Chatham Lodging Trust

Greetings, and welcome to the Chatham Lodging Trust first quarter 2020 financial results conference 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, Chris Daly, owner of Daly Gray. Thank you, Mr. Daly. You may begin.

Thank you, Devin. Good morning, everyone, and welcome to the Chatham Lodging Trust First Quarter 2020 Results Conference Call.

Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of May 11, 2020, 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. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. Now, to provide you with some insight into Chatham's 2020 first quarter results, allow me to introduce Jeff Fisher, Chairman, President, and Chief Executive Officer of Dennis Craven, Executive Vice President and Chief Operating Officer, and Jeremy Wagner, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff?

Okay, Chris. Thank you very much. Good morning, everyone. First and foremost, thank you for your interest in Chatham, and we sincerely appreciate your participation during these unusual times. The COVID-19 pandemic has been one of the most destructive events ever, to the global and national economy in history, and its impact on the lodging industry is unprecedented, forcing hotel owners and operators to quickly assess hotel operations under the most dire scenarios. Complicating the assessment is not knowing the duration of the current trends and the length of the recovery. Accordingly, all lodging companies are having to analyze liquidity needs, which is something unheard of in our space, especially for well-capitalized companies such as Chatham, whose leverage was reasonable going into the pandemic. We started to feel the impact from the pandemic the second week of March and knew that we needed to take rapid action to protect our long-term financial stability. Key corporate actions include the following. Of course, we made the extremely difficult decision to suspend our dividend, preserving $64 million of cash flow on an annual basis. We suspended all renovations that had not started and all non-emergency CapEx or CapEx required by local regulations, preserving $10 million. We slowed down CapEx spending on our Warner Center development. We amended our credit facility, enhancing our liquidity by $77 million and providing key covenant relief through the end of the 2021 first quarter. We appreciate the support of our bank group in that endeavor. Reduced cash corporate G&A expense by $3 million or approximately one-third. Dennis and I took voluntary pay cuts of 50%, and all other Chatham employees took voluntary pay cuts of 25%. Our board of trustees also voluntarily agreed to the 25% reduction in comp. I am thankful to have our best-in-class operating platform with Island Hospitality, especially now, which gives us the tools to act promptly and more expeditiously than others and has a meaningful impact on the top and bottom line. Furthermore, our teams at Chatham and Island have the experience to persevere through these situations, having successfully navigated through numerous cycles, and we are thankful to have this platform. Dennis has 20 years of public lodging REIT experience, and I am now working on my 25th year as a public lodging REIT CEO. We know how to lead a public company through these challenging times. Contrary to other hotel companies that closed a significant number of their hotels, we've kept all 40 of our hotels open as we've been able to provide accommodations to our nation's military, infrastructure-related workers, first responders, and critical medical workers dedicated to ending this pandemic. Our revenue management and direct sales teams are aggressively sourcing revenue opportunities daily, and we all review and look at our national sales team working at Islands Reports every single day. I believe that our portfolio has been especially appealing today. to the limited amount of demand in our markets as over 70% of our portfolio EBITDA was generated from extended stay hotels. You can also see that our efforts are paying off with the sharp increase in REVPAR index over the last three months, going from an index of 120 in February to now over 150. If you look at our hotel performance since early March, occupancy for us bottomed out at a low of 17%. on March 29, and today sits at approximately 30%. Not surprisingly, the industry and we are no different, and we've been unable to hold rates, which have slowly declined since early March. Since early March, our lowest ADRs are happening now in the low $90 range, having said that, REVPAR is at its highest since bottoming out on March 29 at the low of $20. Does that mean the darkest days are behind us? I sure hope so, and the current trend is somewhat encouraging, but if we've learned anything, it's in these times. These times are incomparable, and there's currently really no way of accurately projecting the future. Looking forward, as localities start to reopen, we believe that regional drive-to leisure and then corporate demand markets will be the first to come back with urban drive-to next, followed by fly-to urban markets, and then lastly, group or large-scale events. We also believe that premium-branded extended stay and select and limited-service hotels will perform best for the foreseeable future due to their ability to accommodate a variety of different travelers at an attractive price point and provide a safe and reliable environment and a positive experience. Big box hotels with massive amounts of rooms as well as unbranded hotels will face a longer road to recovery. In addition to the concentration of premium branded extended stay hotels in our portfolio, more than 96% of our hotels are limited service rooms, the highest percentage among public lodging REITs. This should bode well for our portfolio as demand returns As markets reopen, we're situated to capture more of the forthcoming demand and better bridge the gap to recovery. Our hotels are benefiting from the closure, of course, of many other mostly full-service hotels in our markets. And since our hotels are open, there will be minimum costs related to ramping up our hotels when the economic recovery begins. we're able to generate more revenue, retain more employees, and lose less money and better our overall cash position, which is paramount during this pandemic. I believe we've got the capital structure to withstand this pandemic. If you assume the full line of credit is drawn, the ratio of our net debt to investment in hotels at cost is approximately 40%. With current cash and available borrowings on our credit facility, our liquidity of $135 million allows us to operate at a rev par $25 until at least January 2022. We certainly don't expect that trend to be the case, of course. And additionally, remember we've got six hotels unencumbered by debt with an aggregate investment value of $276 million today. available as additional source of cash if necessary. Operationally, as a major Hilton and Marriott franchisee, I do believe that our operating model is going to look very different going forward. The pandemic has triggered us as an industry to reevaluate how guests are served, whether that is with respect to housekeeping, food and beverage, or other complimentary services, and what the guests should have to pay for those services that we offer. As most of you have heard from us for a while, we've been pushing for change. These changes won't happen overnight, but of course the brands are now very much in concert with us relative to making the necessary changes to be successful. Additionally, the impact of new supply, as I'm sure you've read, should mitigate as we move forward. Hotels under construction, or at least most, will be completed but slowed down. If you aren't under construction, it's going to be difficult to underwrite the appropriate returns that justify construction, and I do believe it's going to be more difficult than ever to obtain construction loans for new hotels. With that, I'd like to turn it over to Dennis.

