Thank you, operator. Good morning, and welcome to RLJ Lodging Trust’s 2021 Fourth Quarter and Year End Earnings Call. On today’s call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter; Sean Mahoney, our Executive Vice President and Chief Financial Officer, will discuss the Company’s financial results; Tom Bardenett, our Executive Vice President of Asset Management, will be available for Q&A. Forward-Looking Statements made on this call are subject to numerous risks and uncertainties that may lead the Company’s actual results to differ materially from what had been communicated. Factors that may impact the results of the Company can be found in the Company’s 10-K and other reports filed with the SEC. The Company undertakes no obligation to update Forward-Looking Statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release from last night. I will now turn the call over to Leslie.

Thanks, Nikhil. Good morning, everyone, and thank you for joining us today. We are pleased that lodging fundamentals continue their recovery relative to 2019 throughout the fourth quarter, with the industry's faster than expected recovery being the most significant event of 2021. Against this accelerating recovery, our portfolio achieved strong operating performance throughout the year. Additionally, our team successfully executed on all of our strategic priorities, which included acquiring three high-quality hotels during the year, which were accretively matched funded with proceeds from non-core dispositions. Generating strong operating results allowed us to achieve positive corporate cash flow for the full year, advancing our value creation initiatives, which are expected to deliver an incremental $23 million to $28 million of hotel EBITDA and actively managing our balance sheet to increase flexibility, extend covenant waivers, further later debt maturities, and lower our cost of debt through refinancing of over $1 billion of debt. Our confidence in our strategic initiatives was bolstered by the industry’s recovery throughout the year, with RevPAR sequentially improving each quarter culminating in the fourth quarter ending at nearly 97% of 2019 levels. The recovery during the year was driven by the continuation of robust leisure demand, which is well documented and at levels exceeding 2019 in many resort markets. Just as importantly, there was clear evidence of an acceleration in recovery in both group and business transient demand as business travel volume increased, and in many cases, in advance of returning to corporate offices. This trend was particularly noticeable with respect to small and medium-sized companies. Finally, we were encouraged that international travel picked up in gateway markets after the borders reopened in early November, although short-lived due to the emergence of Omicron, the quick ramp-up provided us with a strong indication of significant pent-up demand to visit the U.S. With respect to our operating performance, our portfolio outperformed our expectations during the fourth quarter and also gained 340 basis points of market share. Our portfolio RevPAR achieved 75% of 2019 levels representing an improvement of approximately 400 basis points from the third quarter. We were encouraged by our ability to drive ADR with almost a third of our hotel portfolio exceeding 2019 levels, and our overall portfolio achieving 91% of 2019 levels representing the strongest quarter since the start of the pandemic. Our portfolio ended 2021 having significantly closed the gap to 2019 with our December RevPAR achieving 87% of 2019 levels. Importantly, our ADR reached 99% of 2019 with particular strength in our leisure markets, such as Charleston, Key West, Miami, Mandalay Beach in New Orleans, as well as many of our urban markets including Atlanta, San Diego, Pittsburgh, and Los Angeles, despite the slower recovery in our Northern California market. The ability to drive ADR underscores our capability to continue to push rates, which will allow us to capture the meaningful rate upside in our segments. In particular, there was positive momentum in the recovery of our urban hotels, which represent two-thirds of our portfolio. Our urban portfolio achieved 83% of 2019 RevPAR in December. We believe that the continued momentum in the recovery of our urban hotels will be the driving force for our portfolio's growth going forward, and we expect outside growth in business transient and group demand throughout the year. We saw evidence of the recovery of these segments throughout the fourth quarter as improved business transient demand drove our weekday occupancy to 78% of 2019, a 400 basis point increase from the third quarter, while our group performance improved significantly, up 20% quarter-over-quarter, as we benefited from the travel of small, social, and sports-oriented groups. These trends have further bolstered our confidence in the positive trajectory of these segments. Now turning to capital allocation, we advanced our internal and external growth objectives, which improved our growth profile and key operating metrics such as RevPAR, EBITDA per key, and margins, while enhancing our overall positioning for this cycle. Our capital recycling initiatives this year alone led to a 150 basis points improvement in our pro forma margins over 2019. Specifically, during the fourth quarter, we closed on the acquisition of the AC Hotel Boston downtown, which opened in 2018 and is in an A-plus location within the ink block development of Boston’s highly desirable