Q4 2025 RLJ Lodging Trust Earnings Call

February 27, 2026

Speaker #2: After the presentation, there will be an opportunity to ask questions. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker #2: I would now like to turn the call over to John Paul Austin, Director of Investor Relations. Please go ahead.

Speaker #3: Thank you, operator. Good morning and welcome to RLJ Lodging Trust 2025 fourth quarter and full year earnings call. On today's call, Leslie Hale, our president and chief executive officer, will discuss key highlights for the quarter.

Nikhil Bhalla: Thank you, operator. Good morning, and welcome to RLJ Lodging Trust's 2025 Q4 and full year Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Nikki Obala, our Chief Financial Officer, will discuss the company's financial results. Tom Bardenett, our Chief Operating Officer, will also be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated. Factors that may impact the results of the company can be found in the company's Form 10-K and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release.

John Paul Austin: Thank you, operator. Good morning, and welcome to RLJ Lodging Trust's 2025 Q4 and full year Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Nikki Obala, our Chief Financial Officer, will discuss the company's financial results. Tom Bardenett, our Chief Operating Officer, will also be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated. Factors that may impact the results of the company can be found in the company's Form 10-K and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release.

Speaker #3: Nikhil Bhalla, our Chief Financial Officer, will discuss the company's financial results. Tom Bardenet, our Chief Operating Officer, will also be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated.

Speaker #3: Factors that may impact the results of the company can be found in the company's 10-K and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements.

Speaker #3: Also, as we discussed, certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release. Finally, please refer to the schedule of supplemental information which includes pro forma operating results for our current hotel portfolio for 2025.

Nikhil Bhalla: Finally, please refer to the schedule of supplemental information, which includes pro forma operating results for our current hotel portfolio for 2025. I will now turn the call over to Leslie.

John Paul Austin: Finally, please refer to the schedule of supplemental information, which includes pro forma operating results for our current hotel portfolio for 2025. I will now turn the call over to Leslie.

Speaker #3: I will now turn the call over to Leslie.

Speaker #4: Thanks, John Paul. Good morning, everyone, and thank you for joining us today. We were pleased with our solid fourth quarter results, which came in ahead of our expectations.

Leslie D. Hale: Thanks, John Paul. Good morning, everyone, thank you for joining us today. We were pleased with our solid Q4 results, which came in ahead of our expectations, despite a choppy operating environment that was further constrained by the protracted government shutdown. Our operating results benefited from the continued outperformance of our urban markets, the ramp of our completed high occupancy renovations, as well as our robust growth in non-rooms revenue. These factors, combined with disciplined cost management, contributed to our better-than-expected bottom-line results. The Q4 capped a highly productive year for us, during which we delivered our Nashville conversion and continued ramping our completed conversions, which on average, achieved RevPAR growth that was nearly 700 basis points ahead of our broader portfolio... We advanced the next phase of our pipeline, including the selection of the brand for our Boston conversion.

Speaker #4: Despite a choppy operating environment that was further constrained by the protracted government shutdown, our operating results benefited from the continued outperformance of our urban markets, the ramp of our completed high-occupancy renovations, as well as our robust growth in non-rooms revenue.

Speaker #4: These factors combined with disciplined cost management contributed to our better-than-expected bottom line results. The fourth quarter capped a highly productive year for us, during which we delivered our Nashville conversion and continued ramping our completed conversions which, on average, achieved REPPAR growth that was nearly 700 basis points ahead of our broader portfolio.

Speaker #4: We advanced the next phase of our pipeline, including the selection of the brand for our Boston conversion. We completed transformative renovations of several hotels in high-demand markets.

Leslie D. Hale: We completed transformative renovations of several hotels in high-demand markets. We achieved robust non-room revenues well in excess of our RevPAR performance, validating investments in our ROI initiatives. We strengthened our balance sheet by addressing all of our near-term debt maturities. We executed on opportunistic asset sales at accretive multiples, and we returned significant capital to shareholders in the form of dividends and share repurchases. The execution of these initiatives has strengthened our long-term growth profile and further bolstered confidence in our ability to deliver on our value creation initiatives, even in an uncertain environment. With respect to our operating performance, our Q4 RevPAR decline of 1.5% came in better than what we had anticipated in the midst of the government shutdown.

Speaker #4: We achieved robust non-room revenues well in excess of our REPPAR performance. Validating investments in our ROI initiatives, we strengthened our balance sheet by addressing all of our near-term debt maturities.

Speaker #4: We executed on opportunistic asset sales at a creative multiples and we returned significant capital to shareholders in the form of dividends and share repurchases.

Speaker #4: The execution of these initiatives has strengthened our long-term growth profile and further bolstered confidence in our ability to deliver on our value creation initiatives, even in an uncertain environment.

Speaker #4: With respect to our operating performance, our fourth quarter REPPAR decline of 1.5% came in better than what we had anticipated in the midst of the government shutdown.

Speaker #4: These improved top-line results were driven by the relative outperformance of our urban markets, a stronger-than-expected acceleration of the ramp at our major renovations as the shutdown ended, as well as an overall stronger December, which benefited from positive leisure demand despite a difficult year-over-year comparison for the month.

Leslie D. Hale: These improved top-line results were driven by the relative outperformance of our urban markets, a stronger-than-expected acceleration of the ramp at our major renovations as the shutdown ended, as well as an overall stronger December, which benefited from positive leisure demand despite a difficult year-over-year comparison for the month. Our urban hotels continued to be a key driver of our performance as they captured positive trends across a broad range of demand sources this quarter. Among our urban markets, San Francisco CBD was once again the top performer, achieving 52% RevPAR growth in the quarter, supported by growth from all demand segments, as well as the calendar shift for the Dreamforce conference into the Q4.

Speaker #4: Our urban hotels continue to be a key driver of our performance. As a captured positive trend across a broad range of demand sources this quarter, among our urban markets, San Francisco CBD was once again the top performer.

Speaker #4: Achieving 52% RevPAR growth in the quarter, supported by growth from all demand segments as well as the calendar shift for the Dreamforce conference into the fourth quarter.

Speaker #4: We are encouraged by the ongoing momentum in San Francisco's recovery, supported by a thriving tech economy, improving perception of the overall local environment, and a strong lineup of events this year, including the recent Super Bowl, which was wildly successful, as well as the upcoming World Cup games.

Leslie D. Hale: We are encouraged by the ongoing momentum in San Francisco's recovery, supported by a thriving tech economy, improving perception of the overall local environment, and a strong lineup of events this year, including the recent Super Bowl, which was wildly successful, as well as the upcoming World Cup games. From a segmentation standpoint, our non-government related business transient revenues grew by 5% during the quarter. With our highest-rated customer demand segment continuing to grow, corporate rates were up a solid 2%. Overall, non-government business travel demand continues to benefit from the resiliency of the economy and healthy corporate profits, especially in sectors such as tech, finance, and consulting, which continue to see positive momentum in return to office trends. However, government business demand was further impacted during the quarter by the shutdown, primarily affecting our DC and Southern California markets.

Speaker #4: From a segmentation standpoint, our non-government-related business transient revenues grew by 5% during the quarter. And with our highest-rated customer demand segment continuing to grow, corporate rates were up a solid 2%.

Speaker #4: Overall, non-government business travel demand continues to benefit from the resiliency of the economy and healthy corporate profits, especially in sectors such as tech, finance, and consulting, which continue to see positive momentum in return-to-office trends.

Speaker #4: However, government business demand was further impacted during the quarter by the shutdown, primarily affecting our DC and Southern California markets. Relative to growth, our revenues were down 3% as demand for the quarter was artificially impacted by the shutdown in October and November.

Leslie D. Hale: Relative to group, our revenues were down 3%, as in the quarter, for the quarter, demand was artificially impacted by the shutdown in October and November. However, group dynamics remained strong, as evidenced by the growth in our group ADR of 4%, despite the soft demand. Regarding leisure, trends remained stable, and we were encouraged to see demand increase a healthy 1% during the quarter, although we continue to observe some price sensitivity among consumers. Our urban leisure once again saw stronger relative performance, achieving revenue growth ahead of our portfolio, driven by strong demand around the holidays. Our leisure segment also benefited from our recently renovated hotels in Waikiki and Deerfield Beach, which achieved RevPAR growth of 12% and 10%, respectively, in December, as they resumed their ramp following the end of the government shutdown.

Speaker #4: However, group dynamics remain strong, as evidenced by the growth in our Group ADR of 4% despite the soft demand. Regarding leisure, trends remain stable, and we were encouraged to see demand increase a healthy 1% during the quarter.

Speaker #4: Although we continue to observe some price sensitivity among consumers, our urban leisure once again saw stronger relative performance achieving revenue growth ahead of our portfolio.

Speaker #4: Driven by strong demand around the holidays, our leisure segment also benefited from our recently renovated hotels in Waikīkī and Deerfield Beach, which achieved RevPAR growth of 12% and 10%, respectively, in December.

Speaker #4: As they resume their ramp following the end of the government shutdown, despite softer occupancy in the quarter, we achieved strong non-room revenue growth of 7.2%, exceeding our REPPAR performance by nearly 900 basis points.

Leslie D. Hale: Despite softer occupancy in Q4, we achieved strong non-room revenue growth of 7.2%, exceeding our RevPAR performance by nearly 900 basis points, allowing us to generate positive total revenue growth. These results validate our strategy to drive high-margin, out-of-room spend and underscore the success of our ROI initiatives aimed at growing profitable food and beverage, re-concepting underutilized space, and growing other ancillary revenues. Overall, better-than-expected RevPAR performance, aided by contributions from the ramp of our completed conversions and renovations, robust non-room revenue growth, and continued disciplined cost containment drove much of the EBITDA upside relative to our expectations. Turning to capital allocation, we made significant progress on a number of fronts during Q4. We continued to ramp our completed conversions, with our four most recently completed conversions achieving 15% RevPAR growth for the full year.

