Ladies and gentlemen, greetings and welcome to the Apple Hospitality REIT Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Clarke, Vice President, Investor Relations. Please go ahead. Thank you and good morning. Welcome to Apple Hospitality REIT's third quarter 2022 earnings call. Today's call will be based on the earnings release and Form 10-Q, which we distributed and filed yesterday afternoon. Before we begin, please note that today's call may include forward-looking statements as defined by federal securities laws. These forward-looking statements are based on current views and assumptions, and as a result, are subject to numerous risks, uncertainties, and the outcome of future events that could cause actual results, performance, or achievements to materially differ from those expressed, projected, or implied. Any such forward-looking statements are qualified by the risk factors described in our filings with the SEC, including our 2021 annual report on Form 10-K, and speak only as of today. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, non-GAAP measures of performance will be discussed during this call. Reconciliations of those measures to GAAP measures and definitions of certain items referred to in our remarks are included in yesterday's earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the company, please visit applehospitalityreit.com. This morning, Justin Knight, our Chief Executive Officer, and Liz Perkins, our Chief Financial Officer, will provide an overview of our results for the third quarter 2022. Following the overview, we will open the call for Q&A. At this time, it is my pleasure to turn the call over to Justin. Good morning, and thank you for joining us today. As we approach the end of 2022 and think back over our accomplishments this year and since the onset of the pandemic, we are incredibly grateful for the quality and dedication of our corporate team and for our relationships with best-in-class brands and management companies. We have executed against a straightforward strategy since our inception through multiple economic cycles over two decades. While we are mindful of the potential headwinds ahead of us, we remain confident in the merits of our investment strategy, the strength of our portfolio of hotels, and our ability to outperform and maximize shareholder value in any macroeconomic environment. Demand trends for our portfolio remain positive, and with the backdrop of historically low supply growth, the lodging industry and our portfolio specifically are poised for a countercyclical recovery. Top line performance for our portfolio was our strongest since the onset of the pandemic, with third quarter RevPAR of approximately $120, up 19% as compared to the third quarter of 2021, and up 8% as compared to the third quarter of 2019. With a shift in consumer spending towards experiences and more robust business travel boosting midweek demand, we continued to see occupancy rebound. Occupancy for the quarter was strong at 76%, up 6% to 2021 and down only 5% to 2019. Strong occupancy allowed our hotels to mix, manage, and push rates. ADR for our portfolio was $158 for the quarter, up 13% to the third quarter of both 2021 and 2019. Positive business and leisure demand trends continued post Labor Day, with September RevPAR up 12% to 2019 and October occupancy of approximately 78% at rates that continue to surpass pre-pandemic levels. We are confident there is additional upside for our portfolio as corporate travel improves, additional markets fully recover, and occupancy across our portfolio continues to strengthen. We continue to benefit from historically low supply growth. At the end of the third quarter, approximately 50% of our portfolio did not have any exposure to new hotels under construction within a 5-mile radius. High construction costs, supply chain disruption, labor challenges, and difficult debt markets continue to limit new construction starts in most markets. Given the current environment and the typical time from start of construction to completion, we expect supply growth to be below historical averages for the foreseeable future. Turning to the bottom line results, during the quarter, we achieved adjusted EBITDAre of $119 million and modified funds from operations of $103 million or $0.45 per share, in line with third quarter 2019 results. With comparable hotels total revenue up 20% relative to the third quarter of 2021 and more than 6% compared to the third quarter of 2019, we achieved comparable hotels adjusted hotel EBITDAre of $129 million, up 19% to the same period of 2021 and up 4% to the same period of 2019, despite modest margin declines of 40 basis points and 80 basis points compared to the same period in 2021 and 2019, respectively. Comparable hotels adjusted hotel EBITDA margin for the quarter was 38%. Actual adjusted hotel EBITDA margin for the third quarter was also 38%, down slightly from the same period in 2021, but up 30 basis points from 2019. We interact frequently with our management companies and use our unique data-driven business intelligence platform to drive performance across our portfolio of hotels. Our asset managers and in-house revenue management teams continue to work closely with our management companies to balance cost controls with efforts to maintain guest satisfaction in order to support a strong value proposition with customers and create an environment for sustainable rate growth. In August, we hosted leaders of each of our management companies for a two-day revenue and operations summit in Richmond, creating a forum focused on sharing best practices, experiences, and strategies for improving operations and addressing current and anticipated challenges at our hotels. Given our size and scaled ownership of branded rooms-focused hotels, we are uniquely positioned to utilize our unparalleled access to operational data and benchmark both statistical metrics and best practices to identify opportunities across our portfolio and maximize the performance of our assets. While we are still early in the budget process, we are pleased with early indications from our managers, which project continued growth in 2023. The strength of our balance sheet further contributes to the long-term stability and optionality of our platform. The recent re-refinancing of our primary unsecured credit facility bolstered our already strong liquidity position, extended maturities, improved pricing, and increased the size of both our revolving credit facility and term loans. Faced with the prospect of potentially greater macroeconomic uncertainty and volatility in capital markets over the coming years, the increased liquidity positions us to be opportunistic in ways that will drive incremental value for our shareholders. We are fortunate to have entered the pandemic with a relatively young and well-maintained portfolio, and as a result, were able to strategically reduce renovation spend to preserve capital in 2020 and 2021. During the first nine months of 2022, we invested approximately $32 million in capital expenditures and anticipate spending a total of $55 million-$65 million during the year. This year's spend will more closely approximate our historical investment of between 5% and 6% of revenues, which we feel is appropriate for our portfolio and a meaningful differentiator for us, which contributes to total shareholder returns over time. Through our scale ownership of branded rooms-focused properties over more than two decades, we have significant experience in determining the most effective scope and timing of our investments to ensure minimal disruption to property operations and maximum impact for dollars spent. During the quarter, we sold a 55-room independent boutique hotel in Richmond, Virginia, for $8.5 million, resulting in a gain on sale of approximately $1.8 million. The