Lisa Ramey - VP of Finance Marcel Verbaas - President and CEO Barry Bloom - COO Atish Shah - CFO.

Thomas Allen - Morgan Stanley Brian Dobson - Nomura Securities.

Welcome the Xenia Hotels & Resorts Fourth Quarter Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Lisa Ramey, Vice President of Finance. Please go ahead..

Thank you, Kate. Good morning, everyone and welcome to the fourth quarter and year-end 2016 earnings call and webcast for Xenia Hotels & Resorts. I am here with Marcel Verbaas, our President and Chief Executive Officer; Atish Shah, our Chief Financial Officer; and Barry Bloom, our Chief Operating Officer.

Marcel will begin with our fourth quarter and full-year results, followed by a discussion of Company achievements in 2016. Barry will follow with portfolio results and operational highlights. And Atish will conclude our remarks with details on 2017 guidance, followed by an update on our financial profile. We will then open up the call for Q&A.

Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements.

These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings which could cause our actual results to differ materially from those expressed in or implied by our comments.

Forward-looking statements in the earnings release that we issued earlier this morning, along with the comments on this call, are made only as of today, February 28, 2017 and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

You can find a reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in this morning's earnings release. An archive of this call will be available on our website for 90 days. With that, I'll turn it over to Marcel to get started..

Thank you, Lisa and thank you all for joining our call. While 2016 presented its challenges from an operating perspective, we're pleased with the results of our continued focus on the execution of our strategy throughout the year.

Despite slowing industry fundamentals and the unique challenges we faced in the Houston market, we spent the year focused on the aspects of our business that we can manage.

We remain diligent and dedicated to the four pillars that form our strategy, our broad portfolio mix, a focus on quality through transactions and portfolio enhancements, differentiated portfolio management and a strong financial profile.

As a result, we ended the year with a higher quality portfolio and stronger balance sheet than when we started 2016. We believe we're positioned well for the future and our experienced management team will be able to continue to maximize results within our portfolio.

In addition, last year's capital allocation decisions have positioned us to take advantage of external opportunities. Operationally, fourth quarter results slightly exceeded our expectations, with RevPAR, adjusted EBITDA and adjusted FFO each above the implied fourth quarter guidance provided in November.

During the quarter, we had net income attributable to common stockholders of $48.8 million, our adjusted EBITDA was $64.1 million for the quarter and our adjusted FFO per share declined slightly to $0.55.

For full-year 2016, we had net income attributable to common stockholders of $85.9 million, our adjusted EBITDA of $287.3 million was between the midpoint and high end of the range we provided in November and adjusted FFO per share grew 2.3% to $2.20.

We made several portfolio changes throughout 2016 that make a year-over-year adjusted EBITDA comparison challenging, a theme that will continue as we move into 2017.

In our press release issued this morning, we have added a number of disclosures that should be helpful in better understanding both our historical results and our 2017 guidance that is based on our current 42-property portfolio. Our current portfolio boasted a 2016 RevPAR of $152.46, 7% higher than our total portfolio RevPAR in 2015.

While we don't view RevPAR as the best metric to consider when determining portfolio quality, it is one simple way to demonstrate the improvements and the quality of our portfolio throughout the year.

We had an active year on the transaction site in 2016, as we continued to fine-tune the portfolio and improve portfolio quality, with over $425 million of strategic transactions during the year. This transaction activity consisted of one $136 million acquisition and approximately $290 million in dispositions.

In January, we acquired the Hotel Commonwealth in Boston which is one of the highest RevPAR and EBITDA per key assets in our portfolio. The Hotel Commonwealth and the three Kimpton properties we acquired in 2015 have performed within the range of our underwriting which was done in mid-2015.

Additionally, our two Grand Bohemian Hotel development projects in Mountain Brook, Alabama and Charleston, South Carolina continued to ramp throughout the year and we look forward to continued growth at these hotels in 2017.

As we have discussed previously, we executed on a number of strategic dispositions in 2016, selling nine lower-quality, low growth hotels. Most recently, we completed the sale of four hotels in two transactions in December for a combined sale price of $119 million.

This price represented an 11 times multiple on the hotels' combined 2016 protected EBITDA. The recent transactions allowed us to exit the St. Louis markets and reduce our exposure in Houston, Chicago and Denver through the sale of our lowest quality asset in each of those markets.

