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CL

Chatham Lodging Trust (CLDT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered RevPAR up 4% to $127 on 35 comparable hotels, occupancy +4 pts to 72% and flat ADR at $176; Adjusted EBITDA was $17.9M and AFFO per diluted share was $0.14, with diluted EPS at $(0.01) .
  • Results modestly beat Street: revenue $68.6M vs consensus ~$68.3M, EPS $(0.01) vs $(0.07), and Adjusted EBITDA $17.9M vs ~$17.7M; normalized net income surprised positively versus a negative consensus estimate (S&P Global) *.
  • Guidance reset lower for FY 2025: RevPAR growth to 0–1% (from 1–3.5%), Adjusted EBITDA to $89–$93M (from $92–$97M), AFFO/share to $0.95–$1.03 (from $1.01–$1.11), primarily reflecting April softness and portfolio changes .
  • Capital allocation as catalyst: Board authorized a $25M share repurchase and raised the quarterly dividend 29% to $0.09; net debt fell to $365M with leverage ~22% at quarter-end .

What Went Well and What Went Wrong

What Went Well

  • Outperformance vs industry: “first quarter RevPAR growth of 4 percent basically doubled the industry performance of 2 percent” (COO) .
  • Tech market strength: Silicon Valley +8% RevPAR, Greater New York +11%, Los Angeles +14%; strong flow-through and margin control .
  • Capital actions and balance sheet: $25M buyback authorization; dividend increased to $0.09; net debt down to $365M and leverage ~22% .
  • Quote: “We delivered adjusted FFO per share near the top of our guidance range” (CEO) .

What Went Wrong

  • April softness and holiday timing: RevPAR down ~4% in April; 10 days around Passover/Easter down ~15%, pressuring near-term growth outlook .
  • Leisure and select markets softness: Coastal Northeast −8%, San Diego −11% YoY; hotel EBITDA margin −30 bps YoY to 31% .
  • Government-related demand pullback in D.C. required quick sales pivot; normalized Street expectations for Q2 reflect negative RevPAR growth (–2% to –0.5%) .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$68.4 $75.1 $68.6
Diluted EPS ($USD)$(0.15) $(0.08) $(0.01)
Adjusted EBITDA ($USD Millions)$18.9 $21.1 $17.9
AFFO per diluted share ($USD)$0.16 $0.20 $0.14
GOP Margin %39% 41% 39%
Hotel EBITDA Margin %31% 33% 31%
RevPAR ($)$122 $129 $127
Occupancy (%)69% 74% 72%
ADR ($)$176 $176 $176

Segment breakdown – largest markets:

Market (% of LTM EBITDA)Q1 2024 RevPAR ($)Q1 2025 RevPAR ($)YoY Change
35-Hotel Portfolio122 127 +4%
Silicon Valley (15%)127 137 +8%
Los Angeles (10%)157 179 +14%
Coastal Northeast (9%)93 85 −8%
Washington, D.C. (9%)130 138 +6%
Greater New York (8%)126 139 +11%
San Diego (7%)195 174 −11%
Dallas (5%)109 117 +7%

Brand KPIs:

Brand (number of hotels)Q1 2024 RevPAR ($)Q1 2025 RevPAR ($)YoY Change
Residence Inn (16)138 142 +3%
Courtyard (4)111 112 +1%
Hilton Garden Inn (3)118 119 +1%
Hampton Inn (2)88 89 +1%
Homewood (3)91 96 +6%
Hyatt Place (2)74 75 +2%

Monthly cadence (comparable hotels):

MonthOccupancy (%)ADR ($)RevPAR ($)Prior-year RevPAR ($)YoY RevPAR Change
January65 167 108 102 +5%
February75 176 131 122 +7%
March77 184 143 143 0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevPAR ($)FY 2025$143–$147 $142–$143 Lowered
RevPAR growth (%)FY 20251%–3.5% 0%–1% Lowered
Total hotel revenue ($M)FY 2025$298–$305 $295–$298 Lowered
Net income to common ($M)FY 2025$(2.2)–$3.2 $(3.4)–$0.5 Lowered
Diluted EPS ($)FY 2025$(0.04)–$0.06 $(0.07)–$0.01 Lowered
Adjusted EBITDA ($M)FY 2025$92–$97 $89–$93 Lowered
Adjusted FFO ($M)FY 2025$52–$57 $49–$53 Lowered
AFFO per diluted share ($)FY 2025$1.01–$1.11 $0.95–$1.03 Lowered
Hotel EBITDA margin (%)FY 202534.8%–35.8% 34.0%–35.0% Lowered
Corporate cash G&A ($M)FY 2025$11.8 $11.7 Slightly Lower
Interest expense excl. amort. ($M)FY 2025$24.0 $23.9 Slightly Lower
Q2 RevPAR ($)Q2 2025n/a$153–$155 New
Q2 RevPAR growth (%)Q2 2025n/a(2)% to (0.5)% New
Q2 Adjusted EBITDA ($M)Q2 2025n/a$26.8–$28.8 New
Dividend per common share ($)Ongoing$0.07 (prior quarter) $0.09 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Technology-driven demand (AI/chips)Q3/Q4: Silicon Valley/Bellevue RevPAR up 8–14%; outlook bright with AI, chip manufacturing tailwinds Tech markets again led: Silicon Valley +8% RevPAR; strong flow-through and EBITDA Improving
Macro/tariffsQ3/Q4: Moderating wage/benefit costs; guidance constructive April softness tied to successive holiday timing; commentary on “initial tariff policies” and spending cuts adding uncertainty Worsening near-term
Government travelQ4: Not a focus; portfolio predominantly business travel Government-driven room revenue ~5% or less; pivot to leisure/corporate in D.C.; sequential improvement into May Stabilizing
Capital allocationQ3/Q4: Asset recycling, debt reduction, dividend maintained $25M share buyback launched; dividend raised; pursuing >9% yield acquisitions Positive
Regional trendsQ3/Q4: Broad-based growth; Coastal Northeast strong in Q3; Dallas/Seattle impacted by renovations LA +14%, Greater NY +11%, D.C. +6%; Coastal Northeast −8%, San Diego −11%; renovations in Seattle/Portsmouth Mixed

