Summit Hotel Properties, Inc. (NYSE:INN) Q1 2024 Earnings Call Transcript

Jon Stanner: Yeah, we spent a lot — it’s a good question. We spend an awful lot of time on this internally, particularly as we’ve talked about before, I think the industry broadly is just underinvested in renovations. And so, one, I think that’ll create some opportunities for those of us that are better capitalized going forward, but we’ve always taken great pride in the physical condition of our portfolio and ensuring we don’t have a huge buildup of deferred CapEx in the portfolio. And there’s no question that the cost to renovate some of these hotels are significantly higher than they were pre-pandemic. They’re I would say 25% or 30% higher and depending on the market, potentially even more. I will say in the last 30 days, we’ve actually finally re-priced a couple of renovations lower than we did last year or even six months, months ago.

So you’re starting to see, it’s not really labor or wage related, but you’re starting to see shipping costs come down, you’re starting to see some commodity costs come down, and so we believe at the very least, the increase in cost of those renovations has stopped. And we’ve got some level of hope or optimism that we’ll see some decreases in the cost to renovate these assets because it did — as I said, it got very, very expensive, especially relative to where we are renovating pre-pandemic.

Michael Bellisario: Thanks. Just any broad strokes around kind of per key costs for those renovations?

Jon Stanner: Yeah seven years we were doing $15,000 or $20,000 a key, probably pre pandemic and they’re 25% higher than that today, 14 years, we’re probably another $5,000 to $10,000 a key on top of that.

Michael Bellisario: Got it. That’s helpful. Thank you.

Operator: Thank you. I’m showing no additional questions in the queue at this time. I’d like to turn the conference back over to Mr. Jon Stanner for any closing remarks.

Jon Stanner: Great. Thank you all for joining us today. We look forward to seeing many of you at one of the conferences over the spring and summer. Thank you.

Operator: Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.