We continue to believe in the long term prospects of each of these markets, as demonstrated by our decision to schedule capital improvements in 2017 and 2018 at each of our remaining hotels in Houston, Denver and Chicago to improve their competitive positions in the coming years, taking advantage of weaker market conditions in each market.

The opportunity to sell our lowest quality assets in these markets at an attractive valuation relative to our public market value has created additional balance sheet flexibility for us. We expect to utilize this for internal and external opportunities, with stronger anticipated growth than we projected for these assets.

We began our disposition activity earlier than many of our peers and inclusive of the sale of our Hyatt Regency Orange County in the fourth quarter of 2015, we have disposed of 10 assets at a total price of approximately $427 million over the past 15 months. This level of activity is significant relative to our enterprise value.

More importantly, the disposition improve the quality of our remaining portfolio. Proceeds, as well as the significant capital expenditures that we avoided by selling these hotels, have positioned us to invest in higher growth opportunities in the future.

In addition to transactions, we also deployed capital into our existing portfolio by completing several renovations throughout the year and commencing several larger scale projects in the fourth quarter.

For the full year, we spent $57 million across the portfolio, including the completed projects at the Marriott Napa, Hyatt Centric Key West, Renaissance Atlanta Waverly and the Fairmont Dallas.

In the fourth quarter, we commenced guestroom renovations at the Westin Galleria in Houston Andes San Diego, Bohemian Hotel Celebration and Bohemian Hotel Savannah, as well as a meeting room renovation at the Marriott San Francisco Airport's Waterfront Hotel.

Our total capital expenditures in 2015 and 2016 amounted to approximately $105 million spent over the two years. As mentioned in our release this morning, our projected CapEx range for 2017 is $85 million to $95 million.

A portion of the increased amount in 2017 is strategic capital that we're choosing to deploy opportunistically for portfolio positioning purposes and in some cases, is a result of an acceleration in guestroom renovations to compete effectively with new supply additions.

In addition to the renovations that commenced in the fourth quarter that will be completed this year, we're also planning guestroom renovations at the Monaco Chicago Andes Savannah, Hilton Garden Inn DC, The Lorien, Monaco Denver, Marriott Chicago UIC, Residence Inn Denver and the Westin Oaks, the majority of which will start in the fourth quarter of this year.

While this level of renovation activity will create an operational headwind in 2017, we believe it is prudent to optimally position the portfolio through these strategic investments for stronger growth in the years ahead.

We believe that the returns we can generate from these investments are superior to those that we can generate from other uses of our capital. As Barry will cover later, we have been very successful in planning and executing renovations in the past.

Our understanding of our hotels and their competitors, the markets in which they operate, as well as the desires of our guests, gives us confidence in the rationale for each of these projects.

From an operational standpoint, expense control continues to be an area of focus and we're pleased with our ability to maintain margins, particularly during a time of RevPAR growth challenges. The result of these efforts is that our same-property EBITDA margin for the year remained flat on RevPAR decline of 0.3%.

This is directly attributable to our aggressive asset management initiatives and proprietary property optimization process, as our team focuses on driving bottom-line profitability across the portfolio.

We continue to focus on maintaining a strong balance sheet, with ample liquidity and flexibility which we continue to reinforce throughout the year with disposition proceeds. During 2016, we addressed near term debt maturities, lowered our weighted average interest rates and reduced our variable rate exposure.

In addition, we were able to return capital to shareholders through dividends and the execution of our share repurchase program at an attractive weighted average price. We were particularly active repurchasing our shares early in 2016, as we bought back approximately $74 million in shares at an average price of $14.89 for the year.

We continued to maintain our quarterly dividends of $0.275 per share, as announced Friday. And our Company continues to deliver a strong and supportable yield relative to peers. As we look into 2017, we anticipate it to be a transitional year, as we position the portfolio for 2018 and beyond.

We spent considerable time in 2016 positioning the Company to take advantage of opportunities as they arise and believe both our team and our balance sheet have capacity to grow the portfolio.

We will look to continue to upgrade our portfolio and believe that our broad market mix will allow us to evaluate a wide array of deals in order to find value and to achieve compelling risk-adjusted returns.

We're pleased with all that we were able to accomplish in our first two years as a public Company and ended 2016 in a significantly better position than where it started across all aspects of our business. And we intend to continue this forward momentum as we look to 2017 and beyond. And with that, I will turn it over to Barry..

