Apple Hospitality REIT(US:APLE)2019-08-06 21:02Financial Data and Key Metrics Changes - Actual RevPAR increased by 1.1% while comparable hotels' RevPAR was essentially flat with a nominal decline of 0.1% [8][9] - Comparable ADR for the quarter increased by 0.5%, offset by a 50 basis points decline in occupancy [9] - Adjusted EBITDA decreased by 3% for the quarter and 2% year-to-date [9][30] - Comparable hotels' adjusted hotel EBITDA margin was 39.6% for the quarter, down 40 basis points year-over-year [9][25] Business Line Data and Key Metrics Changes - Non-room revenue grew by 3% in the second quarter, while food and beverage revenue declined [24] - Same store total payroll increased by 4% for occupied room, with controllable operating expenses increasing less than 1% for occupied room [25] Market Data and Key Metrics Changes - Only two markets, Los Angeles and San Diego, contributed more than 5% to EBITDA for the quarter, both showing approximately 3% RevPAR growth above the portfolio average [22] - The Phoenix market performed well with healthy demand exceeding new supply increases [23] - Austin, Chicago, Dallas, Nashville, and Seattle markets faced challenges due to new supply absorption [23] Company Strategy and Development Direction - The company remains selective in considering new acquisitions and dispositions, with a focus on high-quality existing select service hotels [12] - The company plans to spend an additional $45 million to $55 million on renovations in 2019, including starting renovations at 20 hotels [32] - The company is exploring potential dispositions through brokered transactions and reverse inquiries, with a strong balance sheet providing flexibility [13] Management's Comments on Operating Environment and Future Outlook - Management believes demand will remain steady through the remainder of the year, offsetting continued supply growth in many markets [10] - The company is tightening its full-year operating guidance without adjusting the midpoint, reflecting performance during the second quarter [10][29] - Management expressed confidence in the strength of their brands and onsite management teams to remain competitive long-term [11][19] Other Important Information - The company has returned over $150 million to shareholders in dividends, representing a 7.9% yield [33] - The company has seven hotels under contract for acquisition, totaling an expected purchase price of $216 million [13] Q&A Session Summary Question: What is the reason for the relative strength in transient demand? - Management noted that transient demand has been better than group demand, with a 1% increase in transient demand [36][37] Question: What is the company's view on new lifestyle brands? - The company is interested in expanding into lifestyle brands but sees Moxy as a niche play, while new concepts from Hilton may have broader appeal [41][42] Question: Why was there no stock buyback in the quarter? - Management indicated that they are more focused on redeploying proceeds from sales into share repurchases, especially given the recent pullback in stock price [44][45] Question: What is the company's strategy regarding acquisitions versus buybacks? - Management sees new builds as better opportunities currently, with share repurchases being equally attractive due to the recent stock price decline [46][47] Question: What is the status of the boutique hotel acquisition? - The boutique hotel acquisition is seen as a unique opportunity to gain insights into the independent hotel business without straying from the company's core strategy [56][57][58]