Thank you, Justin. Good morning, everyone, and thank you for joining us. With me on the call today is Jeff Donnelly, our Chief Executive Officer; and Justin Leonard, our President and Chief Operating Officer. Before we begin, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from what we discuss today. In addition, on today's call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. We were pleased with our second quarter results, which exceeded our expectations going into the quarter. Comparable RevPAR grew 2.2% over last year, which was 260 basis points higher than the growth that we saw in the first quarter and exceeded the 100 basis point to 150 basis point of sequential acceleration we expected. Total RevPAR increased 4.5%, also an acceleration from the 2.4% total RevPAR growth in the first quarter. The 230 basis point gap between total RevPAR growth and room RevPAR growth was the result of an intentional mix shift toward Group business that drove strong out-of-room spend. The strategy has worked. Group revenue increased 7.2% over last year, and banquet catering and AV revenue increased over 20%. The strong revenue growth was driven by both our resort and urban hotels. Comparable RevPAR at our resorts was 1.9% higher than last year, with total RevPAR 2.7% higher. Comparable RevPAR at our urban hotels was 2.2% higher than last year, with total RevPAR 5.4% above 2023. Comparable hotel operating expenses increased 4.5% from last year, which was largely in line with our expectations. Total wages and benefits increased by 7%, a better growth rate than the prior quarter. Early in the second quarter, we renewed our insurance program with a better-than-anticipated outcome. Overall, our premium cost was reduced by 16%, which led to insurance expense for the quarter declining 14.5% from 2023. Comparable hotel adjusted EBITDA was $99.5 million, reflecting a 5.5% growth over last year on a 20 basis point increase in margin. Adjusted FFO per share increased 6% over 2023 to $0.34 per share. Turning to our outlook; the success of our Group strategy has exceeded our expectations, shifting our mix towards Group as well as a focus on building occupancy in our resorts may reduce room RevPAR growth, but it is done so to the benefit of total RevPAR and ultimately, profit. Accordingly, we are adjusting our RevPAR growth outlook to a range of 1.5% to 3%. However, we expect total RevPAR growth to be in the range of 3% to 4.5%. Our Group strategy has performed well, and we expect it will continue to drive incremental revenue and profit. But due to the types of Groups on the calendar, we do not expect out-of-room spending in the second half of the year will contribute 250 basis points to our total RevPAR growth as it did in the first half of the year. We now expect 2024 adjusted EBITDA to range between $278 million and $290 million. Our 2024 adjusted FFO to range between $201.5 million and $213.5 million, and the resulting adjusted FFO per share range increases to $0.95 to $1. Turning to capital allocation; we commenced share repurchase activity during the quarter. To-date, we have repurchased 2.8 million shares with a weighted average price of $8.36 per share for total consideration of approximately $23.5 million. We continue to explore asset dispositions, the proceeds of which can fund additional share repurchases, internal ROI projects, or external growth. Our balance sheet remains strong. As of the end of the quarter, our net-debt-to-EBITDA ratio was 3.8x trailing four quarter results, and our liquidity was $630 million. We plan to repay our $73 million mortgage maturity in early August with cash on hand. In addition, we intend to exercise our 1-year extension right on our $300 million term loan, bringing the maturity to January 2026. We continue to monitor and assess all available options to address our upcoming 2025 debt maturities, and we'll continue to keep you updated on that front. I also want to share that during the quarter, DiamondRock successfully completed the implementation of a new Oracle cloud-based ERP system that has streamlined our accounting-related activities as well as a new Enterprise Analytics system to better collect and analyze the enormous volume of hotel level operating and financial data available to us. Together, we expect these systems will extend our impact while maintaining one of the most efficient teams amongst our peers. Kudos to our accounting and asset management teams for their efforts on this significant project. I'll now turn the call over to Jeff for additional color on the quarter.

