Apple Hospitality REIT, Inc.

Greetings and welcome to the Apple Hospitality REIT fourth quarter and full year 2018 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Clark, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. We welcome you to Apple Hospitality REIT's fourth quarter and full year 2018 earnings call on this, the 26th day of February, 2019. Today's call will be based on the fourth quarter and full year 2018 earnings release, which was distributed yesterday afternoon. As a reminder, today's call will contain forward-looking statements as defined by federal securities laws including statements regarding future operating results. These statements involve known and unknown risks and other factors which may cause actual results, performance, or achievements of Apple Hospitality to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. Participants should carefully review our financial statements and the notes thereto as well as the risk factors described in Apple Hospitality's 2018 Form 10-K and other filings with the SEC. Any forward-looking statement that Apple Hospitality makes speaks only as of today, and the company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, certain non-GAAP measures of performance, such as EBITDA, EBITDA RE, Adjusted EBITDA, Adjusted EBITDA RE, FFO, and Modified FFO will be discussed during this call. We encourage participants to review reconciliations of those measures to GAAP measures as included in yesterday's earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the company, please visit applehospitalityreit.com. This morning, Justin Knight, our Chief Executive Officer, Chrissy Gathright, our Chief Operating Officer, and Brian Peary, our Chief Financial Officer, will provide an overview of our results for the fourth quarter and full year 2018 and an outlook for the sector and for the company. Following the overview, we will open the call for Q&A. At this time, it is my pleasure to turn the call over to our CEO, Justin Knight.

