Michael Bellisario

Michael Bellisario asked Jonathan Stanner to elaborate on the market and asset-specific drivers boosting Summit Hotel Properties' 0%-3% RevPAR guidance beyond the broader industry outlook, specifically mentioning Fort Lauderdale and Asheville. He also followed up on the booking window, inquiring about changes in discounting, advanced purchase rates, and group booking strategies, and what gives management confidence looking ahead.

Answer

President and CEO Jonathan Stanner explained that Summit's midpoint guidance aligns with industry forecasts, but specific tailwinds include tremendous post-renovation lift in Fort Lauderdale, recovery in Asheville, and significant exposure to World Cup markets like Atlanta, Miami, and Dallas. He also highlighted strong performance in San Francisco, South Florida (Miami/Brickell), Tampa, and Orlando due to new attractions. Regarding the booking window, Stanner noted that while Q2 and Q3 2025 saw remixing into lower-rated channels due to government demand pullback, Q4 showed less remixing and more stability in other segments. He emphasized that outside of government and international inbound, other segments performed reasonably well, with no significant widening of the booking window but increasing incremental demand.

Michael Bellisario asked for a breakdown of market and asset-specific drivers, such as Fort Lauderdale and Asheville, that are expected to boost Summit Hotel Properties' 0-3% RevPAR guidance above broader industry trends. He also followed up on booking window dynamics, inquiring about changes in discounting, advanced purchase rates, and group booking strategies.

Answer

President and CEO Jonathan Stanner highlighted Summit-specific tailwinds, including significant lift from the recently renovated Oceanside Fort Lauderdale Beach, recovery in Asheville, strong performance in World Cup markets (San Francisco, Miami, Tampa, Orlando), and the benefit of Universal's new park in Orlando. Regarding booking, Stanner noted that Q2 and Q3 2025 RevPAR pressure from government and international demand forced a remix into lower-rated channels. However, Q4 2025 and Q1 2026 show less remixing and more stability in other segments, with no significant widening of the booking window, as incremental demand helps offset government segment falloff.

Michael Bellisario of Baird inquired about proactive measures being taken to protect margins beyond managing contract labor and turnover. He also asked for the strategic thinking behind the new $50 million share repurchase program, including how it would be funded and balanced with leverage. Finally, he requested an update on conversations with Summit's joint venture partner regarding their capital deployment views.

Answer

Jonathan Stanner, President and CEO, responded that deeper, 'COVID-era' expense cuts haven't been necessary yet as occupancies remain high, but those levers are available if needed. Regarding the buyback, he cited the 'extreme' stock price dislocation as the driver, stating it would be funded through reduced CapEx, opportunistic asset sales, and potentially a minor leverage increase of less than 0.25x. He noted that the JV partner is well-capitalized and prepared to act on valuation dislocations, though near-term transaction activity is expected to be slow.

Michael Bellisario from Baird inquired about the background of the December acquisitions, the underwriting for long-term returns beyond the 8.8% cap rate, and adjustments for the assets' older vintage.

Answer

Executive Jonathan Stanner described the off-market deal as a compelling opportunity with a strong going-in yield in desirable submarkets. He noted that the unlevered IRRs are underwritten to be 300-400 basis points higher than their recent dispositions. While the assets are older, they are in good physical condition with capital allocated for future renovations, and their prime locations ensure their continued relevance.

Michael Bellisario asked for details on the increased optimism for acquisitions, including whether seller expectations have adjusted, current going-in yields, and any differentiation between targeting leisure versus urban assets. He also inquired about the lifecycle of joint venture assets and the potential for future sales.

Answer

President and CEO Jon Stanner explained that the company's successful disposition program has created balance sheet capacity for external growth. He noted that an improving capital markets environment and more realistic seller expectations are making transactions more feasible. While market-agnostic, Stanner sees near-term opportunities in urban markets benefiting from group and business transient demand. He also confirmed that Summit will continue to opportunistically sell lower-margin JV assets that require significant capital.

Michael Bellisario of Baird asked how Pebblebrook balances its positive outlook with potential asset sales and deleveraging, specifically whether the company plans to rely more on organic growth or asset sales to meet balance sheet targets. He also asked for the rationale behind the new investor presentation slide on brand management encumbrances.

Answer

Jon Bortz, CEO and Chairman of the Board, stated that the strategy is a dual approach: selling assets to pay down debt and buying back stock at a discount, leveraging the public-private arbitrage. He expects organic EBITDA growth from urban market recovery to naturally improve debt ratios. Regarding the new slide, he explained it clarifies misconceptions about unencumbered assets (77% of portfolio), which historically trade at a 10%-20% premium, and differentiates between ground leases with private vs. public entities.

Michael Bellisario of Baird asked how Pebblebrook balances its positive outlook with potential asset sales and deleveraging, specifically whether organic growth or asset sales would be prioritized for balance sheet targets. He also inquired about the new slide on brand management encumbrances.

Answer

Jon Bortz, CEO and Chairman of the Board, stated the strategy is a dual approach: buying back stock at a discount and selling assets to pay down debt and repurchase shares, leveraging the public-private arbitrage. He emphasized that organic EBITDA growth will naturally improve ratios as urban markets recover. Regarding the brand management encumbrances slide, he clarified misconceptions about 'unencumbered' assets, noting that 77% of the portfolio is unencumbered by brand and operator, historically trading at a 10%-20% premium due to broader buyer competition and perceived upside. He also addressed ground leases, explaining that their liability is already factored into EBITDA and that public entity ground leases tend to be extended.

