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Pebblebrook Hotel Trust (PEB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 results were ahead of company outlook: Adjusted EBITDAre was $62.7M, topping the Q4 Outlook midpoint by $11.2M, aided by stronger hotel performance and $5.4M in unanticipated Hurricane Ian BI income; Adjusted FFO was $0.20 per share, $0.10 above the outlook midpoint .
  • Operationally, same‑property Total RevPAR rose 1.8% YoY in Q4, with resorts +4.0% and urban +0.7%; recently redeveloped assets outperformed with 4.7 pts higher occupancy and 6.3% Total RevPAR growth YoY .
  • 2025 guide embeds an LA wildfires drag (–115 bps to Same‑Property RevPAR and ~$9M to Hotel EBITDA/Adjusted EBITDAre) and calls for Same‑Property Total RevPAR growth of 1.8–3.7%, Adjusted EBITDAre of $341.5–$355.5M, and Adjusted FFO/share of $1.50–$1.62; Q1’25 Adjusted FFO/share guided to $0.09–$0.13 .
  • Balance sheet improved: $1.6B of financings/extensions in 2024, Debt/EBITDA reduced to 5.8x, $217.6M of cash and $642.6M of revolver availability at year‑end; capex falls to $65–$75M in 2025 as multiyear $525M redevelopment program is largely complete .
  • Potential stock catalysts: sustained urban recovery (San Francisco, D.C.), efficiency-driven margin resilience, lower capex, and redeveloped assets’ share gains, versus near-term LA wildfires headwinds and lower BI proceeds in 2025 versus 2024 .

What Went Well and What Went Wrong

  • What Went Well

    • Resorts and redeveloped properties outperformed; Q4 same‑property Total RevPAR +4.0% at resorts and redeveloped hotels saw occupancy +4.7 pts and Total RevPAR +6.3% YoY; CEO: “our recently redeveloped properties generated significant gains… momentum we anticipate will extend through at least 2027.” .
    • Cost control: same‑property expenses before fixed costs +3.1% YoY in Q4; cost per occupied room –1.7%; management emphasized sustained efficiency initiatives to offset wage pressures .
    • Balance sheet/capital: $1.6B debt actions, no major maturities until Dec‑26; 2024 share repurchases at a large discount to NAV midpoint; capex step‑down to $65–$75M in 2025 .

  • What Went Wrong

    • LA wildfires: material cancellations and booking slowdown in West LA submarkets; embedded 2025 impact –115 bps RevPAR and $9M Hotel EBITDA/Adjusted EBITDAre; Q1’25 drag heaviest ($6.5M) .
    • Q4 margins pressured: same‑property Hotel EBITDA fell 6.1% YoY on labor agreement costs, Florida storms, and Santa Monica conversion disruption, despite higher revenues .
    • Lower BI tailwind ahead: 2024 benefited from $23.8M BI from Ian (plus $5.4M incremental in Q4), but 2025 assumes only ~$6M BI (Helene/Milton), creating an earnings headwind versus 2024 .

Financial Results

Consolidated financials by quarter (older → newer):

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($M)$397.1 $404.5 $337.6
GAAP Diluted EPS (Common)$0.16 $0.24 $(0.51)
Adjusted EBITDAre ($M)$123.5 $112.2 $62.7
Adjusted FFO/Share (Diluted)$0.69 $0.59 $0.20

Same‑Property operating metrics YoY:

MetricQ4 2023Q4 2024
Occupancy (%)64.3% 67.4%
ADR ($)$295.54 $284.59
RevPAR ($)$190.06 $191.73
Total RevPAR ($)$299.08 $304.43
Same‑Property Total Revenues ($M)$315.7 $321.6
Same‑Property Hotel EBITDA ($M)$66.6 $62.5
Same‑Property EBITDA Margin (%)21.1% 19.4%

Market performance (Same‑Property RevPAR variance vs 2023):

MarketQ4 2024 vs 2023FY 2024 vs 2023
Chicago18.4% 9.5%
San Diego13.5% 9.7%
Washington, D.C.2.6% 3.0%
Other Resort Mkts0.9% 5.0%
Portland0.2% (11.3%)
Boston0.0% 3.8%
Southern FL/GA(1.5%) (3.9%)
Los Angeles(10.4%) (4.3%)
San Francisco(10.9%) (5.6%)
Resorts2.8% (0.5%)
Urban0.2% 2.5%

KPIs and notable drivers (Q4 2024 vs YoY):

  • Weekday occupancy +4.4 pts; weekend +~2 pts, reflecting business group and leisure strength (commentary) .
  • Resort occupancy +3.7 pts, with California resorts’ occupancy +6.6 pts and RevPAR +8.8% (commentary) .
  • Food & Beverage revenues +4.1% in Q4; non‑room revenue +3.4% in Q4 .