sale enabled us to forego more than $4 million in planned capital expenditures and transact at a meaningful premium to our original investment. In October, we acquired the AC Hotel Louisville Downtown for $51 million and the AC Hotel Pittsburgh Downtown for $34 million. Both hotels opened in 2018 and are uniquely positioned within vibrant downtown areas where they benefit from a variety of business and leisure demand drivers. The combined purchase price represents a 6.5% cap rate on full year 2019 and a similar cap rate on trailing twelve-month financials through August after an industry standard 4% FF&E reserve. Given additional ramp in the individual assets and the robust performance of their respective markets, we anticipate that both will produce stabilized returns in excess of 8%. Recent numbers for both properties have been strong, with September RevPAR for the Louisville AC up 8% to 2019 and the Pittsburgh AC up 36%. These acquisitions increase our ownership of AC Hotels, a brand with strong appeal for both business and leisure travelers, and provide exposure to Louisville and increase our presence in Pittsburgh, both of which have seen strong post-COVID recovery. As we have built and refined our portfolio over time, we have intentionally sought to create exposure to markets that benefit from a mix of business and leisure demand and to concentrate our ownership in markets that have been and will be beneficiaries of macroeconomic and demographic shifts. Since the onset of the pandemic, we have invested approximately $558 million in 14 hotels. Excluding the two ACs acquired subsequent to the end of the third quarter, these recent acquisitions exceeded our original underwriting by more than $9 million in hotel EBITDA during the first 9 months of the year, contributing meaningfully to our year-to-date outperformance. On a trailing twelve-month basis through September, these 12 hotels produced an 8% return on our investment after CapEx, despite COVID impact on first quarter numbers and with meaningful upside remaining as assets continue to ramp and markets improve. A third of these hotels continue to produce yields in excess of 10%. Higher interest rates and disruption broadly in debt markets continue to impact the transaction market, and we expect total transaction volume to be somewhat muted between now and the end of the year, though we continue to underwrite deals and engage with potential sellers. Given our outperformance since the onset of the pandemic, the strength and flexibility of our balance sheet, and the additional borrowing capacity under our amended credit facility, we are incredibly well-positioned as assets come to market and in conversations with ownership groups about potential off-market deals. With just 3.3 times net debt to EBITDA, extended and staggered maturities, a relatively young portfolio, and over $700 million in total liquidity, we are able to be both patient and flexible as we work to capitalize on dislocations in the market. We have been and will continue to be highly selective and intentional in the build-out of our portfolio, pursuing assets that are additive to those that we currently own where we can achieve attractive pricing. Future acquisitions will be consistent with our strategy of investing in high-quality rooms-focused hotels located in strong RevPAR markets with attractive cost structures and meaningful growth potential. Recent market volatility has also provided us with the opportunity to purchase our own shares at a meaningful discount to their intrinsic value. Through October, we had purchased just under 200,000 shares at a weighted average market purchase price of approximately $14.21 per share for an aggregate purchase price of approximately $2.7 million. Shares were purchased under a written trading plan as part of our share repurchase program. As of October 31st, 2022, we had approximately $342 million remaining under this program. We will continue to be opportunistic buying shares where we see market dislocations create opportunity for value creation. We have also led our peers in post-pandemic dividend payments. Supported by strong operating fundamentals in August, our board of directors approved an increase in our regular monthly cash distribution from $0.05 to $0.07 per common share, beginning with our September payment. We were able to pay dividends of $0.17 per share during the third quarter for a total of approximately $39 million. Subsequent to the quarter end, our board approved an additional increase in our monthly distribution from $0.07 to $0.08 per common share, beginning with our November distribution. Based on our closing price on Friday, November 4, the annualized distribution of $0.96 per common share represents an annual yield of approximately 5.9%. Together with our board, we assess our payout monthly in the context of the current operating environment, our expectations for the future, and other investment opportunities to ensure that we are allocating capital to drive the strongest total returns for our shareholders. While we are cognizant of potential headwinds as the Fed takes action to mitigate inflationary pressures, we remain confident in the resiliency of travel and our ability to drive strong results and maximize shareholder value in any macroeconomic environment. With nearly every operating metric exceeding pre-pandemic levels, additional upside remaining in business travel, new supply at historically low levels, recent acquisitions adding to the strength of our existing portfolio, and a strong balance sheet with significant liquidity, we are incredibly optimistic about the future of our business. It is now my pleasure to turn the call over to Liz for additional detail on our balance sheet, operations, and financial performance during the quarter. Thank you, Justin, and good morning. Top-line performance for the third quarter continued to be strong with total portfolio revenues up approximately 23% to prior year and 3% to the third quarter 2019. RevPAR growth for the quarter was driven primarily by ADR, which improved 13% to the same period in both 2021 and 2019. Occupancy was up meaningfully to 2021, but came in approximately 5% lower than the third quarter of 2019. While the gap to 2019 occupancy widened to approximately 8% in August, September occupancy was down only 2% to 2019. Preliminary results for October show continued strength in demand, with occupancy increasing to 78% and RevPAR growth relative to 2019 trending in line with results for the third quarter, bolstered by another month of double-digit ADR growth as compared to October of 2019. We are now consistently producing top-line results above pre-pandemic levels with meaningful upside remaining in our portfolio. While we expect occupancy in November and December to be lower than October, consistent with historical seasonality for our portfolio, booking data through the end of the year remains strong, and we anticipate we will continue to produce RevPAR ahead of 2019 through the remainder of the year. Recent performance reflects both continued strength in leisure and a meaningful recovery in business demand. July, August, and September weekend occupancies were 82%, 79%, and 81%, respectively. Weekday occupancy remained stable around 74% during the quarter, down less than 9% on average to 2019. As we entered the fourth quarter, October weekday occupancy notably improved over September, surpassing weekday occupancy in July and further shrinking the gap to 2019. Weekday ADR for the quarter was $153, up nearly 6% to 2019 rate levels. As we look at demand segments and business transient trends, travel patterns are beginning to normalize with Tuesday and Wednesday occupancy regularly above 80% during the quarter. 