Diamondrock Hospitality Company

quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the EVP, Chief Financial Officer and Treasurer, Bryony Queen. The floor is yours.

Good morning, everyone, and welcome to Diamond Rock's first quarter 2025 earnings column webcast. Joining me today is Jeff Donnelly, our Chief Executive Officer, and Justin Leonard, our President and Chief Operating Officer. Before we begin, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from what we discussed today. In addition, on today's call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. We are pleased to report that our results for the first quarter were largely in line with our expectations. Comparable REVPAR increased 2% over 2024 and total REVPAR increased 1.6%. Our urban footprint was the primary driver of the portfolio's REVPAR growth, up 5% on a strong contribution from both the group and business transient segments. The growth was steady throughout the quarter, with room revenues up 3.1% in January, up 2.6% in February, and up 5.4% in March. Food and beverage revenue at our urban hotels declined 3.3% year over year. This was mainly due to the Chicago Marriott's exceptional in-house group programs with more extensive food and beverage contribution last year, compared to this quarter, where there was a larger proportion of citywide rooms-only group with limited in-house food and beverage spend. If we exclude the Chicago Marriott, food and beverage revenues at our urban hotels increased 5.5% instead of declining 3.3%, an 880 basis point swing. In anticipation of the question, total RevPAR growth excluding the Chicago Marriott was 2.5%, for about 90 basis points higher than the reported 1.6% growth for the entire portfolio. Total expenses in our urban portfolio increased 2.1% on a 1.5% increase in wages and benefits. Hotel adjusted EBITDA margins increased 54 basis points. Switching to our resort portfolio, comparable rev par declined 2.1% over 2024 and total rev par was down slightly, just 40 basis points. Total revenues were up slightly in January and February, 0.4% and 0.9% respectively, but declined 4.3% in March. Drilling into March, our resorts were largely flat through the first three weeks of the month, similar to January and February, but in late March when we hit the comparison to Easter week in 2024, we experienced sharp year-over-year declines, supporting that much of the softness was driven by the calendar shift. Consistent with our comments on last quarter's call, we saw mid-single-digit revenue declines at our Florida assets, with first quarter rev par down 5.9% and total rev par down 4.0%. Outside of Florida, where our resorts skew a little more luxury, REVPAR increased 1.7% and total REVPAR increased 2.9%. For example, the Heights and Vail enjoyed a great ski season and saw REVPAR increase 7% and total REVPAR increase 9.5%. The margin story at our resorts is important and bears highlighting. We had great success managing costs in the face of top-line softness to preserve profitability. We reduced overall expenses by 2.4% compared to 2024, expanding our hotel adjusted EBITDA margin by 76 basis points to 32.5%. Group remained our strongest segment in the first quarter, as it did throughout 2024. First quarter group room revenues increased 10.4% over last year on a 5.2% increase in room nights. At our urban hotels, group revenues increased 14.4% on a 5.9% increase in room nights. We remain focused on adding groups to our resorts to build a base that will preserve pricing and improve profitability. Although group lead generation remains strong, the closure rates have been softer recently as event planners have been slow to make a final decision due to the unsettled macroeconomic environment. As of the end of the quarter, our booking pace for 2025 continues to be up slightly versus the same time last year. Turning to profits, hotel adjusted EBITDA in the first quarter was $61.3 million, reflecting 2.2% growth over 2024 on a margin that was 39 basis points higher. Corporate adjusted EBITDA was $56.1 million flat the last quarter. An adjusted FFO was $0.19 per share, $0.01 or 5.6% over 2024. Finally, free cash flow per share in the trailing four quarters, calculated as AFFO less CapEx, increased 10% to $0.63 per share over the prior four-quarter period. Before I turn the call over to Jeff to discuss recent events, our updated outlook and strategy, let me touch on our dividend and our balance sheet. I want to reiterate that we intend to continue to pay an $0.08 per share quarterly dividend in 2025, and depending on our 2025 operating income, an additional stub dividend for the fourth quarter. Turning to the balance sheet, during the quarter, we repurchased 1.4 million shares of common stock at an average price of $7.85. We continued repurchases following quarter end, bringing the year-to-date total to approximately $16 million or 2.1 million shares. The average price equates to a trailing capitalization rate of a little over 10%. We have approximately 160 million of capacity remaining on our share repurchase authorization. Finally, we have three mortgage loans totaling just shy of 300 million, maturing in 2025, at a weighted average cost of approximately 4.2%. We also have a $300 million term loan maturity in early 2026 that as of quarter end had an average cost of approximately 5.8% or 135 basis points over SOFR. We continue to review the most cost-effective options to refinance these maturities through a combination of an inaugural corporate debt issuance, placement of mortgage debt, and a recast of our corporate credit facility. At the current time, we believe a recast and upsize of our corporate credit facility is likely the most economical option for us to address our loan maturities. And this is factored into our updated 2025 guidance that Jeff will discuss. This updated assumption lowers our interest expense outlook by approximately $3 million. On that note, I'll turn the call over to Jeff.