Speaker #4: Allowing us to generate positive total revenue growth. These are results validate our strategy to drive high-margin out-of-room spend and underscore the success of our ROI initiatives aimed at growing profitable food and beverage reconcepting underutilized space and growing other ancillary revenues.

Speaker #4: Overall, better-than-expected RevPAR performance, aided by contributions from the ramp of our completed conversions and renovations, robust non-room revenue growth, and continued disciplined cost containment, drove much of the EBITDA upside relative to our expectations.

Speaker #4: Turning to capital allocation, we made significant progress on a number of fronts during the fourth quarter. We continue to ramp our completed conversions, with our four most recently completed conversions achieving 15% REPPAR growth for the full year.

Speaker #4: We completed transformative renovations at our high-occupancy hotels in Waikikī and Deerfield Beach, and are already seeing positive trends, with both assets generating RevPAR growth of more than 10% in December.

Leslie D. Hale: We completed transformative renovations at our high-occupancy hotels in Waikiki and Deerfield Beach and are already seeing positive trends, with both assets generating RevPAR growth of more than 10% in December. We made further progress towards our conversion of the Renaissance Pittsburgh and expect to relaunch this asset as part of Marriott's Autograph Collection this year. We advanced the programming of our Wyndham Boston Beacon Hill conversion to Hilton's Tapestry Collection, with construction slated to commence later this year. We remain on pace to deliver an average of two conversions per year and look forward to announcing our next conversion later this year. Additionally, during the quarter, we executed on the opportunistic sale of two hotels at accretive multiples and used the proceeds to pay down debt. Subsequent to the quarter, we completed a series of refinancing transactions, which addressed all of our debt maturities through 2028.

Speaker #4: We made further progress towards our conversion of the Renaissance Pittsburgh and expect to relaunch this asset as part of Merit's Autograph Collection this year.

Speaker #4: And we advanced the programming of our Wyndham Boston Beacon Hill conversion to Hilton's Tapestry Collection, with construction slated to commence later this year. We remain on pace to deliver an average of two conversions per year and look forward to announcing our next conversion later this year.

Speaker #4: Additionally, during the quarter, we executed on the opportunistic sale of two hotels at accretive multiples and used the proceeds to pay down debt.

Speaker #4: Subsequent to the quarter, we completed a series of refinancing transactions which addressed all of our debt maturities through 2028. Our strong balance sheet and liquidity continue to support the optionality that we have with respect to capital allocation.

Leslie D. Hale: Our strong balance sheet and liquidity continue to support the optionality that we have with respect to capital allocation.... This year, we returned $120 million to our shareholders through share repurchases and a well-covered dividend. Now, looking ahead, we are cautiously optimistic overall. While we acknowledge the lingering geopolitical uncertainty, we remain constructive on the setup of the broader economy, given the tailwinds expected from moderating interest rates and tax cuts, which should have positive implications for travel demand. Relative to this setup, the lodging industry is expected to achieve slightly positive RevPAR growth this year, driven by the ongoing positive momentum in non-government related business travel, increased leisure demand, especially urban leisure demand, from several unique events, particularly the World Cup Games, plus the 250th anniversary of America, in addition to healthy group dynamics.

Speaker #4: This year, we returned $120 million to our shareholders through share repurchases and a well-covered dividend. Now, looking ahead, we are cautiously optimistic overall.

Speaker #4: While we acknowledge the lingering geopolitical uncertainty, we remain constructive on the setup for the broader economy. Given the tailwinds expected from moderating interest rates and tax cuts, which would have positive implications for travel demand, relative to this setup, the lodging industry is expected to achieve slightly positive RevPAR growth this year.

Speaker #4: Driven by the ongoing positive momentum in non-government-related business travel, increased leisure demand—especially urban leisure demand—from several unique events, particularly the World Cup Games, plus the 250th anniversary of America, in addition to healthy group dynamics.

Speaker #4: We believe that these trends will disproportionately favor urban markets, allowing them to continue to outperform the broader industry. Against this backdrop, we believe we are well-positioned given our favorable geographic exposure, urban footprint, and high-impact capital investments, which should allow us to benefit from the broad-based growth across all the segments that urban markets are capturing—a favorable footprint with a number of World Cup games across nine of our markets, including prominent games in New York, Los Angeles, and Miami; the 250th anniversary of America, with large-scale related events in the Boston, New York, D.C., and Philadelphia markets; the favorable rotation of more major sporting events, including the NFL Draft, the Major League Baseball All-Star Game, and the NCAA March Madness; a healthy group pace and strong group pricing, particularly in the second quarter supported by these events; continued growth of non-room revenues driven by our successful ROI initiatives; the ongoing momentum in our Northern California market, supported by the rapid growth of the AI industry that is stimulating business travel, events, and corporate investment; and the tailwinds from the ramp of our completed conversions and high-occupancy renovations. In aggregate, these tangible catalysts and the resiliency of our urban-centric portfolio underpin our positioning for this year.

Leslie D. Hale: We believe that these trends will disproportionately favor urban markets, allowing them to continue to outperform the broader industry. Against this backdrop, we believe we are well-positioned, given our favorable geographic exposure, urban footprint, and high-impact capital investments, which should allow us to benefit from the broad-based growth across all the segments that urban markets are capturing. A favorable footprint with a number of World Cup games across 9 of our markets, including prominent games in New York, Los Angeles, and Miami. The 250th anniversary of America, with large-scale related events in the Boston, New York, DC, and Philadelphia markets. The favorable rotation of more major sporting events, including the NFL Draft, the Major League Baseball All-Star Game, and the NCAA March Madness. A healthy group pace and strong group pricing, particularly in Q2, supported by these events.

Leslie D. Hale: Continued growth of non-room revenues, driven by our successful ROI initiatives. The ongoing momentum in our Northern California market, supported by the rapid growth of the AI industry that is stimulating business travel, events, and corporate investment, and the tailwinds from the ramp of our completed conversions and high occupancy renovations. In aggregate, these tangible catalysts and the resiliency of our urban-centric portfolio underpin our positioning for this year. Our strong relative positioning is further supported by our flexible balance sheet, which will allow us to execute on our key investments. Overall, we remain confident in the long-term outlook for the lodging sector, especially against an elongated period of limited new supply, which will disproportionately benefit urban markets, allowing our urban-centric portfolio, combined with our value-creating initiatives, to drive shareholder returns long term. With that, I will turn the call over to Nikhil.

Speaker #4: Our strong relative positioning is further supported by our flexible balance sheet, which will allow us to execute on our key investments. Overall, we remain confident in the long-term outlook for the lodging sector, especially against an elongated period of limited new supply, which will disproportionately benefit urban markets—allowing our urban-centric portfolio, combined with our value-creating initiatives, to drive shareholder returns long-term.

Speaker #4: With that, I will turn the call over to Nikhil.

Speaker #1: Thanks, Leslie. To start, our comparable numbers include our 92 hotels owned at the end of the fourth quarter. Our reported corporate adjusted EBITDA and AFFO include operating results from all sold hotels during RLJ's ownership period.

Nikhil Bhalla: Thanks, Leslie. To start, our comparable numbers include our 92 hotels owned at the end of Q4. Our reported corporate adjusted EBITDA and AFFO include operating results from all sold hotels during RLJ's ownership period. As Leslie noted, our Q4 results came in ahead of our expectations. Q4 occupancy was 68.7%, average daily rate was $199, and RevPAR was $137, which translated to a 1.5% RevPAR contraction versus the prior year, comprised of a 0.9% decline in occupancy and a 0.7% decline in ADR. The government shutdown weighed on our results in both October and November, which are seasonally the highest contributors during Q4, and December faced a uniquely difficult comparison from the prior year.

Speaker #1: As Leslie noted, our fourth-quarter results came in ahead of our expectations. Fourth-quarter occupancy was 68.7%, average daily rate was $199, and RevPAR was $137, which translated to a 1.5% RevPAR contraction versus the prior year, comprised of a 0.9% decline in occupancy and a 0.7% decline in ADR.

Speaker #1: The government shutdown weighed on our results in both October and November, which are seasonally the highest contributors during the fourth quarter. And December faced a uniquely difficult comparison from the prior year.

Speaker #1: Our urban markets outperformed our portfolio by approximately half a point, benefiting from robust growth in markets such as Northern California, Denver CBD, and New York City, achieving 18.5%, 10.1%, and 4.7% REPPAR growth, respectively.

Nikhil Bhalla: Our urban markets outperformed our portfolio by approximately half a point, benefiting from robust growth in markets such as Northern California, Denver CBD, and New York City, achieving 18.5%, 10.1%, and 4.7% RevPAR growth, respectively. We were especially pleased with our non-room revenues growing by 7.2% over Q4 of last year, which led our total revenues to grow by 0.2%, driven by solid growth in F&B, parking, and other revenues. With respect to expenses, total operating costs were up only 0.8% during the quarter and up 1.6% for the full year.

Speaker #1: We were especially pleased with our non-room revenues growing by 7.2% over the fourth quarter of last year, which led our total revenues to grow by 0.2%, driven by solid growth in F&B, parking, and other revenues.

Speaker #1: With respect to expenses, total operating costs were up only 0.8% during the quarter, and up 1.6% for the full year. Our fixed expenses during the quarter benefited from a favorable insurance renewal as well as 4.7 million in real estate tax benefits as a result of our successful appeals.

Nikhil Bhalla: Our fixed expenses during the Q4 benefited from a favorable insurance renewal, as well as $4.7 million in real estate tax benefits as a result of our successful appeals, which were not contemplated in our outlook. Excluding these tax benefits, our total expenses increased only 2.1% for the full year, reflecting the benefits of our lean operating model, as well as relentless focus on enhancing productivity and managing expenses. Our ability to manage costs in a soft RevPAR environment allowed us to achieve Q4 comparable hotel EBITDA of $87.8 million and hotel EBITDA margins of 27%, which was only 44 basis points behind last year. This translated to adjusted EBITDA of $80.4 million and adjusted FFO per diluted share of $0.32 for the Q4.

