Welcome to the RLJ Lodging Trust Q4 2022 earnings call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. If anyone should require operator assistance, please press star 0 on your telephone keypad. I would now like to turn the call over to Nikhil Bhalla, RLJ's Senior Vice President, Finance and Treasurer. Please go ahead. Thank you, operator. Good morning, and welcome to RLJ Lodging Trust 2022 Q4 and full year earnings call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Sean Mahoney, our Executive Vice President and Chief Financial Officer, will discuss the company's financial results. Tom Bardenett, our Chief Operating Officer, will be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated. Factors that may impact the results of the company can be found in the company's Form 10-K and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. As we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release. Please refer to the schedule of supplemental information which was posted to our website last night, which includes pro forma operating results for our current hotel portfolio for 2019, 2021, and 2022. I will now turn the call over to Leslie. Thanks, Nikhil. Good morning, everyone, and thank you for joining us today. We were pleased that lodging fundamentals strengthened throughout last year with significant improvement across all segments of demand, demonstrating the resiliency of the industry. Against this positive backdrop, we successfully executed on our key priorities, including capturing strong operating performance driven by the accelerating recovery in urban markets, successfully launching all three of our transformative conversions, including the Zachari Dunes on Mandalay Beach and the iconic The Mills House in Charleston, both of which join the Curio Collection by Hilton, and the Pierside in Santa Monica, which was rebranded as an independent hotel. Acquiring a high-quality hotel in Nashville, an attractive growth market. Further strengthening our balance sheet by addressing our 2023 maturities and exiting all COVID restrictions, and returning capital to our shareholders through an increased dividend and disciplined share repurchases. This successful execution has positioned us to realize incremental EBITDA from our embedded growth catalyst in 2023 and beyond. Underscores our ability to leverage the optionality our strong balance sheet provides. Turning to our operating performance. In the Q4, we saw sustained pricing power across our portfolio, outsized growth in urban markets, and continued recovery of business travel in addition to strong group booking activity. During the quarter, our hotels achieved 94% of 2019 RevPAR levels, driven by ADR that achieved 105%. Our performance was led by our urban markets, which benefited from improving corporate demand trends, increased citywide attendance, and a continuation of leisure demand, as well as the early recovery of international travel. Our urban hotels outperformed our overall portfolio, achieving 97% of 2019 RevPAR, driven by ADR, which achieved 107%, reflecting a sequential improvement. This outperformance was broad-based, with our hotels in markets such as Southern California, Atlanta, Boston, and Austin exceeding 2019 RevPAR, further validating our strong position relative to improving trends in urban markets. In terms of segmentation, the momentum in corporate travel that we saw throughout last year carried into the Q4, which achieved 70% of 2019 BT revenues, the highest since the pandemic. This represented an increase of 300 basis points from the prior quarter and an improvement of over one and a half times from the Q1. SME travel continued to be the main driver of corporate demand, while our larger core accounts from industries such as entertainment, energy, consumer goods, services, and aerospace saw increased demand throughout the quarter. We also saw strong production from small groups, which continued to contribute at elevated levels to our overall group mix. These positive trends drove pricing power as group ADR achieved 105% of 2019 for the quarter. Although booking windows were short, momentum and group demand remained strong, as demonstrated by our total in the year for the year bookings last year, which were over 30% higher than a typical year. As it relates to leisure, although trends returned to normal seasonality, demand remained healthy, an indication that consumers continued to overweight experiences in their spending decisions. Weekend ADR for our entire portfolio achieved 116% of 2019 during the quarter, improving 200 basis points from the Q3. These positive trends led our overall weekend RevPAR to achieve 107% of 2019 levels during the quarter. Urban leisure trends were especially robust, as demonstrated by our weekend urban RevPAR achieving 111% of 2019, led by ADR that achieved 118% during the Q4. Relative to the bottom line, excluding our three conversions, which are ramping, our portfolio achieved hotel EBITDA of over 91% of 2019 levels and margins that were only 128 basis points lower. This performance speaks to the efficiencies we have obtained in a high operating cost environment. Now turning to capital allocation. Our internal and external growth catalysts have created multiple