South End neighborhoods. We also closed the acquisition of the Moxy Cherry Creek in Denver, which opened in late 2017 and is located in the heart of the highly desirable Cherry Creek submarket of Denver. And we completed the disposition of a DoubleTree metropolitan in New York City. This disposition was highly accretive and reduced our concentration in New York City to less than 3.5%. In total, we have deployed nearly $200 million to acquire three high-quality hotels located in top growth markets at an aggregate stabilized EBITDA multiple of approximately 12 times. These acquisitions were creatively match funded with proceeds from non-core dispositions during the year, which were sold at an aggregate multiple of approximately 30 times 2019 hotel EBITDA. The net impact of match funding will result in an incremental $8 million of stabilized hotel EBITDA. We are pleased to report that all three of our recent acquisitions are already outperforming our underwriting with the aggregate 2022 hotel EBITDA expected to exceed our underwriting by approximately 35%. By fully match funding our recent acquisitions, we were able to retain our acquisition capacity, which will prove valuable given our robust acquisition pipeline. We expect to be a net acquirer this year and are encouraged by the quality of our assets within our pipeline, which includes several off-market opportunities. On the internal growth front, we are continuing to make progress towards generating an incremental $23 million to $28 million in stabilized EBITDA from our embedded value creation opportunities. These include $7 million to $10 million from our three conversions, which remain on track; $9 million to $11 million from our revenue enhancement opportunities that are being completed as part of our normal cycle renovations; and $7 million representing 50 basis points of margin expansion from management agreement amendments that we are finalizing, which will be incremental to any industry-wide margin efficiencies from post-COVID operating synergies. Our efficient capital recycling and the unlocking of our internal growth catalysts have created multiple channels of growth to drive EBITDA expansion throughout this cycle and our balance sheet with the capacity to fund the opportunities to drive internal and external growth initiatives. Looking ahead, we are seeing a resurgence of demand in February as the industry moves past Omicron. This reinforces our confidence in the expectation for strong accelerating growth in lodging fundamentals this year, especially in urban markets, which we believe will drive the next leg of the lodging recovery. This improving backdrop is being driven by the release of pent-up demand across all segments. We believe that in addition to the continued strength in leisure that is expected throughout the year, business travel should see meaningful improvement, especially in the back half of the year. This will be driven by the continuation of strong demand from SMEs and the reemergence of travel from global companies, such as Wells Fargo, Bank of America, and Microsoft, which have pulled forward office reopenings and eased travel restrictions. The return of traditional corporate travel represents an outside runway for growth in urban markets. Group demand should accelerate throughout the year as well with a mix of corporate groups increasing. Our confidence in the momentum of the group recovery has increased with our definite currently representing 68% of 2019 levels. Within the first 30 days of this year, we saw an impressive booking pace that is already at 25% of last year’s end-of-year pickup. Finally, an uptick in international volume when the borders opened at the end of 2021 provides us with cautious optimism that international travel could provide a surprise to the upside, if travel restrictions are eased, which would benefit gateway markets such as New York City, San Francisco, Boston, and Miami. As we think about the cadence of the recovery, we expect trends to improve sequentially each quarter, with growth accelerating in the third and fourth quarter, as recovery broadens to urban and key gateway markets. Our portfolio is well positioned in 2022 given our geographical footprint with two-thirds of our EBITDA generated in urban markets. As we look at the overall cycle, our outside EBITDA growth will come from the recovery of both business transient group, which will significantly benefit urban portfolios like ours, the ramp-up of our recent acquisitions, as well as future acquisitions funded with existing capacity, our lean operating model, which will allow us to operate with fewer FTEs compared to full-service portfolios and be less impacted by the current inflationary wage environment. The realization of incremental EBITDA from our embedded growth catalysts and our strong balance sheet, which provides a competitive advantage as well as flexibility to pursue both internal and external growth opportunities. Over the last three years, we have significantly enhanced the overall quality of our portfolio, which is evidenced by an 8% increase in absolute RevPAR, a 12% increase in hotel EBITDA per key, and a 50 basis point improvement in hotel EBITDA margins. We believe we are well-positioned to achieve outsize growth this year and beyond. Finally, I would like to thank all of our hotel associates, our management companies, and our entire corporate team for their hard work, commitment, and support during this recovery. I will now turn the call over to Sean.