Speaker #1: Which were not contemplated in our outlook. Excluding these tax benefits, our total expenses increased only 2.1% for the full year, reflecting the benefits of our lean operating model as well as relentless focus on enhancing productivity and managing expenses.

Speaker #1: Our ability to manage costs in a soft REPPAR environment allowed us to achieve fourth-quarter comparable hotel EBITDA of 87.8 million dollars and hotel EBITDA margins of 27%, which was only 44 basis points behind last year.

Speaker #1: This translated to adjusted EBITDA of $80.4 million and adjusted FFO per diluted share of $0.32 for the fourth quarter. Our team continues to work diligently to execute cost containment initiatives to minimize operating cost growth in response to the current environment.

Nikhil Bhalla: Our team continues to work diligently to execute cost containment initiatives to minimize operating cost growth in response to the current environment. We continue to actively manage our balance sheet to create additional flexibility. During 2025, we proactively addressed all of our near-term debt maturities. Subsequent to the year, we executed four financing transactions, which addressed our debt maturities through 2028 and expanded our capacity. These included the recasting of our $600 million revolver to extend maturity to 2031, upsizing and extending our existing $225 million term loan, the addition of a new $150 million term loan, and refinancing of our two mortgage loans maturing in April.

Speaker #1: We continue to actively manage our balance sheet to create additional flexibility. During 2025, we proactively addressed all of our near-term debt maturities. Subsequent to the year, we executed four financing transactions which addressed our debt maturities through 2028 and expanded our capacity.

Speaker #1: These included the recasting of our $600 million revolver to extend maturity to 2031, upsizing and extending our existing $225 million term loan, the addition of a new $150 million term loan, and refinancing of our two mortgage loans maturing in April.

Speaker #1: The term loans created approximately $500 million of new capacity which we intend to use under delayed draws to pay off $500 million of senior notes at maturity in July this year.

Nikhil Bhalla: The term loans created approximately $500 million of new capacity, which we intend to use under delayed draws to pay off $500 million of senior notes at maturity in July this year. The successful execution of these refinancing transactions will result in minimal increase to our annual interest expense, despite refinancing our lowest cost debt in a higher interest rate environment. As a result of these transactions, we have further laddered our debt maturity profile such that we will have no maturities due before 2029. Our balance sheet is well positioned with $600 million currently available under our undrawn corporate revolver, 84 of our 92 hotels unencumbered by debt, an attractive weighted average interest rate of 4.6%, and 73% of debt either fixed or hedged.

Speaker #1: The successful execution of these refinancing transactions will result in minimal increase to our annual interest expense despite refinancing our lowest cost debt in a higher interest rate environment.

Speaker #1: As a result of these transactions, we have further laddered our debt maturity profile such that we will have no maturities due before 2029.

Speaker #1: Our balance sheet is well positioned, with $600 million currently available under our undrawn corporate revolver. Eighty-four of our ninety-two hotels are unencumbered by debt, and we have an attractive weighted average interest rate of 4.6%, with 73% of our debt either fixed or hedged. We ended the fourth quarter with over $1 billion of liquidity and $2.2 billion of debt, and the company's weighted average debt maturity will be approximately 4.5 years.

Nikhil Bhalla: We ended Q4 with over $1 billion of liquidity and $2.2 billion of debt. The company's weighted average debt maturity will be approximately 4.5 years post the payoff of the senior notes. We continue to leverage the flexibility offered by our healthy balance sheet to unlock embedded value across our portfolio through high value conversions and renovations, while remaining committed to returning capital to shareholders. During 2025, we advanced our Nashville and Pittsburgh conversions and executed 4 transformative renovations. Additionally, we sold 3 properties for $73.7 million in aggregate at a highly accretive multiple of 17.7x projected 2025 hotel EBITDA, including required CapEx.

Speaker #1: Post the payoff of the senior notes. We continue to leverage the flexibility offered by our healthy balance sheet to unlock embedded value across our portfolio through high-value conversions and renovations, while remaining committed to returning capital to shareholders during 2025.

Speaker #1: We advanced our Nashville and Pittsburgh conversions and executed for transformative renovations. Additionally, we sold three properties for $73.7 million in aggregate at a highly accretive multiple of 17.7 times projected 2025 hotel EBITDA, including required CapEx.

Speaker #1: We recycle substantially all of these proceeds into the repurchase of 3.3 million shares for $28.6 million and our refinancing efforts, inclusive of the paydown of a first mortgage.

Nikhil Bhalla: We recycled substantially all of these proceeds into the repurchase of 3.3 million shares for $28.6 million, and our refinancing efforts, inclusive of the paydown of a first mortgage. Finally, we continue to pay an attractive and well-covered quarterly dividend of $0.15 per share. We will continue to make prudent capital allocation decisions to position our portfolio to drive growth through the entire cycle, while maintaining a strong and flexible balance sheet. Turning to our outlook. Based on our current view, we are providing full year guidance, which at the midpoint, assumes a continuation of the current operating environment. For 2026, we expect comparable RevPAR growth to range between 0.5% and 3%. Comparable hotel EBITDA between $344 million and $374 million.

Speaker #1: Finally, we continue to pay an attractive and well-covered quarterly dividend of $0.15 per share. We will continue to make prudent capital allocation decisions to position our portfolio to drive growth through the entire cycle.

Speaker #1: While maintaining a strong and flexible balance sheet . Turning to our outlook Based on our current view , we are providing full year guidance which at the midpoint assumes a continuation of the current operating environment for 2026 , we expect comparable growth to range between 0.5% and 3% , comparable hotel EBITDA between 300 and $44 million and $374 million .

Speaker #1: Corporate adjusted EBITDA between 300 and $12 million and $342 million , and adjusted FFO per diluted share to be between $1.21 and $1.41 , which assumes no additional repurchases Our outlook assumes no additional acquisitions , dispositions or balance sheet activity beyond what has been completed to date We estimate capital expenditures will be in the range of $80 million to $90 million .

Nikhil Bhalla: Corporate adjusted EBITDA between $312 million and 342 million. Adjusted FFO per diluted share to be between $1.21 and 1.41, which assumes no additional repurchases. Our outlook assumes no additional acquisitions, dispositions, or balance sheet activity beyond what has been completed to date. We estimate capital expenditures will be in the range of $80 million to 90 million. Cash G&A will be in the range of $32.5 million to 33.5 million, and expect net interest expense will be in the range of $101 million to 103 million. We also expect total revenue growth will outpace RevPAR growth due to the continuing success of our initiatives to drive out of room spend.

Speaker #1: Cash G&A will be in the range of $32.5 million to $33.5 million, and we expect net interest expense will be in the range of $101 million to $103 million.

Speaker #1: We also expect total revenue growth will outpace reef par growth due to the continuing success of our initiatives to drive out of room spend With respect to the cadence for the year , we expect the first quarter to be the softest quarter as we lap difficult year over year comparisons in DC from the inauguration and increased demand at our Southern California hotels following the wildfires January rebar was down 1.9% , reflecting these difficult comparisons based on our current visibility .

Nikhil Bhalla: With respect to the cadence for the year, we expect Q1 to be the softest quarter as we lap difficult year-over-year comparisons in DC from the inauguration and increased demand at our Southern California hotels following the wildfires. January RevPAR was down 1.9%, reflecting these difficult comparisons. Based on our current visibility, we expect the contribution for Q1 adjusted EBITDA to represent approximately 22% of our full year outlook. As we move beyond Q1, we expect Q2 contribution to be similar to last year, with the balance of the contribution in the back half of the year. As you bridge between 2025 and 2026 adjusted EBITDA, please keep in mind the adjustments for the asset sales as well as the non-recurring property tax credits of $4.7 million during Q4.

Speaker #1: We expect the contribution from first-quarter adjusted EBITDA to represent approximately 22% of our full-year outlook as we move beyond the first quarter.

Speaker #1: We expect the second quarter contribution to be similar to last year, with the balance of the contribution in the back half of the year.

Speaker #1: As you bridge between 2025 and 2026, adjusted EBITDA—please keep in mind the adjustments for the asset sales, as well as the non-recurring property tax credits of $4.7 million during the fourth quarter.

Speaker #1: Finally , please refer to our press release from last evening for additional details on our outlook and to our schedule of supplemental information , which will include comparable 20 , 25 and 2024 quarterly and annual operating results for our 92 hotel portfolio Thank you .

Nikhil Bhalla: Finally, please refer to our press release from last evening for additional details on our outlook and to our schedule of supplemental information, which will include comparable 2025 and 2024 quarterly and annual operating results for our 92 hotel portfolio. Thank you, and this concludes our prepared remarks. We will now open the line for Q&A. Operator?

Speaker #1: And this concludes our prepared remarks. We will now open the line for Q&A. Operator?

Speaker #2: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed.

Speaker #2: A confirmation tone will indicate your line is in the question queue . You may press star two . If you would like to remove your question from the queue .

Speaker #2: And for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys Our first question is from Austin , Wurschmidt with KeyBanc Capital Markets .

Speaker #2: Please proceed

Speaker #3: Hey, good morning, it's Josh Friedland on for Austin. How much benefit are you guys assuming from the World Cup? And then, separately, from easier comps due to the government shutdown? And how much of the growth this year are you expecting to come from that?

Austin Wurschmidt: Hey, good morning. It's Austin Wurschmidt going on for Austin. How much benefit are you guys assuming from the World Cup, and then separately, from easier comps due to the government shutdown? How much of the RevPAR growth this year are you expecting to come from rate growth versus occupancy?

Speaker #3: Rate growth versus occupancy

Leslie D. Hale: Hey, good morning. Let me unpack all of our, you know, all of our building blocks for what's embedded, you know, at the midpoint of our guidance, based on your question. I would say, from a balance perspective, we're balancing rate and occupancy. We see it, you know, equally weighted, you know, for, you know, at the midpoint. When we think about, you know, segmentation, we're assuming that BT is going to continue to improve on the strength of national accounts that continue to come back in terms of frequency and length of stay.

