Summit Hotel Properties, Inc. (NYSE:INN) Q1 2024 Earnings Call Transcript May 2, 2024 9:00 AM ET

Company Participants

Adam Wudel - SVP, Finance, Capital Market and Treasurer
Jon Stanner - President & Chief Executive Officer
Trey Conkling - Executive Vice President & Chief Financial Officer

Conference Call Participants

Austin Wurschmidt - KeyBanc Capital Markets
Bill Crow - Raymond James
Chris Woronka - Deutsche Bank
Michael Bellisario - Baird

Operator

Welcome to the Summit Hotel Properties’ 2024 First Quarter Earnings Conference Call.

I will now be passing the line to Adam Wudel, Senior Vice President of Finance, Capital Markets and Treasurer.

Adam Wudel

Thank you, Howard, and good morning. I am joined today by Summit Hotel Properties' President and Chief Executive Officer, Jon Stanner; and Executive Vice President and Chief Financial Officer, 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, May 2, 2024, 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 website 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 first quarter 2024 earnings conference call. We were extremely pleased with our first quarter operating performance and financial results as adjusted EBITDAre increased 10% and adjusted FFO increased 14% compared to the first quarter of last year. Pro forma RevPAR increased 1.5% year-over-year and meaningfully outperformed the total US lodging industry and upscale chain scale by 130 basis points and 140 basis points, respectively. Our asset management team and operating partners did a terrific job managing expenses during the quarter, resulting in hotel EBITDA growth of 6% and margin expansion of over 80 basis points compared to the first quarter of last year. And yesterday, we announced the closing of three additional asset sales, an increase in our common dividend and a revised 2024 guidance range that reflects our strong first quarter results and a constructive outlook for the remainder of the year.

On today's call, Trey and I will provide more details on our first quarter results and recent capital allocation activity, as well as highlight our longer term view on the industry outlook and Summit's relative positioning. Fundamentals continued to improve across the company's portfolio in the first quarter as our RevPAR growth was driven by a 3% increase in occupancy, predominantly concentrated in urban and suburban markets, which was partially offset by a 1.4% decrease in average rate versus the prior year, which was predominantly concentrated in outperforming leisure-oriented markets. Our RevPAR growth continues to be driven by weekday and urban demand, which increased approximately 4% and 3%, respectively, in the first quarter. More specifically, total portfolio RevPAR on Mondays, Tuesdays and Wednesdays increased by 5% year-over-year and a robust 7% when isolating those days of the week to the company's urban portfolio, further evidence of strong group business and the continuing recovery of corporate transient demand.