Thank you, Kelly. Good morning, and thank you for joining us today. As we begin 2019, the macroeconomic backdrop continues to be relatively strong with healthy GDP growth, low unemployment, rising corporate profits, and high levels of consumer confidence, despite some political uncertainty in the U.S. and abroad. Although the hotel industry experienced only modest growth during 2018, fundamentals are stable. and we remain optimistic that 2019 will be another year of steady performance for Apple Hospitality REIT. Outperformance during the fourth quarter of 2017 related to hurricane recovery and restoration efforts in Houston and parts of Florida created difficult year-over-year comps for us, which were exacerbated by the margin impact of the 2018 hurricanes Florence and Michael, and ramping new supply in many of our markets. For our portfolio, Comparable Hotels RevPar declined 0.8% during the fourth quarter and 0.2% for the year. Adjusted EBITDA grew approximately 2% for the quarter and the full year. Through continued strategic mix management and effective cost control measures, we were able to achieve Comparable Hotels' adjusted hotel EBITDA margin of 35% for the quarter and 37% for the full year, well within guidance provided at the onset of 2018 and above the revised guidance despite revenue challenges. We are incredibly proud of both our asset management and onsite management teams, especially during this period of moderate to flat top line growth with continued wage and expense pressures. We anticipate we will continue to see moderate demand growth in 2019 with property level performance challenged by new supply and continued expense growth overall. including increases in labor costs driven primarily by a competitive labor market. From a capital allocation standpoint, we returned $380 million to shareholders in 2018 and over $1.2 billion since listing through dividends and share buybacks. While we anticipate that funds used to buy shares will ultimately be offset by proceeds from asset sales, we were able to utilize our balance sheet to take advantage of what we saw as significant discrepancies between public and private market valuations as hotel stocks traded down during the fourth quarter. As we have highlighted in the past, we will continue to evaluate share repurchases and act where we see opportunity to create incremental value for our shareholders. In addition to share buybacks, we continually seek opportunities that are additive to our portfolio and build upon our strategy to enhance shareholder value over the long term. During the fourth quarter of 2018, we purchased the 127-room Hyatt Place Jacksonville Airport for $15 million, bringing our total 2018 acquisitions to five hotels for $152 million. We are excited to have our first Hyatt-branded hotel and look forward to adding additional Hyatt hotels when appropriate. While we build scale within the Hyatt brands, We believe that we will be able to leverage our experience with comparable Hilton and Marriott rooms focused product to enhance property operating performance. We have six additional hotels under contract for acquisition with a combined purchase price of $162 million, including a recently signed contract for the existing 160 room Hampton Inn Suites in St. Paul, Minnesota for $32 million. This asset, along with the five hotels highlighted on previous calls, which are new construction projects, augment and strengthen our existing portfolio. We anticipate construction of the 128-room Home 2 suites in Orlando, Florida, will be completed this spring, and construction for the remaining four hotels will be completed in 2020. All of the new build projects are with trusted developers, and our contracts have enabled us to lock in attractive per-key pricing in the current rising cost environment. As we add hotels to our portfolio, we assess our existing assets and look for opportunities to exit where we're able to achieve attractive pricing and where we feel proceeds can be redeployed in ways that further enhance shareholder value. During 2018, we completed the sale of three hotels and entered into a contract with a private equity buyer for the sale of 16 assets. The total combined sales price for the 16 assets of $175 million is represented just under a 12 times multiple on 2018 EBITDA after PIP or a 7.5% cap rate on 2018 results after anticipated PIP costs and an industry standard FF&E reserve. In February, the buyer for the 16 assets failed to meet its obligations under our contract and we entered into a new contract at a similar multiple for a subset of the initial portfolio representing nine of the original hotels with an anticipated closing over the next couple of months. The buyer's $7 million deposit is non-refundable. With the first quarter rebound in the public markets and continued availability of debt for quality hotel assets, we view portfolio transactions as increasingly likely over the coming months. We continue to closely monitor new hotel supply growth in our markets, which has approximated national averages for our product type. Despite demand growth across much of the U.S., ramping supply continues to create a headwind for our portfolio in a number of markets. At the end of the fourth quarter, approximately 64.3% of our properties had one or more upper mid-scale, upscale, or upper upscale new construction projects within a five-mile radius, a slight uptick from last quarter. We are optimistic that as construction costs continue to rise, new supply will begin to peak over the next 12 to 18 months and begin to represent less of a headwind for us. We are confident that the strength of our brands, our consistent reinvestment, our locations within markets, and the quality of our onsite management teams position our portfolio to remain competitive over the long term, despite near-term increased competition from newly opened hotels. Apple Hospitality was intentionally structured to mitigate risk of investing in the lodging industry and maximize operating results through all phases of an economic cycle. With a focus on providing our investors with consistent dividends and appreciation in the value of their underlying investment, we own hotels with broad consumer appeal that are diversified across a variety of U.S. markets and aligned with the best lodging brands and hospitality management teams in the industry. We consistently reinvest in our hotels. We follow a disciplined approach to capital allocation, and we maintain financial flexibility with low levels of debt. Today, with 241 hotels diversified across 88 U.S. markets, we are the largest publicly traded REIT focused on the rooms-focused segment of the lodging industry, and we are confident we are well-positioned for continued success this year and beyond. I would now like to hand the call over to Chrissy to provide additional detail on performance across our markets during the fourth quarter and full year 2018.

