Good day, and thank you for standing by. Welcome to the Summit Hotel Properties Q2 2023... Good day, and thank you for standing by. Welcome to the Summit Hotel Properties Q2 2023 earnings conference call. At this time, all participants are in 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 that 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, Adam Wudel, SVP of Finance, Capital Markets, and Treasurer. Please go ahead. Thank you, Tanya, and good morning. I am joined today by Summit Hotel Properties President and Chief Executive Officer, Jonathan Stanner, and Executive Vice President and Chief Financial Officer, Trey Conkling. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our SEC filings. Forward-looking statements that we make today are effective only as of today, August 3, 2023, and we undertake no duty to update them later. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at www.shpreit.com. Please welcome Summit Hotel Properties President and Chief Executive Officer, Jonathan Stanner. Thanks, Adam, and thank you all for joining us today for our second quarter 2023 earnings conference call. During today's call, we'll discuss recent industry trends and the continued improvement in many of our key operating metrics, which are increasingly being driven by non-leisure demand segments, urban markets, and the NewcrestImage portfolio. We will also provide an update on our recent transaction and balance sheet activity, as well as review our revised guidance range, which we provided in our earnings release yesterday afternoon. Industry-wide demand trends normalized in the second quarter as easy Omicron variant-driven comparisons in the first quarter were replaced with more difficult comparisons to last year's second quarter, when robust, price inelastic, and predominantly domestically concentrated leisure demand drove tremendous top and bottom line growth. Despite the more difficult comparisons, key operating metrics in our portfolio continued to improve in the second quarter, as pro forma RevPAR increased 3.5% compared to the second quarter of last year, and once again reached a new nominal RevPAR high since the onset of the pandemic. RevPAR growth in the quarter was driven by a relatively balanced mix of occupancy and average rate growth, and was mostly concentrated midweek in continuing to recover urban and suburban markets. RevPAR growth for our urban and suburban portfolios, which collectively comprise approximately 75% of our revenue base, increased 6% and 5%, respectively, year-over-year during the second quarter. Non-leisure demand segments, particularly business transient and group demand, are increasingly driving the recovery in our business. Negotiated segment RevPAR grew 4% during the quarter, while group RevPAR increased a robust 7%, driven by a 5% increase in average daily rates. While industry demand and RevPAR growth slowed in the second quarter, our team continued to drive impressive market share growth as RevPAR index in our pro forma portfolio finished the quarter at 113%, nearly a 300 basis point improvement from the second quarter of last year. Excluding hotels that were under renovation in the second quarter of either this year or last, our RevPAR index increased over 4% year-over-year. As I mentioned in the introduction, second quarter results in the NCI portfolio were particularly strong, as RevPAR increased nearly 15% and hotel EBITDA increased over 20%, driven by a 225 basis point increase in margins compared to the same period of 2022. Group and negotiated RevPAR increased 37% and 11%, respectively, from last year, and midweek RevPAR grew 15% during the quarter. RevPAR index in the NCI portfolio also achieved a new post-acquisition high of 110%, increasing nearly 750 basis points from the second quarter of last year. A testament to the great work our team has done implementing and executing strategic cluster sales strategies across many of these markets. Within the NCI portfolio, the Texas markets were the strongest performers during the quarter, highlighted by Houston and Dallas, which generated second quarter RevPAR growth of 49% and 16%, respectively, driven by accelerating corporate travel and strong group and special event demand. Additionally, Oklahoma City saw meaningful improvement throughout the second quarter, growing RevPAR by 17% versus last year. Our outlook for the NCI portfolio remains extremely positive, and we expect it to continue to generate outsized RevPAR and EBITDA growth throughout 2023 as our operational initiatives drive better performance and the newer hotels continue to ramp towards stabilization. Many of our hotels in downtown urban markets outside of the NCI portfolio also continue to recover and performed particularly well during the quarter. RevPAR growth in Chicago, Cleveland, Tampa, Kansas