Apple Hospitality REIT Inc

NYSE:APLE

Earnings Call Transcript 2017-Q4

[Operator]

Greetings and welcome to Apple Hospitality REIT Fourth Quarter and Year Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now pleasure to introduce your host Ms. Kelly Clarke, Vice President of Investor Relations. Thank you. You may now begin.

[Kelly Clarke, VP of IR]

Thank you and good morning. We welcome you to Apple Hospitality REIT's fourth quarter and full year 2017 earnings call on this the 23 days of February, 2018. Today's call will be based on the fourth quarter and full year 2017 earnings release, which was distributed yesterday afternoon.

As a reminder, today’s call will contain forward-looking statements, as defined by Federal Securities Laws including statements regarding future operating results. These statements involve known and unknown risks and other factors, which may cause actual results, performance, or achievements at Apple Hospitality to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.

Participants should carefully review our financial statements and the notes thereto, as well as the risk factors described in Apple Hospitality's 2017 Form 10-K and other filings with the SEC. Any forward-looking statements that Apple Hospitality makes speaks only as of today, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.

In addition, certain non-GAAP measures of performance such as EBITDA, adjusted EBITDA, FFO, and modified FFO, will be discussed during this call. We encourage participants to review reconciliations of those measures to GAAP measures as included in yesterday’s earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the Company, please visit applehospitalityreit.com.

This morning Justin Knight, our Chief Executive Officer, Krissy Gathright, our Chief Operating Officer and Bryan Peery, our Chief Financial Officer. We will provide an overview of our results for the fourth quarter and full year of 2017 and an outlook for the sector and for the company. Following the overview, we will open the call for Q&A.

At this time, it is my pleasure to turn the call over to our CEO, Justin Knight.

[Justin Knight, President and CEO]

Thank you, Kelly. Good morning and welcome to Apple Hospitality REIT fourth and full year quarter 2017 earnings call. Bolstered by new lease and restoration efforts related to storm occurred in the third quarter, revenue during the fourth quarter exceeded expectations for the hotel industry overall. Our portfolio benefited from particularly strong operations for the South Texas and in a number of our Florida market.

We achieved comparable hotel RevPAR growth of 3.5% during the quarter and 1.6% for the year, although increased occupancy and wage pressure driven largely by lower employment product higher variable cost for our portfolio, we achieved a strong comparable hotel, adjusted hotel EBITDA margins of 37.8% for the year.

Overall, despite strong market volatility in recent weeks, sentiment recurring the broader U.S. economy continues to be positive. For the full year 2018, we're forecasting comparable hotels RevPAR growth of 0% to 2%, comparable hotels, adjusted hotel EBITDA margin of 36.8% to 37.8% and adjusted EBITDA of $437 million to $457 million. Our 2018 comparable hotels RevPAR growth guidance assumes a steady economy and while we are yet to see meaningful change in trends directly impacting business at our hotels, we're optimistic the continued economic strength, infrastructure spending and consumer confidence will provide an environment where we could see incremental upside. With 241 Marriott and Hilton branded hotels diversified across 88 U.S. markets and the strength and flexibility of our balance sheet, we’re confident and we’re well positioned for any economic environment.

So, the balance is very by market supply and demand generally grew intend of nationally in 2017. In response with the continue development cost increases which is out based revenue growth in most market, we're beginning to see the phase of new construction start to moderate. Just under 62% of our hotel expects one or more upper mid-scale, upscale or upper upscale new construction projects within a five-mile radius to be completed within the next 18 months, a slight decline from the third quarter.

Additionally, according to switch our research rooms under construction declined from prior year for the first time since the recovery from the recession begin. Each market is different and there continues to be significant supply under development however, absent a significant decrease in construction or a significant reacceleration in the economic growth, we anticipate the industry will continue to see a deceleration in new construction start over the next several years.

We’re pleased to have access to the equity market in the fourth quarter through our ATM program issuing approximately 7 million shares for gross proceeds of approximately $140 million adding an average sales price of $19.55 per share.

More importantly we were able to efficiently deploy these proceeds into acquisitions that we believe locked in value for our shareholders. Since the beginning of the fourth quarter we acquired a total of five hotels for a combined purchase price of approximately $168 million expanding our geographic footprint and further exposing the portfolio to diverse demand generators. Each of these acquisitions is consistent with our strategy of earnings high quality, select service hotels in strong market.

