Q1 2025 DiamondRock Hospitality Co Earnings Call
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Unknown Executive: © The Ultimate Parody Site! Hello, everyone, and welcome to DiamondRock Hospitality Company First Quarter 2025 Earnings Conference Call.
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Speaker Change: Hello, everyone and welcome to Diamond Rock Hospitality Company first quarter 2025 earnings Conference call.
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Unknown Executive: Now it's my pleasure to turn the call over to the EVP, Chief Financial Officer and Treasurer, Briony Quinn. The floor is yours.
Speaker Change: It's my pleasure to turn the call over to the EVP, Chief Financial Officer and Treasurer.
Ione clean the floor is yours.
Briony Quinn: Good morning, everyone, and welcome to DiamondRock's first quarter 2025 earnings column webcast. Joining me today is Jeff Donnelly, our Chief Executive Officer, and Justin Leonard, our President and Chief Operating Officer. Before we begin, let me remind everyone that many of our comments today are not historical facts, and are considered to be forward looking statements under federal securities law. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from what we discussed today.
Speaker Change: Good morning, everyone and welcome to Diamond rocks first quarter 2025 earnings call and webcast.
Speaker Change: Joining me today is Jeff Donnelly, our Chief Executive Officer, and Justin Leonard Our President and Chief operating Officer.
Speaker Change: Before we begin let me remind everyone that many of our comments today are not historical facts and are considered to be forward looking statements under federal securities laws.
Speaker Change: As described in our filings with the SEC. These statements are subject to numerous risks and uncertainties that could cause future results to differ materially from what we discuss today.
Briony Quinn: In addition, on today's call, we will discuss certain non-GAAP financial A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. We are pleased to report that our results for the first quarter were largely in line with our expectations. Comparable RevPAR increased 2% over 2024, and Total RevPAR increased 1.6%. Our urban footprint was the primary driver of the portfolio's RevPAR growth, up 5% on a strong contribution from both the group and business transient sector. The growth was steady throughout the quarter, with room revenues up 3.1% in January, up 2.6% in February, and up 5.4% in March.
Speaker Change: In addition on today's call, we will discuss certain non-GAAP financial information a reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release.
Speaker Change: We are pleased to report that our results for the first quarter were largely in line with our expectations.
Speaker Change: Comparable revpar increased 2% over 2024, and total Revpar increased one 6%.
Speaker Change: Our urban footprint was the primary driver of the portfolio's revpar growth up 5% on a strong contribution from both the group and business transient segments.
Speaker Change: The growth was steady throughout the quarter with room revenues up three 1% in January.
Speaker Change: Two 6% in February and up five 4% in March.
Briony Quinn: Food and beverage revenue at our urban hotels declined 3.3% year over year. This was mainly due to the Chicago Marriott's exceptional in-house group programs with more extensive food and beverage contribution last compared to this quarter, where there was a larger proportion of city-wide, rooms-only group with limited in-house food and beverage sets. If we exclude the Chicago Marriott, food and beverage revenues at our urban hotels increased 5.5% instead of declining 3.3%, an 880 basis point swing. In anticipation of the question, total RevPAR growth, excluding the Chicago Marriott, was 2.5%, or about 90 basis points higher than the reported 1.6% growth for the entire portfolio.
Speaker Change: Food and beverage revenue at our urban hotels declined three 3% year over year.
Speaker Change: This was mainly due to the Chicago Marriott is exceptional in house group programs with more extensive food and beverage contribution last year compared to this quarter, where there was a larger proportion of citywide rooms, only group with limited in house food and beverage spend.
Speaker Change: If we exclude the Chicago Marriott food and beverage revenues at our urban hotels increased five 5% instead of declining three 3% and 880 basis point swing.
Speaker Change: In anticipation of the question total revpar growth, excluding the Chicago Marriott was 2.5% or about 90 basis points higher than the reported one 6% growth for the entire portfolio.
Briony Quinn: Total expenses in our urban portfolio increased 2.1% on a 1.5% increase in wages and benefits.
Speaker Change: Total expenses in our urban portfolio increased two 1% on a 1% increase in wages and benefits.
Briony Quinn: hotel adjusted EBITDA margins increased 54.
Speaker Change: Hotel adjusted EBITDA margins increased to 54 basis points.
Briony Quinn: Switching to our resort portfolio, comparable REVPAR declined 2.1% over 2024, and total REVPAR was down slightly, just 40 basis points. Total revenues were up slightly in January and February, 0.4% and 0.9% respectively. declined 4.3% in March. Drilling into March, our resorts were largely flat through the first three weeks of the month, similar to January and February, but in late March, when we hit the comparison to Easter week in 2024, we experienced sharp year-over-year declines, supporting that much of the softness was driven by the calendar shift. Consistent with our comments on last quarter's call, we saw mid-single-digit revenue declines at our Florida assets, with first quarter REV PAR down 5.9% and total REV PAR down 4.0%.
Speaker Change: Switching to our resort portfolio comparable Revpar declined two 1% over 2024 and total Revpar was down slightly just 40 basis points.
Speaker Change: Total revenues were up slightly in January and February.
Speaker Change: 4% and 9%, respectively, but declined four 3% in March.
Speaker Change: Drilling into March our resorts were largely flat through the first three weeks of the month similar to January and February but in late March when we hit the comparison to Easter week in 2024, we experienced sharp year over year declines supporting that much of the softness was driven by the calendar shift.
Speaker Change: Consistent with our comments on last quarter's call. We saw mid single digit revenue declines at our Florida assets with first quarter Revpar down five 9% and total revpar down 4%.
Briony Quinn: Outside of Florida, where our resorts skew a little more luxury, REVPAR increased 1.7% and total REVPAR increased 2.9%. For example, the Heights and Vail enjoyed a great ski season and saw rev par increase 7% and total rev par increase 9.5%.
Speaker Change: Outside of Florida, where our resort skew a little more luxury revpar increased one 7% and total revpar increased two 9%.
Speaker Change: For example, the heightened Vale enjoyed a great ski season, and saw Revpar increased 7% and total revpar increased nine 5%.
Briony Quinn: The margin story in our resorts is important and bears highlight. He had great success managing costs in the face of top line softness to preserve profitability. We've reduced overall expenses by 2.4% compared to 2024. Expanding our hotel adjusted EBITDA margin by 76. to 32 and a half percent. Group remained our strongest segment in the first quarter, as it did throughout 2024. First quarter group room revenues increased 10.4% over last year on a 5.2% increase in room revenues. At our urban hotels, group revenues increased 14.4% on a 5.9% increase in room nights. We remain focused on adding groups to our resorts to build a base that will preserve pricing and improve profitability.
Speaker Change: The margin story in our resorts is important and there is highlighting.
Speaker Change: We had great success managing costs in the face of topline softness to preserve profitability.
Speaker Change: We have reduced overall expenses by two 4% compared to 2024, expanding our hotel adjusted EBITDA margin by 76 basis points to 32, 5%.
Speaker Change: Group remained our strongest segment in the first quarter as it did throughout 2024.
Speaker Change: First quarter group room revenues increased 10, 4% over last year on a five 2% increase in room nights.
Speaker Change: At our urban hotels group revenues increased 14, 4% on a five 9% increase in room nights.
Speaker Change: We remain focused on adding groups to our resorts to build a base that will preserve pricing and improved profitability.
