Greetings, welcome to the Chatham Lodging Trust First Quarter 2023 Financial Results. At this time, all participants are in a listen-only mode. A question 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. I would now like to turn the conference over to your host, Mr. Chris Daly, President, DG Public Relations. Please go ahead, sir. Thank you, Melissa. Good morning, everyone, and welcome to the Chatham Lodging Trust first quarter 2023 results conference call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subjects to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of May 4, 2023, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. To provide you with some insight into Chatham's 2023 first quarter results, allow me to introduce Jeff Fisher, Chairman, President, and Chief Executive Officer; Dennis Craven, Executive Vice President and Chief Operating Officer; and Jeremy Wegner, Senior Vice President and Chief Financial Officer. Let me turn the session over to Jeff Fisher. Jeff? Thanks, Chris, good afternoon, everyone. I certainly appreciate being on the call this afternoon with us. Just before addressing our quarterly performance, I wanted to highlight that we were awarded the Hilton Brand Development Award for our Home2 Suites at Woodland Hills Warner Center, California, that we've spoken highly about, and give special recognition to the teams from Chatham, Island, Western International, and EPCO, who worked incredibly hard over several years to bring that project to fruition. Turning to our performance in the quarter, which was very strong, with higher than expected RevPAR growth, driving EBITDA growth of 34% and more than doubling FFO per share to $0.16, exceeding consensus estimates of $0.13. Driven by meaningful growth in some of our larger markets, more reliant on the business traveler, RevPAR growth was over 25% in the quarter, the fourth best amongst all lodging companies. Our RevPAR growth was attributable to similar growth in both occupancy and ADR of approximately 14%. Relative to 2019, RevPAR was off about 6%, that result was adversely impacted by approximately 700 basis points due to the performance at our four Silicon Valley hotels. Excluding those hotels, RevPAR was up almost 1% compared to 2019. Relative to 2019, RevPAR improved each of the first four months of 2023, with RevPAR down 12%, 5%, 4%, and less than 2%, an encouraging trend and a key indicator that business travel continues its recovery across the country, even in Silicon Valley. Leisure travel remains strong with all of our leisure markets producing strong growth in the quarter. We can look at Destin, Florida, up 13%, Portsmouth, New Hampshire, up 40%, Portland, Maine, up 16%, Anaheim up 14%, Fort Lauderdale up 9%, and Savannah up 28%. Occupancy finished the quarter at 69%, up almost 14% and about 10% off pre-pandemic levels, evidenced by the year-over-year growth of 28%. We continue to see the return of the business traveler across our portfolio, as well as improved international travel due to loosening restrictions on entering the U.S. and obtaining work visas. Weekday occupancy is the best indicator of business travel, and versus 2019, weekday occupancy in the first quarter improved each month of 2023 and was 69% for the entire first quarter. Weekday ADR was up approximately 17% versus last year and only down approximately 1% versus 2019. An encouraging pattern given the first quarter historically is our slowest of the year. Weekend RevPAR remains strong as it was up approximately 9% in the quarter versus 2019. As we move into the second and third quarters, we are more confident with respect to the outlook as we see business travel demand continuing to build month by month. For the first time since the pandemic, we're also really starting to see meaningful demand pick up from Korea, Japan, Taiwan, and China in our Silicon Valley hotels and our Bellevue, Washington hotel. Offsetting some of this recovery is gonna be the intern programs in 2023. Since our last call, many of the world's largest tech companies, such as Meta, Apple, Google, Microsoft, and T-Mobile, have meaningfully reduced their programs in 2023 following significant corporate layoffs. Although they are expected to fully return in 2024, we will see a decline in intern revenue of approximately 80% to 90% across our four hotels in Silicon Valley and Bellevue, Washington, from about $12 million in revenue last year to between a million and a half and two and a half million dollars this year. Thankfully, and most importantly, we are able and expect to be able to make up at least half to 75% of the intern related EBITDA loss of $6 million. Work is ongoing, and recent occupancy trends in Silicon