Welcome to DiamondRock's second quarter 2026 earnings conference call. At this time, all participants on a 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. As a reminder, today's conference is being recorded. I will now hand the conference over to your first speaker, Briony Quinn, Chief Financial Officer. Please go ahead. Good morning everyone, and welcome to DiamondRock's second quarter 2026 earnings call and webcast. Joining me today 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 another quarter of strong operating performance. Our business model demonstrated its earnings power as RevPAR grew 7%, supported by improving trends across all customer segments. While expenses, excluding the benefit of favorable property tax appeals, increased just 1.8% due to our relentless focus on efficiency. The significant operating leverage drove our 240 basis point margin expansion and led to strong profit growth. We delivered corporate Adjusted EBITDA of $107.9 million and Adjusted FFO per share of $0.44 during the quarter. Our results benefited from the settlement of multi-year property tax appeals on our two Chicago hotels, which totaled $6.9 million, or $0.03 per share. Excluding this benefit, our FFO margin expanded by an impressive 303 basis points and our trailing 12 months free cash flow per diluted share, defined as Adjusted FFO less capital expenditures, increased 27% year-over-year to $0.80. Starting with the top-line performance, comparable RevPAR increased 7% during the quarter, with April and May each growing approximately 5.5%, followed by 10.1% growth in June, reflecting broad-based strength across all customer segments. While the World Cup benefited several of our markets, most notably Boston and Greater San Francisco, it was not the primary driver of our performance. We estimate the World Cup contributed approximately 90 basis points to our second quarter RevPAR growth, and we now expect it to contribute approximately 30 basis points to the full year, which is modestly above our initial estimate of 20 basis points. Group and transient revenue growth were fairly similar during the quarter, each increasing more than 6%. Group demand remained consistently strong throughout the quarter, while transient demand accelerated as the quarter progressed. Looking across the last three major holiday weekends, RevPAR growth ranged from approximately 9%- 12%, providing further evidence of healthy leisure demand. Guest spending while on property also remains healthy. Food and beverage, spa, and parking revenues each increased in the low single digits, leading to Total RevPAR growth of 5.6%. We continue to benefit from the relative strength of higher income consumers and their preference to spend their time and money on unique experiences. At checkout, the average guest bill exceeded $475 per day this quarter, with hotels above that level accounting for approximately 2/3 of our EBITDA. At our top five ADR hotels, the average bill exceeded $1,200 per night. Over the last year, our hotels generating ADRs above $300 have outperformed lower-rated hotels by almost 300 basis points on Total RevPAR growth. We expect that trend to continue through the remainder of this year and into 2027. Strong demand is only a part of the story. Maintaining operating discipline below the top line remains a core competency for DiamondRock. During the quarter, total hotel operating expenses increased just 1.8% compared to total revenue growth of 5.5%, resulting in 240 basis points of Hotel Adjusted EBITDA margin expansion without the one-time property tax benefit. Year- to- date, operating expenses have increased only 1.3%, while total revenue grew 4.2%, driving nearly 200 basis points of margin gains. Wages and benefits, which represent nearly half of our total expenses, increased 2.2% during the quarter, reflecting continued productivity gains as labor hours worked declined despite the increased occupancy. Our focus remains simple: control costs without compromising the guest experience. RevPAR at our resorts increased 7.9%, led by L'Auberge de Sedona, Cavallo Point, our two Destin resorts, and The Landing Lake Tahoe, all of which delivered double-digit growth. We expected that our resorts would outperform our urban hotels in 2026, and that thesis continues to play out. We view our resort portfolio favorably given its strong cash flow generation, supply constraints, and embedded ROI opportunities. Before turning to our urban portfolio, I want to provide an update on L'Auberge de Sedona, our most recent ROI project. The property continues to outperform expectations. In its first three quarters as an integrated resort, revenues increased 17%, Hotel Adjusted EBITDA increased 40%, and margins expanded 670 basis points, each compared to two years ago when the hotels operated separately. We have increased our estimate of the hotel's contribution to 2026 RevPAR growth from 50 basis points to at least 75 basis points. Importantly, the property has not yet stabilized. Its 2027 group pace is more than double this year's level, and we continue to expect meaningful earnings tailwinds from L'Auberge into 2027. RevPAR at our urban hotels increased 6.6%, led by The Dagny, our two Chicago hotels, Bourbon Orleans, the Kimpton Hotel Palomar Phoenix, and Hotel Emblem. Urban performance accelerated steadily