Chesapeake Lodging Trust (NYSE:CHSP) Q1 2018 Earnings Conference Call Transcript
May 01, 2018 • 11:00 am ET
(Operator Instructions) Your first question comes from the line of Austin Wurschmidt from KeyBanc. Go ahead please. Your line is open.
Obviously first quarter RevPAR growth was largely driven by occupancy as you referenced particularly at the three hotels that were under renovation, but just curious what has been -- what's holding back rate growth, I guess, in the first quarter and are you seeing any improvement as you get into the second quarter?
You know, that's a great question. There are some company-specific reasons there -- for lack of ADR growth in Q1 that do dissipate and we are certainly showing and expect -- forecasting stronger ADR growth throughout the year. So in Q1, we had a couple of things. First, we had the impact in DC from the inauguration last year so rates are down. It's only one property for us. But rates are down close to 20% in the quarter. At Chicago City Center, where we had the entire lobby torn up, we again had significant -- a more meaningful impact on ADR in the quarter than we expected and the rates were down at City Center close to 5%.
We also had the issue at -- not the issue but the phenomenon as these properties rebound from renovations and you build occupancy, you have the fact that last year at (inaudible) to some extent you could say rates were slightly inflated because as you reduced your room counts and you're revenue managing the hotel, you're actually moving rates up during a renovation because you have a much smaller room count. And you of course are taking the highest rated business you can get and as you open up additional channels to build occupancy in a very short -- over just a short period of time you have some downward pressure on rates as you start to build back that business. That will dissipate as we go into the next quarter or so. So -- and I would -- The other thing is -- I would just say in general in Q1, LA was a little bit soft from a rate perspective that market.
So you have a few things going on that are happened in Q1 that won't continue to happen and we are seeing a little bit stronger you know modestly stronger demand trends. So while I'm not suggesting ADRs quickly going to jump off and take off. So we do expect ADR growth to strengthen throughout the year and when we are seeing that as we look at our numbers for Q2 for sure.
Is that a function of, are you starting to see a shift, I guess in the mix of business or are you having any success I guess shifting the mix a bit towards the corporate customer and would you be willing to provide any detail on some of the transient trends that you're seeing in April and into the second quarter?
I mean it's -- certainly there's a little bit of