American Hotel Income Properties REIT LP

Thank you, Operator. Good morning, everyone and thank you for joining us for our first quarter 2022results conference call.

Discussing AHIP's performance today are Jonathan Korol, Chief Executive Officer; Bruce Pittet, Chief Operating Officer; and Travis Beatty, Chief Financial Officer. The following discussion will include forward-looking statements as required by securities regulators in Canada.

Comments that are not a statement of fact, including projections of future earnings, revenue, income, and FFO are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause our actual financial and operating results to differ significantly from our forward-looking statements are detailed in our MD&A for the 3 months ended March 31, 2022.

Our other Canadian securities filings available on SEDAR and on our website at ahipreit.com. AHIP does not undertake to update or revise any forward-looking statements to reflect new events or circumstances, except as required by law.

Listeners are urged to review the full discussion of risk factors on AHIP's annual information form dated March 21, 2022, which has been filed on SEDAR at www. sedar.com.

Our first quarter results were made available yesterday afternoon. We encourage you to review our earnings release, MD&A, and financial statements, which are available on our website as well as on SEDAR.

On this call, we will discuss certain non-IFRS financial measures, including NOI, hotel EBITDA, FFO, and AFFO. For the definition of these non-IFRS financial measures, the most directly comparable IFRS financial measure and a reconciliation between the two, please refer to our MD&A.

References to prior year operating results are comparisons of AHIP's current portfolio of 77 properties results in that period versus the same properties results today. All figures discussed on today's call are in U.S.

dollars, unless otherwise indicated. I'd like to remind everyone that this call is being recorded today, May 11, 2022, and a replay of this call will be available on our website.

Jonathan will begin today's call with an overview of operational, and financial highlights, followed by Bruce, who will provide an update on hotel operations, and lastly, Travis will highlight key financial results. I'll now turn the call over to Jonathan Korol, Chief Executive Officer.

Thank you, Kelly. And thanks everyone for joining us today for our first quarter financial results conference call.

When we last spoke in the second week of March, we outlined the positive demand trajectory that we are witnessing following the effects of Omicron on our business in January and the early part of February. Since that time, market demand dynamics have continued to improve and U.S.

hotel customers are showing a healthy desire and ability to travel. The improving consumer backdrop has resulted in rising room rates accompanied by stable occupancies.

We finished Q1 1% above Q1 2019 average daily rates. This marks the third consecutive quarter where we have exceeded 2019 rates.

RevPAR for the quarter finished in an 87% recovery rate to Q1 2019,a result that we are pleased with considering the Omicron induced challenges in January, which led us to finishing that month at 81% of 2019 RevPAR levels. Q1 improvements to the top line were accompanied by inflationary cost pressures, the impact of geopolitical events on commodity prices, as well as the enduring effects of COVID disruptions on the labor markets and supply chain impacted operating margins.

Q1 is always a quarter which is our most challenging from a seasonality perspective. In the current environment our ability to maintain margins at 2019 levels or better will be determined by achieving revenue growth to offset inflationary cost pressures.As the only real estate asset class with the ability to set rates daily, we are well positioned for an inflationary environment.

Subsequent to quarter end, April results continued to positive monthly trends in ADR and occupancy and you will see us continuing the trend of exceeding 2019 ADR levels and narrowing the gap to 2019 occupancy levels. Bruce will discuss the positive trends we're seeing in the market that drive our expectations as we near our busiest demand seasons.

Overall, we are very pleased with the performance of our portfolio of premium branded select service hotel properties during the pandemic recovery. Our year-over-year comparison illustrates this improvement in performance.

For the three months ended March 31, 2022,total revenues increased by $15.1 million or 32% compared to 2021. Funds from operations or FFO for the quarter increased to $3.6 million, versus negative $2 million in 2021.

This is as a result of higher NOI due to the improvement of operations. As we enter a rising rate environment, the fixed rate nature of our debt obligations begins to be an advantage for us.

