CLDT - Chatham Lodging Trust (CLDT) Q4 2022 Earnings Call Transcript

Chatham Lodging Trust (CLDT)

Q4 2022 Earnings Conference Call

February 23, 2023, 10:00 AM ET

Company Participants

Chris Daly - President, DG Public Relations, IR

Jeff Fisher - Chairman, CEO & President

Dennis Craven - EVP & COO

Jeremy Wegner - SVP and CFO

Conference Call Participants

Anthony Powell - Barclays

Ari Klein - BMO Capital Markets

Tyler Batory - Oppenheimer

Bryan Maher - B. Riley Securities FBR

Presentation

Operator

Greetings and welcome to the Chatham Lodging Trust Fourth 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 call is being recorded.

It is now my pleasure to introduce to your host, Chris Daly, from DG Public Relations. Thank you, Chris. You may begin.

Chris Daly

Thank you, Nathan. Good morning, everyone. And welcome to the Chatham Lodging Trust fourth quarter 2022 results conference call. Please note that many of our comments today are considered forward-looking statement 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 February 22, 2023, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement 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 contains reconciliations to non-GAAP financial measures referenced on this call on our website at chathamlodgingtrust.com.

Now to provide you with some insight of the Chatham Lodging Trust 2022 fourth 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. Jeff?

Jeff Fisher

Thanks, Chris. And I certainly appreciate everyone joining us this morning for our call. Before talking about the fourth quarter and 2023, generally, I'm going to spend a few minutes highlighting some noteworthy accomplishments for our company last year. We increased cash flow before CapEx nearly fivefold from $12 million in 2021 to $58 million in 2022. We reinstated the common dividend for the first time since the start of the pandemic.

Last year, we had the highest absolute RevPAR of the Select Service REITs. We drove EBITDA margins higher by 31% or 900 basis points from 29% to 38%. We opened the $70 million, 170-suite Home2 Suites in Woodland Hills Warner Center. And we acquired the 111-room Hilton Garden Inn in Destin Miramar Beach, Florida for $31 million.

Then we went ahead and sold four hotels with an average age of 27 years at a cap rate of 2% and 6% respectively, on 2021 and 2019 NOI strong, strong results there. Completed the refinancing of Chatham's existing $250 million senior unsecured revolving credit facility with a new $260 million senior unsecured credit facility and a new $90 million unsecured term loan. So we improved our overall liquidity from $199 million on January 1, 2022 to $376 million at the end of the year.

By doing all that we've reduced our net debt by $82 million. And we reduced our overall leverage ratio from 31% at the beginning of the year to 26% at year end. Our net debt reduction is second best among all the lodging REITs since the start of the pandemic. And for the first time we participated in the global real estate sustainability benchmark assessment. Most people say GRESB, achieving green star status and achieving a rating 15% higher than our peers. We're very proud of that.

Shifting back to our fourth quarter performance, RevPAR remain strong in the quarter up 24% over the same quarter last year, driven by ADR growth of 20% and occupancy growth of 3%. And relative to 2019, fourth quarter ref par was off 4% with ADR growing 7% and occupancy declining 9%. November to February are always our seasonally slowest months of the year, given our strong reliance on business travel in certain of our key markets. But February is definitely showing signs of improvement as we go through the middle back half of this month in business travel relative to the past 90 days forward, demand trends are encouraging. And our tech-focused intern programs are planning to occur according to the companies and the conversations that we're having in that regard.

As business travel continues this recovery, we will post outsized growth. So our full year RevPAR of $124 recovered to 92% of 2019 RevPAR of $136. And our macro view is that business travel including groups will continue to gain traction in 2023 and leisure travel will remain strong, but some of the white pot leisure markets of the past couple of years will give some RevPAR back. As this transition occurs and 2023 we will derive the most benefit and changing demand trends as compared to many of our peers who really have become more dependent on that leisure travel segment.

Operationally, our margins remain high and we should finish 2022 with the highest operating margins of all lodging REITs, attributed to our platform, which has delivered outstanding results, even at RevPAR levels below 2019.

