Sean Mahoney : Yes. Thanks, Bill. Great question. I think on a relative basis, because of the attributes, particularly around FTEs to our lean operating model, we would expect on balance to be a little better positioned than full-service hotels because of that. I think industry-wide, we think breakeven margins next year are somewhere slightly below 4% for the industry. And we expect next year’s operating expenses, the growth because the operating expenses, the growth rate has moderated throughout the year, we would expect next year’s operating expense growth to mirror what the inflation is going to be next year.
William Crow : Okay. I’m curious, I assume you all are net beneficiaries of the slightly improved return to office rate, is this also hurting the shoulder night demand?
Tom Bardenett : Yes. Bill, it’s Tom. What we’re seeing is Monday, Tuesday, Wednesday is still where the most amount of growth is weekday. When we look at our Sundays and Thursdays, which is what you’re referring to on shoulder nights, still having growth in regards to Sunday coming back at ’19 levels. And then what you’re also seeing on Thursday is we still see that hybrid work environment still is a positive. But the most amount of growth that we’re seeing 23 versus ’22 is Monday, Tuesday, Wednesday, which is kind of a leading indicator in regards to what Leslie was referring to on the business transient side. And what’s also driving that is your national corporate accounts are now starting to show up at more regular amounts compared to the SMEs which were the driving factor previously.
So shoulder nights are still good, it still has opportunities to grow compared to 2019 and Thursday being the best because of, obviously, the weekend way we can price that because it’s an arrival day versus a departure date.
Leslie Hale : Yes. And what I would add, just to add on to that comment is that when you look at the construct of our portfolio, we’re built to capture 7-day week demand. So when we look at our midweek trends Tom gave you, we were up 4%. If we look at our urban weekends, we’re up 4.2% — 4.6% rather year-over-year. And so we’re seeing it spread and we’re capturing in our portfolio.
Operator: Our next question comes from the line of Gregory Miller with Truist.
Gregory Miller : I’ll start off on a related question from Dori. In terms of the mix, does the recovery of New York City change your strategy or hold period on that property?
Leslie Hale : No. I think the NIC is fitting nicely in our portfolio from a standpoint of urban lifestyle asset, how it’s performing, how New York is performing, the limited amount of meeting space and F&B, that asset fits right into the contract of our portfolio. And so no, it doesn’t change today.
Gregory Miller : Okay. And this is on operating question. If we were to compare operating profit margins in 4Q between your select service hotels and your full-service hotels, which group of properties would you expect to have superior hotel margins year-over-year, upscale versus upper upscale.
Sean Mahoney : Yes, Greg, I think whether it’s 3Q or 4Q, our select service assets perform or operate at a higher margin because of the lean operating model and the lower FTEs. And so I would — what our trends have been and we expect to continue on an operating margin perspective is the select service assets will perform better than the full-service assets.
Gregory Miller : I should have specified as more referring to the year-over-year change between upscale versus upper upscale.
Sean Mahoney : Yes, I think that trend would also hold as well for year-over-year change as well as whole dollars.
Operator: Our next question comes from the line of Tyler Batory with Oppenheimer.
Tyler Batory : A few questions on the group side of things, which I think given the nature of your portfolio, sometimes might get a little bit overlooked. What percentage of your mix right now is group — the strong bookings that you’re seeing, is this a new normal? Is this still some sort of a catch-up post COVID? Is this just people booking farther in advance, maybe all of the above? And then when you look at some of the conversions that you have planned, are there opportunities to reposition some of those assets to be even more attractive to the group customers? Is that something that you’re considering?
