Greetings, and welcome to Pebblebrook Hotel Trust First Quarter Earnings Conference Call. Operator instructions were provided. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raymond Martz, Co-President and Chief Financial Officer. Thank you. Please go ahead.

Thank you, Donna, and good morning, everyone. Welcome to our first quarter 2026 earnings call. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer; and Tom Fisher, our Co-President and Chief Investment Officer. But before we begin, I'd like to remind everyone that our remarks are as of today, April 29, 2026. Today's comments may include forward-looking statements that are subject to various risks and uncertainties. Please review our SEC filings for a detailed discussion of these risk factors and visit our website for reconciliations of any non-GAAP financial measures mentioned today. Now let's jump into the first quarter financial results. We had an exceptional first quarter with results well above the high end of our outlook across key earnings metrics. Same property hotel EBITDA increased 27.6% to $82.2 million, coming in $8.2 million above the high end of our outlook. Adjusted EBITDA was $73.3 million, up 29.5% from last year and $9.3 million above the high end. Adjusted FFO per diluted share doubled year-over-year to $0.32, which was $0.09 above the high end of our outlook. So this is a very strong quarter by any measure. Even more important, performance was not narrowly driven. While we had a great setup, the strength was broad across the portfolio and the performance came from both stronger revenues and superb expense control. At the property level, same property occupancy increased 550 basis points, ADR increased 2.8% and RevPAR increased 11.8% and total revenue increased 10.1%. Same-property total expenses increased just 5.6% and driving 327 basis points of hotel EBITDA margin expansion. More than half of the incremental same-property revenue flowed through to hotel EBITDA. That reflects the strategic operating initiatives we've been implementing across the portfolio, benefits from our investments in revenue generation in many avenues, and strong execution by our property teams and asset managers. The strength extended across the portfolio with 32 properties exceeding revenue forecast and 34 exceeding GOP forecast in the quarter. San Francisco was exceptional. While it benefited from the Super Bowl and a large citywide convention that shifted into the first quarter, all segments, including business and leisure transient, were incredibly strong and continue to recover. RevPAR increased a robust 44.5% and hotel EBITDA more than tripled from a year ago, climbing by $11.6 million. Los Angeles also recovered sharply from last year's fire-related disruptions, with RevPAR climbing 31.5% and occupancy growing more than 16 points to 74.6%. The improvement across LA properties is broad, helped by stronger lease demand, improving entertainment-related group and leisure activity, and the ramp-up of our recently renovated and rebranded Hyatt Centric Delfina in Santa Monica. LA's Q1 same property EBITDA increase captured all of the EBITDA loss in the first quarter from last year's fires. While San Francisco and L.A. were standout markets, they were far from the whole story. Our urban portfolio posted RevPAR growth of 14.3%, total RevPAR growth of 12.9% and EBITDA growth of 55.1%. City and urban hotels delivered RevPAR growth of 8.7%, driven by a 900 basis point jump in occupancy supported by healthy weekend leisure demand. Chicago also turned in a good quarter with RevPAR increasing 5.6%. Washington, D.C. was our most challenged market in Q1, with RevPAR declining 24.1% and reflecting a very difficult inauguration comparison and continued weakness in government-related travel, though we have seen some recent improvements. Boston was another softer market, with RevPAR down 3% and reflecting a lighter citywide calendar, two major winter storms and the rooms renovation of Revere Hotel Boston Common. We expect both markets to improve in the second quarter given the better event calendars. Our resorts also had a very strong quarter, with RevPAR rising 7.5%, total RevPAR increasing 6.7% and EBITDA declining 13.9%. Resort performance was driven by resilient leisure demand, healthy on-property spending, favorable holiday timing and the continued ramp-up of our redeveloped assets. We also benefited from an earlier-than-normal spring break, which pulled more spring break travel into March from April. Several resorts delivered double-digit RevPAR gains, including Newport Harbor Island Resort, Playa del Rey Beach Resort and Club, Skamania Lodge, Paradise Point Resort & Spa, Estancia La Jolla Resort and Asana La Jolla Hotel and Spa. Overall, first quarter demand was encouraging despite heightened geopolitical tensions and increased uncertainty around travel. Leisure demand remained strong, business transient continued to recover, and group was stable. Consistent with broader travel and spending commentary, visibility has shortened somewhat in late March, but we have not seen any material change in booking trends to date. Premium