Greetings, and welcome to the RLJ Lodging Trust First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow as a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Paul Austin, Director of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator. Good morning and welcome to RLJ Lodging Trust's 2026 First Quarter Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Nikhil Bala, our Chief Financial Officer, will discuss the company's financial results. Tom Bardnett, our Chief Operating Officer, will also 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 has been communicated. Factors that may impact the results of the company can be found in the company's 10-Q and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discussed certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release. Finally, please refer to our schedule of supplemental information, which includes pro forma operating results for our current hotel portfolio. I'll now turn the call over to Leslie.

Thanks, John Paul. Good morning, everyone, and thank you for joining us today. We are encouraged to see the lodging industry off to a strong start this year, benefiting from the underlying strength of fundamentals, with the acceleration of business transient demand being a key driver. We are particularly pleased with our first quarter results as our urban-centric portfolio outperformed the industry. Our favorable footprint, with exposure to many top-performing markets, such as Northern California and South Florida, among others, allowed us to capture the broad-based momentum in all segments of demand, along with a ramp from our recent high-impact renovations and conversions, driving solid results ahead of our expectations. During the first quarter, we achieved REVPAR growth of 4.8%, outperforming the industry by 100 basis points. We delivered robust non-room revenue growth, which exceeded our REVPAR performance by more than 300 basis points. And we drove high single-digit year-over-year EBITDA growth and margin expansion. We also advanced our conversion pipeline and addressed all of our maturities through 2029. Our solid first quarter performance demonstrates the momentum in our urban markets and the growth embedded in our portfolio, while the ongoing execution of our capital allocation and balance sheet initiatives position us to continue to drive outperformance relative to the industry and create long-term shareholder value. Turning to our operating results, our first quarter REF-PAR growth of 4.8% was balanced between occupancy and ADR gains. Trends improved sequentially throughout the quarter, with REF-PAR February and March achieving healthy year-over-year growth of 6% and 9% respectively, following January's REF-PAR decline. Both February and March were aided by a robust calendar of events, as well as the favorable timing of holidays, which bolstered demand. We were pleased to see this positive momentum carry into April. Our urban markets have been consistently performing well, disproportionately benefiting from positive trends across all demand segments. We were pleased to see our urban footprint outperform the broader industry urban markets, with a number of our markets delivering high single-digit rev part growth. Notably, Northern California achieved outstanding rev repart growth of 27%, benefiting not only from the Super Bowl and the favorable shift of the RSA conference to March this year, but also from the continued expansion of the AI industry, which is driving significant corporate investment and business travel demand broadly across this market, in addition to a better overall environment. New York City was another noteworthy market during the quarter, with our properties achieving over 8% rep park growth driven by healthy corporate and leisure transient demand, a favorable events lineup, and a ramp of our high occupancy renovations that we completed last year. As it relates to segmentation, business travel saw robust growth during the first quarter, with our business transient revenues growing by 9%, which was largely demand-driven, with room nights increasing by nearly 700 basis points. The momentum in business travel accelerated throughout the quarter, underpinned by strong growth in business investment driven by AI-related spending as well as record corporate profits. This is specifically fueling the ongoing strength in sectors such as technology, finance, aerospace, and life sciences, which is amplifying overall BT demand. Leisure trends were strong across our portfolio, with revenues growing by 5%. Demand remained resilient, and we were encouraged to see rate growth at 3%. The leisure segment benefited from a compressed spring break, as well as elevated demand at a number of our hotels, as winter storms across the country drove additional leisure travel during peak season. Our urban leisure once again saw stronger relative performance, as our hotels and live-workplace submarkets are capturing robust demand around sports, concerts, dining, festivals, and entertainment. Importantly, our geographically diversified portfolio continues to benefit year after year from the rotation of signature events within our footprint. Relative to our group segment, even with difficult comparisons from the inauguration in D.C. and the Austin Convention Center, booking trends remained healthy, evidenced by our in-the-quarter, for-the-quarter revenue pace increasing by 900 basis points and ADR increasing by 3% over last year. We were especially pleased to see a meaningful pickup in group bookings for the second quarter, which saw pace improved by 400 basis points. We are encouraged by the increasing share of corporate bookings within our group mix, which has positive implications for ADR and out-of-room spend. Our portfolio also generated outsized non-room revenue growth of 8.2%, once again underscoring the momentum behind our ROI initiative and the investments we have made in expanding ancillary revenue channels. These initiatives allowed us to increase our total revenues by 5.4%. This top-line growth combined with disciplined cost management and a lean operating model contributed to our significant EBITDA outperformance relative to our initial expectations and our margins expanding by 45 basis points over the prior year. Now turning to capital allocation. Our transformative renovations from last year, as well as our completed conversions, are delivering tangible results and contributed meaningfully to our outperformance relative to the industry. This is demonstrated by our four major renovations at high-occupancy hotels completed last year, achieving 9% REVPAR and 10% EBITDA growth during the quarter. Our conversions continue to deliver solid results, with our seven completed conversions generating EBITDA growth of 16%. Additionally, we made further progress towards our Renaissance-Pittsburgh conversion and remain on track to relaunch the property under Marriott's autograph collection this summer. We advanced preparation of our conversion of the Wyndham-Boston Hotel, which will join Hilton's tapestry collection, and we are on pace to begin construction later this year. And we look forward to announcing our next conversion in the coming quarter. However, collectively, these capital allocation initiatives, supported by our strong balance sheet, position us for multiple years of growth in 2026 and beyond. Looking ahead, we recognize that the macro environment remains uncertain, driven by an evolving geopolitical backdrop, which is giving rise to shorter booking windows and limiting visibility beyond the near term. To date, however, we have not observed a noticeable impact on our results. Our first quarter outperformance on both the top and bottom line is encouraging, and we believe the setup continues to favor urban markets for the remainder of the year, supported by sustained strength in business transient and robust demand for urban leisure experiences, trends that should disproportionately benefit our portfolio. overall we had already anticipated these healthy trends in our original guidance for the remainder of the year however given the current uncertainty we will continue to monitor any shifts in demand our outlook assumes the continuing broad-based strength in bt supported by healthy corporate profits and growth across a number of industries reinforcing our view that the recovery in this segment has further room to grow. The resiliency of leisure demand and expectations for continued rate growth as we approach the peak summer travel season, especially in our urban markets, which have an extensive lineup of events, sports, concerts, and entertainment. A positive group pace for the remainder of the year, with ADR demonstrating pricing power, and our expectations that even with a shortened booking window, we will continue to see strong in the quarter, for the quarter bookings. A favorable footprint to capture upcoming catalysts, including the World Cup and America's 250th anniversary. The ongoing momentum in Northern California across all demand segments, further validating the sustainability of this market's recovery. Continued growth of non-room revenues from our ROI initiative as well as tailwinds from the ramp of our four significant renovations completed last year and our recently completed conversions, which are well-positioned to drive multiple years of growth. Our strong results are a direct outcome of the strategic repositioning of our portfolio over the past several years through asset recycling, targeted acquisition, and high-impact conversion. As we look ahead, we remain cautiously optimistic about the long-term durability of the demand trends we are seeing and believe our well-positioned portfolio will support continued strong relative performance and the creation of long-term value for our shareholders. With that, I will turn the call over to Nakhil.

