Executive Summary

Q2 2025 revenue of $407.5M and diluted EPS of $0.06; revenue beat S&P Global consensus by ~$8.9M (~2.2%) while EPS matched; Adjusted FFO/share at $0.65 exceeded consensus by ~$0.06, and Adjusted EBITDAre outpaced internal outlook but S&P’s EBITDA “actual” shows a modest miss due to definition differences *.
Same-Property Total RevPAR rose 1.3% YoY; excluding Los Angeles, Total RevPAR grew 2.7% with Urban +4.1% and Resorts +0.6%; LA remained a headwind amid market-specific disruptions .
FY 2025 guidance narrowed with higher midpoints for Adjusted EBITDAre (+$2M) and Adjusted FFO/share (+$0.03), while the same‑property Total RevPAR midpoint was trimmed by 10 bps; Q3 2025 outlook anticipates softer RevPAR but firm cost control and BI insurance income tailwinds .
Management highlighted strong recovery momentum in San Francisco (+15.2% RevPAR), Portland (+10.4%), and San Diego (+8.6%), plus operating efficiencies and early AI-enabled tools as structural margin supports .
Stock narrative catalysts: raised FY guide midpoints, San Francisco convention/event tailwinds (Dreamforce, Ignite), and visible efficiency gains; balanced by LA softness and shorter leisure booking windows .

What Went Well and What Went Wrong

What Went Well

Demand strength and mix: Same-Property Total RevPAR +1.3% YoY, Urban +1.6% (ex‑LA +4.1%); group room nights +1.9% with group revenue share at 27%, underscoring resilient non‑leisure mix .
Market recoveries: San Francisco led with +15.2% RevPAR (benefiting from conventions and tech/AI demand); Portland +10.4%, San Diego +8.6% .
Cost discipline: Same-Property hotel expenses before fixed costs +1.7% YoY; energy −2.1%, with per‑occupied room expenses −0.8%; management emphasized “relentless focus” and “productivity and efficiency program” .
- Quote: “Our second-quarter results exceeded our outlook… recently redeveloped properties are gaining momentum… Newport Harbor Island Resort… well above expectations…” – Jon Bortz, CEO .

What Went Wrong

Los Angeles headwinds: Underperformance from fires aftermath and immigration enforcement disruptions; FY impact ~80 bps to Same-Property Total RevPAR and $7.7M to Same-Property Hotel EBITDA (modestly worse than prior) .
Leisure pricing pressure: Shorter booking windows creating near‑term ADR pressure; management flagged promotions/discounting in summer as rate competition increased .
Margin compression vs 2024: Same-Property Hotel EBITDA down 6.7% YoY and EBITDA margins down 250 bps (31.9% → 29.4%) due to tax credit comps and LA softness .

Financial Results

Core financials and operating metrics

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$397.1	$320.3	$407.5
Diluted EPS ($)	$0.16	$(0.37)	$0.06
Adjusted FFO per diluted share ($)	$0.69	$0.16	$0.65
Adjusted EBITDAre ($USD Millions)	$123.5	$56.6	$117.0
Same‑Property Hotel EBITDA ($USD Millions)	$124.2	$62.3	$115.8
Same‑Property Occupancy (%)	76.3%	61.9%	78.2%
Same‑Property ADR ($)	$308.09	$301.48	$302.50
Same‑Property RevPAR ($)	$235.09	$186.57	$236.56
Same‑Property Total RevPAR ($)	$366.10	$301.22	$370.93
Same‑Property EBITDA Margin (%)	31.9%	19.7%	29.4%

Q2 2025 actual vs S&P Global consensus

Metric	Consensus (Q2 2025)	Actual (Q2 2025)	Result
Revenue ($USD Millions)	398.7*	407.5	Beat (~+2.2%)*
Diluted/Primary EPS ($)	0.06*	0.06	In‑line*
FFO / Share (REIT) ($)	0.591*	0.65	Beat (~+$0.06)*
EBITDA ($USD Millions)	111.5*	106.8* (S&P actual); Adjusted EBITDAre company: 117.0	Miss vs S&P*; above company outlook

Values with an asterisk (*) are retrieved from S&P Global. Definitions may differ (e.g., S&P “EBITDA” vs company’s “EBITDAre/Adjusted EBITDAre”).