Our fourth quarter adjusted EBITDA and FFO were up substantially. And as a result, we saw a healthy increase in free cash flow to $10 million, double our '21 fourth quarter. Hotel operating margin slipped approximately 100 basis points in the quarter, due primarily to some onetime items that either benefited the 2021 fourth quarter or hurt the 2022 fourth quarter. Additionally, labor related costs, including casual labor adversely impacted margins by approximately 80 basis points. And these seasonally slower months rising labor efficiency is difficult, especially when weekend demand is higher than weekday demand. Of course, we're closely monitoring those staffing levels as we move through this year.

Like others in the industry, we're seeing cost pressures impact other areas of the P&L. So it's not just labor, namely utilities, insurance, and general hotel supplies.

Lastly, I want to touch on our financial condition, which is extremely healthy as we sit here at our lowest leverage levels in over a decade. In 2022 alone, we reduced our net debt by over $80 million and reduced our leverage to 26%. We ended the year with approximately $380 million of liquidity, including a new credit facility and term loan. As such, we have the flexibility to acquire hotels and or address or refinance maturing debt over the next couple of years. And we have 24 unencumbered assets that could serve as additional sources of liquidity.

During the 2023 first quarter, we've already paid off loans amounting to $73 million, including the high rated loan on our Woodland Hills Hotel as well as two maturing loans. We only have three additional loans maturing in 2023, amounting to $77 million. And those maturities will be funded with the remaining borrowings on our term loan and free cash flow.

Touching quickly on external growth, the transaction market has been dormant, but it seems like it's starting to ease up a bit, with a significant rise in interest rates and a bunch of maturing debt occurring throughout the industry. We believe there will be some opportunities to acquire hotels that fit into our high-quality portfolio in the back half of the year.

So to finish up, we published much during 2022, and we are well positioned to generate outsized growth, both internally and externally given the strength of our balance sheet.

With that, I'd like to turn it over to Dennis for a little more color. Dennis?

Dennis Craven

Thanks, Jeff. Our portfolio performs significantly better than the industry with fourth quarter RevPAR growth of 24%, exceeding industry performance by approximately 50%. Again, I think noteworthy is this is a relative indicator of potential outperformance moving forward in 2023.

If you look at our portfolio for the quarter, excluding Silicon Valley, our fourth quarter RevPAR was up 3% versus 2019 on ADR growth of 12% offset by a decline in occupancy of 8%. Pretty good performance. And what I think Jeff referred to is generally our seasonally slower period.

During the fourth quarter 19 of our 37 comparable hotels generated RevPAR greater than 2019 and or the year 16 of our 37 comparable hotels are greater than 2019. Again, a bullet point with respect to upside in our portfolio, as business travel recovers to 2019 levels.

Week day occupancy in the fourth quarter was down approximately 11% versus 2019, which represented a decline from approximately 6% in the third quarter. On the flip side weekday ADR was up versus 2019, each of the last seven months in 2022, which bodes well as that business traveler continues to recover in '23.

Weekend RevPAR remain strong, up approximately 9% in the quarter versus 2019. Silicon Valley, our largest market continues to grow meaningfully over the prior year, with fourth quarter RevPAR growth of 45%, but it's still down basically 32% versus 2019. Year-to-date rour 2022 Silicon Valley RevPAR for $26 is also still down 32% 2019 RevPAR of $185. Occupancy is getting closer to 2019 levels. It's off 8% to 68% versus 74% in 2019. Silicon Valley EBITDA was $17 million in 2022, still below 2019 EBITDA levels of $29 million, or approximately 41%.

Fourth quarter air travel into both SFO and San Jose airports remains well below 2019 levels, off 22% and 37% respectively, given its reliance on the international business traveler, as well as a slower return-to-office. Silicon Valley has been and think will be still on the road to recovery than most of the rest of our markets. One thing to note is it certainly within the last couple of weeks, we have seen anything shift to this briefly, a continued increase in business -- international business travel coming into our hotels in Silicon Valley.

