Q1 2025 Chatham Lodging Trust Earnings Call
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Speaker Change: Greetings and welcome to the Chatham Lodging Trust's first quarter 2025 financial results conference call. At this time, all participants are in a listening mode. A question and answer session will follow the formal presentation.
Speaker Change: If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Chris Daly, president of DG Public Relations.
Thank you, Chris. You may begin.
Thank you, Alicia.
Speaker Change: Good afternoon everyone and welcome to the Chatham Lodging Trust First Quarter 2025 Results Conference Call.
Speaker Change: Please note that many of our comments today are considered court-looking statements defined by federal securities laws. These statements are subjects to risks in uncertainties, both known and unknown, as described in our most recent form 10K and other SEC violence.
Speaker Change: All information in this call is as of May 6, 2025, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
Speaker Change: You can find copies of our SEC filings and earnings at least, which contain reconciliation to non-GAAP financial measures referenced on this call on our website at ChathamLodgingTrust.com
Speaker Change: Now to provide you with some insight from the Chatham's 2025 first quarter. Allow me to introduce Jeff Fisher, Chairman of President and Chief Executive Officer, Dennis Craven, Executive Vice President and Chief Operating Officer, and Jeremy Wegner, Senior Vice President and Chief Finance Officer.
Let me turn the session over to Jeff Fisher. Jeff?
Jeff Fisher: Thanks, Chris. Good afternoon, everyone. I certainly appreciate you all being on our call today. Before I turn it over to Dennis for a recap of the first quarter, I'm going to talk about a few key corporate developments as well as our current outlook on lodging and our operating environment.
Jeff Fisher: I'd like to start the call by talking about a first for us, and that is the announcement that our Board of Trustees have approved a $25 million share-by-back plan.
Jeff Fisher: We've been discussing a repurchase program for quite some time with our board, and felt the time was right to initiate the plan.
Jeff Fisher: The $500 million of maturing debt we had in 2023 and 2024.
Jeff Fisher: and we successfully completed that phase of recapitalization last fall. Since then, we've sold five older hotels and generated an additional over $80 million of proceeds.
Jeff Fisher: We're in great shape to use our low leverage, I believe is the lowest since our IPO, to enhance shareholder value and we view the share repurchase plan as another tool in our tool box of ways to add value for our shareholders.
Jeff Fisher: At current trading levels, we are trading at approximately $150,000 per key and at an approximate 9.5% cap rate on forecasted 2025 NOI, historically low multiple for us as well as most of our peers.
Jeff Fisher: Additionally, seems like a long time ago, but another exciting development in the first quarter.
Jeff Fisher: was that we increased our quarterly common dividend by 29% or 2 cents per common share to 9 cents per share. On an annualized basis, our dividend equates to a yield of over 5%.
Jeff Fisher: This was the first increase since we reinstated the dividend and there's another way we are adding value for our shareholders through this increase dividend payment.
Jeff Fisher: Next, we certainly were very pleased with our execution of the sale of all five hotels we listed in the fourth quarter with the last closing in April .
Jeff Fisher: We sold five hotels with an average age of 25 years.
and an approximate 6% capitalization rate on 2024 NOI levels.
for Proceeds of $83M and Dollars.
Jeff Fisher: Each of these five hotels were among the six lowest rip far hotels in our portfolio.
Jeff Fisher: Of course, we are going to use a portion of these proceeds to buy back shares of our stock or acquire hotels, both options that will be accretive in the short term and value enhancing over the long term.
Jeff Fisher: Given the yields we can opportunistically recycle assets at, we can grow creatively and enhance shareholder value, whether that is by buying hotels for the right return or repurchasing shares.
Jeff Fisher: We are actively looking at external growth acquisitions and opportunities since you never know when potential opportunistic acquisitions will present the kind of returns we need to add shareholder value.
Jeff Fisher: We have been focusing our attention on high-quality premium branded targets that further diversifies our portfolio across demand generators and geographic areas where we believe future economic growth will be concentrated.