throughout the quarter, reaching nearly 10% RevPAR growth in June. Importantly, this performance reflects broad-based strength across the portfolio rather than a single market recovery story. By year-end, pro forma urban revenues are expected to exceed 2019 levels by double digits. Group revenue increased 6.6% during the quarter, driven by rate growth of more than 3.5% and 2.5% higher room nights. Strength was broad-based across the portfolio, with particularly strong contributions from our Boston hotels, Cavallo Point, Sonoma, and L'Auberge de Sedona. One notable characteristic of our group business this year has been the consistency of rate growth, which we view as an encouraging indicator of underlying pricing power and the quality of demand our hotels are attracting. Looking ahead, pace for the second half of the year is currently up approximately 1%, led by strength in the fourth quarter as the third quarter is expected to be essentially flat. Despite the exceptionally strong group year we achieved in 2025, we again expect to report a record group year in 2026. Turning to the balance sheet, our capital structure remains simple and conservative. We have no debt maturities until 2029, no secured or convertible debt, no preferred equity, and no off-balance sheet encumbrances. Our debt remains fully pre-payable and leverage remains at the lower end of our peer group. We believe maintaining a conservative balance sheet provides optionality, allowing us to pursue external growth, fund internal investments, and return capital to shareholders as opportunities arise. For perspective, one additional turn of leverage would provide approximately $500 million of incremental investment capacity while remaining within our target leverage range. Our confidence in the earnings outlook supported both our dividend increase and our updated 2026 guidance. We announced a 22% increase in our quarterly common dividend to $0.11 per share and continue to expect our payout ratio to increase over time as our net operating losses are utilized. We are also raising our 2026 outlook. We now expect RevPAR growth of 2.5%-4%, up 75 basis points at the midpoint. We expect that RevPAR growth in the fourth quarter will be stronger than the third quarter. Adjusted EBITDA is now expected to be in the range of $310 million-$320 million, and Adjusted FFO per share between $1.18 and $1.23. With anticipated capital expenditures of $75 million-$85 million this year, our raised guidance implies 18% growth in free cash flow per share. With that, I'll turn the call over to Jeff. Thanks, Briony. Thank you all for joining us this morning. Over the past two years, DiamondRock 2.0 has been focused on one objective, growing free cash flow per share. Every major decision we've made has been in the service of that goal because free cash flow per share growth restarts the flywheel and ultimately drives shareholder returns. On a trailing 12-month basis, free cash flow per share has increased approximately 30%, reflecting disciplined execution across capital investment, asset management, oversight of hotel operations, and capital allocation. Last quarter, I highlighted three topics, stability and intent of our five-year capital investment program, the value and optionality created through our renegotiated franchise agreement for The Westin Boston Seaport, and the execution of our capital allocation philosophy. Today, I want to focus on three new topics. First, the improving transaction market. Second, the optionality embedded in our business strategy. Third, why we remain constructive on our earnings growth into 2027. The transaction market feels healthier than it has been in several years. We are seeing more opportunities to buy, sell, and create value, and we have been actively underwriting potential acquisitions. While competition is intense, we remain focused on opportunities where we see a clear path to higher cash flow and long-term value creation that others do not. We believe lodging REITs create the most value when they can internally fund their external growth. That philosophy underpins our focus on free cash flow per share. Our strong earnings growth is creating additional balance sheet capacity, allowing us to pursue attractive opportunities while remaining comfortably within our conservative target leverage. Historically, our most successful acquisitions have come through our longstanding relationships with other owners. Those opportunities typically involve exceptional hotels in supply-constrained markets, where the combination of the right real estate, manager, capital investment, and asset management can unlock meaningful value. That formula has served us extremely well. Over the last five years, acquisitions sourced through those relationships have generated nearly 10% compounded annual growth in EBITDA from pre-pandemic levels. That type of risk-adjusted earnings growth is what we continue to seek. We've been close to several attractive investment opportunities this year. If successful, we expect to fund them through a combination of accretive capital recycling, cash on hand, and selective incremental leverage. On the disposition side, we're more active today than at any point in recent years, and the breadth of interest is encouraging. In fact, one property we are marketing received well over a