successfully recast the balance sheet and refinanced all that debt. I think we still have the most internal growth upside of other lodging REITs, considering the tech hotels and the double-digit RevPAR gains we're experiencing there, together with very little new supply coming in our markets.

Jeff Fisher: Operationally, GOP margins of 46% finished at the top of our guidance range, and I will add we absorbed approximately $700,000 of one-time non-recurring expenses that brought down our margins by 85 basis points. So, just to finish up here before I turn it over to Dennis, in conclusion, we're essentially in great financial shape, having successfully recast the balance sheet and refinanced all that debt. I think we still have the most internal growth upside of other lodging REITs, considering the tech hotels and the double-digit REVPAR gains we're experiencing there, together with very little new supply coming into our markets.

Speaker Change: Operationally G. L. P margins of 46% finished at the top of our guidance range and I will add we absorbed a properties approximately $700000 of one time nonrecurring expenses that brought down our margins by 85 basis points.

Speaker Change: So just to finish up here before I turn it over to Dennis in conclusion, we're essentially in great financial shape shape, having successfully recast the balance sheet and refinanced all of that that I think we still have the most internal growth upside of other lodging Reits.

Speaker Change: Considering the tech hotels, and the double digit revpar gains were experiencing there together with very little new supply coming in are markets.

Jeffrey Fisher: We're positioned to benefit from declining interest rates because now we've reset the debt, as I said, with floating rate debt for the most part, and do have the capacity and flexibility to acquire hotels if they can be accretive to our FFO and cash flow.

Jeff Fisher: We're positioned to benefit from declining interest rates because, as I said, we have reset the debt, as I said, with floating rate debt for the most part, and do have the capacity and flexibility to acquire hotels if they can be accretive to our FFO and cash flow. So with that, I'd like to turn it over to Dennis. Thanks.

Dennis Craven: We're positioned to benefit from declining interest rates because now we've reset the dead as I said with floating rate debt for the most part.

Speaker Change: And does do have the capacity and flexibility to acquire hotels, if they can be accretive to our F O and cash flow so with that I'd like to turn it over to Dennis.

Dennis Craven: So, with that, I'd like to turn it over to Dennis. Thanks, Jeff. Good morning, everyone.

Dennis Craven: Thanks, Jeff. Good morning, everyone. June REVPAR growth of 1% was impacted by the timing of the Juneteenth holiday. REVPAR for that week was down 2% for the industry and was down 5% for our portfolio. Our July REVPAR growth of approximately 1% also saw us get hit by travel the week following the holiday, where industry REVPAR growth was off 5% while we were down 8%. Generally speaking, because of our reliance on business travelers, especially given that our guests average along the length of stay, holiday weeks generally adversely impact our performance relative to the industry. Having said that, we've still outperformed the industry meaningfully in 2024.

Dennis Craven: Thanks, Jeff and good morning, everyone.

Dennis Craven: June rev-par growth of 1% was impacted by the timing of the 2% for the industry and was down 5% for our portfolio. Our July rev-par growth of approximately 1% also got hit by travel the week following the holiday, where industry rev-par growth was off 5%, while we were down 8%. Generally speaking, because of our reliance on the business traveler, especially given that our guest average along with the length of stay, holiday weeks generally adversely impact our performance relative to the industry. Having said that, we've still outperformed the industry meaningfully in 2024. Some additional rev-par statistics from the quarter, markets representing over half of our trailing 12-month EBITDA, generated rev-par growth between 5% and 10%, proving again some encouraging business travel demand underpinnings.

Dennis Craven: June Revpar growth of 1% was impacted by the timing of the Juneteenth holiday Revpar for that week was down 2% for the industry and was down 5% for our portfolio. Our July revpar growth of approximately 1% also saw us get hit by travel the week following the holiday where industry Revpar growth was off.

Speaker Change: 5%, while we were down 8% generally speaking because of our reliance on the business traveler, especially given that our guest average along the length of stay holiday weeks generally adversely impact our performance relative to the industry, having said that we still outperformed the industry mean.

Speaker Change: <unk> in 2020 for some additional revpar statistics from the quarter markets representing over half of our trailing 12 month EBITDA generated revpar growth between five and 10% proving again, some encouraging business travel demand underpinnings are second quarter Revpar was not impacted by any renovations as we are.

Dennis Craven: Some additional REVPAR statistics from the quarter. Markets representing over half of our trailing 12-month EBITDA generated REVPAR growth between 5% and 10%, proving, again, some encouraging business travel demand underpinned. Our second quarter REVPAR was not impacted by any renovations as we had three hotels, Whereas we had three hotels under renovation in the first quarter and as we look forward we'll have One hotel under renovation for most of the third quarter being our courtyard Addison, Texas And then we'll start the renovation of our Spring Hill Suite Savannah in September, Weekday occupancy was the highest since 2019, and REVPAR in our seven predominantly leisure hotels, which comprises approximately 20% of our second quarter room revenue, saw REVPAR decline 2% in the quarter.

Dennis Craven: Our second quarter rev-par was not impacted by any renovations, as we had three hotels, whereas we had three hotels under renovation in the first quarter. As we look forward, we'll have one hotel under renovation for most of the third quarter, being our Courtyard, Addison, Texas, and then we'll start the renovation of our Spring Hills Wheat Savannah in September. Weekday occupancy was the highest since 2019, and Rev-Par in our seven predominantly leisure hotels, which comprises approximately 20% of our second quarter room revenue, saw Rev-Par decline 2% in the quarter. Other than our residents in Fort Lauderdale, the other six hotels had Rev-Par gains or declines ranging from down 5 to up 5%.

Speaker Change: Three hotels.

Speaker Change: Whereas we had three hotels under renovation in the first quarter and as we look forward, we'll have one hotel under renovation for most of the third quarter being our courtyard Addison, Texas and then we will start the renovation of our Springhill suites Savannah in September.

Speaker Change: [laughter].

Speaker Change: Weekday occupancy was the highest since 2019.

Speaker Change: And revpar in our seven predominantly leisure hotels, which comprises approximately 20% of our second quarter room revenue.

