Greetings, and welcome to the Apple Hospitality REIT First Quarter 2024 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 of Investor Relations. Thank you. You may begin. Thank you, and good morning. Welcome to Apple Hospitality REIT's First Quarter 2024 Earnings Call. Today's call will be based on the earnings release in 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 in our 2023 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 first quarter of 2024 and an operational outlook for the remainder of the year. 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. Consistent with our expectations, performance for the first quarter remained strong, with Adjusted EBITDAre of approximately $101 million, an increase of 6% year-over-year, and Modified Funds From Operations of $83 million, an increase of 5% year-over-year. Comparable hotels ADR of $154, occupancy of 72%, and RevPAR of $111 were all in line with results for the first quarter of 2023, despite challenging year-over-year comparisons related to the Super Bowl and an unfavorable shift in timing of the Easter holiday, which was consistent with the industry overall and ahead of our blended chain scales for the quarter. Our portfolio continues to perform ahead of pre-pandemic levels, with comparable hotels RevPAR for the quarter up approximately 8% relative to the first quarter of 2019, and we see continued upside opportunity to rebuild occupancy in many markets, especially midweek. Despite the tough comparison from a top-line perspective, comparable hotels Adjusted Hotel EBITDA was $112 million for the quarter, down only 3% as compared to the same period of 2023, but still up approximately 4% to the first quarter of 2019, bolstered in part by the Easter holiday shift and with growth in both weekday and weekend occupancies. Preliminary results for our portfolio show comparable hotels RevPAR for the month of April 2024 above the high end of our full year guidance range. We anticipate that we will be in a position to more meaningfully grow rate as we move into our seasonally stronger occupancy months in the second and third quarters, and that continued strength in leisure demand and further recovery in corporate demand, combined with limited near-term supply growth, will position us for stronger year-over-year performance as we progress through the year. Our revenue and asset management teams, together with our third-party operators, continue to work to maximize efficiencies and drive profitability across our hotels, achieving strong margins despite the current inflationary environment and ongoing wage pressures. During the first quarter, we achieved a comparable hotels Adjusted Hotel EBITDA margin of 33.7%, with year-over-year margin declines in line with expectations for the first quarter at the midpoint of our previously provided guidance range. Stronger rates during the summer months should help margins by offsetting, in part, continued inflationary pressure on wages and other operating expenses. Our operators are among the best in the industry and monitor real-time performance to focus on-site efforts on maximizing profitability at our hotels without sacrificing service, cleanliness, maintenance, or overall guest satisfaction. Supported by our strong operating performance, we continue to provide investors with an attractive dividend yield. Modified Funds From Operations for the first quarter was $0.34 per share, in line with first quarter 2023, and during the quarter, we paid distributions totaling $0.29 per common share, including a special cash distribution of $0.05 per common share that was paid in January. Based on Friday's closing stock price, our annualized regular monthly cash distribution of $0.96 per share represents an annual yield of approximately 6.5%. Together with our board of directors, we will continue to monitor our distribution rate and timing relative to the performance of our hotels and other potential uses of capital. We recently acquired the AC Hotel Washington DC Convention Center for $116.8 million, or $499,000 per key. In addition to its ideal location, premium amenities, and modern guest rooms, the asset generates additional revenue through its rooftop bar and restaurant, with stunning views of the city, and through its ground floor retail space and a large billboard that are leased to third parties. Our purchase price represents a 7.7% cap rate after an industry standard 4% FF&E reserve and an EBITDA yield of 8.5% on trailing 12 month numbers through March of this year. The D.C. market is among the lowest supply growth markets in the country, with a robust convention calendar and a broad base of government, business, and leisure demand. The AC is exceptionally well positioned relative to attractions within the city, and we believe it will be a significant contributor to our long-term performance. Our recent acquisitions have been meaningfully additive, creating increased exposure to high growth markets, lifting overall portfolio performance, and driving incremental profitability. The hotels complement our existing portfolio and reflect our proven investment