dozen bids. While there is no assurance we will complete any transaction, our pipeline is more active than it has been in recent years. As we look ahead, I expect DiamondRock to be active on both acquisitions and dispositions over the next six to 12 months. Our objective remains simple: enhance earnings growth, reduce risk, and create shareholder value. The second topic I want to discuss is optionality. One of DiamondRock's greatest strengths is not just the number of avenues we have to create value, but the fact we control more of our own outcomes than most lodging REITs. It begins with a balance sheet. We have maintained a conservative leverage profile that provides flexibility to act when opportunities emerge, whether those opportunities are dispositions, share repurchases, or acquisitions. It also extends to how our hotels are managed. Nearly 90% of our portfolio operates under third-party management agreements that can be terminated at will. That structure creates strong alignment with our managers while preserving our ability to make ownership decisions that maximize value. Moreover, when we ultimately sell an asset, that flexibility translates into higher value because buyers are often willing to pay more for hotels where they control their own operating destiny. The same principle applies to our independent hotels. Their positioning, pricing, marketing, and capital investment strategies are designed specifically to maximize our return on investment rather than support the objectives of a brand system. Historically, EBITDA per key at our independent hotels has been 50% higher than our branded hotels. As the benefits of AI are fully integrated into travel, we do believe that spread will continue to expand. Branding is a choice, if branding creates value, we have the option to move in that direction. The reverse is far more difficult. We have two upcoming brand versus independent decisions. At the Kimpton Shorebreak Resort, our brand agreement has expired and is now month to month. At the Courtyard by Marriott Denver Downtown, our franchise agreement expires in 2027. The Courtyard is a powerhouse. It could remain a Courtyard, reposition to a higher-rated brand, expanded on adjacent land, converted to independent, or even sold. We will choose the path that creates the greatest long-term value. Ownership requires the ability to make decisions solely in the best interest of each hotel, we have deliberately structured DiamondRock to preserve that freedom. I will close with our outlook. While the World Cup helped a handful of markets, it was never the primary reason to be excited about DiamondRock in 2026. The more important story is the breadth of demand across the portfolio. Leisure remained healthy, business transient continued to improve, group demand was strong. Historically, the industry's strongest RevPAR growth occurs when we see all demand channels growing, that's exactly what we saw during the quarter in our portfolio and continue to see as we enter the second half of the year. The L'Auberge de Sedona is outperforming our expectations. What began as a project expected to generate a low double-digit EBITDA yield for nearly $3 million of incremental EBITDA on our $25 million investment is now on track to produce a 20% yield on invested capital. Given the strength of the second quarter and encouraging momentum in the back half of the year, we have increased our 2026 guidance and raised our common dividend. What gives us incremental confidence is that performance has not been driven by one event or one market. It reflects the broader strength throughout the portfolio. Looking ahead to 2027, we see five drivers of earnings growth. First, continued strength among higher-income travelers. Second, a lack of new supply in most of our markets. We estimate replacement costs for our portfolio exceeds $700,000 per key versus a trading value today of $350,000 per key. Third, a tailwind of strong citywide calendars, notably in our major markets of Boston, Chicago, and San Diego. Fourth, additional upside from nearly $80 million spent on guest-facing renovations at hotels that comprise nearly one-quarter of our EBITDA that have not yet stabilized. Finally, improved flow-through with The Westin Boston Seaport District following our successful negotiation of the franchise agreement. Over the last two years, we have demonstrated what a sound strategy and disciplined execution can accomplish. Shareholder returns have responded. Today, DiamondRock has a stronger portfolio, a better balance sheet, more opportunities to create shareholder value than we have had in many years. As we look ahead, we believe DiamondRock is exceptionally well-positioned, we remain confident in the opportunities ahead. Thank you for your continued trust and support. We are happy to answer your questions Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. As a reminder, please limit yourself to one question and one follow-up. If you have additional questions, you may reenter the queue as time permits. One moment for our first question. First question coming from the line of Chris Woronka with Deutsche Bank. Your line is now open. Hey, good morning, everyone. Thanks for taking the questions, congratulations on a really nice quarter. I think you guys mentioned in the prepared comments about labor costs