Thank you, Briony, and thank you all for joining us this morning. I want to acknowledge the exceptional efforts of our entire team who worked diligently this quarter to achieve strong Q2 results during a leadership and information systems transition. I also want to honor Bill Tennis, who recently retired after serving as DiamondRock's General Counsel for 14 years. Additionally, I would like to welcome Anika Fischer, who has joined DiamondRock as Senior Vice President and General Counsel from Essex Property Trust. She has already proven to be an outstanding addition to our team, and I am personally pleased to have her with us. Now, let’s delve deeper into the second quarter. It’s important to note that our focus is on maximizing profit, rather than only on RevPAR or margin. This is why Justin and his team decided to shift their focus towards Group a few quarters ago. Although this shift may lead to slightly lower room RevPAR growth, it ultimately benefits total RevPAR growth. Currently, the difference between our room RevPAR and total RevPAR growth stands at a strong 250 basis points. While higher total RevPAR growth may lead to increased total expenses and potentially lower margins, it results in higher profits, which we prioritize. As Briony mentioned, the portfolio's comparable EBITDA grew by 5.5% in the quarter, and food and beverage profit at our urban hotels surged nearly 27% despite increased costs associated with non-room Group revenue. Urban hotels experienced the largest gap between total RevPAR and RevPAR growth. The Clio had a spread of 1,000 basis points, the Worthington 780 basis points, Chicago Marriott 740 basis points, Westin Seaport 520 basis points, and The Gwen 480 basis points. Looking forward to the second half of 2024, Group room revenue on the books is up 14% compared to last year, with over 30% growth at the Chicago Marriott, Westin D.C., and the Worthington. For the year, we have booked 704,000 Group room nights, marking a 7.3% increase over 2023, which represents 88% of our 2024 budget. Regarding our resorts, this quarter marked the first positive RevPAR growth in our resort portfolio since late 2022. Comparable occupancy for resorts rose by 8.6%, though this was counterbalanced by a 6.1% decline in ADR. Even with increased reliance on occupancy as a historically costlier source of revenue growth, we managed to increase EBITDA by 7.1% while limiting expense growth to just 2.5%. Significantly, we are outperforming our markets, capturing share in 14 of our 16 resorts. Like our urban hotels, we have embraced Group, sometimes at the expense of average rates, to enhance total RevPAR and profitability. It’s no longer the case that resorts were handsomely rewarded for holding out for last-minute transient business, but we are still operating over 40% above 2019 levels and adapting our revenue strategy to maximize profit. In the latter half of the year, we anticipate trading off ADR for occupancy profitably. For this reason, we expect our full year room RevPAR growth to be slightly below our original guidance, although we have higher expectations for total RevPAR and profit growth. We successfully completed the room renovation of the Westin San Diego Bay Front and converted Hilton Burlington to Hotel Champlain, which now features a new restaurant called Original Skiff Fish & Oysters, led by renowned chef Eric Warnstedt. The hotel offers a great experience from arrival through its two-story lobby, new health club, and spacious rooms. We also have several additional ROI property opportunities in progress, such as the new hotel bar, Havana Cabana, Marina at Tranquility Bay, and the integration of our two Sedona resorts in 2025. We are continuously assessing our portfolio for value-add opportunities while also re-examining our six-year capital expenditure plan to maximize efficiency for increased capital retention. To this end, we have decided to reduce the scope of the ROI project in New Orleans by 40%. We originally planned to invest around $13 million in renovating 220 rooms and revamping the lobby and pool areas for new food and beverage outlets. The initial budget was set with the expectation that these expenses would justify implementing an urban amenity fee, capturing incremental market share, and driving additional food and beverage profit. Since then, we have managed the hotel to gain significant share, and we now believe it is wise to scale back the capital plan to focus solely on room renovations. This revised scope still supports the case for the amenity fee while leaving the option open for future outlet expansions. We expect the renovations will be completed before the Super Bowl. Now is a good moment to reflect on our strategy. Shareholders have inquired about how the recent leadership transition will impact our strategy, and we’ve indicated that we will maintain a long-term focus on expanding our leisure market presence, whether through resorts in unique destinations or hotels in lifestyle cities, while also recognizing opportunities in targeted urban markets. Moreover, we plan to take a more deliberate and analytical approach to our actions. Our primary focus is on identifying ways to drive incremental earnings per share as a means to narrow our discount to net asset value. The stock market often emphasizes RevPAR, but this only captures a fraction of revenue and does not factor in how leverage, branding, age, and other elements influence long-term earnings growth. To support our focus on improving earnings per share, we are working on reducing costs. At the corporate level, we are examining our G&A expenses during this leadership transition, in addition to implementing new technologies to enhance efficiency. At our hotels, we are striving to lower our capital expenditures relative to revenues by carefully scrutinizing what truly generates cash flow and value. Historically, full-service hotel REITs allocate about 11% to 12% of revenue to capital expenditures. Considering usual dividend payouts and high leverage, it becomes challenging to retain significant earnings to organically fund share repurchases, ROI projects, or acquisitions aimed at earnings per share growth. It is a priority for us to keep our annual capital expenditures in the high single digits. Every 100 basis points reduction in capital expenditures translates to over $10 million preserved and potentially 50 basis points of earnings per share growth. The $5 million reduction in scope for New Orleans, while modest, is significant as it demonstrates DiamondRock's commitment to being responsible and assertive stewards of your capital. It also emphasizes that we control the scope and timing of renovations at our independent hotels to tailor the product to our target customer in each specific market. What more can we do? The average age of our assets is a key consideration. While real estate can be renovated, the necessity and scale of capital investment tend to escalate with age, and market values do not always accurately reflect the obsolescence of older assets. There are instances where new hotels are traded at similar EBITDA multiples despite the increasing capital needs of aging assets. We are actively looking for opportunities to recycle non-core assets within our portfolio into higher after-capital cash flow yields that will be additive to earnings. Flexibility is also crucial in adapting our investment strategy to local market conditions. For example, in certain urban markets, an upscale hotel may prove far more profitable in the long run than an upper upscale product, given the comparable profit per key but reduced capital costs. In summary, our asset focus remains largely the same, but our approaches to driving earnings per share growth have evolved. We believe this focus will ultimately result in relative multiple expansion and enhanced total shareholder return. Now, we would like to open the floor for questions from you, and Justin, Briony, and I will be happy to address them.