Thanks, Leslie. We were pleased with our fourth quarter results, which further narrowed the gap to 2019 and represented the closest quarter to 2019 since the start of the pandemic. As expected, fourth quarter results followed normal seasonal patterns around the holiday season, with October being the strongest month of the quarter. Pro forma numbers for our 97 hotels include the acquisitions of the AC Hotel, Boston Downtown and the Moxy Denver Cherry Creek and exclude the sale of the DoubleTree Metropolitan, which was sold during the quarter. Our reported corporate adjusted EBITDA and FFO include operating results from all sold and acquired hotels during RLJ’s ownership period. Our fourth quarter portfolio occupancy of 62.2% was 83% of 2019 levels, which represented a 340 basis point improvement from the third quarter and was better-than-expected. The continuation of strong leisure demand, the return of more traditional corporate customers, and strong demand from social and sports groups provided our hotel operators with the ability to yield rates during the fourth quarter, resulting in average daily rate growing approximately 2% from the third quarter to $163 during the fourth quarter. Our leisure markets such as Key West, Charleston, Tampa, Mandalay Beach, and Miami generated ADRs in excess of 2019 by 32%, 22%, 11%, 15%, and 24% respectively. Our progress towards 2019 improved throughout the year with fourth quarter RevPAR at approximately 75% of 2019 levels. Our portfolio RevPAR recovery to 2019 accelerated throughout the quarter at 69% in October, 73% in November, and 87% in December, which was stronger than we expected at the beginning of the quarter. Turning to the segmentation performance. Strong leisure demand continued throughout the fourth quarter and was at 96% of 2019 levels. Business transient revenues continued recovering and improved approximately to 50% of 2019 levels, which was a result of demand at 62% of 2019, an average daily rate at 79% of 2019, representing the strongest quarter since the start of the pandemic and a 1200 basis point improvement from the third quarter. Group revenues also continued to recover and improved to approximately 60% of 2019 levels, which was the result of demand at 67% of 2019, an average daily rate at 88% of 2019. The improving operating trends during the fourth quarter led our entire portfolio to achieve hotel EBITDA of $64.8 million, which improved to 64% of 2019 levels. We are further encouraged with our ability to drive strong operating margins of 27%, which were only 425 basis points behind the comparable period of 2019. Despite revenues still being 25% below 2019. During January, which is expected to be the weakest month of the quarter due to both Omicron and normal seasonality, our portfolio is forecasted to generate occupancy of approximately 49.4% and ADR of approximately $158, which represents RevPAR growth of 99% over last year, and 64% of 2019 levels. Turning to the bottom line, our fourth quarter adjusted EBITDA was $54.7 million and adjusted FFO per share was $0.14. As Leslie mentioned, while fourth quarter demand was strong throughout the quarter, we remained vigilant in maintaining cost containment initiatives that are appropriate for the current environment. Underscoring our continued focus, our fourth quarter operating costs maintained more than 20% below the comparable period of 2019. Within operating expenses, wages and benefits, which represent 38% of total fourth quarter operating expenses were 25% below the comparable quarter of 2019. On a relative basis, our portfolio is better positioned to operate in this challenging labor environment as a result of fewer FTEs required in our hotels, given our lean operating model and smaller footprints with limited F&B operations. While our portfolio occupancy was at approximately 83% of 2019 levels, our hotels operated with approximately 40% fewer FTEs from the comparable period of 2019. Overall, while we expect the tight labor environment to persist near-term, we are increasingly encouraged by recent positive momentum with success in attracting applicants and filling open positions at our hotels, which we expect to continue to improve throughout 2022. We have been very active managing the balance sheet to create additional flexibility and further lower our cost of capital since the beginning of 2021. These accomplishments include raising a billion dollars through two high-yield bond offerings that were both oversubscribed with annual coupons of 3.75% for the five-year bonds and 4% for the eight-year bonds, using the bond proceeds to repay all of our 2022 and a portion of 2023 maturing debt and fully redeeming the $475 million 6% senior notes, which represented our most expensive debt. Extending maturity on a $100 million term loan from January 2022 to June 2024, adding a one-year extension option on $225 million of our 2023 maturing term loans. Amending our corporate credit agreements to extend covenant waivers through the first quarter of 2022, increase our acquisition capacity to $450 million, and add flexibility to retain certain proceeds for general corporate purposes, and recently repay the remaining $200 million outstanding on our corporate revolver. The execution of these transactions is a testament to our strong lender relationships and favorable credit profile. These initiatives resulted in extending our weighted average maturity to 4.5 years and reducing our weighted average interest rate by approximately 50 basis points. Turning to liquidity. We ended the quarter with approximately $665 million of unrestricted cash, $400 million of availability on our corporate revolver, $2.4 billion of total debt, and no debt maturities until 2023. We continue to maintain significant flexibility on our balance sheet. Currently, 100% of our debt is fixed or hedged and 82 of our 97 hotels are unencumbered. As we expected, our portfolio generated positive corporate cash during the fourth quarter and we were pleased that we also generated positive corporate cash for the full year of 2021. We maintain a disciplined approach to managing our balance sheet even if fundamentals have improved; we remain focused on making prudent capital allocation decisions to position our portfolio to drive results during the entire lodging cycle. We remain among the best positioned lodging rates to take advantage of ROI investment and external growth opportunities, which we demonstrated through our recent acquisitions. Additionally, we continue to prioritize high-value revenue enhancement projects, margin expansion initiatives, and our three 2022 conversions. Looking ahead, we estimate RLJ capital expenditures will be approximately $100 million in 2022. In closing, RLJ remains well-positioned with a flexible balance sheet, ample liquidity, a lean operating model, and a transient-oriented portfolio with many embedded catalysts. We will continue to monitor the financing markets to identify additional opportunities to improve the laddering of our maturities, reduce our weighted average cost of debt, and increase our overall balance sheet flexibility.