Jeff Fisher: Successfully selling hotels at an approximate six cap rate and repurchasing shares or requiring hotels at yields over 9% are both great options.
Jeff Fisher: Operationally, we've delivered a great first quarter with Red Park growth among the highest of all lodging reads, and we substantially exceeded industry growth yet again.
Jeff Fisher: We were able to grow our GOP profit margins in the first quarter and we delivered adjusted FFO per share near the top of our guidance range.
Jeff Fisher: Last year, our only acquisition was the home two sweet Phoenix downtown and we beat our budgeted first quarter top line by 12% and EBITDA by approximately 25%.
Jeff Fisher: Now, I'm switching gears to spend a few minutes discussing the latest demand trends.
Jeff Fisher: that we've seen within our portfolio and our outlook for the future.
Jeff Fisher: After a great start to the year for us, Riv Par Growth and March was flat and in April we saw Riv Par decline 4%.
Jeff Fisher: As highlighted in the release, April was meaningfully impacted by the success of Passover and Easter holiday weekends.
Jeff Fisher: So through the first 12 days of April , leading in the Passover, Rev. Par was up.
Jeff Fisher: Over 1% and then for the 10 days from April 13 to 23, surrounding the holidays, Red Poe was down approximately 15%
Jeff Fisher: and we finished the month with RevPAR up slightly over the last eight days of the month. Though we're early in the month, May RevPAR is projected to be flat to up over 1%.
Jeff Fisher: Of course, everyone wants to know about the status of government-related travel. The good news is that government-driven room revenue is a fairly small piece of our overall portfolio at approximately 5% or less this year and last year.
Jeff Fisher: A lot of our government-related business is centered in our three hotels in Washington D.C. and in around D.C.
Jeff Fisher: And after seeing the demand, the drop in demand, we quickly shifted our sales efforts to gain more leisure travelers and also retarget certain special corporate business.
Jeff Fisher: that is the advantage of having island hospitality as our manager.
Jeff Fisher: As we look forward to the rest of the year, demand remains strong however the ability to grow rev power over last year's numbers is somewhat limited at this point.
Jeff Fisher: We're currently projecting flat-rev part given the uncertainty in the economy as of now. It is worth noting that it's the same uncertainty I'm referring to.
Jeff Fisher: that should result in even less new supply than the already low supply numbers that exist today.
Jeff Fisher: The past several down cycles have been characterized by weak demand and historically high supply at the same time.
Jeff Fisher: Today's situation is exactly the opposite, which should provide a strong runway for future growth in red part and earnings. With that, I'd like to turn it over to Dennis to give some more color on the quarter, Dennis.
Dennis Craven: Thanks, Jeff. Good morning, everyone. We saw broad and diverse rev-part growth across our portfolio with rev-part growing in six of our top seven markets.
Dennis Craven: Leading the way where our technology dependent markets and the underlying strength in those markets is encouraging as we move forward through the year.
Dennis Craven: after posting 14% growth in the last two quarters of 24.
Dennis Craven: By the way, our Silicon Valley Hotel, EBITDA jumped approximately 10% in the first quarter on that 8% Rev Park Road, so good flow through there.
Dennis Craven: Our residents in Bellevue was under renovation for the quarter, but the Bellevue market was up 3% within the first quarter, with the 5% increase in ADR, pretty solid numbers in a very seasonally slower period in the Seattle area, the first quarter.
Dennis Craven: Chatham has the highest exposure to big tech hotel demand whether that's in Silicon Valley Bellevue or Austin and tech investment continues to be rapidly expanding and certainly there's a lot of initiatives coming out of some large companies that are looking to invest.
Dennis Craven: Billions and billions of dollars in tech investment in the US. In our other top markets, LA RevPAR was up 14% with our home to Woodland Hills benefiting from fire-related demand when RevPAR was up 40% at that hotel.
Dennis Craven: Coming off a pretty weak 2024 rev-par was also up about 15% at our other two LA hotels and they really didn't see as much fire-related business.
Dennis Craven: New York, Dallas, and DC were up at least 6% in the quarter, again showing the broad depth across our markets.