Today, 93% of our debt obligations are fixed rate coupons are subject to variable to fixed swap arrangements. Our weighted average interest rate for our debt obligations is at or below the market for comparable first mortgage debt were it issued today.We recently refinanced our only remaining loan maturity in 2022, and our next loan maturity will not occur until the end of 2023.

In the next few days, we will be releasing our inaugural corporate responsibility and sustainability report. This report is designed to help our stakeholders understand our commitment and efforts regarding environmental stewardship, social responsibility and governance.

We are proud to be able to report on present and future commitments with respect to ESG initiatives. Underscoring the importance of these commitments, our Board of Directors nominating Governance Committee will now expand its scope to include the oversight of our sustainability efforts.

I'm excited to see our organization coming together for the shared goal and I'm grateful for the efforts of our brand partners, hotel managers, vendors, guests and other stakeholders for their stated commitments to implement programs that have a positive effect on our business to the environment and our communities. As previously announced in January, we closed on the sale of the 89 room Fairfield Inn in Lake City Florida in an off market transaction to a local hotel owner operator.

Sale price of $10.3 million translates to roughly 115,000 per key, and it's a 7.6 yield on 2021 income. This was a non-core asset for AHIP in a location characterized by imminent new supply.

In addition, a pending PIP requirement from Marriott that AHIP estimated would generate a low return on investment made the sale decision consistent with our overall asset management philosophy. In Q1, we reinstated our monthly distribution and an annualized level of $0.18 per unit.

Back in November of last year, when we made the announcement that we were reinstating the distribution, we were one of the first North American Hotel Lodging REITs to do so, following the COVID outbreak in 2020. Despite the macro and micro challenges in Q1 that we could not have foreseen, we remain confident in the distribution levels.Moving forward, we will continue to regularly interact with our Board to assess opportunities to increase our payout in the context of the current operating environment.

We're proud of our ability to provide our unitholders with a meaningful cash yield on their investment at this point in the recovery. Based on our closing price yesterday, the annualized distribution of US$0.18 per unit represents a cash yield of over 6%.

The fact that we're able to do this ahead of most of our peers speaks to the strength of our portfolio and of our team. I'll now turn the call over to Bruce to discuss first quarter hotel operations.

Travis will highlight key first quarter financial metrics. Bruce?

Thank you, Jonathan. And good morning everyone.

As we look at Q1 performance in many ways, we had distinct operating environments, January, which was impacted by Omicron muted demand and the February-March time period which saw continued revenue recovery comparable to Q4 2021. Overall consumer demand continues to remain healthy.

More specifically, total occupancy for our 77 hotels in the first quarter averaged 63.6%.On a monthly basis through the quarter, January occupancy was 54.7%, February occupancy was 65.7% and March occupancy was 70.7%. While Q1 is typically a seasonally slower period, Omicron further impacted demand in January and early February, across the portfolio.

And in some instances, we had group business push to dates later into 2022. For the quarter occupancy was 87% of 2019 levels.

ADR continues to be the catalyst for RevPAR recovery across AHIP's portfolio exceeding 2019 performance by 1%. This is the third consecutive quarter of ADR matching or exceeding 2019 levels.

ADR for the quarter was $109.27 in January, $118.25 in February and $122.28 in March.We anticipate we will continue to see strong ADR performance going forward. Q1 RevPAR for our 77 Hotels was $74.54 or 87% of 2019 levels, with overall Q1 performance being negatively influenced by January slow start due to pandemic impacts.January's recovery to 2019 RevPAR benchmarks at 81% was below the recovery trend we had seen in Q4 at 90% of 2019 levels.

Once into February and continuing into March, RevPAR recovery rates were more aligned with Q4 2021 with February at 91% and March at 89%. Looking at our portfolio performance we referenced three distinct segments of our business extended stay, select service and our Embassy Suites hotels.

The extended stay segment which contributes to higher overall operating margins typically as a result of longer average length of stay has outperformed during the pandemic.As the recovery continues, we are seeing a more balanced -- we're seeing more balance amongst the three segments as demand continues to strengthen and stabilize across the portfolio. For the quarter the extended stay segment achieved a RevPAR of $82.78 or 88% recovery to 2019.The select service segment achieved a RevPAR of $67.66 in Q1.