channels to drive EBITDA growth throughout this cycle. With respect to internal projects, we are pleased with the relaunch of our three conversions and are seeing significant momentum. Specifically, The Mills House in the historic district of Charleston is off to a great start after completing a comprehensive reimagination of the entire hotel, including repositioning all food and beverage outlets and the transformation of the hotel's rooftop, pool, and bar. The hotel's repositioning and affiliation with Hilton's Curio Collection is driving significant ADR premiums, and early results are exceeding our expectations. The Zachari Dunes is taking full advantage of its transformative resort-wide renovation and its attractive beachfront location on the California coast. Additionally, we are benefiting from the enhanced operating model, which is driving meaningful out-of-room spend and savings of approximately $1 million from annual costs related to the elimination of comp services. We recently launched The Pierside Hotel in Santa Monica, which converted from a Wyndham following a transformative renovation of guest rooms and public spaces, and the addition of a new open-air F&B outlet. The hotel has a prime location at the entrance of the famous Santa Monica Pier, with sweeping views of the iconic Pacific Wheel. The repositioning will allow us to attract higher-rated experiential travelers to this irreplaceable location. The relaunch of these three conversions not only validates our ability to unlock the significant value embedded in our portfolio but also enhances the overall quality of our platform. We expect these properties to significantly exceed 2019 levels of EBITDA. This year, as they continue to ramp, and we remain confident in their ability to meaningfully exceed our initial underwriting, which supports our conviction in our ongoing value creation initiatives. Looking forward, we have tremendous optionality with one of the strongest balance sheets among publicly traded peers, which is allowing us to continue to pursue multiple channels of growth, such as additional brand repositionings. In 2023, we will build upon the successful execution of our recent conversions and are excited to announce two additional conversions, including the Wyndham Houston Medical Center, which is being repositioned as a DoubleTree by Hilton brand. This property is ideally located across from one of the largest medical complexes in the world. Given the initial ADR lift this property has already achieved following its soft launch, we are confident that an opportunity exists to capture significant incremental ADR lift and market share after completing a comprehensive renovation this year. Also in 2023, our Indigo in New Orleans will join the Marriott Tribute Portfolio. The hotel benefits from its prime location within the New Orleans famous Garden District and is expected to generate incremental ADR as a Tribute. The hotel's renovation is scheduled to begin later this year. With regard to external growth, we are continuing to build a pipeline of off-market acquisition opportunities. Given the current backdrop, where transactions are being constrained by limited lending capacity and all-cash buyers are preferred, our strong balance sheet is a significant advantage. That said, we remain highly disciplined given the current uncertain environment. Now looking ahead to 2023. While we acknowledge the overall macroeconomic uncertainty, with the continued acceleration of business travel, group booking momentum, and growing urban leisure demand, we believe that urban markets will outperform the industry on a relative basis. This will benefit our portfolio, which generates over two-thirds of EBITDA from these markets. With respect to our 2023 outlook, in general, we expect ADR to remain healthy in all segments, while demand growth across each segment will differ. We expect leisure demand to remain above 2019 levels, with seasonality continuing to normalize. We expect urban leisure to see stronger performance due to continuation of leisure demand from hybrid flexibility. Business transient recovery should continue to improve during 2023, with demand from larger corporate accounts increasing, which we are already seeing. Group will remain strong as citywide attendance increases and more citywides are held in key markets such as San Francisco, Boston, and San Diego. Additionally, we expect small group to continue to see elevated contribution levels. We remain encouraged by the healthy booking activity since the beginning of the Q4, where we booked over $55 million in group revenues, with approximately 70% related to 2023. This strong booking activity allowed us to enter 2023 with our group booking pace at 76% of 2019. Finally, inbound international travel should improve throughout the year, which will further benefit urban markets. Overall, we expect the strongest growth during the first half of the year due to easier comps. We have already seen this in January, which achieved year-over-year RevPAR growth of 43.5%, benefiting from improving corporate business travel, strong attendance in citywides, such as J.P. Morgan Healthcare Conference in San Francisco, and continued pricing power. February is predicted to see an