Speaker #4: So hey , good morning . I let me unpack all of our , you know , all of our building blocks for what's embedded .

Speaker #4: You know , at the at the midpoint of of our guidance , based on your question , I would say from a balanced perspective , we're we're balancing rate and occupancy .

Speaker #4: We see it , you know , equally weighted , you know , for , you know , at the midpoint when we think about , you know , segmentation , we're assuming that BT is going to continue to improve on the strength of national accounts that continue to come back in terms of frequency and length of stay .

Speaker #4: We're also assuming that because our highest rated customers coming back , that we're going to see rate growth . The BT side and that is going to benefit from the holiday calendars shift , which is having seen a lot of holidays on the weekends Additionally , we're assuming that leisure demand is expected to increase in 2026 on the strength of the unique events .

Leslie D. Hale: We're also assuming that because our highest rated customer is coming back, that we're going to see rate growth on the BT side, and that BT is going to benefit from the holiday calendars shift, which is haven't seen a lot of holidays on the weekends. Additionally, we're assuming that leisure demand is expected to increase in 2026 on the strength of the unique events. We think urban leisure is going to continue to outperform. We think that rate is going to be a key driver of growth in 2026 for leisure, which was not in 2025, and that our leisure is going to benefit from the ramp of our high occupancy renovations that we did last year, which are in leisure markets.

Speaker #4: We think urban leisure is going to continue to outperform. We think that rate is going to be a key driver of growth in 2026 for leisure, which was not the case in 2025, and that our leisure is going to benefit from the ramp of our high-occupancy renovations that we did last year, which are in leisure markets.

Leslie D. Hale: you know, group is going to see pace ahead of 2025 in the Q2, Q3, and Q4. All of those things are going to benefit urban, which is going to continue to outperform the industry, particularly on the strength of San Francisco. If I drill down on the special events for World Cup, we've got 9 markets that are benefiting from World Cup with 63 games, and we have prominent games in Miami, New York, and LA, and that's translating into about 45 basis points of pickup for us.

Speaker #4: And , you know , group is going to see a pace ahead of 2025 . In the second , third and fourth quarter and that all of those things are going to benefit urban , which is going to continue to outperform the industry , particularly on the strength of San Francisco .

Speaker #4: And then if I drill down on the special events for World Cup , we've got nine markets that are benefiting from World Cup with 63 games , and we have prominent games in Miami , New York and LA , and that's translating into about 45 basis points of pickup for us .

Speaker #4: I would say . Additionally , you know , as we mentioned last year , we were impacted by our high occupancy renovations . And so this year we're getting the benefit of that .

Leslie D. Hale: I would say additionally, you know, as we mentioned last year, we were impacted by our high occupancy renovations, this year we're getting the benefit of that in Waikiki, Deerfield, and Key West, and that's going to translate into an incremental 40 basis points for us. That's on top of the benefits from the special events, the 250th anniversary in DC, Boston, New York, and Philly, as well as more regional games that we're getting from March Madness. We also have the Final Four in our footprint this year as well, that's incremental to the Super Bowl that benefited San Francisco. In aggregate, those things are reflected, you know, in the midpoint of, you know, of our, of our range.

Speaker #4: And Waikiki, Deerfield, and Key West, and that's going to translate into an incremental 40 basis points for us. And that's on top of the benefits from the special events.

Speaker #4: And the hundred and 50th anniversary in DC , Boston , New York , and Philly , as well as more regional games that we're getting from March Madness .

Speaker #4: And we also have the Final Four in our footprint this year as well. And that's incremental to the Super Bowl that benefited San Francisco in aggregate.

Speaker #4: Those things are reflected in the midpoint of our range.

Speaker #3: Okay . Thank you for that . That's really helpful . My second question , how are you prioritizing capital allocation today between asset sales and possible share repurchases , given where your stock is trading and what would need to change either in valuation or transaction markets for external growth to become more attractive ?

Austin Wurschmidt: Okay, thank you for that. It's really helpful. My second question, how are you prioritizing capital allocation today between asset sales and possible share repurchases, given where your stock is trading? What would need to change, either in valuation or transaction markets, for external growth to become more attractive?

Speaker #4: Yeah , I think , you know , clearly , you know , we were active this year . We recycled some capital from asset sales .

Leslie D. Hale: Yeah, I think, you know, clearly, you know, we were active this year. We recycled some capital from asset sales. We bought back shares. We executed on our conversions, with our most recent conversions, generating 15% RevPAR growth this year. We also took some actions to strengthen our balance sheet in the back half of the year as the environment softened, and we continued to pay a healthy dividend. Clearly, the balance sheet is what gives us optionality. We want to be thoughtful about balancing between near-term opportunities and long-term resiliency. We are constructive on asset sales. We will look to recycle more proceeds in 2026 and take advantage of the arbitrage and valuation while also maintaining our balance sheet.

Speaker #4: We bought back shares. We executed on our conversions, with our most recent conversions generating 1,515% growth this year. We also took some actions to strengthen our balance sheet in the back half of the year.

Speaker #4: As the environment softened and we continued to pay a healthy dividend, clearly, the balance sheet is what gives us optionality. We want to be thoughtful about balancing between near-term opportunities and long-term resiliency.

Speaker #4: We are constructive on asset sales. We will look to recycle more proceeds in 2026 and take advantage of the arbitrage and valuation, while also maintaining our balance sheet.

Speaker #4: And we're going to look to use all the tools that are available to us , not these are not mutually exclusive . You know , they have relative benefits based on the market .

Leslie D. Hale: We're going to look to use all the tools that are available to us. These are not mutually exclusive. They're, you know, they have relative benefits based on the market conditions. We want to drive value for our shareholders and grow earnings, and we think that buybacks are an important tool, you know, in our toolkit.

Speaker #4: And we want to drive value for our shareholders and grow earnings. And we think that buybacks are an important tool in our toolkit.

Speaker #3: Great. Thanks for the color.

Austin Wurschmidt: Great. Thanks for the color.

Speaker #2: Our next question is from Tyler Batory with Oppenheimer and Company . Please proceed

Operator: Our next question is from Tyler Batory with Oppenheimer & Co. Inc. Please proceed.

Speaker #5: Hey . Good morning . Thanks for taking my questions . First one for me just on the EBITDA side of things and EBITDA margin , 1% growth year over year at the midpoint .

Tyler Batory: Hey, good morning. Thanks for taking my questions. First one for me, just on the EBITDA side of things and EBITDA margin, 1% growth year-over-year at the midpoint, when you make some adjustments. Just talk a little bit more what you're seeing on the operating cost side of things and your expectations for 2026?

Speaker #5: When you make some adjustments , just talk a little bit more . What you're seeing on the operating cost side of things . And your expectations for for 2026 .

Speaker #4: Yeah , I think in aggregate , you know , our assumption is , is that expenses are going to grow about 3% . We think it's , you know , variable expenses are going to be about two .

Leslie D. Hale: Yeah, I think in aggregate, you know, our assumption is that expenses are going to grow about 3%. We think it's, you know, variable expenses are going to be about 2, and that fixed expenses are going to be about 4, excluding the tax benefit that we have. I think from a wage perspective, we're assuming kind of 3% to 4%, you know, on wage and benefits growth.

Speaker #4: And that fixed expenses are going to be about four . Excluding the tax benefit that we have . And I think from a wage perspective , we're assuming kind of 3 to 4% , you know , on on wage , wage and benefits growth

Speaker #5: Okay . Perfect . Thank you for that . And then I wanted to double click on conversions and renovations . Just remind us what's planned for 2026 .

Tyler Batory: Okay, perfect. Thank you for that. I wanted to double-click on conversions and renovations. Just remind us what's planned for 2026. I know there was some renovation disruption that impacted 2025, so I'm not sure if there's anything that's going to be happening that we should be aware about in terms of 2026. Talk a little bit about just conversions. I think you mentioned, I think it was 15% RevPAR growth in your recent conversions. Just talk a little bit more about the ramp up and just some of the performance at the hotels that you've converted recently.

Speaker #5: I know there was some renovation disruption that impacted 2025, so I'm not sure if there's anything that's going to be happening that we should be aware of in terms of 2026. And then talk a little bit about just conversions.

Speaker #5: I think you mentioned , I it was 15% revenue growth in your recent conversions . Just talk a little bit more about the ramp up and just some of the performance at the hotels that you've converted recently .

Leslie D. Hale: Sure, Tyler, and just catch me if I missed part of your question. I think in terms of on a relative basis, recall that last year we mentioned that-

Speaker #4: Sure , Tyler and just catch me if I missed part of your question , but I think in terms of on a relative basis , recall that last year we mentioned that the the types of renovations we did last year were high occupancy renovations .

Leslie D. Hale: Sure, Tyler, and just catch me if I missed part of your question. I think in terms of on a relative basis, recall that last year we mentioned that-

Tom Bardenett: ... The types of renovations we did last year were high occupancy renovations, and so by nature of the occupancy and how they performed throughout the year, you were gonna have some level of disruption. That's not the case for this year. You see we have lower CapEx for this year. That's also a function that these are smaller assets relative to what we did last year. The largest asset that we have this year is really gonna be Boston, which is gonna be in the latter part of the year after all of the special events. We don't, you know, expect to indicate disruption as a headwind for us, you know, this year. I think as it relates to the conversion, we've completed seven conversions.

Leslie D. Hale: ... The types of renovations we did last year were high occupancy renovations, and so by nature of the occupancy and how they performed throughout the year, you were gonna have some level of disruption. That's not the case for this year. You see we have lower CapEx for this year. That's also a function that these are smaller assets relative to what we did last year. The largest asset that we have this year is really gonna be Boston, which is gonna be in the latter part of the year after all of the special events. We don't, you know, expect to indicate disruption as a headwind for us, you know, this year. I think as it relates to the conversion, we've completed seven conversions.

Speaker #4: And so, by nature of the occupancy and how they perform throughout the year, you are going to have some level of disruption.