leisure and business travel have remained healthy to date. Weekday RevPAR increased 9.7% overall and 12% in our urban markets, while weekend RevPAR increased 15% overall. Weekend leisure demand remains healthy but the improvements in weekday demand are equally important as they reflect the continued recovery in business transient and group travel and create more meaningful earnings power as our occupancies rebuild. What was notable about this quarter was the quality of the revenue growth. Room revenues again grew nicely, 7.6% overall. Food and beverage revenues increased 7.4% and outlet revenues were up 10.2%, and banquet and catering revenues increased 4.8%. Guests were not only staying with us in greater numbers, but they were also spending more on property, and that is exactly the kind of revenue mix that supports increased profitability. On the expense side, our strategic operating initiatives again delivered this quarter. Total expenses rose by only 5.6%, while total revenues increased 10.2%. Food and beverage revenues rose 7.4%, while food and beverage expenses increased just 3.7%. Sales and marketing expenses, excluding franchise fees, grew only 3.9%, while energy costs actually declined 2.8%. And on a per occupied room basis, total expenses declined 2.8% and total fixed costs declined 3.2%, demonstrating the favorable benefits of the operating leverage in our portfolio. We are generating more efficiencies from improved labor productivity and technologies, tighter cost controls and continued benefits on property level efforts to reduce energy and water consumption. Simply put, as revenues improve, our portfolio is flowing more of that upside to the bottom line than it did a year or two ago. A quick point on one-time items because it is important to put this quarter in a proper context. The Super Bowl contributed about 215 basis points to same-property RevPAR and the recovery in Los Angeles contributed another 285 basis points. Offsetting those benefits, the two winter storms reduced RevPAR by about 115 basis points and the difficult inauguration comparison in Washington, D.C. reduced it by another 105 basis points. Even after adjusting for those items, same-property RevPAR still grew by roughly 9%, underscoring the overall strength of the quarter. This strong underlying performance translated into higher free cash flow and greater financial flexibility. On the capital side, we invested $11.9 million in our properties during the quarter, including guest room renovations at LaPlaya and Revere Boston Common, both of which are now substantially complete. For the full year, we still expect capital investments of $65 to $75 million, which represents a much more normalized run rate and an important tailwind for higher discretionary free cash flow and greater flexibility for debt reduction and share repurchases. We also completed the rebranding of Mondrian Los Angeles into the Valor Los Angeles, Curio Collection by Hilton. We believe that strategic change has and will create value for the property. Rebranding as part of Curio Collection by Hilton leverages Hilton's distribution platform, pairs it with a strong hospitality operator in Davidson, and preserved the distinctive character of the iconic hotel. We made this change at no cost as franchise-related key money funded the changeover. We appreciate the partnership with both Hilton and Davidson during this strategic transition, and we are excited to work together to drive improved performance at this important property in L.A. Moving to our balance sheet, our net debt-to-EBITDA ratio declined to 5.5x from 5.9x at the end of last year. We ended the quarter with $24.6 million of cash and restricted cash along with roughly $641 million of capacity on our revolving credit facility. Our weighted average interest rate remained a very attractive 4.1% with approximately 98% of our debt effectively fixed and 98% unsecured. As of the start of the year, we've repurchased over 400,000 common shares at an average price of $12.11 per share. Higher EBITDA, improved debt metrics and strong liquidity all moved in the right direction. Stepping back, the first quarter takeaway is clear. Despite heightened macro uncertainty and risks, the quarter demonstrated stronger demand across both urban and resort markets, healthy revenue quality and disciplined expense control. At the same time, we're not assuming the balance of the year will be as visible as the first quarter. Recent events in the Middle East, higher fuel prices and broader economic uncertainty could pressure travel demand and booking patterns. However, based on our current booking trends and broader travel and spending commentary, the demand environment remains constructive, particularly for premium leisure and business travel. So while we feel really good about the first quarter and the underlying trend line, we remain appropriately cautious on the balance of the year. And with that, I'd like to turn the call over to Jon for more color on the quarter, the financings that we're seeing across the portfolio, the broader industry backdrop and our outlook for the balance of 2026. Jon?

