Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the factors influencing your 1% to 3% RevPAR guidance for 2025, and what are the potential risks or headwinds? A: Our guidance is based on the assumption that the momentum from 2024 continues, with urban markets outperforming due to diverse demand segments. On the high end, we assume stable macro conditions and stronger-than-expected business transient (BT) and group demand. On the low end, slower BT growth and less group rate growth could occur, along with potential displacement from renovations.
Q: How do your capital allocation priorities for 2025 compare to those in 2024? A: We remain flexible with our capital allocation, leveraging our strong balance sheet. In 2024, we repurchased stock, invested in conversions, acquired assets, and increased dividends. We will continue to be nimble, evaluating opportunities based on market conditions and fundamentals.
Q: Given the strong performance of your conversions, do you plan to accelerate your conversion pipeline? A: We believe maintaining a cadence of two conversions per year is optimal for capital allocation and risk management. This approach allows us to consistently introduce growth catalysts without overextending in any single year.
Q: How do you view the transaction market in 2025, and what are the key drivers for improvement? A: The transaction market remains choppy with a wide bid-ask spread. While small deals are happening, there's no clear trend. We expect improvement in the latter half of 2025 as headline volatility decreases and margins stabilize, but we remain opportunistic.
Q: Is the rate-driven RevPAR growth in Q4 2024 expected to continue, and how does it impact margins? A: We anticipate continued rate momentum, driven by strong BT and group demand. Rate-driven RevPAR growth benefits margins more than occupancy-driven growth. If rate growth continues, it could help us achieve the lower end of our margin range.
Q: How did the LA fires impact your hotels, and what are your expectations for transient demand in the area? A: The LA fires positively impacted demand at some of our hotels, but our budgets do not rely on this. We expect conditions to improve as displaced individuals find permanent housing, and our broader performance assumptions do not include fire-related demand.
Q: What are your expectations for urban leisure versus resort leisure demand and rates in 2025? A: We expect urban leisure to outperform broader leisure due to favorable market setups and special events. Our portfolio is well-positioned to benefit from these dynamics.
Q: What is the current occupancy delta relative to 2019 levels, particularly in your urban portfolio? A: Our total portfolio is at 94% of 2019 occupancy levels, with special corporate and group segments around 90%. Urban markets are not materially different, and we see significant demand growth opportunities, especially with the return to office and group travel.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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