Greetings, ladies and gentlemen, and welcome to Chatham Lodging Trust's First Quarter 2021 Financial Results Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Mr. Chris Daly. Sir, you may begin.

Thank you, Jen. Good morning, everyone, and welcome to the Chatham Lodging Trust First Quarter 2021 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 on this call is as of May 4, 2021, unless otherwise noted. And the company undertakes no obligation to update any forward-looking statements to conform the statements 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 to Chatham's 2021 first 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?

Thanks, Chris. Good morning, everyone. It's great to be here again with everybody this morning. We're seeing a strong RevPAR growth trend in our portfolio after bottoming out in December. Sequentially versus the prior month, RevPAR grew 18% from December to January, 13% from January to February, 25% from February to March and 14% from March to April. The gains have been driven by both increases in occupancy, up to 65% in April from 40% in December; and rate, which is up 15% to $116 in April from $101 in December. We expect to see continued sequential RevPAR improvement moving forward as leisure travel demand remains very strong, and we are seeing the return of the business and transient traveler beginning. Most importantly, we are very happy about this, our April RevPAR finished at $75, and at this level, we expect to be positive cash flow after all debt service and corporate overhead. Getting to cash flow breakeven is critical to protecting shareholder value. We are the second hotel REIT to reach this critical point, which should reaffirm that our corporate actions and our portfolio performance have been outstanding. Also, we're thrilled that our Warner Center development is now projected to open in the 2021 fourth quarter and is going to provide incremental revenue and FFO growth in 2022 and 2023 as it ramps up. Our negative cash flow has only been $35 million since the beginning of the pandemic. When you exclude our Warner Center development debt, our net debt has actually declined $46 million over that same time frame as we executed a highly successful sale of our Residence Inn in Mission Valley and we've been producing great operating results throughout the pandemic that minimized cash burn. Our focus on select-service hotels, and particularly extended-stay hotels, along with our strong operating team, has kept our balance sheet strong. We have no real debt maturities until 2023, and by the way, all of those can be absorbed into today's available liquidity. We firmly believe that Chatham will emerge from the pandemic financially healthier than many of our lodging peers who have and will continue to burn significant amounts of cash and equity value. As such, we'll be better positioned to be acquisitive and further grow FFO as we move forward. On the acquisition front, as you've heard from others, deal flow has been light. Similar to the financial crisis, it's going to take some time for deals to come to light and become available. But this time, hotels have been losing money, lenders are holding most available cash and forbearance agreements are expiring. This should provide some interesting opportunities to grow the company over the next few years. We look forward to that. From a top line perspective, our sales and revenue management teams continue to deliver outstanding results. Our first quarter RevPAR index was over 126, still well above our 2019 already strong RevPAR index of 118. The impressive gains are being driven by Island's outstanding direct sales efforts from its national, regional and local sales teams as well as concentrated revenue management efforts, ensuring that we're quickly adjusting to the diverse demand sources in today's lodging environment. Although our booking window has been very short, we are seeing a lot of bookings for the summer in markets like Portland, Maine; Portsmouth, New Hampshire; Savannah; and Anaheim. And in some of those markets, ADR will be above 2019 levels. We expect summer leisure travel to be very, very strong. Some pundits, of course, are concerned about the return of the business traveler. Will they return at all? To what extent will the business traveler return? I can tell you that business and transient travel is returning. We are seeing demand return from big tech companies in Silicon Valley. Shipbuilders are coming back to life, San Diego and Portsmouth. Patients, doctors, and medical consultants are returning to medical centers, Houston. IT-related projects are starting up, and we're seeing some intern business in some of our markets, and that's led by Silicon Valley. We're seeing small functions return to some of our hotels with meeting space. Google has announced it's going to fast track its office reopening plan. Other tech giants such as Facebook, Uber, and Microsoft, with whom we do a lot of business, are bringing employees back into the office, and that will be occurring all over the country. From a timing perspective, once we move past Labor Day, we believe business and transient travel will be robust. As the recovery continues and the business traveler does come back, we will continue to get more than our fair share of revenue because we have the largest concentration of extended-stay rooms of all lodging REITs at 58%, and the business traveler is going to get the most value in our kind of hotels. Our upscale extended-stay hotels provide us the flexibility during periods of growth or weakness to diversify our customer base to maximize revenue, a thesis we believed and espoused for almost four decades with these hotels. Our relative RevPAR performance throughout the pandemic has been strong despite lackluster performance in our most significant market, Silicon Valley. For the quarter, Silicon Valley RevPAR was $54 on ADR of $106 and occupancy of only 51%. The good news is we are seeing business traveler production from some of the big tech companies out there. As I stated previously, we are starting to see the business traveler return to our hotels, and along with the office reopening, when you combine this with other tech companies who are giving employees the opportunity to work from alternative locations, those workers will have to come back frequently to the central office, to the headquarters, and we're bullish that corporate demand in Silicon Valley, especially post Labor Day, will be even stronger with that kind of travel together with other inbound travel than it was pre-pandemic. Among our top markets, South Florida remains on fire, and our Fort Lauderdale Residence Inn posted the highest RevPAR of our top markets with RevPAR of $161, down just a little from last year but almost double its RevPAR in the fourth quarter just three months ago. As a matter of fact, I was looking over our weekend ADRs and RevPAR for the past weekend, and Lauderdale popped up as having an ADR that was up double digits from our 2019 peak ADR. We expect to see that kind of phenomenon this summer in some of the leisure markets and hotels that I've mentioned a little bit earlier. Our bogey in setting our rates and revenue management will be to exceed 2019 ADRs, and I believe we'll get there. From an operating expense standpoint, we continue to be hyper-focused on every expense. On the Island side, we have a team of analysts that are in day-to-day touch with every hotel GM and investing 100% of their time to help each hotel micromanage its expenses. As Dennis highlighted in our release, we produced incredible cash flow-through of 84% on the sequential revenue improvement from the fourth quarter to our first quarter. On a $2.6 million increase in hotel revenue, we drove an increase in GOP of $2.2 million. Yet again, this is more proof that our platform with Island is producing great results. As trends improve in 2021, this focus will need to be maintained to continue to produce strong flow-through to the bottom line. If you look at our 39 hotels, 32 of the 39 generated positive GOP in the first quarter, and our top five producers of GOP were all Residence Inns: Gaslamp, San Diego; Fort Lauderdale; Anaheim; Mountain View, California; and New Rochelle, New York. Our liquidity is up from year-end. We are cash flow positive. Our balance sheet is strong, and our actions over the past year protected shareholder value while providing flexibility to add value down the road. Given our portfolio attributes, our industry-leading platform with Island, our ability to appeal to the diverse customer base that our room type and hotel type allows, we believe we'll be able to return to 2019 levels sooner than most of our peers. With that, I'd like to turn it over to Dennis.

