Apple Hospitality REIT, Inc.

and filed yesterday afternoon. Before we begin, please note that today's call may include four looking statements as defined by federal securities laws. These four looking statements are based on current views and assumptions, and as a result are subject to numerous risks, uncertainties, and the outcome of future events that could cause actual results, performance, or achievements to materially differ from those expressed, projected, or implied. Any such forward-looking statements are qualified by the risk factors described in our filings with the SEC, including in our 2023 Annual Report on Form 10-K, and speak only as of today. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, non-GAAP measures of performance will be discussed during this call. Reconciliations of those measures to GAAP measures and definitions of certain items referred to in our remarks are 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, and Liz Perkins, our Chief Financial Officer, We'll provide an overview of our results for the third quarter 2024 and an operational outlook for the remainder of the year. Following the overview, we will open the call for Q&A. At this time, it is my pleasure to turn the call over to Justin.

Good morning, and thank you for joining us today on Election Day for our third quarter earnings call. Travel trends across our portfolio remained relatively stable during the quarter. With slow but steady improvement in business transient demand and continued strength in leisure travel, we are pleased to report comparable hotels' Red Park growth for approximately 1% as compared to the third quarter of 2023. Red Park growth was driven entirely by improvement in rate, with increases in midweek occupancy largely offsetting a slight pullback on weekends. As we anticipated at the onset of the year, improvements in business travel continue to be the primary driver of overall growth for our portfolio. We have, however, been pleased with the resilience of leisure travel demand in many of our markets. Bolstered by recent acquisitions, top-line ADR growth, and moderating expenses, we achieved strong bottom-line performance during the quarter. Third quarter adjusted EBITRE was $129 million, and modified funds from operations was $107 million, up approximately 6% and 3%, respectively, compared to the third quarter of 2023. Preliminary results for October are strong and show continued growth, with WebPAR up approximately 4% compared to October 2023. Supply-demand dynamics for our business continue to be favorable. At the end of the second quarter, approximately 54% of our hotels did not have any new upper upscale, upscale, or upper mid-scale product under construction within a five mile radius. And actual rooms under construction within the same five mile radius decreased 7% year over year. As I have highlighted on past calls, limited supply growth in our markets materially improves the overall risk profile of our portfolio by both reducing potential downside and enhancing the upside impact from variability in lodging demand. Supported by our strong operating performance, we continue to pay an attractive dividend. Based on Friday's closing stock price, our annualized regular monthly cash distribution of 96 cents per share represents an annual yield of approximately 6.5%. Evolving market conditions over the past year have provided us with the opportunity to demonstrate our disciplined and strategic approach to capital allocation. While the overall transaction market continues to be challenging, we have seen a strengthening private market for smaller, rooms-focused properties and have been able to optimize our portfolio concentration within select markets through strategic dispositions. Proceeds from these sales have been used to reduce debt, fund share repurchases, and acquire hotels with stronger growth profiles and lower near-term CapEx needs. Since the beginning of 2024, we have completed the sale of three hotels, the 122-room Hampton Inn and the 126-room Homewood Suites in Rogers, and the 82-room Spring Hill Suites in Greensboro, for a combined sales price of approximately $41 million. In addition, we recently entered into contracts with separate parties for the sale of an additional four hotels for a total sales price of approximately $31 million, including our 90-room Courtyard in Wichita, our 97-room Town Place Suites in Knoxville, our 76-room Homewood Suites in Chattanooga, and our 117-room Hilton Garden Inn in Austin North. We expect to complete the sales of these hotels over the next several months, assuming all conditions to closing are satisfied. While pricing for the individual hotels varies, as a group, the seven hotels will trade at a sub-7% cap rate, or 12 times EBITDA multiple before CapEx, and a 5.3% cap rate, or 16 times EBITDA multiple after taking into consideration the estimated average of $30,000 per key in required capital improvements. During the quarter, under our share repurchase program, we repurchased approximately 1.4 million common shares at a weighted average market purchase price of approximately $14.02 per share for an aggregate purchase price of approximately $19 million. Bringing the total shares purchased year to date through September to approximately 2.4 million at a weighted average market purchase price of approximately $14.16 per share for an aggregate purchase price of approximately $35 million. It is noteworthy that we've been able to purchase shares at around a one and a half turn spread to recently disclosed dispositions before considering required property improvement plans, and over a five turn EBITDA multiple spread after taking into consideration required capital improvements. While much of our focus over the past several months has been on share repurchases, recent acquisitions continue to contribute positively to our overall portfolio performance. The seven hotels acquired