Anthony Powell: Hi. Good morning. We haven’t talked a lot about corporate transient on call yet. So maybe you could tell us where it ended up as a mix of your revenues in 2023, where that was versus ’19, and where you’re seeing that business going forward?
Mark Brugger: Yeah. The corporate transient, it’s a tricky one. It’s obviously the one that’s been the hardest, we’ll call it, post-pandemic new normal. It’s probably down about 20% from where we were at a pre-pandemic level. On the positive side, special corporate rate negotiations have been up year over year. And the small corporates, so-called non-special corporates, corporate travelers, that’s actually trading at above 100% of what it did in 2019. But the big special corporate, a lot of the big consulting companies and the ones that generate hundreds of thousands of room nights a year, a lot of those are down 30%, 40%, 50% from where they were in a pre-pandemic world. And we’re seeing that heal gradually and slowly. And what’s built into our guidance is that it continues to get a little better every quarter, but not a big upshift in the level that we’re at today.
Anthony Powell: What markets does that decline in the consulting and whatnot? Where did that hit you the most?
Mark Brugger: It’s broad-based. I mean, in New York City, we benefited from supply contraction and some other things that have offset it. But especially corporate, it permeates the entire United States. Obviously, the top 25 markets are probably more attuned to the big special corporates. But whether you’re in Boston, Chicago, Miami, it’s going to impact all the major markets in the United States. I think the good news is that the small business traveler is really — the overall economy is $3 trillion bigger than it was in 2019. And business travel, generally, on historic terms, has correlated with the growth of the overall economy. So we saw that correlation happen with the small business traveler, which is great. But there’s been fundamental changes in the way that big special corporates travel, the number of days of travel, whether travel on Mondays and Fridays.
So some of that’s going to be a lasting impact. And as the business travel evolves — and it always evolves — and the general economy gets bigger and bigger, yeah, we’ll probably get back to ’19 levels, but not on an inflation-adjusted basis.
Anthony Powell: Got it. And maybe one more for me on some of the deals you’ve done. I know, at Lake Austin and the Kimpton Fort Lauderdale, there are some, I guess, issues at acquisition with managers or whatnot. Can you talk about how those have progressed and maybe talk about how Chico Hot Spring has done relative to your expectations?
Mark Brugger: Yeah. So Chico’s our most recent acquisition. We closed that in August of last year. It came — we also bought the adjacent ranch. So if you just take the Chico Hot Springs, we bought on . I think this year, our budget for just the Hot Springs Resort, it’s about an eight cap. So we feel great about the acquisition. We’re excited to figure out what we can do with the extra 600 acres of land that we have. So that continues to be a very interesting asset for us. On some of the other ones, Fort Lauderdale, the Kimpton we have there, we redid the roof and added, we’ll call it, roofed hotspot. So that took a lot of last year and that transition. So it continues to ramp up this year. We think we’ll see significant growth.
It is a little under our rating. And then Lake Austin, we think, is the — it’s the only hotel that will ever be on Lake Austin. So we think it’s a truly a once-in-a-career opportunity to own something in that location. But there was some transition as new systems got implemented, which we talked about on prior calls, but we remain optimistic about the performance of that asset over the next couple of years. But there’s been — it will be a longer ramp than we originally underwrote.
Anthony Powell: Okay. Thank you.
Operator: Thank you. Your next question comes from the line of Bill Crow from Raymond James.
Bill Crow: Hey, good morning. Thanks. Mark, I’m curious. The TSA screening growth year over year has been running about twice the growth or maybe more than twice the growth of hotel demand. And I’m wondering how much of that we should attribute to business travel shifting from a four- or five-day-a-week travel environment to on, two, or three days a week. Is that the primary driver? Is that still outbound, international? Or how should we think about that relationship?
Mark Brugger: That’s an Interesting question. To tell you the truth, we haven’t really contemplated it that much. I mean, we’re looking at the demand generators that are coming into our individual hotels and tracking those patterns. And we look at enplanements and — yeah, which obviously, TSA throughput tracks as well. We’re seeing the enplanements and the passenger loads up some, but not corresponding to the demand that the hotels — I have to noodle through that one and look a little deeper and get back to you.
