Summit Hotel Properties, inc (INN) Q2 2021 Earnings Call Transcript

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Summit Hotel Properties, inc (INN -1.57%)
Q2 2021 Earnings Call
Aug 4, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by, and welcome to the Summit Hotel Properties Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Adam Wudel, Senior Vice President of Finance, Capital Markets and Treasurer. Please go ahead.

Adam Wudel -- Senior Vice President of Finance, Capital Markets and Treasurer

Thank you, Valerie, and good morning. I am joined today by Summit Hotel Properties' President and Chief Executive Officer, Jon Stanner; and Executive Vice President and Chief Financial Officer, Trey Conkling.

Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our SEC filings. Forward-looking statements that we make today are effective only as of today, August 4, 2021, and we undertake no duty to update them later. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at www.shpreit.com. Please welcome Summit Hotel Properties' President and Chief Executive Officer, Jon Stanner.

Jonathan P. Stanner -- President and Chief Executive Officer

Thanks, Adam, and thank you all for joining us today for our second quarter 2021 earnings conference call. Overall, we are extremely pleased with the acceleration of our operating trends in the second quarter, which significantly exceeded our initial expectations and represented a nearly 50% increase in RevPAR from the first quarter. Occupancy average daily rate and overall profitability all reached new highs since the onset of the pandemic. And importantly, we achieved positive corporate cash flow for the quarter. Demand improved sequentially each month during the quarter and we sold 30% more room nights in the second quarter than we did in the first quarter, while leisure demand continues to be the primary driver of our operating results. We are also encouraged by improving corporate transient demand trends that are having a positive effect on our hotels located in urban locations and our mid-week performance, in particular. Demand in our urban hotels grew at a considerably faster pace than the overall portfolio during the second quarter, increasing 43% over the first quarter.

For the second quarter, we reported pro forma RevPAR of $78, which was over 3 times higher than our second quarter RevPAR last year and a 49% increase over last quarter. Like demand, RevPAR improved sequentially each month of the quarter and our preliminary results for July show further RevPAR acceleration to just over $100, a robust 15% improvement over June, and our first full month of RevPAR above $100 since the pandemic started. RevPAR for the second quarter was 43% lower than what was achieved in the second quarter of 2019, a significant improvement from the first quarter when RevPAR was nearly 60% lower than the comparable 2019 period. This gap narrowed considerably in July with RevPAR only 21% below July 2019 levels, which we expect will be sufficient to drive corporate cash flow positive on a year-to-date basis.

Importantly, the recovery of average rates accelerated meaningfully during the quarter as ADR across our portfolio increased 15% compared to the first quarter, as both weekend and weekday ADR grew double digits. Average rates in our urban portfolio increased 23% from the first quarter, which encouragingly reflects some level of rate accretive remixing of our business with corporate travel. Weekend occupancy was an impressive 79% during the second quarter and was over 80% in both May and June. Midweek occupancy also continues to steadily improve and the gap between weekday and weekend occupancy continues to narrow. Midweek occupancy in July was 67%, a full percentage points higher than it was just 60 days ago.

As you would expect, we are closely monitoring the developments of the spread of the Delta variant of COVID-19 and have positioned the company very well, if we begin to see any reversal in the strong reopening momentum we've experienced over the past few months. Thankfully, to date, we have not seen any negative response to the variant in our July operating numbers and our pace for future months remains decidedly positive. August pace is up slightly to what we had on the books for July at this time last month, but with rates nearly 5% higher. September pace is up 6% over August and October pace is over 25% higher than September. While we would not preclude some plateauing of results in the back half of August and into September when we get into a naturally slower leisure demand period, we remain optimistic that some of that leisure business will be replaced by pent-up corporate demand in the post Labor Day period, particularly as we get into October and pass the Jewish holiday season. Trey will provide some additional color on our operating results later in the call.

