Michael Bellisario: Two parter for you on San Antonio, just first, it’s not a market that a lot of us are really familiar with, so maybe help us understand the supply demand dynamics there and then how have the hotel and the convention center both performed historically and what the outlook looks like for the next couple of years? And then the second part, just on return expectations, what sort of longer term growth rate did you assume in your underwriting for the hotel and any levered or unlevered targets that you could share with us? Thank you.
Bryan Giglia: Sure. Let me start, and then I’ll turn it over to Robert. When looking at the market, one, our overall view with, when we’re going to deploy capital, we want to make sure we’re finding the best piece of real estate within that market. The location of the hotel is as good as you can get in that market. When you look at the demand drivers, you’ve got — you have, the combination of leisure and convention are the two biggest, and then you have a growing business, transient demand also. Our location is when you look at the leisure demand drivers, you have the Riverwalk, you have the Alamo when we are situated right in the middle of the Riverwalk and at the entrance of the Alamo, the Alamo obviously having a massive redevelopment and expansion, which will open right up to our front door.
We think that longer term, that’s going to provide additional investment opportunity for us. We have a fair amount of retail, have a relatively large parking structure that is right next to the Alamo Education and Information Center that they are developing right now. From the convention standpoint, convention center has 1.6 million square feet, recently had a multi $100 million dollar upgrade. When you look at Pace for the, for the upcoming couple years, it’s positive and should also benefit from other regional convention centers going down or partially down or restricting some of their availability because of renovation, mainly in Austin and Dallas. Citywide pace is positive for ’25 and ’26 and then when you look at the market, also has a fair amount of government and military in there.
The military tends to be more cyber focused. So a much more dynamic and growing piece of business there. Overall, we are very pleased with our investment. We believe that going in, we’re investing around an eight cap on 2024. We think that there is some good near term and medium term growth here for us and I will say we’ve been very, very pleasantly surprised with the performance in our very short ownership period. But the hotel is performing very well. The market is performing well and while there is some supply and Robert can talk to that a little bit more coming into the market, our location, I think, is pretty insulated from that. We are absolutely what you want to be in that market, Robert?
Robert Springer: Yeah, just a couple of add-ons, I think Bryan mostly covered all of your question, but a couple of details to add to that. So Bryan mentioned the Alamo redevelopment, that’s a half a billion dollar, state funded project. If anybody’s actually been to the Alamo before, it is a state park that is no disrespect intended. It’s a little bit underwhelming for the visitor experience and the state has allocated a significant amount of capital to build a proper museum and a significant visitation experience there, which we think will be very positive for what is already one of the most popular attractions in San Antonio. The airport is kicking off on a multi-billion dollar expansion, which should help drive additional visitation.
Bryan mentioned or alluded to, regional convention center impact, both Dallas and Austin are going under different meaningful convention center renovations that ultimately should benefit a city like San Antonio as those convention centers come down for different state, regional business that is looking to be in the Texas area, but can’t go to those markets. There is you mentioned on the outlook. So I think we covered everything there.
Michael Bellisario: And anything on return expectations from your underwriting.
Bryan Giglia: Going into it, as I said, it was an ACAP. We hope to stabilize somewhere around a ten or so. Operator, we’ll take the next question.
Operator: Our next question comes from the line of Dany Asad from Bank of America. Please go ahead.
Dany Asad: Hi. Good morning, everybody. Bryan, in your prepared remarks, you called out the first quarter headwinds should shift to tailwinds, especially when you look to the second half of the year. Are you guys able to quantify or bucket these easing comps, especially when you look at Q3 and Q4. So outside of the Confidante, how many points maybe could we uptail? When should we expect out of Wailea, Long beach and so on, if you could.
Bryan Giglia: Okay. Morning, Dany. When we look into –so, looking at Q1, Q1, when comparing to 2023, had the compression ’23, had the compression of the pent-up demand of Omicron going into a lot of the markets, especially some of the resort markets like Wailea, which then go and compress the transient rate. So when we look at the performance in Q1, we actually saw some very positive factors at play. One of them was our Q1 forward group production for current year and future years was basically second to ’18. It was a great year of production, both in room nights and in rate. In transient, given that the comp of group was difficult, we were actually able to backfill with a lot of transient across the portfolio. And so that was definitely a positive and then on the group side, the group contribution was up year-over-year.
So we’re able to continue to get more out of room spend and our transient demand was backfilling. When we look into the second half of the year, where you look at where the pace is the strongest and where you expect the most, DC for Q2, Q3will continue to grow. Revenue for the full year is up almost 20%, driven by the benefits that we’re seeing not only on the group side, demand from the renovation, but also where DC has been the strongest is really or has been the most refreshing to see is the expectation that changing to the Westin flag, we would receive more transient demand and in the first quarter in DC, we saw all transient segments up, both in occupancy and rate and so we’re seeing and then when we look forward, we see additional the transient rate.
The pace looking forward is up double digits. So not only are we getting more transient guests, but they are also paying a higher rate and spending more. Orlando has a better second half of the year, and then Long beach will start to ramp up in Q2 going through the rest of the year. New Orleans, which had a very strong first half of last year, has a very strong first or second half of this year.
Operator: Our next question comes from the line of Floris Van Dijkum from Compass Point. Please go ahead.
