Ashford Hospitality Trust Inc

Please stand by, we're about to begin. Good day and welcome to the Ashford Hospitality Trust first quarter 2019 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jordan Jennings. Please go ahead.

Good day everyone and welcome to today's conference call to review the results for Ashford Hospitality Trust for the first quarter of 2019 and to update you on recent developments. On the call today will be Douglas Kessler, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, Jeremy Welter, Chief Operating Officer. Your results as well as the notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday afternoon in a press release that has been covered by the financial media. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risk, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call were only made as of the date of this call, and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8K with the SEC. SEC on May 2, 2019 and may also be accessed through the company's website at www.ahtread.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the first quarter of 2019 with the first quarter of 2018. I will now turn the call over to Douglas Kessler. Please go ahead, sir.

Good morning and thank you for joining us to discuss Ashford Hospitality Trust's first quarter results. I want to begin by providing an update on the success we're having with our ERP initiative with Ashford, Inc. Then I'll review our financial results and other items. Given our approximately 17% insider ownership of Ashford Trust, we believe we have a tremendous alignment with our shareholders, which encourages us to think and act like owners. Our strategies throughout our 16-year history have consistently focused on ways to create shareholder value. Many of our diligent efforts have been economically transformational and successful over the years. We believe that the ERP is one of these initiatives and will provide meaningful benefits to improve our competitive position as well as increase shareholder value. As we've discussed previously pursuant to the ERP initiative, Asherd Inc. has committed to provide $50 million to the company on a programmatic basis, equating to approximately 10% of each new investment's acquisition price to be used for the purchase of FF&E at properties owned by the company. We believe the ERP has the opportunity to significantly improve returns on hotel acquisitions. The attractiveness of the ERP is to make good deals great deals. Since establishing the ERP, we have already completed $406 million of high-quality acquisitions that have utilized the program which equates to approximately 80% committed utilization of the pledged $50 million of ERFP funding. To date, we have received approximately $21 million of the $40.6 million that Ashford, Inc. has committed to provide us for the four acquisitions under the ERFP. In January, we acquired the Embassy Suites New York Midtown Manhattan for $195 million. In connection with this acquisition, Astrid, Inc. committed to provide us with approximately $19.5 million under the terms of the ERFP. We expect this newly constructed 41-story hotel, ideally located near Bryant Park and Times Square, to benefit from being the only Embassy Suites in the dynamic Manhattan market. Additionally, as our first direct hotel investment in New York City, we believe the recent positive changes in Manhattan's hotel metrics point to favorable timing of this addition to our portfolio. While this property is still ramping up operations, having only recently opened in early 2018, the hotel performed exceptionally well during the first quarter. In March, the hotel's penetration index already achieved our underwriting target for the year. Looking ahead, we believe there is significant upside at the property. Additionally, in February, we purchased the Hilton Santa Cruz Scotts Valley in Santa Cruz, California for $50 million. Our latest acquisition to take advantage of the ERP has an attractive location near the expanding tech market in San Jose and just minutes from Santa Cruz, one of Northern California's most desirable beach communities. This property also benefits from being the only full service Hilton branded asset in the Santa Cruz market. The acquisition was partially funded by the issuance of approximately 1.5 million OP units. The OP units were issued at a price of $7 per unit, which reflects an approximate 23% premium to yesterday's stock price. We also assumed a $25.3 million mortgage loan that bears interest at a fixed rate of 4.7% and matures in March of 2025. In conjunction with this transaction, Ashford, Inc. provided us with $5 million as part of the ERP. Year to date, the hotel's penetration index has already grown 2.8 percentage points, and we're enthusiastic about the future performance of this asset. We believe these acquisitions are highly favorable investments on their own. However, with the ERP, the projected return should be even greater. I can assure you that our underwriting efforts continue to be focused, diligent, and with the same high standards to improve our portfolio with the best assets for the best value. We strongly believe that the ERP provides us not only with a competitive advantage, but is also structured to enhance shareholder value. Let me now turn to our first quarter performance. Our actual rev par for all hotels for the quarter increased 2.1%, while comparable rev par for all hotels increased 1.9%. For the first quarter, comparable rev par for all hotels not under renovation increased 2.7%. For the first quarter, we reported AFFO per share of 26 cents and adjusted EBITDA RE of $100.5 million. As for our balance sheet, we believe in the benefits of an appropriate amount of non-recourse leverage to enhance equity returns. We also believe having floating rate debt has several benefits, including flexibility, as well as being a natural hedge against our cash flows. Over the past couple of years, we've been very active in refinancing a majority of our existing loans, both to improve the spreads compared to the prior loan terms and to extend our maturities. To that end, during the quarter, we refinanced a mortgage loan on the Renaissance Nashville and Weston Princeton with a new loan that totaled $240 million and has a lower spread than the previous loan. Derek will provide more information on that refinancing shortly. With all our recent... financing activity, we now have an attractive, well-laddered maturity schedule. We also seek to maintain a high cash and cash equivalence balance between 25 percent and 35 percent of our equity market capitalization for financial flexibility. We note that this excess cash balance can provide a hedge during uncertain economic times, as well as the requisite funds to capitalize on attractive investment opportunities as they arise. As of the first quarter of 2019, our net working capital totaled $359 million, equating to approximately $2.89 per share, which represents a significant 51% of our current share price as of yesterday's close. We also continue to make progress with our investor outreach efforts, including organizing and hosting a Key West market tour in April that included several of our REIT peers' properties and management teams. The event was very well attended by investors and analysts. During the remainder of 2019, we will continue to get out on the road to meet with investors to communicate our strategy and the attractiveness of an investment in Asher Trust. We look forward to speaking with many of you during upcoming events. Looking ahead, we have a high-quality portfolio and well-diversified portfolio, and we remain focused on accretive transactions as well as proactive asset management initiatives. We are committed to maximizing value for our shareholders as we focus on generating solid operating performance and continuing to seek investment opportunities, and efficiently managing our balance sheet. I will now turn the call over to Derek to review our first quarter financial performance.