being down in the quarter despite higher occupancy. I'm curious how that breaks down between maybe your independent hotels, your branded hotels or your independently managed hotels. Is there also any benefit coming through from the brands possibly working with you guys a little bit more on brand standards in terms of amenities and things like that? Then I have a follow-up. Thanks. Sure, Chris. I don't think we said that labor was actually down for the quarter. I think we said it was slightly down or generally flat on a per occupied room basis. I think that just echoes the continued success we've had on finding productivity improvements throughout the portfolio. It's not necessarily driven by one type of hotel or one sector of hotel. I don't think it's driven by brand implementation of any kind of cost-saving maneuver. It's really just our focus on finding productivity and finding efficient ways to deliver guest service throughout our portfolio of hotels. Okay. Thanks, Justin. Jeff, I know you mentioned that you're seeing more activity in your pipeline on both potential acquisitions and dispositions. On the acquisition front, I'm curious as to whether you guys are thought of as being a little bit more resort heavy than a lot of your peers. Should we think directionally that you're leaning more in that direction, or is it more a market specific or customer segment specific kind of hotels that you're looking at? Thanks. Thanks, Chris. I wouldn't say market specific. I think all else equal, if price was no object, I think the long-term secular drivers for resorts are particularly attractive. Pricing on resorts has been very competitive and has tightened substantially this year. While we do look at a lot of them, there's a lot that I think get bid outside what we're willing to pay. We do look at urban markets as well. I would tell you all else equal, yes, I would like to tilt towards resorts, but we do look at everything, both urban markets and resorts. Thank you. Our next question in queue coming from the line of Nick Joseph with Citi. Your line is now open. Thanks. You touched on the improving transaction market and the intense competition. I was hoping you could just give some more color on kind of the buyer pool at the new entrants and kind of what are you seeing in terms of that competition today? Justin can chime in here too. It depends on the type of property, but I think, you see a lot of high net worth capital, sort of PE capital that's showing up for those types of assets. I think some owner operators as well. Yeah, I would say, while it's probably been more skewed towards high net worth capital over the preceding 12 months- 24 months, we've definitely seen private equity get significantly more active, and I think that's really responsible for a lot of the increased transaction and the increased bidder depth that we see on bidder sheets. Mm-hmm. Thanks. You said you'd been close on a few deals. How far off are you on these? Are you the underbidder, are you just below, or is it that competitive that maybe that gap is still a little wide? Yeah, it's a good question. Actually, I guess I should probably rephrase it and say there's some that I thought we would be close, then we proved to be 10%-15% off with many bidders in between. I think that's what's probably been most surprising is maybe a year ago, the gap between a first round bid and a second round bid was relatively tight. We've seen that widen out pretty substantially, I think, on the last few properties that we were pursuing, where there could be as much of a move as maybe 10%, 15%, or even buyers going hard with a letter of intent. It's gotten much more aggressive for certain properties. Thank you. Our next question in queue coming from the line of Jack Armstrong with Wells Fargo. Your line is now open. Hey, good morning, and thanks for taking the question. Could you touch on some of the booking trends you're seeing into Q3 by demand segment and how you're working to fill some of the group holes that you have there the quarter from a comparison perspective? Sure, Jack. I think we've been pleased with the uptick in short-term transient pickup, and that's probably given us a little bit more optimism, particularly as it pertains to Q3, where I think we've been vocal about a little bit of a group pace deficit that we've had coming into the year. That really makes up, I think, some of the optimism for the back half of the year, the changing view that we're going to be able to fill more of that group deficit with short-term transient pickup. I think that's the one thing that we saw over the course of the last 45 days-60 days that's really encouraged us in terms of the back year forecast. Helpful there. Any early read you can give on 2027 group pace, what you've got on the books from so far, and how the comps set up after a heavy 2026 event calendar? Yeah. It's actually pretty early for us, Jack. I would say if we look to 2027, we probably only have 5%-6% of our total revenues in our group pace, which ultimately is going to be maybe 20% of our actual production that year. Candidly, the results are quite negative and very volatile by hotel. It's really hard for us with the types of hotels we have to make any big prognostications. I would say, to give you an example, there's some hotels like Chicago that are up