Valley particularly, are stronger than expected, on a week-by-week basis. We feel very positive about the piece of the intern business and the EBITDA related to it that we should be able to replace. Operationally, our margins grew 200 basis points over last year to a post-pandemic first quarter high of 40%. Good flow through in corporate expense controls allowed us to double free cash flow before CapEx and amortizing debt from about $5 million last year to $10 million this year. I wanna touch on our financial condition, which is extremely healthy as we sit here at our lowest leverage levels in over a decade. During the first quarter, we've already paid off loans amounting to $73 million, including the high-rated loan on our Woodland Hills Hotel, as well as 2 maturing loans, replacing debt with an average interest rate of 8%, with the term loan that is currently at 6.2%. Funded with our remaining borrowings in our term loan and free cash flow, on May 5th, we will repay another $16 million maturing mortgage. After that, we'll only have 2023 maturing debt of about $60 million secured by two hotels for later this year, and we have full capacity in our $260 million unsecured credit facility. Touching quickly on external growth, excuse me. The transaction market has been dormant, but it does seem like it's starting to ease up a bit with the significant rise in interest rates and a bunch of maturing debt occurring throughout the industry. We believe there'll be some opportunities to acquire hotels that fit into our high-quality portfolio in the back half of the year. With 39 hotels, we can acquire one or two hotels, it significantly moves the needle with respect to EBITDA and FFO growth. We wanna continue to increase further our focus, of course, on the extended stay segment. With that, I'd like to turn it over to Dennis for a little more color. Dennis? Thanks, Jeff. Our portfolio performed significantly better than the industry, with first quarter RevPAR growth of 28%, exceeding industry performance by approximately 50% again for the second consecutive quarter. Excluding the impact of the intern business, this is a pretty relative indicator of potential performance moving forward in 2023. If you look at our portfolio for the quarter excluding Silicon Valley, our first quarter RevPAR was up slightly versus 2019, on ADR growth of almost 10%, offset by a decline in occupancy of 9%. Silicon Valley, our largest market, continues to grow meaningfully over the prior year with first quarter RevPAR growth of 59%, meaningfully higher than our fourth quarter 2022 RevPAR growth of 45%. That market remains well off of 2019 levels, still down 36%. Occupancy of 64% in the quarter, for those four hotels was up 20% over last year, and still below 2019 levels by approximately 16 percentage points. Silicon Valley EBITDA was $3 million in the first quarter, which is up 150% over last year. Still below first quarter 2019 EBITDA levels, though. First quarter international air travel into both San Fran and San Jose airports are at their best levels since the pandemic, though still off approximately 16% versus 2019. Again, this is an encouraging trend. In other key tech markets, Seattle RevPAR grew 17% in the quarter. It still remains about 35% below 2019 levels. EBITDA at that hotel grew over 30% in the quarter. First quarter international air travel into Seattle was only off 2% versus 2019, and for the first time since the pandemic, March international deplanements exceeded 2019 levels. Beating the slower recovery in our Silicon Valley and Seattle markets, Austin continues to do really well. At our Residence Inn in Austin, RevPAR was up 13% versus 2019, with gains in both occupancy and ADR. Our TownePlace Suites was not open in 2019. I will say that RevPAR at our TownePlace Suites Austin was up almost 40% year-over-year. Our five highest hotels with absolute RevPAR in the quarter were our Residence Inn Fort Lauderdale with RevPAR over $273 on occupancy of 93%, followed by our Hilton Garden Inn Marina del Rey with RevPAR of $147, and then our SpringHill Suites in Savannah, SpringHill Suites Savannah and Home2 Woodland Hills, and those both also had RevPAR over $150 bucks. 