Thanks, Douglas. For the first quarter of 2019, we reported a net loss attributable to common stockholders of $48.7 million, or 49 cents per diluted share. For the quarter, we reported AFFO per diluted share of 26 cents. Adjusted EBITDA RE totaled $100.5 million for the quarter. At the end of the first quarter, we had $4.2 billion of mortgage loans with a blended average interest rate of 5.7%. Our loans were 9% fixed rate and 91% floating rate. All of our loans are non-recourse, and we have a well-laddered maturity schedule. Interest rate caps are in place for virtually all of our floating rate loans. And including the market value of our equity investment in Ashford, Inc., we ended the quarter with networking capital of $359 million. As of March 31, 2019, our portfolio consisted of 121 hotels with 25,552 net rooms. Our share count at quarter end stood at 124 million fully diluted shares outstanding, which is comprised of 102.2 million shares of common stock, and 21.9 million OP units. With regard to dividends, the Board of Directors declared a first quarter 2019 cash dividend of 12 cents per share, or 48 cents on an annualized basis. Based on yesterday's stock price, this represents an 8.5% dividend yield, among the highest in the hotel REIT space. On the capital markets front, during the quarter we refinanced our RL Capital Nashville Princeton mortgage loan. with an existing outstanding balance totaling approximately $178 million and a final maturity date in June 2022. The new loan totals $240 million and has a two-year initial term with five one-year extension options, subject to the satisfaction of certain conditions. The loan is interest-only and provides for a floating interest rate of LIBOR plus 2.75%. The loan remains secured by the same two hotels, the Renaissance in Nashville, Tennessee, and the West at Princeton and Princeton, New Jersey. In January, in connection with the acquisition of the Embassy Suites Manhattan, we entered into a $145 million non-recourse mortgage loan. The loan is a three-year initial term with two one-year extension options, subject to the satisfaction of certain conditions. The loan is interest-only with a rate of LIBOR plus 3.9%. In connection with the closing of the Hilton Santa Cruz Scotts Valley acquisition, We assumed an existing non-recourse mortgage with a balance of approximately $25.3 million. The loan bears interest at a fixed rate of 4.7% and matures in March of 2025. This concludes our financial review. I would now like to turn it over to Jeremy to discuss our asset management activities for the quarter.