And our first question comes from Austin Wurschmidt from KeyBanc Capital Markets. Your line is now open.

Thanks and good morning everybody. Jeff, I guess I'm just curious how far along you are in sort of identifying the noncore assets that you'd potentially like to sell. And if you can just kind of provide an update on the transaction market, kind of depth of the buyer pool and interest for you to execute kind of on this new on strategy investments?

Good morning, Austin. Yes. I would say that from the list of noncore assets, I would describe it as really the assets we've talked about in the past. I mean we've highlighted previously like our Westin in Washington, D.C., Chicago Marriott, and even our Fifth Avenue Courtyard in New York. I would tell you that list isn't more extensive. It hasn't changed materially. I think it's how we're looking at those assets when we kind of think about the long-term capital needs of them and where we think we can find reinvestment opportunities. It's not all going to happen in a day, but I think those are the sort of the most likely characters that we look at as noncore for us in the coming quarters. As far as the current market and Justin can chime in as well. I think it's been challenging out there for buyers. It's not that there's not a lot of capital chasing assets. I think with debt costs relatively high, it could be difficult for folks to get things financed and bought at a level that's accretive, but it's also appealing to us. And therein lies the bid-ask spread between buyers and sellers. But I don't know, Justin, if you want to add in?

Yes, we're still seeing a significant drop-off in transaction volume. I think if you look at the last sort of eight to 10 years, hospitality transactions are sort of a $20 billion to $25 billion transactional market on an annual basis and the first half of the year was about $5 billion. So that gives you a sense of kind of the amount of transactions are actually getting done relative to our normal run rate. We still see a pretty large bid-ask spread between buyers and sellers.

Got it. That's helpful. And then just separately, last quarter, you had indicated that the rate impact to leisure was really more of this mix shift strategy to more Group which clearly benefited you this past quarter by shrinking the base. But what's sort of the latest update on just rate sensitivity of that leisure transient customer? And does the Group demand remain strong enough for you to continue kind of with that strategy of filling the base without having to sacrifice some rate too much? Thanks.

I believe we are seeing a return to previous trends rather than simply a decline in the leisure transient customer. During the COVID period, having groups or a strong base was seen as a disadvantage due to high demand and consistent patterns. Currently, some of our resorts are experiencing a midweek return, not quite to 2019 levels but definitely a step away from 2021. We are incorporating more discounted leisure customers during midweek along with additional group bookings, which has been successful in strengthening our base. We experienced a 20% increase in Group at our resorts for the second quarter and expect similar growth in the third quarter. This ongoing shift indicates that we still have the opportunity to increase group bookings in our resort assets and approach 2019 levels in segmentation from our resorts.

Thanks for taking the questions.

Thank you. And one moment for our next question. And our next question comes from Patrick Scholes from Truist. Your line is now open.

