RLJ Lodging Trust(US:RLJ)2023-11-03 02:00Financial Data and Key Metrics Changes - The third quarter RevPAR grew by 3.4% year-over-year, achieving 98% of 2019 levels, with a 200 basis point improvement from the prior quarter [1][18] - Adjusted EBITDA for the third quarter was $88.8 million, and adjusted FFO per share was $0.40, both within guidance ranges [20][21] - Total revenues grew by 4.9% year-over-year, with non-room revenues increasing by 12.7% [33] Business Line Data and Key Metrics Changes - Business transient revenues increased by 11%, with room nights improving to 90% of 2019 levels, a 400 basis point increase over the second quarter [13][34] - Group revenues grew by 4% year-over-year, achieving 104% of 2019 levels, driven by a 15% increase in ADR [34][68] - Urban weekend RevPAR increased by 4% year-over-year, benefiting from strong attendance at events [14][32] Market Data and Key Metrics Changes - Urban markets such as New York, Washington D.C., and Tampa significantly exceeded 2019 RevPAR levels, with Tampa achieving 139% [39] - Monthly total revenue growth accelerated throughout the third quarter, reaching 6.9% in September [19] - October RevPAR is forecasted to be approximately $160, representing a 6% increase from 2022 and 101% of 2019 levels [22][19] Company Strategy and Development Direction - The company remains focused on urban-centric portfolio positioning to capture emerging trends, with a strong emphasis on group demand and leisure segments [31][37] - Continued capital allocation towards renovations and conversions is expected to unlock significant growth, with a disciplined approach to shareholder returns [15][20] - The company anticipates that urban markets will continue to outperform the industry due to a muted new supply outlook [37][89] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, expecting sequential improvement in performance for the fourth quarter [2][36] - The company is encouraged by the strong industry trends observed in September, which have continued into October [36][100] - Management highlighted the importance of capturing all segments of demand, particularly in urban markets, as consumer preferences shift towards experiences [37][89] Other Important Information - The company repurchased approximately $15 million of common shares in the quarter, bringing total repurchases to $70 million for the year [15][21] - The company expects capital expenditures to be in the range of $100 million to $120 million during 2023 [90] Q&A Session All Questions and Answers Question: Industry outlook for 2024 and RLJ portfolio performance - Management is positive about markets such as Southern California, Tampa, Boston, San Diego, and Atlanta for next year, expecting the portfolio to perform well as the new normal unfolds [46] Question: Inbound interest trends for hotels - Most inbound calls are from buyers looking for distressed assets, but the company is not under pressure to sell due to its strong balance sheet [52] Question: Operating expenses and margins - The company expects to maintain better operating margins than full-service hotels due to its lean operating model [61][93] Question: Group booking dynamics and future contributions - Current group contribution sits at about 18%, with room for growth as small group demand increases [68] Question: Impact of events and concerts on performance - While events have a positive impact, they do not significantly move the needle for the portfolio overall [106] Question: Insurance renewal outlook - The company is currently in the market for insurance renewals, expecting favorable terms due to a strong claim history [121] Question: Capital allocation and share buybacks - The company remains committed to share buybacks and has been active in capital allocation, balancing internal growth initiatives with shareholder returns [112][132]