Greeting, and welcome to the RLJ Lodging Trust Fourth Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Nikkie Sacks with ICR. Thank you, Ms. Sacks. You may now begin.

Thank you, operator. Welcome to RLJ’s fourth quarter and full-year earnings call. On today’s call, Tom Baltimore, the company’s President and Chief Executive Officer, will discuss key operational highlights for the quarter and for the year. Leslie Hale, Treasurer and Chief Financial Officer, will discuss the company’s financial results. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may cause the company’s actual results to differ materially from what has been communicated. Factors that may impact the results of the company can be found in the company’s 10-K and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release from last night. I will now turn the call over to Tom.

Thank you, Nikki. Good morning, everyone, and welcome to our 2015 fourth quarter and full-year earnings call. I’m pleased to say 2015 completes our fifth year as a public company. During this time we increased our RevPAR by 58%, expanded our EBITDA margins by over 400 basis points, and more than doubled our adjusted EBITDA. Additionally, we upgraded our portfolio with 30 accretive acquisitions for $1.3 billion and sold 43 non-core hotels for approximately $400 million to create a high-quality diversified portfolio. As of year-end, RLJ owned 126 hotels across the U.S. with 70% of EBITDA generated from assets in urban or dense suburban markets. With the majority of our hotels in the upscale, focused-service category, we are extremely well-positioned to continue to deliver solid results through varying economic conditions. We were once again able to deliver another year of solid growth and remain committed to our guiding principles of achieving operational excellence, being prudent capital allocators, and proactively managing our balance sheet. In 2015, this is clearly evidenced through the following. First from an operational standpoint, our portfolio grew RevPAR by 3.9%, marking a 6th consecutive year of RevPAR growth. We also achieved consolidated hotel EBITDA of approximately $405 million, which is an increase of 6.1% over last year. Second, we enhanced the quality of our portfolio through the sale of 23 non-core hotels. The RevPAR of the hotels sold was approximately 42% below our portfolio average and the margins were 450 basis points lower than our portfolio average. Third, we recycled proceeds from asset sales into the acquisition of three hotels in key markets for approximately $176 million that further diversified and improved the growth profile of our portfolio. Fourth, we returned approximately $400 million of capital to our shareholders in the form of dividends and by buying…

Thanks, Tom. Over the last five years, we have shown a consistent and disciplined approach to managing both our operations and the allocation of our capital with a focus on creating shareholder value. Looking at our results for 2015, we are pleased to report that our Hotel EBITDA increased by $23.3 million to $405 million. This represents an increase of 6.1% over the prior year. During the fourth quarter, our Hotel EBITDA increased by $3.8 million to $95.9 million. For the year, we achieved Hotel EBITDA margins of 36.4%, which represents a 9 basis point increase year-over-year. For the quarter, we achieved margins of 35.5%, which is down 27 basis points from the prior year. Throughout the year, higher property taxes coupled with the challenging performance in Houston and New York way down our margins. Excluding these two markets, our margins would have expanded by 87 basis points for the year and 52 basis points for the quarter. Now with respect to our corporate performance, our adjusted EBITDA increased by $13.2 million, the $389 for the year, which represents an increase of 3.6% over the prior year. During the quarter, we achieved $89.8 million of adjusted EBITDA. Adjusted FFO for the year increased $14 million to $324.7 million, representing a 4.5% increase and equates to $2.50 on a per share basis. For the quarter, our adjusted FFO was $74.8 million, or $0.60 on a per share basis. Our adjusted EBITDA and adjusted FFO reflect add back to normalize our results. In the fourth quarter, we had three non-cash adjustments, the most significant of which was $40 million adjustment related to the release our valuation allowance. The other adjustments, including impairment charge of $1 million and a $4.6 million gain related to the sale of an asset during the quarter. The…

[:

Good morning, guys. How are you?

Good morning, Ian.

How are you?

Good. How are you?

All right. We’ve heard from several of your peers this quarter, who I guess would describe still a pretty strong bid for core assets in global gateway cities. I think you can essentially say that they’ve seen a little in the way of backup in cap rates despite dislocation in the credit markets in the global economy. I mean, you guys are active sellers. Can you just talk a little bit about buyer demand and pricing for secondary markets in and call it lower RevPAR assets today?

