La Quinta Holdings' (LQ) CEO Keith Cline on Q2 2016 Results - Earnings Call Transcript

| About: La Quinta (LQ)

La Quinta Holdings Inc (NYSE:LQ)

Q2 2016 Earnings Conference Call

August 2, 2016 5:00 PM ET

Executives

Nikki Sacks - IR, ICR

Keith Cline - President and CEO

Jim Forson - CFO

Analysts

Smedes Rose - Citi

Shaun Kelley - Bank of America

Chris Woronka - Deutsche Bank

Thomas Allen - Morgan Stanley

Jared Shojaian - Wolfe Research

Joe Greff - JP Morgan

Operator

Greetings and welcome to La Quinta's Second Quarter 2016 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Ms. Nikki Sacks. Thank you, Ms. Sacks. Please go ahead.

Nikki Sacks

Welcome to La Quinta Holdings' second quarter 2016 earnings call. Before we begin, we'd like to remind you that our discussion this afternoon will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements and forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or to revise these statements. The factors that could cause actual results to differ are those identified in the Risk Factors section of our Annual Report on Form 10-K, and such factors may be updated from time-to-time in our filings with the SEC, which are available on our Web site.

In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of the non-GAAP financial measures discussed in today's call to the most comparable measures calculated and presented in accordance with GAAP in our earnings press release and on our Web site at lq.com.

Here today are Keith Cline, President and CEO; and Jim Forson, Chief Financial Officer.

I will now turn the call over to Keith.

Keith Cline

Thanks Nikki. Good afternoon and welcome to La Quinta's second quarter 2016 earnings conference call. On our call today, we will review our second quarter development activity, our operational and financial performance, and we will discuss progress on our strategic priorities and initiatives.

As we review the quarter overall, we see that La Quinta once again demonstrated the many strengths of our business, by continuing to generate strong and consistent cash flow, which among other things, allowed us to complete our second $100 million share repurchase program; execute on our significant growth opportunity by increasing our footprint with new franchise openings and expanding our pipeline, then move forward with our key strategic priorities and initiatives.

We remain positive on the long term growth attributes of lodging, specifically, the upper midscale and midscale segments of limited service, as well as our ability to realize the benefits of the proactive steps we are taking to enhance our brand, unlock value from our portfolio, and maximize returns on our investments in capital and people.

The overall lodging environment saw incremental challenges during the second quarter, and we felt our share of this impact. These pressures have been widely reported across the lodging industry, including some softness in business transient demand, and they have impacted our operational results as well as our outlook for the remainder of the year.

On the development front, we continue to see a tremendous amount of interest from our franchise partners in growing the La Quinta brand. This allowed us to grow our current and future footprint in the second quarter by opening 11 new hotels, including a key location in New York City at Central Park West, and to sign 26 new franchise agreements, including our first location in El Salvador and our second location in Alaska, bringing our total pipeline to 238 hotels and more than 21,000 rooms at the end of the quarter.

As we grow our franchise locations, we are focused on complementing our existing footprint domestically and in Mexico, Central and South America, with primarily new construction projects in attractive locations, particularly in high barrier to entry urban and otherwise generally higher RevPAR markets. In this regard, La Quinta continues to have a unique growth opportunity, given that our brand is not currently represented at all in one third of STR's market tracks, and still has room to grow in many of the market tracks that we already have a presence. In fact, our pipeline as of the end of the quarter, would put us into 40 new STR market tracks.

In terms of operational performance, during the second quarter, systemwide comparable RevPAR increased by 20 basis points, driven by a 1.5% lift in ADR and a 91 basis point reduction in occupancy compared to the prior year quarter. Bright spots in our portfolio reflecting double digit or high single digit RevPAR growth in the second quarter, include markets such as Dallas-Fort Worth, San Antonio, Phoenix, Nashville, San Diego, Tampa, St. Petersburg and Central and Southern California. Offsetting these strong performers, were markets such as Houston, South and West Texas, and parts of Louisiana, which continue to be impacted by the ongoing effects of a significant pullback in oil production.

While this impact has moderated in terms of year-over-year RevPAR comparison and our hotels in these markets have improved their overall market share, the performance of our hotels in these oil markets continues to lag behind the rest of the system. Excluding the STR defined oil tracks, our second quarter system-wide comparable RevPAR would have been up 1.6% as compared to last year, an impact of 140 basis points. And year-to-date system-wide comparable RevPAR would have been up nearly 60 basis points as compared to last year, an impact of over 170 basis points.