Thanks, Jeff. I want to spend a few minutes providing a bit more color on our hotel operating activities since early March when the pandemic commenced in the U.S., relying on our experience from prior down cycles or shocks to the lodging industry. Working with Island, we are implementing massive changes to our operating structure on basically a daily basis, using real-time daily access to revenue and expense data trends. Emphasizing direct sales outreach early on, we were able to soften the sharp decline and start building back our revenue base. We've had to make a lot of adjustments to our expense structure. First and foremost, unfortunately, we've had to lay off or furlough approximately 70 percent of our hotel employees, reducing our headcount from approximately 800 employees at the end of February to essentially 500 employees at the end of April. Across our 40 hotels as of the end of April, our full-time equivalents were essentially 370 employees, an average of about eight and a half employees per hotel. We've shuttered all of our F&B outlets. We do provide a limited grab-and-go breakfast where it's necessary for in case of the business that's in the hotel. We've consolidated operations of nearby hotels, such as in Silicon Valley, Houston at the Medical Center, Houston West University, Dallas, Denver, Somerville, Charleston, South Carolina, to gain greater economies of scale. In these locations, we're essentially shifting newly arriving guests to a partner hotel. Obviously, in every hotel, we've reduced service levels at hotels, including housekeeping, hospitality offerings. And having said that, we're adopting the best practices for cleaning that are being rolled out by Hilton and Marriott and Hyatt along the way. We've been analyzing all of our purchasing programs and maintenance programs for additional cost savings opportunities. And we're limiting utility costs as much as possible by consolidating occupancy within hotels to certain locations or floors. and adjusting ongoing utility costs in unoccupied rooms or floors by monitoring temperatures, lighting, et cetera. Our hotels have never operated at these types of levels before. In our release, we disclosed our current estimate of monthly cash burn after all debt service and before capital expenditures based on certain levels of REVPAR. These are preliminary estimates based on our April operating results, which had some noise in it related to just staffing changes, vacation, benefits, and the like, and certainly we'll refine our model as we get through the second quarter at some of these depressed occupancy levels. On a GOP basis, when you look at break-even cash flow, it's essentially at rev par of, you know, kind of in the low to mid-30s, you know, $32 to $35. On a hotel EBITDA basis, we're break-even at rev par of approximately $50. And on a cash flow basis, after all debt service and before CapEx, we're breaking even at REVPAR of approximately kind of $90 to $100, again, just depending on the mix of ADR and occupancy, which I think will, again, gather some more detail as we get through the quarter. We do believe that our actual break-even might be a little bit towards the lower end of that $90 to $100 range, perhaps even lower. But, again, we'll wait to see kind of how we play out in the second quarter. With respect to CapEx on our 40 hotels, we expect to spend approximately $7 million on over the final three quarters of the year with approximately 5 million of that spending occurring in the second quarter as we finish up two renovations in Anaheim and New Rochelle, New York, as well as 32 rooms at our Silicon Valley number two location that's essentially been waiting final inspections from the city, but the city has been shut down with all inspections due to the coronavirus stoppages. Turning to the first quarter, obviously it's a different world, so we're not going to spend a lot of time Just rehashing the details, REVPAR declined 22% to $96 with ADR dipping 5% to $153 and occupancy declining 17% to 63%. Through February, REVPAR was flat year over year and before the pandemic effects hit us. And though REVPAR was down 22% for the quarter, other revenue was down about 10%. Again, as a major emphasis for us over the last couple of years was improving that other operating revenue line, which we were still seeing some year-over-year benefits to that before this down cycle occurred. On the expense side, payroll and benefits obviously down only 10% in the quarter. Again, a little bit of a trail in terms of operating costs specific to payroll with respect to labor and benefits. Our benefits on the benefits side, our costs continued to trend down with those costs down about 15% year-over-year in the quarter. On the supply front in our markets as measured by Smith Travel New Supply, which peaked at 5% in 2015, had basically been declining each year through 2018. It did perk up a little bit to 3% in 2019. and remain there as of the end of the first quarter. When you take out our four Houston hotels, which is where there was still a significant amount of new supply, new supply for us is down about 2% if you look at it on a March 31st basis. And as Jeff remarked, we certainly believe hotel supply and the lack thereof should be a tailwind for the industry over the coming years as hotel development most likely will be severely impacted due to a lot of the effects that Jeff talked about. So I think with that, I'll turn it over to Jeremy.

