Greetings, and welcome to the Pebblebrook Hotel Trust first quarter earnings call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. 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, Co-President and Chief Financial Officer. Thank you. Please go ahead. Thank you, Donna. Good morning, everyone. Welcome to our first quarter 2023 earnings call and webcast. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer, and Tom Fisher, our Chief Investment Officer and Co-President. 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 only today, April 27th, 2023, and we undertake no duty to update them later. We'll discuss non-GAAP financial measures on today's call, and we provide reconciliations of these non-GAAP financial measures on our website at pebblebrookhotels.com. Our financial results exceeded our outlook for the first quarter. Adjusted EBITDA finished at $60.8 million, increasing 30.9% from a year ago. Adjusted FFO was at $22.4 million with Adjusted FFO per share of $0.18, a 67.3% improvement, and represented very significant progress from a year ago and a great start to the year, especially in many of our urban markets. We're pleased with our financial results despite cancellations and disruption from numerous winter storms, excessive rain from various rivers, and flooding that negatively impacted demand at many of our hotels and resorts during the quarter and knocked out approximately 80 guest rooms in Los Angeles, with most of them not due back into service until mid to late May. Our year-over-year revenue, EBITDA and FFO would have been higher if not for the remediation and restoration of LaPlaya from Hurricane Ian and the disruption caused by the five significant redevelopments and repositionings taking place in the quarter. These two issues negatively impacted Adjusted EBITDA and FFO by approximately $11 million or about $0.09 per share. On the revenue side, same-property RevPAR increased 18.5% and non-room revenue increased 34.4%, exceeding the top end of our outlook, highlighting the robust out-of-room spend we continue to experience. Total RevPAR increased 23.7% at the high end of our Q1 outlook. The markets showing the most robust year-over-year growth with San Francisco, Washington, D.C., Portland, Seattle, and Chicago. Our San Francisco hotel is generated at a 117.5% increase same-property RevPAR, driven by occupancy rising to 46% versus 26% the prior year. Our San Francisco hotel has generated $3.5 million of EBITDA versus - $2.4 million of EBITDA in Q1 2022, an outstanding $6 million improvement from last year. San Francisco benefited from several citywide groups that performed well, including J.P. Morgan Healthcare in January and Game Developers Conference March, as well as improved corporate transient and leisure demand in the city. Obviously, despite the significant improvement, San Francisco still has a long way to reach full recovery. Our Washington, D.C. hotel has also exhibited strong improvement during the quarter over the prior year, growing same-property RevPAR 126.6% as occupancy increased 53%, up from 27% the previous year, and ADR rose 13%. D.C. benefited from increased business group, transient, convention demand, as well as slowly improving international demand. The administration's recent announcement encouraging federal workers to return to the office, if successful, would further bolster hotel and restaurant demand in the market. D.C. is shaping up to have a solid second quarter. Our two Key West resorts continue to perform well but had difficult year-over-year comparisons due to the robust quarter last year, when Florida was one of the few states fully open for business during the Omicron surge. Fortunately, the Florida year-over-year challenges were primarily focused on Key West, and to a lesser extent, Naples, which was probably still impacted by a negative perception of the market following Hurricane Ian. Margaritaville increased RevPAR by 5%, growing occupancy 4% with ADR up 1%, and food and beverage revenues climbing by 14% as group recovered and transient demand remained healthy. Margaritaville continues to outperform its Fort Lauderdale competitors and our expectations. Key West was our weakest market from a quarterly growth perspective. RevPAR declined 16.6%, primarily due to ADR being down 15.5% and occupancy down 130 basis points. We expected a pullback in Key West, yet ADR is still up more than 37% versus the comparable period in 2019, with RevPAR up 22.1%. We expect that overall demand in these markets will return to 2019 levels, with ADR premiums remaining very significant to pre-pandemic pricing levels. As we detailed in last night's earnings release, we have made substantial progress in repairing, restoring, and reopening LaPlaya. We were able to open the Bay Tower rooms in Q1. The Gulf Tower partially opened in April, though the overall resort is operating with limited services and amenities. This is positive progress. Other hotels and many high-rise apartment and condo buildings along the beach remain completely shuttered. In March, we ran 19% occupancy, and in April, we expect to achieve 24%-25% occupancy. As public areas and services return, we expect this to improve throughout the year. We're currently forecasting the beach house to be restored and reopened by the end of the year. Rebuilding, re-rebuilding inside of the beach house, which is in progress, is quite the process, as we and our board have saw last week when we toured following our board meeting at LaPlaya. Our insurance carriers have approved approximately $8.1 million in business interruption income during the first quarter, slightly more than we assumed in our outlook. This is an initial preliminary amount related to lost business from the fourth quarter of 2022, and it does not represent the full amount of BI we expect to receive for Q4 of last year. Our Q2 outlook assumes we will receive approval from our insurance carriers for an additional $10 million of BI, which will be the initial preliminary amount for lost business from the first quarter of this year, historically the seasonally strongest quarter for LaPlaya. Before the hurricane, we expect LaPlaya to generate approximately $14 million of EBITDA for Q1 2023. Our BI has been reflected in Adjusted EBITDA and FFO, but not hotel EBITDA, which should be noted by our investors and analysts in their respective models. To date, we've received approximately $35 million from our insurance providers to complete the necessary remediation, repair, and BI work. As we look to the second quarter, we haven't experienced any noticeable increase in cancellations or attrition related to concerns with the macroeconomic environment. Generally speaking, the cancellations and negative surprises we've experienced so far in 2023 have been weather-related, not economic. April same-property RevPAR is expected to be flat to down versus the prior year period, negatively impacted by the five redevelopments and repositionings, with out-of-order rooms peaking in April, and the storm related rooms out of service in West Los Angeles as well. Our Q2 outlook assumes same-property RevPAR increases 1%-4%, and this outlook incorporated the disruption from these ongoing redevelopments, which we estimate will negatively impact Q2 same-property RevPAR by approximately 150 basis points, total revenues by approximately $7.5 million, and Adjusted EBITDA by approximately $5.5 million. Our portfolio continues to narrow the gap to 2019 same-property revenues and