Thank you. Our first question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Hey, good morning everybody. Leslie, you referenced the new acquisitions are expected to exceed your underwriting by 35% in 2022. And I’m just trying to understand what that 35 outperformance reflects or how it compares to the initial underwriting. Is it extrapolating performance simply from 4Q or do you have some additional pickup beyond what you achieved in 4Q 2021? Any detail would be appreciated?

Sure, Austin, this is Sean. I will hop in there. I mean, so the bottom-line outperformance of the acquisitions was 35%. It was really a combination of quicker ramp in these assets, particularly in the urban markets, like Boston that is recovering quicker than we thought in our underwriting, which is driving a lot of the outperformance. But also, as we have gotten into these assets and implemented what would be institutional quality asset management initiatives, we found more synergies on the cost side to do things more efficiently, but also more revenue opportunities within each one of these hotels to drive the top-line. And so, when you put that all together, it was outperforming really across all three of the acquisitions.

What was the period you underwrote for stabilization across the assets and does that pull it forward - does it pull that forward pretty significantly?

So, we underwrote stabilization leads somewhere in the three to four-year timeframe from acquisition. And so, I think it more is a function of our view on the ability of these hotels to compete in the marketplace. I will break it into two pieces. The ramp up in the urban market like Boston is a 2022 specific outperformance because our house view on Boston has evolved and has gotten more bullish since we underwent the asset. Whereas the asset management initiatives, which are meaningful are something that is going to be a permanent enhancement to both the top and the bottom line. So I think it is a combination of both of those things, Austin. Some of it is the timing of 2022 specifically, and some of it is - there is more opportunity within these assets than we initially underwrote on the asset management side.

I think it also demonstrates, Austin, our continuous discipline in terms of how we underwrite. We are pretty conservative in general.

Yes. That is very helpful. And I’m curious, then kind of just switching over to the portfolio within Northern California. You are clearly upbeat about the recovery in urban markets. This market is clearly lagged certainly no secret there. But one I’m wondering if there has been any notable dispersion in performance across the region in various submarkets you are in, and what is the expectation for that market relative to your other urban markets?

Yes. I mean obviously there is no secret that San Francisco CBD is going to struggle. It needs to see production from business travel and international, which is also a challenge at this point in time. But keep in mind that our portfolio only has two assets in the CBD and as you sort of articulated, we have got a much broader footprint. We are seeing the non-CBD assets start to perform a little bit better as we are starting to see business travel pick up this year. And so we do expect our non-CBD to outperform the CBD assets. Having said that, we still expect all of Northern California to recover slower than the broader market.

And Austin, I would add one thing to that, and that is, with the office reopenings, what we noticed in Northern California is, they are the same national accounts that we have across the board. So, when you start to see Microsoft, Bank of America, Wells Fargo starting to move their offices forward, that is an encouraging sign. And to Leslie’s point about our footprint, we have already seen pickup in Silicon Valley just over the last three weeks, which is encouraging because of those offices reopening and the type of demand that we know can come with that on the national accounts versus the SMEs that we talked about in our script.

And then I think the last point on Northern California and San Francisco specifically is, we do continue to be believers in the market long-term. Despite the short-term headwinds, it is going to be a lagging market in the recovery, but it doesn’t change our overall view on the dynamics within that market. The airlift, it is a world-class city, the demand generators, the business, all those things still are positive long-term for San Francisco. It is just a function of the ramp being longer in that market.

Got it. And then just last one, assuming the next leg of the recovery continues in the months ahead. Do you guys expect to be a net acquirer in 2022?

We do expect to be a net acquirer. Our pipeline continues to be robust and active. And as I have mentioned in previous calls, we are very focused on off-market transactions and so our pipeline has continued to grow and we feel pretty good about being a net acquirer for this year.

Thank you very much. I appreciate the time.

Thank you. Our next question comes from line of Michael Bellisario with Baird. Please proceed with your question.

Good morning, everyone. Just wanted to follow up on that last question - has your view changed at all on dispositions? Your commentary is much more focused on acquisitions this year. Any change in your view, given the heavy lifting that you did last year maybe in a rear view mirror?

Mike, you broke up a little bit, so I want to make sure that I understood your question. You are asking about what our sort of house view on acquisitions relative to our portfolio, I believe, I’m sorry, dispositions?

Yes, dispositions. Thanks.

Got it. What I would say is that clearly we did heavy lifting in 2020, and we continued to be active portfolio managers, disposing of assets as we see trends in a particular market that we want to move away from. So we sold seven assets last year, including the DoubleTree. I would say that as we look forward, we will continue to be active portfolio managers, but it is going to really be more opportunistic. For example, if we want to reposition ourselves in a particular market, that is how I would sort of think about dispositions for this year. We still may sell some, but I wouldn’t expect it to be similar volume in terms of what we did last year.

Got it. That is helpful. And then just, back to your comments about the reacceleration and demand in booking trends over the last few weeks. Any markets or customer segments, excuse me, in particular that you are seeing a faster reacceleration in?

It is actually broad-based, Mike, which is what is giving us confidence that urban is going to outperform this year. We think that both business transient and group are going to be strong and accelerate. It is looking at all of the trends, looking at the fourth-quarter trends, looking at the current trends we are seeing in February, and our forward booking, and also keep in mind where we are starting those two segments at the beginning of this year from a lower base. So all of that gives us confidence that it is moving forward. But let me give you a couple of data points: on the business travel side, we are definitely seeing midweek pickup in February. If we look at our numbers most recently month-to-date, we are seeing occupancy at 60% in the most recent week; we were at 68% over the weekend most recently, obviously because of the holiday, we were at 80%. So February is proving to be strong. And within that timeframe in February, we are seeing a pickup in GDS contribution, which is really telling us that not only are SMEs giving us production, but also national accounts giving us production as well. That is across all markets including we are seeing with Tom mentioned in Northern California as well. So our transient pace, our business travel contribution we feel the pickup in what we are seeing is broad-based. I would also say that is also on the group side as well. We started the year at a 60% pace relative to 2019. We are now at 68%, which is an eight-point pickup. We are only two months into the year; we have already booked 25% of the end-of-year contribution that we picked up last year. And when we look at the mix of what we are getting from a contribution, corporate group is representing 50% of what we are booking today. I would tell you that was running 5% to 10% prior to this year. The other thing that is interesting for us is that the booking window continues to be short and so that means that the in-the-quarter production, we expect to continue to be strong. Just to give you a data point, we picked up 20% of our group in the fourth quarter. When we look at all of the data points, the momentum and the pace of it and the fact that it is broad-based, we feel pretty good about the trend lines for business travel.