Speaker #4: That's not the case for this year. And you see, we have lower CapEx for this year. That's also a function that these are smaller assets relative to what we did last year.

Speaker #4: The largest asset that we have this year is really going to be Boston, which is going to be in the latter part of the year.

Speaker #4: After all of the special events . And so we don't , you know , expect to to indicate disruption as a headwind for us .

Speaker #4: You know , this year , I think as it relates to the conversion , we've completed seven conversions to date . We have two more that , you know , are underway .

Tom Bardenett: To date, we have 2 more that, you know, are underway. Obviously, Boston, which I just mentioned, we'll start this later this year. Our Pittsburgh, at Renaissance Pittsburgh Hotel, which is gonna be converted to an Autograph Collection, deliver that later this year. All of our, you know, conversions were up on average about 5% last year, you know, with our more 4 most recent ones being up 15%, they continue to ramp very well. We're very pleased in terms of the returns that we're generating, and the overall production from our, from our conversions. We remain on pace to continue to deliver 2 conversions per year, and we look forward to announcing our second one at the latter part of this year.

Leslie D. Hale: To date, we have 2 more that, you know, are underway. Obviously, Boston, which I just mentioned, we'll start this later this year. Our Pittsburgh, at Renaissance Pittsburgh Hotel, which is gonna be converted to an Autograph Collection, deliver that later this year. All of our, you know, conversions were up on average about 5% last year, you know, with our more 4 most recent ones being up 15%, they continue to ramp very well. We're very pleased in terms of the returns that we're generating, and the overall production from our, from our conversions. We remain on pace to continue to deliver 2 conversions per year, and we look forward to announcing our second one at the latter part of this year.

Speaker #4: Obviously , Boston , which I just mentioned , we'll start this later this year . And then our Pittsburgh Renaissance , Pittsburgh , which is going to be converted to an autograph collection and deliver that later this year .

Speaker #4: All of our , you know , conversions were up on average about 5% last year . You know , with our more for most recent ones being up 15% .

Speaker #4: And so they continue to ramp very well. We're very pleased in terms of the returns that we're generating and the overall production from our conversions.

Speaker #4: We remain on pace to continue to deliver two conversions per year . And we look forward to announcing our second one at the latter part of this year .

Speaker #5: Okay, great. That's all for me. Thank you for the detail.

Tyler Batory: Okay, great. That's all for me. Thank you for the detail.

Speaker #2: Our next question is Michael Bellisario with Baird. Please proceed.

Operator: Our next question is from Michael Bellisario with Baird. Please proceed.

Speaker #3: Hi . Good morning everyone Just a few questions . Good morning . Just a couple of transaction questions for you . Just first , what was the motivation and process like to sell Dallas in Houston ?

Michael Bellisario: Hi, good morning, everyone. Just a few transaction questions.

Tom Bardenett: Good morning, Mike.

Leslie D. Hale: Good morning, Mike.

Michael Bellisario: Good morning. Just a couple transaction questions for you. Just first, what was the motivation and process like to sell Dallas and Houston? Was it more market or asset-driven to sell those hotels?

Speaker #3: And was it more market- or asset-driven to sell those hotels?

Speaker #4: Yes . Mike . Those two assets , one was a function of where we saw the demand drivers going in that particular market , coupled with the capital for capital needs of the asset And the other one was opportunistic , you know , an alternative use buyer .

Tom Bardenett: Yes, Mike. Those two assets, one was a function of where we saw the demand drivers going in that particular market, coupled with the capital, for capital needs of the asset, and the other one was opportunistic, you know, an alternative use buyer, you know, was looking at that asset. What we found in today's market is that inbound calls are more credible today. We took advantage of some opportunistic opportunities.

Leslie D. Hale: Yes, Mike. Those two assets, one was a function of where we saw the demand drivers going in that particular market, coupled with the capital, for capital needs of the asset, and the other one was opportunistic, you know, an alternative use buyer, you know, was looking at that asset. What we found in today's market is that inbound calls are more credible today. We took advantage of some opportunistic opportunities.

Speaker #4: You know , I was looking at that looking at that asset . And so what we found in today's market is that inbounds are being inbound .

Speaker #4: Calls are more credible today, and so we took advantage of some opportunistic opportunities.

Speaker #3: Got it. That’s helpful. And then just looking at Northern California, how do you balance sort of the expected improvement in that market?

Michael Bellisario: Got it. That's helpful. Then just looking at Northern California, and sort of how do you balance sort of the expected improvement in that market that sort of you and everyone expect, with potentially selling some of the kind of non-CBD hotels? Just, you know, is your fundamental view of San Francisco is gonna benefit San Francisco, is the improving demand profile gonna make its way out to the outer rings?

Speaker #3: That you and everyone expect with potentially selling some of the kind of non CBD hotels just , you know , is your fundamental view of San Francisco is going to benefit San Francisco and is is the improving demand profile going to make its way out to the outer rings ?

Speaker #4: Yeah , I think we were able to balance it by the size of our footprint . You know , Michael . And so I think that there's opportunity for us to continue to benefit from the relative strength that San Francisco is seeing , while at the same token , be opportunistic on asset sales .

Tom Bardenett: Yeah, I think we're able to balance it by the size of our footprint, you know, Michael, I think that there's opportunity for us to continue to benefit from the relative strength that San Francisco is seeing, while at the same token, be opportunistic on asset sales, and just to be thoughtful about how we prioritize, you know, which submarkets we look to prune our portfolio in.

Speaker #4: And just to be thoughtful about how we prioritize which submarkets we look to, to prune our portfolio in.

Speaker #3: Helpful . Thank you

Michael Bellisario: Helpful. Thank you.

Speaker #2: Our next question is from Gregory Miller with Truist Securities. Please proceed.

Operator: Our next question is from Gregory Miller with Truist Securities. Please proceed.

Speaker #6: Thank you . Good morning . I'd like to start off on the AI front . A number of your franchise or brand partners have spoken about their consumer facing AI efforts , including towards the LMS .

Nikhil Bhalla: Thank you. Good morning. I'd like to start off on the AI front. A number of your franchise or brand partners have spoken about their consumer-facing AI efforts, including towards the LLMs. Do you expect any material change in how your bookings from the brands, will be sourced this year? Thanks.

Gregory Miller: Thank you. Good morning. I'd like to start off on the AI front. A number of your franchise or brand partners have spoken about their consumer-facing AI efforts, including towards the LLMs. Do you expect any material change in how your bookings from the brands, will be sourced this year? Thanks.

Speaker #6: Do you expect any material change in how your bookings from the brands will be sourced ? This year ? Thanks

Tom Bardenett: That's a good question, Greg. You know, we're actively working with the brands to pass through, you know, when we think about how they're interacting with the consumer, and specifically on the front end, when they're shopping, researching, and looking to book business. The great thing that we're continuing to see is brand.com continues to be the source of business that's the highest return, where people are booking through the brand, which the cost is less there than, let's say, the OTA channels. We're very supportive of all the initiatives around, you know, centralized services in regards to how they're thinking about rolling out to the consumer to be able to make it easier to get to brand.com, number one.

Speaker #7: That's a good question . Greg . You know , we're actively working with the brands to pass through . You know , when we think about how they're interacting with the consumer and specifically on the front end when they're shopping and looking to book a business , the great thing that we're continuing to see is Brand.com continues to be the source of business .

Speaker #7: That's the highest return where people are booking through the brand , which the cost is less there than , let's say , the OTA channels .

Speaker #7: And so we're very supportive of all the initiatives around , you know , centralized services in regards to how they're thinking about . Rolling out to the consumer to be able to make it easier to get to Brand.com number one , the other thing that I would say is , you know , when I think about what the brands are doing , you know , there's an opportunity also to have savings through economies of scale .

Tom Bardenett: The other thing that I would say is, you know, when I think about what the brands are doing, you know, there's an opportunity also to have savings through economies of scale. Whether that's through their AI tools, you know, they're evolving meaningfully over the next few years, and they're doing tremendous amount of beta testing. We sit on, as you know, owner advisory councils and have a voice as long as well as our peers. We're excited about the opportunity to enhance productivity, you know, not only through, you know, the cost side and labor and scheduling initiatives, everything related to how we can make sure that we're maximizing the opportunities that are ahead of us.

Speaker #7: And whether that's through their AI tools , you know , they're evolving meaningfully over the next few years , and they're doing tremendous amount of beta testing .

Speaker #7: And we sit on , as you know , owner advisory councils and have a voice as long as as well as our peers .

Speaker #7: And so we're excited about the opportunity to enhance productivity . You know , not only through , you know , the the cost side and labor and scheduling initiatives .

Speaker #7: Everything related to how we can make sure that we're maximizing the opportunities that are ahead of us. And I think when we go down the road of our own work and what we're doing, we're really taking a look at data insights in regards to making our decisions from an asset management standpoint with our management companies and enhancing the tools there as well.

Tom Bardenett: I think, when we go down the road of our own, work and what we're doing, we're really taking a look at data insights in regards to making our decisions from an asset management standpoint with our management companies, and enhancing the tools there as well. We're supportive and excited about the future and look forward to having the brands really lead the way when it comes to our industry.

Speaker #7: So we're supportive and excited about the future, and look forward to having the brands really lead the way when it comes to our industry.

Speaker #6: Thanks, Tom, for my second question. This is similar to Tyler's question, but maybe with a bit more granularity as we think about modeling labor costs through the year.

Nikhil Bhalla: Thanks, Tom. My second question, this is similar to Tyler's question, but maybe with a bit more granularity. As we think about modeling labor costs through the year, is there any change in the step-up we should assume in terms of cost growth in Q3 and Q4, particularly given labor dynamics in New York City?

Gregory Miller: Thanks, Tom. My second question, this is similar to Tyler's question, but maybe with a bit more granularity. As we think about modeling labor costs through the year, is there any change in the step-up we should assume in terms of cost growth in Q3 and Q4, particularly given labor dynamics in New York City?