This represents a recovery of 89% to the same period in 2019. The Embassy Suites segment achieved a RevPAR of $84.08 or 80% recovery versus 2019.

We are seeing evidence that our food and beverage business at the Embassy's is improving as the revenue GAAP to 2019 continues to narrow. Strengthening food and beverage revenues is a signal of recovery in corporate and group business demand.

As we look back over the last year, the embassy segment has seen the biggest improvement in terms of RevPAR recovery going from 48% of 2019 levels to 80% this past quarter. An additional sign of corporate and group travel returning to our hotels is the improvement in the negotiated segment and GDS channel performance.

GDS or Global Distribution Systems is mostly driven by travel agents booking corporate travel for their clients. Negotiated revenues increased 11% quarter-over-quarter, while GDS revenues increased 13% over that same period.

Brand operating standards that have been in effect since Q3 2021, continue to remain in place today. Specifically housekeeping and complementary service standards continue to be reduced when compared to 2019 requirements.

That said our margins were challenged in Q1. Throughout the quarter, we saw inflationary cost pressures, labor scarcity, and increasing energy costs impact margin performance.

This drove Q1 margins -- this drove Q1 2022 margins below 2019 levels after three consecutive quarters where NOI margins exceeded 2019 levels. After a pandemic impacted January we saw margin strengthened considerably in February and March.

We continue to work with our hotel manager on revenue management initiatives, particularly maximizing ADR, improving retention and hiring more in-house staff in an effort to reduce overtime and third party labor requirements as occupancy and revenue continue to recover. As previously announced AHIP's 2022 capital plan represents a return to pre-pandemic spending levels.

The capital plan is weighted to the second half of 2022 where we are planning significant renovations of eight of seven hotels located in Florida and the U.S. Northeast.

Total value of the renovation projects is approximately $20 million. We also anticipate spending $10 million in capital maintenance projects across the portfolio for a total capital commitment of $30 million million of the capital program will be funded from existing restricted cash accounts.

In Q1 2022, the AHIP capital spent was approximately $3 million. As Jonathan mentioned, initial April results suggest continued improvement in top line performance with

Thank you, Bruce. Good morning everyone.

AHIP continued to see improved financial results in Q1 2022 compared to the prior year. Funds from operations, or FFO was $3.6 million or $0.05 for the quarter compared to negative $2 million or negative $0.03 for the same period last year.

This is due to operating improvements in 2022 and that 2021 was negatively impacted by a $1.3 million nonrecurring financing charge. Reported net loss for the quarter was $3.9 million, which was an improvement over the loss of $14 million for the same period in 2021.

Along with improved operating results, the decrease loss compared to prior year was a result of a gain of $1.7 million in the sale of a hotel in Florida and a $2.4 million increase in the change of fair value of our interest rate swap contracts. Diluted loss per unit was $0.05 in Q1 2022, compared to a loss of $0.18 in the same period of 2021.

Total available liquidity at March 31, 2022 was $40 million, plus an additional restricted cash balance of $40.4 million. Net to gross book value remained stable at 54.1% from the fourth quarter to the first quarter, and represents a 460 basis point improvement from mid-2020.Further improvements to leverage are expected through a combination of improved operating results and maintaining a sustainable distribution.

On April 6, AHIP repaid an outstanding loan of $54.5 million with a maturity date of July 6. This loan was repaid with $5 million of cash and the remainder by borrowing under the revolving credit facility.Net of the incremental borrowing availability into the credit facility increased by $14 million, and an additional $3.3 million was released from restricted cash.

In the first quarter of 2022, market expectations for short and long term interest rates increased substantially. Since 93% of our debt is at fixed interest rates, or is effectively fixed due to interest rate swaps, we do not expect the material increase in our interest expense in 2022 or 2023.

In addition, we have no debt maturities or a maturity of our interest rate swaps until the fourth quarter of 2023. This debt and hedging structure will provide financial stability during uncertain times in the debt financing markets.

Our recently reinstated monthly distribution of U.S. dollars, $0.015 per common unit commenced with announcement on February 15.