Speaker Change: All revpar declined 2% in the quarter.

Dennis Craven: Other than our residents in Fort Lauderdale, the other six hotels had REVPAR gains or declines ranging from down 5% to up 5%. Our Fort Lauderdale residents in REVPAR were off 13% in the quarter. Sunday to Thursday weekday occupancy was 81% in the quarter, with Monday to Thursday and then Friday to Sunday occupancy of 86%. All metrics were over 2023 levels.

Speaker Change: Other than our residence Inn Fort Lauderdale, the other six hotels had revpar gains or declines ranging from down five to up 5%, our Fort Lauderdale Fort Lauderdale residence Inn Revpar was off 13% in the quarter.

Dennis Craven: Our Fort Lauderdale residents in Rev-par was off 13% in the quarter. Sunday, the Thursday, weekday occupancy was 81% in the quarter, with Friday, I'm sorry, Saturday, Monday, the Thursday, and then Friday, Sunday, occupancy of 86%. All metrics over 20 to 23 levels. Both weekday and weekend ADRs were $183 in the quarter. Our June ADR of $191 matches our June July 2022 portfolio ADR of $191, which are the highest since 2019, and our June Weekday ADR of $191 was in fact the highest monthly weekday ADR since 2019 as well. June Rev Part of $157 matches the third highest monthly Rev Part since 2019.

Speaker Change: Sunday that Thursday weekday occupancy was 81% in the quarter with Friday, I'm, sorry, Saturday Monday to Thursday, and Friday, and Sunday occupancy of 86% all metrics over 2020 three levels.

Dennis Craven: Both weekday and weekend ADRs were $183 in the quarter. Our June ADR of $191 matches our June-July 2022 portfolio ADR of $191, which is the highest since 2019, and our June weekday ADR of $191 was, in fact, the highest monthly weekday ADR since 2019 as well. June REVPAR of $157 matches the third highest monthly REVPAR since 2019. July Rev Par was up 8% in Silicon Valley and 6% across our five tech-driven hotels.

Speaker Change: Both weekday and weekend 80, ours, where $183 in the quarter.

Speaker Change: Our June ADR of $191 matches, our June July 2022 portfolio ADR of 191, which are the highest since 2019 and our June weekday ADR of 191 was in fact, the highest monthly weekday ADR since 2019 as well June revpar of $157.

Speaker Change: Matches, the third highest monthly revpar since 2019.

Dennis Craven: July Rev Part was up 8% in Silicon Valley and 6% across our five tech-driven hotels. Our top five Rev Part hotels were led by the residents in Washington DC with Rev Part of $235, up 11% over last year, followed by our residents in San Diego Gas Lamp at $209, up 10%, followed by our Hampton and Portland Main with Rev Part of $202, also up 5%, then followed by our resident in White Plains with Rev Part of $197, again up 11%, and then our Hilton Garden and Marina Del Rey with Rev Part of $194. We continue to monitor deployments into San Francisco and Seattle to major gateway airports that do again provide some correlation to hotel demand, especially in our tech hotels.

Speaker Change: July Revpar was up 8% in Silicon Valley, and 6% across our five tech driven hotels.

Dennis Craven: Our top five RefPAR hotels were led by the residents in Washington, D.C., with RefPAR of $235, up 11% over last year, followed by our residents in San Diego Gaslamp at $209, up 10%, followed by our Hampton Inn Port Lemain with RefPAR of $202, also up 5%, then followed by our residents in White Plains with RefPAR of $197, again up 11%, and then We continue to monitor deployments into San Francisco and Seattle, two major gateway airports that do, again, provide some correlation to hotel demand, especially in our tech hotels.

Speaker Change: Our top five Revpar hotels were led by the residents in Washington D C with Revpar of $235 up 11% over last year, followed by a resident 10, San Diego Gaslamp at 209 up 10%.

Speaker Change: Followed by our Hampton Inn in Portland, Maine, with Revpar of $202 also up 5% then followed by a resident in White plains with Revpar of $197 again up 11% and then our Hilton Garden Inn Marina del Rey Rey with Revpar of $194.

Speaker Change: We continue to monitor deployments into San Francisco, and Seattle, two major gateway airports that do again provide some correlation to hotel demand, especially in our tech hotels, San Francisco's airports, all international passing and passenger traffic surpassed 2019 levels in April and May in total passenger traffic is only <unk>.

Dennis Craven: San Francisco's airports saw international passenger traffic surpassed 2019 levels in April and May. In total, passenger traffic is only off 10% versus 2019 levels. The lowest April and May variants since 2019. Versus last year, April and May passenger traffic is up 3% at SFO. At C-TAC, April and May total passenger traffic is up 3% over last year, and importantly, international deployments are up approximately 15% for both of those months. Most of that in-mound travel is generally coming from the Asia region. As a reminder, Amazon opened a portion of the Sonic building in Bellevue, which welcomed more than 1,000 employees and intends to double its Bellevue workforce from 10,000 to 20,000 employees over the next several years.

Dennis Craven: San Francisco's airport saw international passenger traffic surpass 2019 levels in April and May, and total passenger traffic is only off 10 percent versus 2019 levels, the lowest April and May variants since 2019, versus last year, April and May, passenger traffic is up 3% at SF. At SeaTac, April and May total passenger traffic is up 3% over last year, and importantly, international deployments are up approximately 15% for both of those months. Most of that inbound travel is generally coming from the Asia region.

Speaker Change: Off 10% versus 2019 levels, the lowest April and May variance since 2019 versus.

Speaker Change: Versus last year April and May passenger traffic is up 3% at SFO.

Speaker Change: At Seatac April may in.

Speaker Change: In May total passenger traffic is up 3% over last year and importantly international deployments are up approximately 615% for both of those months most of that inbound travel is generally coming from the Asia region.

Dennis Craven: As a reminder, Amazon opened a portion of the Sonic building in Bellevue, which welcomed more than 1,000 employees, and intends to double its Bellevue workforce from 10,000 to 20,000 employees over the next several years. TikTok continues to expand its office presence in the Bellevue market as well. At our 38 comparable hotels, hotel EBITDA margins were down 230 basis points in the quarter. We are, as always, focused on managing our operating expenses, quite difficult over the last five or so years, having absorbed significant inflation across all expense categories, including labor and benefits.

