Future M&A Plans
Q: How are you thinking about future M&A and target markets?
A: We are actively pursuing acquisitions and are hopeful to complete additional transactions this year. We are leveraging our strong balance sheet, which doesn't require us to access debt markets to get deals done. We're focused on elevating the EBITDA growth profile of our portfolio and targeting markets where we currently lack exposure. Despite a quiet M&A landscape due to higher interest rates, we see opportunities, especially with owners who may need to sell assets due to various pressures. We believe our investment-grade balance sheet puts us in a unique competitive position. " "

Leisure Transient Softness
Q: Can you elaborate on the leisure transient demand softness?
A: We observed softness in short-term leisure transient demand starting in March, possibly influenced by poor weather in key states like Arizona, Florida, and California. Rates remain strong, but pickup is slower, especially into April due to the Easter shift. However, group bookings for the second half of the year are robust, with total revenue pace up 9% over last year, giving us confidence for the full year. "

EBITDA Guidance and Recurring EBITDA
Q: What is the right recurring EBITDA to build off for the longer term?
A: Adjusting our full-year EBITDA guidance of $1.670 billion, we subtract $38 million of business interruption proceeds, add $10 million for Alila Ventana, $13 million for the Nashville acquisition, and $46 million for Maui, arriving at a recurring EBITDA of approximately $1.7 billion. This reflects the ongoing run rate excluding non-recurring items. " "

Nashville Acquisition Details
Q: Walk us through the Nashville deal timeline and cost evolution.
A: Nashville is a market we've targeted for years. We initially considered participating during construction but decided to observe performance post-opening due to macroeconomic uncertainties and our fluid cost of capital. The property performed strongly in 2022 with $8.7 million EBITDA and improved in 2023 to $37.7 million EBITDA. Our underwriting for this year projects $275 RevPAR and $42.2 million EBITDA. We believe Nashville's positive market dynamics make it a strategic addition to our portfolio. "

Deal Market Dynamics
Q: What are the gating factors for a more active deal market?
A: The primary constraint is the high cost of debt, which prevents private equity firms from underwriting deals that meet their return hurdles while satisfying seller price expectations. Our advantage lies in not needing to access debt markets to complete acquisitions. We anticipate opportunities arising as some owners may need to sell due to factors like loan maturities and lack of asset investment, and we expect more activity in the second half of the year. "

Surge Spending and International Travel
Q: Is surge spending cooling, and how is international travel impacting you?
A: While ADR at assets like the Four Seasons Orlando might be lower this year compared to 2023, they remain significantly above 2019 levels. Affluent consumers continue to spend on experiences, but strong outbound international travel has impacted domestic demand. The Caribbean saw RevPAR up 17%, indicating a shift in travel patterns. The strong dollar and visa wait times are contributing factors, and we expect the inbound-outbound imbalance to take longer to correct than anticipated. " "

Maui Demand Evolution
Q: Provide more color on the evolving demand in Maui.
A: Demand in Maui continues to evolve post-wildfires. Travelers, especially first-time visitors, were initially deterred by official advisories. Cleanup efforts are ongoing, and displaced residents are moving into permanent housing. We are working with local associations to promote Maui's attractions. Air capacity remains down by 19% from first-quarter 2019 levels, but we are confident that as marketing efforts take effect and capacity increases, recovery will commence. "

Seasonality of Key Assets
Q: What is the seasonality of the Naples Ritz asset historically?
A: For the Ritz Naples, approximately 50% of EBITDA is generated in the first quarter, 25% in the second quarter, near zero in the third quarter, and the remaining 25% in the fourth quarter. This seasonality aligns with historical patterns and supports our confidence in the asset's performance throughout the year. "

Revenue from Cancellation Fees
Q: Was the increase in cancellation and attrition fees unusually high?
A: Cancellation and attrition revenues have been higher than expected, with a forecast of approximately $71 million for the year, up from the $57 million previously anticipated. This increase may stabilize at these elevated levels due to tighter contracts and better collection efforts by our managers, though it's difficult to predict exact future amounts. " "