strategy. Recent acquisitions, including the seven hotels we acquired since June of last year, together with the parking garage adjacent to our downtown Salt Lake City hotels, are yielding approximately 9% after capital improvements on a trailing 12-month basis through March of this year, with meaningful upside from projected market growth and improvements in operations, driven by the transition of management companies at five of the seven assets. We continue to have two additional hotels under contract for purchase: the Embassy Suites, downtown Madison, Wisconsin, for approximately $79 million, and a Motto in downtown Nashville for approximately $98 million, both of which are currently under construction. The Madison Embassy is on track to open this summer, and construction recently began on the Nashville Motto, with an anticipated completion and acquisition date in late 2025. As has been the case historically, our acquisitions focus continues to be on high-quality, branded, room-focused hotels in urban, high-density, suburban, and developing markets, supported by a broad variety of business and leisure demand drivers. Our discipline over the past several years positioned us to be active in a market with limited competition, where we were able to secure high-quality assets at pricing that met our internal underwriting criteria. Our balance sheet remains strong, with ample liquidity to pursue additional acquisitions, and we are actively underwriting deals that would further enhance and add to our unique and scalable platform. We are, of course, mindful of where our stock is trading and will continue to assess these deals relative to the opportunity to repurchase our own shares and allocate capital where we believe we can achieve the most desirable results for our shareholders. We also continually monitor the performance of our existing hotels and work to strategically dispose of select assets in order to optimize our portfolio concentration within markets we believe have higher growth potential, manage our long-term CapEx needs, and maximize returns on individual assets. As previously announced, during the quarter, we sold a Hampton Inn and a Homewood Suites in Rogers, Arkansas, for a combined total of $33.5 million, resulting in a gain on the sale of approximately $18 million. The assets were older, prototypical hotels that had performed well during our period of ownership but were facing significant new competition, with 15% supply growth under construction and an additional 14% in final planning, and had near-term CapEx needs estimated at approximately $22,000 per key. A portion of the proceeds from the sale of these two assets was used to complete a 1031 exchange with the acquisition of the AC Hotel in Washington, D.C., which resulted in the deferral of taxable gains of $15.1 million. Since the onset of the pandemic, we have completed approximately $287 million in hotel sales and have invested nearly $1 billion in new acquisitions while maintaining the strength of our balance sheet. These transactions have lowered the average age of our portfolio, increased revenue per available room and margins, helped to manage near-term CapEx needs, grown the size of our platform, and positioned us to continue to benefit from near-term economic and demographic trends. We continue to reinvest in our existing portfolio to ensure our hotels remain competitive in their respective markets and are positioned to command premium rates and further drive EBITDA growth. Our experienced team utilizes advantages made possible by our scale ownership to control costs and maximize the impact of dollars spent, while implementing projects during periods of seasonally lower demand to minimize revenue displacement. During the quarter, we invested approximately $20 million in capital expenditures, and we expect to spend between $75 million-$85 million during 2024, with major renovations at approximately 20 of our hotels. As we look ahead, the fundamentals of our business remain favorable, with continued strength in demand and limited new supply. As of year-end, more than 56% of our hotels did not have any new upper upscale, upscale, or upper midscale product under construction within a five-mile radius, providing us with the ability to meaningfully benefit from incremental demand and improve the overall risk profile of our portfolio by both reducing potential downside and enhancing the upside impact from variability in lodging demand. Our investment strategy has proven resilient across economic cycles, yielding compelling total returns for our shareholders. We are confident that with our portfolio of high-quality, room-focused hotels broadly diversified across markets and demand generators, the effectiveness of our brands and management companies, the strength and flexibility of our balance sheet, and the depth of our corporate team, we are well positioned for continued outperformance. It is now my pleasure to turn the call over to Liz for additional details on our balance sheet, financial performance during the quarter, and annual guidance. Thank you, Justin, and good morning. We