Helpful, thank you.

Thank you. Our next question comes from line of Neil Malkin with Capital One Securities. Please proceed with your question.

Good morning everyone. First question, maybe for Tom or Sean, but if you think about what the new operating models, kind of the enhanced brand standards, all those things. I’m just wondering if you can give your kind of thoughts on the difference between sort of select service and full service in terms of I guess the net benefit or most to gain. Just, curious thinking about your portfolio, a lot of extended stays, mostly housekeeping and F&B are other largest parts. So then if you kind of juxtapose that to the group side where there are so many more outlets, so kind of like that a lot more fat to cut type of thing. So, I know Sean you’ve had experience in both models. So, if you could maybe just kind of elaborate on your thoughts there and how a portfolio like RLJ would fare compared to a larger group-focused portfolio?

I will start and I will let Tom add incremental color. I would generally say that our house view about the overall industry being able to pick-up a 100, 200 basis points of margin expansion has not changed. We recognize that wage inflation may affect where we end up in that range, but overall, we feel very confident that there has been cost taken out of the industry on a permanent basis. We do believe that RLJ and our portfolio is in a better position to see sustained savings and it is a lot of what you are articulating. The segmentation that we play in largely in the limited service space allows us to be able to what I would say, have our customer adapt to those changes more at a higher level than they would see at a traditional full-service hotel. I would also say the length of stay for us is also a benefit relative to those savings. The F&B you touched on as well. We have a generally a fixed food service model in a significant portion of our portfolio, which also gives us an advantage relative to being able to maintain those savings. Lastly, if you think about the size of our overall portfolio and the average size of the footprint of our asset, that allows us to continue to cluster and allow for employees to do job share when you have a smaller footprint. So, when we think about our portfolio all in aggregate, relative to where we play in segmentation, our length of stay, the size of our portfolio, the F&B model, all of those things are giving us confidence that RLJ will be able to benefit from that savings at a higher level than many of our traditional full-service peers. The other thing that I would remind you of is that we have 50 basis points of margin expansion from our value creation that is above and beyond what we are expecting from the industry as well.

Neil, what I would say, just adding on to what Leslie talked about, these last two years have been very informative regarding how we complex. As you know, prior to the COVID pandemic, we were complexing on the same pad locations where we would have a residence inn and a courtyard and shared services. What we have done after that has been to really focus on a wider geographic area, even across ownership groups. We feel we are coming out of these last two years with a whole different FTE model regarding how to run our business. We believe this is sustainable and we have seen the benefit of that by having great skill sets oversee more and have more accountability and responsibility in a wider net. That shared services and expansion of that role gives us confidence that in our select service model and compact full service model we will continue to have that margin increase, based on those sustainable efforts.

That is great. Super helpful. Other one for me, is kind of on, I guess, balance sheet related. You guys have been, Leslie, Sean, I mean, since I have known you guys just really good stewards of capital or especially just having a good balance sheet, being very active, managing at low leverage, etc. I mean, you went into COVID with very low leverage and a ton of cash. Just thinking about the business and your balance sheet, how do you guys think about the decision with waivers? When to bring back the dividend, how much and how do you weigh the priority of the elevated cash balance and liquidity that you have in a pivotal year like 2022?

Well Neil, thanks for the feedback on the balance sheet, which we appreciate. Obviously, we take it very seriously with a CFO and an ex-CFO on the call recovering, sometimes occasionally still going into discipline model. But, I think on the dividends specifically, and then I could talk about capital allocation second, right. It is a very timely question. It is a live discussion right now going on with both boards, as well as management teams on the dividends. Let me sort of start by framing what is the RLJ house view on how we think about dividends, right. I feel obligated to reiterate the fact that dividends are a Board decision. But, when you think about dividends, it is core to our REIT model and a critical tool for us to return capital to shareholders. Obviously, it is also a key driver of our long-term total shareholder return for our shareholders. I think from RLJ specifically, what allows us to differentiate ourselves a little bit is that we have got an operating model that generates more free cash flow, as well as the balance sheet and liquidity which provides us optionality on the dividend and that is an important distinction within the Lodging REIT community. I think the way we are thinking about dividends in the post-COVID world is that we are going to have more discretion because of the net operating losses that were generated during COVID, with respect to dividend policy. So, pre-COVID dividend policy was generally dictated by taxable income and distributing at 100% of taxable income, because of the NOLs that is going to provide management teams with more flexibility around how we pay dividends, sequencing structure, etc. It is going to increase the importance of relative yield as well as FFO payout. Our dividends will stay at current levels until we are out of the waivers, which will be after the second quarter. After that, we will have the ability to change things. Dividends are important to us. It is a live discussion. It is something that we are taking very seriously and we believe that companies like RLJ, with our model, should be early movers in the dividend game. Shifting to capital allocation and balance sheet, I think the one benefit that we have, because of our liquidities you mentioned a lot from the 2019 sales, as well as what we have done since provides us with the ability to pull multiple levers, right. We have demonstrated that through our internal value creation initiatives that we have outlined, the acquisition strategy, as well as the ability to pay dividends. We are going to continue; our cost of capital gets marked-to-market every day. So whenever we make any capital allocation decision, we will make the decision which best fits based on our cost of capital at that moment in time. The beauty of our balance sheet is that it provides us with the liquidity and the capacity to pick - not just choose one of those options.

