Standing by. Welcome to the DiamondRock Hospitality Company Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Briony Quinn, Chief Financial Officer. Please go ahead. Good morning, everyone, and welcome to DiamondRock's Fourth Quarter 2024 Earnings Call and Webcast. Joining me on today's call is Jeff Donnelly, our Chief Executive Officer, and Justin Leonard, our President and Chief Operating Officer. Before we begin, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from what we discuss today. In addition, on today's call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. We are pleased to report that our results for the fourth quarter, which we already anticipated to be strong, came in even better than expected. Comparable total RevPAR increased 5.5% over 2023, well ahead of our expectations going into the quarter, and over 250 basis points stronger than the growth achieved in the prior quarter. The upside to our expectations was most pronounced in our urban footprint, particularly in November and December. RevPAR at our urban hotels increased 8.2% on a 5.4% increase in average daily rate. November performance was less affected by the U.S. election than we originally expected, and more importantly, the calendar in December was favorable for two reasons. First, there were 17 business days in December ahead of Christmas, as compared to 15 days in 2023. Secondly, Hanukkah started on December 25, or nearly three weeks later than the prior year. The combination of these calendar shifts led to exceptional growth across all our urban markets, with December RevPAR up 13.2%, led by our hotels in Chicago, Salt Lake, San Diego, and Boston. I also want to recognize the team at the AC Minneapolis for generating 17% RevPAR and 28% total RevPAR growth in our first full calendar month of ownership. Fourth quarter results at our resort hotels were mixed. RevPAR declined 150 basis points in the quarter, but out-of-room spending contained total revenue to a 10 basis point decline. Florida continues to see headwinds owing to what can best be characterized as a hangover from the pandemic: heavy visitation, price inflation, Florida fans relocating to Florida, et cetera, but we are hopeful the market finds its footing in 2025. Our Florida resorts collectively saw a 5.8% decline in RevPAR, while all our other resorts, excluding Orchards Inn, which is under renovation, grew RevPAR 4.5% in the fourth quarter. Chico Hot Springs again performed well, delivering nearly 18% RevPAR growth on over 12% ADR growth, as our revenue management and marketing strategies continue to play out at that hotel. Both Vail and Sonoma had strong revenue and EBITDA growth in the fourth quarter. Group remained our strongest segment in the fourth quarter, as it has throughout 2024. Fourth quarter Group Room revenues increased 8.1% over 2023, on a 5.9% increase in room nights. At our urban hotels, Group Room revenue increased 10.2%, which drove a 6.4% increase in total food and beverage revenue. We continued to add Group to our resorts to build a base to preserve transient pricing and improve profitability. This strategy allowed us to deliver EBITDA growth at our resorts on essentially flat revenue. Turning to profits, hotel-adjusted EBITDA in the fourth quarter was $75.9 million, reflecting 16.4% growth over 2023, on a margin that was 250 basis points higher. Corporate-adjusted EBITDA was $68.7 million, representing almost 20% growth over 2023. Adjusted funds from operations was $0.24 per share, $0.06, or 33% over 2023. Before I turn the call over to Jeff to discuss recent events, outlook, and strategy, let me touch on our dividend and our balance sheet. At the end of the fourth quarter, we announced we would pay a $0.20 per share subdividend in addition to the regular $0.03 per share quarterly dividend we had paid throughout 2024. In total, we paid $0.32 per share of common dividends for 2024. With that announcement, we communicated our intention to pay regular quarterly dividends of $0.08 per share in 2025, and depending on our 2025 operating income, an additional subdividend in the fourth quarter. Several analyst reports and outlooks still reference a $0.03 per share quarterly dividend, so I'm not sure this material change was widely understood. In fact, last night, we announced our common dividend for the first quarter of $0.08 per share. Turning to the balance sheet, we have three mortgage loans totaling just shy of $300 million, maturing in 2025 at a weighted average cost of approximately 4.2%. Moreover, we have a $300 million term loan maturity in early 2026 that, as of year-end, had an average cost of approximately 5.8%, or 135 basis points over SOFR. Finally, our 8.25% preferred stock is callable in August. We continue to review the most cost-effective options to refinance these maturities through a combination of an inaugural corporate debt issuance, placement of mortgage debt, and a recast of our