Thanks, Leslie. To start, our comparable numbers include our 92 hotels owned at the end of the first quarter. Our reported corporate adjusted EBITDA and AFFO include operating results from all sold hotels during RLJ's ownership period. Our first quarter results came in ahead of our expectations with occupancy increasing by 2.6% to 70.8%. Average daily rate increasing by 2.1% to $210 and a ref par of $149 increasing by 4.8% versus the prior year. Fundamentals strengthened throughout the quarter following January's 1.9% ref par decline with growth accelerating to a robust 6.1% in February and 8.9% in March. These healthy trends carried into April, which achieved preliminary RFPAR growth of approximately 4%. During the quarter, we saw meaningful strength within our urban markets, which achieved 4.4% RFPAR growth, outperforming STR's comparable markets by 110 basis points. This growth was broad-based and balanced between approximately a two-point increase in occupancy and a two-point increase in ADR. Our strong urban portfolio performance was bolstered by double-digit REF PAR growth in markets such as South Florida, which grew REF PAR by approximately 10%, and Houston and Denver, which each achieved 14% REF PAR growth. Additionally, demonstrating that our portfolio benefits from seven-days-a-week demand, both weekdays and weekends saw mid-single-digit ref bar growth. Our urban markets benefited from improvements in all segments of demand, notably business travel. The acceleration in BT demand that we are seeing has positive implications for the momentum in out-of-room spend, which was evident in the robust growth of 8.2% in our non-room revenues that we saw during the first quarter. We were especially pleased to see the strong revenue growth come on the heels of the robust 7.2% growth we achieved during the prior quarter. Our non-room revenues generate strong margins, which improve by 130 basis points during the quarter, underscoring the success of our RY initiatives aimed at profitably growing food and beverage, reconcepting underutilized bases, and growing other ancillary revenues. Overall, non-room revenue growth led our first quarter total revenues to grow by 60 basis points ahead of our ref bar growth. Turning to bottom-line results, total operating expenses were up 2.1% on a per-occupied room basis, underscoring the benefits of our lean operating model and our disciplined approach to managing costs, which allowed for strong flow to the bottom line. Although energy expenses were elevated due to the winter storms as well as disruption in the energy markets due to the war, these were more than offset by improvements in fixed costs given by a double-digit decline in property insurance due to a favorable renewal last year and other cost-control initiatives. During the first quarter, our portfolio achieved Hotel EBITDA of $89.9 million, dollars, representing year-over-year growth of $6.1 million, or 7.2 percent, and hotel EBITDA margins of 26.4 percent, which expanded by 45 basis points over the prior year. These results translated to adjusted EBITDA of $80.9 million and adjusted FFO per diluted share of 33 cents for the first quarter. With respect to our balance sheet, as previously announced, during the first quarter, we executed a series of refinancing transactions, which expanded our undrawn capacity by $500 million and created additional flexibility. We intend to use the additional capacity created by these refinancings to pay off our $500 million senior notes that mature on July 1 this year. Following this payoff, we will have no maturity due until 2029, and our weighted average maturity will be over four years. Our balance sheet remains well positioned with over $950 million of liquidity, including undrawn capacity of $600 million on our corporate revolver, 84 of our 92 hotels unencumbered by debt, an attractive weighted average interest rate of 4.6%, and 75% of debt either fixed or hedged. We ended the first quarter with $2.2 billion of debt. In addition to proactively addressing our maturities, we continue to demonstrate our steadfast commitment to returning capital to shareholders by paying an attractive and well-covered quarterly dividend of $0.15 per share. Now turning to our full-year outlook, we are pleased with the strong start to the year. At the same time, we remain mindful of the uncertainty in the overall macro environment. We have incorporated our strong first quarter outperformance into our revised guidance while keeping our expectations for the remainder of the year unchanged from our prior outlook. For 2026, we now expect comparable REF PAR growth to range between 1.5% and 3.5%, comparable hotel EBITDA between $356 million and $380 million, Corporate adjusted EBITDA between $324 million and $348 million, and adjusted FFO per diluted share to be between $1.29 and $1.45. Our outlook assumes no additional acquisitions, dispositions, or balance sheet activity beyond what has been completed to date. We continue to estimate capital expenditures will be in the range of $80 million to $90 million. Cash G&A will be in the range of $32.5 million to $33.5 million. And expect net interest expense will be in the range of $101 million to $103 million. We also expect total revenue growth will continue to outpace RefPAR growth due to the success of our initiatives to drive out-of-room spend. With respect to the cadence for the rest of the year, our view of the second quarter has not changed. However, in light of our strong first quarter results, our adjusted EBITDA contribution for the second quarter will be slightly lower than last year, with the balance of the contribution in the back half of the year. Finally, please refer to our press release from this morning for additional details on our outlook, and to our schedule of supplemental information, which will include comparable 2026 and 2025 quarterly operating results for our 92 hotel portfolio. Thank you. And this concludes our prepared remarks. We will now open the line for Q&A. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Michael Bellisario with Baird. Please proceed with your question.