Speaker #6: Is there any change in the step up? Should we assume, in terms of cost growth in the third and the fourth quarters, particularly given labor dynamics in New York City?

Leslie D. Hale: That's embedded in our overall blended expense growth. If you then look at Q4, we were up 0.8% in growth, and if you take out the tax benefit, we were slightly over 2%. I think if you assume that trend line for the first two quarters and then the back half, you blend back to three for the full year.

Speaker #4: That's embedded in our overall blended , you know , blended expense growth . You know , if you look at the fourth quarter , you know , we were up point 8% in growth .

Speaker #4: And if you take out the tax benefit , we're slightly over 2% . And so I think if we assume that trend line for the first two quarters and then , you know , the back half , you blend back to three for the full year .

Speaker #7: And I think to beyond what your question was around New York City , when you think about the bigger picture , Greg , you know , contract labor continues to be reduced , productivity continues to improve .

Tom Bardenett: The thing, too, beyond what your question was around New York City, when you think about the bigger picture, Greg, you know, contract labor continues to be reduced, productivity continues to improve. You know, when we think about our portfolio specifically, you know, you dig into the synergies that we continue to make sure that we're maximizing because of our footprint, whether it's operations, sales, food and beverage, and repairs and maintenance, making sure that we're building a business model that's sustainable. We feel very good about our management companies and how they're interacting with us around scheduling. Back to, you know, what we talked about in regards to yielding that, just as important as we're yielding revenue, to be able to maintain the levels of that Leslie referred to.

Speaker #7: You know , we think about our portfolio specifically , you know , you dig into the synergies that we continue to make sure that we're maximizing because of our footprint , whether it's operations , sales , food and beverage and repairs and maintenance , making sure that we're we're building a business model that's sustainable .

Speaker #7: And so we feel very good about our management companies and how they're interacting with us around scheduling. Back to, you know, what we talked about in regards to yielding, that's just as important as we're yielding revenue to be able to maintain the levels of that that Leslie referred to.

Speaker #6: I appreciate it. Thanks. Thanks, Tom.

Nikhil Bhalla: I appreciate it. Thanks, Leslie. Thanks, Tom.

Gregory Miller: I appreciate it. Thanks, Leslie. Thanks, Tom.

Speaker #2: Our next question is from Chris Woronka with Deutsche Bank. Please proceed.

Operator: Our next question is from Chris Woronka with Deutsche Bank. Please proceed.

Speaker #8: Hey, good morning everyone. Thanks for taking my question. I wanted to ask if I could ask a longer-term strategic question.

Chris Woronka: Hey, good morning, everyone. Thanks for taking my question. Wanted to ask, if I could, a longer-term strategic question. You know, if we look at portfolio today, 92 hotels, you probably skew a little bit more full service at this point, particularly from an EBITDA perspective. Is there any thought to, you know, as we potentially get more, I guess, traction in the transactional markets going forward, is there any thought to do anything more, you know, significant in terms of reshaping the portfolio to maybe continue to de-emphasize select service, which you've kind of been doing on a measured basis thus far? Thanks.

Speaker #8: You know , if we look at portfolio today , 92 hotels , you probably skew a little bit more full service at this point , particularly from a from an EBITDA perspective .

Speaker #8: But is there any thought to as we potentially get more , I guess , traction in the transactional markets going forward ? Is there any thought to do anything more significant in terms of reshaping the portfolio to maybe continue to de-emphasize select service , which you've kind of been doing on a , on a , on a measured basis thus far ?

Speaker #8: Thanks .

Speaker #9: Yeah .

Speaker #4: So , Chris , thanks for the question . I think in general , you know , when it makes sense to be active externally , you're going to continue to see us lean towards lifestyle oriented assets , which have a mix of thoughtful FMB , you know , that are built right from a room count perspective .

Leslie D. Hale: Chris, thanks for the question. I think in general, you know, when it makes sense to be active externally, you're gonna continue to see us lean towards lifestyle-oriented, you know, assets, which have a mix of thoughtful F&B, you know, that are built right from a room count perspective. You've seen our portfolio shift to, you know, the urban lifestyle as we made acquisitions, as we do our conversions. You will see, you know, our portfolios continue to move in that direction, when it makes sense to execute on external growth. You know, we do think that, you know, the transaction market will improve this year, particularly kind of given the debt markets. There are a lot of players out there providing debt and expectations around rate cuts.

Speaker #4: And you've seen our portfolio shift to , you know , to urban lifestyle as we as we made acquisitions , as we do our conversions .

Speaker #4: And so you will see , you know , our portfolio continue to move in that direction when it makes sense to , to execute on external growth .

Speaker #4: You know , we do think that , you know , the transaction market will , you know , will improve this year particularly kind of given the debt markets , a lot of players out there providing debt and expectations around rate cuts .

Speaker #4: You know , we are constructive on , you know , more asset sales . And so you'll see us be , you know , be active on on that front .

Leslie D. Hale: You know, we are constructive on, you know, more asset sales, and so you'll see us be, you know, be active on, you know, on that front, you know, more so, you know, this year.

Speaker #4: You know more, so you know this year.

Speaker #7: The last thing I would add to Chris and I think you can see it in our non room revenue spend . When you look at our ROI initiatives and you look at our conversions and our renovations , we're leaning in heavily to trying to grow food and beverage margin with beverage centric , you renovations that are driving that .

Tom Bardenett: The last thing I would add, too, Chris, and I think you can see it in our non-room revenue spend. When you look at our ROI initiatives and you look at our conversions and our renovations, we're leaning in heavily to trying to grow food and beverage margin with beverage-centric, you know, renovations that are driving that. We continue at, you know, our urban properties to be able to enhance the capital initiatives around parking, which is also driving profitability. The last thing, whether it's select service or full service, we're seeing the fact that our margins are growing because of market expansion.

Speaker #7: And we continue at our urban properties to be able to enhance the capital initiatives around parking , which is also driving profitability . And then the last thing , whether it's select service or full service , we're seeing the fact that our margins are growing because of market expansion .

Speaker #7: So when you're in our lobbies , we're really putting more minds and efforts against how do how do we make sure that we the grab and goes , if you will , which is , you know , really a playbook from select service , but also expanding it into our full service hotels where that's a need as the consumer looks to buy things , you know , when they're individually , you know , you know , in a in a hurry

Tom Bardenett: When you're in our lobbies, we're really putting more minds and efforts against how do we make sure that we've the grab-and-gos, if you will, which is, you know, really a playbook from select service, but also expanding into our full-service hotels, where that's a need as the consumer looks to buy things, you know, when they're individually in a hurry.

Speaker #8: Well , okay . Appreciate all that color . Thanks . Thanks , Leslie . Thanks , Tom . A follow up I think we've heard from some of your peers to varying degrees , that there's a little bit more and perhaps increasing flexibility with the brands on things both related CapEx and also sometimes operational efficiencies .

Chris Woronka: Okay. I appreciate all that color. Thanks. Thanks, Leslie. Thanks, Tom. As a follow-up, yeah, I think we've heard from some of your peers, to varying degrees, that there's a little bit more and perhaps increase in flexibility with the brands on things both related to CapEx and also sometimes operational efficiencies. Are you guys seeing that same trend, or are you know, more encouraged or less encouraged by what you see going forward in terms of, I don't know if pushback is the right word, but working with the brands collectively to kind of give yourselves a little bit more margin and free cash flow conversion? Thanks.

Speaker #8: Are you guys seeing that same trend or are you more encouraged or less encouraged by by what you see going forward in terms of I don't know if pushback is the right word , but working with the brands collectively to kind of give yourselves a little bit more margin and free cash flow conversion .

Speaker #8: Thanks .

Speaker #4: Look, I think in general, you know, we have very strong relationships with our brand partners and that we have a very healthy relationship.

Leslie D. Hale: Look, I think in general, you know, we have very strong relationships with our brand partners, and that we have a very healthy relationship. I think the brands are being very thoughtful, around, you know, their renovation requirements and trying to be market specific as it relates to that. I think they're also looking for ways to be able to give benefits to owners who deploy capital within their portfolios, of which we are one of those. They're also looking for ways to, you know, to help reallocate some of the fee dollars. I think in general, you know, I think the brands are being good partners, and we have very strong relationships that we've been able to, you know, to benefit from.

Speaker #4: I think the brands are being very thoughtful around, you know, their renovation requirements and trying to be market-specific as it relates to that.

Speaker #4: I think they're also looking for ways to be able to give benefits to owners who deploy capital within their portfolios, of which we are one of those.

Speaker #4: And they're also looking for ways to , you know , to help reallocate some of some of the fee dollars . So I think in general , you know , I think the brands are being good partners and we have very strong relationships that we've been able to , you know , to to benefit from .

Speaker #8: Okay. Very good. Thanks, Leslie.

Chris Woronka: Okay. Very good. Thanks, Leslie.

Speaker #2: Our next question is from Rich Hightower with Barclays. Please proceed.

Operator: Our next question is from Richard Hightower with Barclays. Please proceed.

Speaker #10: Hey, good morning, guys.

Richard Hightower: Hey, good morning, guys.

Rich Hightower: Hey, good morning, guys.

Speaker #4: Hey . Good morning Rich .

Leslie D. Hale: Hey, good morning, Rich.

Richard Hightower: Good morning, Leslie. A couple questions. Leslie, if I go back, I think it was your answer to the first question. You know, it's sort of strength upon strength upon strength in terms of the building blocks for 2026. I think, just out of curiosity, when you add all of it up, you know, again, assuming that the world we think we know and understand today kind of plays out as expected, I mean, what is the likelihood of coming anywhere near the low end of guidance as we just think about the plausibility of the range?

Speaker #10: Good morning . A couple , couple questions . Leslie , if I go back , I think it was your answer to the first .

