The following is a summary of the Service Properties Trust (SVC) Q3 2024 Earnings Conference Call Transcript:

Financial Performance:

• Normalized FFO (Funds From Operations) for Q3 2024 was reported at $52.9 million, or $0.32 per share, compared to $0.56 per share in the same quarter last year.

• Total gross operating profit margin percentage saw a reduction of 380 basis points to 27.5%.

• Adjusted EBITDAre declined 11.6% year-over-year to $155 million.

• Increased interest expense and lower hotel EBITDA continue to impact financial results negatively.

Business Progress:

• SVC announced plans to sell 114 focused service hotels in Sonesta portfolio, targeting proceeds of approximately $1 billion, anticipated in 2025.

• Operating statistics were provided for hotels being exited and those expected to be retained, illustrating strategic refining of the portfolio towards higher-performing assets.

• Completed major renovations at multiple hotels during Q3, with further renovations planned.

Opportunities:

• The projected sale of 114 hotel properties is expected to not only decrease future capital expenditures by approximately $725 million over six years but also enhance SVC's focus on higher-performing full service and select service hotels.

• SVC's efficient management of its strong net lease portfolio, which maintains consistent performance, provides stable cash flows aiding financial and operational flexibility.

Risks:

• Revenue displacement from hotels undergoing renovations negatively impacted performance, with full recovery expected to take time.

• Rising labor costs and operational expenses in a fluctuating economic environment pose sustained pressure on profitability.

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