Apple Hospitality REIT(US:APLE)2019-05-09 19:18Financial Data and Key Metrics Changes - Total revenue for Q1 2019 was $304 million, an increase of 2% from Q1 2018 [21] - Adjusted EBITDA was $101 million, compared to $100 million in the same period of 2018, reflecting a growth of approximately 1% [21] - Modified FFO per share remained flat at $0.38 compared to the previous year [21] - Comparable hotels RevPAR increased by 0.1%, driven by a 1.2% increase in average daily rate [8] Business Line Data and Key Metrics Changes - Comparable hotel adjusted hotel EBITDA margin was reported at 36% for the quarter [9] - Same-store payroll increased by 3.5% per occupied room, which was lower than the 4% increase factored into guidance [16] - The decline in food and beverage revenue was attributed mainly to the full-service Marriott in Richmond, Virginia, which faced fewer city-wide events [41] Market Data and Key Metrics Changes - Several markets in the Sunbelt, including Atlanta and Phoenix, remained strong performers due to expanding economic opportunities [17] - Markets with softer hotel performance included Houston, Miami, and Orlando, impacted by decreased demand and increased new supply [18] - Approximately 66.2% of properties had new construction projects within a five-mile radius, indicating increased competition [12] Company Strategy and Development Direction - The company completed the sale of nine hotels for $95 million, reducing exposure to lower RevPAR markets [10] - Two hotels were acquired for a combined total of $52 million, with five additional hotels under contract for acquisition [11] - The company plans to invest $60 million to $70 million in renovations during 2019, focusing on maintaining competitive positioning [14] Management's Comments on Operating Environment and Future Outlook - Management anticipates healthy demand growth but acknowledges that new supply will continue to impact property-level performance [9] - The company expects RevPAR growth for Q2 to be at the low end of the full-year outlook, with a pickup anticipated in Q3 [20] - Management remains confident in the portfolio's ability to remain competitive despite increased competition from newly opened hotels [13] Other Important Information - The company adopted a new lease accounting standard, resulting in an increase of approximately $147 million in assets and $152 million in liabilities [22] - The company paid distributions of $0.30 per share, totaling approximately $67 million, representing a 7.3% yield based on the closing price [24] Q&A Session Summary Question: Is the uptick in new supply concentrated in already supply-challenged markets? - Management indicated that the increase in new supply is affecting more markets, particularly those with the highest RevPAR [28] Question: Are the remaining seven assets from the original portfolio still under negotiation? - Management is actively exploring options for the remaining assets and is optimistic about finding opportunities to prune the portfolio [31] Question: What sources are being used to identify acquisition targets? - The company is being selective in acquisitions, leveraging long-standing relationships with developers and operators [36] Question: Can you discuss the decline in food and beverage revenue? - The decline was primarily due to fewer group room nights and increased competition in the Richmond market [41] Question: How has the underwriting for new development deals changed? - The methodology remains unchanged, but the company is more conservative in ramp-up expectations due to moderate RevPAR growth [45] Question: What is the outlook for market share shifts between brand families? - The company saw over half of its hotels grow market share, with Hilton hotels performing slightly better than Marriott [47] Question: What revenue management initiatives are expected to drive growth? - The company is focusing on increasing parking fees and late cancellation fees, along with optimizing revenue mix management [49]