are pleased to report another strong quarter for our portfolio of hotels. Comparable hotels' total revenue was $332 million for the first quarter of 2024, up 1.5% as compared to the first quarter of 2023. Continued strength in leisure demand and recovery in business travel during the first quarter enabled us to achieve comparable hotels RevPAR of $111, flat as compared to the first quarter 2023, with ADR of $154 and occupancy of 72%, both consistent with the first quarter of 2023. As we anticipated, because of the calendar shifts with the Easter holiday and more challenging year-over-year comparisons driven by the 2023 Super Bowl in Phoenix, where we have meaningful portfolio concentration, performance for our portfolio for the first quarter was below the low end of our guidance range. RevPAR for the 10 hotels that we own in the Phoenix market was down 8.5% for the quarter, with a 7% decline in ADR and a 1.7% decline in occupancy. Given our significant ownership in Phoenix, we estimate that the shift in Super Bowl venues negatively impacted portfolio RevPAR by approximately 40 basis points and revenues by $1.2 million during the quarter, even after taking into consideration the partially offsetting gains realized at our newly acquired SpringHill Suites in Las Vegas, which grew RevPAR 14.5% during the quarter. We saw similarly strong year-over-year results at our two assets in Anchorage, Alaska, which were up 22% for the quarter, and the five assets we own in the broader D.C. market, which were up 11.5% year- over- year. Preliminary results for the month of April show RevPAR for our full portfolio above the high end of our guidance range, and forward bookings show continued strength in both leisure and business demand. We expect operations to continue to strengthen as we move into the peak travel months in the second and third quarters. Looking day-over-day, leisure travel has been relatively resilient year to date through April. While weekend occupancies were down over 2% for the first quarter compared to the first quarter 2023, this was driven mostly by the declines in March related to the unfavorable calendar shift, and we saw a rebound in April with weekend occupancies up over 5%. Weekday occupancies were flat for the first quarter, with a negative drag from the Easter holiday. But business travel continued to improve steadily in April, with weekday occupancies up over 2%, led by improvements on Monday, Tuesday, and Wednesday nights. We have been pleased to see steady improvement in midweek occupancies, an area where we continue to have meaningful upside relative to pre-pandemic levels, and weekend occupancies have remained relatively stable, indicative of continued strength in leisure demand. Forward bookings remain strong, and we are optimistic that increased occupancy in the second and third quarters will better position us to drive incremental rate growth. Same-store room night channel mix quarter-over-quarter remained relatively stable, with brand.com bookings at 40%, OTA bookings and property direct down slightly at 12% and 24%, respectively, and GDS bookings up over a hundred basis points at 18%. Our overall channel mix continues to highlight the power of our brands and the continued improvement in business transient. First quarter same-store segmentation was largely consistent with the first quarter of 2023. BAR remained strong at 33%. Other discounts represented 28% of our occupancy mix. Group was 15%, and the negotiated segment represented 18% of our mix, in line with the same period in 2023, which implies growth if adjusted for the Easter holiday shift, but is still nearly 200 basis points lower than 2019, which we believe represents opportunity for continued upside. Turning to expenses, total payroll per occupied room for our same-store hotels was $40 for the quarter, up approximately 5% to the first quarter 2023, but decelerating as compared to the fourth quarter of 2023. We anticipate that higher wages for full and part-time employees and higher utilization of contract labor will continue to result in elevated cost per occupied room relative to pre-pandemic levels, though year-over-year growth should continue to moderate to levels that are more in line with historical norms. We're pleased to have meaningfully reduced our use of contract labor, which represented roughly 8.5% of wages during the quarter, a 10% reduction compared to the first quarter of 2023. With lower turnover and decreased reliance on contract labor, we are better positioned to drive incremental property-level productivity. We will continue to work with our management companies to enhance the efficiency of our operations over time. We achieved comparable hotels Adjusted Hotel EBITDA of approximately $112 million for the first quarter, down 3% compared to the first quarter 2023. Comparable hotels Adjusted Hotel EBITDA margin was 33.7% for the quarter, down 160 basis points to the first quarter 2023, consistent with what we assumed in the first quarter at the midpoint of our guidance range, despite top-line growth below the low end of our full-year guide. Our