corporate credit facility. Included in the 2025 guidance Jeff will discuss, we have assumed that the maturing loans are replaced at a high 6% interest rate. Despite this, we do expect our overall interest expense to be slightly lower in 2025, as we realize the full-year benefit of interest rate swaps we executed in late 2024. On that note, I'll turn the call over to Jeff. Thanks, Briony, and thank you all for joining us this morning. Kudos to the entire team at DiamondRock for exceeding expectations, not just in the fourth quarter, but throughout the year. It has been a very busy year. Our board took steps to reduce our G&A costs and increase efficiency. Under Justin, our asset managers exceeded performance throughout the year. In fact, we exceeded our original full-year total RevPAR growth, adjusted EBITDA, and AFFO per share guidance, guidance which we raised several times throughout the year. Moreover, our design and construction team rationalized our capital expenditures to minimize costs and maximize impact. Under Briony, our finance and accounting team seamlessly implemented new systems to improve and expedite financial reporting and data analysis, and they handled this yeoman's task without a hitch. Anika Fischer has been a terrific addition to the team. She helped update corporate policies, strengthen governance, and internalize legal work that might have otherwise been outsourced to a costly third party. I also want to applaud our entire team for receiving Nareit's Leader in the Light Award in recognition of our corporate responsibility success. I'm so proud of what we've accomplished and how we are positioned for the future. Let me start with capital expenditures. In 2024, we completed room renovations at Bourbon Orleans and Westin San Diego Bayview, the rebranding of the Hilton Burlington to Hotel Champlain, and a spa renovation at the Westin Fort Lauderdale, among other projects. The rooms at Westin San Diego were completed in early 2024 at a cost of $14 million. The public spaces will be completed in 2025, where money will be used to improve the sense of arrival and expand the bar area and provide grab-and-go food options. We spent about $5 million at Bourbon Orleans updating the rooms and corridors. We introduced a destination fee for a food and beverage credit that guests can redeem in the hotel. Fourth quarter other income is up about 80% over the prior year, and we continue to see RevPAR increases. Recall, we reduced the scope of our renovation here, eliminating the addition of a lobby and pool area F&B outlet to enhance the overall ROI. The $8 million expenditure at Hotel Champlain enhanced our arrival and food and beverage outlets. These opened in June, and in the last six months of the year, F&B outlet sales were up $850,000, or nearly 40% over the prior year. We need to see more from these venues. We're aiming for upwards of $1 million of incremental F&B profit in 2025. Lastly, the spa renovation in Fort Lauderdale was a $1.5 million endeavor on which we expect a very rapid payback. Looking to 2025, the redevelopment and repositioning of the Orchards Inn and Sedona is well underway, and we expect to be finished with the rooms product by summer 2025 and the new pool amenity by fall. We've spent about $10 million thus far in 2024, and the remaining $15 million will come in 2025. We expect this project will cause about $1.2 million of EBITDA disruption in the first half of the year, more in Q1 than in Q2. On a full-year basis, we expect disruption will be about $500,000, as we expect significant year-over-year improvement when the repositioning is complete in late 2025. Finally, we are working to refine the scope of the renovation and expansion of The Landing Resort in Lake Tahoe to deliver a more impactful ROI, just as we did with Bourbon Orleans. There is more work to be done. We'll have an update in the coming quarters as to whether and how we're moving forward. It is important to circle back to performance of The Dagny repositioning, a hotel we converted to an independent in August 2023. The hotel remains number two on Tripadvisor in all of Boston, up from the mid-50s when it was branded. Now, the decision to go independent was not about higher revenue, although that has been strong, up 15% in the quarter and 9% for the year. The decision was about expense control to drive profitability. Our thesis was that the brand contribution was simply too expensive, and we could match or improve profits as an independent while enhancing value with an unencumbered property. I'm pleased to report hotel EBITDA of The Dagny was up 90% in the quarter and up 40% for the year to $14 million, surpassing our 2024 budget by $2 million. We're looking for more of these opportunities. Let's talk about our recent sale in Washington, D.C. We closed the 410-room Westin for $92 million, which equates to about a 7% trailing NOI cap rate, or 12 times EBITDA. We intentionally