Okay. Thank you for the thoughts.

Thank you. Our next question comes from line of Anthony Powell with Barclays. Please proceed with your question.

Hi, good morning. Just a question on the pipeline of acquisitions you seem to be favoring urban markets now, and maybe tell us kind of what markets you are targeting and how pricing has trended for urban select service given, I guess, the improving outlook for the segment.

Sure. Yes. What I would say about pricing just in general, Anthony, is that we saw pricing increase over the summer last year, and coming into the fourth quarter, and then we saw pricing stabilize in the fourth quarter. Part of what was driving that was that we moved from motivated sellers to opportunistic sellers who were seeing the amount of capital and volume for demand for hotels, particularly given on the yield side, and so they were opportunities to see how far they can push pricing. That has stabilized, and we continue to see it stabilize. What I would say about us is that we lost in a lot of our deals prior to that ramp. We feel pretty good about the pricing that we got relative to what we are pricing to today overall. I would simply say that when you look at the overall what is coming to the market, there have been entry deals, but it is still limited and mindful. Obviously, anything that is sort of leisure-oriented is getting a lot of attention, and again, opportunistic sellers there. On the urban side, there is more product coming to the market because you do now point to the green shoots of demand recovering, and keep in mind that urban select services have been cash-flowing for a while throughout the pandemic. So there is a lot of demand for those assets and given the yield, there are a lot of players who are chasing the assets. Many of them are not necessarily traditional hoteliers. Between the demand and limited supply, values have continued to remain above 2019 levels is the way I would put it. But what I was focusing on is how we approach transactions; one is that we focus on off-market transactions. We leverage unique relationships and situations to allow us to get to assets that we might not otherwise and that has played out in the value and the yields of the deals that we have acquired most recently.

Okay. Thanks. And I guess on Boston, you seem bullish on that market. Could that make sense? Because it makes sense to make you to pull forward the Wyndham, I guess, Boston renovation in the strength of the market. So you can maybe benefit from the recovery there a bit earlier.

I mean, we are evaluating all of our conversions to make sure we hit the right time, but keep in mind that the Wyndham Boston does have a ground lease that we are working through. We would want to make sure that we extended that before we execute the conversion.

Thank you. Our next question comes in line of Tyler Batory with Janney. Please proceed with your question.

Thank you. Good morning. Question on CapEx spend that you just said a $100 million for this year, as much as for conversions versus other projects. Is there any deferred CapEx assumed in that number this year? And how are you thinking about a run rate for CapEx, whether it is a percentage of revenue or an absolute number going forward?

Tyler, this is Sean. You are right; we said we expect the total spend of $100 million in 2022. This is going to include normal cycle renovations. We have allocated that really to markets and hotels that we expect to outperform during the cycle. So that is going to include hotels in Miami, Deerfield Beach, Phoenix, Orlando, and Los Angeles. It also includes spillover from our 2021, either the three conversions, which remain on track to launch by the end of the year. So there is just the timing of the capital there will spill over. That is a subset of the $100 million as well. As a reminder, our midpoint of our range last year was $80 million. We ended up at about a little under $50 million in CapEx. So that accounts for a lot of that spill over; it is just the timing of when that is going to happen. With respect to how we think about CapEx and our portfolio, I think the beauty of what we have done over the last several years and we have planned for 2022 is that we are going to emerge with a broadly renovated portfolio in good shape and are well-positioned to compete. We have done a lot of the heavy lifting particularly in renovating a lot of the assets that we bought as part of the merger. We will be through the vast majority of those assets by the end of 2022, and so our portfolio is well-positioned and set up to compete.

Okay, great. And then I apologize if I missed this earlier, interested in your thoughts or updated thoughts perhaps on leverage and leverage targets a little bit longer-term. Obviously think business is moving in the right direction, certainly seems like some normalization coming here. I mean, once we kind of get into the more normal post-COVID period, how are you thinking about leverage? And kind of how are you evaluating where you might shake out? I mean, you kind of looking at a net debt to EBITDA metric in terms of a target or some sort of gross assets ratio as well, just interested in any updated thoughts there.

Sure. Our view on sort of the appropriate leverage for lodging REIT has not changed; our view is that it should be at or below four times net debt to EBITDA, which is a metric based on stabilized EBITDA. We are on track to get back to that level through the growth of EBITDA. Our view is that is the appropriate metric and the appropriate level for lodging REIT, so it has not changed. We are on track through improved operations to hit that number.