Segment and market KPIs (Q2 2025)

Metric	Value
Same‑Property Total RevPAR YoY	+1.3%
Same‑Property Total RevPAR ex‑LA YoY	+2.7%
Urban Same‑Property RevPAR YoY	+1.6%
Resorts Same‑Property RevPAR YoY	−1.9%
Market RevPAR variance YoY – San Francisco	+15.2%
Market RevPAR variance YoY – Portland	+10.4%
Market RevPAR variance YoY – San Diego	+3.6%
Market RevPAR variance YoY – Los Angeles	−8.2%
Group room nights and mix	+1.9% room nights; 27% of room revenue (+100 bps YoY)

Guidance Changes

Metric	Period	Previous Guidance (midpoint, 5/1/25)	Current Guidance (midpoint, 7/29/25)	Change
Net loss ($M)	FY 2025	$(19.9)$ (range: $(30.2)$ to $(9.7)$)	$(19.3)$ (range: $(26.5)$ to $(12.0)$)	Maintained (minor tweak)
Adjusted EBITDAre ($M)	FY 2025	$338.0 (327.5–348.5)	$340.0 (332.5–347.5)	Raised (~+$2.0M mid)
Adjusted FFO ($M)	FY 2025	$180.3 (170.0–190.5)	$183.8 (176.5–191.0)	Raised (~+$3.5M mid)
Adjusted FFO per diluted share ($)	FY 2025	$1.505 (1.42–1.59)	$1.53 (1.47–1.59)	Raised (+$0.03 mid)
Same‑Property Total RevPAR variance vs 2024	FY 2025	0.9% (−0.5% to 2.3%)	0.8% (−0.1% to 1.7%)	Lowered (−10 bps mid)
Same‑Property Total Expense variance vs 2024	FY 2025	2.8% (1.9%–3.7%)	2.5% (2.0%–3.0%)	Lowered (−30 bps mid)
Same‑Property Hotel EBITDA ($M)	FY 2025	$348.5 (338–359)	$350.5 (343–358)	Raised (~+$2.0M mid)
BI insurance income ($M)	FY 2025	$8.5	$11.5	Raised (+$3.0M)
Newport EBITDA not in Same‑Property ($M)	FY 2025	$1.7	$3.5	Raised (+$1.8M)
LaPlaya Q4 EBITDA not in Same‑Property ($M)	FY 2025	$7.5	$6.2	Lowered (−$1.3M)

Q3 2025 outlook highlights: Adjusted FFO/share $0.45–$0.51; Adjusted EBITDAre $93.5–$100.5M; Same-Property RevPAR $230–$237 (−1% to −4% YoY), with ~$2M BI insurance included in Adjusted results .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
AI / technology efficiency	Q4: broad cost controls and efficiency initiatives; wage pressures offset by programs . Q1: continued efficiency, low expense growth; early mention of operating tools .	Piloting AI-enabled operating and automation tools to improve labor scheduling, service, decision-making; expect structural productivity gains .	Building adoption; medium-term margin lever
Macro / tariffs / policy	Q4: balanced outlook; LA fire impacts; lower new supply . Q1: more cautious 2H views; widened ranges .	Cautious on tariff policy/government spending and consumer hesitancy; expect Q3 to be year’s low point; optimism for 2026 setup .	Near-term caution; improving longer-term
Regional trends	Q4: San Diego, Chicago, Boston strong; LA and SF weaker . Q1: DC inauguration support; SF/Chicago/Portland improving; LA disrupted .	SF +15.2% RevPAR; Portland +10.4%; San Diego +8.6%; LA −8.2%; ex‑LA portfolio stronger .	Recovery broadening; LA lagging
Leisure booking & pricing	Q4/Q1: resilient leisure demand; resort strength .	Shorter booking windows driving ADR pressure; promotions/discounting rose in summer, expected to fade by September .	Price‑sensitive; visibility reduced
Regulatory / legal (wages)	Q1: wage increases from union renegotiations; outer years less severe .	LA and San Diego wage policy initiatives; ballot efforts and business community engagement to moderate outcomes .	Policy risk being managed

