Chatham Lodging Trust (CLDT) 2022 Q1 法說會逐字稿

Greetings. Welcome to the Chatham Lodging Trust First Quarter 2022 Financial Results Conference Call. (Operator Instructions) And please note that this is being recorded. I now turn the conference over to Chris Daly, President of DG Public Relations. Thank you. You may begin.

Thank you, John. Good morning, everyone and welcome to the Chatham Lodging Trust first quarter 2022 results conference call. Please note that many of our comments today are considered forward looking statement defined by federal security laws. These statements are subjects to risks and uncertainties, both known and unknown, as described in our most recent form, 10K and other SEC filings.

All information in this call is as of May 4th, 2022, unless otherwise noted. And the company undertakes no obligation to update any forward-looking statements, conform the statement to actual results or changes in the company's expectations.

You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website@chatchathamlodgingtrust.com.

Now to provide me some insight into Chatham’s 2022 first quarter results, allow me to introduce Jeff Fisher, Chairman, President, and Chief Executive Officer. Dennis Craven, Executive Vice President and Chief Operating Officer and Jeremy Wegner, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff.

Thanks, Chris. I appreciate everyone joining us this morning for our call. As I look at these results, I'm very proud of our teams at Chatham and Island, who did a fantastic job during the pandemic maximizing revenue and operating profits while minimizing cash burn and executing key corporate transactions, that have been a hand start financial position. In fact, for the 8 quarters just ended we produced positive corporate cash flow before of amortization and CapEx.

As we sit here today, the business traveler is coming back across the country and our 5 primarily tech driven hotels, in Silicon valley and Bellevue, which historically comprised 25 to 30% of our EBIDA -- are seeing demand accelerate rapidly. As a reminder, these 5 hotels generated EBIDA of $35 million in 2019, but only a mere $7 million in 2021. This recovery is going to be a major driver behind our outperformance over the foreseeable future.

Strategically, we're excited to announce that we're expected to close within the next week on the sale of 4 hotels, comprising 537 rooms for approximately $80 million in 2 separate transactions. These older hotels are on average 27 years old and have produced RevPAR below our portfolio average. In 2019 and 2021, they produced rip par of $96 and $59, below our 2019 and 2021 portfolio RevPAR by 28% and 32% respectively.

Additionally, 2 of the 4 hotels were set for renovation in the next 12 months, and we believe we could put that money to better use buying assets. 2 of the 4 hotels are going to be converted for multifamily use and would represent our second and third hotels sold over the past 2 years at a very low cap rate for the purposes of converting to apartment use. The proceeds will be used to pay down most of the borrowings on our $250 million credit facility, which will have only $30 million outstanding when they close.

When we exit the waiver period down on a credit facility, after the second quarter, we will have the full capacity available and we'll have a substantial number of unencumbered assets available to provide flexibility to acquire hotels and address, at the right time, a very manageable $114 million of fixed rate debt maturities next year.

We sit here today with substantial dry powder, a refined portfolio, given the sale of the 4 hotels and a platform that can grow quickly. Over the past 2 years, we did a great job putting the beds pivoting away from the higher rated business traveler during the pandemic.

Since mid-February, we are seeing now a substantial acceleration in business travel and just like we did on the downside on the upside pivoting again and pivoting our sales and revenue management efforts to capture the higher rated traveler.

Our message to our operating team is to push rates. We are in a heightened inflationary environment and have the opportunity to push higher rates. Our opportunity is much better than it was in the years leading into the pandemic when supply growth was significant and there was resistance to any kind of what rate growth.

Previously, we stated our belief that the business traveler was going to return with a vengeance and never bought into the belief that business travel is permanently impaired. I've lived through a lot of cycles here and heard for many years how online meetings were going to be the downfall of the business traveler and many other external events that were supposedly going to really cut down business travel.

People still like to travel. That's clearly evident in everybody's numbers. They like to meet in person. They like to do business in person. And now we've got 2 new kinds of travelers to the space, the leisure or digital novac traveler and the people who live away from the office and are being asked to come back to their office regularly.

And for those new travelers, I think they're going to be staying for more than one or 2 nights, that's already evident. And extended stay hotels, the majority of the hotels we own, should be the primary beneficiary of this new added demand.