Thanks, Bryony, and thank you for joining us this morning. Let's start by reviewing capital projects, then transactions, and I'll conclude with comments on what we're seeing and how that drives how we're thinking about the rest of the year. First off, recall that we completed guest room renovations at the Westin San Diego Bayview in early 2024. REVPAR in the first quarter was up 28% against a competitive set that declined 8%, and NOI increased 65% year over year. We're looking to close out this project with minor changes to the lobby configuration to improve F&B potential by expanding the seating area and potentially offering a grab-and-go option. At Bourbon Orleans, we concluded a room renovation in late 2024 that supported implementation of a resort fee. In the first quarter, other income increased over $200,000, or 90%, versus first quarter 2024. For the year, we are forecasting a $1 million increase in high-margin other income at the Bourbon, implying a mid-teen current yield on renovation costs. In the first quarter, we completed the room refresh at the Hilton Garden in Times Square, and the product looks great. This is the first time the rooms have been refreshed since the hotel was constructed in 2014. RevPar was down by over 16% due to displacement, and we saw a $500,000 impact to EBITDA. In a market that runs close to 90% occupancy, the first quarter is the most cost-effective window to execute such work, and our team did a great job executing here on time and on budget. Turning to Sedona, the renovation of our rooms at The Orchards is complete, and we are beginning the process of rebranding this property as The Cliffs Sedona. In fact, aerial photos on the website, thecliffssedona.com, We'll give you a good view of our location in the heart of Sedona and highly desirable views of the Red Rocks visible from every room of the hotel. All that remains is for the hillside work to be completed. This will create a new pool and bar area with stunning views of the Red Rocks and connect the Cliffs Hotel to our Loberge de Sedona that sits below on a shaded creek. Construction is well underway and will be completed by fall 2025. We are very excited about the repositioning opportunity and believe it will be an earnings and value driver. On the disposition front, we previously announced the sale of the Westin D.C. City Center Hotel for $92 million during the quarter, which equated to close to a 5% trailing cash flow yield after CapEx. A portion of these proceeds were accretively recycled into repurchasing common shares at an average price of better than a trailing 10 cap rate. We continue to pursue opportunities to dispose of non-strategic assets, as well as opportunistic dispositions, all with a focus on recycling proceeds into the most attractive investment alternatives. There is nothing we can comment on at this time, but we hope to be able to share more soon. On the transaction front, there are a good number of high-dollar resorts on the market, with prices ranging from $500,000 to as much as $2 million per key. All-in pricing after CapEx is in the range of 5.5% to about a 7% cap rate. Given our source of funds, our common shares, preferred equity, and even our debt are among the most accretive reinvestment options today, but we are always actively looking for accretive recycling opportunities. Before I get into guidance, let's talk about what we are seeing real time. On the resort front, RevPAR growth was up about 1% in January, 4.4% in February, and flat through about the first three weeks of March. It was only in the final days of March when the resorts were comparing against Easter week 2024 that we saw REVPAR decline. Fast forward to mid-April, and we saw a significant year-over-year REVPAR spike at the same properties for Easter week 2025. Moreover, the transient pickup for the second quarter remains consistent with last year. The point is that much of the choppiness seen thus far at our resorts seems to originate from holiday shifts and not the coincidental timing with negative macroeconomic headlines. Looking ahead, an unsettled economy may lead to more demand at the drive-to resorts common in our portfolio versus costly or fly-to destinations. Our direct exposure to foreign travelers is low, Nevertheless, foreign visitation to the U.S. will likely be softer than initial expectations, and it is not clear whether the incremental demand from U.S. travelers will be sufficient to backfill this potential gap. Currently, we are not seeing a meaningful shift in resort demand, but remain vigilant. The long-term secular drivers for U.S. resorts remain strong, but we recognize near-term performance could be soft. Nevertheless, we expect Diamond Rock's drive-to destinations will perform well in this environment. At our urban hotels, business transient demand increased in the mid-teens during the quarter and trends are encouraging. As for group, it's important to remind everyone Diamond Rock is building upon peak group room revenues in 2024. Given that backdrop, lead volume is still higher than last year. Group pickup for 2025, or in the year for the year bookings, increased in January and again in February, but we saw a pause in group pickup as we moved into the end of March. It is that pause, that deceleration in our lead conversion, leading us to a more cautious stance on the back of 2025. The optimistic view is that group demand is there, and a little more confidence in an unsettled economy will convert business leads to revenue. Considering we've seen capitulation on many aspects of the unpopular trade policies, one could argue we're already moving toward a calmer environment. The cautious view is confidence arrives too late for the industry to fully recapture its prior potential. Typically, group dependent hotels in the market grow anxious and start discounting, which leads to lower revenue creation than may have otherwise occurred. Our decision to reframe our 2025 guidance was driven by healthy group lead volume and business transient demand on the one hand, and the acknowledgement that a continuing pause in group pickup may make it more challenging for us to replicate the very strong group production we had in the back half of 2024. So let's get to our outlook for 2025. Our FFO per share guidance is unchanged at a range of 94 to $1.06 per share. We revised our full year 2025 RevPAR outlook to a range of minus 1% to plus 1% growth or about 200 basis points lower than our prior range. Total REVPAR growth is expected to be the same in the minus one to plus 1% range. The lower and upper bound of our new full year range assumes REVPAR for the remaining three quarters of the year is down less than 2% at the low end and slightly positive at the high end. 2025 corporate adjusted EBITDA is expected to be in the range of 270 to $295 million. or $5 million lower at the top and bottom than our previous guidance. This places the midpoint at $282.5 million. It bears noting that the revision includes the benefit of a $3 million savings on our insurance placement. As Brownie mentioned, we have a bit of financing work to do in 2025, and included in our guidance is the assumption we will execute a credit facility recast to address near-term debt maturities. Adjusted FFO is expected to be in the range of $198 to $223 million, or $1 million lower than prior guidance. Adjusted FFO per share is expected to be in the range of $94 to $1.06, which, as I said earlier, is unchanged from our prior guidance in part because of the share repurchases, as well as the flexibility our liquidity affords us to allow to pivot on our debt refinancing plans. In closing, the outlook is cloudy. Underlying trends were obscured rather than illuminated by the short-lived Doge days of spring coinciding with holiday shifts only to be immediately followed by the somewhat ironically named Liberation Day. It is my personal view the Trump administration will continue to soften their policies to settle the economy and improve the re-election potential of congressional Republicans in 2026. For this reason, I'm cautiously optimistic we'll see economic anxieties settle as we move through 2025. Regardless of the future path, increasing earnings per share remains our focus. Our greatest investment during the quarter, aside of course from the exciting work in Sedona, was the repurchase of our common shares and we will continue to lean in on opportunities to continue to prudently grow earnings and create value while preserving flexibility. Thank you for your time this morning and we'll be happy to answer your questions.