During the second quarter, we completed the contribution of six wholly owned hotels, totaling 846 guestrooms and our joint venture with GIC for $172 million. The transaction generated approximately $84 million of cash proceeds, which increased our investment capacity, reduced corporate leverage, and enhanced our overall liquidity. Subsequent to quarter end, a portion of the net cash proceeds from the asset contribution were reinvested into the acquisition of the newly built 110 guestrooms Residence Inn Steamboat Springs for $33 million, which further scales our joint venture with GIC. The extended stay hotel is expected to benefit from favorable market demand trends and is a perfect complement to our existing portfolio of well-located, high quality hotels with efficient operating models. As the newest hotel in Steamboat Springs, one of only six other hotels that have opened in that market since the year 2000, and the first Marriott branded extended stay product in the market. The hotel has been able to achieve a 30% RevPAR premium compared to its competitive set in the first six months of operation. And just over three weeks of our ownership, the hotel has been one of our best performers, running over 93% occupancy with RevPAR of over $180. Our 2021 forecast for the hotel is already ahead of our underwriting, reflecting just how quickly the fundamental operating backdrop has improved. Our joint venture now holds 12 assets with a total investment of nearly $500 million and affirms the commitment from both parties to find unique and opportunistic investments to continue to grow the partnership.

During the second quarter, we invested approximately $2.9 million in our portfolio and items primarily related to planned maintenance capital. As we mentioned last quarter, given our conviction around the long-term improvement in demand trends, we plan to accelerate several renovations into the second half of 2021, which will take advantage of the still lower than historical occupancies to minimize disruption from those projects. We expect to spend between $30 million to $40 million in capital expenditures for the year on a consolidated basis and between $25 million and $35 million on a pro rata basis.

With that, I'd like to publicly welcome and turn the call over to our new CFO, Trey Conkling.

William H. Conkling -- Executive Vice President and Chief Financial Officer

Thanks, Jon, and good morning, everyone. During the second quarter, our resort hotels continued to lead the recovery with occupancy levels that exceeded 83% and a RevPAR of nearly $110. Resort occupancy remained strong across the quarter with each month achieving 80% or better, driven by continued growth in leisure demand and overall robust summer travel.

For July 2021, preliminary occupancy, ADR and RevPAR of our comparable resort portfolio, which excludes the Residence Inn Steamboat exceeded second quarter 2019 levels. Moving onto our 42 non-urban hotels, this subset of the portfolio achieved better than 75% occupancy and an $89 RevPAR during the second quarter, with June metrics improving substantially to 78% occupancy and a $99 RevPAR on the strength of weekend demand. Consistent with our resort portfolio, preliminary July numbers for our non-urban portfolio demonstrated steady improvement with a 79% occupancy and a $108 RevPAR, representing month-over-month growth of approximately 9% compared to June. Finally, while urban hotels continue to lag the broader sector recovery, our 30 urban assets have also benefited from strong summer travel, with second quarter RevPAR increasing sequentially 75% compared to the first quarter. This was driven by strong weekend travel with occupancies averaging over 70%. The outlook for our 30 urban hotels continues to improve as preliminary July RevPAR is anticipated to exceed $94, representing month-over-month growth of 23% compared to June.

Although booking windows remain very short term in nature and forecasting continues to be a challenge, we have experienced a decline in the percentage of room nights booked near to or on the night of stay. for example, transient room nights booked within three days of stay declined from 46% in April to 39% in June, and nights booked in the week, for the week, declined from 60% to 53% over that same time period. While this represents a very short booking window relative to pre-pandemic standards, we view this as another encouraging trend reflecting an improving environment.

From a cash flow perspective, the continued growth in demand combined with thoughtful expense management enabled Summit to generate positive corporate cash flow for the second quarter. Pro forma hotel EBITDA was $25.3 million for the second quarter, which is more than three times higher than the hotel EBITDA we reported in the first quarter of 2021. Operating cost per occupied room declined over 20% compared to 2019, which drove second quarter gross operating profit margin and hotel EBITDA margin to an impressive 45% and 29%, respectively.

We continue to operate our hotels utilizing a very lean staffing model, which consists of approximately 17 FTEs on average or less than 50% of pre-pandemic staffing levels. Rehiring hourly staff, particularly in the housekeeping department has been an ongoing issue across the industry. Despite these challenges and a primarily occupancy driven topline growth, our asset management team has done a great job controlling operating expenses, leading to strong hotel EBITDA retention of 46% when compared to the second quarter of 2019.

Lastly, turning to the balance sheet and liquidity. We currently have over $430 million of pro rata total liquidity, which includes nearly $42 million of unrestricted cash on hand. Today, our weighted average interest rate is approximately 3.4%. We have no debt maturities until November of 2022 and we maintain ample with current liquidity to repay all maturing debt through 2023.

With that, I will turn the call back over to Jon.

Jonathan P. Stanner -- President and Chief Executive Officer

Thanks, Trey. In closing, we continue to gain enthusiasm on the recovery of our business and the outlook for Summit in particular. We remain confident in our business model and optimistic on the overall recovery in general. And with that, we'll open the call to your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question our first question comes from Neil Malkin of Capital One. Your line is open.

