Greetings, and welcome to the Pebblebrook Hotel Trust second quarter earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raymond Martz, Chief Financial Officer. Thank you. Please go ahead. Thank you, Donna, and good morning everyone. Welcome to our second quarter 2022 earnings call and webcast. Joining me today are Jon Bortz, our Chairman and Chief Executive Officer, and Thomas Fisher, our Chief Investment Officer. Before we start, a reminder that many of our comments today are considered forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, and future results could differ materially from those implied by our comments today. Forward-looking statements that we make today are effective for today, July 27th, 2022, and we undertake no duty to update them later. We'll discuss our Non-GAAP financial measures on today's call, and we provide reconciliations of these Non-GAAP financial measures on our website at pebblebrookhotels.com. Last night, we reported very favorable Q2 results. Faster growth than we expected in business travel, both group and transient, coupled with continuing robust leisure demand, allowed us to significantly exceed our expectations from 90 days ago. Our urban properties led the upside. Second quarter adjusted funds from operations of $0.72 per share was $0.09 above the top end of our outlook and 83% of Q2 2019's AFFO. This represents a dramatic improvement to both last year, when we had negative AFFO of $0.10 per share, and Q1, which was just 23% of Q1 2019. This strong performance was driven by the hard and intelligent work of our hotel operating teams, management companies, and asset managers. We thank each of them for their great effort and achievements in the quarter. On the revenue side, same-property RevPAR came within 5% of Q2 2019, even though occupancy was down 20%, showing the sizable demand recovery opportunity we still have ahead. Average daily rate climbed a very strong 18.7% compared to Q2 2019. Non-room revenue per occupied room rose an even stronger 25.1%, and total revenue per occupied room increased by 20.8%, all representing an acceleration from Q1's growth rates. These revenue increases demonstrate our ability to take room and non-room price increases across the portfolio, which are offsetting operating cost increases. Same-property revenues recovered to 96.9% of 2019 levels, despite occupancy at 69.4% versus 86.7% in Q2 2019. Same property hotel EBITDA recovered to 94.7% of Q2 2019, which marks our best quarter compared to 2019 since the pandemic. Even more encouraging were the rapidly improving demand trends as the quarter progressed throughout our urban markets from both the business and leisure demand segments. In Q1, our urban hotels ran an occupancy of 45%. In April and May, we experienced a rapid improvement in demand in both business and leisure demand from both group and transient, driving occupancies up to 65% for both months, with another significant step-up in occupancy in June to 72%. For July, we're forecasting occupancy at 7% or more for urban hotels, down slightly to June, as business travel has historically been slower during the heavy summer vacation season in July and August. It does appear that historical seasonal demand patterns, including weekday versus weekend demand, are returning as business travel recovers. For example, we are now experiencing slightly softer occupancy levels, especially from business travel, around and during the weeks of major three-day holidays like Memorial Day and July Fourth. This is a reversal from last year, when the three-day holidays were the more substantial periods of hotel demand, given the lackluster level of weekday business travel last year. Driving into the occupancy improvement from Q1 to Q2, Boston improved from 68% in Q1 to 87% in Q2. San Diego from 61% to 78%. Philadelphia from 46% to 72%. Chicago from 28% to 66%. Seattle from 31% to 64%. D.C. from 27% to 63%. San Francisco from 24% to 50%. Weekday occupancy at our urban hotels, which is a good proxy for business demand, increased to 66.9% in Q2, representing a dramatic improvement from Q1's 43.4%, yet still down about 20 percentage points to 2019, which represents a significant opportunity for further recovery as we head into the prime business travel season in the fall. Weekend occupancy at our urban hotels rose to 73.3% in Q2 compared with 54.4% in Q1. Again, a very encouraging sequential improvement quarter to quarter and representative of the domestic and international leisure customers beginning to return to the major cities. At our resorts, we continue to experience robust demand with occupancy at 71% for Q2 compared with 78% in Q2 2019. Down just seven percentage points due to normal seasonality. This is a significant sequential improvement from Q1 when we were down 13 percentage points. Our same property room rates at our urban hotels increased rapidly during the second quarter, growing 22.2% from $234 in Q1 to $286 in Q2. ADR for urban markets in total exceeded Q2 2019 by $19 or 7.2%. Many of our urban markets ADR exceeded Q2 2019, including Miami, L.A., Boston, San Diego, D.C., and San Francisco, which is a market that probably surprises some of our investors. Weekday ADR at our urban hotels was $279, slightly exceeding Q2 2019, and the first quarter that urban weekday ADR exceeded a comparable quarter in 2019. Weekend ADR was $281, surpassing 2019 by over $40 or 17.4%. This overall increase in demand and pricing continues to be extremely encouraging, especially since our urban markets still have a lot of demand yet to recover, which we expect will continue throughout the year. At our resorts, despite more difficult year-over-year comparisons in several resort markets, such as South Florida, Q2 ADR was $427, which was up 54% to Q2 2019 and a substantial 16% over Q2 last year. These powerful pricing trends are continuing into July, which historically is one of the strongest leisure demand months of the year. Same-property hotel EBITDA for Q2 was $138.8 million, down just 5.3% to Q2 2019, despite occupancy about 20 points below 2019. Resulting same-property hotel EBITDA margins for Q2 were down just 83 basis points compared with Q2 