We're becoming more and more confident with respect to this outlook as we see weekday demand really start to accelerate. Weekday occupancy is the best indicator of business travel and it rose significantly through the first 4 months of the year. Weekday occupancy was 48% in January, before jumping to 60% in February, 68% in March and 72% in April. April weekday and full month occupancy of 73% are both the second highest levels since the start of the pandemic. April, 2019 weekday weekend occupancy were both 82%. So given where we are in the recovery of the business traveler, we are already in a very good position with the sharp uptick in occupancy, ADRs are also advancing quickly, a sign of great things to come are 2022, April ADR of $161, only $4 shy of our 2019 ADR of $165.

We've been encouraged by the return of some tech related group business in Silicon Valley and Bellevue, Washington. Offices have reopened, which will be the impetus to travel both in and out of these market. In Silicon valley, Q1 22 witnessed office vacancy decline for the first time in 2 years falling to 10.6%. And that decline in vacancy is notable given that 9 and a half million square feet of new office product was delivered to the market over the same period.

Office developers and owners remain bullish anticipating the great return for the region's highly profitable and growing tech companies. RevPAR at those 5 hotels has basically been $70 to $75 for the better part of the last year, but April RevPAR is up 45% over the first quarter figures. So that business is coming in fast.

More great news out of the valley in Bellevue, we can confirm that later this month, tech companies such as meta apple, eBay and T-Mobile are going to be hosting in person internships this summer in 2019.

As we've said before this business accounted for over 7 million in revenue. This year, we allocated more rooms for this business, knowing that the return of the international business track out and long term consulting business in these markets would be gradual over the course of the year. At this point, we have approximately $15 million in intern revenue on the books for the summer ADRs or approximately $200 compared to approximately $220 in 2019. So pretty close there.

An added benefit is that our operating margin on this business is very high as this limited room servicing as part of the arrangement. We expect the second half of the year to be especially strong in these markets and we'll be an impetus to drive our portfolio growth higher relative to our peers. We're seeing increased demand in many of our other primary business travel driven markets, such as Washington, DC, the Northeastern US, Dallas and especially Austin -- all postings sizeable games here lately.

In Austin, where we acquired to you hotels last year, RevPAR was about $115 in the first quarter and in April that's jumped to $140. Our 2 hotels at the domain should be top performers, as that market is benefiting from tech company expansions and relocations to the area.

I want to quickly put point out how things are going at our recently opened Home2Suites in Woodland Hills Warner Center. After opening in late January, it's ramping up nicely and latest trends are very encouraging there. April occupancy was over 63% and ADR was approximately $185. We've seen occupancy exceed 90% and ADRs in excess of $200 on certain nights already. This area is in the midst of a massive growth spurt.

More great news in the market, it was announced about a month ago that the super bowl champion Los Angeles Rams closed on the acquisition of a 38 acre site. Just a few blocks from our hotel. That's going to be turned into a mixed-use development, which will include the team's headquarters post off season training activities, as well as other football events during the year and welcome fans all year round.

Our hotel that Home2Suites brand is perfectly positioned for the kind of business and demand that this development should generate. We're real excited about that. As I mentioned on our last call, we're confident in the ultimate recovery and trajectory of that recovery in our portfolio and want to see continued improvement, as we expect we will, in the business traveler, especially in our tech driven markets before reinstating the dividend.

Silicon Valley and Bellevue and other primary our business travel markets are rebounding and increases our confidence in generating consistent and distributable cashflow. We've historically targeted paying out 100% of taxable income. And when we look at any potential distribution, of course we'll carefully analyze our taxable income for the upcoming years while also considering use of taxable deductible NOL carry forwards that came as a result of the pandemic. With that, I'd like to turn it over to Dennis for a little more color.

Thanks, Jeff. Compared to 2019, our monthly RevPAR improved each month of the first quarter down 36%, 27%, 22% and then only down 13% in April. The acceleration is definitely attributable to the return of the business traveler, especially in our tech driven markets of Silicon Valley and Bellevue, which saw RevPAR jump approximately 45% compared to the first quarter. Large group and convention business is also coming back to the life and we're seeing healthy gains at our hotels in these downtown markets, such as San Diego, Dallas and San Antonio.

Our 5 highest hotels with absolute RevPAR in the quarter -- where our residents in Fort Lauderdale on the inter coastal waterway with RevPAR over $250 on occupancy of 93%. Followed by our Hilton Garden in Marina Delray with RevPAR of $147. Then our residents in new Rochelle, New York, and then rounded out by 2 hotels, making their first appearance and our top 5 in some time, which is our residence in San Diego Gas Lamp and our Homewood Suites, San Antonio Riverwalk. Again, just seeing the return of convention and group and those 2 markets, especially.

