Apple Hospitality REIT(APLE)2024-11-05 17:32Financial Data and Key Metrics Changes - Comparable hotels RevPAR growth was approximately 1% compared to Q3 2023, driven entirely by improvement in rate [8][10] - Third quarter adjusted EBITDAre was 107 million, up approximately 3% [10][37] - Total revenue for comparable hotels was 163, up more than 1%, and occupancy was 77%, essentially flat compared to Q3 2023 [28] - Total hotel expenses increased year-over-year by 2.7% for Q3, decelerating from previous quarters [34] - Comparable Hotels Adjusted Hotel EBITDA margin was 36.8% for the quarter, down only 60 basis points compared to Q3 2023 [37] Market Data and Key Metrics Changes - Supply-demand dynamics remain favorable, with approximately 54% of hotels not having new upper upscale or upper midscale products under construction within a five-mile radius [11] - Actual rooms under construction within the same radius decreased by 7% year-over-year [11] - October preliminary results showed RevPAR up approximately 4% compared to October 2023 [10] Company Strategy and Development Direction - The company is focused on disciplined capital allocation, optimizing portfolio concentration through strategic dispositions and acquisitions [13][21] - Recent acquisitions have produced strong yields, with the seven hotels acquired since June yielding an unlevered 9% [19] - The company plans to continue investing in capital expenditures, expecting to spend between 85 million during 2024 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of leisure travel and the continued improvement in business travel demand [25][26] - The operating environment is stable with favorable supply and demand dynamics, positioning the company for continued strong performance [45] - Management anticipates continued growth in midweek occupancy and rates, with a positive outlook for 2025 [54][56] Other Important Information - The company repurchased approximately 1.4 million common shares at an average price of 1.5 billion, with a weighted average interest rate of 4.9% [39] - The company has approximately $301 million remaining under its share repurchase program [41] Q&A Session Summary Question: Update on the disconnect between business transient and leisure rates - Management noted that the gap continues to shrink, with weekday ADR up about 6% relative to 2019 and weekend ADR up about 18% [49] Question: Assumptions for November and December RevPAR - Management projected some RevPAR growth for both November and December based on positive booking trends [51] Question: Expectations for 2025 expense growth - Management indicated that current trends are likely to continue into the coming year [52] Question: Excitement for 2025 and changes expected - Management highlighted the resilience of leisure travel and improvements in midweek occupancy as key factors for optimism [54] Question: Midweek occupancy growth potential - Management indicated there is still room for occupancy growth midweek, with 300 to 750 basis points of opportunity relative to 2019 [64] Question: Overall transaction marketplace and interest in acquisitions - Management noted that while there are ample opportunities, sellers remain reluctant to adjust pricing, leading to fewer transactions [70][72] Question: Group business performance and bookings for next year - Management stated that group business has consistently performed well, with no significant fluctuations expected [74] Question: Impact of shorter booking windows on staffing and planning - Management acknowledged that shorter booking windows require close monitoring of staffing and scheduling [78] Question: Capital allocation strategy regarding asset sales - Management expressed intent to be more aggressive in selling assets if the market remains favorable [82]