Speaker Change: And as a reminder, Amazon opened a portion of the of the Sonic building in Bellevue, which welcomed more than 1000 employees and intends to double its bellevue workforce from 10000 to 20000 employees over the next several years Tic Toc continues to expand its office present presence in the Bellevue market as well.

Dennis Craven: TikTok continues to expand its office presence in the Bellevue market as well. At our 38 comparable hotels, hotel EBITDA margins were down 230 basis points in the quarter. We are, as always, focused on managing our operating expenses, quite difficult over the last five or so years, having absorbed significant inflation across all expense categories, including labor and benefits. Key expenses adversely impacting our margins in the quarter payroll-related expenses, and I want to emphasize not necessarily wages, 130 basis points. Complimentary breakfast was up 21% and hit margins by approximately 30 basis points, and then insurance was up almost 20%, and again hitting margins by about 20 dips.

Speaker Change: At our 38 comparable hotels hotel EBITDA margins were down 230 basis points in the quarter. We are as always focused on managing our operating expenses quite difficult over the last five or so years, having absorbed significant inflation across all expense categories, including labor.

Speaker Change: And benefits.

Dennis Craven: Key expenses adversely impacting our margins in the quarter were payroll-related expenses, and I want to emphasize not necessarily wages, 130 basis points; complimentary breakfast was up 21% and hit margins by approximately 30 basis points, and then insurance was up almost 20% and again hit margins by about 20 basis points. The 130-basis point impact from payroll-related expenses includes some one-time items that adversely impacted our margins, and if you actually look at just pure labor costs, our average hourly wages are only up 1 percent from December, and on a CPR basis, wages were up only 0.1 percent versus the 2023 second quarter, essentially flat as our productivity has improved. Even more encouraging, our room's labor costs on a CPR basis were actually down 1 percent year over year.

Speaker Change: Key expenses adversely impacting our margins in the quarter payroll related expenses and I want to emphasize not necessarily wages 130 basis points, a complimentary breakfast was up 21% and hit margins by approximately 30 basis points, and then insurance was up almost 20% and again hitting margin.

Speaker Change: By about 20 bps.

Dennis Craven: The 130 basis point impact from payroll related expenses includes some one-time items that adversely impacted our margins, and if you actually look at just pure labor costs, our average hourly wages are only up 1% from December, and on a CPR basis, wages were up only 0.1% versus the 2023 second quarter, essentially flat as our productivity has improved. Even more encouraging, our rooms labor costs on a CPR basis were actually down 1% year over year. Our head count is up about 1% from the last quarter but still remains 19% below pre-pandemic levels. On the positive side, and this is something completely in our control, we continue to push our other operating revenue and profits across all of our hotels, with special emphasis on parking in our retail market revenue.

Speaker Change: 130 basis point impact from payroll related expenses include some one time items that adversely impacted our margins and if you actually look at just pure labor costs. Our average hourly wages are only up 1% from December and on a CPR basis wages were up only 0.1% versus the <unk>.

Speaker Change: 23 second quarter, essentially flat as our practice productivity has improved even more encouraging our rooms labor costs on a CPR basis, we're actually down 1% year over year, our head count is up about 1% from the last quarter, but still remains 19% below pre pandemic levels.

Dennis Craven: Our headcount is up about 1% from the last quarter, but still remains 19% below pre-pandemic levels. On the positive side, and this is something completely in our control, we continue to push our other operating revenue and profits across all of our hotels, with special emphasis on parking and our retail market revenue. During the second quarter, our other operating department profits accelerated 16 percent, or $0.4 million, again basically adding a penny of FFO per share to our results.

Speaker Change: Yeah.

Speaker Change: On the positive side and this is something completely in our control we continue to push our other operating revenue and profits across all of our hotels with special emphasis on parking in our retail market revenue during the second quarter, our other operating department profits accelerated 16% or zero point.

Dennis Craven: During the second quarter, our other operating department profits accelerated 16 percent, or 0.4 million, again basically adding a penny of FFO per share to our results. We're on track to add approximately four cents of FFO this year in our other operating department. Our top five producers of GOP in the quarter, we're led by our gas-length residents in with 2.8 million, the 10th straight quarter to let our portfolio follow by our Embassy Suite Springfield with government-related business gaining traction and for the first time since 2019, three of our five tech hotels round out the top five with Bellevue and then our two Sunnyvale residents coming in and our rankings.

Speaker Change: 4 million again, basically, adding a penny of <unk> per share to our results. We're on track to add approximately four cents of <unk> This year and our other operating department.

Dennis Craven: We're on track to add approximately four cents of FFO this year in our other operating departments. Our top five producers of GOP in the quarter were led by our Gaslamp Residence Inn with $2.8 million. For the tenth straight quarter, it's led our portfolio, followed by our Embassy Suite Springfield with government-related business gaining traction. And for the first time since 2019, three of our five tech hotels round out the top five, with Bellevue and then our two Sunnyvale Residence Inns coming in and ranking.

Speaker Change: Our top five producers of G O P. In the quarter were led by our gasoline residents in with $2 8 million the 10th straight quarter to let our portfolio followed by our embassy suites Springfield with government related business, gaining traction and for the first time since 2019 three of our five tech hotels.

Speaker Change: Round out the top five with Bellevue and then our two sunnyvale residence inns coming in in our rankings and our five tech driven hotels hotel EBITDA and G O P or up approximately 12% over last year and as we've previously disclosed if we get back to 2019 EBITDA levels, we would add approximately 30 centers SSO.

Dennis Craven: At our five tech-driven hotels, hotel EBITDA and GOP are up approximately 12 percent over last year, and as we've previously disclosed, if we get back to 2019 EBITDA levels, we would add approximately 30 cents of FFO.