Dennis Craven: Just been a little bit of time just talking about kind of the sales pivot within DC and just to give you some trends within our three hotels in that market.
Dennis Craven: March Rift Park at our three hotels as a group was down 8% in DC and within that our DC and Tyson's residents were actually up 4% while our Springfield Virginia Embassy Suites was down 20%.
Dennis Craven: as they pivoted sales efforts to derive more demand really on the leisure side.
Dennis Craven: April Reff par for the collection of three hotels was down 4%, so essentially cut that decline in half. And our projection for May is that Reff par at those three DC hotels looks to be down about 2%. So again, having the shortfall.
Dennis Craven: The only thing with from a government side is our Portsmouth Hilton Garden Inn, which hasn't really been a heavy government hotel due to ample leisure demand. We've seen some attractive demand from the shipyard there this year and we have a room block of well over 1,600 room nights over the next few months at our hotel.
Dennis Craven: Shipbuilding, as a lot of people know, has been a, seems to be a major focus of the current administration, and that demand ultimately is pretty sticky over a multiple year period of time. So, from a long-term perspective, that's encouraging for that market.
Dennis Craven: Some additional Rev-PAR color are top five Rev-PAR hotels in the quarter where our residents in Fort Lauderdale with Rev-PAR $259.
Dennis Craven: 2nd was our Marina Del Rey, Hilton Garden Inn, with ref part of $199 and then coming in 3rd and making its first ever appearance in our top 5 was our home to Phoenix Downtown.
Dennis Craven: Excluding our tech hotels, RevFar was still up 4% across the remainder of the portfolio.
Dennis Craven: Rev4RR6 predominantly Leisure Hotels, declined only 1% in the quarter, Leisure Hotels generally comprise about 20% of our EBITDA on an annualized basis.
Dennis Craven: On the operations front, for the second consecutive quarter, we drove operating margins higher this time, 30 basis points above last year's levels. Our other department profit increased another 5 percent this year with parking profit driving
Dennis Craven: Our GOP margins would have been even higher, save a couple of increases that hit us by approximately 50 basis points, and should improve in the near future.
Dennis Craven: Complimentary F&B costs were up 20% in the quarter due to a combination of brand-man-dated items and cost inflation, though we certainly hear that some of those prices are coming down.
Dennis Craven: Utility costs were up approximately 10% in the quarter and impacted our margins by approximately 30 basis points. Again, given the focus on energy expansion, these should moderate in the future.
Dennis Craven: On the labor and benefits front, our total cost on a paracupied room basis was up 4% in the quarter to $44. Our average hourly wages were up 3% in the quarter.
In Italy, kind of as March swung, our head counts.
Dennis Craven: We had to adjust them relatively quickly, based on the demand trend. As we sit here, kind of in early May, our headcount for hourly employees is down about 6% from what it was just a couple months ago.
Dennis Craven: In the quarter, property related insurance was down 6% for the year or for the quarter with our actual property program down over 10%.
Dennis Craven: We had 11 hotels produced over a million dollars of GOP in the quarter and for the 13th consecutive quarter our gas line presence and led the way with GOP of 2.1 million.
Dennis Craven: and again making its first appearance in our top five was our home to Phoenix downtown with the second highest GOP in the quarter at approximately 1.6 million.
Dennis Craven: Our last of the top five were our Sunnyvale 2 residents in, our Courtyard Downtown Dallas and our home to Woodland Hills.
Dennis Craven: On the Capix front, we spent approximately $7 million in the quarter. We substantially completed renovations at our residents in Bellevue, Washington, and the Hilton Garden in in Port Smith, New Hampshire. The comprehensive renovation of the residents, including a complete refresh of all guest rooms, public space, and meeting spaces.
Dennis Craven: The improvements at our report to Mathilde and Garnand included a complete redesign and reallocation of our public space adding a new much improved bar market meeting room space and importantly we converted the old meeting room space into five additional guest rooms.
Bringing our total room count there to 136 rooms
Dennis Craven: Additionally in the quarter at our Exeter Hempton Inn in Suites, we converted a seldom used meeting room into an expansive guest room suite.