Neil Malkin -- Capital One -- Analyst

Hey gentlemen, good morning.

Jonathan P. Stanner -- President and Chief Executive Officer

Good morning, Neil.

Neil Malkin -- Capital One -- Analyst

First question, you called it out in your press release and then in your prepared remarks about mid-week getting noticeably stronger, contributing to your performance. Can you just maybe talk a little bit more about that, but specifically in terms of markets? Is it regional private business travelers? I guess are you seeing the demand come from larger, I guess you can call them mainstay corporate negotiated accounts? How does that look?

Jonathan P. Stanner -- President and Chief Executive Officer

Yes, sure. Thanks for the question, Neil. It's a little bit of both. I would say the strongest markets mid-week have continued to be the leisure oriented markets, markets like Fort Lauderdale, and Tucson and Tampa, Orlando. The markets we've talked a lot about driving overall strength and certainly some of that has just continued better and longer stays on the leisure side. We are starting to see and we mentioned in the prepared remarks as well. You're starting to see it mid-week in some of our more urban properties and probably is encouragingly is anything you're starting to see better rates come in mid week. And rewind, even over the last two or three earnings calls, I think what we've been monitoring is how rate continues to evolve and typically what happens is occupancy comes first and rate come second. I think we're very encouraged by what we're seeing on the rate side.

We're certainly starting to see some level of negotiated corporate type of business come back and I think in the second quarter our corporate negotiated rates were up $12 over the first quarter. So you are starting to see some of that. It's not your bigger, larger national accounts to the same extent they were pre-pandemic, you're seeing, as we've talked about previously, more regional, more local, more drive-to type of corporate business. Nonetheless, the remixing of that business is positive and I think the outlook for that continues to get better and better.

Neil Malkin -- Capital One -- Analyst

Yeah, I appreciate that. Maybe sticking with the same theme, I think one of the issues for the sectors lagging performance is sort of the uncertainty with regard to business travel in the group sort of recovery pace, obviously not really a group portfolio. But can you just talk about what you -- what your property managers are telling you? What you guys expect for like the post Labor Day and in the fourth quarter in terms of the business, the business transient side? I guess, if you could talk about it as relative to 2019 levels, I mean that'd be helpful in assessing how you see the cadence sort of playing out at least near term?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look I think bigger picture and longer-term, we expect corporate transient to come back and look a lot like it was pre-pandemic. The timing of that is the question. It's in -- it's more of a question of when, not if, in our minds. I think we've kind of an industry evolve to believe that post Labor Day, you're going to start to see that come back more meaningfully. I do think the trajectory of that recovery is going to be more gradual than what we saw on the leisure side. But again, we do expect that business to come back and to come back in a meaningful way. We haven't seen -- look market sentiment has certainly changed given what we've seen with the Delta variant. We haven't seen that effect consumer behavior yet and our July results continue to be very strong even through the last week and in week of July. Our August pace has held up nicely. Rates on the books for every month over the next three months continue to increase and our pace looks quite positive. We're certainly monitoring it very closely. As we said in the prepared remarks, we wouldn't preclude for there being some plateauing of results as we get into the back half of this month and into the post Labor Day period. What I would say, again I think encouragingly what we've seen from a pace perspective is where we've seen the best pace of increases in the back half of August, in particular have been in some of our urban markets that have been slower to recover in the markets like downtown Cleveland or downtown Pittsburgh or Boulder, where we see some benefit of return to school. So again, I think it's difficult for us to assess today when exactly the cadence and the sequencing of that business comes back, but we do. Overall, we're optimistic and all the numbers that we have on the books support that. Things are still continuing to improve.

Neil Malkin -- Capital One -- Analyst

Thanks. I guess, last one real quick, maybe for Trey, theoretical bigger picture question. I think before we touched on your interest in or doing some study on alternative lodging and potential allocation there or looking at that to augment growth, can you maybe just talk about what that kind of looks like? What you're doing there and how realistic something like that is for Summit?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, hey, Neil, it's Jon. I'll start and Trey can can jump in at the end if he like. Look, I would say that as we've talked about a lot of, what we've always focused on is how we believe customers' preferences evolve and change. And that hasn't changed. And so, we certainly want to make sure that we're cognizant of how those preferences continue to evolve. But we do study a fair number of business. We love our current business. We don't have any immediate plans, but it's certainly something that we continue to evaluate.

