Pebblebrook Hotel Trust(PEB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a same property hotel EBITDA of $62.3 million for Q1 2025, exceeding the midpoint of the outlook by $4.3 million [4] - Adjusted EBITDA was $56.6 million, which was $4.1 million above the outlook midpoint, and adjusted FFO was $0.16 per share, $0.05 above the midpoint [5] - Same property total revenues increased by 1% for the quarter, driven by a 7.1% increase at resorts [10] - Same property hotel expenses rose only 3.7% year over year, significantly below the low end of the expense growth outlook [12] Business Line Data and Key Metrics Changes - Same property total RevPAR rose 2.1% year over year, with an 8.2% increase at resorts, while urban total RevPAR declined by 2.2% [5] - Excluding Los Angeles, same property total RevPAR increased by 6%, and same property RevPAR grew by 4.9% [5] - Group room nights rose 5.4% year over year, contributing 28.2% of room revenue, a 190 basis point increase over last year [11] Market Data and Key Metrics Changes - Washington DC posted a 14.7% RevPAR increase, while San Francisco saw a 13% increase due to strong business group and transient travel [6] - Portland achieved a 7.5% RevPAR increase, and Chicago reported a 7.1% growth [8] - The company experienced a decline in RevPAR in March, primarily due to LA fires and a pullback in government-related travel [9] Company Strategy and Development Direction - The company is focused on operational efficiencies and cost control, which contributed to the strong Q1 performance [26] - There is a cautious outlook for the second half of the year due to economic uncertainty and reduced government and international inbound demand [32] - The company plans to continue investing in capital projects, with a full-year capital plan of $65 million to $75 million [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter performance exceeded expectations despite economic uncertainty [3] - There are concerns about a potential economic slowdown impacting demand, particularly in the second half of the year [32] - Preliminary numbers for April indicate a 3.5% gain in RevPAR, with a stronger performance expected in markets like San Francisco and Chicago [25] Other Important Information - The company has $218 million in cash and over $640 million of available capacity on its unsecured revolver, providing significant liquidity [14] - The company is experiencing a negative EBITDA impact from LA properties due to the wildfires, but the forecast for Q2 is less severe than previously expected [19] Q&A Session Summary Question: Impact of the second half outlook on bookings - Management indicated that the second half impact is related to potential demand pullback due to economic slowdown and reduced government travel [38][40] Question: Trends in corporate travel spending - Currently, there is no downturn in business transient travel, but caution is expected if economic uncertainty continues [42] Question: Expected cost impacts from tariffs - Tariffs are expected to impact new construction and renovation projects, particularly for items sourced outside the U.S. [46][48] Question: Recovery indicators for Los Angeles - Key indicators include bookings from traditional industry groups and the return of entertainment and tech companies to normal travel policies [80][82] Question: Expectations for summer performance - There is uncertainty regarding summer performance, particularly for leisure business which is often booked short-term [108]