2019, mainly due to increased fixed expenses, including property taxes and insurance, which increased 12%, negatively impacting margins by about 100 basis points. Excluding these fixed expenses, hotel EBITDA margins actually increased by 20 basis points compared with the second quarter of 2019. We're pleased with these results, given that occupancy is still only 80% recovered to 2019 levels. The ability to expand our same-property EBITDA profit margins as occupancy recovers highlights the significant upside going forward as more business travel returns with favorable operating leverage yet to be realized in the portfolio. This also underscores the revised business models at our hotels. Our properties are more operationally and technologically efficient, mitigating operating cost increases in this inflationary environment. As a result of these much better than forecasted hotel operating results, our adjusted EBITDA climbed to $128.8 million, 83.8% recovered versus Q2 2019 and $10.3 million above the top end of our Q2 outlook. As we look forward to the third quarter, the improving business travel demand trends are continuing. There seems to be plenty of pent-up demand for meetings. Corporate group bookings, leads, and site visits remain healthy. We're closely monitoring the overall business and leisure consumer behavior and have yet to see any pullback in demand, future booking pace or room rates, so very encouraging. We continue to expect ADR to be far higher than 2019 for all of 2022, led by our resorts, but with an increasing number of urban markets climbing above 2019 as the year progresses. Based on current trends and the increasing visibility of business on the books, our current outlook for Q3 versus 2019 is for RevPAR to be down just 5%-8% and up 32.5%-36.8% to Q3 2021. Given economic indicators that are showing signs of slowing, and while we haven't seen any indication of a slowdown in the travel recovery, we are being suitably responsible for our Q3 outlook. Adjusted EBITDA is expected to be down just 12%-19% to Q3 2019 and up 93%-110% to Q3 2021. This outlook is better than we expected 90 days ago, revealing the improving hotel demand and overall travel environment despite heightened concerns about the economic slowdown. Our Q3 outlook for RevPAR, same-property hotel EBITDA, adjusted EBITDA, and adjusted FFO remove the three properties we currently have under contract as we assume these hotels are sold during the quarter. Shifting to our capital improvement program, we remain on track to invest $100-$120 million in the portfolio in 2022, with approximately $80 million of it targeted for a number of ROI redevelopment projects, which we expect will generate cash and cash returns of 10% or higher when these transformed and remerchandised hotels and resorts stabilize over the next two to three years. Jon will provide additional color into some of these projects later on our call. On the investment side, on May 11th, we acquired the luxurious Inn on Fifth in downtown Naples, Florida for $156 million. On June 23, we acquired Gurney's Newport Resort and Marina for $174 million. Both of these resorts have healthy trailing 12-month NOI yields, with the Inn on Fifth at 7% and Gurney's Newport at 7.1%. Looking at our 2021 acquisitions, they are all exceeding our underwriting, and more importantly, they are already generating robust trailing 12-month NOI yields. Margaritaville Hollywood Beach Resort has hit 9.8%. Jekyll Island Club Resort is at 8.5%. Estancia La Jolla Hotel & Spa at 7.4%, and the Key West B&Bs at 10%+. We also made significant progress with our disposition plan. On June 28th, we completed the sale of The Marker San Francisco for $77 million. We have also executed three separate purchase and sale agreements, which include hard money deposits with separate buyers for three of our urban hotels, totaling $183.9 million of additional gross sales proceeds. We expect these sales to be completed during the third quarter, and we have additional properties on the market for sale. While the transaction market has gotten bumpier due to debt markets and some deals are taking longer to close, quality assets like ours continue to be desired by the vast amount of equity looking to invest in the hotel industry. Turning to our balance sheet, we have no meaningful debt maturities until November 2023. As of June 30th, we had approximately $560 million of liquidity and 75% of our debt was locked in with fixed interest rates, limiting the impact of rising interest rates on our cash flow. Finally, given the current improving demand trends, we have exited our covenant waiver period with our bank group. This marks another significant milestone in our road to recovery and substantially enhances our balance sheet and operating flexibility. On that positive note, I'd like to turn the call over to Jon. Jon? Thanks, Ray. As Ray indicated, the trends are very positive coming out of the second quarter and heading into the third quarter. For Pebblebrook, we're almost back to 2019 levels for both revenues and hotel EBITDA. This recovery and the prior recoveries following the great financial recession, the 2001 recession, and the events of 9/11, the great real estate collapse of the early 1990s, and the Fed-induced recession in the early 1980s, have clearly demonstrated the incredible resilience of the hotel industry. After each recession, recoveries have led to record highs in hotel revenues and profits. This industry, while obviously much more volatile than other real estate sectors, always bounces back, sets new records relatively quickly, and due to its one-day leases and secular demand growth, has forever followed inflation and replacement costs higher. We see no reason for any different outcome this time, and this year's recovery firmly demonstrates our industry's incredible resilience. With replacement costs for our portfolio currently estimated in the $750,000 per key range, and with supply growth severely restricted by the pandemic, very limited availability of construction financing, and generally challenging economics for new builds, our industry and company have a very long runway to not only fully recover, but