RLJ Lodging Trust Q1 FY2025 earnings call

• First quarter results were better than anticipated despite industry headwinds, with 1.6% RevPAR growth driven by ADR increase offsetting occupancy decline. • Urban hotels outperformed the broader industry, benefiting from business travel and large events. • Group segment was strongest with 10% revenue growth. • Leisure segment saw 2% revenue increase. • Actively strengthened balance sheet by addressing maturities, selling non-core asset, and repurchasing shares. • Operating cost growth moderated to 2.9% in Q1, a 100 basis point improvement from Q4.

Urban hotels achieved robust RevPAR growth of 3.6% with several urban markets seeing high-single-digit growth or higher. The group segment was the best-performing with 10% revenue growth driven by strong city-wide events. The leisure segment saw 2% revenue increase, and out-of-room spend grew 3.8%. Occupancy declined 0.5 point while ADR increased 2.1%, resulting in 1.6% RevPAR growth for the quarter.

• Adjusted full-year guidance with midpoint assuming recent trends continue. • Midpoint of revised guidance for comparable RevPAR growth ranges from negative 1% to up 1%, hotel EBITDA from $365.5 million to $395.5 million, corporate adjusted EBITDA from $332.5 million to $362.5 million, and adjusted FFO per diluted share from $1.38 to $1.58. • Expect March operating trends to continue in Q2, with preliminary April RevPAR forecasted to decline 1%-2% from prior year. • Capital expenditures expected to be $80 million-$100 million, cash G&A $34 million-$35 million, and net interest expense $94 million-$96 million.

• Macro-economic uncertainty leading to reduced visibility on near-term lodging operating results. • Short booking windows reflecting heightened uncertainty. • Potential softness in government and international demand. • Impact of seasonal shifts and macro backdrop on demand pockets.

Q: Michael Bellisario asked about April and March trends relative to initial expectations.

A: Leslie Hale responded that March was expected to be slightly positive but came in negative 1.3%, April was originally expected to be positive but is now forecasted to decline 1%-2% from prior year.

Q: Tyler Batory asked about booking window quantification and cancellations.

A: Leslie Hale stated the zero to seven day booking window increased from ~51% to ~58% since uncertainty increased, and they are monitoring cancellations, attendance, lead volume, and conversions.

Q: Austin Wurschmidt asked about Northern California recovery and disposition appetite.

A: Leslie Hale mentioned Northern California's recovery is gaining momentum due to city-wides, positive headlines, and office absorption, while disposition activity is slow due to market uncertainty but buybacks remain attractive.

Q: Chris Woronka asked about repositioning and tariffs.

A: Sean Mahoney responded that balance sheet provides ability to look at repositioning, tariffs impact FF&E which is ~40% of renovation costs, but the team has diversified suppliers.

Q: Chris Darling asked about NorCal EBITDA and margin profile.

A: Sean Mahoney said 2024 EBITDA was in high 30s percentage of 2019 levels, indicating significant upside potential.

Q: Floris van Dijkum asked about assets for sale and transaction market.

A: Leslie Hale stated they have one other asset under consideration, but transaction activity is slow due to current market backdrop.