managed the marketing to capture the post-election bidding excitement and timed closing to capture the inauguration benefit. We've been fortunate to avoid the uncertainty that has since overtaken the Washington, D.C. market. The hotel performed better than expected last year. Several hotels in the brand family renovated in the past year, and we were able to draft off their associated average daily rate increases. I'm disappointed I could not return more of the capital that was invested in this hotel, but I am very pleased with the proceeds our team realized and the very real brand-mandated renovation we avoided. We anticipated the room renovation may have surpassed $30 million. A lobby atrium renovation could have pushed this figure meaningfully higher. Given the market dynamics in Washington, D.C., and especially the submarket, we felt the incremental investment could have been wasted and not produced a return on your capital. That is why I believe our free cash flow yield cap rate on sale is closer to 5%, if not lower. We are not collectors of hotels. They are merely the medium through which we are investing. We are here to invest, harvest, and reinvest your capital. Our job is to do this again and again to drive total shareholder return or return capital to you if we cannot. Today, the pool of external growth opportunities is not particularly deep. Lenders are making it easy for undercapitalized owners to continue kicking the can down the road unless they receive an unrealistic price. We will continue to look at our portfolio for opportunities to prune hotels where we feel we can realize attractive pricing. Given our source of funds, our common shares, preferred equity, and in some cases, even our debt are among the most accretive options for deployment today. Let's get to our outlook for 2025. We expect RevPAR to grow 1%-3% for the year. Total RevPAR growth is expected to be in line with RevPAR growth. Our group pace continues to improve with group revenue for the year up about 2%, which is about a 500 basis point improvement in our 2025 pace since our third quarter call. In the first half of the year, group pace is up in the mid to high single digits. The headwind to our year-over-year group pace is found at the Chicago Marriott. Recall, the Chicago Marriott benefited from the Democratic National Convention in August of 2024 and a strong calendar throughout the back half of 2024, a victim of its own success. As an interesting data point, if we exclude the Chicago Marriott from just the back half of 2025, DiamondRock's comparable full-year 2025 group revenue pace increases close to 400 basis points to nearly 6% from just under 2%. Now, it's still early, but large group sales is where Marriott excels. Since the end of the third quarter, we've seen the Chicago Marriott's revenue pace in the second half of 2025 increase by over 1,500 basis points, so we're optimistic we'll narrow this gap. Looking ahead to 2026, company-wide revenue pace is up 15% on strong room demand and rate growth, so we remain very encouraged. On the resort front, we remain cautious. We expect leisure will continue to see headwinds due to a combination of known issues such as the value proposition of foreign destinations and new concerns such as the resurgence of inflation and job uncertainty. Overall, our guidance expects continued softness in leisure, and in the first quarter, we expect Florida markets will see mid-single-digit RevPAR declines. As I mentioned earlier, we expect to see about $1.2 million of EBITDA disruption at the Orchards Inn in the first half of the year, but we expect to get back all but about $500,000 by the end of the year. Continuing with guidance, 2025 corporate-adjusted EBITDA is expected to be in the range of $275-$300 million. Adjusting for the net impact of the AC Minneapolis acquisition and the Westin D.C. sale, as well as the removal of share-based compensation, 2025 adjusted EBITDA is slightly behind 2024 at the midpoint. As Briony mentioned, we have a bit of financing work to do in 2025, and included in our guidance is the assumption we will execute some combination of a corporate debt issuance, credit facility recast, and possibly a mortgage loan on a hotel. Adjusted FFO is expected to be in the range of $199-$224 million, and adjusted FFO per share is expected to be in the range of $0.94-$1.06. In conclusion, our focus is on increasing earnings per share. One aspect of that means focusing on free cash flow per share, that is, FFO after normalized capital expenditures and dividends. The more free cash flow DiamondRock can preserve and create, the more we can return to shareholders through share repurchases, dividends, and to reinvest to generate higher earnings. I encourage folks to consider FFO and free cash flow metrics in their valuation assessment of the sector. The disparity between portfolios is most evident in balance sheets and physical asset conditions, so it is important to consider the financial metrics that reveal these differences instead of focusing on metrics that ignore them, such as EBITDA. With that, I will thank you for your time, and we'll take your questions. Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Dori Keston of Wells Fargo Securities. Your line is open. Thanks. Good morning. Jeff, I think there tends to be an oversimplification of applying one company's demand trends broadly across all peers. Can you give us a sense of your leisure VT group revenue growth expectations that aggregate up to the 1%-3% RevPAR guide and just highlight why your portfolio may not align immediately with peers? Good morning, Dory. I mean, I would say off the cuff that a lot of it obviously relates to your footprint. Just speaking to, for example, on the leisure side, I think where a lot of the weakness that we've seen in leisure that we referenced really has been in Florida, where, frankly, our portfolio tends to be a little more what I would say popular priced or more sort of appeal to a broader consumer set, where it's outside of Florida, a lot of our properties tend to be at sort of the luxury end, where we haven't seen as much of a headwind. I think from a ranking standpoint, we tend to think of group being better than VT and VT better than leisure, but I do not think we have a budget available by segment that I could give you that would back into the 1%-3% because we tend to budget more by hotel location than we do necessarily by segment. All right. That's fair. Justin, you talked about, or I guess, can you talk about what you're seeing today on the transaction front, maybe just highlighting the volume of off-market deals you're seeing today versus, say, six months ago? Can you talk about how competitive the process was for the Westin City Center? Sure. I mean, I think we're seeing, I think as everyone looks at the transaction volume, and transaction volume's still down significantly from kind of prior run rate. We'd see it down about 75% versus kind of like pre-COVID transaction volume. I think there are very few transactions that are getting done. I think if you really back out some of the very large transactions, which are driving a lot of that volume, I mean, we have not seen a lot of stuff get across the finish line, and there's still a pretty significant bid ask. While we're actively out there and sort of soliciting bids, I wouldn't say that we're soliciting bids at a number that people particularly like, and we haven't seen a lot of forced selling in the market. It is a pretty quiet transaction market, and I think that really is similar to what we saw six months ago. I think people were optimistic we'd see a drop-off in rates, and that might drive some incremental volume, but given what's happened to interest rates, I think the market still seems to be sort of stuck in a holding pattern. Okay. Last one. Does your 2025 guide assume further hotel-level operating efficiencies are achieved coming off those in 2024? I think we're seeing a little bit of slowing of expense growth. A lot of our expense growth last year was driven by our great group year. I mean, the vast majority of our room shopping growth and food and beverage growth particularly came from the group segment, just had a lot of labor growth to service that incremental food and beverage business. I think as our group pace has slowed a little bit, we're going to see a slowing of that labor growth number. We've also been very focused on productivity within the portfolio. I think the business intelligence tool that we put in place last year really gives us a lot more visibility into individual hotel P&Ls, and we've been able to sort of highlight some inefficiency and transplant some best practices throughout the portfolio. Okay. Thanks so much. Thank you. Our next question comes from Austin Wurschmidt of KeyBanc Capital Markets. Your line is open. Hey, good morning, everybody. Jeff, you referenced the drag from the Florida resort assets this past quarter and maybe continuing into the early part of the year, but just maybe broad strokes. I mean, how are you thinking about this subset of assets relative to the overall portfolio as you look out over the course of the year, given there has been a little bit of a normalization in resort patterns? I mean, just curious where we are in that, where you think we are in that normalization process. Yeah. Good morning, Austin. No, it's a great question. I mean, I wish any of us had a crystal ball on that, but I think our expectation and how we're thinking about this year is the belief that in the back half of the year, as we begin to comp over what we saw in the back half of 2024, is that Florida, in particular, will begin to find its footing a little bit. We're not expecting to be clear like a hockey stick recovery. It's just that the year-over-year declines will begin to subside. That's how we're