Jon Bortz - Chairman and Chief Executive Officer Raymond Martz - Chief Financial Officer.

Rich Hightower - Evercore ISI Anthony Powell - Barclays Capital Inc. Shaun Kelley - Bank of America Merrill Lynch Ian Weissman - Credit Suisse Bill Crow - Raymond James Jim Sullivan - Cowen Group Jeff Donnelly - Wells Fargo Wes Golladay - RBC Capital Markets Lukas Hartwich - Green Street Advisors Neil Malkin - RBC Capital Markets.

Good day, everyone and welcome to the Pebblebrook Hotel Trust Third Quarter Earnings Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Raymond Martz, Chief Financial Officer. Please go ahead, sir..

Thank you, Dana. Good morning, everyone. Welcome to our third quarter 2015 earnings call and webcast. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer. But before we start, let me remind everyone that many of the comments we make today are considered forward-looking statements under federal securities laws.

These statements are considered subject to numerous risks and uncertainties, as described in our 10-K for 2014 and our other SEC filings, and could cause future results to differ materially from those expressed in or implied by our comments.

Forward-looking statements that we make today are effective only as of today, October 23, 2015, and we undertake no duty to update them later. You can find our SEC reports and our earnings release, which contains reconciliations of the non-GAAP financial measures we use on our website at pebblebrookhotels.com. Okay.

So we have another good quarter to talk to you about and during the third quarter, our hotel delivered strong bottom line results, which resulted in healthy 22.1% increase in adjusted FFO per share. Let me take you through the detailed results. Same-property RevPAR for the total portfolio increased 4%, to $230.

This was in line with our revised outlook which we provided in the first half of September and at the bottom end of the range that we provided with our second quarter earnings release. The more modest RevPAR growth was largely due to the late Labor Day shift to September 7 this year.

This negatively affected August as well as the beginning of September, certainly more than has historically been the case in prior years when Labor Day fell this late. September was also negatively impacted by the shipment to September of the Jewish holidays.

Despite some of the demand shift in the quarter, our ADR grew 5.3% to $261 as we continue our focus on driving rate growth at the expense of occupancy which declined 1.3% to 80.4% in order to drive better bottom line growth.

The discontinued customer remixing strategy combined with our comprehensive asset management and best practice programs resulted in same property EBITDA increasing a healthy 8.6% as our margins increased 159 basis points. Overall portfolio wide operating expenses increased just 1.4% while revenues increased 3.9%.

If we exclude property taxes, which increased 10.7% in the quarter, primarily as a result of California properties acquired in the last year, they were automatically reassessed at the time of acquisition, operating expenses only increased 0.8%.

Solid execution, no doubt, by our hotel operating teams focused on increasing profitability across the portfolio. For our portfolio on a monthly basis, July RevPAR, which was the strongest month in the quarter for us increased 6%, August was up 0.9% and September climbed 5.1%. Our RevPAR growth was led by our hotels in Nashville, Portland and Boston.

Our softer markets this quarter were Washington DC, Minneapolis, New York and San Francisco. John will provide more color on individual markets later on the call. Transient revenue, which makes up almost 76% of the room night demand for our total portfolio rose 7.3% compared to the prior year with ADR growing 4.3%.

Group revenues declined 5.6% with ADR up 6.1% and Group room nights down 11%. The shortfall in room nights was primarily due to a weaker convention calendar during Q3, which was largely expected. As a reminder, our Q3 RevPAR and hotel EBITDA results are same-store for ownership period and include all the hotels we owned as of September 30.

Our hotels do not exclude hotels under renovation. RevPAR growth in the quarter was led by Le Méridien Delfina Santa Monica, Hotel Modera Portland, Union Station Nashville and The Nines Portland. Food and beverage revenues increased 0.4% or $0.2 million compared with last year.

This is largely attributable to the WLA where we installed STK Los Angeles as our third party restaurant lessee operator effectively eliminating most of our food and beverage revenues and significantly improving profitability through rent, which falls in a separate revenue line item on the income statement.

Food and beverage expenses declined by 3.7% or $1.3 million resulting in overall food and beverage [indiscernible] profit increasing $1.5 million with food and beverage margin up 300 basis points.

The hotel EBITDA percentage growth leaders in the third quarter were Viceroy Miami, Westin Coral Gables, LaPlaya Beach Resort, The Union Station Nashville, Le Méridien Delfina and The Nines Hotel Portland.

It's noteworthy that four of these six hotels were acquired in 2014 or 2015 highlighting the relatively immediate successes we've achieved implementing our asset management best practices at these hotels. 15 of our 37 hotels grew same property EBITDA by double-digit rates in the quarter compared to the same period last year.

And moving down the income statement, adjusted EBITDA increased 29.6% and adjusted FFO per share climbed 22.1% compared with last year's third quarter. Switching now to our year-to-date results, same property RevPAR has increased 3.9%, same property ADR has grown 5.5%, same property EBITDA has climbed 9.8% and EBITDA margin is up 187 basis points.

Adjusted EBITDA is up 33.4% or more than $48 million versus last year and adjusted FFO per share has grown a very strong 25.3% over prior year. Now let's focus on our capital reinvestment activities in the third quarter.

During the third quarter, we invested $21.9 million into our hotels as part of our capital reinvestment programs including capital related to the early completions of the Hotel Zephyr Fisherman’s Wharf and WLA West Beverly Hills renovations, as well as kicking off the redevelopment of the Prescott in San Francisco, which many of you saw during our Investor Day tour a few weeks ago.

We remain on track to close the Prescott on November 1 and currently plan to reopen and re-launch the hotel as Hotel Zeppelin in 2Q 2016. Year-to-date we've invested $77.1 million into our hotels.

On the capital market side of our business, we funded a new 5.5 year $125 million unsecured term loan in July and in October after quarter end, we paid off the $48.6 million mortgage loan secured by our InterContinental Buckhead, with proceeds from our credit facility.

In the near term, you should anticipate that we will originate new longer term debt to reduce our current credit facility balance, which stands at approximately $240 million as of today. I would now like to turn the call over to Jon to provide more color on the recently completed quarter and some thoughts on what to expect for the remainder of 2015.

Jon?.

Thanks Ray. So as Ray said, the third quarter was another good quarter for both the lodging industry and for Pebblebrook though not as good as we expected three months ago. When we look at the third quarter's overall industry performance, there are a few trends worth noting.

First, industry demand was choppy in the quarter with a number of cross wins particularly holiday movements on a year-over-year basis that negatively impacted performance in August and September.