ability to maintain or potentially grow margin will be largely conditioned on our ability to grow rate, though we have been pleased with our management company's ability to manage operating costs in the current inflationary environment. Adjusted EBITDAre for the first quarter was $101 million, up 6% to the first quarter 2023, and MFFO for the quarter was $83 million, up 5% as compared to the first quarter 2023. Looking at our balance sheet, as of March 31, 2024, we had approximately $1.5 billion in total outstanding debt net of cash, approximately 3.4x our trailing 12 months EBITDA, with a weighted average interest rate of 4.6%. Total outstanding debt, excluding unamortized debt issuance costs and fair value adjustments, was comprised of approximately $281 million in property-level debt secured by 15 hotels and approximately $1.2 billion outstanding on our unsecured credit facilities. At quarter end, our weighted average debt maturities were 3.4 years. We had cash on hand of approximately $5 million, availability under our revolving credit facility of approximately $519 million, and approximately 78% of our total debt outstanding was fixed or hedged. We have approximately $105 million of debt maturing in 2024, consisting of $185 million term loan and a mortgage loan of approximately $20 million. If we elect not to extend the maturity dates, we plan to pay for these upcoming debt maturities using funds from operations, borrowings under our revolving credit facility, and, or new financing. During the quarter, we entered into an equity distribution agreement, which reauthorized and extended our ATM program, providing us availability for the issuance of common shares up to $500 million. No shares were sold under the current or prior ATM program during the quarter. We also have $335 million remaining on our share repurchase program. Turning to our updated full-year outlook for 2024, as compared to previously provided guidance, the company is increasing net income at the midpoint by $16 million, maintaining comparable hotels RevPAR change, increasing comparable hotels Adjusted Hotel EBITDA margin by 20 basis points at the midpoint, and increasing Adjusted EBITDAre by $9 million at the midpoint. While our asset management and hotel teams are working diligently to mitigate cost pressures, we have assumed, for purposes of guidance, that hotel operating costs will increase by approximately 5% at the midpoint. For the full year 2024, we anticipate that results will be in the following range: Net income of $207 million-$233 million. Comparable hotels RevPAR change of 2%-4%. Comparable hotels Adjusted Hotel EBITDA margin of 34.8%-35.8%, and Adjusted EBITDAre between $461 million and $483 million. This outlook is based on our current view and does not take into account any unanticipated developments in our business or changes in the operating environment, nor does it take into account any unannounced hotel acquisitions or dispositions. Operational results for the first quarter 2024 were in line with our expectations at the previously provided midpoint, and the increases to guidance are driven by the acquisition of the AC Hotel Washington DC Convention Center in March. The high end of the full year range reflects relatively steady macroeconomic conditions throughout 2024, with continued strength in leisure demand and improvement in business transient. The low end of the range reflects more modest lodging demand growth, with a slight pullback in leisure demand, offset by continued improvement in business transient and group. As we begin 2024, we are pleased with our performance and confident we are well positioned for the remainder of the year. Our recent acquisitions activity has enabled us to drive incremental value for shareholders, despite challenges in the operating environment, which continue to put pressure on margins. Implied Modified Funds From Operations are up on a per-share basis year-over-year at the midpoint and higher of our guidance range, and our balance sheet provides us with meaningful optionality to drive incremental value. Our differentiated strategy has proven resilient through economic cycles. Our assets are in good condition, with consistent capital investments, ensuring that we maintain a competitive advantage over other product in our markets. We believe the fundamentals of our business are sound, with favorable supply dynamics allowing us to benefit from incremental demand. Our team will continue to work to maximize the performance of our existing assets and to allocate capital in ways that further enhance returns for our shareholders. We would now like to open the line for any questions that you may have for us this morning. 