Our top 5 absolute occupancy hotels in the quarter were the residents in Fort Lauderdale, followed by our residents in New Rochelle, our Homewood Suites in Maitland and then our Residents Inn Charleston Summerville.

And lastly, our newly acquired Residents Inn Austin at the Domain, which is its first time making our top 5 and all, all 5 hotels had occupancy of at least 80% for the entire quarter.

Our portfolio did significantly better than the industry with first quarter occupancy of 60% compared to industrywide occupancy of 56%. And we continue to see an average length of stay much longer than our historical levels. And our residents in hotels, our average length of stay was 3 nights, still well above the 2 and a half nights pre pandemic. And at our Homewood suite hotels, our average length of stay was 3 and a half nights. Again, pretty meaningfully above our pre pandemic average of 2.7 nights.

For the quarter total revenue of $55 million was up 75% compared to last year's revenue of $31 million. We were able to generate incremental GOP of $12 million for flow through of approximately 50% on that total revenue increase.

Lots of good trends on the top line, in our bottom line is also trending in the right direction. We fully expect that same store margins will be higher post pandemic. Our first quarter GOP margins were 38% on RevPAR of $88, 15% below 2019 first quarter margins of 44%, but that was when RevPAR was $33 or 38% higher.

March was really the only stable month in the quarter. And our March margins were 44% on RevPAR of $119. The same margin as our first quarter, 2019 margins when RevPAR was 11% higher.

Our teams have produced great results throughout the worst year in the history of our lodging industry and positive developments for margin expansion moving forward, despite the impact of Omicron on the first quarter, we were able to generate positive cashflow before CapEx. It's noteworthy, because it marks 4 consecutive quarters of positive corporate cash flow.

Despite the pandemic, we’ve produced positive corporate cashflow after debt service and preferred dividends of $22 million over the past 4 quarters. We generated positive corporate EBIDA each month during the quarter. At the corporate level, we generated just EBIDA $13.3 million versus about $1 million last year. We generate FFO per share of 7 cents up 22 cents over the same were last year when we had an FFO loss per share of 15 cents.

During the first quarter, all but one hotel generated positive GOP and all but 5 hotels generated positive hotel EBIDA. Our top 5 producers of GOP in the quarter where our residents in Gasland followed by our residents in Fort Lauderdale. Third was our new recently acquired residents in Austin and then followed by our residents in Anaheim and then our Courtyard Downtown Dallas, making its first appearance on the list.

Despite opening in late January and not having access to the reservation system until opening, our TownHome2, as Jeff talked about, is ramped up very quickly on the top and even the bottom line. In March, the hotel produced GOP margins of 22%, which is particularly impressive when you think about the amount of staff we have in place to handle the ramp up process.

On a preoccupied room basis at our comparable hotels, payroll and benefit costs were approximately $36, down approximately 3% from the first quarter of 2019. Comp breakfast costs were $0.8 million in the quarter, up about $0.4 million or 20 basis points over the same quarter last year, but down approximately $400,000 or 10 basis points compared to the 2019 first quarter.

As we talked about before, the brands proposed new standards that reduced some of the offerings and should lead to same store savings. So far, that still seems to be the case on a preoccupied room basis. Breakfast costs were $244 in the 2022 first quarter, which compares to $282 in the 2009 team. First quarter, a pretty meaningful decrease of approximately 13%.

On the CapEx front, the in company incurred capital expenditures of $4.1 million excluding any spending related to the Water Center development. Our 2022 capital expenditure budget was approximately $23.7 million.

But once the sale of a 4 hotels closes our total budgeted spend will be reduced to approximately $19 million. That includes 5 renovations at 5 hotels, our Hampton Inn and [Ecuador] in Portland. Both those renovations have been complete and came in about $200,000 below their budgeted cost of $4 million.

And then the later this year in the fourth quarter, we have 3 hotels scheduled for renovation, which are our residents ends in Washington, DC Downtown, our residents in White Plains, New York and Holtsford, New York.

As a reminder, we're hosting in person meetings at REIT week in early June. So please email me directly if we haven't locked up a time with you yet. I'll turn it over to Jeremy.

