RLJ Lodging Trust(US:RLJ)2023-08-04 19:50Financial Data and Key Metrics Changes - The second quarter RevPAR increased by 4.5% year-over-year, achieving 96% of 2019 levels, with a 3.8% increase in ADR and a 0.6% increase in occupancy [27][38] - Monthly RevPAR exceeded 2022 for each month of the quarter, growing 6.8% in April, 4% in May, and 2.7% in June [17] - Total second quarter hotel operating costs were only 2% above 2019 levels, significantly below the aggregate core CPI growth rate of approximately 15% in 2019 [18] Business Line Data and Key Metrics Changes - Business transient revenues increased by 12%, with weekday RevPAR up 6% year-over-year [29] - Group revenues achieved 103% of 2019 levels, with a 400-basis point improvement from the first quarter [30] - Non-rooms revenue increased by 21% this quarter, contributing to a total revenue growth of 7% year-over-year [28] Market Data and Key Metrics Changes - Urban markets drove growth, with RevPAR in urban markets growing 7.7% over last year and achieving 2019 levels for the first time [6] - The group segment benefited from increasing corporate demand for meetings and events, with strong citywide events contributing to performance [8] - Urban leisure demand remained strong, with urban weekend RevPAR increasing by 4% over last year [30] Company Strategy and Development Direction - The company is focused on capital allocation opportunities, including share repurchases and increasing dividends, with a 25% increase in quarterly dividends to $0.10 per share [21][34] - The company is executing conversions in key markets, including Nashville, to enhance portfolio performance and capture market share [11][32] - The strategy emphasizes urban market concentration, which is expected to drive outsized EBITDA growth [15] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the lodging industry's ability to achieve positive RevPAR growth despite macroeconomic uncertainties [13] - The company is encouraged by strong booking activity, with group pace reaching 97% of 2019 levels [14] - Management believes that the urban leisure demand will remain strong, supported by ongoing trends in travel and entertainment [36] Other Important Information - The company repurchased approximately 5.3 million shares for $54.2 million at an average price of $10.22 per share in 2023 [42] - The company ended the quarter with approximately $477 million of unrestricted cash and $600 million of availability on its corporate revolver [41] - The company anticipates capital expenditures in the range of $100 million to $120 million during 2023 [68] Q&A Session Summary Question: Can you discuss the transient side and the pickup seen in Q2? - Management noted that business transient demand is gradually improving, with midweek RevPAR up 6% year-over-year and room nights at 90% of 2019 levels [46][47] Question: What is the rate spread for renovated hotels compared to their comp set? - Pre-conversion, hotels were running at roughly 90% of share against their comp sets, but post-conversion, they are outperforming and gaining share [52] Question: How is the company positioned in the current transaction market? - The transaction market is constrained, and the company is opportunistic but does not need to be programmatic due to its strong balance sheet [54] Question: What is the outlook for the urban market, particularly in NYC? - Management believes the urban lifestyle positioning is strong, and the company is optimistic about its portfolio's performance in NYC [100] Question: How are guest satisfaction scores trending? - Guest satisfaction scores are improving for both select service and full-service hotels due to consistent service delivery and staffing levels [93][136]