EBITDA. After adjusting out the impact of LaPlaya and our renovations, same-property EBITDA versus 2019 has improved from down 21% in the fourth quarter of 2022 to down 8.3% in Q1, and based on the midpoint of our Q2 outlook, down just 8.8%. We have some one-time expenses related to the cleanup and remediation of our hotels in L.A. that were affected by the storms in Q1, plus increased energy and property insurance costs, which unfortunately are likely to persist for the balance of the year. Revenues continue to improve, as well as our property EBITDA, despite some of these operational challenges. Shifting to our capital improvement plan, we completed approximately $26 million of investments during the quarter. The majority of these dollars represent investments in five significant redevelopments and repositionings, which Jon will discuss later. We continue to target investing $145 million-$155 million into the portfolio during 2023. On the investment side, we are very active. We sold three properties in the quarter, one in Portland, a retail parcel on Michigan Avenue in Chicago, and a hotel in Coral Gables, generating $135.3 million of proceeds. As we highlighted in last night's earnings release, we also executed contracts to sell the Hotel Monaco Seattle for $63.3 million and the Viceroy Seattle for $33.7 million to separate third parties. We expect both sales to be completed later in the second quarter, subject to normal closing conditions. The net proceeds from our asset sales are being held as cash and are being used to reduce our net debt and for prior and potential additional share repurchases. Since we reported in late February, we have repurchased an additional 3 million common shares, comprising $42 million of capital at an average share price of $13.96. Since October of last year, when we commenced repurchases, we have utilized $124.6 million of capital to repurchase 8.5 million common shares, or over 6% of the then existing common shares outstanding at an average share price of $14.64, representing a more than 50% discount to the midpoint of our NAV range. These common share repurchases have increased our NAV by roughly $1 per share. As we sell additional properties, we will evaluate how the best utilize these proceeds, including reducing debt and/or additional common and preferred share repurchases, depending on our outlook on the economy and how our performance progresses. If we use some portion of future proceeds to repurchase our securities, we will do so only while reducing our net debt on a no worse than a leverage neutral basis. On that positive note, I'd like to turn the call over to Jon. Jon? Thanks, Ray. I'd like to provide some color on the demand trends we've been seeing, where our growth is coming from, our booking trends and pace for Q2 and the rest of this year, I'll discuss the cost pressures we're experiencing. First, the demand trends. It's been just two months since we last reported our year-end earnings and trends, we provided a mid-quarter update last month with performance through February, March hasn't been any different. We haven't seen any changes in overall demand trends in our industry in the last 60 days. Business travel continues to recover, both group and transient. Demand related to conventions is getting back to normal. International inbound travel continues to improve with Europe closing in on pre-pandemic levels and Asia at the early stages of its recovery with a long way to go. Leisure travel remains healthy, though with less exuberance than last year when splurging on suites and upgrades was higher than historical norms. With the continuing recovery in business travel, our urban properties have benefited the most. Our urban market occupancy climbed over 10 points, or 22.1% versus an Omicron impacted first quarter last year, and ADR increased a strong 8.7%, bringing same property RevPAR for our urban hotels to an increase of 32.8%. Non-room revenue growth was even higher at 53.1%, with increased prices and group demand that comes with more non-room spend driving this higher level of growth. With leisure and international in the early stages of recovery in the cities and business travel with the ways to go, we have significant occupancy and total revenue opportunities as our urban market occupancy was still over 19 occupancy points, or 25% below the 2019 level. Some of this will be recovered after the three urban redevelopments are completed later in the second quarter, most of it will be recovered as business, leisure and international travel normalize at higher levels. The cities that led to first quarter recovery, as Ray indicated, included San Francisco, Washington, D.C., Chicago, Portland and Seattle. We saw continuing improvement in San Diego, Boston and Los Angeles. Our West L.A. properties were up against a tough comp in Q1 with Super Bowl in February last year. L.A. also experienced uniquely heavy and continuous rains throughout the quarter, which negatively impacted leisure travel. Yet we still grew RevPAR by 14.9% due to the continuing recovery in business travel, particularly entertainment, that helped drive a 28% increase in occupancy in the quarter. Yet we're still 10 points or 12.5% below 2019 occupancy. In San Diego, the first quarter was very strong in the market, benefiting from a robust convention calendar, though it too was negatively impacted by the never-ending heavy rains. We had two of our four downtown properties under redevelopment, Hilton Gaslamp and Solamar. As a result of this disruption, the Hilton lost almost 9 points of occupancy or 17%, while Solamar lost 7.8 points of occupancy or 14%. Comparatively, and as indicative of the market strength, our Westin Gaslamp Quarter grew occupancy by 12 points or 17%, and our Embassy Suites grew occupancy by 19.6 points or 33%. The Westin's occupancy climbed all the way back to 2019's level due to its higher group segmentation, with overall ADR 22% higher than 2019. The Embassy is still 9.5 points or 11% below 2019's occupancy, but with a rate 10% higher. San Diego is our best performing urban market, it has an even better convention calendar next year. Our resorts performed well in the quarter despite the year-over-year softness in rate in Key West, the continuous heavy rains that negatively impacted all six of our West Coast resorts. On a same property basis, which excludes LaPlaya, our resorts gained 6.6 points of occupancy or 12.1% growth, while ADR declined by 11.7%, resulting in RevPAR down 1.1% year-over-year. As expected, the occupancy gains were driven by the recovery in group demand and some lower rated transient segments. The ADR decline resulted from the decline in Key West and the return of demand from some lower rated channels, while group rate throughout increased at a healthy rate. Our Q1 2023 same property ADR for our resorts remained at a $126 premium or 44% higher than Q1 2019. Our non-room revenue at our resorts also grew substantially in the quarter, up 19.2%. This was primarily a result of price increases we've taken and the recovery of group that drives substantially higher non-room revenue spend versus transient. Turning to our pace for Q2 and the rest of the year, it looks pretty good. In Q2, on a year-over-year basis, group room nights on the books at the end of March were up 5.7%, group rate was up 6.1%, and group revenues were up 12.1%. Total revenue pace for Q2 versus last year, including group and transient, was up 4.9%, with rate representing 2.1% growth. For