The very late Labor Day on September 7, coupled with the trend over the last few years of school starting earlier in August in many places around the country seems to have had a very negative impact on leisure travel in the last 10 days of August.

As a result, August industry-wide demand actually declined for the first time since late 2009 and led to RevPAR growth of only 2.2% in the month, also the lowest monthly performance since 2009. The movement of the Jewish holidays into September also had a negative impact on performance.

However, the strong 8% RevPAR growth for the industry is not indicative of the impact in the major cities where corporate businesses are more sensitive to scheduling meetings and travel.

So while the industry had strong growth in September, the urban markets were weaker with RevPAR increasing just 4.2% and the luxury and upper upscale chain scale segments increasing just 5.1% and 3.9% respectively.

Indicative of the impact of a holiday shift on September's performance, industry-wide Group demand for the month was down over 4.5% with Group occupancy down 3.5% and Group RevPAR actually declining 0.7%, certainly creating a drag on the month and the quarter's performance.

As a result of the negative impact from August and September, industry-wide Group occupancy for the quarter declined by 1.7%, leading to weak industry-wide Group RevPAR growth of just 1.6% in the third quarter.

And we can see the impact of these holiday shifts coupled with our anecdotal evidence of soft growth in international inbound travel and the performance of the top 25 markets, which also naturally underperformed the industry with RevPAR growth of 6% in September and 5.5% for the quarter versus the industry's RevPAR growth of 8% in September and 5.9% in the third quarter.

Yet with all this noise in the quarter, total U.S. demand growth still increased 2.5% down slightly from last quarter's 2.7%, but well in excess of the growth in new supply of just 1.2% and well within our beginning of year forecast of 2.5% to 3% demand growth for the year. I mentioned softer growth in international inbound travel.

While we don’t yet have comprehensive data for the industry from the Department of Commerce beyond first quarter data, we do believe that a strong U.S. dollar and weaker than originally forecast economies in many countries around the world, have combined to limit growth in inbound international travel, primarily affecting the major gateway cities.

Greater numbers of U.S. travelers going abroad due to the strong dollar has also likely reduced domestic leisure growth this year. While international airlift capacity is up substantially and airfares have come down very significantly, we don't believe they've offset the negative factor as much as we would have expected earlier this year.

The other major trend impacting results has been the cyclical trend of a broadening and the benefits of the economic recovery, the socioeconomic middle, which is clearly benefitting hotels throughout the U.S.

in the economy to mid-price change scale segments, which have outperformed the upper end of the hotel market all year including in the most recent quarter. We can see this outperformance in most of our markets, where the suburban markets are actually outperforming the urban or CBD markets.

We expect this trend to continue as the economy continues to improve and the suburban and secondary markets with much lower current occupancy levels are able to take advantage of this growth and demand particularly from the middle class.

As a result, the urban markets on an industry basis particularly with expected ongoing underperformance in New York and Washington DC are likely to have a difficult time outperform the overall industry in the near term, at least until we see renewed growth in international inbound travel or renewed strengthening in corporate profits.

As a result of the third quarter's results and our visibility into the rest of the year, we believe industry growth is likely to end the year somewhere in the middle of our industry outlook of 6% to 7% that we gave at the beginning of the year.

This suggests we're slightly more cautious in our expectation for the industry for the fourth quarter with industry results for October so far coming in a little lighter than expected and a concern that these trends may continue in November and December particularly with the difficult comparison to very strong Q4 last year.

For Pebblebrook as Ray indicated, RevPAR growth in the third quarter came in right in top of our lowered expectations of 4%. However, please keep in mind that room revenues actually increased 4.6% due to the additional 54 rooms throughout the portfolio.

We continue to focus on remixing our business to drive rate growth at the expense of some occupancy and still more than we would like in order to drive bottom line growth and increase long term values.

As we indicated at our Investor Day last month, our lower top line expectations were primarily a result of weaker than expected results in August and September across the portfolio with the weakness more pronounced in San Francisco due to leisure travel both domestic and international that didn’t fill in for difficult convention calendar.

When we look at our portfolio for the third quarter, our West Coast properties continue to outperform our East Coast properties. RevPAR at our West Coast properties grew 4.7% with occupancy down 1.1% to 90% and ADR increasing 5.9%.

This despite the challenges in San Francisco in the quarter and the loss of competitive share that we expected and did lose as a result of the transitions to new managers at our four hotels.

Lost share as a result of the Management transition was a little less than our forecast for the quarter, but of course still had a significant impact on our performance in the market. RevPAR at our seven San Francisco properties rose 1.2% in the third quarter.

Had we not lost share our four transitioned hotels, San Francisco RevPAR would have grown 3.4%. RevPAR our East Coast properties grew just 2.6% impacted primarily by continuing weakness in New York and Washington DC. As we indicated last quarter, the performance of our New York properties improved again from the quarter before and versus the market.

RevPAR for the six hotels in the Manhattan collection was exactly flat in the quarter compared to last year's third quarter, much better than the minus 5.4% in Q2 and 9.6% decline in Q1 and in line with the Manhattan markets RevPAR growth of 0.1% in Q3.

We continue to make progress on our efforts to improve our group sales and revenue management and the results so far bearing fruit as the portfolio gained over a 100 basis points of RevPAR share in the quarter versus the combined competitive sets. The first time this has occurred this year.

We're also making progress at Hotel Zephyr San Francisco, which has been receiving incredible reviews from our customers. And while we're nowhere near where we had expected to be at this point in the beginning part of our ramp-up following the properties transformation, we're encouraged by Q3' results.

RevPAR grew 5.4% in the quarter with ADR increasing 9.4% and occupancy declining 3.6%. We also gained RevPAR share in the quarter. In this case, we outperformed the property's competitive set by over 400 basis points with all of the outperformance in rate, which is the focus of our team's effort.

One of our other properties of focus that was also a drag on the portfolio in Q2 the WLA West Beverly Hills also improved in Q3 though not as much as we expected and we continue to be disappointed with our progress.

We’re very closely with Starwood to improve the property's performance and pickup positive momentum following the property's transformation and we should see continued improvement.

RevPAR declined 4.3% though room revenues actually increased 10.2% with the 39 rooms we added and that compares to the second quarter when RevPAR declined 9.9% with an increase in room revenues of 3.7%. With the benefit of the additional rooms, EBITDA increased 12.4% in the third quarter versus an increase of 6.1% in Q2.