Thank you. As Justin mentioned, the fourth quarter of 2018 was challenging from a comparison standpoint due to elevated hurricane-related demand in late 2017. During the quarter, we also experienced a net positive impact from demand associated with the 2018 hurricanes and, to a lesser extent, the Boston area gas explosions. Rep Park, excluding the markets affected by these events, was 130 basis points higher for the quarter and 20 basis points higher for the year. In 2019, we estimate that the headwind from Hurricanes Harvey and Irma should materially subside by mid-year. Elevated demand from Hurricane Florence will boost first quarter results, but along with the fourth quarter benefit from the Boston area gas explosions, will create a headwind in the fourth quarter. And benefits from Hurricane Michael recovery business in Panama City should continue throughout the year, leading to an expectation for a slightly more favorable comparison in 2019. While the impact of the government shutdown is difficult to quantify, it weighed on January results. Their January comparable rev par declined almost 1%. Aided in part by a more favorable Super Bowl comparison, and Valentine's Day shifting one day forward, February results have improved with REVPAR increasing in the 2% range through the first full three weeks of the month. Market performance continues to vary across our geographically diversified portfolio. Many of our Sunbelt markets are benefiting from increased population growth due to their warmer climate, strong job growth, and relative affordability. Our east-south central region REBPAR grew 4% and a quarter, with several Alabama markets benefiting from multi-year manufacturing and government projects. Our Phoenix and Tucson markets continued to perform well, with a solid outlook in 2019, including additional benefit from the ramp of our downtown Phoenix Hampton Inn & Suites, which opened in May 2018. Our Pacific region performed well with a robust convention calendar in San Diego, strong technology demand in Sacramento and San Jose, some additional lifts from wildfires in the Los Angeles area, and earthquake, government, and energy-related demand in Anchorage. Diminished hurricane recovery business, as well as supply-related pressures, resulted in declining red par for several Florida and Texas markets in the fourth quarter. The Houston market was the largest underperformer with RevPar down 23%. Austin remains one of our most challenging markets, with RevPar declining 20%, resulting from lower hurricane-related FEMA demand, ongoing renovations, and increased supply. As three of our Austin area hotels come out of renovation in the first quarter, we will be well-positioned to take advantage of new demand generators, including Apple's campus expansion, construction of the University of Texas' new world-class arena, and a new MLS soccer park and stadium. Dividing to profitability, we are extremely pleased with our fourth quarter and full-year results, achieving a strong hotel EBITDA margin of 34.6% and 37.2% respectively. Same-store expenses grew a modest 40 basis points for the quarter and 1.4% for the year. Excluding fixed expenses, our operating margin only declined 30 basis points in 2018. While wage pressures persist, our proactive implementation of labor management tools, combined with the intensive oversight of our asset management team, enabled our operators to improve scheduling efficiency, reduce overtime, and increase productivity. At the end of 2018, 90% of our operators had implemented a labor management system. Approximately half of our operators had fully implemented systems at the beginning of 2018. And for that subset of hotels, we completed an analysis of the key components of the savings. We focused our analysis on hourly wages in the rooms department and found that the average pay rate increase was 4.6%. with a 2.2% overall reduction in hours with a net 2.3% increase in rooms hourly wages. On a per occupied room basis, the rooms wage increase for the subset was 2.7% compared to 3.4% for the remainder of the portfolio. As a percentage of total hours, overtime hours decreased 4% to 3.5% of total hours. Total same store wages both hourly and salaried, increased 2.1% for the year, or 2.9% on a per-occupied-room basis, just under our target of 3%. A favorable reduction in workers' compensation expense and in-land benefits costs produced an even lower increase in total same-store payroll dollars of 1.9% or 2.6% on a per-occupied-room basis. Considering that we are still challenged by a tight labor environment, and associate satisfaction and retention remains a high priority. Our target is to be at or below 4% same-store wage growth in 2019. While much of the efficiencies from the labor management systems have been realized, there are still savings to be achieved by the management companies that were not fully operational for the entire year. We have also seen success from green choice programs, which allow guests to forego services in exchange for loyalty points and the take rate continues to grow as guests become more familiar with these programs. Our team's diligent focus on maximizing parking and cancellation revenue continues to produce impressive results. Other revenue dollars on the same store basis grew 23% or 60 basis points as a percentage of revenue in the quarter and 18% or 40 basis points as a percentage of revenue for the year. Our highly effective process from executing timely renovations that minimize disruption to detailed benchmarking enabling solid cost control, to initiating sustainability projects that reduce energy consumption, to a sharp focus on driving ancillary revenue, have enabled us to maintain solid margins in a low revenue growth and increasing cost environment. For 2019, we will continue these efforts as well as investing in additional internal resources to work with our operators on enhancing their revenue strategy capability. ensuring that revenue management, sales, and digital teams are working collaboratively and proactively to drive the optimal mix depending on individual market conditions. I will now turn the call over to Brian to provide additional detail on our financial results.

