Everyone, and welcome to the Hersha Hospitality Trust Q2 2023 earnings conference call and webcast. My name is Emily, and I'll be coordinating your call today. After the presentation, there will be the opportunity for any questions, which you can ask by pressing star followed by the number one on your telephone keypads. I'll now turn the call over to our host, Andrew Tamaccio, with Hersha Hospitality Trust. Please go ahead, Andrew. Thank you, Emily, and good morning to everyone joining us today. Welcome to the Hersha Hospitality Trust Q2 2023 conference call. Today's call will be based on the Q2 2023 earnings release, which was distributed yesterday afternoon. Before proceeding, I would like to remind everyone that today's conference call may contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause the company's actual results, performance, or financial positions to be considerably different from any future results, performance, or financial positions. These factors are detailed within the company's press release, as well as within the company's filings with the SEC. With that, it's now my pleasure to turn the call over to Mr. Neil H. Shah, Hersha Hospitality Trust's President and Chief Executive Officer. Neil, you may begin. Good morning. Thank you for being with us on today's call. Joining me this morning are Ashish Parikh, our Chief Financial Officer, and Jay Shah. I'll begin by covering this portfolio's performance in this quarter, including a deep dive on our New York portfolio, before touching on our capital allocation and strategic outlook. When we last spoke in late April, despite economic uncertainty and general market volatility, our positive outlook was driven by the accelerating performance at our hotels, especially in our core urban markets. While the macroeconomic picture for the back half of the year remains uncertain and forecasts vary significantly among economists, overall GDP forecasts have continued to improve, and we are seeing more confidence by both businesses and the consumer than at any time in the previous 12 months. In fact, in June, consumer spending, adjusted for inflation, increased the most since January, while annual U.S. inflation rose at its slowest pace in more than two years. During the Q2, our urban markets achieved 12.2% RevPAR growth. We recorded a similar level of growth and performance in July as compared to July 2022. This strong growth in our urban markets has helped our portfolio offset some of the retracement the lodging industry has experienced at domestic resorts. Although we have seen a pullback at these properties compared to the record-setting year of 2022, our resorts are still significantly outperforming pre-COVID levels. With this segment stabilizing as we move through the summer, we view 2023 as a new base year for growth moving forward for the resort portfolio. We believe the stabilization at our resorts, coupled with the continued outperformance of our urban markets, which account for nearly 60% of our room count, will allow us to drive cash flow and profitability as we continue to progress through the ongoing travel recovery in the back half of 2023 and into 2024. With that, I will move on to discuss our portfolio's performance in the quarter. Our comparable hotel portfolio generated approximately 77% occupancy at an ADR of $303, resulting in RevPAR of $234 for the Q2 2023. This equates to nearly 4% RevPAR growth to 2022. Urban demand remained robust throughout the quarter, with occupancy growing over 800 basis points compared to the Q2 of 2022. Urban EBITDA of $22.5 million represented 67% of total portfolio EBITDA production, an expansion of 11% from Q2 2022. Our strategy to retain a high-quality portfolio of properties in New York is delivering outsized results, and we remain extremely positive about the runway ahead of us in that market. Overall, Manhattan was our largest EBITDA producer for the quarter, generating $8.4 million, or 25% of total portfolio EBITDA. The Hilton Garden Inn Midtown East and the Hyatt Union Square were the highest-producing New York assets in the Q2, generating $2.4 million and $2.1 million in EBITDA, respectively, and four of our top 10 EBITDA-producing assets were located in Manhattan. Meanwhile, our total New York City portfolio, including the boroughs, recorded 13.4% RevPAR growth compared to the Q2 of 2022. Strong summer performance in New York and Manhattan was driven by a robust return to midweek leisure and long-term group demand. According to Skift, New York is the top searched U.S. travel destination for the summer of 2023 and ranked in the top 10 globally. On the ground, international room revenue grew 21.2% from the first to the Q2 of 2023 at our top five New York assets. However, despite this growth, international room revenue in the New York portfolio remains 23% below pre-COVID levels, suggesting more growth opportunities in the coming quarters and years. On the corporate front, per the Partnership for New York City, New York City experienced 5% employment growth from Q1 2022 to Q1 2023. This