Even with our challenges at WLA, our West Los Angeles properties still did reasonably well last quarter. RevPAR our five properties increased 5.4% and excluding the WLA, the other four properties grew RevPAR 8.6%. Downtown Portland was also very strong in the quarter with our properties there increasing RevPAR by 14.2%.

Other strong markets in the quarter included Boston where our two properties combined increase RevPAR by 7.3% and Miami where our two properties grew RevPAR by 7.3% as well. Nashville was even stronger with our Union Station property growing RevPAR by 15.1% in the quarter.

Our weakest performance was in Washington DC, which had a difficult convention calendar compared to last year. RevPAR at our two properties in DC declined 6.7% and both underperformed the market. Overall for our portfolio, we lost RevPAR share versus our specific competitors in the quarter as well as versus our markets.

In other words, we underperformed, in this case by 56 basis points for the portfolio versus our competitive sets.

I mentioned this because given our renovation and repositioning, we should be outperforming and gaining share in any given quarter, particularly when we're not displacing business directly from an ongoing renovation, which was not the case in Q3.

In addition, to the slower ramp-up at Zephyr and WLA we've likely lost share due to greater than normal turnover this year of key topline leaders at many of our properties throughout our portfolio.

While the annual turnover of property level Executive Team members would typically be around 20% to 25% meaning an average tenure of four to five years, this year it has been more like 50%.

There is no single reason for the turnover, nor is it symptomatic of any systemic problem, but we do believe we're seeing more voluntary turnover because the economic environment is more attractive and providing more opportunity for those working in our industry.

As is often the case when we buy properties there have been significant leadership changes at properties we acquired in 2014 and 2015, but we’ve also seen changes throughout the rest of the portfolio due to promotions, retirements, competitive offers, spousal relocations and individuals leaving the industry for personal or opportunistic reasons.

Not surprisingly when there are changes in leaders that are key to generating revenues, it can have an impact on property performance. Sometimes we all forget that while we're in the real estate business, our business is also operationally intensive on a day to day basis.

While these changes often have a negative short term impact on property performance and they are having that impact this year, these changes generally lead to better long-term performance as our operators transition to individuals that are a better fit for our hotels.

Despite relatively modest RevPAR growth in Q3 of 4%, we were able to increase room revenues by 4.6% because of the additional rooms we’ve added, leading to strong growth in same property hotel EBITDA of 8.6%.

This was primarily a result of our focus on growing rate, which increased 5.3% while achieving great success by continuing to implement best practices.

With total same property operating expenses limited to 1.4% increase, we achieved a 78% flow through of revenues to EBITDA in the quarter an accomplishment our team is particularly proud of given the fact that our same property revenues grew 3.9%.

For the first nine months of the year, we grew same property EBITDA by a strong 9.8% with same property EBITDA margin growth of 187 basis points. We had flow-through of 84% of same property revenue growth to same property EBITDA. Or looked at another way, the 9.8% growth in same property EBITDA is 2.5 times the year-to-date RevPAR growth rate of 3.9%.

Now I’d like to give you a quick update on our upcoming renovations and repositionings. While we have a number of projects later this year and next year, the good news is the expected negative impact from these renovations should be substantially less than the projects undertaken earlier this year.

As Ray mentioned, we started some work at the Prescott in the third quarter with the major project commences on November 1 when we closed the property.

We also started the redevelopment of the Westin Coral Gables on September 1 and will be doing the work in phases in order to reduce displacement with completion and reflagging expected to occur next summer.

We're currently in the process of completing the design phase of the redevelopment and repositioning of Union Station Nashville and expect the work to commence and be complete in next year’s third quarter.

We also expect to commence our rooms and meeting space renovation at Monaco DC in January, which should be completed by April next year and we plan to begin our rooms, lobby and meeting space renovation at The Nines in Portland this December with completion in late Q1 next year.

We don’t expect either of these projects to incur any major displacement of revenues.

Finally, we're also planning to begin a redevelopment of both Palomar Beverly Hills and Revere Boston Common late next year with completion by early Q2, 2017 for both properties and as a reminder, these renovations are no different than what we described last quarter. Now let me turn to an update on our outlook for the remainder of the year.

We continue to expect 2015 to be a great year for both the industry and Pebblebrook though for us, not quite as good as we thought earlier. On RevPAR, our forecast for the industry remains 6% to 7% for the year and as indicated earlier, we believe it's likely to end somewhere in the middle of the range.

We're a little more cautious about the remainder of the year than we were even a month ago as a result of a slightly weaker industry trends that we're seeing in October and weaker economic data that's reasonably been reported including the most recent jobs report in early October that showed a meaningful slowdown in a rate of job growth in the third quarter including adjusted jobs growth numbers for July and August that were meaningfully lower than previously reported.

There have also been reductions in forecast for global economic growth and corporate profit growth rates for the remainder of the year. We may have hit another short term soft patch in the economic recovery that’s been bumpy so far and feel it’s prudent to be a little more cautious.

We also think it’s worth pointing out that it’s been a little more difficult this year than last year to forecast due to the greater volatility in month to month industry and local market demand and consequentially quarterly performance forecast have been more challenging. No news there.

For our portfolio, we’re lowering our same property RevPAR outlook for the year to 3.5% to 4% in order to account for our slightly increased cautiousness and continuing trends of giving up more occupancy in RevPAR while we drive higher ADRs in order to deliver stronger growth and same property EBITDA and increased values in the long term.

This also reflects an expectation that we'll continue to lose some RevPAR share as the new leaders at our properties get up to maximum speed. With these RevPAR changes, our same property EBITDA growth rates declined slightly from a range of 9% to 12% provided with our second quarter earnings release through our current outlook of 8.5% to 9.3%.

For Q4 we're forecasting our same property RevPAR to increase by 2.5% to 4.5%, that’s lower than our implied outlook at our Investor Day last month of around 5% and results from a desire to be more cautious about short term bookings based on recent trends we're seeing in October and an acceptance as I just said of the fact that we’re likely to continue to lose more occupancy in topline RevPAR while we drive higher ADRs and bottom line profits, particularly at the many properties that are being repositioned.

Specifically so far in October we've been seeing some increases in short term transient cancelations and slightly slower net bookings within 10s of 30 days of arrival. Our same property hotel EBITDA range for Q4 is $70 million to $72 million with same property hotel EBITDA increasing by between 5% and 8%.

While we're more cautious about short term trends, we continue to be very positive about the strength of the underlying fundamentals of the industry for the intermediate term.

Supply continues to be restrained with the three months trend at just 1.2% and our expectation is that demand will likely continue to outpace new supply over the next two to three years.