thinking about it. To step back for a moment, I think there's just a lot of uncertainty right now in the economy. I mean, inflation seems to be something that's being difficult to get tamed, and unemployment's up a little bit. We recognize that consumers continue to be under a bit of pressure, and I think that's why we're a little more cautious on the outlook for some of those, as I describe it, as more popular price resorts. That's helpful. Just to your comments on CapEx at the Westin D.C. and how you guys have continued to convey your thinking about managing free cash flow, any other large kind of hotels with mandated CapEx projects that you're staring down and considering maybe it's better to evaluate other options instead of moving forward with those projects? That's all for me. Thanks. Yeah. I mean, in some of them, I would actually say it does not necessarily have to be large in dollars in absolute terms. It can just be large relative to the earnings that we expect out of that hotel and also just relative to how the market will sort of pay you for that hotel. Some of the properties we have mentioned in the past as potentially non-core would sort of fit that bill where the CapEx over the next few years could actually come very close to equating to the NOI of the hotel. I do not know. Justin, if you have anything to add or. No, I think we're actively looking at the portfolio, and I think trying to figure out the best use of capital dollars. We've been elongating some of those renovation cycles in order to try and get sort of more bang for our buck. Unfortunately, I think some of the assets that require a significant amount of capital are not necessarily the ones that are going to trade for a premium price. I think that's really the balance that we're making. Looking at some of those assets, as Jeff said, it may not be necessarily the biggest number from a CapEx perspective, but we're able to market price through it. It may actually come in markets that we're a little bit more optimistic about, but the CapEx numbers as a percent of total value is large. Appreciate the time. Thank you. Thanks. Thank you. Our next question comes from Smedes Rose of Citi. Your line is open. Hi, thanks. I was just wondering if you could share what the increase in property-level labor and wage and benefits was for 2024, what you're expecting in 2025, and maybe just any thoughts on kind of the pace going forward. It seems like yours are maybe a little bit lower than some of your peers, so just wanted to put some numbers around it. Sure. Yeah. I think we've mentioned this. A lot of our benefit growth and wage growth is really driven by the massive amount of increase we had in food and beverage, and we saw it abate towards the end of the year. In totality, we actually saw wages up about 7% for the year. Salaries and wages, salaries were about 5%, and benefits picked up at about 12.5%. We saw that significantly abate as we got to the third and fourth quarter. We had 10-plus percent food and beverage growth and saw significant growth, just really driven by a lot of that food and beverage labor. As we got to the end of the year, that number had slowed to about a 4% year-over-year growth as food and beverage was more comparable to the year prior. Yeah. Our 2025 guidance assumes that wages and benefits will grow sort of around 4%. Okay. Would you expect the pace to continue to slow, I guess, as we go into 2026, or kind of just your general thoughts? I know we still have a lot, the year is young, but. I think marginally. I think we're seeing more applicants for open job positions, and it's definitely not sort of the breakneck pace of labor growth that we saw. The jobs market seems to have slowed a little bit, and I think with more applicants, there's probably less wage pressure in the majority of our markets. That's true. I would say that the only thing in 2026 for us is we will have a union contract reset in New York, but we only have three limited service hotels there, so that shouldn't be as impactful for us as a lot of the full-service hotels. We will have that headwind, if you will, in 2026. Yep. Great. I just wanted to ask you on the dividend. You mentioned going to the $0.08 kind of quarterly run rate and then a potential stub dividend. Based on your guidance now, would you expect to pay a stub dividend, or can be I think you have a loss on the sale of the Westin. Does that count against the required dividend payouts? Yeah, that's true. We will have a loss on D.C. I think the tax loss is actually a little lower than the GAAP loss. I do expect that we will pay a stub dividend in the fourth quarter. I can't tell you today what that might be, but that's our expectation. Thank you. Thank you. Our next question comes from Michael Bellisario of Baird. Your line is open. Thanks. Good morning, everyone. Morning, Mike. Just want to go back to CapEx for a second, just to dig into the potentially