the entire rest of the year, including Q2 through Q4, group room night pace is ahead of last year by a strong 10.3%. Group ADR is up by 8.7%, and group revenue pace is ahead by 20%. Factoring in group and transient and looking at the total pace for the remainder of the year, total room nights are up by 8%, ADR is ahead by 3.9%, and total revenues are up by 12.2%. Q2 year-over-year total room revenue pace is the weakest of the year. It improves in Q3 and then further in Q4. This is encouraging considering the concurrent concerns about an economic slowdown or recession later this year, which we certainly do not yet see in our pace for the rest of the year. However, we should all remember that in the hotel business, it's good until it's not, meaning it can turn very quickly and business on the books can cancel as well. Outside of the positive demand trends, we're experiencing a challenging cost environment. While we believe the rate of growth in wages and benefits is normalizing this year, and generally following inflation, we've significantly restaffed our property teams over the last six months, and so total staffing costs versus last year have been and will remain a challenge through September. As food and beverage and other services volumes like spa services recover, significant marginal expenses also recover. At this time, we're also experiencing significant increases in costs related to energy, water, and property insurance. Despite these expense pressures, we believe that after we lap last year's restaffing success later this year, we'll have significant operating leverage in the business to drive higher margins and higher EBITDA. Also on the positive side, we had further success in one of our markets, significantly reducing some prior year property assessments. As a result, we achieved a significant property tax reduction that was trued up in Q1. We expect to have further success in this market and other markets on prior year assessments in the coming years. These reductions in true-ups in likely over-accrued property taxes will help reduce cost increases related to some of these other expense categories. In the transaction market, as Ray indicated, we've had great success selling numerous properties over the last 18 months. We have two additional properties, both in Seattle, under contract with buyers who have completed due diligence and have hard money deposits at risk. Assuming these two property sales close, sales to date will total over $230 million. Of course, sales are not done until they're done, regardless of the contracts. High quality and well-located properties like we own continue to be highly desirable to the buying community. As a result, we're bringing additional properties to market. While the transaction market for hotels, and frankly, most property types, continues to be challenging because of the debt markets, and they've probably been made more difficult because of the recent events surrounding several smaller regional banks, we'll continue to work smartly by seeking out buyers who can overcome these debt market challenges. Finally, I wanted to update you on this year's major redevelopment and repositioning projects. We completed the first phase. Sorry, the final phase of the redevelopment of Viceroy Santa Monica earlier this month. Following the renovation of the public areas two years ago, we now have a lifestyle property at the luxury level in Santa Monica that is highly attractive to both business and leisure travelers. We believe we're now in a great position to drive a $30-$50 higher rate in a market that is seeing some shrinking supply and improving demand. By the end of next month, we expect to be substantially complete with the renovation and transformation of our Hilton Gaslamp Hotel in San Diego into a higher-end lifestyle hotel with a dramatically improved and larger indoor-outdoor bar restaurant, expanded and improved event venues, and a whole new vibe. This property probably has the best location in downtown San Diego. It benefits from being the closest hotel to the entrance to the convention center, as well as the main entrance to the Gaslamp District. This repositioning, coupled with the property's premier location, should allow us to drive $25-$35 of higher ADR and substantially higher non-room revenues, and achieve a 10% or better annual cash return on our investment. In July, we expect to complete the redevelopment and transition of Hotel Solamar into the Margaritaville Hotel Gaslamp District, just two blocks from our Hilton. We're incredibly excited about this project, and we expect to drive significantly higher rates and dramatically higher food, beverage, and non-room revenues at this property as a Margaritaville. Between the rate share gains and increased total revenues, we expect to deliver a stabilized annual return substantially above our typical 10% cash yield on investment. At Estancia La Jolla, a resort we acquired in late 2021, we expect to complete in June the first phase of our two-phase repositioning of this property as a luxury resort that will be more appealing to both leisure travelers as well as its already heavy social and business group and corporate transient customers from the surrounding La Jolla area, including its large and growing life sciences hub. This phase involves a complete renovation of the guest rooms, including bathrooms, and an expansion and upgrading of the many outdoor event venues at this expansive resort. We'll commence the second phase of this redevelopment and repositioning starting late this year. This second phase includes the renovation of the main ballroom, meeting space, restaurants, lobby, and coffee shop, and it involves expanding and upgrading the entire pool complex, including adding high-end cabanas, a new pool bar, and creating a new event venue as part of the pool complex. We're in the process of completing a major upgrading of Jekyll Island Club Resort, which includes a comprehensive guest room renovation of all of the historic buildings, including the main building and the three large cottages. It also includes complete public area and meeting space renovations and upgrades, expansion of both pool complexes, including the addition of high-end cabanas for rent, relocating and expanding the property's retail store, and upgrades to the property's numerous outdoor venues. We believe repositioning this grand and unique historic resort as a luxury regional resort will deliver, upon stabilization, a very attractive double-digit cash yield on our total investment. To these current projects, we expect to commence the complete redevelopment and upgrading of Newport Harbor Island Resort late this year. This represents the last major redevelopment project in our strategic plan involving the LaSalle portfolio and the properties we purchased in the last two years. As you know, we've completed over 24 major repositioning and redevelopment projects throughout our portfolio during the last several years. These projects are gaining share as the demand returns, and we expect to achieve very attractive cash yields at these properties upon stabilization. Significant progress has already been made at Chaminade Resort, Mission Bay Resort, Westin Gaslamp, Embassy Suites San Diego Downtown, Skamania Lodge, 1 Hotel San Francisco, W Boston, The Marker Key West, and L'Auberge Del Mar. All of these projects also involve creating and expanding indoor and outdoor event spaces, reconcepting and upgrading restaurant and bar outlets, and generally merchandising all indoor and outdoor spaces to drive significantly greater out-of-room revenues and EBITDA. We're confident that with the dramatic reshaping of our portfolio during the last several years through dispositions and acquisitions, combined with these many major projects, we're now in a great position to organically grow our top line and bottom line beyond the industry's growth in the years ahead as we achieve the payoff of the very significant dollar investment and hard work that's gone into the dramatic improvement and repositioning of the properties we acquired in the LaSalle transaction and those resort properties we acquired in the last two years. That completes our prepared remarks. We'd now be happy to take your questions. Donna, you may proceed with the Q&A. Thank you. 