Thanks, Jeff. I want to fill in some additional revenue and RevPAR facts. 21 of our 39 hotels had occupancy over 50% in the quarter. All hotels have been opened since the beginning of the pandemic. Weekends continue to carry the day. In the first quarter, our Friday, Saturday night RevPAR was $61, which is up 20% over our weekday RevPAR of $51 with the differentiation primarily due to occupancy, which was almost 60% on the weekends, again, up 20% compared to our weekday occupancy of 48%. Our most significant brands had the highest occupancies with Residence Inn at 60%, Homewood Suites of 58%, and Hampton at 60%. Our suburban New York assets in New Rochelle and White Plains had average occupancy of 72% in the quarter and ADR of $150, only down 16% over the 2020 first quarter. Despite the challenges that urban New York City is going to face for years to come until the international traveler comes back in full, our hotels are already performing pretty well. And again, a differentiation in our portfolio that often goes unrecognized is the location of many of our assets that are able to benefit from diverse demand drivers. Our San Diego Gaslamp Residence Inn, despite no convention business, had occupancy over 70% at, again, an ADR of $150. Again, diversity of demand. Two hotels saw an ADR increase, and 11 of our 39 hotels saw occupancy gains over the 2020 first quarter. Our top five absolute ADR markets were our Residence Inn Fort Lauderdale; our Residence Inn San Diego Gaslamp; our Hilton Garden Inn Marina del Rey; our Embassy Suites Springfield; and our Residence Inn in White Plains, New York. All these hotels had ADRs over $140. And I also might add you've got an incredible representation there with areas from New York to D.C. to California to Florida. Our top five absolute occupancy markets in the quarter were the Residence Inn Fort Lauderdale, the Residence Inn Anaheim; our Residence Inn Mountain View, California, which had occupancy of 79%; our Homewood Suites in Farmington, Connecticut; and our Hampton Inn Suites Houston Medical Center. All of these hotels had occupancy over 75%, and these are certainly not just leisure markets. Again, look at the diversity of markets from Florida to California to Connecticut to Texas. This is the first time since the pandemic we've seen a Silicon Valley hotel pop into the top rankings, and with the Hampton Inn Houston coming in, another positive indicator for lodging as patients, doctors, and consultants are starting to resume procedures and treatments. We continue to see an average length of stay much longer than historical levels for our portfolio especially with respect to our Residence Inn and Homewood Suites brands. Our Residence Inn hotels, our average length of stay was 4.5 nights in the first quarter compared to 4.4 nights in the 2020 fourth quarter and 2.4 nights in the 2020 first quarter, almost double. For our Homewood Suites hotels, our average length of stay was 3.7 nights in the first quarter compared to 3.3 nights in the 2020 fourth quarter and 2.7 nights in the 2020 first quarter. Looking at our segmentation production. Compared to last year, our corporate revenue was off 37% versus a decline of 56% in the fourth quarter and 65% in the third quarter, which was our best performing segment on a year-over-year basis and reflective of some of those green shoots in corporate travel and other types of transient travel that Jeff referred to in his prepared remarks. Our retail production is off 45% versus 60% in the third and fourth quarters, and our government business is off 42% versus 45% to 55% previously. On the corporate revenue negotiated front, we saw a pretty good boost in our local negotiated segments as we scored some good wins in a handful of Homewood Suites markets, booking primarily government, nursing, and prison staffing books of business. Let's talk for a minute about our best-in-class operating model that pumps out operating profits and positive hotel EBITDA. For the first time since the pandemic, we generated positive GOP and hotel EBITDA each month during the quarter. Our first quarter operating margins were 30% on RevPAR of $55, which is a 20% margin jump over our fourth quarter operating margins of 25% on RevPAR of $47, obviously, again, proving that the operating leverage within our portfolio is strong. Throughout the quarter, margins improved meaningfully, with operating margins of 23% in January, 27% in February, and 37% in March. Island Hospitality has dedicated resources on their operations team that dedicates time every day analyzing data and communicating with our general managers at all of our hotels on a real-time basis, managing staffing levels and expenses. It's that kind of focus which is necessary to control the pennies and increase our profits. It's going to be very important for us as a team as lodging recovers to control costs as much as possible and avoid expense creep as much as we can. Labor is a bit of a concern. I think as many of our peers have talked about, it is our biggest expense, and it has been and seems to be a challenge to find steady employment. On a per occupied room basis at our 39 comparable hotels, payroll and benefit costs were approximately $30, which is down approximately 10% from our 2020 fourth quarter and down approximately 24% compared to our first quarter of 2020. Our employee count as of the end of the quarter was 915, which compares to approximately 825 at year-end and approximately 1,700 hotel-level employees before the pandemic. A fantastic job by our team, holding employment relatively steady despite our growth and strong RevPAR growth trends. The current employment environment, as I said, is becoming more challenging to hire and retain hourly employees, given the amount of money people are making collecting unemployment, and certainly, we believe that benefit must end sooner rather than later. We have to be very creative with respect to incentives such as signing bonuses, performance bonuses, and stay bonuses to be able to hire and retain our talent. In the first quarter, our complementary food and beverage costs have come down 55% year-over-year. Our comp breakfast spend was $410,000 in the first quarter, which is down from over $900,000 last year. And even if you look at it on a CPR basis, cost per occupied room, our breakfast is now $1.50 per room versus $2.80 last year. Our evening hospitality costs are basically 0 with less than $500 in the quarter. As we move forward, we do believe that complementary food and beverage offerings will be changing as customer desires change and health and safety protocols, and those should benefit our bottom line. We are working closely with our brand leaders at Marriott and Hilton, sharing our experiences and our visions for what we believe that should look like. Another quick data point is that our utility costs were down year-over-year despite the horrific freeze in Texas, where many property owners saw major increases due to energy shortages. We had made the decision to lock in prices in our Texas markets prior to this year and thus did not get jammed. On the CapEx front, we spent approximately $1 million in the first quarter, with our budget for the full year about $6.5 million, and we invested approximately $9 million in our Warner Center development. The Warner Center development continues to go according to plan, and we're very much looking forward to opening that hotel in the fourth quarter. Before I turn it over to Jeremy, I do want to highlight something, which is really a lot of initiatives we've put in place on corporate responsibility and ESG initiatives. In early March, we rolled out our inaugural corporate responsibility report for 2020. We have always been committed to ESG matters, but this marks our first memorialized reporting of both our historical efforts and our renewed approach to sustainability. As a direct result of the release of our report, our substantial efforts have been recognized by investors and others in the industry, including Institutional Shareholder Services, ISS, who gave us improved ratings from December in all areas, including governance, which improved approximately 17% from a 7 to a 6 rating; our environmental scores, which improved about 50% from a 9 to a 5 rating; and social, which improved 80% from a rating of 10 to a rating of 2. We strive to improve our ESG initiatives going forward with a particular focus on DEI issues over the next year. With that, I'll turn it over to Jeremy.