Thanks. Good morning, everyone. Good morning, Mike. Leslie, can you add a little bit to your commentary? on the accelerating business demand you mentioned, but that seems to be offset a little bit by a shorter booking window. Did I hear that correctly? And is that shorter booking window, is that broad-based or specific to a customer segment?

So, you know, I would say on BT, you know, Mike, my comment about the booking window is really more so on group and on leisure. I think as it relates to BT, the acceleration we saw was broad-based. We're continuing to see national accounts grow, which is our highest rated customers. The sectors in tech and aerospace and life sciences continue to be the sectors that we're seeing the strength at. And that's really a function of, you know, strong corporate profits. It's business investment really sort of driving and aligning what we're seeing. So our midweek trends remain strong, you know, relative there. On the booking window side, what we've seen is that, you know, group is booking shorter. As I mentioned on the call, our in the quarter for the quarter pace for the first quarter was strong. We actually saw 22% of our bookings in the quarter for the quarter. And while it's been short, it's still been materializing, and so that gives us comfort as it relates to group. And then on the leisure side, we've actually seen booking window elongate. and so we've seen the opposite relative to group.

Got it. That's helpful. And then just sort of along the same lines, just on the out-of-room spending, how much of that is you're taking price versus an increase in volume, and is that pickup really being driven by business travel?

It's definitely business travel is playing a key role, and it's not just business transit. It's also business group. You know, business group has increased to more than 50% of our overall group mix, and that bodes well for out-of-room, you know, for F&B orders while they're in their group meetings. And it's in general, as BT continues to increase, they do more in spending in the hotel as well. I'll let Tom add some color.