Dennis Craven: Our CAPEX budget for $25 is approximately $26 million, which includes three renovations. The last two renovations we will commence this year will start in the fourth quarter and that will be at the resident in Austin and the resident in Mountain View, California during the fourth quarter.
Dennis Craven: And I'll turn it over to Jeremy. Thanks, Dennis. Good afternoon, everyone. Our Q1 2025 hotel EBITDA was $20.8 million. Adjusted EBITDA was $17.9 million. Adjusted FFO was $0.14 per
Speaker Change: We were able to generate a GOP margin of 38.9% and hotel EBITDA margin of 30.5% in Q1.
Speaker Change: GOP margins for the quarter rough 30 basis points from Q1 2024, which was due to the strong 3.8 percent rough part growth and outstanding expense control.
Speaker Change: This improvement in year-over-year margin trends relative to prior quarters reflects the continuing stabilization of key expenses.
Speaker Change: Over the past couple of years, we have successfully reduced leverage through the sales of a number of older hotels with lower growth prospects and significant capital needs and addressed a significant amount of debt majorities.
Speaker Change: With the repayment of the mortgage loan on the Hampton Houston in January 2025, we have now addressed all of our near-term CMBS maturities.
Speaker Change: In Q4 we close in the sales of the Homewood Bloomington and Homewood Maitland for $29.3 million In Q1 we close the sales of the Homewood Brentwood for $15 million in January in the Hampton Houston for $15.5 million in March and subsequent to the end of Q1 we close the sale of the Courtyard Houston for $23.5 million in April
Speaker Change: The aggregate sale price for these five hotels, including approximately $22 million of required renovation costs, represents a cap rate of approximately 6.5% on LTM and OY.
Speaker Change: As of March 31st, Chatham's net debt to LTM EBITDA was 3.6 times, which is significantly below our historical leverage, which is generally in the 5.5 to 6 times area.
Turning to our Q2 in full year 2025 guidance.
Speaker Change: We expect rev-par of minus 2% to minus 0.5%, adjusted EBIDOV 26.8% to 28.8 million, and adjusted the FFO for share of $0.32 to $0.36 in Q2.
Speaker Change: and Rev. Part Growth of Flat to Plus 1%, Adjusted to Evadov, $89 million to $93 million, and Adjusted FFO per share of $95 to $1.3 for the full year. This guidance reflects the sales of the five assets we closed from December to April .
Speaker Change: and the Q2 Rev Par Guide to reflect the shift in the timing of Easter from March 2024 to April 2025, which negatively impacted our April 2025 Rev Par Results.
Reflecting our recently completed asset sales.
Speaker Change: Our 2024 REF PAR would have been $123 in Q1, $156 in Q2, $155 in Q3, $133 in Q4, and $142 for the full year.
Speaker Change: This concludes my portion of the call. Operator, please open the line for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star two 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.
One moment please, Bowie Pull for questions.
Speaker Change: Thank you. Our first question comes from the line of Gaurav Mehta with the line's global partners. Please proceed.
Guarva Mehta: Thank you, good afternoon. But I wanted to go back to your comments around some of the capital allocation initiatives you highlight here, buyback and acquisitions.
Guarva Mehta: I want to get some more color on how you think about both of those alternated and then what are you guys seeing in acquisition market?
Yeah, hi, Gaurav, it's Jeff.
Guarva Mehta: Obviously, we're looking at both of those from a very opportunistic perspective, particularly with the new tool and the toolbox, as I mentioned, with the ability to buy back some shares
You know, where...
We're going to work real hard.
Guarva Mehta: to, and as we always do, to try to grow this company in an accretive way to enhance shareholder value.
But the acquisition market...
Guarva Mehta: You know, is such that, A, there's no large pipeline out there for the most part, and B, the kind of yields we need, which I indicated in my prepared remarks, better be over, you know, at or over 9%.