Michael Bellisario of Baird asked for a quantification of 2024 expense savings, specific on-property examples of efficiency initiatives, and an update on the company's disposition strategy.

Answer

Jon Bortz, Chairman and CEO, explained that expense management is a 'continuous and relentless' effort and did not provide a specific dollar amount for savings. He cited examples such as improved F&B efficiency, predictive technology to prevent pipe breaks, and enhanced labor management. Tom Fisher, Co-President and CIO, addressed dispositions, stating that while the transaction market is improving with better debt availability, policy uncertainty could cause near-term delays.

Michael Bellisario of Baird asked if the recent stock buyback signaled progress on asset sales and inquired about plans for a 'next wave' of redevelopments and the CapEx outlook for 2025.

Answer

Jon Bortz, Chairman and CEO, clarified that the buyback was funded by strong free cash flow, not asset sales, though dispositions remain the primary intended source for future buybacks. He emphatically stated there is 'no next wave' of major redevelopment projects, as the portfolio's significant repositioning is now largely complete. Raymond Martz, Co-President and CIO, projected a run-rate CapEx of $65-$75 million for 2025, a significant decrease from prior years, and noted that any hurricane restoration costs would be covered by insurance.

Michael Bellisario asked about the Nashville market's performance in Q4 2025 and the outlook for leisure and business transient demand in 2026.

Answer

Barry Bloom, President and COO, stated that Q4 was challenging for Nashville, including Xenia's property. He sees opportunities for improvement in midweek corporate and group segments for 2026, expecting modest overall improvement. Longer-term, the new F&B platform is anticipated to enhance the property's appeal as a leisure destination. Regarding the RevPAR vs. total RevPAR spread, Barry attributed the positive difference to the new ballroom at Hyatt Regency Grand Cypress and the Scottsdale ramp, driven primarily by banquet and catering revenues from corporate group business, with hotels also implementing pricing increases.

Michael Bellisario from Baird asked about the performance of the Nashville market in Q4 2025 and the outlook for leisure and business transient demand in 2026, given its recent underperformance. He also inquired about the sustainability of the positive spread between RevPAR and Total RevPAR growth, specifically whether the growth in food and beverage and other revenues is driven by price increases or volume, and the overall dynamics of non-room revenue performance.

Answer

President and COO Barry Bloom stated that Q4 2025 was challenging for Nashville, but the W Nashville hotel sees opportunities in midweek corporate and group segments. He expects 2026 to be an improvement over 2025, though not significantly, with growth primarily from midweek corporate and group business. Longer-term, the new F&B platform with José Andrés Group is expected to enhance the property's appeal as a destination for leisure guests. Regarding RevPAR vs. Total RevPAR, Barry Bloom attributed the positive spread to increased group business driving significant ancillary spend, particularly in banquets and catering, benefiting from recent meeting space expansions. He confirmed that hotels are both seeing volume pick up and actively raising prices for banquet and catering services. Chairman and CEO Marcel Verbaas added that the F&B relaunch's primary benefit is not just F&B profitability but its role in making the hotel a more attractive destination across all segments, playing out over several years.

Michael Bellisario from Baird asked for details on the Santa Clara land acquisition's rationale and timing, and inquired about the plan for deferred CapEx projects, including the evaluation process and the impact of delays.

Answer

Chair and CEO Marcel Verbaas explained the Santa Clara purchase from the city was a unique opportunity to eliminate ground lease risk and increase long-term optionality. President and COO Barry Bloom stated that CapEx deferrals are due to tariff uncertainty and are under continuous reevaluation, with the timing of future projects dependent on cost, ROI, and asset seasonality.

Michael Bellisario requested clarification on softening group demand outside of urban locations and asked for quantification of the margin impact from rising loyalty program costs.

Answer

COO Barry Bloom clarified that the 2024 group softening was specific to large resort hotels in Orlando and Carlsbad, which are now seeing a return to a more normalized business mix for 2025. Regarding loyalty costs, he explained the increase is driven by higher volume of loyalty member stays, not a higher per-stay cost, making a precise margin impact difficult to quantify.

Michael Bellisario asked if the incremental $3 million EBITDA impact from the Scottsdale renovation implies a similar reduction in 2025 expectations, and also inquired about the primary drivers of expense pressures across the portfolio.

Answer

Chair and CEO Marcel Verbaas clarified the $3 million impact was a Q3/Q4 2024 issue due to renovation delays and would not bleed into 2025 expectations. President and COO Barry Bloom added that expense pressures are not geographically concentrated but are driven by the mix shift toward occupancy growth at the expense of ADR. He noted that margin erosion is most pronounced where occupancy gains are paired with rate declines, and that bringing back fixed staffing also impacts smaller hotels.

Michael Bellisario sought clarification on the expense guidance, specifically how changes in the same-store comparable pool, such as the inclusion of Hotel 57 and Nashville, impact growth rates and margins for 2026. He also asked if any explicit performance lift from the recent manager changes is included in the 2026 outlook.

Answer

CFO Liz Perkins clarified that adding Hotel 57 back to the comparable set impacts the 2025 margin by 40 basis points, with same-store total hotel expense growth at 1.6% at the midpoint. She also noted a net benefit of $5 million from the absence of brand conferences and fee reductions. CEO Justin Knight stated that no explicit lift from manager changes is included in the 2026 outlook, as the primary benefits are expected in future years, with 2026 focusing on offsetting transition costs through more efficient operations.