Thank you. Good morning, everyone. When I think about your results this year and your portfolio composition, certainly, the composition, I think of you folks more leisure-centric. I find it very interesting that you've been able to raise your guidance for two consecutive quarters, which is quite unique here. You certainly have talked about certainly shifting Group mix in there. But anything else you'd like to call out there, how you've been able to do that, especially in relation to other public REITs that haven't been able to that are maybe less resort-centric? And then I'll also relate that to one of the themes that's earning certainly some pressure on the leisure customer. Jeff, any other color or thoughts around that?

Thank you, Patrick. We mentioned this in our remarks and in the release, but Justin and his team made a smart move several quarters ago by focusing on Group bookings, not just at our urban hotels but also at leisure and resort-oriented properties. As Justin noted earlier, many hotels have been trained over the past few years to prioritize transient bookings, aiming to maximize rates every day of the year. As we transition to the present, we're starting to see those trends shift. Some resorts may need to be reeducated to understand that, for example, selling a $500 weekend rate for $350 midweek to a group is acceptable. The transient guest doesn't notice this change, but it represents revenue we might have missed if we had prioritized transient guests during the week. It's about recognizing that booking patterns are evolving. It's important to clarify that this isn't about discounting; the weekend customer isn't aware of any rate changes. Instead, it's about identifying different types of guests at various price points. I believe it was wise to embrace this approach early on, as there are groups we can attract to resort properties just as we do in urban areas. Although our resorts may cater to a more diverse range of business, we need to be realistic about the current environment.

Okay. That's great. And then another question and I suspect I know the answer to this, but I'd like to hear it crystal clear from you. What is your appetite for dilutive trophy asset acquisitions and levering up now that rates are higher? Thank you.

Dilutive acquisitions are not attractive to us. Ultimately, we aim to allocate capital effectively. While there are assets where initial yields may be low but the internal rates of return could be promising, we are cautious. Many distressed urban assets are currently selling at low prices, but they often come with zero or negative yields, which is not appealing because they entail substantial carrying costs that hinder long-term returns. Thus, it's challenging for us to proceed with those options. Conversely, there are deals at mid-single-digit cap rates, but they are priced near replacement costs, making it difficult to identify potential upside. We are looking for opportunities where we can secure a favorable price for the asset while also generating some yield, which is a delicate balance to achieve in urban markets.

Thank you.

Thank you. And one moment for our next question. And our next question comes from Dori Kesten from Wells Fargo Securities. Your line is now open.

Thanks. Good morning. What does the new enterprise analytics platform give you access to that you didn't previously have? And how do you intend to utilize it?

I think, Dori, what we're really excited about is we have, I think, 12 different managers within the portfolio, all with a different reporting process. And so it's really given us the ability to do with standardized remap every single one of those P&Ls into a standardized format and do a significant amount of benchmarking within the portfolio to identify issues, particularly from a cost perspective. I think before it was a lot more cumbersome for us to take all of those different packages and try to isolate where we were overspending within certain categories and what we've been able to do over the last two quarters, I think, hopefully, you can see that in some of the cost mitigation is really line all of them up and put them in buckets where they are comparable assets and look for some best practices that we can translate throughout the entire portfolio.

Okay. And then as you think about the likely trajectory of occupancy over the next few quarters, are we in an environment where your FTEs may be contracting, flat, growing?

I think on a year-over-year basis, if we continue to see what we're forecasting, which is significantly more out-of-room spend, we'll see growth in full-time equivalent (FTE) positions. The reality is that food and beverage is a relatively labor-intensive business. In the last two quarters, we've experienced 11% growth in food and beverage, which requires a considerable amount of man hours. This is why it tends to be a lower-margin business. So, if this trend continues, we might see some growth in FTE, but I believe it will stabilize toward the end of the year.

Okay. And then you addressed the ROI project at Bourbon, New Orleans. Have you made any other material changes to the ROI pipeline in the last few months, whether it's adding to plans, redlining completely pulling in?

There's been no material changes to the ROI pipeline at this time, Dori, nothing that's really materially been added or altered at this point. But we're always looking at projects available in our pipeline or in our portfolio that we can identify, so no big changes.

Okay. And just last one, I might have missed this. Did you provide any guardrails around Q3 RevPAR growth or margin expectations?

Dori, this is Briony. We have not, but I would tell you that I would expect our Q3 RevPAR to be slightly higher than the growth rate we saw in Q2.