Briony Quinn: Although group lead generation remains strong, the closure rates have been softer. As event planners have been slow to make a final decision due to the unsettled macroeconomic environment. As of the end of the quarter, our booking pace for 2025 continues to be up slightly versus the same time last year. Turning to profits, hotel adjusted EBITDA in the first quarter was $61.3 million, reflecting 2.2% growth over 2024 on a margin that was 39 basis points higher. Corporate Adjusted EBITDA was $56.1 million, flat the last quarter. An adjusted FFO was 19 cents per share, 1 cent or 5.6% over 2024.
Speaker Change: Although group lead generation remains strong the closure rates have been softer recently as event planners have been slow to make a final decision due to the.
Speaker Change: Unsettled macroeconomic environment.
Speaker Change: As at the end of the quarter, our booking pace for 2025 continues to be up slightly versus the same time last year.
Speaker Change: Turning to profit hotel adjusted EBITDA in the first quarter was $61 3 million, reflecting two 2% growth over 2024 on a margin that was 39 basis points higher.
Speaker Change: Corporate adjusted EBITDA was $56 1 million flat to last quarter and.
Speaker Change: And adjusted <unk> was <unk> 19 per share one or five 6% over 2024.
Briony Quinn: Finally, free cash flow per share in the trailing four quarters, calculated as AFFO less CapEx, increased 10% to 63 cents per share over the prior four quarter period.
Speaker Change: Finally free cash flow per share in the trailing four quarters calculated at <unk> less capex increased 10% to <unk> 63 per share over the prior four quarter period.
Briony Quinn: Before I turn the call over to Jeff to discuss recent events, our updated outlook and strategy, let me touch on our dividend and our balance. I want to reiterate that we intend to continue to pay an $0.08 per share quarterly dividend in 2025. and depending on our 2025 operating income, an additional stub dividend for the fourth Turning to the balance sheet, during the quarter, we repurchased 1.4 million shares of common stock at an average price of $7.85. We continued repurchases following quarter end, bringing the year-to-date total to approximately 16 million, or 2.1 million shares. The average price equates to a trailing capitalization rate of a little over 10%.
Speaker Change: Before I turn the call over to Jack to discuss recent events, our updated outlook and strategy, let me touch on our dividends and our balance sheet.
Speaker Change: I want to reiterate that we intend to continue to pay an <unk> <unk> per share quarterly dividend in 2025.
Speaker Change: And depending on our 2025 operating income and additional stub dividend for the fourth quarter.
Speaker Change: Turning to the balance sheet during the quarter, we repurchased one 4 million shares of common stock at an average price of $7 85.
Speaker Change: We continued repurchases following quarter end, bringing the year to date total to approximately $16 million or $2 1 million shares.
Speaker Change: The average price equates to a trailing capitalization rate of a little over 10%.
Briony Quinn: We have approximately $160 million of capacity remaining on our share repurchase authorization.
Speaker Change: We have approximately $160 million of capacity remaining on our share repurchase authorization.
Briony Quinn: Finally, we have three mortgage loans totaling just shy of 300 million maturing in 2025 at a weighted average cost of approximately 4.2%. We also have a $300 million term loan maturity in early 2026 that as of quarter end had an average cost of approximately 5.8% or 135 basis points over SOFR. We continue to review the most cost-effective options to refinance these maturities through a combination of an inaugural corporate debt issuance, placement of mortgage debt, and a recast of our corporate credit facility. At the current time, we believe a recast and upsize of our corporate credit facility is likely the most economical option for us to address our loan maturity.
Speaker Change: Finally, we have three mortgage loans totaling just shy of $300 million maturing in 2025 at a weighted average cost of approximately four 2%.
Speaker Change: We also have a $300 million term loan maturity in early 2026 that as of quarter end had an average cost of approximately five 8% or 135 basis points over sofa.
Speaker Change: We continue to review the most cost effective options to refinance these maturities through a combination of an inaugural corporate debt issuance placement of mortgage debt and a recast of our corporate credit facility.
Speaker Change: At the current time, we believe a recast and upsize of our corporate credit facility is likely the most economical option for us to address our loan maturities.
Briony Quinn: And this is factored into our updated 2025 guidance that Jeff will discuss. This updated assumption lowers our interest expense outlook by approximately $3 million.
Speaker Change: And this is factored into our updated 2025 guidance that Jeff will discuss.
Speaker Change: This updated assumption lowers our interest expense outlook by approximately $3 million.
Jeffrey Donnelly: On that note, I'll turn the call over to Thanks, Briony. And thank you for joining us this morning.
Jeff Donnelly: On that note I'll turn the call over to Jeff.
Jeff Donnelly: Thanks, Brian and thank you for joining us. This morning, let's start by reviewing capital projects, then transactions and I'll conclude with comments on what we're seeing and how that drives how we are thinking about the rest of the year.
Jeffrey Donnelly: Let's start by reviewing capital projects, then transactions, and I'll conclude with comments on what we're seeing and how that drives how we're thinking about the rest of the year. First off, recall that we completed guest room renovations at the Westin San Diego Bayview in early 2024. RevPAR in the first quarter was up 28% against a competitive set that declined 8%. And NOI increased 65% year over year. We're looking to close out this project with minor changes to the lobby configuration to improve F&B potential by expanding the seating area and potentially offering a grab-and-go option.
Jeff Donnelly: First off recall that we completed guestroom renovations at the Westin San Diego debut in early 2020 for Revpar in the first quarter was up 28% against the competitive set that declined 8% and NOI increased 65% year over year.
Jeff Donnelly: We're looking to close out this project with minor changes to the lobby configuration to improve F&B potential by expanding the seating area and potentially offering a grab and go options.
Jeffrey Donnelly: At Bourbon Orleans, we concluded a room renovation in late 2024 that supported implementation of a resort. In the first quarter, other income increased over $200,000, or 90% versus first quarter 2024. For the year, we are forecasting a $1 million increase in high-margin other income at the Bourbon, implying a mid-team current yield on renovation costs.
Jeff Donnelly: At Bourbon Orleans, we concluded a room renovation in late 2024, the supported implementation of a resort fee.
Jeff Donnelly: In the first quarter other income increased over $200000 or 90% versus first quarter 2024.
Jeff Donnelly: For the year, we are forecasting a $1 million increase in high margin other income at the Bourbon, implying a mid teen current yield on renovation costs.
Jeffrey Donnelly: In the first quarter, we completed the room refresh at the Hilton Garden in Times Square, and the product looks great. This is the first time the rooms have been refreshed since the hotel was constructed in 2014. Revpar was down by over 16% due to displacement, and we saw a $500,000 impact to EBITDA. In a market that runs close to 90% occupancy, the first quarter is the most cost effective window to execute such work. And our team did a great job executing here on time and on budget.
Jeff Donnelly: In the first quarter, we completed the room refresh at the Hilton Garden in times square and the product looks great. This is the first time the rooms have been refreshed since the hotel was constructed in 2014.
Jeff Donnelly: Revpar was down by over 16% due to displacement and we saw a $500000 impact to EBITDA in a market that runs close to 90% occupancy. The first quarter is the most cost effective window to execute such work and our team did a great job executing here on time and on budget.
Jeffrey Donnelly: Turning to Sedona, the renovation of our rooms at the Orchards is complete, and we are beginning the process of rebranding this property as the Cliffs Sedona. In fact, aerial photos on the website, thecliffssedona.com, will give you a good view of our location in the heart of Sedona and highly desirable views of the red rocks visible from every room of the hotel. All that remains is for the hillside work to be completed. This will create a new pool and bar area with stunning views of the Red Rocks, and connect the Cliffs Hotel to our L'Auberge de Sedona that sits below on a shaded creek.