increase of over 20% from last year. Given these trends, we believe our RevPAR and hotel EBITDA should increase over 2022 throughout the year and achieve performance ahead of the industry. Our confidence in our growth profile is supported by our favorable footprint and our unique growth catalyst. As we look at the overall cycle, our outsized EBITDA growth will come from our concentration in urban markets, which have additional run room for growth, our high quality portfolio benefiting from many lifestyle properties that have 7 day a week demand locations, ramping of our 4 high quality acquisitions which are pacing ahead of our underwriting, completion of our margin expansion initiatives, and incremental growth from embedded catalysts, including the ramp of our 3 recently completed conversions and our 2 newly announced projects and our pipeline of future opportunities. Our overall positioning will be enhanced by our strong balance sheet, which provides significant optionality to drive growth while also driving shareholder returns. Our balance sheet provides valuable liquidity to mitigate risk during the current macroeconomic uncertainty. I am incredibly proud of the hard work our team has done over the past several years in not only successfully navigating one of the most challenging periods in the history of the lodging industry, but also positioning RLJ to take advantage of multiple channels of growth to maximize shareholder value. I will now turn the call over to Sean. Sean. Thanks, Leslie. To start, our comparable numbers include our 96 hotels owned throughout the Q4. Our reported corporate adjusted EBITDA and FFO include operating results from all sold and acquired hotels during RLJ's ownership period. We were pleased with our Q4 results, which were in line with our expectations. Q4 portfolio occupancy was 66.9%, which was 89% of 2019 levels, and ADR was $190, achieving 105% of 2019. Specifically, as previously mentioned, Q4 ADR in our urban markets was the highest with respect to 2019 as urban markets continued to benefit from pricing power. Q4 ADR exceeded 2019 levels by approximately 20% or more in a number of key urban markets, including San Diego, Manhattan, Tampa, Pittsburgh, and New Orleans. Our Q4 RevPAR was 94% of 2019 levels, which was in line with the Q3. Monthly RevPAR achieved 95%, 91%, and 96% of 2019 levels during October, November, and December, respectively. November results were impacted by difficult comps to 2019 due to an additional travel week in 2019 as a result of the later timing of Thanksgiving compared to 2022. December re-accelerated, which was primarily driven by our urban markets such as New York, Washington, D.C., Tampa, and New Orleans. Our Q4 operating trends led our portfolio to achieve hotel EBITDA of $87.6 million, representing 87% of 2019 levels, and hotel EBITDA margins of 29%, which was only 229 basis points below the comparable quarter of 2019. For the full year 2022, our RevPAR was $129.61, representing 89% of 2019 levels, and hotel EBITDA was $370 million, representing approximately 83% of 2019 levels, which underscores the incremental EBITDA potential in our urban-centric portfolio. This year has started off well with January RevPAR increasing by approximately 44% from 2022, with occupancy of nearly 60% and ADR of approximately $188. Turning to the bottom line, our Q4 adjusted EBITDA was $79 million and adjusted FFO per share was $0.33. While demand remained strong during the Q4, our operating costs continued to normalize. Underscoring the benefits of our portfolio construct and tangible results of the initiatives to redefine the operating cost model, our total Q4 and full year hotel operating costs were below 2019 by approximately 3% and 8% respectively. We are proud of our ability to maintain operating costs below 2019. As a frame of reference, the aggregate core CPI growth rate since 2019 equates to approximately 14%, which is meaningfully above our Q4 operating costs, which remained approximately 3% below 2019. There are many factors that influence these positive results, with the most significant contributors being the recent successful restructurings of many of our third-party operating agreements and success in reducing property taxes, both of which we expect to continue benefiting our operating costs. Q4 wages and benefits, our largest operating cost at approximately 40% of total costs, remain approximately 5% below 2019 levels. Our portfolio remains better positioned for the current labor environment due to the need for fewer FTEs given our lean operating model, smaller footprints, limited F&B operations, and longer length of stay. During the Q4, our hotels continued operating with approximately 20% fewer FTEs than pre-COVID. Overall, while the labor market remains, tightWe are encouraged that the hiring environment is showing signs of improvement, and we believe that the inflationary pressures on hourly wages are stabilizing. We remain active in managing our balance sheet to create additional flexibility and further lower our cost of capital during 2022. These accomplishments include entering into a new $200 million term loan to address 100% of our 2023 debt maturities and proactively address $100 million of our 2024 debt