61% of our portfolio produced RevPAR above pre-pandemic levels during the quarter, with improvement in demand impacting nearly every market. Seventy of our hotels had RevPAR improvement of 10% or more relative to the same period in 2019. Top performers included hotels from a variety of markets, including Portland, Maine, Downtown Atlanta, Huntsville, Phoenix, Oceanside, Greenville, Anchorage, Syracuse, and San Diego, and included a mix of both urban and suburban locations. While results improved across the portfolio, we continue to see slower recovery in a number of markets, including our assets in Northern Virginia, Philadelphia, Houston, Chicago, and St. Paul. These high-quality hotels are well-located within their respective markets, and we expect their performance to improve over time, providing additional upside for our portfolio. Our hotels in markets impacted by Hurricane Ian did not sustain any material damage and remained open during and after the storm. In terms of room night channel mix, brand.com bookings increased to over 39% during the quarter. OTA bookings remained stable at 13%. Property direct bookings declined to 25% but remained elevated to third quarter 2019, a testament to the continued efforts of our property and management company sales support teams. GDS bookings continued to increase, showing growth in corporate demand and represented 16% for the quarter, a 100 basis point increase from the second quarter. Preliminary revenue data shows further improvement in October as well, indicating a continuation in the trend of return of business travel. Looking at third quarter same-store segmentation, BAR continued to be elevated to 2019 levels and in line with the second quarter at 34%. Other discounts remained at 28% in the third quarter. Negotiated also remained stable at 18% during the quarter, and group was 14%, still slightly higher than the third quarter of 2019. Turning to expenses, total payroll per occupied room for our same-store hotels was around $36 for the quarter, slightly higher than the second quarter and up 11% to the third quarter of 2019. A tight labor market continued to create operational challenges, and third quarter results were impacted by higher wages for full and part-time employees, training costs, and higher utilization of contract labor. While we anticipate wages will remain elevated relative to pre-pandemic levels, we believe a portion of the overall increase in labor costs is temporary and that year-over-year growth rates will come down as in-house staffing stabilizes and we are able to reduce training costs and reliance on contract labor. As we have always done, we will continue to balance productivity initiatives with our efforts to uphold a positive work environment conducive to attracting and retaining top talent. These efforts better position us to support the high levels of service and cleanliness necessary to sustain rate growth and maximize the long-term profitability of our assets. Our asset management and on-site teams were able to keep increases in same-store rooms expenses, excluding payroll, on a per occupied room basis to 3% relative to 2019, despite significant inflationary pressure. Strong rate growth and effective cost control, despite the challenging labor and inflationary environment, enabled us to achieve third quarter comparable adjusted hotel EBITDA of approximately $129 million and comparable adjusted hotel EBITDA margin of approximately 38%, down 80 basis points to the third quarter of 2019. Actual adjusted hotel EBITDA margin for the third quarter was also 38%, but up 30 basis points to 2019, highlighting the positive impact of our transactional activity. As we have stated on past calls, we believe that long-term margin expansion for the industry and for our portfolio will be largely conditioned on our ability to grow rate. While we expect a portion of our recent expense growth to be temporary, driven by elevated training costs and short-term increases in our use of contract labor, we anticipate continued near-term pressure on wages and other expenses, offset in part by alterations to our operating model, which should create opportunity for increased efficiency as we stabilize property-level operations. MFFO was approximately $103 million or $0.45 per share for the quarter, up 36% compared to the third quarter of 2021 and in line with the third quarter of 2019. Looking at our balance sheet, as of September 30, 2022, we had $1.3 billion in total outstanding debt, approximately 3.3 times our trailing twelve-month EBITDA, with a weighted average interest rate of 3.7%. Total outstanding debt, excluding unamortized debt issuance costs and fair value adjustments, is comprised of approximately $332 million in property-level debt secured by 19 hotels and approximately $1 billion outstanding on our unsecured credit facilities. The company's weighted average debt maturities are almost 5 years. At the end of the quarter, we had cash on hand of approximately $26 million, availability under a revolving credit facility of approximately $650 million, and term loan availability of $100 million. 87% of our total debt outstanding was fixed or hedged. Valuable swap agreements and low overall leverage levels mitigate the impact of the current rising interest rate environment. As Justin highlighted, in July, we amended and restated our existing $850 million credit facility, increasing the borrowing capacity to approximately $1.2 billion, extending maturity dates, and achieving improved pricing across the facility. These updates provide for additional capacity of $150 million under the term loans and $225 million under the revolving credit facility. The agreement includes an accordion feature in which the amount of the total credit facility may be increased from approximately $1.2 billion to $1.5 billion. At closing, we borrowed $475 million under the term loans and used the proceeds to repay the $425 million outstanding under the term loans of the previous credit facility and $50 million outstanding under the revolving credit facility. On August 1, 2022, we repaid in full an additional three secured mortgage loans for a total of approximately $32 million. Through the refinance of our primary credit facility, the additional seven-year senior notes facility closed in June, and the recent repayment of 9 secured mortgages, we achieved our key balance sheet objectives of managing and continuing to stagger our debt maturities, increasing access to liquidity through upsizing our revolving credit facility, and shifting a portion of our secured debt to unsecured, and as a result, increasing the unencumbered pool of assets in our portfolio. We are extremely grateful for our lenders and their continued support. The strength of our balance sheet, combined with robust cash flow from operations, has uniquely positioned us to allocate capital in ways that we believe will drive long-term value for our shareholders. Over the past months, we have acquired assets, purchased shares of our own stock, and increased our monthly dividend from $0.05 per share to $0.07 during the third quarter and then to $0.08 in October, effective with the November payment. We will continue to allocate capital in ways that we believe will optimize our performance and maximize total returns for our shareholders over time. In yesterday's press release, we provided 2022 guidance regarding certain corporate expenses, including G&A expenses, interest expense, and capital expenditures. We expect total G&A expense, including all corporate level expenses in both cash and share-based compensation, to be $40 million at the midpoint of the range. This estimate is based on operational and shareholder return performance through September 30, 2022. Total interest expense is expected to be between $58 million and $63 million or $60.5 million at the midpoint. Full year capital expenditures are anticipated to be between $55 