Duane Pfennigwerth: Thanks for those thoughts, Jon. And maybe just take a rifle shot on LaPlaya. When you think about the timing of getting that asset completely repositioned and completely renovated and launched. Do you think you have enough time to catch the heart of the season in the first quarter? Or is it a little bit late and it would be more about kind of the second half of 2024.Thanks for taking the questions.
A – Jon Bortz: Sure. Well, we’re working really hard to catch the season and there is an intense effort at the construction and project management level to get this project done and open. Of course, the the one unknown continues to be how quickly we can get the county to respond. And I think we’re down to one last permitting approval, that we’ll have obviously continuous inspections — and there, you may lose days, but you’re not going to lose weeks. Right now, we’re losing weeks waiting on a permit, but I think from a ramp-up perspective I mean, we’ve been trying to ramp up. We have a lot more money going into sales and marketing efforts. We have a pretty good group booking pace right now for the property. We have had to unfortunately move some business out of January that we can’t accommodate without having the Beach House building.
But going into the prime season of really President’s Day on, we’re starting to build a pretty good base. And the nice thing is we have a lot of people who want to come back to Naples who haven’t common vacation there for a couple of years, and a lot of the business tends to be annual because they have family in the marketplace. So, we’re hoping we don’t miss the season. We don’t control everything as it relates to the reconstruction of that Beach House building, but we’re getting pretty close now, and we’re feeling better.
Duane Pfennigwerth: Okay. Thank you
Operator: Thank you. The next question is coming from Anthony Powell of Barclays. Please go ahead.
Anthony Powell: Morning. Question on get cash flow for next year and the year after. In terms of your CapEx, where do you think your CapEx spend could go next year, you finished up a lot of these projects and also on the dividend, you had some NOLs this year, you have an impairment. So, I’m curious if you have enough NOLs to may not pay a dividend next year even as RevPAR grows.
Raymond Martz: Sure. So, on the CapEx, as you know, we talked about this, where we’re investing about $150 million this year. the property we would expect in 2024. That number should be $100 million or less. We just — not haven’t even started our budgeting process with our teams and we’ll go through that. But should be substantially less next year and then trending at a low level for a number of years, but for if we ever decide to get approval on say, Paradise Point in San Diego for that conversion there. But overall, as we commented before, the major renovations of the portfolio have been made. Therefore, the amount of CapEx we’re going to need going forward will be much less than what we’ve had the last couple of years. So, we should assume that for 2024 and beyond.
And then regarding the dividend, yes, we still have an NOL that we could certainly burn through and also as we make progress on sales, it’s good for the cash and take advantage of the public/private arbitrage on that. But as a result, for example, for Brazil, we completion of that sale, we will incur a tax loss, which we can add into our NOLs. So, for most likely, we would have — don’t have a need in 2024 to increase the dividend to — for taxable income purposes, we may choose to otherwise. But you should not assume that in 2024, we have to increase the dividend. Beyond that, we’ll have to see where the world plays out, what the macro is and additional sales that we complete.
Anthony Powell: Great. Thank you.
Operator: The next question is coming from Michael Bellisario of Baird. Please go ahead.
Michael Bellisario: Thanks. Good morning, everyone.
Raymond Martz: Good morning.
Jon Bortz: Good morning.
Michael Bellisario: Jon, just on the topline, can you just walk us through the puts and takes compared to last year. I know there are a lot of moving pieces last year. You mentioned the convention calendars being stronger this year, but could you maybe remind us of the good and bad in both periods to kind of help us get a better feel for what the underlying, kind of, true run rate is in the fourth quarter?
Jon Bortz: So, we had a — we did have a couple of renovations last year that started, I think, November, December, which had a fairly mild amount of impact. I don’t recall it being great. I mean, we can get back to you with what that number was, but I would think it was relatively small, $1 million to $2 million or something perhaps, perhaps, might not even have been that much. So it’s pretty clean on the revenue side. The expense side, the biggest negative impact is we had a nice true up in property taxes of over $3 million in Q4 last year. And so that — without any expected true up this year in Q4, that will show an increase in quote expenses if you will for property taxes. Outside of that, I don’t think there’s any major item on the revenue side.
Raymond Martz: For last year, no, nothing that’s notable. We did comment about this earlier, but fourth quarter of this year, in terms of the pluses here, very good convention calendar in San Francisco. It’s about four times what it was in the fourth quarter last year. In San Diego, the commencement center room nights are almost more than double what it was last year. And in Boston, it’s also double what it was last year. The only market that — and D.C. is also up. The only conventional market that was down year-over-year is Chicago. So the fourth quarter we have — and one reason why we have the group pace going in is very favorable and we’re starting out. So those are the positives this year, less anomalies last year, at least on the revenue side.
Jon Bortz: Hey Mike, the one other thing is related to LaPlaya, which is not in our reporting numbers, but obviously is in our numbers overall. I think LaPlaya was negative, slightly negative in Q4. And there was some impacting in Key West. And LaPlaya in Q4 this year should be $2 million to $3 million positive.
Michael Bellisario: Got it. That’s helpful. And then just along the same lines, just on 4Q, last year you had a big shortfall on the bottom line, maybe we’re all just on our side here bad at modeling 4Q this year. But there’s been a lot of portfolio changes, is it just post-pandemic changes and demand patterns or is there something else going on in the fourth quarter that’s causing profitability to be lower than we sort of all remember it to be?
Jon Bortz: Well, the thing that happens in Q1 and Q4 is, when you lose volume, obviously your fixed costs are still there. And so it tends to have a worse flow compared to more normal volumes pre-pandemic. And so there tends to be less ability to absorb that shortfall in one and four, whereas in Q and 2 you have a lot more volume, you have a lot more occupancy, you got higher rates in those quarters, and it’s a little easier to absorb that flow, that shortfall from pre-pandemic in volume than you can in one and four. I don’t think it has much to do with a change in the portfolio on an overall basis.
