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RLJ Lodging Trust (RLJ)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 results were mixed: EPS $0.15 beat consensus while revenue and EBITDA were modestly below, with margin compression contained; management framed the quarter as “exceeded our expectations” with cost controls and conversions offsetting softer RevPAR (-2.1% YoY) .
  • Full‑year guidance ranges were maintained (Comparable RevPAR growth -1.0% to +1.0%; Adjusted EBITDA $332.5M–$362.5M; AFFO/share $1.38–$1.58) with an explicit bias toward the low end given macro uncertainty and a softer Q3 setup; capex $80–$100M and net interest expense $94–$96M reiterated .
  • Liquidity remained strong ($974M; $374M cash, $600M revolver) and near‑term maturities addressed, supporting continued buybacks (0.8M shares in Q2, YTD 3.2M) and dividend ($0.15 common, $0.4875 preferred) .
  • Near‑term narrative: Q3 expected to be weakest on calendar shifts and tough citywide comps, with Q4 tailwinds from a more favorable calendar and ramping conversions/renovations, setting up a better exit rate into 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Cost discipline and conversions supported earnings: “resiliency of our portfolio, the continued ramp of our conversions, and disciplined cost controls” drove results ahead of internal expectations .
    • Balance sheet/financing execution: Upsized/refinanced term loan to $300M (maturity to April 2030) and extended $181M in mortgage maturities; liquidity of ~$974M at quarter‑end .
    • Capital allocation: Repurchased 0.8M shares in Q2 ($6.0M at $7.14 avg) and 3.2M YTD ($28.0M at $8.67 avg), with $246.3M remaining 2025 capacity .

  • What Went Wrong

    • Top‑line softness and margins: Comparable RevPAR fell 2.1% YoY; Comparable Hotel EBITDA margin compressed 90 bps to 31.1% .
    • YoY earnings pressure: Net income declined to $28.6M from $37.3M; Adjusted EBITDA to $104.0M from $109.0M; AFFO/share to $0.48 from $0.51 .
    • Macro visibility/near‑term headwinds: Management pointed to a “softer backdrop” in Q3 due to calendar/tough citywide comps and ongoing renovations; expects low end of guidance more likely given macro uncertainty .

Financial Results

  • Quarterly comparison vs prior periods and estimates
MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$330.0 $328.1 $363.1
Net Income attributable to common ($USD Millions)$(0.9) $(2.9) $22.2
GAAP EPS (common) ($)$(0.01) $(0.02) $0.15
Adjusted EBITDA ($USD Millions)$81.1 $77.6 $104.0
Comparable Hotel EBITDA ($USD Millions)$90.4 $85.3 $113.0
Comparable Hotel EBITDA Margin (%)27.4% 26.1% 31.1%
Adjusted FFO per diluted share ($)$0.33 $0.31 $0.48
Comparable RevPAR ($)$137.53 $141.23 $155.08
  • Q2 2025 actual vs consensus (S&P Global; values marked with asterisk are from S&P Global)
MetricConsensusActualSurprise
Primary EPS ($)$0.13*$0.15 +$0.02 (Beat)*
Revenue ($USD Millions)$364.9*$363.1 -$1.8 (Miss)*
EBITDA ($USD Millions)$99.9*$104.0 +$4.1 (Beat)*

Note: Values retrieved from S&P Global.

  • Segment revenue mix
Revenue Component ($USD Millions)Q4 2024Q1 2025Q2 2025
Room Revenue$267.69 $267.65 $296.10
Food & Beverage Revenue$39.59 $37.51 $41.93
Other Revenue$22.71 $22.95 $25.07
Total Revenues$329.99 $328.12 $363.10
  • KPIs
KPIQ4 2024Q1 2025Q2 2025
Comparable ADR ($)$198.71 $204.31 $205.27
Comparable Occupancy (%)69.2% 69.1% 75.5%
Comparable RevPAR ($)$137.53 $141.23 $155.08

Guidance Changes

  • Full‑year 2025 ranges maintained, with management biasing to the low end in Q2.
MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable RevPAR GrowthFY 2025+1.0% to +3.0% -1.0% to +1.0% Lowered in Q1; maintained in Q2
Comparable Hotel EBITDA ($M)FY 2025$378.0–$408.0 $365.5–$395.5 Lowered in Q1; maintained in Q2
Adjusted EBITDA ($M)FY 2025$345.0–$375.0 $332.5–$362.5 Lowered in Q1; maintained in Q2
Adjusted FFO per diluted share ($)FY 2025$1.46–$1.66 $1.38–$1.58 Lowered in Q1; maintained in Q2
Net Interest Expense ($M)FY 2025$94–$96 $94–$96 Maintained
Cash Corporate G&A ($M)FY 2025$34–$35 $34–$35 Maintained
Capex ($M)FY 2025$80–$100 $80–$100 Maintained
Diluted Shares & Units (M)FY 2025152.5 151.5 Lower (repurchases)
Dividends (Common / Preferred)Q2 2025$0.15 / $0.4875 $0.15 / $0.4875 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Macro visibility/booking window“Potentially more business friendly environment” in 2025 outlook Booking window shortened; 0–7 days moved from ~51% to ~58% amid uncertainty Limited visibility; shorter booking windows; low end of guidance more likely Deteriorated QoQ
Urban markets & group/citywidesUrban momentum cited in Q4 Urban outperformance; group revenues +10%; strong citywide calendars (D.C., SF, New Orleans, Louisville) Q3 headwinds from tough citywide comps (Chicago DNC, Boston, San Diego, New Orleans); Q4 tailwinds from favorable calendar Mixed: Q3 soft, Q4 improving
Conversions/renovationsSeveral conversions completed (Houston, New Orleans, Pittsburgh) Conversions drove strong RevPAR (e.g., +35% at recent conversions; Nashville +16%) Conversions/renovations ramp to aid Q4; Q2 constrained room nights at high‑occupancy assets (NYC, Waikiki, South Florida) Positive medium‑term, near‑term friction
Tariffs/supply chainN/AFF&E tariff exposure managed; diversified sourcing (China ~10% of FF&E vs 40% pre‑COVID) No new tariff issues; ongoing project management Stable/managed
Regional trends (Northern California)N/ANoted recovery momentum; SF citywide calendar +70%; AI conferences scaling (Databricks) Continued mixed macro, but longer‑term urban/SF backdrop constructive Improving LT