Neil Malkin -- Capital One -- Analyst

Okay, thank you.

Jonathan P. Stanner -- President and Chief Executive Officer

Thanks, Neil.

Operator

Thank you. Our next question comes from Austin Wurschmidt of KeyBanc. Your line is open.

Austin Wurschmidt -- KeyBanc -- Analyst

Great, thanks guys. Just curious, Jon, if some of the lift in ADR that you've seen and achieved month to month. If this is just reflecting kind of increasing demand broadly or is it really these urban markets that have driven ADR here to 4? And are you seeing any less price sensitivity on the leisure side as well?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, certainly, we are. I mean, again, I would say it's market by market and on the leisure side and this has been kind of well-documented across the industry. In strong markets, there is a fair amount of pricing elasticity. I mean, we've been able to push prices dramatically in markets that are compressed with leisure travel. The better growth has been mid-week and in urban markets. Now, in fairness, the bar was much lower, the baseline was much lower. So we are growing off of a much lower base. But I think, again, as we look out over kind of the cadence of the recovery in the types of business that we need to see come back, that mid-week and that urban business, in those urban locations in particular is where I think we have the most opportunity, and we are starting to see that as we talked about. Some of that is a result of leisure. But we do believe and we've seen some level of kind of remixing of the business into more corporate demand come in and improve mid-week rates, in particular.

Austin Wurschmidt -- KeyBanc -- Analyst

Yeah. So if the recovery kind of continues to take hold and it's a little bit of a seamless transition coming out of the summer and into kind of back to corporate travel. What do you think that means for upside to ADR as you move into the fourth quarter or just that spread between mid-week and weekend type rates looking out a little bit further?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look, I think it continues to narrow. The gap certainly peaked out probably early in the second quarter or late in the first quarter. We have seen that gap narrow later in the second quarter and into July. My expectation is that changes for a couple of reasons. One, again, we're getting in just to a naturally slower leisure demand period. And so, well, I still think leisure will be strong. We're getting to a point where kids are going back to school, offices are going back to in-person. I think there is going to be a little less of the type of travel that has been the strength of the industry across the summer. We do think we're going to start to see a pickup of corporate travel as we get into later -- the latter parts of the third quarter and in the fourth quarter. So I'm not sure how would quantify or time the difference, but I do think again, generally you're going to see kind of that gap between mid-week and weekend performance begin to narrow. Part of that's going to be driven by just stronger results out of our urban properties.

Austin Wurschmidt -- KeyBanc -- Analyst

Got it. And then just one last one. What sort of the mix today are your best guess to the mix between leisure versus BT business?

Jonathan P. Stanner -- President and Chief Executive Officer

It's probably still 75% leisure, Austin, rough numbers. And I would say in a normal environment it's closer to to 50-50.

Austin Wurschmidt -- KeyBanc -- Analyst

Yeah. That's helpful, great. Thanks, Jon.

Operator

Thank you. Our next question comes from Dany Asad of Bank of America. Your line is open.

Dany Asad -- Bank of America -- Analyst

Good morning, Jon, and good morning, Trey. You guys, in your prepared remarks touched on the topic of staffing. So just in the context of how you've made tweaks to the operations of your hotels. How should we think about FTE counts relative to pre-COVID levels once we return to a more normalized environment?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah. No, Dan, I'll start and then Trey jump in. I think historically we ran on average at about 35 FTEs across the portfolio. We're running half or just slightly less than half of that level today. Part of that is just the challenges of us being able to find labor, and I think that's been again well documented across the industry. And part of that is we are adapting the operating model just to what is still a unique environment and still lower than normal occupancies. I do think we'll continue to add FTEs back. I don't think 17 is the right stabilized number. I do think there are opportunities for 35, again this is an average to be lower going forward. And a lot of that's going to be based on how brand standards evolve. I think we're encouraged by the opportunity that cleaning on stay-overs is going to be something that is optional and not a brand standard, that's the most meaningful lot for us from a margin perspective. And I think we're reevaluating things like our breakfast offering and all the other kind of services and amenities that were put in place pre-pandemic that are being reevaluated, food trucks and social hours, and airport shuttles, a lot of these other -- a lot of these other amenities and services that are costly and labor intensive, likely come back in a slightly different form. But I think, overall, generally help profitability of the hotel level.

