Pebblebrook Hotel Trust(US:PEB)2025-05-02 14:02Financial Data and Key Metrics Changes - The company reported a strong first quarter performance, exceeding expectations despite economic uncertainty, driven by improved hotel operating efficiencies and cost reductions [4][5] - Same property hotel EBITDA totaled $62.3 million, surpassing the midpoint of the outlook by $4.3 million, while adjusted EBITDA was $56.6 million, exceeding the midpoint by $4.1 million [5][6] - Adjusted FFO was $0.16 per share, $0.05 above the midpoint, reflecting strong operational execution [6] Business Line Data and Key Metrics Changes - Same property total RevPAR rose 2.1% year over year, with resorts seeing an 8.2% increase, while urban total RevPAR declined 2.2% due to disruptions from the LA fires and renovations [6][7] - Excluding Los Angeles, same property total RevPAR increased by 6%, and same property non-room revenues climbed 6.6% [7][12] - Group room nights rose 5.4% year over year, contributing 28.2% of room revenue, indicating resilience in business group demand [12] Market Data and Key Metrics Changes - Washington DC posted a 14.7% RevPAR increase, benefiting from inauguration-related activities, while San Francisco saw a 13% increase due to strong business and leisure travel [8][9] - Portland and Chicago also showed solid results with RevPAR growth of 7.5% and 7.1%, respectively [9] - The company experienced a softening in demand in March, particularly from government-related segments and international inbound travel, leading to a decline in overall RevPAR [8][17] Company Strategy and Development Direction - The company is focused on operational efficiencies and cost control, which contributed to the strong performance in Q1 [13][27] - The capital plan for the year remains unchanged, with expected investments between $65 million and $75 million, while the balance sheet remains strong with $218 million in cash [15] - The company is cautious about the second half of the year due to economic uncertainty and reduced government travel, adjusting its outlook accordingly [31][33] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment is uncertain, with expectations of a slowdown impacting demand, particularly in the second half of the year [32][33] - There are concerns about the impact of tariffs on costs, particularly for new construction and renovation projects, but the company has not yet seen significant material impacts [46][97] - The company remains optimistic about its ability to adapt and generate free cash flow, maintaining flexibility in its operations [35][57] Other Important Information - The company recorded $4.3 million in business interruption income for the quarter, raising its total forecast for the year to $8.5 million [14] - The company is actively monitoring demand trends and has not yet seen significant cancellations outside of government-related groups [22][23] Q&A Session Summary Question: Impact of second half outlook on bookings - Management indicated that the second half outlook is influenced by potential demand pullback due to economic slowdown and reduced government travel [39][40] Question: Trends in corporate travel spending - So far, corporate travel has not shown a downturn, but there are indications that companies may reduce discretionary travel as uncertainty persists [41][42] Question: Expected cost impacts from tariffs - Management expects some impact on new construction and renovation costs due to tariffs, particularly for items sourced outside the U.S. [46][47] Question: Washington D.C. market performance - The D.C. market is experiencing positive demand due to increased congressional activity and a healthy convention calendar, despite some negative impacts from government travel freezes [64][66] Question: Summer performance expectations - Management is optimistic about summer performance, particularly for stabilized resorts, but acknowledges potential challenges due to economic conditions [108]