On a trailing 12 month basis through September, industry occupancy achieved a new all-time high of 65.4% and should set records for at least the next couple of years. This bodes well for healthy pricing power and higher ADR growth.

And while we expect to see greater than industry supply growth in our markets beginning next year, we expect RevPAR growth in our currently strong markets to remain strong due to their extremely high record occupancy levels and higher growth economic environments.

For Pebblebrook when we look at our pace for the fourth quarter as of the end of September, total group and transient revenue on the books was up 6.3% over same time last year with ADR up 4.5% and room nights on the books up 1.7%. Group room nights for the fourth quarter are up 0.5% with Group ADR up 2.4% and total Group revenue up by 3%.

Transient room nights on the books for the fourth quarter were up 2.6% with transient rate up 5.7% and total transient revenues on the books up 8.4%. In the year -- for the year total revenue bookings in the third quarter for 2015 were up 6.2% versus prior year bookings, which certainly represents an encouraging number.

As we've taken out of peak into 2016, we continue to be encouraged by both our group pace and convention calendars for our markets. While it's still early, our Group pace is up 11.7% in 2016 with room nights down 0.3%, but ADR up 12.1%. This is better than the 7.3% pace benefit we reported last quarter for 2016.

Since Group room nights on the books currently represent only about a third of our 2016 target, we caution that our current pace doesn’t guarantee anything about the performance in 2016, but nevertheless, better is still better, especially when it's mostly in ADR.

And continuing with the better theme, convention calendars currently look better in many of our markets in 2016, including Atlanta, Boston, San Diego, Washington DC, Portland and Nashville and they currently look similar to 2015 in pretty much the rest of our markets except Seattle and Philadelphia.

To wrap up while we're a bit more cautious about the remainder of this year, we continue to expect 2015 to end as another terrific year for both the lodging industry and Pebblebrook. Underlying industry fundamentals should remain very healthy for the next few years and we don't see any real trouble ahead.

We continue to have tremendous opportunity in existing portfolio to drive property ADRs and EBITDAs higher as a result of renovations completed in previous years as well as recent and upcoming renovations and repositioning? With finally one final request, as we move to Q&A, please refrain from asking up anything related to the issues or parties surrounding the property transitions in San Francisco.

In our remarks we said everything that's prudent to say at this time. And with that, operator we would be happy to entertain questions now if our audience didn't hang up..

Thank you. [Operator Instructions] We'll go first to Rich Hightower with Evercore ISI..

Hey guys. Good morning. Thanks for taking the question..

Sure..

So I want to talk a little bit about the fourth quarter first. So RevPAR guidance as of the Investor Day was 5% as you mentioned and then we've taken that down to I guess 3.5% at the midpoint.

I guess that's not so bad, especially given some of the bigger trends you've talked about, but can you give us a little bit more of a bride in terms of the market and the demand segment that are leading to that 150 basis point reduction there and just a little more detail if you don't mind..

Sure. Well, the reduction is spread out through the portfolio because the cancellation trends and the short term pick up trends we've been seeing have been prevalent throughout the portfolio though clearly more dominant in the gateway cities.

In terms of the emphasis, I would say we're seeing more of it in a couple of markets like San Francisco and Los Angeles and Boston within the portfolio and probably a little less on a weighted basis in some of the other markets.

We've been seeing that for longer in New York, which we've talked about again in previous calls, but we had already changed our strategies and tactics to more significantly overbook than what we had been doing based upon what was a fairly consistent ability to project the cancelations in the New York market, but otherwise it's fairly spread out through the portfolio..

Okay. That is helpful. And then a question on margins, so I guess for the last couple of quarters and then this would also apply to the fourth quarter looking ahead, it does seem like flow-through has been one of the highlights relative to what's been happening to the topline perhaps.

And I know that a lot of the RevPAR gains are coming from rate, which is good for margins.

But how long do you think this -- the positive flow-through trends can continue given some of the deceleration in demand and maybe a little bit jitteriness on the pricing side that I think investors are starting to consider at this point?.

Yes, I think we have a ways to go within the portfolio in terms of productivity enhancements, best practice implementation, improvements in food and beverage and we have quite a number of significant initiatives within the portfolio related to restaurants and reconcepting or leasing them out that are under different phases of being underway, some with lease assigned, some that are already opened, some that we’re in the market leasing right now, some that we’re in the process of reconcepting, and then we continue to have significant savings particularly at the hotels we bought over the last two to three years.

And those have offered us kind of a plethora of opportunity to continue to improve margin. So I think we've a ways to go, Rich, and much of it’s already identified and it’s about execution and some things take a little longer to execute in terms of years, some things we can get done in three, six, nine months within the portfolio..

Okay, thanks.

And one last quick follow-up, so on the GM turnover that you mentioned that’s happening, I guess above the average number of properties this year, do you have any idea what margins could have been if it weren’t for some of that extra turnover versus the historical average?.

Yes, it's really -- it’s less of an impact on margins.

It's more of an impact on top line and the Executive Leadership that I was referencing was really three main positions at our hotels through the portfolio, the General Manager, the Director of Sales, or Director of Sales and Marketing, in other words the Head of the Sales Effort, and the Revenue Manager, which might be the most important of the three.

And so that’s what’s been about 50% this year and it represents probably almost an impact of at least one leadership position of those three in the portfolio this year at two-thirds of the portfolio. So we know, it’s had an impact on performance.

It’s hard to quantify it, but we see it in the share that we're losing at the properties where we've had those changes. And then when we do get new people in, it does take some time for them to ramp up and understand the dynamics of the property that they're now selling or revenue managing or managing..

Okay. That’s helpful. Thanks Jon..

We'll go next to Anthony Powell with Barclays Capital..

Hi, good morning.

Just on the cancelation, could you give more detail on which type of customers are canceling? Are you seeing corporate transient customers cancel or leisure or cancellations around groups that will be helpful if you can give more detail there?.

Sure Anthony. Well, it’s all of the above but the largest change that we've seen in behavior has been around transient cancelations, not group cancelations.

And as it relates to the transient cancelations, it's more heavily weighted towards business travel, than it is to leisure travel and I think that we could attribute some of that to the greater sophistication of technology that’s being used by some corporations to monitor rates and take advantage of any reductions.

I think we've talked in the past about the concern about these loyalty programs that are causing our revenue managers or revenue managers in the industry at branded properties to lower rates near arrival versus raising rates closer to arrival.