Thank you, Marcel and good morning, everyone. As a reminder, all of the portfolio information I will be speaking about is reported on a same-property basis, with 39 hotels for the quarter and year end. In the fourth quarter, our portfolio results were challenged but in line with our expectations as of our last earnings call.

Same-property RevPAR was down 4.2% which comprised of a decline in occupancy of 194 basis points and a decline in rate of 1.5%. Excluding our three hotels in the Houston area, portfolio RevPAR was down 1.9% for the remaining 36-hotel portfolio.

For the full year, our RevPAR was down 0.3% compared to 2015, as occupancy was down 103 basis points and rate was up 1.1%. Excluding our Houston area hotels, RevPAR for the portfolio for the year grew 1.9%, attribute entirely to rate, as occupancy remained flat.

As demonstrated by our results, we continue to experience weakness in Houston through the end of 2016 and we also experienced anticipated disruption from the start of several renovation projects. Our Houston hotels accounted for nearly half of our year-over-year decline in rooms revenue for the quarter.

Our performance was also impacted by a number of nonrecurring events that took place in 2015, including the Breeders' Cup in Lexington, Kentucky; several significant non-repeating groups or events benefiting a number of our hotels, including our Marriott Dallas City Center and the Aston Waikiki Beach Resort; newly renovated competitors that were under renovation last year; and a general shift in group patterns through the Jewish holidays falling in Q4 this year.

Our portfolio results were also impacted by hurricane Matthew in October which, as mentioned on our third quarter call, impacted our hotels in Charleston, South Carolina; Savannah, Georgia; and Orlando, Florida.

Food and beverage revenues suffered a double-digit decline in the fourth quarter attributable primarily to declines in group and social catering revenues in some of our larger group-oriented hotels. Most notably in October, where year-over-year group business declined by over 17%.

Despite the weakness we experienced during the quarter with a decline of 7% on the revenue side, our properties were able to maintain a decline in EBITDA margin of only 116 basis points as a result of a number of portfolio-wide and property-specific expense control initiatives which I will discuss shortly.

During the fourth quarter, our top-performing markets were Napa up 8%; Salt Lake City up 7%; Washington, DC and Atlanta each up 6% and Kansas City and Santa Clara, both up 5%. Easter remains our most challenged market, with RevPAR down 22% for the quarter, followed by San Diego down 14% and Key West and Lexington each down 12%.

For the year, our top-performing markets were San Francisco up 17% and Santa Clara and Atlanta each up 5%. Houston finished the year down 17%, while Pittsburgh and Key West were each down 6%. We're particularly pleased by the performance of our recently renovated hotels.

Most notably our Marriott San Francisco Airport, Hyatt Regency Santa Clara and Andaz Napa had their best revenue and EBITDA years ever as a result of their substantial guestroom renovations, all of which were completed in the first half 2015.

On a combined basis, the Marriott San Francisco Airport and Hyatt Regency Santa Clara grew EBITDA by over one third compared to 2014 for the last full year prior to their guestroom renovations.

The combined increase in 2016 of approximately $10 million in EBITDA versus 2014, when compared to project cost of $26 million, is indicative of our ability to utilize our experienced in-house capital and project management team to make the right renovations at the right properties at the right time in order to drive overall property performance and achieve strong returns on our reinvestments in our hotels.

Given this recent success and strong returns on our investment, we're particularly enthusiastic about the renovation work we will tackle in 2017.

As we looked our five-year capital plans in early 2016, we identified a number strategic opportunities to develop guestroom product, in particular, that would be able to meet and in many cases exceed, market expectations.

As an example, we have become big believers in tub-to-shower conversions, as we have seen the success in our hotels where these conversions are being done.

As a result, we have programmed significant tub-to-shower conversions in our upcoming renovations in Chicago, Denver and Washington, DC, as we look to reposition these hotels to capture greater market share.

We also expect significant lift in the future, from our late-year starting renovations in a number of our Marriott Hotels, including Chicago Medical District, Dallas City Center and Houston Woodlands properties, as we introduced the new Marriott guestroom and bathroom in these locations.

2017 will also be an important year for enhancing our lobby and food and beverage facilities, as we look to follow on to recent rooms renovation projects.

Specifically, we will add a lobby bar to the Westin Galleria in Houston, renovate our very successful great room at the Marriott San Francisco Airport and expect to completely revamp the food and beverage operations at the Hyatt Regency Santa Clara and RiverPlace in Portland.

