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In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings release and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on April 25, 2012, and may also be accessed through the company’s website at www.ahtreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release.I will now turn the call over to Monty Bennett. Please go ahead, sir. Monty Bennett Thanks and good morning. The first quarter this year continued to reflect the early stage benefits from the hotel cycle recovery and as a result our reporting metrics are positive. It should be recognized however that until the recovery gains have more sustained footing, progress could be uneven at times. We continue to make headway in certain key areas such operating margin improvement, RevPAR growth and risk mitigation. We are focused on how best to create near term and long-term shareholder value within an environment where we continue to see improving trends in the lodging sector and great resiliency in the US economy as a whole. We remain bullish on the hotel outlook and are confident that our initiatives are adding value. Since our last conference call on February, US hotel demand has continued to improve with RevPAR growth still well above historical average growth rates. In 2011 US market achieved annual RevPAR growth of 8.2%. At 2012 and 2013, the US hotel industry is expected to report steady RevPAR increases at 5.8% and 6.6% respectively according to the recent forecast from PKF. For the first quarter Ashford’s RevPAR growth was 3.1%. The legacy portfolio registered a RevPAR growth of 3.6% whereas the Highland portfolio was 1.3%. The performance reflects our heavy concentration at Washington DC, Dallas, Forth Worth and certain airport locations as well as some impact from capital expenditures. Approximately 15% of our EBITDA comes from the Washington DC area. While DC has underperformed other gateway cities, we remain confident in this [external] long term market and expect to see improved performance particularly following the 2012 election.
Some factors that affected the quarter’s RevPAR in DC were related to the Pentagon’s Base Realignment and Closure Program particularly in the Crystal City area where several of our assets are located. Also affecting our RevPAR for the quarter was the fact that our second largest market Dallas, hosted the Super Bowl during the first quarter last year which makes year-over-year comparisons challenging.Lastly airport markets generally, and our airport markets in particular experienced better weather by comparison to last year resulting in fewer stranded passengers needing hotel rooms. In January and February for 2011 the nation experienced 45000 cancelled flights compared to 12000 for this year. Clearly compared to our peers we have one the most diversified geographic portfolios which we believe mitigates risk. The pace of the economic recovery in certain markets could at times contribute to RevPAR variations. However we continue to see the hotel RevPAR recovery as broad based, noting that for the entire industry, the top performing markets for the first quarter were Nashville, New Orleans and Waikiki, while the top performing segments was highway locations. Additionally we have implemented an aggressive CapEx program which is having an impact on RevPAR. We believe these capital expenditures will result in the future strong market share gains. We are targeted to spend a $120 million to $135 million for 2012 and during the first quarter we spent $29.5 million in 32 hotels. By comparison to our historical experience with CapEx initiatives in other quarters, we are seeing an impact on RevPAR from the acceleration of our work and a scope for the refurbishments. If we were to exclude those assets in renovation our RevPAR would have reflected 4.8% growth. Read the rest of this transcript for free on seekingalpha.com