to again grow and hit new revenue and bottom-line records. We expect the supply constrained environment to last four or five years. Whether we soon have an economic slowdown or recession, it's just a matter of time before we hit these new records given these supply-restricted fundamentals. In addition, our performance is and will be further bolstered by the benefits coming from the significant investments we've made in our portfolio in the last several years, where we redeveloped, transformed, and repositioned properties, mostly from the LaSalle portfolio, to higher quality levels with higher average rates and ultimately higher bottom lines. This is already being demonstrated by our overall ADR share growth in the portfolio, particularly at our resorts, where recovered demand levels have allowed us to price our repositioned properties substantially higher. For example, year-to-date, our resorts have gained on average over 1,700 basis points of ADR share over their market competitors, representing $57 more in rate, or roughly one-third of the massive $171 ADR gain at our resorts since 2019. Gaining this extremely large amount of rate is obviously a big part of the reason for the large bottom-line growth at our resorts over 2019 levels, and it has already resulted in a very significant return our investments in repositioning and transforming these resorts over the last few years. Year-to-date, our resorts, excluding Gurney's and Inn on Fifth, have gained $30 million more in EBITDA than the first half of 2019, and they're on pace to gain between $50 million and $60 million for the entire year. Our investments to redevelop, reposition, and upgrade these properties, along with adding amenities and transforming and reconcepting restaurants and bars, remerchandising indoor and outdoor space, total approximately $120 million. Our return on these investments has already been very attractive, and there's more to come as these resorts have not yet stabilized. At LaPlaya, for example, where we invested $20 million to dramatically upgrade this property to its current luxury positioning, our EBITDA has grown from $16.5 million for full year 2018 to $33.5 million on a trailing 12-month basis through June 2022. The improvement in bottom-line results at LaPlaya, like our other properties, comes not only from gaining significant rate share, in the case of LaPlaya, it's over 2,800 basis points versus 2019 or $129 of ADR. The EBITDA increase also comes as a result of the improvements we made throughout the resort. This includes the restaurants, including Baleen, which is the main restaurant and bar, which now does over $17 million in revenues on an annual basis, and the Tiki Bar, and the retail outlet and spa, and the club restaurant, and improvements to the meeting spaces and other venues. Non-room revenues at LaPlaya have grown from $24.7 million for full year 2018 to $36.7 million on a trailing 12th-month basis through June 2022. Clearly, this almost 50% increase in non-room revenues is contributing substantially to the almost doubling of EBITDA of this property since 2018, even though we only just completed the full redevelopment last summer. Consider Mission Bay Resort, where in the second quarter of 2020, we completed the repositioning of this former Hilton to a luxury independent resort through a two-phase $32 million redevelopment. As this property is just beginning to kick into gear this year, we've gained 680 basis points of rate share versus 2019, and we're building momentum as group returns in a big way. With the dramatic improvements in the public areas and additional outlets to drive increased non-room revenues, San Diego Mission Bay Resort grew non-room revenues by 49% in the second quarter from the same quarter of 2019. The rate improvement, combined with the huge growth in non-room revenues, led to a 124% increase in EBITDA in the second quarter versus 2019. At L'Auberge Del Mar, where we recently completed a dramatic $11.7 million repositioning of this small luxury resort in the second quarter of 2021, we've gained over 3,100 basis points of ADR share versus our luxury competitors, or $115 so far this year as compared to first half 2019. Combined with our substantial improvements to our public areas and the addition and reconcepting of all restaurant and bar outlets, which have also substantially increased our non-room revenues, EBITDA in Q2 grew by 76% compared to the second quarter of 2019. Take Chaminade, where we just completed a $3 million resort pool, which we added to our existing pool and follows 2020's dramatic repositioning of the resort's public areas, meeting space, restaurant and bar, outdoor event spaces, and wedding venues into a luxury product. Chaminade has already gained 920 basis points of rate share year to date, and food and beverage revenues have grown 49% so far this year, all together delivering growth of 107% in EBITDA versus the first half of 2019. As this property begins to ramp up from its repositioning over the next few years, it is a huge opportunity for growth. Every one of our resorts, with the exception of Inn on Fifth and Gurney's Newport, which we just acquired, all of them have gained significant rate share so far in 2022, and all have done so as a result of the significant investments we've made transforming and upgrading them. Even Jekyll Island Club Resort, where we haven't yet started our redevelopment, has gained significant share due to a repositioning opportunity we and Noble House recognized when we were acquiring this very unique property. There's a lot more upside to come as we commence our redevelopment this winter. Yet the property investments we've made to drive upside in our bottom line haven't been limited to our resorts. In 2020, we completely renovated both the Embassy Suites and Westin Gaslamp in downtown San Diego through $34 million in total upgrades between the two properties. We're just beginning to see significant benefits at both of these properties as citywides and group meetings return in a meaningful way. We expect to gain 700-1,000 basis points of rate share upon stabilization. In the second quarter of 2020, we also completed the $12.5 million transformation and upgrading of Le Parc Suite Hotel in West Hollywood, one of our three all-suite West Hollywood hotels. Year to date, rate is up 23% or $57 versus 2019 at $307 for the first six months, and we're gaining ground on our competitors. For the first quarter since the redevelopment was completed, that being the second quarter, Le Parc's Q2 EBITDA exceeded Q2 2019, in this case by 10%. Also in West Hollywood, in late March, we completed a $6 million transformation of the 108-room Grafton on Sunset to Hotel Ziggy, the newest member of our Unofficial Z Collection. While we're really just getting going, the reviews and customer response at this unique music-focused hotel and venue have been off the charts, so to speak. In our first quarter since the completion and conversion, our ADR has already climbed $45 or 22% compared to 2019. In the second quarter of 2020, we also completed $43.5 million worth of major redevelopments at Viceroy Santa Monica and what are now Hotel Zena, D.C. and Viceroy Washington, D.C. These three hotels are still in the early stage of their ramp up, but the new products have been very well received and all have significant upside as demand returns to these markets, and we have an opportunity to push rates and gain share. Santa Monica's faster market recovery is allowing us to achieve significant improvement at the Viceroy Santa Monica as its rate is up 22% or $82 in the first half of this year as compared to 2019. Most recently, we completed the $28 million redevelopment, transformation, and conversion of Hotel Vitale into the luxury and eco-focused 1 Hotel San Francisco. We reopened the hotel on June first. The hotel is ramping quite rapidly, with occupancy growing from 28% in June to the low-to-mid 40s% here in July, with further increases expected through August, September, and the rest of the year. Most impressive and encouraging has been the rate growth we're already achieving. So far, average rates are over $100 higher than in 2019, as we're now competing head-to-head with the luxury set in San Francisco. As demand continues to recover, we feel confident that this hotel will achieve an outstanding return on our $28 million investment. In addition to the future upside from the 20-plus properties we've transformed and repositioned higher in the last several years as these properties ramp up to stabilization, we have significant additional upside from the major upcoming redevelopments of some of our recent acquisitions, including Jekyll Island Club Resort in Georgia, Estancia La Jolla Hotel & Spa, Margaritaville Hollywood Beach Resort, and Gurney's Newport Resort & Marina in Newport, Rhode Island. All of these properties were obtained through the LaSalle acquisition, including the upcoming conversion. These are additional to those properties from the LaSalle acquisition, and they include the upcoming conversion of Hotel Solamar to Margaritaville Hotel San Diego Gaslamp Quarter, the second and final phase of the Viceroy Santa Monica redevelopment, the lifestyle transformation of arguably the best located hotel in downtown San Diego, the Hilton San Diego Gaslamp Quarter, the conversion of Paradise Point Resort in Mission Bay, San Diego, to a Margaritaville resort once our plans are approved, and the future addition of potentially hundreds of alternative lodging units and other facilities and amenities at both Skamania and Chaminade. In addition to the very significant upside from these major past, current, and future redevelopments and repositionings, as the recovery continues and we move to the growth phase of the economic cycle, whether next year or the year after, there is very significant operating leverage in our portfolio from the more efficient property-level operating models developed by our operating teams during the pandemic. We've also spent the last almost four years transforming our portfolio to a more balanced leisure and business customer mix, achieving a 50/50 balance through the past and upcoming sales in our urban markets and the acquisition of a number of more leisure-focused resorts. Our portfolio transformation has been ongoing since we acquired LaSalle and sold roughly $1.6 billion of urban hotels from that portfolio. Finally, the acquisitions we've made this year are being financed by sales, including the recent sale of The Marker San Francisco for $77 million, the three properties currently under separate contracts to be sold for $183.9 million, which we announced yesterday, and additional properties that are on the market. We also funded half of the Inn on Fifth acquisition with $77 million of preferred units. We also expect to bring additional properties to market for sale later this year. At this point in time, we expect to be a net seller for the year. We're very optimistic about the future of our business. We've been very busy, hard at work creating value, which we believe we're doing successfully, and we're confident the investment community and the market will recognize the very large disconnect between the current public market value of our company, which seems to have already more than discounted moving into the potential danger zone of a recession, and the underlying private market value of our company based upon property values determined by real current transactions. Now, we'd love to move to the question and answer portion of our call. Donna, you may click proceed. Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time today, we are asking you to please limit yourself to one question. You may re-queue if you have additional questions. Once again, that is star one if you would like to register a question at this time. Our first question today is coming from Dori Kesten of Wells Fargo. Please go ahead. Thanks. Good morning, guys. How are you thinking about your dividend, the 2023 debt maturities and share repurchases as you consider a range of recession or slowdown scenarios over the next year, and in addition, the dispositions you just talked about? Sure. Well, first as we think about the dividend, that's more of a 2023 story than something this year. As you know, we had some net operating losses that we're carrying forward the last couple of years, which we have the opportunity to burn off of that. That's one to think about the dividend. Think about that more of a 2023. That also depends on the outlook of the economy at that point in time and other sales, as well. On our debt maturities, and we look at this, you know, on a long-term basis, not just our 2023 maturities, but maturities beyond that, we feel very confident we'll be extending all those. As you know, we have great relationships with our banking group. They extended out $1 billion of our debt during the pandemic, so you should expect that we'll do the same as we have historically. Many of these bank relationships we've had for decades, so that's also certainly a positive. Certainly right now in the world for the bank sentiment right now towards the hotel space is very positive. It's much better than it was, you know, 12 months ago. So we have no concerns about those sort of any of those debt maturities upcoming now or in 2024. Just the last piece of share purchases. Sure. Well, we, as we go through it, as Jon noted, you should expect us to be funding the acquisitions that we completed this year with our dispositions. In addition to the Marker and the three coming up, we may have some additional sales. That's funding the acquisitions, and beyond that, we'll use that to either reduce debt and then evaluate share purchases again, depending on what the environment is and how our share price is at the time. We have about $150 million share buyback that's been authorized by the board, and we'll evaluate that. Similar to what we did in 2016 and 2017, where we paired some sales with debt pay downs and/or stock repurchases, you should expect some similar precedents this year and next year. Okay. Great. Thank you. Thank you. The next question is coming from Gregory Miller of Truist Securities. Please go ahead. Good morning. Thought I'd ask about 2023 for what you can share. I know it's early, but I was curious about peak season winter 2023 for some of your warm weather leisure markets. You have benefited from considerable room rate growth post-pandemic and, you know, thinking about South Florida in particular, based on the current macro today, do you anticipate room rates in these leisure markets will rise at or above inflationary levels or operating cost levels in this upcoming winter? Thanks. Hey, thanks, Greg. You know, it's interesting when we look at what's on the books already in Q1 for South Florida. Rates are up significantly on both the transient and the group side. Now, we don't have a huge amount of business on the books, but we do have a healthy amount of business in the first quarter. A lot of people who go to South Florida, that go to LaPlaya, that go to The Inn on Fifth, kind of rebook as soon as they leave for the following year. Certainly, it's very encouraging what we're seeing already in terms of rates in South Florida and frankly for the whole portfolio next year. One of the things we noted in the last call, but it's worth emphasizing again because the group rates for next year continue to increase. Particularly at the resorts, we've had a very wide gap created in the last year between transient rates and group rates. What that's led to is pretty confident meaningful increases in group rates as we look into next year for those properties. We do feel pretty confident that rate increases are gonna continue well into next year, if not all of next year. We do think that's gonna happen in the Southeast as well. Thanks, Jon. Thanks, Greg. Thank you. The next question is coming from Bill Crow of Raymond James. Please go ahead. Hey, good morning. Thanks. Hey, Jon, I think in hindsight, it's pretty easy to see that e-commerce spiked during the pandemic and is now in the process of normalizing and kind of a painful normalization, I guess. Is lodging going through the same thing? Are we just having a post-pandemic spike that is gonna normalize, whether it's 2023 or 2024? You mean, is it a pull forward of? Yeah ... of- Yeah. Well, spending. Of demand? Spending on lodging. Yeah, spending on lodging, in particular on the rate front. Yeah, are we just getting more than our fair share as a part of the economy, and we're gonna give that back to more normalized travel spending as a part of the overall economy going forward? Yeah, I don't think so, Bill. I think in fact, you know, what we're partly dealing with right now is pent-up demand from people who haven't traveled. If you look at the overall demand levels, they're not at 2019 levels yet. In fact, we're nowhere near 2019 levels on both the business travel side and the international travel side. I think actually, we will be normalizing over the next year to 18 months. We think it's more normalizing to higher demand levels, which will actually continue to put pressure on rates and pricing. Particularly as you look at this environment, not only over the next two years, but the point I was trying to make in my comments, we have a pretty long runway of opportunity to grow rates in this industry due to a severely supply-constrained environment over that period of time. The more difficult the debt markets have gotten, the more difficult it's gotten to get construction financing to start anything new, even if one can make sense out of those economics with these much higher development costs today. I don't think it's the same. But we'd love to have the same boom over the next 18 months that they had on the e-commerce side over the last 18 months. Yeah. Okay. If I could just follow up with a question for Ray. I think, Ray, in your prepared remarks, you talked about responsible guidance for the third quarter, I guess, given the macro clouds up there. I think that's what you said. I'm just curious, you've got July pretty much in the books. August seems like it should be just leisure-driven, pretty good month. Is it really September, which is the biggest contributor, I believe, to the third quarter that causes you consternation? Or, how much conservatism is there in your 3Q outlook? Sure. Well, yeah, look, as we get to August, as you know, down in Florida, you guys start to go to school in early August now these