Apple Hospitality REIT (NYSE:APLE) Q3 2025 Earnings Call November 04, 2025 11:00 AM ET Company ParticipantsLiz Perkins - CFOJay Kornreich - VP of Equity ResearchAri Klein - Director of Equity ResearchCooper Clarke - Equity ResearchJustin Knight - CEOKelly Clarke - VP of Investor RelationsConference Call ParticipantsAustin Wurschmidt - Director and Equity Research AnalystMichael Bellisario - Managing Director and Senior Research AnalystChris Darling - Senior Analyst and Head of U.S. Lodging and Gaming Resear ...

Core Viewpoint - The trend of high-end hotels engaging in street vending reflects a strategic shift to adapt to declining traditional revenue streams and attract a broader consumer base [2][9][20]. Group 1: Market Trends and Challenges - Since July, a wave of street vending has emerged among five-star hotels across China, including notable establishments in Shanghai, Zhengzhou, and Changsha [2]. - The 2024 China Hotel Industry Development Report indicates a significant decline in business traveler occupancy rates for high-star hotels, dropping from 60% to below 50% [2]. - Average daily room rates (ADR) in first-tier cities have decreased by 3.7% to 4.2%, with occupancy rates (OCC) down by 2% to 4% [2]. - Revenue for high-end hotels has seen a drastic decline, with some reporting a nearly 40% drop compared to 2019 [9][10]. Group 2: Innovative Business Strategies - The initiative to sell street food has proven financially beneficial, with some hotels generating daily revenues of approximately 30,000 yuan, which can cover staff wages [2][4]. - The success of street vending is attributed to strategic locations with high foot traffic and appealing food offerings that resonate with current consumer preferences [5][6]. - Hotels are expanding their offerings beyond breakfast to include lunch and dinner options, significantly increasing revenue streams [7][21]. Group 3: Operational Adjustments - Hotels are adopting flexible staffing strategies, encouraging employees to take on multiple roles to maintain service quality despite reduced staff numbers [24][25]. - The focus remains on core services such as room bookings and event hosting, with street vending seen as a temporary measure rather than a primary revenue source [18][25]. - Cost control measures are being implemented, including menu adjustments and pricing strategies to attract more customers [22][23]. Group 4: Consumer Engagement and Brand Building - Street vending serves as a platform for hotels to engage with local communities, fostering brand recognition and trust among potential customers [16][18]. - The introduction of promotional activities, such as live streaming and community events, aims to enhance customer interaction and drive future bookings [16][17]. - Hotels are leveraging their street food operations to promote their core services, creating opportunities for upselling and customer retention [16][18].

Core Viewpoint - The article discusses the significant decline in business travel and the impact on the hotel industry, particularly five-star hotels, as foreign companies tighten their travel budgets and shift to online meetings instead of in-person events [2][14]. Group 1: Changes in Business Travel - A notable shift has occurred where foreign companies are canceling in-person meetings and opting for online formats, leading to a decrease in hotel bookings and associated services [5][10]. - Data from Ctrip's business travel management market report indicates that 87% of traveling employees feel the impact of cost control measures, with nearly 30% finding hotel prices exceeding travel standards [8][14]. - The traditional model of business travel, which included luxurious accommodations and extensive services, is being replaced by a focus on cost-cutting and efficiency [14][15]. Group 2: Impact on the Hotel Industry - Five-star hotels are experiencing a decline in bookings from foreign companies, leading to a shift in their business focus towards local events such as weddings and family activities [10][21]. - Hotels are adjusting their services by reducing maintenance costs for large banquet halls and lowering rental prices for meeting rooms to attract local businesses [10][12]. - The once-reliable revenue from foreign corporate clients is diminishing, prompting hotels to seek alternative revenue streams and adapt their offerings to meet new market demands [15][27]. Group 3: Future of Business Travel and Hotel Services - The future of the hotel and business travel industry will require a shift from merely providing accommodations to offering comprehensive solutions that address clients' specific needs [27][28]. - Hotels must understand and respond to the evolving requirements of clients, focusing on creating spaces that blend work and leisure, rather than relying on traditional luxury offerings [28]. - The industry is moving towards a model where understanding client needs and providing tailored solutions will be crucial for survival and success [27][28].

Group 1 - The trend of reducing business travel and in-person meetings among foreign enterprises in China is becoming increasingly evident, with many companies opting for online meetings instead of traditional gatherings at luxury hotels [3][4][8] - Over 60% of companies have chosen to cut travel budgets, with some sectors like technology and finance reducing budgets by over 30% [8][20] - The shift from high-end hotel meetings to more cost-effective alternatives reflects the broader economic pressures faced by foreign enterprises in the Chinese market [20][22] Group 2 - The luxury hotel industry is experiencing a significant decline in business from foreign enterprises, leading to a shift in focus towards local events such as weddings and family gatherings [12][37] - Hotels are adjusting their business strategies by lowering rental prices for meeting rooms and increasing offerings for local clientele [12][47] - The traditional high-budget corporate events that once filled luxury hotels are being replaced by smaller, more budget-conscious gatherings, impacting the overall revenue of these establishments [10][19][34] Group 3 - The changing landscape of corporate travel is forcing travel service providers to adapt, shifting from simple booking services to comprehensive budget management and compliance solutions [40][42] - The focus has shifted from merely providing travel services to understanding and addressing the specific needs of clients, emphasizing problem-solving capabilities [45][46] - The future of the hotel and travel industry will depend on the ability to offer tailored solutions that align with the evolving demands of businesses [47][48]