Apple Hospitality REIT, Inc. Q4 FY2025 earnings call

• CEO Justin G. Knight mentioned that against challenging backdrop in 2025, corporate and hotel teams executed strategic initiatives to maximize operating performance, manage expenses, capitalize on stock market dislocations, optimize portfolio, enhance growth profile. Portfolio is diversified across 84 markets. - CFO Elizabeth S. Perkins discussed portfolio performance, market variations, top and bottom performing hotels, channel mix and segmentation trends, expense details, balance sheet status, and 2026 outlook including net income, RevPAR change, EBITDA margin, and EBITDAre ranges. - Team adjusted strategy to optimize business mix as demand shifted, with management teams working on hotel and market specific strategies and operational execution. - Disciplined capital allocation: sold 7 hotels for ~$73M and repurchased 4.6M shares for ~$58M in 2025, reinvested gains via 1031 exchanges, and had future hotel development projects in early stages.

Comparable hotels RevPAR for full year 2025 was $118, down 1.6% from prior year. Fourth quarter comparable hotels RevPAR was $107, down 2.6%. ADR in fourth quarter was $152, down 90 basis points, occupancy 70%, down 1.7% vs Q4 2024. For full year 2025, ADR was $159, down 10 basis points, occupancy 74%, down 1.6% vs 2024. Comparable hotels adjusted hotel EBITDA was $99M in Q4 and $474M for the year, with EBITDA margin of 31.1% in Q4 and 34.3% for the year. Total revenue for comparable hotels was $319M in Q4 and $1.4B for full year 2025, down ~2.1% from 2024. Expenses: comparable hotels total hotel expenses increased 1% in Q4 and 1.9% for the year vs same periods 2024. MFFO for Q4 was ~$73M or $0.31 per share, down 3.1% vs Q4 2024; full year 2025 MFFO was ~$361M or $1.52 per share, down 5.6% vs 2024.

• For 2026, comparable hotels RevPAR is expected to be flat at midpoint, aligning with STR forecast for chain scales. - Net income expected between $133M and $160M. - Comparable hotels RevPAR change between negative 1% and positive 1%. - Comparable hotels adjusted hotel EBITDA margin between 32.4 - 33.4%. - Adjusted EBITDAre between $424M and $447M. - Assumed total hotel expenses will increase ~3% at midpoint (2% on CPOR basis). - Excluding share-based compensation expense from adjusted EBITDA and MFFO calculation effective 01/01/2026.

• Policy uncertainty and pullback in government travel impacted midweek demand in 2025, temporarily disrupting midweek occupancy improvement. - Weather events like winter storms weighed on results in early 2026. - Uncertainty regarding future policy related demand disruption, including ongoing partial government shutdown. - Difficulty in extrapolating full year trends early in the year due to seasonality and changing market conditions. - Supply growth dynamics and competitive market factors can impact hotel performance and brand transitions.

Q: What would you say was the total drag on RevPAR in 2025 from Liberation Day and the government shutdown? And how much of that do you expect to come back as a benefit in 2026?

A: Elizabeth S. Perkins said it's hard to quantify completely, but on a same store basis, room nights for government were down ~12% and negotiated down 5 - 6% for full year 2025, and assumed a good portion could come back, potentially about a point in occupancy.

Q: Liz, just you discussed all the moving pieces related to the outlook this year from some of the policy related disruption that went on last year, as well as the event-driven demand coming this year. I am just wondering if the RevPAR growth guidance assumes any volatility. And if you could just kind of maybe provide some of the cadence of how you are thinking about the quarters or first half versus back half of this year?

A: Elizabeth S. Perkins said FIFA World Cup benefit likely mostly in late second quarter, midpoint guidance assumes fairly flat cadence in middle of year, first quarter has slight decrease due to California wildfire comp and weather, fourth quarter has little more increase due to government shutdown last year.

Q: Going back to the RevPAR outlook, curious just at the high end of the range, that incorporating the fact that comps are getting easier and some of the event tailwinds that you talked about? And then 2025 was characterized more so by weaker occupancy than ADR growth. Is that your assumption for how 2026 will play out as well?

A: Elizabeth S. Perkins said at midpoint guidance assumed little impact or benefit from special events, moving higher up the range would anticipate some growth in occupancy as we lap comps more so than rate.

Q: Justin, maybe talk a little bit about just what you are seeing as far as the transaction market is concerned? Are you more focused on dispositions at this juncture?

A: Justin G. Knight said at this point focused on select dispositions where can redeploy proceeds into higher producing opportunities, environment similar to 2025, and sees shares as attractively priced.

Q: Rich Hightower asked about outlook for midweek transient business segment in 2026 and share-based comp calculation.

A: Elizabeth S. Perkins said encouraged by midweek occupancy improvement in December and February, but early to extrapolate full year; share-based comp mechanics involve recalibrating to target-based compensation at beginning of year based on performance.

Q: Michael Bellisario asked about bridging changes in same store comp pool and manager changes impact on 2026 outlook.

A: Elizabeth S. Perkins said adding Hotel 57 back creates noise, same store total growth at midpoint is 1.6%; Justin G. Knight said no explicit lift in outlook now, but transition costs expected to be offset through more efficient operations over time.

Q: Jay Kornreich asked about World Cup potential upside and booking window.

A: Justin G. Knight said team focused on maximizing World Cup opportunity, booking window is short, and at midpoint guidance not reflecting full impact yet as it's too soon to tell.

Q: Kenneth G. Billingsley asked about EBITDA guidance conservatism and Marriott franchise transition benefits.

A: Elizabeth S. Perkins said portion of EBITDA guidance conservatism is revenue driven; Justin G. Knight said Marriott transition makes assets more marketable, and anticipates cost savings from management consolidation and overhead allocation reductions.

Q: Chris Darling asked about supply backdrop and capital allocation appetite for portfolio deals.

A: Justin G. Knight said feels good about supply picture, and currently seeing more attractive pricing for individual assets, but will probe for portfolio opportunities.