Guarva Mehta: The real numbers just obviously is a difficult metric to hit, but that doesn't mean we stop looking and that doesn't mean that we don't attempt to try to make some kind of deals work, but in the absence of that.
Guarva Mehta: I think, you know, we look at where our share price is and we look at some of the 52 week low numbers and a real what we consider to be dislocation in the share price relative to the value of the company and the assets that we own.
and...
Guarva Mehta: You know, we buy some stock back in. I will tell you that from the acquisition side, I think...
You know, the-
Guarva Mehta: The ability to have island hospitality under right deals continuously and looking for value at our opportunities, not...
Guarva Mehta: Stabilized assets that are on the market, you know, at an eighth cap, those deals won't work.
Guarva Mehta: but we do have the unique ability with the affiliated management company to have a lot of insight into what a hotel.
Guarva Mehta: You know, on a achieve in so far as margins and otherwise. So, you know, that's probably an area that will continue to try to work on as well.
Speaker Change: Okay, I think on the last call you had also mentioned opportunity for a development in Portland, Maine. Just wanted to get some more color on if that's still an option for you guys this year.
We look, it's out there, the process in terms of entitlements [inaudible]
Speaker Change: continues to be a little bit more extended, but in the meantime...
Speaker Change: So, you know, we've got, for example, a zoning board of appeal here and coming up.
Speaker Change: for a certain variance request relative to that asset that didn't need to occur.
Speaker Change: You know, even as short as like two months ago but nonetheless, I think with the tariffs and with the uncertainty around...
what those costs could be.
Speaker Change: You know, we're going to be very careful in pulling the trigger on that deal even though the returns look extremely favorable as we've indicated before.
you know, with our knowledge and our hampton in.
Speaker Change: in Sweden, sitting on, you know, right next door to where this hotel would be constructed. We certainly know what the turn-away nights are, you know, for being full, where the demand is by segment and otherwise market continues, actually, to be strong. So, you know, we'll just, we'll just kind of move forward here, since we own the land anyway, and other than some minor, you know, costs.
Speaker Change: Soft Coss incurred during this period of time, I think it would be a wonderful opportunity if we could tie the costs down and have the approvals we need in a manner that it's been under it in that.
Okay, then. Lastly.
Speaker Change: I think you mentioned Phoenix Hotel a few times, being in like top rap part hotel for your company for the first time and also on the margin side. Just wanted to learn, you know, what drove the performance for the Phoenix Hotel.
Speaker Change: Dennis, you want to pick that one up? Yeah, Gaurav Mehta. It opened up last, basically January of 2024. So, we obviously have some ramp in there in terms of repart growth, but I think it's certainly outperformed our budget for 2025 through the first quarter. And really, January was a little bit slower than we estimated has really come on strong. So, I think it was a little bit slower than we expected. So, I think it was a little bit slower than we expected.
in the last few months, but just please with…
Speaker Change: The overall performance there, we've got a great GM that we hired not too long ago that's really had a positive impact.
Speaker Change: in operating team entirely the Tata Paz of Impact on getting some good corporate business in that hotel. So just really kind of as we sit here, please, with...
Speaker Change: kind of where that hotel is going. Of course, you're in the season, so to speak, with the winter season being as we under-roaded, you know, the very high rev part period of time, but you know you come to find
that when you're in a brand new product
Speaker Change: You know, you can really achieve some pretty hefty market share gains and some pretty strong numbers and that's what that hotel is at experiencing.
Okay, thank you. That's all I have.
Thanks.
Speaker Change: Thank you. Our next question comes from the line of Aryeh Klein with BMO Capital Market.
Please proceed.
Thank you and good afternoon.
Speaker Change: I was curious just as it relates to the four died and some of the weaker friends you saw in April .
Speaker Change: Now, how much is that is, I guess, government versus some of the trends that you're seeing in BT and leisure. Hopefully you can talk a little bit more about the broader trends that you're seeing from those assignments. Thank you.
Speaker Change: Hey, Aryeh, this is Dennis. Yeah, I mean, listen, I think if you look at March, you know, obviously you had Easter kind of right at the end of March last year.
