Good day and welcome to the Pebblebrook Hotel Trust Third Quarter 2016 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Raymond Martz, Chief Financial Officer. Please go ahead, sir.

Thank you, Evan. Good morning, everyone. Welcome to our third quarter 2016 earnings call and webcast. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer. Before we start, a quick reminder that many of our comments today are considered forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties, as described in our 10-K for 2015 and our other SEC filings, and future results could differ materially from those implied by our comments today. Forward-looking statements that we make today are effective only as of today, October 28, 2016, and we undertake no duty to update them later. You can find our SEC reports and our earnings release, which contain reconciliations of the non-GAAP financial measures we use on our website at pebblebrookhotels.com. Same property operating results that we will provide on this morning's call are based on the hotels we owned as of September 30, 2016. Same property revPAR, same property hotel EBITDA, and same property hotel EBITDA margins are based on the combination of wholly owned property information, as well as our 49% pro rata interest in our Manhattan collection joint venture. You will note that in the press release we issued yesterday we break out wholly owned and our joint venture separately, and do not provide the combined operating performance. This is due to the SEC's recent pronouncement about pro rata reporting which does not allow combined pro rata reporting data. Fortunately, next quarter will be the last quarter that we need to provide the information in this manner since we exited our joint venture in Manhattan last week. With that, we have a lot to cover this morning. Let's first review the highlights from our third quarter financial results. Our same property revPAR declined 0.1% during the third…

Thanks, Ray. During the third quarter industry operating results remained relatively stable, though they were aided by the holiday shift that significantly benefited September at the expense of October. We believe the holiday shift meant a continuing graduate deceleration in business travel demand, as well as a year-over-year decline in inbound international travel. While our top-line performance was weaker than the industry, it was generally as expected, ending in the middle of the outlook we provided 90 days ago. The industry's revPAR growth was 3.3%, in the last quarter's 3.5% growth, yet September revPAR increased 5.6%, representing a significant benefit that has reversed in October. I'd like to take a shot at summarizing the overall industry trends that we saw in the third quarter. As it relates to group, we didn't really see any changes to the trends from the second quarter that we discussed. Group continues to have a pretty good year, based primarily off of healthy convention calendars across most of the major markets. This business consists primarily of major association- and corporate-sponsored meetings. This accounts for the industry's positive pace this year. Small and mid-sized corporate meetings, which are primarily booked in the year for the year, in the quarter for the quarter, or even in the month for the month, have weakened throughout the year. Businesses remain cautious, not surprising given a generally weak corporate profit environment. Business transient travel also remained soft. Businesses continue to stay focused on cost-cutting as a way to improve their bottom-line performance and, unfortunately, travel is a discretionary item, at least on a short-term basis. Curiously we have not seen any increase in attrition or cancellations, nor have we seen any sign of weakening food and beverage spending in conjunction with meetings. That spending remains healthy. We continue to believe…

[Operator Instructions] We'll take our first question from Rich Hightower from Evercore ISI. Please go ahead.

Good morning, Jon and Ray. I've got two questions this morning. In terms of the asset sales strategy and the numerous moving parts to the balance sheet, can you give us a sense of the range of overall leverage you're either targeting or anticipating maybe by the end of next year, also factoring in the movements to cash with respect to the special dividend and the share repurchases, just all the different moving parts, where we should expect you to be 12 months from now?

Sure. I think our objective is to be into the 3s on a debt to EBITDA basis, and upwards of 4 times or higher for fixed charge coverage.

All right, great, thanks. And then second question, just with respect to what sounds like a heads in bed strategy for next year based on some of the numbers you threw out with respect to pace, can you give us a sense of what the impact to margins might be with that kind of strategy versus one in the past, at least for the past year or two, have been primarily rate driven, and maybe holding back a little bit on the occupancy side, just given the fact that occupancies were already so strong. And then, also, as a side note there, I think Ray mentioned in his prepared remarks about increased customer acquisition costs. I just want a little more color on what that entails, as well. Thanks.