Thanks, Dennis. Good morning, everyone. Even though the full impact of the COVID-19 pandemic was only felt for just over half of March, Chatham's March rev par was down 55.6%, and Q1 rev par was down 8%. Adjusted EBITDA was down 38.9% to $16.5 million in Q1. Despite the 21.8% rev par decline in Q1, Chatham's hotel EBITDA margin was 27.6% in the quarter. While this represents an 800 basis point decline from our Q1 2019 margin, it is not far off from the hotel EBITDA margins that many of our lodging peers generated prior to the COVID-19 pandemic. Chatham's adjusted FFO per share was 13 cents in Q1 2020, down 62%. from the $0.34 of adjusted FFO per share in Q1 2019. Our two joint ventures were highly leveraged before the COVID-19 pandemic and are facing significant challenges in the current operating environment. For the full year 2019, before the start of the pandemic, the two JVs had combined leverage of 9.9 times debt to EBITDA. Both JVs have not made their debt service payments in April and May. Colony and Chatham are pursuing potential relief from the servicers and lenders for these loans. Both JV loans are non-recourse to Chatham except for certain bad boy acts, and defaults under the JV debt do not trigger cross-defaults under any Chatham debt. In light of current circumstances, Chatham recorded a $15.3 million impairment on its equity investment in the Inland JV, which represented the full carrying amount of this investment. Our basis in the innkeeper's JV is negative, so no impairment was necessary for that investment. Chatham's balance sheet and liquidity profile is significantly different from our JVs. Chatham has a strong balance sheet that positions it well to weather the disruption being caused by the COVID-19 pandemic. We ended Q1 with $58 million of unrestricted cash and $11.6 million of restricted cash escrowed with loan servicers that can be used for capital expenditures, property taxes, and insurance. At the end of Q1, we had $173 million drawn under our revolving credit facility, and in early May, we completed an amendment to our credit facility that provides us covenant relief for the next year and the ability to utilize the entire $250 million capacity of the facility. When covenants begin to be tested again, starting in June 2021, EBITDA and NOI figures used for covenants will be calculated on an annualized basis through the end of 2021. At March 31st, we had $135 million of liquidity between our unrestricted cash balance and revolving credit facility availability. Even at a rev par of $25, our monthly cash burn, including corporate G&A, interest, and principal amortization is approximately $6.5 million before CapEx, so our current liquidity position should cover us for approximately 20 months at current performance levels. We expect operating performance will improve materially before that point. While we don't believe that we will need additional liquidity, we have six unencumbered hotels with a book value of $276 million that could serve as collateral to raise additional debt proceeds. Chatham's balance sheet also benefits from minimal debt maturities over the next several years. The only debt we have maturing between now and the end of 2021 is a single $12.8 million non-recourse mortgage loan that matures in September 2021. After that, the next debt maturity we have is for our credit facility in March 2022, but we have an option to extend that maturity through March 2023. We will have a significant amount of time for both hotel operating performance and the capital markets to recover before we need to refinance a material amount of debt beginning in 2023. With the current lack of visibility around operating performance, we withdrew our earnings guidance in March. Since we're in the very early stages of a reopening of the economy and visibility around the timing of a recovery and hotel operating performance remains limited, we are not going to provide guidance at this time. This concludes my portion of the call. Operator, please open the line 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 the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Ari Klein with BMO Capital Markets. Please proceed with your question.

