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Chatham Lodging Trust (CLDT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was operationally strong: RevPAR +4% to $129 on 36 comparable hotels (occupancy +5 pts to 74%, ADR -1% to $176), GOP margin +150 bps to 41% and Hotel EBITDA margin +90 bps to 33% .
  • Financial print: Total revenue $75.1M, GAAP diluted EPS $(0.08), Adjusted EBITDA $21.1M, and AFFO/share $0.20; all outperformed company Q4 guidance midpoints and exceeded the prior top-end on several line items (notably margins) .
  • Management issued initial 2025 guidance: FY RevPAR $143–$147 (1%–3.5% growth), Adjusted EBITDA $92–$97M, AFFO/share $1.01–$1.11, and Hotel EBITDA margin 34.8%–35.8%; Q1 RevPAR $125–$127 and AFFO/share $0.12–$0.15 .
  • Balance sheet and capital recycling provide upside optionality: leverage 23%, net debt $389M; five lower-RevPAR hotels monetized/under contract ($101M proceeds at 6% cap incl. foregone capex), with plans to redeploy into higher-yield assets; $250M floating-rate exposure is a tailwind if SOFR falls ($0.05/share per 100 bps) .
  • Stock catalysts: continued tech-market demand (Silicon Valley +14% RevPAR; Bellevue +9%), sustained labor-cost moderation, margin resilience, and accretive redeployment; management noted Q4 results exceeded “consensus estimates,” but we could not access S&P Global consensus to independently verify numerically .
    • Estimates note: S&P Global consensus retrieval was unavailable at query time; company stated it exceeded consensus. We cannot independently verify numbers due to data access limits .

What Went Well and What Went Wrong

  • What Went Well

    • Business travel-led demand improved; five of top six markets posted ≥4% RevPAR growth; Silicon Valley +14% and Bellevue +9% supported corporate mix and margin flow-through .
    • Cost discipline: GOP margin +150 bps to 41% on moderating wage/benefit inflation; wages per occupied room declined 2% YoY; Q4 Hotel EBITDA margin reached 32.5%–33% range .
    • Strategic portfolio actions: Sold/contracted five of the six lowest RevPAR hotels (~$101M aggregate proceeds at ~6% cap incl. required capex), reduced leverage to ~23%, set up redeployment capacity .
    • Quote: “We were able to comfortably exceed the upper end of our guidance range and consensus estimates.” – CEO Jeffrey Fisher .

  • What Went Wrong

    • Rate mix: ADR declined 1% to $176 despite occupancy rising to 74%, indicating pricing power is still rebuilding; management expects ADR to lag occupancy until higher-stress months enable rate push .
    • Market pockets of weakness: Dallas RevPAR -16% (convention center disruption); Seattle -8% (Bellevue renovation) .
    • Leisure softness persists vs peak levels; some intern program demand lost in 2024 likely persists into 2025 (stipend model), limiting seasonal lift from tech interns .

Financial Results

  • Consolidated results vs prior year and sequential, and guidance/estimates context.
MetricQ4 2023Q3 2024Q4 2024Consensus (S&P Global)
Total Revenue ($M)$72.278 $87.177 $75.111 Unavailable (see note)
GAAP Diluted EPS ($)$(0.23) $0.05 $(0.08) Unavailable (see note)
Adjusted EBITDA ($M)$20.820 $29.553 $21.146 Unavailable (see note)
AFFO per Diluted Share ($)$0.19 $0.35 $0.20 Unavailable (see note)
GOP Margin (%)39% 44% 41% N/A
Hotel EBITDA Margin (%)32% 37% 33% N/A
  • KPI Levels and Long-Run Benchmarks
KPI (Comparable 36 hotels)Q4 2019Q4 2023Q4 2024
Occupancy (%)76% 70% 74%
ADR ($)$163 $177 $176
RevPAR ($)$124 $124 $129
  • RevPAR by Major Market (Q4 2024)
Market (% of LTM EBITDA)RevPAR ($)YoY ChangeQ4 2023 ($)Q4 2019 ($)
36-Hotel Portfolio$129 4% $124 $124
Silicon Valley (15%)$136 14% $119 $158
Coastal Northeast (10%)$158 4% $152 $135
Los Angeles (9%)$154 5% $147 $149
Washington D.C. (9%)$137 10% $125 $132
Greater New York (8%)$163 — $163 $138
San Diego (7%)$179 9% $164 $148
Dallas (5%)$89 (16%) $105 $91
Seattle (5%)$101 (8%) $110 $101
  • Additional Operating Metrics (Q4 2024): Hotel EBITDA $24.3M vs $22.8M in Q4 2023; Corporate EBITDA $21.1M vs $20.8M; cash flow before CapEx $11.8M vs $10.1M .
  • Dividend: Common $0.07/share, Preferred $0.41406/share (paid Jan 15, 2025, record Dec 31, 2024) .