million and $65 million. All projects have been approved, and we expect to be at the high end of our range, assuming limited delays. As we consider the outlook for the final months of 2022, we remain confident in the broader industry recovery and the performance of our company specifically. We saw strong performance from our portfolio in the third quarter. Preliminary results for October RevPAR show continued strength relative to 2019, and average daily booking trends continue to be elevated relative to pre-pandemic levels. Although macroeconomic and pandemic-related factors continue to add a layer of complexity to the current operating environment, leisure demand within our portfolio is strong and business travel continues to improve. As we build back midweek occupancy, we are gaining pricing power, which should enable us to further grow RevPAR for our portfolio. Third quarter bottom line operating results were ahead of the same period in 2019, and we expect continued strength through the end of the year. As we move through the remainder of the fourth quarter and into 2023, we believe we are well positioned for any macroeconomic environment. We have weathered the most challenging period in our industry's history and demonstrated the resiliency of our differentiated strategy. Our balance sheet is strong, and our recent restructuring provides extended maturities and additional liquidity, which we intend to use opportunistically to pursue accretive opportunities. Our assets are in good condition, with recent dispositions and planned renovations ensuring that we maintain a competitive advantage over other products in our markets. The supply picture is favorable and should help to bolster the performance of our existing portfolio through the coming year. Our team has used our recent experience to enhance our internal systems and processes in ways that will enable us to further maximize the performance of our current holdings. Justin and I will now be happy to answer any questions that you have for us this morning. Thank you. Ladies and gentlemen, at this time, we will 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. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Austin Wurschmidt from KeyBanc Capital Markets. Please go ahead. Hey, good morning, everybody. Liz, with respect to expenses, how much expense do you think you can take out of, you know, wages and benefits as you reduce contract labor and look to hire more permanent staff and sort of limit, you know, turnover? I'm just curious, how long do you think that could take? Do you think that you can see hotel EBITDA margins, you know, profitability, you know, re-accelerate versus, you know, the comparable periods in 2019? Good morning, Austin. You asked a fully loaded question there. You know, the labor market's very dynamic. There are a lot of moving pieces. Obviously, there are even broader macroeconomic impacts to, you know, what may happen in the future, related to, you know, wage growth particularly, and you know, what may happen with unemployment long term. You know, as we look at our results and dig in with our management companies on site as to where we have opportunity, you know, I think the team is doing a really good job, balancing labor needs with what's available in market today. Unfortunately, we are having to use more contract labor. You know, historically, we have not had to use the levels of contract labor that we are today, and you know, our management companies and our asset management teams both believe that, you know, we will be able to reduce that over time. It will take time, you know, how quickly, you know, that's yet to be seen. I can tell you that everyone is working really, really hard, you know, to do that as quickly as possible and to, you know, attract and retain top talent in-house. You know, not only does that help with the overall wage rate levels, contract labor is more expensive, you know, can be 30%+ more expensive than in-house labor. You know, also it helps with productivity, and it helps keeping morale up and keeping people motivated. I think everyone is trying to do that as quickly as possible. You know, as we looked at the quarter, I think you know you can see too, when you look at September margins relative to August, September improved. You know, part of that was we did see, you know, broadly speaking, wage rates moderate, but also, you know, some improvement. You know, I think, you know, whether, you know, how long it will take to mitigate the overall impact of what we have going on from a labor perspective, you know, we'll see. We're entering slower months, typically from a seasonality perspective, and, you know, we're gonna be really mindful of demand trends over the next coming, you know, next few months. We want to make sure that, again, we retain top talent, we keep people staffed, but, you know, we won't need to utilize the same level of contract labor even in those months to the extent occupancies decrease seasonally. You know, we're mindful there are a lot of puts and takes and, you know, I can tell you that the team is really focused on making improvements as quickly as possible. You know, as we think about long-term margins, relative to 2019, we're still optimistic that as an industry, there's long-term growth rate perspective from an ADR standpoint, and that, you know, we believe that as some of the actions the Fed is taking sort of moderate some of the expense creep from an inflationary perspective, we'll be able to maintain rate levels. You know, that will take a cognizant focus on delivering an exceptional experience. Again, when we think about staffing, you know, that's comes first to mind as to what we need to do, and that's really make sure that we have, you know, staff in-house, you know, and creating a work environment that is conducive to staff that cares about the hotel, cares about our associates and really can drive a premium guest experience to maximize rate long term. You know, we're optimistic there's still opportunity to 2019 margins, so long as we can continue to grow rate on the top line. I do think that some of the impact that we're seeing related to contract labor, training, and even hiring costs, you know, should come down over time. Maybe putting a finer point on it, what percent of labor expense today is contract versus where you've been historically at sort of the comparable occupancy you're at today? You know, we are probably over double, where we have been historically from a contract labor perspective as a percentage of wages. You know, low double digits probably is where we are right now. Got it. That's helpful. Then, you know, how much do you think weekday occupancy can continue to improve without losing some of the benefits of, you know, the leisure demand that you've enjoyed heretofore in the recovery? That'll do it for me. I'm not confident that there's, you know, an inverse correlation there. I think our expectations are that we can continue to see improvement in midweek occupancies while maintaining a strong leisure business on weekends. You know, I think certainly many of our peers have spoken to the fact that business trips have been extended and from time to time, combined with leisure trips, which has helped to buoy our shoulder nights, which, you know, were traditionally lower occupancy nights. Really, I think our expectation is that we will continue to see improvement in midweek Tuesday, Wednesday night occupancies and that with that improvement, we'll gain incremental pricing power and an ability to further drive top line. It's also worth noting that not every one of our markets has recovered evenly. Liz highlighted that, you know, over half of our markets now are performing, or our properties are performing above 2019 levels. We still have a number of markets that were slower to begin the