maturities. Exiting all restrictions under our corporate credit facilities, which lowered our consolidated weighted average interest rate that resulted in annual interest savings close to $9 million. Exercising extension options on $425 million in maturing debt and maintaining an undrawn corporate revolver. The execution of these transactions is a testament to our strong lender relationships and favorable credit profile. Our current weighted average maturity is approximately four years, and our weighted average interest rate is 3.6%. We are benefiting from 85% of our debt that is either fixed or hedged under valuable swap agreements, which protects us in the current interest rate environment. We continue to maintain significant flexibility on our balance sheet with 81 of our 96 hotels unencumbered by debt. Turning to liquidity, we ended the year with approximately $481 million of unrestricted cash, $600 million of availability on our corporate revolver, and $2.2 billion of debt. Turning to capital allocation, we were active under our $250 million share repurchase program last year, where we repurchased approximately 4.9 million shares for $57.6 million at an average price of $11.75 per share, including $7.6 million in shares repurchased during the Q4 at an average price of $10.66 per share. Far in 2023, we've repurchased $0.5 million of stock at an average price of $10.49 per share. Additionally, given the embedded growth in our portfolio, our lean operating model, and the strength of our balance sheet, our board recently authorized the increase of our quarterly dividend by 60% to $0.08 per share starting with the Q1, representing the second dividend increase since last summer. We continue to view dividends as an important component of the total return we seek to provide investors. The recent increase validates our ongoing commitment to enhancing shareholder returns. We will continue making prudent capital allocation decisions to position our portfolio to drive results during the entire lodging cycle, while monitoring the financing markets to identify additional opportunities to improve the laddering of our maturities, reduce our weighted average cost of debt, and increase our overall balance sheet flexibility. Based on our current view, we are providing Q1 guidance that anticipates a continuation of the current operating and macroeconomic environment. For the Q1, we expect comparable RevPAR between $133 and $137, comparable hotel EBITDA between $85 million and $91 million, corporate adjusted EBITDA between $76 million and $82 million, and adjusted FFO per diluted share between $0.29 and $0.33. Our outlook assumes no additional acquisitions, dispositions, refinancings, or share repurchases. Please refer to the supplemental information, which includes comparable 2019 and 2022 quarterly and annual operating results for our 96-hotel portfolio. Finally, we estimate RLJ capital expenditures will be in the range of $100 million to $120 million during 2023. Thank you, and this concludes our prepared remarks. We will now open the line for Q&A. Operator? Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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. Our first question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question. Great. Thanks. Good morning, everybody. I realize you guys didn't provide, full year 2023 guidance and don't, have a crystal ball on how, economic growth's gonna shape up for this year. Can you just share based on the citywide calendar and, some of the various demand generators you see that of today, through the balance of the year, how we should maybe think about, generally speaking, the cadence of RevPAR growth through the year? Sure. Good morning, Austin Wurschmidt. Let me frame for you kind of our general expectations. You know, we expect our performance to correlate to the performance of urban markets in 2023. As you know, urban markets are expected to outperform the industry by 300-400 basis points in 2023. We expect year-over-year growth each quarter, 2023 versus 2022. Clearly, Q1 is gonna have the most significant growth, which is well known. We expect the other quarters to moderate but to remain positive year-over-year. In general, we expect to build upon a trajectory we had in 2022, with, some growth quarter-over-quarter. Got it. You know, second, with the upside you guys continue to highlight across the portfolio from occupancy, the ability to drive ADR, presumably as occupancy improves, maybe most notably within that, urban, portion of the portfolio. When you marry that with, Sean, I think you said stabilizing wages, and other costs, I mean, how do we think about the operating leverage you have today and the margin upside potential without, asking you to put a timeline around that? Sure. Thanks, Austin. I think, I'll start with just, talking about quickly the advantages of our model, right? Give the smaller footprints, we're room-centric, longer length of stay hotels. With that comes less labor relative to, say, full-service hotels. We're at about 40% of our total operating costs, labor represents versus roughly 50% for the full-service hotels. When you look, then drill a little deeper into RLJ-specific catalysts, right? We've got, the initiatives