Sure. As it relates to margins, obviously the challenge is going to be, for any company, when revenues are flat or growing very slowly it's obviously difficult to grow your margins, as evidenced by the New York portfolio where there is, unfortunately, not a ton of room to cut costs because our hotels are effectively select service hotels in that market. Our focus is going to continue to be on becoming more efficient implementing our best practices, using technology to reduce labor, combining jobs in order to offset wage and benefit increases. We've had a lot of success with that this year. Our expense growth this year is running in the 1.5% to 1.8% range. We think with the continuing efforts we're making throughout the portfolio, and less of a headwind on property taxes next year, as pretty much all of our properties will have been reassessed based upon the transactions, that we think will be able to do a pretty good darn job containing margins.

Okay. Thank you, Jon.

You asked about acquisition costs in Ray's comments. With that relates to is the increased mix of OTA business that is compensating for less business travel. There are higher costs to that channel than there are to the business travel channel. It's not a reflection of increased rates by OTAs -- in fact, they have continued to be reduced -- but it has to do with the increase percentage. I think our OTA business through the portfolio this year is up 15% of where it was last year.

We'll take our next question from Shaun Kelley, Bank of America. Please go ahead.

Good morning, guys. This is actually Danny Asad on for Shaun. First, really quick, I'm just going to piggyback off of Rich's question here. When you're planning for next year, based on the range that you're talking about in terms of expense growth for this year, while you still do have pressures like healthcare and wage inflation, where do you think you can hold expense growth? Is it going to be similar to this year or is it going to be a little bit higher?

I would think next year we are going to be 2% or less in terms of total expense growth. We are just starting the process with budgets. We haven't gotten a single budget in from our properties. But we know what we are doing from a best practice implementation and deficiency program implementation. Again, when you think about wages and benefits, the offset is reduction in the number of people. And that is likely to continue at our hotels, both because we have to, and because there is an opportunity to be more thoughtful about how we deliver services to our customers in a more difficult environment. I do think that's an offset to the wage and benefit impact in our markets, as well as we've seen lower inflation in other costs. Energy has been declining. We continue to implement capital investments that provide anywhere from a one- to a four-year payback in order to reduce our unit use in our hotels on top of what has been an opportunity to reduce the actual costs of those units, as we've seen natural gas and utility costs, electricity in particular, be reduced. Insurance has come down, as well, as an offset. As you know, we've been making portfolio-wide efforts to change our concept in our food and beverage outlets, reduce our people, reduce our cost of delivering the service, actually increase the revenues through conversion of a lot of the spaces to venue use, which would be banqueting and catering, which is much more profitable than outlets. And where we have been changing the concept, we've been going from restaurants to bars with food. And the margins are significantly better because the mix of revenues is higher in beverage than it is in food. And then, finally, we've continued to outsource restaurants where we can and where it makes the most sense for the property, like the Embassy Suites in San Diego where there is a third party now operating the restaurant. We do continue to feel comfortable that we can offset otherwise increasing wages and benefits through efficiencies, the use of capital investments, technology, to reduce costs in both people and in other areas.

That's very helpful. And then, maybe just switching over to LA, which your song today was very apropos. On the topic of LA, how much do you think the Porter ranch situation is going to be a headwind for next year? Jon, you talked about a 50 basis point tailwind on last quarter's call. Is that just going to be as simple as reversing that for the first half of next year or is it a little more different than that?