I think, it’s still strong, Ian, if anything and maybe it’s backed up 50 basis points, clearly the debt markets has wind out a little bit. But I still think there are a number of groups looking for yield, whether it’s high network, whether it’s private equity, whether it’s large sovereign. So we’re in active discussions and then we’re certainly cautiously optimistic that we’re going to be able to move some of our non-core assets. I think we demonstrated that over the last few years, again, we moved 23 assets for about $250 million. Last year, we’ve moved $400 million over the last couple of years. And so we’re cautiously optimistic. We think it’s still active. The debt markets are choppy. But we don’t think at the size of deals that we’re looking at whether the individual asset sales or small portfolios are slightly larger, we think and expect it’s going to be relatively active.

Okay. And just quickly on the guidance, Leslie, if I heard you right, you said of the results this quarter you experienced about 87 basis points of displacement, which I thought would have been a little bit higher just given what you guys did in Houston down 13%. As I think about the 3% to 5% RevPAR guidance for 2016 without maybe pinpoint exactly, can you just sort of give us some indication what your expectations are for Houston and for New York within that 3% to 5%?

Yes, I think couple of things to keep in mind. We’ve transformed the portfolio. So we’ve – we bought 18 assets in the last two years, 15 of those in 2014 for about $630 million. Obviously, we bought three assets last year for about $176 million largely on the West Coast in high desirable markets. So now obviously we get a pretty significant tailwind from Northern California. As we said, we expect Northern California to be about a 11% when you combine that with Southern California, obviously we think an incremental 5%. So that moves into being our largest market followed largely by Austin being strong, South Florida being strong. I do think it’s important to sort of walk through that kind of top 10 through the way we’re going to rereporting and the future is focusing not on kind of a historical top six, but more of the top 10. So, perhaps the South Florida followed by probably Denver, New York City will fall down to probably our fifth market; Chicago, six; the DC, seventh; Louisville, eight; Houston, ninth; and Southern Cal, again, closing out the top 10. It’s an incredibly diverse portfolio. I think that’s why I think our portfolio held up even though New York and Houston were a big drag last year, they were a drag of about 230 basis points. So you add those two back last year, we would have been for the quarter and for the year, I think for the quarter about 4.8% and for the year about 6.2%. Generally in line when you then add back the renovations, we had 87 basis points, the four previous years, we were north of 7% in RevPAR growth. So, again, that also I think provides a backdrop that while things certainly softened slightly and…

No, that’s great color, Tom. Thank you very much. That’s it from me.

Thank you. Our next question is from the line of Ryan Meliker with Canaccord Genuity. Please go ahead with your question.

Hey, good morning, guys.

Hi, Ryan.

Thanks for all that color to Ian’s question, that was really helpful to understand the tailwinds from renovations as well as what your underlying expectations are for Houston and New York, as we know those are continuing challenged markets. My other question that I had for you guys was, as you talked a little bit about the dislocation in the credit markets, it seems like there’s not the bid for portfolios of select service hotels that there was a year or two ago, you guys obviously have one of the best balance sheets in the industry. What’s your appetite for kind of stepping in and filling the void on portfolio acquisition, but it seems like private equity and maybe even some of the non-traded REITs have now vacated as we go through 2016?

It’s a great question, Ryan. I would say that we’re always opportunistic. But I think as a general rule based on where we sit today, we can expect there will be a net seller. We’re – we’ll continue to be really focused on selling non-core assets. And again as I said Ryan, I think the climate is perhaps a little tougher, but we’re cautiously optimistic and based on the discussions we’re having, we think that there are active buyers out there and the debt markets will certainly be sufficient. . : We’re active last year and are buying back, we bought back 8 million shares at an average price of $28 and $24 last quarter and we thought it was a good buy. At that point, we clearly think it’s a good buy today. We are trading at a huge significant discount to net asset value, at least, in the north of 40% range. So we think that’s the highest and best use of our capital. And I think we pride it ourselves on being really prudent capital allocators. And I think we’ll continue to see that kind of effort from us.

All right. And then I apologize if I missed this in the prepared remarks. But as you guys look to sell non-core assets, any particular markets that you guys are focused on trying to either reduce your exposure or outright exist?