In other key tech markets, Seattle RevPAR achieved 2022 RevPAR of $125, which represents 87% of 2019 RevPAR. At that hotel, our EBITDA in 2022 was $5.2 million, which is approximately 85% of 2019 hotel EBITDA. So that market relative to Silicon Valley performing a little bit better on the road to recovery.

Looking to slow recovery in our Silicon Valley and Seattle markets, Austin is performing above 2019 levels. Our residents in Austin RevPAR was up 8% versus 2019. The TPS was not open yet in our two hotels at the domain should have a strong 2023.

Our five highest hotels with absolute RevPAR in the quarter, were at our residence in Fort Lauderdale at $184, our HDI Marina del Rey at $173, and then our Hampton Inn Portland at $172. Lastly, our fourth and fifth ranked hotels were the Hilton Garden in Portsmouth and the Residents in White Plains. Our Homewood suites Maitland led portfolio occupancy at 89% in the quarter, we had eight other hotels achieve occupancy over 80%.

Our top five hotels with respect to average daily rate, again led by our Fort Lauderdale Residents Inn at $230, then our Hampton Inn Portland with an ADR of $226, followed by Fort Smith [ph] Marina del Rey, and our Silicon Valley residents in Mountain View, all above $210. 29 of our 37 Hotels achieved fourth quarter ADR higher than 2019.

We continue to see an average length of stay approximately 15% to 20% longer than our historical levels, which translates to incremental GOP because there's less required housekeeping that I think you've heard from others that, certain other brands have started to roll out new operating procedures with respect to required housekeeping services.

For the quarter total hotel revenue of $70 million was up 23% compared to last year's revenue of $57 million. And we're able to generate incremental GOP flow through of almost $5 million for flow through a 35%. Our employee headcount remains down approximately 25% compared to pre-pandemic levels. And admittedly we're still probably a bit understaffed there. Since 2019, our hourly wages have increased approximately 25%. So meaningful cost increases there. In the quarter, casual labor was up approximately a $0.5 million, or 50% over last year and reduced margins by approximately 50 basis points.

On a per occupied room basis that our comparable hotels across were approximately 4% relative to 2019. Our top-five producers of gross operating profit in the quarter were, our Gaslamp Residents Inn which was also the highest producing GOP hotel in the first three quarters of the year, followed by our Silicon Valley 2 Residents Inn and then our Hilton Garden in Portsmouth Courtyard, Dallas downtown, and then our Spring Hill suites Savannah.

With respect to capital expenditures, we have spent approximately $21 million in 2022. And as we look ahead to '23, we expect to spend approximately $30.6 million which includes $22 million of renovation costs at five hotels.

With that, I'll turn it over to Jeremy.

Jeremy Wegner

Thanks, Dennis. Good morning, everyone. Chatham's Q4 2022 RevPAR of $117 represents 23.9% increase from Q4 2021 RevPAR of $95 and was down 3.7% from our Q4 2019 RevPAR of $122. Q4 and Q1 are typically the lowest RevPAR quarters for our portfolio given the drop off in business travel around the holidays and the start of the year, and lower level levels of leisure travel given the concentration of our leisure focused properties and markets where summer is the peak season.

In Q4, we continue to see business travel below 2019 levels and leisure travel above 2019 levels. Although we believe business travel will continue to recover and then at some point leisure travel could plateau or begin to decline. As we stated in our earnings release, January 2023 RevPAR was $92 and RevPAR through the first few weeks of February was $113. So absolute RevPAR levels are low for the first few weeks of the year. Our portfolio is generating strong RevPAR growth relative to 2022 and businesses starting to pick up a path early January, as is typically the case for us.

We expect this seasonal recovery to continue throughout the balance of Q1 and into Q2. Just to provide some color on how this seasonal rebound has played out in the past, in 2019 March RevPAR was approximately 15% higher than February 2019 RevPAR.