Management Commentary

“Our second-quarter results exceeded our outlook, led by a strong rebound in San Francisco… recently redeveloped properties are gaining momentum and market share… Newport Harbor Island Resort delivering results well above our expectations…” – Jon Bortz, CEO .
“Adjusted EBITDA was $117 million… Adjusted FFO came in $0.65 per share, $0.06 ahead of our midpoint… received $3.2 million of business interruption income related to LaPlaya…” – Raymond Martz, CFO .
“We’ve begun piloting a number of AI-enabled operating tools… increased productivity, reduced hotel operating expenses… significantly reshape our operating model over time.” – Raymond Martz, CFO .
“We remain cautious about the macro… Q3 likely the weakest quarter… increasingly optimistic about 2026… extremely restricted supply… major events across our portfolio.” – Jon Bortz, CEO .

Q&A Highlights

LA submarket divergence and drivers: Higher-end West LA submarkets suffered despite broader market RevPAR gains; demand disruptions tied to media‑amplified safety perceptions; confidence in gradual recovery and favorable event calendar (NBA All‑Star, World Cup, Super Bowl, Olympics) .
SF momentum and convention calendar: Expect “blowout” Q4 YoY with Dreamforce shift to October and Microsoft Ignite in November; business transient and leisure returning; occupancy implied to move from ~64% in 2024 to high‑60s in 2025 .
Leisure pricing sensitivity: More discounting and promotions in the summer; expected to dissipate by September .
AI deployment: Larger/complex operations and independents adopting faster given fewer legacy systems; early wins reducing call volumes and improving guest service .
Capex and Paradise Point: Major transformation program completed; Paradise Point conversion timing dependent on approvals; not a major capital user in 2026 H1 .

Estimates Context

Revenue beat: Q2 2025 revenue $407.5M vs S&P consensus ~$398.7M; ~+2.2% beat, a positive surprise supporting narrative strength outside LA *.
EPS in‑line: Diluted/Primary EPS matched consensus at ~$0.06 *.
FFO/share beat: Adjusted FFO/share $0.65 vs consensus ~$0.591; ~+$0.06 beat, aided by BI insurance and Newport outperformance *.
EBITDA mixed: Company Adjusted EBITDAre at $117.0M exceeded internal outlook midpoint, but S&P’s EBITDA “actual” (~$106.8M) was below its ~$111.5M consensus (definition differences) *.

Values with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

Ex‑LA portfolio exhibiting healthy growth; watch SF convention/event tailwinds into Q4 and 2026 (Dreamforce, Ignite) for upside to rates and occupancy .
Structural margin levers (efficiency programs, energy savings, AI tools) are visible and should offset wage pressures and inflation, supporting 2026 margin expansion .
FY 2025 guide midpoints raised for Adjusted EBITDAre and AFFO/share; BI insurance and Newport ramp add cushion in 2H; guidance raises are stock‑positive .
Near‑term caution: Q3 likely trough on leisure mix and citywide comps; expect rate sensitivity and shorter booking windows; use weakness to position for Q4 strength .
LA remains a drag in 2025, but easier comps, event pipeline, and policy progress could ease headwinds in 2026; monitor ballot initiatives and production tax credits .
Balance sheet resilience (cash $267.1M; 96% fixed, 4.1–4.2% avg rate; no major maturities until Dec‑2026) provides flexibility for debt paydowns and opportunistic actions .
Dividends maintained ($0.01 common; preferred regularly declared); income investors should calibrate expectations to AFFO trajectory and capital allocation priorities .

Appendix: Additional Data Points and Notes

Consolidated revenues: Room $257.6M; F&B $106.0M; Other $43.9M (Q2 2025) .
BI insurance income recognized: $3.2M in Q2 (LaPlaya); FY 2025 BI now expected $11.5M (+$3.0M vs prior) .
Capital investments: $21.0M in Q2; FY 2025 plan $65–$75M; multi‑year $525M transformation program completed (ex‑Paradise Point potential conversion) .
Liquidity: $267.1M cash/restricted; $642.1M undrawn revolver; net debt/TTM corp EBITDA 5.8x .

Pebblebrook Hotel Trust (PEB)·Q2 2025 Earnings Summary