No, I think it will be pretty similar just in terms of reversing it. Porter Ranch ran through April at our properties with various levels of impact. Probably the biggest benefit was at the W. The least impact was down at the Meridien Delfina. So, I think that's a big part of it. The other benefit we had this year, which will reverse in a different way, is that supply declined this year beginning March 1 with the Hyatt Century City being taken out of service to be converted ultimately to a much smaller luxury hotel and condominiums. And there is supply being added into the market a bit in Hollywood and West Hollywood. That will be a bit of a headwind in LA. We have a very strong underlying business environment in LA with a lot of job growth, a lot of venture capital coming into entertainment and content development. As you know, there are more and more businesses that have gotten into the business of creating content, much of which does still happen in the LA market. All of that underlying demand has been very strong as well as the re-creation of downtown LA, all of which has been having a positive impact on LA. We think that will continue next year, but we'll have a couple of headwinds instead of two tailwinds.

Great. That's it for me. Thanks very much.

Your next question is from Anthony Powell of Barclays. Please go ahead.

Hi, good morning everyone. I wanted to drill more down into the transient room night growth for next year. What kind of transient trips are being planned this far out? And how are you ensuring that you're able to lock in that travel? Is it through advance purchase, increased cancellation fees? What can you do to protect those bookings going forward?

So, you haven't booked your travel for next year?

One or two trips, but not the majority.

Every one of my trips is booked. It's interesting what the industry does in terms of how it categorizes what goes into transient. In Smith travel they report a category called contract, which is primarily airline crews and other kinds of contract crews. Since we only report and categorize group and transient, crew goes into transient, Anthony. In this case, we have chosen to, and have had success, winning some international crew business which tends to be pretty attractively priced, particularly when you consider it's generally seven days a week, including Sundays, including holidays, and obviously is otherwise totally predictable. We've done some of that business, which accounts for a good piece of the improvement in transient, as well as doing more advance purchase promotions throughout the portfolio, which has been an increasing part of the overall mix to give us more certainty. And there is some sacrifice in rate as that portion of the mix picks up. That's really what makes up the primary component of that increase of 25,000 or so transient rooms next year.

Got it. On share repurchases next year, what leverage level do have to be at before you would consider starting repurchases?

We don't have any specific leverage level that's targeted. I think we've like to be below 4. But I think there will be a lot of variables to consider, where is the stock trading, what's the discount to underlying private market values, what's our view on the year and the year after at that point in time as best as we can. And all of that will get taken into account at the time we decide whether we move forward with a stock buyback program or not.

And, Anthony, to add to that, also, we have to look at any special dividends from some of these future sales that we are working on. So, that may result in some use of capital back to the shareholders.

Okay. Thanks. One more quick one, if you could go over the supply growth outlook for most of your markets. You talked about LA, but the others would be great. Thank you.

Sure. I'll give you, these are the urban or CBD, as Smith Travel defines each of these markets. Boston we have at 0.6% next year, down from 5.2% this year. We have DC increasing to 4.7% from a 3.4% increase this year. Now, these numbers are the way they will come through Smith Travel, meaning there is a 12-month tail on a year-over-year growth. So, this is not the percentage increase at the moment the property is delivered. It is the impact every month from having more supply, more inventory in the market, next year versus this year. Some of this growth obviously is properties that have opened this year, but haven't been opened for 12 months yet. Hollywood Beverly Hills goes from minus 2.6% this year to plus 5.9%. Now, that is spread out from Hollywood to West Hollywood primarily, with little to nothing from Beverly Hills. I think we have the Waldorf late next year, maybe October, delivering into the market in Beverly Hills. And we do have a couple of Select Service properties about six or eight blocks from the beach in Santa Monica that get delivered next year, as well. In Philly, 4.9%, up from 1.4%. Portland is the biggest increase next year, it goes to 7% from 2.2% growth this year. San Diego actually comes down a little bit to 2.9% from 3.7%. We have San Francisco coming down. Actually many of these numbers are different from other numbers you might have heard. We have San Francisco at 0.7% again, meaningless in that market down from 1.2% this year. We have Seattle pretty flat at 2.1% next year from 2.3% this year. We have Manhattan pretty flat, as well, 5.3% in 2016, going to 5.2% in 2017. The one thing I would say about this is we have consistently overestimated the amount of supply that would get delivered into these markets, both because projects have taken longer, and because some properties that had appeared to start construction actually didn't start construction, meaning they might have cleared the site and started doing some site work, but not really building, not digging the hole and not building the new building. For us this means a weighted average supply growth next year of a little bit over 3%. It will probably end up there or less. With 2016 ending for us and I think this is pretty interesting at 1.9%. And if you go back a year ago, we were talking about a weighted average supply growth for our markets for 2016 of 3%. So, that's come all the way down to 1.9%.