Thanks, Chrissy, and good morning. Summarizing some of our results for the quarter and year, total revenue was $295 million, an increase of 2% from the fourth quarter of 2017. For the year, total revenue was $1.3 billion, an increase of 3 percent from 2017. Adjusted EBITDA was $95 million in the fourth quarter and $449 million for the full year of 2018, both an increase of 2 percent from the same periods in 2017. Modified FFO per share was 36 cents per share, flat compared to the fourth quarter of 2018, and we were down 1 percent to $1.72 per share for the full year compared to 2017. Consistent with our normal annual spend, we invested $71 million in capital expenditures in 2018. We anticipate spending $80 to $90 million in capital expenditures in 2019, a slight increase due to a planned renovation at one of our three full-service hotels and completing anticipated property improvement plans related to two of our 2018 acquisitions. finished the year with $1.4 billion in outstanding debt with a weighted average maturity of approximately 5.2 years and an average rate of 3.7%. Availability under our credit facilities totaled $231 million at the end of the year. Almost 75% of our debt was effectively fixed rate with a weighted average rate of 4% and an average remaining term of 4.4 years. Christy and Justin touched on it, but in addition to the revenue disruption, we did experience additional costs in the quarter related to Hurricane Michael. Two of our hotels in the hurricane's path have named storms, insurance deductibles due to their location. As a result, we incurred approximately $900,000 in the fourth quarter to remediate and repair the affected hotels, which represented 30 basis points of the 50 basis points margin decline in the quarter. Continue to work through the insurance claims process, and although the hotels are operational, we do have certain remediation tasks to complete. However, we do not anticipate any additional costs that will not be reimbursed by insurance carriers associated with Hurricanes Florence and Michael, and we do anticipate receiving business interruption proceeds in 2019. Proceeds will not be recognized until received. Our 2018 adjusted EBITDA and hotel EBITDA margin percent were in line with the midpoint of our guidance provided in February of last year and above the high end of our expectations in early November. Based on our operating performance to date, our announced transactions, and our expectations for the year, we anticipate results for 2019 to be in the following ranges. At income between $168 and $192 million, Comparable hotels REVPAR changed between negative 1 percent and plus 1 percent. Comparable hotels adjusted EBITDA margin percent between 35.4 and 36.4 percent, and adjusted EBITDA RE between $423 and $443 million. To discuss this position of nine hotels as completed as currently anticipated at the end of the first quarter, we do not believe the REVPAR change and hotel EBITDA margin percent change will be affected. However, our adjusted EBITDA range will be reduced by $7 million at the end of each range. Our guidance does not reflect the company's adoption of the new lease accounting standard of Effective 1119. We anticipate the adoption of this standard will increase our adjusted hotel EBITDA margin percent and adjusted EBITDA as we will have four ground leases reclassified from operating to financing leases. As a result, these leases will reduce current ground lease expense and increase interest and depreciation expense. The company anticipates recording a total right of use asset in the first quarter of 2019 between $110 and $125 million, of which between $100 and $110 million relates to the four ground leases that will be classified as financing. Do not plan to restate any prior periods. Justin highlighted we acquired over 6.5 million shares of our common stock through our share repurchase program for a total of just over $100 million since the end of the third quarter. The weighted average purchase price was $15.79 per share. We currently have a written trading plan in place intended to comply with 10b-5-1. Our repurchase program may be suspended or terminated at any time. During the fourth quarter, the company paid distributions of 30 cents per share, or a total of approximately $69 million. For the full year of 2018, the company paid distributions of $1.20 per share, or a total of $276 million. The annualized $1.20 per common share represents an annual 7.2% yield on our February 21st closing price of $16.76. Thank you for joining us this morning on what we know is a very busy morning. We will now open the call out for questions.

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. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Austin Werschmitt with KeyBank Capital Markets. Please go ahead.

Hi, good morning, guys. This is Casey O'Brien calling for Austin Werschmitt. With respect to the portfolio disposition, you mentioned the nine assets under contract will still be sold at a similar multiple, a 7-5 cap rate. And I was curious if you are still actively marketing the remaining seven assets that were in your original 16-asset portfolio.

Good morning, and thanks for joining us. Yes, that is correct. We were able to re-sign the nine assets at a similar moment to the initial deal, and we continue to explore opportunities for other assets within our portfolio, including the balance of that portfolio.

Okay, awesome. And then also one more question. With the stocks above $16, how much buyback capacity do you have relative to your leverage targets? And would you consider buying back stock prior to the closing of the portfolio sale in February?

Good question. So from a capacity standpoint, we have more than enough capacity. We have $360 million approximately available under our share repurchase authorization, and we have roughly $200 million immediately available on our line of credit. Our expectation would be that future share repurchases would be funded with proceeds from disposition in an effort to preserve our balance sheet. That said, should we encounter a situation like we did in the fourth quarter where there's a massive displacement, we have flexibility to act near term using our balance sheet and then to pay down the debt with proceeds from sale at some point in the future.