is the third highest growth rate in the United States, behind only Dallas and Tampa, and is now solidly in line with most other major metros when it comes to office attendance, where it had previously trailed the national average for most of the pandemic. Our Manhattan portfolio recorded occupancy of 86% in the Q2, more than 1,000 basis points greater than 2022. In June, our Manhattan hotels topped 90% occupancy for the first time since 2019. Strong demand carried into July, with occupancy of approximately 91%. As we begin to reach pre-COVID occupancy levels in our New York portfolio, I want to point out that during the last cycle, we had record demand for hotel rooms in the city. Year-over-year, mid-single digit supply growth resulted in a very challenging operating environment for owners. As we look forward, a key differentiator from the prior cycle to today's operating environment are the much more favorable supply dynamics, coupled with very strict zoning regulations and many alternate use conversions. These factors are forecasted to result in a net supply reduction of 1%-2% of inventory for the short to medium term, with very little new supply forecasted after that time period. New York is our largest overall exposure. We are extremely encouraged with the market's recovery to date and remain optimistic on the long-term outlook for the growth in the city, which, in our view, is as positive as any market in the country. Boston had yet another strong quarter, with 10.5% RevPAR growth compared to 2022, driven by nearly 8% ADR growth. The Boston Envoy was the top EBITDA producer in our, in our consolidated portfolio, generating $3.4 million of EBITDA. For the quarter, the Envoy recorded occupancy of 84% at a $431 ADR, resulting in RevPAR of $361, up 14% from the Q2 of 2022. The Westin Philadelphia generated nearly $2.4 million of EBITDA in the quarter, despite disruption from the total rooms revenue, which completed in April. Looking ahead to the balance of the year, Philadelphia, which has been one of our slower recovering markets, has several tailwinds related to group and corporate travel. Comcast, NBCUniversal, one of the city's largest employers, is requiring employees back in the office four days a week post-Labor Day. I've been in Philadelphia all summer, the momentum is palpable. Office occupancy, retail activity, and street life has improved meaningfully. For the Q3, business transient room revenues are 15% ahead of 2022 for the entire Philadelphia market. Looking ahead to the Q4 for Philadelphia, group pace is impressive, with the reemergence of convention demand. The Westin has stronger corporate board meeting demand and a social group base, including wedding room blocks and the like. As corporate and group demand continues to return in Philadelphia, we remain confident that our newly renovated Philadelphia Westin and The Rittenhouse Hotel, the city's only independent Forbes 5-star hotel, will be beneficiaries of the increased demand in the market. In Washington, D.C., The Ritz-Carlton Georgetown recorded occupancy of 71% at a nearly $700 ADR, resulting in RevPAR of $492. The Ritz's $1.2 million in EBITDA is up nearly 10% from the Q2 of 2022. Meanwhile, The St. Gregory Hotel generated over $1.2 million in EBITDA, up 72% from prior year. Looking at the congressional calendar, with the House and Senate on vacation for the entirety of August. However, both the House and Senate are forecast to be in session for the majority of October, November, and the first two weeks of December, which will boost overall demand in the city. Washington, D.C., is also expected to host four citywides in the Q4, with the largest expected to generate nearly 60,000 room nights for the market. Broader lodging industry has experienced a pullback in resort markets compared to the record-setting 2022, as service levels normalized and alternative travel options and destinations became available. Despite that softness versus 2022, we are performing well above pre-COVID levels, and we have seen a stabilization of these results that has continued into July. We view 2023 as a base year for growth moving forward. Despite the difficult comparisons to a very strong 2022, our resorts generated just under $11 million in EBITDA, down approximately 24% to prior year, but up 37% to 2019. The Annapolis Waterfront Hotel, the Mystic Marriott, and the Ambrose Hotel, Santa Monica, turned in strong quarters with $2.3 million, $1.8 million, and $1.2 million in EBITDA, increases of 15%, 5%, and 6% to 2022, respectively. In July, RevPAR for our resort portfolio has continued to stabilize compared to 2022. Prior to handing it off to Ashish, I will briefly cover our strategic outlook. We are encouraged by the resilience of our portfolio and the strength in our urban markets. Our outlook on the current lodging recovery and the sector's long-term fundamentals, including a low supply environment and long runways in the recovery of international and business travel, remains very positive. The debt and transaction markets remain somewhat