RLJ Lodging Trust

First quarter 2024 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the call over to Nikhil Bala, RLJ's Senior Vice President, Finance and Treasurer. Please go ahead.

Thank you, Operator. Good morning and welcome to RLJ Lodging Trust. 2024 First Quarter Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Sean Mahoney, our Executive Vice President and Chief Financial Officer, will discuss the company's financial results. Tom Barnett, our Chief Operating Officer, will be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated. Factors that may impact the results of the company can be found in the company's 10Q and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release. I will now turn the call over to Leslie.

Thanks, Nikhil. Good morning, everyone, and thank you for joining us today. We are pleased that our momentum from last year has continued with our first quarter results once again exceeding the industry. These results were in line with our expectations, which anticipated the impact of the holiday shift in March. Against this backdrop, we were encouraged to see urban markets once again lead the way for the overall industry. During the first quarter, in addition to delivering REVPAR growth and growing our REVPAR index, we executed on a number of fronts including making progress on our next wave of conversions, expanding our pipeline of conversions with the acquisition of the Wyndham Boston Beacon Hill, executing multiple high-return ROI projects, and taking steps to further ladder our debt maturities. Overall, our relative outperformance during the first quarter continues to demonstrate our multiple channels of growth. With respect to our operating performance, our first quarter rep part increased by 1% over last year, primarily driven by an increase in occupancy. As we expected, our growth was constrained by the shift of Easter into March, which muted citywide and other group activity during the most significant month of the quarter. Additionally, cold and rainy weather in California and South Florida negatively impacted these markets during the quarter. In light of this, we were pleased by our portfolio's rev part growth, which outperformed the industry by 80 basis points, And we also gained 110 basis points of market share, underscoring the growth profile of our portfolio. The growth in our portfolio was broad-based, with a number of our urban markets achieving mid- to high-single-digit red-card growth. Urban markets are continuing to benefit from robust group activity, improving inbound international demand, and most notably, a steady improvement in corporate travel. From a segmentation perspective, our business transient revenues outpaced our other segments during the quarter, with BT achieving revenue growth of 13%, driven by a balanced contribution between occupancy and ADR. The recovery of business transient is benefiting from continued strength and travel from SMEs, in addition to the broadening of corporate travel across industries such as consulting, technology, and financial services, which is being aided by the return-to-work office mandates. This improving corporate demand enabled our midweek rep part to grow by 2.4% during the quarter. Relative to group demand, the strong booking momentum from last year continued during January and February, which achieved robust revenue increases of 10% and 9% respectively. The strength of demand led our group ADR to increase by approximately 3% during the first quarter, despite a soft march. We expect group demand to remain strong for the remainder of the year, as evidenced by our full year pace at 106%, with the third and fourth quarters being the strongest of this year. Leisure demand remains healthy, as demonstrated by our leisure revenues increasing by 2% during the first quarter, driven primarily by the strength of our urban leisure, which increased by 3%. Urban leisure continues to be bolstered by a robust volume, of social events such as concerts and sporting events. Additionally, over spring break, our leisure also benefited from our sweet mix, which represents 50% of our portfolio. Our top line growth was amplified by our 7.7% growth in our out-of-room spend, which was driven by the continuing success of our ROI initiatives, leading to total revenue growth of 3.1%. We are also encouraged by the improving operating expense landscape, with the growth of cost per occupied room continuing to decelerate. Our top-line growth translated to hotel EBITDA margins of 27.4%. From a capital allocation perspective, we are seeing strong returns from our investments. During the first quarter, our conversions in Charleston, Mandalay Beach, and Santa Monica achieved 26.5% rare part growth. The strong ramp that these properties are achieving further bolsters our confidence and our ability to unlock significant value in our next wave of conversion. We remain on track to complete the conversion of the Doubletree Houston Medical Center, Hotel Tonel in New Orleans, and the Bankers Alley in Nashville this year. Additionally, we are advancing on the planning of our conversion of the Wyndham-Pittsburgh University Center to a courtyard. and the Renaissance Pittsburgh to Marriott's autograph collection, both of which will be delivered in 2025. During the first quarter, we expanded our pipeline of conversion opportunities by acquiring the fee-simple interest in the Wyndham Boston Beacon Hill. We have made great progress with our plans to unlock the embedded value at this hotel, which sits in an irreplaceable A-plus location surrounded by Mass General Hospital, that is undergoing a $1.8 billion expansion. We remain confident that we can unlock over 40% of EBITDA upside following the repositioning of this property. We expect this property to be included in our next phase of conversions and will give more color later this year. In addition to our large-scale conversions, we are unlocking additional embedded value across our portfolio by also prioritizing our investments in markets poised to outperform. Since the beginning of the year, we have been executing on a number of high-return ROI projects to increase out-of-room spending by reimagining and optimizing non-revenue generating space. For example, at the Residence Inn in Bethesda, we took advantage of our rooftop with city views to create a new bar and entertainment space. At the Embassy Suites LAX, we transformed the lobby, creating multifunctional social and small group meeting space. At the Doubletree Austin, located adjacent to the state capitol, we added new guest rooms and elevated the lobby bar. At the Doubletree Suites Orlando at Disney, we reimagined the lobby to incorporate a new, very profitable market. And at the Embassy Suites Deerfield Beach Resort, we created a new indoor-outdoor oceanfront bar and added a new profit center in the form of a sundries market. Our group mix and banquet and catering revenues are already seeing the benefit of these space reconfiguration projects. We expect these ROI projects to continue to ramp through the remainder of this year and contribute to our total revenues achieving growth ahead of REVPAR. In addition to our internal investments, our pipeline of external growth opportunities has continued to build. Our competitive advantage as an all-cash buyer is enabling us to build an actionable pipeline. That said, we will continue to maintain our discipline as we have demonstrated. As we look ahead, we are cognizant of the macroeconomic uncertainty that exists. However, we remain constructive on the outlook for lodging fundamentals for the rest of the year. Our outlook is supported by the continued momentum in the recovery of business transient, the outsized growth trends in urban markets, especially those with healthy city-wise, leisure attractions, and special events and exposure to inbound international travel. We believe that the momentum in these segments should allow urban markets to continue to outperform the industry. For the second quarter, we expect rep art growth to sequentially improve from the first quarter. May is forecast to be the strongest month of the quarter, given robust citywide activity in a number of our markets such as Boston, Washington, D.C., Southern California, as well as our Louisville market. which will benefit from the 150th anniversary of the Kentucky Derby. As we move into the second half of the year, we expect Red Park growth to strengthen further due to citywide calendars and the location of many large-scale events. This will be favorable to our portfolio given our footprint in markets such as Boston, which should continue to benefit from citywide in addition to robust business and international travel, supported by the growth in financial services, biotech, and education. Southern California should benefit from a healthy citywide calendar, growth from our conversions in Santa Monica and Mandalay Beach, and improving business transient demand from aerospace and a backlog of demand from Hollywood-related industries, as well as increased inbound international travel, especially from Asia. And Washington, D.C. will benefit from a strong citywide calendar in the second half of the year. Collectively, this should allow us to continue to exceed industry growth. Longer term, we remain optimistic about the trajectory of lodging fundamentals, which should benefit from growth in all segments of demand, given the ongoing consumer preferences towards experiences, especially against the backdrop of an elongated period of limited new supply. Relative to these dynamics, our urban-centric portfolio is well-positioned. I will now turn the call over to Sean. Sean.