recovery process, where we continue to see meaningful pickup in overall occupancy, both weekend and midweek occupancy. We anticipate that the continued improvement in those markets will further prop up the performance of our overall portfolio. Great. Thank you. Thank you. Our next question comes from the line of Neil Malkin from Capital One. Please go ahead. Hey, everyone. Good morning. Thanks for taking the questions. Good morning. Good morning. Hey. Hello, hello. I guess first one, Liz, maybe similar to Austin's, is you know you talked about further upside in the portfolio in terms of occupancy as you know markets have been different cadences of recovery. But I think obviously everyone knows that it's really a corporate issue that's gonna probably get you over the hump. It would seem like you would need the least amount of incremental growth in that travel segment to get back to pre-COVID occupancy. But can you maybe just help us understand the difference between what you're hearing from like the local regional negotiated versus the sort of like coastal national you know publicly traded segment? Just maybe that'll help us understand how you kinda like see it out there and maybe, you know, the cadence to get back to pre-COVID occupancy. You know, I think, you know, we have some of the conversations, particularly with our local negotiated accounts more directly than some of the corporate negotiated accounts and businesses that the brands negotiate directly with. You know, I think, you know, the brands have spoken to positive, you know, rate growth conversations as well as volume, you know, and room night contribution conversations with some of the corporate negotiated accounts with, you know, some industries, you know, moving forward more quickly than others with their rebound. I think as you know, as we approach 2023, you know, everyone understands the inflationary environment we're in. I think from a rate perspective, we're in good shape from both the local negotiated and corporate negotiated standpoint. From the occupancy side of things, you know, we have started to see corporate negotiated accounts grow volume. Again, it depends, you know, largely by market and sector. We have seen technology and financial services start to come back more recently, still not at pre-COVID levels, but we've started to see their volumes increase. You know, I think the beauty of what has happened for our portfolio, as a silver lining for the past couple years is, you know, we have broadened the reach of accounts that we work with, you know, appealing to a wide variety of industries, and demand generators broadly. you know, as you know, our individual hotel teams approach corporate negotiations, they're you know, balancing high transient and bar volume with the benefit of you know, somewhat negotiated you know, rates for base business. you know, each market and each hotel will be different. I think you know, as Justin mentioned in his prepared comments, you know, we so far from our management companies as part of the initial budgeting process, you know, believe we're gonna see future growth in 2023. when you think about you know, our expectation that we'll continue to exceed RevPAR levels relative to 2019 through the end of the year as things continue the way our booking data shows it to be today, you know, that bodes well. I think, incremental corporate negotiated, you know, recovery for our portfolio, will only help further accelerate our growth. I think we've shown with our performance relative to 2019 to date, you know, an ability to grow midweek occupancy, you know, steadily, as some of the corporate negotiated comes back, but also filling in with other accounts and, you know, incremental bar business as well. Okay. Appreciate all that insight, Liz. Justin, other one I have is for you. You've been pretty vocal, especially for you guys of the opportunities that you feel like are gonna come. You think about a tough debt market, you know, elevated maturities over the next 24 months, you know, lenders, you know, aren't gonna keep kicking it out. Brands are, you know, kind of getting pips back, or mandating that they do them in short order. You know, can you just maybe talk about the landscape for the transaction market? You know, it looked like, you know, the two assets you acquired are, you know, I think, fairly lower cap rates than I would have thought, just given the rise in interest rates. Maybe those were put under contract earlier. You know, maybe just talk about generally how you see your opportunity set, you know, again, next call at 12-18 months, just given the landscape I laid out, particularly with portfolio opportunities. Thanks. Absolutely. I'll start with the second question first, related to the cap rates for the new acquisitions. Important to note is that we were highlighting trailing and 2019 cap rates. These are hotels that opened midway through 2018, so we're ramping in 2019. Our expectations based on incremental ramp for those assets, and the fact that there are markets that have recently performed exceptionally well relative to 2019, that we will, in the near term, achieve yields in excess of 8%. Which puts the performance of those hotels, over time in line with where, we've been performing on our other recent acquisitions. Speaking to the acquisition market more broadly, I highlighted in my prepared remarks that our expectation is that transaction volume will be down for the industry as a whole, between now and the end of the year. That said, we continue to be active in dialogue with potential sellers of assets, and, you know, feel that a number of those conversations could yield fruit over coming months. I think to the point you were making more broadly speaking, our expectation going into 2023 is that we will see a meaningful uptick in industry transaction volume, with sellers coming to market, you know, as a result of refinancings and increased pressure from the brands around capital improvements. You know, I think acquiring assets in an environment where sellers are motivated to sell assets is always a better place for us to be. We have been, I think, very disciplined and targeted in our acquisitions throughout the pandemic and maintained our balance sheet capacity to become more aggressive at a point in time when you know deals were better priced, and we could acquire assets in scale in a way that would further drive the performance of our shares over time. Okay. Thank you, guys. Nice quarter. Congrats on the beat. Thank you. Thanks, Neil. Thank you. Our next question comes from the line of Floris van Dijkum from Compass Point. Please go ahead. Thanks for taking my question, guys. You know, your business is room driven. It's not really known for food and beverage revenues, but I noticed your food and beverage revenues almost doubled for the quarter. I wonder if you can just talk a little bit about some of the ancillary revenue opportunities potentially that you see ahead. Absolutely. For us, food and beverage for our portfolio is driven in large part by performance of our full-service asset here in Richmond, the Richmond full-service Marriott. We did see a pickup at that hotel in food and beverage revenue, both from our restaurant and from increased meetings and catering business. Looking more broadly at our portfolio, I think the select-service brands have curated a very efficient food and beverage offering that's enabled us to grow revenues even at our select-service hotels related to food and beverage. We anticipate continued opportunity both at the Richmond Marriott and across our portfolio more broadly in that area. Looking at huge successes, though, we've been incredibly productive in generating parking revenues. I think our efforts there began prior to the pandemic, but we've seen continued improvement there, and that has