As we move through the remainder of 2016, we expect year-over-year RevPAR comparisons to become more favorable, particularly for our hotels in the STR defined oil tracks. However, performance from our hotels in these STR defined oil track has lagged our expectations through the second quarter. These results, as well as the broader softness in the lodging environment are moderating our RevPAR expectations for the remainder of the year.

And now to review progress on our key initiatives that are designed to support our three strategic priorities; which are to, drive consistency in our product, drive consistency in the delivery of an outstanding guest experience, and drive engagement with our brand, by investing in points of differentiation.

As discussed on previous earnings calls, the initiatives we are undertaking requires substantial analysis, preparation and investment, and thus have relatively long lead times to execute and realize benefits. Therefore, we continue to believe that we will begin to see the most significant benefits of these initiatives in 2017. Now four months into working on these initiatives, we will give as much of a progress report as we are able to today, and we will continue to update our progress in quarters to come.

With regard to the first two of our strategic priorities; driving consistency in our product and in the delivery of an outstanding guest experience. During the second quarter, our new Chief Operating Officer, John Cantele, brought a fresh and very experienced perspective to our ongoing review of our owned asset portfolio and field operating model. John has spent a significant amount of time in the field, becoming familiar with our own hotel operations and personnel, and is partnering with all functions of our business to drive value, as we move forward.

Our comprehensive strategic review of our owned hotels is ongoing and now has the insight and perspectives of a new operations leader. In addition to our continuing assessment of operating model opportunities, our work to-date includes identifying properties, that with the appropriate scope of capital investment and renovation, have the opportunity to reposition upwards within a market, capturing occupancy and additional rates, while being measured against new higher quality competitive sets. We have identified approximately 50 properties for this first wave of incremental investment.

While some of this work will begin in the third quarter in countercyclical markets, we expect that the bulk of this work will begin in the fourth quarter of this year, with projects generally finishing in Q1 of 2017, in time for [indiscernible] influenced by spring break and summer travel. We continue to expect the incremental capital dollars expended in 2016 for these projects to be in the range of $60 million to $70 million.

For those properties not identified for the first wave of renovations, our ongoing work could result in several alternates of outcomes. For example, we could conclude that the property is appropriately positioned within its market, or, the property should be part of a second wave of incremental renovations, beginning in the latter half of 2017, or the properties should be disposed off and/or removed from the La Quinta brand, opening the market to potential new franchise development.

With respect to the last of these alternatives, we continue to have success in the second quarter by selling one hotel in Greenville, South Carolina, and entering into definitive agreements to sell a total of three hotels located in Charleston, South Carolina and in Georgetown and Huntsville, Texas. In three of these four markets, we were able to maintain our market presence by signing a development and franchise agreement with the buyer of the hotel, for a new construction that will sell prototype franchise hotel to be built in the near term.

And finally, we are on track with our initiatives focused on our third strategic priority, driving engagement with the La Quinta brand. These initiatives are focused on several enhancements to the La Quinta returns loyalty program, that include exciting new ways for our returns members to engage with the program and our brand on a regular basis. These features include convenient ways to redeem points for everyday purchases and for free nights while on property, as well as other enhancements to membership to your benefits, which will drive additional engagement with La Quinta.

As a reminder, during the first quarter, we launched the first phase of this initiative, by significantly enhancing the aspirational travel component of the program, whereby our members can now redeem at our La Quinta returns points for stays at over 20,000 luxury hotels and resorts throughout the world. Work continues on several other exciting enhancements to drive engagement with our brand, and we look forward to rolling these out later this year. Our La Quinta Returns program members are our best customers, and we intend to invest in maintaining and growing that loyalty.

As we look forward, we continue to focus on our business model that is proven and fundamentally strong and our strategic priorities and initiatives have been focused on building upon our key three strengths; the quality and depth of our franchise partners and their continued interest in growing the La Quinta brand; the scalability and efficiency of our business model and the substantial free cash flow we are able to deliver, and our operation in the highly desired select service segment, a segment to which guests and hotel developers have migrated. Guests for the price value proposition and hotel developers for the high cash on cash returns.

We remain encouraged by our progress and the outstanding opportunities that lie ahead for the La Quinta brand.

