- RevPAR Growth: 2% growth, driven by a 1.4% increase in occupancy and a 0.6% increase in ADR.
- Occupancy: 75.1% for the third quarter.
- Average Daily Rate (ADR): $193.39.
- RevPAR: $145.23.
- Business Transient RevPAR Growth: 8.7% above 2023, with ADR growth of 5% and occupancy growth of 3%.
- Group Revenue Growth: 3.4%, with a 1.4% increase in demand and a 1.9% increase in ADR.
- Leisure Revenue Growth: 2%, driven by a 4% increase in demand and a 2% decline in ADR.
- Non-Room Revenue Growth: 7.3%, contributing to total revenue growth of 3%.
- Hotel EBITDA: $100.7 million, representing 2.6% growth above 2023.
- Hotel EBITDA Margins: 29.2%.
- Adjusted EBITDA: $91.9 million for the third quarter.
- Adjusted FFO per Diluted Share: $0.40.
- Weighted Average Interest Rate: 4.56%.
- Liquidity: Approximately $885 million at the end of the third quarter.
- Debt: $2.2 billion, with 74% either fixed or hedged.
- Share Repurchases: 2.2 million shares repurchased for $20.7 million year-to-date.
- Quarterly Dividend Increase: 50%, with a new dividend of $0.15 per share.
- 2024 RevPAR Growth Guidance: Expected to range between 1% and 2.5%.
- 2024 Hotel EBITDA Guidance: Between $382.5 million and $402.5 million.
- 2024 Corporate Adjusted EBITDA Guidance: Between $346.5 million and $366.5 million.
- 2024 Adjusted FFO per Diluted Share Guidance: Between $1.45 and $1.58.
- 2024 Capital Expenditures: Estimated between $100 million and $120 million.
- Net Interest Expense Guidance: Expected to be between $92 million and $94 million.
Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RLJ Lodging Trust (RLJ, Financial) achieved a 2% RevPAR growth rate, which was double the industry average, demonstrating the strength of its urban-centric portfolio.
- The company successfully refinanced all near-term debt maturities and executed attractive interest rate hedges, enhancing financial stability.
- RLJ Lodging Trust (RLJ) increased its quarterly dividend by 50%, reflecting strong financial performance and commitment to shareholder returns.
- The company completed two hotel conversions, resulting in a strong RevPAR growth of 17% year-over-year for these properties.
- Business transient demand showed significant improvement, with nearly 9% revenue growth driven by both ADR and occupancy gains.
Negative Points
- The impact of storms and the election is expected to constrain fourth-quarter RevPAR by approximately 100 basis points.
- Leisure revenues grew by only 2% during the third quarter, with a 2% decline in ADR, indicating consumer pricing sensitivity.
- The transaction market remains constrained and choppy, with a wide bid-ask spread, limiting opportunities for asset sales or acquisitions.
- Operating cost growth, although moderated, remains a concern with wages and benefits increasing by 4% to 5% year-over-year.
- The company anticipates a softer fourth quarter relative to prior expectations, partly due to the impact of Hurricane Milton and election-related disruptions.
Q & A Highlights
Q: Leslie, you spoke about large corporate account demand improving. Can you provide additional detail on specific industries or regions where you're seeing the most improvement?
A: Leslie Hale, CEO: We're pleased with the improvement in business transient (BT) demand, particularly from national accounts. We're seeing strength in travel from consultants, accountants, and technology sectors, especially with international travel from India and China. This demand is reflected in midweek revenue growth, with national accounts being less price-sensitive, which helps with rate increases.
Q: How is labor impacting your expenses, and what are the updates on hiring and retention?
A: Sean Mahoney, CFO: We're seeing a 4% to 5% year-over-year increase in wages and benefits, which has been stable. Fixed costs, which were a headwind earlier, have moderated. We're also seeing a reduction in contract labor, which is positive for retention and cost management.
Q: Can you discuss the expected lift from your hotel conversions this year and next?
A: Sean Mahoney, CFO: We're ahead of expectations with conversions, seeing top-line growth around 10% and bottom-line growth of 20% to 25% year-over-year. This validates the value created through conversions, even with some hotels under renovation.
Q: Have you seen a shift in corporate demand post-Labor Day, or is it a continuation of earlier trends?
A: Leslie Hale, CEO: It's a steady improvement rather than a step change. Urban markets continue to outperform, driven by business transient and group demand, with leisure remaining stable.
Q: With the third quarter exceeding expectations, why is the fourth quarter guidance unchanged?
A: Leslie Hale, CEO: The second half is generally intact, with third quarter slightly stronger and fourth quarter slightly softer due to storms and election-related softness. October was impacted by storms, and November is expected to be weaker due to the election, but December should align with October.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