days. It's a flipping from- Same on the West Coast. West Coast, too, it's early. There's a transition from a leisure focus heavy in the first half of all of July and half of August to then transitioning to back to business travel, back to school, and those things. That's where August, we expect, will give up a couple points of occupancy, you know, three to four versus where I think we'll be at for July. We'll come back with September coming back. It's a little bit late Labor Day this year. What we're seeing right now in business travel is very encouraging. Part of this is just to be, you're right, be conservative in an environment that there is uncertainty. Again, we're not seeing any change in booking behavior or pullback on pricing. Again, it's encouraging for what it's worth. Realizing we have a pretty short booking window here, where most of it's inside of like 30 and 60 days. Given what we're seeing right now, you should not infer that because of our outlook there, our RevPAR looks 5%-8%, that we're expecting any declining overall demand trends. It's just a transition of seasonality as we get into the good fall season. Hey, Bill, the other thing I'd add, it's totally appropriate question. I'm sure others might have asked it. July benefits from five weekends this year compared to 2019 when it had four. The weekends are clearly stronger, and they're particularly stronger in July, which is the strongest leisure month. Then we move to August. As Ray said, you know, we're moving back to normal seasonal patterns, both from a seasonality perspective and from a weekday pattern perspective. August flips the other way. We actually had five weekends in 2019 in August, and we only have four in August of this year. The double flip kind of hurts on a comparative basis a little bit. The other thing is September has a slightly late Labor Day, which historically has hurt business travel return. As we've indicated, we've gone back to these normal patterns where the weeks around holidays are actually softer because of the impact on business travel, which was typical pre-pandemic. The holiday doesn't help September. We have a Jewish holiday in September, which was not the case back in 2019 when we had two of them in October. We're just being prudent as it relates to how the comparisons work to 2019. October would benefit from that holiday shift. Outside of Halloween, if you want to technically call that a holiday, which it is because it impacts business travel, October should be better than '19. Our view of the fourth quarter that we've indicated before is we do think in the fourth quarter that we'll exceed 2019 numbers, both top line and bottom line. Great. Great color. I appreciate it. Thank you. Thank you. The next question is coming from Neil Malkin of Capital One Securities. Please go ahead. Hey everyone, good morning. Thank you. My question is on the capital allocation decisions, specifically the urban hotels you mentioned you were selling. Obviously you've been, you know, cycling significantly into, you know, resorts exclusively and then selling, you know, urban hotels. You know, you talked about three additional hotels coming up. Excuse me. Looked like the Hotel Spero, I saw some news about that one being one of them. I was wondering if you can give any color on the sorts of, you know, hotels or markets that the other two are gonna be in, and you mentioned potentially another set later in the year. You know, can you just maybe talk about that? You know, really, what does that say, Jon, about your view on urban, either recovery or a longer term operating dynamic versus sort of domestic leisure, just based on where you've been putting your money? Sure. Can't provide you any additional color on the markets or the individual properties that constitute the three that are under contract, or what else is on the market right now. We'll provide you that color along with the math and the financials when those transactions actually close. We're trying to be sensitive to the buyers and our responsibilities under our agreements in these particular cases. We'll give you all that detail soon enough when those transactions ultimately close. I think the overall capital allocation question brings us really to what we've been talking about, of trying to find a more even balance between business travel overall and leisure travel overall, which both of which we believe will continue to grow over the long term. When you think about the resorts that we've bought, it's not that they're all leisure-focused, they're not. In fact, many of them do a very large amount of group business, of which a significant part is business travel. It's not as if we're eschewing properties that cater to business customers. It's not the case, but we are trying to get more to a 50/50 balance in terms of segmentation within our portfolio because we think on a risk basis, the portfolio will perform better through the ups and downs of the cycles. Okay. It's less about a call on a specific market or the drivers within those markets or the fundamentals that would support travel, you know, pre- versus post-COVID and more of a, you know, that mix is being at the top of the list of rationale for the decisions. Yes. Is that fair to say? Okay. Yeah. Yes, that's fair to say. Okay. All right. Thank you. Thanks, Neil. Thank you. The next question is coming from Ari Klein of BMO Capital Markets. Please go ahead. Thank you, and good morning. Maybe just following up on that last question, if you can talk a little bit about, you know, what's happening with pricing in the transaction market, and if you could tie that into, you know, the assumed cap rate in your NAV which remained unchanged overall, even if there were some markets that changed a little bit here or there. Sure. Thom, you wanna handle the first part of that? Yeah. I mean, I think as it relates to pricing, I mean, I think you gotta be careful to talk just in general terms. I mean, everything right now, there's a lot of capital available in the system. It's a very market-by-market, asset-by-asset focus. I think, when you look at it, for example, you know, John, Ray, and I spent a lot of time on our NAV. You