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Edited Transcript of LHO earnings conference call or presentation 23-Feb-17 7:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 LaSalle Hotel Properties Earnings Call

Bethesda Feb 23, 2017 (Thomson StreetEvents) -- Edited Transcript of LaSalle Hotel Properties earnings conference call or presentation Thursday, February 23, 2017 at 7:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Max Leinweber

LaSalle Hotel Properties - VP, Finance & Asset Management

* Mike Barnello

LaSalle Hotel Properties - President & CEO

* Ken Fuller

LaSalle Hotel Properties - EVP, CFO, Secretary & Treasurer

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Conference Call Participants

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* Smedes Rose

Citigroup - Analyst

* Shaun Kelley

BofA Merrill Lynch - Analyst

* Thomas Allen

Morgan Stanley - Analyst

* Wes Golladay

RBC Capital Markets - Analyst

* Bill Crow

Raymond James & Associates - Analyst

* Chris Woronka

Deutsche Bank - Analyst

* Michael Bellisario

Robert W. Baird & Company, Inc. - Analyst

* Ryan Meliker

Canaccord Genuity - Analyst

* Anthony Powell

Barclays Capital - Analyst

* Lukas Hartwich

Green Street Advisors - Analyst

* Neil Malkin

RBC Capital Markets - Analyst

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Presentation

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Operator [1]

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Good day and welcome to the LHO fourth-quarter 2016 earnings call. At this time I would like to turn the conference over to Max Leinweber, Vice President of Finance and Asset Management. Please go ahead, sir.

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Max Leinweber, LaSalle Hotel Properties - VP, Finance & Asset Management [2]

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Thank you, Matt. Good afternoon, everyone, and welcome to the fourth-quarter 2016 earnings call and webcast for LaSalle Hotel Properties.

I'm here today with Mike Barnello, our President and CEO, and Ken Fuller, our CFO. Mike will discuss our fourth-quarter results and activities, then he will provide an overview of the industry. Ken will provide details on our portfolio performance and an update on our balance sheet. Then we will open the call for Q&A.

Before we start please take note of the following. Any statements that we make today about future results and performance or plans and objectives are forward-looking statements. Actual results may differ as a result of factors, risks and uncertainties over which the Company may have no control.

Factors that may cause actual results to differ materially are discussed in the Company's 10-K, quarterly reports and its other reports filed with the SEC. The Company disclaims any obligation or undertaking to update or revise any forward-looking statements.

Our SEC reports as well as our press releases are available at our website, LaSallehotels.com. Our most recent 8-K and yesterday's press release include reconciliations of non-GAAP measures with the most comparable GAAP measures.

With that I will turn the call over to Mike Barnello. Mike?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [3]

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Thanks, Max. And thanks everyone for joining our fourth-quarter call on what we know is a very busy earnings day.

Let's begin this afternoon with a short recap of last year. In 2016 we sold two non-core assets, debuted the newly redeveloped Mason & Rook Hotel in DC, expanded our hotel EBITDA margins to a new high, opportunistically issued preferred shares at a record low coupon for a lodging REIT and repaid three mortgages which significantly lowered our average interest rate.

Thus far in 2017 we have sold another non-core asset, the Hotel Deca in Seattle, and we refinanced our credit facility. Overall the hotels continue to perform well despite a slow growth operating environment.

We have also enhanced our already well-positioned balance sheet. We are very proud of these accomplishments.

With that let's zoom in on our Q4 which had 2.5% RevPAR growth, 1% expense growth and 42 basis points of hotel EBITDA margin expansion. While we benefited again from the recovery of last year's lost business at Park Central New York and WestHouse, our results excluding these hotels still reflected moderate RevPAR growth and fantastic expense management.

We also benefited from great food and beverage margin improvement due to our ongoing initiatives in that department. Despite a revenue decline of approximately 4% F&B expenses were down over 6%, leading to food and beverage margin expansion of nearly 200 basis points.

Our asset managers and our teams across the portfolio continue to relentlessly pursue opportunities to operate efficiently in each department while delivering a great product and experience to the guests at our hotels. These efforts are reflected in our standout margins and our impressively low expense growth. Excluding Park Central New York and WestHouse our expenses grew by less than 1% in Q4.

Turning to capital, we invested $27 million in our portfolio during the quarter partially for the rooms renovation we just completed at L'Auberge Del Mar and Embassy Suites Philadelphia. For all of 2016 we invested $102 million of CapEx. For 2017 we expect to invest between $130 million and $170 million of CapEx in our properties which is heavily weighted towards renovations beginning in the fourth quarter.

Several of these renovations are hotels in San Francisco. Given the known headwinds in that market this year and the historic strength in citywides coming into 2019 our plan is to renovate these hotels while displacement is relatively modest. At the beginning of our call we mentioned that our portfolio performed well in a slow growth operating environment which is a product of steady deceleration of demand and RevPAR growth for the industry over the last two years.

Let's now review the specific results for the industry and for LaSalle. When we spoke on our third-quarter call we were three weeks into October, a month that ended with 1.6% RevPAR growth for the industry, which is the lowest growth of any month last year. Conversely, November came in at 5.9% RevPAR growth for the industry which is the highest increase in any month last year.

As we have often said, demand is the wildcard when it comes to predicting RevPAR and November's demand growth of more than 4% was the largest monthly demand change for the industry since September 2015 and the second largest since February 2015. We had thought November would be a good month, but we were pleasantly surprised by how strong it ended.

From there December basically fell in line with the trend in the first 10 months, turning in 2.3% RevPAR growth on flat occupancy. Ultimately, Q4 industry RevPAR increased 3.2% which is the eighth time in the last nine quarters that RevPAR growth has decelerated.

More importantly, RevPAR for the urban and upper upscale segments continue to lag the industry for both the fourth quarter and the full year. Urban RevPAR was 1.6% in Q4 and 2.1% for the year. Upper upscale RevPAR was 1.5% in Q4 and 2.4% for 2016. We were pleased that our RevPAR growth of 2.5% for the quarter and for the year outperformed both segments of the industry.

Looking more closely at the mix for 2016, industry group RevPAR increased by 2.1% and transient RevPAR grew by 2.3%. Our RevPAR performance was similar with group and transient both up approximately 2%. For LaSalle our growth is driven primarily by transient occupancy and group rate.