Thanks, Dennis. Good morning, everyone. Chatham's Q1 2021 RevPAR of $55 represents a 17% increase versus our Q4 RevPAR of $47. Q1 is generally a seasonally low quarter for our portfolio with absolute RevPAR levels in line with Q4 so we are very encouraged by the 17% increase versus Q4. During the quarter, RevPAR increased from $47 in January to $53 in February and $66 in March, and Q2 was off to a great start with RevPAR of $75 in April. Our $55 Q1 RevPAR represents a 54% decline from our RevPAR in Q1 2019, and our April 2021 RevPAR at $75 represents a decline of 45.3% to April 2019. We expect RevPAR declines relative to 2019 will continue to be reduced throughout the remainder of 2021. Through our significant efforts to contain costs, we were able to generate a Q1 hotel EBITDA margin of 11.1% and GOP margin of 29.9%, which is quite strong in light of our absolute RevPAR level of $55 for the quarter. Our Q1 2021 hotel EBITDA was $3.5 million, adjusted EBITDA was $1.2 million. And cash flow before capital, which represents hotel EBITDA less corporate G&A, cash interest, and $2.3 million of principal amortization, was minus $7.6 million. Chatham's portfolio has demonstrated remarkable resilience during the pandemic, and our unique focus on extended-stay hotels has enabled us to get through the worst of the pandemic with significantly less cash burn than most of our peers. Our April 2021 RevPAR of $75 is generally what we think we need to be free cash flow neutral through corporate G&A and debt service. And when I say free cash flow neutral, that includes approximately $2.3 million of quarterly CMBS principal amortization. So at April's RevPAR level, we believe our unrestricted cash balance should remain level while we paid down approximately $2.3 million of debt per quarter. In addition to the outperformance of our hotels during the pandemic, we have taken a number of actions that will help us to emerge from the pandemic with a reasonable amount of leverage and liquidity. In November, we completed the sale of the Residence Inn Mission Valley for $67 million, which allowed us to repay the $26.7 million mortgage on that property and $37.7 million of borrowings under our credit facility. The $67 million sale price represented a 6.5% cap rate on the hotel's 2019 NOI of $4.3 million and a 14x EBITDA multiple on 2019 EBITDA of $4.8 million. In March, we completed the sale of our 10.3% interest in the Innkeepers JV for $2.8 million, which generated a gain of $23.8 million. We have received over $100 million of cash distributions over the life of our Innkeepers JV investment since we made the initial investment of $37 million in 2011. Importantly, the sale of Innkeepers will meaningfully reduce our leverage going forward. Our share of the Innkeepers debt was $88 million, and the Innkeepers JV had net debt-to-EBITDA of 10x in 2019. In Q1 2021, we issued $21.3 million of equity through our ATM and direct stock purchase programs at an average price of $14.15. We felt it was prudent to issue this very limited amount of equity in order to repay a $12.5 million loan that was scheduled to mature in 2021, our only debt maturity before 2023, and offset our cash burn in Q1. We take the decision to issue even a very limited amount of equity seriously, and we believe this made sense and will allow us to avoid issuing larger amounts of more costly debt or dilutive equity-linked securities like we've seen some other companies do. We believe the steps that we have taken to reduce leverage and increase liquidity, coupled with our return to RevPAR levels which we believe are consistent with positive cash flow, will enable Chatham to exit the pandemic with reasonable leverage and solid liquidity. At March 31, we had $145 million of liquidity between our unrestricted cash balance and revolving credit facility availability. $12.7 million of this liquidity was used to repay our 2021 debt maturity at the end of April. So pro forma for that, our liquidity is approximately $132 million. We believe our balance sheet is now in great shape since we no longer are burning cash and we now have no debt maturities until 2023. This is very important because it provides time for hotel performance to continue to recover before we need to refinance any debt and should enable us to avoid locking in high-cost debt or doing other more dilutive financings. Our positive free cash flow and solid liquidity also provide us with the capacity to acquire hotels should attractive opportunities arise. That concludes my portion of the call. Operator, please open the line for questions.

