Ken Billingsley

Ken Billingsley from Compass Point sought clarification on the significant G&A expense savings in 2025, asking if they are temporary or sustainable, and inquired about the expected expense savings from the planned transition of Marriott-managed hotels. He also questioned the decision to develop two new hotels in the Las Vegas market, given some perceived weakness.

Answer

Liz Perkins, Chief Financial Officer, clarified that G&A expense is primarily tied to the executive compensation incentive plan, which correlates to operating metrics and total shareholder return, resetting annually and thus fluctuating. Justin Knight, Chief Executive Officer, explained that transitioning Marriott-managed hotels to franchise and consolidating management with existing third-party partners is expected to unlock incremental value through near-term cash flow and long-term sales flexibility. Regarding Las Vegas, he highlighted a 10% trailing 12-month yield on their existing SpringHill Suites, acknowledged market volatility but expressed conviction in the long-term trajectory due to continued investment, diverse demand drivers, and the strategic location adjacent to the convention center, which will allow for operating efficiencies across the combined properties.

Ken Billingsley asked for clarification on G&A expense savings, whether they are temporary or sustainable, and about the expected expense savings from the Marriott shift plan. He also questioned the decision to add two more hotels in the Las Vegas market despite its current weakness.

Answer

CFO Liz Perkins clarified that G&A expense is primarily tied to the executive compensation incentive plan, fluctuating annually based on operating metrics and total shareholder return. CEO Justin Knight explained that transitioning Marriott-managed hotels to franchise and consolidating management with existing partners is expected to unlock incremental value through near-term cash flow and long-term sales flexibility, aligning with Marriott's efficiency strategy. Regarding Las Vegas, Justin Knight highlighted the existing SpringHill Suites' 10% trailing 12-month yield, the market's strong long-term trajectory due to diverse demand drivers and investment, and the operational efficiencies expected from managing three connected hotels adjacent to the convention center.