They continue to pursue additional contracts, reducing costs on a per unit basis. New technologies, the Curator team reviews new technologies almost on a daily basis. Many of them are geared to reducing costs. We see a lot of technologies related to reducing energy costs over the long-term. Water Usage in particular, is seeing a lot of focus within the Technology industry. And we’ll see adoption of that overtime as those become more widespread and available. So we do think efficiencies are going to continue. And again, if you go back and look historically, at our margins at the LaSalle margins, all the way back to the late 1990s, what you’ll see is gradual improvement in those margins over the long time. And obviously, they’re cyclical, they go up and down.
And we tend to get more costs eliminated when things are difficult. And I would say we’re still in an environment which has its challenges, because of inflation. So we continue to focus on reducing costs.
Raymond Martz: And then, Ari, on the second part of your question on the insurance coverage, we have the same amount of overall property coverage today than we did last year. So it’s $500 million, which takes a lot of storms and different events. Here and there, we’ll have higher deductibles at some different parts of the layers of the insurance structure. It looks like it’s a quilt of different programs that are in there, but overall, with the same amount of coverage that we did before. So I think that speaks to the benefit we had is compared to if you’re a smaller owner operator with the relationships on the insurance carrier side, when push comes to shove in markets like this, the carriers that you have relationships with, they’ll stick with you.
So we’re able to maintain those levels of coverage, probably more than if you are a smaller owner or did it have the long-term relationships that we had. But look, overall, insurance market, it goes up and down. The property market is tough. The GL market is better. Cyber has gone a little better. So there’s varying phases. Right now, we’re going through a rough patch here on the property side. But as history has showed, we go through a period where there’s less storms and then it comes back down because a lot more carriers will come back to the space.
Ari Klein: Got it. Thank you.
Operator: Thank you. The next question is coming from Smedes Rose of Citi. Please go ahead.
Smedes Rose : Hi. Thanks. So John, in addition to AI, you need to be able to work in [indiscernible] in your remarks.
Jon Bortz : You talked about corporately, not personally, right?
Tom Fisher: I think he’s saying something. Thanks, Smedes.
Smedes Rose: Guys, operator, can we move to the next — no, I’m just kidding.
Jon Bortz : Go ahead, Smedes.
Smedes Rose: I wanted to just ask you a little bit about kind of what you’re seeing in the transaction market? It looks like you have two more properties on the market and certainly in the media, there’s been more than that, that has been sort of popping up. But just we’ve all seen what’s happened with interest rates and just kind of curious, is it still deals under $100 million or easier to get done? Or kind of what are you sort of seeing in terms of the ability to transact in this market?
Tom Fisher: Hey, Smedes, it’s Tom. That’s obviously a great question. I think it continues to be kind of a bifurcated market in terms of those assets that have cash flows and then those assets, for example, like the ones we’re selling maybe in those assets that are in recovery markets. So I would say, overall, the transaction market is pretty challenging. I would say that the deals and the things that we’re selling, obviously, the things that are trading are below $100 million that continues to be the trend. I think deals are taking longer. I would tell you that at the end of the day, our perspective is there’s a lot of strong interest. We’re seeing a lot of interest. We’re just trying to translate that into conviction in terms of the investors given the fact of the macro market.
So I think that there’s still some headwinds there. I think the higher for longer narrative from the Fed is not necessarily helping on the financing side. But you will see some deals that with high cash flow, the CMBS market is open. You’ll see some deals north of $100 million that will trade. But again, they have some, again, high cash flow, et cetera. I do think that in some of these recovery markets, we’re transitioning, not necessarily from a return basis, but we’re looking — the investors are looking at a price per key and they’re looking at it from the perspective of if they believe in a market, they want to get in early in a cycle because the price per key is compelling, especially relative to replacement costs and also given the backdrop of very limited supply in a number of these markets moving forward.
Smedes Rose: Okay. Thank you. Appreciate it. Operator: The next question is coming from Duane Pfennigwerth of Evercore ISI. Please go ahead.
Duane Pfennigwerth: Hey, good morning. Thanks. I wonder just to follow-up. If you could talk a little bit about your outlook for asset sales into 2024. Of course, it will depend upon the environment and depend upon conditions. But like in your ideal optimal scenario, how many assets would we be talking about? And how would you be thinking about shaping the portfolio
A – Jon Bortz: Yes. So from a strategic perspective, I think it will ideally, it’s going to be — it depends what happens with the trading of our stock and the relative value opportunity between the public market and the private market. I think we’ve said before, we were asked how many of your 47 properties would you sell given the arbitrage opportunity to take advantage of it. And I think I’ve said 47. So we wouldn’t sit here and say, we have a sales target for next year of five properties and $300 million or anything like that, we don’t really work that way. We don’t need to sell any of these properties. We feel like we’ve transitioned the portfolio to a more favorable leisure business mix, as I talked about. So it’s really going to be opportunistic, and that will be driven by not just the overall macro.
Obviously, it will be driven by the debt markets. It will be driven by what the view of investors is related to the future of both of those. But I think where we see the opportunity for fairly significant value improvement is as interest rates come down, we get past this macro view. We have an environment, as we’ve said, in our markets, cities, resort markets, probably four years to five years of very, very nominal supply growth. And that’s going to lead — assuming we have a good macro environment, it’s going to lead to pretty strong RevPAR growth. And that will ultimately get built into buyers underwriting fairly early on as we start to see an acceleration in the growth rate of RevPAR. So it’s really going to depend upon how that market plays out, how the macro environment plays out and then the relative value opportunity between what we can sell for on any given day and where our stock is trading, the opportunity to buy that back and create value for the shareholders.