Thank you, Derek. Comparable rev par for our portfolio grew 1.9% during the first quarter of 2019. Comparable rev par for those assets not under renovation grew 2.7%. This growth represents a 180 basis point gain and a 40 basis point gain relative to the upper upscale class nationally and the total United States, respectively. During the first quarter, comparable hotel EBITDA grew $2.3 million, or 2.1%. The government shutdown at the beginning of the quarter impacted January and February, leading to approximately $1.3 million less in revenue. Easter occurring later in April 2019 benefited March this year relative to 2018. In January, we acquired the recently opened 310-room Embassy Suites New York Midtown Manhattan. Following its opening in January 2018, the hotel's performances continued to ramp due in large part to its proximity to the Hudson Yards redevelopment, Times Square, Penn Station, and Bryant Park. It is also the only Embassy Suites hotel in Manhattan. As I've highlighted in the past, our property manager, Remington, has a strong track record of driving results following our acquisition of both independent and franchised hotels, and this hotel has not been an exception, as comparable to Red Park during the first quarter grew 43.4%. This Red Park growth represents 5,050 basis points and 4,920 basis points growth relative to its market and the hotel's competitors, respectively. We're excited about the outlook for this hotel, and we believe that significant upside remains at this property. One of the first initiatives is to convert 40 king rooms to double queen rooms during the third quarter in order to capitalize on the premium pricing of multi-bed hotel rooms in Manhattan. During 2019, we will continue to invest in our portfolio to maintain competitiveness. In total, we estimate spending approximately $135 to $145 million in capital expenditures during the year. This estimate is down significantly from what we spent in 2018. We've completed guest room renovations at several hotels, including the Embassy Suites Crystal City, High Regency Coral Gables, along with a few select properties. We've also completed a lobby renovation at the Merritt Crystal Gateway. We continue to work on guest room renovations at the Marriott DFW Airport and a number of other hotels. We're continuously identifying opportunities to create value throughout the portfolio. To that end, the first phase of the Renaissance Nashville redevelopment is complete, and the second phase is underway, which will include the build-out of additional meeting space. Furthermore, we have identified accretive opportunities to add additional keys within our portfolio. We'll be adding four keys at the Hilton Boston Back Bay and have added two keys to the MSC Suites Crystal City and one key to the High Regency Coral Gables. Throughout 2018, I have discussed the impact of renovations on our portfolio. I'm now excited to discuss the positive benefit experienced from some of these transformational renovations and how they have positioned us for long-term success. I'd like to turn to our largest DC area hotel, the Marriott Gateway in Arlington, Virginia. During the first quarter, We completed the final stages of a major renovation, completing the refurbishment of the remaining portions of the lobby. We also finished painting the exterior of the building and adding pavers and lighting to the driveway important to share. Despite the ongoing renovation, Hotel Iba the Flow Through during the first quarter was a robust 66%. Major renovation at one of our largest hotels positions us well going forward, especially considering Amazon HQ2's increased market presence is expected to significantly add to overall room demand in this market. In addition to our two acquisitions during the first quarter, the Embassy Suites Midtown New York and Hilton Scotts Valley Santa Cruz, I wanted to highlight the outstanding performance of our fourth quarter acquisition, the La Posada Santa Fe, which is a hotel and marriage tribute portfolio. During the first quarter, our initial quarter of ownership, Comparable Red Park grew 22%, driven by 18.1% occupancy growth. This Red Park growth represents 1,890 basis point growth relative to the Santa Fe upscale and above sub-market. During the first five months of ownership, Comparable Red Park La Posada Santa Fe has grown 16.1%. We're not only able to realize strong revenue growth, but we also saw a 7 percentage point increase in hotel EBITDA margin with 51% hotel EBITDA flow through. We're excited about the early successes of our recent acquisitions and the future of our portfolio. That concludes our prepared remarks, and we will now open the call for Q&A.

Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, please press star 1 to ask a question. We'll pause just a moment to allow everyone an opportunity to signal. And we'll go first to Brian Marr with B. Reilly FVR.