City, and Pittsburgh averaged nearly 18% during the quarter, while Atlanta, Boston, and Boulder all grew mid-single digits. Strength in these markets was partially offset by weakness in several markets in which we have meaningful concentrations, most notably Minneapolis and the Bay Area, where RevPAR declined approximately 7% on average. Importantly, despite the softness in several of these markets, we continue to maintain or improve our market share relative to our competitive sets. Though our industry is known for its cyclicality and demand, we believe we are in a relatively stable demand environment. Preliminary July RevPAR growth finished generally in line with June results, despite some softness early in the month around the Fourth of July holiday, that fell on a less favorable Tuesday compared to Monday of last year. Revenue pace for August, September, and October continues to trend favorably, driven again by a healthy mix of rate and occupancy growth and continued outsized growth within the NewcrestImage portfolio. During the second quarter, we remained active, acquiring and selling hotels, despite the overall slower pace in the transaction markets. In May, we closed on the previously announced sale of four wholly owned non-core hotels, totaling 467 guest rooms, for a gross sales price of $28.1 million, eliminating more than $20 million of near-term capital needs as a result. The sale price represents a capitalization rate of 4.3% on the hotel's collective trailing twelve-month net operating income prior to sale, and 2.4% when considering the estimated near-term capital expenditures. In June, our joint venture with GIC, we redeployed a portion of those proceeds with the acquisition of two hotels for $42.7 million. The previously announced 120 guest room Residence Inn, Scottsdale North, and the 47 guest room Nordic Lodge in downtown Steamboat Springs. The Residence Inn was acquired for $29 million, or approximately $240,000 per guest room. Located directly across North Scottsdale Road from our Courtyard in SpringHill Suites, the Residence Inn creates meaningful cross-selling and complexing opportunities that are expected to enhance the performance of all three hotels. The purchase price equates to an expected 2023 net operating income yield between 8% and 8.5% on a standalone basis, prior to factoring in the effects of the numerous potential operational synergies. The Residence Inn received a transformative renovation in 2019, and will require minimal capital investment over the next several years. We also recently acquired the 47 guest room, Nordic Lodge in downtown Steamboat Springs for $13.7 million. The independent hotel is located on nearly a full acre on downtown Steamboat's Main Street, and consistently, consistently ranks as a top hotel in Steamboat on TripAdvisor. The hotel's lean operating model is expected to generate hotel EBITDA margins of approximately 60%, and the purchase price results in an estimated capitalization rate of approximately 10%-10.5% on our underwritten 2023 net operating income, prior to realizing any potential synergies with our Residence Inn, owned within the joint venture and located just down the street. The Nordic Lodge has been well-maintained and is expected to require minimal capital investment in the near term. The underutilized site plan, high barriers to entry, notable recent supply reductions, and exceptional demand in the market create a variety of long-term opportunities to develop a one-of-a-kind experience in downtown Steamboat through thoughtful re-imaging, expansion, or redevelopment of the property. We expect the Nordic Lodge will also benefit from its proximity to our Residence Inn through various cost-sharing and cross-selling strategies. Our conviction in the Steamboat market has grown tremendously since our acquisition of the Residence Inn, which is currently running an annual RevPAR of more than $215 and an EBITDA margin of over 50%. Today, the Residence Inn Hotel's EBITDA is approximately 65% above our underwritten result, resulting in a yield on our total investment of nearly 14%. Before I turn the call over to Trey, let me provide a quick overview of the key drivers of our revised full year guidance range. Roughly 7 months into the year, we have seen demand patterns across the industry normalize to more typical seasonal trends. While leisure demand remains strong in any normal historical context, a portion of last year's highly resort-oriented, compressed demand is finding alternatives in urban markets, cruises, and abroad. While urban markets broadly continue to recover, several markets within our portfolio continue to experience a typically soft demand trends, most notably San Francisco, San Jose, and Minneapolis. We are maintaining the low end of our RevPAR growth guidance