[Operator Instructions]. Our first question comes from the line of Aryeh Klein with BMO Capital Markets.

On the ADR front, you noted a lot of positives on the leisure side of things. How should we expect to play -- that to play out in the rest of the portfolio? Is there still a lot of low-rated occupancy that should turn to higher rate business? And are you still expecting the internship programs in Silicon Valley this summer?

Let me start by just talking -- and then, Dennis, you can talk about the interns. Look, the business side of the equation is still, I think, challenged with ADR. We're doing about $15 or even up to $20 better in some cases compared even to the fourth quarter when you look at the segmentation reports for corporate and business travel. But still, without the volume of business traveler there and without that also coming through the various reservation systems at the higher ADRs, you're not going to see the kind of results until that volume picks up. Dennis?

Yes. I think on the intern program, Aryeh, in Silicon Valley, which is normally where we have most of -- the four hotels are full with tech interns, a lot of those programs are not occurring this summer, especially at the size that they did previously. We have heard certain companies are looking and believing they're going to do kind of late summer, early fall internships. But additionally, we do have -- and we think we have in even our Tysons, our Springfield hotels some intern -- and our D.C. hotels, some intern business on the East Coast, which is a little bit different for us than prior years. And then we expect a little bit of intern business up in Seattle. But it's certainly -- still this summer is not going to be the significant book of business that it was for us in 2019 and prior, but we do -- we are encouraged that we are going to see some of it.

I think what you want to look at from a macro perspective is just the amount of office reopenings that you read about online or in the newspaper or whatever and how surprising they may be in terms of announcements about office reopening that's earlier than most people had expected. And you're starting to see a little bit of that even in New York City. And when you see announcements from different states about the relaxation of restrictions, of course, not to make a political statement, but we live in quite an interesting state on that front. But anyway, as you see more of the relaxation and the vaccination rate go up, I think that you'll see a faster acceleration of that kind of travel.

And then just on the labor side, how are you thinking about staffing as occupancy kind of ramps? And where do you think it ends up relative to kind of pre-pandemic levels at your hotels?

Yes. I mean listen, it's a challenge, as I said in my prepared remarks. I mean we're throwing out all kinds of incentives to try and hire or retain talent. Thankfully, one of the -- again, one of the benefits of our portfolio, which is the extended-stay hotels and as I talked about, our length of stay is still quite high compared to what it was pre-pandemic, is given the size of our hotels, we aren't cleaning them as often. So I think for us, we get a little bit of a benefit there, even though labor is a challenge, in the fact that our guests are staying a little bit longer. Only in a couple of instances that we had an issue with turning rooms to drive revenue or sell rooms for the night. And quite honestly, that was in a couple of what I would call -- those were not extended-stay hotels, so we had a lot of room turn on a couple of nights. But that's -- again, thankfully for us, it hasn't been a significant problem. But finding labor over the next 90 days is going to be important and is a major focus of our operations team.

