NEW YORK — Despite not being heavily concentrated in resort markets, Apple Hospitality REIT's portfolio has achieved incredible strength in leisure demand, CEO Justin Knight said.
"The leisure demand that we've benefited from has been everything from youth sports teams to families traveling on vacation; that's propped up our weekend occupancy in a meaningful way," he said in a video interview with Hotel News Now during the 2022 International Hospitality Industry Investment Conference.
Hotel demand from business travelers has also been sturdy for the the real estate investment trust, with bookings picking up from local and smaller accounts as well as larger corporate accounts, he said.
"With the pandemic came pandemic-specific business travel, in the form of traveling nurses, doctors and things of the sort, but as that business has gone away, we've seen an increase from some of our other accounts helping to lift midweek occupancy," he said.
Acquisition Strategy
Knight said the REIT entered the pandemic with a relatively strong balance sheet, and it was uniquely positioned to pursue acquisitions.
"The deals that we've been able to acquire are meaningfully additive in that they tend to be newer assets with lower [capital expenditure] needs, and positioned in markets that have been early beneficiaries of the recovery," he said.
Acquisitions Apple completed within the past year include a three-hotel portfolio comprised of the 157-room Hilton Garden Inn Fort Worth Medical Center, the 112-room Homewood Suites by Hilton Fort Worth Medical Center and the 243-room Hampton Inn & Suites by Hilton Portland Pearl District for a total price of $126 million.
The REIT also purchased the 157-room Aloft Hotel in downtown Portland, Maine, for $51.2 million, the 130-room Hyatt Place in downtown Greenville, South Carolina, for $30 million, and the 178-room AC Hotel by Marriott in Portland for $66.8 million.
Additionally, Apple was also able to sell off some assets, which Knight said helped offset capital needs for the overall portfolio and better reposition it.
Expense Control
During the first quarter of 2022, Apple was able to reduce operating expenses, which Knight said was due to a collaborative effort among his corporate team, management companies and the brands.
"Together, we looked for ways to remove costs from the business, while ensuring we maintained a strong value proposition for our guests," he said, which involved adjustments to housekeeping, food-and-beverage offerings and job descriptions.
"As we emerge from the downturn, and see strengthening numbers on the top line, that's yielded stronger margins for us, which we anticipate will continue to benefit us as we move throughout the recovery," he added.
For more from Apple Hospitality REIT CEO Justin Knight, watch the video above.