Apple Hospitality REIT Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aryeh Klein - BMO Capital Markets - Analyst : Thanks and good morning. I was hoping maybe you can provide a little bit more color on the RevPAR guide. It seems to imply, I think, maybe are flattish or even a little bit better the rest of the year. Just talk about what you're seeing from a demand standpoint to the extent you have some visibility over the next couple of months, what that kind of looks like. And any changes in behavior on the consumer side of things.

Question: Aryeh Klein - BMO Capital Markets - Analyst : Thanks for that. And then, Justin, maybe just on the transaction market. You got some deals done in the quarter, which is good to see. But curious how conversations -- what conversations look like moving forward? Are there deals to be had in that market and how active do you expect to be?

Question: Aryeh Klein - BMO Capital Markets - Analyst : Thanks. Appreciate the color.

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : Thanks, good morning everyone.

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : On the demand front and maybe putting government aside here, where are you seeing those macro uncertainties result in RevPAR to be lower? And is it really just related at this point to booking hesitancy? Or are you seeing transient or group cancellations occur?

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : Got it. That's very helpful. And then just my follow-up, maybe for Justin. Just on CapEx. Can you remind us sort of your philosophy there. How much you want to spend, where you want to spend it, and then any thoughts around maybe deferring projects and saving a little extra cash given the uncertainty that's out there? I know some of your peers have pulled back on CapEx, but maybe just more broadly remind us of your philosophy around CapEx spending and return expectations. Thanks.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : Great, thanks. Good morning, everyone. First off, Liz, I just wanted to clarify a comment earlier about implied RevPAR growth trends. Did you say you expect second quarter to be the worst quarter of the year and then the second half RevPAR growth trends to be up 1%?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : All right. And then I guess when we think about the midpoint of the revised RevPAR growth guidance, is that more reflective of what we saw in March or more of what you're seeing in sort of this late April and into May, where things have stabilized a little bit? Not sure if that's more on the March trajectory or kind of a new normal somewhere between we started the year and March. Just any commentary you can provide around that would be helpful.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : Got it. And then if I heard you correctly, I believe you said that some of the ADR in the first quarter offset some occupancy softness, I assume, particularly in March. But after you kind of remix your business, from the weakness in certain. (technical difficulty)

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : Yeah, so I was just kind of referencing you had said earlier that ADR offset some occupancy softness early in the year. But after remixing the business now, and some weakness in certain -- the weakness in certain segments, how do we think about that ADR occupancy?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : Can you guys hear me?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : Correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, APLE.N - Q1 2025 Apple Hospitality REIT Inc Earnings Call

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : It's helpful. Thank you.

Question: Jay Kornreich - Wedbush Securities Inc. - Analyst : Hi, good morning. Thank you. You mentioned that group is overall looking strong, and I recognize it's a smaller overall segment of your portfolio at roughly 14% of demand. But I'm just curious if you've seen any changes to booking trends there or any increased hesitancy from group counterparties to get contracts signed for travel later this year or into next year? Or is everything kind of remaining strong as you referenced before?

Question: Jay Kornreich - Wedbush Securities Inc. - Analyst : Okay, thanks for that. And then just for one follow-up, I wanted to go back to being willing to opportunistically sell assets and redeploy proceeds into additional share repurchases. If you decided to do that, how quickly do you think you could sell assets to do so? And at what total size do you foresee being able to or wanting to? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, APLE.N - Q1 2025 Apple Hospitality REIT Inc Earnings Call

Question: Jay Kornreich - Wedbush Securities Inc. - Analyst : Okay, I appreciate the information. Thank you.

Question: Floris van Dijkum - Compass Point Research & Trading, LLC - Analyst : Following up on the capital allocation side. Just maybe can you talk about how many assets do you have in the market today? Presumably, this -- and this has forced you to look at your -- the bottom 10% of your portfolio in greater detail. Maybe talk a little bit about how many assets currently you're looking to sell? And obviously, with the share price being where it is, repurchasing that, which is not in your essence, would also boost your FFO per share presumably going forward as well.

Question: Floris van Dijkum - Compass Point Research & Trading, LLC - Analyst : And maybe the follow-up, in terms of forward contracts, obviously, you have a big one in Nashville. Your appetite to do those kinds of things in this environment presumably is almost nonexistent. Would that be correct?

Question: Floris van Dijkum - Compass Point Research & Trading, LLC - Analyst : Thanks, Justin.

Question: Michael Herring - Green Street Advisors - Analyst : Hi, thank you. You guys have talked a little bit about the change in mix shift of demand as you guys go through the year. I was wondering if you could talk a little bit about how your operators are thinking about some cost mitigation at certain properties or various markets? And if that's been prioritized as of yet?

Question: Michael Herring - Green Street Advisors - Analyst : All makes sense. And I guess kind of thinking about that, that last point there. Do you think that the hotel industry in general is better set up to do better in a recession type of scenario as well as Apple's portfolio in particular? Or do you think that there's still some risk there in case there is any broader drawback in demand? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, APLE.N - Q1 2025 Apple Hospitality REIT Inc Earnings Call

Question: Jack Armstrong - Wells Fargo - Analyst : Hey, good morning. Thanks for taking the question. So quarter-to-date, we've seen some weaker RevPAR for hotels kind of at the upscale level and down the chain scale. Would you say that across your portfolio, you're seeing more pressure on all of the middle income consumer and maybe less of a trade-down effect than we would have expected at a normal macro slowdown environment?

Question: Jack Armstrong - Wells Fargo - Analyst : Okay. Great. And just a quick follow-up. Can you compare your level of full-time employees to kind of pre-pandemic and your opposition of contracted labor? Do you have more flexibility or less flexibility now than when you were just kind of heading into the pandemic, if we get to a scenario where you need to (inaudible)

Question: Jack Armstrong - Wells Fargo - Analyst : Okay, great. Thank you.