Estimates note: S&P Global consensus could not be retrieved at query time; management stated results exceeded consensus. We cannot independently verify the magnitude of any beat due to data access limits .

Guidance Changes

  • Q4’24 actuals vs Q4’24 guidance (issued Nov 7, 2024); FY’25 initial guidance (new).
MetricPeriodPrevious GuidanceActual/CurrentChange
Total Hotel RevenueQ4 2024$74–$75M $75.111M Above high end
Adjusted EBITDAQ4 2024$19–$21M $21.146M Above high end
Adjusted FFO ($)Q4 2024$7–$9M; $0.15–$0.18/share $10.03M; $0.20/share Above high end
Hotel EBITDA MarginQ4 202430%–32% 32.5% Above high end
RevPARQ4 2024$124–$127 $129 Above high end
RevPARQ1 2025—$125–$127 (3%–4% growth) New
RevPARFY 2025—$143–$147 (1%–3.5%) New
Adjusted EBITDAFY 2025—$92–$97M New
Adjusted FFO/shareFY 2025—$1.01–$1.11 New
Hotel EBITDA MarginFY 2025—34.8%–35.8% New
Corporate cash G&AFY 2025—$11.8M New
Interest expense (excl. amort.)FY 2025—$24.0M New
Weighted avg shares/unitsFY 2025—51.5M New
DividendOngoing$0.07 common; $0.41406 preferred (Q4) Board evaluates quarterly Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q2’24)Q-1 (Q3’24)Current (Q4’24)Trend
Tech/AI-driven demand (Silicon Valley/Bellevue)SV/Bellevue RevPAR +10%; SV ADR +5%; occupancy rising, upside to 2019 SV/Bellevue RevPAR +8%; October +14% at tech hotels SV RevPAR +14%, Bellevue +9%; SV occupancy 74% (highest since 2015) Improving
Business travelPortfolio occupancy 82%, business travel gains broad; leisure slightly softer BT momentum across D.C., NY, SD, Austin; Oct RevPAR +6% BT growth drove occupancy; rate to follow as occupancy enters 70s/80s Improving
Leisure demandPredominantly leisure hotels -2% RevPAR; resilience Slight growth ex-renovation impact in Savannah Leisure +1.4% headline; +~6% ex-renovations Stabilizing
Labor/benefitsMargin pressure moderating; 2Q hotel EBITDA margin 39% Wages moderating; benefits could be flat next year Wages per OCC room down 2%; 2025 medical/worker’s comp flat; property insurance -13% in 2025 renewal Easing cost pressure
Asset recyclingBalance sheet reposition; repaid ~$261M debt; acquired Home2 Phoenix 5 hotels under contract (~$80M) 3 hotels sold ($29.3M, $15M); 2 to close ($39M); proceeds imply ~6% cap (incl. capex) Executing
New supplyNew supply muted; <1% across portfolio Similar positioning impliedReiterated muted new supply and accretive opportunities Supportive
DevelopmentNone—Portland, ME project targeted; moratorium with CLDT grandfathered; aiming 150–200 bps yield premium over ~8% acquisition cap rates Emerging
Intern business (tech)——2024 intern room nights largely lost due to stipend model; similar assumption in 2025 Headwind
Regional specificsDallas +8% YoY in Q2 Dallas -11% (renovation); Seattle +7% Dallas -16% (convention center expansion); Seattle -8% (renovation) Mixed