Now that we've had an opportunity to reflect on our Company's performance last year, we'd like to move the conversation forward into 2017 and discuss the state of the lodging industry. At this time we do not plan on providing additional numerical RevPAR range for 2017. However, as we've always done we will continue to provide our perspective on the current market conditions based on the information we have today. This will provide a frame of reference regarding our portfolio for the coming year.

At this point in the year our portfolio usually has only about 30% of its annual revenue on the books and a good portion of that can cancel. In order to better understand the current lodging environment let's break RevPAR down into its components: supply and demand.

Supply is reasonably predictable this year because projects need to be substantially complete very soon in order to have an impact this year. With the exception of San Francisco and Key West, which have supply growth between 1% and 1.5%, supply in all of our markets is expected to be higher than the industry average. In addition, except for Boston and Key West supply growth in all of our markets is accelerating.

The most extreme example of this is within our submarkets of LA which actually had a supply reduction of more than 3% in 2016 due to the Hyatt Century City closure. This was followed up by a supply growth of approximately 6.5% in 2017. With supply as a backdrop it's pretty clear that RevPAR strength will be determined by demand which is much harder for us to predict.

Let's take a few minutes to discuss the components of demand as we see it. We will start with group. As mentioned last year, citywides are down in most of our markets in 2017.

The bright spots for citywides remain Boston, DC, Seattle and to a lesser extent Chicago. After examining how the citywides look in our markets this year it's not surprising that our own group pace for 2017 is currently down by 1%. While we are encouraged our pace has improved since October, when it was down 4%, we note that inauguration in January overall had a big impact.

For February through December our pace is down almost 3%. As we have discussed, San Francisco is one of the larger headwinds for our group pace. Excluding San Francisco for the full year, our pace would be up 1%.

Even though group makes up 24% of our total demand it remains a tough indicator for us because most of our group production comes from a very, from a few large hotels. For reference, in any given year we typically start the year with approximately 60% of our budgeted group revenue on the books, and 2017 is no different.

Our next piece of demand is corporate. For the S&P 500 profits are estimated to increase in Q4 for the second straight quarter which could even bring earnings positive for 2016. While we are pleased earnings have turned positive recently, we expect the sustained earnings growth through 2017 will be required before we may feel the impact from corporate travelers.

In the fourth quarter we saw our corporate negotiated room rates decline by approximately 1%, which is actually the smallest quarterly corporate demand decline we experienced all year. Corporate ADR was up by nearly 2%, so revenue did increase this quarter in the corporate segment.

For the full year our corporate ADR was also up by 2% but our corporate negotiated room rate declined by more than 4% and as a result revenue decreased in the segment.

Moving on to our international business, our volume increased for the fourth consecutive quarter, ending the year up 14%. International volume represents 12% of our demand in 2016, which was up over 100 basis points to 2015.

Speaking of international, we did hear about a few isolated cancellations from transient guests who were impacted by the recent travel ban by the Trump administration. This has not had a material impact to date, but we will certainly continue to monitor this trend throughout the year.

Following the election in November there was an overwhelming shift towards positive sentiment around the industry with hopes of changes to the tax code, reduced bank regulation and improved infrastructure. Those ideas should help industry is implemented. However, those are each complicated processes to change and it could take a year or more to feel any impact.

Additionally, as we have seen over the last month, this positive sentiment can change rapidly with each new executive order. As a whole, we think the facts we have today about increasing supply growth and softer overall demand keep us cautious on industry fundamentals going forward despite the hope of GDP acceleration.

As we continue to zoom out from the lodging industry to the broader economic environment, the indicators we track have changed slowly since October. We still see some positives with unemployment, enplanements and consumer confidence. Corporate profits and GDP are two indicators we had concerns about all last year.

Both metrics have improved as of late but overall the outlook looking into 2017 remains optimistic but cloudy. Unemployment remains stable below 5% and enplanements were steady with estimated capacity increases again in 2017 from carriers.

For consumer confidence after hovering around a similar level at the end of 2015 for the first half of this year, of last year the index ended 2016 at its highest level in nine years. While unemployment, enplanements and consumer confidence are generally a good story, corporate profits and GDP, which are the two most important drivers for lodging, have been less consistent. As we mentioned, corporate profits turned positive during the second half of 2016 after a year and a half of earnings declines.

Earnings estimates for 2017 currently sit at about 10% growth. But we know that in eight of the last 10 years actual earnings have underperformed the beginning of the year estimate. Whether it is plus 10 or plus 4, we would be encouraged if corporate profits can continue to rise in 2017, which would spur more corporate travel demand.

Similarly, GDP was underwhelming for the better part of 2016 with Q3 standing out as bright spot. GDP estimates for 2017 currently sit at 2.3% which is down slightly from 2.4% at the beginning of 2016, but is up from 2.1% before the election in November.

Before handing the call over to Ken, I want to briefly touch on the Hotel Deca sale that we completed in January. Deca was another excellent long-term investment for us, delivering a 12% unleveraged IRR over 11 years. We sold Deca at a 14 times EBITDA multiple which is a positive reflection of the value of our portfolio, especially given that Deca had the second lowest RevPAR in our portfolio.

Now Ken will provide some details about our fourth-quarter and full-year performance as well as an update on our balance sheet. Ken?

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Ken Fuller, LaSalle Hotel Properties - EVP, CFO, Secretary & Treasurer [4]

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Thank you, Mike. Good morning, everyone. Good afternoon, I should say. I will start by providing more color on our fourth-quarter results.

While the operating environment was challenging our hotels delivered solid results overall, driven by another excellent quarter of limiting expense growth to 1%, which is particularly impressive in the face of higher occupancy and a slight decline in average rate in addition to a 5% increase in property taxes. As Mike mentioned, one of the contributors to this performance was an outstanding F&B margin improvement of close to 200 basis points. Our best-performing markets during the quarter in terms of RevPAR were DC, LA and Boston with increases of 12%, 9% and 5% respectively.

LA was a strong market all year due to continued solid entertainment demand and a drop in supply. And Grafton also continued its post-renovation ramp.

The out-performance in New York was a recovery of lost business at Park Central and WestHouse from August to October 2015. As a reminder, for the full-year 2015 the disruption at these hotels reduced our portfolio RevPAR by 120 basis points, our hotel EBITDA margin by 50 basis points and our adjusted EBITDA by $9.2 million.

