Hersha Hospitality Trust Class A Common Shares of Beneficial Interest

and a warm welcome to the Hershey Hospitality Trust fourth quarter 2022 earnings conference call and webcast. My name is Candice and I will be your operator for today's call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you'd like to ask a question, please press star followed by one on your telephone keypad. I would now like to hand the conference over to our host, Andrew Tamachio from Investor Relations, The floor is yours. Please go ahead.

Thank you, Candice. And good morning to everyone joining us today. Welcome to the Hershey Hospitality Trust fourth quarter 2022 conference call. Today's call will be based on the fourth quarter 2022 earnings release, which was distributed yesterday afternoon. Before proceeding, I'd like to remind everyone that today's conference call may contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause the company's actual results performance, or financial positions to be considerably different from any future results, performance, or financial positions. These factors are detailed within the company's press release, as well as within the company's filings with the SEC. With that, it is now my pleasure to turn the call over to Mr. Neal H. Shaw, Hersha Hospitality Trust President and Chief Executive Officer. Neal, you may begin.

Good morning, and thank you for being with us on today's call. Joining me this morning are Ashish Parikh, our Chief Financial Officer, and our Executive Chairman, Jay Shah. I'll begin with our results in the quarter and a quick recap of our strategic accomplishments in 2022 before touching on our capital allocation outlook for the year and discussing our view of the portfolio going forward. Ash will take a deeper look at our first quarter guidance, talk through the balance sheet, and discuss our margin outlook. When we last spoke in late October, despite economic uncertainty and market volatility, our positive outlook was driven by performance on the ground, signaling a pickup in travel within the core urban markets, as well as a continuation of demand for differentiated high-end leisure offerings. And these trends continued throughout the fourth quarter. Our comparable hotel portfolio generated 71.2% occupancy, and an ADR of $311.86, resulting in rev par of $222.10 for the fourth quarter of 2022. The high quality of our portfolio, coupled with the ongoing demand environment, allowed our revenue managers to continue to drive rate in the quarter, as ADR outpaced our 2019 rate by 21.5%, and all of our markets expanded ADR more than 15% compared to 2019. Our view on rate integrity remains unchanged, as we are currently experiencing robust ADR growth throughout February and anticipate continued pricing power as occupancy returns. Our focus on driving rate resulted in a 5% increase in rev par for the fourth quarter, with rev par growth compared to 2019 in each month since September to close out the year. As I transition to our market performance, I will start with our urban portfolio. Urban demand accelerated into October, as RevPar pulled even with 2019 production for the first time since the onset of the pandemic. In total, our urban portfolio generated over $9 million of EBITDA, 67% of total portfolio production in October, seasonally our strongest month in Q4. And momentum persisted throughout the quarter, as weekday rev par in December outpaced 2019 for our urban portfolio, weekday rev par, driven by a 4% increase in Manhattan. Overall, Manhattan was our largest EBITDA-producing market for the quarter, generating $9.6 million, or 31% of total portfolio EBITDA. Our two highest EBITDA-producing assets for the quarter were the Hyatt Union Square and the Hilton Garden Inn, Midtown East. each generating $2.7 million in EBITDA, outpacing 2019 by 12% and 15% respectively. Manhattan's EBITDA production was rate-driven, as our portfolio posted 16.8% ADR growth for the quarter. Our Manhattan December REVPAR growth of 6% was driven by over 20% ADR growth for the month from 2019. Now, while we are encouraged to see our hotels surpass 83% occupancy in December, there is still significant room for recovery, as our Manhattan market is still 1,100 basis points below 2019 levels. Boston had yet another strong quarter, with 11% rev par growth compared to 2019. This was driven by nearly 17% ADR growth. The Boston Envoy outpaced 2019 RevPar by nearly 5% in the quarter, while generating $1.7 million in EBITDA, a 21% increase to 2019. Rounding out our urban portfolio, our Ritz-Carlton Georgetown continues to outperform, posting nearly 40% ADR growth compared to 2019, resulting in 67% EBITDA expansion for the quarter. Urban luxury trends are impressive. Meanwhile, in Philadelphia, our Westin generated nearly $2.4 million of EBITDA in the quarter, despite disruption from a rooms refresh project that is currently underway. Our Rittenhouse Hotel in Philadelphia outpaced 2019 RevPAR by 3%, driven by nearly 30% ADR growth. Once again, South Florida's continued strong run drove our resort performance in the fourth quarter. The Parrot Key Hotel and Villas, and the Cadillac Hotel and Beach Club were top five EBITDA contributors for our portfolio, generating $2.4 million and $2.3 million of EBITDA, respectively. South Florida was our second biggest EBITDA contributor, generating $6.5 million, over 20% of the total portfolio. For 2022, these two assets alone generated almost $22.7 million of EBITDA, and are on track to achieve the return on investment we projected when we undertook the transformational renovations at both of these assets back in 2018. We also upgraded the Ritz-Carlton Coconut Grove pre-pandemic and Q4 achieved 37% growth driven by 33% ADR growth. The Ritz-Carlton exceeded group revenue by 20% in Q4 and has a very strong outlook for 2023. On the East Coast, the Mystic Marriott and the Annapolis