Okay, great. That is all for me. Thank you for the detail.

Thank you. Our next question comes from line of Gregory Miller with Truist Securities. Please proceed with your question.

Thanks, good morning. I would like to start off on the macro front, given the current events in Ukraine, we have received investor questions on how the geopolitical situation translates to domestic demand impact based on what you know today, and I recognize the situation is fast-moving. How material are rising gas prices or other macro factors to your near-term hotel demand, say looking out to March or April?

So, I mean, obviously, the events are unfolding today. We think on the domestic side, which has been driving the vast majority of our demand today, we don’t think there is an impact. Clearly, on the international travel that could have a significant impact just in terms of what is happening on a macro geopolitical perspective. What I would say though is that we have not baked in any international into our general house view this year. As we said in our prepared remarks that international could surprise the upside, but that was generally in the back half of the year, Greg. From our perspective, clearly, macro events could have all kinds of unseen intent and ramifications. But as we sit here today, the way we have built our budgets and what we are seeing, we don’t see an immediate impact. We also haven’t necessarily talked about the fact that there could be an incremental variant, and so all of the marks that we have given today are in the absence of that as well. So, clearly, there are macro things that could occur. But what we see today from a domestic perspective, we are not necessarily seeing an impact from that.

Okay. Thanks. Second question is a bit offbeat, but I thought to ask given your portfolio is diversified by product type and geography. When your hotel associates are allowed to not wear masks, I’m curious about the operational impact. Have you noticed any changes to guest satisfaction scores or employee retention or even operational efficiencies, positive or negatively, and this impact pretty broad-based across the portfolio?

Hey, Greg. It is Tom. What I would say is obviously every state, every city, every municipality is a little bit different on how they are reacting to the mask mandate lifts. So first and foremost, before we get into the associate side of it, what we have seen is because of these mask mandate lifts, it is an immediate opportunity to see pace pickup, both transient group and so there is more activity when those cities that have all been talking about doing it at the 28th of February, beginning of March, all that has been transpiring into what you are seeing on the pace side, where more people are traveling. It is a new normal, and we are all having to adjust to that, not only with guests, but with offices as well as the associates. What I would say initially is, I think there is an excitement out there regarding the new normal for associates to be able to smile and greet guests in a way that they used to do it on a regular basis, first and foremost. The second thing that I would say is because there is more demand midweek, we are starting to see some of the same customers that we used to see on a regular basis on those national corporate accounts that we talked about that are now traveling again because those were the road warriors that we had that relationship with versus a transaction in the past. I think it is early to say any impact, but on the concern about health and safety and security, we take that very seriously and are working with our management companies to make sure we are making those right decisions at each level depending upon where our portfolio sits.

And Greg, the other thing I would just sort of add which much more broadly is in fact the psychology around COVID as a result of Omicron, given how widespread it was, the number of people who were impacted and the less severity of it has really changed the general psychology. So, people are more mobile in all aspects of their lives, not just travel. That is generally changing the overall reflex when you see somebody without a mask, and so I just generally think that we are moving to a point of being an endemic and less of a concern for most people. Now again, all of that, I’m saying in the absence of something else spiking, but I think in general, the psychology around mask-wearing is actually a benefit. I’m sorry, the lifting of mask wearing is a benefit for the psychology for people and mobility in all aspects of their lives.

Thanks everyone. I appreciate it.

Thank you. Our next question comes from line of Bill Crow with Raymond James. Please proceed with your question.

Yes, thanks. Good morning, just a quick one for me on CapEx. A follow-up to the prior discussion. I’m just curious whether the brands are starting to push back on deferred CapEx, not so much Leslie in your portfolio, but more broadly speaking, whether that doesn’t eventually free up more acquisition opportunities.

I think that is a great question, Bill. I do think that we are going to have a multi-year buying opportunity and I do think as a result of owners having to put more capital into assets that is going to flush some owners who had to survive off of their reserves, and who had to dip into different proceeds not wanting to put more capital in. I don’t think that it is necessarily going to be driven by the brands. I think the brands continue to be accommodating and working with owners. I think it is going to be a function of preserving the operations of the asset, and the longer you go in terms of not putting in the capital that is needed and the degradation that may cause, somebody’s going to want to get ahead of that. The brands will put pressure, but I don’t see that in the next kind of 12, 24 months. Based on the accommodations that the brands are trying to make, but I do see that being an eventual push, but more the necessity to maintain the competitiveness of an asset.

Thank you for that. How sensitive are the brands to guest satisfaction scores and how much at risk are the changes to guest-facing services that have been implemented in reaction to the pandemic to these changes in guest satisfaction scores? So I think what I’m getting at is just, if we start to see dissatisfaction, do these savings start to get eroded?

Yes. So I think it is an evolving question, Bill, because the brands are sensitive to the guest satisfaction scores, but they have also adjusted the guest satisfaction scores to accommodate the current environment we see today. But those guest satisfaction scores benchmarks will push back up over time; it has been some adjustments, but they are increasingly becoming sensitive. I do believe that our portfolio, because of where we play from a segmentation perspective, the nature of our customer, will be able to have customers who adopt changes in a way that doesn’t affect our guest satisfaction scores, as you may see in sort of the higher-end segment that we don’t play in.