Good morning, guys. A couple of questions from me, and maybe this one's for Jeremy. On the CapEx that you talked about, the $135 to $145 million, how much of that would you consider as maintenance versus project?

Consider what?

Maintenance CapEx versus project or ROI project type CapEx.

Most of it predominantly is going to be maintenance capex. It's just part of the business that we're in. We don't really break that out. We can probably start doing that on a go-forward basis, but most of it's going to be substantially overwhelmingly maintenance capex.

Okay. And then other than Nashville, are there any other big projects kind of on the horizon maybe that you would start in late 2019 or in 2020?

Not anything like Nashville, where we have meeting space out for so long. We've got some renovations we disclosed that we'd start in the fourth quarter on that renovation schedule that we provide, and those are mostly some guest room renovations at W. Minneapolis Hotel. We do have some meeting space work that we're going to do at Ritz-Carlton Atlanta, but it won't be anything near what we did at Nashville. That's just a refresh. Most of it is mainly just refreshed CapEx.

And then when we look at your rev par outperformance in the first quarter of 19 over 18, how much of that would you attribute to, you know, renovations that were completed in 18 that are now not, you know, going on in 2019? You know, is it 50 bps? Is it 25 bps? What do you think that that outperformance measurement is?

I haven't gone back to actually calculate that, but if I were to guess, I would say somewhere between 50 to 100 basis points.

And then maybe for Douglas, when you're looking at the acquisition pipeline and ERFP, first of all, have you started any further discussions with Oxford Inc. to grow the size of ERFP from 50 to 100 million? And then secondarily, kind of how deep is your pipeline now versus historically, and historically being over like the last year or two?

Thanks, Brian. So you highlight an interesting point, which is the ERP agreement contemplates a potential increase in size of the ERP to $100 million by mutual agreement. We've spent 80%. We're committed 80% of the ERP. So we still have a little bit of ways to go, and I think we'll cross that bridge when we get there as we continue to seek out accretive acquisitions for the platform. So a little too early to have any discussion around your first question. As for your second question about transaction pipeline, I'd say that Overall, for the industry, we're seeing a decent flow of single assets. In fact, the data would show that volume is up about 1.5% for single assets, but there are a lot fewer portfolios out there in the market over the same time a quarter ago. It's down substantially, almost 75%. And yet, the total dollar volume this year over the same quarter last year for the whole industry is is down about 31%, mainly due to the lack of portfolio activity. And I think all this is directionally consistent with our specific focus on the upper upscale full service segment. I think it's worth noting that the average cap rates, I'd say, for the type of assets we're seeking are down about 67 basis points. So showing, at least from the trades that have happened, pretty strong price competitiveness and that the per key prices have also traded up mid to high teen percentages. So it's a strong market in terms of pricing movement. I think one comment I'd say is there seems to be a little bit more upsides to the increase in pricing above BOVs for the higher quality assets and maybe a little bit more aggressive BOVs and what's actually coming out for the less demanded assets by buyers. But overall, I'd say prices, as indicated by the data I shared with you, are pretty firm. I think people are being a little bit more conservative on underwriting, but delaying recessionary forecasts. And I think deals in general are taking a little bit longer to close in this competitive bidding transaction market where bids may be going to multiple rounds. So for us, I think I'd conclude by just saying that we've had great success with the four deals we've bought over the past year. The ERP has worked, I think, substantially to our benefit to increase shareholder value, gives us a competitive advantage. We're going to continue to remain disciplined. We're underwriting deals, and the objective is to make good deals great deals.

Okay, thanks. That's all from me.

And we'll go next to Chris Woronka with Deutsche Bank.

Hey, good morning, guys. I want to ask, you know, a lot of your peers have talked about seeing some benefits related to Marriott and Starwood and that they're coming through in a more meaningful way. And I know some of that relates to managed hotels, which wouldn't apply as much to you guys. But even on the franchise side, things like OTA fees, are you seeing those come through more meaningfully this year?