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 that 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. One moment please while we poll for questions. Our first question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question. Thanks, and good morning, everybody. Liz, you highlighted some of the negative impact that the Easter holiday shift had on 1Q, but any sense how much of a benefit that shift had on April's performance and just how April's kind of compared versus budget? And then I recall last year you talking about some really strong midweek strength in late April, and I'm just curious, when you remove some of that holiday noise, maybe from the April performance, what did you see towards the latter half of April on a year-over-year basis? Thank you. Good morning, Austin. It's a good question, trying to isolate trends between, you know, March and April, given the calendar shift. You know, we were pleased with April overall when we looked at the day- of- week trends for the full month, seeing growth in both, you know, weekday and weekend occupancies and RevPAR. You know, it was heavily weighted, particularly from a growth rate perspective, on the first two weeks of the month. But as we rounded out towards the end and potentially had cleaner weeks to look at, we saw continued strength in midweek demand. You know, one of the trends I think that, you know, we may see and may be experiencing is some normalization between a pickup in midweek, potentially offsetting some leisure on the weekend. You know, when we look year to date, we're slightly positive, driven by that midweek demand and some, you know, some weak softening on the leisure side. But overall, you know, the midweek, the midweek growth is, is resulting in a positive result. That's helpful. And then wanted to hit one on the transaction landscape. Justin, you know, given kind of the evolving interest rate environment or interest rate expectations, maybe, have you seen any changes in seller expectations and sort of the volume of opportunities that are coming to the transaction market? Really, from a total transaction volume, we've seen very little change in that area. We continue the bulk of the deals that we're underwriting today are with groups who are exploring a potential sale, either because of pending financing, either specific to the asset or, you know, their larger portfolio, or in some cases, upcoming renovations. So that has been less of a driver to date than we had anticipated it would be. We continue to feel that that will bring additional assets to market in the near term. But, you know, total transaction volume continues to be low across the industry. I think, if you look at our performance over the past 12 months, we've taken more than our fair share of total transactions, and certainly continue to view ourselves as well-positioned relative to potential competition. Those I highlighted in my prepared remarks, you know, I think with the pullback in our share price, you know, and the relative valuations that we're doing, you know, we also see value there. I think, looking forward, I highlighted we continue to underwrite a number of potential transactions, assets, I think, that we feel would be meaningfully additive to our portfolio. And, you know, I think, we'll continue to see how that plays out as the year progresses. We're fortunate, I think, given our strategy, to have a broad palette to paint with. You know, I think there are a lot of markets where we have interest, and a lot of assets that would fit our investment criteria. So given the appropriate cost of capital, I think we could continue to be, you know, meaningfully acquisitive in the current environment. That's helpful. Then just last one for me. On the AC D.C., can you remind us, given when that was completed, where that stands relative to kind of stabilization versus, you know, a comp set of hotels in the D.C. market? So the hotel was stabilized when we acquired it. The bulk of the growth... And I say that hesitantly, only because, as you know, the D.C. market was slower to recover. And so a significant portion of the growth that we have seen year to date and that we expect to continue to see will come from continued growth in the market. That said, this is one of the assets where we transitioned management, and the new management team has done an exceptional job, both in driving top-line performance for the asset and, you know, flowing the top-line performance to the bottom line. So you know, I think despite the hotel having been open for a period of time, and ramping with the market, we see incremental opportunities both as the market continues to grow, bolstered by a strong convention calendar, and increasingly a return of government workers to the city, and you know, improvement in our share, and the efficiency of our property-level operations, with the management transition. Great. Thanks for the time. Absolutely. Our next question comes from Anthony Powell with Barclays. Please proceed with your question. Hi, good morning. It's a question on the overall, I guess, state of, of the consumer in your eyes. You know, we've heard a lot about kind of leisure, I guess, hesitancy or softness from other calls. You seem to be pretty optimistic there. So what are you seeing from your leisure customers, your small, you know, groups and social groups, and maybe your SMBs on their willingness to travel, right now? Good morning, Anthony. Generally, I would say that what the industry has seen and what we've seen doesn't