that we talked about, the prepared remarks with respect to the operating agreements and property taxes. In addition, we have the benefit of the COVID era synergies, particularly around sales and marketing and how we've successfully complexed hotels, all of which will help us on a relative basis. What does that mean in total is that we expect if the baseline for full-service hotels to get flat RevPAR is roughly 8% RevPAR, which is sort of the market, our conventional wisdom there is we expect plus or minus 200 basis points lower than that for our portfolio to have break-even margins. Hopefully that helps you think about the relative positioning. Yeah, that's very helpful. Thanks for the time. Thank you. Our next question comes from the line of Michael Bellisario with Baird. Please proceed with your question. Good morning, everyone. Morning, Mike. Leslie, you talked about a bunch of the levers that you could pull this year, and I know you can sort of do all of them given the strength of the balance sheet. Maybe what would be at the top of the list today in terms of incremental spending as we sit here today? Mike, obviously, you saw us be very active last year, and we demonstrated our ability and willingness to leverage the optionality in our balance sheet. You know, as you mentioned, clearly our balance sheet liquidity gives us the optionality to have, to execute multiple levers at the same time. You know, if we look at the fact last year we were active on buybacks, we did it on a leverage neutral basis with disposition proceeds. We were active from a standpoint of internal investments, and you saw us deliver our conversions, and we're poised to deliver 2 more. We also were active, in the right window from an acquisition perspective, and entered the growth market of Nashville, and we raised our dividends. It's obviously pretty clear based on how the volatility in the market is that buybacks remain the most attractive, but we're gonna continue to do that on a leverage neutral basis. We're also gonna continue to monitor the backdrop in which we find ourselves in to find the right window. All of these levers have benefits. The key thing is to remain disciplined and focused on finding the right window to exercise those options, Mike. Got it. Understood. On those 2 new conversions that you just announced, could you share, if you could, the total cost of each project and how you're thinking about incremental IRRs or returns from those investments? Sure, Mike, this is Sean. On the, we haven't talked, specifically about what the aggregate costs are for those conversions. When I think about the incremental to sort of a normal run rate, renovation, it's somewhere in the incremental cost of, sort of $2 million-$4 million of incremental capital for each one of those renovations. Or sorry, conversions in addition to sort of a normal cycle renovation. From a return perspective, I think the returns we're expecting are similar to what, or similar attributes to what we have on the first conversion, which is we expect to have rate-driven gains as a result of the change of the brand affiliation. Now, we expect the unlevered IRRs to likely be lower than the first set of conversions but still be well into the low double digits. It's a function of, the New Orleans market and the Houston market relative to Charleston and Santa Monica, and those, they're just higher rate of markets. We still expect those to be, significant rate, ADR gains, and significant returns. It's just a function of sort of where they are. Attractive, and likely be layered in over the next, call it 1-2 years is when we, post-conversion, as we expect them to ramp up. Similar to the first set, you'd expect the benefits to be earlier in that 1-2 year ramp-up period because of the benefits of the brand reaffiliation. Mike, just as a frame of reference, the first conversions that we did, we expect the returns that are well north of 40%, and that was, when we were writing pre-COVID, underwriting pre-COVID. We now expect to materially exceed that. While we expect it to be lower, I mean, keep in mind, that's the relevant benchmark to think about. Got it. Just last one for me on the acquisition pipeline that you referenced. It sounded a little more optimistic maybe than you have recently. Are you seeing more deals, or has pricing come in on the deals that you were previously looking at where any particular deal might pencil better today than it did, say, 90 or 120 days ago? Yeah, Mike, I think the optimism you heard in my voice is just recognizing that in an environment where transactions are constrained and the debt market, while it's loosening, is still relatively tight, all cash buyers are gonna have an advantage. I'm excited about our balance sheet and what it'll provide. From an overall transaction perspective, deals remain, still relatively low. What I would say is that what's happening is that assets are not being taken out from the market on a broad basis. What's happening is that sellers and brokers are calling buyers who they believe can actually execute on a transaction, and we're receiving some of those inbound calls because of our balance sheet strength and capability of actually, closing. I'm encouraged by that. I'm also encouraged