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 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 the handset before pressing the star keys. In the interest of time, we do ask you please limit yourself to one question and one follow-up. Once again, that's star one to register a question at this time. Today's first question is coming from Smedes Rose of Citi. Please go ahead. Hi. Thanks. Jon, I was wondering if you could just talk a little bit more about some of the cost pressures you mentioned on the wage side and maybe just kind of, on the sort of hourly kind of, I guess, you know, relatively lower skilled workers versus more on the managerial side, at the, at the hotel level. Are you seeing similar pressures across the board? You said sort of in line with inflationary, so what is that, around, like, maybe 5% increases for the year? Maybe just a little more detail there. Generally, I think when we look at cost pressures, I don't think the biggest cost pressures are the growth in wages and benefits at this point. I think they'll run this year in the probably 4%-5% range and will vary throughout the portfolio by market. It's pretty similar for the managers and up within the portfolio. The increase in costs from wages and benefits is really due to the restaffing within the portfolio, filling a lot of open positions, trying to get off of contract, third-party contractors who are providing people, and to be able to accommodate, frankly, the occupancy growth that we believed and continue to believe that we'll be able to achieve this year and going forward. It's not really about the rate of growth in wages, or benefits. It's about the increase in volume from staffing up. Okay. Okay. Then just I'm sure it's still a relatively small piece of your overall expenses, but could you just kind of quantify what you're seeing on the insurance side in terms of the% increases that you're having to pay? Yes, Smedes. Well, we're in the middle of our negotiation process with our renewal with our insurance carriers, which is on June 1. It's gonna be a tough market. You know, I think we touched on this last quarter, because of all the storms that's occurred throughout the country as well as inflationary costs. This is gonna probably be the second most difficult renewal since Katrina. Costs are gonna go up significantly. We certainly don't wanna negotiate against ourselves, but it is gonna be a headwind. Now we're gonna do our best to evaluate the different areas and how do we, you know, frame up some parts of insurance in the stack and maybe take some higher deductibles and other adjustments to work through that. It is gonna be a headwind for us for the year. Smedes, in terms of sort of what we're experienced prior to the renewal, more of it really comes down to the fact that we've had a lot of, a lot of smaller weather-related events within the portfolio, whether it's the huge freeze we had in the Northeast that led to a lot of pipe breaks and damage from water, or the heavy rains out on the West Coast that had inflicted some significant damage on four of our L.A. properties and rooms within those properties. They're not big in and of themselves each, but each one hits the deductible and that adds up over the course of, you know, six weeks. Smeeds, just to put it in perspective, overall insurance costs are about 1.5% of our total expense there. The property and casualty side is about 75% of that, so it's about $17 million a year. It's sort of your numbers. Great. All right. Thank you, guys. Copy. Thank you. The next question is coming from Shaun Kelley of Bank of America. Please go ahead. Hey, good morning, everyone. Jon, maybe to kind of follow up, you know, with where I think Smedes Rose was going there. You know, if we put all these pressures together, I think when we rewind of how we thought, you know, things would evolve post-pandemic, you know, I think we oftentimes talked about, you know, framing things in terms of margin improvement, you know, like efficiencies learned or earned during the pandemic about what was able to be done on the staffing side. You know, fast-forward to today and, you know, the narrative has shifted to a lot around, you know, the cost landscape, you know, multiple years of inflation pressure, and some of the things you just talked about. Should we be thinking really in terms of how much margins are a little bit lower than 2019? Is that too, you know, aggressive or too concerning to worry about? How would you help us kind of like update the framework from, you know, let's call it two years ago, where we were talking about, you know, on a stabilized basis, things being maybe 100-200 basis points better on a margin basis than where they were. Should we be thinking about, you know, 100-200 basis points possibly worse than where we were, all other things equal? Maybe if you could just help us level set that, I think it'll be really helpful. Yeah, sure. Well, the cost, the 100-200 basis points that we've talked about previously in cost reductions to the operating model have been taken. You know, the operating more efficiently, using more technology, operating with fewer people, that's actually occurred, Shaun. We have taken those costs out of the model, which tells you know, it would be worse today had that not been the case. You know, we don't think of a world of margins. We think of a world of profits. We look at expenses and we forecast expense growth as opposed to forecasting margins in our portfolios. And margins get impacted by a dramatic increase in non-room revenues, as an example. As we increase the percentage of our revenues to non-room categories, with the remerchandising and redevelopments that we're doing within the portfolio, that'll actually lower our margins, but it'll increase our profit per key. We're focused on operating as efficiently as we can. To think about your sort of general comment, I'd say expenses go up over time, and the macro environment has an impact, obviously, on profitability, both revenue growth and expense growth. I don't-- we don't really think about it the way you were describing it. We think about it as how do we make the operating model more efficient, and then how do we mitigate macro and micro pressures on costs that go up and down. You know, Ray talked about insurance. It's gonna be a tough year. There were probably four years in a row, probably seven years ago, where we went down 10%-15% a year in our premium. You know, these things go up and down. Energy does too. We've seen oil and natural gas go up. Natural gas has come down. If it stays there, we'll be recontracting at lower rates again, and that'll bring energy back down again. All these things