Bryan Giglia: Sure. So looking at capital allocation, since that’s our focus. Last year, there was — we had some transition in the beginning, but then got to work as quickly as we could and really set the — I wouldn’t say step to strategy but reinvigorated the strategy of focusing on capital recycling, investing in our portfolio when it makes sense and then returning capital to our shareholders. So on the investment front or on — let’s start on the capital recycling front. We were able to divest the Chicago hotels. And while — when we said this, and maybe you may have even asked this question when we sold them, our expectation was absolutely that there would be growth in the Chicago market. And — but the reason why we look to divest of them was a combination of capital needs and even though there would be short-term gains and especially in the near term, where maybe staffing levels weren’t fully up, that we knew what we saw with leisure that earnings would come back quickly.
But longer term, based on our investment tenure in that market, we knew that there were some headwinds with labor, with real estate taxes and other things. So we believe that based on where those hotels were in our investment life cycle that it was the right time to divest of them and reinvest in markets where we thought we could give more growth. And then those proceeds went into Miami, which we’re very happy with how it’s been performing and getting ready to do a major repositioning there, which we think will add significant value. And in San Diego, which was a more stabilized, there wasn’t — it was 25% interest that we bought. It’s a sizable asset, an asset that was performing really well, an asset that had money that was recently put into it that added more meeting space to allow it to increase its group component, which San Diego over the last few years did really well with transient and leisure but — and there still is meaningful leisure demand there, but that hotel needs to have a meaningful amount of group for profitability.
And last in Q4, you started seeing that hotel shift out of some of the more discounted leisure or the more traditional corporate group that comes with a meaningful out-of-room spend, and you saw the profitability of that hotel continued to increase. And based on its pace for 2023, we think that there’s even more growth there. And so that’s a hotel where our investment, while Andaz was a decent near-term cash yield with longer-term upside. San Diego was more of a near-term cash flow play where we were able to acquire the hotel at a very good yield and let that yield grow, and we continue — and we expect that to continue to grow. On the — looking at some of the other acquisitions that happened later in the previous year, you said you have some of the things that didn’t go quite as well.
The 2 wine country assets, while 2021 had incredible leisure compression, the second half of last year was — that compression went elsewhere. And so those hotels, while they were maybe geared and set up to take advantage of this ongoing leisure demand, maybe spent a little less time focusing on group. Second half of last year, we really changed that focus. And the hotels have added the appropriate amount of group business where Montage’s pace is double to what it was a year ago and Four Seasons is up 80%. Is that something we should have done earlier? Yes. And that’s something that we look at our other markets that continue to benefit from leisure demand. While in an example is somewhere where, yes, there is a lot of leisure demand. The rate is very strong, but we’re remaining — we want the hotel to remain disciplined and make sure that it has the right — always have the right group mix to it and not rely solely on leisure demand.