Our next question comes from the line of Kyle Menges with B. Riley.

This is Kyle on for Bryan. I was curious if you could talk a little bit more about the kind of demand you're seeing heading into the summer in coastal Maine and New Hampshire and maybe more specifically, the kind of booking momentum you're seeing heading into June.

Yes. I mean it's very strong in coastal New Hampshire. We've seen, especially over the last 45 days, a significant uptick in room reservation demand for our Portsmouth, Exeter, and Portland hotels. I think we're very bullish on what that summer looks like. As we talked about really last year, those markets were closed to essentially any inbound travel until, I think it was, July 15. So even on a year-over-year basis, that should be very strong. And as Jeff talked about, especially in those markets, we are pushing ADRs, and we believe those are markets that should, even compared to '19, have pretty high, if not higher, ADRs than 2019. So we're very encouraged by the booking pattern for those markets. We think it's going to be really strong.

Great. And then as far as capital allocation is concerned, I was curious kind of how you're weighing looking at acquisitions. I know you mentioned the pipeline is a little slow right now, but kind of how are you looking at acquisitions versus getting CapEx to a more normal level as we head through 2021 into 2022?

Well, on the CapEx side, I think we're conservative there, and our hotels, because of the money we've spent over the years, are in very, very good shape anyway. So by having even up to 24 months of very little CapEx going on, we will come out of the pandemic in good shape. We have allocated some money to one or two hotels that have about 10 years into their cycle for what really is just a soft good cycle redo, not extremely expensive. So we'll -- on the CapEx side, we'll be looking just fine. And acquisitions are something that just we'll continue to dig for and work on to expand, particularly in the extended-stay arena, our kind of presence there. And I think it's going to take, as we've commented and I think others, a little bit more time here for some of these opportunities to really come to fruition. But we'll continue to utilize our kind of long-standing industry contacts and relationships, and I think we will make some deals down the road here.

Our next question comes from the line of Tyler Batory with Janney Capital Markets.

First question for me, I wanted to zero in on the short-term trends and what you're seeing out there. And I appreciate all the color on April and appreciate all the market commentary as well, but it sounds like you expect continued sequential improvement into May broadly for the portfolio. Can you talk a little bit more about that? How much visibility do you have into the rest of May? And how much is seasonality, you think, playing into some of the stronger results that you've been seeing here?

Well, I mean, certainly, Tyler, for our portfolio, November to February are always seasonally lower months and slower months. And then you start to come out of it in March, and you build really through October, with October being historically one of the strongest months for our portfolio. I think from a May perspective, I think we do expect it to be -- continue to have RevPAR growth in May over April. I think you're in that kind of weird period where you're not in the spring break anymore. Schools are kind of starting -- at least colleges are starting to get out of -- to finish their spring semesters in early May and as you move through the month. So we do expect May to be better than April, but I think once you get to June, July, and August, I think you are -- we expect to see really strong growth. So I think, yes, we expect that trend to continue.

Okay. Excellent. And then in terms of your RevPAR index, because I think it's really quite impressive and quite good, as we look going forward, do you expect to be able to hold on to that market share or perhaps, I think, level out as some of the other properties that are out there start to reopen and whatnot?

I mean listen, I think we're certainly -- and you've seen over the last few quarters, it has started to come back closer to our 2019 RevPAR index of 118. I think we would like to -- we do believe that even over the next several quarters, that our index remains strong because, again, of our ability to diversify our customer base. But certainly, I think, expecting it to stay 15% to 20% above is not realistic, but we certainly hope to hold on to some of those incremental gains as we move forward.

Okay. Great. And then just the last question for me, to put a finer point on this labor discussion, certainly top of mind for a lot of investors out there. Can you quantify or talk more just about the labor needs in an extended-stay hotel versus -- an extended-stay versus normal select service versus full service? Just trying to get a sense of how much variance there is across the property types here in terms of how many employees are necessary to effectively operate once we get back to more normalized occupancy levels.

