Financial Data and Key Metrics Changes - Same property hotel EBITDA totaled $105.4 million, in line with the midpoint of guidance, while adjusted EBITDA came in at $99.2 million, exceeding the midpoint by $2.2 million [3] - Adjusted FFO per share was $0.01, $0.03 above the midpoint, reflecting resilience in the operating model and disciplined cost management [3] - Same property occupancy increased nearly 190 basis points, while ADR declined 5.4%, resulting in a 3.1% decline in RevPAR and a 1.5% drop in same property total RevPAR [3][4] Business Line Data and Key Metrics Changes - Performance was led by properties in San Francisco and Chicago, with San Francisco's RevPAR rising 8.3% due to a 690 basis point jump in occupancy [4][5] - The resort portfolio remained resilient, with total RevPAR increasing by 0.7%, driven by Newport Harbor Island Resort's RevPAR jumping 29% [6] - Urban total RevPAR declined 2.7%, with strength in San Francisco and Chicago offset by weakness in Los Angeles and Washington, D.C. [7] Market Data and Key Metrics Changes - Washington, D.C. was the softest market, with RevPAR down 16.4% due to reduced government travel demand [7] - Los Angeles experienced a 10.4% decline in RevPAR, driven by adverse weather conditions [8] - Boston and San Diego also saw year-over-year declines attributed to lighter convention calendars and softer group attendance [8] Company Strategy and Development Direction - The company is focused on driving operating efficiencies and disciplined cost management, with a strategic redevelopment program enhancing market share and profitability [6][17] - The company plans to leverage favorable macroeconomic conditions and a robust events calendar in 2026 to drive growth [30] - The company is investing in AI-enabled tools to improve operational efficiency and reduce costs [17][42] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q4 due to macroeconomic uncertainty and the ongoing government shutdown impacting travel [18][20] - The company anticipates a favorable setup for 2026, with expectations of normalized hotel demand correlating with GDP growth [22][23] - Management highlighted the potential for significant demand growth driven by major events and a favorable holiday calendar in 2026 [27][28] Other Important Information - The company entered into an agreement to sell one of its hotels for $72 million, expected to close in Q4 [11] - The company successfully completed a $400 million offering of convertible notes, using proceeds to retire existing debt [12] - The company expects to generate over $100 million in free cash flow by the end of 2026 [12] Q&A Session Summary Question: Inquiry about San Francisco lodging performance - Management noted that San Francisco is experiencing strong demand, allowing for increased room rates during high-occupancy nights [31][34] Question: Impact of AI industry on demand - Management observed a growing number of companies booking transient and group business, particularly in the AI sector, positively impacting weekday demand [37][38] Question: Expense management and labor costs - Management confirmed that efficiency improvements and reduced headcount are contributing to lower costs, with expectations for moderated labor costs in 2026 [39][40] Question: Future performance of Los Angeles market - Management expects Los Angeles to perform better in 2026 due to easier comps and a recovery in entertainment production [42] Question: Transaction market outlook - Management indicated a pause in the transaction market due to macro uncertainty but anticipates pent-up demand for transactions once clarity returns [44][46] Question: Attrition trends in bookings - Management noted increased attrition primarily in government-related bookings, but overall attrition payments were lower year-over-year [56][57]