Thank you so much. And to ask a question, simply press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question. It comes from Smith Rose with Citi. Please proceed.

Hi, thanks. Hi. You mentioned a little bit about some of the trends you're seeing in April. I just wondered, can you just share the preliminary portfolio-wide red bar for April?

Yeah, we're swimming.

Yes, needs our preliminary April is showing a little better than 2% growth.

Okay, okay, thank you. And then I guess I just wanted to ask you a little bit on the renovation projects that are underway with the tariffs, etc. Would you expect those costs to go up? Or are they already kind of locked in before that went into effect?

I think it's a bit of a difficult answer because it really depends on which types of renovations you're talking about. And this kind of goes to complexity. I think that most people are in leadership positions and buying stuff from overseas or making decisions about it. I'll give you an example. We were renovating our hotel in Phoenix. We went very quickly from trying to understand what storage options were for a large order of FF&E that was being made in Vietnam to getting it on a boat as fast as possible when the tariffs were pushed back for 90 days so that we could get that FF&E in before the tariffs were reinstituted. So I think we're trying to be pragmatic without understanding exactly what the future is going to look for. I think for the summer window, the stuff that we have on order is likely all going to come in before the tariffs are imposed again. For the stuff that we have slated to start in November, we're at a bit of a pause trying to understand what the landscape is going to look like.

Okay.

Thank you. Thanks.

Thank you. Our next question comes from Duane Frenningworth with Evercore ISI. Please proceed.