Rich Hightower: Good morning, Leslie. A couple questions. Leslie, if I go back, I think it was your answer to the first question. You know, it's sort of strength upon strength upon strength in terms of the building blocks for 2026. I think, just out of curiosity, when you add all of it up, you know, again, assuming that the world we think we know and understand today kind of plays out as expected, I mean, what is the likelihood of coming anywhere near the low end of guidance as we just think about the plausibility of the range?

Speaker #10: The first question. You know, it's sort of strength upon strength, upon strength in terms of the building blocks for 2026.

Speaker #10: And I think just out of curiosity , when you add all of it up and , you know , again , assuming that the world we think we know and understand today kind of plays out as expected , I mean , what is the likelihood of coming anywhere near the low end of guidance just think about the plausibility of the range

Speaker #9: Yeah .

Leslie D. Hale: Yeah, I mean, Rich, I think that you have to remember that, you know, our portfolio is 80% transient. We have a short-term booking window. When you think about our range, our range is really just a, you know, reflection of either the strength or weaker production in some combination of the factors that we laid out relative to our baseline. At the high end of the range, you know, you could have stronger production in World Cup or stronger production out of special events or end of year for the year pickup, or urban markets may outperform better or the ramp may be stronger. We think that if those things happen, it's going to translate into rate growth primarily, the flip side is opposite for the lower end of the range.

Speaker #4: I mean , Rich , I think that you have to remember that , our portfolio is 80% transient . We have a short term booking window .

Speaker #4: So, when you think about our range, our range is really just a, you know, reflection of either the strength or weaker production in some combination of the factors that we laid out relative to our baseline.

Speaker #4: So at the high end of the range , you know , you could have stronger production in World Cup or stronger production out of special events or in the year for the year pickup or urban markets may outperform better or the ramp may be stronger .

Speaker #4: We think that if those things happen, it's going to translate into rate growth primarily. But the flip side is opposite for the lower end of the range.

Speaker #4: If you have weaker production from World Cup or any of the other combination of things from urban markets or special events , or in the year for the year pickup or slower ramp on on our , you know , on our conversions , you know , those types of things would lead you to the bottom end of the range .

Leslie D. Hale: If we have weaker production from World Cup or any of the other combination of things, from urban markets or special events or end of year, for the year pickup or slower ramp on our, you know, on our conversions. You know, those types of things would lead you to the bottom end of the range. That would take in the form of demand. I think it's about relative strength. I mean, what we've built at the midpoint is based upon what we can see today. You know, but we're in an 80% transient business with short-term booking window.

Speaker #4: That would take in the form of demand . So I think it's about relative strength . I mean , what we built at the midpoint is based upon what we can see today , you know , but we're in an 80% transient business with short term booking window

Speaker #10: That makes sense . That's helpful . My second question I'd like to dive a little bit deeper on the the wind of Boston conversion to tap to tapestry in particular .

Richard Hightower: No, that makes sense. That's helpful. My second question, I'd like to dive a little bit deeper on the Wyndham Boston conversion to Tapestry in particular. You know, I know that asset reasonably well. You know, it really kind of is a, it's a demand, you know, category killer, given its location, you know, kind of on the campus of MGH and obviously in the Beacon Hill neighborhood. I would assume it does pretty well on its own as a Wyndham. Just help us understand the economics behind the Tapestry conversion, what that brand will do for the hotel, you know, what the all-in basis per key, et cetera, might look like at the end of all that. Thanks.

Rich Hightower: No, that makes sense. That's helpful. My second question, I'd like to dive a little bit deeper on the Wyndham Boston conversion to Tapestry in particular. You know, I know that asset reasonably well. You know, it really kind of is a, it's a demand, you know, category killer, given its location, you know, kind of on the campus of MGH and obviously in the Beacon Hill neighborhood. I would assume it does pretty well on its own as a Wyndham. Just help us understand the economics behind the Tapestry conversion, what that brand will do for the hotel, you know, what the all-in basis per key, et cetera, might look like at the end of all that. Thanks.

Speaker #10: So I know that asset reasonably well . You know , it really kind of is a it's a it's a demand , you know , category killer , given its location , you know , kind of on the , on the campus of and obviously in the Beacon Hill neighborhood .

Speaker #10: So I would assume it does pretty well on its own as a Wyndham. And so just help us understand the economics behind the conversion.

Speaker #10: What that brand will do for the hotel . You know , what the all in basis per key , etc. might , might look like at the end of all that .

Speaker #10: Thanks .

Speaker #7: Yeah, I'll talk about the decision to move into that arena a little bit, Rich, and some of the things that we're doing that we think are going to be transformative. But you hit the nail on the head.

Tom Bardenett: Yeah. I'll talk about the decision to move into that arena a little bit, Rich, and some of the things that we're doing that we think are going to be transformative. You hit the nail on the head. We love the location, and in real estate, it's all about location, location. Just to add to your color, you know, with $1.8 billion going into Mass General, with two buildings literally adjacent to the hotel, those are going to be future demand generators above and beyond, you know, the location, as you mentioned, Beacon Hill, which is high-end residential, great community, where you have universities, healthcare, education, as well as the attractions and walking distance to the TD Garden and things that we benefit from.

Speaker #7: We love the location and in real estate , it's all about location , location , location . So just to add to your color , you know , 1.8 billion going into mass General with two buildings , literally adjacent to the hotel , those are going to be future demand generators above and beyond .

Speaker #7: You know , the location , as you mentioned , Beacon Hill , which is high end residential , rate community where you have universities , healthcare , education , as well as the attractions in walking distance to the TD garden and things that we benefit from .

Speaker #7: So what we feel is, by going into the Hilton system, specifically on the lifestyle side, we can make it that community-centric.

Tom Bardenett: What we feel is by going into the Hilton system, specifically on the lifestyle side, we can make it that community-centric, you know, feel when people are walking into the hotel. What's happened in our other conversions, Rich, as you know, because you've visited some of them, the mix changes. When that happens, you get more corporate base. You also get more Hilton contribution because of the lack of supply that Hilton has in that marketplace, we feel we enter into a place where we can really compete on the lifestyle and upper-end threshold of that clientele that's looking for, you know, locations as well as accommodations.

Speaker #7: You know , feel when people are walking into the hotel and what's happened in our other conversions . Rich , as you know , because you've visited some of them , the mix changes when that happens , you get more corporate base .

Speaker #7: You also get more Hilton contribution because of the lack of supply . The Hilton has in that marketplace . We feel we we enter into a place where we can really compete on the lifestyle and upper end threshold of that clientele .

Speaker #7: That's looking for, you know, locations as well as accommodations. We also have some meeting space on the highest floor that really has beautiful views over Boston.

Tom Bardenett: We also have some meeting space on the highest floor, that really has beautiful views over Boston. Having that mix of business will help us on the group corporate and base of what we find in our other conversions, like Mills House, when we went to a Curio, or Nashville, where we went to a Tapestry, where we automatically see that shift in business. We're pretty excited about, yes, it's a great hotel today because Wyndham does a super job for us in that location with the value buy, but we're going to be playing on a different level when we move into the Tapestry Hilton collection. I'll kick it over to Leslie for returns.

Speaker #7: And having that mix of business will help us on the group, corporate, and, based on what we find in our other conversions, like Mills House.

Speaker #7: When we went to a curio or Nashville , where we went to a tapestry where we automatically see that shift in business . So we're pretty excited about yes , it's a great hotel today because Wyndham does a super job for us in that location with the value by , but we're going to be playing in a different level when we move into the tapestry .

Speaker #7: Hilton collection, and then I'll kick it over to Leslie for returns.

Speaker #9: Yeah , I think .

Leslie D. Hale: Yeah, I think, you know, Rich, I think we've been, you know, pretty, you know, bold on this asset. We believe that there's 40% upside in the EBITDA from converting it to a Tapestry for all the reasons that you articulated in the market demand there. This is an asset that's going to benefit from all of the demand drivers, you know, segmentation. We know that the rate is in the market because there are other assets already achieving the rate that we've underwritten for this asset, and feel very good about what it can, you know, what it can produce. The overall renovation dollars are actually not that much more than what we would have to do in a normal renovation.

Speaker #4: You know , Rich , I think we've been , you know , pretty . You know , bullish on this asset . We believe that there's 40% upside in the EBITDA from converting it to a tapestry .

Speaker #4: For all the reasons that you articulated in the market demand. There, this is an asset that's going to benefit from all of the demand drivers.

Speaker #4: You know, segmentation. And we know that the rate is in the market because there are other assets already achieving the rate that we've underwritten for this asset, and feel very good about what it can.

Speaker #4: You know, what it can produce. And the overall renovation dollars are actually not that much more than what we would have to do in a normal renovation.

Speaker #4: And so the returns, you know, for the asset relative to the incremental capital is well north of 50%.

Leslie D. Hale: The returns, you know, for the asset relative to the incremental capital is well north of 50%.

Speaker #10: Okay. Great. Thanks for the color, guys.

Richard Hightower: Okay, great. Thanks for the color, guys.

Rich Hightower: Okay, great. Thanks for the color, guys.

Speaker #2: As a reminder, press star one on your telephone keypad if you would like to ask a question. Our next question is from Jack Armstrong with Wells Fargo.

Dori Kesten: As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Dori Kesten with Wells Fargo. Please proceed.

Operator: As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Dori Kesten with Wells Fargo. Please proceed.

Speaker #2: Please proceed .

Speaker #10: Hey . Good morning .

David Brown: Hey, good morning, thanks for taking the question. How do you expect RevPAR growth to outperform RevPAR in 2026, and how much of that is being driven by some of the F&B improvements you made across the portfolio?

Jack Armstrong: Hey, good morning, thanks for taking the question. How do you expect RevPAR growth to outperform RevPAR in 2026, and how much of that is being driven by some of the F&B improvements you made across the portfolio?

Speaker #11: Thanks for taking the question. How do you expect growth to outperform repair in 2026? And how much of that is being driven by some of the fab improvements you made across the portfolio?

Speaker #1: Hey , Jack , this is Nikhil . How are you Just . Just to give you some frame of reference . Right . So there are a number of things that are going into our room .