27 of our 36 comparable hotels achieved first quarter ADR higher than 2019, and 14 of our 36 comparable hotels achieved RevPAR higher than 2019. We continue to see an average length of stay approximately 10% longer than our historical levels. It's come down from pandemic-related stays, but, you know, on a long-term basis, should remain longer due to the more flexible work arrangements that exist in today's work environment. For the quarter, total hotel revenue of $67 million was up 23% compared to last year's revenue of $54 million, which is the same percentage growth as last quarter. We were able to generate an incremental GOP flow through of almost $6 million. For flow through of approximately 50%, much better than our fourth quarter flow through of 35%. We are still able to control operating expenses and headcounts. Our employee headcount remains approximately 20% below pre-pandemic levels. Since 2019, our hourly wages, similar to last quarter, have increased approximately 25% over that same four-year period. Versus last year, through the first quarter, our hourly wages are essentially flat at our hotels. Our top five producers of GOP in the quarter were our Gaslamp Residence Inn, the fifth straight quarter to lead the portfolio, followed by Residence Inn Fort Lauderdale, Courtyard Dallas Downtown, and then our Residence Inn Silicon Valley 2, and then our SpringHill Suites in Savannah. With respect to capital expenditures, we spent approximately $8 million in the quarter and expect to spend about $30 million total in 2023. That includes $22 million of renovation costs at five hotels. During the quarter, we completed renovations at our Residence Inns in White Plains and Holtsville, New York, as well as our Residence Inn Foggy Bottom. Just in as extra tidbit, RevPAR at our Residence Inn, Foggy Bottom, was actually still up approximately 60% year-over-year, despite being under renovation for most of the quarter, indicative of just another business travel market that's been pretty dormant for the last couple of years that's starting to come back to life. A reminder, we are hosting in-person meetings at REITweek in early June. Please email me directly if we haven't already locked up a meeting yet. With that, I'll turn it over to Jeremy. Thanks, Dennis. Good afternoon, everyone. Our Q1 2023 hotel EBITDA was $20.7 million. Adjusted EBITDA was $17.8 million. Adjusted FFO per share was $0.16. Cash flow before capital was $7.6 million. While we have seen costs increase due to reinstatement of certain brand standards and the impacts of inflation on a number of key line items, we were able to generate a solid GOP margin of 39.8% and hotel EBITDA margin of 30.7% in Q1. Our Q1 GOP margin of 39.8% was essentially equal to our Q4 2022 GOP margin of 39.9%. It was 150 basis points higher than our Q1 2022 GOP margin of 38.3%. Over the last several years, Chatham has taken a number of steps to strengthen its balance sheet, and as a result, we now have the lowest leverage and most liquidity we've ever had. As of March 31st, Chatham's net debt to LTM EBITDA was 4.3 times, which is significantly below our pre-pandemic leverage, which is generally in the 5.5 to 6 times area, despite the fact that EBITDA has not fully recovered to pre-pandemic levels. In Q1, we used $75 million of the delayed draw term loan availability to repay two maturing mortgage loans and the construction loan in our Home2 Warner Center. We intend to use the remaining availability under our delayed draw term loan to repay a $16 million mortgage that matures in May 2023, and use available cash to repay a $20 million mortgage that matures in July 2023. Over the course of 2023, we'll continue to closely monitor debt markets to consider opportunities to refinance a $40 million mortgage that matures in December and potentially address a portion of our 2024 debt maturities. Our undrawn $260 million revolving credit facility provides a valuable source of liquidity that increases our flexibility to address our remaining debt maturities. With our reasonable leverage, solid liquidity, strong operating performance, sizable portfolio of unencumbered hotels, and meaningful free cash flow, we are well positioned to refinance our remaining debt maturities when needed. As a reminder, our reported 2022 RevPAR figures did not include results for the Home2 Warner Center, since it had been in operation for less than a year. Our reported 2023 RevPAR figures include Warner Center's results starting on January 24th, 2023, the one-year anniversary of its opening date. 2022 RevPAR, including Warner Center, was $90 in Q1, $138 in Q2, $151 in Q3, $118 in Q4, and $124 for the full year. This concludes my portion of the call. Operator, please open the line for questions. Thank you. 