We are pleased to be in a financial position to proceed with distributions in 2022. This reflects confidence and our operating model and a positive outlook for the sector for the balance of the year.

At our current unit price, the yield of 6.2% represents the highest annualized yield in the Bloomberg Hotel REIT Index. The declaration of payment of each monthly distribution under our revised distribution policy remains subject to Board approval.

I will now turn the call back over to Jonathan.

Thanks, Travis. I'd like to thank our management team, the hundreds of people on the front lines and guest facing roles who work diligently to ensure that our guests have a safe and enjoyable experience at our properties.

With revenues approaching pre-pandemic levels and trends pointing to strengthen demand as we move through the second and into the third quarter, we have reason to be optimistic about 2022 and beyond. I continue to believe that there are many opportunities to exceed 2019 baseline levels.

First of all, and as mentioned earlier, the eventual sustained return of business travel will provide further demand compression and rate gains as well as gains to the limited food and beverage offerings within our portfolio. Secondly, our five Embassy Suites properties which represent 15% of our total key count, still lag the rest of the portfolio recovery.

We're seeing signs of this business coming back. Thirdly, the 12 assets that were purchased in late 2019 have benefited from our asset management oversight and dedicated revenue management and should exceed 2019 results.

In 2019, AHIP also renovated several properties. The benefits of these investment dollars did not have time to surface prior to the outbreak of the pandemic.

Taken together, these items paint an encouraging picture for the short to intermediate term. In closing, our public market valuation continues to be significantly discounted to private market values and replacement costs for our portfolio.

In my opinion, as performance continues to accelerate as the recovery takes hold, this gap will close through sustained cash flow production. Besides this, we will continue to evaluate all opportunities to close this Public to Private Market Value gap.

Our stated mandate remains to drive attractive yields for our investors, while maximizing long-term value. So with that overview of our first quarter, and recent initiatives will now open the call to questions from analysts.

Operator?

Hi, thanks good morning. So my first question is around corporate travel.

With the largest improvement expected from corporate demand at the Embassy Suites portfolio. What trends have you seen in corporate travel recently and more particularly in April and May?

And does it align with your outlook?

Yes hi, Nick it's Bruce. We are seeing travel and room nights increase into our Embassy Suite hotels, perhaps one of the best measures we have is looking at food and beverage demand in those hotels.

So we're back to about 50% of where we were in 2019, which is actually a pretty sharp jump over the last four or five months. And in fact, I think in March, we were at 58% for that month of March of 2019 levels.

So that food and beverage businesses typically driven by conference attendees or group attendees, who are attending small meetings as well as corporate travelers. So as I mentioned in my remarks, we're seeing growth in kind of two key segments that drive corporate business negotiated rates, and GDS.

So we're seeing very favorable growth and both of those well in that segment in that channel.

Great, thanks for the color, just shifting gears to the labor front. So as per CBRE the hotel industry saw a 50% wage increase year-over-year, which kind of echoes what was mentioned in the disclosure.

So I'm just wondering, what have you seen in terms of wage pressures and job vacancies recently? And what are the implications for the margin moving forward?

Sure, I'll tackle that one. Nicholas, I think we talked about labor we want to talk specifically about rooms labor, so rooms, departmental expenses.

And then we'll talk about salary payroll. On the on the room's labor costs - the week we're having difficulty staffing up hourly workers due to challenges in the labor market that were really magnified by Omicron in January, and the early part of February.

So we were forced to dip into the contract labor pool with more frequency and this led to higher overtime costs, as well. So the hourly wage increase that you're talking about was really magnified by the fact that we had less people and we were in a position where we had to pay overtime, and dip into to contract labor.

The other ripple effect is that productivity suffered. So in the contract labor case, we're bringing in folks that with less experience, for example, in housekeeping, and so productivity rates were diminished.

So what have we done since that impact which is really felt in January in the early part of February. We've ramped up our hiring and specifically dipping into foreign worker programs so employees on visa programs and that are now working full time.

Within the property, we ramped up our hiring of these individuals during the quarter. So now we have about 160 folks on the payroll from this program, which represents about 10% of our total employee count at this time.

