Welcome the Xenia Hotels & Resorts Fourth Quarter Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Lisa Ramey, Vice President of Finance. Please go ahead.

Thank you, Kate. Good morning, everyone and welcome to the fourth quarter and year-end 2016 earnings call and webcast for Xenia Hotels & Resorts. I am 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 our fourth quarter and full-year results, followed by a discussion of Company achievements in 2016. Barry will follow with portfolio results and operational highlights. And Atish will conclude our remarks with details on 2017 guidance, followed by an update on our financial profile. 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 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, February 28, 2017 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 and thank you all for joining our call. While 2016 presented its challenges from an operating perspective, we're pleased with the results of our continued focus on the execution of our strategy throughout the year. Despite slowing industry fundamentals and the unique challenges we faced in the Houston market, we spent the year focused on the aspects of our business that we can manage. We remain diligent and dedicated to the four pillars that form our strategy, our broad portfolio mix, a focus on quality through transactions and portfolio enhancements, differentiated portfolio management and a strong financial profile. As a result, we ended the year with a higher quality portfolio and stronger balance sheet than when we started 2016. We believe we're positioned well for the future and our experienced management team will be able to continue to maximize results within our portfolio. In addition, last year's capital allocation decisions have positioned us to take advantage of external opportunities. Operationally, fourth quarter results slightly exceeded our expectations, with RevPAR, adjusted EBITDA and adjusted FFO each above the implied fourth quarter guidance provided in November. During the quarter, we had net income attributable to common stockholders of $48.8 million, our adjusted EBITDA was $64.1 million for the quarter and our adjusted FFO per share declined slightly to $0.55. For full-year 2016, we had net income attributable to common stockholders of $85.9 million, our adjusted EBITDA of $287.3 million was between the midpoint and high end of the range we provided in November and adjusted FFO per share grew 2.3% to $2.20. We made several portfolio changes throughout 2016 that make a year-over-year adjusted EBITDA comparison challenging, a theme that will continue as we move into 2017. In our press release issued this morning, we have added a number…

Thank you, Marcel and good morning, everyone. As a reminder, all of the portfolio information I will be speaking about is reported on a same-property basis, with 39 hotels for the quarter and year end. In the fourth quarter, our portfolio results were challenged but in line with our expectations as of our last earnings call. Same-property RevPAR was down 4.2% which comprised of a decline in occupancy of 194 basis points and a decline in rate of 1.5%. Excluding our three hotels in the Houston area, portfolio RevPAR was down 1.9% for the remaining 36-hotel portfolio. For the full year, our RevPAR was down 0.3% compared to 2015, as occupancy was down 103 basis points and rate was up 1.1%. Excluding our Houston area hotels, RevPAR for the portfolio for the year grew 1.9%, attribute entirely to rate, as occupancy remained flat. As demonstrated by our results, we continue to experience weakness in Houston through the end of 2016 and we also experienced anticipated disruption from the start of several renovation projects. Our Houston hotels accounted for nearly half of our year-over-year decline in rooms revenue for the quarter. Our performance was also impacted by a number of nonrecurring events that took place in 2015, including the Breeders' Cup in Lexington, Kentucky; several significant non-repeating groups or events benefiting a number of our hotels, including our Marriott Dallas City Center and the Aston Waikiki Beach Resort; newly renovated competitors that were under renovation last year; and a general shift in group patterns through the Jewish holidays falling in Q4 this year. Our portfolio results were also impacted by hurricane Matthew in October which, as mentioned on our third quarter call, impacted our hotels in Charleston, South Carolina; Savannah, Georgia; and Orlando, Florida. Food and beverage revenues suffered a double-digit…

Thanks, Barry. I will cover two topics today; First, I will discuss our outlook for 2017, then I will turn to a discussion of our balance sheet. As Both Marcel and Barry alluded to earlier, our industry fundamentals remain challenged and in 2017, the industry is likely to experience supply growth in excess of demand growth for the first time since 2010. Our guidance is reflective of this industry dynamic. We expect RevPAR to be flat to down 2% for 2017. Two other items are negatively impacted our RevPAR outlook for this year. First, we expect RevPAR at our hotels in Houston to decline 8% to 12% due to continued weakness in the market, additions to supply and property renovations. This decline is expected to have an approximate 100-basis-point impact on the full portfolio's RevPAR. Second, we anticipate revenue displacement due to property renovations to negative impact RevPAR by an additional 50 basis points. Apart from these two factors, we believe our portfolio will continue to perform in-line with our peers. As to specific market dynamics, looking forward, we anticipate relatively stronger results from recently renovated or newly opened hotels. Properties such as the Marriott Napa Valley, Hyatt Centric Key West and the Grand Bohemians in Charleston in Mountain Brook should do well. In addition, our hotels located in Washington DC, Atlanta and New Orleans are expected to perform well, as market demand is strong in these locations. On the flip side, markets in which additions to competitive supply are outpacing demand growth, such as Houston and Denver, are expected to be more challenged. And our hotels in Philadelphia and the San Francisco area are expected to have demand declines relative to last year for market-specific reasons. As we look at the entire portfolio, group revenue pace is up approximately…

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

You guys talked a decent amount about your balance sheet and the strength of your balance sheet. Can you just talk about how aggressive you would be willing to be in terms of acquisitions? And if you are going to be aggressive, what markets would you be looking at? Thanks.

