Joshua Friedland

Josh Friedland of KeyBanc Capital Markets inquired about Apple Hospitality's decision to lower RevPAR guidance despite positive July trends and questioned the strategy for adding group business in the third quarter.

Answer

CFO Liz Perkins explained that the guidance adjustment was based on the current booking data for August and September, which appears soft, but acknowledged potential upside if recent positive trends continue. She also stated that group business was accretive to ADR in Q2 and a key driver of performance, so the company will continue to strategically layer in group bookings at attractive rates to optimize RevPAR.

Joshua Friedland of KeyBanc Capital Markets inquired about the impact of economic uncertainty on group booking trends, including cancellations, and the effect of lower international inbound travel on specific markets.

Answer

EVP and CFO Atish Shah confirmed that Q1 group production was healthy with no increase in cancellations or attrition. Chair and CEO Marcel Verbaas added that the portfolio has limited exposure to international travel, with only minor leisure softening observed in markets like Orlando and Phoenix.

Joshua Friedland, on for Austin Wurschmidt, asked which markets besides Scottsdale are expected to drive above-average RevPAR growth and what the company's assumptions are for its West Coast markets in 2025.

Answer

CFO Atish Shah identified markets with strong group components like Houston, Orlando, and Nashville as likely outperformers. COO Barry Bloom added that the performance spread between assets is expected to be much tighter in 2025. For the West Coast, Bloom anticipates continued business transient recovery in Northern California and a strong group setup at Park Hyatt Aviara.

Joshua Friedland of KeyBanc Capital Markets inquired about the evolving trends in government and international travel segments since the initial impact earlier in the year, and whether these segments have stabilized. He also asked about the performance and short-term outlook for the business transient (BT) customer.

Answer

Jonathan Stanner, President and CEO, explained that the most acute impact from government and international travel was felt in March but has since stabilized at lower levels, with some optimism for recovery as the year progresses. He noted that the midweek negotiated business, a proxy for BT travel, has held up reasonably well and has not shown a meaningful downward trend, with most softness concentrated in the government and international segments.