move around, so I can't really comment on it from a margin perspective. I can just tell you that we took 100 to 200 basis points of cost out of the operating models permanently, but there's growth in other areas. I would continue to believe that as we get through whatever this macroeconomic thing is, a slowdown, a recession, whatever it is, that as we ramp back up at peak in the next cycle, particularly with supply being so restrained for probably three to five years, that we'll peak again at higher margins as an industry than we did in the last cycle. That would be my sort of broader forecast. That's helpful. Maybe one sort of on a couple of either markets or asset specific, but you obviously called out some of the rate normalization in Key West, and I think that's certainly not the first we've heard of that. Could you just, you know, help us think about some of these kind of other resort markets you've kind of acquired into? I'm thinking specifically, you know, off the coast of Georgia, you know, maybe a market like Newport. Are you seeing similar pressures to a different magnitude? Appreciate there's some renovations and maybe property-specific stuff going on, but just broadly, what is the consumer behavior in some of those, you know, assets that, you know, I think were really big pandemic winners? You know, we're not seeing pricing pressures in those markets. Where there's some impact from a change in behavior, it would really come from, I would say, a general reduction in demand of premium suites and premium rooms from the high levels that we got to last year and some even the year before, as people splurged on themselves after being inside for a year or two. That's pretty general across the board. It's interesting. It's a little different than what the airlines are seeing in terms of them talking about the premium customer. But it is consistent with the high demand we continue to see at our high-end resorts in terms of the number of overall luxury customers. We're not seeing pricing pressure really elsewhere, but we are seeing some slightly fewer number of premium rooms at higher rates. We're also driving more group at our resort properties, so that's a different segmentation. Our group rates, by and large at our resorts are actually lower than our transient rates, not surprisingly, right? They come with other revenue and other profitability, but they also come generally at lower rates than the leisure transient rates in those markets. That's the biggest impact on our rates and the trends that we're seeing on the leisure side. Even Key West, a good example, the demand is held up in Key West. We've swapped out some high-spending customers, perhaps, for some more normal, lower-rated customers, that's impacting the market. Understood. Thank Thank you very much. Thank you. The next question is coming from Bill Crow of Raymond James. Please go ahead. Bill, are you there? Sir, please make sure your phone is not on mute. I'm here. I'm here, Jon. Yep, I'm here, Jon. Sorry. Good morning. On the expense side of things, is it time yet to start thinking about slowing down the new hire process or maybe even reversing a little bit of it, just given the uncertainty in the macro and what appears to be maybe a slowing consumer? Yeah, I mean, I think that's what we're doing right now. If a position becomes available, we may or may not fill it. I think that really is more at the manager level than it would be at the hourly level. The hourly level gets just dictated by volume. Of course, many of those people, you know, may or may not get hours every week, particularly when it comes to food and beverage, and banquet and catering. They probably work multiple properties and they work, you know, when there's business. The general answer is yes. We are at the property level talking with our operators about continuing to be more cautious about adding additional. From here, until we actually see greater volumes, further greater volumes, and as we get a clearer picture of what the macro is gonna look like, and what its impact is gonna be on our industry. Yeah. One more follow-up question, Jon. You probably have more insight on this topic than others in the space, so figured I'd direct it to you. The writers, I guess, Writers Guild is threatening to go on strike in Los Angeles, the last time that happened was in 2007. I'm just wondering how you assess that, the disruption to that market and your assets in particular, which can rely on entertainment fairly heavily. It's really gonna depend upon whether if they do strike, Bill, whether it's short or it's long. The short strikes, three weeks, four weeks, two weeks, I mean, we've seen these in the past. They tend to get settled pretty quickly, and historically at least, and they have very little impact on the market. And I think the, you know, compared to history, the content obviously development volume has morphed in so many different directions. Music, of course, is not impacted and some other forms of entertainment. You know, most production that's going on today and probably is gonna go on over the next three to six months is already written. It likely doesn't have much impact in the short term. That's why I said it really depends upon if they do strike, how long it's gonna be. Then we're just gonna have to see how it plays out. Okay. All right. Thank you. Thank you. Thank you. The next question is coming from Floris van Dijkum of Compass Point. Please go ahead. Thanks, thanks for taking my question, guys. I guess I have a question regarding, you know, the recent asset sales in Seattle. You know, kudos, obviously, if you get those over the line, it helps fund your, essentially your, you know, almost all of your redevelopment pipeline. Could we expect more urban sales, perhaps you know, markets that are, you know, they've got some political issues like Portland? Maybe talk about because your mix of urban versus resort has, you know, changed at the margin. You're now slightly more heavy towards resort at 40%. I think you were at 35% before. How do you see that trending forward? Floris, hey, this is Tom. Thank you for the question. I think as it relates to, as it relates to the locations and that type of thing, we don't necessarily indicate what we're gonna do, but I think it's a safe assumption that we'll continue to look at some of our urban markets. I mean, we're risk-adjusted return investors. When we look at some of the friction costs and some of the other things that are going on, you know, from an earnings perspective and/or political perspective, that certainly influences where we're going to look to sell. You know, could it be in markets that you suggested? Potentially. I think the overall transaction market right now, you've got to be careful in terms of what you're looking because if you wanna actually sell something, you've got to look at what's marketable. I think certainly looking at assets that are smaller, that are, you know, that offer upside to maybe investors that have a strategic, a strategic investment thesis, those are the types of buyers that we're looking for. Does that mean that, you know, we've heard people talk about, you know, assets less than $100 million are much more liquid? Is that what you're seeing in the market as well? Obviously- Yeah ... you own a pretty nice in Portland, that's might be just over that in terms of total value. you know, does that make it less, easily transactable? Well, I would say nothing is necessarily easy in today's