As we said in our prepared remarks, our top 60 assets really the RevPAR is comparable to almost most of our full service peers. I wouldn’t say that there are off-limits, but we see that many of those are going to be core holding. So, if you look at the other buyer belt the other side of that with our portfolio, we do have a number of assets that are RevPARs in the $100 to $105 range that we don’t think our long-term holds. You’ll continue to look for us to and they’re spread throughout the country. We’re in 21 markets today. So that gives us an opportunity to craft single assets and small portfolios. We prefer to do small portfolios and he sizes that you’ve seen us during the past. 13 hotels, we did one last year, 20 hotels, and that certainly will be the focus for us, as we move forward. And we’re setting a target internally of $300 to $400 million initially. I mean, we can certainly increase that if the buyer universe is attractive and pretty robust. We will also explore lighting our load in New York. One of the comments I – that again, I made earlier want to stretch that – stress is that both New York and Houston historically were probably in the 19% range. They will be – we believe that about 12% of EBITDA. So, again, there are less and less of an impact to us on the overall portfolio, in part because they had – they underperform, but I think equally important and perhaps even more important is the fact that that we’ve grown the portfolio and we repositioned with so many of the wonderful acquisitions over the last two years. The high portfolio on our relationship with them has been very strong. And that portfolio generated nearly a 10 cap for us that last year that we bought in 2014, we now renovated half of that portfolio. So we are very bullish. And seven of those 10 assets were in the West Coast. So there’s a lot of optimism and I think the market perhaps has – not understood that and that’s something that we that Leslie and I plan to do a much better job, communicating that. So people see despite the softness in a couple markets. Our diversification is a real strength. And we look forward to showing that benefit here in the months and years to come.

All right. Thanks, Tom. I appreciate the answers to my questions. Have a great day.

Thank you. Our next question is from the line of Wes Golladay with RBC. Please go ahead with your questions.

Hey, good morning, everyone.

Good morning, Wes.

You had mentioned your stocks at a 40% discount and the core assets are fairly, I mean, you still get – you could still get a good bid for those assets. Why not sell core assets and buyback the stock?

It’s an excellent question. Well, all options were on the table, Wes, I think you know us, we’ve had discussions before. We think the industry should consolidate right and we want to be part of the discussion as a buy or seller. And I think, as – what we think in the intermediate long-term selling non-core positions us and helps us in long-term goal again of looking and exploring M&A. Having said that if there are core assets and I’ll take, I mean, New York asset or two, if the pricing is right and it’s attractive and it creates value of our shareholders and given where trading as a discount as I said in the $300 to $400 million that we targeted so far, you can expect that we will seek to sell an asset or two in New York. So I mean, I think that answer your question and certainly that will be a part of the game plan that we’ll explore.

Okay. So you mentioned you would actively hire some of the time seller rather than wait for reverse enquiry, if I heard that correct?

Yes, we’ll do both. I mean we’ll look to sell assets off-market. We have a broker that we’re currently working with. And given Ross Bierkan’s background and all of those we are and given our history, we certainly have unique relationships. So selling using brokers or not; we’ll continue to explore ways to create value for shareholders.

Okay. And then, Leslie, a real quick. What kind of margin expansion do you expect for this year? I think you just gave the absolute margin, but what’s embedded in that?

That would assume at the high-end 100 basis points and the midpoint 50.

Okay. And then for the tax release, will that allow you to keep your taxable income loan people will payout ratio this year and are not to raise the dividend, I guess, buy back more stock this year?

Exactly opposite, Wes, the fact that we are generating positive net income, and the TRS would suggest that you’re having more distributable capital income, which you’d have to increase the dividend theory. So it’s actually the opposite indication.

Okay, sorry about that. And then, yes, that’s it from me. Thank you.

Our next question is from the line of Will Crow with Raymond James. Please go ahead with your question.

Good morning.

Good morning, Will.

Hey, Tom, it sounds like if anything your concentration in Northern California is going to increase through the years via asset sales whether non-core or New York? I would like to get your take on and I know it’s tough to pin down even 2016, but 2017 in the first-half of the year look so in San Francisco in particular to be challenging, while also lot of citywide because of the Convention Center work. How are you thinking about that as you try and model out the next few years?