Michael Bellisario with Baird asked for a bridge to the expense guidance, specifically how changes in the same-store comparable pool, including Hotel 57 and Nashville, impact growth rates and margins. He also inquired if any explicit lift from manager changes is included in the 2026 outlook.

Answer

CFO Liz Perkins clarified that Hotel 57 (New York) being added back impacts 2025 margin by 40 basis points, and same-store total hotel expense growth is 1.6% at the midpoint. She also noted a $5 million net benefit from no brand conferences and fee reductions. CEO Justin Knight stated no explicit lift from manager transitions is included for 2026, as initial costs offset benefits, with primary benefits expected in future years.

Michael Bellisario asked about the CapEx and potential earnings disruption for the Seattle Lake Union project, including any outsized costs, and the typical disruption expected when transitioning 13 Marriott-managed hotels to a new management company.

Answer

CEO Justin Knight stated that the Seattle Residence Inn renovation was anticipated regardless of the brand transition, with the change to Homewood Suites driven by competitive supply and brand incentives. He expects some outsized disruption during the reservation system transition but hopes to mitigate it due to the property's extended-stay nature. For the other properties, he anticipates much less disruption from management company transitions, leveraging experience and consolidating management during slower periods to drive operational efficiencies and unlock long-term sales flexibility. CFO Liz Perkins added that it's too early for definitive expense guidance for next year, but the team has maximized cost savings this year.

Michael Bellisario with Baird asked about potential outsized costs and earnings disruption for the Seattle Lake Union project's renovation and brand conversion, and the typical disruption expected when transitioning the 13 Marriott-managed hotels to new management. He also requested an early outlook on the cost per occupied room (CPOR) growth rate for next year compared to this year, including any influencing factors.

Answer

Justin Knight, Chief Executive Officer, stated that the Seattle renovation disruption would have occurred regardless of the brand change, driven by the end of the franchise term. The brand decision was influenced by competitive supply and brand incentives. He anticipates some outsized disruption during the reservation system transition for Seattle but hopes the extended-stay nature will mitigate it. For the Marriott-managed hotels, transitions are expected to be less disruptive, leveraging past experience with management company changes and timing during slower periods to drive short-term operational efficiencies and long-term sales flexibility. Liz Perkins, Chief Financial Officer, indicated it's too early for definitive CPOR guidance for next year due to the budgeting process and ongoing transitions, but noted moderation in expenses this year and hopes to carry some of that through.

Michael Bellisario inquired about the specific sources of demand weakness, aside from government travel, and whether it's manifesting as booking hesitancy or actual cancellations. He also asked for Justin Knight's philosophy on CapEx spending and the potential for deferring projects amid current uncertainty.

Answer

CFO Liz Perkins detailed that while government travel saw a pullback, small group business remains strong and negotiated business has held up well, describing the situation as a mix of factors rather than a single weak segment. CEO Justin Knight affirmed the company's plan to spend $80-$90 million on CapEx, viewing it as a prudent investment to maintain a competitive advantage, and noted the company's strong balance sheet provides the flexibility to proceed.

Michael Bellisario asked what operators are doing to offset expense growth, how real estate values have changed recently, and what factors beyond CapEx needs are driving the asset sale strategy.

Answer

CFO Liz Perkins highlighted that operators are managing costs by improving occupancy, reducing contract labor, and leveraging extensive benchmarking. CEO Justin Knight commented that while transaction volume is low, real estate values for quality assets appear stable to improving. He explained the disposition strategy is both strategic (market trajectory) and tactical (focusing on smaller assets where pricing is currently favorable).

Michael Bellisario from Baird asked about recent trends in booking windows and cancellations, the operational impact of shorter booking windows on staffing, and why the company isn't more aggressively selling assets to fund buybacks given the favorable spread.

Answer

CFO Liz Perkins stated that while booking patterns have shifted slightly shorter-term, there has been no material change in cancellation rates. She acknowledged that shorter booking windows create staffing challenges, which slightly impacted Q3 payroll costs. CEO Justin Knight explained that the disposition market has only recently become more favorable and affirmed that if it remains open, they will be more aggressive in selling assets to redeploy capital while protecting the balance sheet. He also noted there is no portfolio premium for sales currently.

Michael Bellisario asked about the execution and value realization from the Four Seasons sales, inquiring about the depth of the buyer pool and the company's willingness to sell more high-value assets in the future.

Answer

President and CEO Jim Risoleo highlighted Host's strong 2025 performance and 2026 guidance, emphasizing capital allocation decisions to unlock shareholder value. He confirmed the company's opportunistic approach to selling top assets at the right price, detailing the Four Seasons transaction's attractive multiple (14.9x EBITDA), 11% unlevered IRR, and the deep buyer pool including sovereigns and private equity. He expressed hope for multiple expansion as a result of these strategic dispositions.

Michael Bellisario from Baird asked about the depth of the buyer pool for high-value assets and the potential for Host Hotels & Resorts to sell more of its top assets following the successful Four Seasons disposition.

Answer

Jim Risoleo, President and CEO, Host Hotels & Resorts, explained that the buyer pool for luxury assets is deeper than perceived, including sovereigns, high net worth individuals, and private equity firms. He reiterated that Host is opportunistic and everything is for sale at the right price, emphasizing the value creation from the Four Seasons sale, which achieved a 14.9x EBITDA multiple and an 11% unlevered IRR.

