Summit Hotel (INN) Earnings Call Transcript

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DATE

Thursday, Feb. 26, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Jonathan P. Stanner
• Executive Vice President & Chief Financial Officer — William H. Conkling

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TAKEAWAYS

• Same-Store RevPAR (Q4) -- Declined 1.6% as government shutdown and lower government/international demand created headwinds, while excluding those segments, year-over-year RevPAR grew by 60 basis points.
• Pro Forma RevPAR Index (Q4) -- Improved 220 basis points to 117, indicating market share gains and surpassing post-pandemic highs in many markets.
• Portfolio Asset Sales -- Three non-core hotels sold in and just after Q4 for a combined $51,300,000 at blended capitalization rates of 4.3%-6.7%, generating proceeds and removing $12,600,000 of near-term capital expenditures; the sold assets had a blended RevPAR of $89, nearly 30% below the pro forma portfolio.
• San Francisco Performance (Q4) -- RevPAR grew over 40% year over year, boosted by citywide conventions and event-driven leisure demand.
• Orlando RevPAR (Q4) -- Increased 9%, supported by group and leisure growth from the new Epic Universe Park opening.
• South Florida Performance (Q4) -- RevPAR rose 4%, with Oceanside Fort Lauderdale Beach showing RevPAR, total revenue, and gross operating profit gains of 9%, 39%, and 53%, respectively.
• Non-Rooms Revenue -- Grew 9% in Q4 and 5% for the full year, driven by higher food, beverage, and other ancillary streams including parking and amenity fees.
• Adjusted EBITDA (Q4/Full Year) -- $39,700,000 for Q4 and $174,800,000 for the full year, reflecting benefits from lower interest expense and reduced share count.
• Expense Management -- Pro forma operating expenses increased 2% year over year, with contract labor down nearly 9% and turnover rates falling 24% from year-end 2024.
• 2026 RevPAR Guidance -- Expected growth range is 0%-3%, primarily driven by average daily rate gains; first quarter projected to be the toughest due to difficult comparisons and weather disruptions.
• 2026 Adjusted EBITDA and FFO Guidance -- $167,000,000 to $181,000,000 in EBITDA and $0.73 to $0.85 per share in adjusted FFO.
• Dividend -- $0.08 per common share quarterly, annualized to $0.32, representing a 7.7% yield with a modest payout ratio versus trailing adjusted funds from operations.
• Capital Expenditures -- $75,000,000 invested in 2025 ($63,000,000 pro rata); 2026 guidance is $55,000,000–$65,000,000 pro rata, signaling capex normalization after pandemic deferrals.
• Balance Sheet Maturity Extension -- $175,000,000 delayed draw term loan fully drawn post-year-end to retire $288,000,000 in convertible notes, with no maturities until 2028; average interest rate stands at 5.5% with nearly four years' average maturity.
• World Cup Exposure -- Up to 60% of matches in domestic host markets touching a third of the portfolio; company expects a 50–75 basis point annualized benefit to RevPAR from the event.

SUMMARY

Summit Hotel Properties (NYSE:INN) reported sequential improvements in key operating metrics, with particularly strong RevPAR growth in core markets such as San Francisco and Orlando. Significant capital recycling through targeted asset sales produced meaningful liquidity enhancements and removed low-performing hotels from the portfolio. Labor cost controls and productivity improvements resulted in tangible reductions in contract labor reliance and employee turnover, further aiding profitability. Shareholders received an annualized dividend yield of 7.7%, while 2026 operational guidance calls for flat to modest RevPAR and adjusted FFO growth on normalized capital expenditure plans and stabilized margins.

• Stanner said, "At the midpoint of our range, we are probably not too far off of where most industry forecasts are for the year," but identified Fort Lauderdale, Asheville, San Francisco, South Florida, and Orlando as company-specific tailwinds beyond industry trends.
• Incremental property tax is forecasted to be a 25 basis point headwind to margins, with management projecting flat to down 100 basis points for 2026 full-year margin versus last year.
• Conkling noted preferred equity distributions (Series E, F, Z) are forecasted at $18,500,000 for 2026.
• The GIC joint venture is structured so that net fee income offsets roughly 15% of corporate G&A expense, excluding potential promote distributions.
• Refinancing activity increased pro rata interest expense guidance by $9,000,000 for 2026, due to conversion from convertible notes to a floating-rate term loan.
• Pay-for-breakfast testing at Hyatt Place, referenced by Stanner as successful to the bottom line, could provide a margin lift pending wider rollout.

