RLJ Lodging Trust(US:RLJ)2025-08-08 15:00Financial Data and Key Metrics Changes - The company reported a RevPAR decline of 2.1% in Q2 2025, with occupancy at 75.5% and an average daily rate (ADR) of $205, translating to a 1.6% decline in occupancy and a 0.5% drop in ADR [18][19][21] - Adjusted EBITDA for the quarter was $104 million, with adjusted FFO per diluted share at $0.48 [21][24] - The company achieved hotel EBITDA of $113 million and hotel EBITDA margins of 31.1% [21] Business Line Data and Key Metrics Changes - Urban hotels outperformed the overall portfolio, with RevPAR growth of 20% in San Francisco and 10% growth in completed conversions [6][11][19] - Non-room revenues grew by 1.5%, indicating success in ROI initiatives despite lower occupancy [10][19] - Leisure revenues increased by 5%, driven by events and holiday shifts, while urban leisure segments achieved 7% revenue growth [7][9] Market Data and Key Metrics Changes - The company gained 140 basis points of market share, outperforming the industry despite RevPAR constraints [6] - Northern California showed ongoing recovery, supported by a positive local business climate and citywide events [6][15] - The company anticipates challenges in the third quarter due to tough comparisons and ongoing renovations, with preliminary July RevPAR tracking down by mid-single digits year-over-year [14][25] Company Strategy and Development Direction - The company is focused on driving earnings growth through disciplined expense management and capital allocation initiatives [5][12] - Key initiatives include repositioning assets, addressing near-term maturities, and opportunistically recycling capital into share repurchases [5][12] - The company expects to benefit from an improving economic backdrop in 2026, with a favorable geographic exposure and urban footprint [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed mixed outlook for the second half of the year, citing uncertainty in the macro environment and shorter booking windows [13][25] - The company anticipates a soft third quarter but expects tailwinds in the fourth quarter from favorable holiday shifts and improved group travel [14][25] - Management remains confident in the portfolio's ability to create long-term value despite near-term volatility [18] Other Important Information - The company executed $6 million in share repurchases during the quarter, maintaining a disciplined approach to capital allocation [12][24] - The balance sheet remains strong, with $600 million available under the undrawn corporate revolver and nearly $1 billion in total liquidity [22][23] Q&A Session Summary Question: Booking pace tracking into August and September - Management noted that the third quarter is expected to be the weakest due to a layering effect of demand and holiday shifts impacting bookings [28][30] Question: Differences between urban leisure and resort leisure - Urban leisure outperformed with a 7% increase, while international leisure showed softness [34][35] Question: Share repurchases strategy - Management indicated a programmatic approach to share repurchases, influenced by fundamentals and leverage considerations [37][38] Question: Update on Nashville asset performance - Nashville asset reported a 14% increase in Q2, benefiting from its location and recent conversion [42][45] Question: Transactions environment outlook - Management observed low transaction volume but noted improved sentiment and potential for more deals in the coming months [46][48] Question: Leisure discounting trends - Demand remains stable, but rate sensitivity is leading to increased use of discount booking channels [52] Question: Expense outlook for the second half of the year - Management expects about 2% growth in expenses, with ongoing cost control measures in place [57][60] Question: Expectations for flat margins from RevPAR perspective - Management indicated a normalized relationship between revenue and expenses, with a focus on maintaining margins [64] Question: Changes in booking channels - Direct bookings through brand.com are growing, while OTAs are slightly up due to leisure softness [66][68]