We continue to experience the benefits of a highly diversified portfolio as we balance approximately 70% transient and 30% group business, consistent with prior years.

The softening trend we experienced in corporate business in the early part of the year reversed slightly later in the year, but was offset by the more significant decline in group business during Q4 and we ended the year in transient ADR and revenue flat to last year and group revenues down 2%, despite a nearly 3% growth in group ADR.

Atish will talk in more detail regarding our positive group outlook for 2017. Our asset management team continues to implement a wide variety of strategic initiatives which have both enhanced margins in properties that are performing well, in addition to mitigating margin decline in hotels where we experience top-line performance.

As we have referenced before, our property optimization process an intensive on-site review by a specialist team within our asset management function continues to identify revenue enhancement and cost-containment opportunities at our properties.

Since the beginning of this process in 2014, we have implemented total net enhancements and reductions of approximately $4.1 million to in-depth reviews oat 45% of our hotels, accounting for nearly 60% of our room inventory.

Specific examples of where we have achieved success include productivity, such as scheduling efficiencies and time and motion studies; pricing, including refinement of on-demand guest request items and room service modifications; and purchasing, where we continue to implement cost-saving green initiatives and substitute generic or non-branded products for commodity items.

We continue to watch our Houston assets very closely for indications that the market has begun its recovery. We expect to be challenged at the Marriott Woodlands this year, as we absorb the impact from new supply through the second quarter.

We also expect to continue to experience some oil and gas industry group meeting cancellations; however, we believe that we will be able to garner significant incremental business at the Westin Galleria following the completion of its extensive room renovation and lobby renovation in the third quarter. Let me now turn the call over to Atish..

Thanks, Barry. I will cover two topics today; First, I will discuss our outlook for 2017, then I will turn to a discussion of our balance sheet.

As Both Marcel and Barry alluded to earlier, our industry fundamentals remain challenged and in 2017, the industry is likely to experience supply growth in excess of demand growth for the first time since 2010. Our guidance is reflective of this industry dynamic. We expect RevPAR to be flat to down 2% for 2017.

Two other items are negatively impacted our RevPAR outlook for this year. First, we expect RevPAR at our hotels in Houston to decline 8% to 12% due to continued weakness in the market, additions to supply and property renovations. This decline is expected to have an approximate 100-basis-point impact on the full portfolio's RevPAR.

Second, we anticipate revenue displacement due to property renovations to negative impact RevPAR by an additional 50 basis points. Apart from these two factors, we believe our portfolio will continue to perform in-line with our peers.

As to specific market dynamics, looking forward, we anticipate relatively stronger results from recently renovated or newly opened hotels. Properties such as the Marriott Napa Valley, Hyatt Centric Key West and the Grand Bohemians in Charleston in Mountain Brook should do well.

In addition, our hotels located in Washington DC, Atlanta and New Orleans are expected to perform well, as market demand is strong in these locations. On the flip side, markets in which additions to competitive supply are outpacing demand growth, such as Houston and Denver, are expected to be more challenged.

And our hotels in Philadelphia and the San Francisco area are expected to have demand declines relative to last year for market-specific reasons. As we look at the entire portfolio, group revenue pace is up approximately 4%, primarily due to an increase in demand.

As a reminder and as Barry mentioned, approximately 30% of our room night mix is from group guests. And we started the year with approximately 50% of our group business on the books. The first and fourth quarters of this year are expected to have the highest year-over-year growth, partially due to the timing of holidays.

We're pleased with our current group pace, but are mindful that we had a similarly positive pace last year, but because of cancellations and lower in-the-year production, finished the year with a decline in group revenues. We expect our adjusted EBITDA to be between $241 million and $255 million in 2017.

I would like to provide a bridge to 2017 adjusted EBITDA relative to 2016. There are three items to discuss. First, our earnings base is lower than last year due to dispositions. The hotels we sold during 2016 contributed approximately $17 million to our adjusted EBITDA last year.

These were successful dispositions and we have significant dry powder as a result. Until we replaced this EBITDA with new growth opportunities, we have a reductions in our earnings base. In terms of the weighting by quarter, the $17 million of earnings in 2016 that will not be repeating in 2017 is as follows.

In each of the first and second quarters, the amount was approximately $6 million. In the third quarter, it was approximately $3 million. And in the fourth quarter, it was approximately $2 million. Second, the expected change in RevPAR will result in lower hotel EBITDA in 2017.