Thanks, Ray. In our last earnings call, just 60 days ago, we laid out the extremely favorable setup we were looking at for 2026. We also provided a robust outlook for our portfolio for Q1, but a cautious outlook for the rest of the year, given our experience in 2025 with major policy actions, geopolitical events and weather events that negatively impacted us in a material way. Our concern about major geopolitical risks proved warranted, as the conflict in the Middle East began just 48 hours after our earnings call. To summarize the setup for 2026 that we discussed, we have easy comparisons to a year that was negatively impacted by a number of policy and geopolitical events. We have a favorable macroeconomic environment and a uniquely strong events calendar particularly in our markets. We have the best holiday calendar we could ever remember. There is very limited supply growth for 2026 and beyond. And we maintained our view that hotel demand would re-correlate to GDP, absent major policy or geopolitical surprises. In our markets, we highlighted that San Francisco's recovery will continue to build, Los Angeles would benefit from easier related comparisons, Washington D.C. would benefit from easier government-related comparisons past the tough inauguration comp and our recently redeveloped and repositioned properties were likely to continue to ramp. We also believe our upper-upscale and lifestyle positioning would remain outperformers given the continued strength of the premium consumer. When we look at how the first quarter played out, that favorable backdrop translated into even better results than we were expecting. I think it's fair to call the first quarter a breakout quarter on both the top line and the bottom line. This setup was accurate and we delivered with a favorable setting. We haven't seen RevPAR and total RevPAR growth at these levels since the third quarter of 2014, excluding one unusually strong pandemic recovery quarter in 2023, and our same-property hotel EBITDA growth of 27.6% was even stronger than Q3 '14. At the industry level, Q1 demand growth of 2% clearly began to demonstrate its reconnection with GDP growth and industry demand would have been even better but for two of the largest winter storms in history to hit in late January and late February. Occupancies increased as demand followed GDP growth while supply grew just 0.6%. In March, we began to see more compression days and ADR growth improved through an impressive 3.8% with a solid 2.4% increase for the quarter. Industry RevPAR in Q1 increased by a much improved 3.8%. Leisure demand was very strong throughout the quarter, aided by the favorable holiday timing around New Year's and the combined Valentine's Day and Presidents Day weekend. Importantly, that leisure strength didn't just benefit our resorts. Our urban markets, especially San Francisco, Los Angeles and San Diego, all continued to benefit from the post-pandemic return of leisure demand to the cities. The early Easter and school spring breaks also helped March, so partly at the expense of April performance. We likely also saw some benefit in Southern California and South Florida from travelers avoiding Mexico and from poor snow conditions out West. For Pebblebrook, we saw the same industry benefits in Q1 and more. The event calendar delivered as we captured increased demand from events throughout our portfolio. Our Hollywood Florida resort benefited from demand from the college football national championship game in Miami as our properties are just 11 miles from the stadium, far closer than most hotels in Miami and Miami Beach. All of our San Francisco hotels achieved very robust results from the Super Bowl and its week of activities and events in February, and our L.A. hotels saw a lift from the NBA All-Star game and related activities, which were also in February. Our hotels in San Diego, Chicago and Washington, D.C. saw increased demand due to the NCAA men's basketball tournament games in March. Events in Q1 definitely pushed our results higher, maybe even more than we were expecting. As Ray indicated, our redeveloped and repositioned properties all continue to ramp up led by Hyatt Centric Delfina Santa Monica, Skamania Lodge, Newport Harbor Island Resort, Playa del Rey Beach Resort and Club, Estancia La Jolla Hotel and Spa and Hilton San Diego Gaslamp Quarter. They all gained significant share in the quarter with more to go for them and many others in the portfolio where we invested so heavily in prior years and we continue to reap the benefits. Business transient continued to recover across the industry and our portfolio during the quarter. We saw even stronger growth in corporate travel in San Francisco and Los Angeles, where both cities are seeing the benefits from return-to-office policies. Group also grew industry-wide and for Pebblebrook in Q1. We delivered strong group revenue growth primarily driven by a 7.4% increase in group ADR, that was aided by the Super Bowl. We had a fantastic quarter all around, but it's highly likely to be our strongest quarter of the year by far. Looking ahead, we remain appropriately cautious given policy and geopolitical risks, particularly the potential impact of the ongoing conflict in the Middle East. Right now, we're most concerned with the potential economic slowdown, rising airline ticket prices, cutbacks in airline capacity on certain routes and potential jet fuel dislocations elsewhere in the world; it could weigh on inbound international travel. As Ray