Mark Brugger: Yes. I mean we’ve been working hard on preparing for the August first state for a long time. We’ve had weekly revenue calls. We’ve had strategies. We’ve had web designs. Probably the most significant defensive thing we did is we took 80 rooms, and we put Delta in there at a decent rate. to kind of cushion the transition period this fall. So there will be some disruption as we kind of — we gave you, and those are in Jeff’s numbers that he provided during the prepared remarks. And I think it’s — listen, the hotel looks beautiful, and we’re excited to see what it can do on its own. Justin, do you want to add anything?
Justin Leonard: Yes. As Mark mentioned, we did a lot of prep work just to ensure that we really didn’t have any significant revenue loss during the dark period. In fact, we intentionally sold the hotel out for the first week of August to sort of insure against that. But we were live, both on GDS and most e-channels within 24 hours so we do have all active reservations up and actively looking. We’ve also done a significant amount of base building, both through the Delta contract and on the group side. So we’re forecasting a drop in revenue as we continue to build brand awareness for the Dagny but we have over $1 million of incremental group rooms on the books for the back half of the year versus last year in addition to the Delta contract.
So August and September are both 70% sold, and in we’re in a significantly better place than we were at the same time last year for the balance of the back half of the year. So we’ve got a great base to really preserve rate integrity as we grow brand identity.
Smedes Rose: Great. Thanks for the detail.
Operator: Thank you. One moment, please. Our next question comes from the line of Chris Darling of Green Street. Your line is open.
Chris Darling: Thank you. Mark, in the prepared remarks, you mentioned exploring a few dispositions perhaps in the near term. Wondering if you could elaborate on what markets, maybe what assets? And then how are you thinking about seller financing in terms of effectuating the transaction today?
Mark Brugger: Yes. So great question. So we are committed to our resort and leisure-oriented properties. We think that, that is the best long-term place to be so those will not be on the disposition list. We’ll continue to pare down some of the urban exposure. I think we want to identify publicly which assets are, but they’ll be smaller assets in this market that are financeable. The large loans are the ones that are very difficult. So it will be a couple of smaller assets that are not core to the portfolio. As far as your question about seller financing, one of the reasons we’re selecting smaller assets as they are financeable and don’t need seller financing. We prefer not to do any and so we’d rather preserve that capacity. If it involved a small piece to kind of fill the capital gap, that might be something we’d entertain but we’re not going out to the market offer and seller financing.
Chris Darling: Got it. That’s helpful. And then one for Jeff maybe. You gave a lot of good detail in terms of the different moving pieces on the expense side this year. But, just curious, maybe taking a longer-term view, ’24 and beyond, what do you view as sort of a reasonable run rate for overall expense growth, kind of assuming maybe a more normalized demand backdrop? Is 3% to 5% annually, a decent betting line for us to think about?
Jeffrey Donnelly: It’s probably a decent range. But when you think about it, I mean, of course, it’s going to relate to ultimately what sort of inflation is at the macro. I think for us, when you look at how our properties have recovered and we’ve largely recovered our revenues and earnings, a lot of the factors that municipalities use to drive things like taxes. I don’t expect our taxes are going to see sort of outsized increases over a long period of time. And property insurance is more difficult to forecast. I’d like to believe that this past year was a year, maybe a little bit like a post-Katrina-type event where you saw a big spike and then you had decreases in costs or slowing significantly thereafter. But it’s hard to forecast because those rates are renegotiated every year.
There might be some catch up in the industry. I can’t necessarily speak to us off the top of my head, but on labor cost, but I think same thing that tends to follow inflation over time. So I think your range is reasonable. If I was a betting man, I’d probably be towards the lower to middle end of that, but that’s just a guess.