Our Q4, 2022 hotel EBITDA was $23.3 million, adjusted EBITDA was $20.4 million, adjusted FFO was $0.20 per share in cash flow before capital was $2.2 million -- sorry, $10 million. And while we're starting to see cost increase due to a reinstatement of certain brand standards, wage increases and increase in staffing levels and increase utilities and insurance costs, we were able to generate a solid GOP margin of 39.9% and hotel EBITDA margin of 33.3% in Q4.

Our Q4 GOP margin of 39.9% was down 120 basis points from our Q4 2021 GOP margin. And our Q4 hotel EBITDA margin of 33.3% was 250 basis points higher than our Q4 2021 Hotel EBITDA margin, primarily due to property tax refunds of approximately $1 million. For the full year in 2022, we benefit from approximately $2 million of property tax refunds and also benefited from assessment reductions related to pandemic related performance declines.

Given the cost pressures the lodging sector is facing, as we saw in Q4 with GOP margins down 120 basis points, we believe margins are likely to decline slightly in 2023 if that trend continues. But we are proactively taking measures to mitigate cost increases where possible, and the ultimate impact on margins will depend on RevPAR growth.

Over the last several years, Chatham has taken a number of steps to strengthen its balance sheet, and as a result, we now have the lowest leverage the most liquidity we've ever had. In 2022. Chatham reduces net debt by $82 million, or 16%. And since March 31, 2020, we have reduced our net debt by $331 million or 43%. In Q4, we replaced our $250 million revolving credit facility that was scheduled to mature in 2023 with a $350 million credit facility that consists of a $260 million revolving line of credit and a $90 million delay drop term loan. Including all extension options, the new revolving terminal and have a final maturity of October 2027.

In early 2023, we used $75 million of term loan availability repay to muttering mortgage loans, and the construction loan on our Home2 Warner Center. We intend to use the remaining availability under our term loan to repay a $16 million mortgage that matures in May 2023 and available cash to repay a $20 million mortgage that matures in July 2023. Over the course of 2023, we will continue to closely monitor markets to consider opportunities to refinance a $40 million mortgage that matures in December 2023 and potentially address a portion of our 2024 CMBS maturities. Our undrawn $260 million revolving credit facility provides a valuable source of liquidity that increases our flexibility to address our remaining debt maturities.

With a reasonable leverage, solid liquidity, strong operating performance, sizable portfolio of unencumbered hotels and meaningful free cash flow, we are well positioned to refinance our remaining debt maturities when needed.

As a reminder, our reported 2022 RevPAR figures did not include results for the Home2 Warner Center and since it had been in operation for less than a year, in our reported 2023 RevPAR figures will include Warner Center's results starting on January 24, 2023 the one year anniversary of its opening date. 2022 RevPAR including Warner Center was $90 in Q1, $138 in Q2, $151 in Q3, $118 in Q4, and $120 for the full year.

This concludes the presentation [ph] portion of the call. Operator, please open the line for questions.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Take our first question from the line of Anthony Powell with Barclays. Please go ahead.

Anthony Powell

Hi, good morning. I guess question on margin. So I think Jeremy said that, margins could continue to decline this year, tf those trends continue. I just wanted to drill down on that. And you get 27.10 [ph] RevPAR growth in the fourth quarter but GOP margins were down. I guess they should be up in the first quarter given the rough, easy comps. But how should I think about the RevPAR growth needed to maintain margins throughout the year? There could be onetime issues, staffing up and whatnot to just more color there will be great.

Jeremy Wegner

Look, I think our plan is not to give guidance at this point. I think you would be RevPAR growth in the double digits for the year to get to flat GOP margins though.

Anthony Powell

Okay, is that mainly just incremental wage growth, insurance costs taxes, maybe what's driving that kind of requirement on the --

Jeremy Wegner

Yeah, on the GOP side, it doesn't include taxes, although property tax meaningfully, it will impact EBITDA margins. But on the GOP margin side, it's both wage increases, given the inflation we're seeing, and also kind of a recovery of staffing levels, again in the pandemic, especially through the first three quarters of last year staffing levels were very low with hotels. And then we're continuing to see large increases in other costs as well. Things like utilities are up based on kind of our internal estimates up about 13% next year. And then on the property insurance side, I think those are expected to increase over 20% as well. So there's, there's a lot of cost pressures.

