CLDT - Chatham Lodging Trust (CLDT) CEO Jeffrey Fisher on Q4 2022 Results - Earnings Call Transcript
Chatham Lodging Trust (CLDT)
Q2 2022 Earnings Conference Call
August 3, 2022 10:00 AM ET
Company Participants
Patrick Daly - Executive Vice President, DG Public Relations LLC
Jeffrey Fisher - Chairman of the Board, CEO & President
Dennis Craven - Executive Vice President & COO
Jeremy Wegner - Senior Vice President and Chief Financial Officer
Conference Call Participants
Anthony Powell - Barclays
Ari Klein - BMO Capital Markets
Tyler Batory - Oppenheimer
Bryan Maher - B. Riley Securities
Presentation
Operator
Greetings. Welcome to the Chatham Lodging Trust Second Quarter 2022 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded.
I would now like to turn the conference over to your host Patrick Daly, Executive Vice President of DG Public Relations LLC.
Patrick Daly
Thank you, Joe. Good morning, everyone, and welcome to the Chatham Lodging Trust second quarter 2022 results conference call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings. All information in this call is as of August 03, 2022, unless otherwise noted. And the company undertakes no obligation to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations.
You can find copies of our SEC filings and earnings release which contain reconciliations to non-GAAP financial measures referenced on this call on our website at chathamlodgingtrust.com.
Now, to provide you with some insight into Chatham 's 2022 second quarter results, allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer; Dennis Craven, Executive Vice President and Chief Operating Officer; and Jeremy Wegner, Senior Vice President and Chief Financial Officer.
Let me turn the session over to Jeff Fisher. Jeff?
Jeffrey Fisher
Thanks, Patrick. I appreciate everyone joining us this morning for our call. I hope all of you have had a chance to take a look at our earnings release. It certainly was a great quarter for us on many fronts. First RevPAR has really jumped in recent months. Second quarter RevPAR was up 50% over last year and June RevPAR of a $158 exceeded. June 2019 RevPAR of $156, the first month since the start of the pandemic, where RevPAR exceeded 2019 levels.
June RevPAR was up a strong 19% over amaze, driven by a combination of incremental leisure travel, and a more meaningful return of the business traveler, especially in our five hotels in the tech reliant markets of Silicon Valley in Bellevue, Washington. Next second quarter operating margins of 50.1%. I think a great overall result were up 60 basis points over the 2019 second quarter, which is especially impressive when you consider that RevPAR of a $138 was still $8 below the 2019 second quarter.
Historically, we produce the highest operating margins of all lodging REIT. And we are well on our way to producing those again. The second quarter operating margins would be our third highest second quarter margin, since our IPO 12 years ago. We know there is even more margin upside in the portfolio, particularly as ADR continues to increase. And it's encouraging that we are within earshot of an all-time high set seven years ago, given all the incremental costs we've absorbed over the years from a labor and benefits perspective.
As a result of the strike, we were able to generate free cash flow of over $20 million in the quarter, almost double our free cash flow from the entirety of 2021. And more than 5x higher than our 2021 second quarter and up over 7x over our first quarter results.
Lastly, we closed on the extremely successful sale of our four hotels for $80 million at a 2019 cap rate of approximately 6% and a 2021 cap rate of 2%. The sale of these four hotels certainly positions our balance sheet to be aggressive on the acquisition front when the time is right. Structurally, I'm very pleased with where we stand today. We are exiting our credit facility covenant waiver period. And our financial position is healthier than it has been in a decade. We have a mere $15 million outstanding on our $250 million credit facility and project that'll be reduced to zero by the end of the year. Additionally, we'll have 24 unencumbered assets available to provide liquidity to acquire hotels and address at the right time, a very manageable $114 million of fixed rate debt maturities next year.
Before turning it over to Dennis, I want to talk about some developing trends. Momentum has been building all year within our portfolio and I think this is an important point. Since the start of the year, weekday and weekend occupancy as well as weekday and weekend ADR have grown sequentially each month of 2022. As most experienced the first week or so of July, was a little soft given the timing of the July 4 holiday certainly not indicative of our trend, because for the last 21 days of July, occupancy was 85%, ADR was $194 and RevPAR was $165. All would be COVID area highs.