Yeah, we are. We had really good flow-throughs of our Marriott managed portfolio. They definitely stood out in the quarter, and there's a pretty good mix of a lot of reasons why that occurred. Some of it is because we had some underperformance in the prior year last year in some of those hotels, given the disruption of the integration, but we're certainly seeing a lot of benefits this year on the cost side. On the revenue side, we're also gaining share. We're gaining quite a bit of share across the portfolio. Our overall portfolio, if you take out Embassy Suites Manhattan, which is ramping up, it was 180 basis point growth in market share versus our direct competitive sets, which is, I think, fantastic for a portfolio this size for the first quarter. And I would say that the merit-managed portfolio definitely stood out to be well north of 250 basis points. And so they were the outperformer for us in the first quarter.

Okay, great. That's helpful. And then I just want to come back to the MC Suites New York. You know, congrats on the early success there. Does that Does that make you – do you guys have maybe a different view of the market? I know it's a very specific asset and the reason you guys bought it, but we've heard some mixed things from others about New York. Do you guys have a different view? If something else similar came up, would you be willing to go deeper in the market?

Well, let me just tell you why we bought this asset. And you're right, this was a unique opportunity given brand new – Be simple, very efficient box, the only brand of this type in the market, opportunity for Remington to take over management. We thought that it would ramp up well, which the early performance indicators clearly highlight that. And as for our macro view on New York, I would say that we're extremely pleased with this acquisition, and we're looking forward to its continued performance. And I think a lot of that has to do with what we – started to see in New York. Now, granted, the first quarter 2019 was a bit soft, but our property was up 43% in terms of REVPAR, and our index was up 46%. So when I look at that, I'd say this is clearly a great asset in its specific market. And so we're excited about that. When we looked at what people were most concerned about in New York, it tended to be the supply pipeline. And I think sometimes that supply pipeline has been a little bit overstated. I think things are taking longer to get developed in New York. But nevertheless, the pipeline was fairly strong with, I'd say, about 9.1 percent new supply in the previous 13 to 24 months, but that's tapered off substantially. And when we look at the past six months, our data shows it was only about 5.2%. And according to Smith Travel Research, New York finished 2018 with 3.4% rev par growth. And the forecast is, and that was in 2018, and the forecast is for continued positive rev par growth in 2019. So I think that's a pretty good setup in one of the nation's hottest hotel markets with a brand new asset of this type and quality. And that's why we made the investment that we made. And plus, with the benefit of the ERP money, it just made this transaction even better. As for other opportunities in New York, it took us 16 years to find this asset that fit perfectly with what we were looking for. I can't really comment on what we might find in the future in New York, but we're pretty patient and disciplined when it comes to thinking about investment activity in Manhattan.

I would add that the ramp is exceeding our expectations. In terms of transition, it takes about 30 to 45 days. But just within two months, we basically achieved our full year underwriting for Red Part Index Penetration, which we mentioned in the prepared remarks, which is fantastic. And one of the things that we really like is that Remington does a fantastic job with the Embassy Suites brand. So we think that there's a lot of upside for us for this particular asset.

Okay, great. I just want to ask on select service, I think we still see a pretty big disconnect in private and public valuations, if not widening. Has your guys' calculus changed any maybe since last quarter in terms of being closer to potentially selling some of the select serve you've talked about in the past?

I think you're right in terms of the valuation. I think there is a pretty substantial disconnect between private and public market values. There's definitely a private market appetite for these types of assets. And when it comes to sales, I'd say our perspective on sales is more holistic. It's not anything other than we're going to be opportunistic when it comes to sales with a focus on trying to upgrade the portfolio and mitigating low ROI CapEx assets, removing lower REVPAR assets, and just having an overall positive impact on leverage and cash flow within our portfolio. And to the extent we sell anything, it's not just a focus on select service hotels. It could be other assets in our portfolio. And I think if you look at the history of what we've sold over the past three years, it really has been a mix of both full service and select service hotels. at cap rates that were materially better than where our portfolio overall traded. And yet, if I recall correctly, I think the average rev par on those hotels was around $80. So, I think that significantly lower rev par, and maybe that rev par number could be a little bit off, but it was materially lower rev par than our overall portfolio. So, I think an indication of the value of the assets that we have in our portfolio, and I think the fact it indicates our ability to be very opportunistic in selling the right type of assets at the right time to the right buyers and getting the maximum proceeds that we can from those assets. So I think our track record speaks for itself in terms of being disciplined and thoughtful in regards to looking at potential dispositions within our portfolio. So I think it goes beyond just your question on select service assets.