low double digits year-over-year. Conversely, there's some other group boxes we have that are down single digits year-over-year. All that disparity in those hotels is in Q4 2027, there's still quite a lot of time until you encounter that period for hotels that ultimately see bookings on a shorter-term basis. It's a little early for us. Thank you. Our next question in queue will come from the line of Rich Hightower with Barclays. Your line is now open. Hi, guys. Good morning. Obviously, the resort segment broadly, as you described, is seeing a lot of strength. Remind us what is going on in Key West at the moment. We just had a couple of relatively softer quarters. Yeah. I would describe, when you think about what's been going on in leisure, I think where you've seen probably the most exceptional strength is at the higher price point hotels. If you look within Florida, we have two assets in Destin, Florida, which have done very well this quarter and year to date. Conversely, if you look down to the Keys, which tends to be below a luxury price point, and it's also during a period of time where summer is not necessarily the Keys' strong time, effectively, where it's drawing a higher-end consumer. I think what you're seeing is not necessarily the lower leg of the K-shaped economy, so to speak, but somewhere in between where you see a little bit of that softness in Florida that can come during their off-season months. Okay. That makes sense. I guess just to maybe continue that line of questioning, I guess sticking to the upper end of the K, rather. I guess, Jeff, if you had to index where the higher-end consumer business spend and that sort of thing is on a sort of a spending stupidly index, relative to history, right? We've seen episodes where 2007 was an example, kind of 2021 was a bit of an example coming out of COVID. Where are we on that sort of index of just people spending stupid money once they get on property? When does that consumer break in terms of just being willing to spend higher and higher prices on rooms and out-of-room spend? I don't know. I don't have the perspective to sort of say broadly about how people are spending. I think within our portfolio, I guess I look at it as, generally speaking, when you think about resorts and U.S. resort destinations, where we are producing, as a country, more and more people who have exceptional net worths, but we are not growing our resort base. It's sort of a supply and demand imbalance that's driving a lot of that, in my view. I don't necessarily think it's spending stupidly. It's just they're spending on what their available options are. Thank you. Our next question comes from the line of Michael Bellisario with Baird. Your line is now open. Thanks. Good morning, everyone. Jeff, you guys were one of the groups that signed the letter to Marriott. Can you maybe give us an update on sort of the conversations you've had with them and also other owners since that letter was made public? How are you thinking about sort of potential outcomes and remedies with your largest franchisor? I think, Mike, we continue to have conversations with our brand partners. It is not something that we want to publicly comment on at this point. Fair enough. Just switching over to Chicago, can you just maybe help us understand the implications and benefits for the Chicago property tax refund, then just sort of how you think about valuation and liquidity of the big Marriott asset that I think you have been trying to sell for a while? Thank you. Sure, Mike. I know it is near and dear to you because it is in your hometown. We are pleased with the outcome that we were able to drive on the Chicago Marriott. We settled the entire triennial, as you probably know, it has been a difficult time in the Chicago appraisal market. We have seen a lot of valuation movement, I think just settling that triennial and knowing that we are going to have certainty over the tax number for the foreseeable future gives, I think, a path for execution of a potential transaction, a higher likelihood. It does not mean that we are necessarily going to be able to find a buyer for it, I think we always felt that we were over-assessed. Getting a buyer to buy into the fact that the tax bill was going to go down is certainly harder than getting someone to underwrite what is now an actual assessment going forward. Thank you. Our next question coming from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is now open. Thanks. Good morning, everybody. Jeff, appreciated your commentary around capital allocation priorities and just the opportunities in front of you. You kind of mentioned about the ability or focus on internally funding external growth. How much internal investment capacity do you have today to fund external growth without taking leverage outside of your target range? Along kind of similar lines with where you're deploying capital, what do you think you're looking at from a value creation perspective that other underwriters aren't beyond just market RevPAR growth forecasts? That's a good question, Austin. In rough numbers, if we sort of do nothing by the end of the year from this point forward, our leverage could effectively end the year close to 3x net debt- to- EBITDA. If you think about staying within that 3x-4x net debt- to- EBITDA range, we have about $500 