RLJ Lodging Trust(US:RLJ)2025-11-06 18:00Financial Data and Key Metrics Changes - The company reported a third quarter REVPAR of $139, reflecting a 5.1% decline year-over-year, driven by a 3.1% drop in occupancy and a 2.1% decrease in ADR [16][21] - Third quarter occupancy was 73%, and average daily rate (ADR) was $190 [16] - Adjusted EBITDA for the third quarter was $72.6 million, with adjusted FFO per diluted share at $0.27 [18][21] - The company ended the quarter with $2.2 billion in debt, a weighted average maturity of three years, and an interest rate of 4.7% [19] Business Line Data and Key Metrics Changes - Urban hotels outperformed the broader portfolio, with REVPAR growth in San Francisco CBD at 19.4% due to strong demand from conferences and events [6][17] - Non-room revenues grew by 1.3% despite lower occupancy, indicating successful ROI initiatives [9][18] - Group revenues were impacted by the shift of Jewish holidays into September, leading to a softer citywide calendar [6] Market Data and Key Metrics Changes - The company noted a decline in government-related transient demand, which remained significantly below last year [6] - The leisure segment showed stable trends, with demand up 1% during the quarter, although some pricing sensitivity was observed [8][40] - Urban leisure markets continued to perform well, benefiting from strong demand for concerts and events [8] Company Strategy and Development Direction - The company is focused on capital allocation, with ongoing renovations in Waikiki, Key West, and Fort Lauderdale, which are now substantially complete [10][20] - The company is optimistic about the upcoming World Cup in the U.S. and other major events that will drive demand in key markets [14][72] - The company is committed to returning capital to shareholders while maintaining a healthy balance sheet [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the impact of the government shutdown on travel propensity and overall market conditions [12][60] - The outlook for the fourth quarter has been adjusted to reflect current trends, with expected REVPAR growth ranging from -1.9% to -2.6% [21] - Management remains optimistic about 2026, citing favorable economic conditions and a lack of new supply in urban markets [14][74] Other Important Information - The company has significant liquidity of approximately $1 billion, including $375 million in unrestricted cash [18] - The company is leveraging its healthy balance sheet to unlock value through renovations and conversions [19][20] Q&A Session Summary Question: Can you dive into the revenue management strategies for the quarter? - Management highlighted a shift towards leisure bookings to compensate for weaker group demand, with a focus on diversifying the mix [26][28] Question: How does the top-line outlook affect your CapEx and expected returns? - Management noted that most renovations were front-loaded, and while they expect delays in ramp-up due to market conditions, they remain optimistic about future returns [32][33] Question: What is the impact of the government shutdown on Q4 guidance? - Management indicated that the government shutdown has affected overall market sentiment and travel propensity, leading to a downward adjustment in expectations for October and the fourth quarter [58][60] Question: How is the REVPAR index share evolving? - Management reported an increase in REVPAR index, reflecting strong asset quality and market positioning [83][84] Question: What are the risks to the hotel operating model in the future? - Management expressed confidence in current labor trends and productivity improvements, despite potential future risks related to immigration policy [85][88]