Thanks Dennis. Good morning, everyone. Chatham's Q1 2022 RevPAR $88 represents a 56% increase versus our Q1 2021 RevPAR of $57. And the 27.2% decline versus our Q1 2019 RevPAR of $146 dollars. RevPAR in January, the first half of February, was impacted by the Omicron wave, but performance has been strengthening significantly since mid-February. March RevPAR of $109 was down 21.6% to 2019 and April RevPAR of $119 was only down 13.4% to 2019.

The early stages of the recovery were driven primarily by leisure travel. But in recent weeks we've seen a significant uptick and midweek results, which indicates that business travel is now starting to make a meaningful recovery. We expect performance to continue to improve with decreasing RevPAR declines relative to 2019 throughout the remainder of 22, with much of this recovery being driven by improving demand for business travel. We were able to generate a Q1 GOP margin of 38.3% in hotel EBIDA a dot margin of 29.2%, despite the January and February impact of the Omicron variant. G O P margins recovered as revenue improved during quarter and in March Chatham's G O P margin reached 44.4% when RevPAR was $109.

Our Q1 2022 hotel EBIDA was $15.9 million adjusted EBIDA was $13.3 million. An adjusted FFO was 0.07 cents per share. In cash level before capital which represents hotel EBIDA, less corporate GNA cash interest. And $2.3 million of principle organization was positive $2.8 million.

Chatham took a number of steps to strengthen its balance sheet in non-dilutive ways during the pandemic and our balance sheet is now in the best shape it's ever been. At March 31st, we had $158 million of liquidity between our unrestricted cash balance of $18 million and $140 million of revolving credit facility availability.

As mentioned earlier, we have some pending asset sales, which is completed with further enhanced chats liquidity. We have no debt maturing in 2022 and only $114 million of maturities in 2023. While we have more than enough credit facility availability to absorb all of our 2023 CMBS maturities, we're likely to begin refinancing our 2023 debt maturities in the second half of 2022. With our reasonable leverage, solid liquidity and meaningful free cashflow, we are well positioned to opportunistically pursue attractive investments.

In Q1, we completed the development of the $70 million home to Warner Center, which opened on January 24th and acquired the Hilton Garden in Dustin for $31 million on March 8th. These 2 new high-quality hotels along with the Residents Inn and TPS Austin, which were acquired last year, will meaningfully enhance Chatham's growth and the quality of our portfolio.

We plan to continue enhancing the quality of our portfolio by acquiring new hotels and markets with strong growth and recycling capital in cases where we've resale prices are attractive relative to future growth prospects. We are very encouraged by the improving operating trends that we have seen in March and April, especially the recent strength we have seen in business travel, the growth that we expect in Austin acquisitions and the Warner Center development to generate and our ability to pursue additional growth opportunities, given our strong balance sheet in significant liquidity.

While we're not going to provide guidance at this time, for those of you building your own projections. I want to remind you that Q2 will include a full quarter of interest expense associated with the Home2Warner Center. And the borrower used to finance the acquisition of the Hilton Garden in Dustin.

Based on our debt balance, as of March 31st, our cash interest for Q2 should be approximately $7.1 million with gap interest of approximately $7.5 million, including amortization of financing costs. This concludes my portion of the call. Operator, please open the line for questions.

Our first question comes from the line of Anthony Powell with Barclays.

Appreciate all the color on business travel is definitely encouraging. I guess looking at leisure travel, had you seen any guess decline in either rate or demand on a year over year basis relative to 2021? And what's your outlook for those that segment as we kind of approach the peak summer timeframe?

Yes, this is Jeff. Hi Anthony. I think it's fair to say we will be a better judge of that -- and most folks will be -- this summer when, especially our North-eastern and New England hotels experience a huge amount of demand there. But I will say that every, particularly weekend and now midweek, our highest ADR hotels are leisure related for the most part, whether it's Il Lugano, Savannah -- crazy, crazy winter there. Wonderful winter there. Great spring there. So I would say leisure demand is still very, very strong, very strong.

Yes. I think just based on comments from our operator, Anthony the Northeast hotels that Jeff just alluded to Exeter and Portland and Portsmouth feel pretty good at the moment about this summer.

Got it. So no real sign of any kind of like consumer weakness, really due to inflation or price fatigue. It sounds like things at least as of now are not showing that, is that fair?