It’s clearly something that we’ve got to monitor carefully. Like everybody, we are all trying to get our arms around with the scope of the work what impacts that was going to have on some of the big groups. But I would say, Will, given the fact that we’re spread out through Los Altos through Santa Clara to the Fremont and just where we are positioned through that and given the distance. And, in fact, that we really want to get one asset the 167-room San Francisco Courtyard Union Square. But we think we are pretty well insulated at this point. Obviously, if we had all of that exposure in the CBD which happen to be a little more uncomfortable than we are today. We will monitor it, but we think and I think we’ll see that while some of our other peers that are really those are locations in San Francisco that have sort of underperformed, I think you’ll see our first quarter print, what we expect to see in Northern California will be a significant above what others are doing.

Well, that’s terrific. My second question, Tom is, and it maybe too early to tell, but I wonder what you’re seeing from inbound international travel demand for the upcoming summer months. So maybe relative to what you saw a year ago?

Yes, I don’t have the data on that right now. But I would say what we saw on New York last year. I think is a decent proxy. You international demand was down revenue about $2.1 billion. It was about 17.5% of total revenue versus about 19.1% of total revenues in 2014 to down about a 150 basis points year-over-year and it had about 300 basis points of RevPAR impact to us in New York. Again, one operator we’ve got four hotels there in Manhattan. So we have seen over the last few years the international generally was in that 18% to 20% range. So certainly with the strong dollar, we have seen a pullback and also think the strong dollars created opportunities for more of the U.S. consumers to be traveling abroad, so I think that’s the other side of your equation as well. So still think as you look at the Department of Commerce and what they put out, I think the compound annual growth rate of international travel between 2000 and 2012, I think it was grown at about 2.3%, and I think they revised it down slightly for the next five years, but it was still north of 3% I think at around 3.1%. So we’re still cautiously optimistic no doubt here in the near-term it’s going to have an impact. We’re not seeing in a real falloff for this summer, just don’t have enough of that data right now given the short booking patterns we have on the transient side.

Okay, great. Maybe I’ll ask the same question next quarter when we get a little closer to this summer months. Thanks, guys. I appreciate the time.

Thank you. Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital. Please go ahead with your question.

Hi, good morning, guys…

Good morning.

Thanks for taking the question. I guess, Tom, just given your general cautious optimism on the industry. Your comment about potentially industry surprising to the upside struck me. And then you mentioned also just having limited visibility in the business. So, I guess, what gives you the confidence that or what are you seeing that that you think could – this year RevPAR could surprise to the upside?

Well, I think clearly we’re seeing supply still below the long certainly below the long-term average. Consumer is still healthy. Housing is still good. Corporate profits well a bit choppy. Balance sheets, I think have been repaired certainly from a consumer standpoint. And as we look out and see some of the trends group, I think is farming and certainly getting better. And I think a lot of the brands have supported that. We see in our own portfolio they’re looking transient, it’s up about 4.7% here over the next 90 days even a group for us, which is not a big part of our business. We see that being up about 13%. So we’re cautiously optimistic, Austin. Also, the greatest is really – if you step back, and kind of look at our performance last year, and again, we all know that the drag that we had for New York and Houston about 230 basis points. But when you take that out and then sort of unique situations right” One strong dollar and certainly supply in New York, the other given the oil crisis and what we saw on the big falloff. But we really had broad support out of our non-top six markets. Again 59 assets are accounting for 54% of our EBITDA, up 7.6% further totaling up 8% for the year. So we’re seeing a broadening and the strengthening. No doubt it’s choppy. No doubt that GDP growth a little soft in fourth quarter. I think most of the pandit still see US growing at 2%, 2.5%. So that’s moderate. But this has largely been a moderate recovery. It has not been a traditionally strong recovery. And that can provide for continued growth in our business. So we – for some who believe that the cycle is over and that we’re looking at our recession in negative RevPAR, we just don’t see any data on the horizon. We do see choppy markets and listen we do – I do want to communicate to listeners, first quarter will be our softest quarter, Will, as well as we pointed out we do have a few renovations this year those largely will occur in first quarter and fourth quarter, we do have some tougher comps in first quarter. So we would expect that we would probably be in the 2% to 4% RevPAR despite all of that in the first quarter. But as we look out in favorable comps and demand patterns and again Northern California we just expect this kind of the north double-digit and we just had a very strong showing coming out of the Super Bowl there. And given our distribution of product there and transformation of the portfolio, we’re cautiously optimistic.