helped to bolster other revenues. Then outside of that, you know, we have worked with the brands to modify other on-site offerings, to generate incremental revenue. But to the point that you made earlier, our primary revenue source is rooms, and we're focused incredibly intently on our primary business and continuing to move room rates in ways that drive overall revenues for our portfolio. Thanks, and maybe a question for Liz. You did give obviously some guidance in terms of G&A and interest expense for the fourth quarter. Presumably, I hope, you know, I think the market sort of expects, you know, you to resume earnings guidance for next year when you report your fourth quarter. Maybe if you can comment on that and maybe also talk about the pricing. You know, I love the refinancing. Your balance sheet is in great shape. The spread appears the same, but, you know, there's another 10 basis points that the bank sort of snuck in there. Maybe that's an extra, you know, just, you know, spread that they get or whatever. Maybe you can comment a little bit on the pricing of debt and what you see happening there over the next, you know, 12 months. Thanks, Floris. I'll start with the guidance question. You know, I think we have certainly a desire to be in a position to feel comfortable and confident issuing 2023 guidance. You know, we'll see what happens over the next few months here. I think you know we've historically given guidance. You know, operations do seem to be more stable and booking data continues to be strong. You know, I think as we approach 2023, you know, we would certainly have the intent to reestablish guidance as we move forward. You know, still believe that there is some variability to the potential of outcomes, but certainly appreciate that the market would like some directional guidance. We'll cross that bridge as we enter 2023. You know, going to the second part of your question around the pricing of debt. Yes, as you know, we move from LIBOR to SOFR as part of the amendment. I think an industry-wide approach to making that transition was the 10 basis point SOFR adjustment. Over time, you know, as bank debt moves away from LIBOR and is broadly relying on SOFR, I think we'll see some of those spread adjustments dissipate and it'll get priced into the grid. Today, I think that was, you know, sort of a blanket approach to adjusting from LIBOR to SOFR. As far as the cost of debt, over the next 12 months, you know, I think the Fed has indicated, you know, that they, you know, will change how they're looking at their December announcement. You know, maybe a more moderate increase to rates. I think right now, I think consensus is that they may take them up 50 basis points in December, and then, you know, should we be in a position to be able to start to moderate rates over time, you know, that's what at least is getting signaled today. We'll see. I think, you know, the Fed also believed that, you know, the actions that they've taken to date would have had more of an impact. I think, you know, it's a very interesting environment and one that's new to all of us. At this point, I think, you know, we may continue to see a little bit of an increase before we see rates pull back. Thanks, Liz. Thank you. Our next question comes from the line of Bryan Maher from B. Riley Securities. Please go ahead. Good morning. It's just two questions for me. On the AC hotels that you purchased, you know, if memory serves me, those are a little bit maybe more upscale than some of the select-service, you know, that you own. Can you talk about if there's kind of a concerted effort to move a little bit more upscale, or, you know, how do you think about, you know, the AC hotels going forward, and should we expect more of those in the pipeline? Sure. AC fits into Marriott's lifestyle, upscale select service category. You know, I think, because the brand is new and because of certain design elements, we've found the brand plays incredibly well, especially in urban settings with both leisure and business guests and at those particular hotels. You know, I think, you've seen and we've talked about in the past our experience in Portland with our AC there. Having followed the brand now for many years, we believe that our experience in Portland isn't unique and that these hotels have an ability to generate meaningful rate premiums within their markets while maintaining an incredibly efficient operating model. Certainly, an operating model that fits squarely within the select service space with limited food and beverage. You know, I think as is the case with many of the newer lifestyle brands, the food and beverage concepts focus more heavily on the beverage component, which tends to be higher margin. But again, staffing models for our AC Hotels are comparable to our Courtyards within the same portfolio. And so with higher rate, we're able to generate very strong and attractive margins. The particular design elements further that, as I highlighted earlier. Thank you. I think in response to the second part of your question, certainly based on our experience with the AC Hotels that we own today, we would be very interested in continuing to expand our ownership in that brand. Thanks. Then my second question relates to this, you know, forum that you talked about that you hosted with some of your managers. How are you and they thinking about pushing rate further? I mean, we've seen clearly, you know, personally and professionally, people start to push back on rate and not take trips once you layer on, you know, crazy airfare prices, rental car prices that are ridiculous, hotel rooms that keep moving up in F&B. I mean, how do you think about kind of walking that fine line between trying to get what you think you can versus turning off the consumer, especially if we head into a weaker economy? You know, I think that's a fair question for the industry, broadly speaking. Looking at our portfolio specifically, our hotels tend to have a fairly even mix of business and leisure demand. You know, I think pricing for leisure follows market trends. You know, in the markets where we own assets, we have not to date seen meaningful pushback on leisure pricing around weekend business. Remembering that we never got to a point at the majority of our hotels where we were doubling and tripling historical rates. When we think about midweek business, which tends to be more heavily, you know, business client or negotiated accounts, we are heavily focused on the mix of business in our hotels. The conversations that we're having are around, you know, how much base business we should take at our hotels and how much we should allow to float with the market in order to maximize the total rate opportunity. You know, base business tends to be consistent and often has longer length of stay, but also tends to come at a lower price point. Most of the conversations with our managers were not around specific pricing strategies, but around managing the mix of business in our hotels in order to maximize overall profitability. In part, you know, we're not only focused on driving the top line. We're focused on driving total profitability at our hotels. A significant portion of the conversation was also around costs associated with various types of business, and ensuring that we were pricing different accounts appropriate to the cost relative to those accounts. