Sean Dell’Orto: Sorry, you were breaking up a little bit there. So, if you can kind of repeat just briefly kind of what you’re trying to…
Jay Kornreich: Just commenting on urban occupancy upside in the first quarter, urban RevPAR grew 8%, yet urban occupancy still sits at 63%. So just curious as to how much urban occupancy upside you see in 2024 and if there’s additional opportunity to push rate on the urban markets as well?
Tom Baltimore: Yes. I think if you think about just ‘19 for a second and kind of how we’re performing, occupancy, overall portfolio is still about 500 basis points below ‘19, but ADR is about 15% over. So, we — look, there’s still an opportunity to drive more occupancy. I’m proud of the team and the fact that we’ve been disciplined from a pricing standpoint, but there’s definitely upside on the occupancy front. Obviously, some markets, I believe, are going to accelerate faster than others. I think New York is an example where we’ve seen that really take off. And part of that is given the fact that you’ve got better regulation and obviously, supply taken out. There’ll be other markets that will be a little slower to recover for a whole host of reasons.
But we haven’t given up some — perhaps some have abandoned certain markets. I think New York is a great example. And it’s not back fully to where it was, but it certainly is approaching in a more compelling market today than it has been, certainly over the last several years. So, we use that. Obviously, Chicago is having a great year, citywide only a record. New Orleans continues to be solid and we saw the first quarter and we’re — another good year citywide, Boston, D.C., certainly improving. There are other challenging markets out there. Seattle should have a very strong second quarter for us, but there are other markets out there that continue to remain challenged. L.A., San Francisco are two that will lag and probably lag for some time.
Operator: Next question comes from the line of Ryan Lambert with JPMorgan. Please go ahead.
Ryan Lambert: Ryan on for Joe Greff. Just kind of wanted to frame occupancy — just wanted to frame the occupancy question a little bit differently. When you kind of look across industry segments, whether it’s manufacturing or tech or consulting, do you have any sort of color there on how those are recovering and how meaningful those are for you guys to kind of make a full occupancy recovery?
Sean Dell’Orto: I mean I think ultimately, as you think about those kinds of groups, you’re kind of aligning with corporate negotiated type of demand. And that’s certainly one has been from the business transient, and that’s certainly been a laggard as you think about relative to ‘19, I’d say on the demand side, actually related, we’re still down, call it, 35%, 40% in that specific subsegment of business transient. We are seeing improvement in that, and we’ve seen some of that demand come back in the business transient side overall. We were, I think, outperformed our expectations for the first quarter. We’re up 13,000 room nights about 3%. And that was across the board, including corporate negotiated as well as local negotiated and government.
So, we are seeing that kind of trickle back still. And I think it’s certainly a good sign as we kind of look through Q2 into Q3. But it’s — I think there’s certainly ways to go there, and we certainly know professional services, Deloitte, the world, PwCs and the like are ultimately traveling less and probably will be for the foreseeable future. Remote work and return to office, has been coming back a little bit slowly too and ultimately helped the business transient. But I would say that in the end, we don’t expect that to really fully recover. That said, — at this point, that corporate negotiated segment is really about, call it, 5% of overall demand historically. So, if it ultimately gets back to 80% of it was, I wouldn’t say, it’s a big drag in the overall portfolio.
I think we’ll overcome that with other aspects of whether it’s leisure or group.
Ryan Lambert: That’s helpful. And following up on sort of the capital markets discussion from earlier. In the past, maybe we’ve kind of heard management teams across the industry talk about the difference between large and small assets and wondering with what you’re seeing in the rate environment right now, if that difference is starting to be less meaningful or if that’s at all changed in your view?
Tom Baltimore: Yes. I think it depends on the individual market, right? If you’re in a market like Key West, where you’re already supply constrained. And in our case, we’ve got Casa an example of 311 rooms, I mean we’re driving as strong a rate as anyone. There might be hotels that are a little smaller, I doubt many that are larger. As you think about other markets, New York is — and where we’ve got, obviously, a larger box, but if you’ve got the right demand supply balance, and you’ve got demand generators and tailwind, and you’ve got multiple sources of demand, meaning you’re anchored with group and then you can layer in your transient business more efficiently, I think the thesis that — that you’re always that a smaller hotel is always going to be more efficient.
In theory, you would think that, that smaller hotel has more pricing integrity, but it’s not a perfect story. And I think that we have demonstrated throughout our portfolio. And if you think about Hilton Hawaiian Village, where you’ve got 2,900 rooms, and we run north of high 80s to 90% occupancy, and we can yield additional sources of revenue. It’s done quite well for us, and you’re generating significant cash as a result of that. So, it’s a really good question, but I think it really depends on the facts and circumstances. Those that argue that the smaller hotels are the only way to invest, I would vehemently dispute that and love to engage in a dialogue about that.
Operator: Thank you. There are no further questions at this time. I would now like to — we have one more question from — do you want to take it?
Tom Baltimore: Sure, sure.
Operator: All right. This question comes from the line of Robin Farley with UBS. Please go ahead.
Robin Farley:
— :