So it's helping us reduce the overtime and increase the productivity, and it's going to lead to a normalization of our room's expense. The industry data that you spoke about is something that we've been - seeing really for the last two to three quarters, and doesn't come to as a surprise at all.

And we've been adjusting labor rates over the last year. Let me let me talk about salary payroll, though first or lastly, before ending this answer?

I'd say that salary payroll increases that we incurred in Q1 were budgeted. So we were intent on ramping up our hiring for more managerial positions in sales, repairs and maintenance, and even general managers in anticipation of higher volumes in Q2 and the rest of the year.

And thankfully, that's what we're seeing on as we look forward to, to demand for the rest of 2022.

Great, appreciate the color on that one. And then just lastly for me, in the rise of the current rising rate environment, how should we think about the REITs capital recycling initiatives?

And do you still see solid investment demand for some of the assets you have earmarked for sale?

We don't have anything earmarked for sale other than…

If you're not earmarked so I'll just thinking about, you know, any potential sales apologies?

Okay potential sales I mean, there's tremendous demand in the private markets for hotels, specifically select Service hotels, because people have seen how select service hotels have performed during the pandemic. And it's attracted a lot of capital sources.

And so that there is still tremendous demand for these property types in the market right now.

Perfect, that's all for me. I'll turn it back.

Thanks.

Thanks and good morning, guys.

Good morning.

You spoke about improving demand can you maybe just give us some numbers for what you think whether it's an occupancy or ADR. What we can see through the summer months, and maybe where you see the longer term trend over the next year?

Yes I'll answer this - Mark, but I think, you know - it's in our business right now, it's difficult to point to rooms on the books, because the booking window is so - it's so short and compressed. But every indication that we have right now is suggesting that this dynamic around ability to push rate above 2019 levels is continuing.

And Bruce mentioned that, you know, we mentioned in our April results, we're exceeding - we're exceeding 2019 ADR levels. And we're starting to narrow that gap substantially to RevPAR levels.

But what we really like about this environment is that it's rate driven. And that's going to and that's going to benefit our business and our margins as we get as we hit our seasonally higher quarters over the next three to six months.

So that's what you're going to see. And I think, when we look at the embassies, which have traditionally been the drag on the revenue during this recovery.

We're just seeing some tremendous we're hearing some tremendous statements from our sales managers - at these five properties that are very bullish on the return of corporate and business transient demand.

Can I push you for some actual numbers on occupancy or ADR?

I think it's reasonable to assume that we're going to be above 2019 levels on the ADR side, and I think occupancy will continue to be in that 90% to 95% range of 2019.

Okay, you made another comment about valuation gap and you're looking at different options. Can you expand on what type of options you're considering?

And then also, what extent is this something that you and the Board feel is something really important to deal with this year, or is it something that you're looking at, but you'd rather just let the recovery take hold and play out over the next year or so?

Oh, well, you know, the board and I are always in discussions about valuation. And you know, we're not alone in the REIT universe right now, saying that we're trading at a substantial discount to net asset value.

I think what's probably changed over the last 90 days is that some of the fixed rate debt that accompanies are assets right now, where a year ago, the defeasance costs, or the in-place coupon was probably not marketable to a potential buyer. I think is -- now that the reverse is true.

So we would, you know, I think the biggest or the most convenient level right now is to entertain the idea of selling certain assets, in order to show the market where per keys are on a trade versus where -- what our unit value per key is. So, I think that's something that we're going to explore with the board over the next quarter.

But I don't have any specific assets right now that we are -- that I can say that we're taking to market imminently.

Okay. Thank you.

Thank you.

Thanks. Good morning, everybody.

Maybe just switching back to the operating cost side of things, obviously, a little bit down, especially after the great numbers you guys were posting in the last few quarters. Jonathan, I think you mentioned that, you know, obviously Omicron had an impact on January.

Can you maybe give us some color as to what the actual NOI margins were by month?