muted, while we anticipate a more active transaction environment as the year progresses. As noted last quarter, we are unlikely to be acquisitive in the near term. We are more likely to use our cash on hand to continue to reduce floating rate debt similar to the paydown of our corporate facility and the St. Gregory Mortgage, which were immediately accretive. With a handful of non-core assets currently on the market, we will continue to refine the portfolio and reduce leverage. Since the pandemic, our most efficient cost of capital has been realized via asset sales at or near NAV and averaging well above our public market valuation. Last year, we sold 11 hotels for over $650 million. Our urban select service portfolio traded at $360,000 per key, while the sales of our lifestyle and luxury properties achieved per key values in the mid-$400s. Trading older, non-core assets with upcoming capital needs has allowed us to rightsize our balance sheet and significantly improve leverage. As Ash will cover in detail, we are in a very strong financial position heading into the second half of the year. The values we've achieved with our asset sales are a testament to both our portfolio assembly, our strategy, and importantly, the hard work our team has done to manage our portfolio, which ranges from property renovations and repositioning to very active asset management, a focus on efficient operations and sustainability that has resulted in industry-leading property operating margins. These valuations affirm our firm belief that we've traded an outsized discount to our private market value. We are focused on closing that gap without diluting our shareholders. We will remain open-minded and nimble in our approach, given our financial flexibility, our financial outlook, margin performance, and our updated guidance for the quarter. Thanks, Neil. Good morning to everyone joining us on today's call. Our flexible staffing and operating model affords us the unique advantage of adapting to changing market conditions as performance across our portfolio recovers and is now starting to stabilize after the multiyear effects of the pandemic on our industry. Similar to our view of our overall resort performance, we view 2023 as a base year for our operating margins and for margin growth moving forward. Through the pandemic, we focused on controlling property-level costs while maintaining a best-in-class experience for our guests. As a result of that hard work by our teams, we've achieved numerous durable opinion of our guests. In the Q2, our comparable portfolio recorded GOP margins of 44% and EBITDA margins of 34.3%, which were 50 and 70 basis points higher than our comparable portfolio margins, respectively, from Q2 of 2019. As noted last quarter, we've entered into new restaurant leases at the Hyatt Union Square and Hilton Garden Inn Tribeca to drive improved profitability and margins. We are excited for an upgraded restaurant product at both of these hotels, along with the bottom line impact these leases will have at both hotels, as we anticipate immediate growth in cash flow and margin performance once they are up and running. As it stands, we're progressing through the final stages of permitting and anticipate both leases to become operational in the Q4. As Neil noted, our urban portfolio drove results in the quarter, generating GOP margins of 46% and EBITDA margins of 36.5%, which were in line with our urban margin performance in the Q2 of 2019. Despite difficult year-over-year comparables, our resort portfolio generated strong GOP and EBITDA margins of 40.5% and 30.6% in the Q2, which were up 430 and 360 basis points, respectively, from the Q2 of 2019. It was a significant retrenchment from last year's Q2, when margins reflected the combination of pandemic-era staffing limitations and operational protocols, along with the record pricing at our resorts that allowed us to drive very strong margins at our resort properties. As we move forward, we are confident that our franchise operating model, close alignment with our affiliated management company, will continue to generate these type of robust property-level margins. I want to briefly touch on property insurance and CapEx prior to transitioning to our balance sheet and Q3 outlook. We recently renewed our property insurance for our wholly owned hotels via a layered insurance policy consisting of multiple carriers. Our layered approach reduces our price risk associated with buying from one insurer and allows for more pricing power as a buyer. On a same-store basis, our portfolio's property and casualty insurance increased 19% for the current policy year, driven by an increase of 4% in total insured values and an increase of 17% in annual rate. While this is a significant year-over-year increase of approximately $1 million, we are pleased with this outcome compared to price increases in the overall market. This is below levels we had internally forecasted for our portfolio this year. Regarding CapEx, as we return to a normalized operating environment, we anticipate