Chatham Lodging Trust(US:CLDT)2026-02-25 16:32Financial Data and Key Metrics Changes - For Q4 2025, the company reported a GOP margin of 40.2% and a hotel EBITDA margin of 33.2%, with GOP margins only down 30 basis points despite a 1.8% decline in RevPAR [28][23] - The company generated adjusted EBITDA of $20.2 million and adjusted FFO of $0.21 per share for Q4 2025 [28][30] - The overall GOP margin decline for the year was limited to 40 basis points, with labor and benefits costs increasing only 1.2% on a per occupied room basis [24][28] Business Line Data and Key Metrics Changes - The company sold four older, lower RevPAR hotels for a total of $71.4 million, which helped reduce net debt by $70 million and leverage ratio to 20% [8][29] - RevPAR for the company's predominantly leisure hotels grew by 50 basis points in the quarter, while RevPAR for Silicon Valley hotels grew only 1% [16][13] - The top five RevPAR hotels in Q4 included Residence Inn in White Plains at $200 and Residence Inn in Fort Lauderdale at $186 [21] Market Data and Key Metrics Changes - In Silicon Valley, RevPAR was up 1% for 2026, with a strong demand from major companies like Google and Apple [13][15] - San Diego's RevPAR declined by 8% due to a retraction from a strong convention calendar in 2024 [17] - Los Angeles saw a 4% increase in RevPAR, benefiting from fire-related business, while the D.C. area hotels are expected to have easier comps in 2026 [18][27] Company Strategy and Development Direction - The company plans to continue repurchasing shares and has already repurchased approximately 1.8 million shares under a $25 million plan [6][10] - The company aims to invest in markets benefiting from increased business investments, particularly in the Central and Southeastern U.S. [12] - A new hotel development in Portland, Maine, is expected to commence soon, with an opening planned before summer 2028 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term industry growth, citing a favorable supply-demand equation and healthy GDP growth [9][10] - Wage pressures are expected to moderate, with a projected increase of only 2% for the second half of 2025 [5][10] - The company anticipates a conservative outlook for RevPAR in 2026, with expectations of low single-digit declines in Q1 followed by growth in subsequent quarters [30][32] Other Important Information - The company completed the largest financing in its history, totaling $500 million, while reducing overall borrowing costs [8] - The company ranked 29th out of 95 listed companies in the GRESB Sustainability Benchmark [8] Q&A Session Summary Question: Are there plans for further asset sales in 2026? - Management indicated there may be one or two more opportunistic sales, following the six hotels sold in the last 18 months [35] Question: What are the expectations for acquisitions and leverage? - Management is comfortable with historical leverage levels and sees sellers becoming more realistic about pricing, which may lead to potential acquisitions [36][37] Question: What expense pressures are expected in 2026? - Management noted potential utility pressures early in 2026 but indicated that overall operating expenses are stable [39] Question: How much room is left for productivity improvements? - Management stated that headcount is down 13% year-over-year, and they will continue to focus on controlling wages and headcount [43][44] Question: What is the impact of the World Cup on business? - Management is cautiously optimistic about the World Cup's impact but remains conservative in expectations due to uncertainties in demand [48][50] Question: What is the expected RevPAR cadence for 2026? - Management expects low single-digit declines in Q1, followed by growth in the last three quarters of the year, aided by easier comps [55][56]