Non‑GAAP notes: Adjusted EBITDAre and Adjusted FFO exclude items including non‑cash ground rent, insurance gains, transition costs, share‑based comp, and hurricane‑related costs; reconciliations provided in the release .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Loss ($M)FY 2025N/A(15.5) to (1.5) New
Adjusted EBITDAre ($M)FY 2025N/A341.5 to 355.5 New
Adjusted FFO ($M)FY 2025N/A182.0 to 196.0 New
Adjusted FFO/Share ($)FY 2025N/A1.50 to 1.62 New
Same‑Prop Total RevPAR Δ vs 2024FY 2025N/A1.8% to 3.7% New
Same‑Prop Total Revenue Δ vs 2024FY 2025N/A1.5% to 3.5% New
Same‑Prop Total Expense Δ vs 2024FY 2025N/A3.5% to 4.8% New
Same‑Prop Hotel EBITDA ($M)FY 2025N/A354.0 to 368.0 New
BI Income ($M)FY 2025N/A~6.0 (Helene/Milton) New
Capex ($M)FY 2025N/A65 to 75 New
LA Wildfires ImpactFY 2025N/A–115 bps RevPAR; –100 bps Total RevPAR; –$9M EBITDA/Adj. EBITDAre; –$0.07 AFFO/sh New
Net Loss ($M)Q1 2025N/A(33.9) to (29.9) New
Adjusted EBITDAre ($M)Q1 2025N/A50.5 to 54.5 New
Adjusted FFO/Share ($)Q1 2025N/A0.09 to 0.13 New
Same‑Prop RevPAR ($)Q1 2025N/A$187 to $190 New
Dividend (Common)Q4 2024 declaredN/A$0.01 per share (Dec 16, 2024) New

Notes: Q1’25 includes ~$4M initial BI income (Helene/Milton) flowing to Adj. EBITDAre/FFO (not Same‑Prop EBITDA) . No explicit prior 2025 guidance was provided to compare as raised/lowered.

Earnings Call Themes & Trends

TopicQ2 2024 (Prior‑2)Q3 2024 (Prior‑1)Q4 2024 (Current)Trend
AI/Tech & EfficiencyPortfolio‑wide efficiency push; expenses –0.1% YoY; tax reductions exceeded plan .Continued efficiency focus; costs per occupied room flat; real estate tax credits accrued .Scaling AI, robotics, sensors, predictive analytics via Curator; detailed benchmarking, labor tech; 2025 hotel expense growth targeted ~3.1% ex tax credits .Increasing tech adoption and sustained cost discipline.
Macro/IndustryMore cautious outlook; ADR pressure expected to persist in 2H24 .Demand normalization lagged until late Q4; hurricanes affected SE resorts .Demand re‑linking to GDP observed in Q4 and Jan; 2025 industry RevPAR +1–3% expected .Improving demand linkage to GDP; cautious on policy risk.
Regional: LASoftness noted; Delfina rebrand planned .LA still lagging; conversion disruption; strikes’ after‑effects .Wildfires caused cancellations/booking slowdown; embedded 2025 drag; watching recovery pace .Near‑term headwind intensifies; medium‑term events could aid.
Regional: San FranciscoRevPAR down in Q2; gradual recovery narrative .SF still a laggard; convention trough in 2024 .Broad improvement: policy shifts, cleanliness, positive office signs, strong convention pickup, AI ecosystem; guided as a top 2025 urban market .Turning positive with multi‑year recovery drivers.
Regional: D.C.Urban occupancy gains; gov’t segment not highlighted .D.C. mixed in Q3 market table (–0.9% Q3 YoY) .Inauguration tailwind; committee changes; return‑to‑office; gov’t spend freezes can cancel some meetings; expected top urban performer .Constructive outlook with cyclical tailwinds.
Product/Resort PerformanceRedeveloped assets ramping; share gains (Estancia, Skamania, Hilton Gaslamp) .Redeveloped portfolio continued share gains; BI proceeds aided results .Redeveloped assets: Q4 occupancy +4.7 pts, strong share gains; no more major redevelopments except possible Paradise Point .Strong, sustained outperformance likely through 2027.
Insurance/StormsBI proceeds expected ($14M in 2024 plan) .Additional BI from Ian recognized in Q3; storms Milton/Helene impacted .Q4 +$5.4M BI (Ian) pushed 2024 BI to $23.8M; 2025 BI only ~$6M (Helene/Milton) .BI tailwind fades in 2025.