approximately $30 to 33 million in CapEx spend related to ROI and PIP projects in 2023. Through the Q2, we've deployed roughly $16 million on project-related CapEx. We estimate that approximately $8 to 9 million of the remaining spend relates to monies that are forecasted to be dispersed in the Q4 of 2023 for FF&E and other purchases related to projects that will commence in 2024. As noted in our press release, the Winter Haven Hotel is currently closed for renovation during Miami's slower season. We anticipate the project will be complete in time for the busier winter months in the Q4. Due to the size of the hotel and timing of the renovation during our shoulder season, we do not anticipate major disruption from this project. In the Q4, we will resume the renovation of the Sanctuary Beach Resort. Next phase of renovations will elevate the rooms product to a higher level, repositioning the resort in time for the high season in the spring and summer of 2024. We are confident that the improvements will generate growth and positive returns at each asset, in a similar fashion to the significant return on investment from the properties we have previously renovated. Turning to our balance sheet, during the quarter, we paid off the outstanding $23 million floating rate mortgage on the St. Gregory Hotel. The note was accruing interest of approximately 9.5%. We also paid down $25 million of the principal balance of our term loan, which is accruing interest at approximately 7.5%. On an annualized basis, these pay downs will save the company approximately $4 million in interest expense. Utilizing cash on hand from operations and property sales to continue to reduce debt aligns with one of our strategic goals of reducing leverage. We ended the quarter at 4.2x debt to EBITDA on a TTM basis, nearly three times lower than at the onset of the pandemic. As a result of our reduced debt profile, we were able to save $5.5 million of interest expense in the Q2 compared to 2022, despite the rising interest rate environment that we've all witnessed over the past 12 months. As of quarter end, our credit facility consists of a $346 million term loan and an undrawn $100 million revolving line of credit. The facility bears interest at 2.5% over the applicable adjusted term SOFR. The nearly $450 million credit facility matures in August 2024 and has one 12-month extension option, which will result in an extended maturity to August 2025. We have an existing swap that hedges $300 million of the term loan at a fixed rate of approximately 3.93%. Following our recent debt paydown, 79% of our outstanding debt is either fixed or hedged through various derivative instruments. Our Q2 weighted average interest rate is approximately 5.42% across all borrowings, with a weighted average life to maturity of approximately two years. We ended the quarter with approximately $147 million in cash on hand, in addition to our $100 million undrawn revolver capacity. In total, we were able to generate approximately $1.7 million in interest income on our cash reserves during the quarter. We are once again providing financial guidance for the current quarter. Looking ahead to Q3 2023, the robust performance in our urban markets experienced in Q2 has continued through into July, while our resort markets in South Florida are starting to stabilize, and due to seasonality, are less impactful to our earnings during Q3 and Q4. For the month of July, our comparable portfolio realized RevPAR growth of 5.1%, driven by our urban properties that recorded 12.3% RevPAR growth from July 2023, 2022. As Neil noted, forecasts vary as to how the economy will unfold in the second half of this year, but operating trends on the ground remain strong. While our reduced footprint may amplify impacts from individual assets or markets in the short term, we maintain an optimistic view for the long-term growth prospects for our sector and our markets, including the low supply environment, as well as the runway remaining in the return of international and business travel. Our substantial liquidity and lower leverage profile allow us to focus on driving operational cash flows while further managing costs within our portfolio where possible, as well as minimizing our floating rate debt exposure. We will continue to be mindful of maintaining a low leverage profile and maximizing flexibility via liquidity. As always, we will remain open-minded and entrepreneurial in our approach. This concludes my portion of the call, and we are happy to address any questions that you may have. Operator? Thank you. If you would like to ask a question today, please do so now by pressing star, followed by the one on your telephone keypads. If you change your mind and would like to be removed from the queue, please press star and then two. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question today comes from the line of Ari Klein with BMO. Ari, please go ahead. Your line is now open. Thank you, and good morning. Neil. Good morning, Ari. You mentioned. Morning. You're noticing some signs of stabilization in, in lead-on resort markets. Can you elaborate a little bit on, on what exactly you're seeing there and kind of the confidence you have that, you know, we're maybe past the trough? Are you seeing anything from a forward booking standpoint or, or any other color you might, you might have there? Sure. you know, Ari, our perspective is based on our portfolio and our resort portfolio, which is South Florida, Northern California or California, Coastal California, and then we have Northeastern resorts in Connecticut and in the Chesapeake region. In those markets, we've already started to see that in Northern California at the Sanctuary Beach Resort, which was to start the year and the end of last year, was really down double digits as much as 15%-20% by month, year-over-year, that has now come into, you know, single-digit kind of declines. As we look forward, we're seeing pace and, and business on the books that gives us the confidence that we are getting very close to a positive trajectory there. South Florida has continued to be a challenging market, but again, has reduced significantly its retracement. We were still down high single-digits again, this quarter. As we look forward, we're starting to see that decline. It has been the demand on leisure side continues to be very sticky, so this is ADR-driven kind of declines, and was ADR-driven kind of overearning the prior year. T hat drives it to a great extent for our portfolio t hen for our portfolio kind of set up, South Florida, for example, which has been the most kind of challenging market in this retracement, it represents nearly half of our EBITDA in the first half of the year, while in the second half of the year, it represents less than 18% of our EBITDA. So for our portfolio, it's the urban markets that really drive results in the Q3 and Q4, which also give us increased confidence. To your question on the resorts, it's just declining, the rate of declines is decline, is, is our, is our point, Ari. Got it. Thank, thanks for that. Then just looking at the performance in Manhattan, you know, very strong RevPAR overall, but ADR actually declined year-over-year with occupancy up meaningfully. Can you provide a little more color there on how you, you view those two components, I guess, moving forward? You know, maybe as occupancy has less, less room, moving forward. Yeah, absolutely, Ari. You know, when we look at our Manhattan portfolio, just give you some context, in the month of July, Manhattan, so what five markets that we have, were up about 19% in RevPAR from last year. From 2019, they were up about 3% in RevPAR. We are running rates in Manhattan currently that are about 10% higher than 2019, but occupancies are still even at 92% for July, about 400 basis points less than July of 2019. I mean, that market just has traditionally, for us, run in the 94%-95% occupancy once you get past March. You know, we're trying to really drive rate, looking at occupancies in the low 90s now for the remainder of the year. There's still room on occupancy, and the flow-throughs remain very, very good as you start, you know, getting rate growth of 10%, 12% plus in the strong occupancy months. Got that. Are you surprised a little bit that you've pushed occupancy so much and, and there hasn't necessarily been quite the same level of ADR flow-through? You know, I think that we've been running kind of mid-eighties% occupancy for the last quarter. The amount of occupancy in June, July did surprise us to the upside. I think that we adjusted our rates properly, but we're also mindful that, you know, these are heavy, heavy leisure months. They're not strong business travel months as you get into July and August. I think that rate, the driving ADR, when you get into strong business travel months, group months, like September, October, November, and then shoppers, you know, and all the Christmas things in December, gives us a lot of confidence on our ability to grow rate, rate once you get past August. Great. Thanks for all the color. The next question comes from Tyler Bortnick with Oppenheimer. Please go ahead, your line is open. Good morning. Thanks for taking my, my questions. Can you talk about your expectations for hotel EBITDA margin the rest of this year? I mean, obviously down year-over-year in the, in the first half, which, which makes sense. Just trying to get a sense of where you think margin could, could shake out the rest of this year. Sure. Tyler, you know, if you look at the Q2, our EBITDA margins were down from last year, about 260 basis points. They-- when you look at it as compared to Q2 of 2019, as I mentioned, we were up 70 basis points. Our non-resort portfolio, EBITDA margins, so urban portfolio, even in this quarter compared to last year, was flat. As we have less and less reliance upon our resort properties, as Neil mentioned, South Florida is roughly 1% of our EBITDA in Q3, give or take 17%-18% for the whole back half of the year. We think that we can get margins very close to 2022 on the full portfolio for the remainder of the year, which