Michael Bellisario inquired about Host's CapEx strategy, specifically how hotels and markets are selected for investment given broader trends of declining renovation returns, and whether the decision not to buy back stock in the quarter reflects better returns on transformational CapEx projects.

Answer

President and CEO Jim Risoleo explained that CapEx decisions involve rigorous screening of assets, focusing on 'transformational' renovations (e.g., new arrival, lobby, F&B, spa) rather than just defensive room redoes. These decisions are made collaboratively with design, asset management, enterprise analytics groups, and operators (Hyatt, Marriott), who provide operating profit guarantees and enhanced owner priority returns. He confirmed that Host did not repurchase stock in the quarter, prioritizing asset investments due to a clearer line of sight to strong cash-on-cash returns compared to stock buybacks when the stock price is not 'disrupted.'

Michael Bellisario inquired about Host Hotels & Resorts' CapEx strategy, specifically how hotels and markets are selected for investment to achieve strong renovation returns, and whether the company's decision not to buy back stock in the quarter reflects better returns on these transformational CapEx projects.

Answer

Jim Risoleo, President and CEO, detailed Host's rigorous process for selecting assets for capital investment, focusing on 'transformational' renovations that reposition properties with new arrival experiences, lobbies, and F&B platforms, rather than just defensive room re-dos. He emphasized collaborative decision-making with design, asset management, enterprise analytics groups, and operators, who support investments through operating profit guarantees and enhanced owner priority returns. Risoleo confirmed that Host did not buy back stock in the quarter, stating that investing in assets currently offers a clearer line of sight to strong cash-on-cash returns compared to stock buybacks, especially given the current stock price.

Michael Bellisario asked if Host has implemented broader cost-cutting initiatives or staffing changes to manage margins for the rest of the year.

Answer

President and CEO James Risoleo explained that while the company has detailed, property-by-property contingency plans ready, they have not been implemented as the portfolio is performing well. He emphasized that they are not currently seeing signs of a downturn and are comfortable with their guidance. He did note a 20 basis point operational improvement from ongoing productivity efforts.

Michael Bellisario of Baird asked about the macroeconomic assumptions underpinning the 2025 guidance and where potential upside or derisking might occur beyond the stated factors of Maui and cross-border travel.

Answer

EVP and CFO Sourav Ghosh explained that the guidance is based on current GDP and nonresidential fixed investment forecasts. He identified potential upside from continued strength in the group segment, which has strong pace and rate growth, and from the business transient segment if positive business sentiment leads to increased travel from large corporations.

Michael Bellisario asked for the clean, underlying top-line and bottom-line growth rates for the portfolio, excluding all one-time items, to better understand current performance and the outlook for 2025.

Answer

EVP and CFO Sourav Ghosh clarified that excluding the significant drag from the Maui wildfires, the portfolio's RevPAR growth rate for 2024 would have been closer to 3%. He noted that at this level of growth, the company would have achieved margin expansion for the year, outperforming the industry due to benefits from recent capital investments.

Michael Bellisario inquired about Choice Hotels' spending outlook for 2026, specifically regarding key money, CapEx, and joint venture investments, and also asked about the conditions for a more aggressive or programmatic share buyback strategy.

Answer

Scott Oaksmith (CFO) detailed key money outlays for 2025 ($83 million net, $92 million gross) and projected an increase to $105-$110 million for 2026, noting a decrease in average key money check size. He also highlighted a significant 70% reduction in net recyclable capital outlays for 2026, projecting $20-$45 million. Patrick Pacious (CEO) added that the improved franchisee value proposition is reducing key money per deal and that the company is entering a phase of recycling capital from Cambria and Everhome. Regarding buybacks, Patrick Pacious (CEO) explained that after the Canadian JV acquisition, the company resumed buybacks in Q4, prioritizing organic investments and M&A before returning excess capital to shareholders, maintaining comfort within their net debt to EBITDA range.

Michael Bellisario asked for the spending outlook for 2026, specifically regarding key money, CapEx, and joint venture investments, and inquired about the balance sheet requirements for more aggressive share buybacks.

Answer

Scott Oaksmith, Chief Financial Officer, detailed expected key money outlays for 2026 (between $105 million and $110 million gross) and a significant 70% reduction in net recyclable capital outlays to $20-$45 million, driven by tapering investments in Cambria and Everhome Suites. Patrick Pacious, President and CEO, added that improved franchisee value proposition is reducing key money per deal. Regarding buybacks, Patrick Pacious explained the company's consistent capital allocation framework, prioritizing organic investments and M&A before shareholder returns, noting comfortable net debt to EBITDA ratios.

Michael Bellisario asked for a follow-up on the Canada acquisition, seeking details on the growth outlook, the timeline for hotel openings, and a quantification of expected revenue and cost synergies.

Answer

President & CEO Patrick Pacious stated that development dynamics in Canada mirror the U.S., with a mix of new construction and conversion opportunities across the brand portfolio. He highlighted the market's projected 5% annual growth and the high quality of the existing 30,000-room system. While not providing specific synergy figures, he expressed confidence in growth driven by the existing franchisee base's interest in new brands.

Michael Bellisario asked for a breakdown of the full-year guidance math, questioning how ancillary fee growth could significantly outpace core royalty fee growth. He also requested insights on franchisee sentiment regarding development from the recent company convention.