Management Commentary

  • “We’re in great shape to use our low leverage… and we view the share repurchase plan as another tool… At current trading levels, we are trading at approximately $150,000 per key and at an approximate 9.5% cap rate on forecasted 2025 NOI” (CEO) .
  • “Yet again, our RevPAR growth significantly outperformed the industry… GOP and hotel EBITDA margins were strong this quarter, and we were able to generate Adjusted FFO per share at the top of our guidance range” (CEO) .
  • “Silicon Valley, our largest market, produced solid RevPAR growth of 8 percent… We set post-pandemic first quarter highs in both occupancy and ADR” (COO) .
  • “As we look forward… demand remains strong; however, the ability to grow RevPAR… is somewhat limited… we’re currently projecting flat RevPAR given the uncertainty in the economy” (CEO) .

Q&A Highlights

  • Capital allocation: Management prioritizing accretive share repurchases given dislocation and targeting acquisitions only at or above ~9% yields; leveraging Island Hospitality underwriting for value-add opportunities .
  • Portland development: Proceeding through entitlements; tariffs and cost uncertainty make timing cautious despite favorable projected returns .
  • Phoenix Home2 Suites performance: New hotel ramping well; strong GM and corporate mix delivering top-five RevPAR and GOP .
  • Government/segment mix: D.C. hotels pivoted to leisure to offset government pullback; May expected down ~2% vs March −8% in D.C. segment .
  • Expense discipline: Headcount flexed down ~6% into April; no “deep cuts,” but margin management amid softer backdrop .

Estimates Context

  • Q1 2025 comparison: CLDT beat revenue and EPS, and modestly exceeded EBITDA consensus; normalized net income was far above Street’s negative expectation (S&P Global).
    | Metric | Consensus | Actual | Surprise | |--------|-----------|--------|----------| | Revenue ($USD Millions) | 68.3* | 68.6 | +0.3 | | Diluted EPS ($USD) | (0.07)* | (0.01) | +$0.06 | | EBITDA ($USD Millions) | 17.7* | 17.9 | +0.2 | | Net Income Normalized ($USD Millions) | (7.7)* | 1.5 | +9.2 |

Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • FY 2025 estimates likely drift lower to reflect revised RevPAR (0–1%), Adjusted EBITDA ($89–$93M), and AFFO/share ($0.95–$1.03) guidance ranges .
  • Near-term Q2 expectations should incorporate negative RevPAR growth (–2% to –0.5%) due to holiday timing and April weakness .

Key Takeaways for Investors

  • Near-term softness is largely calendar/macro-driven; core business-travel and tech-centric markets remain strong, supporting medium-term recovery once uncertainty abates .
  • FY 2025 guide reset reduces top/bottom-line ranges; positioning estimates conservatively around the midpoints helps avoid disappointment in a choppy demand backdrop .
  • Share repurchase authorization and dividend increase provide downside support and signal confidence; buybacks are accretive at current implied cap rates .
  • Asset recycling de-risked the portfolio and improved leverage (~22%); extended-stay concentration (61% of rooms; ~65% of LTM hotel EBITDA) remains a structural advantage .
  • Watch regional mix: LA and tech markets driving outperformance; San Diego and Coastal Northeast weaker; D.C. pivot underway—monitor May/June booking trends .
  • Margin discipline credible: GOP +30 bps YoY despite RevPAR mix; expense controls (labor/benefits/utilities normalization) support EBITDA resilience .
  • Trading implication: Balanced stance—capitalize on buyback/dividend support against lowered FY guide; catalysts include confirmation of resumed RevPAR momentum and accretive acquisitions above ~9% yields .