Awesome.

Thank you.

Thank you.

Our next question comes from Anthony Powell with Barclays. Please go ahead.

Hi. Good morning, everyone. Another question on a disposition. So what caused the original buyer to reduce their commitment? And have you seen other buyers come in with interest in the space, especially given the disconnect between public and private market valuations?

I highlighted in our last call that this particular buyer, like many of the buyers that we've interacted with, responding to reverse inquiries, was relatively new to the space and that this transaction for this particular buyer with a larger transaction than the buyer had done in the past. We resized the portfolio to be a better fit for the buyer and this buyer's capacity with the intention that upon successfully completing this transaction, we might pursue additional transactions with him in the future. The makeup of the subset of the portfolio is fairly similar to the broader portfolio. The average age of the portfolio that we currently have under contract is 14 years. We have REVPAR for that portfolio approaching $75. The remaining assets, so the assets that were pulled, are slightly younger, about a year younger, and about $10 more in REVPAR. But otherwise, you know, relatively similar in terms of geographic distribution. You know, as I highlighted in response to your earlier question, we continue to explore opportunities for the remaining assets as we look at opportunities with other assets in our portfolio as well.

Thanks. And last year, there was a big hope or expectation, I guess, that you would see signings and construction starts in a service-based decline given higher interest rate costs and higher labor costs. Did you see that to the extent you expected? And are you seeing a bit more of a pickup in those metrics this year as financing costs, I guess, come back in line?

It's a good question. We haven't seen a material change, you know, at least beneficial change in terms of the cost structure for these deals. We continue, as you know, to underwrite for our own purposes, a number of development deals and have seen construction costs driven by labor and the cost of raw materials and land continue to go up. So we haven't seen a major change there. The most notable pattern that we've recognized is we've looked at this quarter to quarter and year over year. is that there's a meaningful discrepancy between pipeline and anticipated deliveries and what we actually are seeing delivered in our markets. And so that could be 100 to 200 basis point variance. And what we are finding is that it's taking longer for projects to get completed even once they're in the ground. We've experienced this firsthand with our our Home 2 project in Florida and have seen it with other projects in markets where we anticipate a project will come online long before it actually ends up getting delivered. And that's the most consistent trend. As we highlighted in our remarks, we continue to anticipate that the dynamics driven largely by continued cost increases and this low growth within the overall economy will, over time, produce fewer new hotels. But right now, there's a meaningful pipeline, and it's taking longer for those deals to be delivered. And as a result, we think there will be continuing supply coming online for the next 12 to 18 months before we begin to see a noticeable decline.

Got it. And maybe one more from me. I think Hyatt is... has changed some of its food offerings at Hyatt Place, and I believe that resulted in some part volatility at those brands in the fourth quarter. What's your view on that process, and how does that impact your view of the brand going forward?

So, sorry, Anthony, sorry, I missed that. Were you talking about the Hyatt Place or Jacksonville performance for the fourth quarter?

Just Hyatt, the Hyatt select service brands in general. I believe they changed some of their food offerings.

Oh, sorry. Sorry, I missed that. Okay. So in terms of the Hyatt Place product, the Hyatt Place, in order to grow, to strengthen their loyalty program, actually made a change that for those who book directly and that are World of Hyatt members, they're able to receive guests or complimentary breakfast before it used to be open to everyone. So that should result in two additional benefits. Number one is that it should hopefully grow, and we are monitoring that, increased loyalty members and increased direct bookings, which then reduces distribution costs. And the second impact of that, and again, we only have one high at place at this particular moment. We look forward to acquiring more. But the second benefit of that is a favorable reduction, a slight reduction from what we've seen in talking to our operators so far, but a favorable reduction in complementary cost as well.

Great. That's it for me. Thank you.

Thank you.

Thanks for joining us.

Our next question comes from Brian Marr with B. Reilly. Please go ahead.

Yeah, good morning. Good morning, Brian. You alluded to in your comments very briefly the potential for portfolio transactions on your part on the acquisition side. Can you give us a little bit more color as to, you know, what the scope and scale of something like that might be?