Thanks for the high-level comments there and the detail there on the first quarter. When you look across the supply picture in your non-top six markets versus the top six markets, how do they stack up?

I would say in the non-top six markets is probably less supply exposure. And on a generally speaking and clearly I think we all know that the New York picture don’t need to talk about that. Austin, it’s interesting. Everybody talks about the end of Austin for years and we were up 11% in 2013, we were up 9.4% in 2014, and we were up another 5% last year. And we think will bring up mid single-digits again this year. But when you have a city like that that’s a tech hub and a university town, and the state capital and just prolific growth occurring. The supply even for the high supplies occurring there, it’s being absorbed. So I would think generally that the – our current non-top six that the supply is probably slightly below what we’re seeing in some of the other urban markets, yes, generally speaking.

Thanks for that. And then just lastly for me just on the transaction side. Is it fair to assume that you didn’t buyback as much stock in the fourth quarter as you had previously. So is it fair to assume that your stock repurchases will kind of depend upon the pace of your asset sales in 2016?

Absolutely. We sent that signal in the last call that, we would match fund, and we would use proceeds from dispositions again to continue to strengthen our balance and continue to buy back stock. Those are priorities one and two for us this year. And we were clearly not happy with where we’ve been trading, but we were – we know it’s a marathon not a sprint, we’ll continue to work hard and prove out our thesis and we know if we do that, over time we’ll get rewarded by investors.

Okay. Thanks for the time today.

Our next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch. Please go ahead with your questions.

Hey, good morning, guys. Thank you for taking my question.

Good morning, Shaun.

Tom, I just wanted to go back to sort of the Houston underwriting and this probably more of a clarification and actual question. But I think you said in response to one of the first questions that you were expecting Houston to be down 2 to down 3. So A, did I catch that correctly? And then Billion, is that inclusive of your – is that the market expectation or is that inclusive of the renovation or disruption tailwind that you’d expect to see at your specific hotels?

Well, that 2% to 3% negative related to our portfolio, we’ve got 10 assets there that was clearly related to our RLJ’s portfolio. That keep in mind we were down pretty significant last year as you know 8.3%. Again, we had, at least, 500 basis points of that related to significant renovations and a drop off in oil and gas business in Houston. So we think Houston is going to be down. I would also stress that we expect that Houston is going to be about 5% of our EBITDA. We saw our hotel EBITDA of $425 million to $450 million. So it – it’s certainly is relevant, but we think again as we reposition and we talk about our top 10 markets, Houston really drops down to about our 9th top markets in the scheme of thing. So Houston is not going to crater or year and crater our business. So where we think long-term Houston is a wonderful market and I would remind listeners that between 2011 and 2014 we were generating a compound annual growth rate of about 10.8% and we were growing cash flow at 16.2%. So it was a bodacious results for us and it’s soft now and who knows how long this oil, certainly shortfall is going to remain. But you we’re well positioned there long-term. We love having assets downtown in the Galleria and Woodlands and we like the portfolio and again don’t want more than 5% exposure, but we’ve always talked about having a really diversified portfolio and I think this is going to prove that thesis out andover time in the next few years.

That’s great, thank you for that. And then the other question again is probably also just a clarification, but we think about top markets for this coming year, I think in the prepared remarks you talked a little bit about South Florida. So I mean of the same – of the bright spots that you see right now is that the number one is it still continuation in places like Austin, and Denver just where do you think it’s going to be the best?