know, we made adjustments to that. We made adjustments downward in markets that are kind of later to recover, including San Francisco and D.C., while we've made some minor increases in markets like San Diego, which is probably one of the most attractive investment markets today. I think given the fact that the debt markets are challenging, obviously what you're seeing is many lenders out there, more of the debt funds, it's maybe lower proceeds, higher debt cost, higher coupon cost. What you're seeing is more conviction in the operating recovery. There's that friction where I think people are having, you know, are feeling better about the future, and they're factoring more normalized financing moving forward as it relates to their underwriting. I think generally though, you know, if there is an impact on pricing, you're not really seeing it on select service or resorts. You might see it in some of the urban markets, but it's anywhere from, quite frankly, very nominal from, you know, 1% to maybe a max of 5%. Yeah. It's a headwind and a tailwind, Ari. It's the tailwind from, you know, consistently improving performance, particularly big jumps in the urban markets, against a more expensive debt market until it stabilizes. It's still likely to stabilize at a more expensive level than where it was, you know, 12 months ago. Just real estate taxes, you know, it was higher than we had expected. What's kind of the outlook there moving forward? Yeah, we've been having a lot of fun with some of these cities and places like Chicago, where they actually have that the values go up in the middle of a pandemic, which makes absolutely no sense. Look, we're gonna be very aggressive in each of these. If we get some of these silly tax bills, we're gonna appeal them. Look, a lot of cities have been using this, the pandemic as an opportunity to, you know, fund their other losses through that. It is gonna be choppy in some of the areas that typically have had tax challenges, like Chicago. We'll continue to appeal those and battle those. You know, less of an issue in markets like California because of Proposition 13, and we have to keep that in mind. We'll watch that. It's a little spiky here and there, but hopefully we'll get some progress on some, you know, appeals on this in the coming quarters ahead. Appreciate it. Thanks. Thank you. The next question is coming from Smedes Rose of Citi. Please go ahead. Hi, thanks. I just wanted to ask a little bit about sort of margin expectations into next year, and I'm just looking specifically, you know, you broke out April, May, and June results. It looks like as occupancy continues to normalize, it's sort of outstripping rate growth in the June, you know, hotel implied hotel margin declined a little bit from April. I don't wanna get into, like, you know, monthly modeling, but I'm just sort of thinking into next year, do you expect sort of more that the rev per growth will be just more driven by occupancies versus rate, and so maybe that has some kind of margin implications, or maybe you can just kind of talk to that a little bit? Yeah, I mean, I think you're gonna see. I mean, you know, we haven't provided an outlook for the fourth quarter, and our views going forward are a little more challenged than a normal environment, obviously. I think in general, Smedes, what I'd say is you're more likely to see both recovery in occupancy, further recovery in demand and occupancy, particularly in the urban markets, though we still have a little ways to recover in the resorts as well. I think we'll continue to see significant rate increases. I don't think at the level that we're seeing this year necessarily, but I certainly think they're likely to be fairly significant next year. Like previous recoveries, particularly when supply ultimately becomes constrained, I think over the next few years, you'll see margins continue to improve, and get to record levels pretty rapidly, particularly as likely compared to prior recoveries. Smedes, this is one that we caution you to look at too much month-to-month data because there's a lot of factors that could go on. We could have a property tax appeal that some of those months that influences margins on the bottom line. It's a lot of factors. Overall, the trend, we feel good. The other side is you also have to look at the revenue and how that's being driven. We talk about a lot of the non-room spend, which is a very healthy 20%, 25% plus in the quarter. Actually, our food and beverage revenue in the second quarter was above second quarter of 2019, and that's with 20 points less occupancy. Food and beverage, as you know, have lower profit margins than rooms, but it does flow to the bottom line. Again, the margins are an indicator that we look at overall, but ultimately it's hotel EBITDA, which we're trying to drive. It's very encouraging that we're having not just increases in the room side, but the non-room spend, less profitable, but contributes to EBITDA growth. Well, it's significant to add to that. I mean, as discussed in my remarks, you know, the redevelopments often include components that relate to remerchandising both indoor and outdoor spaces and trying to create more revenue per square foot at our property. Again, it doesn't come necessarily at a higher margin level if particularly if it's food and beverage focused, but it does drive more EBITDA per key. As Ray said, that's really what we're focused on. Margins are a result obviously of all of these things happening. Okay, that's great. I just wanted to quickly ask you, could you just maybe touch on what you're seeing in terms of, just sort of wages and benefits pressure at the property level? Yeah, I mean, again, it varies by market. I would say our greatest increases are in the hourly categories at our properties, and within the hourly categories, they're more intense in housekeeping and in the kitchen, and they're less intense in other jobs throughout the property. You know, I'd say overall, we're probably seeing, you know, probably something on the order of about 5%, give or take in wage increases, smaller in the cities where we're really either in contract or following the contracts in the