INDUSTRY GLOSSARY

• RevPAR: Revenue per available room, a key performance metric in the hotel sector reflecting both occupancy and pricing.
• ADR: Average daily rate, the average revenue per paid occupied room in a given period.
• FFO: Funds from operations, a REIT-specific measure of operating performance, excluding gains or losses from property sales.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, an indicator of overall profitability.
• Capex: Capital expenditures, funds used by a company to acquire or upgrade physical assets such as property, buildings, or equipment.

Full Conference Call Transcript

Jonathan P. Stanner: Thank you, Kevin, and good morning, everyone. Thank you for joining us today for our fourth quarter and full year 2025 earnings conference call. As I reflect on last year, I am pleased with how we executed in what was a complex and challenging operating environment. Coming out of the first quarter, we understood the year would be defined by uncertainties surrounding macroeconomic conditions, demand visibility, and certain policy-related headwinds, and I am proud of how our teams responded.

Throughout the year, we remained disciplined and focused on the aspects of the business we can control: growing market share, managing expenses, strengthening the balance sheet, allocating capital prudently, and investing in our portfolio to best position Summit Hotel Properties, Inc. for long-term shareholder value creation.

On today's call, we will provide details on our fourth quarter and full year 2025 results, offer our perspective on the current lodging environment and our outlook for 2026, and highlight our recent capital recycling and balance sheet activities. In the fourth quarter, we experienced an encouraging positive inflection in demand compared to 2025, as RevPAR trends improved sequentially by over 200 basis points, resulting in a fourth quarter same-store RevPAR decline of 1.6%. Demand patterns generally stabilized throughout the quarter, despite the incremental pressure created by the October government shutdown.

In particular, midweek results reflect stable underlying group demand and growing corporate travel, which allowed us to increase rates in each of these segments for both the fourth quarter and full year. Government and international inbound demand, which combined represent approximately 10% to 15% of total room nights across our portfolio, continued to create meaningful headwinds in the quarter, declining approximately 20% on a blended basis. Excluding these two segments, our fourth quarter RevPAR grew by 60 basis points year over year, reflecting the overall relative strength of other segments. These are encouraging trends as we move into 2026, particularly with easier government demand comparisons on the horizon.

Our teams continue to do a terrific job growing market share, with our fourth quarter RevPAR index improving by 220 basis points to an index of 117, reflecting the high-quality nature and locational strength of our portfolio, complemented by our expertise in revenue management. We are approaching, and in many markets surpassing, all-time post-pandemic market share highs across our portfolio. For the full year, same-store RevPAR declined 1.8%, driven predominantly by lower average daily rates as demand shifted towards lower-rated segments starting late in the first quarter when the significant reduction in government demand first began to materialize.

While weakness in government demand and international inbound travel has been well documented, it is important to emphasize that demand patterns in other segments have been stable, and we are expecting year-over-year results to improve as comparisons ease starting in the second quarter.

From a capital allocation perspective, we continued to execute on our disciplined capital recycling strategy during the fourth quarter, closing on the sale of two non-core hotels: the 107-room Courtyard Amarillo Downtown, which was owned in our joint venture with GIC, and the wholly owned 123-room Courtyard Kansas City Country Club Plaza. These dispositions generated aggregate gross proceeds of $39,000,000, reflecting a blended yield of 4.3% based on trailing twelve-month net operating income after consideration of approximately $10,000,000 of foregone near-term capital expenditures. In addition, last week, we closed on the sale of the 122-room Hilton Garden Inn in Longview, Texas, another noncore asset owned in our GIC joint venture. The $12,300,000 sale price represented a 6.7% capitalization rate based on the estimated trailing twelve-month net operating income after consideration of approximately $2,600,000 of foregone near-term capital expenditures.