immediately point to a weaker consumer, you know, specifically around leisure. Broadly, you know, whether traveling domestically or internationally, the consumer still appears to be preferencing travel, which is a positive for the industry overall. We've said on past calls, and I mentioned in response to one of Austin's questions, that, you know, as people begin picking up midweek corporate travel and normal travel patterns, materialize, there could be a potential or partial offset to leisure on the weekends. You know, again, when looking year- to- date through April at our trends, you know, that's what we're seeing broadly. You know, we've also said on past calls that Q1 is a really, tough time to draw broad conclusions about how the strongest travel quarters for our portfolio and the industry may play out, especially with our Super Bowl comp and the Easter shift. It just makes drawing broad conclusions a little tricky. We did assume in guidance at the beginning of the year and still feel that we'll have the most opportunity to drive incremental RevPAR in our strongest occupancy quarters here in the second and third. ... And Anthony, is it important to recognize too, that while we can zoom out and generalize overarching trends, that the trends vary pretty significantly from market to market. And so, you know, I think, even with weekend occupancies for several weeks being flat to slightly down, we have a number of markets where we continue to see very strong weekend performance and year-over-year growth. And the same is true midweek. You know, meaningful variance market to market, and I think, adding to what Liz said earlier, for that reason, you know, and given the overall strength and demand that we've continued to see through April, we think it's early to peg a specific trend in that area. Okay. So following up on that, you know, most of your other peers have talked about May and June being a lot better than April, yeah, and that, and your April was better than most of your peers. I'm curious what you view for the rest of the cadence for the rest of the, the quarter here. You know, as we look at average daily bookings and as we look at, you know, manager forecasts and speak to the field, you know, I think that they remain encouraged for the quarter overall. You know, April was promising and strong. I think, you know, we believe that, you know, incremental, there's growth that we'll see both in May and June as well, you know, hopefully similarly to what we saw in April. Okay. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Michael Bellisario with Baird. Please proceed with your question. Thanks. Good morning, everyone. Morning. Morning. Just one more on the leisure commentary. You did the softer trends. Did that come on the demand side, or was it really related to some pricing sensitivity? And then I know, Justin, you said big variances across markets, but any particular markets that you can point to that were surprisingly weak? I don't think the variances are within a fairly narrow band. Right. And I would say, the occupancy and rate dynamic is somewhat related. You know, I think we've commented for some time that pre-pandemic, leisure was our most rate-sensitive segment. And we've been incredibly pleased, and I think the entire industry has benefited from that segment being less price sensitive. It has always been our thought that over time, we would revert towards more normal behavior with a greater ability to drive rate with our corporate customers as we achieved stronger occupancies midweek, and you know, and ability to drive rate with leisure customers around compression nights in markets where demand was strong. I think you know, we are we're assessing what we're seeing right now, and as I highlighted, there is some variance from market to market. What we've seen overall is the extent there has been a pullback in some markets on weekends from an occupancy standpoint. It's been largely offset or more than wholly offset- ... by a pickup in midweek business. And that's a trend we feel very comfortable with. When we look at overall profitability of our business, and how we historically split business between business travelers and leisure, reversion to more normal behavior with stronger performance midweek, would from a overall profitability standpoint, be a favorable shift for us. Yeah, Mike, as Justin mentioned, when we look year-to-date at sort of the split between occupancy and rate, it's, they're closely aligned directionally. Got it. Helpful. Then just switching gears on the D.C. transaction, could you quantify how much of the $10 million of trailing EBITDA comes from that rooftop retail space in the billboard? And then also, just any more color on the transaction process, the background, other bidders, and seller motivation would be helpful. Thank you. When we look at AC D.C. on a trailing basis, the rooftop and retail income is significantly more than our average portfolio. It's, you know, closer, closer to 20% of total revenue, with, you know, close to 80% coming from rooms. And then from a background standpoint, this was a group, a