We’ve have two additional hotels under contract with anticipated closings later in 2018 and [indiscernible] in Phoenix and a [home to suites] in Orlando. Similar to our other newly build hotel acquisitions, we entered into fix price contracts with trusted developers for these projects prior to construction which in a rising construction cost environment add additional value and acquisition. Although the acquisition market remains tight we continually underwrite hotels that would be a strong fit for our portfolio.

In 2017 the company completed the opportunistic disposition of two of our four service account the 224-room Hilton in Dallas and the 316-room Marriott in Fairfax, Virginia, further strengthening our concentration in the select service segment of the industry. We will continue to closely monitor the profitability of our hotels, market conditions and capital requirements and seek disposition opportunities where we feel pricing is appropriate and proceeds can be redeployed into assets which better fit our long-term strategy.

We are pleased to have recently added Blythe McGarvie to our Board of Directors. Blythe is an exceptional individual with broad financial public markets and board experience. Her appointment increases the size of our board from seven to eight members and we look forward to her perspective and input.

The strength of our balance sheet continues to be an important differentiator factor for the company with debt to adjusted EBITDA at under three times, our balance sheet is among the strongest in the industry. As the largest company -- publicly traded REIT focused on the select service segment or lodging industry the size, scale and geographic diversification of our portfolio provide purchase in economies, operational efficiencies and unparalleled to access to performance data combined with our strong flexible balance sheet and capital allocation philosophy we are well positioned to enhance long term value for our shareholders in a variety of economic scenarios.

It is now my pleasure to turn the call over to Krissy who will provide additional detail regarding performance across all markets and the industry overall.

[Kristian Gathright, EVP and COO]

Thank you, Justin. We were excited to end 2017 on high news. We estimate that incremental demand from the post hurricane recovery effort boosted RevPAR growth by approximately 150 basis points in the quarter and 50 basis points for the year. Factoring in our estimated 40 to 50 basis points of negative impact from the Porter Ranch comp, the net impact of these onetime events was essentially awash for the year.

While carry over post hurricane demands has helped mitigate the loss of Super Bowl business for the first quarter in our Huston area hotels. Our hotel themes are reporting that the disaster recovery business is diminishing. However, we are also expecting a modest improvement in energy related business over the course of the year. Strengthened the southern Florida markets has persisted into 2018 with elevated government spending and strong leisure business for group and transient.

Our occupancy grew 110 basis points in the fourth quarter with rate growth of 1.9%. Drilling down into segmentation our corporate negotiating mix improved slightly in the quarter versus the year-to-date trends. The other discount segment continues to have a highest growth which is consistent with a relative strength in leisure travel.

If there is any acceleration in business travel our hotel revenue teams are well positioned to quickly manage the mix, to reduce discounts and drop higher rated corporate and retail business. Our outlook assumes relatively stable demand trends derived from our very throughout detailed budget process and a slight uptick in supplies consistent within two projections.

We expect the fourth quarter comp to be our most challenging due to the temporary hurricane related lift we experienced in 2017. While market performance continues to be varied across our broadly diversified portfolio, the trend has been consistent in terms of the number of hotels growing in RevPAR, approximately 62% of our hotels grew RevPAR in the quarter as compared to 61% in the prior quarter and 59% for the year.

We have provided additional detail on our individual market performance in our earnings release. Pivoting to profit ability we achieved a solid EBITDA margin of 34.9% for the quarter and 37.8% for the year just above the high end of our range. With continue presence on maximizing productivity and minimizing turn over and tight labor market, we were pleased to see for the second quarter in a row rate increases for occupied room grew less than 3%. Wages increased 2.4% for occupied room for the quarter and 3.8% for occupied room for the year, accounting for 20 and 50 basis points of margin impact respectively.

Increases in incentive and other benefits resulted in 30 basis points of margin impact for the quarter and a 10 basis points for the year. The majority of the increase look from properties reaching annual inventive target. Total payroll cost increased 3.7% for occupied room in the quarter and 3.6% for the year. The set full appeal effort help mitigate real estate tax increases which were 5% for the quarter and 4% for they. We expect those labor cost and real estate taxes to continue to pressure margins and this all raise we’re diligently focused on opportunities to mitigate cost increases.