I mean, I think you start -- I think you first start with, especially as we sit here today and I think even for a little bit of the foreseeable future, which is our length of stay, which is longer. So where our length of stay is kind of 4 to 5 nights on average in our extended-stay hotel, it's most likely half of that at something else. And therefore, you're going to be cleaning a room every two nights at least instead of every four nights. So we can manage to clean the rooms as they turn with essentially, just on a housekeeping perspective, half the labor, I think, just to put it simply. So that at least mitigates some of the concerns and problems we're seeing with hiring the right people that I think other owners who have different types of hotels that are more 1 to 2 night average stay or weekend stays are going to be posed with the problems of cleaning rooms and flipping them.

So you're really talking about housekeepers then at least in our hotels. Comparing a select service -- and so let's start from the bottom. Starting with select service, comparing that to upscale extended stay. I mean Dennis hit the nail on the head. You've got X number of housekeepers depending on the day and depending on the occupancy. But with stay-overs, we're not recleaning the room and there is no expectation that we'll reclean the room, especially coming out of the pandemic. So that works well. As you move up the food chain -- and let me just talk a little bit about food and beverage. On the food and beverage side, you've only got 1 or 2 dedicated employees in a select-service hotel anyway to do the breakfast and to do the evening sort of complementary cocktail hour or otherwise. The evening hour in extended-stay hotels is gone and probably going to stay gone. So there's savings there compared to before the pandemic. And what we're working on, and the brands are helpful, is a combination of kind of a service level between the front desk and what happens during the more limited breakfast time, breakfast hour. And so I think there's going to be ultimate -- actually, I know there'll be ultimate labor savings in that arena. Now if you're a full-service hotel, it's a different story because as occupancy comes back, unless full-service hotels want to keep their food and beverage facilities closed the way most are today, then they're going to have, as you know, quadruple the employees that we've got in our hotels. So and if they keep them closed, then the ultimate difference between a select-service and a full-service hotel really goes away, and that would be an interesting perspective from a sales and marketing point of view. So we feel, again, pretty good about the kind of hotels that we own.

Our next question comes from the line of Anthony Powell with Barclays.

In some of your markets like Fort Lauderdale and New England, where you expect to maybe get ADR at or above 2019 levels, do you also expect to see GOP or wholesale EBITDA above '19 levels? And how much above, given the cost saving you just talked about?

Yes. I mean listen, I think, Anthony, we do expect in some of those markets to have ADRs higher than 2019. And with the challenges and with -- I think there's a very efficient operating model at the moment, as evidenced by our flow-through that we've been producing. We do expect, in that case, GOP to be stronger. But that also assumes that occupancy is similar to what it was in '19, which we think demand is really strong so it should be. So I think we're not going to step out there and say, on a same-store basis, operating margin should be 275 basis points stronger at this point. But especially, I think when you look at this summer, we think the operating margins will be pretty strong.

Got it. And maybe just a broader -- I mean I know you like the upscale extended-stay business. Any changes sort of regional or other allocation as we look forward to buying hotels in the future, more leisure, more Sun Belts? Any change in your target markets or allocation as you look to the next buying cycle?

Look, I think we're as favorably inclined as we were pre-pandemic, frankly. We were talking about Sun Belt. That's only come to be more obvious through the pandemic. But I think you have to be careful because there's a lot of money on the sidelines, and the herd mentality is 'We got to buy leisure. We got to buy -- drive to markets.' You've heard it, right? You've heard it all. So -- and you've written about it. So that might drive the prices up to a point in those particular locations, unless it's a special kind of an opportunity, to make not a lot of sense. So we'll be careful about that. But we certainly, as we look forward to the next five years, let's say, want to be fundamentally, as we always have been, in markets with good, diverse demand generators. And I think that's going to be the key.

Ladies and gentlemen, at this time, there are no further questions. I would like to turn the floor back to management for closing comments.

Well, I appreciate everybody joining us today. I think our hotel's performance throughout the pandemic proves the high quality of our assets and the flexibility that we've talked about a lot of the extended-stay model and the strength of our operating team. We look forward to a multiyear recovery here, and that bodes well for the future of our hotels and our ability to grow cash flow and earnings over the next several years. I'm looking forward to a very robust summer, and I hope you'll join us for our August earnings call. I would think that will be an interesting one. Thank you very much.

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