And, Anthony, as we look beyond 2017, obviously it's difficult to predict at this point in time, but the message we're hearing throughout the lending community we represent, all of our banks, they are getting more conservative and more restrictive when it comes to new financing of development. In many cases, they are pulling back in many markets. The good news is, whatever ultimately the peak supply is in this cycle, it will probably be something a lot lower than what we all thought 12 or 24 months ago, maybe lower than overall supply growth that we've seen in prior cycles.

Thanks for all that detail.

Our next question is from Jeffrey Donnelly of Wells Fargo. Please go ahead.

Good morning, guys. Jon, I don't know if you might know this off the top of your head, but just assuming the Manhattan assets were sold, how does the exposure to union labor, how has that changed for you versus maybe, say, a year ago, given the handful of sales you have executed?

I don't know it offhand other than all of the properties in New York are union. So, we've slightly lowered our percentage of our properties overall from the six that we had down to the two that we have right now in New York. I'm hard pressed to think of the relevancy of it, however.

I'm just wondering to the extent, has it reduced your potential embedded expense growth in 2017 versus maybe what it might have been otherwise.

It doesn't matter whether it's union or non-union in New York. Wages are going to go up 3%-plus in that marketplace every year for the remainder of the contracts in New York, regardless of what is going on in the environment. From that perspective, any reduction in New York is a positive, in terms of what you do and don't have control over in our various markets.

Do you think it's that construct in other markets like San Francisco or LA?

I think it depends. I think the contract is not as long in the other markets. And I think there's been a little more flexibility in the other markets.

Maybe to switch gears, as we look out to 2017, you made some comments about the trends you are seeing in group and corporate transient and leisure transient. Do you think we're going to continue to see superior demand out of that leisure traveler as we have this year? Or does your gut tell you that eventually some of the weakness you've seen in corporate is going to catch up to the group and leisure segments as we look to full year 2017?

That's a good question. I think it's highly unlikely that we will see that weakness in leisure. And all you have to do is look at job growth, and look at consumer balance sheets. They've continued to improve. What we've been experiencing is really a business recession, which perhaps a good bit of it relates to economies outside of the United States versus maybe what is going on specifically in the U.S.

One last question. Hopefully you'll indulge me. Denihan was a highly watched transaction for a lot of people, with some fairly wide ranging expectations on what the outcome would be. Now that transaction with the Denihan folks is closed, are you able to maybe pull back the kimono for us a little bit and talk about how that transaction progressed to its final terms? Did tightening credit market terms or deterioration in New York City affect pricing expectations? I'm just curious what were some of the hurdles that you encountered over the last few months to bring that deal to fruition.

Sure. I'm happy to do my best to indulge you, Jeff. As you could tell from our comments throughout the year, we went through a number of different permutations from our partner, whose desire was to keep the portfolio and not sell. There were various factors that occurred over the course of the year that relate to both underlying operating performance and what that meant for capital availability. They did their best, and we did our best to help them keep as much of the portfolio as they could afford to keep. And we've ended up with two properties that we think, because of the structure and the location of the properties and the real estate, are eminently salable and offer good value in the marketplace. I hope that helps you a little bit in terms of understanding what went on throughout the year.

Were there many instances of the transaction having to get retraded? Or was there a time where -- I know their resources are scarce -- it was contemplated that they would be able to acquire all the assets, and just changes in the market made that less possible?