Dennis Craven

Anthony, this is Dennis. I mean, I think add to what Jeremy was saying, I mean, obviously, I think you've heard from other REITs, as well. And we're all kind of in a process where RevPAR growth year-over-year is pretty strong in the first quarter given the Omicron comparison. But I think as you've heard from most people, typically you would see some pretty good expansion and a plus 20% RevPAR scenario that I think we saw in the fourth quarter. And in fact, our operating margins as we indicated in our release were down approximately 100 basis points or so. So, I think it's certainly a challenging environment from an expense standpoint at the moment.

Anthony Powell

Okay. And maybe on Silicon Valley, and I think he talked about how the training business should be back this year. What about other business like, product launches, things like that. What's your conversation, like with the big tech firms in Silicon Valley in terms of just overall business volumes in 2023?

Jeff Fisher

Yeah, this is Jeff. Hi, Anthony. I will tell you that that our team certainly were not surprised, but not overly encouraged by November and December then lack of activity generally in Silicon Valley. And that continued in the January for the other kinds of business travel.

And then all of a sudden in February, things have really started to perk up. And overall bookings in the market and in the two hotels specifically in Sunnyvale, which are the ones that really drive our results as you know, really started to look way better. And we've seen international travel, particularly for example with Samsung from Korea, and otherwise, it was non-existent through the entire pandemic. All of a sudden booking substantial rooms, starting later in this month.

So they and we feel way better. And this is some real time sort of week-by-week information I'm giving you relative to that. The interns -- and one reason why we're not giving guidance at this point in the year, is we want to see that are those contracts actually signed, and conversations are being had around what the volume is going to be there. So I think over the next 30 to 45 days, those conversations should be finalized as well. And we'll feel a lot better about how 25% of our portfolio roughly based on old numbers should perform for the rest of the year. But it is significant. And team feels much better about the level of business activity there.

Anthony Powell

Got it. So I guess, you should know by the first quarter earnings call up kind of the plan for the interim businesses, is that fair?

Jeff Fisher

Without a doubt, that's the plan that

Anthony Powell

Thank you.

Operator

Thank you. We'll take the next question from the line of Ari Klein with BMO Capital Markets. Please go ahead.

Ari Klein

Thanks. And good morning. Maybe just following up on Silicon Valley, it sounds like it's moving in the right with the right direction, but obviously still meaningfully lagging. From a portfolio construction standpoint, would you prefer to have less concentration to the market? And could you maybe look to sell something there knowing that prices are probably not ideal, but maybe there's an opportunity to reposition capital in other market?

Jeff Fisher

Well, this is Jeff. Hi, Ari. Look, I think there's two considerations are way more than two, short term and long-term. Long-term, we've had a lot of strategic conversations with our board and otherwise, just generally about how California feels. And we're kind of more concerned about legislative initiatives, and things that are occurring on that front that diminished value perhaps, over the longer haul. So I think repositioning capital as you're describing, and cycling and into some markets, that have a little better long-term view and growth frankly, is a good idea.

In the near term, these hotels have great upside. And someone's going to really take advantage of us frankly, if we're going to sell these hotels right now. Of course, there is multifamily opportunity. And actually, I'm going to take a visit out there and speak to some of the well -- the zoning official relative to how that may pan out in that regard, because very big numbers are being paid as you probably know on a per key basis, somewhere around $500,000 a door and more for apartments in that market.

So we'll take a look at that, too. I mean, we've always said these hotels are very well positioned in the market. And with the visits of visibility on this foreign travel coming back, which is always been a big piece of our business that's been non-existent. Together with the intern business, I think we're sort of going to hold them for the very near term without a doubt. Sorry, for the long answer.