These three assets had a blended RevPAR of $89, a nearly 30% discount to the current pro forma portfolio. Since 2023, we have sold 13 non-core hotels, generating approximately $200,000,000 of gross proceeds and eliminating nearly $60,000,000 of anticipated capital expenditures. And an approximate 4.6% net operating income capitalization rate. These sales reflect our disciplined approach to monetizing lower-growth, capital-intensive assets and redeploying proceeds to enhance liquidity, reduce leverage, and support higher-return uses across the portfolio.

As we turn to 2026, we believe the fundamental setup for our industry is improving, and several company-specific tailwinds position Summit Hotel Properties, Inc. for a positive year. We expect demand trends broadly to continue to improve, and year-over-year comparisons to ease as we move through the year. Historically low levels of new supply support incremental demand growth translating into both occupancy and rate gains in 2026 and for the foreseeable future. While we remain mindful of near-term volatility, we believe these trends create a more constructive backdrop for top line growth in 2026. With that context, we are introducing our initial outlook for the year.

William will walk through the details of our ranges later in the call, but broadly speaking, our guidance reflects modest top line growth supported by improving fundamentals, disciplined expense management, and the cumulative benefits of our capital reinvestment and recycling efforts, which have enhanced our portfolio and strengthened the balance sheet.

The company is poised to benefit from several special events in 2026, notably the FIFA World Cup. We have exposure to six World Cup host markets, which together account for nearly 60% of the matches played domestically, providing a unique demand tailwind in June and July. In addition, convention and special events calendars are favorable in several of our key markets, and we expect continued normalization of government-related demand and international inbound travel as year-over-year comparisons begin to ease in the second quarter. We expect full year 2026 RevPAR to range from flat to up 3%, driven predominantly by gains in average daily rates.

While our outlook for the full year is constructive, we expect the first quarter to be the most difficult of the year, with RevPAR trending in line with our fourth quarter 2025 results. January RevPAR declined approximately 3%, despite a strong start to the month, as Winter Storm Fern created a significant disruption across our portfolio. We also faced difficult comparisons in the quarter, as our first quarter last year benefited from incremental demand created by natural disasters in Florida and California, and Super Bowl LIX being hosted in New Orleans, where we have six hotels. February represents our most difficult comparison of the quarter, as portfolio RevPAR increased over 7% last year.

Finally, the majority of our first quarter of last year was insulated from the significant reduction in government demand we experienced for the remainder of the year. Despite these challenges, our outlook is trending positive, as March pace is down less than 1% year over year and April pace is up year over year, reflecting the ongoing gradual improvement in demand patterns we see across the portfolio. It is important to highlight these pace improvements come at a time of the year prior to lapping the sharp pullback in government demand we experienced last year over the same period, making these trends even more encouraging.

In summary, we believe our industry is beginning 2026 with modest expectations but with meaningful upside driven by the continued improvement in several of the demand patterns we are already experiencing in our business. Longer term, we are poised to benefit from an extended period of low supply growth and the ongoing societal prioritization of travel and experiences. Summit Hotel Properties, Inc. is uniquely positioned to benefit from these conditions, given our high-quality portfolio, efficient cost structure, and strong balance sheet. Our priorities in 2026 remain clear: a continued relentless focus on optimizing hotel profitability, prudently allocating capital, and strengthening our balance sheet, all of which will drive long-term shareholder value. With that, I will now turn the call over to William to walk through the financial results and balance sheet in more detail.

William H. Conkling: Thanks, John, and good morning, everyone. Fourth quarter 2025 RevPAR demonstrated sequential improvement of 240 basis points from the third quarter. Operating fundamentals outside of government and inbound international demand remain resilient in the face of broad macroeconomic uncertainty. Fourth quarter pro forma RevPAR declined 1.8%, driven by occupancy and average daily rate declining by 0.7% and 1.1%, respectively. This outperformed our RevPAR expectations for the quarter of down 2% to 2.5%, as we experienced stability in group and strengthening business transient fundamentals, as well as a mix shift to higher-rated demand segments.

Several core markets demonstrated strength in the fourth quarter, including San Francisco, Orlando, South Florida, and Nashville. San Francisco is benefiting from improved perception, as the market experienced strength from citywide conventions and event-driven leisure demand and improving business travel, which drove outsized RevPAR growth of over 40% year over year during the quarter. Two citywide events, including Dreamforce, which shifted into the fourth quarter, and Microsoft Ignite, were key contributors to our hotel performance in Fisherman's Wharf and Oyster Point. In addition, continued strength in corporate demand, particularly in the Silicon Valley submarket, resulted in another strong quarter for our Hilton Garden Inn Milpitas.

