Dany Asad: Hi, good morning, everybody and congrats Jeff, Briony, and Justin. Jeff, in your prepared remarks, you mentioned that you’re at 85% of budgeted rooms on the books at the end of Q1. How much would you normally have on the books for the year at this time?
Jeff Donnelly : It’s a good question. I think last year, we were around 80% at this point, maybe high 70s. Yes, I think it was we’re up certainly year-over-year.
Dany Asad: Understood. Okay. And then, look, I know there’s not probably a very clean answer for this, but historically, what has your, just thinking about the group pace color that you gave on the in your prepared remarks. What has this group pace historically resulted in terms of actualized group RevPAR?
Jeff Donnelly : Yeah, it’s a good question, Dany. I mean, as you progress through the year, it begins to, of course, as you sort of realize group that number naturally sort of averages down. I think if you kind of think about where we could end up if this is roughly a third of our business, this is just a guess at this point. I would say you’re probably in the high-single-digits total revenue growth for group.
Operator: Our next question is going to come from the line of Michael Bellisario with Baird. Your line is open. Please go ahead.
Michael Bellisario: Just one more on loyalty redemptions. Can you just size that up for us? Like, how important is that? What percentage of room nights at your resorts are actual, redeemed nights? And then what is it for the rest of the portfolio, ex-resorts?
Jeff Donnelly : It’s funny. It’s going to vary by property. So I’m not sure we’re going to be able to give you a number that’s company-wide. We could probably follow up with you on something like that. I think there’s specific examples of properties where that maybe Justin can share that will give you a flavor for it. I think that’s really where it manifested itself for us in the first quarter.
Justin Leonard: As Jeff said, it’s kind of all over the map. I could come back to you on a portfolio-wide number because obviously, we have a number of assets that are not branded. So it’s 0% of our segmentation. But I would say in the resorts in season for an asset like Vail, in the height of season it can be as high as 40% as we go season-wide, it’s probably in the high teens. But for an asset like Charleston, which might surprise people, it was our number one redemption hotel. So in ’22, redemptions in Charleston were over 30% of our total segmentation. And that so when you get a significant fall off in that number, it’s 30% of your business. It’s tough to maintain share against the comp set that’s not completely branded. So I’d say, it is very variable depending on asset, but for the resorts, it’s a meaningful piece of the segmentation.
Michael Bellisario: I was just trying to understand the absolute change there with the negative 20% plus year-over-year figure that you provided. So that’s helpful. And then just switching gears, just one more on transactions. It does sound like Urban is on the list. I know that it wasn’t off the list before, but it did seem like there wasn’t as much interest or focus on acquiring urban assets previously. So what does the urban acquisition target look like to you guys? And then how do you think about returns, underwriting any differently, especially in some of the slower-to-recover markets or maybe looking at deep return renovation projects as well today? Thanks.
Jeff Donnelly : Concerning in the past, I will just say is that it’s difficult to buy what’s really not available to be bought. I would say that there really wasn’t a lot of urban product in the market in the last few years that was appealing to us. There were some high quality product, but candidly, I would say the pricing was a little rich either per key or on cap rates or as you mentioned, there’s somewhere it really required a strong view on recovery that could be three to five years away. I think as Justin and I think about it now, I think we’re getting to that point where we’re a little later into this cycle that you’re starting to see more stress on some of these owners or assets that will probably start to shake more loose in the next six to 12 months.
But I think we look at it very similarly in the way that we think about resorts is it’s all sort of a risk adjusted return. The resorts, the benefits they have right now is, generally speaking, they produce a lot of cash flow today and currently. And I think we can get a little more comfortable with where they’ll settle out. But urban, I think, generally speaking, requires a little bit more view on where the future comes. I don’t know, Justin, is there anything you want to add?
Justin Leonard: I think it’s also maybe a little bit more focused on basis, right? When I think about what our advantage is especially as we look towards the urban market today against other capital sources that utilize a lot more leverage than we do, it’s really a cost of capital advantage. So I think maybe looking at an asset that’s at a significant discount to what it would cost to replace it. I don’t mean a 60-year old sort of functionally obsolete asset where replacement cost may not be as relevant, but something that was newer built but maybe doesn’t maybe in a market that’s had some issues, I think that’s something that we might find more interesting I mean what I’ve before because we do have, we have an advantage against some of the people who bedding against for us to underwrite levering it up and carrying from a negative carry perspective two to three years until recovery.