In 2016 the recovery of business at these hotels improved our portfolio RevPAR by 100 basis points, our hotel EBITDA margin by 28 basis points and our adjusted EBITDA growth by $6.9 million. As a note, we included tables detailing last year's impact in our third-quarter 2015 press release, and we also provided our fourth-quarter 2016 portfolio results, excluding these hotels in last night's release.

The Manhattan market faced headwinds in 2016 with RevPAR down 2.3% which held us back from fully recapturing all of the lost EBITDA from 2015. That said, we are encouraged by the recent strength in demand in Manhattan in November, December and January which led to positive RevPAR in the face of significant supply.

Looking at our RevPAR performance over the full-year 2016 our best markets were LA with an increase of 13%, New York with growth of 7% and DC with an improvement of 5%. By property our highest RevPAR growth in 2016 came from Grafton, Amarano and Le Parc, all in LA; Sofitel in DC; and Park Central and WestHouse in New York, all of which had double-digit increases.

For the portfolio occupancy rose to a noteworthy 84%, signifying solid demand for our hotels. With respect to our bottom-line performance, our asset management team and our operators have continued to do an outstanding job. As a result, expense growth was limited to an impressive 1.4% for the year.

In terms of EBITDA margin improvement special kudos to our top-performing hotels this quarter and year which were the Grafton, Amarano, Hotel Chicago, Sofitel, Park Central New York and WestHouse. Our portfolio hotel EBITDA, our adjusted EBITDA and our adjusted FFO all improved by approximately 3% in 2016.

Looking into 2017, January RevPAR grew by 12.5% driven by a historically strong performance over the inauguration. It's great to see DC and 2016 and start 2017 with double-digit RevPAR growth. Excluding DC altogether for January, the rest of the portfolio grew RevPAR by 3.6%.

Now as we announced in yesterday's press release our Board authorized an expanded share repurchase program to acquire up to $500 million of common shares. Including the previous authorization we now have $569.8 million of capacity remaining in our share repurchase program. The Board of Trustees authorized the expanded program to increase our flexibility to execute opportunistic repurchases when we believe that share buybacks are an accretive use of funds that will enhance shareholder value.

The program does not obligate us to acquire any specific number of shares. And as a result there is no guarantee as to the number of shares that will be repurchased, if any, or the timing of such repurchases. We did not acquire any common shares during the fourth quarter of 2016 or to date during the first quarter of 2017.

Now I will provide a brief update on our balance sheet which was further strengthened following the Hotel Deca sale and the credit facility refinancing in January. In early January we refinanced our credit facility, which improved our interest rate grid. We also moved the maturity of our revolver and $300 million term loan from 2019 to 2022.

As such, we only have a very small maturity coming up in 2018, which can easily be absorbed by our revolver. Beyond that, our next maturity isn't until 2021.

As of December 31 we had total debt outstanding of $1.1 billion. Total debt to trailing 12-month corporate EBITDA was 2.8 times, which does not include our full cash balance per our credit facility covenants. After including $135 million of cash on hand our debt to EBITDA would actually be 2.5 times.

We finished the year with substantial fixed charge coverage of 6 times, further demonstrating our commitment to responsible balance sheet stewardship. We continue to have substantial flexibility with 43 of our 45 hotels unencumbered by debt. In addition, with nearly $775 million of capacity available on our lines of credit and cash of $135 million we have a highly liquid balance sheet and remain extremely well-capitalized.

With that, I'd like to turn it back over to Mike to close out our prepared remarks. Mike?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [5]

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Thanks, Ken. As we look out at the lodging industry fundamentals we are anticipating a tough operating environment throughout the year from a supply and demand perspective. Despite that we are pleased with our performance.

Our track record of top-notch margin has held up in all phases of the lodging cycle due in part to our asset management best practices which have been developed over the last 19 years. However, it's truly the people both in our office and on the ground managing the hotels who deliver these results.

We own highly desirable assets in the best locations within the top markets in the country and we look forward to continuing to deliver outstanding results at the property level while mitigating risk through thoughtful balance sheet management.

That completes our prepared remarks. Ken and I would now be happy to answer any questions you may have. Matt?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Smedes Rose, Citi.

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Smedes Rose, Citigroup - Analyst [2]

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Hi, thanks. I wanted to ask you a couple of things. Just first of all, on the increasing the buyback authorization, it's a pretty large number and you haven't been particularly active in that department previously.

So I am just wondering is that a checking the box and have it there or how you are thinking about buyback activity now? And then the other question just a little bit along the same lines is would you expect to have to make any kind of special dividend given the gains on your sale of the Deca hotel?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [3]

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Good morning, Smedes. It's not really check the box in terms of the buyback. If that was the case I guess we would have done one a long time ago.

The simple answer, though, is really optionality. So a buyback authorization really is just another tool at our disposal to use whenever the timing makes sense.

As far as the amount, the size it does tie into recent proceeds over the last 12 months from the sales of our preferred, the Merit Indianapolis, Casa, Shutters and the Deca. But it also represents an amount that we have capacity for and it also represents an amount that we could do within the boundaries of our covenants. So from that perspective that's part of the reason that we came up with the size.

But again, and we need to emphasize this that having this tool does not mean we are going to use it soon or ever. I just want to be clear about that. It really just is another tool in the tool belt.

On your second part, the second part of your question, the special dividend, it's really way too early for us to make any decision on special dividend. We did have a gain on Deca, but we have the better part of 11 months to go before we figure out what, if anything, we need to do. And a lot of things have come into that process in terms of how the hotels do, if we buy anything, if we sell anything, etc., etc. So we are a long way from making that decision.

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Smedes Rose, Citigroup - Analyst [4]

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Okay, thanks. That wasn't a good choice of words on my side. I didn't mean to sound flippant there, checking the box. It's been a long season.

One last question if I could. Could you just as a reminder, are there any markets where you are operating now where you are going to see a legislative raise in cost that we should just be reminded of?

I think in New York something phases in this year and then maybe something in Seattle. But just if you could do a quick round-up, that would be valuable.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [5]

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I think the short answer is we've seen those movements across the country. Really DC, Chicago, pretty much everywhere in the West Coast and I'm certainly happy to walk through any of those off-line.

