Summit Hotel Properties, Inc. (NYSE:INN) Q3 2022 Results Conference Call November 2, 2022 9:00 AM ET

Company Participants

Adam Wudel - Senior Vice President of Finance, Capital Markets and Treasurer

Jon Stanner - President and Chief Executive Officer

Trey Conkling - Executive Vice President and CFO

Conference Call Participants

Neil Malkin - Capital One

Michael Bellisario - Baird

Austin Wurschmidt - KeyBanc

Operator

Good day, and thank you for standing by. Welcome to the Summit Hotel Properties Q3, 2022 Conference Call [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Adam Wudel, Senior Vice President of Finance, Capital Markets and Treasurer. Please go ahead.

Adam Wudel

Thank you, and good morning. I am joined today by Summit Hotel Properties' President and Chief Executive Officer, Jon Stanner; and Executive Vice President and CFO, Trey Conkling. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our SEC filings. Forward-looking statements that we make today are effective only as of today, November 3rd, 2022, and we undertake no duty to update them later. 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 Web site at www.shpreit.com.

Please welcome Summit Hotel Properties' President and CEO, Jon Stanner.

Jon Stanner

Thanks, Adam, and thank you all for joining us today for our third quarter 2022 earnings conference call. We were encouraged by our third quarter results, which reflect the ongoing improvement in our operating fundamentals, as same store RevPAR recapture was 95% of 2019 levels for the quarter, a 120 basis point increase from the second quarter and a new quarterly high for our portfolio. The quarter was highlighted by a particularly strong September when both same store and comparable 2019 portfolio RevPAR recapture reached 98%. This represented our best operating performance of any month since the onset of the pandemic, as business transient, midweek and urban demand improved meaningfully post Labor Day and are increasingly driving growth in our business. Top line growth continues to be driven by strong pricing power, as average daily rates are now consistently running higher than 2019 levels across nearly all segments of our business. For the third quarter, same store and comparable portfolio ADRs were approximately 4% higher than 2019, both of which represented an approximately 200 basis point improvement from the second quarter. While ongoing labor challenges persist in our industry and rising utility costs, combined with a particularly hot summer across the Sunbelt, put pressure on operating margins. Hotel EBITDA recapture reached 92% in our same store portfolio, an improvement from the second quarter despite seasonally driven lower nominal rates and RevPAR quarter-over-quarter. Once again, September's results highlighted the quarter, as hotel EBITDA was 6% above 2019 in our same store portfolio. The first month hotel EBITDA was ahead of 2019. Same store property level EBITDA margins exceeded 2019 levels by nearly 300 basis points in September.