Management Commentary

  • “Our fourth‑quarter results exceeded expectations, bolstered by strong resort demand… and impressive performances at our recently redeveloped properties… [and] significant progress in controlling operating expenses” .
  • CEO on normalization: “By Q4 2024, we observed more typical demand behavior… This trend continued in January 2025, with demand up another 1.7%” .
  • On LA fires: “While the fires caused significant group and transient cancellations… we’re currently estimating a $9 million impact to rooms revenue… $12–$16 million hit to total revenue… $6.5 million impact in the first quarter” .
  • On tech/efficiency: “Testing new technologies based on AI, robotics, sensors and predictive analytics… extensive benchmarking… confident in achieving further improvements in 2025” .
  • On capex and balance sheet: 2025 capex $65–$75M; $1.6B refinancings; weighted‑avg interest ~4.2%; net debt/EBITDA 5.8x .

Q&A Highlights

  • Out‑of‑room spend: Management expects non‑room revenue growth to outpace RevPAR driven by F&B, parking, spas, and club spending; clients often spend more than originally booked .
  • D.C. demand: Inauguration, committee reshuffling and RTO support travel; gov’t spend freezes can cancel some meetings; direct gov’t mix mid‑single‑digits of D.C. hotel revenues .
  • Leisure pricing: Expect meaningful occupancy gains at resorts in 2025 with flat to slightly higher ADR by year‑end, helped by redevelopments and amenities .
  • LA recovery risk: Guide reflects best estimate; near‑term booking pickup noted; potential later‑year compression from cleanup/rebuild demand likely at lower‑priced tiers .
  • Dispositions and capital allocation: Will be opportunistic; if sold near NAV, proceeds likely toward buybacks and leverage‑neutral debt paydown; multiple refinancing options for 2026 convert; substantial liquidity including undrawn revolver .

Estimates Context

  • We attempted to pull S&P Global consensus for Q4 and FY 2024 (EPS, revenue, EBITDA), but the SPGI endpoint returned a “Daily Request Limit Exceeded,” so consensus estimates were unavailable at time of writing. As a result, we cannot present vs‑consensus comparisons for this quarter. Instead, we note company vs outlook: Adjusted EBITDAre beat the Q4 Outlook midpoint by $11.2M and Adjusted FFO/share beat by $0.10 .

Key Takeaways for Investors

  • Redevelopment program is bearing fruit: outperformance and share gains at upgraded assets should support multi‑year growth with lower capex intensity starting 2025 .
  • Efficiency and technology adoption are structural: management targets modest hotel expense growth despite wage/insurance pressures, underpinning margin resilience through 2025 .
  • Urban recovery has legs: San Francisco and D.C. positioned as top 2025 markets given convention strength, policy shifts, and RTO; Chicago and Boston remain constructive .
  • 2025 guide prudent on LA: wildfire headwinds front‑loaded in Q1; any faster‑than‑modeled recovery or market compression could be an upside lever .
  • Balance sheet optionality: staggered maturities, low average borrowing cost, ample liquidity, and net debt/EBITDA at 5.8x provide flexibility for buybacks or funding the 2026 convert solution set .
  • BI tailwind fades: 2024’s sizable BI income won’t repeat; investors should model lower non‑operating support in 2025 and focus on organic EBITDA growth .
  • Near‑term setup: Expect soft Q1 (LA impact, BI step‑down) but improving trajectory through 2025 if GDP‑linked demand normalization persists and redeveloped assets continue to ramp .