million of borrowing capacity to still stay within that, and that's assuming that you're recycling capital at effectively the market pricing that we're seeing today, or using that capital to invest at the market pricing we see today. It depends on the asset, frankly. Sometimes there are just situations where it's the wrong manager that's in place and we see different revenue management strategies. There's others where there's sort of cost efficiencies, frankly, there's others where there's opportunities for expansion or doing something a little different. Like for example, we have the property in Montana, Chico Hot Springs, where we have a small hotel there that sits on about a square mile of land, that's one that we think, down the road, that we can begin to find ways to expand that property pretty accretively. Not unlike how we joined the two adjacent properties in Sedona. Just pivoting to guidance in the back half. What are you assuming for hotel EBITDA margins for the back half of the year and maybe what that implies for a cost per occupied room growth? On the RevPAR side, you discussed the expectation of 4Q should be better than 3Q, but seems like July should be coming in well based on some of the industry data. You've got easier comps at L'Auberge de Sedona. Beyond the group hole you discussed in August, is there anything else that's skewing your view around the cadence of RevPAR growth in the third quarter versus the fourth quarter? Just one thing I would say is that we've been talking about throughout much of this year is that August was a little bit of our hole in our group calendar. Some of the confidence we've had in the back half of the year is that we're seeing transient fill in, and I think there's more confidence that we'll be able to plug some of that hole, if you will. I don't know if you I think from, Jeff said we're a little bit more confident about Q3, but we do anticipate our expense growth rate to elevate a little bit. We've had things like the New York Hotel union renewal that are going to elevate our labor costs a little bit on a year-over-year basis, and also higher bonus accruals given performance versus same time last year. We do anticipate some of the margin growth we've been able to generate year-to-date is going to abate. We're hopeful that we're going to continue to be slightly elevated to same time last year, but not to the degree we were able to perform in the second quarter. To your question also on margin, I don't have the back half of the margin in front of me, our expense growth is sort of assumed to be around 2.5% for the back half of the year at our guidance. Thank you. Our next question in queue coming from the line of Duane Pfennigwerth with Evercore ISI. Your line is open. Hey, good morning. Thank you for the question. I wanted to follow up on Chris's question on cost execution sustainability. It's been very strong, especially in light of stronger RevPAR this year. You did a great job last year, but demand was pretty muted. I would assume it's actually harder to do to hold the line when demand is this strong. Can you just dig a little bit deeper on what it is you're up to and really the sustainability of that as we look into 2027 and beyond? You're right in that expenses are inevitably tied to occupancy. To the extent you see outsized occupancy growth going forward, you will see some movement, of course, in staffing levels to accommodate the increased guest occupancy. Justin can chime in, but a lot of this has to do with just our asset managers staying on top of staffing levels at the property and trying to find ways to be more productive and more efficient with labor, whether that's in food and beverage outlets or it's in the rooms department. Yeah, as Jeff mentioned, we've been able to keep labor growth at a fairly low run rate because we've been able to reduce hours worked in the portfolio really every quarter for the last four or five quarters. We can't do that ad infinitum at some point. We're doing, I think, what a lot of companies are doing. We're doing a lot with AI in order to find labor efficiency, in order to make our existing team members more efficient. I do think there's some incremental productivity we're going to be able to source from that. It is more efficient to do the incremental room. As occupancy and rates continue to grow, it's not that it doesn't cause some uptick in labor costs, but we're able to service that at a lower marginal rate. Thanks for those thoughts. Jeff, in your prepared comments, one of the things that stuck out, you referenced a few properties that have optionality, I think, in terms of management agreements. Can you just expand a little bit? What do those conversations look like today, versus maybe prior periods, and how has your experience with The Dagny kind of influenced your thinking as you approach these? Thank you. That's a great question, Duane, and timely. The two that I mentioned, the Kimpton Shorebreak in Huntington Beach and the Courtyard in Denver. I think we're at a time where brands are very focused on their unit growth, and those just happen to be assets where I think they have great locations. They perform very well, particularly in the case of Denver. There's aspects of those properties, whether it's being oceanfront in Southern California or having an adjacent parking