I will now turn the call over to Bryan to provide additional details on our financial results.

[Bryan Peery, EVP and CFO]

Thanks, Krissy and good morning. I will quickly summarize a few numbers for the fourth quarter and full year of 2017. Total revenue increased to 290 million for the fourth and 1.2 billion for the full year. Adjusted EBITDA was 93 million and 439 million respectively, and modified FFO per share declined slightly to $0.36 for the fourth quarter and a $1.74 for the full year.

G&A expenses increase in the fourth quarter and full year by 3.6 million from fourth quarter and $9.3 million for the full year from the same periods of 2017. 3.5 million as a full year increase was due to easy cost reimbursement from Apple 10 prior to the merger in September 2016. The majority of the remaining increase for the year end and the quarter was due to performance under the company's incentive plan. With approximately 80% of senior managements compensations based on operational shareholders return metrics payoffs and vary from year-over-year. Based on the company's performance in 2016 the payout on this plan was approximately 30% in target and in 2017 it was 85%, consistent with our overall focus on cost effective operations, our G&A expenses remain one of the lowest in the industry at 2% of revenue and less than 50 basis points of market cap.

At the end of the year the company had 1.2 billion of outstanding debt with the combined weighted average interest rate of 3.6% for 2018. Excluding debt issuance cost and fair value adjustments on acquired debt and debt is comprised to $467 million in property level debt, $757 million of unsecured debt.

Overall approximately 80% of our debt is fixed rate. Our undrawn capacity on our secured credit facility is after completing the transactions earlier this month was approximately $340 million. During 2017, we invested $69 million in renovation to property improvement. Consistent reinvestment in our hotels continues to be a key component of our strategy to maintain competitive positioning across our markets, yield strong guest satisfaction and loyalty provide more predictable future capital needs and the mitigate the impact of competing new supply within our individual markets.

We have similar projects planned for 2018 and anticipate spending 70 to 80 million which includes various scheduled renovation projects for 30 to 35 properties.

During the fourth quarter we recorded 38 million noncash impairment charges related to our New York Renaissance Hotel. The hotel has been and is anticipated to be impacted by a number of factors including a decline in hotel market conditions in the city, continued anticipated new supply and the loss of retail tenants of the property within extended period of time and cost required to release the available space. The factors are magnified by the fact the property is on a relatively short-term land lease.

Although we are disappointed in the performance of this hotel and continue to work aggressively on opportunities to improve its positioning and profitability, it is important to reemphasize that it has been inconsistent with our overarching strategy and one of only three remained four service hotels within their portfolio.

As we have mentioned previously it is our intention to opportunistically dispose of these three hotels to be 100% focused on the select service sector of the industry. During 2017 the company paid distributions of $0.10 per month or $1.20 per share for the full year. This distribution rate represents an annual 6.6% yield based on our February 20 closing price of $18.16.

Finally, as we head into proxy season our Board of Directors has once again approved the proposals present to shareholders that provide for amending our charter to de-stagger our board such as the current board members terms expire, duly elected board members terms within one year. Although we have been unable to achieve required votes capacity to approve this amendment we believe it is an important governance provision and we will continue to provide shareholders the opportunity to consider the proposal.

Within our overall strategy of providing strong risk adjusted returns through the investment in high quality, well diversified select service hotels we were successful in 2017 in refining our portfolio both in makeup and operational performance. We also believe we were able to grow the portfolio accretively and we are well positioned to continue to produce strong results in the coming year.

Thank you for joining us this morning. We will now open up the call for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

[Austin Wurschmidt, KeyBanc Capital Markets]

Just wanted to kick off here with the RevPAR guidance forecast, you talked in the past about taking ques from Marriott and Hilton and then doing a more detailed property by property budgeting process and so aside from I guess the tougher fourth quarter comp that you referenced what's led you guys to be a little bit more conservative in your forecast for 2018?

[Kelly Clarke, VP of IR]

Well with our geographically diversified portfolio and our brands you are correct in the past and consistently we [indiscernible] average is a good benchmark for our portfolio. And if you look at it with travel I believe their projected average is 1.8%, CBRE is 0.7%, they actually have factored going to small decline in the fourth quarter related to the excess demand from the hurricane.

