Pebblebrook Hotel Trust(US:PEB)2025-07-30 14:00Financial Data and Key Metrics Changes - The company reported same property hotel EBITDA of $115.8 million for the quarter, exceeding the midpoint by $1.8 million [4] - Adjusted EBITDA was $117 million, which was $6.5 million above the midpoint [6] - Adjusted FFO came in at $0.65 per share, $0.06 ahead of the midpoint [6] Business Line Data and Key Metrics Changes - Total property same property RevPAR grew by 1.3% year over year, with a 1.7% increase in the urban portfolio and a 0.6% gain at resorts [7] - Excluding Los Angeles, same property total RevPAR rose 2.7%, with urban portfolio increasing by 4.1% [7] - Newport Harbor Island Resort outperformed expectations, generating $5.1 million of EBITDA, which was $1.8 million above forecast [29] Market Data and Key Metrics Changes - San Francisco led the portfolio with a RevPAR increase of 15.2%, supported by a strong convention calendar and business group demand [9][26] - Los Angeles faced challenges, with a $2.2 million EBITDA headwind, attributed to market-specific issues [4][23] - The company noted a decline in group demand across the industry, largely due to reduced government travel and weaker international participation [20] Company Strategy and Development Direction - The company is focused on enhancing operational efficiency through AI and automation tools, aiming to reshape the operating model over time [14][33] - A strategic productivity and efficiency program is in place to drive meaningful operating improvements and enhance guest satisfaction [14][32] - The company plans to invest $65 million to $75 million this year, primarily in capital maintenance and targeted ROI projects [18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic outlook, anticipating muted demand growth in the second half of the year [36] - The company expects Q3 to be the weakest quarter due to a heavier leisure mix and ongoing challenges in Los Angeles [38] - There is optimism for 2026, with expectations of normalized hotel demand and strong fundamentals due to restricted supply [40][43] Other Important Information - The company ended the second quarter with $267 million in cash, an increase of $49 million from the previous quarter [18] - Nearly all debt is unsecured, with a weighted average interest cost of 4.2% [19] - The company has increased its full-year business interruption income forecast for La Playa to $11.5 million [15] Q&A Session Summary Question: About Los Angeles performance and ICE activity impact - Management clarified that the decline in RevPAR in Los Angeles was primarily due to media attention around ICE activities, creating a misperception of safety, rather than the activities themselves [46][50] Question: Recovery trajectory for LA and growth in San Francisco - Management indicated that LA is on a recovery trajectory, with expectations for improvement in the back half of the year, while San Francisco is expected to benefit from a strong convention calendar [54][59] Question: Guidance for fourth quarter improvement - The company expects Q4 to improve due to easier comps and a more favorable convention calendar, particularly in San Francisco [64][66] Question: Wage pressure and expense growth sustainability - Management believes that efficiency and productivity enhancements will significantly offset wage pressures, with expectations for sustainable low expense growth [69][71] Question: AI implementation in hotels - Management noted that more complex operations in resorts may benefit more from AI, with independent operators adapting more quickly to new technologies [77][80] Question: Transaction market observations - There has been renewed interest in the transaction market, with increased investor inquiries and a more favorable sentiment in the last sixty days [110][111]