Answer

CFO Scott Oaksmith detailed the EBITDA growth drivers, confirming that partnership and ancillary services are expected to contribute approximately 2% to 2025 EBITDA growth, independent of RevPAR. He stated this segment has long-term potential to grow faster than core royalties. CEO Patrick Pacious reported that franchisees at the convention were optimistic, seeing their hotels outperform peers due to Choice's investments in loyalty and technology. He noted strong developer interest in extended-stay and conversion brands.

Michael Bellisario from Baird questioned the seemingly low 1% net unit growth guidance for 2025, asking for the domestic vs. international breakdown and details on the Bluegreen and Westgate partnerships' contributions and fee structures.

Answer

CEO Patrick Pacious explained that the focus on rapid hotel conversions (80% of 2024 openings) means many units enter and open within a quarter, not lingering in the pipeline. He stated the Bluegreen unit count is expected to remain stable. CFO Scott Oaksmith provided the NUG breakdown: international growth is expected slightly above 3%, with domestic being slightly positive. Oaksmith also clarified the Westgate deal is a distribution agreement with higher-than-typical fees paid for reservations delivered, not a standard franchise agreement.

Michael Bellisario asked for details on the company's owned hotel portfolio and associated CapEx, and also sought quantification of the October hurricane impact on RevPAR and the current mix of group and business transient room nights.

Answer

CFO Scott Oaksmith stated there are 10 open and operating owned hotels, with a handful more under construction, primarily for the Cambria and Everhome brands as part of a capital recycling strategy. CEO Patrick Pacious noted October's 5% RevPAR growth was broad-based, not just hurricane-driven, and that the business travel mix was 35%, a high level reflecting the Radisson portfolio's contribution.

Michael Bellisario inquired about the increase in affiliate deals like Choctaw, the opportunity set for such partnerships, the payment structure (specifically if it's only on direct contribution), and the percentage of rooms growth or gross openings derived from these higher FeePAR affiliate deals.

Answer

CEO Geoff Ballotti stated that Wyndham reports on affiliates annually and will continue to seek aspirational hotels and resorts that offer unique guest experiences and Wyndham Rewards redemption opportunities, like the Choctaw affiliation. He noted that affiliate additions in 2025 would be consistent with prior years and are instrumental in driving credit card and ancillary fee growth.

Michael Bellisario inquired about the company's strategy for more affiliate deals like Choctaw, the overall opportunity set, the payment structure (specifically if it's only on direct contribution), and the percentage of rooms growth or gross openings in 2025/2026 derived from these higher Fee PAR affiliate deals.

Answer

CEO Geoff Ballotti stated that the company reports on affiliates annually and will continue to seek aspirational hotels and resorts that offer unique guest experiences and redemption opportunities for Wyndham Rewards members, like Choctaw. He noted that affiliate additions in 2025 would be consistent with prior years and are helpful in driving credit card and ancillary fee growth.

Michael Bellisario asked for more details on the 'other franchise fees' line item in Q3, including its components and why it was down, and sought insight into the G&A bridge for next year, specifically regarding this year's cuts and any expected step-ups.

Answer

CFO Michele Allen explained that 'other franchise fees' include event-driven items like termination, transfer, and application fees, as well as transactional revenue, which are subject to varying revenue recognition policies and can fluctuate quarter-to-quarter. She noted that the Q3 decline was largely timing-related and only slightly below internal forecasts, with year-to-date fees roughly flat. Regarding G&A for 2026, Allen stated it's too early to provide specific expectations, but mentioned that about half of the variable reductions implemented in 2025 are expected to be permanent, with the other half being temporary.

Michael Bellisario asked for more detail on the 'other franchise fees' bucket in Q3, why they were down, and insights into G&A moving pieces for the bridge into next year.

Answer

CFO Michele Allen clarified that 'other franchise fees' include event-driven items like termination, transfer, and application fees, which are naturally variable. She noted a $7 million year-over-year decline in Q3, but only a $3 million shortfall from internal forecasts, attributing it to timing. Regarding G&A for next year, she stated it's too early for 2026 expectations, but approximately half of this year's variable cost reductions are expected to be permanent.

Michael Bellisario of Baird requested an update on the Echo Suites brand, including recent signings and starts, the growth trajectory with different developer types, and plans for international expansion.

Answer

CEO Geoffrey Ballotti reported strong progress for Echo Suites, with a pipeline exceeding 30,000 rooms and continued signings from individual developers. He noted recent openings in Texas, Tennessee, and Virginia, with performance on track and some hotels already achieving a RevPAR index over 100. For international expansion, he confirmed agreements are in place for Canada and Mexico is being considered for the next year.

Michael Bellisario of Robert W. Baird & Co. inquired about Wyndham's long-term growth algorithm, noting its absence from the presentation, and asked for an updated framework and sensitivities looking out to 2026.

Answer

CEO Geoffrey Ballotti affirmed confidence in the long-term 3% to 5% net room growth algorithm, citing a record Q1 for openings and strong signings. CFO Michele Allen stated that while the 2025 EBITDA is revised down slightly, it does not alter the long-term trajectory. She noted that key controllable metrics like system growth, royalty rate, and ancillary revenues are performing at or above expectations, and that underperforming RevPAR years are typically followed by stronger ones, supporting confidence in their ability to compound growth.

Michael Bellisario asked about the company's key money strategy, questioning if returns on these investments are increasing and whether the company is deploying capital into more deals or investing more dollars into the same number of deals.