Ari Klein

No, I appreciate it. And just maybe on flexibility overall with leverage improving and the balance sheet in good shape. For 2023 do you expect to be a net seller, net acquirer or net acquirer? How are you thinking about the balance there?

Jeff Fisher

We really do believe after just talking to our friendly owners and developers that we've kind of established or known for 20 and 30 years, in some cases that there will be some deal activity in the back half of the year. And I also think that our friends at the various PE firms that have, frankly been buying a lot of things during the pandemic might not be as aggressive as they have been given the interest rate scenario. So, on a relative basis, I think that bodes better for hotel REITs. So yeah, I think we're net acquirers.

Ari Klein

Okay. And just lastly, just follow up on the interim program, have they given you a sense of just what the volume could look like, maybe relative to this past year?

Dennis Craven

Hey, Ari, this is Dennis. We're still in negotiations with that. I mean we're obviously not the only hotels that get this intern business. So as we kind of work, and I think Jeff talked about the timeline over the next basically 30 days, we're negotiating with them on volume and REIT. So still kind of up in the air at the moment. The good news is, it appears as the programs are on both in Austin -- in each of Austin, Silicon Valley and Bellevue, for I think all of the tech companies we've referred to in the past that we've housed in our hotels. So it's encouraging at the moment, but still negotiating. And I think, as you have talked about, we'll know in the next 30 to 45 days, exactly what's under agreement and what our volume is yet.

So as soon as we're able to talk about it, we will, but we're encouraged at the moment.

Ari Klein

Got it. Thanks for all the color

Operator

Thank you partake. Next question from the line of Tyler Batory with Oppenheimer. Please go ahead.

Tyler Batory

Hey, good morning. Thank you. Just a follow up again, on the cost side of things. When you talk about margin that could decline year-over-year this year? Can you give more detail on what's in your budgets in terms of year-over-year increases for wages, year-over-year increases for insurance and then utilities as well?

Jeff Fisher

Yeah, I mean, I think this all chime in and Jeremy can chime in as well. I think for just a general labor assumption, it's essentially -- hey we're averaging kind of 5% a year since 2019. We're expecting another 5% or so in 2023. And I think Jeremy already mentioned with utilities being up kind of 13% 14%, and property insurance up over 20%, year-over-year. So I think it the biggest item, from a year-over-year perspective is property taxes, which Jeremy alluded to in his prepared comments, that we've benefited to the tune of, I think, around $2 million in 2022 that from refunds. So I think those are your big ticket items.

Jeremy Wegner

Yeah, I think the other thing to point out on the labor side, it's not just the 5% wage inflation, we're assuming here. It's also the fact that brands are requiring us to clean rooms more often now. So there is an increase in staffing levels as well. So while wages are going up, 5%, housekeeping cost per occupied room are going up more like 12% or 13% for the year.

Tyler Batory

Okay, okay. So given that commentary ---

Jeremy Wegner

Sorry, Tom, I think as you look kind of 2023, I mean, similar to what you've heard from other companies, obviously, first quarter RevPAR growth is going to be really strong, with second to fourth quarter moderating kind of to obviously much lower relative to first quarter. And I think, as Jeff talked about, we should given kind of our reliance on business travel, produce some decent RevPAR growth relative to the industry, even in those second, third and fourth quarters. But I think, as we saw in the fourth quarter, and in terms of margins certainly there's a lot of cost pressures in there. So I think, just keep that in mind.

Tyler Batory

So, how are you thinking about the interplay between occupancy, billing that back and REIT? Just perhaps, given a difficult environment out there, in terms of operating costs going up, I mean, it doesn't make more sense to lean a little bit more into the REIT side of things can potential flow through there. Or maybe you do want to build back the occupancy a little bit more to get back to where you were in 2019?