since June of last year produced an unlevered 9% yield after CapEx on a trailing 12-month basis with continued upside. Our recent acquisitions in Las Vegas and Washington, D.C. yielded 10.7% and 8.4% respectively on a trailing 12-month basis through September, and the recently opened Embassy Suites in Madison is ramping well. We continue to actively underwrite additional opportunities and are well-positioned to act where we can achieve attractive yields relative to other capital allocation opportunities. We have one additional hotel under contract for purchase, a model by Hilton, which is under construction in downtown Nashville for approximately $98 million. Similar to the Embassy of Madison, the asset is being developed under a fixed price contract, and we anticipate acquiring this hotel upon completion of construction in late 2025. Since the onset of the pandemic, we have completed approximately $294 million in hotel sales, with an additional $31 million under contract and expected to close by the end of this year, and have invested a billion dollars in new acquisitions while maintaining the strength of our balance sheet. These transactions have further enhanced our already well-positioned portfolio by lowering the average age, lifting overall portfolio performance, helping to manage near-term CapEx needs, growing the size of our platform, increasing our exposure to high-growth markets, and positioning us to continue to benefit from near-term economic and demographic trends. Our recent acquisition and disposition activity, along with our share issuance and repurchases, highlight our ability to adjust tactical strategy to account for changing market conditions and underscore our long and impressive track record of seizing opportunities at optimal times in the cycle to maximize total returns for our shareholders. During the first nine months of the year, we also invested approximately $48 million in capital expenditures, and we expect to spend between $75 and $85 million during 2024, with major renovations at approximately 20 of our hotels. These reinvestments in our portfolio are a key component of our overall strategy and ensure that our hotels remain competitive in their respective markets to further drive EBITDA growth. As we approach the end of 2024, we are confident that with our portfolio of high-quality, rooms-focused hotels broadly diversified across markets and demand generators, the strength of our brands and effectiveness of our management companies, the stability and flexibility provided by our balance sheet, and the depth and experience of our corporate team, we are exceptionally well positioned for the future. While we do not have perfect visibility into the coming year, current fundamentals for our business are strong. Barring unanticipated macro events, we believe that operating performance should continue to improve with the greatest opportunity coming through steady growth in midweek occupancy and rate. Leisure travel has proven resilient, supporting the observed consumer shift towards experience. The past several years have provided opportunities for us to demonstrate both the strength and stability of our business and the capabilities of our team. I'm confident in our ability to produce strong returns for investors over the coming years. It is now my pleasure to turn the call over to Liz for additional detail on our balance sheet, financial performance during the quarter, and annual guidance.

Thank you, Justin, and good morning. We are pleased to report another strong quarter for our portfolio of hotels and that we were fortunate to not be adversely impacted by the recent hurricane activity and damage in the southeast. Our hotels in the path of the hurricanes had no material structural damage and remained open, serving their communities and caring for guests and associates, While our hearts go out to all those impacted, they are also warmed by the acts of service, care, and hospitality that were extended by our team members and communities. For the quarter, Comparable Hotels' total revenue was $378 million for the third quarter and $1.1 billion year to date through September, both up approximately 2% as compared to the same periods of 2023. With continued strength and leisure demand and additional recovery and business demand, Third quarter comparable hotels REVPAR was $125, up approximately 1%. ADR was $163, up more than 1%. And occupancy was 77%, essentially flat as compared to the third quarter, 2023. A strong third quarter brought year-to-date through September comparable hotels REVPAR to $122, up more than 1%. Comparable hotels occupancy to 76%, up approximately 1%, and comparable hotels ADR to $160, up nearly 1% to the same period of 2023. Uninterrupted by holidays or calendar shifts, August was our strongest month during the quarter, with year-over-year comparable hotels rep part growth of more than 3%. Based on preliminary results, Performance in October was even stronger, with occupancy of approximately 80% and continued improvement in ADR, yielding approximately 4% RevCar growth for the month. Looking at day-over-day trends, leisure travel continues to be resilient, with weekend occupancies down less than 1% during the third quarter. Weekday occupancy was down in July, driven primarily by disruption around the 4th of July holiday. up nearly 2% in August and up slightly in September, bringing total weekday occupancy growth to 40 basis points for the quarter. With overall occupancy for the quarter essentially flat, REVPAR growth was driven entirely by increase in rate. Weekend ADR for the quarter was essentially flat year over year, while weekday ADR grew just over 1%. with July weekday ADR down slightly and August and September weekday ADR up 2.3% and 1.8% respectively. Weekday absolute ADR continues to lag weekends, representing meaningful upside as midweek demand continues to strengthen, positioning us to move