Answer

CFO Michele Allen stated that the key money strategy is successfully attracting higher fee PAR properties, with less than 20% of additions receiving it but yielding a 40% fee PAR premium. She noted that as interest rates decline, returns improve. The 2025 guidance assumes a consistent capital deployment approach, with about 90% of the investment focused on the U.S. midscale and above segments, including La Quinta and Echo Suites.

Michael Bellisario questioned whether the latest ECHO Suites deals were with new or existing franchisees and asked how the build-out of data centers for AI fits into Wyndham's infrastructure-related growth strategy.

Answer

CEO Geoffrey Ballotti confirmed the new ECHO deals are with new institutional developers, broadening the franchisee base. He elaborated that the explosion in data center construction across the U.S. is a significant, incremental demand driver for Wyndham's brands, particularly for weekday stays and new construction in secondary markets with limited lodging supply.

Michael Bellisario asked about recent changes in the booking window, how it has evolved, and the current confidence levels among meeting planners.

Answer

Chris Nassetta, President and CEO of Hilton Worldwide, reported that the booking window has remained stable, extending slightly by one day from 26 to 27 days. He indicated that sentiment from both business transient customers and meeting planners is positive, with expectations for increased travel and continued business bookings, suggesting a healthy attitude towards future planning.

Michael Bellisario, Managing Director and Senior Research Analyst at Baird, asked about recent changes and improvements in the booking window and whether Hilton is observing increased confidence from meeting planners.

Answer

Chris Nassetta, President and CEO of Hilton Worldwide, reported that the booking window has been stable, technically extending by one day from 26 to 27 days since the last quarter. He indicated that sentiment from customers across all segments, including business transient and meeting planners, feels 'pretty good,' with a general theme of increased travel expectations for the year, barring unforeseen macro disruptions.

Michael Bellisario of Robert W. Baird & Co. asked for a follow-up on business fundamentals, specifically if group leads are converting to signed contracts and if there is recent momentum in business transient bookings.

Answer

President and CEO Christopher Nassetta confirmed they are seeing early signs of a "thaw" in booking behavior after a recent "wait and see" period. He pointed to high single-digit growth in group positions for 2026 and 2027 as a strong leading indicator of improving confidence. However, he cautioned that it is still very early and a clearer picture will likely emerge in Q4, after Q3's calendar and holiday shifts pass.

Michael Bellisario requested a deeper dive into the demand weakness observed in April, asking for specific color on performance differences between high-end and low-end Leisure, as well as between small/medium-sized businesses and large corporate accounts.

Answer

President and CEO Christopher Nassetta cautioned that April data is skewed by the Easter holiday shift. However, he noted a broad pullback across all categories of Leisure. For Business Transient, he stated there has been very little impact on the resilient SMB segment, which constitutes 85% of Hilton's BT business. The impact has been slightly more pronounced among large corporate accounts, although the banking and finance sector has been a bright spot. He stressed that growth rates remain positive, not negative.

Michael Bellisario asked for commentary on hotel deletions from the system and attrition from the development pipeline, inquiring about current trends and their implications.

Answer

Kevin Jacobs, CFO and President, Global Development, explained that Hilton typically removes 1% to 1.25% of its system annually, mostly by choice. While deletions were slightly higher in 2024, the expectation for 2025 is a return to the long-term average, which is already factored into the company's net unit growth guidance.

Michael Bellisario asked if a slower RevPAR growth environment, similar to 2018-2019, could be relatively beneficial for Hilton in terms of gaining RevPAR index and pipeline share.

Answer

President and CEO Christopher Nassetta conceded that while higher RevPAR is always preferred, the current environment does have benefits for Hilton. He explained that in periods with tighter financing, Hilton tends to capture a disproportionate share of both conversions and new construction due to the financeability of its brands. He highlighted the model's resilience, noting its ability to deliver ~10% EBITDA growth even with low single-digit RevPAR growth.

Michael Bellisario asked about the economic model for franchisees, which he noted has become less favorable, particularly for new construction, and what Marriott is doing to improve the financial viability for both existing and prospective franchisees.

Answer

CEO Anthony Capuano acknowledged that owners and franchisees are at a different stage of recovery from the pandemic. Marriott is focused on driving top-line revenue, enhancing margins, and scrutinizing every facet of affiliation costs, including previously lowering the Bonvoy program charge-out rate. He also mentioned evaluating the entire hotel operating model, including services, staffing, scheduling, and purchasing, to improve property-level profitability.

Michael Bellisario asked about the economic model for franchisees, particularly concerning new construction, and what Marriott is doing to improve the financial viability for both existing and prospective franchisees.

Answer

CEO Tony Capuano acknowledged that while global brand companies perform well, the owner and franchise community is at a different stage of recovery. He emphasized Marriott's focus on driving top-line revenue, enhancing margins, evaluating every facet of affiliation costs (like lowering the Bonvoy program charge-out rate), and re-evaluating the entire hotel operating model to improve property-level profitability.

Michael Bellisario inquired about the health of Marriott's franchisees, specifically asking what owners are requesting and what Marriott is providing to maintain attractive economics and achieve mid-single-digit net unit growth, given recent loyalty chargeback reductions and RevPAR slowdowns.

Answer

Tony Capuano (President and CEO) pointed to record global signings as evidence of strong owner relations, emphasizing efforts to drive top-line performance through technology transformation, reduce loyalty chargeout rates, and enhance margins. Leeny Oberg (CFO and EVP of Development) added that Marriott believes it offers the lowest affiliation costs relative to revenue in the industry.