The big picture is that when you think about increases for us, for LaSalle, last year the increases cost us in the neighborhood of about $1 million over and above the normal increases. And in 2017, once again, it's actually a little less than that. Just one thing that's important to note is we don't have a lot of minimum wage employees, so we are probably not as affected as many but that is when you look across the entire country.

So it's got some impact. But I would not call it meaningful overall relative to the size of the Company.

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Smedes Rose, Citigroup - Analyst [6]

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Okay, great. Thank you.

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Operator [7]

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Shaun Kelley, Bank of America.

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Shaun Kelley, BofA Merrill Lynch - Analyst [8]

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Hey, good afternoon guys. Mike, you definitely alluded to this throughout the prepared remarks, but you've been probably the best bellwether of this sector of the last two years, helping us think about what's going on on the margin and hotels.

So the question for you, and we've heard people comment throughout earnings season so far, but the question for you is your frame of mind versus before the election and today. Has it changed materially? And do you see any green shoots or anything post-election that have you at all more optimistic about where we sit?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [9]

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I think it's a good question. When you think about where we were before the election and you think about what's happened since, you know there's been some activity that would suggest things have been a little more optimistic. So just looking for my notes.

We met or we had a call the third week of October, and as mentioned in the prepared remarks October ended up as the worst month RevPAR wise for the industry. We then had November, December and January, we had almost a 6% RevPAR in November, 2.3% in December 3 .8% in January.

If I just freeze on those 90 days that's a 4%, 90-day RevPAR. It's not a traditional quarter because it doesn't end in the normal quarter-end calendar. But that 4% will be the best since 2015.

So on one hand you might say all right, we are off to the races, things are great and we've certainly taken note of that. But when you dig into that there's a couple of things that are of importance. One, we did have some pent-up demand in October that I think fell into November.

What I mean by that, we had Jewish holidays that did curtail October's results. I think some of that picked up in November. There was an additional increase certainly in New York with the Trump election that caused Manhattan to do much better really, well, November, December and January. And we had an inauguration in January which, obviously, we only have once every four years.

So that part made us feel better, as well as some of the things that have people been talking about and we did mention a little bit on the remarks. The deregulation, tax reform, those things that if they are put in place with the intention of getting more corporate business and having the S&P 500 do better, well, that should translate to more travel for us.

So we would be the beneficiary of that, so we would feel better about that. However, that takes a while.

Then when we look at what's happened in February a little bit of that has turned off. I mean, if you look at the first 18 days of February on a day-by-day basis listing the travel numbers are negative 1.3. And then when you look at our markets, upper upscale and urban, the upper upscale are down 2.7 and urban is down 1.2%.

When you add the February year to date to January, we are in the range of mid- to high 1s year to date, which is clearly not horrible. It's just not the boom that I think we -- people were hoping for at the end of last year.

So I think there is a lot of optimism about things. And clearly we will be the beneficiary if a lot of that happens.

But what we are trying to route our year on is what we can see. And the things that we can see are we know what is going on from a supply perspective, we know what's going on from a citywide perspective, we know how our pace is. So from that perspective it tempers some of the enthusiasm that would come with the optimism.

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Shaun Kelley, BofA Merrill Lynch - Analyst [10]

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It's perfect. Thank you, Mike.

And then the other question I had was just the obvious and next step is a number of companies I think sensing some of that optimism but also seeing the movement in the stock prices and the change in their cost of capital have been more optimistic about acquisitions in 2017. Obviously, you sold the Hotel Deca and you are raising your authorization for buybacks. So where does that put LaSalle and you in terms of the frame of doing acquisitions?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [11]

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I think it just puts us in framework of being ready. When we answered the questions on the buybacks, it's giving us optionality. And that optionality, the question was directed at buybacks, but it could just as easily be directed at acquisitions.

We are constantly looking. I know some people have said that we are actually trying, some other peers have said that they are more active trying to find acquisitions. We look at whatever is out there.

But for us it's looking at what is in front of us in terms of potential acquisitions, it is measuring what is going on in the short term and the medium-term and then it's looking at it relative to alternatives. So we would love to grow the portfolio. We think it's better for the shareholders to have more diversity in terms of the number of assets.

And generally when we buy an asset we are able to find some efficiencies that we didn't underwrite. So we would prefer to grow the business versus shrinking it.

But as far as making any kind of statement as to what direction we will definitively go in in 2017, that's so hard to say given what happens and what could change one month, three months, six months from now, especially since we have most of the year in front of us.

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Shaun Kelley, BofA Merrill Lynch - Analyst [12]

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Thank you very much.

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Operator [13]

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Thomas Allen, Morgan Stanley.

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Thomas Allen, Morgan Stanley - Analyst [14]

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Just you mentioned your CapEx numbers for 2016 and 2017, 2017 there is going to be some acceleration in CapEx. When we think about your investment activity, should we view it as a net positive or a net drag on RevPAR growth in 2017? Thanks.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [15]

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So the way we think about the CapEx, Thomas, is that we are constantly just reinvesting in the properties to A, make sure they are fresh, attractive to the customers and also if we can find ROIs wherever in the portfolio they usually turn out to be good investments for the shareholders.

When we look at the CapEx range that we have, it was the same range we gave last year. We actually just ended up investing less. It is heavily tilted towards Q4.

If you look at the first three quarters there's pretty much no impact Q1, 2 and 3. They are fairly benign. If you look at Q4 if we go forward with all the projects that we have, which is not a guarantee because sometimes we push things out a year or decide to change the project, then the impact in Q4 would be somewhere in the 1.5 point to 2 points of RevPAR range and on an EBITDA basis in Q4 somewhere in the neighborhood of $2.5 million to $3 million of EBITDA.

As far as, and we mentioned a little bit in the prepared remarks, a number of those hotels are in San Francisco. The reason for piling on there is because that would mean we would be doing renovations in Q4 of 2017 and then part of 2018. And as you guys all know the tough part of San Francisco is going to be this year and next year, but 2019 we are looking at a record citywide pace and really not much supply.

So we think San Francisco will probably be if not the best one of the better markets in the country at that point. So to be renovated will put us in a really great position from that perspective.