Not showing up yet. I think we'll have to wait and see where this economy goes. But you know, our efforts, especially on the operating side are just all around maximizing and working the corporate accounts now that they're showing willingness, you know, to start traveling again.

Yes, thanks. And maybe related -- as you kind of get out the covenant wave and as you start to kind of at buy hotels over the next few quarters, now there's a lot of talk about business travel coming back and that being favorable, but most of the acquisitions across the industry have been leisure focused. I mean, and I know Austin is a bit of a mix. I'm curious as you seek to grow the portfolio size again, what's kind of the target hotel and has it shifted over the past few quarters?

We haven't really substantially shifted our focus and we're never afraid of acquiring business related, or driven hotels as evidenced by Austin. I mean domain, tech driven, all you hear about the next word and second word after Austin is always tech. And there we were in Silicon Valley with no business and we bought these hotels.

But as you said, there's some diversified demand generators there as well. And we'll certainly continue to look for markets like that that have some other sources of business. One thing that we tried not to do is just completely shift our strategy in terms of the kind of hotels that we believe in because we've experienced -- for me almost 40 years of doing this -- very, very good results in the kind of business and frankly, the kind of brands and particularly extended stay. And that's not a new idea on our part either, as you well know, even though it's being talked about as the best part of the lodging business for the most part, especially during the pandemic. So I think that we feel good about our focus and the brands that we do look to acquire.

Our next question comes from the line of Aryeh Klein with BMO Capital Markets.

Maybe just on Silicon Valley, it looks like it's on the path to recovery this Summer with interns coming back. How are you thinking about the occupancy recovery more broadly through the portfolio and through the remainder of the year. Given that what's been lagging seems to be recovering pretty strongly here. How close can we get to 2019 occupancies over the second, third quarter?

Hey, Aryeh, Good morning. This is Dennis. Listen, I think we're going to get pretty close to 2019 levels from an occupancy perspective in the second half of the year. Once in this intern business, we started talking to them earlier this year and that's kind of morphed over the last 120 days in the expansion of the intern programs. Now we're really seeing some robust requests for rooms outside of the intern business. Even starting this month with some long-term corporate business, IE, 2 to 4 weeks of it. And the relationships and the good will that we've built, I think over the last 2 plus years with some of our key corporate clients -- they're talking about and wanting to secure rooms for the Fall, again for kind of some more long-term product development type business as well.

So I think we're pretty encouraged at the moment of what that second half of the year looks like from an occupancy perspective. And just from a rate perspective, Ari I think it's important to note that when we first were negotiating intern rates for this Summer, as Jeff to talked about, their about $20 or 10% below 2019. But since we kind of allocated the first chunk of rooms to the intern program and those companies and other companies are coming back for additional demand, those rooms are getting priced substantially higher. I think that bodes well for post intern business into the Fall and for the rest of the year. So I think not only from an occupancy perspective, but a rate perspective things are looking pretty good out there.

Right. And, and just following up on that, are those rates -- those rebooking or new booking rates higher than the original rates or higher than…

Yes, absolutely. Higher than the original and higher than 2019.

Got it. And then just on the supply side, it seems like the environment is improving with lower supply outlooks, but if you can just talk across portfolio, what you're seeing there.

Yes. Aryeh, I think from a supply perspective we're set up, I think pretty well. We absorbed a tremendous amount of supply leading into the pandemic. I think one of every select service brand was in one of our -- were introduced if not more than one in certain of our key markets. So I think as we're in this period, post pandemic, very little new supply in those markets. I think if you look at kind of what's being announced and new developments that are out there -- those are in new markets that generally we're not in. So I think we're pretty confident that we have a pretty good runway here.

Our next question comes from the line of Kyle Menges with B. Riley Securities.

I was curious, you mentioned the 4 hotels that you have under agreement to sell. Those were among the 15 lowest performing hotels in the portfolio. I'm curious for opportunities to sell the other 11.

Well, I mean, listen, I, yes, we're not going to sell all the other 11, but I think it's really just a highlight of those assets have really been kind of just steady producers of RevPAR, but certainly nothing from a major growth perspective or anything like that. So we're going to continue. And 2 of those, as Jeff mentioned, and as prepared comments are being converted to multifamily within I think a short timeframe. So we'll just continue to be opportunistic with recycling capital, which is what we've been doing.

But listen, I think even though those 4 are definitely below our portfolio averages, we're not just going to up and mass sell any of our lower REVpar. We believe that those assets, some nice room for growth from here on.