market, just given the challenging capital markets. I think you hit it on the head in terms of... Certainly, I think the threshold that we see today is certainly less than $100 million is much more you know, you can transact that much more easily than you can something over $100 million. I think there's a number of investors that we look at and that we've been successful with who can close on a deal all cash or all equity and finance it later, or sub $100 million, there's relationship lenders that many of these investors have. Tom, my follow-up question, I guess, and my, I'll waste on that as well. Maybe if you can touch a little upon the buyers of the assets in Seattle. Obviously the lending markets are sort of, you know, remain gummed up and very, you know, difficult right now. Are these all cash buyers or buyers willing to accept a much higher spread and cost and in your view, and looking to refinance it in two years' time when presumably rates are lower? What's the mentality of the buyers and based on what you're seeing for your assets? Yeah. I can't necessarily comment just based on confidentiality, just as it relates to the characterization of buyers. All I can tell you is, I think for assets like this, there continues to be competitive depth. There's a number of groups that, you know, will look at it that have a reason for being there that are potentially strategic, and that have, what I'll say, relationship lenders recognizing that it is more expensive debt today, but recognize that relationship lenders and how they structure their debt may still fit within their strategic plan. Maybe because I've heard some stories in San Francisco of a sale recently, of a hotel that's gonna be converted. Are you seeing more of that and does that sort of feed the supply-demand dynamics that should be working in your favor as well longer term? We're seeing some one-off in some markets, but I wouldn't say that that's predominant because that has its own challenges. I think overall, you know, as Jon indicated before, we think that the supply picture in a number of these urban markets looks very promising, certainly over the course of the next three to five years. One, it's going to be very difficult, one, from a construction financing perspective, and two, just from a political climate in terms of what can and can't get done in some of these recovering markets. Thanks. That's it for me. Thank you. The next question is coming from Michael Bellisario of Baird. Please go ahead. Thanks. Good morning, everyone. Morning. Morning. Jon, you talked a little bit about your urban markets, but I wanted to dig in a little bit more. It looks like things really stepped up in March, maybe relative to your expectations. Was that more volume or price? What industries or what urban markets actually drove that upside in the quarter? Yeah, I mean, I think in March it was more volume than it was price. You know, the price growth remains healthy and, you know, continues to increase modestly from quarter to quarter in the urban markets, as they recover and as the citywides come back, which tend to drive more compression and higher rates, and as the corporate transient comes back in those markets. You know, for us, a lot of these markets have, I don't know, I guess you could describe them as, you know, many large tech users in those markets. They're gradually coming back to work. You know, the getting people back for the minimum of three days a week is, I'd say, pretty prevalent now, including in markets like San Francisco and Seattle and Portland and a market like Boston. I think that's beneficial overall to our business in those particular markets. We're seeing more BT, we're seeing more group that comes from those industries. I think the recovery in business travel is pretty broad-based from an industry perspective, just happens to be a tech need is a little heavier weighted in some of our coastal markets. Got it. That's helpful. Then maybe tying that together, just the topic of urban to the prior question on transactions. As you get through some more of these asset sales, presumably more urban hotels, maybe help us understand what's the ideal PEB hotel look like and what's the right size of the portfolio, you know, sort of prospectively, maybe 12 months out after some more of these hotels get sold? You know, I mean, part of the reason we're selling is not because, you know, we don't wanna be in a particular market. As Tom said, we're risk-adjusted return investors. The concept of selling has more to do with capital reallocation to places where we believe the returns are gonna be higher. Today, as indicated by what we've been doing, you know, we've been reallocating some of those proceeds to buy back our stock. We think that's far more accretive on a value basis per share than reallocating that capital and going out and buying new properties for the portfolio. That's where our current focus is. I'd say in general, what we've been selling has been the lower quality assets. Not that any of our properties are low quality because we don't have anything below upper upscale. Selling the lower quality properties where we think the combination of the market and the individual property will have less attractive risk-adjusted returns than what our alternative use of capital today is, which is buying the rest of the portfolio back at a 50%+ discount on a levered basis and a 27% discount on a gross basis. More than half of the gross sales proceeds that we're using, we're using to build cash and effectively lower net debt. Thanks for all that color. Sure. Thank you. The next question is coming from Dori Kesten of Wells Fargo. Please go ahead. Thanks. Good morning. I guess just a follow-up on that, with utilizing sales proceeds to repurchase stock. What would you need to see in the macro environment that would make you shift to retaining more of that as cash? effectively holding for debt paydown. I think we would need to see a significant slowdown in the economy that's actually having a negative, a meaningful negative impact on the operating business. Even then, I would say it would still depend upon what happens to the stock. Again, it's back to risk-adjusted returns. If the stock were to react negatively to that, I guess even more so than it already has from the fear of a downturn, then again, we're gonna weigh those two things in terms of what we do with proceeds. Liquidity, our liquidity is huge. We have almost $800 million of liquidity. If things were obviously to turn bad, more severely, you know, we've got plenty of liquidity to deal with that, and we don't really have any material maturities until late next year. Yeah. We have more liquidity than we had going in pre-pandemic, as an example. Thanks. You touched on this a bit in your pre-prepared remarks. What are your expectations for out-of-room spend as the year progresses? Would you expect the outperformance versus room spend to continue? We do expect the out-of-room performance to continue to grow at a higher level than RevPAR. Again, it's really coming from two areas. Pricing increases that we've taken to try to mitigate cost increases, as well as group, the increasing segmentation of group really getting back to its more normal percentage of the portfolio. As those group rooms come back, they're coming back with non-room revenue. We do think they'll grow faster than RevPAR. You know, outside of the second quarter, we don't really have any outlook for the rest of the company, we don't have