With Marriott they are 1% to 2% from North America and Hilton is 1% to 3% globally but they did, they say that they expect North America to lower and as we mention we do have a tough comp from the fourth quarter from the incremental hurricane demand. And budget process in those market, we have very limited visibility, obviously that far out. So, several of these markets or managers are budgeting for declining year-over-year when we get to that point, our thought of course is that we do see in this market other dynamics here a pickup in business travel or continue to strengthen in Miami for instance to offset some of that impact.

And then for recent trends we really haven't seen any recent trends as of that with make us modify or outlook, we don’t feel the late fourth quarter or the early first quarter performance is the good indicator of each of business travel trends and the lot of noise around holiday, the shifting calendar and weather. So that’s where we got where we're.

[Justin Knight, President and CEO]

And Austin, I mentioned in my comments, our guidance based on what we're seeing today in the market, I've mentioned several times as we have been on the road and then prior calls, we deal slightly more optimistic than we did same time last year, and but until we begin to see that optimism materialize in the form of numbers and specifically business trends and business at our hotel, we thought it unwise to set expectations too high.

[Austin Wurschmidt, KeyBanc Capital Markets]

Appreciate the thoughtful response and then next question, you guys announced the two new acquisitions in early 2018 Hampton Inns, I think you presently referenced last quarter remaining focused on strong brands like Hampton Inn and those do fall within that upper mid-scale segment. And I'm just curious what your exposure is to leisure today, given that you have seen the strength there and how does that compare to where you'd like to be in the near to medium term.

[Justin Knight, President and CEO]

I think what you will find is that we continue to pursue assets with diverse demand generators, the types of assets that we acquire have strong appeal with business travelers but if you look at the locations where we recently acquired assets there are mix demand generators to include a higher percentage of leisure than we had in the past. So, Portland, Maine and the two down town properties, the Beale Street and Hampton Inn and the downtown Atlanta Hampton Inn have very steady business during the week from business travelers but are uniquely positioned to benefit from lease on the weekends and even sometimes midweek in ways that some of our other assets have not. Given the strength in that sector, I think we have seen an opportunity within our portfolio to increase on the margin our exposure to it but you shouldn't assume that you would see a radical shift in our overarching strategy. we're talking an increase in special 3% to 5% as being kind of a target to that particular segment of the economy, recognizing again that our main stay will be business travelers.

[Austin Wurschmidt, KeyBanc Capital Markets]

Thanks to that and then just last one for me, you referenced having three remaining full-service assets and have talked in the past about ultimately looking to sell those, just curious what lead the decision to tap the ATM program in the fourth quarter, instead of continuing down the path of selling assets.

[Justin Knight, President and CEO]

You shouldn’t think that those are mutually exclusive for us. So, we continue to look for opportunities to dispose of our full-service hotels. And we have highlighted in past calls the unique situation that we see ourselves in. And again, for the record we do not consider the upper upscale assets, our embassy suites to be full service hotels because the unique operations within those hotels, so we are speaking specifically to the two remaining Marriott full service hotels and the one Renaissance that we have. But there are unique factors in those markets that may cause us to hold them for a little bit longer. Houston New York both markets have been significantly depressed and Richmond interest may a market that seen significantly strong performance recently, but isn’t necessarily on the radar for a lot of buyers looking for assets.

We will look for opportunities there but specifically on the ATM we have seen a unique opportunity to be able to issue equity when we see the opportunity to acquire assets at a spread to the implied multiple of that equity. And I think what you should in infer from our issuance of equity is that we saw unique opportunity in the market where we could lock in a spread on acquisitions to the price we are able to issue equity and a way that we felt would be accretive to our shareholders. I think we will continue to do that where we see that type of opportunity and continue as well to look at unique and interesting opportunities to dispose of and recycle capital, dispose of some recycle capital that kind of portfolio as well.

[Operator]

Our next question comes from Bryan Maher with FBR. Please proceed with your question.

[Bryan Maher, FBR]

A couple of questions here. On the labor cost, can you talk about maybe where its more profound in the country than others, is it city centers, is it south, where are you seeing it most impactful?