Turning to Sedona, the renovation of our rooms at the orchards is complete and we are beginning the process of re band rebranding this property as the cliffs Sedona.
Jeff Donnelly: In fact aerial photos on the web site. The cliffs Sedona Dotcom will give you a good view of our location in the heart of Sedona and highly desirable views of the Red rocks visible from every room at the hotel.
Jeff Donnelly: All that remains is for the hillside work to be completed this will create a new pool and bar area was stunning views of the red rocks and connect the Clift hotel to our low barriers to sedona that sits below initiated creek.
Jeffrey Donnelly: Construction is well underway and will be completed by fall 2025. We are very excited about the repositioning opportunity and believe it will be an earnings and value driver.
Jeff Donnelly: Construction is well underway and will be completed by fall 2025.
Jeff Donnelly: Excited about the repositioning opportunity and believe it will be an earnings and value driver.
Jeffrey Donnelly: On the disposition front, we previously announced the sale of the Westin DC City Center Hotel for $92 million during the quarter, which equated to close to a 5% trailing cash flow yield after CapEx. A portion of these proceeds were creatively recycled into repurchasing common shares at an average price of better than a trailing 10 cap rate. We continue to pursue opportunities to dispose of non-strategic assets, as well as opportunistic dispositions, all with a focus on recycling proceeds into the most attractive investment alternatives.
Jeff Donnelly: On the disposition front, we previously announced the sale of the Westin D. C City Center hotel for $92 million during the quarter, which equated to close to a 5% trailing cash flow yield after capex.
Jeff Donnelly: A portion of these proceeds were accretively recycled into repurchasing common shares at an average price of better than a trailing 10 cap rate.
Jeff Donnelly: We continue to pursue opportunities to dispose of non strategic assets as well as opportunistic dispositions all with a focus on recycling proceeds into the most attractive investment alternatives. There is nothing we can comment on at this time, but we hope to be able to share more soon.
Jeffrey Donnelly: There's nothing we can comment on at this time, but we hope to be able to share more soon.
Jeffrey Donnelly: On the transaction front, there are a good number of high dollar resorts on the market with prices ranging from $500,000 to as much as $2 million per key. All in pricing after CapEx is in the range of 5.5 to about a 7% cap rate. Given our source of funds, our common shares, preferred equity, and even our debt are among the most accretive reinvestment options today, but we are always actively looking for accretive recycling opportunities.
Jeff Donnelly: On the transaction front there are good number of high dollar resorts on the market with prices ranging from $500000 to as much as $2 million per key.
Jeff Donnelly: All in pricing after Capex is in the range of five and a half to about a 7% cap rate given our source of funds are common shares preferred equity and even our debt are among the most accretive reinvestment options today, but we are always actively looking for accretive recycling opportunities.
Jeffrey Donnelly: Before I get into guidance, let's talk about what we're seeing real time. On the resort front, RevPAR growth was up about 1% in January. 4.4% in February and flat through about the first three weeks of March. It was only in the final days of March when the resorts were comparing against Easter week 2024 that we saw a rev par decline. Fast forward to mid-April, and we saw a significant year-over-year RevPAR spike at the same properties for Easter week 2025. Moreover, the transient pickup for the second quarter remains consistent with last year. The point is that much of the chopping is seen thus far at our resort seems to originate from holiday shifts and not the coincidental timing with negative macroeconomic headlines.
Jeff Donnelly: Before I get into guidance, let's talk about what we are seeing real time.
On the resort front Revpar growth was up about 1% in January four 4% in February and flat through about the first three weeks of March It was only in the final days of March when the resorts were comparing against Easter week 2024 that we saw Revpar decline.
Jeff Donnelly: Fast forward to mid April and we saw significant year over year Revpar Spike at the same properties for Easter week 2025. Moreover, the transient pickup for the second quarter remains consistent with last year.
Jeff Donnelly: The point is that much of the choppiness seen thus far in our resort seems to originate from holiday shifts and not the coincidental timing with negative macroeconomic headlines.
Jeffrey Donnelly: Looking ahead, an unsettled economy may lead to more demand at the drive-to resorts common in our portfolio versus costlier fly-to destinations. Our direct exposure to foreign travelers is low. Nevertheless, foreign visitation to the US will likely be softer than initial expectations, and it is not clear whether the incremental demand from US travelers will be sufficient to backfill this potential gap. Currently, we are not seeing a meaningful shift in resort demand, but remain vigilant. The long-term secular drivers for U.S. resorts remain strong, but we recognize near-term performance could be soft. Nevertheless, we expect DiamondRock's drive-to destinations will perform well in this environment.
Looking ahead and unsettled economy may lead to more demand, but the drive to resorts common in our portfolio versus costly or fly to destinations.
Jeff Donnelly: Our direct exposure to foreign travelers as low Nevertheless, foreign visitation to the U S will likely be softer than initial expectations and it is not clear whether the incremental demand from U S travelers will be sufficient to backfill this potential gap.
Jeff Donnelly: Currently we are not seeing a meaningful shift in resort demand, but remain vigilant.
Jeff Donnelly: The long term secular drivers for our U S resorts remains strong, but recognize but we recognize near term performance could be soft. Nevertheless, we expect domino its drive to destinations will perform well in this environment.
Jeffrey Donnelly: At our urban hotels, business transient demand increased in the mid teens during the quarter and trends are encouraged. As for group, it's important to remind everyone DiamondRock is building upon peak group room revenues in 2024. Given that backdrop, lead volume is still higher than last year. group pickup for 2025 or in the year for the year bookings Increased in January and again in February, but we saw a pause in group pickup as we moved into the end of March. It is that pause, that deceleration in our lead conversion, leading us to a more cautious stance on the back of 2025.
Jeff Donnelly: Yeah.
Jeff Donnelly: At our urban hotels business transient demand increased in the mid teens during the quarter and trends are encouraging.
Jeff Donnelly: As for group, it's important to remind everyone Diamond rock is building upon peak group room revenues in 2024, given that backdrop lead volume is still higher than last year.
Jeff Donnelly: Group pickup for 2025 or in the year for the year bookings.
Jeff Donnelly: Increased in January and again in February, but we saw a pause in group pickup as we moved into the end of March and does that pause that do you see a deceleration in our lead conversion, leading us to a more cautious stance on the back of 2025.
Jeffrey Donnelly: The optimistic view is that group demand is there, and a little more confidence in an unsettled economy will convert business leads to revenue. Considering we've seen capitulation on many aspects of the unpopular trade policies, one could argue we're already moving toward a calmer environment. The cautious view is confidence arrives too late for the industry to fully recapture its prior potential. Typically, group-dependent hotels in the market grow anxious and start discounting, which leads to lower revenue creation than may have otherwise occurred.
Jeff Donnelly: The optimistic view is that group demand is there and a little more confidence in an unsettled economy will convert business leads to revenue.
Jeff Donnelly: <unk>, we've seen capitulation on many aspects of the unpopular trade policies. One could argue we're already moving toward a calmer environment.
Jeff Donnelly: The cautious view is confidence arrives too late for the industry to fully recapture its prior potential.
Jeff Donnelly: Typically group dependent hotels in the market grow anxious and start discounting which leads to lower revenue creation that may have otherwise occurred.
Jeffrey Donnelly: Our decision to reframe our 2025 guidance was driven by healthy group lead volume and business transient demand on the one hand, and the acknowledgement that a continuing pause in group pickup may make it more challenging for us to replicate the very strong group production we had in the back half of 2024.