indicated, we're not seeing any negative impact on pace or bookings at this time, but we're closely monitoring all our data as well as travel data and commentary from others in the travel industry, particularly the airlines. Since our last call, our 2026 room revenue pace advantage versus last year has continued to increase. For the year, full year pickup in room revenue improved by $12.5 million over the two months ended March 31 at an improved pace for every quarter of the year, which is very encouraging. As of the end of March, full year room revenue pace was $33.5 million ahead of last year, with $21.8 million from Q1 performance and the remaining $11.7 million in quarter 2 and beyond. Over 90% of the room revenue pace advantage is in transient revenue with roughly 20% of that from higher rates. The $33.5 million advantage would put us at a 3.8% increase in room revenue for the year, right in the middle of our increased range of 2.75% to 4.25% for the year. If we pick up more in the year-for-year, it will go higher. And if pickup is lower than last year, it will go lower. Recall that last year, with everything that happened, we lost pace advantage as the year progressed and finished down for the year in room revenue. For Q2, total room revenue pace as of the end of March was ahead of last year by $7.5 million. April pickup looks like it will be down year-over-year, but much of that likely reflects pace being so far ahead when we entered the month. We expect April RevPAR and total RevPAR to grow in the 3% to 5% range versus last year. May appears to be our weakest month in the quarter, weighed down by the year's most difficult monthly convention comparison in San Diego, along with softer convention calendars in both Boston and San Francisco compared to last year. Finally, I thought I'd provide a few thoughts about this year's World Cup. We've always thought of it as a large collection of college football bowl games. Like the college bowl games, we believe demand for World Cup games will vary dramatically depending on the teams involved and the impact from each game will vary, not only by the attendance of the games, but also by everything else that is already going on in the specific market. Most of the 48 teams have based themselves in locations across the U.S., including many markets without games. For example, we have a team based in Portland, even though there are no games there. I'm sure you've seen the media reports about promoters blocking large blocks of rooms in many markets. Our understanding is that these blocks are intended mostly for fans who can choose to purchase hotel rooms through third-party channels. Obviously, fans are not choosing to purchase hotel rooms for FIFA in a major way and will likely book the rooms individually through normal hotel booking channels. When teams and ticket holders move around the country many go on extended trips that include non-World Cup destinations and visa and visa waiver documents are required. We expect and continue to expect most of the demand to book very short term, certainly within the 60-day window, which we're in now. And consistent with that, we are seeing some of that demand book on and around game days in our markets. We also booked some group demand from teams, sponsors and FIFA. We're currently contracted for about $1.9 million of room revenue. Over half of this group business is booked in our Boston hotels. We don't have an estimate for the total impact of the World Cup on our overall performance, but we do think it will be positive with most of the benefit coming in terms of higher average rates and increased non-room revenues. Occupancy will be aided by the World Cup; however, it comes at what is already a very busy time of year with high occupancies in June and July the norm in our World Cup markets. We also remain concerned about the impact of the conflict in the Middle East on airline ticket pricing, airline capacity, jet fuel availability and especially inbound international travel. As a result, our forecast for the World Cup and Q2 remains conservative. For the full year, similar to the second quarter, we remain appropriately more cautious for all the same reasons. We have reflected a significant Q1 beat in our hotel performance assumptions, but we've left Q2 and the rest of the year unchanged from our prior outlook. As we said last quarter, we're going to take it one month at a time, given the volatile and uncertain environment. But we've got a very strong first quarter done and in the books. So we've increased our current outlook for RevPAR and total RevPAR growth for the year by 75 basis points for each, with our RevPAR growth outlook range now at 2.75% to 4.75% and our total RevPAR growth outlook range now at 3% to 5%. For 2026, we expect to continue delivering operating efficiencies and keeping property expense growth well controlled as our outlook indicates. The Q1 $10 million hotel EBITDA beat has been fully passed along into our hotel EBITDA outlook at the year's midpoint. As a result, we're now forecasting same-property EBITDA growth of 5.2% to 8.6% with the midpoint at almost 7%, a healthy increase for the year and a material step-up from our prior outlook. To wrap up, with a terrific first quarter behind us, we remain very excited about the 2026 setup for Pebblebrook. Now we just need the rest of the year to cooperate and provide a more stable environment. And with that, we'd now be happy to take your questions. So Donna, could you please proceed with the Q&A?