So, Mike, what we're seeing underneath the F&B hood is we have banquets growing. What Leslie was stating about group, we're seeing a much more significant amount of corporate group come, and with that, Banquets goes right along with that. Even when we think about our ROI initiatives, we've spent quite a bit of money on making sure that we have a beverage-centric, thoughtful food and beverage approach, so our lounge up around 12%. And then when we think about AV, room rental, when we look at our meeting space and our atriums as well as where we've put some capital, those continue to be enhancing our ability on the F&B, which allows us to increase margin by about 50 basis points. Below that, because of the drive-to market still being healthy in the first quarter, we had parking revenues up. And then lastly, I would say where we've been spending a lot of time is watching the consumer behavior in and around our lobby and where we've been enhancing. We've kind of taken that select service margin expansion, excuse me, market expansion to our full-service hotels as well. And so that grab-and-go, consumer trends, total revenues, who's enhancing by, you know, people looking for something in a hurry on the way to the airport and having an opportunity to grab that in addition to what we talked about with F&B and parking has really enhanced our profitability on non-revenue.

Yeah, and Mike, I'll just add what's kind of in our pipeline that kind of bolts onto some of Tom's comments around the thoughtful F&B and how we've approached it. We've talked about on previous calls how we've been really focused on having F&B that attracts guests that are outside the hotel. We did it at Mills House in Mandalay and Nashville, and we still have Pittsburgh and Boston in the pipeline. And just to put some numbers around that, our total revenues for our conversions were up 8% in aggregate, and that's really a function of our ROI investment in demonstrating how thoughtful we've been around the out-of-room spend.

That's helpful. Thank you.

Our next question comes from the line of Austin Werschmidt with KeyBank. Please proceed with your question.

Thanks. Good morning, everybody. Leslie, you highlighted some high-level details about the outlook across, you know, various segments. Could you just walk through the cadence of red part growth guidance over the balance of the year and maybe how some of those building blocks between segments are expected to play out at this point? Thanks.

Yeah, sure. So, Austin, what I would say is that, you know, clearly, you know, Q1 came in better than we expected, but that, you know, our view for second quarter really hasn't changed. The trends that we're seeing right now are coming in line with our expectations. We mentioned in our prepared remarks that, you know, April was, you know, up around 4%. You know, we know that Easter was going to move up in the month, and so we're seeing strength in business and group filling in that space has been moved up. May, you know, within that quarter, it's going to be our softest month because of the tough comps. And then, as you know, June's going to benefit from the World Cup. And then what I would say, you know, is that, you know, within that month, within the second quarter, group pace was already pacing ahead of 2025. And then we, you know, really have no change to our perspective on the back half of the year. Again, third quarter, benefiting from World Cup, we expect third quarter benefit more than second quarter from the World Cup because there's a higher demand for the later stage games. And then you layer in the 250th anniversary on top of an existing holiday and obviously Salesforce. Fourth quarter, we'll see a lapsing of the shutdown, a government shutdown, but that's going to be offset by the election. So this setup was already anticipated, you know, in our, you know, original guidance, and what we're seeing today is in line with, you know, with our, you know, expectations. In particular, you know, I would also just sort of say, you know, as it relates to the World Cup, you know, it's still early, you know, but we are, you know, encouraged, you know, by what we're seeing. You know, we were very thoughtful in, you know, how we approached, you know, our perspective around building our blocks and on World Cups. For example, you know, we were really thoughtful about focusing on blocks related to teams, media, and sponsors, and we wanted to have, you know, really strong revenue management and focusing on length of stay and, you know, making sure that we were disciplined about rate. So today what we're seeing is that those blocks that we anticipated are actually picking up. because we were thoughtful, and we're getting deposits around teams and media. And then as it relates to transient, what we're seeing today is promising. It's early, but around game day, we are seeing ADR, you know, come in line with our expectations. You know, I think that the World Cup, when you look at high occupancy markets, it's really a rate game in markets like L.A., New York, and Miami. But overall, these trends we're seeing are in line with our expectations and our original assumptions that we had in our guide.

That's helpful detail on World Cup. Just switching for a comment you had on leisure and the elongated booking window, just wondering how much of that you think is sort of sensitivity to changes in airfare, given what's happened with energy costs, and how does that inform your view on sort of pace as you look out within this segment and what that could look like? just given the resiliency, you know, in the consumer?

