• 15 hotels had significant construction/renovations
  • 1Q portfolio grew market share
  • Transient: +4.5%, strong rate growth
  • Group:  +1% (+8.5%-association business, corporate business was flat despite tough Super Bowl comps)
  • 9% of EBITDA come from international
  • Continue to have positive view on lodging cycle
  • Do not expect 2017 suppy to accelerate meaningfully
  • Lending continues to improve. Pricing has continued to improve
  • Expect mid-teens return on investment opportunities
  • Expect to complete more acquisitions in 2015 than 2014
  • Stock repurchase program effective once they file 10Q this week
  • View stock as attractively priced
  • Replacement costs for portfolio avg $425k/key (well above current trading level of $328k/key)
  • Expect group demand to be solid for remainder of 2015. Bookings in the 1Q 2015 for 2015 was +10% (rate: +8%).  Demand for 3% in 2Q in 2015, (rate: +3.5%) resulting in rev growth of +7%.
  • 2Q Construction impact will be not as severe as in 1Q
  • Expect FX impact to be $25m for FY 2015 ($8m worse than previous prediction in February)
  • Cost-saving initiatives will raise margins higher than what was forecasted in February
  • REVPAR declines: NYC/DC/Houston/Canada
  • Boston: +6% in occu, +9.5% in ADR, +19% in F&B
  • San Francisco:   Driven by strong group (+15%) and transient demand (+12.1% REVPAR). Will continue to be a top market.
  • Phoenix: +15.8% REVPAR; group demand up 27% driven by Super Bowl, baseball spring training. Expect Phoenix to be one of the strongest in the year.
  • Asia:  +11% REVPAR (rate: +9.2%); Australia/New Zealand benefited from Cricket World Cup
  • Outperformers: Los Angeles, San Diego, Florida. Expect continued outperformance in 2Q
  • Embassy Suites Chicago renovation will be completed in May
  • NYC:  Expect positive REVPAR growth in remaining quarters
  • Strong dollar:  No impact on US visitation
  • DC:  Citywide strong for 2016/2017
  • Canada:  -21% REVPAR.  Room renovations expected to be completed in June. Meeting space to be done by August.
  • Euro JV:  strong transient offset softer group business.  Outlet revs up 2.8% offset by banquet revs decline of ~3%. 
  • Eurozone sentiment improved in April
  • Spain/Germany macro forecast raised
  • Utilities: -7.7% YoY
  • Property insuarance: -10.3 YoY

Q & A

  • Positive view on lodging cycle
  • Why Stock repurchase $500m?:  $500m is a good round number
  • Near-term opportunities:  look at Calgary contract which they had renegotiate 
  • They're also looking at international assets, single assets, and smaller deals
  • Potential asset sales:  likely be spread out.  
  • Risks on demand side, not supply side
  • Capital allocation: Could also put out $600m in form of dividend
  • Few large projects that will start later in 2015 that will have renovations in 2016. Feel 2016 renovation by $ amount will be lower than 2015 (more than 10% decrease)
  • REIT consolidation?  hard to predict in near-term
  • $25m incremental revenues will flow through in 2016 and 2017 as a result of the renovation projects
  • DC hotel renovations may be completed in May 2015
  • Looking at meaningful energy ROI project which will reduce their utility costs
  • Try to issue stock if stock price above NAV
  • Have benefited from cap rate compression
  • Trajectory of REVPAR growth by quarter in 2015:  Q4 is strongest. Expect things to improve as they work through the year.
  • Q4 will be strongest in margin growth perspective
  • US travel into Europe up 6-8% YoY in 1Q 
  • Tourists tend to book a little longer out (longer than 60-90 days). 
  • Asian travelers to US (excluding Japanese) are growing 

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