Summit Hotel Properties CEO Sees Travel as Long-Term Secular Growth Industry

Bigger picture, I think we still feel very good as we fast forward through this period of uncertainty. We believe travel is a secular winner and we think hotels are going to be a big beneficiary of that going forward, once we work through some of this policy uncertainty that's clouded the markets in the near term.

Thank you.

You know, I think we're generally in a period of a lot of uncertainty today. I would say that we were really encouraged with what we saw from a demand perspective in January and February. We were up a little over 3% in those two months combined. Things started to turn in March and that was largely driven by a pullback in government spending. And I think between what we've seen with DOGE and then some of the tariff related noise and the policy uncertainty, we have seen a modest slowdown in demand. Most of that has been concentrated, as I said, in government sectors. We've actually been pretty encouraged in terms of the stability of what we've seen in negotiated. Leisure has been generally flattish. That tends to be the most durable demand segment for us in periods of economic uncertainty and we would expect that to continue. I think we'll see a little bit less inbound international travel over the summer. I think we will offset that with better domestic drive-to-leisure travel over the summer. Bigger picture, I think we still feel very good as we fast forward through this period of uncertainty. We believe travel is a secular winner and we think hotels are going to be a big beneficiary of that going forward, once we work through some of this policy uncertainty that's clouded the markets in the near term.

Yeah, well, we've done a lot of really good work on the balance sheet and we are in great position. Just this year we did a new delayed draw term loan. We have a large convertible debt financing that matures in February of next year. It's a 1.5% coupon, an extremely attractive piece of paper. And so we put in place a new delayed draw term loan that allows us to keep the convert out through its maturity date. We've eliminated the overhang from the maturity, but we'll be the beneficiary of that lower coupon rate through the maturity. We also just announced a new secured financing, a $50 million secured financing to refinance our existing mortgage on our AC element in the Miami Brickell market. So the balance sheet's really in good position. We have no maturities really through 2027. We have over $300 million of liquidity. We feel really good about how we're positioned. It's given us the flexibility and capacity, frankly, to buy back some stock while we've seen some near-term dislocation in the pricing of lodging rates.

Yeah, look, we generally think of ourselves as being market agnostic. We believe we're looking for markets and opportunities where there's mispriced risk or we believe that we have a different view and ability to add value or see a supply-demand picture differently than other people in the market. If you look at what we've bought since the pandemic, we've bought over a billion dollars of assets. A lot of that was concentrated in the Sun Belt. I think immediately coming out of the pandemic, we saw better demographic patterns, corporate relocations, people migration into some of these Sun Belt markets. We've been very active in some of the mountain markets, which are really high barrier to entry markets, very difficult to build new supply in. But our last two acquisitions, we bought an asset outside of Boston, an asset outside of Washington DC. Urban markets, kind of submarkets of gateway city markets where we felt like the better growth profile in the near term has been in urban markets as business travel recovers, which has lagged in the recovery, and that has provided us a little bit more of a better growth profile going forward. So we try to be market agnostic, opportunistic around where we see value and better upside. And I think we've got a good track record of that coming out of the pandemic and allocating capital accordingly.