Sunstone Hotel Investors Inc. (NYSE:SHO) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 12:00 pm ET


Sunstone Hotel Investors Inc. (NYSE:SHO) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen. And thank you for standing by. Welcome to the Sun Stone hotel investors third quarter 2019 earnings call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today November 5 2019. That's 4pm Eastern time.

I will now turn, the presentation over to Aaron Reyes Vice President of corporate finance and Treasurer Please go ahead.

Aaron Reyes

Thank you, Chloe and good morning everyone. By now you should have all received a copy of our third quarter earnings release and supplemental which were made available yesterday. If you're not yet have a copy you can access them on our website. Before we begin I would like to remind everyone that this call contains forward-looking statements that are subject to risks and uncertainties including those described in our prospectuses 10-Qs 10-Ks and other filings with the SEC which could cause actual results to differ materially from those projected. We caution you to consider these factors in evaluating our forward-looking statements. We also note that this call may contain non-GAAP financial information including adjusted EBITDA adjusted FFO and hotel-adjusted EBITDA margins. We are providing that information as a supplement to information prepared in accordance with generally accepted accounting principles. With us on the call today are John Arabia President and Chief Executive Officer; Bryan Giglia Chief Financial Officer; Robert Springer Chief Investment Officer; and Marc Hoffman Chief Operating Officer. After our remarks we will be available to answer your questions.

With that I would like to turn the call over to John. Please go ahead.

John V. Arabia

Thank you Aaron, Good morning everybody. And thank you for joining us. We'll begin today's call with a review of our third quarter operating results as well as an update on the current market. grading environment. Next I'll discuss our approach to capital allocation including our recent disposition of the courtyard LA x. Afterwards brown will provide an update on our fortress balance sheet discuss the specifics on our updated guidance and provide a range for fourth quarter ketchup dividend. mbegan third quarter comparable portfolio rev par increased 90 basis points over the prior year and comparable portfolio total revenues increased 1.8%. Similar to our performance in the second quarter or third quarter room revenue growth was driven by a nearly 3% increase in transient room revenues which helped offset and nearly 4% decline in group revenues. Group business was a bit softer than we had anticipated during the quarter in terms of both room nights and rates.

And while we were able to backfill most of the shortfall in group room nights with transient demand we witnessed less room rate compression on several nights that we had anticipated would have meaningful group compression particularly in San Francisco. Total comparable portfolio revenue benefited from room rate growth in both group and transient segments and from a 16% increase in other ancillary property level revenues. So let's dig a little deeper into the details of the quarterly operating results. Our third