strong developer, multi-market developer, that has investments across segments of real estate. And, you know, I think we're struggling a bit in an unrelated office portfolio, and I think, you know, saw an opportunity to gain some incremental liquidity through the sale of this asset. This was an asset that was built by the group to be held long term, and I think if you have an opportunity to visit it, you'll recognize that in the quality of construction and the premier location. You know, I think we were fortunate, as we have been in several instances, to be the right group at the right time and purchase the asset at a price that we believe we will feel... We already feel very good about, but we feel will look even better as we move into the future. Got it. And And then just one clarification, Liz, just 20% of total revenues, presumably at the 100% margin, so a much higher percentage of EBITDA. Is that a correct assumption? It's not 100% margin. The restaurant is managed, so it would be near 100% margin for the other outlets. But the restaurant is managed by a third party, and so there are expenses associated with that. Got it. Helpful. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Tyler Batory with Oppenheimer. Please proceed with your question. Good morning, this is Jonathan on for Tyler. Thanks for taking my questions. First one from me, just a follow-up on that leisure demand discussion, more clarification questions. Can you remind us how you define leisure demand? Is that commentary interchangeable with weekend occupancy? There is close alignment when we look at it to weekend occupancy, not exclusively. We also look at negotiated accounts, separate and apart from that. But when you look at our hotels, outside of a few markets, where the majority of our business, regardless of when it occurs during the week, tends to be leisure, most of our hotels skew toward heavily towards leisure on the weekends, and towards business travel midweek. Okay, helpful. Thank you for that. And then, Liz, helpful commentary on the labor side. Can you talk about the other cost inflation in the business and what areas of the expenses are seeing kind of the greatest year-over-year growth outside of labor? You know, we were pleased with the first quarter overall. If you look at comparable results, you know, the team did a reasonably, you know, good job, with costs, you know, outside of labor and including labor. We saw a deceleration, in labor expenses or total, you know, cost per occupied room from a payroll perspective in Q1 relative to Q4. And really, you know, as we looked at guidance in the midpoint, we were right in line on the top line, slightly ahead on the bottom line, and took that into account to some extent, about $1 million with the change in the guidance range. It was really broad-based, where we saw some deceleration. Utilities were down, you know, a lot of the overhead departments, as you know, decelerated their increases relative to Q4. So it was really broad-based. We were pleased to see overall, you know, the impact of the efforts that our teams have put in place and some stabilization in the cost environment. Okay, great. Appreciate the color there, Liz. And then last one for me, if I could. Justin, on the acquisition in D.C., you talked about the favorable market dynamics and how you wanted to have a presence in that market for some time, I think the release said. Are there any other markets that you'd still like to expand to? And maybe can you rank order the criteria you look for in new markets? There are a number of other markets where we would like to have a presence. It's interesting, you know, our strategy has always been to focus on rooms-focused hotels, predominantly in the upscale and upper mid-scale segment, and to broadly diversify our portfolio across a variety of markets and market types. In order to achieve that objective, you know, we need to be in both urban, large urban, small urban, and as well as, you know, high-density suburban markets. Pricing in large urban markets has made it challenging, you know, for us to find an appropriate entry point. The cost dynamics in urban markets are different. And historically, a market like D.C., and, you know, an asset of this quality would have traded at, you know, 150 basis point lower cap rate, which, given the dynamics of the market, would have put it outside of kind of the return threshold that we target. I think over... And I talked about this a little bit on our last call, but over the past several months, with the meaningful increase in interest rates and the pullback from many lenders, we found ourselves in a position to be very competitive around larger assets in some of these urban markets, where ordinarily we would have seen very stiff competition, predominantly from private equity, but from a variety of potential buyers. And given our ready access to capital and our ability to bid on assets without financing contingencies, we've been more successful. And when you look at the D.C. acquisition or the Vegas acquisition, which was another market where we've looked for an appropriate