Thank you.

Thank you. And one moment for our next question. And our next question comes from Smedes Rose from Citi. Your line is now open.

Hi. Thanks. I just maybe wanted to switch to uses of capital. Could you just talk about where share repurchase kind of falls in terms of priorities? And would you consider maybe just sort of putting in place some sort of a programmatic repurchase program? Will you just have sort of a constant dollar amount being targeted to share repurchase every quarter?

Good morning, Smedes. This quarter, we focused on capital allocation without being tied to a specific dollar target. Currently, I believe investing in share repurchases is one of the most advantageous uses of our funds. Our trading cap is above nine, and with our higher-than-average leisure exposure, it's evident that resort assets in the market are generally trading at five to six cap rates. This means we can acquire resorts at relatively low prices. For urban assets, transactions are limited; distressed assets often have zero cap rates while operational ones are typically at stabilized sixes, creating a significant gap. I'm confident that share repurchases are attractive right now. However, we closely monitor our leverage and prioritize maintaining our overall financial leverage while utilizing funds from asset sales for share buybacks.

I wanted to ask if you prefer moving to more unsecured debt or if you think refinancing at the property level is a better option. What is your general preference in that regard?

Hi Smedes. Generally, our preference is to move to be more of an unsecured borrower. I think we continually evaluate the secured market. We certainly would do that if it was more attractive. But I think becoming an unsecured borrower just provides us a little bit more flexibility at the operating level.

Thank you. And one moment for our next question. And our next question comes from Duane Pfennigwerth from Evercore ISI. Your line is now open.

Hi, thanks. Good morning. Regarding your comments on grouping up, what are the potential downsides, if any, of pursuing this strategy? Aside from the RevPAR metrics you explained well, what circumstances might result in leaving money on the table by adopting a more aggressive approach to groups?

In the case of larger assets, there is a lengthy booking period. This means you're potentially securing rate increases if the market picks up again. We decided a year ago that we preferred the safety associated with a significant focus on the group segment and the related spending. The main risk is overcommitting at a lower rate than what the market could eventually support. This has required some reeducation, particularly because during COVID, having group bookings was a disadvantage due to rapidly increasing rates. If you had group reservations from the previous year, you could lose market share. As we move back toward normalcy, rethinking this strategy has taken some time for our operators.

One thing I would add to that, Duane, is that when you think about the average size of our assets, we're around 200, 225 rooms. The type of groups that's coming to our hotel are not necessarily groups that are going to book three years in advance. Our average group size is relatively smaller compared to some of the big box hotels in the marketplace, which are arguably going to have a longer booking window or maybe you're not as appealing to a 30-person offsite. So we have a little bit.

There's a little bit of the ability to be more nimble when we group up.

Makes a lot of sense. And then just for my follow-up on the larger asset disposition front. If you had to guess, how long do we need to wait for that unlock? And again, what are the set of circumstances we need to see for your recycling strategy to really kick in? Thanks for taking the questions.

I can't really give you a date. I mean I think we're just looking for an opportunity where I think where rates are fortunately seem to be moving or the expectation of rate cuts seem to be moving in a favorable direction and results in our hotels are doing well. So I think the stars are aligning for that. But as Justin mentioned, there's not a lot of assets that have been on the market that could play to our advantage, but I think there's going to be time in the coming quarters where we're going to investigate this. So I can't give you a specific date. I don't want to negotiate against.

Makes sense. Thank you.

Thank you. And one moment for our next question. And our next question comes from Michael Bellisario from Baird. Your line is now open.

Thanks. Good morning, everyone. For Jeff or Justin here, I want to go back to Group. That 14% pace that you mentioned for the back half. Where do you think that actualizes by the end of the year? And then what's the pace differential 3Q versus 4Q?

My gut is, I think forecast, we've got a very high single digit in terms of actualized on a year-over-year basis, and it's slightly better in Q3 versus Q4 on a year just from a pace perspective.

Got it. And then that 88% of booked so far that's of your target budget, let's call it, 20% remaining for the back half of the year. Like what's the risk there? What are you hearing from your hotels or corporate planners? Any change in size of event or booking window or cancellation attrition just for that remaining piece that still needs to be booked for the year?