Yes, we went through a lot of different permutations starting with the desire of our partner to buy the whole portfolio.

Okay, thanks.

Your next question is from Wes Golladay from RBC Capital Markets. Please go ahead.

You were talking a lot about the business traveler being soft, but you also touched upon a few other demand drivers that were a bit soft -- U.S. travel abroad and international travel. Are those distant second and third versus business transient travel? Or, if we see a pickup in any of those, would that move the RevPAR back higher?

Yes, I think any of those are meaningful, Wes. I think the broadest one and the one that impacts more markets, more properties across the U.S. is clearly the overall business travel environment. But particularly for the gateway cities, the major cities where we have hotels, international travel in and out is highly important. It makes up at least 15% of our portfolio, and in a number of our markets like New York it's probably 30% or 35% of our business.

Okay. And then we talked about LA and San Francisco quite a bit. I'm just trying to get a little bit more context how you see these markets performing relative to next year relative to whatever some of the industry forecast is, would you think San Francisco would be slightly down, maybe down 4% or 5%? And LA, could there be a case, were it still outperforms the other urban cities, high demand, high supply markets, such as a Nashville? How do you see that on a relative basis?

I think the easier one is LA. I think LA is not going to be an outperforming market next year because of the comparisons and the flipping of the supply growth in that market. So, despite a healthy underlying industry base in demand, I think the comparisons have some impact on that market. In San Francisco, it's a lot harder to predict. The good news is, there isn't a supply issue there. There isn't expected to be a supply issue there for the next three or four years. And who knows after that. We have pretty good clarity on a lack of supply growth in that market. We are going to have to deal with the negative impact of what is an ultimate fairly large demand generator to drive the overall performance of San Francisco in 2019 and beyond. Our best shot, I've heard different ranges, SF travel believes it will be flat to slightly up. I've heard people talk about minus 5% in the market. If you look at some of the quarters that were weaker in San Francisco, like the third quarter where the market was down 3.6%, I'm not sure that isn't at least in the ballpark of a reasonable example of what next year could be. It's going to bounce around by quarter. Q1 is actually pretty good, but for Super Bowl. JPMorgan healthcare conference, our average rates are up $100 through our portfolio over last year. Not insignificant. The fourth quarter is pretty flat next year, partly because it's not much of a convention month to begin with. So, it could be zero to minus 5%. Anywhere in that range seems very reasonable, West, for San Francisco.

Okay. Looking at disruptive technology, are you seeing any changes on the cancel and rebook? Are you starting to get pricing closer to stay? And then your thoughts on when we could see a potential impact of the Airbnb legislation on pricing power in New York.

It's interesting. The Starwood properties that we had in the loyalty test program that they have been running, actually all saw benefits from the resloping of the reimbursement curve dropping down to 80%, starting at 80% versus a one step at 95%. So, we are hoping that Marriott, as it absorbs Starwood and gets back to business, will and hopefully is working on modifying the way the reimbursement program works. And we believe that Hilton is working hard on it, as well. I also think we're moving towards tiered pricing. I know Hilton has been testing it. We have been testing it even at our little properties. One of the ways we have been getting a little more certainty in bookings from a visibility perspective is building the share of advance purchase business that we have within the portfolio. Of course that comes at a discount, so we're taking some initial hit from that. But we think over the long term more and more of that business is going to be effectively 100% guaranteed. And then other business will either be subject to a change fee or will have some time limitations in terms of when you can make a change or cancel versus when you end up being locked in. I think it's all moving in the right direction. I think it will continue to be a slow process. And this will probably take two to three years to play out.

Okay. And then, just lastly, on the Airbnb, do you think it will have any change on pricing power in the city over the next, call it, three to six months?