Sure. Good morning, Tom. As we have noted, we have over $250 million of cash available. We're fully undrawn, $400 million line. We've obviously been very active on the disposition front over the past 15 months. And frankly, when you look at the amount of activity we've had there, it's been a fairly big percent of our enterprise value. So we've clearly made all the moves to put ourselves in a position to be an inquisitor for the right kind of opportunities that would come around. It really depends on the long term outlook of potential opportunities that would come up and how aggressive we'll be on those. We certainly feel like this year could be a year where we could be more of a net acquirer versus a net seller, like we've been over the past 15 months. And market wise, we're going to be very much focused on the strategy we have, looking at primarily top 25 lodging markets, key leader destinations. There are a few markets where we're not represented, where we'll where we will certainly look at. But we're very much focused on what the supply picture looks like in individual markets, whether we want to actually get into some of those markets in the current part of the cycle. So think about markets like some markets where we're, where we wouldn't mind increasing exposure in markets like DC, like Boston, like Orlando, Atlanta. There are certain markets where we're not currently where we'd also take a look, like Minneapolis, Charlotte, Nashville, those types of markets. But we would have to be very comfortable with supply picture, with growth opportunities with those specific opportunities.

And a couple of questions on Houston. I'm right that it came in below your expectations for the fourth quarter. What do you think is happening there? When do you expect that market to stabilize? And you did sell an asset in that market in the fourth quarter. How easy was it to sell? Thanks.

I will take the second part of the question first and I will talk about the transaction and then I will turn it to Barry to give you a little bit more color on what we're seeing from the operational standpoint. As we looked at potential dispositions last year, the four assets we sold in the fourth quarter were assets that we had earmarked that we believe didn't quite have the same growth characteristics going forward that we expect form the rest of our portfolio. And an opportunity to exit a market like St. Louis and an opportunity to lower our exposure in some of the other more challenging markets like Houston, Denver and Chicago was appealing for us. So, when we looked, at including the Houston asset in that portfolio, there frankly was a fair amount of interest in that just because people are obviously thinking that there will be a turning of the market there at some point and there will be some growth that can be achieved in assets in that market. From our perspective, we obviously have a concentration in Houston and we prefer to refocus our efforts on the assets that are the higher-quality assets for us in those markets. So I'll turn it Barry to answer a little bit more specifically on the operations side.

So a couple of different things and we're certainly seeing some divergence as we look at the three hotels together as the Oaks and Galleria as opposed to the Woodlands. The Woodlands is the worst story, but it's a little easier to walk through. The challenges there in Q4 and our continued challenge is at least through the first half of this year related to the new supply that entered that market, primarily in Q2 of last year. So we continue to have very -- battle very aggressively with those new competitors for both occupancy and rate in the Woodlands sub-market. We also experienced in Q4 in the Woodlands a number of continued group cancellations in the oil and gas sector, both on the room size, as well as a number of large holiday parties which was part of our --the overall impact on food and beverage decline in Q4. We see the Woodlands market as being, unfortunately, relatively stable through the year in terms of quarter by quarter and are not really anticipating any recovery in the Woodlands market this year. The Oaks and Galleria, very different story. Some real challenges there continue, we expect to continue through Q1 and Q2, despite a very successful Super Bowl. But we do expect and have underwritten into our guidance a modest stabilization there. As it relates to the Oaks and Galleria Hotel it was primarily due to the Gallery renovation. It's a great renovation. We're really touching all the guestrooms. We're doing a lot of tub-to-shower conversions. We're adding a bar in the lobby. We're looking at some other ancillary upgrades we may do later in the year to complete the renovation. But our expectation certainly is that we get to not positive growth, but certainly get very close to flat year-over-year environment there in Q3 and Q4.

[Operator Instructions]. The next question comes from Brian Dobson of Nomura. Please go ahead.

Just a quick question on group pace, I see you mentioned that was up low single digits so far this year. How much of that is in your outlook? Or have you taken a more conservative approach given what happened last year?

We have taken a little bit more conservative approach as we looked at and as Atish mentioned in his comments, I believe in his comments as well, that we came in for the year, last year with positive pace as well. We saw a fair number of cancellations and a little bit or weakness in the year for the year bookings last year. So we have certainly taken that into consideration as we have looked at this year. And keep in mind that our group contribution is about 30% of our business, like Barry mentioned. And with about half of that on the books, it certainly isn't something that we want to completely hang our hats on as we look at the RevPAR changes for this year.

Yes, that's right. So it's fair to assume that you're anticipating a flat booking pace in your guidance?

Well, I think, certainly we expect for the -- between the in the year, for the year production and the impact of cancellation and attrition to impact that pace as it realizes during the course of the year. So we're hopeful that it's not down 2 again this year, but we don't expect it to be up 4%. So somewhere in between flattish is probably about right.

There are no additional questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Marcel Verbaas for closing remarks.

Thank you, Kate. Thank you all again for joining us today. As I mentioned in my opening remarks, we're very pleased with where we're positioned with the Company. Certainly our dealing with some operational headwinds and particularly some of the challenges in Houston that have persisted, but we believe we've set the Company up for growth in the future and are looking forward to effectuating that. And with that, I will wish everyone a happy Mardi Gras and thank you for joining us today.

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