Nikhil Bhalla: Hey, Jack, this is Nikhil. How are you? Just to give some frame of reference, right? There are a number of things that are going into our non-room revenues, and one of them is the markets that Tom described earlier. If you look at sort of the Q4, our revenues were actually up in the high single digits, and consistently, we've had very strong growth in that. We are continuing to see very strong production across that, and we expect that to continue. If you look at our if you see our prepared remarks, we did say that our total revenues will outperform our room revenues. We expect, you know, somewhere around 50 basis points.

Speaker #1: Revenues—and one of them is the markets that Tom described earlier. If you look at sort of the fourth quarter, our revenues were actually up in the high single digits, and consistently, we've had very strong growth in that.

Speaker #1: So we are continuing to see very , very strong production across that . And we expect that to continue . If you look at our if you see our prepared remarks , we did say that our total revenues will outperform our room revenues .

Speaker #1: We expect somewhere around 50 basis points.

Speaker #7: And then in fab, Jack, just to give you a little color there, we had about a 120 basis point improvement in margin in fab for the full year.

Tom Bardenett: On F&B, Jack, just to give you a little color there, we had about 120 basis point improvement in margin in F&B full year and this year. We continue to see the reason that's happening is because not only group is now having more corporate group, but they spend more money on banquets, beverage, and then many of our renovations as well as ROI initiatives have really been what I talked about earlier, more beverage-centric. Having more seats at the bar, having our meeting space have reception areas where there's more an opportunity to have camaraderie in an outdoor area, whether it's an atrium or locations that are highly desirable to gather. We're seeing outlets grow.

Speaker #7: And this year . And we continue to see the reason that's happening is because not only group is now having more corporate group , but they spend more money on banquets , beverage and then many of our renovations , as well as ROI initiatives have really been what I talked about earlier .

Speaker #7: More beverage centric , having more seats at the bar , having our meeting space have reception areas where it's more an opportunity to have camaraderie in an outdoor area , whether it's an atrium or locations that are highly desirable to gather .

Speaker #7: And so we're seeing outlets grow . And lastly , on the community side , as Leslie stated earlier , we're trying to be attractive to folks that aren't even staying in the hotel .

Tom Bardenett: Lastly, on the community side, as Leslie Hale stated earlier, we're trying to be attractive to folks that are not even staying in the hotel. An example of that would be Mills House, where we did the, you know, The Black Door Café. We're getting 50/50 from our guests and 50% from the outside, just foot traffic, taking advantage of our locations. I think Boston is going to be a perfect example of that. You know, people who are going to be in those locations are going to want a place to eat, and there's a significant crowd now, literally next door, who's going to be going back to office in those locations. Those are examples of that, and I'll kick it to Leslie Hale for one more.

Speaker #7: An example of that would Mills House , where we did the , you know , the black Door Cafe . We're getting 50 over 50 from our guests and 50% from the outside , just foot traffic taking advantage of our locations .

Speaker #7: I think Boston is going to be a perfect example of that . You know , people who are going to be in those locations are going to want a place to eat , and there's a significant crowd now , literally next door , who's going to be going back to office in those locations .

Speaker #7: So those are examples of that, and I'll kick it to Leslie for one more.

Speaker #9: Yeah. And I would just...

Leslie D. Hale: Yeah, I would just bolt on to Tom's comments in the sense that every time we do this, we get smarter. The last comment that Tom made about being able to track not just hotel guests to our F&B outlets, we're seeing that in all of our conversions. He mentioned Mills House. We also done it in Santa Monica. We're doing it in Nashville. We also did it in NOLA as well. He mentioned that we're gonna be doing it in Boston, but we're also doing that in the Renaissance Pitt, that we're converting to an Autograph. The other asset that we'll announce later the year, this year, will have the same concept as well.

Speaker #4: Bolt on to Tom's comments in the sense that every time we do this , we get smarter . And so the last comment that Tom made about being able to track not just hotel guests to our fab outlets , we're seeing that in all of our conversions .

Speaker #4: He mentioned Mills House . We've also done it in Santa Monica . We're doing it in Nashville . We also did it in Nola as well , and he mentioned that we're going to be doing it in Boston , but we're also doing that in the Renaissance pit that we're converting to an autograph .

Speaker #4: And then the other asset that we'll announce later in the year , this year will have the same concept as well . So , you know , we're really leaning into this thoughtful , fab with the beverage centric , you know , mindset .

Leslie D. Hale: You know, we're really leaning into this thoughtful F&B with a beverage-centric, you know, mindset, and that's going to help us sustain, you know, that, you know, that 50 basis points that Nikhil mentioned.

Speaker #4: And that's going to help us sustain , you know , that , you know , that 50 basis points in Nashville mentioned

Speaker #11: Helpful color . There . Thank you . And can you remind us what percentage of your business was government related in 2025 . And then maybe contrast that with with a more stabilized year , without the impact from Liberation Day and the shutdown .

David Brown: Helpful color there. Thank you. Can you remind us what percentage of your business was government-related in 2025, and then maybe contrast that with a more stabilized year without the impact of Liberation Day and the shutdown, and that's the way you expect in 2026?

Jack Armstrong: Helpful color there. Thank you. Can you remind us what percentage of your business was government-related in 2025, and then maybe contrast that with a more stabilized year without the impact of Liberation Day and the shutdown, and that's the way you expect in 2026?

Speaker #11: And that to what you expect in 2026.

Speaker #4: Yeah , I mean , what I would say is that in a normalized year , government was , you know , 3% . And if we think about like how it performed last year , it was down about 20% .

Leslie D. Hale: Yeah, I mean, what I would say is that in a normalized year, government was 3%. Then we think about like how it performed last year, it was down about 20%. We think that we saw a step down in Liberation Day, and as I mentioned previously, our range assumes no change in government demand.

Speaker #4: And , you know , we think that we saw a step down in Liberation Day . And as I mentioned previously , our range assumes no change .

Speaker #4: You know, in government demand.

Speaker #11: Great. Very helpful. Thank you.

David Brown: Great. Very helpful. Thank you.

Jack Armstrong: Great. Very helpful. Thank you.

Speaker #2: Our next question is from Chris Darling with Green Street. Please proceed.

Operator: Our next question is from Chris Darling with Green Street. Please proceed.

Speaker #12: Hi . Thanks . Good morning . Going back to the capital allocation discussion . Leslie , you mentioned inbound interest from potential buyers being more credible these days .

Chris Darling: Thanks. Good morning. Going back to the capital allocation discussion, Leslie, you mentioned, you know, inbound interest from potential buyers being more credible these days, just a more constructive transaction market in general. As you think through potential dispositions, what are some of the main factors you consider when making that decision? Is it market-driven, asset level considerations, something else? Just sort of curious how you internally think about these things.

Speaker #12: Just a more constructive transaction market in general. As you think through potential dispositions, what are some of the main factors you consider when making that decision?

Speaker #12: Is it market driven , asset level considerations ? Something else ? Just sort of curious how you internally think about these things .

Speaker #4: Yeah, I mean, I think it's a combination of our view of a market and where the puck is going from a demand perspective.

Leslie D. Hale: Yeah, I mean, I think it's a combination of our view of a market and where the puck is going from a demand perspective. It's also whether or not we think we can get any return on the capital that we have to put in to sustain the asset. Then, you know, it's, you know, our perspective on any opportunistic calls that we get in to determine whether or not, you know, we think that that value is appropriate for a relative asset. I think that, you know, we are active portfolio managers, and we'll consider, you know, looking at all aspects of our portfolio relative to, you know, to a constructive disposition environment.

Speaker #4: It's also whether or not we think we can get any return on the capital that we have to put in to sustain the asset.

Speaker #4: And then , you know , it's , you know , our perspective on , on any opportunistic calls that we get in , determine whether or not , we think that that value is appropriate for a relative asset .

Speaker #4: You know , but I think that , you know , we are active portfolio managers and we'll consider , you know , looking at all aspects of our portfolio , you know , relative to , you know , to , to a constructive disposition environment .

Speaker #12: Okay . And , you know , related to this in your mind , do you think there's appetite for larger scale portfolio deals today ?

Chris Darling: Okay. You know, related to this, in your mind, do you think there's appetite for larger-scale portfolio deals today? If not, you know, what do you think might change that story as we move through this year?

Speaker #12: And if not, what do you think might change that story as we move through this year?

Speaker #4: Yeah , I mean I think it's a great question . I think that , you know , as I kind of look at the market today , you know , the most active buyers are owner operators because they're able to consistently underwrite growth .

Leslie D. Hale: Yeah, I mean, I think it's a great question. I think that, you know, as I kind of look at the market today, you know, the most active buyers are owner-operators, because they're able to consistently underwrite growth. That lends itself to more single assets. Having said that, you know, we do think that there has been an increase in volume for larger single assets, which could then translate into liquidity for smaller pools of assets. I think a key ingredient of that is for the interest rate cuts to actually materialize, and for buyers to be able to underwrite bottom line growth with conviction.

Speaker #4: And so that lends itself to more single assets . Having said that , you know , we do think that there has been an increase in volume for larger single assets , which could then translate into liquidity for smaller pools of assets .

Speaker #4: I think a key ingredient of that is for the interest rate cuts to actually materialize, and for buyers to be able to underwrite bottom line growth with conviction.

Speaker #12: All right. I appreciate the time.

Chris Darling: All right. I appreciate the time.

Speaker #2: That will conclude our question-and-answer session. I would like to turn the conference back over to Leslie Hale for closing remarks.

Operator: That will conclude our question-and-answer session. I would like to turn the conference back over to Leslie Hale for closing remarks.

Speaker #4: Well, thank you, everybody, for joining us today. We look forward to meeting with many of you over the next couple of months.

Leslie D. Hale: Well, thank you, everybody, for joining us today. We look forward to meeting with many of you over the next couple of months. Have a good day.

Speaker #4: Have a good day .

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Q4 2025 RLJ Lodging Trust Earnings Call

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