No, I don't. I don't know how much of an impact it has had on pricing in the city. I don't know what impact it will have on pricing. I do know that, if you're talking about New York City, it was passed because it had such a negative impact on affordable housing and on the quality of neighborhoods, and is kind of an illegal statement about what zoning means. There's been zoning in our cities and our states for decades, if not hundreds of years. The reason for that zoning is to improve the quality of life, and allow businesses to operate in areas where they don't have an impact on the neighborhood. I think those were the driving forces in New York. I think they were the driving forces in LA and Chicago and in San Francisco. Believe me, it's not the hotels screaming and yelling that the cities really care about. It's the people who live there and the quality of their life and the safety of their families. As we've said over the years, we believe that illegal behavior would get regulated because that illegal behavior is bad for society. If it has a benefit to the hotel industry, which is a legal industry operating under very significant regulations, for the safety of the population, so be it.

Okay. Thanks a lot.

[Operator Instructions] We will take our next question from David Loeb from Baird. Please go ahead.

Ray, I get your motivation about LA and choosing that song. But was there also commentary in there, given the opening lyrics, about negativity around New York and Chicago?

It had nothing to do with that. We stuck with Randy Newman's positive message about LA. It just happened to be. And we were also thinking about Chicago, too. And, David, I'm not sure if you can confirm this or not, but we heard a rumor that this may be the last earnings season that you will be around on earnings calls. Is that true?

That is true.

I think we've been listening to you for 18 years on calls. We've been enjoying your very thoughtful questions and late night conversations. So, we will miss you. It's the end of an era. Sorry to see you go.

Thank you for that. On that I will end with a serious question. Can you give a little more color on dispositions and which markets you would like to lighten your exposure to? What, really, are the criteria that you are using to decide which hotels to put on the market?

As you would expect, we're not going to give any color on the markets because, again, we deal with operating businesses, and we try to be as less impactful as possible. When we look at, and when we've looked at what we have sold, we're looking at assets that we believe there is a large disconnect between public and private market value. There are other factors. Our view on a market over the short to intermediate term is an impact. Are there other issues related to any individual property? Are there any large capital exposure, which is not much of an issue in our portfolio, because pretty much most or all the hotels have been redone since we bought them. So, there is a lot of different factors we have looked at. Do they generate taxable income? Do they generate substantial proceeds net of taxable income so that the capital can be utilized either to lower leverage or to buy back our stock. All of these things are taken into account.

Okay. Great, thank you. It's been a pleasure.

We'll take our next question from Bill Crow of Raymond James. Please go ahead.

Jon, I've got three topics I want to hit on real quick. The last two sales have been completed below your investment value. How many more assets do you think there are in the portfolio that, if they traded today, would be below what you have invested in them?

I want to make sure there's clarity here. You're talking about book value?

Purchase plus investment.

I don't know that there are any, Bill.

Okay. I assumed that was the case.

Bill, the only assets we have which relate to an impairment charge, based on what we know today, is from our understanding of the assets and their value, are the Manhattan collection, which we talked about, and Doubletree.

And, Bill, the other thing I want to mention is, when we provided a NAV estimate range early in the year I want to make sure folks understand that what we have sold to date have all been within that range. The markets continue to play out pretty much as we expected.

On CapEx, Jon, it seems like its more consistent that we are hearing that the impact is maybe greater than you expected as you're undergoing these transformational changes. Maybe the tail on that underperformance lasts longer than it had previously. So, given the low or no growth environment, and given the impact, how do you think about committing additional CapEx for major renovations in 2017 and 2018?

I don't think we've consistently had issues with the negative impact if you're talking about displacement. If you're talking about a slower ramp, I think that's definitely the case. Our experience has been that in good times you can obviously ramp quicker, and in more difficult times or slower growth times it takes longer to ramp to the competitive position that you think you will ultimately get to. I don't think it necessarily changes where we think the properties in their new conditions, new quality, new service where they ultimately get to. But it might take longer. It could take a year longer, it could take two years longer. These are very high return projects, in general. I think the other experience we've had, and it's a very appropriate question when things slow down, it's about capital allocation -- what are you going to use your capital for. The thing that we have learned over the years is if you don't maintain your assets you lose share. That is on top of any weak or declining market. And that becomes very expensive, not only because you ultimately need to invest the capital to bring the properties back up to a competitive position, but it will take you a lot longer to regain the share that you lost, and it will cost you a lot more money than you would have had to spend to keep those customers. In a challenging environment, customers would rather stay in a nice property for the same price than a crappy property for the same price. We've always continued to invest in our hotels other than in state of emergency situations because we know that it's very good investment, very good capital allocation, and the alternative ultimately leads to very poor performance.