Operator instructions were provided. Today's first question is coming from Cooper Clark of Wolfe Research.

Appreciate some of the conservatism baked into the second quarter guidance as you bounce the calendar event with an uncertain macro. I was just hoping you could remind us about the historical impact of higher oil prices on travel demand for your portfolio and maybe certain assets either on the drive-to or fly-to markets where you see a greater impact? And then curious when you may expect to see some of the negative impact from higher oil prices as it relates to room night demand if we do see higher oil prices for longer.

Sure. Thanks, Cooper. So historically, for our portfolio, increases in gas prices have not had a material impact. A big part of that is the fact that our resorts in particular are all in drive-to markets. And of course, many of our markets also have other forms of transportation access like trains on the East Coast, and Amtrak service on the West Coast. But it's really airline ticket prices where there's a clearer connection between demand and people's ability to fly. Now, again, it has more of an impact on middle-income and lower-income travelers and less of an impact on the upper end. So it's hard to forecast exactly what the impact is going to be. According to the airlines, there's been a lot of bookings and ticket prices have been going up. We've seen increases anywhere from 0% to 2% in domestic ticket prices and much bigger increases for international travel, particularly international travel originating from Europe and Asia. So it's hard to tell how much of an impact that will have on international inbound. That is what we worry about. But resorts that are drive-to can benefit if people trade down from flying to driving, which is something we've seen to some extent in the past; domestically located resorts tend to benefit a little bit more and the ones that rely heavily on air travel tend to be impacted a little bit more.

Great. And then just switching over to the expense side. Curious if you could take us through some of the building blocks on the expense guidance for the full year and where you're expecting to see growth come in for wages and benefits, insurance and utilities.

Sure, Cooper. Yes. So our full year outlook implies expense growth in the 2.4% to 3.8% range. On the labor side, which is the largest cost, that's low single digits. We're in the 3% to 5% range depending on the market in terms of wage increases, but in many cases we're having FTEs actually in line or declining year-over-year despite the increase in occupancy. So we're finding a lot of efficiencies there, which we continue to pursue, as we talked about this quarter. In areas like property insurance, it's a very favorable market for owners this year given a lack of storms last year and a lot of capacity from insurers. So we would expect property insurance premiums to be down year-over-year. Our renewal isn't until June 1, so at our July call we'll have an update there, but we would expect property insurance costs to be declining relative to last year. Outside of that, we're doing what we can on energy initiatives. Given what's going on right now with the Middle East, we expect a little more pressure on energy costs. But overall, we feel really good about our expense growth guidance and the fact that we've been able to find new ways to operate accretively and limit expense growth versus what others are experiencing in the industry.

Our next question is coming from Smedes Rose of Citi.

I was just interested to hear a little bit more about your decision to rebrand what was, I think, the Mondrian to Valor and join the Hilton system. Could you just maybe talk about how you weighed what I assume would be maybe higher costs to be in the Hilton system versus the system you were in and sort of how you made that decision?