Yes. So Bill, just to give you some specifics around that, when you think about the guest experience, it comes down to wanting to have their room clean and the type of clean that they were getting. The adjustments that the brands were making are real positive giving the option to the consumer to ask. What we are finding is that interaction between the employee and the guest is giving us an opportunity to have that chance to ask questions about how they would like to view their stay and the length of stay that Leslie mentioned really gets you into a relationship with somebody because of suites and 50% of extended stay, you are asking them how they would like to view that opportunity when they are with us. The second thing that I would say because of the collaboration around food and beverage, there is a good opportunity to reshape and reimagine that experience. For instance, yes, our cost per occupied room is down because we have removed some items, but there were so many significant items on there that people didn’t actually take that I think it was more of what they really wanted versus what they needed in the past. Those changes in addition to hours of operations have been met with I think a welcome experience in regards to that. We are giving them what they are looking for and having the hours of operations be acceptable to the fact that they know they still can rely on it when they come to that area. Lastly, to Leslie’s point about our footprint versus full service, we feel that our customer is a little bit more accepting of that because they only have maybe one outlet or they have an opportunity that breakfast is included in the rate, so more of an experience versus the optionality of a full-service hotel, where their expectations are going to be a little bit different regarding the level of services being provided when they experience that.

Alright, I appreciate all the color. That is it for me. Thanks.

Thank you. Our next question comes from line of Floris van Dijkum with Compass Point. Please proceed with your question.

Thanks for taking my question guys. You know getting back to the balance sheet, Sean. Cash, I know you don’t have any maturities, so presumably, that is going to get deployed into acquisitions - earnings enhancing even if you are buying it at a low cap rate. Is that the right way to think about it?

You broke up a little bit Floris and so I just want to make sure I understand your question, which is because of the liquidity that we have on the balance sheet today, you would expect us to be in a better position to deploy that on external growth. Is that the question?

Yes.

Okay, alright thanks for that. Yes, so you are right. I think we are uniquely positioned because of the heavy lifting that we did in 2020 and the liquidity that we have on our balance sheet today to use acquisitions as one of the sources. In 2021, we were active on the acquisition front, but it was also funded with dispositions, so the capacity that we had at the beginning of 2021 is the same as it is today. Acquisitions are certainly one tool that we have at our disposal to rate value. I do think on the comment around being able to buy lower cap rate things, you would expect us to continue to be disciplined and underwrite deals in a way that allows us to deliver returns. The data point we provided talked about how we were outperforming our underwriting and is a good testament of our ability to underwrite conservatively, get the deals, and have strong returns. On the acquisitions front, you would expect to continue; and then the other point acquisition as Leslie mentioned, we are going to be net acquirers this year. We have a pipeline, we are actively looking at acquisitions, and we are going to remain disciplined. We think with our liquidity, we have the capacity to do that. I want to just add the additional point is the acquisitions are just one of the tools we have at our disposal, because we have liquidity; we can do the acquisitions. We have within our base case model, the internal growth catalyst with the conversions and the CapEx, etc., is also going to deliver outsized returns for us within our ROI initiatives. Lastly, as I mentioned earlier, we have the liquidity when dividends resume and returning capital through shareholders that is also an option that is in our toolkit. We have the liquidity for all of it; this is how we think about it.

Thanks. And maybe if you could also comment on your value and where, obviously, investors have been thinking potentially you could be one of the more attractive options for private equity being select service.

Sorry, you cut out. Finish your question.

No. If you could just comment on where you think your underlying value is, that would be helpful.

Sure. It is important to affirm our strong view that we are trading at a discount to both consensus NAV as well as our internal view of NAV. From a public NAV perspective, the discount is in the 35% range today. Today is a tough day in the market with the global things going on. But the discount is even wider based on our internal view of our NAV as well as replacement cost. Our internal view of our internal value is really based on the fact that when we look at what asset - comparable assets are trading at around $200,000 per key or slightly more than $200,000 per key, which is materially below where comparable assets are trading today in the marketplace, that gives us confidence around the value of the underlying assets. We also have seen, and you know as Leslie mentioned in her remarks, that assets are trading at or above 2019 levels, which also gives us confidence around value. There are areas that we believe the market is not giving us credit for today and the overall quality of our portfolio, which is from a RevPAR and metric standpoint the strongest that has been in our life as a public company. We also, to all of your earlier questions, have investment capacity to deploy. We think that needs to get factored in. Also, we have discussed the $23 million to $28 million of incremental EBITDA. We think that is a point we need to put on the Board to demonstrate that. There is more value within our portfolio. All that being said, we are going to work hard and continue to work hard to bridge that gap to NAV through executing these initiatives. It is important for RLJ for us to bridge that NAV gap and you would expect us to act in a commercial manner to make sure that we take steps to bridge that gap.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Ms. Hale for any final comments.

Well, I want to say thank you to everybody for joining us today. We look forward to providing updates throughout the year as recovery continues to unfold. We look forward to being able to provide an update on our progress relative to that. Have a good rest of the week.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.