You know, I think that the elongated booking window, some of it may be related to, you know, to airfare, but I actually think it's around the strength of demand that people are recognizing, and they may not be able to get the room that they want in, so they're recognizing they need to book a little bit earlier. As you mentioned before, a lot of these special events are happening on top of timings that were already, windows that already had high occupancy. And so I think that's affecting the psychology of the consumer today. I would also say that a lot of our leisure, again, urban leisure, is seeing urban entertainment ramp up around the lifestyle consumer. And so as a result, I think they're trying to get ahead of what they saw in the first quarter around leisure travel. And so I think that's what's causing it to elongate. You know, could there be some airline, you know, implications in that for sure? You know, but I think that's, you know, that's part of it.

The other thing I would add, Austin, to what we're seeing is there's a shift going on in regards to the ability to drive rate with leisure. If you recall, last year was primarily demand and there was rate sensitivity. Right now we're seeing growth in both midweek as well as weekend demand. and then we're also seeing growth in rate. And so we're pricing ourselves appropriately based on that seven-day heart of demand and these events that are taking place that our footprint is pretty diversified, as you know. So when a special event moves from one location to another, whether it was, let's say, the NBA All-Star game that went from San Francisco to LA, we get the benefit of that because of our diversified portfolio. Same thing with Super Bowl. You know, it was in New Orleans last year, San Francisco this year. So we're able to capture a lot of those, instead of anomalies, they're just moving around the country where we're able to capitalize on it based on our diversification and our footprint.

And I think Tom's point around rate is another example of the consumer not being price sensitive, which is why I was suggesting that it's more around them seeing the strength of demand.

Thanks. All good points. That's all for me. Thank you.

Our next question comes from the line of Tyler Battery with Oppenheimer. Please proceed with your question.

Hey, good morning, everyone. Thanks for taking my questions. And congrats on the strong results here and some really good execution. Just to follow up on Austin's question, can you put a finer point on how you define leisure travel? I'm not sure if World Cup-related travel, if that's all leisure. I'm assuming there might be a portion of that that's group and maybe even business travel, too.

Yeah, I'll give you an example since you asked about World Cup. So when Leslie was speaking about the difference between group and leisure, group would be, you know, the teams, the media, the sponsors, where we've actually locked in blocks and have deposits. What's still to come and what we're finding on the transient pace, specifically in the last three to four weeks, is around the game days, ticket sales, searches around, you know, where do I want to stay? You're going to book your airfare. You're going to make sure that you've got travel, and then you're going to look at hotels. So what we're seeing is the ADR growth around that. That would be leisure around World Cup. Same thing with 250th anniversary. We do have activation. There's marketing programs around the four cities, which are New York, Philadelphia, D.C., as well as Boston. And when we see that, you're also seeing now more demand coming in. It'll all be pretty much leisure-related based on how we code, you know, when people are booking from the outside in. Okay, thank you for that.

Switching gears, capital allocation, can you rank order your priorities right now? I'm curious if capital recycling is something that might look a little more interesting just given your fundamental outlook.

Sure, Tyler. What I would say is that, you know, we're constructive on the transaction market, and as we become more active with dispositions, you know, we will be balanced between taking advantage of the dislocation in our stock, maintaining a strong balance sheet, and, you know, executing on our conversion strategies. We strive to execute buybacks on a leverage-neutral basis, and so when we use disposition proceeds, that allows us to do that. and obviously we didn't have any dispositions in Q1. Relative to our conversions, our results are very tangible. As I mentioned before, total revenues for our seven completed conversions are up 8%, and our EBITDA was up 16% in the quarter. So this is a direct result of the investment we're making in the ROI. So as we recycle assets, you're going to see us be balanced, and that would include activity on the buyback side.

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

Our next question comes from the line of Gregory Miller with Truist. Please proceed with your questions.

Good morning, everyone. I'd like to ask a couple questions on specific markets. And maybe to start off, could you provide your thoughts about how Louisville is performing this year and your expectations for the rest of the year, particularly on the convention group? Thank you.

Sure, Greg. As you know, we have our Marriott as well as the Residence Inn in Louisville. And the Marriott is connected to the convention center. What we're finding at our Marriott is that it's had, you know, back-to-back significant growth years. We just came off of Kentucky Derby, which was another major success for us. And what we're finding is agriculture, you know, some of the type of accounts that go to Louisville that are attracted to Louisville are all Midwest-based, if you will. It competes with Nashville, competes with other regional locations. And so we get the benefit of that because we're connected to the convention center. And a long time ago, probably five, six years ago, when they added additional space, they really changed the way we can sell our hotel where we can actually have two conventions at the same time because of the exhibit space they added right across the street, which is connected. In addition to that, we were looking at the beginning of the year, pretty strong results in regards to, you know, what we're seeing on the pace side. We're also, because of the size of the asset, we look out to 27 and 28. We're very encouraged in regards to what the pace looks like going forward for this asset. And what I would say is the big top accounts that come into Louisville, like healthcare, Humana, the University of Louisville continues to spend and look to add research. And so we're seeing our top accounts come back into the city as well. So I feel very strong about where we're positioned. And then the Residence Inn also does very well being just a couple blocks away from our Marriott with overflow when we have those type of groups.