Jeff Fisher

I mean, it's market by market, obviously, Tyler. I think, you know, in my prepared remarks talking about how many hotels that had ADR up relative to 2019. So, certainly, it's a, as it always has been a supply and demand issue. So, in markets like Silicon Valley and Washington DC, it's more we still haven't recovered enough as a market from an occupancy perspective to really drive rates. But in markets such as Austin, Texas and the Northeast and Los Angeles, I think ADR growth is Paramount. So, in general, we believe our ADR growth is going to be stronger than our occupancy growth in 2023.

Tyler Batory

Okay, and then what last one for me, I'm interested in the trends that you're seeing so far in 2023. And I understand there's seasonality here, not a ton of business travel. But I'm really curious on the leisure side of things, markets like Destin, down in Florida overall. Kind of what are you seeing any indication that things are starting to soften a little bit?

Jeff Fisher

Well, I mean, I think it's -- I hate to say it, but it's market-by-market, whereas our Fort Lauderdale Residents Inn even relative to 2019 and last year is still doing well. Destin is a little bit of a laggard compared to '19 and in last year. But if you look to the Northeast Portland and Portsmouth, outperforming still relative to last year and in 2019. So ---

Dennis Craven

Even in the winter.

Jeff Fisher

Yeah, even in the winter. So I think of kind of what we would call more of our leisure markets, Destin is probably the laggard of the five or six hotels. Again, Savannah, high leisure, really still doing well, relative to last year in '19. So for the most part, leisure is still carrying the weight. And I think, as you've seen that a lot of the beer companies reporting as well.

Tyler Batory

Okay, that's all for me. Thank you.

Jeff Fisher

Thanks, Tyler.

Operator

Thank you. Take the next question from the line of Bryan Maher with B. Riley Securities. Please go ahead.

Bryan Maher

Okay, thanks. So most of my questions have been asked and answered. But maybe for Jeff, given the backdrop of what we're hearing for second half opportunities when people go to refi. As you think about your market and your product, how deep of an opportunity, do you think that can be? My suspicion is, it's probably not going to be as relatively deep as maybe gateway markets like New York and others. But how are you thinking about the opportunity pool there, as you approach the back half?

Jeff Fisher

Well, I think the good news for us is we've only got 39 hotels. So we acquire one or two hotels, it really moves the needle, and very, really, really pushes our FFO up substantially. So, it's hard to predict where and how much volume there will really be, but I don't want to get overly excited. I think I think you're right, I think there'll be selected opportunities, were picky, as you know, generally very picky about the kind of assets that we want to own.

And we want to continue to increase our focus on the extended stay segment, obviously, it's 60%, which still trying to push that a little bit higher as an overall mix, so that even further narrows the field just a little bit, because we're primarily hunting for residence ends Homewood suites, Towneplace Suites and Home2 Suites. So in that way, we'll continue, I think to put up the margins and the results that exceed for the most part others. So we'll have to see how it plays out.

Bryan Maher

Okay, thanks. And not to beat a dead horse on the leisure component, but it was pretty profound. I want to my covered companies this week. When you think about your leisure-ish properties in aggregate and RevPAR this year, do you think that that ends up being kind of flattish for the year or maybe down low-single digits?

Jeff Fisher

You know, I'm not looking for down really in those hotels. And actually, I think will be up across the board, or all together, when you look at those five hotels or six or so that really comprise what we might or do call leisure for our portfolio. I think we'll be up. I don't think there's a huge pullback happening, particularly in the kind of hotels that we've got. They are not ultra-luxury resort hotels. But overall, pretty low single digit growth for those versus much higher growth for things. They're still recovering like Silicon Valley or the rest of the big focus.

Bryan Maher

Right, appreciate the feedback.

Operator

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd like to turn the call back -- the floor back over to Jeff Fisher, for closing comments. Over to you sir.

Jeff Fisher

Thank you, and we really appreciate everybody being on the call this morning. And we look forward to providing some more color and continued good results and better news as we move forward through the rest of the year for our next quarter conference call. Thank you.

Operator

Thank you. Ladies and gentlemen this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

For further details see:

Chatham Lodging Trust (CLDT) Q4 2022 Earnings Call Transcript