Good day and welcome to Xenia Hotels & Resorts, Inc. Second Quarter Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that this event is being recorded. I would now like to turn the conference over to Ms. Lisa Ramey, Vice President, Finance. Please go ahead.

Thank you, Andria. Good morning everyone and welcome to the second quarter 2016 earnings call and webcast for Xenia Hotels & Resorts. I’m here with Marcel Verbaas, our President and Chief Executive Officer; Atish Shah, our Chief Financial Officer; and Barry Bloom, our Chief Operating Officer. Marcel will begin with the discussion of our second quarter performance and details on various activities during the quarter. Barry will follow with additional details regarding our operating performance. Atish will conclude our remarks with the discussion on our capital allocation strategy and balance sheet as well as an update on our outlook for the remainder of the year. We will then open up the call for Q&A. Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K and in other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued earlier this morning, along with the comments on this call, are made only as of today, August 5, 2016, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks, in this morning’s earnings release. An archive of this call will be available on our website for 90 days. With that, I’ll turn it over to Marcel to get started.

Thank you, Lisa. Good morning and thank you all for joining our second quarter call. As most of your aware, the outlook for revenue growth in the lodging industry has moderated as demand is increasing at a slower rate of growth and supply starting to catch up in many markets. With this backdrop, we believe it is important to reiterate the pillar of our Company strategy as we discussed during our Investor Day in May. We continue our transaction oriented mindset with the focus on diversification, quality and portfolio enhancement. We’re dedicated to aggressive asset management initiatives and leveraging our relationships with both brands and managers, as we maintain an emphasis on a conservative leverage profile and a healthy balance sheet throughout various learning cycles. We believe these fundamentals will serve us well, as we navigate through a more challenging operating environment. Turning to our second quarter same-property results. Consistent with industry performance, it was a soft quarter with results varying by month. April results benefited from the shift of the Easter holiday into March, and our portfolio RevPAR was up approximately 5% for the month. May was essentially flat and June rebounded slightly with RevPAR up nearly 1%. For the quarter, our same-property portfolio RevPAR grew 1.8% due entirely to an increase in rates as occupancy remains stable. While our hotels in Houston continue to be a drag on the portfolio, evidenced by our Houston hotels being down over 12% in RevPAR for the quarter and year-to-date, the balance of our portfolio outperformed and grew RevPAR at 3.8% for the quarter and 3.4% for the year. Year-to-date, our same-property portfolio RevPAR has increased by 1.3%. For the second half of the year, we expect RevPAR growth would be lower than that, and have therefore reduced our RevPAR guidance to…

Thank you, Marcel, and good morning everyone. I’ll be providing further detail and insight into our market and property level performance in Q2. All the portfolio information I will be speaking about is reported on a same-property basis for 43 hotels. In terms of RevPAR, we are pleased with the performance of many of our hotels and an overall portfolio that gained a point of market share or RevPAR index built to our competitive sets compared to the second quarter of last year. Our top RevPAR markets were San Francisco, up 28%, as our Marriott San Francisco Airport property continued to demonstrate great results, while in last year’s comprehensive room renovation; Atlanta up 12% and Baltimore up nearly 12%. 10 of our markets achieved RevPAR growth over 4% and 18 of our markets had positive RevPAR growth for the quarter. As mentioned earlier, Houston continues to be our toughest market, down 12.3% during the second quarter. Results on our other large exposure markets were mostly positive and order of their weighting within our portfolio, Dallas was up 2.2%, Denver up 4.3%, Washington DC and Virginia up 1.3%, Silicon Valley up 3.7%, Honolulu down 1.4%, Napa down 1.4% due to the Marriot renovation, and Chicago up 0.6%. Although not included in our comparable detail statistics, the recently acquired Hotel Commonwealth is performing very well with RevPAR nearly equal to last year, despite additional of 96 rooms to the previously 149-room property. EBITDA continues to be on track with our original projections and is expected to more than triple this year. We’re very pleased with our base in the asset in light of recent transaction in this market and are hopeful for an extended Red Sox baseball season. I’d like to touch on Houston in a bit more detail. As a reminder,…

Great. Thanks, Barry, and good morning. I would like to cover two topics today. First, I will discuss our liquidity and balance sheet position; and second, I will discuss our outlook for the full year. Let me start first with our liquidity and balance sheet position. We continue to have a strong level of liquidity. We have approximately $280 million of unrestricted cash, this reflects an increase of nearly $120 million since the end of the first quarter. The increase is primarily due to the asset disposition proceeds. In addition, we have full availability on our $400 million revolving credit facility and we also have the ability to expand our term loans. This capacity gives us the flexibility to be opportunistic with regard to transactions. As to our balance sheet position, we are focused on maintaining a strong leverage profile. Our net debt to EBITDA of 3.6 times is among the lowest of our full service lodging REIT peers. This level reflects our full leverage and we have no other senior capital outstanding. We anticipate our leverage ratio to decline to below 3.5 times by the end of year. During quarter, we reduced our gross leverage slightly by paying off the $22 million loan at the Courtyard Pittsburgh in advance of its maturity. Moving on to our upcoming debt maturities, we have two maturities in September. These loans are secured by the Renaissance Atlanta Waverly and the Renaissance Austin. We intend to utilize our cash liquidity to pay off each loan. By year-end, we expect 26 of our 46 hotels will be owned free and clear with no property level debt. The weighted average interest rate of all of our debt will decline by over 30 basis points to the low 3% range, as a result of the payoff of…

[Operator Instructions] The first question comes from Thomas Allen of Morgan Stanley. Please go ahead.