Looking ahead, we expect continued growth for San Francisco in 2026 driven by citywide events, increasing business transient demand, and broader Bay Area activity surrounding Super Bowl LX and the World Cup.

In Orlando, three of the company's assets are benefiting from the recently opened Epic Universe Park, driving growth in both the leisure and group segments. RevPAR for our Orlando properties increased 9% in the fourth quarter, as strong demand enabled our hotels to shift away from advanced purchase and back toward higher-rated retail channels, driving meaningful ADR improvement. In South Florida, where RevPAR grew 4% during the fourth quarter, our hotels are experiencing sustained momentum across leisure, corporate, and special event demand, supported by a strong local economy and a continued wave of new business and investment activity in the region.

Miami continues to benefit as a destination for corporate relocations, financial services, and international business, translating into solid corporate transient and group demand. In particular, our newly renovated Oceanside Fort Lauderdale Beach is delivering very strong results, with fourth quarter RevPAR, total revenue, and gross operating profit increasing 9%, 39%, and 53%, respectively, as the renovated rooms product and multiple oceanfront food and beverage outlets are resonating with guests. We expect another strong year in 2026 from our South Florida properties, which are off to a great start in the first quarter, supported by the College Football National Championship held in January and incremental leisure demand, partially driven by the harsh winter conditions in the Northeast and Midwest.

Looking ahead, our portfolio is well positioned to capitalize on World Cup-related activity in South Florida, alongside the continued ramp-up and stabilization at the Oceanside Fort Lauderdale Beach.

In Nashville, fourth quarter performance was primarily driven by strong sports-related and group demand, complemented by our focused transient revenue strategies aimed at capturing high-value weekend leisure travelers. This deliberate mix shift allowed us to optimize rate on peak nights, drive incremental occupancy around key events, and further strengthen our property's position within a resilient and experience-driven market.

Non-rooms revenue increased 9% and 5% for the fourth quarter and full year 2025, respectively, in our pro forma portfolio. Food and beverage revenue continues to benefit from the reconcepted restaurant and bar offerings at the aforementioned Oceanside Fort Lauderdale Beach, our reprogrammed breakfast offering at certain hotels, and other ongoing initiatives aimed at improving breakfast and beverage sales. Other non-rooms revenue growth was driven by strong increases in marketplace sales, parking income, and resort and amenity fees. We are encouraged by the growth of these ancillary revenue streams and expect this trend to continue in 2026.

Fourth quarter adjusted EBITDA was $39,700,000 and adjusted FFO was $22,300,000, or $0.18 per share, as the company benefited from lower interest expense and a reduced share count resulting from our accretive share repurchases completed in the second quarter. For the full year 2025, same-store RevPAR declined 1.8%, adjusted EBITDA was $174,800,000, and adjusted FFO was $0.85 per share. The company's intense focus on expense management resulted in pro forma operating expenses increasing approximately 2% year over year. Throughout the year, our asset managers and third-party operators executed effectively on wage management initiatives, reduced reliance on contract labor, and improved employee retention.

For the year, contract labor declined nearly 9%, and contract labor currently represents less than 10% of total labor cost, which is approaching pre-pandemic levels. We also continue to experience improvement in employee retention, which is driving higher productivity, lower training costs, and enhanced guest satisfaction. Turnover rates at year-end 2025 have declined approximately 24% from year-end 2024, highlighting the ongoing stabilization of the labor market.

From a capital expenditure perspective, for the full year 2025, we invested approximately $75,000,000 across our portfolio on a consolidated basis and $63,000,000 on a pro rata basis. Ongoing and completed renovations during 2025 include the Oceanside Fort Lauderdale Beach, Courtyard Charlotte, Residence Inn Metairie, Scottsdale Old Town Hyatt Place, and the Atlanta Midtown Residence Inn. Over the past three years, we have invested more than $250,000,000 in capital expenditures on a consolidated basis, reflecting our continued commitment to maintaining a best-in-class portfolio. Our 2026 pro rata capital expenditure guidance is $55,000,000 to $65,000,000, which is consistent with our spend in 2025 and a level we believe is sustainable going forward.