Jeff Donnelly: Our decision to reframe, our 2025 guidance was driven by healthy group lead volume in business transient demand on the one hand, and the acknowledgement that a continuing pausing group pickup may make it more challenging for us to replicate the very strong group production, we had in the back half of 2024.
Jeffrey Donnelly: So let's get to our outlook for 2025. Our FFO per share guidance is unchanged at a range of 94 to $1.06 per share. We revised our full year 2025 REVPAR outlook to a range of minus 1% to plus 1% growth, or about 200 basis points lower than our prior range. Total REVPAR growth is expected to be the same in the minus one to plus one percent range. The lower and upper bound of our new full-year range assumes RevPAR for the remaining three-quarters of the year is down less than 2% at the low end and slightly positive at the high end.
Jeff Donnelly: So let's get to our outlook for 2025.
Jeff Donnelly: <unk> <unk> per share guidance is unchanged at a range of 94 to $1 six per share.
Jeff Donnelly: We revised our full year 2025, revpar outlook to a range of minus 1% to plus 1% growth or about 200 basis points lower than our prior range.
Jeff Donnelly: Total revpar growth is expected to be the same.
Jeff Donnelly: The minus one to plus 1% range, though.
Jeff Donnelly: The lower and upper bound of our new full year range assumes revpar for the remaining three quarters of the year is down less than 2% at the low end and slightly positive at the high end.
Jeffrey Donnelly: 2025 corporate-adjusted EBITDA is expected to be in the range of $270-295 million, or $5 million lower at the top and bottom than our previous guidance. This places the midpoint at $282.5 million. It bears noting that the revision includes the benefit of a $3 million savings on our insurance placement.
Jeff Donnelly: 2025, corporate adjusted EBITDA is expected to be in the range of $270 million to $295 million or $5 million lower at the top and bottom than our previous guidance.
Jeff Donnelly: This places the midpoint at $282 5 million.
Jeff Donnelly: It bears, noting that the revision includes the benefit of a $3 million savings on our reinsurance placement.
Jeffrey Donnelly: As Briony mentioned, we have a bit of financing work to do in 2025. Included in our guidance is the assumption we will execute a credit facility recast to address near term debt maturity. Adjusted FFO is expected to be in the range of $198 to $223 million, or $1 million lower than prior guidance. Adjusted FFO per share is expected to be in the range of $94 to $1.06, which, as I said earlier, is unchanged from our prior guidance in part because of the share repurchases, as well as the flexibility our liquidity affords us to allow to pivot on our debt refinancing plan.
Jeff Donnelly: As Brian mentioned, we have a bit of financing work to do in 2025 and included in our guidance is the assumption, we will execute a credit facility recast to address near term debt maturities.
Jeff Donnelly: Adjusted <unk> is expected to be in the range of $198 million to $223 million or $1 million lower than prior guidance.
Jeff Donnelly: Adjusted <unk> per share is expected to be in the range of <unk> 94 to $1 six which as I said earlier is unchanged from our prior guidance in part because of the share repurchases as well as the flexibility our liquidity affords us to allowed a pivot RMR debt refinancing plans.
Jeffrey Donnelly: In closing, the outlook is cloudy. Underlying trends were obscured rather than illuminated by the short-lived doge days of spring, coinciding with holiday shifts, only to be immediately followed by the somewhat ironically named liberation day. Because my personal view, the Trump administration will continue to soften their policies to settle the economy and improve the re-election potential of congressional Republicans in 2026. For this reason, I'm cautiously optimistic we'll see economic anxiety settle as we move through 2025. Regardless of the future path, increasing earnings per share remains our focus.
Jeff Donnelly: In closing the outlook is cloudy underlying trends were obscured rather than illuminated by the short lived those days of spring coinciding with holiday shifts owing to be immediately followed by the somewhat ironically named Liberation day.
Speaker Change: It is my personal view the Trump administration will continue to soften their policies to settle the economy and improve the reelection potential congressional Republicans and 2026 for this reason I'm cautiously optimistic we will see economic anxiety settle as we move through 2025.
Jeff Donnelly: Regardless of the future path increasing earnings per share remains our focus.
Jeffrey Donnelly: Our greatest investment during the quarter, aside, of course, from the exciting work in Sedona, was the repurchase of our common shares, and we will continue to lean in on opportunities to continue to prudently grow earnings and create value while preserving flexibility.
Jeff Donnelly: Our greatest investment during the quarter aside of course from the exciting work in Sedona was the repurchase of our common shares and we will continue to lean in on opportunities to continue to prudently grow earnings and create value while preserving flexibility. Thank.
Unknown Executive: Thank you for your time this morning and we'll be happy to answer your questions. Thank you so much.
Jeff Donnelly: Thank you for your time this morning, and we'll be happy to answer your questions.
Unknown Executive: And to ask a question, simply press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question.
Jeff Donnelly: So much into ask a question simply press star one one on your telephone and wait for your name to be announced to remove yourself press star One again, one moment for our first question.
Smedes Rose: Smedes Rose with Citi. Please proceed. Hi, thanks. Hi. You mentioned a little bit about some of the trends you're seeing in April. I just wondering, can you just share the preliminary portfolio-wide REV FAR for April? Yeah, let me Yes, Smedes, our preliminary April is showing a little better than 2% growth. Okay, okay, thank you.
Speaker Change: It comes from Smedes Rose with Citi. Please proceed.
Smedes Rose: Good morning. Thanks.
Speaker Change: Hi.
Speaker Change: You mentioned, a little bit about some of the trends Youre seeing in April I was just wondering can you just share the preliminary portfolio wide revpar.
Speaker Change: Revpar for April.
Speaker Change: Yes.
Speaker Change: Yeah. It does means our preliminary April is showing a little better than 2% growth.
Jeffrey Donnelly: And then I guess I just wanted to ask you a little bit on the renovation projects that are underway with the terrace, etc. Would you expect those costs to go up? Or are they already kind of locked in before that went into effect? I think it, you know, it's a bit of a difficult answer, because it really depends on which types of renovations you're talking about, I think, and it kind of goes to complexity, I think that most people are in leadership positions and buying stuff from overseas or making decisions about it. I'll give you an example.
Speaker Change: Okay. Okay. Thank you.
Speaker Change: And then I guess I just wanted to ask you a little bit on the renovation projects that are underway.
Speaker Change: With the tariffs et cetera would you expect those costs to go up or are they already kind of locked in before that went into effect.
Speaker Change: I think it's a bit of a difficult to answer because it really depends on which types of renovations youre talking about I think in this.
Speaker Change: Kind of goes to the complexity I think that most people earn.
Speaker Change: Leadership positions in buying stuff from overseas or making decisions about it and I'll give you. An example, we are renovating our hotel in Phoenix, We went very quickly from trying to understand what storage options, where for a large order of <unk> that was being made in Vietnam to getting it all are about as fast as possible. When the tariffs were pushed back for 90 days, so that we could get that <unk>.
Jeffrey Donnelly: We were renovating our hotel in Phoenix, we went very quickly from trying to understand what storage options were for a large order of FF&E that was being made in Vietnam to getting it on a boat as fast as possible when the tariffs were pushed back for 90 days so that we could get that FF&E in before the tariffs were, you know, reinstituted. So I think we're trying to be pragmatic without understanding exactly what the future is going to look for. I think for the summer window, the stuff that we have on order is likely all going to come in before the tariffs are imposed again.
Speaker Change: And before the tariffs were reinstituted so.