And so I think it’s leading to people with multiple reservations to monitor different properties and also no penalty for cancelling a reservation or even changing a reservation if it’s more than 24 hours out right now and with most of the branded policies out there. So that’s where we've been seeing it most.

We have seen a little more attrition in some of the conventions in various markets that we have. They've been a little harder to predict this year.

Again, we're not sure that it's anything other than people playing these rate opportunity games within the market where sometime the transient rates become more attractive than the group rate that they might have booked under.

The other thing that’s worth mentioning is I know that we have, but many of the owners particularly the institutional larger owners out in the industry, have been having a lot of conversations with the major brands about instituting longer cancelation polices meaning you can’t just change your reservation by 6 PM and not suffer a penalty.

So hopefully we're going to see those restrictions get pushed out a little bit because it’s really costing the industry. It makes it really hard to manage our business on a short term basis.

And I think what we’re going to see ultimately is we're likely to see penalty fees for either cancellation or changes and hopefully that's coming down the pike sometime over the next year..

All right. Got it, thanks. And second question is on I guess the ramp up of the Zephyr and WLA. You're getting in pricing increases, but I guess the occupancy is falling off a bit further than you expected. What customer segments can you target more that you're not getting right now at those two hotels? Thank you..

Sure, well we're -- it’s interesting, in the case of Zephyr it’s actually a fairly dramatic change in the customer segment from what it was doing as of Radisson, primarily because we’re pricing $50 higher on average than we were previously. So it’s not necessarily about changing the segmentation per se as much as it is about changing the customer.

And since we're providing a product that has much more value to the customer, we want to charge the customer more and that generally means you have to find new customers. So that takes time. It's as if it’s a new hotel and so it really is about all of the segments.

It’s about increasing the wholesale business, getting new customers there at higher rate. We get much, much higher rates for the wholesale business at the Argonaut down the street.

And so again, if the business is out there we need to get it and we got to get the customers to the property to see the property though they're willing to pay the price that we're asking.

We do expect to actually expand our corporate base there which was fairly nonexistent previously based upon the humanity base of the hotel and then it's really again on the transient side about getting exposure to the property, the people who are willing to pay more to be down at Fisherman’s Wharf and the trip advisor reviews and the Yelp reviews are all extremely helpful in getting us that exposure that we need to get customers willing to pay more than what they were willing to pay when it was at Radisson..

Okay. Thank you..

At WLA that’s a little different, because in many cases it is a customer segment modification. We need to bring in more group, which wasn’t coming to the property before because of its condition and so we think that business again is out there.

We have other properties in the market and we have to get those people to the property, get them to experience it and then book it. So part of it is group. A lot of it will be rooms only group. So that may be entertainment. That may be international travel, longer term stays.

It will include the business that comes out of the consulting and accounting firms that is project business, which again is more repeat weekly longer stay business.

And then we need to drive some additional corporate accounts into the property, particularly in order to pick up the 39 additional rooms that we've added, which is about 15% of the inventory..

Thanks for the detailed answer..

Sure..

Thanks Anthony..

We'll go next to Shaun Kelley with Bank of America Merrill Lynch..

Hey guys can you hear me?.

Yes..

Great, good morning, Jon, Good morning Ray. So in the prepared remarks you guys mentioned a little bit about possibly leaving some RevPAR on the table as you remixed more towards rate and away from occupancy.

And so I was just curious if you could provide little bit more color on that given -- the occupancies in your markets are so high already and San Francisco and New York and a lot of places you guided previously from the CBD in which you guys operate.

It feels like you should be able push more rate than perhaps you're getting and my guess is you would probably agree with that.

So I am curious why do you think -- why do you think elasticity is maybe a little different, are you not able to get quite the rate boost that you would expect at this point in the cycle? And Jon in your kind of longer term or historical perspective is there another period in the past where you've seen similar behavior and any perspective you could provide on that?.

Sure. So that's a good question and actually it's a very complicated -- it's a more complicated answer because it's so much about and particularly where we're doing it strategically repositioning properties is I was kind of talking about was Zephyr. It's more about changing the customer than it is about just increasing prices with existing customers.

So it's something that takes time and unfortunately we're running customers off the property if you will more quickly than we're getting new customers to the property, but we're getting the rate increases in many cases that we're looking for.

We're just not getting enough of it yet to offset the occupancy loss or looked at the other way, we're also losing too much occupancy meaning we didn't get enough new customers into the property to make up for the occupancy that we lost by driving away customers that wouldn't be willing to pay that higher rate and there is nothing new about that.

People have their own price range and they're going to shop properties in the market that provide that price range even if in many cases it means going downhill from a quality perspective. So I do think it's just a time issue primarily within our portfolio.

Some of it is execution Shaun and it's harder to execute when you don't have the key leaders at some of the properties. So that will tend to stretch out for the time period it takes to gain that share and reposition the properties and we know we're losing share.

We get that date both obviously on our competitive sets and in the markets that we're at and by and large, our markets aren’t losing occupancy, we are. And again it's more about the time it takes to get new customers than it is about the customers not being out there at all.

In terms of history, we've never been at levels of occupancies that we're at today in my career.

And so some of the dynamics are new and I would also say that there are so many things that have changed in the industry that whether it's technology, whether it's the OTAs, whether it's the dynamics of a loyalty programs have never really kicked in at this level because the markets have never gotten to these levels of occupancies where it becomes a regular occurrence to be at or near the breakpoint on so many nights during a year.

And most of these programs have also gone to put a no blackout day programs and so during higher rate periods, people are using their points instead of paying cash. So the dynamics have really changed in the market and that's part of what is making it a little more difficult on top of lots of cross wins and changing wins on the macros side this year.

That's what making it more difficult to forecast on even a near term basis.

And I mentioned at your conference the BoA Conference and the ISI Conference I was recently at, we can go into a quarter with 50% or less of our business on the books for the whole quarter and so what -- the small changes in the dynamics can have a big impact on whether we're at 4% or we're at 2% or we're at 6% and while those things are blown around, just looking at historical trends has been less than ideal as we've proven in some of our last forecast this year..

Thanks for the candor on that. It's really helpful. And my second question would be just a little bit on -- you gave some helpful outlooks for different markets for next year and I wanted to ask a little bit about supply in some of your markets for next year.

So just any sense you could give us on which markets you're expecting to see some of the biggest supply increases in the CBD next year versus some of the markets where you think that's going to be the most benign or perhaps likely the most bullish for your portfolio?.

Sure. So we mentioned this at our Investor Day. There is a few markets where we're going to see 3% to 4% supply growth next year. They would include Portland. They would include Nashville. Interesting -- Nashville is a good example. It's running in record occupancy. I think supply is up around 7% this year.