Dennis Craven: At our five tech-driven hotels, Hotel EBITDA and GOP are up approximately 12% over last year. And, as we've previously disclosed, if we get back to 2019 EBITDA levels, we would add approximately 30 cents of FFO. With respect to capital expenditures, we spent $8 million in the quarter, $19 million year-to-date, and still expect to spend approximately $37 million in 2024. No renovations occurred in the second quarter, and we've talked about our renovations that will be occurring in the third quarter. Last year, we did have a renovation in our courtyard, Charleston-Somerville, during the third quarter, so there will be a little bit of an adverse impact on REVPAR in the quarter.

Dennis Craven: With respect to capital expenditures, we spent 8 million in the quarter, 19 million year to date, and still expect to spend approximately 37 million in 2024. No renovations during the second quarter, and we've talked about our renovations that will be occurring in the third quarter. Last year, we did have a renovation at our courtyard Charleston Somerville during the third quarter, so there will be a little bit of adverse impact on rev part in the quarter.

Speaker Change: With respect to capital expenditures, we spent $8 million in the quarter $19 million year to date and still expect to spend approximately $37 million in 2024, no renovations during the second quarter and we've talked about our renovations that will be occurring in the third quarter last year. We did have a renovation at our core.

Speaker Change: Our Charleston, Summerville during the third quarter so.

Speaker Change: There'll be a little bit of adverse impact on revpar in the quarter.

Jeremy Wegner: I think with that, I'll turn it over to Jeremy. Thanks, Dennis. Good morning, everyone. Our Q2-2024 hotel EBITDA was 33.7 million. Adjusted EBITDA was 31.4 million, and adjusted FFO was 39 cents per share. We were able to generate a GOP margin of 46 percent in hotel EBITDA margin of 39 percent, Q2. While our Q2 hotel EBITDA margin was down 230 basis points from our Q2-23 margin, much of this was due to a $1.2 million workers' company fund recognized in Q2-2023. Importantly, we are seeing a stabilization of some of our key expense line items such as room's labor facilities.

Jeremy Wegner: And I think with that I'll turn it over to Jeremy. Thanks, Dennis Good morning, everyone. Our Q2 2024 hotel EBITDA was $33 7 million adjusted EBITDA was $31 4 million and adjusted <unk> was 39 cents per share we were able to generate a GOP margin of 46% and hotel EBITDA.

Jeremy Wegner: Thanks, Dennis. Good morning, everyone.

Jeremy Wegner: And I think with that, I'll turn it over to Jeremy. Thanks, Dennis. Good morning, everyone.

Jeremy Wegner: Our Q2 2024 hotel EBITDA was $33.7 million, adjusted EBITDA was $31.4 million, and adjusted FFO was $0.39 per share. We were able to generate a GOP margin of 46 percent and a hotel EBITDA margin of 39 percent in Q2. While our Q2 hotel EBITDA margin was down 230 basis points from our Q2 2023 margin, much of this was due to a $1.2 million workers' comp refund receivable for Q2 2023. Additionally, we are seeing a stabilization of some of our key expense line items, such as rooms, labor, and utilities.

Speaker Change: <unk> of 39% in Q2, while our Q2 hotel EBITDA margin was down 230 basis points from our Q2 'twenty three margin much of this was due to a $1 2 million dollar workers' comp refund recognized in Q2 2023 importantly, we are seeing a stabilization of some of our key expense line items such as rooms.

Speaker Change: Labor and utilities.

Jeremy Wegner: Our balance sheet remains in excellent condition, and in Q2, we took significant steps to address our near term debt maturity. In Q2, Chatham completed a $50 million increase in its unsecured term loan and enclosed three single asset CNBS financings that generated $60 million of proceeds. We used the proceeds from these financings, together with excess cash and $120 million of borrowings under our revolving credit facility, to repay $261 million of maturing CNBS and acquire the home to Phoenix for $43.3 million in Q2. In July, we borrowed an additional 15 million under our credit facility and used the proceeds to repay an $18.8 million mortgage loan, which was our last piece of debt maturing in July.

Jeremy Wegner: Our balance sheet remains in excellent condition, and in Q2, we took significant steps to address our near-term debt maturity. In Q2, Chatham completed a $50 million increase in its unsecured term loan and closed three single-asset CMBS financings that generated $60 million of proceeds. We will use the proceeds from these financings, together with excess cash and $120 million of borrowings under our revolving credit facility, to repay $261 million of maturing CMBS and acquire Home 2 Phoenix for $43.3 million in Q2.

Speaker Change: Our balance sheet remains in excellent condition and in Q2, we took significant steps to address our near term debt maturity.

Speaker Change: In Q2, Chatham completed a $50 million increase in an unsecured term loan and closed three single asset C. N B S financings that generated $60 million of proceeds.

Speaker Change: We used the proceeds from these financings together with excess cash and $120 million of borrowings under our revolving credit facility to repay $261 million of maturing see MBS and acquire the home to Phoenix for $43 $3 million in Q2.

Jeremy Wegner: In July, we borrowed an additional $15 million under our credit facility and used the proceeds to repay an $18.8 million mortgage loan, which was our last piece of debt maturing in July. As of today, we have only $30 million of debt maturing over the next 12 months and have $125 million of availability under our revolving credit facility. As Jeff mentioned, we are exploring several potential asset sales, and if any of these are completed, the proceeds would likely be used to repay credit facility borrowings in the near term and reinvested into hotel investments in the medium to longer term.

Speaker Change: In July we borrowed an additional $15 million under our credit facility and used the proceeds to repay and $18 $8 million mortgage loan, which was our last piece of debt maturing in July as of today, we have only $30 million of debt maturing over the next 12 months and have $125 million of availability under our revolving credit facility.

Jeremy Wegner: As of today, we have only 30 million of debt maturing over the next 12 months and have $125 million of availability under our revolving credit facility. As Jeff mentioned, we are exploring several potential asset sales, and if any of these are completed, the proceeds would likely be used to repay credit facility borrowings in the near term and reinvest it into hotel investments in the medium to longer. term. As of June 30, Chatham's net debt to LTM EBITDA was 4.3 times, which is significantly below our pre-pandemic level leverage, which was generally in the 5.5 to 6 times area, despite the fact that EBITDA has not fully recovered to pre-pandemic levels.