[Kelly Clarke, VP of IR]

It's pretty much spread all throughout the country but it's not in any one particular market we are seeing across the board low employment driving labor count and this portion of our markets and as such we talked about in the past works very proactively with our management companies. We have got the majority of our teams on a labor tracking system which will help to us identify over time us earlier and this year it seems me to work on benchmarking standard benchmarking and improve performance and utilization of that system and then one or the other opportunities is just we're continuing to work with and support the American Hotel and Lodging Association also in working for suitable immigration reform because it's using these wage pressure but also you just got the ability to fund labor in certain markets and it has become more difficult.

[Bryan Maher, FBR]

And then on the transaction side, it seems like the fourth quarter you had a few that closed. How should we think about 2018 and your run rate as it relates to what you are out there underwriting and when do you think you can close? I know you have the 200 contracts but should we be thinking about it its one or two per quarter, or two or three per quarter? And then as far as the acquisition cost, is just teen [ph] the 30 million kind of the zip code that we should be thinking for the costs of those assets?

[Justin Knight, President and CEO]

Our acquisitions are opportunistic and so our appetite for new acquisitions will depend on opportunities that we see and our cost of capital at that moment, we as I mentioned over the past year saw opportunities to issue equity in a way based on opportunities that we felt we could lock in value for our shareholders and we may do that in the coming years.

I think given the fact that hotel stocks have traded down slightly and the market for private assets has not moved in tandem, there would need to be a shift to one or the other in order for us to more aggressively pursue that but as that you will see us kind of recycling capital selling into a market where we feel, we can achieve strong values and either replacing assets or buying our stock with the proceeds from those sales, again depending on which of the two is the better opportunity at the movement.

And I know that’s not a specific as what you would like but hopefully it’s a helpful response that helps you understand that we're not going to set a specific target for acquisitions absent those individual deals being accretive for our shareholders.

In terms of value for assets, select service assets tend to trade in the $15 million to $30 million range, we have acquired assets as prices double down and are certainly not out of the question, but I think $25 million to $30 million on average is probably a good range for you to thinking about in terms of individual asset acquisition.

[Bryan Maher, FBR]

Okay and then just lastly on the Renaissance 57 which is just kind of up the street from this year, how long is left on that land lease on that property and how do you think about disposing that and if memory serves me I think this is, as far as I can recall may be the second write down on that asset, which isn’t a bad asset it's in a good location but I understand it's kind of challenging to you, what are your thoughts there and how long is the land lease.

[Justin Knight, President and CEO]

So, the land lease, remain term on the land lease is just under 30 years, which given that plus new supply and the underperformance of the New York markets is the challenge for us as we look at opportunities to dispose of it. I think in terms of priorities given the fact that the asset produces negative cash flow for us, I think it’s the higher priority for us, both from a dispositions standpoint and quite frankly gets a lot of attention from us as you might hope and in terms of looking to improve by current numbers as well. With the number that we're beginning to stabilize in the New York market and potentially over the next little bit beginning to improve, we're in a much better position to explore opportunities but you shouldn’t think that we haven't had conversations or been looking for opportunities to dispose with that asset.

[Bryan Maher, FBR]

Is extending the land lease just off the table with the owner?

[Justin Knight, President and CEO]

It exits as a possibility but there are costs associated with that.

[Operator]

Thank you. Our next question comes from Anthony Powell from Barclays. Please proceed with your question.

[Anthony Powell, Barclays]

The question on supply growth you mentioned that your hotels are seeing a bit less competitive supply, over the prior quarter, do you see that continue going forward or do you expect maybe a spike in '19, given some delays we’re seeing in some of the construction activity.

[Justin Knight, President and CEO]

My expectation is barring as I highlighted in my earlier comments, barring reacceleration but significant reacceleration in the economy which would drive stronger RevPAR growth in interest of market or nationally or some kind of reductions in construction costs. I see current trends continuing and in fact our expectation with EBIT, we continue to see declines in terms of new construction sites with pipelines stretching out further and further into the future. It's not our expectation that there will be a spike in terms of new supply in our markets over the next couple of years.

[Anthony Powell, Barclays]

And in terms of acquisitions you have obviously done a lot of ones and twos, are there any portfolios out there interesting to you?