Speaker Change: We're trying to be.
Speaker Change: Be pragmatic without understanding exactly what the future is going to look forward I think for the summer window. The stuff that we have on order is likely all going to come in before the tariffs certain host again over the stuff that we have slated to start in November worried a bit of a pause trying to understand what the landscape is going to look like.
Unknown Executive: For the stuff that we have slated to start in November, we're in a bit of a pause trying to understand what the landscape is going to look Okay, thank you. Thanks. Thank you.
Speaker Change: Okay. Thank you.
Duane Pfennigwerth: Our next question comes from Duane Pfennigwerth with Evercore ISI. Please proceed. Hey, thanks. appreciate the detailed commentary. Just on the on the group conversion pause. Can you talk a little bit about the profile of your average group? Are these are these corporates? Are these small businesses, associations, social gatherings? Yeah, what what types of events are we talking about? And do you have like an average group size? Yeah, it's a good question. I would say it's going to run the gambit from associations to corporate. The other thing I would say is when you consider our average hotel, we particularly take Chicago Marriott out of it.
Speaker Change: Thanks.
Speaker Change: Our next question comes from Duane <unk> with Evercore ISI. Please proceed.
Duane: Hey, thanks.
Speaker Change: Appreciate the detailed commentary.
Speaker Change: Just on the on the group conversion pause can you talk a little bit about the profile.
Speaker Change: Of your average group are these are these corporates are these small businesses associations social gatherings.
Speaker Change: What types of events are we talking about and do you have like an average group size.
Speaker Change: Yeah. It's a good question I would say, it's going to run the gambit from associations to to corporate.
Speaker Change: The other thing I would say it is when you consider our average hotel you can take particularly take Chicago Marriott out of it when you look at our average hotel over about a 200 to 250 room hotel. So the the nature of our groups tend to be a little shorter book closer in and for that reason there are going to be.
Jeffrey Donnelly: When you look at our average hotel, we're about a 200 to 250 room hotel. So the nature of our groups tend to be a little shorter, book closer in. And for that reason, they are going to be smaller size. I don't have a number for you at the top of my head for what the average group size is, but I would say it's probably going to be about the size of those hotels at most. Chicago in particular, and maybe Boston are going to be some of the ones where you see really a different size group.
Speaker Change: Smaller sized I don't have a number for you off the top of my head for what the average group sizes, but I would say, it's probably going to be about the size of those hotels at most.
Speaker Change: Chicago in particular, and maybe Boston Theyre going to be some of the ones, where you see really a different size groups.
Jeffrey Donnelly: But it really does run the gambit. in terms of the mix of the source of that. Got it.
Speaker Change: But it really does run the gamut.
Speaker Change: In terms of the mix of the source of equity.
Jeffrey Donnelly: And then on that front, any any markets in particular where you're excited about the group pacing? Thanks for taking the questions. San Diego also just partly driven by the fact that we had, you know, some displacement from a renovation last year, but we're also seeing post-renovation, you know, a nice uptick in group bookings. Thank you. Of course. Thank you.
Speaker Change: Got it and then.
Speaker Change: On that front any any markets in particular, where you're excited about the group pacing and thanks for taking my questions.
Speaker Change: Uh huh.
Speaker Change: Denver's showing some significant strength for us just given the citywide.
Speaker Change: Paste, it's on the books to actually for our hotel downtown we don't participate in a lot of those blocks. So the citywide pace is great for our little hotel looking compressor round at Salt Lakes also kind of a significant standout for us I think we're finally seeing the benefit of the renovation that we did about a year and a half ago.
Speaker Change: San Diego also just partly driven by the fact that we had some displacement from our renovation last year, but but we're also seeing post renovation a nice uptick in group bookings.
Speaker Change: Thank you.
Speaker Change: Of course.
Michael Bellisario: Our next question comes from the line of Michael Bellisario with Bayard. Please proceed. Good morning, everyone.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Michael Bellisario with Baird. Please proceed.
Michael Bellisario: Thanks, Good morning, everyone.
Michael Bellisario: Two-parter for me, sort of just along the same lines on group, I guess, maybe where are the holes in terms of dates as you look out for the rest of the year in terms of quarters, and then sort of secondarily, I guess, Justin, what's the updated revenue management strategy today to try to back those? I mean, for a guy in Chicago, Mike, I would think you'd know. No, I mean, you know, look, the biggest holds for us are frankly more due to the comparable period than they are necessarily the cadence of where group bookings are.
Speaker Change: Good morning.
Two parter for me sort of just along the same lines on on group I guess, maybe where the holes in terms of states and you look out for.
Speaker Change: Rest of the year in terms of quarters, and then sort of secondarily I guess.
Speaker Change: So just what's the updated revenue management strategy today to try to backfill some of those holes.
Speaker Change: I mean for guidance Chicago, I would think you would know.
Speaker Change: I mean, the biggest holds for us or frankly more due to the comparable period than they are necessarily the cadence of where group bookings or was just given D&C in Chicago in August last year that just presents a pretty difficult comp for us in terms of backfill like that size of citywide business.
Jeffrey Donnelly: We were just given DNC in Chicago in August last year. That just presents a pretty difficult comp for us in terms of backfilling that size of citywide business. And then I think probably November after that, we've got a little bit of a difficult comp given some of the business that was in Boston last year. You know, from a revenue management perspective, I would say that we've actually been relatively steadfast on rate up to this point. Maybe that is some of the cause of the lack of conversion. We're trying to shift people into more appropriate patterns in exchange for giving them a discount.
Speaker Change: And then I think probably November after that <unk> got <unk> got a little bit of a difficult comp given some of the business that was in Boston last year.
Speaker Change: From a revenue management perspective, I would say that we've actually made relatively steadfast on right up to this point, maybe that has some of the cause of the lack of conversion.
Speaker Change: We're trying to shift people into a more appropriate patterns in exchange for giving them a discount while we've had some success doing that and candidly trying to book transient into some of those holes.
Jeffrey Donnelly: We've had some success doing that and candidly trying to book transient into some of those holes. But I think we're not at a point where we feel like cutting rate is instigating demand. So it's a bit of a wait and see pattern, I think, for some of those further out holds on the transition. Understood. Thank you.
Speaker Change: We're not at a point, where we feel like cutting rate is instigating demand. So it's a bit of a wait and see pattern I think for some of those further further out holes on the transient front.
Speaker Change: Understood. Thank you.
Speaker Change: Thank you.
Chris Woronka: Our next question comes from Chris Woronka with Deutsche Bank. Please proceed. Hey, good morning, everyone. Thanks for taking the question. Jeff, you guys gave out a lot of data points. I think one of the things you mentioned was kind of the, you know, the pause that maybe happened in March and April on some of the group in the year for the year. The question is kind of. What's the average booking window for that stuff, and at what point do you... Do you say it's not coming back this year, or do you think it's partially a pricing issue where groups are just kind of using this pause as leverage to try to get better rates on some of the smaller meetings?
Speaker Change: Our next question comes from Chris <unk> with Deutsche Bank. Please proceed.
Speaker Change: Hey, good morning, everyone. Thanks for taking the question.
Speaker Change: Yeah, Jeff you guys you gave out a lot of data points I think one of the things you mentioned in his comments.
Speaker Change: Is that maybe happened in March and April.
The group.
Speaker Change: For the year.
Speaker Change: Question is kind of.
Speaker Change: Whats the I guess, the average booking window, because that stuff and at what point do you.
Speaker Change: You say, it's not coming back this year or is it all is also.