Speaker Change: As Jeff mentioned, we are exploring several potential asset sales and if any of these are completed the proceeds would likely be used to repay credit facility borrowings in the near term and reinvested into hotel investments in the medium to longer term.

Jeremy Wegner: As of June 30th, Chatham's net debt to LTM EBITDA was 4.3 times, which is significantly below our pre-pandemic level leverage, which was generally in the five and a half to six times area despite the fact that EBITDA is not fully recovered to pre-pandemic levels. In Q3 2024, we expect rev par growth of 0 to 2.5%, adjusted EBITDA of $28.2 to $30.6 Our Q3 Cash Interest Expense Guidance of $8 million reflects the financings completed in Q2 and the incremental debt associated with the acquisition of Home 2 Phoenix.

Jeff Fisher: As of June 30th Chatham is net debt to LTM EBITDA was 4.3 times, which is significantly below our pre pandemic level leverage which was generally in the five five to six times area. Despite the fact that EBITDA has not fully recovered to pre pandemic levels.

Jeremy Wegner: In Q3 2024, we expect it, rev par growth of 0 to 2.5 percent, adjusted EBITDA of 28.2 to 30.6 million, adjusted FFO per share of 31 to 36 cents. Our Q3 cash interest expense guidance of 8 million reflects the financing's completed in Q2 and the incremental debt associated with the acquisition of the home due to Phoenix. Our results over the last few quarters have included a material amount of interest income given the large cash balances that we held during these periods. Now that we have used our excess cash to address debt maturities, we expect interest income to be essentially 0 for the balance of the year.

Speaker Change: In Q3, 'twenty 'twenty four we expect.

Speaker Change: Revpar growth of zero to 2.5% adjusted EBITDA of $28.2 million to $36 million adjusted <unk> per share of 31% to 36 cents.

Speaker Change: Our Q3 cash interest expense guidance of $8 million reflects the financings completed in Q2 and the incremental debt associated with the acquisition of the home to Phoenix.

Jeremy Wegner: Our results over the last few quarters have included a material amount of interest income given the large cash balances that we held during these periods. Now that we have used our excess cash to address debt maturities, we expect interest income to be essentially zero for the balance of the year. Operator, please open the line for questions.

Speaker Change: Our results over the last few quarters have included a material amount of interest income given the large cash balances that we held during these periods now that we have used our excess cash to address debt maturities. We expect interest income to be essentially zero for the balance of the year.

Jeremy Wegner: This concludes my portion of the call.

Speaker Change: This concludes my portion of the call operator, please open the line for questions.

Operator: Operator, please open the line for questions. Thank you. At this time, we will be conducting a question and answer session.

Speaker Change: Thank you.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. Our first question today comes from Aryeh Klein of BMO Capital Markets. Please proceed with your question.

Speaker Change: At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Aryeh Klein: Our first question today comes from Ari Klein of BML Capital Markets. Please proceed with your question. Thanks, and good morning. Can you elaborate maybe a little bit on the trend you've been seeing in recent weeks? It seems like the comparisons are relatively easy in tech markets, in particular, in the third quarter.

Speaker Change: Our first question today comes from Ari Klein of BMO capital markets. Please proceed with your question.

Aryeh Klein: Thanks and good morning. Can you elaborate maybe a little bit on the trends you've been seeing in recent weeks? It seems like the comparisons are relatively easy in the tech markets, in particular in the third quarter. What are you seeing from a leisure standpoint, and how much is that weighing on the third quarter outlook?

Ari Klein: Thanks, Matt and good morning.

Ari Klein: Can you elaborate maybe a little bit on the trends you've been seeing in recent weeks. It seems like the comparisons are relatively easy.

Speaker Change: Heck market particular in the third quarter, but what are you seeing from a leisure standpoint, I guess and how much is that weighing on the third quarter outlook.

Aryeh Klein: What are you seeing from a leisure standpoint, I guess, and how much is that weighing on the third quarter outlook?

Jeffrey Fisher: Hey, Ari. I mean, listen, I think we disclosed what our leisure hotel performance was in the second quarter, which was down 2%. We don't expect that to move a whole lot from there. If it goes from down 2 to down 3 or something, but that's essentially 20% of our portfolio. I think you see a little bit there.

Jeff Fisher: Hey, Aryeh. I mean, listen. We disclosed what our leisure hotel performance was in the second quarter, which was down 2%. We don't expect that to move a whole lot from there, you know, if it goes from down 2% to down 3% or something. But, you know, that's essentially 20% of our portfolio. I think you see a little bit there.

Art: Hey, Art, I mean listen I think we disclose what our leisure hotel performance was in the second quarter, which was down 2%. You know, we don't expect that to move a whole lot from there if it goes from down two to down 3% or something but that's essentially 20% of our portfolio.

Speaker Change: I think you see a little bit there.

Jeffrey Fisher: Obviously, the week after July 4th, I think, caught a lot of people by surprise with the industry off 5% in RevPAR for a Thursday holiday, and it was really the week after that really hit the industry. That alone brings down July RevPAR for us. We were off 8% by about a point or so. I think not a ton of difference, I think, between what we had expected for the third quarter versus our zero to 2.5% range, but I think it's just a combination of a couple of those things, really.

Speaker Change: Obviously the week after the July 4th Holiday I think caught a lot of people by surprise with the industry off 5% in Revpar for our Thursday holiday and it was really the week after that.

Jeff Fisher: Obviously, the week after the July 4 holiday caught a lot of people by surprise, you know, with the industry off 5% in Rev. Par for a Thursday holiday. And it was really the week after that that really hit the industry. So, you know, that alone brings down July Rev. Par for us, we were off 8% by about a point or so. So, you know, I think not a ton of difference, I think, between, you know, what we had expected for the third quarter versus our zero to two and a half percent range.

Speaker Change: It really hit the industry, so that alone brings down.

Speaker Change: July Revpar for us were off 8%.

Speaker Change: By about a point or so so you know I.

Speaker Change: I think not not a ton of difference I think between what we had pre yeah. What we had expected for the third quarter versus our zero to two 5% range.

