Earning Date, Transcript Summary & Report

Strong Performance Exceeds Expectations: Fourth quarter and full year 2024 results significantly outperformed outlook, driven by strong performance from resort portfolio and recently redeveloped properties.

RevPAR Growth Overview: Same-property total RevPAR increased 2.1% for the full year, with strong gains across urban and resort properties and increased out of room spending.

Adjusted EBITDA Increase: Adjusted EBITDA rose 0.8% to $359.2 million, exceeding the midpoint of outlook by $11.2 million.

FFO Growth Surpasses Outlook: Adjusted FFO per diluted share grew 5% to $1.68, surpassing outlook midpoint by $0.09.

RevPAR Growth Analysis: Fourth quarter same-property total RevPAR increased 1.8%, with 4% growth at resorts and 0.7% at urban hotels, despite disruptions from storms and renovations.

RevPAR Growth Analysis: Excluding disruptions, fourth quarter same-property total RevPAR growth would have been closer to 3.7%.

Strong Hotel Performance: Adjusted EBITDA for the quarter reached $62.7 million, exceeding expectations due to stronger hotel performance, particularly at California resorts and redeveloped properties.

Demand-Driven Growth: Portfolio-wide increases in business group, corporate transient, and leisure demand fueled growth in Q4.

Resort Occupancy Increase: Same-property resort occupancy jumped 3.7% to 65%, with weekday occupancy surging 4.4 points and weekend occupancy increasing 2 points.

California Resort Performance: California resorts led occupancy gains with a 6.6 percentage point increase and RevPAR climbing 8.8%.

Resort Demand Surge: Business group demand at resorts increased almost 15%, contributing significantly to revenue growth, particularly in food and beverage.

Resort Revenue Growth Comparison: Same-property resort revenue grew 4.3% in Q4, outpacing urban properties' 0.7% growth.

Revenue Performance Overview: For the full year, resort total revenues rose 1.2%, while urban properties posted a 3.1% gain, with strong performance outside challenged markets.

Non-Room Revenue Growth: Same-property non-room revenues remained healthy, increasing 3.4% in Q4 and 3.3% for the full year, with food and beverage revenues growing 4.1% in Q4.

Strong Redeveloped Property Performance: Redeveloped properties completed in 2023 delivered strong results, with Q4 occupancy rising 4.7 percentage points and RevPAR increasing 3.8%.

Room Night Growth Analysis: Group room nights rose 2.8% in Q4, while transient room nights grew 5.6%, with group representing about 26% of total room revenue.

Operational Efficiency Impact: Intense focus on operational efficiencies resulted in same-property hotel expense increase before fixed costs of just 3.1% in Q4, lowering cost per occupied room by 1.7%.

EBITDA Growth and Cost Control: Same-property hotel EBITDA exceeded 2023 by $3 million, reflecting successful cost control measures.

Balance Sheet Improvement: Significant strides in strengthening balance sheet and reducing leverage, with $1.6 billion in debt financing and extensions executed in 2024.

Low Interest Cost Management: Weighted average interest cost on debt was 4.2%, one of the lowest in the industry, reflecting disciplined management.

Debt Reduction Improvement: Net debt-to-EBITDA reduced to 5.8x, down from about 6.5x in 2023, indicating improved financial health.

RevPAR Growth Impacted by Storms: Same-property total RevPAR growth was negatively impacted by 190 basis points due to two named storms in Florida and the brand conversion and renovation at the Hyatt Centric in Santa Monica.

Urban RevPAR Challenges: Urban performance remained constrained by ongoing headwinds in San Francisco, Los Angeles, and Portland, with urban RevPAR growth significantly lower than the overall portfolio.

Revenue Impact from Wildfires: The company anticipates a $9 million to $12 million impact to rooms revenue in 2025 due to the LA wildfires, with a projected total revenue hit of $12 million to $16 million.

RevPAR Impact from Wildfires: The first quarter of 2025 is expected to see a 380 basis point impact on RevPAR and a 320 basis point impact on total RevPAR due to the LA wildfires.

Booking Volume Recovery: Despite some recovery in booking volumes, the LA properties have not yet returned to normal levels, with February showing weaker performance compared to January.

Real Estate Tax Credit Impact: The absence of additional real estate tax credits in 2025 creates a roughly 100 basis point headwind to the expense growth rate, impacting overall financial outlook.

Economic Caution and Travel Demand: The company expressed caution regarding potential negative economic impacts from domestic policy announcements and threats from the current administration, which could affect business confidence and travel demand.