Okay, very good. Thanks, guys.

Our next question comes from Tyler Vittori with Janney Capital Markets.

Hey, good morning. Thanks for taking my question. I just wanted to follow up on one of the earlier questions just about your REVPAR outperformance in the quarter. How did results come in versus your internal budgets and expectations? And are there any notable trends with respect to demand that are worth highlighting specifically Any differences as far as what you're seeing on leisure versus corporate travel?

Yeah, this is Jeremy. I'll take that. I think it exceeded what we thought it was going to be for the quarter. No real trend in terms of substantial changes in demand. It's a little bit difficult because we did have a big change of mix in the quarter because we had our meeting space back at our largest group hotel, which is National Renaissance. We had a lot more group business in the quarter than what we did prior year. But when you look at it, we were definitely impacted by the government shutdown. So if that didn't occur, we didn't even have a better red part for the quarter. And then March was fairly solid for us as well. So in terms of other trends, one thing that I do want to point out in terms of just kind of distribution is that we are seeing really for the first time in quite some time, that we're having declines in our OTA channels, which I think is very positive. We are seeing growth in our direct channels, our brand channels and direct website channels. So we're positive about that, but there's not really any other trends in terms of major change in demand or mix that we can provide any insight at this time.

Okay, great. And then how about on the cost front? Any change to your expectations for labor expenses or any other costs?

No, I don't think – the one thing is insurance is continuously difficult for us. We're in the market right now pricing our program, and that renewal hit in June of this year. And we had a decent-sized increase last year that provided some headwinds going into this year. But there's been a lot of issues, not necessarily with our portfolio or our assets, but just the market in general and capacity in the insurance market. which has been challenging. So that's something that I'm a little concerned about as we kind of go into the renewal. But that's not going to be a huge overall cost for us, but it's probably going to be potentially a decent percentage increase. And then labor continues to be a challenge for us. Right now, our franchised assets, we pulled the data, and their labor and benefits combined are up 3.8%. We're projecting for the year. which is certainly higher than what we'd like to see.

Just to add on to that, just from a macro perspective, I'd say that our comparable EBITDA margins were down 25 bps, which we feel generally pretty good about in light of some of the headwinds that Jeremy highlighted, the insurance and the labor costs. That was against a backdrop of a 2.9% increase in our hotel revenue, of which there was a slightly more disproportionate amount related to food and beverage, which obviously has lower margins associated with that. So I'd say that everyone is in the same boat here with respect to labor costs. And I think everyone's probably experiencing the cyclical shift in insurance costs given what happened across the country over the past year. And so I think we're doing a very good job of holding margins despite some of those headwinds.

Okay, great. That's all from me. Thank you.

And ladies and gentlemen, as a reminder, it is Star 1 if you wish to ask a question. Again, that is Star 1 for questions. And we'll go next to Amanda Switzer with Baird.

Thanks. Good morning, guys. I wanted to start with a higher level question. Can you talk about how the return profile of CapEx spending has maybe changed over the past year? And then how do you think about the relative attractiveness of ROI projects today versus some of the returns you're seeing in the acquisition market?