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Thomas Allen, Morgan Stanley - Analyst [16]

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And then on the last earnings call you had talked about San Francisco, you said RevPAR could be slightly positive or slightly negative, you weren't ready to say anything. I think a lot of your peers have said over the past few days that they think RevPAR is going to be slightly negative for 2017. Do you agree with that or how are you thinking about it?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [17]

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I think since that time we've actually gone through our budgets. Some things have improved. If you think about the citywide pace didn't improve for San Francisco, that pace was down about 37%.

Our pace actually did improve for San Francisco. I think we are down pace about 10%.

But given that pace with the headwinds we are facing, it's hard to see a positive story coming out of San Francisco this year with the tough comparisons. So I tend to agree it's going to be negative. Now how much that's a harder question to answer, but the likely answer is negative.

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Thomas Allen, Morgan Stanley - Analyst [18]

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Great, thank you.

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Operator [19]

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Wes Golladay, RBC Capital Markets.

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Wes Golladay, RBC Capital Markets - Analyst [20]

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Hey guys, looking at the renovations in 4Q is it just going to be standard renovations or are you going to do anything ROI related at the hotels?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [21]

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The list that we have is pretty much standard room renovations. Just happens to be a number of the bigger hotels. And we will be doing the Westin Copley which is 800 rooms.

That's planned, and then during the second quarter and then later again next year we will be doing the San Diego Paradise Point which is not quite 500 rooms. But the rest of it when you think about it we have depending on what we will do seven or eight projects, and of those projects they will probably come in in the $45,000-ish per room level. That's mostly guest rooms and bathrooms.

But nothing that we have planned right now along the lines of, say, what we did at Park Central years ago. If that is what you are thinking about.

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Wes Golladay, RBC Capital Markets - Analyst [22]

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No, I was just thinking maybe smaller projects. But, okay, looking at supply, how do you feel about it for next year relative to this year? Typically how you look at that I believe is a weighted average.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [23]

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Yes, the way we look at 2017 versus 2016 --

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Wes Golladay, RBC Capital Markets - Analyst [24]

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I'm sorry, versus 2018. Looking at next year.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [25]

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Next year. Actually our weighted average right now, the way we do it is, first of all, we are looking at only CVD, to be clear, not MSA. And from a CVD perspective our weighted average actually the number is pretty much the same.

It's 3.9% in 2017. It's a 3.9% in 2018. And that's the rollup. Were you interested in the markets or just the macro?

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Wes Golladay, RBC Capital Markets - Analyst [26]

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No, just the macro, kind of getting that. And then I guess when do you see it guests starting to fall? Is it probably too early to make a call on 2019?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [27]

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We have a rollup for 2019. There's a number of the markets with some pretty big numbers. It's a little lower, our weighted average is just under 3.8 and then it starts to moderate after that in 2020 and 2021.

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Wes Golladay, RBC Capital Markets - Analyst [28]

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Perfect. Thank you.

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Operator [29]

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Bill Crow, Raymond James.

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Bill Crow, Raymond James & Associates - Analyst [30]

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Good afternoon, guys. Mike, a follow-up to Shaun's question on acquisitions. Would we read a positive message into an acquisition on your part?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [31]

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Well, I would hope that anything we would buy would be positive. I hope we would have a great story with it.

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Bill Crow, Raymond James & Associates - Analyst [32]

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I don't mean that. I mean more from a macro perspective. Is it isn't going to really take increased conviction on your part for the outlook in order to pull the trigger on an acquisition?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [33]

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I think I'd have to really reiterate what we were just talking about which is look, we have got to look at the short term versus the medium-term because we are, obviously, very positive on the long-term in terms of the real estate and the markets we are in. And then we have to look at the alternatives built.

So we have to be able to convince ourselves, our Board and you guys and the shareholders that what we did, whether it was big or small, was better than waiting or better than buying back our stock. And if we can get through all those gates, then we would buy an asset. I mean, you know as well as we do that it comes down to the pricing and then what we can do with the asset.

But we really haven't ever seen ourselves in a year we have shut down the door on one thing or the other when we said there is no chance we are buying or there's no chance that we are selling. We haven't operated that way. It's a long year, and we will evaluate both opportunities as we see them.

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Bill Crow, Raymond James & Associates - Analyst [34]

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All right. I did have a question on the sale. You referenced the Deca as non-core, and I'm just curious what made it non-core? Because I think that typically would be considered a core asset.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [35]

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I think that was a mistake on the part. Reading it I will tell you that we should, it should have been a core market for us.

It's actually not downtown Seattle, but Seattle is a core market for us. So good catch on your part.

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Bill Crow, Raymond James & Associates - Analyst [36]

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Just trying to figure out because these portfolios evolve over time. Okay, I appreciate that.

And then finally I don't know if you will bite on this, but it certainly would be helpful when we hear your views, do you have a baseline RevPAR view for the industry for this year? We've heard anywhere from, various companies give their views on their portfolios, but do you have anything that's a baseline view?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [37]

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No, I know some companies actually give it out. We try to look at it really on our portfolio base. We, obviously, look at what other folks are predicting, but no we haven't played the prediction game ourselves.

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Bill Crow, Raymond James & Associates - Analyst [38]

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Okay, and then finally for me, you referenced 2019, your rollup of 2019 supply still being at like 3.8%. How many of those projects are actually in the ground? How many are -- we heard somebody earlier today talk about supply in their markets which are, obviously, in some cases different markets but being halved, supply growth being halved in 2018 versus 2017 and talking about all the projects that are falling out of the pipeline. So how much conviction do you have at this point on that 2019 number?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [39]

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Well, right now we feel it's as solid as we can have. We do check it regularly, but your question is a fair one relative to 2019. Anything can happen, that's still two years away to get to it and easily could be delayed or canceled.

The big markets for us that we are looking at supply that has been claimed in 2019, Boston has a big number, Philadelphia has a big number, San Diego, so could Seattle. Now part of this, quite frankly, Bill is there's a number of big projects that have been announced, so it's in some respects a little binary. If the big hotel gets canceled then that's going to change the number a lot.

But, unfortunately, people are quick to announce a plan to build something. They are not so quick to announce plans to cancel something. So unless you are just seeing it drag on and there's no chance they can get it completed, it's hard to just dismiss it as something that's actually going to be canceled, especially as far at his 2019 where a lot of things could still get built.

