Summit Hotel Properties, Inc. (NYSE:INN) Q2 2016 Earnings Conference Call - Final Transcript
Aug 03, 2016 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to the Summit Hotel Properties Second Quarter Earnings Conference Call. (Operator Instructions) As a reminder this conference call is being recorded.
I would now like to turn the conference over to Adam Wudel, VP of Finance. Sir, you may begin.
Thank you and good morning, everyone. I am joined today by Summit Hotel Properties' President and CEO, Dan Hansen, and EVP and CFO, Greg Dowell.
(Forward-Looking Cautionary Statements) You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at www.shpreit.com.
Please welcome Summit Hotel Properties' President and CEO, Dan Hansen.
Thanks, Adam, and thank you all for joining us today for our second-quarter 2016 earnings conference call. We are thrilled with the results that our diverse portfolio of premium select-service hotels delivered in the second quarter of 2016.
For the quarter we reported adjusted FFO of $36.5 million, which is a 23% increase over the second quarter of 2015. Our adjusted FFO per share increased 22.5% from the second quarter 2015 to $0.42 per share.
On a pro forma basis, we posted revPAR growth of 6.4% in the second quarter, which was above the midpoint of our outlook and, as a reminder, was on top of 7.6% growth in the second quarter of 2015. Our revPAR growth was driven by a 2.4% increase in occupancy to 83% and an average daily rate increase of 4% to $145, both of which partially offset revPAR by a total of 19 basis points due to renovation displacement.
Our same-store revPAR growth for the quarter was 6.5% compared to the second quarter 2015. RevPAR was driven by a combination of increases in occupancy, which was up 2.7%, and a 3.7% increase in average daily rates.
The strength and quality of our portfolio continues to be evident as we again surpassed the Smith Travel Research overall US and upscale revPAR growth rates by large margins. Not only has our same-store portfolio now exceeded the Smith Travel Upscale revPAR growth rate for 16 of the last 17 quarters, but it has done so by an average margin of nearly 300 basis points, which is truly a testament to our best-in-class revenue and asset management teams.
As discussed last quarter, we expect our revPAR growth to shift more heavily to rate growth as the year progresses from what was 40% rate driven in the first quarter, now 60% rate driven in the second quarter. The strength in our second-quarter revPAR growth was again very broad-based, which is what we would expect from the geographic diversification of a high-quality portfolio like ours.
Four of the strongest markets in the country during the second quarter were Dallas at 12.1%; Los Angeles at 11.1%; Nashville at 10.6%; and Phoenix at 9% revPAR growth. Combined, the Dallas, Nashville, and Phoenix markets make up 17% of our portfolio EBITDA as of June 30, and we were able to outperform the robust