Interesting, not only with this RevPAR before percent higher than last month, as well as July 2019. This RevPAR of a $165 would be an all-time July high for Chatham $5 higher than our previous record of $159 set in 2018. These trends further support our belief that the business traveler is returning and adding to a very strong leisure base. We're seeing increased demand in many of our primary business travel driven markets such as Washington D.C., the Northeastern U.S. Dallas and especially in Austin all posting sizable gains again this quarter. But for us, as we've said many times, it's the resurgence in Silicon Valley in Bellevue Washington that really helps pop our performance and increases our confidence for our promising outlook going forward.
It's the intern business return this year starting in late May, and the business traveler is picking up steam overall, our performance in these markets is nearing pre-pandemic levels. At the five hotels, June RevPAR was $192 on occupancy of 86% and ADR of $223, which is down 10% from June 2019, RevPAR of $213 on occupancy of 88% and ADR of $241, July RevPAR, finished a strong $207, which was up 12% over June's RevPAR and only off 2% to July 2019. So we're really coming along there. Looking past the summer, we're encouraged by what we're hearing from our teams in these five hotels. Our key accounts continue to reach out for blocks of rooms in the fall. And that list includes common names known by everybody and our long-term customers Samsung, Google, Apple, Applied Materials Amazon and the rest.
From a retail perspective, although our booking window is relatively short term, we are seeing retail bookings ahead of 2019 levels. And although it isn't huge in terms of dollars, it is the first time we've been up in quite some time. International travel is slowly gaining traction. And again, even though total revenue dollars are not significant. The list of countries from which we're seeing guests has grown from 15 to 25 countries in July.
Lastly, we're starting to see the bell curve with Monday to Wednesday, Thursday and Thursday beating the rest of the week. They're traveling to San Francisco and San Jose is starting to rebound and has a lot of upside to come. Domestic deployments are down about 25% from 2019 levels still and international deployments are up about 40%. In Seattle, both domestic and international deployments are up 15% and 20% respectively. But with the lessening of restrictions for international travel, and the return to office just starting to pick up steam.
In these lagging tech driven markets. We certainly expect business travel to continue to gain momentum. That just translates into more upside for Chatham. In Austin, where we acquired two hotels last year demand continues to strengthen and is benefiting from tech company expansions and relocations to the area. Our two hotels at the Domain ran occupancy of 89% in the quarter and RevPAR at the Residence and in the TownePlace Suites were $154 and $131 respectively. On the operating side, these two hotels generated operating margins of 58% pretty strong.
Washington DC, which was previously a pretty dormant market, where we managed to put heads and beds came back to life in the second quarter, with our two Residence Inn in Tysons Corner and Foggy Bottom, seeing occupancy of 87% and the Embassy Suites in Springfield, Virginia, just outside of DC boosting occupancy above 75%. Importantly, the big driver of the growth was ADR with average ADR gains of 55% at the three hotels.
Needless to say, with these kinds of numbers, we believe the future is bright, people still like to travel, people like to do business in person. And we've got some new kinds of travelers to the space, the digital nomad traveler that we've talked about. People who live away from the office that are asked to come back to their office regularly. And with return to Office allowing more flexibility, employees can get away for long work weekends and mix business with leisure as we've seen.
These new travelers will be staying for more than one or two nights. They've got the flexibility to do that. And our extended stay hotels, which of course is the predominance of our portfolio, the majority of our hotels are extended stay, and we believe we will be the primary beneficiary of this new added demand. So we remain confident in the ultimate recovery and trajectory of the portfolio. And this was the first quarter since the pandemic began where our most significant markets started to show strong gains in either ADR occupancy or both.
Adding to great top line performance, of course is our ability to generate very strong operating margins, very high flow through of that top line higher than 2019. And we believe we will take same-store margins even higher, which means our free cash flow will meaningfully grow. Our balance sheet, as I said is in great shape. I think we're poised to outperform. With that, I'd like to turn it over to Dennis for a little more color.
Dennis Craven
Thanks, Jeff. Compared to 2019, our monthly RevPAR improved each month of the quarter, from down 12% and 6% in April, in May to up 2% in June. As Jeff talked about the acceleration is primarily attributable to the return to the business traveler, especially in our tech driven markets. As we talked about on our last earnings call this quarter marked the return of in-person internships, and significant room demand from high tech companies such as Meta, Apple, eBay, and T-Mobile. As we said before the business accounted for over $7 million in revenue. In this year, we allocated more rooms for that business, knowing that the return of the International Business Traveler and longer-term consulting type business in these markets would build gradually over the course of this year and next year.