We're not seeing any significant change in trend in terms of group room list coming in at or above attrition levels or what we're seeing from an inbound lead perspective. I think we're a little bit more conservative in our forecast and in the year for the year pick up for the back half of the year than what we actually produced in the first half of the year. So I don't think we see any reason right now to sort of change that outlook.

Got it. And one more question on Group, considering the DNC happening in Chicago in a few weeks and more generally regarding large events. How significant is an event like that, particularly during a potentially slower week in late August in Chicago? Does it impact the RevPAR for your entire portfolio by about half a percentage point? How important are these major one-time events in driving RevPAR for your portfolio in the latter half of the year?

Not as meaningful as you might think. I think the reality of the super events, especially for the large hotels is a lot of that block is required to be given in order to secure the event in the beginning, right? So when you think through a lot of times Super Bowl or the DNC for someone like the Marriott, they're part of that initial bid. So the room rate that you get is not as much of a premium as you might think. A lot of times, it's actually more beneficial for some of our smaller hotels because they're outside of the large block that's required to be given or to garner the Group in the first place, and they can really compress around that.

That's helpful. That's all for me. Thank you.

Thank you. And one moment for our next question. And our next question comes from Dany Asad from Bank of America. Your line is now open.

Good morning, everyone. I would like to revisit the guidance update. Regarding the change in EBITDA, could you elaborate on what specifically is offsetting the room and RevPAR reduction to help increase EBITDA when we consider the total RevPAR aspect? Thank you.

Sure, Dany. So just to quantify a little bit the change in our EBITDA. I think a portion of that reflects a little bit of outperformance that we saw in Q2, maybe call that around $1 million. We also talked about on the call, our positive insurance renewal, and that should benefit us about $1 million a quarter for the balance of the year given that, that was a Q2 renewal. And then the balance really reflects the benefit of our mix shift in the back half, although lower than the first half, I think it's better than we originally anticipated. So there's a little bit of that in there. And then we are offset by a little higher corporate G&A, about $1 million on that front. But when you look at our G&A overall, it's still lower than pre-transition.

Got it. Jeff, earlier you mentioned your capital recycling strategy. Some of the hotels you discussed appear to focus more on urban areas than resorts. As you plan to redeploy that capital, will it be a one-for-one approach? Will you be looking to invest that same capital in urban markets? What regions in the country are you considering, given your existing balance between leisure and urban? Are you comfortable with that? Additionally, where do you see those extra funds being allocated?

It meaning that if we were to sell an urban asset, where we need to redeploy?

Yes. Yes, that's right.

I mean, you think right now, maybe we're about two-thirds, 60%, give or take, in urban markets. And I think longer term, it's appealing to us to grow our resort or leisure exposure, but we want to do so profitably. And I think right now, it's very difficult to do that. It doesn't mean we've stopped looking. I think what could happen or I guess I'd say I'd like to see happen is that maybe you sell one of those larger urban assets and then does it result in two transactions. It results in an urban asset that you purchased that right now can have some attractive returns if we find the right situations. But maybe it results in a resort asset as well. And so potentially, you can replace the same or roughly the same amount of income and end up at sort of a higher concentration of leisure, but you have sort of two assets and a little more diversified that have a better growth profile. So I don't know if it answers your question entirely. We don't have specific target markets where we say we've got to be in market X or we've got to be in market Y. We're really just looking for situations where we can accrete value at the end of the day.

Got it. That's it for me. Thank you very much.

Thank you. And one moment for our next question. And our next question comes from Chris Woronka from Deutsche Bank. Your line is now open.

Hi, good morning everyone. Thanks for taking my question. Jeff, I believe you still have about 13 independent hotels in your portfolio. I'm curious if there’s been any recent consideration regarding branding. I understand there are many markets where demand is strong and recognizable. However, as I observe some of the hotels that are being included in the soft brands, it makes me wonder if there’s something you might be missing out on.

No. I would say definitely not. I think there's a lot of focus that people pay to the top line, but look to the bottom line, I know that's whenever we went to the other direction we exited the hotel system. And we've said upfront that that's one where we could shed potentially 8%, 10% of top line revenue leaving the system, but you will also gain back a significant amount of expense. And that decision was really based on that sort of middle of the P&L, if you will, to drive bottom line profit. And so far, we continue to be on plan with that. So I guess I would tell you that our job as owners is really to drive profit, not top line revenue. And so I hear you that there is an opportunity there to collect the check. But typically, the key money checks, I think if you speak to the brands, they tend to expect mid-teen IRRs on that money, which means it's not cheap.