refined scope at The Landing and just maybe also in relation to what you did in New Orleans. Are you dialing back spend because of cost inflation and returns are lower, or are you seeing something different in these markets fundamentally that's maybe changing your view about where and how much you should be investing there? I'll chime in, and Justin can join in. I mean, as it related to the Bourbon, I think the scope of work and meaning the actual design, setting aside the cost for a moment, I think was something that we were pursuing. When you actually kind of went to go bid that out, I think the sheer cost was a little bit higher than our expectation. Frankly, there are some costs such as room renovations that, I would say, do not trigger incremental operating expenses, and there are some expenditures. Like in that case, we are adding more food and beverage outlets and bars that are going to trigger additional staffing, and you have to think about whether or not that's really something that you want to be doing there from a return perspective. I think in the case of Bourbon, we felt that just the room renovation and the destination fee that followed could effectively produce a better return than if we had spent all the incremental money on building food and beverage outlets that generally tend to run with lower margins. It was just really thinking about where we could minimize the dollars and generate the biggest return. It does not mean that we cannot hold that option for F&B outlets on the side for the future, but that is just how we had thought about that one. Justin can speak to The Landing's. Yeah. I think, generally, when it comes to The Landing, we're just trying to be more disciplined about what the true potential ROI is for capital dollars invested. We have some entitlements to build additional room product, but it's a hotel that doesn't run high occupancy for a good portion of the year. I think perhaps some of our underwriting initially about what we could do in terms of incremental occupancy when we added 14 rooms, we really dug into it. We thought it was a little overly optimistic. I think that combined with the fact that cost came in a little higher than we had originally anticipated when we priced the project, it's just taken us back to the drawing board to see if we can find a better way to utilize those 14 additional entitlements, but do it in a more cost-effective way, given that we're only going to get occupancy on kind of premium occupancy nights. Got it. Understood. That's helpful there. Just on the group comments you guys made, just aside from Chicago, maybe what hotels, what markets did you see the pace pick up since 3Q, and where does the potential still exist in the portfolio to continue filling in as the year progresses? Yeah. I think some of our sort of mid-size urban hotels had some nice movement. Denver, Salt Lake, San Diego all had some decent movement and closed a decent amount of business towards the end of the year. I think we're seeing some good progress. I think particularly in Salt Lake and San Diego, which are two hotels we've just renovated, I think we're starting to see some of the benefit of those capital dollars invested on group tours. We're able to close a little bit more of that group business. That's all from me. Thank you. Thanks. Thank you. Our next question comes from Duane Pfennigwerth of Evercore ISI. Your line is open. Hi. Thanks. This is Peter on for Duane. Thanks for taking the questions. I guess, Jeff or Justin, if you could help us think about the RevPAR growth by quarter this year, anything that you would highlight on the shape of RevPAR throughout the year, maybe a tough comp in a certain quarter, easier comp in other quarters. In particular, in 1Q, it sounds like Florida Resorts expected to be down, but you did get the benefit of the inauguration at DC and the Super Bowl. Just kind of help us think about 1Q and then how it evolves through the rest of the year. I mean, looking at it, I think when you look at it overall, I think our first quarter is where our expectation is that our RevPAR will be a little bit softer than the average of the remaining quarters. It's a little bit of like Tale of Two Cities, I would say, in that the resorts we're expecting, as I said in my remarks, would be a little softer in the first part of the year. In first quarter, we tend to be very resort or leisure-driven. Really, that's when ski markets and, say, Florida markets would typically be at their peak, and we're expecting Florida to be on the soft side. As we move through the remainder of the year, that's when the urban markets tend to fare a little bit better, and we have a little more visibility. I would say our probably toughest comp on the urban side is August Q4. Yeah, August and Q4. August because Chicago, the Democratic National Convention came through, and also in the fourth quarter, we had very good group pace. When