Thanks, and good morning. Hey, Eric. Jeff, you mentioned the operating model potentially looking different post-COVID. Can you elaborate a little bit on some of the changes you expect to most likely be implemented and then what this could mean from a structural profitability standpoint longer term?

Yeah, thank you. The conversations, whether they be with Marriott or Hilton, of course, for limited service hotels, but frankly for all, revolve around two highest cost items, housekeeping and food and beverage. On the housekeeping front, and again, all these conversations are currently ongoing as between the brand, the brand's various advisory groups of which I sit on that residence in board. So I can't disclose too much until they really settle on what they want to do with us. But I think, for example, for stayovers, there will not be automatic cleaning of the room or, frankly, any service, depending upon the brand you're talking about, for I'd say at least three or four nights. Maybe it will even extend beyond that. But, of course, you're going to pick up some extra costs on whatever the new cleaning requirements are going to be that each brand is also going to roll out to make guests and the general public feel comfortable about coming to hotels again. And that's going to be a pretty significant effort, and we think it may even take a normal cleaning that took 20 minutes or 25 minutes per room, maybe even up to 45 minutes a room. So all of that has to really come out in the wash in real practical everyday experience to see the impact to overall costs and margin on the food and beverage side at least in select service hotels we all provided a pretty extensive breakfast buffet As you probably know, I'd expect those to go away for the foreseeable future with most brands going to some grab-and-go concept in a little brown paper bag, you know, with a few items in it. So that should reduce costs pretty substantially. In our residence inns and our Homewood suites, there were evening rooms. you know, hours of free cocktails with some food items at least three times a week. I'd expect to see that go away. So, you know, there's significant opportunity there. But as I said, I think we need to get our occupancy rates up a little bit more and start testing what the impact is going to be.

And then what have you seen from an advanced booking standpoint in recent weeks, maybe as you look out to June or July? And then it sounds like first responders and others are accounting for a decent percentage of occupancy right now. As things start to recover, do you see a step down before you maybe see improvement?

I missed the last part. Basically, listen, I think there will be you know, as far as an industry, right, I mean, I think as first responders, military that are needed for some of these, you know, urban areas as they check out and you have business travelers or whomever it might be, leisure travelers coming back in, there will be a little bit of a disconnect, I think, in the timing of how that happens. I don't think you're going to see a massive fall off, though, because I think, you know, what, you know, especially in You know, certain locations, primarily in the southern part of the United States where, you know, some of the shelter-in-place restrictions have been relaxed a little bit, we are seeing a pickup in, you know, leisure-related demand, you know, whether it was two weekends ago to this past weekend at our Savannah Hotel, you know, that essentially, you know, jumped up about 50%. Now, again, a low level from essentially kind of 17% to now 25%. of leisure demand. But, you know, I think that, you know, it really just depends on the timing. But certainly there is at some point going to be nurses and first responders checking out, but others I think will be checking in. Thanks for the call.