Speaker Change: Do you think it's partially a pricing issue where groups or just kind of using using this pause as leverage to try to get better rates on some of the smaller meetings.
Speaker Change: Yeah, I'm not sure if it's necessarily a pause to get better rates. It does necessarily that strategic I mean, maybe for larger groups. They would probably be looking for better terms around cancellation or attrition. So if they have uncertainty around how many folks are going to be attending their event or if theyre coming from abroad.
Speaker Change: We might not be the host of the majority of that type of business, but.
I would say that our booking window for smaller groups tends to be four to six months out and for larger groups tends to be about eight to 12 months out.
Chris Woronka: Okay. Thanks. Super helpful.
Okay.
Chris Woronka: Then this question, you know, I know you guys talked a lot last year about about kind of the post-renovation lift and Diagony was one of the ones you highlighted. Almost 5% rep part growth in Q1, not bad. But is that, is that property you say that's kind of fully stabilized now it's going to grow in line with the market? Or is there still, you know, more to go more to go there?
Speaker Change: Okay.
Speaker Change: Super helpful.
Speaker Change: Question.
Speaker Change: I know you guys have talked a lot last year about kind of the post renovation lift and Doug who he was one of the wonderful one of the ones you highlighted.
Speaker Change: Almost 5% Revpar growth in Q1 not bad.
Speaker Change: Is that property would you say that's kind of fully stabilized now and it's going to grow in line with the market or is there still.
Jeffrey Donnelly: And I guess on your renovations that are going to wrap up this year, remind us of kind of how long you generally see before stabilization of the post reno benefits. Yeah, the comment we had made when we announced that project was the property was doing about $10 million in EBITDA. And we thought that eventually kind of its stabilization, you know, it would be like, I think, around $16 million, $15, $16 million. And, and we thought in its first year, it would do about 12, I think it did about $14 million, if I recall, in its first year post renovation.
Speaker Change: More to got more to go there I guess on your renovations that are going to wrap up this year.
Speaker Change: Remind us of just kind of how long you generally see more stabilization of the post Reno benefits. Thanks, Yeah. The comment we've made when we announced that project was the property was doing about $10 million in EBITDA and we thought that eventually kind of a stabilization.
Speaker Change: Around $16 million $15 million to $16 million.
Speaker Change: We saw it in its first year would do about 12, I think it did about $14 million if I recall.
Jeffrey Donnelly: So I think there's still some more room to go. We've actually come out of the out of the blocks really out of the gate really strong. So, but I still think, you know, there's still potential there for us to have additional upside. Okay, very helpful. Thanks.
Speaker Change: In its first year post renovation. So I think there's still some more room to go we've actually come out of the out of the blocks really were out of the gate really strong so, but I still think theres still.
Speaker Change: Potential there for us to have additional upside.
Speaker Change: Okay very helpful. Thanks.
Floris Vantjes: Thank you. Our next question comes from Floris Vantjes with Compass Point. Please proceed. Hey, guys. Jeff, you're very, you've become the new messenger in terms of, you know, shareholder value and cash flow per share. I love the messaging you're providing. Obviously, that would suggest that, you know, you're not done with share of authority remaining.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Floris Van <unk> with Compass point. Please proceed.
Speaker Change: Hey, guys Scott Jeff.
Speaker Change: You are very.
Speaker Change: You've become the new.
Speaker Change: Messenger in terms of <unk>.
Speaker Change: Shareholder value in.
Speaker Change: Cash flow per share.
Speaker Change: Look the messaging youre, providing obviously thats.
Speaker Change: Would suggest that you are not done with share buybacks. She has got about 100 million left on the balance sheet in terms of cash.
Speaker Change: $158 million of authority remaining.
Jeffrey Donnelly: In this environment, I know that your tenure as a CEO is, you know, perhaps more limited than than some of your your other peers. I mean, is there a better opportunity out there right now to deploy capital besides, you know, buying back stock? you know, generally speaking, I would say no, I mean, we'll see what the environment brings. But at this point, I would say repurchasing our own chairs is superior to, you know, certainly buying, you know, acquisitions in the marketplace.
Speaker Change: In this environment.
Speaker Change: I know that your.
Speaker Change: Tenure as the CEO.
Perhaps more limited than in than some of your other peers is there a better opportunity out there right now redeploy capital besides buying back stock.
Speaker Change: Generally speaking I would say no I mean, we'll see what the environment brings but at this point I would say repurchasing our own shares is superior to certainly buying.
Speaker Change: Acquisitions in the marketplace.
Jeffrey Donnelly: And then and then maybe a follow up question. You mentioned something about New Orleans and how you've instituted resort fees. Could you remind us what percentage of your hotels today charge resort fees, and is there any more incremental upside in bringing some of those on board? I'm trying to think of the percentage off the top of my head. I know it's a, I guess three quarters of it, you know, yeah, maybe slightly less, but 70 75 would be my guess by by number of rooms, probably. Yeah, and our ability to try and charge those as a function oftentimes of if they're branded, you know, do you have brand sort of permission and approval, but also what will the market bear?
Speaker Change: And then and then maybe a follow up question.
Speaker Change: You mentioned something about New Orleans, and how you've instituted resort fees could you remind us what percentage of your hotels today charge resort fees and is there any more incremental upside in in <unk>.
Speaker Change: Bringing some of those onboard.
Speaker Change: I'm trying to think of the percentage off the top of my head I know its a I guess three quarters.
Maybe slightly lost 70 to 75, it would be my guess by number of rooms, probably yes, and our ability to try and charge those as a function oftentimes of if their branded brand sort of permission and approval, but also what will the market bear.
Unknown Executive: And, you know, in Bourbon, where it's an independent hotel, we had more of a free hand, but we also had to make sure that the value proposition was there in order to sort of charge that fee. And so we've had good success there. Great, thanks. One moment for our next question.
Speaker Change: Sure.
Speaker Change: In Bourbon, where it's an independent hotel, we had more of a free hand, but we also had to make sure that the value proposition was there and in order to sort of charge that fee. So we've had good success there.
Speaker Change: Great. Thanks.
Speaker Change: One moment for our next question.
Jack Armstrong: comes from Jack Armstrong with Wells Fargo please proceed Good morning, Jack. Good morning. Thanks for taking the question.
Speaker Change: It comes from.
Speaker Change: Jack Armstrong with Wells Fargo. Please proceed.
Speaker Change: Good morning, guys. Good morning, Thanks for taking the question.
Jeffrey Donnelly: What kind of shifts are you seeing in consumer behavior in terms of the booking window, out-of-room spend, and is there a meaningful difference that you'd point out there between your higher-end consumers versus more of your middle-income drive-thru markets? I don't know if there's a lot of trends that, you know, in the relative short term, since I think people feel like the world shifted. I think the window continues to get shorter. I mean, we've definitely seen that over the course of this year. And maybe that's just people are less concerned about ultimately being being squeezed out of particular dates.
What kind of shifts are you seeing in consumer behavior in terms of the booking window out of room spend and is there a meaningful difference that you've pointed out there between your higher end consumers versus more of your middle income drive to market.
Speaker Change: There's a lot of trends in the relative short term since I think people feel like the world shifted I think the window continues to get shorter I mean, we've definitely seen that over the course of this year and maybe that's just people are less concerned about ultimately being being squeezed out of.