Thanks, Tom. Shifting gears, I'd like to ask you about another market with some changes to their convention pace, and that's Austin. And now I believe we're past the one-year mark since the temporary closure of the Austin Convention Center for its renovation. Could you provide an update on how your downtown hotels are performing and sort of extraditions for the rest of the year in that market as well? Thank you.

And, again, we're adjacent to the Convention Center for two of our assets, as you know, and then we have one other asset that's right by the state capitol and near University of Texas. To your point, the closure occurred in March of 2025 right after the South by Southwest, and the new construction is underway in regards to the Convention Center. I think what we're most excited about with Austin is it's going to double the size on the square footage, and more importantly, it's going to have the ability to host over 1,200 exhibits. And that's really important when you think about association business. For instance, Austin, which is the 11th largest city in the country, had the 59th largest Convention Center. So now it's going to be more appropriately aligned with the space and the size of what's needed. And as an example, Greg, 50% of the leads in the past couldn't even be accommodated based on the space that we didn't have. In addition to the convention center, we're excited about the fact that Austin continues to grow. People want to live there. The airport expansion is going to have more flights, and 20 more gates will be aligned with the convention center opening. And that's going to bring 22 million passengers up over 30 million passengers, which is going to be a highlight in regards to the more demand that's going to come in because of that convention center. But in the interim, to your point, we are focused on self-contained group business that are two assets adjacent to the center. There's been a great campaign on marketing and dollars that are allowing us to offer incentives to groups, not only for our hotels but for the city, because of the opening right now that we have for the next few years. And then the Doubletree that we have over by the Capitol, that was renovated about a year ago, so the property looks great. It's getting a really nice ramp from University of Texas as well as being adjacent to the Capitol. So this year, the first quarter had the legislation, and so every other year, so we did the renovation to make sure that we benefited from that. That will happen in 2027.

The only thing I would add is that, you know, based on all the good nuggets that Tom laid out, we are expecting Austin to be positive for the remainder of the year.

That's very helpful. Thank you both.

Our next question comes from the line of Ken Billingsley with Compass Point. Please proceed with your question.

Hi, good morning. Two quick questions. One, just to follow up, you said second quarter adjusted EBITDA is expected to be below last year. Is that just primarily on room count being down?

So it's a function of Q1 being stronger than our original expectations. And so last quarter we had guided that Q2 would be in line with last year's contribution, and now it's going to be slightly below because Q1 is stronger.

Okay. And the other question I have is, could you just talk about Pittsburgh? The draft occurred and had record numbers. Can you just talk about how that translated into your expectations and maybe the results of what developed out of Pittsburgh?

Yeah, I'm glad you were paying attention. The draft was a great event for us. We have three assets in Pittsburgh. Ken, you're aware that Leslie earlier stated about our opportunity to convert a renaissance to an autograph, and that is downtown looking over Three Rivers and the ball field where the Pirates play as well as Heinz Field. So the draft was closer to Heinz Field this year, outdoor arena, but the activation was all in and around the convention center as well as our location there.

So we were just finishing up Pittsburgh

and wanted to make sure you heard the last piece, which was we're excited about what's happening, but the NFL draft was very successful this year, and our three assets saw significant demand due to that. So I'll go back to the operator for future questions.

Mr. Billingsley, does that complete your question?

It does.

And then, Ken, I just want to make sure that on your prior question that you were talking about contribution for second quarter, that's what we were referring to in our prepared remarks. It was contribution for the year.

Oh, I understand.

Sorry for the technical difficulty, everyone. Operator?

Our next question comes from the line of Flores Van Dykem with Ladenburg-Balman. Please proceed with your question.

Thanks, guys. Question on the capital allocation, getting back to the capital allocation. Could you maybe just remind us of what you've spent on your renovations, what the EBITDA return or yield is on those renovations today as we stand, And also what – you mentioned two more projects that you're going to announce later on this year. What's sort of the aggregate amount that we could expect, you know, RLJ to invest in repositioning assets relative to the, you know, sort of the maintenance CapEx?

Yeah, I would say that in general, Flores, that we gave a guidance of $80 to $90 million of capital spend for 2026. And the vast majority of that is focused on ROI-related renovations from there. We generally target high double-digit returns on general investments and on our ROI conversions. We're generally seeing north of 40% returns on the incremental capital that we're putting in the assets in order to effectuate the conversions.