Yes, if somebody is promising 2017 and they haven't started that's not going to happen. But we'd be thrilled if a bunch of these projects got canceled. That would be terrific news.

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Bill Crow, Raymond James & Associates - Analyst [40]

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Thanks, Mike. I appreciate it.

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Operator [41]

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Chris Woronka, Deutsche Bank.

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Chris Woronka, Deutsche Bank - Analyst [42]

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Good afternoon, guys. I think one of the things that, obviously, impacted you guys negatively in 2016 was the mix shift.

You built some occupancy but you didn't get the rate categories that you wanted. Do you think based on where your group position is now and what you are seeing on transient, I know it's short term but do you think that could reverse a little bit this year?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [43]

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Well, last year we went out with a heads and beds philosophy where we could get it and we were trying to do two things. One, create a better pace, obviously fill it with sustainable business and try to minimize expensive business in some markets and some hotels where we do that and some we weren't. But as you noted in the remarks our group and our transient growth was about the same for the course of the year.

When you think about it this year what I would tell you is the teams are really doing everything they can to find the business. That sounds little ironic when your portfolio is running 84% occupancy. But depending on the market some folks have holes in their pace and some folks don't.

So they are open, all of our teams are open to finding the best business. But in some cases, Chris, they are just finding business. And it really depends on the market and the property and the circumstances.

I know it doesn't exactly answer your question. But it's too broad with 45 hotels to have really one answer to that.

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Chris Woronka, Deutsche Bank - Analyst [44]

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No problem. And I appreciate the data points on January. Can you maybe share with us what percentage of the quarter January is roughly? I'm guessing it's not necessarily a third.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [45]

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Percentage of the quarter. It's not a third, you are right. Do you know what the exact number is?

March is the biggest. I don't recall, I thought it was more like 30-30-40. Something like that.

It might be 25 or 30, Chris. We don't have an exact number for you. It is, obviously, the lightest of the three.

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Chris Woronka, Deutsche Bank - Analyst [46]

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Okay, that's fine. Thanks, guys.

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Operator [47]

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Michael Bellisario, Baird.

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Michael Bellisario, Robert W. Baird & Company, Inc. - Analyst [48]

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Good afternoon, guys. I just wanted to focus on OTAs, how has this channel changed as a percentage of your room nights for the portfolio over the last, say, six or 12 months or so and what are seeing coming from that?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [49]

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OTA has been a big channel for us. If you look at the mix we've gone to it's about 28% overall of the total room nights. That's up about 15% over 2015.

Michael Bellisario

Got it. And then the international demand, that you made, how much of that business being stronger is leading to the increase in the OTA usage? Is there a correlation there?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [50]

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I don't have that number in terms of how much the international is of the OTA. We could probably dig through it, but we've mentioned a couple of the calls this international data is getting better every quarter as we work with our teams to make sure they grab it accurately as well as getting it from the OTAs who in the past hadn't been the best at articulating the source.

So what we feared over the last year is that we don't really know if some of the international increase is true increase or is it just capturing the source accurately. Don't know.

But we are tracking it as best we can. And we are looking for the countries of origin. It is the same countries that you would expect, but I don't have -- it's hard to predict what that means for 2017.

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Michael Bellisario, Robert W. Baird & Company, Inc. - Analyst [51]

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Got it. And then just one last one on this increase, how much of that increase do you think is attributable to the re-ramp at Park Central WestHouse in New York?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [52]

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I think we were up 13% with and about 9% or 10% without. We are grabbing it as we speak. But pretty close actually.

13% with including it and 9% without. So it had some impact.

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Michael Bellisario, Robert W. Baird & Company, Inc. - Analyst [53]

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Got it. Thank you.

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Operator [54]

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Ryan Meliker, Canaccord Genuity.

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Ryan Meliker, Canaccord Genuity - Analyst [55]

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Good afternoon, guys. I wanted to ask about LA as we look out to 2017. First, can you remind us what type of impact the Porter Ranch gas leak had on you guys in the first and second quarters, and if you are starting to see an impact now on the reversion of that this year?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [56]

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Yes. Absolutely. So we can give you the quarter, Ryan.

So last year Q1 in LA was up just under 20% and about half of that was Porter Ranch. Although it is inexact, and the reason I say it is because people are filling up, we are filling up, you start charging more for other rooms but we said it was about half.

When you think about the quarter I guess rather than just pinpoint that one I think I would point you towards three abnormal data points. One was that one, the second one was the Super Bowl in San Francisco. If you combine those two they had about a 280 basis point impact to Q1 last year.

Now conversely, and I guess conveniently, the inauguration is about the same impact in Q1 this year. So we gave that number.

We were up 95% in January in DC for inauguration as a result of inauguration. So that run through for the quarter will be just shy of 300 basis point increase. So they're kind of a wash, but that's probably the easiest way to think about it.

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Ryan Meliker, Canaccord Genuity - Analyst [57]

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Okay, that's really helpful. That's good that washes out. And then was there any further impact from Porter Ranch in 2Q that we should be thinking about as well?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [58]

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So the numbers we gave out for 2Q for LA were about 17% for the portfolio and the Porter Ranch impact was less. We had about 4%.

So it kind of ended really towards the end of April, maybe a little bit of May, but that was it. So by it's safe to say that by May 1 it's almost no impact at that point.

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Ryan Meliker, Canaccord Genuity - Analyst [59]

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Okay, that's helpful. Then you had also mentioned in your prepared remarks you talked about the Hyatt Century City going off-line and a significant amount of supply coming online this year. Does that lead you to believe or should we think that LA is going to be a pretty tough market in 2017, more so than some of the others you operate in?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [60]

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Absolutely. We think it's going to be one of the tougher markets. I mean, that's a tough combination.

Think about it. That was our best market in 2016. We were up at 13%, I think 13% for the year.

And so conversely, because it was our best because they had a couple of strange phenomenon when we had no supply, we had Porter Ranch and then we had a super-strong music and entertainment business in our submarkets. And while the entertainment music business has still been strong that's one of the three.

Porter Ranch clearly not repeating and the supply is going from benign to significant. So absolutely, that will, on paper that looks like one of our tougher markets for the year.

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Ryan Meliker, Canaccord Genuity - Analyst [61]

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Okay, that's helpful. And then just the last question, just curious where your head is at on this. This is now the second year in a row where you've decided not to issue guidance.