At this point, we were projecting to earn approximately $13 million and in turn revenue this summer, so almost double what we did in 2019.
Taking more of this business was definitely the right decision has proven out by a pretty attractive gain in our RevPAR indexes these past two months. An added benefit is that our operating margin on this business is very high as limited room servicing is part of the arrangement, June operating margins at these five tech driven hotels were approximately 63%. Large Group and convention business is also coming back and we're seeing healthy gains at our hotels in certain Downtown markets such as San Diego, Dallas and San Antonio. San Diego just recently hosted Comic-Con this month and it's really been a standout all year for us.
During the second quarter, 17 of our 37 comparable hotels produced RevPAR greater than 2019. Weekend travel which for us averaged just over 80% in the quarter continue to outperform weekday travel, but the gap is compressing during most part again to the business traveler coming back. Weekday occupancy, which is the best indicator of business travel has risen from below 70% in March to the mid-70s in April and May to over 80% in June, another COVID era high. Coinciding with the rising demand, we continue to push rates in our ADR both Weekday and Weekend have also grown each month of 2022 sequentially. Weekday ADRs have increased from $158 in March to $187 in June, and weekend ADRs have increased from $168 in March to $198 in June.
Our message to our operating team continues to be to push rates, as we believe it is a great opportunity to hopefully reset some rates in our business driven markets. Our five highest hotels with absolute RevPAR in the quarter were Hilton Garden Inn in Marina Del Rey with RevPAR of almost $200 on occupancy of 86% followed by our Residence Inn, Foggy Bottom and Hampton in Portland with RevPAR of $195 and then the Residence Inn San Diego Gaslamp District and in the SpringHill Suites, Savannah.
Leisure markets remain strong in the quarter both relative to last year in 2019. And we haven't seen much of a hit due to rising inflation and travel costs whether that's flying or driving. San Diego Anaheim, Savannah, Charleston, Fort Lauderdale are all still showing growth. Our seasonally high performing summer hotels in New Hampshire and Portland are showing growth of over 20% relative to last June and up approximately 5% in 2019. Our Destin market has shown some softness relative to last year, which we believe is most likely attributable to gas and other inflationary costs.
Our top five absolute occupancy hotels in the quarter were our Residence Inn Charleston Summerville, followed by our Residence Inn White Plains, our Homewood Suites in Maitland and then our Residence Inn in New Rochelle with all four of those hotels, seeing occupancy above 92%.
Our top five was rounded out by the SpringHill Suites Savannah and our Residence Inn in Austin both with occupancy of 89%. Our portfolio did significantly better than the industry with first -- with second quarter occupancy reaching 77% compared to industry-wide occupancy of 67%. We continue to see an average length of stay longer than our historical levels, which dovetails back to Jeff's comments regarding today travelers staying longer in hotels.
At our Residence Inn and Homewood Suites hotels, our average length of stay was approximately three nights, which is still about 20% higher than pre-pandemic levels. For the quarter total revenue of $82 million was up 63% compared to last year's revenue of $50 million and we were able to generate incremental GOP of almost $19 million for flow through of approximately 60% on that increase top line.
Revenue growth doesn't mean certainly as much if you can push that through to the bottom line. And we certainly have been delivering great flow through in same-store margin growth over 2019 despite RevPAR coming in 5% below 2019 levels. That margin growth is based on our entire comparable portfolio, not just some select component there have. Our same-store second quarter operating margins surpassed 50% and were up 60 basis points over the 2019 second quarter.
A good bit of this increase is attributable to a more efficient operating structure, especially with respect to labor, our employee count is still down about 20% compared to pre-pandemic levels. And although we are a bit understaffed out there, we expect there will be certainly be a permanent headcount reduction on a long-term basis. On a per occupied room basis at our comparable hotels, payroll and benefit costs were approximately $32, a decline of $2 or 6%. During the quarter, all hotels generated positive hotel EBITDA and GOP, our top five producers of GOP in the quarter were our Gaslamp, Residence Inn which was also the highest producing GOP hotel in the first quarter, followed by Silicon Valley II and then our Residence Inn in Bellevue Washington. And then lastly, our Embassy Inn Springfield and our Silicon Valley I hotel.