Jeff Fisher: But, you know, I think it's just a combination of a couple of those things, really. I think we do expect, as we kind of get out of the summer and into, you know, some of the heavier business travel-reliant months, that we should, and I think we should expect to, hopefully, outperform a little bit.

Speaker Change: But you know I think it's just a combination of a couple of those things really I think we do expect as we kind of get out of the summer and into some of the heavier business travel reliant months that.

Jeffrey Fisher: I think we do expect, as we kind of get out of the summer and into some of the heavier business travel reliant months, that we should, and I think expect to be able to hopefully outperform a little bit.

Speaker Change: We should and I think expect to be able to to hopefully outperform a little bit.

Speaker Change: Okay.

Aryeh Klein: Thanks for that.

Jeff Fisher: Thanks for that. And I guess from a REVPAR cadence for the second half of the year, would you expect the fourth quarter to be softer than the third quarter? And I know you're not yet providing guidance, but just from a directional standpoint.

Speaker Change: Thanks for that I guess from a revpar cadence for the second half of the year, what would you expect fourth quarter to be softer than in the third quarter.

Aryeh Klein: I guess from a RevPAR cadence for the second half of the year, would you expect fourth quarter to be softer than the third quarter? I know you're not yet providing guidance, but just from a directionals. I mean, listen, generally October is a pretty strong BT month, especially when you're looking at our tech hotels as you get towards the end of the year. I think for now, I'd say we, you know, our viewpoint is the range is going to be similar to our third quarter. We have, you know, yeah, I think it'll be similar.

Speaker Change: Providing guidance, but just from a directional standpoint.

Jeff Fisher: I mean, listen, generally October is a pretty strong BT month, especially when you're looking at our tech hotels as you get towards the end of the year. I think for now I'd say we, you know, our viewpoint is the range is going to be similar to our third quarter. We have, you know, yeah, I think it'll be similar.

Speaker Change: I mean listen generally October is a pretty strong month.

Speaker Change: Especially when you are looking at our tech hotels as you get towards the end of the year.

Speaker Change: I think for now I would say we are.

Speaker Change: Our viewpoint is the range is going to be similar to our third quarter.

Speaker Change: We have you know.

Speaker Change: Yeah, I think it'll be similar.

Jeff Fisher: All right, thanks for that. And then maybe on the Home2Phoenix acquisition, are you seeing other similar types of opportunities emerge that you're looking to transact on? And then from a disposition standpoint, you highlighted $40 to $80 million in potential sales. Curious what types of assets or markets you're looking to sell in and just the level of interest you're seeing on those. Thank you.

Aryeh Klein: Alright, thanks for that.

Speaker Change: Alright, Thanks for that and then maybe on the.

Aryeh Klein: And then maybe on the home to Phoenix acquisition, are you seeing other similar types of opportunity opportunities? The merge, they are looking to transact on. And then from a dish, this position standpoint, you highlighted 40 to 80 million in potential sales.

Speaker Change: Phoenix acquisition or are you seeing other similar type of opportunity opportunity to merge our they are looking to transact on them from a dish disposition standpoint, you highlighted 40 to 80 million in potential sale.

Aryeh Klein: Curious what types of assets, markets, you're looking to sell it and just the level of interest you're seeing on the thank you.

Speaker Change: Curious what types of assets.

Speaker Change: So you're looking at sell in.

Speaker Change: Will of interest are you seeing on that thank you.

Jeff Fisher: Thanks, Aryeh. It's Jeff.

Jeffrey Fisher: Thanks, Aryeh, Jeff. I'll take that question on the acquisition side.

Speaker Change: Thanks, Harry it's Jeff I'll take that question on the acquisition side.

Jeffrey Fisher: You know, I kind of think on the last call called Phoenix, a needle in the haystack. Not a lot of deals like that being brand new, being in a market that we really wanted some exposure to and being the right brand for us, which is home to, you know, our kind of our second favorite brand to residents in for the most part, and all extended stay as we continue to increase that percentage of our room count. So we're pretty excited about the deal. Look, I think, and we still expect that there'll be a little more deal flow as the year progresses, but we are talking to a few of our friends that actually do have some opportunities for the remainder of this year.

Speaker Change: I kind of I think on the last call called Phoenix, a needle in the haystack.

Jeff Fisher: I'll take that question. On the acquisition side, you know, I've kind of, I think, on the last call, called Phoenix a needle in the haystack. Not a lot of deals like that, being brand new, being in a market that we really wanted some exposure to, and being the right brand for us, which is home to, you know, kind of our second favorite brand for residents in, for the most part, and all extended stay, as we continue to increase that percentage of our room count.

Speaker Change: Not a lot of deals like that being brand new being in a market that we really wanted some exposure to.

Speaker Change: And and and being the right brand for US, which is home to a you know a.

Speaker Change: Kind of our second favorite brand to residents in for the most part are all extended stay as we continue to increase that percentage of our room count. So we're pretty excited about the deal.

Jeff Fisher: So we're pretty excited about the deal. Look, I think, and we still expect that there'll be a little more deal flow as the year progresses, but, and we are talking to a few of our friends that actually do have some maturities for the remainder of this year, and I think most either special servicers or lenders are extremely patient, you know, with their borrower, but in an effort to recycle capital, if nothing else, not necessarily facing foreclosure, per se, there could be a few opportunities out there as the year goes on, but, you know, we'll be real careful about what we do.

Speaker Change: Look I think and we still expect that there'll be a little more deal flow as the year progresses, but and we are talking to a few of our friends that actually do have some maturities.

Speaker Change: The remainder of this year.

Jeffrey Fisher: And I think most either special services or lenders are extremely patient, you know, with their borrower, but in an effort to recycle capital. If nothing else, not necessarily facing foreclosure per se, there could be a few opportunities out there as the year goes on. But, you know, we'll be real careful about what we do. We understand, you know, our share price are multiple and what we need to be a creative or not a creative.

Speaker Change: And I think most either special servicers or lenders are extremely patient with their borrower.

Speaker Change: But in an effort to recycle capital if nothing else not necessarily facing foreclosure per se.

