RLJ Lodging Trust(US:RLJ)2026-02-27 16:02Financial Data and Key Metrics Changes - The fourth quarter occupancy was 68.7%, average daily rate (ADR) was $199, and revenue per available room (RevPAR) was $137, reflecting a 1.5% decline in RevPAR year-over-year, driven by a 0.9% decline in occupancy and a 0.7% decline in ADR [17][18] - Total revenues grew by 0.2%, supported by a 7.2% increase in non-room revenues, which outperformed RevPAR by nearly 900 basis points [11][18] - Adjusted EBITDA for the fourth quarter was $80.4 million, with hotel EBITDA margins at 27%, only 44 basis points behind the previous year [19][22] Business Line Data and Key Metrics Changes - Urban markets outperformed the overall portfolio, with notable RevPAR growth in Northern California (18.5%), Denver CBD (10.1%), and New York City (4.7%) [18] - Non-government related business transient revenues grew by 5%, while group revenues declined by 3% due to the government shutdown impacting demand [9][10] - Leisure segment revenue grew by 1%, with urban leisure outperforming the portfolio, driven by strong holiday demand [10][11] Market Data and Key Metrics Changes - San Francisco CBD achieved 52% RevPAR growth, benefiting from a strong tech economy and events like the Dreamforce conference [8] - The company expects the lodging industry to achieve slightly positive RevPAR growth in 2026, driven by increased leisure demand and unique events such as the World Cup [14][15] Company Strategy and Development Direction - The company is focused on urban markets, anticipating that these will continue to outperform the broader industry due to favorable geographic exposure and high-impact capital investments [15][16] - Plans include advancing conversions and renovations, with expectations to deliver an average of two conversions per year [12][41] - The company aims to balance capital allocation between asset sales and share repurchases, maintaining a strong balance sheet while pursuing growth opportunities [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing tailwinds from moderating interest rates and tax cuts that could positively impact travel demand [13] - The company acknowledges lingering geopolitical uncertainties but remains constructive on the broader economy [13][14] - Management expects the first quarter of 2026 to be the softest due to difficult year-over-year comparisons, with expectations for stronger contributions in the latter half of the year [25] Other Important Information - The company completed significant refinancing transactions, addressing all debt maturities through 2028 and maintaining a favorable debt maturity profile [21][22] - A total of $120 million was returned to shareholders through share repurchases and dividends during 2025 [13][23] Q&A Session Summary Question: How much benefit is expected from the World Cup and easier comps due to the government shutdown? - Management indicated that RevPAR growth is expected to be balanced between rate and occupancy, with urban leisure demand anticipated to outperform [28][30] Question: How is capital allocation prioritized between asset sales and share repurchases? - Management stated that they are actively recycling capital from asset sales and share repurchases while maintaining a strong balance sheet [32][33] Question: What are the expectations for operating costs in 2026? - Management expects expenses to grow about 3%, with variable expenses at 2% and fixed expenses at 4% [37] Question: What is the expected impact of the Wyndham Boston conversion to Tapestry? - Management believes there is a 40% upside in EBITDA from the conversion, with favorable demand drivers in the market [78] Question: What percentage of business was government-related in 2025? - In a normalized year, government-related business was about 3%, but it was down approximately 20% in 2025 due to the government shutdown [88]