would imply margin growth of roughly 150 basis points for the back half of the year compared to 2019. Okay, okay, great. Neil, you mentioned, you have some non-core assets for sale on the market. Can you give a little bit more details on that? You know, maybe how many assets you have, you know, kind of why it makes sense to be selling now and use of proceeds potentially as well? Yeah, Tyler, you know, as we've seen the, the kind of recovery in, in some of the, some of our markets that we've, we have been looking at some asset sales, particularly what we consider non-core hotels. You know, generally, our playbook across the last, really since 2019, has been to sell hotels that have significant capital requirements upcoming, that we- -are unclear whether we'll earn the kind of return and generate the kind of EBITDA growth from the asset that the rest of our portfolio might t hey're generally older assets that either other hotel owners can create value from by repositioning or or doing something differently, or increasingly, we're finding alternate use buyers, affordable housing, student housing, and a range of other products that are conducive for hotels. We have been looking at a couple of asset sales, some of our smaller hotels in New York City, that have upcoming capital, and we've have one small asset in Miami that we've been in the market with. You know, right now, there is-- there hasn't been a lot of high-quality product on the market, so we felt like this was actually a time where there could be some good opportunities to transact. We have seen the debt markets meaningfully improve across the last two, three, four months, or at least since last spring. We're encouraged early on. These processes are ongoing, but hopefully by early part of the fall, we'll be able to report back on a couple of transactions. To your point of use of proceeds, as we mentioned in our prepared remarks, we generally view the best use of capital right now to reduce floating rate debt, which is immediately accretive, reduces our interest expense in a time of still significant uncertainty w e think that that is, you manage where you have certainty and where we can get good transactions done and reduce our debt load and interest expense and increase our financial flexibility w e think that that makes good sense. Okay. That's all from me. Appreciate the detail. Thank you. The next question comes from David Katz with Jefferies. David, please go ahead. Your line is open. Hi. Morning, gentlemen. Thanks for taking my questions. Morning. A couple of minutes late, so I missed really just the first few minutes. But one of the themes that's come up really in the past 24 hours in some of the commentary is the differential between outbound international travel versus inbound international travel and its impact on domestic demand in certain areas. I'm curious whether that's something that is evident, you know, in New York, where you would expect that to be, you know, a barometer or any of the other urban markets that you have. Well, I mean, David, I guess just on the outbound international travel, that's clearly kind of a case of what, you know, people having a lot of pent-up demand for international travel, and that has clearly been-... a place that a lot of people are going t here's also cruise lines and a lot of other areas that people are pushing on. The inbound international travel, you know, we were expecting to be a little bit of a slower recovery, I think, even in the heart of the pandemic, because there's concerns around strong dollar, there's concerns around how restrictive our visa policy is, all of which are making improvements, but have been slow, slow to recover. This was the Q1 that, you know, we can report, David, you know, really significant growth on the international side. In New York City, at least, we were able to see nearly 20% kind of sequential quarter-over-quarter international contribution in New York. Just anecdotally, as you walk around the streets of Manhattan right now, as, as I know you do, you see a lot more European travelers there. We've been able to kind of dig into, you know, kind of contributing countries. You know, Italy's up, France is up, but we still have a ways to go for the Great Britain, for lots of other European countries and obviously all of Asia, which is still at very low levels. You know, Ash, do you want to add anything else on international? We've been looking at this a lot because we think of this as a significant tailwind, not only for this year, but really for 2024. Yeah. Just a couple of things, David. You know, we, we did see a big uptick in international travel in the Q2 leading into the Q3 in New York, which is definitely helping our occupancies and helping our performance. We are still about 20... I think right now for the Q2, about 23% off. from 2019. There is still a long ways to go when you think about international travel as a tailwind for these urban, urban markets. I mean, those stats that I'm giving you are just New York in particular. I think that, you know, the