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Apple Hospitality REIT, Inc. (APLE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $373.9M, up vs consensus ($370.9M), but EPS of $0.21 missed consensus ($0.227); margins compressed on fixed cost growth and an impairment, while comparable RevPAR fell 1.8% YoY . Values retrieved from S&P Global.*
  • Management reduced FY2025 RevPAR guidance to -2% to -1% and net income to $162–$175M, but raised EBITDA margin and Adjusted EBITDAre slightly on cost control and insurance/G&A tailwinds .
  • Tactical capital allocation continues: $48M in YTD buybacks through Oct, selective dispositions at attractive spreads, and forward commitments in Nashville, Anchorage, and Las Vegas; Marriott-managed assets will transition to franchise to unlock efficiencies .
  • October preliminary RevPAR declined ~3% YoY due to the government shutdown; management expects pent-up demand on reopening, framing a near-term headwind and potential rebound catalyst .
  • Dividend remains a central feature (current annualized $0.96, ~8.6% yield at Oct 31 close); balance sheet remains flexible (net debt-to-total capitalization ~34%) .

What Went Well and What Went Wrong

What Went Well

  • Revenue beat consensus with $373.9M vs $370.9M; ADR held resilient (Comparable ADR ~$163, down just 0.6%), and comparable EBITDA margin remained strong at 35.2% despite pressure . Values retrieved from S&P Global.*
  • Strategic portfolio actions and buybacks: three asset sales YTD for $37M, four additional under contract for $36M, and 3.8M shares repurchased for $48.3M through Oct, exploiting public-private valuation spreads .
  • Operating initiatives: transition of Marriott-managed hotels to franchise and consolidation of market-level management to realize synergies and increase flexibility for future dispositions (“win-win-win” per management) .

What Went Wrong

  • EPS missed consensus ($0.21 vs $0.227) and YoY net income declined (-9.6%), reflecting occupancy softness, fixed expense growth (taxes, liability insurance), and a $5.7M impairment on hotels under contract for sale . Values retrieved from S&P Global.*
  • Comparable RevPAR fell 1.8% YoY (occupancy -120 bps), and comparable EBITDA margin declined 200 bps, driven by government travel pullback and calendar effects (Rosh Hashanah shift) .
  • October preliminary RevPAR down ~3% YoY due to the federal shutdown, prompting a cautious FY guide reset; weekday softness and mix shifts away from government and corporate transient persisted late in Q3 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenue ($USD Millions)$378.8 $384.4 $373.9
Net Income ($USD Millions)$56.3 $63.6 $50.9
Diluted EPS ($USD)$0.23 $0.27 $0.21
Operating Income ($USD Millions)$77.7 $84.9 $72.5
Operating Margin %20.5% 22.1% 19.4%
Adjusted EBITDAre ($USD Millions)$128.9 $133.0 $122.1
Comparable Hotels Adj. Hotel EBITDA Margin %37.2% 37.4% 35.2%
MFFO per share ($USD)$0.45 $0.47 $0.42

Estimates vs Actuals (S&P Global consensus):

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)0.130*0.265*0.227*
Primary EPS Actual ($)0.115 0.270 0.210
Revenue Consensus Mean ($USD Millions)328.2*381.2*370.9*
Revenue Actual ($USD Millions)327.7 384.4 373.9
FFO/Share (REIT) Consensus Mean ($)0.322*0.473*0.416*

Disclaimer: Values retrieved from S&P Global.*

KPIs (Comparable and Actual):

KPIQ3 2024Q2 2025Q3 2025
Comparable ADR ($)$163.71 $163.62 $162.68
Comparable Occupancy (%)77.1% 78.6% 76.2%
Comparable RevPAR ($)$126.29 $128.68 $124.01
Actual ADR ($)$162.57 $163.56 $162.70
Actual Occupancy (%)77.0% 78.6% 76.2%
Actual RevPAR ($)$125.10 $128.59 $124.03
Weighted Avg Shares (mm)240.5 237.7 237.1
Total Debt ($USD Millions)—$1,530.2 $1,515.2
Cash & Equivalents ($USD Millions)—$7.9 $50.3
Net Debt to Total Capitalization (%)—36.0% 34.0%

Guidance Changes

MetricPeriodPrevious Guidance (Aug 6, 2025)Current Guidance (Nov 3, 2025)Change
Net Income ($USD Millions)FY 2025$161–$187 $162–$175 Lowered midpoint and high end
Comparable Hotels RevPAR Change (%)FY 2025-1.5% to +0.5% -2.0% to -1.0% Lowered
Comparable Hotels Adj. Hotel EBITDA Margin (%)FY 202533.5%–34.5% 33.9%–34.5% Raised low end
Adjusted EBITDAre ($USD Millions)FY 2025$428–$450 $435–$444 Narrowed and slightly raised midpoint
Capital Expenditures ($USD Millions)FY 2025$80–$90 $80–$90 Maintained
DistributionsOngoingAnnualized $0.96 (monthly) Annualized $0.96 (monthly) Maintained