Yeah, this is Jeremy. I'll take that. We continue to mine our hotels for opportunities, and what we're finding is we're doing new rooms renovations. We're finding opportunities to add a few keys here and there. We've been moving some of our lounges down to the main level, which has allowed us to add keys and some other opportunities as well. I mentioned we just recently bought MC Suites Manhattan, and there's a big opportunity to add Double Queens, which is a premium in New York, and so that's something that we're going to do as well. Most of the other ROI projects we've done, we've already implemented in the assets that we've owned. We've been very, very creative on how we have approached that and what we've done. So I don't see a ton of value-added CapEx that we see in the horizon within the trust portfolio. But as it relates to just CapEx spend in general, I do think that we probably define ROI a little bit different than our peers. I think our peers take a much looser definition of what is truly ROI versus what we view as brand standards and continued upgrades that we have to do to stay competitive to be in the business. Whether it's taking tubs out and putting showers in, yeah, that's a nice return on that investment. The guest is happier. I don't see that we're going to get a lot of return on that incremental spend. So a lot of what we see that we're doing is just to stay competitive, to be very competitive. I think we've done a great job at that. If you look over the last, with the exception of last year, the previous four years, we gained market share. So four out of five years we gained market share. We gained a tremendous amount of market share in the first quarter, which I'm very, very proud of. And so we're on track, hopefully, to gain five of the last six years, which I think is amazing if we accomplish that. And I think that's a reflection of how we approach pretty prudent and diligent CapEx spend within our portfolio.

That's helpful. And then just a housekeeping question maybe for Derek. Can you talk about how the Embassy Suites New York impacted the overall portfolio during the quarter, both in terms of rev car growth margin and then absolute EBITDA contribution, just given that that hotel was ramping?

Yeah, sure. Amanda, thanks. This is Derek. So as we mentioned, the total portfolio had 1.9% comparable REVPAR growth. If you back out New York, the portfolio would have been 1.5%, which we think is still an attractive result there. And in terms of margins, total portfolio, EBITDA margin, comparable EBITDA margin was down 25 basis points. If you pull out New York, It would have been down 31 basis points, so it impacted margins there by six basis points. And then in terms of impact overall EBITDA growth, total portfolio comparable hotel EBITDA growth was up $2.3 million. And if you pull out New York, it would have been up $1.5 million. So still attractive results for the overall portfolio, even when you pull out New York, which obviously had a great quarter.

And I'll add on just market share in general. For the first quarter, I already mentioned that without the MSC suites, Manhattan, our market share, we gained 180 basis points versus our competitive sets. If you include the MSC suites on the entire portfolio, that goes up 30 basis points to 210 basis points market share gains.

Perfect. Thanks for taking my question.

We'll go next to Robin Farley with UBS.

Hey, this is Jake Westfall on for Robin. Just a quick question. Can you give an update on your supply outlook and specifically around the select service portfolio where industry supply forecast will be a little higher going forward?

Sure. It's Douglas, and then I'll have Jeremy make a few comments. When you look at our major markets, we've got a pretty good supply situation. Obviously, the industry overall is tapering off on the supply pipeline, but most of what's coming in, as I think you're alluding to, is in the select service segment. When you look at our major markets in terms of, let's say, revenue, largest markets by revenue, D.C., we're seeing 1%. 0.2% to 1.3% of new supply growth over the next couple of years. Atlanta next at just over 2% supply growth. The San Jose, Santa Cruz market next in line would be less than 1.5% supply growth. Boston in the 3% range. Nashville, one of our larger markets, has had new supply coming in, but it's also one of the more dynamic markets with lots of demand coming in as well. And so that market has somewhat continued to defy gravity in terms of REVPAR performance. So overall, I think one of the benefits we have of our portfolio is I do believe we have one of the most geographically diverse footprints. And as a result of that, we get sort of the ebb and flow of supply and new demand coming in. And so we're very happy with our footprint in light of what seems to be a market that overall is showing a reduction or at least a cresting of supply in the near term.

Thanks, guys.

I was going to say, I don't really have anything more to add than what Doug said.

Okay. And then maybe could you just talk about the strong F&B performance? What were some of the drivers in the quarter? And what trends are you seeing and expect going forward?

Yeah, we had an increase in group business for the quarter, and a lot of that actually is because of the National Renaissance. If we broke out that property, I believe they were up 30% in total revenue for the quarter, and so that was a big impact.

Yeah, about half of the dollar growth in F&B revenue was a result of the Renaissance Nashville having its meeting space back.

Great. Thank you, guys.

And as we have no further questions, I'd like to turn the conference back over to management for any additional or closing remarks.

Thank you for joining today's call, and we look forward to speaking with you again next quarter, as well as seeing you in New York at NAREE.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.