Hey, thanks. Appreciate the detailed commentary. Just on the group conversion pause, can you talk a little bit about the profile of your average group? Are these corporates? Are these small businesses, associations, social gatherings? What types of events are we talking about, and do you have an average group size?

Yeah, it's a good question. I would say it's going to run the gambit from associations to corporate. The other thing I would say is when you consider our average hotel, you can particularly take Chicago Marriott out of it. When you look at our average hotel, we're about 200 to 250 room hotels. So the nature of our groups tend to be a little shorter, book closer in. And for that reason, there are going to be smaller size. I don't have a number for you at the top of my head for what the average group size is, but I would say it's probably going to be about the size of those hotels at most. Chicago in particular and maybe Boston are going to be some of the ones where you see really a different size group. But it really does run the gambit in terms of the mix of the source of that group.

Got it. And then on that front, any markets in particular where you're excited about the group pacing? Thanks for taking the questions.

I think Denver's showing some significant strength for us, just given the citywide pace that's on the books. Actually, for our hotel downtown, we don't participate in a lot of those blocks, so the citywide pace is great for a little hotel that can compress around it. Salt Lake's also kind of a significant standout for us. I think we're finally seeing the benefit of the renovation that we did about a year and a half ago, and San Diego also just partly driven by the fact that we had some displacement from a renovation last year, but we're also seeing post-renovation a nice uptick in group bookings.

Thank you.

Of course.

Thank you. Our next question comes from the line of Michael Bellisario with Baird. Please proceed.

Thanks. Good morning, everyone. Good morning. Good morning. To Carter, for me, sort of just along the same lines on group, I guess maybe where are the holes in terms of dates as you look out for the rest of the year in terms of quarters? And then sort of secondarily, I guess maybe for Justin, what's the updated revenue management strategy today to try to backfill some of those holes?

Thanks. I mean, for a guy in Chicago, Mike, I would think you'd know.

No, I mean, look, the biggest holds for us are frankly more due to the comparable period than they are necessarily the cadence of where group bookings are. We were just given DNC in Chicago in August last year. That just presents a pretty difficult comp for us in terms of backfilling that size of citywide business. And then I think probably November after that, we've got a little bit of a difficult comp given some of the business that was in Boston last year. From a revenue management perspective, I would say that we've actually been relatively steadfast on rate up to this point. Maybe that is some of the cause of the lack of conversion. We're trying to shift people into more appropriate patterns in exchange for giving them a discount. We've had some success doing that and candidly trying to book transient into some of those holes. But I think we're not at a point where we feel like cutting rate is instigating demand. So it's a bit of a wait and see pattern, I think, for some of those

further out holes on the transient front. Understood. Thank you.

Thank you. Our next question comes from Chris Woronka with Deutsche Bank. Please proceed.

Hey, good morning, everyone. Thanks for taking the question. Jeff, you guys, you gave out a lot of data points. I think one of the things you mentioned was kind of the you know, the pause that maybe happened in March and April on some of the group in the year for the year. The question is kind of what's, I guess, the average booking window for that stuff? And at what point do you do you say it's not coming back this year or is it also, you know, is it, do you think it's partially a pricing issue where groups are just kind of, you know, using this pause as leverage to try to get better rates on some of the smaller meetings?

Yeah, I'm not sure if it's necessarily a pause to get better rates and it's necessarily that strategic. I mean, maybe for larger groups, they would probably be looking for, you know, better terms around cancellation or attrition, you know, so if they have uncertainty around, how many folks are going to be attending their event or if they're coming from abroad. You know, we might not be the host of the majority of that type of business, but I would say that our booking window for smaller groups tends to be four to six months out and for larger groups tends to be about eight to 12 months out.

Okay. Thanks. Super helpful. Then this question, you know, I know you guys talked a lot last year about kind of the post-renovation lift and Dagny was one of the ones, one of the ones you highlighted. Almost 5% rep part growth in Q1, not bad, but is that, is that property when you say that's kind of fully stabilized now and it's going to grow in line with the market or is there still, you know, more to go, more to go there? And I guess on your renovations that are going to wrap up this year, remind us of kind of how long you generally see before stabilization of the the post-reno benefits. Thanks.

Yeah, the comment we had made when we announced that project was the property was doing about $10 million in EBITDA, and we thought that eventually kind of its stabilization would be like, I think, around $16 million, $15, $16 million. And we thought in its first year it would do about $12 million. I think it did about $14 million, if I recall, in its first year post-renovation. So I think there's still some more room to go. We've actually come out of the blocks, out of the gate really strong. But I still think there's still potential there for us to have additional upside.