Jon, the answer to that question leads me to my last question, when you mentioned loss of share and state of emergency, et cetera. We know you run tight ships at your properties, and you're talking about cutting heads in order to maintain margin integrity. But why should a guest who gets off a completely full airplane and hears on the news about record hotel occupancy levels, et cetera, why should they be accepting of fewer heads, fewer headcounts in your hotels, if there's an impact on the guest? Aren't they going to just go somewhere else in this sort of environment? We're not exactly in a state of emergency cost-cutting environment, are we?

Bill, that’s really the key. You hit on it. How do you do what we are doing without impacting the guest experience? And, in fact, our objective is actually to improve the guest experience. Sometimes it means combining three positions with two people but having higher-quality people and have people not waste time, do things that are more customer facing than back of house facing. Changing the concepts in our food and beverage in our portfolio, simplifying our menus but providing very high-quality food is just being smart. What we get at is, how do you deliver the same service with fewer people, but to do it in a better way than was being done before? That's been our focus. We are not to the point of necessity is the mother of invention, and since everybody is cutting service we're going to join the club. We're not at that point because that's not the environment that we're in yet. So, that's really the tricks, is how do you become more efficient without negatively impacting the services being provided to the guests? That's, frankly, a big part of the secret sauce here.

Yes. I appreciate the answers. Thanks, guys.

We'll take our next question from Lukas Hartwich from Green Street Advisors. Please go ahead.

Good morning, guys. Jon, can you talk about the health of the general transaction market? Is it harder to sell a hotel today than it was even earlier this year?

I would say it's probably a little bit harder, Lukas, for sure, because there's probably a little more uncertainty about the operating environment. Obviously the trends have weakened over the year and that is going to create anxiety or caution for buyers, or even knock some buyers out of the market. So, it's not an easy time to sell hotels. It's definitely not an easy time to sell commodity hotels, particularly if they're not in major markets. I think in our case it's definitely not easy to do the sales that we are doing, but because of what we have to sell, and the values to the buyers and the desires to own the assets, we've had some success. Unless the environment gets a lot worse, we continue to believe we will have more success in our efforts to create value for the shareholders through selling assets.

That's helpful. And then just a second quick one. There's a lot of negative news out there around the election. I'm just curious, is that impacting hotels at all? Or is that just noise in the background, not really impacting fundamentals?

It would be impossible for us to speculate on that. People don't call and cancel and say they are not coming because of the election. Frankly, half the time we don't know why somebody is at our hotels, to begin with, let alone why they don't come. But what we've heard from folks, I know Hilton talked about this in their call, that they believe, when they talk to businesses at the highest levels, that there is cautiousness on the part of businesses, and certainly the election could be part of it. It could be global turmoil, it could be terrorism abroad, it could be fear of a recession. It's hard to guess. If I were speculating I would say it probably has some impact on business demand because I think it's having an impact on some business decisions. In our case, I can tell you in running our business it has no impact. But the things that we're doing in our hotels to become more efficient aren't positively impacting the economy.

Great. Thank you.

Those are all the questions at this time. I would like to turn it back over to Jon for additional remarks.

Thank you very much, Evan. Thank you all for participating. We appreciate your time and your support. We look forward to updating you on the full year and our outlook for 2017 early next year.

That does conclude today's presentation. Thank you so much for your participation. You may now disconnect.