Sure. I'll jump in. Strategically, as we've seen the L.A. market and the West L.A. submarket evolve over time, there's been a lot of luxury product added into that market. What we found over time is Mondrian performed well when it was created and up to maybe five years ago it was a dominant player in the market. As other luxury products come in, the prior system was just not delivering to the property at the level that a domestic major brand could deliver. Given the positioning of Curio Collection, we felt like tucking under a major collection brand with the right positioning for the property made sense — it is a luxury product, but the service levels are more lifestyle than traditional luxury. We thought Curio was a much better positioning with a more valuable brand and a more entrepreneurial, lifestyle-oriented operator who is comfortable with the major collection brands like Curio. As it relates to cost, the combined cost between the operator and the franchise in total is lower than the cost of where we were previously with both the brand and the operator. So the economics also made sense for the change.

We've gone through a number of transitions in the past with switching brands going from one brand to another or going independent and back. Davidson has been fantastic to work with. The transition has been very smooth so far and has been additive in the process. With Davidson, we have a deep relationship with their team. They've done a very good job for us and we look forward to, in July, when we have a full quarter under our belt, reporting on the results that we're producing. I realize, of course, transitions can be bumpy when you move from one system to another, but we like the direction we've had so far since April 1.

Maybe one other thing to add is Hilton distribution in that market is significant and we felt like it was really strong positioning with Hilton.

Okay. That's interesting. And then I wanted to ask you, just coming into the year, you had provided some guidance around what you thought LaPlaya could do — how did the first quarter go? And is that property still on track as what you had initially expected?

Yes. The first quarter for LaPlaya went well. We're on track to be in that $28 million to $30 million range compared to $24 million last year. And I'd say also that as the asset stabilizes, we went into the quarter with softer group than we would normally have given all the construction disruption last year, so the group recovery is still ongoing. So far, so good. We've also sold, I think, we've already sold 45 or so additional memberships there at the low that were well over $100,000 a piece. Those are nonrefundable and that continues to grow the revenue at the property as well.

Our next question is coming from Gregory Miller of Truist Securities.

I'd like to start off with a question on 2027, and I promise to not ask you too much on guidance perspective. But hopefully, one of the more straightforward questions relates to the Super Bowl change moving from the San Francisco Bay Area down to Los Angeles. And I'm curious, just your general perspective so far, do you consider an LA Super Bowl exposure superior or inferior to your San Francisco exposure as we think about the implications to 1Q next year?

Sure. Good question, Greg. I think the Super Bowl in L.A. will obviously be an extremely major benefit to the market, particularly in February. L.A. is a much larger market than San Francisco or even the combined nature of San Francisco and San Jose. When we look at where the pricing is already and where it's likely to be for Super Bowl, it's likely to be at similar levels as San Francisco. It will still be super, as the name implies, but it won't quite have the same concentrated benefit that we had in San Francisco. I'm sorry, Greg — your line is breaking up a little bit on our end, so I'm not sure I heard the full follow-up.

Our next question is coming from Aryeh Klein of BMO Capital Markets.

I was hoping maybe you can unpack a little bit more about the World Cup and how it's setting up for you. I understand that you're not incorporating a large upside, but is there any risk that if the World Cup sizzles, it could ultimately emerge as a headwind if it's also disruptive to other travel into those markets?

It's possible it could be a headwind, but I think that's highly unlikely. I don't think there will be a headwind for our portfolio because we didn't hold rooms off-market for any large blocks that would prevent other business coming into the market. Unlike a Super Bowl or an inauguration, which are very large discrete events that can deter normal business, World Cup impacts will vary by market and by game. The gains are spread out and generally not back-to-back in the same market. So I don't really think it's going to be a headwind — certainly not for us and likely not for the industry. The other thing we've seen is that markets like L.A. already have a huge number of concerts and events in June and July that mix in through the World Cup, which we think will be additional demand generators in that market as well. So I tend to think it's more likely to be a modest positive overall rather than a negative.