Waterfront Hotel generated $2 million and $1.8 million in EBITDA, outpacing 2019 by 76% and 47% respectively, clearly demonstrating the earnings potential of best-in-class assets in regional resort markets with multiple demand generators. On the corporate front here at Hersha, after a strategic and transformational year for our company, we begin the new year with significant cash on hand, access to an undrawn revolver, and a lower leverage profile than we've had in many years. While we remain content in our markets and our portfolio, we are further comforted with our financial position. While the debt and transaction markets remain muted, we will remain flexible and entrepreneurial in our approach. We constantly monitor the markets and actively underwrite opportunities to expand our footprint. Given our financial flexibility and relatively low sensitivity to the interest rate environment in a time of economic uncertainty, we are particularly well positioned to act swiftly when the right growth opportunities present themselves. Our management team has worked diligently to right-size our balance sheet and to close the significant NAV gap that persists for our portfolio. We still believe that we trade at an outsized discount to our private market value and are extremely sensitive to any capital allocation decisions that would impact our NAV or leverage as a trade-off to growth. This is my first call as CEO of the company, and before turning the call over to Ash for a more detailed look at our financials, I want to take a moment to make some comments about our portfolio today in light of this NAV gap. Our performance during 2022 was far ahead of what many had expected, not only from a REVPAR standpoint, but most definitely from our full EBITDA recovery versus 2019 peak we achieved during 2022. Although the anticipated timeline of recovery in our markets was estimated to be sometime in the latter half of 2024 or even 2025, we surpassed 2019 EBITDA production in every quarter of 2022. And with EBITDA expansion in both our urban and resort markets, we delivered the largest outperformance in the fourth quarter with comparable portfolio EBITDA of $31.4 million, a 12.6% increase to 2019. This outperformance is a result of our execution, but importantly, it is a result of our streamlined and focused portfolio. Through our deliberate work to dispose of our non-strategic assets, we've created a high-quality, purpose-built portfolio levered toward high-growth urban markets and a strategic mix of resort markets. Our properties are located on premium real estate and in markets where we identified a multiplicity of demand generators. And this refined portfolio continues to be positioned to outperform as the industry continues its long recovery. We believe it is important to understand that seasonality of our portfolio is also fundamentally different than the portfolio we held before the pandemic. With the changes we have made since 2020, our resort portfolio benefits from multiple demand generators. First, it has benefited significantly from an increase in domestic leisure travel, which led to record EBITDA production. Second, in addition to demand for high-end experiential leisure travel, which we believe will continue, our purpose-built resort portfolio is also positioned to benefit from additional revenue streams and non-leisure demand. All but two of our resorts are located in markets that cater to additional travel segments, including convention centers, corporate headquarters, and universities. The most notable case of evolving market drivers can be seen in Miami, which has experienced a significant influx of new business and residential relocations in the past three years, as well as the renovation of its convention center. Similar market trends apply to resort markets in Annapolis, California, and New England. The exceptions are our resorts in Key West and Monterey, California, which are more solely focused on leisure. We do expect these resorts to stabilize in 2023 after unprecedented performances in 2021 and 2022, but we do not expect significant retracement. Parrot Key, in particular, is on pace to significantly outperform 2019 and is still benefiting from its comprehensive renovation following Hurricane Irma. The Sanctuary Beach Resort will be undergoing an ROI capital project this year that will set the property up for another level of growth moving forward. In our urban markets, we made the decision to sell our urban select service portfolio, which reduced our reliance on business transient. Our focused urban portfolio is located in markets with long runways for growth and will benefit from the additional return of occupancy and demand that we expect, aided by an increase of group, business transient, and international travel as markets around the globe continue to open up from pandemic-era restrictions and travel to key gateway markets in the U.S. accelerates. We recognize the macroeconomic outlook remains uncertain, but despite the constant drumbeat of recessionary forecasts and negative sentiment data, We see actual economic activity as measured by job gains, industrial production, and retail sales still indicating growth. This is certainly true for what we are seeing on the ground in our hotel performance as well. In summary, our portfolio is exceptionally well positioned to expand cash flow generation through operations as it benefits from the broader trends we see across the market, including the growth of experiential travel and demand for differentiated high-end leisure travel, and the continued pent-up demand, especially from business travel and the international segments, all in an environment of very low supply growth. The setup in fundamentals is very encouraging. With that, let me turn it over to Ash to discuss in more detail our financial outlook, margin performance, and our updated guidance for the quarter.