And just missing out on the top five were our SpringHill Suites in Savannah and our Residence Inn in Mountain View. And really the fact that three of the top seven GOP producing hotels were tech related, obviously is very encouraging as we move forward and a sign of certainly what those markets mean to us. As an added note the recently opened Home2 Woodland Hills generated a pretty respectable operating margin of 43% in the quarter, given again that that hotel is continuing to ramp-up on all fronts.
On the CapEx side, the company incurred capital expenditures of approximately $5 million in the quarter which excludes any spending related to the Warner Center development, our 2022 capital expenditure budget is now going to be approximately $19 million after the sale of the four hotels. And later this year, we'll have renovation starting at three hotels, which is our Residence Inn in Washington DC Foggy Bottom, White Plains, New York and Holtsville New York. I'll go ahead and turn it over to Jeremy.
Jeremy Wegner
Thanks Dennis. Good morning everyone. Chatham's Q2 '22 RevPAR of $138 represents a 50% increase versus our Q2 2021 RevPAR of $92 and was only 5.2% below our Q2 2019 RevPAR of $146. Performance strengthened significantly over the course of the quarter with April RevPAR of $123 down a 11.9% to 2019. May RevPAR of $133 down 6.4% in 2019 and June RevPAR of $158 up 1.9% to 2019.
The early stages of the recovery were driven primarily by leisure travel, but over the course of Q2, we have seen a significant uptick in midweek results, which indicates the business travel is now starting to make a meaningful recovery. Our Q3 is off to a strong start with July RevPAR of $158 equal to the RevPAR achieved in July 2019. We were able to generate a Q2 GOP margin of 49.2% and hotel EBITDA margin of 41.9%, which were up from our Q2 2019 margins despite the fact that Q2 RevPAR was $8 below the Q2 2019 level.
Our Q2 hotel EBITDA was $34.1 million, adjusted EBITDA was $31.3 million, adjusted FFO was $0.41 per share and cash flow before capital, which represents hotel EBITDA less corporate G&A, cash interest and $2.2 million of principal amortization was positive $20.3 million. In Q2 Chatham completed the sales of the Hilton Garden Inn Billerica, Homewood Dallas Market Center, residents in Houston West University and Courtyard Houston West University hotels for $80 million.
These hotels had an average age of 29 years, approximately $12 million of capital requirements over the course of the next year and generated a 2019 RevPAR of $98 versus 2019 RevPAR of a $135 for the rest of Chatham's portfolio. Pro forma for the sales of these four hotels Chatham's 2019 RevPAR would have been $124 in Q1, $146 in Q2, $149 in Q3, and $121 in Q4.
Despite the fact of the quality of these hotels was much lower than the rest of Chatham's portfolio. The sale price including capital savings reflects a 6.3% cap rate on 2019 NOI. Proceeds from these asset sales were used to repay credit facility borrowings. Chatham's balance sheet is now in the best shape it's ever been. At June 30, we had $253 million of liquidity between our unrestricted cash balance of $18 million and $235 million of revolving credit facility availability.
We are exiting our credit facility covenant waiver period with the delivery of our Q2 compliance certificate, which further increases our financial flexibility. At the end of Q2, our leverage ratio as defined by our credit agreement was approximately 30%, which is materially below our pre-pandemic leverage, which was generally in the 45% area. We have no debt maturing in 2022 and only $114 million of maturities in 2023.
With our reasonable leverage, solid liquidity and meaningful free cash flow, we are well positioned to refinance debt maturities when needed and acquire hotels when we find attractive opportunities. We are very encouraged by the improving operating trends we have seen in Q2, especially the continuing recovery we have seen in business travel, the growth that we expect the Austin investment acquisitions, and the Warner Center development to generate and our ability to pursue additional growth opportunities given our strong balance sheet.
This concludes my portion of the call. Operator, please open the line for questions.
Question-and-Answer Session
Operator
Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Anthony Powell with Barclays. Please proceed.
Anthony Powell
Hi, good morning. This question on business and leisure. So you mentioned that business travel is really picking it up which is nice. And leisure is actually still holding in except for one hotels. I'm curious what your view is on the ability to for leisure properties to really maintain or even grow versus '19. Even as you see more business travel come back. Have you seen any kind of softening up for booking trends or anything like that, outside of Destin and what's your view on those hotels over the next year or so?
