Chatham Lodging Trust(CLDT) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company announced a $25 million share buyback plan, indicating a strong position to enhance shareholder value after addressing$ 500 million of maturing debt [6][7] - The quarterly common dividend was increased by 29% to $0.09 per share, reflecting a yield of over 5% [7] - Q1 2025 hotel EBITDA was$ 20.8 million, adjusted EBITDA was $17.9 million, and adjusted FFO was$ 0.14 per share [24][25] - GOP margin was 38.9%, with a hotel EBITDA margin of 30.5%, showing a 30 basis point increase from Q1 2024 [24][25] Business Line Data and Key Metrics Changes - RevPAR growth was noted across the portfolio, with significant increases in technology-dependent markets, particularly an 8% growth in Silicon Valley hotels [14][15] - The average age of sold hotels was 25 years, with proceeds of approximately $83 million from the sale of five hotels [8][25] - RevPAR at leisure hotels declined only 1%, indicating resilience in that segment [19] Market Data and Key Metrics Changes - RevPAR in LA increased by 14%, with specific hotels benefiting from fire-related demand [16] - New York, Dallas, and DC markets saw at least a 6% increase in RevPAR [17] - Government-related room revenue constituted approximately 5% of the overall portfolio, with a shift towards leisure travelers noted [11][12] Company Strategy and Development Direction - The company is actively seeking external growth acquisitions, focusing on high-quality premium branded targets to diversify its portfolio [9] - The strategy includes opportunistically recycling assets to enhance shareholder value through either hotel acquisitions or share repurchases [8][9] - The company aims to reduce volatility in cash flow by diversifying its asset base beyond tech-heavy markets [59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future RevPAR growth despite current economic uncertainties, projecting flat RevPAR for the year [12][13] - The company noted that the current environment has resulted in lower new supply, which could support future growth [13] - Management highlighted strong demand trends and the ability to pivot sales efforts to capture leisure travel [11][12] Other Important Information - The company completed renovations at several hotels, with a CapEx budget of approximately$ 26 million for 2025 [22][23] - The company has successfully reduced leverage, with a net debt to LTM EBITDA ratio of 3.6x, significantly below historical levels [25] Q&A Session Summary Question: Insights on capital allocation initiatives regarding buybacks and acquisitions - Management is looking at both buybacks and acquisitions opportunistically, with a focus on achieving yields over 9% for acquisitions [29][30] Question: Update on potential development in Portland, Maine - The development process is ongoing, with careful consideration of costs and approvals due to tariff uncertainties [34][35] Question: Performance drivers for the Phoenix hotel - The Phoenix hotel has outperformed expectations due to strong management and market conditions, contributing to its top RevPAR ranking [36][39] Question: Impact of government demand and international travel exposure - Government demand is minimal, constituting less than 5% of the portfolio, and international travel exposure is also limited [54][55] Question: Guidance on RevPAR expectations for 2025 - The company anticipates flat RevPAR growth, with potential ADR growth offsetting occupancy changes [56][58] Question: Potential acquisition markets and asset types - The company is considering diversifying its asset base beyond current tech-heavy markets to reduce cash flow volatility [59]