So, if that gives us an opportunity to go into a market with an asset that we really like at a discount to replacement cost, we just think that’s the proper investment decision is going to give us opportunity for growth before the development pipeline gets started up again.
Operator: And our next question is going to come from the line of Floris van Dijkum with Compass Point LLC. Your line is open. Please go ahead.
Floris van Dijkum: Congrats, Jeff, Justin and Briony for your new roles. I’m obviously not the first one to do this, but, kudos. Just curious, maybe, Jeff, if you can talk a little bit about what you’re able to share on your discussions with the new Board, which you’ve just joined as well, which is I’m glad to see that you’re part of that as opposed to some other companies. Maybe talk about the, some of the issues like the ensuring change of control statutes or and the discussions around share buybacks. Is there any meaningful change that you’ve seen there? And how focused are you on those kinds of issues?
Jeff Donnelly : On the share repurchases, to me, that’s a very valuable tool. I would say my experience has been our shareholder base is somewhat split on it. But I do think it’s a useful tool for returning capital to shareholders in a tax-efficient way and frankly, a good way to invest capital that can be superior risk-adjusted returns relative to going out to the market sometimes and buying a new asset. That is something that we actively discuss with our Board. As a general comment, I would say, I think they like us to lean in on areas that we have conviction in, whether its acquisitions, dispositions, share repurchases, it’s not necessarily one direction. I think they are looking for us to be, I’ll call it, bold in our decision-making. But I wouldn’t to be clear, I would not derive from that that there’s any big pending announcement or anything along those lines. I apologize. Was there another part to your question?
Floris van Dijkum: The change of control, did you talk about that? Did you ensure to make sure that everybody in the team gets to participate in the same way that senior management does?
Jeff Donnelly : Yeah. That’s a great question. That’s really was a focus of mine and assuming this role is to making sure that executive leadership of the company is all aligned and shares the same view and same incentives on change of control.
Operator: And our next question will come from the line of Chris Darling with Green Street.
Chris Darling: Going back to the leadership transition, do you feel appropriately staffed in all areas of the organization below the C suite level, just given the additional responsibilities that each of you on the call has taken on?
Jeff Donnelly : We do. I don’t think there will be any major staffing changes in the organization. There were some open positions that we had one or two prior to this announcement and those would continue to be pursued. But there are no major staffing changes that are anticipated.
Chris Darling: And then just one either for maybe Justin or Jeff. Can you talk about the appetite among private buyers to transact at scale today? I know for really the better part of the last year, year and a half, we’ve talked about that $100 million or less price point really being the sweet spot. But I wonder if that dynamic either is beginning to change or maybe it was changing before the recent move higher in interest rates. So any comments you have around that would be interesting to hear.
Jeff Donnelly : Yes. Justin can chime in as well. I would say that from talking to folks in the brokerage community recently, I really think that for a lot of private buyers, they tend to be much more reliant upon debt capital for their transactions. And just given the interest rate environment right now, it just does not feel that not only is there not a lot of products coming to market, though that’s changing, it doesn’t feel like a lot of those buyers are equipped to be the best buyer. So I don’t think that’s changing. I don’t know, Justin, if you think that.
Justin Leonard: No, I think that’s right. I mean, I think the only encouraging sign we’ve seen is it does feel like there’s been a bit of a thawing of the SaaS-Fee market, sort of the large-scale single asset securitization market. So unfortunately at the same time, we’ve seen an uptick in the underlying base rate. So despite the fact that market seems to be coming alive and the spreads are tightening a little bit, the overall cost of that debt is still probably more expensive than it was three months ago, just given how much SOFR has come up. So I think we’re happy to see a little bit more liquidity come in the market, but given where we would like to transact some of our assets, we feel like people need to see the Fed’s trajectory start to move lower and see that movement and so far before that leverage becomes accretive and will really drive pricing.
Operator: And our next question is going to come from the line of Stephen Grambling with Morgan Stanley. Please go ahead.
Stephen Grambling : I heard the comments about the mix shift impact on margins from S&P, but I wonder if there’s any other major cost considerations over the back half of the year as we think about wages and other factors, insurance, property tax, and et cetera that you have line of sight on. And then any other broader comments just around inflation and expenses across different property tax? Thanks.