With that, I will turn the call over to Jim, to give you more details on the quarterly results. Jim?

Jim Forson

Thanks Keith. During the second quarter of 2016, total revenue decreased 1.6% compared to the prior year second quarter, driven in part by the sale of several owned hotels, which generated revenue of approximately $6.8 million in the second quarter of 2015. System-wide comparable RevPAR was up 20 basis points, driven by a 50 basis point comparable RevPAR increase at our franchise hotels and a 30 basis point decrease in comparable RevPAR in the owned hotel portfolio.

As Keith mentioned earlier, our system-wide comparable RevPAR, excluding the STR defined oil tracks, would have been up 1.6% from the prior year quarter. A net 700 room increase in our total system room count as compared to the same time last year, was composed of a net 2,600 room increase in our franchise room count and a 1,900 room decrease in our owned hotel portfolio, resulting from the sale of certain owned hotels.

In our owned segment, RevPAR performance in the second quarter was driven by a 2% increase in ADR, offset by a 156 basis point decline in occupancy. Franchise ADR in the second quarter increased by 80 basis points, while occupancy experienced a slight decline, down 21 basis points.

Total adjusted EBITDA for the second quarter was $105.4 million compared to $111.8 million in the prior year and adjusted EBITDA margin was 39.1% compared to 40.8% in the prior year second quarter. The year-over-year decline in total adjusted EBITDA was driven in part by the sale of the 16 owned hotels mentioned earlier, which generated total adjusted EBITDA of approximately $2.1 million for the company in the second quarter of 2015.

For the second quarter of 2016, adjusted earnings per share increased to $0.21 per share versus $0.19 per share in the prior year, an increase of over 10% and adjusted net income was approximately flat at $24.1 million.

We were again active with our share repurchase activity, and during the second quarter, we completed our second $100 million share repurchase program, which was announced in mid-March.

During the second quarter of this year, we purchased 6.1 million shares for a total purchase price of approximately $75 million. Year-to-date, in 2016, we have purchased a total of 8.1 million shares, and with the combined $200 million we have utilized under our two authorizations, we have repurchased a total of 14.4 million shares or approximately 11% of the outstanding float prior to the first program being initiated and bringing total shares outstanding at the end of the quarter to 116.8 million.

With respect to our balance sheet, as of the end of the quarter, the ratio of our total debt less cash or net debt to our trailing 12 month adjusted EBITDA was approximately 4.3 times. Given a long term debt structure that has prepayment flexibility is covenant-light, and has limited amortization, and given our strong free cash flow and undrawn revolving credit facility and a very solid balance sheet, we believe we are well positioned to support our ongoing growth and the planned investments in our business.

Now turning to our outlook; when we initially introduced our outlook for 2016, we mentioned several key underlying assumptions. Two of those assumptions come into play, as we update our current outlook for 2016. With our initial outlook, we assumed no additional sales of assets beyond the closing of 13 remaining properties from the group of 24 properties that were sold during the latter half of 2015.

As mentioned earlier, we sold or entered into definitive agreements to sell several additional properties during the second quarter, and we anticipate that they will leave the La Quinta system before the end of 2016, removing previously expected EBITDA from the system. Conversely, some of the assets from the group of 24 properties have remained in our system longer than originally expected. The impact of the currently anticipated timing of these properties leaving our system, results in a net reduction of EBITDA of approximately $2 million for the full year of 2016. This impact, plus the impacts of the more challenging lodging environment, which Keith discussed earlier, particularly within the STR defined oil tracks in our case, has led us to adjust guidance for 2016.

We now anticipate system-wide comparable RevPAR change to be in the range of down 75 basis points to up 75 basis points and total adjusted EBITDA to be between $361 million and $371 million.

And with that, I will turn the call back over to Keith, for some closing comments. Keith?

Keith Cline

Thanks Jim. In closing, I will share with you my excitement about the future of the La Quinta brand. We are set up for success by operating in the attractive select service segment, with a strong brand and a highly scalable and efficient business model that consistently generates substantial free cash flow, in a franchise and development platform that has significant growth opportunity and support from a highly passionate, dedicated and loyal community of franchise partners. As always, we continue to evaluate all options to create long term value for our shareholders, and I am confident that the strategic priorities and initiatives we are executing, will drive brand performance, as well as continued strong cash flow generation.

Now I will open up the call to questions. Operator?