Management attributed changes to economic uncertainty and the federal government shutdown, offset by cost controls, better insurance renewal, and lower G&A .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Government travel pullbackEarly-year demand shifts; April RevPAR -3.5% YoY; Q2 RevPAR -1.7% YoY; mix optimization underway October prelim RevPAR -~3%; gov’t mix fell to <4% in Oct; ~5.2% in Q3; expect rebound post-reopening Continued near-term headwind; potential rebound
Cost control & fixed expensesCPOR growth moderated vs early 2025; taxes/insurance rising Variable expenses +0.7% (comp), fixed +12%; payroll POR $40 (+<2%) with contract labor down 140 bps Cost discipline offsetting top-line softness
Capital allocation (dispositions/buybacks)Two hotel sales; buybacks $43M through Jun; Motto Nashville pending Three sales YTD ($37M), four under contract ($36M); buybacks $48M through Oct; arbitrage vs private values Active, accretive redeployment continues
Development pipelineMotto Nashville under development AC Anchorage ($66M, 4Q27), Las Vegas dual-branded ($144M, 2Q28); brand conversion in Seattle Future growth positioning
Operating model changes—Transition Marriott-managed to franchise; consolidate third-party managers to unlock efficiencies Structural efficiency initiative
Macro/policyElevated uncertainty; Rosh Hashanah calendar shift impacted Q2/Q3 comps Shutdown weighed on October; cautious outlook embedded in guide Uncertain, guide prudently reset

Management Commentary

  • “Fundamentals for our portfolio remained strong during the third quarter despite ongoing uncertainty broadly impacting the operating backdrop…tactically shifting the mix of business…to strengthen market share and adjust to changing demand trends driven in large part by the pullback in government travel.” — CEO Justin Knight .
  • “Impacted by the recent government shutdown, comparable hotels' RevPAR was approximately 3% lower in October 2025 versus October 2024…variable expense growth…has moderated…though slightly down versus prior year, our portfolio continues to produce industry-leading margins.” — Management prepared remarks .
  • “We will be transitioning our Marriott-managed hotels to franchise and consolidating management…to realize incremental operational synergies…unlock incremental value.” — Management prepared remarks .
  • “Proceeds from these well-timed dispositions have been used primarily to fund share repurchases…we have repurchased approximately 3.8 million of our shares…” — Management prepared remarks .
  • “We remain confident in the long-term outlook for the hospitality industry…our ability to maximize total shareholder returns over time.” — CEO Justin Knight .

Q&A Highlights

  • Expense reductions and labor: Efficiency gains through FTE management aligned to occupancy; contract labor reduced to 7% of total wages (-140 bps YoY) .
  • Government shutdown impact: Roughly two-thirds of Q4 guide adjustment tied to shutdown; historical pattern suggests meaningful post-reopening pickup and pent-up demand .
  • Development vs acquisitions and buybacks: Forward commitments target returns vs weighted average cost of capital over a multi-year horizon; buybacks funded by dispositions; limit of ~1–2 developments closing per year .
  • Marriott management transitions: Expected near-term cash flow benefits, market-level consolidation efficiencies, and greater flexibility for potential asset sales .
  • Las Vegas complex: Larger footprint adjacent to convention center expected to unlock revenue synergies and operational efficiencies across three brands .

Estimates Context

  • EPS: Q3 2025 actual $0.21 vs consensus $0.227 (miss); Q2 2025 $0.27 vs $0.265 (beat); Q1 2025 $0.115 vs $0.130 (miss) . Values retrieved from S&P Global.*
  • Revenue: Q3 2025 $373.9M vs consensus $370.9M (beat); Q2 2025 $384.4M vs $381.2M (beat); Q1 2025 $327.7M vs $328.2M (slight miss) . Values retrieved from S&P Global.*
  • FFO/share: Consensus was $0.416 for Q3; company emphasizes MFFO/share ($0.42) and provides FFO totals; per-Share FFO disclosure was not emphasized in the release; use EPS and revenue for primary comparison . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Mixed print (rev beat, EPS miss), with FY RevPAR and net income guidance cut; expect headline sensitivity to government shutdown and margin compression, partially offset by cost controls and buybacks .
  • Medium-term: Structural efficiencies (Marriott franchise transitions), brand conversion (Seattle), and forward developments (Nashville/Anchorage/Las Vegas) support future growth and margin resilience .
  • Capital allocation remains accretive: Disposition multiples vs buyback multiples suggest continued spread capture; management is disciplined on balance sheet and timing .
  • Portfolio resilience: ADR held, leisure demand steady, group business targeted to backfill weaker midweek corporate/government; comparable EBITDA margin still mid-30s .
  • Watch fixed costs: Real estate taxes and insurance drove elevated fixed expense growth; any moderation in 2026 could be a positive margin catalyst .
  • Dividend and yield: Annualized $0.96 (~8.6% at Oct 31 price), with board monitoring in context of performance and capital needs; income appeal remains high .
  • Catalysts: Government reopening (pent-up demand), asset sale closures/buyback pace, Marriott transition milestones, and December Motto Nashville acquisition could drive narrative shifts .

Notes:

  • Non-GAAP items impacting results included a $5.7M impairment on assets under contract for sale and a $4.4M gain on sale; MFFO and Adjusted EBITDAre trends remained relatively resilient YoY given the backdrop .
  • October preliminary RevPAR decline (~3%) and calendar effects (Rosh Hashanah shift) explain late-Q3 and Q4 booking softness embedded in guidance .