outbound international travel has had an outsized impact on coastal resorts, whether it's California or Florida, and even in the Northeast, you know, markets like Cape Cod or, or the Hamptons, where people have been there over the last few years and are now going international because they haven't been able to go international i think that has amplified some of the retrenchment in the resort markets. I think all of these things tend to normalize over time. You know, people will sort of start doing more domestic leisure, will start getting more inbound international, especially from the Asian markets and, and from Europe. We just think that it's such a volatile time that you are seeing the real tailwinds of international travel coming back into some of these urban markets. Understood. Just as a second question, you talked about potential, potential divestiture processes out there, and I'm, you know, curious for just a bit more color on the market's movement. You know, as of, let's say, discussions at, you know, NAREIT, a couple of months ago, you know, there was, I guess, deals were challenged by underwriting conviction and higher cost of debt. You know, is that something that you are seeing? Do you think it's been alleviated a bit just with this past 30 days shift toward a soft landing? You know, what perspectives might you have about that? I think since NAREIT, so, you know, take the last 60 days, I think we have seen the debt markets improve since that point. We've seen more CMBS transactions take place. On the other hand, the base rates did go up, but the outlook for them has remained pretty consistent. I think debt markets have gotten a little bit better, and then property performance or kind of conviction around underwriting, at least in cities like New York, I think that conviction is building pretty significantly because performance has just been so strong. I think, you know, it is marginally a better environment than it was at NAREIT. There is a real lack of high-quality properties on the market today, so we'll see how these processes go. T he two first ones are smaller assets, which we feel are even easier transactions because they require less quantum of, of debt or equity. But they do require capital expenditures and the like. As I mentioned in some of our remarks before, there is increasingly, there's a very active alternate use bid in, in major cities and particularly in New York. We're-- we, we believe that not only is the hotel kind of opportunity, something that's getting easier to underwrite, but the alternate use bid is also growing and available. Got it. As with most things, most questions, it depends. Appreciate it. Thank you. Yeah. The next question comes from Chris Woronka with Deutsche Bank. Chris, please go ahead. Your line is open. Hey, good morning, guys. Thanks for taking the questions. I want to circle back. I know you gave some pretty decent data points for July, I think in terms of, you know, both pricing and OC. You know, I guess the one area of potential pushback is, you know, Q2, how Q2 unfolded y ou know, everybody knew April was great, May promptly disappointed, right? June was maybe a little better, not a lot. T hen last year, as we look back, July was the strongest month of the year and of the quarter, both year-over-year and relative to 2019. The question is, you know, do you think you have enough visibility on August and September to so that, you know, we don't have a situation where the quarter just weakens throughout? Yeah, Chris, I, I think what gives us more confidence is, is September. August is, is a highly leisure-oriented month, and so, you know, so we, we do expect some softness w e mentioned Washington will be a little bit softer. In September, our outlook and our perspective is very strong right now for September, October, and through the end of the year s o that's what's giving us confidence. I think if you look at kind of each of our markets, we mentioned about Washington in some of the prepared remarks, but think of New York, like this September and October, the setup is, is better than last year. The Jewish holidays, the day of the week that they fall, UNGA, at least as of now, there isn't any competing kind of issues l ast year, we had the Queen's funeral at the same time. We have excitement around Fashion Week. I think for September, the setup is good for New York. We are seeing some strength in Philadelphia as well o n the urban side, we feel pretty confident right now. To your point, there is a lot of uncertainty in the market and the environment. We feel like we've put out guidance that is appropriate for what we're seeing at this moment. Yeah, Chris, I'll just add to that. Just, you know, our reliance upon urban markets and the back half of the year, especially when you get past August, which have been the best performing markets, is what probably gives us the most comfort in our outlook. Okay, fair enough. As a follow-up, wanna kinda ask you guys what your perspective is on, on the notion of, of higher for longer in terms of interest