This represents a significant reduction relative to the elevated capital spend from 2022 through 2024 as the company addressed deferred capital investment related to the pandemic.

Turning to the balance sheet, during 2025, we made significant progress in extending maturities, reducing borrowing costs, and enhancing corporate liquidity. Subsequent to year-end, we fully drew our $175,000,000 delayed draw term loan to retire the $288,000,000 1.5% convertible senior notes that matured in mid-February. Pro forma for this refinancing, we have no debt maturities until 2028. Adjusting for swap activity in the third and fourth quarters, as well as the retirement of the fixed-rate convertible notes and the draw on the floating-rate delayed draw term loan, approximately 50% of our pro rata share of debt is fixed.

Including the company's Series E, Series F, and Series Z preferred equity within our capital structure, we are over 60% fixed on a pro rata basis. With ample liquidity, an average interest rate of 5.5%, and average length to maturity of nearly four years, we believe the company is well positioned to navigate any potential near-term volatility while pursuing value creation opportunities.

On 01/22/2026, our Board of Directors declared a quarterly common dividend of $0.08 per share, representing a dividend yield of approximately 7.7% based on the annualized dividend of $0.32 per share. The current dividend continues to represent a modest payout ratio relative to our trailing twelve-month AFFO. The company continues to prioritize striking an appropriate balance between returning capital to shareholders, investing in our portfolio, reducing corporate leverage, and maintaining liquidity for future growth opportunities.

Included in our press release last evening, we provided full year guidance for key 2026 operational metrics in addition to certain non-operational items. For the full year, we anticipate RevPAR growth of 0% to 3%, which translates to an adjusted EBITDA range of $167,000,000 to $181,000,000 and an adjusted FFO range of $0.73 to $0.85 per share. It is worth noting that the company's two asset sales from 2025, the Courtyard Kansas City and the Courtyard Amarillo, as well as the recently announced sale of the Hilton Garden Inn Longview, contributed approximately $1,600,000 in adjusted EBITDA, or $0.01 of AFFO per share, in 2025.

Based on the indicated RevPAR range of 0% to 3%, we expect margins to be flat to down 100 basis points, which incorporates approximately 25 basis points of headwinds from higher property taxes and implies operating expenses increasing between 2%–3% year over year. We expect pro rata interest expense, excluding the amortization of deferred financing costs, to be $57,000,000 to $61,000,000, which includes an incremental $9,000,000 from the recent refinancing of the 1.5% convertible notes with the delayed draw term loan. Preferred distributions, including the Series E, Series F, and Series Z securities, are forecasted to be $18,500,000. This outlook does not include any additional acquisition, disposition, or capital markets refinancing activity beyond what we have discussed today.

Finally, the GIC joint venture results in net fee income payable to Summit Hotel Properties, Inc., covering approximately 15% of annual pro rata cash corporate G&A expense, excluding any promote distributions Summit Hotel Properties, Inc. may earn during the year. We will now open for questions.

Operator: Our first question will come from the line of Austin Todd Wurschmidt with KeyBanc Capital Markets. Your line is open. Please go ahead.

Austin Todd Wurschmidt: Thanks. Good morning, everyone. John, you discussed the booking pace accelerating into March and April. Can you just dig into the visibility that you have and length of the booking window that underlies your confidence in the trends in the months ahead?

Jonathan P. Stanner: Yes, sure. Thanks, Austin. Good morning. Look, as we said, we have seen very positive indications from a pacing perspective really throughout most of the beginning of the year, but I would say even more specifically over the last couple of weeks, that has translated into a pretty meaningful improvement in March. We are actually now pacing slightly positive for March.

Our pace for April has turned almost up mid-single digits, and I think what gives us the most optimism around that is, as we said, we still have not lapped the point where we started to see the effects of the pullback in government demand, so we are still kind of comping against periods where government demand was in place at this point last year. We have seen, again, I think a lot of this has been the continued solid performance midweek and particularly in urban markets.