Management Commentary

  • Prepared remarks themes: “We are pleased with our second quarter results, which exceeded our expectations. This quarter we demonstrated the resiliency of our portfolio, the continued ramp of our conversions, and disciplined cost controls… Looking ahead, we anticipate a softer backdrop in the third quarter… however, we are encouraged by the positive tailwinds taking shape for the fourth quarter” — Leslie D. Hale, President & CEO .
  • Balance sheet execution: Refinanced $200M term loan into $300M, extended maturity to 2030, used proceeds to repay revolver; extended $181M in mortgage loans .
  • Capital allocation: Continued share repurchases and maintained dividend, signaling confidence in free cash flow .

Q&A Highlights

  • Near‑term fundamentals: Management characterized Q3 as the weakest quarter on tough citywide comps and renovations; emphasized shorter booking windows and limited visibility with expectations for Q4 improvement from calendar/conversions .
  • Regional/comps detail: Chicago (DNC in prior year), Boston, San Diego, New Orleans flagged for tough comps; Tampa/Houston difficult YoY vs last year’s FEMA‑related demand .
  • Transactions and supply chain: Volume remains low; deals skew smaller/owner‑operator; tariff/FF&E risk remains managed via diversified sourcing (as discussed prior quarter) .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: EPS $0.15 vs $0.13 consensus (Beat); Revenue $363.1M vs $364.9M consensus (Miss); Adjusted EBITDA $104.0M vs EBITDA consensus ~$99.9M (Beat). EPS had 4 estimates; Revenue had 9 estimates. Values retrieved from S&P Global.*
  • Implications: Street may adjust revenue models lower near‑term on citywide/renovation headwinds, while maintaining confidence in cost controls and conversion ramps that supported the EBITDA beat.*

Key Takeaways for Investors

  • Near‑term caution, medium‑term setup: Expect Q3 softness on calendar/comps and renovation disruption, with Q4 inflection from favorable events and conversion ramps; 2026 trajectory supported by portfolio quality and urban demand normalization .
  • Earnings quality: Despite RevPAR headwinds, AFFO/share and Adjusted EBITDA improved QoQ (from $0.31 to $0.48; $77.6M to $104.0M), reflecting effective cost management and mix/out‑of‑room spend initiatives .
  • Balance sheet optionality: $974M liquidity with maturities addressed provides flexibility to continue buybacks and fund high‑ROI conversions; monitor debt markets for incremental refinancing opportunities .
  • Guidance bias: Ranges maintained but explicit tilt to low end; watch Q3 print and any revisions to FY ranges and capex timing .
  • Urban/SF tailwinds: Citywide calendars and corporate travel recovery (including AI‑related events) remain structural positives for urban assets overtime; short booking windows warrant caution on near‑term visibility .
  • Trading lens: Into Q3, skew negative on comps/renovation drag; into Q4, potential positive catalyst from calendar tailwinds and conversions if execution stays on track .
Sources: Company press releases and 8-K for Q2 2025 **[1511337_8780585b668b4373b45589cd1f7a571b_0]** **[1511337_8780585b668b4373b45589cd1f7a571b_1]** **[1511337_8780585b668b4373b45589cd1f7a571b_2]** **[1511337_8780585b668b4373b45589cd1f7a571b_9]** **[1511337_0001511337-25-000021_rljq22025exhibit991.htm:0]** **[1511337_0001511337-25-000021_rljq22025exhibit991.htm:1]**; Q1 2025 **[1511337_57502c41946b47f29b17f085a79a592b_0]** **[1511337_57502c41946b47f29b17f085a79a592b_1]** **[1511337_57502c41946b47f29b17f085a79a592b_7]** **[1511337_57502c41946b47f29b17f085a79a592b_8]**; Q4 2024 **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_0]** **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_1]** **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_8]** **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_9]** **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_10]** **[1511337_33c4e97d1d7a4bbf838b543f603d8c46_11]**. Earnings call references from public sources **[https://investor.rljlodgingtrust.com/news-releases/news-release-details/rlj-lodging-trust-reports-second-quarter-2025-results]** **[https://seekingalpha.com/article/4811500-rlj-lodging-trust-rlj-q2-2025-earnings-call-transcript]** **[https://finance.yahoo.com/quote/RLJ/earnings/RLJ-Q2-2025-earnings_call-342137.html/]** **[https://www.marketscreener.com/news/transcript-rlj-lodging-trust-q2-2025-earnings-call-aug-08-2025-ce7c5edddf81f223]**.
S&P Global consensus and estimate metrics marked with an asterisk; Values retrieved from S&P Global.