higher rates. Same-store room-night channel mix quarter over quarter remained relatively stable, with brand.com bookings at 40%, OTA bookings and property direct at 13% and 24% respectively, and GDS bookings representing 18% of our mix, up slightly to the second quarter. Third quarter same-store segmentation was largely consistent with the third quarter of 2023. Bar remained strong at 33%. Other discounts represented 29% of our occupancy mix. Group was 14%, and the negotiated segment represented 18% of our mix. Turning to expenses, comparable hotels' total hotel expenses increased year-over-year by 2.7% for the third quarter, decelerating from year-over-year total hotel expense growth of 3.5% in the second quarter and 4.2% in the first quarter. The deceleration was driven primarily by a reduction in fixed costs, with same-store property insurance costs down 20% year-over-year in the quarter. Total payroll per occupied room for our same-store hotels with $40 for the quarter, up 5% to the third quarter 2023, with the most meaningful increases coming in sales and repairs and maintenance payroll, which were up 12% and 8% respectively, and with greater holiday disruption in the quarter adversely impacting cost per occupied room. Contract labor decreased during the quarter to 8.3% of total wages and was down 200 basis points, or 16%, versus the same period in 2023. we will continue to work with our management companies to enhance the efficiency of our operations over time. We achieved comparable hotels adjusted hotel EBITDA of approximately $139 million for the quarter and $402 million year to date, essentially flat as compared to the same periods of 2023. We are especially pleased with our comparable hotels adjusted hotel EBITDA margin of 36.8% for the quarter and 36.7% year to date down only 60 basis points and 90 basis points to the same periods of 2023, which has consistently exceeded our expectations. Adjusted EBITRE was approximately $129 million for the quarter and $371 million year to date, up approximately 6% and 7% to the same periods of 2023, respectively. MSFO for the quarter was $107 million and year to date was $312 million. of 3% and 6% as compared to the same periods of 2023, respectively. During the quarter, we paid distributions totaling $58 million, or 24 cents per common share. Together with our board of directors, we will continue to monitor our distribution rate and timing relative to the performance of our hotels and other potential uses of capital. Looking at our balance sheet, as of September 30, 2024, we had approximately $1.5 billion of total debt outstanding net of cash, approximately 3.3 times our trailing 12-month EBITDA, with a weighted average interest rate of 4.9%. In August, we repaid in full one mortgage loan of approximately $20 million, increasing the number of unencumbered hotels in our portfolio to 210. At quarter end, our weighted average debt maturities were three years. We had cash on hand of approximately $6 million, availability under a revolving credit facility of approximately $540 million, and approximately 74% of our total debt outstanding was fixed or hedged. As Justin mentioned, we were active repurchasing shares in the third quarter, bringing the total shares repurchased year to date through September to approximately $2.4 million at a weighted average price of approximately $14.16 per share. for an aggregate purchase price of approximately $35 million. As of the end of September, we had approximately $301 million remaining under our share repurchase program. We have updated our full-year outlook for 2024, narrowing and refining the range to account for performance to date, the announced dispositions, and the timing of the Hotel 57 transition. At the midpoint, we are decreasing net income by $1 million decreasing comparable hotels rev par change by just 12.5 basis points, increasing comparable hotels adjusted hotel EBITDA margin by 20 basis points, and decreasing adjusted EBITDA RE by $1.5 million. For the full year 2024, we anticipate the results will be in the following ranges, net income between $204 million and $221 million, Comparable hotels rev par change between 0.75% and 2%. Comparable hotels adjusted hotel EBITDA margin between 35.3% and 35.9%. And adjusted EBITDA RAs between $458 million and $469 million. This outlook is based on our current view and does not take into account any unanticipated developments in our business or changes in the operating environment. nor does it take into account any unannounced hotel acquisitions or dispositions. The changes reflect several puts and takes, including modest Rev Park growth results in the third quarter, continued outperformance on the bottom line related to decelerating expense growth and the positive impact of the announced dispositions on margin, and a later transition date for Hotel 57. These modifications yield less than 1% change to comparable hotels adjusted EBITDA and EVA.RE. As we near the end of 2024, we are confident we are well positioned for continued strong operating fundamentals and bottom line performance. The operating environment is relatively stable with favorable supply and demand dynamics. Our recent capital allocation activity has enabled us to drive incremental value for shareholders and our balance sheet continues to provide us with meaningful optionality. Our differentiated strategy has proven resilient through economic cycles. enabling us to preserve equity value in challenging environments and be uniquely positioned to improve value through opportunistic transactions when market conditions are more constructive. Our team works diligently to maximize the performance of our existing portfolio while staying ready to take advantage of market shifts and opportunities to further enhance returns for shareholders. That concludes our prepared remarks. We would now be happy to answer any questions you have for us this morning.