I do think we are seeing some near-term lift in Arizona and Florida markets from folks potentially relocating away from Mexico, given some of the security concerns there, so we do think that is going to give us a bit of a lift particularly over the spring break period. But I would say more generally, the demand trends and the patterns that are giving confidence are fairly broad based.

Austin Todd Wurschmidt: And then you mentioned that rate growth is really underlying the RevPAR growth outlook this year. Is that consistent with what you are seeing in terms of the pace figures in the months ahead? And just for the year, which segments do you expect to be the biggest drivers of that improvement year over year?

Jonathan P. Stanner: Yes. Again, I would say generally broad based, but I do think today what we are seeing is better performance and better lift midweek, and so I would expect the majority of that lift to come from the BT and group segments. But again, I do think we are encouraged with some of the signs we have seen on the leisure side as well. I would say it is kind of a two-thirds, one-third mix for us going into the year, and I think two-thirds will come from rate growth, which obviously has positive flow-through implications to the bottom line.

Austin Todd Wurschmidt: And then just last one from the World Cup perspective. How much lift do you have that is World Cup or event specific this year? You highlighted a number of events, but I assume World Cup is a big piece of that. Could you just peel that off of the 0% to 3% RevPAR growth outlook? Thank you.

Jonathan P. Stanner: Yes, sure. I will say we are very constructive around the World Cup. I do think the industry has tempered expectations to some extent around what that will actually drive. What we pointed out on the call, and what I would emphasize, is a couple of things. One, we have exposure to about 60% of the matches domestically, and it touches about a third of our total portfolio, and so we do have a significant amount of exposure to the World Cup. When we roll it up, we expect to see the vast majority of the benefit of those matches in the six markets where we host.

I think the biggest positive impacts for us will come in markets like Atlanta, Miami, and Dallas, but we also expect to see some lift in a market like Orlando where people will tack on an extra trip to South Florida potentially from Miami. When we roll it all up for our outlook, we think it probably adds plus or minus 50 to 75 basis points to our full year expectations.

Austin Todd Wurschmidt: Thanks for the thoughts. Thanks, John. Thank you.

Operator: Star 11. Our next question will come from the line of Michael Bellisario with Baird. Your line is open. Please go ahead.

Michael Bellisario: Morning, everyone. John, on your 0% to 3% RevPAR guide, can you help us go from a broader industry outlook to stacking some of the market or asset-specific drivers that are boosting your forecast, maybe like Fort Lauderdale, assumed ramp-up in Asheville? Any other markets or assets to call out that are lifting your outlook relative to the broader industry trends?

Jonathan P. Stanner: Sure. At the midpoint of our range, we are probably not too far off of where most industry forecasts are for the year. I think you did highlight a couple of what I will call Summit Hotel Properties, Inc.-specific tailwinds for this year. One is the lift we expect to get in Fort Lauderdale, and William commented on this in the prepared remarks. We are seeing tremendous lift since the renovation has completed. We do lap the renovation comps for the first part of the year, so we will see some significant year-over-year growth.

But I think more importantly and more sustainably, we think that asset is going to continue to perform incredibly well given the capital that has been invested there and the market that is strong. Asheville is another one that we have that is still recovering from the storm a couple years ago that we expect to have strong performance. We expect all of our World Cup markets to perform. I talked a little bit about that just a minute ago, but it is meaningful for us given the significant percentage of assets we have in those markets.

And then, obviously, there are markets like San Francisco, which we expect to continue to be very strong, obviously off to a great start to the year with not only the convention calendar but the Super Bowl. It is also another World Cup market, which we think we will see some benefits from. I would also highlight the South Florida market generally, even outside of Fort Lauderdale. The trends we have seen in Miami, particularly in Brickell, are off to a tremendous start to the year there and we expect that to continue to be a very strong market. And Tampa, once it laps the weather comps from the first quarter, and Orlando are both doing very, very well.

Orlando again is the beneficiary of the new park that is coming at Universal, which is driving incremental demand.

Michael Bellisario: Got it. That is helpful. And then going back to the prior question on the booking window, any changes in discounting or advanced purchase rates? Are you still grouping up? Anything beneath the surface that you are seeing or doing that gives you more confidence looking ahead? That is all from me.