by the fact that given the backdrop of the debt market, and where interest rates sit today, also how expensive caps are, and this looming CapEx that some sellers will have, I'm encouraged that there'll be more willing sellers as we move throughout the year. I'm just encouraged by the trajectory, not necessarily what I'm seeing immediately today. Understood. Thanks for that color. Thank you. Our next question comes from the line of Floris van Dijk with Compass Point. Please proceed with your question. Thanks, guys. Wanted to follow up on the question basically about the capital allocation. You've got a lot of financial flexibility with the cash and the line, obviously. I guess what people are trying to get a sense of is what portion of your liquidity could people assume to be spent on share buybacks versus some of the newer acquisitions versus some of the other potential rebranding of high-profile assets like the San Diego Renaissance, as well as some of the, more maintenance repositioning like the Hilton Cabana? Thanks, Floris. This is Sean. I think when you think about the liquidity that we have, we appreciate the comments. You know, we are, happy with our liquidity position at $1.1 billion and, a little under $500 billion of that is cash. I think, you know, how we will specifically allocate that is based on what the relative return is on the opportunity. As Leslie mentioned, share purchases are attractive today, and you would expect us, to follow a similar tact that we did in the last year or so, is that we will be opportunistic on deploying proceeds in the shares. The acquisition market, we also showed that we were, that we were active when the market was appropriate. You know, we think that the liquidity provides us with a first-mover advantage when the market reopens to get, access to the most attractive deals as a preferred buyer, so I think that is certainly an option. Then thirdly, we continue to have a pipeline of internal opportunities, the two conversions we talked about this morning, as well as, incremental ROI initiatives. So, the answer is, we have the liquidity to do all of them. We don't specifically take that cash and allocate it between the two. We look at it more on a long-term basis, because our portfolio is generating free cash flow, so liquidity is increasing over time. I think you would expect us to pull the right lever at the right time as opposed to be more regimented about, specific dollars. Maybe as a follow-up, obviously, your current stock still is below the price where you bought back stock in 2022. Would it be fair to assume that when you could, your view on the company obviously presumably hasn't changed, that we could see certainly a level equal to or greater than the buybacks that you did, during the past year? Yeah, I'm not gonna put a number on it, but you would expect us, we continue to view share purchases as attractive. You know, our house view continues to be that we're gonna do it on an opportunistic basis and a leverage neutral basis. The volume and cadence of share purchases is gonna be based on, obviously, how we see the year playing out, from macroeconomic perspective, as well as, where the opportunities present relative to where our stock is priced. Sean, maybe one more if I can. You guys have a lot of exposure to San Francisco, if you include Silicon Valley and Oakland as well. Maybe if you can give some comments on what you're seeing in that market and what kind of growth potential lies ahead for you there. Yeah, I think I'll start, and I'll let Tom, add some color as well. You know, what I would say, Floris, is that, when we look at San Francisco, we're encouraged by what we're seeing this year so far. We're seeing that the year-over-year growth relative to 2022 is gonna be meaningful. We acknowledge, though, that San Francisco, CBD in particular, as a percent of 2019 is gonna lag. We are, encouraged that 2023 citywide are 2x in 2022, that when you look at the back half of the year on citywides for San Francisco, they're actually above 2019 levels for the Q3 and Q4. We're starting to see, international demand obviously be at very early, but we're seeing positive signs associated with that. The momentum that we're seeing in San Francisco is encouraging. You know, we ended the Q4, the full year at 2x, where we started at, as a percentage of, 2019. We think the momentum is continuing to build in San Francisco, but we acknowledge that it's gonna, be a slower build, overall. We do see that the markets that are outside of the CBD are moving at a faster pace than CBD San Francisco. I would add just a couple things, and that is, through the RFP season, we were focused on trying to get average rate lift. Over the last few years, it was just rolling over rates. We felt good about the negotiations specifically for that market with many of the demand generators, Microsoft, Accenture, Amazon, Salesforce, Google, Cisco, all are receiving, average rate increases, which are gonna give us a nice backdrop in regard to continued movement and recovery compared to 2019, in addition to growth over 2022. Thanks, guys. Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from line of Gregory Miller with Truist Securities. Please proceed with your question. Thanks. Good morning, all. First question. One trend that has arisen in recent months is soft business travel for a full week after a major holiday, such as Thanksgiving. I'm curious if you think such trends are likely to continue in 2023. Good morning, Greg. I would say always the holiday is a unique timeframe where people are thinking about other things outside of business travel. What I would say is when you match up the calendar and you look at 23 versus 2022, we think that there's gonna be some growth in some of those weeks, depending upon how the holiday falls. You know, examples of that would be, the date of Halloween or, what we've seen already in January and February, where we had Martin Luther King, we had Presidents' Day. It was an elongated weekend, so again, that was on the weekend itself. Then immediately on Tuesday, Wednesday, we ramped back up on both those weeks when it came to BT. I think it's more around the holidays, as in Thanksgiving and Christmas, is where it's a little bit more unique on BT, and I don't think it's a norm that you're gonna be able to look at in 23 versus 22 based on what you might have seen in Q4. Then, you know, one thing to add, Greg, the way we're looking at it, we are seeing that same trend for the specific weeks. The way we're thinking about it is you really have to look at the weeks surrounding the holiday too and look at those two weeks in aggregate. We think net-net because of the incremental leisure, it's a positive, when you look at the aggregate of the two weeks relative, to 19 because of the incremental leisure travel through there, as well as the rate that we've seen pick up during those otherwise slow times in past years. I would just bolt onto that, Greg, and just say that our portfolio, given the way it's built, and the fact that we are in seven-day-a-week demand markets where you live, work, and play, that we're gonna benefit from that shift no matter what happens. What you're not seeing on that day after the holiday, you're seeing on Thursday nights, and we're capturing that as well. I would say that our portfolio, more than others, is built to capture whatever movement in the new normal looks like. Okay. I appreciate all that. As my follow-up, at the ALIS conference last month, when some of you and your colleagues were on the stage, you and your team spoke very positively to soft brands as a growing presence. Your portfolio today is still primarily comprised of hard brands. If I were to look at your portfolio 5-10 years from now, roughly what percentage of your portfolio would you ideally like to see as soft brands, even if that does mean some disposition activity? Yeah, look, Greg, I would, say that I don't have a number. You know, I think it's important to think about the characteristics of an asset as opposed to actual physical label of a soft brand versus a hard brand. I go back to when I point to who, the asset that we bought in Atlanta. It's a 20-story, rooftop bar, sky lobby Hampton Inn, right? It functions just like, a lifestyle, asset because of its construct, because of the finishes and who it attracts and where it sits. So, it's less about hard versus soft and more about the dynamics of the asset. If you think about what we've acquired, you think about the conversions that we've done, all of those would mean that it's gonna be a higher percentage, overall, but I don't have a specific number for you. Okay. Very fair. Thank you very much. Thank you. Once again, it's star one to join the question queue. Our next question comes from the line of Chris Darling with Green Street. Please proceed with your question. Thank you. good morning, everyone. I just wanna follow up on some comments you made earlier around staffing. I'm curious, are you more or less, or your operators more or less running at the right headcount today, relative to the level of demand you're experiencing? Do you think there's more work to be done in terms of hiring? I would generally say that, and we've said this before, that we generally expect to settle out at about 85% of 2019 levels from an FTE perspective. We ended 2022 at 75 on a full year basis, but we ended the Q4 at 79. We're nearing that. We do think that the labor market has improved from a hiring perspective. It's still not there yet, but we think that we are nearing, kind of where we think we've stabilized at. I would also say, again, that goes back to why we expect to have a more favorable margin profile. Again, kind of leaning back into Sean's earlier comments around, our expense management and how we're able to be under 2019 levels. Yeah, Chris, the driver of that incremental, 500 basis points roughly is gonna be as demand returns. The portfolio is sitting at, for the year at 89% of 19 levels of occupancy. That's the natural progression. As we, sell more rooms, you would expect that to normalize. Got it. It's very helpful. You know, just to follow up there, one of your peers has discussed the use of contract labor, maybe more elevated than it's typically been in the past. Just curious what your experience has been and how that might factor into the margin discussion as well? Yeah, I would say that everybody across the industry is experiencing that, given the tight labor market. I