Thank you. Our next question comes from the line of Tyler Battery with Janney Capital Markets. Please proceed with your question.

Hey, good morning. Thank you. So I just wanted to follow up a little bit more on the previous question there. And also on the preparable mark, Jeff, I think you were talking about, you know, current trends somewhat encouraging. You talked about the occupancy, you know, bottoming at 17%, now closer to 30% a little bit more. Can you just get more precise in terms of, you know, what's driving that, which markets you're seeing the strength in throughout Savannah there? I'm just trying to get a sense of, in a little bit more detail, you know, real-time, what you're seeing in some of these markets where the shelter-in-place rules have been removed, you know, just what you're seeing in terms of leisure demand at some of those hotels would be helpful.

Hey, Tyler. Yeah, I mean, just to hit your last point real quick, I mean, leisure demand is really just a last two-week phenomenon, and it's only in a couple of markets. So the example I gave you for Savannah, because Georgia, I think, relaxed its standards, you know, two weeks ago, You know, the occupancy demand at Savannah was, again, kind of upper teens. Two weekends ago, this past weekend, it was mid-20s. So, you know, I think that's just one hotel. But I think, you know, as leisure markets, I think we'll be some of the first to come back. You know, our leisure room count as a percentage of our total portfolio is probably in the, you know, around 25% of total rooms. so that should bode well for that. Now, as far as from the 17% to 18% occupancy now to 30%, what I would tell you is for us, across most of our portfolio, it's occupancies in kind of a mid-teen to 35% to 45% occupancy. We have a half a dozen markets or so that are performing meaningfully better, and I would characterize those as coastal markets where there's at least a mix of not only first responders, but also military. So between, you know, our San Diego markets, we even have some, you know, some military and naval related business in Silicon Valley, a little in Seattle, in the Northeast, we have some as well, as well as, you know, in our Charleston, Somerville area. So, you know, I think those types of areas where we're getting a mix of first responders, plus some naval or military business or where we're seeing the highest outperformers.

Okay, perfect. That makes sense. And, you know, following off the same train of thought, just, you know, I'm curious, you know, how you guys are thinking about ADR and your ADR strategy, both now but also when things reopen. I mean, as some of these markets get going and you get some more demand, you know, do you think there's going to be potentially a race to the bottom in terms of some other hotel's trying to capture the market share, or you're not really concerned about that being an issue?

Yeah, no, I mean, we're concerned about it. I mean, I think, listen, everybody that's – all the companies that are giving occupancy break-even levels are just basically lying, you know, because at the end of the day, it all depends on what the heck your rate is. And, you know, for us, you know, one, you've got a lot of hotels that are closed. So as what – and similar to what you've seen in China and Korea – As hotels open back up, your occupancy levels stay depressed because, again, more hotel rooms are open. As you say, rates are going to become challenging because as that new hotel inventory opens back up, people are going to try and get business. So rate is going to be an issue. So I think that's why we think it's most appropriate to tell you, hey, on a break-even basis, you know, we believe that RevPAR, which is a mix of OCK and ADR, is the best guideline, at least at this point, to what the heck that looks like. So, you know, I think for us, ADR, and everybody, ADR is going to be an issue as hotels start to come back up. Even though demand is going to be picking up, there will be a rate issue for the short term.

And let me just add to that. Because of islands day-to-day, communications with us and sharing all information relative to what business is out there and not out there. And conversations tend to be around at least desire and ability of the large corporate users, the ones that really drive corporate rates to come back when they start traveling again. And there's already a little conversation going on here and there, let's just say, with their expectations to start anyway at an ADR that's way lower than the ADR they were paying before this whole thing hit in March. So hotels will be responding. to those requests and we'll be looking to put heads in beds and we don't want to be too bearish, but we will work like everybody else, I hope, to maintain rates and rates that looked similar to pre-pandemic rates, but I wouldn't bank on it.

