Sign in

You're signed outSign in or to get full access.

AH

Apple Hospitality REIT, Inc. (APLE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered modest top-line softness and margin compression: Total revenue was $327.7M (-0.5% YoY), operating margin fell 620 bps YoY to 15.5%, and Adjusted EBITDAre was $95.4M (-5.4% YoY) .
  • Versus S&P Global consensus, APLE slightly missed: revenue (-$0.49M, -0.15%), Primary EPS (-$0.015, -11.3%), and EBITDA (-$2.22M, -2.3%)*; management cited government demand shifts, expense headwinds, and calendar effects (Easter) .
  • Guidance lowered: Net income to $167–$195M (from $173–$202M), Comparable Hotels RevPAR change to (-1%)–(+1%) (from +1%–+3%), Adjusted EBITDAre to $433–$457M (from $447–$471M); capex maintained at $80–$90M .
  • Capital allocation remains active: two Q1 dispositions ($21.0M), one pending sale ($16.0M), two pending acquisitions ($117.0M), and YTD share repurchases of ~2.4M shares for ~$32.3M .
  • Near-term narrative pivot: management expects Q2 to be the worst quarter, then ~1% RevPAR growth implied in H2; muted new supply and targeted sales/repurchases frame a supportive setup if macro stabilizes .

What Went Well and What Went Wrong

What Went Well

  • Comparable Hotels ADR rose 1% YoY to ~$157; absolute occupancy and rate remained resilient despite demand shifts . “Demand remained steady across our portfolio, supporting continued strength in absolute occupancy and rate” — CEO Justin Knight .
  • Active portfolio optimization and capital returns: sold 2 hotels (gain ~$3.6M), contracted another sale ($16M), under contract to buy 2 hotels ($117M), repurchased ~2.4M shares YTD for ~$32.3M . “We will opportunistically sell assets and redeploy proceeds primarily into additional share repurchases” — CEO .
  • Market strength examples: LA RevPAR +20% (fire recovery), New Orleans >20% growth (Super Bowl), Salt Lake City ~10% RevPAR growth; Houston RevPAR +8% on convention/corporate drivers .

What Went Wrong

  • YoY margin and earnings pressure: operating margin down 620 bps YoY; Comparable Hotels Adjusted Hotel EBITDA margin down 180 bps; Adjusted EBITDAre -5.4% YoY; MFFO -9% YoY .
  • Expense headwinds: utilities +9%, property taxes +8%, insurance pressure; fixed costs weighed on bottom line despite managing variable costs and reducing contract labor .
  • Softness tied to government demand mix and calendar: pullback in government travel during March and negative April RevPAR impact from Easter timing; Q2 expected to be weakest quarter .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$329.512 $333.036 $327.702
Net Income per Share ($)$0.22 $0.12 $0.13
Operating Margin %21.7% 15.0% 15.5%
Adjusted EBITDAre ($USD Millions)$100.810 $96.590 $95.378
MFFO per Share ($)$0.34 $0.32 $0.32
ADR (Actual, $)$153.18 $152.39 $156.24
Occupancy (Actual, %)72.0% 71.4% 71.1%
RevPAR (Actual, $)$110.25 $108.75 $111.04
Comparable Hotels Adj. Hotel EBITDA Margin %34.1% 32.9% 32.3%

Results vs S&P Global consensus (Q1 2025):

MetricActualConsensus*Surprise ($)Surprise (%)
Revenue ($USD Millions)$327.702 $328.196*-$0.494-0.15%
Primary EPS ($)$0.1153*$0.13*-$0.015-11.3%
EBITDA ($USD Millions)$95.345*$97.563*-$2.218-2.3%

Comparable vs Same Store (Q1 2025 vs Q1 2024):

MetricQ1 2024Q1 2025
Comparable Hotels Total Revenue ($USD Millions)$325.427 $324.262
Comparable Hotels Total Operating Expenses ($USD Millions)$214.574 $219.396
Comparable Hotels Adj. Hotel EBITDA ($USD Millions)$110.853 $104.866
Comparable Hotels Adj. Hotel EBITDA Margin %34.1% 32.3%
Same Store Hotels Total Revenue ($USD Millions)$320.161 $317.343
Same Store Hotels Adj. Hotel EBITDA ($USD Millions)$108.681 $103.175
Same Store Hotels Adj. Hotel EBITDA Margin %33.9% 32.5%

Monthly KPIs (Comparable Hotels, Q1 2025 vs Q1 2024):

MetricJan 2024Feb 2024Mar 2024Q1 2024Jan 2025Feb 2025Mar 2025Q1 2025
ADR ($)$145.27 $155.71 $162.59 $155.05 $147.87 $159.11 $161.59 $156.56
Occupancy (%)64.7% 74.2% 78.0% 72.2% 63.7% 73.3% 76.6% 71.1%
RevPAR ($)$93.92 $115.46 $126.75 $111.97 $94.22 $116.66 $123.72 $111.36