Question-and-Answer Session

Operator

Thank you, Mr. Cline. [Operator Instructions]. And our first question comes from the line of Smedes Rose from Citi. Please proceed with your question.

Smedes Rose

Hi, thanks. Sorry if you said this right at the end, but you said there is 10 hotels that are still waiting to be sold from you original agreement of 24? In your release you said that they are obligated to be sold by the end of the third quarter, is that correct?

Jim Forson

That is correct Smedes.

Smedes Rose

Okay. And what are the proceeds associated with those 10?

Jim Forson

The 10 yet to come is probably in about the $20 million range.

Smedes Rose

And if there is something -- okay, but that's ballpark. But is there something in particular that's holding up the sale of those properties? I mean, do you expect those to close in the third quarter?

Jim Forson

Yeah. We actually do have hard money down. We are dealing with partners that we have done a lot of business with, in the past. We are very confident that they will close these deals. It’s a matter of them finding the right home in the right flag for these assets in the markets that they are going to ultimately reside in. These partners will very likely not be the ultimate owners of these hotels.

Smedes Rose

Okay. And then, could you just tell us, what was the RevPAR down in the properties where you have better oil tracks? You said that's 1.6, but what was it the other way around?

Jim Forson

So in the oil tracks for Q2, we saw those properties down about 12%.

Smedes Rose

Okay. All right. Thank you.

Keith Cline

Thanks Smedes.

Operator

And our next question comes from the line of Mr. Shaun Kelley from Bank of America. Please proceed.

Shaun Kelley

Hey, good afternoon. Maybe just a follow-up on that last question; could you just remind us where those properties were down in Q1 in the oil tracks?

Keith Cline

Yeah Shaun. In Q1, those properties were down around 18%. And if you dial all the way back to Q3 and Q4, you are talking high teens and low 20%.

Jim Forson

So Shaun, this gets back to kind of our original basis, that we see a sequential improvement in these markets, as we move throughout the year. Obviously, as they talked about in the prepared comments, we are moderating our expectations a bit, and certainly a piece of that is the fact that these oil markets continue to outperform, and in fact, they underperformed our expectations for the second quarter.

Shaun Kelley

Got it. But just to make sure I am clear, it was Q3 high teens and the bottom would have been Q4, down low 20s, is that correct?

Jim Forson

That is correct.

Shaun Kelley

Okay, great. Thank you for that clarity. And then, I guess, just a higher level question, if we look at the markets where that wasn't an impact, on your overall RevPAR performance, you would have been up 1.6. So we look at the overall kind of the blended chain scale, where basically I think for the midscale, chain scale was up around 3.2. Curious as to kind of your insights on why you think you probably underperformed the broader chain scale ex-oil? What do you think some of the forces might have been, that were sort of driving that weakness?

Jim Forson

Well you can really back that up all the way to the way we set expectations for the year. Our original guide for the year was up 1% to 3% RevPAR, which was broadly below kind of our kind of comp set at that point in time. And it really speaks back to the exact initiatives that we are pursuing to drive the improvement in performance in our business, where we talk extensively about our strategies designed to drive consistency in our product, consistency in how we deliver an outstanding guest experience and to drive engagements. All of these initiatives are well underway, as we have discussed in prior quarters, and the ultimate goal of these, is to drive performance as we move forward.

So really, out of the gate in the year, our expectation for the year was a bit below the comp set, and we have stayed in that position, post Q2.

Shaun Kelley

Understood. Thank you very much.

Operator

And our next question comes from the line of Mr. Chris Woronka from Deutsche Bank. Please proceed with your question.

Chris Woronka

Hey, good afternoon guys.

Keith Cline

Hey Chris.

Chris Woronka

Can you maybe talk a little bit about how the quarter played out, monthly or at least relative to your expectations, and if you could maybe bucket it a little bit between corporate and leisure?

Keith Cline

Yeah sure. I mean, obviously, we don't typically discuss how the months play themselves out. But if I think about Q2 expectation, coming into the quarter, we certainly didn't expect to see the pullback in corporate transit demand that occurred and it has been widely talked about during our earnings season. And as I mentioned, we also didn't expect to see a continued softening in the STR oil markets.

I would describe that the weakness in the STR oil markets versus expectations to be fairly evenly spread throughout the quarter. In our business, we began to see the impact of the slowing and business transient demand, right around the first to second week of May.

