RLJ Lodging Trust ((RLJ)) has held its Q4 earnings call. Read on for the main highlights of the call.
RLJ Lodging Trust’s recent earnings call conveyed a positive sentiment, highlighting strong RevPAR growth, successful asset conversions, increased shareholder returns, and a robust balance sheet. Despite these achievements, the company faces challenges such as a slight decline in occupancy and a difficult transaction market.
Strong RevPAR Growth
RLJ Lodging Trust reported a top quartile RevPAR growth, outpacing the industry with a 2.2% increase over the previous year. This growth was primarily driven by urban markets, which saw a 3.7% RevPAR increase in the fourth quarter.
Successful Asset Conversions
The company completed three asset conversions in Houston, New Orleans, and Pittsburgh, achieving over 10% RevPAR growth in 2024. Notably, the Courtyard Pittsburgh University Center conversion experienced a 14% year-over-year RevPAR increase.
Increased Shareholder Returns
RLJ enhanced shareholder returns by boosting the quarterly dividend by 50% and repurchasing approximately 2.3 million shares for $22 million at an average price of $9.39 per share.
Solid Financial Performance
The company reported an increase in Q4 EBITDA over the prior year for the second consecutive quarter, with hotel EBITDA reaching $90.4 million and margins at 27.4%.
Strong Balance Sheet and Liquidity
RLJ ended the fourth quarter with over $0.9 billion in liquidity and $2.2 billion in debt. The company successfully addressed 2025 debt maturities with a new $500 million term loan.
Occupancy Decline
The fourth quarter saw a slight decline in occupancy by 0.2%, resulting in an overall occupancy rate of 69.2%.
Challenging Transaction Market
The transaction market remains challenging, with a wide bid-ask spread making asset sales difficult.
Group Segment Challenges
The group segment faced challenges due to the timing of the Jewish holidays in October and muted demand around the election in November.
Forward-Looking Guidance
RLJ Lodging Trust provided guidance for 2025, anticipating RevPAR growth between 1% and 3%, adjusted EBITDA between $345 million and $375 million, and adjusted FFO per diluted share ranging from $1.46 to $1.66. The company expects continued outperformance in urban markets, driven by improving business travel and group demand.
In summary, RLJ Lodging Trust’s earnings call reflected a positive outlook with strong RevPAR growth and successful asset conversions, despite facing challenges in occupancy and the transaction market. The company’s forward-looking guidance suggests continued growth and resilience in the coming year.