don't think there's anybody who doesn't have higher contract labor today. You know, as the labor market improves, hopefully that will subside and come down. You really have to look at it from a standpoint of not only the wage, but also compare that to the fact you have. When you hire somebody, you're not only paying wages, but you're paying benefits, et cetera, et cetera. On a relative basis, it's somewhat in line, in aggregate. The last thing that I would add to that is it really comes down to productivity. When we look at how we size up, when we look at hours per occupied room and the workforce that we're using, we wanna make sure that our productivity is in line. That we feel very good about in comparison to, just 2019 versus where we're at today. We're still below on an hours per occupied room. Lastly, I would say that because we're receiving more applicants and retention is better, we're really having our managers invest in tools and resources with the staff that we do have to make sure that productivity and morale is an all-time high. Appreciate it. Thank you. Thank you. Our next question comes from line of Anthony Powell with Barclays. Please proceed with your question. Hi, good morning. This question on urban leisure, which you've talked about a lot on this call, where is that versus 19 in terms of either room rate, room demand, and just curious how much more just natural recovery is left in urban leisure? Yeah. I'll kick it off, Anthony. Good morning. Good morning. urban leisure in the Q4 was 111% of RevPAR compared to 2019. The primary driver of that was we were at 118% on the ADR side. Real movement above and beyond our portfolio numbers that we shared around Q4. You think about weekends have been real positive compared to 2022, with RevPAR over 106% and ADR 113%. What's interesting about urban leisure, though, the dynamics that Leslie Hale was talking about, who's coming to the hotels in regard to where they're staying. Many times we're seeing Thursday night as a check-in day. There's a lot of activity around urban leisure with concerts and venues, as well as all the things that they might have in their backyard as far as demand generators around corporate universities and even medical. The locations as well as the desire of the consumer going to those locations is really what is driving that. That's benefiting us because urban is gonna be the significant growth 2023 versus 2022. Got it. It sounds like you believe that there's still more year-over-year growth in urban leisure, whereas maybe in resort leisure, there could be some more moderation. Is that a fair comment? That is a fair comment. We think that urban leisure is still evolving as the new normal shakes out, Anthony. I think what Tom is trying to say is that where our assets are situated and the nature of our assets, it's easy to flip from that BT experience into the weekend leisure. We think that that's still evolving, and there's more room there. We're seeing those trends that Tom talked about carrying into January and, in the first quarter. We're actually, net positive on the incremental, side. I think overall for us, we think that our portfolio is gonna see RevPAR growth that's driven not by just occupancy but also rate this year. We think there's room on the BT side. As it ramps, we think that group will continue to be strong, and we think urban leisure, is gonna continue to have, on a relative basis, growth there as well. Thanks. Maybe one more. Does the experience with the conversions doing more, I guess, upper upscale brands, soft brand, do you think will do more, I guess, upper upscale hotels, whether they're soft branded boutique, hard branded over time, versus kind of the more urban, upscale, less rooms focused product that-? Yes. you've been known for historically? Yeah. What I would tell you is that our team does an incredible amount of work to determine what is the right brand for an asset, and to think about, what's gonna perform well. For example, when we think about the two announcements that we made here, one, is moving to a DoubleTree, and that was the right brand for that asset, for where it sits, what the demand drivers are. You know, we can't sit here today and say we're moving in an X direction or not. We're looking at the market, we're looking at the physical assets, and we're determining what's gonna perform best there, and then we'll achieve the greatest returns. That's the way to think about it. There's a tremendous amount of underwriting that goes into this. We have a very expensive experienced asset management team and a fantastic design and construction team that's executing on these conversions. I don't wanna give this impression that we just picked the north, true north. We are analyzing, studying, and determining and working with the relevant brands to make sure that we've got the right asset, right brand for the right asset. All right. Thank you. Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Ms. Hale for any final comments. I would like to thank everybody for joining us today, and we look forward to delivering, positive results for the year, and we look forward to seeing many of you all, at the Citi conference next week. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.