range while reducing the midpoint by 150 basis points to 7%. The midpoint of our adjusted EBITDAre guidance range is being reduced by approximately 4% after adjusting for second quarter transaction activity that reduced our full year adjusted EBITDA by approximately $2 million. Our guidance range assumes easier expense comparisons in the second half of the year, when current operating models better align with last year's practices. We continue to operate in a tight labor market that we expect to pressure margins. For the full year, we expect operating margins to be roughly flat at the high end of our guidance range and down approximately 150 basis points at the low end. With that, I'll turn the call over to our CFO, Trey Conkling. Thanks, John. Good morning, everyone. While most of Summit's location types experienced a normalization in demand patterns year-over-year, the urban hotels continued to benefit from strong weekday growth across all segments, with overall urban RevPAR increasing 6% versus prior year. In particular, the urban portfolio experienced outsized RevPAR growth in the negotiated segment, a strong proxy for the business transient customer, increasing 12% versus last year. Further validating the momentum we see in urban weekday demand. Negotiated room night contribution was a meaningful catalyst to this growth, increasing by 4% versus last year. Group demand also increased meaningfully during the second quarter, particularly within our suburban, airport, and resort assets, for which second quarter group RevPAR growth was 17%, 30%, and 33% respectively. While leisure demand moderated in the second quarter, our resort and small town location types, which have most benefited from the recent leisure trends, continued to meaningfully outpace 2019 levels. Pro forma hotel EBITDA for the second quarter was $71.1 million, a slight increase from the second quarter of last year. Hotel EBITDA margin for the pro forma portfolio contracted by 155 basis points quarter-over-quarter to 36.6%. The margin contraction was driven by challenging prior year expense comparables, given food and beverage outlets and other hotel amenities were significantly limited in the first half of 2022 due to the impact of the Omicron COVID variant. Insurance premiums increased over 40% in the quarter, resulting in an incremental 60 basis point headwind to hotel EBITDA margin. Today, we are operating with nearly all outlets and amenities open across our 101 hotels. While our FTE count at the end of the second quarter was approximately 7% higher than the same period last year, increases in FTE count have been minimal over the first half of 2023, and we expect that current labor levels reflect a stabilized run rate. Second quarter EBITDA margins expanded more than 100 basis points sequentially from the first quarter on higher nominal RevPAR. Today's more stabilized operating model and staffing levels represent a 15%-20% reduction in FTEs versus 2019. As we look to the third and fourth quarter of 2023, we expect a more like-for-like expense comparison versus prior year, given comparable staffing levels and amenity offerings in the second half of 2022. For context, our average FTE count increased 13% from the first half of 2022 to the second half of 2022. Since that time, staffing levels have increased less than 3% over the first half of 2023, providing for a more favorable year-over-year expense comparison in the second half of this year. Adjusted EBITDA for the quarter was $52.9 million, a 3.1% decrease compared to the second quarter of 2022. Pro forma hotel EBITDA was flat year-over-year, the $1.7 million decline in adjusted EBITDA was attributable to the relative contribution of our wholly owned portfolio compared to the joint venture portfolios, in particular, the NCI portfolio, which saw meaningful relative outperformance during the quarter, as well as overall net transaction activity. Second quarter adjusted FFO was $33.2 million, or $0.27 per diluted share, compared to $32.6 million, or $0.27 per diluted share in the second quarter of 2022. From a capital expenditure standpoint, in the second quarter, we invested approximately $19 million in our portfolio on a consolidated basis and approximately $16 million on a pro rata basis. For the year, CapEx spend on a pro rata basis now totals approximately $35 million. CapEx for the second quarter was driven by comprehensive ongoing renovations at our Staybridge Suites, Cherry Creek, Courtyard, New Orleans, Metairie, Hilton Garden Inn, Milpitas, SpringHill Suites, Dallas Downtown, Embassy Suites, Tucson, and our two Hyatt Place hotels in Denver. Second quarter displacement related to renovation was approximately $2 million in revenue, $1 million in hotel EBITDA, and $0.7 million in adjusted EBITDA. When adjusting for the