Chris Woronka

Okay. That's helpful. Just a follow-up on that; in the oil markets, do you think -- is it a function of oil prices starting to -- I think the decline has been more in the third quarter. But what do you -- is there anything you specifically kind of attribute the worse than expected performance to?

Jim Forson

I think given the prolonged nature of the downturn in pricing and the pullback in production; and I believe we had talked about this potentially on previous earnings calls. But if you think about the way this works, when there is an oil boom, you have these artificially high demands that comes into a market and displaces a lot of demand drivers at a very high rate.

Now that oil has fundamentally backed out of many of these markets, but the demand drivers that were in place to underwrite the original construction of the hotel are back in place. But now you are in an economic environment, where the job declines and the pullback and just the oil business in general, has been much longer and deeper than we expect. So really, those secondary and tertiary tentacles of a reduction in pricing in those markets. So it's kind of those secondary effects of the pullback in the pricing and production of oil.

Chris Woronka

Okay, great. And then just on the franchise, as we think about the pace of the openings this year, I know its normally very back end loaded. Is that -- I guess how confident are you in the 55 to 60, and does that include any, I guess, refranchising of owned hotels that get sold later this year?

Keith Cline

So if you think about it -- you are right. Historically, the majority of our openings occur in the second half of the year, in fact within the second half, it's very heavily weighted towards the fourth quarter. So as we are actively tracking the pipeline that's under commencement, really does give us a level of confidence and a comfortable perspective on our guidance range. So we feel good about the range of 55 to 60 openings this year.

Chris Woronka

Great. And just finally for me, as we think about kind of the cost structure going forward, I know you guys talked a little bit about it in the past, do you see any incremental pressure on the labor front -- is it market specific or anything you can say, more generally?

Jim Forson

Yeah. I mean, certainly we talked about -- when we gave our original guidance, we talked about competitive wage pressure, and we have seen that manifest itself. What we have seen is, that the labor pool for the pool of talent that we want and need in order to deliver the kind of guest experience that we want and need to do, is tighter. And we need to be sure that we are paying the right rates to get the right people in house, to be able to deliver that experience.

So certainly, we are seeing pressure in the competitive costs/wage section.

Chris Woronka

Okay. Very good. Thanks guys.

Keith Cline

Thanks Chris.

Operator

And our next question comes from the line of Mr. Thomas Allen from Morgan Stanley. Please proceed with your question.

Thomas Allen

Hi. Just trying to understand your 2016 EBITDA guidance a little better; so the midpoint of your old guidance range was -- so the midpoint of your new guidance range is $366 million, and you said earlier that -- so you sold five incremental hotels beyond what you expected in your original guidance, but then you held on to the other hotels beyond the end of the second quarter. So netting those two things together, those two things impacted your EBITDA guidance by $2 million negatively, is that the way to think about it?

Jim Forson

That's exactly correct.

Thomas Allen

Okay, okay. I understand now. Sorry. And then in terms of -- can you give us any color on July, now that we are in August, how RevPAR trends can perform then? And then any thoughts on how 3Q versus 4Q RevPAR growth should shape up? Thanks.

Jim Forson

So I would say July performed consistent with our expectations, especially taking into account, the fact that July 4th this year occurred on a Monday versus a Saturday last year, which is not great from a standpoint of business travel in the first week of July. But it did perform overall for the full month, in line with our expectations, we have included that within our updated guidance.

And then talking about Q3 and Q4, we would expect Q4 to sequentially outperform Q3, and back half -- at the midpoint, back half implied RevPAR growth for us would be about 1.1%.

Thomas Allen

So just understanding your comment on July, it performed in line with your expectations. That was in line with lowered expectations. In line with the kind of 1.1% growth?

Jim Forson

It was in line with the range of guidance that we provided. So our expectations at this new projection level were met with our performance in July.

Thomas Allen

Correct. Okay. And then what's your thinking on your peer's direct booking push? I don't think you have changed anything, but how do you think about that? Thanks.

Jim Forson

Right. So as you think about that, we are certainly watching incredibly closely. At the end of the day, if you think about distribution, there is really no free channel, right? It's all about increasing the effectiveness and efficiency of how you acquire customers at the lowest possible cost.

So certainly, before you jump into the fray and spend all the marketing necessary to support something like a members-only pricing program, we want to ensure that the resulting stay is really accretive to our business. So I will characterize this as watching closely with great interest and evaluating our options, but at the end of the day, our bias is to get to channel effectiveness and be efficient and cost effective at acquisition.