As I Shaun look at what I call the positives for 2016 for RLJ I would begin with Northern California, which we’ve talked about. We think it’s our top market and our top-performing market. We estimate it will be approximately 11% of our EBITDA, we expect it will be in the north of 10% RevPAR growth. We’ve got eight assets there again part is coming from the Hyatt portfolio acquisition in 2014 and the other bolt-on’s that we did last year coupled with the San Francisco, Courtyard Union Square, bull’s-eye location, it just opened, and it’s ramping up very nicely. We get the tailwinds from a number of renovations, the Waikiki a significant renovation our courtyard there. Largely out of service last year, our DoubleTree Grand Key West in South Florida, one of the two assets that we have in a very strong key, Key West market, our Embassy suites Irvine and again coming off of a major renovation. Our Portland Courtyard also coming off of a major renovation. The Hyatt portfolio again we renovated probably half of that portfolio last year. And then our recent acquisitions. We get the tailwinds coming from the Hyatt Place DC, DC we think it’s going to have a strong 2016, and an outstanding 2017 the asset that we bought last year in Seattle of course the Los Altos residents and then we also bought in the Silicon Valley area. So we think that it really provides the greatest tailwinds. So Northern California certainly strong Austin has continued to be a resilient market, South Florida feel very good about Southern Cal we feel very good about and then. Again as we look at some those old what we call nontraditional, non-top six markets where we continue to get the benefit, Atlanta should have an outstanding year, New Orleans should have a good year, Dallas should have a good year and so that diversification helps us and positions us and candidly can soften the blow for perhaps some of the other markets that may slip a little bit. Again we – as I’ve communicated earlier we’d expect first quarter would be our softest quarter, it traditionally is we do a tougher comps, and again we would expect and we would be RevPAR probably in the 2% to 4% range for first quarter, but we are very optimistic as we look out for the second third and fourth quarter for the balance of the year.

Thanks and sorry to make you repeat yourself, but I appreciate it.

Our next question is from the line of Lukas Hartwich, Green Street Advisors. Please go ahead with your questions.

Thank you. Hey guys I just have a one…

Good morning Lukas.

Hey, Tom just curious the asset sales that you are planning on doing. What’s the priority in terms of the uses of proceeds there is it buying back stock, is it lowering leverage, just if you could talk about the priorities of disposition proceeds?

Yes, we don’t see them mutually exclusive Lukas. So the reality is we’ll continue to look at the balance sheet, as Leslie articulated in her prepared remarks and we are working on again extending maturities, giving us more flexibility with covenants. We want – we have a superb balance sheet. We want a fortress balance sheet. And particularly, as we get later in this cycle and you’ll see that again being equal priority for us, as well as buying back stock. If we were an active buyer buying out at the higher prices, you can fully expect that we have as much energy and enthusiasm today to buy back at what are – unbelievably depressed prices and trading at a 40% or more discount to NAV. So we’ll manage both. I think the first priority is to seek to sell non-core assets and we’ll seek to do that and whether it’s single asset, small portfolios, or slightly larger portfolios and also again look to, like many of our peers look to lighten our load in New York, all those issues were on the table.

Great. That’s it from me. Thank you.

Our next question comes from the line of David Loeb with Robert W. Baird. Please go ahead with your question.

Good morning, David.

Good morning, Tom. I want to hit on a couple of themes you guys have talked a lot about. So I apologize if it’s a little bit repetitious. Leslie, one specific thing I know you’ll have, which were the non-comp hotels in the supplement later today. But if you could just run through that now that would just help us in our understanding of the guidance?

Sure. This year we’re going to have four non-comparable hotels. As I mentioned in my prepared remarks like a key we will continue to be non-comparable. Obviously, San Francisco just came online last year, so that won’t be comparable nor with the single suite. Houston, because that came on last year, as well as the DC Hyatt, which opened last year, those are the four non-comparable hotels.

Just that was great, okay. And, Thomas, just kind of more of a thought question on the dispositions and use of proceeds. I very much appreciate you have a highly accretive use of proceeds in buying your stock at a big discount to NAV. But do you think that there’s some potential buyers of those assets out there that believe they have the upper hand on pricing given this use of proceeds that you were highly motivated to use?

Yes, it’s a great question, David. I mean, there’s always a little bit of a game theory. And look, we – there’s no need for a fire sale. There’s no need for us to panic. We’ve got liquidity. We’ve got a wonderful balance sheet. Again, we want to continue to strengthen it and get it to a fortress position. But we’ll always be careful and thoughtful about going to create shareholder value, but it’s a very fair question. I think that there will be in this environment and keep in mind, as you know and, as part of our history, we were on the private equity side. We did have three funds, as you know prior to and we’ll private before that for us. So we understand a little bit of that. And but at the same time there are buyers out there that have got a finite period of time to put out capital. This is their window. And as I tell many of the private equity guys, if you’re going to transact when you largely got a lot of the REITs on the sidelines, this is your window back, and if you don’t take advantage of it, I think you’ll regret that. And so it’s a little bit of game theory on both sides of the eye.