net renovation revenue displacement, second quarter RevPAR growth increased an additional 90 basis points to 4.4%, and RevPAR index increased an additional 110 basis points to 114.2%. We are clearly seeing the initial benefits of our recent renovation activity, which has settled into a more typical cadence for the first time since the pandemic. An example of our team's ability to execute meaningful renovation projects is evident in our Hyatt Place, Orlando Universal Studios, which recently won Hyatt's Best Renovation of the Year award. In the months since the renovation was completed, the hotel has averaged a RevPAR index of 133%, more than 20 percentage points higher than the hotel achieved in 2019 for the same time period. We expect the ongoing transformational renovations across our portfolio to drive future growth. John previously highlighted our transaction activity, including the sale of the wholly owned four-pack and the acquisition of the Residence Inn, Scottsdale North, and the Nordic Lodge Steamboat, through our GIC joint venture. For 2023, we estimate this transaction activity reduces revenue and adjusted EBITDA by approximately $6.5 million and $2 million, respectively. It should be noted that proceeds from the four-pack asset sale funded our pro rata share of the acquisition of both the Residence Inn, Scottsdale North, and the Nordic Lodge Steamboat properties, with the remainder of proceeds going to cash on hand. The sale of the four-pack allowed us to defer more than $20 million of estimated near-term CapEx, and the net proceeds from the sale were reinvested into high-quality assets with minimal near-term capital requirements. Turning to the balance sheet, our current overall liquidity position remains robust at over $400 million. From an interest rate risk management perspective, our balance sheet is well positioned, including an average pro rata interest rate of 4.8% and approximately 74% of our pro rata share of debt fixed, inclusive of the March interest rate swaps that became effective July 1, 2023. When including the company's fixed coupon preferred securities, the balance sheet is approximately 80% fixed at a blended rate of just over 5%. In June, we successfully completed the refinancing of our $600 million senior unsecured credit facility, which consists of a $400 million senior unsecured revolving credit facility and a $200 million senior unsecured term loan. The fully extended maturity date of the credit facility is June 2028, and as a result, our average length to maturity increased to more than 3 years. For the balance sheet as a whole, we have no debt maturities until the fourth quarter of 2024, when accounting for all available extension options. On July 27th, our board of directors declared a quarterly common dividend of $0.06 per share, or an annualized dividend of $0.24 per share, which represents a dividend yield of approximately 4%. The dividend continues to represent a prudent AFFO payout ratio, leaving room for increases over time, assuming no material changes to the current operating environment. The company continues to prioritize striking an appropriate balance between returning capital to shareholders, reducing corporate leverage, and maintaining liquidity for future growth opportunities. As John previously referenced in our press release last evening, we provided updated ranges of our full year guidance for 2023 operational metrics, as well as certain non-operational items. This outlook reflects the previously highlighted demand normalization and does not include any additional transaction or capital markets activity. Based on the company's second quarter operating results, as well as our future outlook, we are revising our full year guidance ranges across certain key metrics. Our full year RevPAR growth range has been revised to 6%-8%. This RevPAR guidance range translates to an adjusted EBITDA range of $183 million-$193 million, and an adjusted FFO range of $0.86-$0.94 per share. Included in this revised range is the full year impact of second quarter transaction activity, which we estimate to account for a reduction to full year adjusted EBITDA and AFFO of $2 million and $1.6 million, respectively. Our revised full year RevPAR guidance implies RevPAR growth of 1.5%-5.5% in the second half of 2023. Assuming the midpoint of the aforementioned second half RevPAR growth range, hotel EBITDA margin will contract approximately 150 basis points versus the second half of 2022. We expect full year pro rata interest expense, excluding the amortization of deferred financing costs, to be approximately $55 million-$60 million. Series E and Series F preferred dividends to be $15.9 million, Series Z preferred distributions to be $2.6 million, and pro rata capital expenditures to range from $60 million-$80 million. As previously mentioned, given the increased size of the GIC joint venture, the fee income payable to Summit now covers nearly 15% of annual cash corporate G&A expense, excluding any pro rata distributions Summit may earn during the year. With that, we'll open the call to your questions. Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. 1 moment for our 1st question. Our 1st question will come from Austin Wurschmidt of KeyBanc Capital Markets. Your line is open. Great, thanks, good morning. Guys, within the RevPAR guidance change, how does the 150 basis point decrease break out between ADR and occupancy, you know, versus the prior expectation? Is the gap between your RevPAR growth decrease versus the decrease in adjusted EBITDA a function of performance across the wholly owned portfolio versus assets in your GIC joint venture that are, you know, kind of outperforming? Hey, good morning, Austin. It's, it's John. I would say the reduction, the 150 basis point reduction is fairly evenly split between OCC and ADR. Yeah, you, you alluded to it correctly. The reduction in the midpoint of the adjusted EBITDA range, which as a percentage, is a little higher than the reduction in the RevPAR range, is driven by the relative strength of the GIC portfolio, particularly the NCI portfolio, which, as we said in the prepared remarks, was up 15% in the second quarter, which is offset by softer performance in the wholly owned portfolio. Got it. Then as far as the July performance, I think you said it was roughly in line with June, which was in the mid 2% range. Can you just share some detail around, you know, forward pace or, or what gets you comfortable with re-acceleration to get to the mid 3% back half implied in the RevPAR guidance? Yeah, you know, you're correct. You know, July finished right around 2.5%, essentially in line with June. Some of that was affected by a slow start to the month around the Fourth of July holiday. The back half of July performed much better than the front half of July. Our pace for August is up 9% today. Our pace for September is up about 13%. The numbers that we have on the books for this month and next still look very positive. When we look at the pickup that we really saw in the second quarter as a more normalized level of pickup, it gives us some comfort that, you know, that kind of mid 3.5% range, which is the, the midpoint of our back half of, of the year range, is, is a reasonable range. One moment for our next question. Our next question will come from Michael Bellisario of Baird. Your line is open. Thanks. Good morning, everyone. Just a first question, just wanted to follow up on, on guidance and sort of the, the implied second half outlook. Maybe how much of the reduction is really just on the top line and, and normal decremental flow through to the bottom line versus any incremental expense pressures that you might be seeing in the business? Yeah, it's predominantly, top line driven, Mike. You know, our assumption for the back half of the year is to be in a much more stabilized expense environment than we were in the first half of the year, and we started to see that trend happen even in, in the second quarter. You know, our expenses in the second quarter grew about 6% on a per occupied room basis. They were up less than 3% in June, and so you can start to see, you know, the, the normalization of the expense environment in the third quarter. Our FTE count was up about 11% in total over the second quarter, but up 7% in June. Our FTE count is essentially flat at the end of the second quarter versus where it was at the end of the third quarter of last year. There still are some well-known headwinds. We're still operating in a tight labor environment, as we mentioned in, in our prepared remarks. Insurance costs are up significantly. Our insurance costs are up about 40% year-over-year. Some of that is baked in, and we've got some difficult property tax comparisons to the fourth quarter of last year, where we had some significant rebates. That's driving a portion of, of the, the margin contraction that we're forecasting for the balance of the year, which is down about 150 basis points in the midpoint in EBITDA. At the operating expenses, our GOP margins at the midpoint of our range are roughly flat in the second half of the year. That's essentially consistent with where we thought we would actualize, adjusted for the lower revenue assumption. Long answer to say, most of the decrease is driven by pressure on the top line. Got it. Thanks for that. Then, second question, just on capital allocation, maybe at the stock price, when do buybacks maybe start to make sense, if at all? Then how do you balance that potential use of capital with your focus on reducing overall leverage and other potential uses of capital you might have for the