I respect that. I understand it. I'm just wondering is there any point, what is it going to take for you to change that view?

Or is this the new paradigm for LaSalle where you are going to give as much clarity as you can across your markets and across your portfolio but guidance isn't something you want to deal with anymore?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [62]

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That is a heck of a question. I don't know. I think if we see a lot of people getting good at it that might be one thing.

But right now the things we said in our prepared remarks they mean a lot. We are in a business where very little of our business is actually on the books by the time we release the fourth quarter, and not only can it change but it can cancel and go backwards. So we don't have a lot of clarity as to what the year unfolds, and we found that it's just much more competent of us to actually lay out the pieces so that we can present a year and then manage as best we can.

I think that hopefully the thing people have realized over last year is that there's nothing wrong with the portfolio because we can't come up with a couple of goalposts and that we performed very well throughout each quarter and then throughout the year, last year as a whole. And our game plan is to continue to do that in any environment. But as far as when we should tell you exactly what we can give you some numbers, I don't have a great answer for you, Ryan.

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Ryan Meliker, Canaccord Genuity - Analyst [63]

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Okay. So from how I understood that was basically it's not so much that you have less visibility today than you've had historically or even last year than you've had historically. It's just the fact that the business is very transient in nature and you haven't had a lot of visibility ever.

Now isn't necessarily more or less so than that and it's difficult to forecast, to guide in that environment so why bother given the challenges the industry has with it? Is that a good paraphrase?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [64]

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I don't think I would say it that way. No, no, we started last year because there wasn't clarity and we are still having -- you are still having these same mixed signals.

You are seeing a lot of what people want to be positive in terms of enthusiasm and optimism about how things are going to unfold throughout 2017. The facts don't remain as rosy, so there's conflicting reports. So to come up with a range with those conflicting goals it is just very difficult.

If there is a time when we see a line of green lights ahead of us with nothing else in front of us, it is much easier to give an outlook when everything lines up. But you have to look at all the pictures, all the pieces that we put in place over the course of last year and this call in terms of where we see our pace, citywide supply, demand, etc.

When you see that, it just doesn't seem like we have a place that we can land on with any comfort. So that builds into it. It's not just heck, it's too hard and we don't have any visibility ever in life.

I wouldn't say that. But at the same time I can't tell you that we are going to turn on guidance any time soon or we are going to give you a year and we will turn it on.

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Ryan Meliker, Canaccord Genuity - Analyst [65]

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That's helpful. All right, I appreciate all the honesty.

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Operator [66]

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Anthony Powell, Barclays.

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Anthony Powell, Barclays Capital - Analyst [67]

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Hi, good afternoon guys. If I could ask an industry question a bit differently, I believe in April last year you said that the industry was in or approaching a downturn. Since then you've had moderate RevPAR growth and your EBITDA have been slightly better than expected.

It sounds like that may continue somewhat into January in the first quarter. So if you could update that statement, just where the industry is right now. Are we in a downturn, is that still coming? That would be great.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [68]

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Anthony, I think what we are seeing is that the environment that was slowing down through the end of through 2015 and then again in 2016 is continuing to be one of slow growth. And so the things that we are looking at industry-wide are that eight of the last nine quarters have been decelerating RevPAR, RevPAR growth.

You've seen demand, it did kick up in the end of 2016 but demand over the last couple of years has decelerated. So from our perspective that decelerating environment is still, we still see it in the same perspective. Whether you want to say it's approaching a downturn or it's a slow growth environment, in our minds it's a little bit of the same.

Because it's slower than it had been we are still late in the cycle. When we said that statement we didn't actually guarantee anything was going to happen in a quarter or even a couple of quarters. That is what we are seeing.

So when we get to this part of the cycle and we see the supply move up and continue to ramp and demand soften, that's when we get more and more concerned. But that's our view, and there's clearly no guarantee as to what happens the rest of this year or next year.

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Anthony Powell, Barclays Capital - Analyst [69]

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Got it, thanks. And if you can talk about leisure travel that would be great. I believe one of the brands you mentioned that what you call retail transient was up 5% in the fourth quarter.

What was your leisure business like in the fourth quarter? And where do you think that can be in 2017?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [70]

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We have no idea. I mean that sincerely because I don't know how to track leisure business with our portfolio.

We track corporate, we track transient, we track the source in terms of OTA but we haven't done a good job asking people when they come to our [belt] why they are here. If you look at weekend, weekday for Smith Travel over the course of the year weekday RevPAR was up 2.1% and weekend was up 2.9%.

If you want to look at that as a proxy for leisure then that would suggest that leisure was a little stronger. It is a proxy because not every weekend stay is leisure, of course, but that is one way that we look at it. But we tend to look at really corporate transient, we look at the group, we look at government, we look at international, etc.

But we don't really break it into leisure versus corporate. Because even though our corporate is only 10% to 14% of our overall business, the reality is the business that's coming with Sunday through Thursday for the most part is corporate. They just don't have a special account with us, so we are not tracking them as a special account but they are there on business.

Especially in our urban hotels, and our resorts the mix there is it's only rarely say in the case of Key West where it's mostly individual leisure. The other resorts are heavy group components, so they wouldn't even give that answer either. I don't mean to be flippant on the question, it is just that we don't have good data on that and we haven't seen it prepared, quite frankly, from an industry perspective to give to either.

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Anthony Powell, Barclays Capital - Analyst [71]

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Great, that's it for me. Thank you.

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Operator [72]

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Lukas Hartwich, Green Street Advisors.

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Lukas Hartwich, Green Street Advisors - Analyst [73]

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Thank you, good morning or I guess good afternoon in your case. Just looking at Smith Travel data, the urban and suburban trendlines look like they have crossed recently with urban outperforming suburban.

Do you have any thoughts on what is driving that? Is it temporary, is there something more permanent there?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [74]

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Lukas, are you talking about 2016 or you talking about in the last six weeks or so?

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Lukas Hartwich, Green Street Advisors - Analyst [75]

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You know, it started in the fourth quarter last year and then it's continued into this year, as well.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [76]

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I don't think that's -- we didn't see that. We actually mentioned in the prepared remarks, urban and upper upscale if you look at it, Ken's pulling up the data, but 2014, 2015 and 2016, those two segments have underperformed the industry.