rates w hat do you think that means for the industry and you guys in particular? Really just talking about, you know, one, the transactional environment, how that impacts potential buyers, but also, on the flip side, right, the more positive side is new construction. Just curious for how you guys think this is gonna play out in the next several years. Yeah, I mean, just, just start on the supply side. It is, the supply environment is very attractive moving forward for the next several years. Probably the lowest levels of supply that anyone in our sector will have seen in their careers, really. You have to go back decades to see this level of supply for the nation, really, as a whole, but particularly for major urban markets. For us, what's most compelling is for New York City to see a relatively flat or negative at times, supply environment is a great fundamental setup, I think. On the higher for, for longer, you know, it's where the market takes time to adjust. I think we've, we've just gone through a year, the last year, having the most interest rate hikes in history, across 12 months. The impact that that had on the market, if you think of 2022, is probably one of the hardest years in the capital markets and in the stock market. 2023, it seems like the world's starting to adjust to it. The performance is, is continues to be very strong. I think there's a little bit more consensus around a kind of soft landing. We are seeing spreads starting to come in on, on financing. Lodging is, is, is kind of the, one of the more attractive sectors within all commercial real estate, to put out financing. I think we'll continue to see spreads come in. We'll see where base rates go, but we think the world adjusts to borrowing at between 6.5% and 8%, you know, for high-quality hotels. I think we've seen the financing markets go from kind of 50% LTV to 60%-70% LTV already. It is at a higher cost, and that has an impact on, on valuations and, and on maybe the volume of transactions w e do think that the world adjusts over time, and now it's been nearly 18 months of, of this drumbeat, and at the very least, the drumbeat is at least stabilizing and likely more conversations about when things come down rather than go up further. Okay, fair enough. Thanks, guys. Our next question comes from Daniel Hogan with Baird. Daniel, please go ahead. Your line is open. Hi, good morning, guys. Just one question on the CapEx side of things. What are your expectations on those upcoming renovations you mentioned, and is the extent of mitigating disruption in 2023, but also those projects you mentioned heading into 2024? Yeah. Hi, Daniel. As I mentioned, you know, this year, for 2023, there's only two major projects that we are undertaking o ne is the Winter Haven Hotel, which is closed right now. That generates very little EBITDA in the Q3, as it's a soft season in Miami. We do see the impact of re-ramping that asset back up in Q4, but it's not going to be that significant as it's a fairly small asset. W e don't think that. That's built into our guidance as well for Q3 and will be built in for Q4. The Sanctuary Beach Resort, we will start renovating that again in November. You know, the occupancies start falling off in November, December. Once again, we don't think that it'll be that impactful because of the way that asset is laid out. You can start doing individual rooms, and they're all sort of bungalow style, so that you don't disrupt the rest of the rooms when you, when you start renovating. We don't think the impact will be that significant for either of these renovations. We do believe next year, in the Q1, we have two larger New York assets that are going to be renovated t hose will be disruptive for Q1, but it's by far the softest quarter in New York and the best time to do it. Got it. Then, what are you hearing, from operators on their side that's giving you confidence in the second half outlook? I know you mentioned the embedded margin expectations, but, can you give any details into just, how much are those cost expectations driving versus the top-line growth? I think we're, we're hearing a better, I'd, I'd say, more confidence from our operators going into sort of the fall. We're not hearing about the type of labor shortages and the extent of them. I mean, I feel like they can get the labor i t is more expensive, but the rate of growth on wages has also normalized. You know, we're more in the, say, 4%-5% range instead of 7%-10%, which we were at for the last few years. Generally, I think the availability of labor and the stabilization of costs have improved as we've gone through the year. Great. Thanks. That's it for me. Those are all the questions we have for today, so I'll turn the call back to Neil for any closing remarks. With no more questions, we'd like to take a moment just to thank everyone for their time on this very busy morning of earnings calls. We will be available for the rest of the day if anyone has any further questions, but thank you for your time. Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.