a specific outlook we can share on non-room revenue. Okay. Thanks. Yep. Thank you. Thank you. The next question is coming from Duane Pfennigwerth of Evercore ISI. Please go ahead. Hey, thanks, good morning, everyone. This is Peter on for Duane. I think just following up on the previous question, you mentioned weather in the West Coast resorts for 1Q and maybe some cancellations that resulted because of that weather. Did that impact the, you know, out-of-room revenue that we saw in the quarter? Or is there a way to put a number on how much effect that weather had? I mean, it did have an impact on non-room revenue because certainly leisure at our resorts has pretty good spend levels. It wasn't just rooms that were impacted. It's shocking that people don't go to the beach when it's raining or it's raining hard with 50 mile an hour winds. It's not really a pleasant place to go to, which is a lot of what our certainly Southern California properties are about on the leisure side. Even as you work your way up the coast, we had flooding near Santa Cruz that negatively impacted business, along with the heavy rains. In the Pacific Northwest at Skamania, I think they had a four or five-week period where it didn't get above, like, 40 degrees. Again, negatively impacting the leisure customer there. We just saw it in the volumes, and the bookings, and it was probably more bookings than it was cancellations per se, throughout the portfolio. It's pretty hard to estimate it, in terms of how much it was, but it was enough to be material enough to mention in this call. It included our song. As evidenced by our song, yes. Okay. Thanks for that. Then, quickly, you mentioned that wages are up maybe about 4%-5% year-over-year. Given the increase in staffing year-over-year as well, how much do you anticipate hours being up? Or is there a way to put kind of a volume number into that equation? Yeah, I mean. Yeah. Like, we're hoping hours are gonna go up because that'll be a function of occupancies rising as well. You know, last year we finished occupancies in the mid to low 60s. That's still well off where we were in 2019, which is low 80s. We're making that climb higher. As a result, hours will go up and costs will go up because revenues are going up. Overall, as Jon indicated earlier, the changes we've made, we still have fewer FTEs at our properties than we had pre-COVID, and that's a function of retooling operations, less hourlies, less managers, combined positions, combined management clustering in certain markets. Overall, that's where we feel better about the costs are. This is all just part of there's more segmentations that are opening and operating. We have banquets and catering from the group side that we really didn't have as much over the last two years, now we're having. That adds hours, but also adds ultimately EBITDA on the bottom line. Thank you. Thanks, Peter. Thank you. The next question is coming from Gregory Miller of Truist Securities. Please go ahead. Thank you. Good morning. I'd like to start off with San Francisco. I'm curious to get your expectations for 2024 for your hotels, given challenged convention pace forecasts and the Convention and Visitors Bureau strategy that appears to be somewhat shifting to in-house group and business at the large big box hotels due to some weakness at Moscone. Sure. It's pretty hard to indicate what we think 2024 is gonna look like because we haven't indicated what the second half of this year is gonna look like, Greg. I can tell you that more group rooms on the books is better and fewer is worse. You know, the fact that they're down a couple hundred thousand room nights next year is gonna be more of a challenge for that market as it recovers. It's typical. It's not a new strategy. It's typical for them to sell both conventions and short-term group at the convention center and in the year, for the year group and frankly, future group in the bigger boxes in the market. That's not really a new strategy on their part. It's, I think it's part of their marketing to indicate that they're not sitting on their hands, which they're not. The other thing they need to do. There's two things happening, Greg. One is they'll be the existing director of San Francisco Travel is retiring. There's a search process in place. Hotels in the market, including ownership, are actively involved in that process, and along with the members of the board who are generally GMs of our hotels in the market, I don't mean ours, Pebblebrook, but owners in the market, that will be involved in the selection of that individual, which we think will bring some great passion and energy, and knowledge to that market that'll be helpful. I don't think the strategy about spending time booking big hotels is a bad strategy. It's what's available currently will benefit all the hotels in the market as it always has in the past. We would certainly view them focusing on that because it is business they can sell today as a positive and where they should be putting their effort. The other area that they need to put more effort into is Moscone was renovated and expanded in order to open it up to being able to have two or three mid-size or smaller conventions in at the same time, as opposed to, I think, what was a previous focus because it was easy, which was these annual humongous corporate conventions that are really difficult on the city and drive probably rates that, you know, some people find unattractive from a buyer perspective. That's the other rotation they'll be doing over this year and future years to help drive business in that marketplace. I really appreciate all the clarity to this. A lot of new learnings for me. As for my follow-up, I apologize, I couldn't hear Ray very well on the prepared remarks regarding Naples. Given your recent visit to the market, I'm curious, I know it's sort of a crystal ball, but, you know, what you think the tourist appeal of Naples will look like by the start of 2024 for peak season. Will the demand or rate take a few years to fully recover? I'm trying to think about it from the perspective of particularly modeling LaPlaya for next year. Yeah, I think, you know, it's interesting. We were down there, and there's a $20 million beach restoration program underway while we were there. These monster, dump, I guess they're dump trucks, but I mean, monstrous ones, basically driving back and forth on the beach, to replenish the beach. That's, I think, if I remember correctly, about a six-week process for the full beach. They actually already reached our property and basically added 2 ft of sand to get back to where it was before the storm. Of course, they do this every few years regardless, because sand, not surprisingly, goes back out to the Gulf over time. I think the market itself, outside of... I think today, outside of, you know, those stretches along directly on the beach in terms of buildings, looks like normal. All the golf courses are open, all the amenities are open, the beach is open. Vanderbilt Beach here, the whole stretch of it, with this replenishment program, will be completely replenished, you know, within six weeks. So it'll be better than new from that perspective. And I think, in our case, you know, as we indicated, we should be complete with the beach house and fully reopened all of the amenities, rebuilt and reopened at the property, and frankly, a product that's better than what we had going into the storm because of all the rebuilding. Naples itself is sort of an annual retreat for a large number of people who come to the market. The good thing is our experience in the market, and we had this five years ago after Irma, is that the market bounces back pretty quickly. The ramp up, and frankly, the ramp up has already started in the market, but I think it'll accelerate next year. I don't know that it really takes more than 12 months, but we're just gonna have to see that Naples needs to do obviously significant marketing. I think it's best for them to wait towards the latter part of this year when everything is back and operating again the way it was pre-hurricane. Thank you very much, Jon. That's all, very helpful. Great. Thanks, Gregor. 