And just, Lauren, we've mentioned one additional conversion that will be announced. I just want to correct you on that in regards to later this year.

Got it. And so the 40% is what we should be expecting from the Wyndham-Boston conversion, or is that just for the renaissance that's going to become the Marriott autograph in Pittsburgh?

So what we've talked about with Boston is that we think that there is 40% upside in the EBITDA on that asset. But, you know, again, keep in mind that on some of these conversions, in the case of Mills House, we double the EBITDA on that asset. Boston's in that category of how strong we think the asset will perform in a post-converted state.

And then how – you did mention the dispositions, obviously, as well. And I suspect if the disposition market were to pick up a little bit later this year, would that cause you to accelerate some of your repositionings as well? Or is that still the buyback, obviously, being another potential source? But, you know, 40% returns, it's tough to beat that anywhere else. I mean, why wouldn't you lean into that even more?

Yeah, I think what we've said before, Flores, is that, you know, we try to strive to have two conversions per year. Our conversion cadence is influenced by when franchise agreements expire and other elements that, you know, have it stack up at about two per year. You know, we're on that pace. We're going to be announcing our next conversion on our next earnings call. And so I think that when we look at, you know, when the franchises come available and when it makes sense from a seasonality perspective, you know, for example, we want it to wait until after World Cup for Boston. So we're trying to be strategic and thoughtful about when we execute the conversion.

Thanks, Leslie. Maybe last question, just a follow-on. The actual demand from – everybody's been talking about the fact that there's going to be last-minute bookings, presumably, to watch the World Cup. Can you talk maybe about some of the – you mentioned some of the FIFA bookings that you've already done. Do you have any teams or anything like that staying in your hotels, or what tangible information can you give us on the potential upside, it sounds like, from the World Cup on your expectations?

Yeah, as I mentioned before, Florence, is that it's early, but we're encouraged. Because we were very thoughtful about making sure that the types of blocks we took were focused on teams and media, you know, we're starting to see those blocks pick up, and we started to receive deposits. I'll let Tom give some color on that. And then as it relates to the transient demand, what I said is that what we're seeing is very promising, but it's really early in that we expect most of the benefits to really come in rate because these are happening in high occupancy markets for us. And the markets I was talking about was L.A., New York, and Miami.

And just to give you a little color on the group side, it's interesting, Floris, when group teams stay with you, they actually encourage fans to stay where the teams stay. So that's a positive, and we actually have locked in deposits for teams in three of those nine markets that we have. So we're really encouraged that not only will you have teams, but you'll have fans that will want to stay with the teams. We're also encouraged, as Leslie talked about, on the transient pace, you know, when you think about the leisure side of it and where ticket sales as well as how we're doing length of stay. So we're seeing ADR increasing in those timeframes when people are going to have the most amount of demand. And then making sure that we're providing the opportunity to take other business outside of those games, you know, whether it's group or BT, to make sure that we're layering in the process of making sure we take advantage of not only the special event, but other demand as it comes, because those are high occupancy locations that Leslie mentioned earlier. So it's a busy time of year. In addition to 250th anniversary, it will be over that same time frame. So we're really doubling down on strategy.

Thanks, Tom. Thanks, Leslie.

Our next question comes to the line of Chris Moronko with Deutsche Bank. Please proceed with your question.

Hey, good morning, everyone, for taking my question. I was hoping we could spend a minute talking about kind of the Silicon Valley market you talked about with growth in AI. I think you guys have probably four or five hotels in that area proper.

You mentioned you saw a nice lift in the first quarter.

kind of curious what's embedded in your outlook for the rest of the year. And, you know, you may sound like a silly question now, but you worry at all. Are you seeing any signs of froth kind of that area had some extremely high red part growth back in 1999 and 2000, as I recall. So any thoughts on your outlook beyond the current quarter?

Yeah, I mean, we are, you know, very encouraged by what we're seeing in San Francisco area, the Northern California market for us broadly, you know, clearly the recovery is well underway. As we mentioned before, all of our assets were up 27 percent in the first quarter. Clearly, it was benefiting from Super Bowl and some major conventions on RSA and J.P. Morgan. But I would also just say more broadly, and this goes to your Silicon Valley comment, you know, You know, BT is, you know, very much in full swing, given the fact that you have a better overall environment, you have better local advocacy with good policy. You talked about the AI investment. You know, we're seeing clearly return to office trends and record office leasing. And so the BT momentum is strong. And we're also starting to see pricing power return. Let's add some comments.