entry point for some period of time, you know, those are great examples of that. Importantly, though, we're not exclusively focused on large urban markets. That's a piece of our strategy, but not the entirety of it. And so we're equally attracted to high-density suburban markets, with the primary criteria that we're looking for being you know, relative growth trajectory, you know, relative to the national average. And you know, I think the positioning... vis-à-vis demand generators, with a view towards having a broad base of demand generators such that we're not subject to fluctuations within a single source of demand. You know, I think if you look at the entirety of the acquisitions that we completed last year, starting with Cleveland and moving through towards Vegas at the end of the year, and then D.C. following that, you get a good sense for the range of assets that we're looking for and the types of markets that we're looking to buy assets in. Okay, that's excellent color. I appreciate that. Thank you for all the color this morning, Liz and Justin. That's all for me. Thank you. Our next question comes from Chris Darling with Green Street. Please proceed with your question. Hey, thanks. Good morning. Justin- Good morning. Going back to the last question, actually, you mentioned, you know, just higher interest rates in the past couple of months, and that putting Apple really in a competitive, you know, position to have a competitive advantage in terms of acquiring properties. On the flip side, how does that impact your ability or willingness, perhaps, to bring incremental assets to market for disposition, perhaps as a source of funds, in the near term? Actually, a great question. And I think we have a super example in looking at what we've done recently as well. Where we have seen meaningful competition and continued strong appetite is around smaller assets, where the total purchase price is lower. And in today's environment... And again, the market shifts quickly, and we adjust our strategy accordingly to be opportunistic. But in today's market, you know, we see ourselves in a position to sell quality assets in smaller markets, potentially assets where we have near-term CapEx needs, and to redeploy into assets that are larger, where we have less competition. Like I said, we continue to monitor markets, and we'll adjust our strategy appropriately as kind of the market dynamics shift. Looking at the two assets we sold recently, and the asset we bought, you know, I think you can get a sense for where we feel the opportunities are. Got it. And that, that's all helpful comments. And then just one more, maybe following up with Liz on some of the operating expense comments. How are you thinking about expense growth, you know, over a longer term timeframe, maybe the next few years? Is 3%-4% kind of still a decent betting line to be thinking about, or how would you characterize the setup? You know, we were pleased with, especially on the payroll side, you know, what we saw. Total, you know, total expenses came in on a comparable basis, up 4%. You know, that's down from 5% that we saw in Q4. So I think we are starting to see some normalization. You know, I think in part, it depends on the broader economy and sort of, you know, how inflation, you know, evolves, and certainly, we're starting to see some benefit from lapping the tougher comps. You know, historically, 3%-4% has been reasonable. In guidance, you know, we anticipated, especially on the payroll side, between 4% and 5%, you know, with some continued cost pressures around some of the other line items like insurance and taxes. But I think over the long term, you know, if we continue to see the trends that we're seeing now, yeah, 3%-4% over an extended period of time wouldn't be unreasonable. I would add to that, over an extended period of time, our expenses tend to track reasonably closely with inflation. The trick is in an environment like the environment we've been in recently, where inflation numbers move more erratically and more significantly, there tends to be a lag around those. But zooming out, you know, I think, depending on where we end up from an overall inflation standpoint, you know, we would expect to be in the range that Liz highlighted, or to the extent the Fed's successful in reining in inflation and that were to come down more significantly, you know, we could even see expense growth below that. All right. I appreciate the thoughts. Thank you. There are no further questions at this time. I would now like to turn the floor back over to Justin Knight for closing comments. We appreciate your continued interest and for you taking the time to spend with us this morning. As I always say, you know, as you have an opportunity to travel, we hope you'll take the opportunity to visit and to stay with us in some of our hotels. We're incredibly pleased with the quality of our portfolio and the recent additions to it through new acquisitions. And we look forward to meeting with many of you here in the coming weeks as we get out on the road. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.