you blend it together, I would say the first quarter, I think, is going to be on the lower side relative to the rest of the year and maybe relatively sort of in the 2%-3% range in the remaining three quarters. That's very helpful. Thank you for that. I guess just on the expense side, could you highlight maybe some initiatives that you've taken, anything in particular that's kind of helped your expense growth for this year, which seems to be a little bit better than peers? Thanks for taking the questions. Yeah. We haven't found a magic bullet. I think it's really just to focus on productivity. I think some of the tools that we've enacted, and I think we've been able to sort of dig a little bit deeper into some of our managers' labor management tools, really to try and figure out where are we having successes from a productivity, particularly in rooms, and where can we utilize some of the standards that are in place at those hotels that are able to drive higher flow-through and better rooms productivity and utilize some of those at other assets. I think that's really where we've had success. It's just kind of blocking and tackling of how do we combat the increase in labor costs with a bit of increased productivity to hopefully offset some of that wage inflation. Got it. Appreciate the thoughts. Thank you. Our next question comes from Floris van Dijkum of Compass Point LLC. Your line is open. Morning, guys. Jeff, appreciated your comments on FFO and why it's important to look at the capital structure and the balance sheet and actually what comes down to what pays the dividends. One of the interesting things, I think, is if we look at your stock and most of your peers as well, frankly, you look cheap on both FFO and EBITDA. I just want to—you sort of alluded to this, but maybe if you can expound on the fact that are there better opportunities today than buying your own stock back? What would make, I guess, maybe ROI projects potentially could get higher returns? If you can talk about your—as you look out at your portfolio today, where you find the best or the most attractive returns available? Yeah. Thank you for the question, Floris. I mean, certainly, share repurchases are attractive. I think if you—and when you consider our source of funds, for example, and you look at what we were saying, sort of CapEx adjusted, where we were thinking that we sold the Westin D.C., and you could conceptually do the same for our portfolio, we just think it's a much better sort of free cash flow yield in our shares than it is in the Westin D.C. There are other investments as well, as you mentioned, ROI projects within our portfolio because for us, we're able to better understand those risks than most. Also, there are some pieces of our capital structure where, depending on the source of funds, there can be opportunities to accretively pay off debt and reduce leverage or call our preferred. We do look at all of those options. Right now, I mean, we'd love to be finding compelling external growth opportunities at 10% caps and a fraction of replacement costs, but there's just not a lot of that out there. Yeah. Maybe my follow-up question, as you think about portfolio composition, you sold another, I guess, $90 million hotel in D.C. How do you see the portfolio of your hotels in two years' time? Is it going to be more concentrated, or do you think it's going to be more diversified in terms of single asset exposures? I guess I'd like to believe that it'll be more diversified. I think there will continue to be some asset sales over the next few years that might skew towards larger assets. If we're successful on that, recycling that capital would allow us to diversify our portfolio a little bit would be my expectation. In terms of management, is there a—I mean, you could argue that having fewer assets are easier to manage. How do you look at, in terms of managing your portfolio and driving growth? I guess you're pretty close in contact with all of your local operators. Are you benchmarking across the portfolio, and are you finding opportunities to increase the operations as well? We just work harder than everybody else. No, I think, candidly, Floris, we have the most in terms of precision of portfolio. We're by far the most third-party managed. It just gives us a lot of say in the operations at our individual assets. We're really able to dictate a lot of the policies and procedures and staffing levels to a higher degree. I think that we ultimately can on some of the brand-managed assets. That gives us more of a say in cost mitigation strategies. Thanks, guys. Thanks, Floris. Thank you. I'm showing no further questions at this time. I'd like to turn it back to Jeff Donnelly for closing remarks. Thank you, everybody, for joining us this quarter, and we look forward to seeing you on the road. Thanks. This concludes today's conference call. Thank you for participating, and you may now disconnect.