Yeah, you know, the campaign that they're really behind in San Francisco is Believe in San Francisco. And when you think about what Leslie was talking about, it's happening locally from a community as well as politically where, you know, BART ridership is up, foot traffic is increasing in CBD. When you think about what's happening around Moscone, they've got a healthy pace for 27 and 28, and the type of conventions that are coming are association, corporate, medical, and then most importantly, high tech, to your point. You know, just an example to give you an idea on growth, Databricks in 2023 had about 11,000 room nights, and in 2026, they're going to have 25,000 room nights. So you can see there's an evolution happening because venture capital money is all coming to San Francisco. And it's basically, you know, when you think about where the city is thriving, it's also spilling out to Silicon Valley and the outlying areas where we have a bigger footprint, as you know, Chris, where we have some airport hotels as well as Silicon Valley and CBD. So we're encouraged with what's happening, and we're trying to make sure that we're capturing all the different types of demand that's now coming there. With the last catalyst, hopefully being international, we are seeing some growth, you know, coming from Mexico, UK, India, and China will be the last step, hopefully, where we can see that start to come back, because it's still a significant amount of spend that comes to San Francisco.

Okay, super helpful. And then just another question on conversion. When you guys, you know, talked about planned conversions, should we generally assume that that refers to the windows you still have on converted or either a few independents and things affiliated with non-Marriott, Hilton, Hyatt brands? Just to help me get a little bit of clarification.

Yeah, I mean, we have, you know, we've published in our management presentation a list of potential, you know, know, conversions in our portfolio. We're obviously looking at the Wyndhams, but we're also looking at current assets, you know, as the franchise agreements expire to see, you know, what else, what other lifestyle brands are available and make sense for that physical asset. So it's not just all, you know, Wyndham assets. It's other assets within our portfolio where the franchise agreement may be expiring.

Okay. Gotcha. Very good. Thanks, Leslie. Thanks, Tom. Thank you.

Our next question comes from the line of Chris Darling with Greenstreet. Please proceed with your question.

Hey, thanks. Just a couple quick follow-ups for me. First, Leslie, you mentioned, you know, being constructive on asset sales. Hoping you could just give an update on the broader transaction market, whether you've seen anything change on the margin, given a more favorable rev par backdrop, whether, you know, that's pricing, depth of the bidding tent, anything else?

Yeah, sure, Chris. For sure, the transaction market, you know, has, you know, has improved. You know, obviously, it's still, you know, not, you know, as robust as it was in the past, but it's definitely improved in general. And what I would say the key driver of that is really the debt market. There are so many debt providers today as people have tried to play sort of the credit trade, if you will. It's creating competition and it's helping spreads tighten. So even though the Fed has not cut rates, because there's competition among providers, we've seen spreads tighten. And so that's allowing buyers, potential buyers, to still underwrite lower interest expense. And then you layer on better fundamentals, which is giving potential buyers confidence in the ability to underwrite. So I think that's just a better overall settlement relative to the transaction environment. I think owner-operators continue to be, you know, the primary buyer, but we're seeing the buying pool, you know, expand. Single assets are still more prevalent, but, you know, you could see some small portfolios, you know, start to emerge, you know, later this year. But in general, I would just say that, you know, that the transaction market has, you know, has improved. Okay, I appreciate

those thoughts. And then just to put a finer point on the guidance discussion, if I look at the midpoint of the revised hotel EBITDA range. It suggests a modest decline, I think, for the rest of the year. I'm hoping you could frame this outlook. And in particular, I'm thinking about the third quarter, where at least in theory, I'd think you'd be lapping in easier comps. So maybe just a discussion of some of the puts and takes that maybe I'm not totally thinking about.

Well, I would say, you know, in general, don't forget that we had, you know, that we had a tax credit in last year. So when you look year over year, we actually have EBITDA growth. And even without that, we still at the midpoint are having EBITDA growth. What was the second part

of your question related to third quarter? Well, I think last year, you had a particularly tough year over year growth percentage in 3Q25. And so I would think in theory, it might be an easier comp this year? And that's where I wanted to get a little bit of context.

Yeah, I would say that, you know, in, you know, in the third quarter, as I mentioned before, that we do expect the third quarter to benefit from World Cup. It is also going to benefit from the 250th anniversary, which is on top of Fourth of July weekend. And then we also have Salesforce that, you know, that we will benefiting from in the, in the, in the third quarter.

Okay. I appreciate the thoughts. That's it for me.

Thank you. We have no further questions at this time. Ms. Hale, I'd like to turn the floor back over to you for closing comments.

Thank you all for your interest today in joining our call. We look forward to connecting with many of you at our upcoming conferences. And I hope all of you have some summer travel planned over the next few months. And have a good day. Thanks, everybody.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.