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Lukas Hartwich, Green Street Advisors - Analyst [77]

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Sorry, I meant like in November and December, I think, is when it started to flip. And pretty much every week we've been getting this year it feels like it's been that way.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [78]

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I just gave you the February. February is light, right?

So if you look at, I will pull it up again, so if we look at February day by day just to give you some examples, and these guys will pull up January, but February the industry negative 1.3, upper upscale is negative 2.7 and urban is basically the same, 1.2. So they are flat.

I think in January you are right, I think that the industry was 3.8. What did upper upscale do?

Yes, so in January urban was 6.5 and upper upscale was 4.6. So January you are correct. February it has gone back to the other way.

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Ken Fuller, LaSalle Hotel Properties - EVP, CFO, Secretary & Treasurer [79]

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January would be heavily influenced by the inauguration.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [80]

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By the inauguration. Also, I'm looking at December, you mentioned December, didn't happen in December. So December industry was 2.3, urban 1.9, upper upscale 0.8.

I don't have November right in front of me. But Max does. So November was closer, was 5.9 for the US, 6.5 for urban and 5.1 for upper upscale.

Pretty close. But that would make sense. If you think about the lift that happened in New York and the shift from the Jewish holidays in October that business I think went into November as well as the little bump that the cities got in terms of say Trump in New York, etc. it would make sense that urban kicked into gear in that month.

So a little bit, a touch higher in November, backwards in December, a little higher in January and then backwards in February.

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Lukas Hartwich, Green Street Advisors - Analyst [81]

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That's helpful. A similar question with New York, New York has been doing better more recently than I think many people have expected. Do you have any views on what is driving that?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [82]

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Yes, we have been digging into that because you are absolutely right. So what happened is November, December and January were great for New York.

And a little backdrop, the first 10 months in New York were negative. So we saw 10 months is a struggle, then we saw three months that were actually very strong in Manhattan and then, unfortunately, it came to an end.

So we saw that February right now, again, if you look at, say, Manhattan or Times Square submarkets, which is not the MSA, look at it day by day does numbers are down about 3.3 to 3.8 depending on the segment. Again, that's just of February, so for 18 days.

So we were hopeful that things were turning around again November, December and January. Because it was looking better. What we are hearing from all our properties is, quite frankly, a lot of it is being attributed to Trump.

The crowds surrounding the activity from election through inauguration were substantial, created a lot of groups, a lot of media, a lot of visitation. And while there's no way to know if when he moved into the White House that just came to a screeching halt, but it does coincide. It's too big of a market to lay it all at one event, but it does seem like that's the answer we keep getting from our properties.

So back to the hope, it would be great if all of a sudden we could reverse and we would do better the rest of the year. But based on our outlook for New York and our pace on New York it's not as optimistic as it has been for November, December and January, unfortunately.

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Lukas Hartwich, Green Street Advisors - Analyst [83]

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That's really helpful. Thank you.

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Operator [84]

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Neil Malkin, RBC Capital Markets.

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Neil Malkin, RBC Capital Markets - Analyst [85]

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Hey guys, good afternoon, thanks for taking my question. First question is about acquisitions, have you guys thought at all about looking at different markets maybe outside the core coastal cities you obviously have a bias toward?

The reason I ask is the whole barriers to entry thing has been turned on its head in this cycle. And also one of the trends you see in all of these markets is there's, obviously, liberal political administrations which tend to make operating costs much higher. So I was just wondering how you guys maybe think about that going forward or when you look at acquisitions?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [86]

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I think it's a great question and the answer is yes, we constantly are looking at other markets. We have, if you look at what has always been our core eight we have bought outside of those markets over the last couple of years, we've sold non-core as well, but we've bought in Key West, Philadelphia and Portland and we are looking at other places.

So I wouldn't want to give you a list of places that we have looked at or we will look at. But it's fair to say that the core eight were always places that we would absolutely look at hotels, but it's never been exclusive.

And you are absolutely right that the barriers to entry have changed. This cycle probably more than any other cycle we've seen developers, lenders have gotten it right and they have moved to build where the demand is, was. And so you've seen an increase of supply in those markets more so than secondary or tertiary markets.

But a lot goes into it: exit strategy, what we can do with the hotel itself in terms of brand independent, how we can operate pricing, etc. But it's a totally fair question and we are not beholden just to the eight markets. They have just been where most of our hotels have been and we will continue to look there.

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Neil Malkin, RBC Capital Markets - Analyst [87]

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Okay great. That's helpful. Then last one for me is your sector in particular has had a lot of moving parts and headwinds from Airbnb to the cancel and rebook that have plagued the short-term ability to have pricing integrity.

I'm wondering if there's anything that you guys see on the horizon or if there is anything that maybe keep you or your property managers up at night when forecasting that could be on the horizon, something similar that could negatively impact your ability to garner pricing power at your hotels?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [88]

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Is the question you are asking is there something similar like short-term rentals or is it a question --

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Neil Malkin, RBC Capital Markets - Analyst [89]

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No, no, no, any impact, any occurrence, any trend you see emerging that could have some sort of similar impact, be it demographics or a technology or anything along those lines?

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Mike Barnello, LaSalle Hotel Properties - President & CEO [90]

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No, no we haven't. I mean, I think I would just say that I know that many of the C Corps, the peers have announced strong occupancies. I would just tell you that with an 84% occupancy portfolio we don't feel like there's a lack of demand for our product in our markets.

That's a macro statement. Obviously, each property is different, each market is different but that's continuing to grow.

So, obviously, we have to deal with whatever trends are evolving. And that means dealing with finding a product that our guests want to be in or find more guests. And so I think our guys are generally doing a pretty good job of that.

But that will continue to evolve. So there's nothing else really to add to that that we haven't talked about over the last year or so.

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Neil Malkin, RBC Capital Markets - Analyst [91]

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All right, thank you.

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Operator [92]

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At this time we have no further questions. I will turn it back over to our host for any additional or closing remarks.

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Mike Barnello, LaSalle Hotel Properties - President & CEO [93]

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Thanks, Matt. Thanks everyone for listening into our fourth-quarter earnings call.

Looking forward to seeing many of you guys at the conferences over the next month and updating you on our first-quarter results in April. Thank you.

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Operator [94]

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Again, that does conclude today's conference call. Thank you all for your participation.