Speaker Change: There could be a few opportunities out there as the year goes on but you know we'll be real careful about what we do and we understand you know our share price or multiple and what we need to be accretive or not accretive.

Jeff Fisher: We understand, you know, our share price are multiple and what we need to be accretive or non-accretive, so, you know, I wouldn't expect to see too much on that front, and then on the disposition side, it's just, again, characterized by some lower-rev par hotels for us that we don't see a lot of upside in the market, and a common denominator would be that they're facing a renovation, a normal cycle renovation in either 2025, you know, or 2026, and, you know, we see that money as probably kind of a no ROI investment, so looking to see if we can recycle that capital into something that's newer and more attractive with a lot more upside.

Jeffrey Fisher: So, you know, I wouldn't expect to see too much on that front.

Speaker Change: So I wouldn't expect to see too much on that front.

Jeffrey Fisher: And then on the disposition side, it's just, again, characterized by some lower of part hotels for us that we don't see a lot of upside in the market. And a common denominator would be that they're facing a renovation, a normal cycle renovation in either 2025, you know, or 2026, and, you know, we see that money is probably kind of a no ROI investment. So, looking to see if we can recycle that capital into something that's newer and more attractive, with a lot more upside. Thanks. Appreciate all the color.

Speaker Change: And then on the disposition side, it's just again characterized by some lower revpar hotels for us that we don't see a lot of upside in the market and.

Speaker Change: A common denominator would be that they are facing a renovation a normal cycle renovation are in either 2025 or 2026, and we see that money is probably kind of a no ROI.

Speaker Change: Investment so.

Speaker Change: Looking to see if we can recycle that capital into something that's newer and more attractive with a lot more upside.

Aryeh Klein: Thanks; I appreciate all the color.

Speaker Change: Thanks, I appreciate all the color.

Jonathan: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question comes from Tyler Batori of Oppenheimer Company. Please proceed with your...

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Tyler Batory of Oppenheimer and Company. Please proceed with your question.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Our next question comes from Tyler Batori of Oppenheimer <unk> Company. Please proceed with your question.

Jonathan: Good morning. This is Jonathan on for Tyler. Thanks for taking our question. First one for me, maybe just expand on that demand commentary, which so far sounds healthy. Is that a fair characterization? Is how you're seeing things, and is there anything out there that maybe gives you pause from a demand perspective or concerns you? I mean, I don't think, you know, that and you read the journal today, for example, you know, all of a sudden the R word, the nasty old R word popped up for the first time in a while, you know, whether it's a soft landing or otherwise.

Jonathan Jenkins: Good morning, this is Jonathan on behalf of Tyler. Thanks for taking our questions. First one for me, maybe just expand on that demand commentary, which so far sounds healthy. Is that a fair characterization of how you're seeing things? And is there anything out there that maybe gives you pause from a demand perspective or concerns you?

Speaker Change: Hey, Good morning. This is Jonathan on for Tyler Thanks for taking our question.

Jonathan: First one from me, maybe just expand on that demand commentary.

Speaker Change: So far it sounds.

Speaker Change: Healthy is that a fair characterization.

Speaker Change: How youre seeing things and is there anything out there that maybe gives you pause from AR.

Speaker Change: Demand perspective or concerns you.

Jeff Fisher: I mean, I don't think, you know, that, and you read the journal today, for example, all of a sudden the R word, the nasty old R word, popped up for the first time in a while, whether it's a soft landing or otherwise. I don't think there's anything at this point for us to be nervous about, you know, in terms of a real economic slowdown and or demand slowdown because We read you in the prepared remarks that occupancy levels are pretty strong in the 80s.

Speaker Change: I mean, I I don't think you know that and you read the journal today for example.

Speaker Change: All of a sudden the R word the nasty Aldar word popped up for the first time in a while you know whether it's a soft landing or otherwise.

Jeffrey Fisher: I don't think there's anything at this point for us to be nervous about, you know, in terms of a real economic slowdown and or demand slowdown, because we read you in the prepared remarks, the occupancy levels, I mean, pretty strong in the 80s. I think everybody's challenge has been, you know, the ability to get an ADR increase commensurate perhaps, you know, with where they thought they might go and the leisure pullback, you know, depending upon what company you are and what level of exposure you have. We got six hotels, you know, really only that expose us to that.

Speaker Change: I don't think there's anything at this point for us to be nervous about you know in terms of a real economic slow down and door demand slowed down because we we read yet in the prepared remarks, the occupancy levels I mean pretty strong in the eighties.

Jeff Fisher: I think everybody's challenge has been, you know, the ability to get an ADR increase commensurate perhaps with where they thought they might go and the leisure pullback, you know, depending upon what company you are and what level of exposure you have. We got six hotels, you know, really only that expose us to that, so we feel pretty insulated, and that's not a matter of consumers necessarily buttoning up their pocketbooks and saying, I'm not doing anything or going anywhere. It's just a pullback from, obviously, COVID. Revenge Travel, and otherwise, as they used to call it.

Speaker Change: I think everybody's challenge has been.

Speaker Change: Now the ability to get an ADR increase commensurate, perhaps you know with where they thought they might go and the leisure pulled back depending upon what company you are and what level of exposure you have we got six hotels, you know really only ah that expose us.

Jeffrey Fisher: So we feel pretty insulated, and that's not a matter of consumers necessarily buttoning up their pocketbooks and saying I'm not doing anything or going anywhere. It's just a pullback from obviously the COVID revenge travel and otherwise, as they used to call it. So I think you're into a normalization phase more than anything else here.

Speaker Change: To that so we feel pretty insulated and that's not a matter of consumers necessarily.

Speaker Change: Buttoning up their pocketbooks, and saying I'm not doing anything or going anywhere. It's just a pull back from obviously, the COVID-19 revenge travel and otherwise as they used to call. It. So I think you're into a normalization phase more than anything else here.

Jeff Fisher: So I think you're more into a normalization phase than anything else.

Jonathan: Okay, very helpful. Thank you for that comment very much.

