Chatham Lodging Trust(CLDT) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved a RevPAR growth of over 5% for the quarter, outperforming the industry for the fifth consecutive quarter [7] - Year-over-year FFO per share grew by 5%, reaching $0.43, exceeding consensus estimates of $0.40 per share [12] - Operating margins remained flat at 49%, while hotel EBITDA margins were slightly below prior year levels at 41% [13] Business Line Data and Key Metrics Changes - Portfolio occupancy rose to 79%, up from 77% last year, and close to the 2019 level of 83% [9] - ADR increased by $3 year-over-year and $6 compared to 2019, with June weekday ADR reaching $186, the third highest since the pandemic [10] - Leisure markets showed strong RevPAR growth, with notable increases in Portsmouth, New Hampshire (24%) and Fort Lauderdale (14%) [11] Market Data and Key Metrics Changes - Silicon Valley, the largest market, saw occupancy at 81%, but RevPAR was down 28% compared to 2019 levels [28] - Seattle's RevPAR was down 9%, but occupancy increased by 1% year-over-year [29] - Washington DC generated meaningful RevPAR growth of 11%, with the Embassy Suites in Springfield seeing a 17% increase [32] Company Strategy and Development Direction - The company is pursuing external growth opportunities while being mindful of the cost of capital and potential acquisitions [15] - There is significant internal growth potential, particularly with the expected return of the intern business in tech markets [16] - The company plans to spend approximately $30 million on CapEx in 2023, including $22 million for renovations [38] Management's Comments on Operating Environment and Future Outlook - Management noted that the loss of intern business will impact comparisons for the third quarter but expects a recovery in the future [26] - International travel is improving, with deployments in key markets at their highest since the pandemic [19] - The company anticipates substantial growth in earnings as tech companies invest in CapEx and product development [24] Other Important Information - The company repaid a $20 million maturing mortgage and has only $70 million of maturity mortgages due between now and June 2024 [14] - The company has refinanced or repaid $109 million of debt year-to-date, leaving only $40 million of remaining debt maturing in 2023 [41] Q&A Session Summary Question: Sustainability of flat hourly wages - Management indicated that wage pressures have decreased, and they are optimistic about maintaining wage stability moving forward [52][53] Question: Timing for addressing future debt maturities - Management plans to address remaining maturities in Q1 next year, depending on market conditions [55] Question: Impact of lost intern business on Q3 RevPAR - The lost intern business is expected to impact RevPAR by about 700 basis points, making recovery more challenging [72] Question: Yield on potential acquisitions - The company is currently evaluating acquisition opportunities that yield above 7%, with some potential deals exceeding 8% [63] Question: Impact of strikes in Los Angeles - Management reported no significant impact from the strikes, with strong performance continuing in the area [66][68]