"We are seeing occupancy at an all-time high," said Knight. "It's leading to higher room rates and increased profitability in our sector."
Apple Hospitality, formerly Apple REIT Nine, is one of the nation's largest owners of premium branded upscale, select-service hotels. The company's portfolio includes 176 Hilton (HLT - Get Report) and Marriott (MAR - Get Report) branded hotels with approximately 22,500 guestrooms located across 32 states.
"We focus with Hilton and Marriott because within our sector they have the strongest brands," said Knight. "Large brand recognition, great loyalty programs and really an efficient operating model which generates high profitability for us."
Apple became one of the largest hospitality REITs in the United States following the mergers of Apple REIT Seven and Apple REIT Eight on March 1, 2014. The company listed its shares on the NYSE on May 18. Knight said the average effective age of his hotels is only four years, making his hotels significantly younger than those of his competitors.
Apple Hospitality focuses exclusively on the select-service segment of the lodging industry. Knight said the select service segment should see RevPAR (revenue per available room) growth for the foreseeable future as demand far exceeds supply and occupancy levels are at the high end of the historic range.
Knight said the healthy environment in the hotel industry will enable Apple Hospitality to maintain and eventually grow its current 6.7% dividend yield over time. "We've seen limited supply growth over the past five or six years and supply growth remains below long term averages," said Knight. "That and a relatively strong economy that continues to grow has resulted in a strong operating performance."