Thomas Allen

Helpful. Thank you.

Operator

Our next question comes from the line of Jared Shojaian with Wolfe Research. Please proceed with your question.

Jared Shojaian

Hi. Good afternoon. Thanks for taking my question.

Keith Cline

Hey Jared.

Jared Shojaian

Hey. Can you -- sorry if I missed this, can you just remind me of the total sales proceeds of those 24 hotels and the EBITDA associated with them as well?

Jim Forson

Yeah. So the hotels that we have sold since Q2 last year, the EBITDA impact was $2.1 million they earned for us last year in Q2, and then the proceeds, you will see it in the cash flow when the Q drops, as $22 million for the first six months.

Jared Shojaian

Okay. I got you. So I mean, with that being said, I mean, I know a lot of these are obviously older hotels that's going to be a lower multiple on the transaction, but how do you think about just your total owned portfolio right here? I mean, if I were to think about it, I mean, obviously, your stock is down a lot here and it doesn't seem like the market is giving you credit here for your owned assets. But how do you think about just the valuation for your entire owned assets right here?

Keith Cline

As we talked about during our Q1's earnings calls, we identified about 50 assets that were candidates for disposition in the near term. We certainly have had a lot of inbound interest from potential buyers, including several that are institutional in nature and a lot of those conversations are certainly ongoing, as we move forward. It's very clear, if you look at the relative valuation of the company on some of the parts basis, that -- given the strong free cash flow and cash flow yield on our owned assets, they are being valued -- I think in some of the parts, that's something sub eight times is extraordinarily inexpensive. Definitely a great value.

So we believe that the strategies that we are pursuing about driving operational performance and consistency in those assets will certainly create a lot of upside and value for shareholders, as we move forward. But I agree with your sentiment. We are certainly not pleased with the perception of that strong cash flow today in the market.

Jared Shojaian

Okay, thanks. And then just one quick housekeeping question, are you repurchasing any stock from Blackstone, or is this all happening in the open market, and what options do you have with that?

Jim Forson

Yeah Jared. It's all out in the open market, the $200 million authorizations that we have done to this point. And looking forward with the $200 million, the $100 million we have done in 2016, we have utilized the vast majority of the renewing baskets we have under our debt agreements to make such restricted payments as they are defined. That being said, there are some other baskets that are available to us, that don't renew, but we would want to be pretty careful about using those. So I think our bias at this point would be towards debt paydown within the excess operational cash flow or proceeds from sales.

Jared Shojaian

Okay. Thanks for the time.

Jim Forson

Thanks Jared.

Operator

And our next question comes from the line of Mr. Joe Greff from JP Morgan. Please proceed with your question.

Joe Greff

Hi guys. Wanted to make sure I heard you correctly? You had $22 million of asset sale proceeds in the first two quarters of the year?

Jim Forson

That's correct.

Joe Greff

$9 million within the first quarter. And then you anticipate another $20 million in the second half of this year?

Jim Forson

Yeah, I don't have that number in front of me, Joe, quite honestly, that's what I recall.

Joe Greff

Okay. And then I think the last comment you just made at this point, you don't plan on going back to the board for a new share repurchase authorization?

Jim Forson

That's correct at this point.

Joe Greff

Okay. That's all for me. Thank you.

Jim Forson

Thanks Joe.

Operator

[Operator Instructions]. Our next question comes from the line of Smedes Rose from Citi. Please proceed with your question.

Smedes Rose

Hi, I actually wanted to ask your view on the share repurchases. Maybe just talking about cash flow. So what is the total CapEx spending I guess for the year at this point?

Jim Forson

So we talked about marginal additional CapEx when we introduced the renovation program, the incremental renovations being in the $60 million range, as we lay out our renovations and set them up for the back half of this year. It's still in that same range, $60 million to $70 million for 2016.

Smedes Rose

Okay. Thank you.

Operator

There are no further questions at this time. I'd like to turn the call back over to management for any closing remarks.

Keith Cline

I just want to thank everyone for your participation on the call today. And as always, we are certainly grateful for all your support of our company and for our brand. Thank you.

Operator

Ladies and gentlemen, this does conclude our teleconference for today. We thank you for your time and participation, and you may disconnect your lines at this time.

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