We finished flat.
Speaker Change: for March this year. You know, I think as we highlighted in the release in
Speaker Change: and in the comments around the timing of hell, April progressed.
Speaker Change: I think the government impact is in there, but that minus 15% for that 10-day period certainly was more driven by really not just government travel but just business travel slowing down around those two successive weekends.
Speaker Change: of religious holidays. And I think kind of as you, you know, think about...
Speaker Change: Corporate business and everything like that, it seems as if around holidays.
Speaker Change: You know they've extended you know kind of we're not going to travel around these dates that's kind of been a post pandemic
you know, trend that we've seen and I think...
Speaker Change: You know, that that was just exacerbated in the middle of April . So,
Again, I think as I think Jeff talked about.
Speaker Change: As we said in our release May is at least trending at the moment where it's going to be a positive month so I think the government impact is a little bit but for us it's less than 5% of our portfolio so it will have some impact but hopefully not too meaningful.
Speaker Change: Thanks, and then maybe it just not on the expense side. I don't think we would do pet count a little bit. I'm just curious about the opportunity, you know, for in a softer kind of kind of backdrop with your friends. How do you think about.
Speaker Change: the opportunities I guess to further reduce costs and manage margins.
Speaker Change: Yeah, I mean, listen, I think, you know, I think probably you've heard from a lot of others. I don't think anybody is
Speaker Change: You know, making any deep what I would call COVID related cuts or anything like that [inaudible]
Speaker Change: You know, it was, you know, as you kind of got five or six days into March things were moving pretty well and pretty encouraging and then kind of the the rug got taken out from a lot of that, you know, whether it was government or, you know, tear-related or whatever it might be people just kind of pulling back quickly and you've got to be able to adjust your head counts fast. [inaudible]
Speaker Change: to make up for that lack of demand, I think. And, you know, with Ireland, you know, they basically said, yep.
Speaker Change: Yeah, we're moving and in essence adjusted we had ramped up.
Headcount going into March
on an expected occupancy level.
Speaker Change: you know, being in demand, being a little bit higher, and then we cut that back.
Speaker Change: You know, basically as we got to eat prawns, said, hey…
Speaker Change: We need to revert back to where we were based on what we saw in terms of occupancy, so I wouldn't say there's a whole lot of deep cuts coming. Everybody's, I think, as reflective in their guidance for the balance of the years.
Speaker Change: is just kind of taking away and see approach, and it's not the end of the world, but it's not what it was in January and February . So I think if we can get some good developments that solidifies kind of the economic certainty out there, then we're positioned to do pretty well like we saw to start the year.
Speaker Change: And then maybe just going back to Portland and that project, curious how the cost of that project might be impacted by Harris. Obviously a lot of unknowns on that front, but just curious how you think about that. Thank you.
Speaker Change: Yeah, I mean, we had factored in some steel-related tariffs a few months ago into our projections.
Speaker Change: Obviously, that's kind of moving around a lot whether it's steel or just anything in general so you know we have our underwriting model we have our projections we know that market really well you know I think as Jeff talked about the at least the projected returns.
Speaker Change: are very strong, but who knows where that goes here in the next?
You know, six or nine months in terms of-
Impact, but, you know, we're taking it and we're...
Speaker Change: You know, we're going to continue to try and get approval for the building and...
and see what it looks like.
I mean, if you extrapolate that…
Thought process, even.
to a multitude of other hotel developers around the country.
You got to imagine that-
Speaker Change: As you read the lodging econometrics pipeline numbers, you got to imagine that...
Those numbers in so far as pipeline
Speaker Change: Hey, they may be what they are. Our number is in the pipeline and has been for four or five years, frankly. But, you know, how many end up really breaking ground here, I think over the six or nine months, I think they're numbers, frankly, or way high.
Appreciate all the color. Thank you.
Speaker Change: Thank you. Our last question comes from the line of Jonathan Jenkins with Oppenheimer. Please proceed.