Demand is up about the same and the market is up in the low teens on a RevPAR basis. So clearly just having more supply is not the only dynamic to look at in a market, but we would always no supply is better than supply being added into the market. San Diego we should see 3% to 3.5%. Boston 4% to 4.5%. West LA 3% to 4%.

DC around 4%, Miami 4% to 5% and New York we should continue to see around 4% in the market. And then markets like San Francisco 1% to 2%, Buckhead under 1%, Seattle between 1% and 2%, Philly between 1% and 2%, Minneapolis around 1%.

So in many cases that’s up from this year and the one thing I think is worth mentioning and trying to understand is one of the reasons you don’t see occupancy growth in the stronger markets is because there isn’t more occupancy to be had in those markets.

And if they're running at 84%, 85%, 86% and they're seasonal, there just isn’t more occupancy to be gained. It's going to go somewhere else either to another city or it's going to the suburbs or it will go to the airport and we saw that in markets like even New York for the first three years of very substantial supply growth.

We had pretty good ADR growth and strong RevPAR growth during that period. So it isn’t just about supply.

The economy is really important in terms of what is the underlying demand that’s being created in a market like Seattle, it’s well more than the 1% to 2% demand growth that it's showing for this year, but it can't be accommodated in the city right now.

And so certainly in the first year or two as we add some supply in some of these markets it's not really going to have an impact on the ability to continue to drive rate in those markets because the occupancy is going to get pretty easily absorbed..

Got it. Thank you very much Jon. Appreciate it..

Yes..

We'll go next to Ian Weissman with Credit Suisse..

Good morning. Just follow-up on that supply question, Jon you've always been pretty candid about supply at least up until now being a tailwinds for your earliest industry fundamentals.

As you kind of think about the challenges across several of your markets LA, San Francisco in particular, the one thing that nobody has mentioned on this call and I am just curious about your views is how much of has Airbnb just taken the wind out of the sales of your ability to push rate?.

We've talked about this in our prior calls Ian and it’s no different. We wouldn't say anything has changed in the last three months and there continues to be some impact that we see and that’s noticeable around some of the more major conventions and events in these markets particularly when they're not business meetings.

They're more meetings or events where people are paying their own way and so it's impacting pricing to some extent in those markets and we're not quite seeing the same compression that we've seen in prior years.

So that’s really where it’s had an impact and I'd say that's fairly typical whether its San Francisco, LA, San Diego, New York, there is no doubt that it’s a bigger impact in a major city than it is in a suburban market or a secondary market..

Okay.

And just another question on San Francisco, clearly not only with your sector, there are other sectors that are facing dislocation or at least market concern about San Francisco and the future of demand in that marketplace, but the reality is that businesses as usual in San Francisco and tech demand is still very strong and it's still a very, very health market.

So as it relates to hotel fundamentals, as you think about business demand for lodging in that market, how much of it is just group saying, you know what, it's an expensive market and we're looking elsewhere and we're going to take our group travel to a cheaper city..

Yes, I don't think we're seeing that at all. I think there is a reason that groups go to San Francisco both to have their meetings and to have their conventions. It's because it's the best business choice for them.

Conventions go there because they get great attendance there and many of these conventions are for-profit conventions for the associations that might be putting them on and so where they go is way more important than the hotel rates, which by the way are paid for the individuals, not by the association.

So when they pick some city, it's not picking a city based upon the cost of the hotel rooms. It's picking a city based upon where they think it's going to get the best attendance because ifs a for-profit meeting. And of course people go to San Francisco because it's a great city to go to. It's got great weather most of the year.

It's got tremendous amenities. It's beautiful. It's got great airlift. All of those are factors for meetings. So I think pricing is by far -- would typically be pretty far down on our list for the times the conventions that go there.

But the cheer leader convention or the basket lever convention, they're not going to San Francisco because they're not going to do well in San Francisco because the people will have to pay their own way can't afford it. But they were never going there. They're going to other cities. They're going to St.

Louis and Minneapolis and Indianapolis and Kansas City and a lot of the secondary markets..

Okay. That's helpful. Thank you very much for your color..

We'll go next to Bill Crow with Raymond James..

Hey. Good morning, guys. Jon, let me just make sure I am clear, your commentary on '16 sounded positive as far as the Group business and your forward bookings etcetera.

So should we read into that there has been no change to the scenarios you painted on '16 and '17 at your Analyst Day last month?.

Yes, we haven't seen enough change in the trend that we've adjusted Q4 for to change our view of '16 yet. If late in the quarter it looks like those trends have continued and may continue, then at that point in time we certainly would change our view of '16 and be more cautious. But as the Fed says, we're data dependent.

We need to see what happens on the macro side. Is this a soft patch on a quarterly basis like we've seen throughout the last five years or is it something that's more expensive from a time perspective..

And Jon we faced very challenging comps for the industry and fourth quarter, but also in the first quarter of next year and I am just thinking about how we get some momentum back in the Group? How do you -- I am not looking for guidance for our first quarter of '16, but how do you see that quarter shaping up relative to your kind of baseline expectations for the year as a whole next year..

Yes, just give me one second to pull up page for how the pace breaks down for the year.

So if we look at the -- if we look at the first quarter, on a Group basis we're up 7.5% right now, room nights are down just shy of 5%, but rates up almost 13% and some of that San Francisco Bill, with Super bowl some of it’s JPMorgan in San Francisco because JPMorgan continues to grow and become an increasingly higher rated city wide for which five years ago it almost didn’t exist..

Okay. Two other quick topics, hopefully quickly, Jon we've seen some rates in other sectors that have been in hot markets all of a sudden find themselves overweight of market that maybe going in the wrong direction.

I am thinking it's specifically Houston, which might be unique in the country, but the success of Houston also has led to challenges for some several companies.

Do you think about your waiting in San Francisco and is it where you want to be? Is it right for trimming? How do you think about that market?.

Yes, we think about our waiting all the time. I think we've indicated previously we feel comfortable with where we are, but we wouldn’t feel comfortable being higher than where we are from a concentration perspective. We have to look at these markets all on a long term basis and we choose them because of the underlying dynamics.

How difficult it is to build and so a market like San Francisco is a good example of a market that will likely have more volatility and variability through different parts of the cycles.

But on a long term basis, based upon the urbanization trend, based upon the difficulty of building and based upon the industries that are there and their growth outlooks over the long term, the creative industries whether it’s technology, biomedical, the cloud, some would say Ubers in the transportation business not the technology business and the same for other businesses we would typically categorize as technology but we view the market as a heavier not less diversified industry base.

