Sean Dell’Orto: I think the general answer is yes, Chris. This is Sean. The — as we look at kind of where group paces to — as you kind of look to ‘19 on the rate side, we’re about 111% over ‘19. And as you think about ‘25 pace, we’re actually up another 114%. So, I think as we look out, I think we continue to see the ability to kind of roll forward and charge groups more. I mean clearly, the operators quickly went as it came out of COVID to booking things and being happy to do so like kind of ‘19 rates, but then quickly realized they had a pivot as inflation was coming on strong to kind of be more dynamic with the rate pricing. And I think we’re seeing the benefits of that now as we come through and seeing what I — what we saw last year was about 5% to ‘19, and now we’re seeing again 11% for this year and up 14%.
So, I think we are seeing the ability to further drive price with the groups. And on top of that, the out-of-room spend has been pretty robust as well. As we noted for Q1, we had some 11% banquet and catering, I think we continue to continue to drive that pricing.
Chris Woronka: Okay. Very good. The follow-up question is kind of on the cost side. I think margin performance is pretty good in the quarter even if you kind of adjust for the onetime. How much visibility or, I guess, conviction do you think you have? I know labor, you have some that are on union contracts, but across the whole portfolio, is there anything we have to that’s unknown for the rest of the year, whether it’s insurance or utilities or anything else?
Sean Dell’Orto: I don’t think there’s anything unknown. Clearly, people have marked the negotiations you noted on the CBAs and budgets and whatnot, planning for things like that. So, I would say, I think potentially a — potential upside from reinsurance. They did — they got some great rate improvements from everybody last year with no major loss at least certainly domestically. So, I think that’s kind of changed the tables a little bit in favor of us, the insureds to kind of have a better renewal this year so than last year. So, I think that’s something that we continue to kind of budget at a higher-level rate than I think we’ll actually actualize. I think that could be a positive going forward. We continue to appeal real estate taxes, which are up over 10% this year forecasted.
So, I think we can kind of get some — not counting on them, but if we can get some appeal wins there, we’ll get some benefits on the real estate tax side. But in the end, I think — we feel good about the cost controls, the teams, as mentioned doing a great job working the operators to maintain those and manage those. We probably looked around 2.5% cost per occupied room across all operating expenses going in, and we achieved just about over 1%, 1.5% on that, even if you adjust for those one-timers. So, I think we saw some benefits in Q1. I think we’d hope to carry that into the next couple of quarters, I think we’ll still see some positions being added. But again, as occupancy goes, we’ll see nominal expense grow. And we’ve certainly said three-plus percent occupancy growth in Q1.
We won’t have markets in Q2, and therefore, we wouldn’t expect expenses to grow as much either.
Operator: Next question comes from the line of Anthony Powell with Barclays. Please go ahead.
Anthony Powell: I wanted to drill in a bit more on the CapEx and ROI projects. It seems like with the Hawaii renovations in Miami, and you may be at an elevated level in the next couple of years. Should we expect kind of this high $200 million range to be your CapEx spend looks for maybe ‘25 to ‘26?
Tom Baltimore: Yes. I would say historically, Anthony, we’ve been sort of in that 6% range of revenue. As we said, we really believe that as we think about capital allocation priorities, we’re still focused on selling non-core and continuing to reshape the portfolio. And I remind listeners that we’ve think about since the spin, we’ve sold or disposed of 42 assets just south of $3 billion. So, it’s a very different portfolio today than it was. And then our top 25 assets really account for about 90% of the value. And what we’ve concluded is it really makes sense to reinvest where we’re making money and where there are real competitive advantages. So, thinking about Hawaii as an example, Orlando, clearly, what we’re talking about in Miami.
A little bit of that is sort of catch-up to from the pandemic. So, I don’t know that we’ll be in the $300 million range consistently, but $260 million to $280 million sort of makes sense given the priorities and what we’re doing. We — another tower, we want to renovate both at Hilton Hawaiian Village and Hilton Waikoloa and of course, another transformative project and what we want to do in Miami. You can see the early results that we’re getting in the Casa Marina. Now probably, I don’t think without question the best asset in Key West and really performing accordingly.
Anthony Powell: Got it. And maybe a follow-up on the asset sales. What are you seeing in the market right now in terms of just demand for assets, pricing and whatnot?
Tom Baltimore: Look, it’s choppy. We’re not a distressed seller, Tom Morey, our Chief Investment Officer and his team are doing a fabulous job. And we’re out in discussions and assets at various stages of the marketing process. But we’re going to be disciplined. I think we’ve been able to demonstrate again, given the track record that I outlined, we’ve been able to sell assets, and we’ll certainly get some asset sales done this year, and we’ll use those proceeds to reinvest back in the portfolio, pay down debt or — and depending on where we’re trading, buy back stock. We bought back, obviously, 15 million shares last year. And if the NAV gap remains wide or widens, we clearly will be buying back stock.
Operator: Next question comes from the line of David Katz with Jefferies. Please go ahead.
David Katz: I wanted to just drill down just a little further on Hawaii because the commentary is quite positive. And we have heard and seen across our platform instances where inbound travel from Japan to Hawaii has been challenged by currency and cost. Are you seeing any of that? Or is it just a relatively small piece and the rest of what’s going on kind of overshadows it?