Jeffrey Donnelly: In terms of, you know, spend, we've seen on property spend be pretty much in line with, if not ahead of last year, we actually had growth in our food and beverage in the resorts over the first quarter, which we hadn't had for the previous two quarters. So we thought that was a pretty good sign to see even with spring break moving out of the quarter. And that was pretty universally spread between some of the lower ADR resorts and the higher or affluent customer base.
Speaker Change: Fuller dates.
Speaker Change: Of spend we've seen on property spend be pretty much in line with.
Speaker Change: If not ahead of last year, we actually had growth in our food and beverage in the resorts over the first quarter, which we haven't had for the previous two quarters. So we thought that was a pretty good sign to see even with spring break moving out in the quarter.
Speaker Change: And that was pretty universally spread between some of the lower ADR resorts and the higher more affluent customer base wants.
Unknown Executive: Okay, great.
Jeffrey Donnelly: And then on the cost side, what are some of the levers that are available to you if we enter a more notable macro slowdown? How does your current level of full time employees compare to pre pandemic? And how does that impact your flexibility to I think we're definitely down in FTEs. I'd have to go back and look at the exact percentage. I'm certain that we're down in FTE count relative to pre-pandemic. It's typical for this industry to find significant cuts and then be slow to sort of reinstitute them. So there's probably some more limit to what we can effectuate to the extent we went into a deeper session.
Speaker Change: Okay, Great and then on the cost side, what are some of the levers that are available to you. If we enter a more notable macro slowdown how does your current level of full time employees compared to pre pandemic and how does that impact your flexibility to cut costs.
Speaker Change: I think we are definitely down in ftes.
Speaker Change: Go back and look at the exact percentage I'm certain that were down on an FTE count relative to pre pandemic. It's typical for this industry to find significant cuts and then be slow it at sort of reinstitute them. So theres, probably some more limit to what we could effectuate to the extent we went into it.
Jeffrey Donnelly: But I think we've got contingency plans for all of our hotels. The struggle that we have now is we're not seeing a market change in business or booking pattern. And so we're a little reticent to cut into service standards at the moment, given that the guests are still showing up and paying very high rates. But I think we've got a number of things, you know, between changing operating hours of outlets, changing service standards on the housekeeping side. We pretty much have a hiring freeze in place for the vast majority of hotels already at the moment.
Speaker Change: A deep recession, but but I think we've got contingency plans for all of our hotels. The struggle that we have now is we're not seeing a market change in business or booking pattern and so we're a little reticent to cut into service standards at the moment.
Speaker Change: Given that the guests are still showing up and paying very high rates, but what I think we've got a number of things between changing operating hours of outlets changing service standards on the housekeeping side rejected we pretty much have a hiring freeze in place for the vast majority of hotels already at the moment, but there is a gradient of things that we can announce.
Jeffrey Donnelly: But there's a gradient of things that we can enact to the extent we start to see a fall off.
Speaker Change: To the extent, we start to see a falloff in demand.
Unknown Executive: Okay, great. Thanks for taking the question. Thank you.
Speaker Change: Okay, great. Thanks for taking the question.
Chris Darling: Our next question comes from Chris Darling with Green Street. Please proceed. Hi, thanks. Good morning. I think you mentioned in the prepared remarks that wages and benefits were up about a percent and a half in the first quarter. I'm wondering how this compared relative to your expectations. And then what are you expecting for the rest of the year there? Yeah, I think wages and benefits came in about what we expected. We had a little favorable comp this quarter with some one-time issues or one-time costs and benefits last quarter that kept that growth rate down in the first quarter.
Speaker Change: Thank you.
Operator: Our next question comes from Chris Darling with Green Street. Please proceed.
Chris Darling: Hi, Thanks, good morning.
Chris Darling: I think you mentioned in the prepared remarks that wages and benefits were up about 1% in the half in the first quarter I'm wondering how this compared relative to your expectations and then what are you expecting for the rest of the year there.
Chris Darling: Sure.
Chris Darling: Yeah, I think the wages and benefits came in about what we expected we had.
Chris Darling: Hello favorable comps this quarter and some one time issues are one time costs and benefits last quarter that that kept that growth rate down in the first quarter. I think we continue to expect our wages and benefit growth rate to be around three to three 5% for the Oems.
Chris Darling: I think we continue to expect our wages and benefit growth rate to be around 3% to 3.5% for the full year. Okay.
Jeffrey Donnelly: And then I want to go back to the question Floris asked about share repurchases. And Jeff, I'm just curious, you know, strategically, how you think about incremental share repurchases relative to just bolstering your cash position. And I asked the question in the context of, you know, we're in a more uncertain environment now. I'd imagine it's, you know, a more difficult backdrop in which to sell assets, although it sounds like, you know, maybe there's still some progress on that front. And then, obviously, the handful of mortgages that are maturing throughout the year. So any incremental thoughts would be helpful to hear?
Chris Darling: Okay.
Speaker Change: And then I want to go back to the question Floris asked about share repurchases and Jeff I'm, just curious strategically how you think about incremental share repurchases relative to just bolstering your cash position and I ask the question in the context of we are in a more uncertain environment now.
Speaker Change: Imagine, it's more difficult backdrop in which to sell assets, although it sounds like maybe there is still some progress on that front and then obviously the handful of mortgages that are maturing throughout the year. So any incremental thoughts would be helpful to hear.
Jeffrey Donnelly: No, that's a great question. And it's something that, you know, I made in my, made a comment or two in my prepared remarks about it's, it's important to be driving value. And I think, when you think about per share earnings, I think that's our magnetic north. But at the same time, you know, I think maintaining liquidity and flexibility is critical. In moments like this, I personally don't think we're on the verge of another global financial crisis or pandemic like outcome, you know, where you really are sort of hoarding cash. you know, almost to the extreme.
Speaker Change: That's a great question and it's something that.
Speaker Change: I made it.
Speaker Change: Made a comment that too in my prepared remarks about it it's important to be driving value and I think when you think about per share earnings I think that's our magnetic north but at the same time I think maintaining liquidity and flexibility is critical in moments like this I personally don't think we're on the verge of a novel another global financial crisis, or a pandemic like outcome.
Speaker Change: Where are you really sort of hoarding cash.
Jeffrey Donnelly: But it is something we're mindful of. And that's why, you know, candidly, when you look at the proceeds that came out of Washington, DC, some portion of it went to repurchases, but some of it's used, really, to kind of manage the the timing around repayment of debt this year, as we sort of bridge towards a period of putting more permanent debt on. So I think that cash becomes sort of more freely available to us as the year goes on. But in the near term, it helps us, as I said, sort of, you know, bridge reworking your balance sheet.
Speaker Change: Almost to the extreme but it is something we're mindful of and that's why candidly. When you look at the proceeds that came out of Washington D. C. Some portion of it went to repurchases, but some of it's used really to kind of manage the timing around repayment of debt. This year as we sort of bridge towards a period of putting more permanent debt on so I think that cash becomes sort of more freely.
Speaker Change: <unk> available to us as the year goes on but in the near term it helps us as I said sort of.
Speaker Change: Bridge, we working your balance sheet, but I do think it's an important.
Unknown Executive: But I do think it's an important use of recycling proceeds into shared repurchase. All right, makes sense, thank you. Thanks. Thank you. And as a reminder, if you do have a question, simply press star 11 to get in the queue.
Speaker Change: Use of recycling proceeds into share repurchases.
Speaker Change: That makes sense. Thank you.
Speaker Change: Thanks.
Speaker Change: Thank you and as a reminder, if you do have a question simply press star one one to get in the queue.