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Ari Klein with BMO Capital Markets. Please proceed with your question. Thanks, good afternoon. Can you talk a little bit about the Silicon Valley market? It looks like RevPAR versus 2019 maybe took a little bit of a step back in the first quarter relative to the fourth quarter. It's obviously a market that has a lot of challenges. To what extent, you know, if any, have they maybe gotten somewhat worse, you know, recently with the layoffs and banking? I think, you mentioned potentially backfilling the intern business. Can you just talk about that a little bit and add some color and context there? Yeah, I mean, I'll start, and Jeff can chime in, Ari. This is Dennis. I think, you know, if you look kind of sequentially from the fourth quarter to the first quarter, I think really the only difference is between kind of October and now as we sit here today, you've had, you know, $100 plus thousand of announced job cuts. You know, in the short term, I would say not all surprising given just the quarter-to-quarter sequential movement. I think the important thing, which I think Jeff talked about, you know, is that, you know, we are, you know, really, and I think we even talked about this in February, which, you know, kind of by the time the second week of February came along, we actually just started to see some trickling of international travel, which has only continued to improve. If you look at, you know, if you look at the four hotels in Silicon Valley, just as recently as the last couple of weeks, you know, you're looking at 82% occupancy in Mountain View, 82% in San Mateo, 80% at Silicon Valley 1, and basically 79% to 80% at Silicon Valley 2. You know, occupancy-wise, you know, the market is continuing, as Jeff talked about, demand from not only international, but just broadening corporate demand in the market has gotten better. I mean, to sit here at, in basically April with, you know, 75% to 80% occupancy at those four hotels is encouraging. you know, rates as well, if you look at each of those four hotels, you know, rates on average are up, you know, essentially $10 to $15 from, you know, just seven or eight weeks ago. you know, it's a, it's a good trend. You know, our operators there are positive about what they're seeing from a demand perspective. You know, that at least believe, you know, I think as we've worked through the last three months, you know, we're encouraged by that trend, and we do feel even though, you know, we took a bunch of intern business last year, which was almost double what we had done, you know, historically on a pre-pandemic basis, you know, I think we'll be able to offset, you know, a good chunk of it, if not most of that lost EBITDA. Thanks. Then just maybe, Jeremy, on the balance sheet, you mentioned some of the things that you're doing this year. There's a lot of debt that's coming due next year, some of it in Silicon Valley challenged markets. You know, what's I guess, kind of the plan there? How difficult is it do you think it'll be to refinance those? Could you look at the delayed term loan as an option? I guess, how are you approaching it? Yeah, look, I mean, we have overall very, very low leverage and a lot of unencumbered properties that serve as borrowing base, the credit facility much more than we need there. I think, you know, we're probably unlikely to put in longer term fixed rate debt on a bunch of the Silicon Valley properties given the performance levels. We're likely just to put debt on other assets. You know, rates have been coming down a little bit. Spreads kind of depend on the week. You know, I think, you know, in today's market, you know, new debt probably has a six handle on it. There's gonna be some increase in cost at some point unless rates come down, which they certainly could, depending on what's going on in the world. I think overall, we're probably less likely to put debt on the Silicon Valley assets, so that won't really have an impact on our refinancing plans. Hey, Ari, this is Dennis. Just one thing I wanna just continue to add just on Silicon Valley, 'cause obviously that's a big component. You know, the fact is, you know, between all of the layoffs of the tech companies since kind of late in 2022, you know, their employment numbers are still well above where they were four years ago. I think to, you know, certainly as you look forward, and again, in a market that we're running 75%, 80% occupancy, and having come through, you know, tech layoffs probably as many as there have been since the financial crisis, you know, I mean, listen, we certainly would love for RevPAR to be higher, but it's not the end of the world either. You know, the hotels are doing well, rate will continue to rise, and demand's gonna continue to come back. We've owned these hotels, you know, whether it be with Chatham or with Innkeeper since the late nineties, and, you know, every cycle is better than the prior one. You know, I think that growth is coming. It's just a question of the timing of how it comes back. Thanks. Appreciate the color. Thank you. Our next question comes from the line of