Michael Bellisario asked about the health of Marriott's franchisees, specifically inquiring about recent reductions in loyalty chargebacks, expanded renovation scopes, and what additional support owners are requesting to maintain attractive economics and achieve mid-single-digit net unit growth.

Answer

President and CEO Tony Capuano cited record global signings as an indicator of strong owner relations, emphasizing efforts to drive top-line performance through technology transformation and reduce affiliation costs, including loyalty chargebacks. CFO Leeny Oberg added that Marriott believes it has the lowest affiliation cost relative to revenue in the industry and aims to improve it further.

Michael Bellisario of Robert W. Baird & Co. inquired about the drivers of weaker select-service performance in March, asking if it was regional or related to the Easter holiday shift. He also asked about the owner commitment for future development of the newly acquired citizenM brand.

Answer

CEO Tony Capuano acknowledged some softness in the U.S. and Canada in March but noted encouraging sequential improvement into April. CFO Leeny Oberg quantified the Easter timing impact and attributed the weakness to a temporary shock from government news. Regarding citizenM, Mr. Capuano described owners' 'profound enthusiasm' to leverage Marriott's network for accelerated growth rather than a formal commitment.

Michael Bellisario from Baird inquired if the cost-saving initiatives would impact franchise sales or support faster net unit growth, and asked for an update on the competitive landscape for hotel conversions and signings.

Answer

President and CEO Tony Capuano stated that growing market share is a top priority and believes the new efficiency initiative will provide incremental support to that growth. He highlighted strong momentum in conversions, attributing it to a portfolio of conversion-friendly brands, a more frictionless process, and dedicated resources focused on driving conversion volume.

Michael Bellisario inquired about the room night contribution from World of Hyatt, how it has tracked year-to-date compared to last year's 45%, how Hyatt plans to narrow the gap to peers, and the value proposition for owners and developers.

Answer

Mark Hoplamazian, President and CEO, Hyatt, stated that World of Hyatt penetration continues to increase, remaining in the mid-40s, with strong membership growth compounding over 20% annually. He emphasized the high engagement of elite members, who stay longer and spend more. He noted that Hyatt's total direct channel delivery is in line with peers despite its smaller size, partly due to consistent benefit delivery at managed hotels, which enhances the value proposition for owners.

Michael Bellisario inquired about the World of Hyatt room night contribution year-to-date, how Hyatt plans to narrow the gap to peers, and the value proposition for owners and developers.

Answer

Mark Hoplamazian, President and CEO of Hyatt, stated that World of Hyatt penetration continues to increase, remaining in the mid-40s, with membership growing over 20% annually. He highlighted the high engagement of elite members and the program's value. He noted that despite group customers not earning points, Hyatt's total direct channel delivery is in line with peers, attributing this to the compelling platform and consistent delivery of benefits across its managed network.

Michael Bellisario of Robert W. Baird & Co. inquired about the integration progress of the Standard and Bahia Principe brands, including loyalty program integration and fee performance, as well as the timeline for integrating converted Playa hotels.

Answer

CEO Mark Hoplamazian reported that the Standard integration is yielding "quite remarkable" early results, with strong World of Hyatt contribution displacing more expensive channels. He noted the Bahia Principe business is performing well and that any disruption from the Playa rebranding will be resolved by year-end, with a full ramp-up by January 2026.

Michael Bellisario asked for more detail on recent booking trends, questioning whether the softness was from cancellations or simply fewer new bookings. He also sought clarity on the group segment, asking which markets or customer types were showing hesitancy and how the current 3% pace for the rest of the year compares to 90 days prior.

Answer

President and CEO Mark Hoplamazian clarified that there were significant cancellations from the government sector and a pullback from association business, which was offset by strong corporate demand. CFO Joan Bottarini added that international markets are showing notably stronger transient pacing for both leisure and business compared to the U.S.

Michael Bellisario asked if Hyatt sees an opportunity to invest in the Lindner portfolio amid its uncertainty and inquired about the foreign exchange impact assumed in the 2025 EBITDA outlook.

Answer

President and CEO Mark Hoplamazian confirmed that investing in Lindner is 'in the realm of possibility' and that Hyatt is exploring options. CFO Joan Bottarini stated that the anticipated foreign exchange impact in 2025 is incrementally positive but not material to the overall financial outlook.

Michael Bellisario inquired about the mechanics and limiting factors of the non-traded preferred stock redemptions and asked for an update on the asset sale market, including buyer activity and the planned use of any proceeds.

Answer

Executive Deric Eubanks and President and CEO Richard Stockton clarified the preferred stock redemption mechanics, noting the company can redeem shares after two years and holders can redeem at par after three years, with timing dependent on the original issuance dates. Richard Stockton also reported pleasantly surprising buyer activity in the asset sale market, driven by better debt markets. He stated Braemar is testing the market with several upper upscale assets and expects to close 1-2 sales this year, with proceeds potentially used for preferred redemptions, share buybacks, or retiring a 2026 convertible note.

Michael Bellisario of Robert W. Baird & Co. inquired about the capital expenditure plan for 2025, specifically asking for details on spending related to the Tahoe development and the company's current restrictions on common stock repurchases versus preferred stock.

Answer

Richard Stockton, President and CEO, clarified that the Ritz-Carlton Lake Tahoe renovation is largely complete, with less than $2 million allocated for a final F&B outlet project in 2025. He noted the separate branded residences project is still in a slow entitlement process with no spending anticipated in 2025. Stockton also confirmed that the company remains restricted from repurchasing common stock at this time.