Stephen Grambling: Our last question is from Stephen Grambling with Morgan Stanley. Please proceed. Hey, thanks for taking the questions. I know you targeted these high barrier entry markets, but you look across your entire portfolio, I guess, what do you think competitive supply growth is this year? Are you seeing any change in behavior in developers in the markets from that you operate from the volatility we've seen broadly? You know, like, I would say more just step back. I mean, I would say probably 40 to 50% of our markets are in places where you almost cannot build. I mean, it's sort of the Florida Keys or French Quarter, Sedona and markets like that, where there's either a very anti development stance, or just by right, you're not allowed to build, you know, like, like, as I mentioned, like the French Quarter.
Speaker Change: Our last question is from Stephen Grambling with Morgan Stanley. Please proceed.
Stephen Grambling: Hey, Thanks for taking the questions I know you started these high barrier entry markets, but if you look across your entire portfolio I guess, what do you think competitive supply growth is this year and are you seeing any change in behavior and developers in the markets from you operate from.
Speaker Change: The volatility we've seen broadly.
Speaker Change: I would say Bob just step back I mean, I would say probably 40% to 50% of our markets are in places where you almost cannot built I mean, it's sort of the Florida keys or French quarter, Sedona and markets like that where there was either a very anti development stands or just buy right youre not allowed to build.
Speaker Change: As I mentioned like the French quarter, So theres, a big chunk of our portfolio that I think for a very long period of time will have almost no supply growth and I think other markets right now like development really doesn't pencil.
Jeffrey Donnelly: So there's a big chunk of our portfolio that I think for a very long period of time, we'll have almost no supply growth. I think other markets right now, like development really doesn't pencil. So I wouldn't, I don't have a specific number, but I think it would be, you know, probably close to 1% growth, if you think about it over the next few years. But as in terms of near term trends, I mean, certainly what's happened in the last 30 days has made financing, even on acquisitions more difficult and more expensive, I would, I imagine it's going to make development more costly to pencil.
Speaker Change: So I wouldn't I don't have a specific number but I think it would be probably close to 1% growth. If you think about it over the next few years.
Speaker Change: But as in terms of near term trends I mean, certainly what's happened in the last 30 days has made financing even on acquisitions more difficult and more expensive.
Justin Leonard: I don't know, Justin, if you think in the last three to six months, if you've seen anything out there on the development side, I haven't. I mean, I've seen very, very little that's get announced, maybe one or two things that have involved public subsidy. And they're going to need that in order to get over the finish line. I think, candidly, what we're more focused on is unfortunately, given the lack of the lack of development, the brands have been more focused on getting unit growth from your brand acquisitions. And so where we do have branded outposts, you know, kind of that that continued acquisition on the brand front, brings competitive supply, although not new rooms, right, competitive supply into a brand channel.
Speaker Change: It's going to make development more costly to pencil I don't know Justin if you think in the last three months to six months, if you've seen anything out there on the development side items.
Speaker Change: Very little was get announce maybe one or two things that are involved in public subsidy.
Speaker Change: And indeed that in order to get over the finish line I think candidly what we're more focused on is unfortunately, given the lack of the.
Speaker Change: A lack of development the brands have been more focused on getting unit growth from brand acquisitions, and so where we do have branded outposts.
Speaker Change: That continued acquisition on the brand front brings.
Speaker Change: Brings competitive supply, although not new rooms, right competitive supply into our brand channels. So I think that's one of the things that we're particularly focused on how do we insulate ourselves to some extent from that Luckily, we don't have as much of a branded portfolio and some others. So we do have some some defense against that but I think it's one of the things that we're watching.
Jeffrey Donnelly: So I think that's one of the things that we're particularly focused on. And, you know, how do we insulate ourselves to some extent from that? Luckily, we don't have as much of a branded portfolio as some others. So we do have some, some dissents against that. But I think it's one of the things that we're watching. Yeah, one other thing I'd say, Steven, is, I mean, you know, it's only a small glimpse. But I mean, in the public markets, I mean, there's a handful of companies that have purchased assets out of development.
Speaker Change: One other thing I'd say Steven is I mean.
Speaker Change: It's only a small glimpse, but in the public markets I mean, theres a handful of companies that have.
Speaker Change: Purchased assets out of development and you can see there's just it tends to be a very difficult.
Jeffrey Donnelly: And you can see there's just, it tends to be a very difficult environment for that, just given the high construction costs, and, you know, the ramp that's associated with a development asset, it's just, for us, at least, it's hard to justify, not that you suggested we get into development, but it's hard to justify that relative to either your own shares or, you know, an acquisition where it's existing income on a lower basis.
Speaker Change: Environment for them, just given the high construction costs and the ramp that's associated with.
Speaker Change: A development asset it's just for us at least it is hard to justify.
Speaker Change: Not that you suggest that we get into development, but it is hard to justify that relative to either your own shares or.
Speaker Change: Acquisition, where it's existing income and a lower basis.
Jeffrey Donnelly: understood and I maybe I missed this but if the capital markets were to become more supportive are there specific markets that you think look particularly interesting or you'd want to increase exposure through from M&A if we do get that kind of I want to say all is clear on the the macro side but at least maybe from a capital market standpoint There's specific markets necessarily think of it that way. I mean, we do we do discuss some markets, I think more thematically, it's trying to find situations where, you know, you see an opportunity for a good recovery out there.
Speaker Change: Understood and maybe I missed this but if the capital markets were to become more supportive are there specific markets that you think look particularly interesting.
Speaker Change: Or you'd want to increase exposure through from M&A. If we do get that kind of I'll say all is clear on the macro side, but at least maybe from a capital market standpoint.
Speaker Change: There are specific markets.
Speaker Change: When you think of it that way I mean, we do we do discuss Submarkets I think more thematically, it's trying to find situations, where you see an opportunity for a good recovery.
Jeffrey Donnelly: And so we have looked at some situations in the last six to 12 months where I think they probably skewed to more urban markets. That to be clear, we're not abandoning a focus on resorts. It's just when you look at where can you find distressed assets, or distressed owners, it can be in more in the urban markets that just haven't rebounded. value buying. Got it.
Speaker Change: Out there and so we have looked at some situations in the last six months to 12 months, where let's say probably skewed to more urban markets.
Speaker Change: To be clear, we're not abandoning our focus on resorts. It's just when you look at where can you find distressed assets or distressed owners. It can be in more in the urban markets that just haven't rebounded yet.
Unknown Executive: All right.
Speaker Change: Value buying got it alright. Thank you.
Jeffrey Donnelly: Thank you.
Unknown Executive: And this concludes our Q&A session for today.
Speaker Change: Yes. Thank you and this concludes our Q&A session for today I will turn the call back to Jeff Donnelly for final comments.
Jeffrey Donnelly: I will turn the call back to Jeff Donnelly for final comments. Just thank you, everybody, for joining us. If we don't see you next week at Wells Fargo's headquarters tour or their REIT conference, I'm sure we'll see you on the road this summer. Thank you.
Speaker Change: Just thank you everybody for joining us if we don't see you next week at Wells Fargo's headquarters tour. There are their REIT conference I'm sure. We'll see you on the road. This summer. Thank you.
Unknown Executive: Thank you, and this concludes our conference for today. Thank you all for participating, and you may now disconnect.
Speaker Change: Thank you and this concludes our conference for today. Thank you all for participating and you may now disconnect.
Speaker Change: [music] would have given you.
Unknown Executive: I would have given you all of my heart, but that someone is torn at heart.
Speaker Change: Nine.
Speaker Change: But.
Speaker Change: This is Todd.