Yes, we -- I think X January, our numbers are actually close to -- what is it, just over 30%. So it's not quite at 2019 level, but certainly closer to, and -- but we can circle back with you on, if you want to get into more specifics on that, Lorne.

Yes, I may take you up on that. And then I guess so, yes, so you mentioned you're obviously taking some initiatives here to try and limit the contract labor and the overtime.

You know, how's that going? And how long do you think it is until you're able to kind of normalize the labor side of things, I guess, in the context of everything else going on?

Yes, I think it's a combination of normalization through this these initiatives that we spoke about with respect to hiring and bringing more people on the payroll in combination with, we're just continuing to drive a rate that we're able to offset some of these challenges on the expense side. But you know, like I spoke about this foreign worker program, which we've dipped into successfully, and we've ramped up the, our, I think, at the end of Q4, we had 30 people that we had on the payroll from this -- that this program, to now 160.

So, this is our way of combating an issue, which really the industry as a whole is encountering. In fact, you might argue the entire service industry in the United States and North America is encountering so, we feel like this is going to be a way for us to normalize this particular line item over the next quarter or two.

So, I guess maybe by Q3, you think you can kind of get back to that 100% recovery versus 2019 on the margin side? Will that be fair to say?

I think it's probably dependent all as well on some externalities regarding commodity prices, right? The three main drivers in the -- on the operating side where utility costs, salary payroll and this hourly payroll or rooms expenses, and I think in salary payroll is a great story because we're essentially ramping up as per our budget to handle more business over the next two quarters.

Utility costs, I mean, we spiked -- I don't know how to tell you, you know, utilities costs spiked in Q1 to levels that we really hadn't seen for many, many years. And then thirdly, on the hourly labor side, we have a plan in place to combat this.

So I think, you know, we feel pretty confident that let me back-up a second, you can't really talk about margins without talking about revenue. And that's the advantage that we have in this business is that we can adjust revenue accordingly and pass some of these increased costs on.

So, we feel pretty confident that as average daily rates continue to improve. We're going -- we anticipate our margin performance to be in and around 2019 levels in the coming quarters.

Okay. That's good to hear.

And then, maybe one last one for Bruce, any chance you can give us the May occupancy and ADR numbers that thus far?

Yes, I actually don't have the specifics. But we're forecasting May to be above April from a RevPAR perspective.

All right. Well, that's good to hear.

Okay. Thank you guys so much for the color.

I'll turn it back.

Thank you.

Thanks, morning, guys.

Morning, Tom.

Just want to touch on capital expenditures quickly. I know the PIP and maintenance spending, there's more weight into the second half of the year, but just curious, like how much flexibility could you guys have, should to kind of -- these kind of inflation or supply chain issues persist?

I know you guys want to mentioned some of this penny could extend it to early 2023. But are there certain thresholds costs or otherwise or provide you a bit more flexibility?

Or is there something more of it that maybe you'll work with in conjunction with your partners there has he unfold?

Definitely, definitely flexibility, Tom. We see this money as, you know, we're eager to get it out because we -- it's good news money that's going to enhance the cash flow of our portfolio.

So we don't see it as an obligation more as an opportunity. If it wasn't obligation, we'd probably entertain selling certain assets.

But if it means that we need to delay in order to combat certain cost escalations on the supply side, that's we'll do

That makes sense. And then just quick one for me, but just in terms of the business interruption proceeds, was that kind of a one off this quarter or could there potentially be more coming into the future quarters?

Yes that's just a one-off Tom.

Okay, thanks. I'll turn it back.

Hi, good morning.

Good morning Tal.

You'd made reference to the debt capital markets for hotels right now. Can you just talk about capital availability and what sort of pricing you would see if you were looking at, you know, financing a new asset at this point or financing existing assets at this point?

Sure, Tal it's Travis. We're not super active in today's market.

But we are monitoring it. When we decided to refinance, that maturity that we had for July of this year, we decided the revolver was the best place for it.

We basically already paid for that capacity. And it was the most cost effective place to put that debt.

It's certainly lower cost at the time, relative to the CMBS market, that benefit is eroded somewhat with rising short-term rates, but it's still the cheapest place for that capital. In terms of our weighted average interest rate is around the 4.6, 4.7 mark.