Okay. Thanks for that (inaudible). And then how do you feel like you're situated from a staffing perspective, especially in Silicon Valley as occupancy expected to ramp through 2022?

Yes. Good question. And, and I think, you know, one of the benefits, and again, I think in just prepared remarks that he talked about, the beauty of that intern business is we're going to be running 90% to a 100% occupancy in those 5 hotels. And with that intern program, we might be cleaning the rooms once a week. I think for the most part, at least no more than once a week. So even in a hotel like that, and even in a market like that, hotels are hiring a lot of people because hotel because their occupancies are starting to ramp up, we're not going to need the same level of housekeeping services because the frequency of cleaning's going to be so little. So that bodes well to be really high margin business for the summer.

So from a staffing perspective, we're generally in a pretty good position across the portfolio, especially in those 5 hotels.

Our next question comes from the line of Tyler Batory from Oppenheimer.

Few follow up for me here in terms of the asset sales. Did you run a process for these were these inbound inquiries? And can you also talk about pricing valuations for these properties now versus potentially pre COVID and then also, I'm not sure if you can say how much EBIDA they contributed to 2019 as well.

Yes, Tyler we'll talk about kind of pricing and everything, but the 4 hotels, I think generated $2.2 million of EBIDA in 2019 -- in 2021. In the recently acquired Dustin hotel actually had 2021 hotel EBIDA $2.3 million. So that one hotel is producing more than the 4 that are out. the pricing we think is attractive. It's a, it was a 6% cap rate on 2019 NOI and a 2% cap rate on 2021 NOI.

Those assets were part of a process that we've been working on. And I think we've talked publicly about here for a couple of quarters that we were going to look to opportunistically sell some assets. And again, I think one of the keys is that, again, 2 of those 4 hotels are ultimately going to be converted from multifamily use, which obviously from a multifamily buyer, they're able to get a great product at a reasonable cap rate, but it's a very attractive cap rate for us.

Okay, great. In terms of trends in the business here is the base case that May is better than April. June's better than May. July is better than June, et cetera. And we just continue to progress going forward. And do you think it, it plays out like that sequentially is that a reasonable expectation here?

Yes, it should. Yes, it should. And that also reverts back to what I would call normal seasonality if you think about our portfolio or the hotel business. So you'll get that kind of run up as you always did it in the past, and then once October's done, you know, then you start into lower seasonal months.

Okay. And then just last in terms of the dividend, I know you want to see continued improvement in the business, travel, see the return in the tech markets -- I mean, can you -- any more specific color in terms of trigger points that you're looking for? I mean is there a RevPAR level perhaps, or comparing EBIDA versus 2019? Just trying to get a sense of perhaps a benchmark that you might look at to, to start thinking more seriously about reinstating the dividends.

It's really all of those things. There's no one thing. Taxable income drives the board's decision obviously, but I think it's considering every metric that you can in terms of where the cash flow is and where it's going.

Okay. and then just the last one, I wanted to put a finer point on the corporate travel commentary. Are you seeing any price sensitivity from that guest as they're starting to come back and traditionally when you look at leisure versus corporate, it's usually the corporate side of things that's not that price sensitive, but the past 6 plus months perhaps it's a leisure that was less price sensitive. So as corporate starts to come back and is your expectation that's the pricing power should be similar to what we've seen in some of these leisure focused hotels where you can, I'm sure in some circumstances, essentially charge whatever you want and guests are still coming.

Well, I wouldn't say we can charge whatever we want, but I will say that the business traveler, at least so far, and as we've kind of looked over the next 4 or 5 months, is less averse to pricing as they were pre pandemic. I think they've -- most travelers have been conditioned over the last year and a half, especially, for increasing rates.

We have certainly an inflationary environment where everybody's paying more for everything that they're buying on a daily basis. So I think, again, there's less aversion to what that pricing is at the moment. And I think as we talked about in our prepared comments, our message really since last year has been push rate, hold rate, the travelers are going to be there and let's capture as much as what we can as you know while we're in kind of this environment.

At this time, we have reached the end of the question and session, and I will now turn the call back over to Jeff Fisher for any closing remarks.

We appreciate it. Thanks everybody for being on the call. And again, we'll continue to do what we're doing and look forward to our next call with even better results as we go forward. Thank you.

This concludes today's conferencing may disconnect your lines at this time. Thank you for your participation and have a great day.