Management Commentary

  • Strategy and 2024 wrap: “We… generated GOP margins of 43%, minimizing the year-over-year margin decline to 70 bps… sold or under contract to sell 6 hotels… reduced our overall leverage ratio to 23%” – Jeffrey Fisher .
  • Operations and beat: “We were able to comfortably exceed the upper end of our guidance range and consensus estimates.” – Jeffrey Fisher .
  • Cost dynamics: “On a per occupied room basis, [wages] were down year-over-year… benefits-related costs… up ~19% in Q4, ~25% for year; 2025 premiums… essentially flat; property insurance 2025 renewal down ~13%” – Dennis Craven .
  • Tech demand/AI: “Chatham has the highest exposure to big tech hotel demand… tech investment… around AI, chip processing and next-gen technology is rapidly expanding” – Jeffrey Fisher .
  • Capital recycling and balance sheet: “Aggregate sale price… represents a cap rate of ~6.3% on 2024 NOI… net debt to LTM EBITDA 3.9x… balance sheet capacity to buy ‘a couple hundred million’ of hotels” – Jeremy Wegner .

Q&A Highlights

  • Redeployment timing and pricing: Acquisition pipeline remains thin at target quality; bid-ask gap ~100 bps; expect ones/twos transactions, likely not 1Q but targeted for 2025 .
  • Portland development: Targeting 150–200 bps yield premium vs ~8% acquisition cap; grandfathered despite local moratorium; minimal 2025 cash outflow expected .
  • Occupancy vs ADR: Q4 growth occupancy-led; expect ADR to contribute roughly half of FY25 RevPAR growth with rate leverage in peak months .
  • Intern demand: 2024 lost due to stipend model at tech firms; assume similar in 2025 unless programs change .
  • Balance sheet capacity: Ability to purchase up to a “couple hundred million dollars” in assets while staying within leverage constraints .

Estimates Context

  • We attempted to pull S&P Global consensus for Q4 2024 EPS/Revenue/EBITDA/Target Price/Recommendation, but data retrieval was unavailable at query time. Management stated Q4 results “exceeded… consensus estimates,” but we cannot independently quantify the beat without S&P numbers .
  • Implications: Given beats vs the company’s guidance high end (revenue, margins, AFFO, Adjusted EBITDA), Street estimates likely shift up for FY25 margins/AFFO if trends in tech markets and cost moderation persist .

Key Takeaways for Investors

  • Mix shift toward business travel-heavy tech markets is accelerating (SV +14%, Bellevue +9%), underpinning margin resilience and supporting FY25 RevPAR/margin guidance; watch SV ADR recovery toward 2019 to drive incremental flow-through .
  • Cost environment is improving: wages per OCC room down, 2025 benefits flat, property insurance down ~13%; this should support FY25 Hotel EBITDA margins of 34.8%–35.8% despite modest RevPAR growth .
  • Portfolio optimization remains a catalyst: recycling out of low-RevPAR, high-capex assets (~6% cap) into higher-growth opportunities; execution on acquisitions or Portland development could offset ~($0.05)/share AFFO drag modeled from asset sales .
  • Balance sheet is a differentiator: 23% leverage, 3.9x net debt/LTM EBITDA, and $250M floating-rate exposure offering AFFO leverage to rate cuts ($0.05/share per 100 bps) .
  • Near-term watch items: Dallas (convention center disruption), completion of Bellevue renovation, intern demand recovery probability, and ADR trajectory as occupancy normalizes in peak months .
  • 1Q25 setup: RevPAR guide +3%–4% with AFFO/share $0.12–$0.15; sequential seasonality from Q4 to Q1 is typical, but January RevPAR up 5% is encouraging for the run-rate .
  • Medium-term thesis: Continued tech-market normalization, muted new supply, and disciplined capital allocation (recycling + selective buys/development) position CLDT to compound AFFO/share in FY25–26 even on modest RevPAR growth .

Appendix: Additional Details

  • Q4 Operations by Month (36 comps): Oct RevPAR $160 (+7% YoY), Nov $121 (+2%), Dec $106 (+2%) .
  • Brand KPIs (36 comps): 2024 Q4 RevPAR YoY – Residence Inn +5%, Hampton Inn +8%, Homewood +5%, Hilton Garden Inn +13%, Courtyard (6%) .
  • Cash flow lens (Q4): Corporate EBITDA $21.1M; Debt service & preferred $(9.3)M; Cash flow before CapEx $11.8M .
  • Capital allocation: Q4 capex ~$6M; 2025 capex budget ~$26M (3 renovations ~$16M) .

Notes:

  • Estimates unavailability: S&P Global consensus estimates were not retrievable at query time; comparisons to “consensus” rely solely on management commentary noting a beat .