I am just trying to get some more granularity around the Houston RevPAR guidance. You came in down 12 and you are forecasting down 13 or 16; you gave us some color. But, is that where you’re seeing higher cancellations, what was July RevPAR, anything else would be helpful?

Really a combination of a couple of things Thomas, and thanks; it’s obviously an appropriate question. We -- it’s really -- it’s a little bit different between the two properties but there are couple of things that definitely are consistent. We’re certainly seeing shorter term cancellations more than we’d expected, we’re seeing some softness in booking pace, booking in the Q3 and Q4, and we’re definitely seeing this continued challenge on the corporate transient side where we’ve got competitors in both markets that are lowering rates for high quality volume accounts. So, we quite frankly, have done a good job of matching and continuing to win that business but it’s at lower rates. In terms of specifity about the month of July there in Houston, it was a very -- it was a challenging month for us but it’s also the weakest -- it’s historically the weakest month for us in Houston, particularly on the group side. We don’t see the July trend continuing through Q3 -- the rest of Q3 and Q4, and we actually have some fairly decent group business on the books for the traditionally strong group months of September and October.

And then, just in terms of asset management and cost management, where would you say you are in terms of the level of intensity of cost cutting? And maybe what things haven’t you started doing yet and you would start doing, if the RevPAR environment continues to get more challenging?

Sure, so another good question. So, what we’ve been doing, and we’ve been working on this program for a long time, it’s not just our property acquisition process, which we’ve talked about, where we go into the deep dives, but the asset managers are working with each of our hotels on specific improvement plans. We have certainly picked up the intensity of those. In terms of implementation, I would say, we’re probably sub-50% in terms of implementation moving toward 100%, but we’re also very cautions to do that on a market by market basis. We’ve really been at a very high level in Huston for really the last 15 to 18 months, given the declines we’ve seen there, and we’ve had a really good focus on expense controls there. As we see markets turns and as we look at markets that we think may continue to soften, we picked those up fairly aggressively. And we have a lot of tools in the kit. We have a very experienced team of asset managers who’ve been through in many cases, two or three significant down cycles. So, we’re pretty confident that we’ve got right tools to do that.

Yes, what I would add to that to Tom is that we spoke in our release and I talked about it in my remarks this morning little bit about some of the benefits we got from some of the very active appeals within the real estate tax side, which helped us a little bit on margin. But, what I don’t want to have lost in that conversation is that by far the bulk of our margin improvement came from the departmental side and particularly on the room side. So, I think when you’re thinking about some of these initiatives that Barry has talked about in quite a lot of detail, we’re certainly seeing the benefit of that in a quarter like the second quarter where we were looking at RevPAR growth in that 1.8% but been able to drive the margins that we were able to drive during that quarter.

Our next question comes from Bill Crow of Raymond James. Please go ahead.

Just a follow-up question on Houston, if I may. As you look at the area around your hotels, how much supply is out there that has yet to open? We talk about easier comps and maybe stability in the energy markets at some point, but if there is still supply to hit, it seems like that’s going to defer new benefits.

Great question, Bill. This is Marcel. Particularly in our two submarkets, we have seen supply that has entered the market. Barry talked about the two hotels that opened up in the Woodlands and we also had some additions in the Galleria with Hyatt opening up relatively recently there. When you look at our specific submarkets that takes a lot off the board, frankly, because there aren’t any hotels that are coming up right in those submarkets at this point. More of what’s happening in Huston still in the supply side is in some of the other submarkets, particularly downtown. Now that’s certainly -- we are not closing eyes to them and then some of those additions in downtown, particularly with the big hotels still opening up there will impact the market overall, particularly as relates to Galleria. But we really have seen the bulk of what we think is going to happen very specifically close to our assets at this time.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Marcel for any closing remarks.

Thanks, Andria. Again, I would like to really point out, there are obviously couple of the questions about Houston and some of the impact that we see in the Houston market and that’s certainly a number that’s drag on our performance a little bit. However, when you look at the rest of the portfolio and how everything went out, I think you can see that we’re performing very well the portfolio overall, and particularly on how we are able to drive those margins in that environment. We certainly have taken a little bit more of a cautious outlook as we look at the remainder of the year, but certainly feel good about where we -- how we can manage this current environment, as Atish pointed out as well. So, we appreciate everyone’s interest today and look forward to continue to update you on future calls.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.