Guidance Changes

MetricPeriodPrevious Guidance (Feb 24, 2025)Current Guidance (May 1, 2025)Change
Net Income ($USD Millions)FY 2025$173–$202 $167–$195 Lowered
Comparable Hotels RevPAR Change (%)FY 2025+1.0% to +3.0% (-1.0%) to +1.0% Lowered
Comparable Hotels Adj. Hotel EBITDA Margin %FY 202534.2%–35.2% 33.7%–34.7% Lowered
Adjusted EBITDAre ($USD Millions)FY 2025$447–$471 $433–$457 Lowered
Capital Expenditures ($USD Millions)FY 2025$80–$90 $80–$90 Maintained
Dividend (regular monthly)Current run-rate$0.08/month (annualized $0.96) $0.08/month (annualized $0.96); April yield ~8.1% on $11.85 close Maintained

Management attributed the reductions to a “slight pullback in future bookings primarily attributable to greater macroeconomic uncertainty” and Easter timing impacts in April .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Supply growth/macroMuted supply growth; business transient/Leisure improving; 2025 initial guide 60% of hotels with no new similar chain-scale construction within 5 miles; tariffs may further slow starts More supply-constrained; supportive longer-term
Government demand/mixPortfolio optimization ongoing March pullback; booked mix over-indexed to gov early, then reset; gov ~5–6% of mix; cancellations leveled in April Mix normalization underway
Expense headwindsExpense growth moderated, but fixed costs pressured Utilities +9%, property taxes +8%, insurance up; contract labor down 160 bps YoY Fixed-cost pressure persists; variable costs controlled
Capital allocationAcquisitions, dispositions; repurchases (~$35M in 2024) Q1 dispositions ($21M), pending sale ($16M), pending acquisitions ($117M); YTD repurchases ~$32.3M Continued active optimization
Outlook/RevPARQ4 guide provided; early Jan slight RevPAR improvement Q2 expected worst; H2 implies ~+1% RevPAR; last week of April improved, but too early to call trend Cautiously constructive H2

Management Commentary

  • “We are disciplined in our approach to capital allocation... should our stock continue to trade at a meaningful discount... we anticipate we will opportunistically sell assets and redeploy proceeds primarily into additional share repurchases” — Justin Knight, CEO .
  • “Supply growth for our industry has generally been muted… nearly 60% of our hotels did not have any new upper upscale, upscale or upper mid-scale product under construction within a 5-mile radius” — Justin Knight .
  • “Comparable hotels utilities expense was up 9% and same-store property taxes grew 8%… we anticipate some relief moving forward from a favorable property insurance renewal this quarter” — Liz Perkins, CFO .
  • “Implied RevPAR expectations for Q2 through Q4 are essentially flat in the back half… we now expect Q2 to be our worst quarter with about 1% RevPAR growth implied for the back half” — Liz Perkins .

Q&A Highlights

  • Estimates/RevPAR trajectory: Management lowered the midpoint of FY RevPAR guidance by ~200 bps; Q2 expected to be weakest due to April; H2 implies ~1% RevPAR growth if booking trends hold .
  • Transaction market: Focus on smaller, local owner-operator deals for dispositions and high-IRR special situations (e.g., Tampa Homewood) for acquisitions; redeploy into share repurchases when arbitrage vs private market returns exist .
  • Segmentation/mix: Government demand normalized to ~5% mix; negotiated business held up; group strong, near-term bookings healthy .
  • Capex philosophy: Maintain $80–$90M spend (5–6% of revenues) with flexibility; renovations seen as competitive advantage; monitoring tariffs for timing/costs .
  • Cost structure: Variable costs well managed; fixed expenses headwinds; contract labor reduced by 160 bps YoY; teams prepared to pivot if conditions worsen .

Estimates Context

  • Q1 2025 vs S&P Global consensus: revenue $327.702M vs $328.196M*, Primary EPS $0.1153* vs $0.13*, EBITDA $95.345M* vs $97.563M* — all modest misses; # of estimates: revenue (6), EPS (2) for Q1 [GetEstimates Q1 2025].
  • Forward consensus snapshots indicate Q3 2025 actuals beating consensus for both revenue and EBITDA, but Q1 missed (context only)*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance reset frames expectations: lower FY RevPAR, margin, and EBITDAre; watch Q2 trough and H2 stabilization signals (bookings, April/May weekly trends) .
  • Operational resilience: ADR growth with steady occupancy and disciplined variable cost control offset some fixed expense headwinds (utilities, taxes, insurance) .
  • Capital allocation optionality: continued dispositions at attractive multiples and opportunistic share buybacks can drive per-share value; monitor Tampa Homewood and Nashville Motto timing/returns .
  • Supply backdrop supportive: muted new construction in APLE markets reduces downside risk and enhances upside leverage to demand normalization .
  • Dividend durability: regular $0.08/month maintained (annualized $0.96), with an ~8.1% yield implied at April 29 close; board monitors payout vs performance and capital needs .
  • Near-term trading lens: post-guide cut, incremental data points (weekly RevPAR, government mix stabilization, cost renewals) likely drive sentiment; Q2 prints are key catalysts .
  • Medium-term thesis: rooms-focused, diversified portfolio; low leverage (~33% net debt to total capitalization), and active capital rotation underpin downside protection and potential EPS/FFO accretion via buybacks and targeted deals .

Footnote: *Values retrieved from S&P Global.