Got it. That's helpful. And then maybe it would be great to get your updated views on San Francisco. Obviously, a really strong start to the year, some special events certainly help there. But I think EBITDA in 2025 was still quite a bit below 2019 — I think it was about 62%. Just curious how you think about that recovery moving forward and some of the tailwinds that you see as sustainable there?

San Francisco is very strong right now in terms of the recovery that's going on in that market and it's impacting all segments — business transient, corporate group and leisure. Leases are coming back into the market that stayed away during the pandemic and even many of the tenants that left are starting to return. The convention calendar will continue to get better over the course of the next three to five years. The city is on a roll — it has good governmental policies and leadership in place. You see it in other real estate categories with very strong office leasing activity. The return-to-office mandates and the concentration of tech, AI and robotics companies in the Bay Area are helping. I think it's reasonable to expect RevPAR growth in the double digits over the next few years, absent a major macro event. For this year, we think San Francisco RevPAR growth will be very strong, again aided by the Super Bowl, and at current trajectories could be 12% to 15% for the year unless something material happens. At that level of growth we would expect to see the bottom line up substantially, perhaps 40% or more over last year. You mentioned EBITDA being in the low 60s relative to 2019 — that's right. Occupancies are still below 2019 levels; 2019 occupancy was about 87% and current occupancies are likely in the mid-70s. So there's multiyear runway here and we believe we're in the early innings of a sustained recovery. Also, there is effectively no meaningful supply coming to that market for at least the next five years, arguably longer, which helps the outlook.

To add, our Q1 San Francisco occupancy was somewhere in the mid-70s — perhaps around 74% to 76% — and compare that to about 87% in 2019. That illustrates the multiyear opportunity for recovery in that market.

Our next question is coming from Gregory Miller of Truist.

Can you hear me better this time? I'm curious about AI and bookings. Are you seeing any meaningful traction with independent hotels showing up on AI agents? Any direct booking impact or incremental demand from travelers who might not have otherwise discovered your hotels?

Sure, Greg. We've been very active in this area and are encouraged by where it could go in terms of AI agents driving direct bookings to hotels that might not have been discovered otherwise. All of our independent hotels are on a central reservation system that we've audited to ensure maximum visibility through the agents. We've implemented a portfolio-wide partnership that our Corporate Vice President of Revenue Management is overseeing and we're monitoring results. We're also working on changes to some of our websites to improve direct booking conversion for independents — we have a lot more flexibility on the independent side. In addition, we're exploring property-level productivity tools; we just came to an agreement with Canary AI, which is a multimodal tool for channels like chat and reservations and guest requests. So we're excited about where this is going and we'll report more progress over time.

Our next question is coming from Richard Hightower of Barclays.

Obviously covered a lot of ground this morning, but I wanted to dig in a little bit more to the idea that I appreciate the level of caution embedded in the guidance for the rest of the year. You talked about booking window visibility maybe narrowing. How much of the second quarter, as we sit here at the end of April, is really baked at this point? How confident are you in that particular part of the outlook? And how does that inform the rest of the year as well?

Yes, Rich. As it relates to Q2, we feel reasonably confident about our Q2 outlook with April just about done and some visibility into May. But we continue to be cautious because trends can change quickly, particularly with the conflict ongoing. We learned a lesson last year: we went into the year very positive, had great pace, and then a series of events — many government policy and geopolitical issues — materially impacted travel and demand over the course of the year. So we're maintaining a month-by-month approach. If there is no material fallout from the conflict and no other major geopolitical or policy events that impact travel like last year, the numbers are going to be a lot higher than our conservative guidance. But we're purposefully conservative because of the heightened risk environment and the potential for sudden changes.

That makes sense. Maybe just to dig in on L.A. specifically for a second: what are you seeing in terms of the industry drivers, the types of companies that are booking business travel, the type of leisure demand? Is it more local or from outside the region? Just what's really going on on the ground in L.A. as we think about the health and growth in that market going forward?