Okay. Very helpful. Thanks.

Thank you. Our next question comes from Flores Vantes with Compass Point. Please proceed.

Hey, guys. Jeff, you're very – you've become the new messenger in terms of shareholder value and cash flow per share. I love the messaging you're providing. Obviously, that would suggest that you're not done with share buybacks. You've got about $100 million left on the balance sheet in terms of cash and $158 million of authority remaining. In this environment, I know that you're tenure as a CEO is perhaps more limited than some of your other peers. I mean, is there a better opportunity out there right now to deploy capital besides buying back stock?

Generally speaking, I would say no. I mean, we'll see what the environment brings. But at this point, I would say repurchasing our own shares is superior to certainly buying acquisitions in the marketplace.

And then maybe a follow-up question. You mentioned something about New Orleans and how you've instituted resort fees. Could you remind us what percentage of your hotels today charge resort fees? And is there any more incremental upside in bringing some of those on board?

I'm trying to think of the percentage off the top of my head. I know it's a... I'd guess three quarters if I, you know, maybe slightly less, but 70 to 75 would be my guess by number of rooms probably. Yeah, and our ability to try and charge those is a function oftentimes of if they're branded, you know, do you have brand sort of permission and approval, but also what will the market bear? And, you know, in Bourbon where it's an independent hotel, we had more of a free hand, but we also had to make sure that the value proposition was there in order to sort of charge that fee. And so we've had good success there. Great. Thanks.

Thanks. One moment for our next question. It comes from Jack Armstrong with Wells Fargo. Please proceed.

Good morning, Jack. Good morning. Thanks for taking the question. What kind of shifts are you seeing in consumer behavior in terms of the booking window, out-of-room spend, and is there a meaningful difference that you point out there between your higher-end consumers versus more of your middle-income drive-thru market consumers?

There's a lot of trends in the relative short term since I think people feel like the world has shifted. I think the window continues to get shorter. I mean, we've definitely seen that over the course of this year, and maybe that's just people are less concerned about ultimately being squeezed out of particular dates. In terms of spend, we've seen on property spend be pretty much in line with, if not ahead of last year, we actually had growth in our food and beverage in the resorts over the first quarter, which we hadn't had for the previous two quarters. So we thought that was a pretty good sign to see, even with spring break, moving out of the quarter. And that was pretty universally spread between some of the lower ADR resorts and the higher or affluent customer-based ones.

Okay, great. And then on the cost side, what are some of the levers that are available to you if we enter a more notable macro slowdown? How does your current level of full-time employees compare to pre-pandemic, and how does that impact your flexibility to cut costs?

I think we're definitely down in FTEs.

I'd have to go back and look at the exact percentage. I'm certain that we're down in FTE count relative to pre-pandemic. It's typical for this industry to find significant cuts and then be slow to sort of reinstitute them, so there's probably some more limit to what we can effectuate to the extent we went into a, you know, a deep recession but but I think we've got contingency plans for all of our hotels the struggle that we have now is we're not seeing a market change in business or booking pattern and so we're a little reticent to cut into service standards at the moment given that the guests are still showing up and paying very high rates but I think we've got a number of things you know between changing operating hours of outlets changing service standards on the housekeeping side We pretty much have a hiring freeze in place for the vast majority of hotels already at the moment, but there's a gradient of things that we can enact to the extent we start to see a fall off in demand.

Okay, great. Thanks for taking the question.

Thank you. Our next question comes from Chris Darling with Green Street. Please proceed.

Hi, thanks. Good morning. I think you mentioned in the prepared remarks that wages and benefits were up about a percent and a half in the first quarter. I'm wondering how this compared relative to your expectations, and then what are you expecting for the rest of the year there?

Yeah, I think wages and benefits came in about what we expected. We had a little favorable comp this quarter. We had some one-time issues or one-time costs and benefits last quarter. that kept that growth rate down in the first quarter. I think we continue to expect our wages and benefit growth rate to be around three to three and a half percent for the full year.

Okay. And then I want to go back to the question Floris asked about share repurchases. And Jeff, I'm just curious, you know, strategically how you think about incremental share repurchases relative to just bolstering your cash position and I asked the question in the context of, you know, we're in a more uncertain environment now. I'd imagine it's, you know, a more difficult backdrop in which to sell assets, although it sounds like, you know, maybe there's still some progress on that front. And then obviously the handful of mortgages that are maturing throughout the year. So any incremental thoughts would be helpful to hear?