Jonathan P. Stanner: Yes. We talked a lot about this in the second and third quarter, and I think when we looked at, and we tried to emphasize this on the call, the pressure we saw in RevPAR, particularly in the second and third quarter of the year, was so much driven by the pullback in government and international inbound demand. Part of the knock-on effects of that was it forced us to remix our business, and part of that remixing was in the lower-rated channels, particularly lower-rated leisure travels, more OTA exposure, more advanced purchase exposure. We definitely tried to create a layer of group and advanced purchase demand. I think we were successful doing that.

I think what has given us some encouragement is, while we were still down in the fourth quarter and we expect the first quarter to still have these government-driven headwinds, we have been forced to do less remixing, and we are seeing a little bit more stability and growth in some of these other segments. Obviously, we are going to get to a point where we lap the very difficult government comparisons. Again, what we have tried to emphasize is that outside of those demand segments, the performance of other segments of our business has held up reasonably well. I would not say we have seen any significant widening of the booking window at this point.

I will say that we feel like there is more and more demand that is helping offset some of the falloff from the government segment in particular.

Michael Bellisario: Okay. Thank you.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Chris Jon Woronka with Deutsche Bank. Your line is open. Please go ahead.

Chris Jon Woronka: Hey, guys. Thanks for taking the question. Apologies if you might have covered all or part of this earlier, but I was really trying to get a sense for, as we look out, kind of World Cup 2Q, you have a little bit more visibility now. I am trying to get a sense for whether you think there is a before and after. Is there a lull before and after in the markets where you have exposure? Do you have enough visibility to see what happens before? The question is really does any of the benefit you are likely to get offset at all by people not visiting immediately before or after the games?

Jonathan P. Stanner: It is not something that has been particularly high on our list of concerns. We think net-net this is going to be a very positive event for the industry, and certainly for our portfolio given the exposures. I will say, and to that point, part of how we have approached the event, not dissimilar to how we typically approach Super Bowls, is we like to create a layer of base demand on the books. We typically try to get some longer-term stay business, whether it is media or takedown/setup type of business, particularly where we have guaranteed nights for extended length of time. We think that helps de-risk matchup scenarios that may not be as favorable.

If there is some softness in the transient pickup, we de-risk that to some extent because we have created this base layer of demand. We have taken a very similar approach. Our approach has been very tailored by market because our hotels have different locational strengths and weaknesses relative to where either the fan fests are located or the actual stadiums are located. Those strategies are customized by market. By and large, I would say we approach this in a way where we try to strike the right balance between taking a base layer of group at still high rates. I think the rates on the books we have over the World Cup period are north of $300.

We still have very attractive rates on the books, but we do it in a way where we de-risk a little bit of the in-the-period-for-the-period risk around potential matchups. That has been our approach, consistent with how we have approached Super Bowls in the past.

Chris Jon Woronka: Okay. Super helpful. Thanks, John. And then, as a follow-up, if we drill down a little bit deeper on Hyatt stuff, there are big changes to points coming up. Not great as a customer, but hopefully helpful for you guys. I know there have been discussions in the past about breakfast at Hyatt Place or Hyatt House. Is there any color you would add? Is there going to be any measurable benefit you see coming from your Hyatts?

Jonathan P. Stanner: We did, as you alluded to, beta test at a number of our assets the pay-for-breakfast concept at Hyatt Place. I would say, generally speaking, it was successful to the bottom line. I think Hyatt is still evaluating, and we are still working with Hyatt on the evaluation of how that gets rolled out more broadly, but it is something that we felt some benefits of in the second half of last year. I would say more broadly, in terms of points and loyalty and these programs, the brands have been receptive to making sure that as those loyalty programs are growing, some of that benefit accrues to the hotel owners.

Chris Jon Woronka: Okay. Fair enough. That is good to hear. Thanks, guys. Appreciate the time.

Jonathan P. Stanner: Thanks, Chris.

Operator: Thank you. This will now conclude today's question and answer session, and I would like to hand the conference back over to Jonathan P. Stanner for closing remarks.

Jonathan P. Stanner: Thank you, everyone, for joining today for another earnings conference call. We look forward to seeing many of you at some of the upcoming conferences. We hope you have a wonderful day. Thank you.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

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