Because of it being subject to capital and capital flows and so it’s going to have more variability, but we believe it will have better long term performance and there will be times where it will underperform. Just like Washington DC a good example, where it's got high barriers to entry.

People will ultimately build, but it’s harder to build, it takes longer and your height limit is a big limiting factor. So it is a place we want to own and we think it’s a good place to own for the long term..

Okay. And Jon finally for me, just looking at -- you're coming up on your sixth year anniversary. So congratulations on that. When you hired your team, one of the things you stressed was that this was unlikely to be a lifetime sort of job that you were going to be opportunistic.

I am looking at the multiple so you're creating below several of the select service peers, you're creating 20% plus below NAV, 20% plus below what we think the assets on a private market basis would be. M&A is conducive to further activity. How do you think about it, it's clearly you can’t be having as much fine as you were a year ago..

Yes. So based upon what you said, it sounds like we're pretty cheap and a good buy. So we certainly would think that’s the case. So really not our job to be focused on value.

We think about strategic issues there or major transactional issues much more on a long term basis than a short term basis and it’s the buyers and sellers out there that will have an impact on short term values.

But we're more focused on long term value creation and those who want to participate in that, maybe they’ll see a good opportunity and those that are short term focused, maybe they should be off a bit today and not Pebblebrook. So, that’s kind of the way we look at it Bill..

Okay. Thanks Jon..

We'll go next to Jim Sullivan with Cowen Group..

Thank you. Good morning.

Jon, just to follow on the last question from Bill, I am curious when you think about the acquisition market this was something that was touched on I know in San Francisco, but given the negative revisions that we've been seeing, are you attempting to see the spread between the bid and the private market and the acquisition market widening.

And what’s your outlook for transaction activity in that respect over the next year?.

Yes I think for -- I think as we said, we're not terribly active in the market today for obvious reasons, but I think as we see what’s going on in the marketplace, I don’t know that we've seen a change in values yet in the major gateway cities.

We've seen some thinning of the buyer pool obviously primarily REITs have in many cases dropped out on the pursuit side, but in many cases it's been replaced by international capital today that has a longer term focus than may be some of the domestic buyers to do.

So can’t really speak too much to other markets Jim because we don’t really monitor them, but at least as it relates to the gateway market, the buyer pools are a little more limited, but we haven’t really seen any kind of material change in pricing..

Okay. And then second question and you may have touched on this earlier so apologies if I missed it, but on the international inward bound travel trends, you've cited that the data flow that we usually get from the Department of Commerce has been disrupted this year.

It's quite late, but I just wonder your sense is that, that trend is deteriorating, it’s getting worse or has it stabilized and as we think out toward 2016 any thoughts you have about where that’s going to go?.

Well I think we've probably seen it and again it’s anecdotal, but we've probably seen it get a little weaker as the year went on and we're coming up on either late in the quarter or in the first quarter lapping the exchange rates from earlier this year.

Now there maybe some delay in the impact just because international travel tends to be booked a little further out than domestic travel, but I think as we laugh and we continue to see growth in global travel we should see that pickup certainly some point next year unless the exchange rates continue to worsen and/or the economies around the world continue to get weaker..

Okay. And then final question from me, you touched on the personnel turnover at the managerial level earlier and I know we've talked about the impact of minimum wage changes in some of the markets particularly in the West Coast and that continues.

And I am just curious as you think about margin opportunity and margin pressure over the next year to what extent is it going to be hard to resist upward moving personnel cost?.

I think we've been seeing upper trends in personnel cost and they've been able to be offset with -- more than offset by productivity enhancements and cost reductions and that’s practice implementation for us and so from our viewpoint, we think that likely to continue for some time.

Salaries at the top level like executives that are certainly likely to go up more than inflation as the market becomes and is more competitive it’s a pretty small percentage of the overall cost base of our hotel. So we've had relief from energy. We've relief from insurance.

We've had and we should continue to have relief from insurances as long as there aren’t any Hurricanes or earthquakes of any material size.

We've had -- in general we don’t have a lot of our stabilized properties, growing property taxes to any great extent because we have half of our portfolio in California and Prop 13 limits that increases at 2% a year once reassessed on acquisitions. So we've some benefit from that on an overall basis as well..

Good. Okay. Thanks guys..

We'll go next to Jeff Donnelly with Wells Fargo..

Good morning, guys.

Just maybe speaking on that topic Jon with margins, what sort of revenue growth do you think you need in '16 to cover the growth in cost per occupied room and do you think there is a wide range of that as you look across your markets if the hurdle is materially different across markets or do you think it's fairly similar?.

Well, no it definitely varies by market Jeff, but we're just -- we haven't even gotten our budget yet for next year. So we don't really have any data to be able to answer your question. You can see this year we've limited our cost increases to 1.4% through -- I think it's 1.4% right through the first nine months..

Yes..

And that was about a 4% increase in revenues. Likely that expense level would be higher than that next year and also higher assuming our revenues are higher than that, but some of the initiatives that we have in terms of out-store seeing, restaurants, leasing them out, outsourcing other business within the hotels.

All of those things are leading to greater productivity and a mitigation of those cost increases we were talking about earlier from a wage perspective.

I would expect our staff level wages to be up at least I would say around 3% next year throughout the portfolio and of course benefit cost are running higher than that probably mid to upper single digits at least..

And just maybe going back to Bill's question on Group pace, maybe you have the data out, thanks for giving us Q1.

Can you repeat what the Group pace numbers are for Q3 and Q4 and maybe even tell us what Q2 of '16 looks like as well so we can see a figure maybe ex Super Bowl?.

Yes, I can't repeat them because I didn't mention them yet. I'll tell you what they are Jeff..

Thank you..

And again this is a third for the whole year, the percentages get less and less for each quarter obviously and so I don't and again keep in mind that we're 24% Group in our portfolio. So I am not sure I would want you to read too much into it from an industry perspective.

You get better information from some of the owners who have a broader group -- larger group and broader group properties and certainly some of the brands, but Q2 for us is up -- rooms are up 6.2%, ADR is up 8.5%, revenue is up 15.3%. Third quarter room nights are up 15%, ADR is up 22%, revenue is up 40% and then we don't really want to talk about Q4.

Q4 room nights are down 17.8%, ADR is up 6.5%, revenue is down 12.4%. Again the base of these numbers gets pretty small as the year goes on Jeff..

