Service Properties Trust (NASDAQ:SVC) Q2 2023 Earnings Conference Call August 8, 2023 10:00 AM ET

Company Participants

Stephen Colbert - Director, IR

Todd Hargreaves - President & CIO

Brian Donley - CFO & Treasurer

Conference Call Participants

Bryan Maher - B. Riley Securities

Dori Kesten - Wells Fargo Securities

Tyler Batory - Oppenheimer

Operator

Good morning, and welcome to the Service Properties Trust Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Stephen Colbert, Director of Investor Relations. Please go ahead, sir.

Stephen Colbert

Good morning. Joining me on today's call are Todd Hargreaves, President and Chief Investment Officer; and Brian Donley, Treasurer and Chief Financial Officer. .

Today's call includes a presentation by management, followed by a question-and-answer session with analysts. Please note that the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of SEC. I would like to point out that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws.

These forward-looking statements are based on SVC's present beliefs and expectations as of today, August 8, 2023. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC, which can be accessed from our website at secreit.com or the SEC's website.

The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. In addition, this call may contain non-GAAP financial measures, including normalized funds from operations or normalized FFO and adjusted EBITDAre. Reconciliations of these non-GAAP financial measures to net income as well as components to calculate AFFO are available in our supplemental operating and financial data package which can be found on our website.

With that, I'll turn the call over to Todd.

Todd Hargreaves

Thank you, Stephen, and good morning. SVC second quarter results reflect the continued improvement in our hotel portfolio as year-over-year comparable RevPAR gains outpaced the industry for the sixth consecutive quarter driven by increases in both ADR and occupancy. Portfolio RevPAR for our 219 comparable hotels increased 2.8% with ADR increasing 2.4% and occupancy increasing by 30 basis points. While leisure demand has softened in markets like Miami, Scottsdale, Fort Lauderdale and Hilton Head, SVC's portfolio benefited due to our higher relative exposure to urban markets and reliance on business travel. We reported year-over-year RevPAR gains in our select service and full service portfolios of 3.8% and 3.6%, respectively, resulting from the recovery of urban markets, specifically on the East Coast and Midwest, and improving trends in business transient, group and contract business.