Jeffrey Fisher
I think I start out by saying we don't see any softening here at all, if anything were encouraged, as I said, by just the newer type of flexibility with people working away from the office, that allows them to come to our hotels in these kind of markets, use our full suites with kitchen for four or five days at a time, and work and play. So I think that that will continue to be a trend. And although folks are certainly worried about leisure, again, you got to remember when you count up our leisure hotels, they might be in hotel number 15% of our portfolio. So we are at a little different spot, I think, than a lot of these other companies that have just bought a ton of resorts, and a ton of hotels in these kinds of markets. We are staying true to our form, in our belief in the kind of hotels and the kind of markets we're in.
Anthony Powell
Thanks for that. And maybe just an update on the transaction market. What are you seeing out there in terms of fields in the market bid ask spread? Just things like that will be super helpful.
Jeffrey Fisher
Well, not to be cute, but it seems like most buyers are taking the summer off here, with what's gone on in the credit markets and really, banks tightening up debt, obviously becoming way more expensive. There is a pretty wide, in my opinion anyway. Gap in the bid to ask. And I think that there were a bunch of transactions pending, that I'm aware of with different folks and different companies, and all I think are almost all within the last 30 days or are looking for some price reduction. And if the price reduction isn't happening, the deals are kind of being tabled for the time being. And we are certainly not in a rush to take our pretty, I think fantastic balance sheet, right at this moment. Unless it is a compelling opportunity at what I would call a repriced opportunity, given the realities of today.
Anthony Powell
Do you think that this strong performance that we're seeing across industry will actually result in price cuts? Because it seems to me that, things were pretty good. So if you're a seller, why would you actually accept the price cut and I understand rates are up, but forums are strong and better than people bought? So how do you think that balances out this year?
Jeffrey Fisher
Well, that's right. That's why that that's why I said people are taking time out. Because you're right. I mean, business are so damn good. People are getting ADRs that they never suspected they would get. Those of us that have been in a hotel business a long time. But even if you had your hotel over the last five to seven years prior to 2019, didn't see a heck of a lot of ADR growth. So now you're seeing it, you're seeing people willing to pay. And you're right, if the buyer comes along, and I think the typical ask right now is about a 10% price reduction. It's really not happening.
Anthony Powell
All right, thanks for that. Appreciate it.
Jeffrey Fisher
Thank you.
Operator
Our next question comes from a line of Ari Klein with BMO Capital Markets. Please proceed.
Ari Klein
Thanks and good morning. Maybe just gone on Silicon Valley, that markets recovering quite well. Here I'm benefiting from the intern business, that's comeback, but how are you thinking about that market? The rest of the year post intern business? And as kind of normalized business travel returns?
Dennis Craven
Hey, Ari, this is Dennis. Yes, listen, I think in some of Jeff's prepared comments, he addressed kind of the trend that we're seeing out there, which is our top corporate accounts are looking at doing business with us in the fall and in the winter. On the retail side, even though it's not a meaningful producer at the moment, the pace is well up compared to 2019. And then even look at some of the kind of the corporate related stuff that also is at least encouraging.
So, I think for us, as we get past Labor Day, the true revenue dollars. I think we'll whether it softens out compared to the summer, because of all the intern business, and then start kind of building back up again or not, is probably too early to tell, but it's at least as we sit here today, all signs are pretty encouraging that that the top accounts that we normally do business with are going to continue to produce room demand for the second half of the year and after the interns all checkout.
So that's encouraging as well, from an ADR perspective that that business is still strong. So I think and I think as we talked about with deployments and international travel coming in to San Jose, Bellevue, in San Francisco still being off kind of 20% to 40%, whether you're talking domestic or international travel, that I think is just going to continue to get better and better. So, I think it's going to be a little bit bouncy along the way. But I think the overall trend is still looking upward so.
Ari Klein
Got it. Thanks for that. And then maybe, Dennis, you mentioned destined softness, likely related to some of the higher costs out there? Why would only that market really see that? And could it just be tougher comps, given that there're more travel options now versus last year?