Similarly, priced debt or structured debt would be 75 to 100 basis points north of that today. If we were to go that market right now, but as we mentioned before, we don't have any such needs to go to that market till the end of next year.

Yes, no I just wanted to get a feel for where things were today, just because everything's been so crazy up late. And sorry, weighted average term on your debt right now so that plus 100 over 4.6 would be for how much term like five, seven years?

Our term is in the high threes. I don't have the exact number for me like 3.6 or 2.7.

Okay you know, your referenced to the sort of 100 bps higher that will be for like five the seven debt I'm assuming?

Yes, that will be for five year money, the curve is pretty flat once you get to next year, so it actually doesn't matter a whole lot between five and 10. But, you know, within that range to 75 to 100 basis points, so you could probably do five or 10.

Okay and then, you know, I appreciate you guys are saying that you think you can kind of get close to you know, be at or near 2019 operating margins in the next couple quarters? What sort of RevPAR, do you think you need to kind of match or exceed that level of margin performance?

Yes, it's more about trying to combat percentage increases on the expense side with percentage increases on the revenue side. And we given the type of the business that we're seeing on the revenue side, specifically, the fact that it's rate driven, we feel pretty confident that we can offset maybe not fully offset in the first - in the next few months, but we can we can offset the expense side with the revenue increases.

Okay. And then this my last question, you know, obviously, the select service segment was kind of the, you know, darling of the hotel space during, the COVID period, given how they performed.

And I'm just wondering now that like, a lot of facts have changed economically on the ground? Do you think the investment market will still remain as keyed in on select service or will people start to shift more, you know, shift their attention that if they believe in a cyclical recovery with, higher inflation like, do they, the investment market, maybe start to move on from select service hotels to other types of hotels at this point in the cycle?

How are you sort of reading that?

They're not, I mean, the capital markets are, have noticed the performance of select service during the pandemic. And I think they've also noticed that - that the structural changes that maybe we didn't talk about as much in this quarter, but that we've talked about, over the last four quarters plus with respect to brand standards, are now structural, and codified for over the long-term.

So on the flip side, the full service segment is, generating tremendous rates. You know, like for example, from resorts and, and getting a lot of flooded headlines right now.

But the steady nature of our business, and our ability to have less headcount in the hotels themselves, is quite a benefit in this labor environment, and expect that the capital markets, they have, and they're going to continue to reward that.

Okay and, obviously, your visibility on bookings and stuff like that is still lower, but I'm just wondering, like how you think more leisure travel will sort of evolve over time, because obviously, destination markets were far less appealing, because international travel was pretty limited? Do you think like, do you have any sort of, you know, idea about where you think, volumes for, like non-corporate travel will go, given that the world will sort of continuing to open up a little bit more each day?

Yes, I think the dynamics that would suggest that leisure travel would reduce are the same dynamics that would suggest that the business travel would increase, in other words abroad opening up. And that's a good thing for us, because we got - we have more great strengths on the corporate side and the business side.

Then the leisure side as a leisure traveler has been very, very good to us over the last couple of years. But we're still anticipating that business traveler to come back and you know, reshuffle our mix back to what it was prior to the pandemic, which is two-thirds business and one-third leisure.

Okay. And then just lastly, you know, in prior quarters, you had discussed, maybe starting to get more active on the acquisition front, to the changing in the finance market and stuff like that kind of, or in the debt markets, like maybe make you rethink that approach or that you still think there are good opportunities out there that are worth moving on?

Yes, I think right now, us issuing equity to purchase properties, given our trading unit value would not be in the cards. We continue to market acquisition opportunities or monitor acquisition opportunities.

And if, you know if we talked a little earlier in the call about potentially, selling off certain assets, we would look to recycle that capital into other markets and other areas that maybe we feel have a higher growth trajectory.

Okay, that's great. Thanks very much, everyone.

Thanks, Tal.

Thanks again, everyone for joining us on our call today and look forward to speaking with you in August when we will report our second quarter 2022 results. Thank you.