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 the resort rates that were talked about a little bit earlier. I think you mentioned Xenia, they were down 11%. How are you thinking about those year-over-year declines, I guess, moving forward through the rest of the year? Do we kind of level off in that range? Do you think the decline steepens? Yeah, I mean, it's hard to predict at this point. we can, we can look at what we have on the books, and it's probably flattish. but my guess is the shorter-term bookings, the resorts are probably gonna be at lower rates as we fill in some of the less desirable dates and days of week. I, I would anticipate, I mean, if I had to guess, I'd say they're probably gonna be similar to where they are now. That's why we've said, we said earlier in the year, we think resort rates will be down, occupancies up at the resorts, and probably bottom line's flat, and probably would be up but for the displacement from the, from the big redevelopments. Urban rates will be up, and will be roughly flat in rates for the year with our big growth in RevPAR coming from occupancy and the big growth in total revenues coming from non-room revenues as well. That's kind of the broader way we look at we would expect the year to play out. Quarter to quarter is really hard to anticipate. Ari, also, I think, look, it's important to think about and talk about rate, but also on the occupancy side, similar to our prior comments about the return of corporate group and some of that business, that'll also benefit the resorts. Our occupancies are still down to where we were in 19. Even though we have a rate premium in the first quarter, as example, our occupancies were about 800 basis points below where they were in 19. We also have ability to grow there, even though it's perceived that, you know, resorts are hitting on all cylinders, and they're doing really well. That's from a rate perspective, but from an occupancy, we'll gain more, and that's more upside as the recovery lessens here. Some of that business that's gonna come back, like international wholesale, some of it's gonna come back at lower rates, but it's gonna fill, you know, down periods, off-season, business, and drive those occupancies and non-room revenues that ultimately still produce more profits. Thanks. Just on the renovation headwinds, there's a meaningful impact in the, in the first half of the year. Would you expect that to be somewhat similar in the second half? Looking out to 2024, kind of as you wrap up, a lot of these major projects, would you expect those headwinds to further moderate? Yeah. It really is little to no impact in the second half of the year from the renovations. We're really done with the impactful parts. The second phase of Estancia is the some of the public areas, meeting space, and the pool area. I mean, it'll have some minor impact on leisure, not having a pool in service for some period of time. Generally, it's the room renos that really have the biggest impact on business. Newport Harbor actually loses money over that four and a half month period that we're gonna do the renovation. It may have an impact on revenues. Obviously, those will be lost. It won't have much impact at all on the bottom line. I think we're pretty past it, with the second quarter. Ari, other thing to note is lot of our heavy lifting on our major redevelopments will be done after this year, after actually this next couple of quarters here. Next year, the only two projects, major ones that we have currently, we're evaluating the Newport, and then the potential conversion Paradise Point, which is still in process. The rest of the portfolio has been either renovated or redeveloped. That puts us in a good position as we go into 2024 and beyond. Got it. Thanks for the color. Thank you. Our final question for today is coming from Anthony Powell of Barclays. Please go ahead. Hi, good morning. Just maybe one more from me on expense growth and staffing. Let's assume that we escape a downturn, and then next year we have occupancy of 5%. Would you still have to add incremental staff to your hotels? I'm trying to figure out when you would be actually able to leverage your staffing and push margins. Yeah, I mean, every point of occupancy is always gonna add hourlies at our properties. That'll always be the case. It doesn't matter where we are in terms of overall occupancy. It's volume that just has to be dealt with, whether it's housekeeping, or whether it's in the outlets. The more volume you have, the more people you need, et cetera. I mean, it's obviously a step function, but you should assume that, you know, if we had 5 points more of occupancy, we're gonna have more hourlies. We probably don't have them in every category, but overall, there'll certainly be some hours added. Got it. Thanks. Maybe one more, if you could just kind of rank the East Coast versus the West Coast in terms of desirable markets? You've talked about in prior times how you like the West Coast. That's changed a bit it looks like, given your asset sales. Maybe just maybe re-rank or discuss some of the major markets again and how you're thinking about them from supply, demand, regulation, and whatnot? Well, I think most markets, not all of them around the country, are gonna benefit over the next three to five years of having very limited supply growth, particularly the urban markets. There's relatively limited supply that gets added to the resort markets, certainly in the hotel or resort category, because it tends to be fairly restrictive from a zoning and approvals perspective. I don't think, first of all, I don't think we ever had a bias to the West Coast as markets. I think our bias was a risk-adjusted return attractiveness that brought us to a lot of those markets early on in the last cycle. I think that proved to be very successful. I think, you know, we have a list of 35 different risks that we look at in the markets that we're underwriting. That's one piece of it, but the return part depends upon what other people are willing to pay. It's hard to tell you we don't have a strategy that says we wanna be here, and we no longer wanna be here. It really is a set of dynamics that'll drive our decision-making, both on the, as I said earlier, on the disposition side, as well as on future acquisitions. Got it. Thank you. Thanks, Anthony. Thanks, Anthony. Thank you. At this time, I'd like to turn the floor back over to Mr. Bortz for closing comments. Thanks, Donna. Thanks everybody for participating. Sorry to keep you so long if you're still there. Hopefully you found it informative, and we certainly look forward to updating you in 90 days. Obviously, if you have further questions, feel free to give us a call. Thanks very much. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time, and enjoy your day.