Dany Asad -- Bank of America -- Analyst

Got it. And we've heard that some brands have already started moving in that direction. Has anybody, like you know, I mean, Hilton might have been one that we've heard over the last couple of weeks about that. Have you heard anyone else commit from the big brands to this concept of making it into like permanently and opt in as opposed to just something that's standard going forward?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, Hilton is the only one that has formally announced it. We're certainly hopeful, if not optimistic, that others will follow.

Dany Asad -- Bank of America -- Analyst

Got it. Thank you very much.

Operator

Thank you. Our next question comes from Michael Bellisario of Baird. Your line is open.

Michael Bellisario -- Baird -- Analyst

Thanks. Good morning, everyone.

Jonathan P. Stanner -- President and Chief Executive Officer

Good morning, Mike.

Michael Bellisario -- Baird -- Analyst

Couple of questions for you. First, Jon, could you just go back to the page numbers, maybe focus on September, and I know it's probably a small amount of bookings at this point, but I know you mentioned a couple of markets for Austin -- August, excuse me. But what about certain markets pockets of strength that you're seeing for September, more of the business traveler, how does the booking pace look weekday versus weekend, etc., and segment strong week?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look September -- first of all, excuse me, Labor Day is in September. So we obviously have strong bookings over that weekend in all the markets that are leisure oriented that you would expect. For the rest of September, its similar -- its a similar dynamic than what we talked about later in August. Its markets that have one in terms of their improvement of pace, its markets that have underperformed. So it is our more urban related markets. As I said September pace is up 6% today over where we sit for August. Its still is a little early for us -- for September, things book in fairly narrowly. But I would say room rents are up, but probably more importantly rates are up double digits as we look at our pace in September. So the hope is that some of that is driven by more mid-week and more corporate demand.

Michael Bellisario -- Baird -- Analyst

Got it. It sounds like its still too early and Labor Day is having a big impact on that basis?

Jonathan P. Stanner -- President and Chief Executive Officer

There is some -- there is some small convention in group activity we have on the books in markets like Atlanta, for example, in particular, that are helping improve this space. So again, I would say that what we see in September, and again its early for September, its really early for October, but we are seeing it outside of your traditional leisure demand sources. Labor Day is clearly driven by leisure. But beyond that, the pace improvement is driven by whether its corporate small group or small convention type activity.

Michael Bellisario -- Baird -- Analyst

Got it. And then just switching gears a little bit on the supply front, just maybe go back to the pre-pandemic question on weighted average supply growth in your markets. Have you seen more projects get started in your markets, more projects get tabled? What's your latest outlook for your portfolio on the supply side?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, I still -- I still think that what's in the ground in under construction, most of which is going to get finished and completed. I do think new starts are going to continue to slow. We have a lot of dialog with developers. There are certainly looking at things. I do you still think new construction is difficult, depends on a lot of markets and so our expectation is that we're going to have a couple of year period where supply runs well below historical averages.

Michael Bellisario -- Baird -- Analyst

And then just last one from me on transactions. Can you maybe talk about portfolio pricing versus one-off deals? And then your level of confidence in your ability to put the money to work on more deals over the near-term?

Jonathan P. Stanner -- President and Chief Executive Officer

Sure. Look, the pipeline today is more active than it's been in any time since the pandemic began and certainly more active than it was 30 days ago, 60 days, 90 days ago. So in the quality of assets that are on the market I think today are higher than what we've seen in any time before. I do think pricing has moved upward. I don't think there's any question that fundamentals have improved and rates continue to stay low, the financing markets have become more constructive, you've seen the asset prices continue to improve. I do think we'll find some unique opportunities. I think Steamboat is a really good example of an asset that is kind of right down the middle of the fairway from a demand perspective and a lack in new supply perspective, because we are able to transact on that. I think is a very, very compelling valuation and then can underwrite a compelling stabilized yield on that type of assets. And I think there'll be more out there. We're fortunate that we've got $150 million of capacity under our existing facility. We've got a partner who is eager to grow it, and so our hope is that we'll be able to find opportunities. We'll always be disciplined around how we allocate that capital. It will continue to be a returns driven approach for us. But given the magnitude of assets on the market, again, we're hopeful to be able to find some opportunities here.

Michael Bellisario -- Baird -- Analyst

And then single asset versus portfolio pricing?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, I don't know that we've seen a huge delineation between pricing -- between single assets and portfolios. I would say it's more market driven and kind of demand driven. So you're still seeing probably steeper type of discount to pre-COVID pricing in core CBD urban markets than you are in drive-to leisure oriented markets as you probably expect.

