Summit Hotel Properties, Inc. Q1 FY2026 earnings call

• Operating fundamentals improved sequentially in Q1, with REVPAR and pro forma portfolio inflecting positive. March saw 4.1% RevPar growth driven by 5.6% average rate increase. Best-performing demand segments were highest-rated, driving RevPar growth in many markets. - Outlook for remainder of year improved due to strengthening demand trends, including robust summer events. Expected April REVPAR increase ~3.5%, Q2 revenue pace ~4% ahead of last year. Exposure to 2026 FIFA World Cup and other major events. - Government-related demand improved from prior year declines, with March government revenue up ~3% and Q2 pace trending mid-single digits. - Successfully closed sale of Hilton Garden Inn in Longview, Texas and entered into agreement to sell Dallas Arlington South hotels. Remained active in share repurchase program, repurchasing 1.4 million shares in Q1. - Intensely focused on optimizing profitability, prudently allocating capital, and strengthening balance sheet. Priorities unchanged.

Pro forma rev par increased 0.2% year-over-year, driven by average daily rate growth. Nearly all segments had positive growth. Retail and negotiated segments had 7% and 8% RevPAR growth in Q1, with sequential improvement. Government-related demand in qualified segment inflected positively in March. Non-rooms revenue increased 10% year-over-year. Core markets like San Francisco and South Florida had strong results. San Francisco hotels saw RevPar increase 27% in Q1. South Florida hotels had rev par growth over 14%, with Oceanside Fort Lauderdale Beach showing strong revenue and EBITDA growth. Food and beverage revenue increased, with Oceanside contributing significantly. Proforma operating expenses increased 3.6% year over year, driven by merit-based wage adjustments and payroll taxes/employee benefits. Capital expenditures in Q1 were $12 million consolidated and $9 million pro-rata. Full-year 2026 pro-rata capital expenditures expected to be $55M - $65M, mostly in H2.

• Increased guidance ranges for key operating and financial metrics. Full-year 2026 REVPAR growth outlook 0.5% - 3%, translating to adjusted EBITDA $170M - $181M and adjusted FFO $0.75 - $0.85 per share. - Nominal expense growth expected ~3% for full year 2026. Pro rata interest expense expected $58M - $62M, preferred distributions $18.5M. Outlook does not assume additional acquisitions, dispositions, share repurchases, or capital markets activity for remainder of year.

• Macro and geopolitical uncertainty persists. - Government and government-related demand was a significant headwind in prior periods, though improved, still a factor. - Potential impact of winter storms, civil unrest, and other disruptions on operating results. - Volatility in lodging industry supply and demand dynamics, including potential changes in construction starts and travel patterns.

Q: Austin Werschmitt with KeyBank Capital Markets asked about May pacing, degradation in pace as it gets closer to realization and comparison to last year.

A: John Stanner said second quarter pace is trending up about 4%, May is lower than April, June pace high due to World Cup, trends in March and April have accelerated.

Q: Michael Bellisario with Bayard asked about separating BT vs leisure trends and quantifiable share gains from Mexico during spring break.

A: John said strength was broad-based, best growth in midweek negotiated segment, urban markets, some benefit from Mexico disruption in South Florida and Scottsdale but not creating long-term distortion.

Q: Chris Waronka with Deutsche Bank asked about direct bookings and impact of Hyatt changes.

A: John said direct bookings share ~70%, brand.com channels helped, Hyatt changes generally owner-friendly, breakfast pilots positive.

Q: Logan Epstein with Wolf Research asked about government segment's drivers and Onera expansion performance.

A: John said government revenue improved with lap of DOGE comparisons, broad-based across portfolio, Onera expansion performed well with beat to budgets and positive thesis playing out