market. Okay. Thanks a lot. Thank you. The next question is coming from Shaun Kelley of Bank of America. Please go ahead. Hey, good morning, everyone. Maybe just a high level question. You know, we've covered a lot of ground already, but you know, as we think about Pebblebrook's mix overall, and obviously it's been shifting between resort and urban areas. Could you just talk a little bit about sort of the remaining recovery that's left in urban and how much or would that be enough to be able to offset some normalization in leisure, you know, some of the leisure pricing that we've seen? Because I think one thing we hear a lot from investors is concerns around, you know, lapping, you know, some extraordinary comps and what we've seen on some of the resort markets. Jon, we know you put a lot of capital into this, so there are reasons that you're, you know, seeing the rate gains that you've achieved. But even if that normalized a little bit, is there enough urban recovery left for Pebblebrook here? Just help us kind of think about how those two pieces could fit together in a more stabilized 2023. I mean, I actually think there's way more to continue to drive profitability. I think there's a misconception. You know, there's been a misconception or a misbelief in pretty much everything we've said the last two years about pricing. I think there are a couple of things to consider. One is I think resorts, to some extent, have structurally repriced. I don't think that those rates are gonna be given back. I mean, we're seeing very encouraging signs of that in Southeast Florida, where demand is normalized out of season. Rates are not coming down, and in season, rates continue to go up. Markets like the West Coast are far away from the kinds of increases we think are available in those markets. Southern California was closed for part of the first quarter this year. Then when you add to that, both the demand recovery still to happen in the resorts, particularly on the group side, which is replacing some transient, but it's coming with more food and beverage and other revenues, which continues to increase profitability. You'll see at LaPlaya, we gave you the trailing 12 numbers, but by the time we get to the end of the year, the EBITDA numbers are gonna be substantially higher than the trailing 12 numbers. That's the case in most of our resorts. It's how we're going from $30 million over 19 in the first half to $50-$60 million by the end of the year. I think there's a long way to go on the resort side. Clearly the urban has a lot to go. You know, take San Francisco as a good example, which is a slow to recover market or even D.C., both of those markets are ahead of 2019 from a rate perspective at this point. The approach to pricing, what customers are willing to pay, the value of the product, I think we're gonna continue to see further pricing opportunity within the portfolio as we get a significant further recovery in occupancy. Very helpful. Just maybe as a quick follow-up, just can you give us any? I know you probably wanna shy away from, you know, detailed underwriting or details around the transactions on the disposition side until they're announced, but, you know, could you just give us a sense on a net basis? You guys are pretty disciplined buyers and sellers over the years. You know, are these net accretive on an AFFO basis? You know, just kind of would be a helpful guidepost. Well, it's very net accretive off of 2022 numbers. On a trailing basis. Well, on a trailing basis, on a full year basis, on probably next year basis, as well. It depends what you wanna compare it to, when you talk about accretion or dilution. We think the pivoting we've done out of these assets and others we've sold already into the assets we've bought. I mean, Ray mentioned, you know, the yields that we're already achieving at properties like Margaritaville, which is approaching 10%, and Jekyll Island at 8/5, and Estancia at 7/5, etc. Those are highly accretive to the assets that we've sold and that we are selling. Understood. Thank you very much. Thanks, Shaun. Thanks. Thank you. The next question is coming from Michael Bellisario of Baird. Please go ahead. Thanks. Good morning, everyone. Just on group, could you maybe provide where pace is for the second half of the year and then also 2023? Is there any desire kind of on the revenue management front to maybe group up more to potentially offset a softer transient environment over the coming quarters? Yeah, I mean, we have plenty of room for groups, so I don't think we need to. We're not displacing anything. We're trying to drive as much group at the right prices and the right contribution to the bottom line as is out there in the marketplace. We're gonna continue to maintain rate integrity, however, at our properties and our pace from a rate perspective, I think is up what? 6 Yeah. 3%-5% for the second half of the year in the group pace. One of the struggles we have now comparing back to 2019 is we don't have good data for a bunch of the resorts, Mike, that we've bought more recently. We know obviously that that pace is up substantially over 2019 at those properties. What I can tell you is from a booking perspective, in the second quarter, we booked more revenue in group, and in fact, in group and transient in total than we did in Q2 of 2019 for the year. The booking pace has picked up substantially. April was the first month we exceeded 2019, and it continued and actually improved throughout the quarter. The pace of activity on both group and transient is significant. Helpful. Thank you. Thanks, Mike. Thank you. This brings us to the end of our question and answer session for today. At this time, I'd like to turn the floor back over to Mr. Bortz for closing comments. Hey, thanks, Donna. Thanks everybody for participating. Out of respect for Hilton's call at 10:30, we've made a decision to limit any further questions. Thanks for participating. Have a great rest of the summer. We look forward to updating you throughout the quarter with our update, monthly updates, as well as in October when we provide third quarter performance. Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.