Great. Thank you very much.

Thank you. Our next question comes from the line of Anthony Powell with Barclays. Please go ahead with your questions.

Good morning.

Hi, good morning, everyone. Good morning, Tom. Obviously, your RevPAR growth in your non-top six markets historically was very strong and it actually accelerated from the – in the fourth quarter from a third. What customer segment it’s kind of drove the acceleration and also will you gain share in those markets, or whether just kind of the market themselves that drove the growth from the third quarter?

[: We always believe that being in four or five markets is not the way to play a volatile asset class like lodging. And where we think, again, you take out New York and Houston, we talked earlier about that. We’re at 6.2%. You add back our displacement given the fact we had 25 renovations, significant renovations last year. We’re really not that far off from where we’ve been there four previous years north of 7%. So, again, no doubt, we saw a slight deceleration, no doubt, it’s choppy out there, and no doubt, forecasting is a little more difficult. And so we’re not naive about this. We’ve been through many cycles. But we think the diversification really gives us the strength as we move forward.

Got it. And I think you mentioned before that M&A would be something that you’d look at and that selling non-core assets helps business before that. Are you seeing, so today a little retreat M&A in the space? What do you think changes that this year or in future years?

M&A is – we have this discussion every quarter. Everyone knows my views on it. I think the industry should consolidate. We want to be part of that discussion as this is a buyer or seller. But I think in this environment, given where multiples are, given where people are trading vis-à-vis their own NAV, it’s tough I think to imagine that a deal can get done. Even for someone that take private, you would need the debt markets to be cooperative to be able to do a large transaction in that scenario. And probably the biggest hurdle, which is historically been is really the social issues. You’ve got a lot of entrenched CEOs and management teams that enjoy their – enjoy the approach, and don’t want to give it up. So I think that’s certainly been one of the big issues as we’ve talked in the past.

Okay. And there’s one more for me. I think recently CBRE, I know if Austin has a top Airbnb market in the country. Have you seen any impact of – to that market from Airbnb and what’s your view on Airbnb in general? I think you are latest kind of plus version on to the same?

Yes, I missed your part when you say Airbnb – you’re talking specifically about Airbnb or a specify market?

Austin, Austin, I think CBRE kind of identified Austin as one of the top 10 Airbnb markets. And I wonder if you saw an impact in Austin or seeing the impact in Austin from Airbnb?

No, we really haven’t. Again as I said earlier, Austin has been strong into those markets, where everybody has been predicting the end of Austin for a long time. I think we were up a 11% in 2013, or up 9.4% in 2014, or up 5% last year. And we fully expect we’ll be in that range again this year. Again, given there the following, the consumer base and then reminding out there it would in some of the special events, I mean, it makes sense that Airbnb might have a nice total there. Listen Airbnb is a real threat here. In many respects they are operating a legal hotels, all we want is a level-playing field. We want them to be able to pay taxes to the same extent that we are, want them to be required to adhere to the same ADA laws and the same fire life safety laws that we RLJ and many of our peers are also required to follow. So we think over time as municipalities are getting smarter about it and understanding, understanding the implications is owning in taxes that will level out over time. We don’t agree. So I think one or two of your peers have suggested that Airbnb has created about 200 basis points of supplying impact. We really disagree with that thesis, and don’t believe that the logic supports that. No doubt in special events in certain situations, we did see out in San Francisco that we had to that affected booking patterns. But at the end of the day, we had a fabulous performance of our hotels in the San Francisco area. All the credit goes to our management company partners and our asset management team that work carefully to revenue management to revenue manage appropriately.

All right. Thanks a lot. It’s been a very good color. I appreciate it.

Thank you. At this time I will turn the floor back to Mr. Baltimore for closing remarks.

Thanks. We appreciate everyone taking time and look forward to our upcoming call in late April or early May. Safe travels.