business? Thanks. Yeah. Well, look, it's certainly something that is, is always a consideration. You know, we, we certainly believe the stock is undervalued relative to the intrinsic value of, of the portfolio. Yeah, I think you alluded to it correctly. You know, we do want to make sure we balance that with managing our corporate leverage. I think we have a bias towards asset sales in the near future to try to manage leverage lower and give us some optionality on the capital allocation front. Got it. Then just 1 follow-up there for, for Trey. Just year-end, midpoint of guidance, where does that put net leverage based on your numbers? Yeah, on the numbers today, it probably puts us in the high 5s. I think, you know, based on the, the guides were before, it was probably in the mid 5s, so we've probably moved about 0.3, 0.4 of a turn from a leverage perspective. What I would say, Mike, is that, you know, we probably did a fair amount of activity over the last 12 months, as you know, including the refinancing of the credit facility. While that leverage does sit a little bit higher, the fact that we don't have any near-term refinancing risk until the end of 2024, gives us some comfort in the ability to kind of navigate what is obviously a volatile market right now out there in the debt capital markets. Thanks. That's all for me. Thanks, Mike. One moment for our next question. Our next question will come from Bill Crow of Raymond James. Your line is open. Great. Thanks. Good morning. John, I think we all talked about markets like San Francisco and San Jose, which you mentioned, and Portland, maybe Seattle, is, you know, suffering some sort of long-term, if not permanent, impairment over the last few years. Is Minneapolis in that, that same boat? If it is, or, you know, how are you thinking about your positioning there? Yeah, you know, Minneapolis has been a really challenged market, on a variety of fronts. You know, we did sell earlier this year, two of our Minneapolis assets. We have two assets remaining. They're both downtown. They're both good assets. It's unfortunately been a very, very challenged market. It's a combination of, you know, never really recovering from, you know, a lot of the riots around the George Floyd incident. There's very, very little BT in the market, so, you know, we've tried to had to reorient around more leisure-based demand in that market. You know, I hate to say never, but it is we do think it's a longer road back for Minneapolis. Our hope is that you'll start to see a little bit of traction. You know, there's a, there's a commonality in many of those markets that you mentioned, that there's real kind of life safety concerns in some of those markets. You know, getting those addressed first and foremost, I think is, is the first step back. You know, I think we hold out hope that Minneapolis can recover to something closer to what it was pre-pandemic. We do think that it's a longer road back there, and our capital allocation decisions reflect that. Shifting a little further south, the performance in North Texas, in particular, has been really strong here this quarter. It's also a market which has a lot of new supply coming at it. I'm just wondering how you're thinking about next year with the tough comps and new supply, whether that turns into more of a headwind than the tailwind we're enjoying now. Yeah, look, we're, we're really bullish on, you know, the Dallas DFW market. Houston's been a tremendous market for us. You know, I think the, the one thing we always point out when you look at overall supply statistics in the DFW metroplex, you, you have to be, you know, mindful of how large of a geographic area that, that really encompasses. So when we look at our exposure in DFW, we really look at pockets of submarkets. We've got downtown exposure, we're in Frisco, we're in Grapevine, we're in Arlington, and we're in Fort Worth. There are different, you know, supply-demand dynamics in each of those submarkets, and by and large, they really operate independently of, of each other. I do think that we've seen tremendous growth, obviously, this year in that market. I don't think we're all the way through the benefits of, you know, the great work the team's done to put in place cluster sales operations and start to really realize the benefit of having multiple hotels and multiple brands with which we can cross-sell. We're mindful of supply, certainly in those markets, I think by and large, we still feel very, very good about the outlook for that business, even, even as we go into next year, or that, that portion of the portfolio, even as, even as we transition into next year. All right. That's, that's helpful. One final one for me, just the transaction environment out there. You know, you were obviously busy over the last six months or