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Dany Asad from Bank of America. Please go ahead. Hey, good morning, everybody. My question is just as we, you know, wrap up this year and head into next year, can you give us a sense for where you're, you know, you're expecting cost inflation to run in the portfolio, you know, where maybe some of the pain points can be and what can act as offsets? I have a follow-up question. I think in terms of expecting costs to run as Liz highlighted, I think in our prepared remarks and in response to an earlier question, to date, in part because it's one of our larger expense line items, a huge amount of focus internally has been around labor and cost increases that we had seen there. Our expectation on a go-forward basis is that growth rate slows and that potentially through increased productivity and lower training and recruiting costs we see those costs come in line. You know, outside of that, we're watching utility expenses, which are our primary focus. You know, relative to labor, it's a smaller line item, but the potential for growth in utility costs is meaningful, I think, in today's environment. Taxes, you know, are another line item that we're watching closely. In terms of, you know, runaway expenses, we feel largely we're at a point in time where operations are normalizing and stabilizing, and we're in a better position based on the staff and leadership that we currently have on site to begin to look for ways to mitigate expenses and improve productivity, which should, combined with continued growth in top-line performance, put us in a position to continue to generate strong margins from our properties. Got it. Justin, we've talked about, you know, hotel margins being 100-200 basis points better than pre-pandemic in the past. How does this inflationary environment that we're in today kind of make you feel about that target as we look ahead? You know, I think there have been a number of our peers that have thrown out various targets for long-term margin improvement. I think from the beginning, we've been clear that while we will continue to focus on managing expenses as we always have, ultimately margin expansion is at least as heavily dependent on our ability to drive rate at our hotels. As Liz mentioned in her earlier remarks, we're intently focused on ensuring that we maintain staffing levels such that we can provide a level of service that drives the value proposition such that we're able to maintain and continue to increase rate at our hotels. I think Liz commented earlier, and I completely agree that there continues to exist an opportunity for us to move margins higher for our portfolio. It will be through a combination of cost controls, increased productivity, and intense focus on driving top-line results. Got it. Thank you very much. Thank you. Thank you. Our next question comes from the line of Tyler Batory from Oppenheimer. Please go ahead. Good morning. This is Jonathan on for Tyler. Thanks for taking our questions and all the commentary so far. Just one from me today. A multi-part question on the common dividend and understanding it's a board decision, but any additional details you can share in terms of what factors were contributing to the decision to raise the monthly dividend twice over the past few months? Is that an increasing sign of the confidence in the and the sustainability of the recovery? I'm also interested in your thoughts on the perspective on potential payout ratios going forward. I think to answer your first question first, the increases in dividend are a direct result of continued strength in the operating performance of our hotels and an expectation that current trends would continue into the future. I think, to your second question, our payout ratios are lower than they were prior to the pandemic. We have, in addition to being in a position to increase dividends, been also able to preserve capital to reinvest in our business, and to fund share repurchases and partially fund acquisitions, and our capital improvements. You know, I think we performed relatively well in the worst of the pandemic, and as a result, had lower operating losses to carry forward into this year. Our primary focus to date has been a payout ratio that puts us in a position to maintain REIT status and minimize tax obligations. I think you've seen our performance here to date. Liz commented on our expectations that that performance would continue into the fourth quarter. Early indications from our management companies are that their expectations are for continued growth in the coming year. With all of that as a backdrop, we feel very comfortable with our current payout. Very helpful. Thank you for all the color. That's all for me. Thank you. Thank you. Our next question comes from the line of Chris Darling from Green Street. Please go ahead. Thanks. Good morning. Going back. Good morning. to the labor environment. Good morning, guys. Going back to the labor environment, is there any appreciable difference in either, the availability or cost of labor between, say, larger, smaller markets, urban, suburban, any other kind of similar trends that maybe you can tease out of the portfolio? I wish it was that simple. I think certainly, we have seen more pressure around wages in markets that have seen the most robust growth, and you know, that includes a mix of both urban and suburban markets. You know, I think we felt the pressure first in markets that were earliest in the recovery, and that pressure has spread as incremental markets have begun the recovery. It tends to be a function of availability of labor in individual markets, and the pressure is most acute in markets that have seen meaningful growth, over the past several years. Okay. Yeah. Understand that it's, you know, not so simple. Mm-hmm That's helpful in any case. Maybe switching gears quickly. Last one for me. You gave some helpful thoughts around the AC brands, you know, in response to an earlier question. Just curious, are there any other brands out there that, you know, you might like to gain exposure to over time? You know, we have been active in dialogue with Marriott, Hilton, and Hyatt about new brands that they are proposing and some of the brands that they've launched over the past several years. I'd say, within those families of brands, we continue to be interested in the legacy branded assets, you know, to include brands like Hampton Inn and Residence Inn that have been around for decades, and in some of the newer brands. You know, I think our experience with AC has been incredibly positive, and we've seen strong performance from a number of other brands within those brand families. At this point, while we have explored opportunities outside of those three brand families, we continue to feel that there's adequate opportunity for us to continue to expand our ownership and relationships with those three brands. Within the select service space, they continue to have the strongest brand reputation and that combined with loyalty programs that drive, you know, top-line performance for the assets, we feel is the best recipe for success in our space. All right. Fair enough. Thanks for the time. Thank you. Thank you. Our next question comes from the line of Anthony Powell from Barclays. Please go ahead. Hi. Good morning. Just a follow-up to that comment. You did sell the independent hotel in Richmond. If I remember correctly, you took that independent to maybe learn something about independent hotels. Maybe if you could talk about some conclusions you drew from that experience. Yes. We did sell that hotel. Looking at the operating environment that we're in now, we felt our time and attention was better spent on focusing on our core business. To the point you made earlier, we did acquire that hotel with a hope that we would, or with a plan and intention of learning about operations outside of the brand families where we have a tremendous amount of experience. You know, I think high level and would be happy to engage in a more extensive conversation offline at some point. High level, what we have found is that you know, cost of a customer acquisition varies and you know, the brand. The non-branded hotels have significantly higher reliance on intermediated business through OTAs, which has a