Bryan Maher with B. Riley Securities. Please proceed with your question. Thanks, and good afternoon. You mentioned in your prepared comments, and we've been hearing in other calls, you know, the international travel, you know, starting to come back, and I think the numbers you said into San Francisco and Seattle, you know, were encouraging. For your markets out on the West Coast, does that include or how should we think about international travel into those markets for kind of rest of world versus, you know, inbound from Asia, which we're hearing is just now really starting to ramp? Most of our Silicon Valley business is Asia. Engineers staying in the hotels. You know, I was there two weeks ago. We're still doing, you know, the appropriate breakfast for that clientele in our Residence Inns. That business, at least, for us, seems pretty darn strong. Okay. On the acquisition front, you know, as we think about, you know, gateway full service hotels in New York and other big markets like that, you know, having problems, you know, big ticket hotels with refinancings probably later this year, how would you characterize your segment of the market, Jeff, you know, as it relates to opportunities? I know that you say, you know, one or two hotels can move the needle, but do you get the sense that, you know, we'll see, you know, kind of a barrage of, you know, $20 million, $30 million, $40 million extended stay hotels hit the market, or are they just easier to refinance and that's not gonna happen? It's hard to tell. I mean, every time we speculate, and you've been around for a long time too, you know, every time we speculate about oncoming distress, it seems like going back to obviously the GFC and to the beginning of the pandemic and all the other cycles we've been through, it never quite happens the way we expect it to happen. You know, but I think there should be, just call it select service hotels, you know, across the board. There's a lot of debt, there's a lot of debt maturing. I think extended stay hotels are way closer, if not on top of 2019 EBITDA numbers. Probably as a group, frankly, you might see less issues within, you know, within what we really like to acquire. That doesn't mean there won't be anything to acquire because there's just so much of it, and it's really, you know, owner dependent upon the status of what their balance sheets may or may not look like. Of course, they're all non-recourse loans anyway. What does their FF&E reserve account look like? You know, what kind of capital calls have they had during the pandemic? What's their appetite, you know, to put money back in, et cetera. You know, we're kind of cautiously very optimistic about opportunities down the road. All right. Thanks, Jeff, and thanks for making me feel old. Appreciate it. It wasn't intended that way. Thank you. Our next question comes from the line of Tyler Batory with Oppenheimer. Please proceed with your question. Thank you. Good afternoon. This is Jonathan on for Tyler. Thanks for taking my questions. First one for me. Any additional color on more recent demand trends, maybe outside of the Silicon Valley market? You know, any pockets of weakness or slowing that are worth calling out there, given some of the macro volatility we've seen? Hey, Jonathan, this is Dennis. No, I mean, I think, you know, outside of that, especially if you look at our major markets, you know, as I talked about with Washington D.C. is coming back to life finally. You know, Dallas, Texas, is just really on fire. Los Angeles, especially with Marina del Rey, is doing really well. San Diego has just been killing it. You know, it was more leisure driven in the early years of the pandemic. You know, it's now back to a pretty strong convention calendar business traveler. You know, outside of, you know, I would say Silicon Valley and Seattle, everything else is pretty good. Even Austin, which is another, you know, tech related market, our two hotels at The Domain, you know, good growth, not only year-over-year, but versus 2019. You know, it's, you know, it's been able to still run, you know, high 80s, 90% occupancies, as well. You know, very, you know, very, very encouraging, you know, pretty much everywhere else. That's great. I appreciate that color. Switching gears on the capital structure, Jeremy, you highlighted the strong leverage profile in the prepared remarks. Any updated color you can provide on how you're thinking about the leverage profile moving forward? I think we have capacity to add a little leverage over time, you know, even at kind of current EBITDA levels. You know, I think we'd be comfortable taking leverage to four and three quarters times-five times, something like