Apple Hospitality REIT Inc Q2 2024 Earnings Call Transcript

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

Question: Dori Kesten - Wells Fargo & Co - Analyst : Thanks. Good morning. In June, you talked about the expectation that business transient versus leisure rates should eventually return to a more normalized spread. Where are you now versus `19, and what's your expectation for that spread in the second half of the year?

Question: Dori Kesten - Wells Fargo & Co - Analyst : Okay. And then based on your new guidance, would you need to or potentially choose to change your dividends on the current $0.08 monthly level?

Question: Dori Kesten - Wells Fargo & Co - Analyst : Correct. And last one. Are there potential acquisitions you may be close on but have paused progress on just given where your stock is trading? Just trying to get a sense of how much of a pipeline there is to the extent that your stock price improved in the near-medium term. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 2:00PM, APLE.N - Q2 2024 Apple Hospitality REIT Inc Earnings Call

Question: Dori Kesten - Wells Fargo & Co - Analyst : Perfect. Thank you.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : Thanks. Good morning, guys. What do you guys think needs to happen here for you to see some additional rate upside or shift in the mix of corporate of accounts to drive that midweek ADR? I guess, does any of the softening in economic data give you pause about how that plays out from here and maybe the pace of improvement as sort of that supply is in a pretty good position? You suggested demand still looks really good, but just wondering if you're seeing any of that change in sort of the booking pace. Thanks.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : Have you analyzed, I guess, if you were in that position where it was the percentage of PAR, what that would have done differently with the rate upside today versus having the fixed price contracts in place?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : Understood. No, that's fair. And then just last one for me, as far as the guidance revision, you provided a lot of detail, but how much of it would you attribute to the leisure weekend piece versus weekday?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : That's helpful. Thanks for the time. Appreciate the thoughts.

Question: Jay Kornreich - Wedbush Securities Inc - Analyst : Hi, thanks so much. Good morning. It looks like there's a trend at the top end of the portfolio kind of outperforming the lower end, both in your top 20 markets and also at the upper upscale and upscale hotels outperforming the lower end, upper mid-scale assets. So I'm just curious, can you maybe just talk about the weakness that you're seeing on the lower end customer at the lower scale and is that working up the chain scale? Is it working up to the top 20 markets or is there really a divergence between those two?

Question: Jay Kornreich - Wedbush Securities Inc - Analyst : Okay, that's a very helpful context. Thank you. And then just one follow up. As I look at the monthly performance and the release, it looks like April started strong in the quarter and then a little bit worse each month as it progressed. So I'm just wondering how does that compare to your initial expectations for the quarter and I'm assuming that trend leading into July. What are your thoughts going forward in terms of holding RevPAR flat for the second half of the year versus maybe any potential upside?

Question: Jay Kornreich - Wedbush Securities Inc - Analyst : Okay. Thank you so much. That's it for me.

Question: Bryan Maher - B. Riley Securities Inc - Analyst : Thank you and good morning. Two questions for me today. We touched a little bit upon this weekday versus weekend, but can you drill down a little bit more on the weekday mix of business? Are any business groups or type of business swapping out for the other? And we've heard that small and mid-sized business travel has come back more robustly than larger business travel. Are you seeing that? And can you give us a little color there?

Question: Bryan Maher - B. Riley Securities Inc - Analyst : Thanks. And then over the past few years, you've had a couple of these takeouts of new construction at fixed pricing, which I have to believe with inflationary pressures on the builders, you probably got the better end of the stick there. Are you still seeing those opportunities? And when you do see those opportunities, are the developers jacking up the price such that maybe it's not as attractive as it was and you may skew your acquisition dollar towards maybe a stressed seller sale or an asset owned by a financial institution?

Question: Bryan Maher - B. Riley Securities Inc - Analyst : Well, developers, I have found, never cease to want to develop if they can. So it is what it is. Thank you for your comments. Appreciate it.

Question: Jonathan Jenkins - Oppenheimer & Co. Inc - Analyst : Good morning. Thanks for taking my question. Liz, you talked about the holiday impact in June and July. Can you just provide some additional color on the softness around the holidays and how demand has trended more recently in the second half of July and into August? And as a follow-up, it sounds like the leisure price sensitivity has consistently softened over the quarter, regardless of the holidays. Did your guidance assume a further softening in leisure demand going forward?

Question: Jonathan Jenkins - Oppenheimer & Co. Inc - Analyst : Okay. Very helpful. Maybe as a follow-up on that, you guys in the past have talked about the margin profile for the industry being dependent on rate growth. And I'm curious, given recent updates across the industry for a relatively muted rate growth environment in the near term, if you think that there's potential for the margin profile of the overall industry to stabilize you're at or around pre-COVID levels.

Question: Jonathan Jenkins - Oppenheimer & Co. Inc - Analyst : And then last one for me, if I could, on acquisitions. Can you talk a little more about the pipeline? How many assets are you currently looking at today versus a few months ago? And as you look into the future, have you seen any shift in industry expectations for transactions given the recent softening in industry demand trends, but seemingly heightened potential for lower rates, maybe increasing RevPAR.

Question: Jonathan Jenkins - Oppenheimer & Co. Inc - Analyst : Okay. That's excellent color. Thank you for the time and all the color this morning. That's all from me.

Question: Michael Bellisario - Baird - Analyst : Hi, good morning. Thanks for taking my question. Can you just give some color on the New York property at just how you're thinking about in terms of run rate performance? And then where is the process in terms of resolution on that? Are you expecting to be made whole or would there need to be a further adjustment to guidance?

Question: Michael Bellisario - Baird - Analyst : Got it. Appreciate that color. And then just one more on the channels. With the OTA usage and other discounted channels, I know you gave those numbers, but were those higher than your original expectations for 2Q? And would that signal to you in terms of customer preferences for what you're seeing?

Question: Michael Bellisario - Baird - Analyst : Great. Thank you for the time.