lot that could have expansion rights in Denver, that just create opportunities, whether it's for us or to the extent those are assets that we look to monetize because we think we can get a better value. Someone else might see a path that's different than we want to pursue. That's something that we engage with the brands on, but we're also running different scenarios here internally. It's still a little early, those are situations that we continue to vet. Thank you. As a reminder, to ask a question, please press star one one on your touchtone telephone. Our next question coming from the line of Floris van Dijkum with Ladenburg Thalmann. Your line is now open. Hey, thanks, guys. I have two questions. Let me start with one that we've sort of talked a little bit about. If you look at your expense growth, I think you guys mentioned that expenses should go up when your occupancy increases. Your comp occupancy increased by 180 basis points, and your hotel expenses actually declined. Maybe you could talk about. I think you're probably among the lowest in terms of expense growth in our coverage universe anyway, among peers. Can we talk about some of the key things that the initiatives that you have in place that drive that outperformance on the expense side? That's our secret sauce. It's not always a perfect tie, I would say that generally speaking, over time, there is a relation there, but I think it's really just having a relentless focus on staying on top of efficiency. I think it's easy for folks in all their jobs to effectively get comfortable, and I think that's our job, is really to kind of stay on top of how we're staffing relative to the demand that we're seeing. Because as you can imagine, demand is always changing week by week at a hotel, and you want to be sure that across the entire organization, you have sort of the right staffing for the demand that you're seeing at that time, and thus not being caught on the wrong side of it. I think that's a fair characterization. Maybe my second question regarding capital allocation. You mentioned you're going to be active both buying and selling over the next 12 months, or probably 18 months. Maybe if you can talk about, are you going to be a net buyer or a net seller? Does that depend a little bit more on if the share price continues to move upwards, how that changes your view? Yeah. We look at it now today just because, as I mentioned, with our leverage coming down and generating incremental cash, I think shareholders want us to redeploy that capital accretively or return it to them if we cannot. Currently, and I said this at the beginning of the year, that we would be a net seller this year. I think that's quite plausible that in this calendar year we will be a net seller. As I look beyond and just seeing more transactions come to market, I guess I'm optimistic that we will eventually find something that we connect on. I think we will be potentially a buyer and a seller. There's nothing imminent today that we're not hard on any transactions or anything like that for an acquisition at this time. Thank you. Our next question in queue coming from the line of Chris Darling with Green Street. Your line is now open. Thank you. Good morning. Jeff, in the prepared remarks, you spoke about strong performance at The Landing in Lake Tahoe. What are your latest thoughts regarding a key count expansion at that asset? Given some of the other opportunities throughout the portfolio, how sensitive are you to starting sort of multiple overlapping ROI projects? On the second part of that, we always want to be conscious of the rooms that we take out of service and our capital spending. I think one of the reasons that we gave that five-year CapEx guidance was to really be deliberate and have intention to how we're spending money, so there's a little more predictability to our free cash flow per share for shareholders. I would also add that projects don't always align perfectly the way we want them to. You're also dealing with local zoning and other needs that you have with the property, and frankly, when seasonally it makes sense to do that work so that you're delivering those rooms at sort of the right time of season. If I could wave a wand and make them all happen at once, it would be great, but there's somewhat of intentionality to try to how we ladder them. As far as The Landing, I think that's an option for us down the road. It's not something we wanted to pursue today. I think ultimately some of the, I guess I would say, the requirements from the local municipality, it just didn't really make the cost make sense for us at this time. I think it's something that we could pursue again down the road. Okay. That's understood. Just a quick clarifying question from the prepared remarks again. I think you mentioned pace for the second half of the year at up 1%. Was that a group pace figure or a total revenue pace figure? Yes, that was a group pace figure. Okay. Understood. That's it for me. Thank you. Thanks, Chris. Thank you. There are no further questions in the queue at this time. I will now turn the call back over to Mr. Jeff Donnelly for any closing comments. Thanks, folks, for joining us today, and we look forward to seeing you soon. This concludes today's conference call. Thank you for your participation, and you may now disconnect.