And you said those were '16 numbers..

Those are '16 numbers yes..

Okay. But repeat was moving for Q3 and Q4 of this year..

Oh, so we mentioned Q3 in the call. Room nights were down 11%, ADR was up 6.1%, revenues down 5.6% on the Group side and for Q4, room nights are up 0.5%, ADR is up 2.4%, revenue is up 3.0%..

Okay. Thank you..

And if you care for the year, room nights are down 4%, ADR is up 5.6%, revenue is up 1.3%..

Great. Thank you. And maybe just switching gears on last question, with just [Danahen] [ph], you've got an option to explore exiting your joint venture there in New York obviously in late summer 2016.

Have you seen your partner begin a process of maybe identifying someone to replace you guys? I was just curious in the past you've talked about on earnings calls and I was just wasn’t sure if you've seen any shift in their thinking what their options are?.

Yes, our partner is open to finding a new partner if we should decide to depart the joint venture..

But nothing that will lead to believe this could be coming sooner than where your option currently expires or comes about..

I think our partner is motivated to not be in a position where the entire portfolio is sold..

Okay. Thank you..

So that would hopefully answer your question..

No understood. Well, thank you..

We'll go next to Wes Golladay with RBC Capital Markets..

Yes, good morning, guys. You talk about how hard it is to forecast the current quarters. I imagine it's pretty hard now to revenue manage the properties as well as due to changing dynamics.

How good -- how hard is it to find a good revenue manager these days and what is your progress on that front?.

So we're actually in pretty good shape right now on the revenue management side.

As I mentioned earlier, we've had fairly significant turnover within the portfolio and we've been pretty successful in being able to find good revenue managers because of the quality of our assets and the interesting nature of our assets and the kind of culture there is with our operator.

So I think right now, we've two vacant positions within the portfolio, which would be pretty typical on an ongoing basis and one of those is for the Zeppelin, which the hotel is going to close November 1..

Okay. Thanks a lot guys..

Thanks Wes..

We'll go next to Lukas Hartwich with Green Street Advisors..

Thank you. Good morning, guys.

Can you talk about what you're hearing from the corporate customers in the tech industry? Are you hearing the tone change at all?.

Not at all. No, they're all still growing like mad. So we've started the RFP process. We look to be getting very healthy increases in the tech markets of LA, Santa Monica in particular San Francisco, Seattle, Portland and Boston.

So everybody pushes back on rate increases in corporate negotiations, but they're going to end up pretty healthy in those markets and we continue to see increased volume out of our technology accounts..

That’s helpful.

And then also given where the stock trades right now the discount, I am curious how you guys are thinking about asset sales?.

It doesn’t really change our thinking per se, Lucas. Again short term valuation of the stock is not really a good – it’s not a good criteria to make long term decisions on. So we're focused on disposing property that we ultimately think aren’t going to grow an increase in value at a healthy level or a meaningful laagered within the portfolio..

Great. That's it for me. Thank you..

We'll go next to Neil Malkin with RBC Capital Markets..

Hey guys, good morning. Just a couple of follow-up questions.

First off with your guidance reduction, how much of it is a function of Pebblebrook asset specific issues versus more macro demand uncertainty?.

It’s a combination of the two.

There is definitely some impact we're seeing within our portfolio as we said of acting on our strategies to change our customer segments to drive rates and bottom line profitability with a willingness to give up occupancy and not grow revenue as much, but reposition the property to ultimately grow the bottom line in a much more significant way and we laid that out in our Investor Day.

We've certainly urged people to take a look at what we laid out for the properties we bought last year and how that’s leading to help the growth in bottom line profitability, some more quickly than others as we change the customer segmentation and in some cases change the customers completely.

Some of it is slower ramp up from renovations as I indicated related to WLA in particular, but Zephyr as well and then the rest of it is -- would be cautiousness about industry trends and a macro soft patch, which we'll see it if it has an impact on travel or not..

Okay. All right.

And then second question is you talked about technology, people having more pricing transparency real time things of that nature, do you think a way that you can compare it on your end in addition to over booking is trying to build up your business transient base or maybe give us some sort of advantage to booking further out from your more higher rated customers.

Just so you're property managers have more confidence to raise rack rates or more shorter term walk in, just sort of combat the people barking at your booked rate when prices go down..

Yes, there is a lot of different strategies depending upon the particular property that some of the ones we're using relate to what you describe which is trying to build a better base. It would not typically be corporate transient although you can certainly expand your corporate accounts in order to get more volume ultimately into property.

But it’s really about getting, in many cases about getting a slightly larger group base on the books or getting a group base further out on the books and not be subject to the short term volatility where a group may or may not show up in the short term. So it is about getting a base in some cases.

In other cases it's about overbooking more, understanding that there are going to be more cancellations. In some cases it can be about trying to understand further out what are your high loyalty redemption days and not waiting to the last minute to get the last 5% on the books, trying to do that further out.

In other cases, it's using guaranteed rates, so non-refundable rates that might further out be a 5% or 10% or 15% discount off your borrow rate, so a lot of different strategies that we’re using depending upon the property..

Okay. Great and then real quick last question is, you're using some market RevPAR share in San Francisco, I am assuming what you alluded to and I am wondering does that poke a hole in your experiential stays, trump everything else or is it the fact that you can get a lot of good Yelp reviews that the price is too high.

The leisure person just will pick somewhere else to stay. Is that -- does it kind of poke a hole in that thesis or is the reason you're losing share at least temporarily because of the repositioning or the turnover and key revenue driving employees..

Yes. In San Francisco well a meaningful part of the share we've lost as we mentioned in the call was for the four properties that have transition managers and in one case where we not only transitioned the manager, but changed the name of the property. So that share was a couple of hundred basis points on our San Francisco performance.

Zephyr actually picked up share in the quarter and was all in ADR. So we picked up a little over 400 basis points of share, so good positive signs in terms of the experiential side.

We don't have any lack of confidence about the benefits of delivering a property that's unique and experiential and that's what the customer is looking for and willing to pay for.

We do lose some share and did lose some share within the portfolio where we were lacking in the Senior Leadership out in San Francisco, which is in the process of being remedied, but we know that from just looking at the share side. So no concerns about the experiential side at all Neil.

All right. Thank you for the color. I appreciate it very much..

And with no further questions in the queue, I would like to turn the conference back to the CEO, Jon Bortz..

Thanks Dana. Thanks everyone for participating and we look forward to a better update next quarter. Thank you..

And that does conclude today's presentation. We thank you for your participation..