Todd Hargreaves: Sure. Dori, the marketing process, so, just to clarify, we have gone through multiple rounds of bidding on the hotels where we’ve identified buyers for the majority of those hotels. And so, we are, as you point out, negotiating contracts, it’s not going to be a portfolio sale, it’s not going to be two or three buyers, there’s going to be likely more than 10 buyers for these 22 hotels and we’re likely to maximize proceeds that way. I think the process has gone somewhat as expected in terms of interest level from a lot of smaller operators for these types of hotels, a lot of local operators, if you recall. These hotels today are losing their negative EBITDA for the most part. They need CapEx, so local operators are coming in and really focusing on turning around some of these hotels.
We did get a lot of interest and I think the types of hotels that are trading even with transaction activity down are these types of hotels, the lower price point hotels where buyers can come in at a good basis. So again, it was similar to what we expected, there was a lot of repeat buyers from the time we sold the 68 hotels a couple of years ago as well. So, I’m not sure we necessarily learned anything further, I think there continues to be interest in these hotels, there continues to be interest in groups buying these hotels and entering into franchise agreements with Sonesta, which was a positive to see as well. To answer your question on more hotels, I think we want to get through these first, but there could be other hotels in the system.
I think it’s just going to be a continuing evaluation of the performance of the hotels. And so, there could be other hotels but we haven’t identified any yet.
Dori Kesten: Okay. And then my last one is just on trucking trends. You’ve talked about the normalization of trends, and therefore, it makes sense your rent coverage is coming in post-pandemic. But for context, what level of rent coverage would make you consider the trend less of a normalization and more worrisome? And to be clear, I don’t think you’re there, I’m just wondering like what your line of thought is?
Todd Hargreaves: Right, it remains to be seen. It’s a good — the commentary is, we agree with that commentary back in 2017, ’18, ’19, the coverage for those assets was probably closer to 1.8 or 1.9 times. And then once we came out of the or once the pandemic hit and trucking activity picked up significantly, e-commerce activity picked up significantly, and you saw diesel volumes, and more importantly, margins get to levels that we hadn’t seen before and that really drove coverage up. I think what you’ve seen over the past several three or four quarters is that really get back down to more what we view as normalized levels. We don’t have as — we don’t have nearly as much insight now given the lease amendment to the performance of these sites but we’re following what BP says publicly.
We have very little concern given the investment-grade credit backing these properties and leases and just the underlying value of the real estate. But I don’t have necessarily a number where I would say I would start to be concerned, but we’re far away from that number.
Dori Kesten: Okay. Thank you so much.
Todd Hargreaves: No problem.
Operator: The next question is from Tyler Batory with Oppenheimer. Please go ahead.
Tyler Batory: Good morning. Thank you. Follow-up question on the guidance for the second quarter, it looks like RevPAR at the midpoint flat year-over-year, $80 million to $85 million of hotel EBITDA, your margin still down year-over-year, is there a way to think about the renovation disruption that’s in those numbers? And then talk a little bit more about what needs to happen, maybe outside or even including renovation disruption, what needs to happen for you to really see some margin improvement and margin growth?
Brian Donley: Hey, Tyler. Good morning. Thanks for the question. I’ll start and Todd if you want to add anything. But as far as disruption goes in Q2, it’s going to be more of the same, I think it’ll have a little bit more of a lift side of the thing. Portfolio from the Hyatt’s coming out of renovation, all 17 of those hotels are going to be coming out throughout the quarter. So, we’re going to start to see some lift from that. So, it’s sort of going to negate some of the disruption we’re seeing, maybe these are some of our stronger seasonal periods, we’re going to try to limit rooms that are out of service, so it’s tough to fully quantify, and once you start a project and get into it, how fast it moves, how many rooms you take out can vary.
But the bigger overall question how to drive margin? We believe it’s an occupancy issue. We need to drive more demand at our hotels. We’re doing that through various initiatives, including the CapEx program. So that’s the operators, our other operators are also very focused on driving demand through different initiatives and marketing, promotions and other projects they’re working on to drive business.
Todd Hargreaves: Yeah, I’ll just add to that. I mean, we saw — we are very pleased with how the full service portfolio did, especially the Royal Sonesta’s that grew over 6% in RevPAR year-over-year, really driven by group business, but also our urban hotels really increased as well just driven by increased citywide demand. So, I think we’re really optimistic with what we’re seeing on the full service side of things. We touched on a couple of things in the prepared comments, but especially on the — it’s tough to get a good comp on the select service portfolio because so many were out of — were disrupted during the quarter. But in terms of the extended stay, I think our focus really is on having our operators really get back to getting that through Tier 4 extended stay business of more than seven nights, in some cases, you can get 30, 60 nights — 30 to 60 nights.
Especially, in the seasonally weak quarters, you really rely on that occupancy for those types of hotels, but ideally we see some of that more longer term project-based business come back online. I think that’s something our operators, especially Sonesta are very focused on.
Tyler Batory: Okay, great. So in terms of the Sonesta brand, I think you cited 30% of stays in the quarter were loyalty members, I think a little bit lower than some of the other brands that are out there, obviously, this loyalty program is still pretty new. So, just talk a little bit more about the adoption of the loyalty program and more broadly just an update on how Sonesta is resonating in the marketplace for travelers?