Okay, that's very helpful. And just last question for me, I apologize if I missed this. You know, the Warner Center development, just where are you guys in terms of construction spend on that, et cetera? I mean, I'm probably premature, but just, you know, any update possibly you could provide on timeline in terms of, you know, when that could be finished or when you could start working on that again?

Yeah, Tyler. Yeah, I mean, on that, we've, listen, we've back about, you know, I'm going to say three weeks ago, four weeks ago, we finished the majority of the concrete pour of the building, which is up through level three. for us and kind of given the challenges associated with the labor, getting it to the site construction, we decided to slow down construction at least for the next 60 days, essentially to July, to early July, to hopefully get to where we can be at full operational efficiencies and reconsider kind of the timeline. As we talked about before, we were expecting kind of a July 2021 opening. I think, you know, with this 60-day pause, you're now going to push that probably into the fourth quarter of 2021. But we certainly didn't feel and felt that, you know, our best use of dollars at the moment was essentially to say, hold on, let's wait until we can, you know, get that development up full scale and, you know, I think on the advice of our contractors in the field that, you know, we felt it was best to kind of slow down things at least for the next 60 days. We are still doing some concrete work on the exterior, and we are still doing some what they call B-permit work related to utilities and everything like that around the site. So it's still active, just on a little bit of a lower scale for the next two months.

Great. That's all from me. Thank you for the detail. You're welcome.

Thank you. Our next question comes from the line of Matt Boone with FBR Riley. Please proceed with your question.

Hey, guys. Good morning. I'm on for Brian. I just had a quick question on liquidity. You mentioned that you had six hotels that are currently unencumbered that could serve as collateral for, you know, raising additional debt. But I was just curious if you had considered potentially pursuing any dispositions to help improve your liquidity profile.

Yeah, hey Matt, this is Dennis. I mean, listen, we'd certainly consider it, but at this point, there's not a whole lot of acquisitions or disposal activity. I think you see everybody that's out there that had hotels under contract, those are all, everybody's backing out. So the ability, at least in the short term, to get any proceeds from a disposition is really, really limited. So you're not going to see us do that. I mean, certainly I think if If things start to come back and people can at least start seeing where it's going to go, maybe somebody is willing to buy a hotel. But every hotel doesn't know what next month looks like, so it's going to be hard to buy a deal at that point.

And with our redone facility, there's no fire sale here, and that's the only transaction that I believe in the next 90 days you'll see occur. uh yeah i think the liquidity are you know relative to other hotel reads like cash burn and the ability to kind of manage day in and day out with island uh you know will prevent us from having to go down that road okay thank you that's helpful and then you know turning to cost savings are there any additional you know initiatives that you're considering deploying at the moment or do you believe that everything that you've already instituted should you know

puts you in a good enough position to weather any additional near-term headwinds.

Yeah, I mean, I think everything we've done so far provides the significant benefit of what we've done to date. As I've talked about in my prepared remarks, I mean, we are still looking at vendor relationships and pricing and utility types of savings, but quite honestly, there's not a whole lot of volume savings anyways on the purchasing side or the utilization of services such as garbage and everything that we haven't already, you know, cut back because of limited occupancy and a lot of hotels. So, you know, the grunt work and the majority of the work has been done, but we'll, you know, obviously continue to look at, you know, little bits here and there that can help us.

Got it. And then my last question is with CapEx, can you remind me what the exact breakdown is supposed to be over the next two quarters? I'm sorry I missed that.

Yeah, we've got about $7 million that we're going to spend, and this isn't related to Warner Center, but $7 million of CapEx for the balance of the year with about five of that in the second quarter related to our Anaheim and New Rochelle residence inns that are going to be wrapping up their renovations.

Okay. Thank you. Appreciate it.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Well, thank you all for listening, and we obviously are looking forward to better days and better times ahead. I think on a comp basis, and, of course, you have to look at things on a relative basis, we're positioned as well as we can be. And we are, by the way, proud of our teams. If any of those, which I expect they are, those folks are listening and particularly proud of our sales teams for the business they've been able to secure. around the country and put in these hotels. Thank you all.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.