[Justin Knight, President and CEO]

There are portfolios, smaller portfolios that are interesting to us over the past several years we have underwritten portfolios of a variety of sizes and haven’t found the right match for us. There are pros and cons obviously in a portfolio transaction we are able to acquire in scale for a very short period of time. The con is that we are not able to individually slight market and our assets and given the size of our portfolio there are advantages to us and being able to handpick assets which are individually added into the portfolio as a whole. And I think if you look at the way we built out our portfolio or adjusted our portfolio through dispositions and acquisitions over the past year you will see that we have shift in on the margin our exposure with the portfolio toward certain markets and certain asset types the way that we think we will have long term value for our shareholders. That’s not that we won't continue to look at portfolio transactions but as a more likely scenario on a go forward basis given what we put that, is that we will continue to acquire assets on an individual basis with the thought that we are continuing to enhance and maintain our portfolio.

[Anthony Powell, Barclays]

And maybe one more from me, in terms of the SG&A obviously there is a variable comp it seems like in the quarter; do you expect the absolute level SG&A will remain at that level in a few years or is it going to go up and down?

[Kristian Gathright, EVP and COO]

It's going to vary a little bit year-to-year but this year probably I mentioned we hit a 5% ish of our target comp so that should be the midpoint is where we were this year around 26 million - 27 million and sort of I would say the baseline if you will.

[Anthony Powell, Barclays]

And actually, I do have one more to in terms of buybacks. If volatility continues in the market how do you judge buybacks versus buying assets?

[Justin Knight, President and CEO]

The deal is that we have the ability to assess process simultaneously and to pursue whichever of the two is the better opportunity at the moment. We continually assess the value of our own portfolio and compare to that opportunities that we see in the market and you will see us buy shares for our stock when that’s the better option for us as we have in the past.

[Operator]

[Operator Instructions] Our next question comes from the line of Michael Bellisario with Robert W. Baird. Please proceed with your question.

[Michael Bellisario, Robert W. Baird]

Just one more on the ATM versus buyback thought process. Are there any restrictions from a legal or New York Stock Exchange perspective that kind of limit how soon after ATM issuances you can buy back stock just trying to kind figure how nimble you can actually be?

[Kristian Gathright, EVP and COO]

It's my understanding and I'm no lawyer but it's sort of a that everything that we can do with relatively quickly but we can't do it on the same day.

[Michael Bellisario, Robert W. Baird]

Got it so with the recent volatility issuing in December doesn’t preclude you from buyback.

[Justin Knight, President and CEO]

Absolutely not.

[Michael Bellisario, Robert W. Baird]

Justin you mentioned the acquisition spread, what are the primary metrics that you’re looking at when you’re underwriting deals and kind of what determines, whether something is accretive to you, how do you think about that.

[Justin Knight, President and CEO]

So, we're always looking at underlying cash flow, but interestingly as we look at spreads, we're particularly focused on the relative growth rate to our existing portfolio. And so, we highlighted in the past where assets that we're looking to acquire have similar growth profiles, to our existing portfolio we look for a larger spread than in assets that we see having significantly larger growth profile even because of [indiscernible] because of particular market dynamics. But as we look for accretion, to our portfolio we're looking at bottom line cash.

[Michael Bellisario, Robert W. Baird]

That’s helpful and then last one for me just on the labor management programs that you implemented recently, any quantitative metrics you can provide so far that, you've seen may be benefit or less that the properties kind of had the programs and what they thinking about the benefit to expect in 2018.

[Kelly Clarke, VP of IR]

If you go back to the earlier comments on the quarter and the past two quarter, because we're able to keep wages for occupied room below 3%, so part of that is from being able to implement this program, but with that being said we do feel there is additional opportunity this year and we've actually taken one of our asset managers and 75% for job is actually pulling reports and getting the data from the labor management system and following that with the management company. We do feel there is additional opportunity to mitigate cost increases in a tough labor environment but what we're actually, what we've included in our outlook is a similar growth rate in table compared to this year. So, any additional savings would be more favorable for our outlook.

[Operator]

Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Knight for any closing remarks.

[Justin Knight, President and CEO]

Thank you. And I would like to thank you for joining us this morning and hope as always if you have the opportunity to travel, we will take the opportunity to stay with us at one of our hotel. Have a great day. We look forward to talking to you again soon.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.