Michael Bellisario from Baird posed a strategic question about value creation, asking how many non-core hotels remain for sale and when the company might consider a larger asset sale to fund more significant share repurchases.

Answer

CEO Bryan Giglia stated the portfolio is 'pristine' with no assets that must be sold. The strategy is focused on recycling capital from any asset, large or small, when there's an arbitrage between private market value and their internal NAV. He confirmed that given the current discount, share repurchases are a compelling use of capital and that Sunstone expects to be a net seller, with proceeds likely funding buybacks.

Michael Bellisario requested an update on the operational improvements at the company's Napa assets and asked what contribution is embedded in the 2025 guidance for these hotels.

Answer

Bryan Giglia, Chief Executive Officer, reported that the two Napa hotels generated over $3 million in EBITDA growth in 2024 from optimizing the group mix and implementing cost controls. For 2025, Giglia stated they anticipate "another couple of million dollars of EBITDA growth at each of these hotels," with any surprise pickup in leisure demand representing further upside.

Michael Bellisario asked for a quantification of the 2025 EBITDA impacts from both the labor disruption in San Diego and the delayed opening of the Andaz Miami Beach.

Answer

CEO Bryan Giglia clarified that the primary impact from the San Diego disruption was contained in Q4 2024, mainly from cost inefficiencies rather than future cancellations, with 2025 group pace up nearly 6%. For the Andaz Miami Beach, he stated the delayed opening would likely reduce the 2025 EBITDA contribution from a projected $12 million down to approximately $9 million.

Michael Bellisario of Robert W. Baird & Co. asked for details on fundamental operating trends in March and April versus initial expectations, and for an overview of the capital available from various sources like banks, high-yield bonds, and the mortgage market.

Answer

President and CEO Leslie D. Hale explained that March RevPAR, initially expected to be positive, finished down 1.3%, and April was projected to decline 1-2%. She attributed this to the Easter shift and softer government demand, while noting rate integrity held. EVP and CFO Sean Mahoney described the bank market as strong for top-tier sponsors, the high-yield market as having recovered but with spreads 50-75 bps wider, and the CMBS market as active but more cautious.

Michael Bellisario asked for an analysis of the high and low ends of RLJ's 1% to 3% RevPAR guidance and inquired about the company's capital allocation priorities for 2025 compared to 2024.

Answer

President and CEO Leslie D. Hale explained that the guidance range depends on the performance of business transient (BT) and group demand relative to their baseline assumptions. She stated that capital allocation will remain nimble, leveraging the company's strong balance sheet to pursue opportunities like share buybacks, acquisitions, and conversions as market windows emerge, similar to their strategy in 2024.

Michael Bellisario inquired about the year-over-year growth rate for labor expenses, current hiring and retention trends, and the expected net lift from hotel conversions in the current and upcoming year compared to previous forecasts.

Answer

President and CEO Leslie D. Hale stated that labor metrics are normalizing. EVP and CFO Sean Mahoney specified a 4-5% year-over-year increase in wages and benefits, noting moderation from the first half of the year. COO Thomas Bardenett added that contract labor usage is decreasing. Regarding conversions, Mahoney stated they are tracking ahead of underwriting, delivering approximately 10% top-line and 20-25% bottom-line growth year-over-year.

Michael Bellisario from Baird inquired about the specific periods with group booking gaps for the remainder of the year and the updated revenue management strategy to address these shortfalls.

Answer

CEO Jeff Donnelly identified August and November as having difficult comps due to major citywide events in Chicago and Boston in the prior year. He stated the strategy is to hold firm on rates and book transient business into the gaps, rather than cutting rates which they feel would not instigate new demand.

Michael Bellisario questioned the rationale behind refining the renovation scopes at the Landing Resort and Bourbon Orleans, and asked which markets saw group pace pick up since the third quarter.

Answer

CEO Jeff Donnelly and President & COO Justin Leonard explained the scope changes were driven by ROI discipline. At Bourbon Orleans, a rooms-only renovation offered a better return than adding low-margin F&B outlets. At the Landing Resort, the high cost and limited occupancy upside of adding rooms prompted a re-evaluation. Leonard identified Denver, Salt Lake, and San Diego as markets with recent group pace improvement, crediting recent renovations for success in the latter two.

Michael Bellisario from Baird asked for details on the underwriting parameters for the small acquisition mentioned by management. He also questioned the lack of significant share buybacks post-August, even as the stock price fell, and whether the pending acquisition was a factor.

Answer

CEO Jeff Donnelly described their ideal acquisition as a newer property with an attractive yield, both on a cap rate and after-capital basis, and a compelling per-key valuation. Executive Briony Quinn confirmed buyback activity was nominal, attributing the decision to the need for cash to repay a mortgage and the ongoing evaluation of capital allocation alternatives, including the potential acquisition.

Inquired about the nature and potential size of cost savings related to Ashford Inc., and asked about the company's strategic priorities and capital allocation plans for 2025 after the Oaktree financing is paid off.

Answer

The company stated that cost savings will come from the corporate level via Ashford Inc., in addition to property-level efforts, but it is too premature to quantify the amount. For 2025, after paying off the Oaktree financing, the top priorities will be addressing upcoming debt maturities through refinancing and extensions, and then strategically turning over assets to reposition the portfolio, taking advantage of favorable industry fundamentals like low supply growth.