LaSalle Hotel Properties (NYSE:LHO) Q2 2016 Earnings Conference Call - Final Transcript
Jul 21, 2016 • 11:00 am ET
REIT. These transactions leave our balance sheet stronger today with lower leverage and greater cash available to continue to be opportunistic going forward.
Now that we've had a chance to review these great transactions, I want to go back to the fundamentals of LaSalle DNA and recap how our asset managers and operators have continued to push EBITDA and margins. Our consistently best-in-class hotel EBITDA margin rose again to an outstanding 38.6% and expanded by 31 basis points. The second quarter margin was a new record for LaSalle.
One of the biggest contributors to the success was the continued improvement in the food and beverage department due to a variety of initiatives we have implemented over the last 18 months. Another bright spot was energy, which decreased approximately 4% per occupied room. This savings resulted from a combination of reduced consumption and a strategic staggering of our utility contracts.
We and our teams continue to relentlessly pursue opportunities to operate efficiently while delivering a great product and experience to the guests at our hotels, and these efforts are reflected in our standout margins. Turning to capital, we invested $21 million in our portfolio during the quarter in primarily maintenance-related expenditures. As a result of fewer planned renovations at the end of 2016 and the sale of the Indianapolis Marriott, we are lowering our 2016 anticipated capital expenditures to be between $110 million and $130 million, from $130 million to $170 million previously.
Now that we've had an opportunity to recap our activities in the second quarter, we'd like to widen our lens and offer our perspective on current market conditions in the lodging industry. As many expected, the second quarter was positively impacted by more citywides and the Easter shift. April was the strongest month of the quarter with 3.7% demand growth contributing to 5% RevPAR growth largely on the heels of the Easter shift. The next two months were softer with demand growth of 1.1% in May and 1.9% in June.
Total quarter RevPAR growth was 3.5%. The softer overall demand trend against increasing supply keeps us cautious on the industry fundamentals. With that said, we'd like to spend a few minutes updating you on the components of demand as we see it as well as how those components interact with our performance. First is group. There has not been a material change in our citywide demand by market since we updated you in April as most of that business was already booked before the year started.
As mentioned before, citywides are up in all of our markets this year except in Chicago and Seattle. Specifically, citywides across our markets are up in the first three quarters of the year and are essentially flat in the fourth quarter. Regarding LaSalle's Group performance, our second quarter Group RevPAR was up approximately 4% driven mostly by occupancy. We noted on our call in April that our overall Group pace for 2016 had improved slightly compared to previous quarters, as it was