A couple of major drivers in L.A. are entertainment broadly — TV, film, commercials, social media content, and the music industry. These industries are producing a lot of activity in the market and drive travel for production, shoots, and rehearsals. We've seen improvement in demand from the entertainment sector, both TV and film. There's also a resurgence in the live music and touring industry; many artists come to L.A. to rehearse or use studio facilities prior to tours. The fashion industry is another demand generator and is improving. There's also significant venture capital and startup activity in L.A., which is creating business transient demand; it's not at the same level as the Bay Area but it's meaningful. Further south in El Segundo and the South Bay you've got defense and space-related activity that's contributing demand. You also have sports and large venues and new arenas that are creating event-driven demand, which you saw evidenced by decisions like hosting the Super Bowl in L.A. All of this suggests a diversified and strengthening demand base in the market. Policy and business confidence will also matter over time, but the market dynamics right now are constructive.

Our next question is coming from Duane Pfennigwerth of Evercore ISI.

Great to hear Rich on the call. Maybe just to take it there. You talked a bit about the fundamental recovery in L.A. and San Francisco, but can you speak to the dialogue you're having about asset sales? What does your optimal footprint in those markets look like versus where your exposure is today?

We're going to continue to be opportunistic with dispositions. It shouldn't surprise anyone to see additional sales occur in major U.S. cities — that's been where most of our sales have been over the last seven years. Tom can speak more to investor sentiment and the market for transactions.

Yes, Duane. In general, investor conviction in the muted transaction market over the last two years has been limited because of the lack of growth, which made it hard for investors to underwrite. It seems like we're pivoting and transitioning from that, especially given Q1 performance. When you see markets that have bottomed like San Francisco, and you see growth in 2025 and continued growth in 2026, you see more investor interest. We have a number of high-profile, upper-upscale luxury properties in the market in the final stage of marketing, and we'll be taking bids over the course of the next 30 days, which should give more clarity on investor sentiment, depth and pricing. So by the time of our second quarter call, we expect to have a lot more visibility on the transaction market, assuming the conflict in the Middle East doesn't pause transaction momentum if it remains unresolved.

Our next question is coming from Michael Bellisario of Robert W. Baird.

Thanks. Just on on-property spend, maybe help us understand what you saw throughout the quarter and what you saw in April. Has demand surprised to the upside? Any differentiation between group and transient out-of-room spend? And what is that telling you about the broader health of the traveler and consumer spending trends?

So we haven't really seen any negative change in on-property spending this year or in April. It remains healthy. If you look at consumer surveys, consumer confidence is near historic highs and the wealth effect from a strong stock market supports spending for premium customers. When groups and leisure guests are on property they tend to spend on food and beverage, spa and activities — they want a great experience. That continues to be true. So far, so good — on-property spend is healthy and encouraging.

Got it. That's helpful. And then just one follow-up: any change in what you are telling your operators to focus on in revenue management? Is there still an imperative to build occupancy first or are you prioritizing rate more?

We are increasingly focusing on taking pricing where the opportunity exists. We've been doing that more in our resorts where robust leisure growth and better holiday calendars are creating compression. So we are pushing price more, but not to the detriment of occupancy. We're trying to do both because we believe there's room to grow both occupancy and ADR as we are not yet at stabilized occupancy levels for many assets. The opportunity to take price seems to have increased over the last several months.

Our next question is coming from Chris Darling of Green Street.

What's the latest you can share as it relates to potential redevelopment of Paradise Point? I think you have the requisite approvals — wondering if that's a project you might consider kicking off sooner than later.

We would love to move forward, but the permitting process takes time. We have California Coastal approvals for the plan, and now we need to go through the city permitting process for actual construction, which is taking anywhere from six to nine months at this point. There's also additional studies required related to geological issues and construction impacts under the Coastal approval. So the process is lengthy and certainly longer than we'd like. I don't see the project kicking off this year at this point, but it's still on the calendar as we move forward.

At this time, I would like to turn the floor back over to Mr. Bortz for closing comments.

Thank you all for participating. We know you're really busy during this earnings season. We look forward to seeing you at various conferences, and we look forward to seeing you at NAREIT next. We'll be prepared to give you an update at that time. Thanks again. We look forward to talking with you.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines and watch the webcast at this time. Enjoy the rest of your day.