As you may recall, we need approximately 1.5% RevPAR growth in order to maintain flat hotel EBITDA. Last year, despite flat RevPAR, our same-property hotel EBITDA did not decline significantly, as we maintain margins. We do not believe that trend will continue again this year.

We will, of course, continue to focus on cost containment and seek additional ways to improve operating performance. Outside of operations, we're also projecting property taxes to increase over 10% in 2017. This has an impact of approximately $4 million relative to 2016.

We face reassessment with a few markets, as property values have increased and municipalities seek additional revenues. Therefore, we expect hotel EBITDA margins to decline approximately 150 basis points for 2017. This results in an $18 million decline in hotel EBITDA as compared to last year.

Third, we expect cash corporate G&A to increase approximately $2 million compared to last year. In 2016, we incurred lower incentive compensation. Our 2017 forecast reflects normalized incentive compensation, hence the year-over-year increase.

Excluding this comparison issue, our increase in cash SG&A is approximately 1.5% which we believe is consistent with inflation levels. Moving ahead to adjusted FFO, we expect this to be between $195 million and $209 million in 2017. This would result in adjusted FFO per share of $1.82 to $1.95 based upon approximately 107 million shares outstanding.

In terms of capital expenditures, in 2017, we're expecting to spend between $85 million and $95 million. This includes both renovation projects as well as maintenance CapEx. We're making these expenditures with an eye towards future growth. We have confidence in our ability to manage these projects to deliver strong returns over time.

I will now move to my second topic this morning, I would like to discuss our balance sheet. We have been focused on further strengthening the balance sheet in 2016. We were active during the year we increased our mix of unsecured debt, we lowered our cost of debt and we made moves to lock in attractive fixed rates.

Overall, we ended the year with net debt to EBITDA ratio of 3.3 times per our line of credit definition and we do not have any debt maturities until April of 2018. As we look forward, you can expect from us a focus on addressing our remaining 2018 maturities and a focus on increasing the overall duration of our debt.

We will also look to continue to fix our variable rates. Earlier this month we swapped two variable rate loans to do just that. As of March 1, variable rate debt will represent approximately one third of our total debt outstanding.

Our sensitivity to an increase in interest rates is now approximately $1 million for each 25-basis-point increase in LIBOR, so are focused on moving our mix of variable rate debt down to approximately 25% over time. As to our liquidity, it remains strong with over $215 million of unrestricted cash on the balance sheet as of year-end 2016.

In addition, we have an undrawn line $400 million. In conclusion, we're pleased with the outcomes we delivered in 2016. We had an active year. We improved the quality of our portfolio by transacting. We strengthened our balance sheet by making smart capital allocation move.

From a strategic standpoint, we believe our positioning is superior to others in the space. We believe in owning the best brands and having broad geographic diversification. We have a strong set of tools to create value in the future, ranging from our asset-management process to our buyback authorization to our strong balance sheet.

And we intend to drive internal and external growth in the months and years ahead and are optimistic about our prospects to create value over the long term. This concludes our prepared remarks and we will now take our first question, operator..

[Operator Instructions]. The first question comes from Thomas Allen of Morgan Stanley. Please go ahead..

You guys talked a decent amount about your balance sheet and the strength of your balance sheet. Can you just talk about how aggressive you would be willing to be in terms of acquisitions? And if you are going to be aggressive, what markets would you be looking at? Thanks..

Sure. Good morning, Tom. As we have noted, we have over $250 million of cash available. We're fully undrawn, $400 million line. We've obviously been very active on the disposition front over the past 15 months. And frankly, when you look at the amount of activity we've had there, it's been a fairly big percent of our enterprise value.

So we've clearly made all the moves to put ourselves in a position to be an inquisitor for the right kind of opportunities that would come around. It really depends on the long term outlook of potential opportunities that would come up and how aggressive we'll be on those.

We certainly feel like this year could be a year where we could be more of a net acquirer versus a net seller, like we've been over the past 15 months. And market wise, we're going to be very much focused on the strategy we have, looking at primarily top 25 lodging markets, key leader destinations.

There are a few markets where we're not represented, where we'll where we will certainly look at. But we're very much focused on what the supply picture looks like in individual markets, whether we want to actually get into some of those markets in the current part of the cycle.