No, that's a great question. And it's something that, you know, I made a comment to in my prepared remarks about it's important to be driving value. And I think When you think about per share earnings, I think that's our magnetic north, but at the same time, I think maintaining liquidity and flexibility is critical in moments like this. I personally don't think we're on the verge of another global financial crisis or pandemic-like outcome where you really are sort of hoarding cash almost to the extreme, but it is something we're mindful of, and that's why, candidly, when you look at the proceeds that came out of Washington, D.C., some portion of it went to repurchases, but some of it's used really to kind of manage the timing around repayment of debt this year as we sort of bridge towards a period of putting more permanent debt on. So I think that cash becomes sort of more freely available to us as the year goes on. But in the near term, it helps us, as I said, sort of bridge reworking your balance sheet. But I do think it's an important use of recycling proceeds into share repurchases. All right. Makes sense. Thank you. Thanks.

Thank you. And as a reminder, if you do have a question, simply press star one one to get in the queue. Our last question is from Stephen Grambling with Morgan Stanley. Please proceed.

Hey, thanks for taking the questions. I know you target these high barrier entry markets, but if you look across your entire portfolio, I guess, what do you think competitive supply growth is this year? And are you seeing any change in behavior in developers in the markets from, uh, that you operate from the volatility we've seen broadly. You know, like I would say more, just step back. I mean, I would say probably 40 to 50% of our markets are in places where you almost cannot build. I mean, it's sort of the Florida keys or a French quarter or Sedona and markets like that, where there's either a very anti-development stance or just by right. You're not allowed to build, um, you know, like, uh, like as I mentioned, like the French quarter. So there's a big chunk of our portfolio that I think for a very long period of time will have almost no supply growth. I think other markets right now, like development, really doesn't pencil. So I don't have a specific number, but I think it would be probably close to 1% growth if you think about it over the next few years. But in terms of near-term trends, I mean, certainly what's happened in the last 30 days has made financing even on acquisitions more expensive. difficult and more expensive, I imagine it's going to make development more costly to pencil. I don't know, Justin, if you think in the last three to six months, if you've seen anything out there on the development side. I mean, I've seen very little that's been announced, maybe one or two things that have involved public subsidy, and they're going to need that in order to get over the finish line. I think, candidly, what we're more focused on is, unfortunately, given the lack of development, the brands have been more focused on getting unit growth from brand acquisitions. And so where we do have branded outposts, that continued acquisition on the brand front brings competitive supply, although not new rooms, competitive supply into a brand channel. So I think that's one of the things that we're particularly focused on. And how do we insulate ourselves to some extent from that? Luckily, we don't have as much of a branded portfolio as some others. So we do have some some defense against that, but I think it's one of the things that we're watching. One other thing I'd say, Steven, is it's only a small glimpse, but in the public markets, there's a handful of companies that have purchased assets out of development, and you can see it tends to be a very difficult environment for that, just given the high construction costs and the ramp that's associated with a development asset. For us, at least, it's hard to justify Not that you suggested we get into development, but it's hard to justify that relative to either your own shares or an acquisition where it's existing income on a lower basis. Understood. And maybe I missed this, but if the capital markets were to become more supportive, are there specific markets that you think look particularly interesting or you'd want to increase exposure from M&A if we do get that kind of I want to say all is clear on the macro side, but at least maybe from a capital market standpoint. There's specific markets, necessarily think of it that way. I mean, we do discuss some markets. I think more thematically, it's starting to find situations where you see an opportunity for a good recovery out there. And so we have looked at some situations in the last six to 12 months where I'd say they probably skewed to more urban markets. To be clear, we're not abandoning a focus on resorts. It's just when you look at where can you find distressed assets or distressed owners. It can be more in the urban markets that just haven't rebounded yet. Value buying. Got it. All right. Thank you.

Thank you. And this concludes our Q&A session for today. I will turn the call back to Jeff Donnelly for final comments.

Just thank you, everybody, for joining us. If we don't see you next week at Wells Fargo's headquarters tour or their REIT conference, I'm sure we'll see you on the road this summer. Thank you.

Thank you, and this concludes our conference for today. Thank you all for participating, and you may now disconnect.

I would have given you all of my heart But that someone is torn at her part. She's taken almost all that I've got. But if you want, I'll try to love again.