Dennis Craven
I think it's some of that. Ari, I think also you've got a market there that that is a fairly significant drive to market. And it's got it's also a market that has a tremendous amount of condominiums and homes that are rented out on a weekly basis. So whereas, for those condos and townhomes and houses, generally, those are probably going to be for a week stay or something like that. And hotels are not quite as long. And if you look at our pattern, especially the Hilton Garden Inn Destin, it's really not necessarily an occupancy deal. Or it's more just a rate perspective at this moment.
So the hotel is still throughout the summer running 90% to 100% occupancies. It's merely a rate thing. So I think as you've kind of seen that softness, at least in terms from inflationary prices affect kind of that type of specific drive to market. And if you compare it to like our Fort Lauderdale Residence Inn which is still holding up pretty well compared to last year, and obviously still well up compared to 2019. So I think it's just a combination of a few different factors for that specific market.
Ari Klein
Great, thanks for the color.
Jeffrey Fisher
Thank you.
Operator
Our next question comes from the line of Tyler Batory with Oppenheimer. Please proceed.
Tyler Batory
Good morning. Thanks for taking my questions. Couple from me, hey couple from me here. In terms of trends, post-Q2, I wanted to circle back first on the July commentary, which I thought was very helpful in terms of highlighting the last 21 days of the month RevPAR $165. How did that compare with July of 2019, I'm assuming the strength there, the progression, second half of July, compared with June is really business travel related that was driving the strength there?
Jeffrey Fisher
Yes, that's exactly right. I mean, July overall, July 2022 compared to July 2019 was basically I think up about maybe $0.20 2022 versus 2019, for all 37 comparable hotels. And then yes, obviously for the last 21 days is we kind of got out of, what I think for the industry ended up being a relatively soft period of time around July 4. Yes, you saw and really as you got to that next Monday night. After July 4, it really ramped up pretty quickly. So I think it is -- was primarily due to people, especially BT getting back out on the road.
Tyler Batory
Okay. And then in terms of August and September, would you expect or is it possible that August RevPAR on an absolute basis is higher than July, can you just help us remind us kind of typical seasonality and how that might impact your portfolio as we move through Q3 here?
Dennis Craven
Yes, Tyler, good question. Seasonally, August ticks down a bit compared to July. And I think we would expect that to be the same for 2022. Because you obviously have, people going back to school, especially all across kind of the Southeast where they think in many markets, they've already started back to school or starting this week. So seasonally, it ticks down a few dollars from July and August. So I think we would expect all things being the same on the business traveler side. But that would be the same.
Jeffrey Fisher
Yes, Tyler just looking back at 2019. For example, our July was 158, August was 149 and September was 139. So like Dennis said, we'd probably expect to see the same sort of seasonal trends this year.
Tyler Batory
Okay, excellent. Very helpful. In terms of the margin performance I think really, really quite strong, really impressive growth over 2019. I mean, do you think that's something that's sustainable in the back half given some of the cost inflation that that's out there maybe with seasonality, starting to impact the portfolio as well? Are you kind of in this thought where maybe you're up 60 basis points over '19 in the second quarter perhaps that growth could even accelerate or at least continue over the next couple of quarters here?
Jeffrey Fisher
And we think we're going to continue to outperform 2019 margins, as I talked about in my prepared comments, we do believe there's a permanent workforce reduction across the portfolio, we're still down, I think just over 20% in employee headcount at the comparable hotel. So I think certainly even though seasonally we will continue to come down on the top line a little bit over the next couple of months, we would expect to produce still strong margins, especially relative to 2019.
Tyler Batory
Okay, okay. And then last question from me, just in terms of the capital allocation side of things, lots of liquidity, a great balance sheet here. Obviously looking at acquisitions, we'll see what comes down the pike, you obviously in January can repay that Warner Center loan, just interested in how you're thinking about deploying some of your capital over the next six months here, and really where the priorities are?
Dennis Craven
Yes, I mean, I'll start and then I'll let Jeremy or Jeff chime in as well. I think, as Jeff talked about, with Anthony's question, the acquisition market is pretty dead at the moment. So, at least for the near-term, who knows how many days or months, we're going to be pretty quiet, until there's either a settling down of financing options, or up repricing of buyer and seller expectations. So I think in light of that, we're going to be pretty quiet on that front. And as Jeremy talked about, we've got $114 million in maturities next year. And that doesn't include the Warner Center construction loan that we can take out early next year.