Dennis Craven: Okay, very helpful. Thank you for that commentary, Jeff. Maybe switching gears, the margin came in stronger than we were expecting and above the guidance range by about 150 basis points, if I'm doing my math correctly. Can you talk about the delta there between the quarter and your original expectations and what drove that outperformance?

Speaker Change: Okay very helpful. Thank you for that commentary.

Jonathan: Maybe switching gears, the margin came in stronger than we were expecting, and I'm kind of above the guidance range by about 150 basis points if I'm doing my math correctly. Can you talk about the delta there between the quarter and your original expectations, and what drove that outperformance? Yeah, I mean, I think the couple of things: one, I think ultimately our property taxes were a little bit better than we thought for the quarter. But, you know, as we, you know, one of the main things was especially on the room's labor side, you know, are essentially on a CPR basis basically flat year over year.

Speaker Change: Maybe switching gears the margin came in stronger than we were expecting and above the guidance range by about 150 basis points. If I'm doing my math correctly can you talk about the delta there between between the quarter in your original expectations and what drove that outperformance.

Dennis Craven: Yeah, I mean, I think the couple of things, one, I think ultimately our property taxes were a little bit better than we thought for the quarter, but one of the main things was, especially on the rooms labor side, are essentially on a CPR basis basically flat year over year, and I think that's really the main difference. A little bit on the property tax side, but primarily some excellent productivity on rooms.

Speaker Change: Yes, I mean, I think a couple of things one I think.

Speaker Change: Ultimately our property taxes were a little bit better than we thought for the quarter, but.

Speaker Change: We you know one of the main things was especially on the rooms labor side.

Speaker Change: Essentially on a CPR basis, basically flat year over year.

Jonathan: And, you know, I think that's really the main difference. A little bit on the property tax side, the primarily some excellent, you know, productivity on rooms labor.

Speaker Change: And I think Thats really the main difference.

Speaker Change: A little bit on the property tax side that primarily some excellent.

Speaker Change: Productivity on rooms labor.

Jonathan: Okay, very helpful color there. And last one for me if I could, Jeff, on the hotel sales. Any early feedback in terms of the transaction market right now and maybe how it compares to your original expectations when you went out with those offsets? What you're hearing in terms of the bad ass grids or any other high-level counter I think would be helpful. Thank you.

Jeff Fisher: Okay, very helpful, Tyler. And then last one from me, if I could, Jeff, on the hotel sales, any early feedback in terms of the transaction market right now and maybe how it compares to your original expectations when you went out with those assets, what you're hearing in terms of bid-ask spreads or any other high-level commentary would be helpful. Thank you.

Speaker Change: Okay very helpful color there and then last one for me if I could Jeff on the hotel sales any early feedback in terms of the transaction market right now and maybe how it compares to your original expectations. When you went out with those assets what youre hearing in terms of bid ask spread or any other high level commentary I think it would be helpful. Thank you.

Jeff Fisher: Yeah, I think we're going to get on a couple of hotels, pretty close to where we had targeted the range, towards the higher end of the range, let's say. So, I'm pretty pleased about that. I mean, there are these one-off buyers out there that are smaller regional players that will stretch a little bit to get an asset and grow, notwithstanding the overall environment as so far as evaluating whether they should buy a deal or not. So I think there are some opportunities for us to recycle, continue to recycle some capital the way we've been doing just, you know, periodically over the last few years for this year.

Jonathan Jenkins: It's very helpful. I appreciate all the color. That's all for me.

Operator: Thanks for the questions.

Jeffrey Fisher: Yeah, I think we're going to get on a couple of hotels. Pretty close to where we had targeted the range towards the high end, higher end of the range, let's say. So, I'm pretty pleased about that. I mean, there are these one-off buyers out there that, you know, that are smaller regional players that will stretch a little bit, you know, to get an asset and to grow, notwithstanding the overall environment that, you know, and are the way public companies may look at the environment and so far as evaluating whether they should buy a deal or not.

Jeff Fisher: Yeah, I think we're gonna get on a couple of hotels pretty close to where where we had targeted the range towards the high end higher end of the range, let's say, so I'm pretty pleased about that I mean, there are these one off buyers out there.

Jeff Fisher: Yeah that you know that are smaller regional players that will stretch a little bit you know to get an asset and to and to grow our notwithstanding the overall environment.

Speaker Change: And our the way public companies May look at the environment and so far is evaluating whether they should buy a deal or not so so I think there are some opportunities for us to recycle continue to recycle some capital the way we've been doing just you know periodically.

Jeffrey Fisher: So, I think there are some opportunities for us to recycle, continue to recycle some capital. The way we've been doing just, you know, periodically over the last few years for this year.

Jeff Fisher: Honestly over the last few years for this year.

Speaker Change: Okay very helpful. I appreciate all the color that's all for me.

Operator: Thanks for the questions. There are no additional questions at this time.

Speaker Change: Thanks for the questions.

Speaker Change: Yeah.

Jeff Fisher: If there are no additional questions at this time, I'd like to turn the call back over to management for closing remarks. All right, I appreciate it.

Speaker Change: There are no additional questions at this time I'd like to turn the call back over to management for closing remarks.

Jeffrey Fisher: I'd like to turn the call back over to management for closing remarks. Well, I appreciate everybody being on the call this morning, and we certainly look forward to continuing to put up some good numbers here and getting some of these dispositions done, which only further solidifies our already strong balance sheet and puts us in a great position to take advantage, perhaps, of some opportunities on the acquisition side down the road. Thank you.

Jeff Fisher: Well, I appreciate everybody being on the call this morning, and we certainly look forward to continuing to put up some good numbers here and getting some of these dispositions done, which only further solidifies our already strong balance sheet and puts us in a great position to take advantage, perhaps, of some opportunities on the acquisition side down the road. Thank you.

Speaker Change: Well I appreciate everybody being on the call this morning, and and and we certainly look forward to put continue to put up some good numbers here and getting some of these dispositions done which only further solidifies our already strong balance sheet and puts us in a great position to take advantage.

Speaker Change: Perhaps of some opportunities on the acquisition side down the road.

Speaker Change: <unk>.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

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