that. Then, you know, as EBITDA recovers, especially Silicon Valley, that should give us more buying capacity as well. Okay, excellent. Thank you very much, guys. That's all for me. Thanks. Thank you. Ladies and gentlemen, if you would like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from line of Anthony Powell with Barclays. Please proceed with your question. Hi. Good afternoon. Thanks. A question on the extended stay brands. A lot of the major brands seem to have a lot of energy around these new mid-scale brands in the extended stay segment. Is that something that you would look into long term, or are you still more focused on more of the upscale extended stay market? Hi, Anthony. It's Jeff. You know, it certainly is gonna be interesting to see how all this shakes out. I believe, you know, that Marriott will announce theirs at the upcoming NYU conference. They'll be a full roundup of everybody in the business. Look, we're not gonna foreclose any opportunities because we like extended stay. Obviously we're very happy with our Home2 performance, and that is more of a upper mid-scale brand than, you know, than Residence Inn or Homewood Suites. We do a bunch of those, we look at other opportunities in some of the other, you know, brands. I think it's certainly a proven business model. If anything, perhaps might get overplayed a little bit. There's also, you know, not as many developers able to truly finance the construction of those deals as the brands would lead you to believe. We'll see how much really gets built. It'll be interesting. You're not worried that these brands would be too low ADR or, I mean, it sounds like the business model is still even attractive even at, you know, lower price points? It just depends on what the service model is really. You know, first of all, we're not gonna, you know, get involved in a, you know, $40 or $50 RevPAR deal, but you know, if the RevPAR is pretty close, like a Home2's RevPAR is to a Residence Inn or Homewood, yet your margins are, you know, you could prove them out to be way in excess or in excess of 50% at the GOP line, those numbers can work really well, depending on construction cost. Yep. Got it. Okay. One more on the Silicon Valley, and I guess the interim business. Can you remind us, when did that start last year? Was that in June? Is that a Q2 impact, or is that more 3 Q in terms of the year-over-year comparison? It's a bit of each, Anthony. I mean, really, you know, the interns last year, well, and really every year, some trickle in the last week of May. The bulk of them are in June, basically June, July, and August. It's, you know, essentially a third of it in June, two-thirds of it July and August. All right. I guess we'll start seeing that impact on the comp this quarter. I mean, I know you get back some of it, but I guess. Yep. Starting in June. Okay. All right. Okay. All right. Thank you. Thanks. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Fisher for any final comments. Well, as always, we certainly appreciate everybody being on this call. Normally, I just say, "We'll see you next time," but I would like to just kind of pick up the ball a little bit and conclude, you know, with good news in Silicon Valley, because I was there, as I mentioned two weeks ago, and, you know, spent extensive amount of time in every hotel, you know, meeting with the teams, particularly our sales team. I will tell you, there's a lot of excitement around, for example, AI, you know, and business that's being talked about that will be generated by the big companies that we already do business with, that everybody knows the name of, you know, for incoming this year and certainly moving into 2024. It's funny, I read the Silicon Valley Business Journal. About two or three weeks ago, read that they had the lowest amount of startups, funded, in three or four years in Silicon Valley, and that week, that number was eight or nine. There, you know, in a normal week, more like 30 to 40. There's still business in Silicon Valley. You know, there will be plenty of business, I think, as we move through the year and into future years. That's why we like our exposure there, you know, in good times and in bad times. As Dennis indicated, we've certainly lived through many cycles there, but there continues to be exciting developments, in a lot of different arenas. There's a, you know, there's a further funding of a company that does those vertical helicopters, that our folks are talking to with another round of financing coming in on those for approval and flight in 2024. All is not lost and we'll be more than fine. With that, we will talk to you next time. Thanks. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.