so. We're, we're kind of biased toward you reducing your leverage levels as opposed to reinvesting, but I'm, I'm wondering what you're seeing out there, from a, an acquisition, disposition point of view. Yeah, sure. It's still a pretty slow transaction environment, Bill. I mean, we've, we've been, we've been a little bit active, certainly less active than we've been historically. We've, we've tried to be really strategic around which assets. The two assets that we've acquired were assets that were adjacent to existing on assets. They had really compelling current yield, profiles, and I think really attractive upside to, to both of those assets. You know, I think as you alluded to, we do have a bias towards selling assets, in part to manage leverage lower over time. We still view the most liquid part of the transaction market as kind of this lower RevPAR, lower per key, but probably lower yield type of asset, that we think we can find, you know, local owner operators that can partner with, with local lenders to, to come up with financing. The financing markets are still choppy. I do think they're improving. You know, we're, we're seeing financings get done in the market at spreads that have certainly compressed from where they were 3, 4, or 5 months ago. There, there's some encouraging signs on the financing side, but it's still a fairly slow transaction environment, and so we're trying to be thoughtful and opportunistic on where we can find opportunities to sell assets. Great. That's it for me. Thanks. Thanks, Bill. Again, ladies and gentlemen, if you would like to ask a question, please press star one one from your touch tone telephone. Our next question will be coming from Dany Asad of Bank of America. Your line is open, Danny. Hi, good morning, everybody. Guys, just my question is, you know, what, what's the expense leverage point going forward? Like, how much RevPAR growth would we need to hold margins in the back half of this year? Yeah, you know, it's a great question. I think historically, we've always looked at kind of 2.5%-3% as the break even RevPAR growth for break even margins. It's a little higher than that. Again, I think that, you know, part of that is just driven by insurance expenses are higher, and they're still a tight labor market. The midpoint of our back half of the year guidance range assumes 3.5% RevPAR growth. We're roughly break even at GOP on those levels. We do expect to see about 150 basis points of margin contraction on 3.5% RevPAR growth in the back half, driven somewhat by property taxes. You know, I think the break even level of RevPAR at, at the GOP level or the true operating expense level, is probably in the mid to high threes or even 4% RevPAR growth range in the back half, just to account for what we're seeing in the labor market. That's probably 100 basis points or so higher than what we would expect in kind of a normalized, stabilized labor environment. Got it. Yeah, just as a follow-up, you know, you, you brought an interesting point about, you know, FTEs being flat at the end of Q2 compared to Q3 of last year. I guess that, to your point about the, the cost, so like, how have wages been trending, and, and where would you expect that to shake out for the back half of this year? Yeah, we, we think we're pretty stabilized on, on the wage growth front. You know, we, we saw some increases in the first half of the year, but in the second quarter, in June, in particular, wage growth has, has been much more moderate, and that's the expectation, you know, for us to get to kind of break even margins or expense growth on a per occupied room to be in the lower single digits versus the higher single digits. We need to kind of continue to see this moderation in wage growth. I think we're there. That's probably not our, our primary concern. We're still struggling with availability of labor in certain markets. You know, our, our utilization of contract labor is still running. It's down a little bit, but it's still running, you know, two times what it did pre-COVID. We're still spending, you know, more money than we would like on, on overtime, on, on turnover-related items, things like training and, and items like that. There's still improvements to be made in the labor market. It's probably a little better than it was before, but wage growth really has moderated as we, as we progress through the year. Got it. Thank you. I'm showing no further questions. I would now like to turn the conference back to Jonathan Stanner, President and CEO, for closing remarks. Yeah, thank you. Thank you all for joining us today. We look forward to seeing many of you at our upcoming conferences and speaking with you all again after our third quarter. We hope you enjoy the rest of your summer. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.