price associated with it. I think beyond that, what we discovered is that, you know, in addition to incremental spend on sales and marketing, there's a need to maintain and to position the hotels from a capital investment standpoint, that's greater than what we would on average spend or need to spend in our branded select service hotels to maintain the same level of quality and to drive the same level of demand. I think it's an opportunity we may come back to at some point in the future. Based on the current operating environment, you know, and I think specifically what we're looking at in terms of near term supply and the potential impact of supply on the hotels that we own, we see greater opportunity to drive returns for our investors by focusing on our core business, and ensuring that we're yielding the best possible results from our existing portfolio. Got it. Maybe one more. I guess in your talks with your development partners, you know, what are they looking for in order for them to get a bit more confident in starting or identifying new projects? I know that's been a source of, you know, deals for you, but also I guess supply broadly. I'm curious what they're thinking about or what they're saying as you discuss with them. You know, I think certainty is the primary impediment to new construction today. It's in part around future performance of individual markets, but less that and more a certainty around the actual final cost of construction. Certainly, interest rates and availability of debt are impacting new supply. As we talk to development partners that we've worked with in the past, the bigger deterrents are availability of labor, supply chain disruption, and really uncertainty around total costs, with an unwillingness for most subs in market to sign fixed price contracts, that really is keeping people from building at a faster pace than they are today. Over time, I think to the extent we're able to stabilize the environment that we're operating in, we could see an increase in construction starts. Certainly, there is no lack of interest, and I think the brands have highlighted that they continue to sign a significant number of new deals. In terms of those deals actually getting in the ground, the biggest impediment today is a lack of certainty around construction costs, driven by the factors that I highlighted. Got it. Maybe one more. I guess in terms of brands requiring, I guess, new costs be reintroduced into the model, like, you know, more kind of housekeeping and breakfast, are we done with that or is there anything else that needs to be added that could be a headwind for cost next year? Based on the conversations that we've had to date with the brands, our expectation is that the current operating model will be the operating model going forward. It is a more efficient operating model in terms of services and amenities than the model that we came into the pandemic with. You know, I think to the point Liz made earlier related to labor, our expectation is that as we stabilize you know the employee base at our hotels, there is opportunity to gain incremental efficiency from an operations standpoint based on current standards. All right. Thank you. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one. Our next question comes from the line of Michael Bellisario from Robert W. Baird. Please go ahead. Thanks. Good morning, everyone. Morning. Thanks for sneaking me in. Actually a couple questions. Just first on the RevPAR in the comments around October, that's all referring to actual growth versus the actual portfolio at the time three years ago, right? Not same store or comparable. Just wanna clarify that. Yes. Got it. Assuming the trend holds, the last couple quarters, comparable and same store has been several hundred basis points lower than actual. Just wanted to confirm that. Justin, back to your comment just on the having less base business when you look out to 2023. Conceptually, does that make revenues and profits maybe more volatile or harder to predict next year if you are taking less base business? No, I think theoretically there would be a potential for that. When you look practically at how our hotels tend to operate, we only reduce base business in an environment where we anticipate and have strong confidence in our ability to replace that with various forms of transient. You know, I think more often we will be replacing existing base business with multiple accounts at higher price points. You know, I think there's not a view that we would radically change the way we're doing business at individual properties. An assessment of the accounts that we currently have in-house and our need for lower rated accounts moving into the future. Got it. Understood. You mentioned seller motivations in one of the earlier questions. Can you just talk about the seller motivation for the AC deals that you just did, and then just broadly the acquisition process and timeline for those deals and how they came about? The two AC deals were motivated by a desire for liquidity by the partners in the deals. They were marketed as part of a broader package that was broken up ultimately. We selected from the broader package, the assets that were the best fit for us and our portfolio. The deals were brokered, but we were able to secure the assets below the highest bid, with the primary determining factor being the surety around closing. You know, we, unlike the higher bidders, did not have financing contingencies in our offer. In today's environment, that's proven to be a competitive advantage for us. You know, I think looking more broadly at conversations we're having, we continue to explore opportunities through brokered transactions, but are also having conversations with individuals and groups outside of the brokered environment around potential transactions. I think most will decide to hold and go slow between now and the end of the year. As I highlighted in my earlier remarks, our expectation is that we'll see a meaningful pickup in transaction volume moving into next year. I think importantly, we feel incredibly good about the transactions that we've completed to date. We still have a tremendous amount of capacity, and we have preserved that capacity for an environment where we can, you know, acquire attractively priced assets in scale. Got it. That's helpful there. Just one more on those two deals. Could you maybe talk about the supply outlook in both Pittsburgh and Louisville and what's on the horizon there in terms of new hotels potentially opening up? Yes. Relative to other markets that we've explored or even where we own assets, the supply picture is favorable in both markets. Certainly, I highlighted in my prepared remarks, recent performance of the assets has been incredibly strong with the AC in Pittsburgh up 36% to 2019 numbers in September, and the Louisville AC up 8%. Our expectation is that in addition to individual asset level ramp, the RevPARs in these assets that opened shortly before the beginning of the pandemic, those markets will continue to improve over time. Both have a mix of demand generators, you know, and on both the business and leisure side. We feel really good about the potential over time. Thank you. That's all for me. Thanks, Mike. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. Now I would like to turn the conference over to Mr. Justin Knight, President and CEO, for closing comments. We appreciate you joining us today, recognizing it's election day. We'd encourage you to get out there and vote. As always, to the extent you're traveling, we hope you'll take an opportunity to stay with us at one of our hotels. Have a great day. We look forward to talking to you soon. Thank you. The conference of Apple Hospitality REIT has now concluded. Thank you for your participation. You may now disconnect your lines.