So think about markets like some markets where we're, where we wouldn't mind increasing exposure in markets like DC, like Boston, like Orlando, Atlanta. There are certain markets where we're not currently where we'd also take a look, like Minneapolis, Charlotte, Nashville, those types of markets.

But we would have to be very comfortable with supply picture, with growth opportunities with those specific opportunities..

And a couple of questions on Houston. I'm right that it came in below your expectations for the fourth quarter. What do you think is happening there? When do you expect that market to stabilize? And you did sell an asset in that market in the fourth quarter. How easy was it to sell? Thanks..

I will take the second part of the question first and I will talk about the transaction and then I will turn it to Barry to give you a little bit more color on what we're seeing from the operational standpoint.

As we looked at potential dispositions last year, the four assets we sold in the fourth quarter were assets that we had earmarked that we believe didn't quite have the same growth characteristics going forward that we expect form the rest of our portfolio. And an opportunity to exit a market like St.

Louis and an opportunity to lower our exposure in some of the other more challenging markets like Houston, Denver and Chicago was appealing for us.

So, when we looked, at including the Houston asset in that portfolio, there frankly was a fair amount of interest in that just because people are obviously thinking that there will be a turning of the market there at some point and there will be some growth that can be achieved in assets in that market.

From our perspective, we obviously have a concentration in Houston and we prefer to refocus our efforts on the assets that are the higher-quality assets for us in those markets. So I'll turn it Barry to answer a little bit more specifically on the operations side..

So a couple of different things and we're certainly seeing some divergence as we look at the three hotels together as the Oaks and Galleria as opposed to the Woodlands. The Woodlands is the worst story, but it's a little easier to walk through.

The challenges there in Q4 and our continued challenge is at least through the first half of this year related to the new supply that entered that market, primarily in Q2 of last year. So we continue to have very -- battle very aggressively with those new competitors for both occupancy and rate in the Woodlands sub-market.

We also experienced in Q4 in the Woodlands a number of continued group cancellations in the oil and gas sector, both on the room size, as well as a number of large holiday parties which was part of our --the overall impact on food and beverage decline in Q4.

We see the Woodlands market as being, unfortunately, relatively stable through the year in terms of quarter by quarter and are not really anticipating any recovery in the Woodlands market this year. The Oaks and Galleria, very different story.

Some real challenges there continue, we expect to continue through Q1 and Q2, despite a very successful Super Bowl. But we do expect and have underwritten into our guidance a modest stabilization there. As it relates to the Oaks and Galleria Hotel it was primarily due to the Gallery renovation. It's a great renovation.

We're really touching all the guestrooms. We're doing a lot of tub-to-shower conversions. We're adding a bar in the lobby. We're looking at some other ancillary upgrades we may do later in the year to complete the renovation.

But our expectation certainly is that we get to not positive growth, but certainly get very close to flat year-over-year environment there in Q3 and Q4..

[Operator Instructions]. The next question comes from Brian Dobson of Nomura. Please go ahead..

Just a quick question on group pace, I see you mentioned that was up low single digits so far this year.

How much of that is in your outlook? Or have you taken a more conservative approach given what happened last year?.

We have taken a little bit more conservative approach as we looked at and as Atish mentioned in his comments, I believe in his comments as well, that we came in for the year, last year with positive pace as well. We saw a fair number of cancellations and a little bit or weakness in the year for the year bookings last year.

So we have certainly taken that into consideration as we have looked at this year. And keep in mind that our group contribution is about 30% of our business, like Barry mentioned. And with about half of that on the books, it certainly isn't something that we want to completely hang our hats on as we look at the RevPAR changes for this year..

Yes, that's right.

So it's fair to assume that you're anticipating a flat booking pace in your guidance?.

Well, I think, certainly we expect for the -- between the in the year, for the year production and the impact of cancellation and attrition to impact that pace as it realizes during the course of the year. So we're hopeful that it's not down 2 again this year, but we don't expect it to be up 4%.

So somewhere in between flattish is probably about right..

There are no additional questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Marcel Verbaas for closing remarks..

Thank you, Kate. Thank you all again for joining us today. As I mentioned in my opening remarks, we're very pleased with where we're positioned with the Company.

Certainly our dealing with some operational headwinds and particularly some of the challenges in Houston that have persisted, but we believe we've set the Company up for growth in the future and are looking forward to effectuating that. And with that, I will wish everyone a happy Mardi Gras and thank you for joining us today..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..