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Chatham Lodging Trust(CLDT) - 2024 Q3 - Earnings Call Transcript
CLDTChatham Lodging Trust(CLDT)2024-11-08 02:25
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Financial Data and Key Metrics Changes - Chatham Lodging Trust reported Q3 2024 hotel EBITDA of 32.2millionandadjustedEBITDAof32.2 million and adjusted EBITDA of 29.6 million, with adjusted FFO of 0.35pershare[21]−RevPARgrowthwas1.30.35 per share [21] - RevPAR growth was 1.3% for Q3 2024, with GOP margin at 44.5% and hotel EBITDA margin at 37.1%, reflecting a decline of only 40 basis points from Q3 2023 [21] - The company ended the quarter with a net debt to LTM EBITDA ratio of 4.2x, significantly below pre-pandemic levels of 5.5x to 6x [22] Business Line Data and Key Metrics Changes - RevPAR in the seven predominantly leisure hotels rose 0.7%, with the Hampton Inn Portland, Maine, being the best performer at 8% growth [14] - The five tech-driven hotels in Silicon Valley and Bellevue achieved RevPAR growth of 8% in Q3, with ADR rising 5% to nearly 200 [9][16] - Overall, RevPAR for the portfolio exceeded 2019 levels for the second consecutive quarter, with a Q3 RevPAR of 150[8]MarketDataandKeyMetricsChanges−Businesstravelshowedsteadygrowthacrossthecountry,withoccupancyratesforkeyweekdaysreaching79150 [8] Market Data and Key Metrics Changes - Business travel showed steady growth across the country, with occupancy rates for key weekdays reaching 79% on Monday and 84% on Tuesday and Wednesday [12] - In October, RevPAR grew 6% with occupancy up 5% to 83% and ADR up 1% to 191 [15] - The company noted that 30 of its 38 comparable hotels produced positive RevPAR in October, indicating strong overall trends [15] Company Strategy and Development Direction - The company is focused on recycling capital by selling five hotels, expected to generate approximately 80million,topaydowndebtandinvestinhigher−qualityassets[4][5]−Chathamaimstoenhanceinternalgrowthbyacquiringnewerassetsandreducingongoingcapitalrequirements,withatargetleveragerangeof4.75xto5.25x[28][30]−ThecompanyisoptimisticaboutthedemanddynamicsinSiliconValley,drivenbytechindustrygrowthandcorporateexpansions[10][11]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintherecoveryofmarginsandoverallperformance,citingashiftindemandtowardsbusinesstravelpost−summer[25]−ThecompanyanticipatesRevPARgrowthof180 million, to pay down debt and invest in higher-quality assets [4][5] - Chatham aims to enhance internal growth by acquiring newer assets and reducing ongoing capital requirements, with a target leverage range of 4.75x to 5.25x [28][30] - The company is optimistic about the demand dynamics in Silicon Valley, driven by tech industry growth and corporate expansions [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of margins and overall performance, citing a shift in demand towards business travel post-summer [25] - The company anticipates RevPAR growth of 1% to 3% for Q4 2024, with adjusted EBITDA guidance of 19 million to 21million[23]−Managementnotedthatexpensepressureshavelessened,withlaborcostsreturningtomorehistoricalincreases[13]OtherImportantInformation−Thecompanyhasonly21 million [23] - Management noted that expense pressures have lessened, with labor costs returning to more historical increases [13] Other Important Information - The company has only 30 million of debt maturing over the next 12 months and 135millionavailableunderitsrevolvingcreditfacility[22]−Capitalexpendituresfor2024areexpectedtobearound135 million available under its revolving credit facility [22] - Capital expenditures for 2024 are expected to be around 34 million, slightly below the budget of $37 million [20] Q&A Session Summary Question: Improvement in RevPAR in September and October - Management indicated that the improvement is likely due to a shift in demand towards corporate travel as leisure travel wanes post-summer [25] Question: Target leverage and asset sales - Management stated that a leverage target of 4.75x to 5.25x is reasonable, and they are actively pursuing asset sales to enhance growth [28][30] Question: Market conditions and pricing - Management noted that while there hasn't been dramatic movement in buyer-seller expectations, there is increased activity in the market [31]