Sure. I appreciate the question. Really, I was speaking to the likelihood of them happening from our perspective on the disposition side rather than the acquisition side. As we've highlighted in direct response to your question, as we've highlighted in past calls, we continue to underwrite both individual assets and larger portfolios. What we have found, given the size of our portfolio, is to date we've been far more effective pursuing individual assets which complement our broader portfolio, then purchasing larger portfolios given pricing, and then disposing of the assets that aren't a good fit. The friction costs related to those types of transactions have made them less desirable for us. That said, we've highlighted over the past several calls, the fact that we continue to receive inbound inquiries from private equity buyers looking for small portfolios of assets, that dynamic continues to exist. We feel reasonably good about the portfolio we currently have under contract. and are continuing to explore similar opportunities with other potential buyers. That said, what we found or have found is that the interest of private equity buyers in our sector is somewhat correlated to the performance of hotel REIT stocks. And when we saw the massive trade downs in the fourth quarter across the public markets, you know, that spooked private equity buyers. And for a period of time, you know, inbound inquiries declined. You know, with some stabilization and continued strength in the debt markets, we're seeing that stabilize. And, you know, that on top of the fact that, you know, what we're seeing in the markets in terms of available assets, is a significantly greater number of assets similar to the types of assets that we would be looking to sell and or buy. And we think that bodes well for the market finally freeing up after a number of years of being relatively quiet.

Thanks for that. And maybe a question for Chrissy, and I really appreciate the details that you gave us on your labor costs. But can you just kind of share with us where your operators are sourcing new labor in such a tight labor market we see across the country?

Absolutely. So for our particular portfolio, contract labor still remains a small percentage of our overall payroll dollars. It's actually less than 10%. In certain markets, we are finding with the hospitality industry having so many open positions, that we do need to use contract labor. But for the most part, with our individual operators, they're using the traditional online resources, whether it be different Indeed.com, different online sourcing models, as well as In many cases, they've actually increased the HR resources internally and in some cases have hired internal recruiters to go out and source the additional labor. So one of the main things that we are making sure that we're doing, which is helping with increasing associate retention and ultimately reducing turnover costs, is making sure that we're regularly surveying the market to make sure that we're paying competitive wages. In doing that, we're finding that we're able to fill positions faster, and we're also able to increase associate satisfaction.

Thanks. That's all for me. Thank you for joining us.

Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question is, comes from Michael Bellisario with Robert W. Baird. Please go ahead.

Good morning, everyone.

Good morning.

Just on the one-off acquisition front, can you maybe give us a little bit of background on the St. Paul transaction and how you sourced that, and then also how you're thinking about balancing acquisitions and buybacks with your investment capacity and disposition proceeds today?

Certainly. So the St. Paul transaction Acquisition is with or was developed by a group that has sold a large number of hotels to us and that currently manages a portion of our existing portfolio. It's a group we've had a great relationship with historically and a group that builds extremely high-quality assets, which are uniquely positioned in markets to, we think, have extended longevity and relevance within those markets. You know, the particular deal gets us into a market where we have not had a presence and the location of this particular project we think is ideal within that market. You know, as we look at the second part of your question was related to share buybacks and the purchase of individual assets. And as we've stated in the past, we continue to look at both at the same time and pursue the opportunity that's the most favorable for us at any given point in time. As I highlighted in my remarks and in response to one of the earlier questions, given current market dynamics and we see as value in maintaining the strength of our balance sheet, the most likely scenario on a go-forward basis through this year is that acquisitions and share buybacks would be funded with proceeds from the sale of assets. And given our activity last year leading into this year, there's even a possibility, and given market dynamics, The most likely scenario would be that we would be on the margin net sellers of assets in today's environment. That said, I think what the past couple of years have proven is that the situation can be volatile, and we feel we are uniquely positioned. to take advantage of opportunities as they present themselves, like the opportunity we saw in our stock in the fourth quarter. And I think we'll continue to act when we see those opportunities to drive meaningful value for our shareholders.

Got it. That's helpful. Thank you.

I would like to turn the call over to Justin Knight for closing comments.

I'd like to thank everybody for joining us today. We know this is a busy day, and we hope, as always, that as you travel, that you'll take the opportunity to stay with us at one of our hotels. Have a great day. Look forward to talking to you again soon.

This concludes today's conference. Thank you for your participation.