Yes, fair enough, Jeff. You're right about that. Continuing with the brand question, let's say we encounter a downturn at some point next year. Given that the brands allowed you some flexibility on brand standards during the pandemic, do you think they would be willing to do that again? Additionally, are there still things you can do since it seems that even in the post-COVID world, you're already operating quite efficiently?

There's always opportunities to get more efficient. I mean, I don't think anybody ever sort of rose the perfect race or hits the perfect game. So I think there's always opportunities for efficiencies out there. As far as what the brands will do, I'd like to believe that they've learned from this past event that they can flex on brand standards in difficult times and things could be, say, okay or successful for their system. So I'd like to believe that the next time that we confront another event, not necessarily a pandemic, but even a recession, they might be a little more tolerant on that front. So that can be appealing.

Okay, very good. Thanks guys.

Thank you. And one moment for our next question. And our next question comes from Chris Darling from Green Street. Your line is now open.

Hi, thanks. Good morning. Circling back to some of the prior discussion around capital recycling. Wondering if you could speak to your philosophy as it pertains to, on the one hand, trying to maximize the price that if you sell a property versus taking advantage of the arbitrage opportunity inherent in the share price even if you don't quite realize every last dollar value.

Yes, it's a good question, Chris. I think there's a tendency in my experience for people to just sort of focus on maximizing that last dollar. And to me, it's sort of the paired trade, if you will. It's looking at what you're selling and what you're buying. And there are times where you might not maximize value on an asset, but if you're able to buy something, whether it's your shares or another property that has a more attractive IRR going forward, that seems like a sensible trade for me.

Got it. Maybe shifting gears, just one more for me. When you look across your portfolio, whether it's on the resort or the urban side, are you seeing any evidence that the consumer is trading down in any regard or is the weakness kind of we've talked about in the leisure transient segment truly a matter of where those individuals are choosing to travel rather than a matter of whether they're spending to the same degree.

Justin, do you have any thoughts on that?

I think we're just speculating from a trading down perspective. We do see more people looking for discounts or sales and willing to adjust their travel plans based on price. I'm not sure if that's strictly trading down or more about changing travel days. As we return to previous patterns, we are focusing on increasing price variability between weekends and midweek, as well as during peak and non-peak periods, to encourage travelers to book our hotels during the off-season. This trend has definitely continued over the last 18 months.

I appreciate the thoughts. That's all for me.

Thank you. And one moment for our next question. And our next question comes from Bill Crow from Raymond James. Your line is now open.

Hi. Good morning, guys. Jeff, I'm wondering, as you think about grouping up smaller urban properties and your leisure-oriented properties, are those more kind of dependent on in the quarter for the quarter, group bookings, say, compared to Chicago or some of the bigger assets out there, and therefore, maybe a bit more sensitive to the leading edge of changing economic conditions?

I don't necessarily think so, Bill. I understand the essence of your question. For some of our properties, events can range from weddings to social gatherings and small corporate offsites. Sometimes these offsites occur after company restructurings, which can reflect negatively in the economy, but they also encourage teams to come together and strategize. It's hard to say definitively. Internally, we often discuss whether we truly observe trends, despite feeling that we have enough scale to do so. A larger property like the Chicago Marriott typically has a longer booking window due to its nature. While we can accommodate small groups, larger assets usually perform better with bigger gatherings. I'm not sure if I'm completely addressing your question, but there is certainly a significant segment of small group activity that our hotels, both resort and urban, can cater to.

Do you think that it's more or less sensitive to economic change, the smaller groups? I'm not talking weddings because I think that's kind of independent of the economy largely. But do you think you're more volatile maybe on the group front your hotels?

I think so. I mean it's hard to know the alternative quite candidly. And I think just looking at our pace for the rest of the year vis-a-vis just what I've been hearing about some of our peers, it doesn't feel like we have been as sensitive, I guess, just looking at very near-term results. It feels like we've actually been a little more resilient on that group front than some of the bigger box hotels. So just on near-term results, the answer would be no, but I can't say definitively.

And I am showing no further questions. I would now like to turn the call back over to Jeff Donnelly for closing remarks.

Well, thank you, everybody, for joining us today. We really appreciate it. Have a great summer, and hopefully, we'll see you out on the road. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.