Michael Bellisario -- Baird -- Analyst

Got it. Thanks for the color.

Jonathan P. Stanner -- President and Chief Executive Officer

Thanks, Mike.

Operator

Thank you. Our next question comes from Bill Crow of Raymond James. Your line is open.

Bill Crow -- Raymond James -- Analyst

Hey, Jon, three questions. One, topic labor. Any change to the percentage guests opting in for nightly housekeeping. We talked last quarter that rate had kind of doubled now off a low base, but it doubled the last time we talked. I'm wondering whether that number is still increasing and whether you're seeing any difference in the opt-in rate between leisure and business travelers?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look, I don't know that I haven't answered on leisure versus business, something we'd have to come back to you on, Bill. I would say more generally the opt-in percentages and picking up as you would expect is kind of vaccinations have rolled out more meaningfully. Its probably 30% today and it was probably 10% to 20% in the first quarter. So we have seen that pickup rate continue to increase. It is still relatively low. Again, its probably 30% today.

Bill Crow -- Raymond James -- Analyst

Okay. And second part of that labor question. That's what the availability of labor. I know that the industry has talked about a post September easing of challenges. But in markets where you've seen the extended unemployment benefits and has that made labor more available?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look, I think you're seeing more applicants. I do think that, that has helped to some degree. I think labor is going to continue to be tight and its going to continue to be a challenge. I do you think some of the challenges that we've seen are transitory and will continue to get better post Labor Day. But I think we're going to continue to see challenges on labor and we've continued to be creative and how we staff and get basic functions at the hotel done. Again, our hope is that you'll start to see some relief in that regard as we get past Labor Day and into the fall.

Bill Crow -- Raymond James -- Analyst

And then finally, Jon, on labor. How is the quality of the workforce that you're able to hire these days? I mean, is it what it used to be, is it -- has turnover increased because they don't show up or can you kind of give us a general thought on how the quality of labor is?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, look, I think it's challenging today though, candidly. I think we've seen, even when we're able to to get new employees you get a fair number of no shows, you get a fair number of people that come to work for few days and then don't come back for a few days, and so there is no question that it has been challenging. We're awfully fortunate that we've got a really good group of management companies that I think have great breadth and do a good job trying to staff hotels. But there is no question that it has been a challenge getting labor and getting good quality labor.

Bill Crow -- Raymond James -- Analyst

All right, thank you.

Operator

Thank you. Our next question comes from Neil Malkin of Capital One. Your line is open.

Neil Malkin -- Capital One -- Analyst

Thanks, guys. This is a quick follow-up for me. So, Jon, could you just maybe talk about why you think Summit has been an underperformer in 2021, and how you can get or what kind of main things you can do or levers you can pull to get the share price higher, particularly given, historically the stock has worked very well when the external engine is running?

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, Neil, I mean, look, clearly we like to be able to grow the business externally. We've done that today. We're one of a handful of [Indecipherable] that have been able to grow. Look, it's hard for me to comment on why the stock performs in a certain way. I think what we're trying to do is be very thoughtful on how we and how we run the business. We are huge believers in the quality of the portfolio we have, the operating model that we have, and the operating platform that we have, and we do believe that over time we'll will be able to operate this business in a way that creates a tremendous amount of value. There is going to be periods of time when the stock underperforms and outperforms. And I think, again, the goal here is to run the business for the long-term in a way that creates value.

Neil Malkin -- Capital One -- Analyst

Okay. I appreciate your thoughts.

Jonathan P. Stanner -- President and Chief Executive Officer

Thanks, Neil.

Operator

Thank you. I'm showing no further questions at this time. I will turn the call back over to the President and CEO, Jon Stanner, for any closing remarks.

Jonathan P. Stanner -- President and Chief Executive Officer

Yeah, thank you very much, and thank you all for joining us today for our second quarter earnings conference call. We look forward to following up with you all post earnings and hope to see you all in person soon.

Operator

[Operator Closing Remarks]

Duration: 33 minutes

Call participants:

Adam Wudel -- Senior Vice President of Finance, Capital Markets and Treasurer

Jonathan P. Stanner -- President and Chief Executive Officer

William H. Conkling -- Executive Vice President and Chief Financial Officer

Neil Malkin -- Capital One -- Analyst

Austin Wurschmidt -- KeyBanc -- Analyst

Dany Asad -- Bank of America -- Analyst

Michael Bellisario -- Baird -- Analyst

Bill Crow -- Raymond James -- Analyst

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