Jonathan Jenkins: Good afternoon. Thank you for taking my questions. First one from me, helpful commentary on the government's demand and the impact there, but I'm sure it's a small percentage, but could you maybe help us think about how much international inbound travel exposure you have in the portfolio and if that's having any impact at all?
Jonathan Jenkins: Pretty light, you know, for our hotels quite frankly. I mean, most of it would be in and around Silicon Valley, but frankly, you know, we've been experiencing some pretty strong numbers overall there, you know, as Dennis indicated in his remarks, but not being
specifically in...
New York City or San Francisco or otherwise .
Jonathan Jenkins: You know, kind of really insulates us from that issue, maybe in the summer.
Jonathan Jenkins: You know, there was a little Canadian travel that you know might be scared off a little bit right now.
Jonathan Jenkins: and some of the Northeastern, a couple of the coastal Northeastern.
Jonathan Jenkins: Hotel, but, you know, and goodness, there's been such access to man, frankly, in those markets in any way over the last few years, I'm not sure that's going to be overly impactful either.
Jonathan Jenkins: Okay, that's a great color. And then switching gears to the guidance.
Jonathan Jenkins: When we think about the Fulier Red Power Guidance, how much of that Red Power expectation for 2025?
Jonathan Jenkins: will be or could be driven by ADR growth. I mean, as the assumption that Oxtancy will continue to grow back to 2019 and may be offset by a little bit of rate.
Jonathan Jenkins: I mean, listen, I think we're basically at a flat midpoint.
for the balance of the year.
Yeah, I don't think there's a-
Jonathan Jenkins: I don't think there's much movement one way either way in ADR or OXFITC.
Jonathan Jenkins: Quite honestly, so you might have, if it's a percent one way or the other.
Jonathan Jenkins: You know, nothing would be kind of surprising at this point. I mean I think the only place you'll see
Jonathan Jenkins: Any ADR slippage, because obviously we were growing ADR along with occupants.
Jonathan Jenkins: here, is when a hotel does have, let's say, a disproportionate amount.
Jonathan Jenkins: of Government Business that is really pulled back. So, as we were talking about, we have one particular hotel. I'm not going to name it of the three in the DC area that has always had lots of government business.
Jonathan Jenkins: at very high rates, higher than per-dem rates, because of what it is in its location, and so there...
Jonathan Jenkins: You're essentially trying to share shift some other business into the hotel and so maybe you see a little lower ADR in that realm but otherwise I think it's you know, flatish to up a little bit.
Speaker Change: Okay, that's perfect. Thank you. And then last one for me if I could. Outside of that potential development opportunity, which you talked about.
Speaker Change: a couple of times now. When you think about the potential acquisition opportunities, is there any markets or types of assets you would like to target? I mean, does it make sense to add to existing markets or expand the new markets? What are your thoughts on that?
Speaker Change: You know, I think that we are, you know, as we look at our portfolio, we are definitely ready to diversify the company's asset base just a little bit outside of markets that we're in. And we're very tech heavy.
Speaker Change: and the fortunes of the company do seem to rely quite heavily.
on that part of the economy. Now, look, it's...
It's the right place to be.
And the hotels we have are absolutely the right locationally.
Speaker Change: in those markets, but I think an overall goal is to get a little less volatility.
Speaker Change: in our cash flow. And if we could make acquisitions that were solid, you know, in a cap-rate that makes sense relative to where we trade at, you know, and that's a big caveat, then I think we would look at, you know, some newer assets.
in markets that allow us to diversify a bit more.
Speaker Change: Okay, that's very helpful. Thank you for all the colors today and that's all for me.
Appreciate your questions. Thanks a lot.
Speaker Change: Thank you. There are no further questions at this time. I'd like to pass the call back over to management if they have any closing remarks.
Speaker Change: Well, thank you very much, everybody, for being on the call today, and frankly, we still remain pretty bullish about where we're headed here, both in the economy, once the certainty gets back to where it needs to be, I think, and overall, for the industry itself, really over the next three to five years. So we look forward to speaking to you on the next quarter.
Speaker Change: Thank you. You may disconnect your lines at this time. Thank you for your participation.