Summit Hotel Properties(US:INN)2023-05-06 21:05Financial Data and Key Metrics Changes - The company reported a pro forma RevPAR increase of 19.3% compared to Q1 2022, exceeding the high-end of the growth expectations of 17% to 19% for the quarter [20] - Adjusted EBITDA for the quarter was $44.4 million, a 35% increase compared to Q1 2022, and adjusted FFO was $26.3 million or $0.22 per share, a 30% increase from last year [44] - Pro forma hotel EBITDA for Q1 was $62.9 million, a 27% increase from the previous year, with hotel EBITDA margins in the same-store portfolio increasing nearly 175 basis points [12][44] Business Line Data and Key Metrics Changes - RevPAR in the urban portfolio grew 25% year-over-year, translating to an 89% recapture to 2019 levels, indicating strong potential for continued growth [42] - The suburban portfolio also saw significant growth, with RevPAR increasing by 21% in Q1 2023 [11] - The resort portfolio, comprising approximately 10% of the pro forma portfolio, produced Q1 RevPAR growth of 12%, reaching 111% of 2019 levels [43] Market Data and Key Metrics Changes - RevPAR in the NCI portfolio grew 22% compared to Q1 2022, with Texas markets like Houston and Dallas showing RevPAR growth of 77% and 29%, respectively [6][7] - The company experienced a 5% year-over-year slowdown in preliminary April RevPAR growth, attributed to seasonal patterns and the Easter holiday [5] - The revenue pace for May and June is trending up in the high single digits compared to last year, driven by strong rate and occupancy growth [23] Company Strategy and Development Direction - The company is focused on operational initiatives to drive better performance and expects continued outsized RevPAR and EBITDA growth throughout 2023 [8] - The company is working towards closing the sale of six hotels and a vacant land parcel, expected to generate nearly $80 million in gross proceeds, which will help defer near-term capital needs [9] - The company is prioritizing a balance between returning capital to shareholders, reducing corporate leverage, and maintaining liquidity for future growth opportunities [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the portfolio's outlook, expecting continued strong performance driven by business transient and group demand [21][8] - The company reiterated its full-year guidance for 2023, projecting RevPAR growth of 6% to 11% and adjusted EBITDA between $190.4 million to $205.9 million [47] - Management noted that while the transaction market has been quiet, they anticipate more activity in the back half of the year due to potential distressed sales [37] Other Important Information - The company declared a quarterly common dividend of $0.06 per share, representing a 50% increase from the previous quarter, reflecting strong performance and ongoing recovery [32][41] - The company invested approximately $24.1 million in capital expenditures during Q1, driven by transformative renovations across several properties [30] - The balance sheet remains robust with nearly $500 million in liquidity, and the company has no debt maturities until Q4 2024 [45][46] Q&A Session Summary Question: What factors are influencing hotel level margins potentially getting to flat? - Management indicated that margins were up close to 200 basis points in Q1, driven by the ability to push rates and RevPAR growth primarily from rate increases [49][50] Question: How does the company prioritize different types of opportunities in the transaction market? - Management stated they evaluate all opportunities through a risk-adjusted return lens, considering various types of assets including core select service and turnaround stories [51]