So I think we're going to continue to work towards trying to grow the portfolio. But meanwhile, we sit in a pretty good position to address the maturities, and not have to be forced into doing some type of financing transaction that would be not very smart at this point.
Jeffrey Fisher
Yes, like Dennis said, I think we just want to maintain our flexibility given our leverage level, we've certainly got capacity to acquire hotels. But just because we have that liquidity and low leverage doesn't mean we want to go out and overpay for something today, either. So, we're just going to wait for the right opportunities to deploy capital.
Tyler Batory
Okay, great. That's all for me. Thank you.
Operator
Our next question comes from the line of Bryan Maher with B. Riley Securities. Please proceed.
Bryan Maher
Thanks and good morning. On Silicon Valley, maybe asked a different way. I think in 2019, you did maybe $35 million in EBITDA there and in 2021, it was seven. What's kind of your best guess for how 2022 shakes out, given the current trends you're seeing?
Jeffrey Fisher
You know, Bryan, I don't know that number off the top of my head. For those five hotels, I'd have to get back to you on it. But I think if you just look at where RevPAR still is compared to 2019 in we're still down, compared to that, even 2% in July. So, yes I'd expect we'd still be meaningfully below that, whether that's 25% or 30%, 20% don't know, but can come back to you on it for the full-year.
Bryan Maher
Okay. And then on business travel, given that you've sold a few assets, you've bought a few assets and so the mix has kind of changed a bit from pre-pandemic, where would you say you are on kind of the continuum of business travel, on a portfolio adjusted basis, how far down is it still relative to kind of pre-pandemic levels again, kind of adjusting for your transactions?
Dennis Craven
Let me start, hi Bryan, let me start off by saying when you think about what we sold and what we bought really, other than Destin there's probably a very similar Reliance as I said, with 15% or so being leisure. So only, so that is a little bit changed with Destin. But I think you think about it generally the same way. And, again, I think others will tell you, but we have, obviously the largest concentration in tech, pure-tech markets. That's where the unknown is as to the strength of the business traveler, once the interns go away. And really, I think the third quarter specifically will tell that story. And we'll be able to talk to you and I think in a lot more specific terms, as to the overall business traveler environment, but in most of our other markets, those business travelers are back, they are more diversified.
And therefore not as reliant on tech, which as you know, seems to be a little bit more liberal in allowing folks to work from wherever not come back to the office, et cetera. On the other hand, when you look at future trends, and I read the Silicon Valley Business Journal that come out every week, you keep seeing all the big names taking down and committing and or building more office space. So it's an interesting market, that's for sure and what time will tell on this front.
Bryan Maher
Great, and just last for me, on the rate front, and people who know that I cover hotels, constantly calling me complaining about how insane rates are, it's certainly not necessarily yours, some of the higher end stuff. But given what's going on with everybody pushing rate, when do you know that you need to kind of pull back or level off, what signal are you looking for that? You can't go anymore? Is it a certain pullback in occupancy? Is it something else that would be helpful, thank you.
Jeffrey Fisher
Look it's a day-by-day, minute-by-minute environment in terms of revenue management, and our Revenue Managers are tweaking that purely with the aid of obviously, the revenue management systems provided by the franchisors daily, I think that what you definitely see is compared to prior periods, in the same month, in the same week, some kind of fall-off in demand, which is going to result most likely in not being able to fill, so it's occupancy.
And then when you see that you can't fill those rooms, and other hotels are perhaps dropping their rates a little bit. It's just the way that revenue management has done away the brand systems work, there'll be a little abatement in terms of rate, in most cases. For us, with our extended stay for dominance and the base occupancy in essence that you've got, that's higher than most traditional transient hotels, I think we can be a little more bullish or less likely to have to drop rate to fill if that's what the game is. So again, we like our type of hotels for that reason.
Bryan Maher
Thank you, Jeff.
Operator
Thank you. This concludes our question-and-answer session. I would like to turn the call back to management for any closing remarks.
Jeffrey Fisher
We thank you all for being on the call today. It certainly was an exciting quarter. And I think it will continue to be so as we move forward and look forward to our next call with everybody. Thank you and have a great day.
Operator
This concludes today's conference. Thank you for your participation. You may now disconnect.
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Chatham Lodging Trust (CLDT) CEO Jeffrey Fisher on Q4 2022 Results - Earnings Call Transcript