Executive Summary

Q1 2025 results were broadly in line with plan: total revenue was $435.2M, Adjusted EBITDAre was $115.8M, and Normalized FFO/share was $0.07; comparable hotel RevPAR rose 2.6% despite renovation disruption and softer demand late in the quarter .
Versus S&P Global consensus, SVC posted a modest revenue beat (+1.0%) and a slight Primary EPS beat (−$0.48 actual vs −$0.52 est); S&P’s EBITDA “actual” was essentially in line (and sits below SVC’s Adjusted EBITDAre due to definitional differences). Expect limited estimate changes near-term [GetEstimates Q1 2025] .
Portfolio optimization advanced: four hotels and three net lease assets sold ($22.7M) with additional hotels under agreement; management reiterated plans to sell roughly $1.1B of hotels in 2025 to delever, with the deck citing 123 hotels and management discussing ~125 hotels on the call .
Liquidity and balance sheet remain focal points: quarter-end liquidity was ~$680M; net lease occupancy stayed high (97.8%) with healthy rent coverage (2.07x), supporting cash flow resiliency during lodging renovations and macro softness .

What Went Well and What Went Wrong

What Went Well
- Comparable hotel RevPAR +2.6% YoY, outperforming the industry by ~40 bps; excluding eight hotels under renovation, RevPAR +3.7% YoY. Select service outperformed with strong Hyatt Place post-renovation traction (RevPAR +35% YoY at renovated hotels) .
- Net lease stability: 97.8% leased, 8-year WALT, and aggregate rent coverage at 2.07x; limited 2025 expirations (2.1% of minimum rents), reinforcing cash flow durability .
- Progress on portfolio optimization: 4 hotels and 3 net lease assets sold ($22.7M) and 4 more hotels under agreement ($26.5M); management reiterated the $1.1B hotel sale program and highlighted strong buyer demand with 4 awarded buyers for the 114 Sonesta hotel pool .
- Management quote: “SVC began the year with…a 2.6% increase in comparable hotel RevPAR…we…ended the quarter with over $680 million of liquidity. Our strategic focus remains on strengthening our balance sheet through asset sales and reinvesting in our hotels…” — CEO Chris Bilotto .
What Went Wrong
- GAAP profitability remained pressured: net loss widened to $(116.4)M; net loss/share of $(0.70), driven by higher interest expense and $37.1M of impairment on 16 hotels .
- Hotel margins compressed: Adjusted Hotel EBITDA fell to $23.0M with a 6.9% margin; GOP margin for comparable hotels declined 330 bps YoY to 21.4%, reflecting renovation disruption and higher labor and utilities .
- Demand softness emerged intra-quarter: RevPAR decelerated from >2.5% in January to ~0.5% in March; April prelim was down ~1% YoY; government and international segments, plus reduced airline crew business, weighed on trends .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($M)	491.2	456.6	435.2
Net Loss ($M)	(46.9)	(76.4)	(116.4)
Net Loss/Share ($)	(0.28)	(0.46)	(0.70)
Normalized FFO/Share ($)	0.32	0.17	0.07
Adjusted EBITDAre ($M)	155.0	130.6	115.8
Adjusted Hotel EBITDA ($M)	60.1	42.8	23.0
Adjusted Hotel EBITDA Margin (%)	15.4%	12.0%	6.9%

Segment revenue detail

Segment	Q3 2024 ($M)	Q4 2024 ($M)	Q1 2025 ($M)
Hotel Operating Revenues	390.9	357.0	335.0
Rental Income (Net Lease)	100.2	99.5	100.2
Total Revenues	491.2	456.6	435.2

Key KPIs (Company-Reported)

KPI	Q3 2024	Q4 2024	Q1 2025
Comparable Hotel RevPAR ($)	94.73	84.27	83.67
All-Hotel RevPAR ($)	94.58	84.13	83.52
Net Lease Occupancy (%)	97.6%	97.6%	97.8%
Net Lease Rent Coverage (x)	2.16x	2.10x	2.07x

Consensus vs. Actuals (S&P Global; Q1 2025)

Metric	Consensus*	Actual*	Surprise
Revenue ($M)	430.7*	435.2*	+$4.5M / +1.0%*
EBITDA ($M)	114.0*	114.0*	+$0.0M / +0.0%*
Primary EPS ($)	(0.52)*	(0.48)*	+$0.04*

Note: S&P Global’s EBITDA/“Primary EPS” definitions differ from SVC’s Adjusted EBITDAre/GAAP EPS; SVC reported Adjusted EBITDAre of $115.8M for Q1 2025 . Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Hotel RevPAR ($)	Q2 2025	Not previously provided	$99–$102 (company view)	New
Adjusted Hotel EBITDA ($M)	Q2 2025	Not previously provided	$69–$74 (company view)	New
Hotel Dispositions (count/value)	FY 2025	114 hotels planned (Oct-2024)	~123 hotels (deck) / ~125 hotels (call) , ~$1.1B	Increased scope vs. initial plan
Common Dividend ($/share/qtr)	2025 run-rate	$0.01 declared in Q4’24	$0.01 declared Apr 2025	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev-2)	Q4 2024 (Prev-1)	Q1 2025 (Current)	Trend
Portfolio optimization / hotel sales	Announced plan to sell 114 Sonesta focused-service hotels in 2025; liquidity/deleveraging focus	Marketing 115 hotels underway; more sales executed	Deck states 123 hotels planned; mgmt references ~125 hotels, 4 buyers selected; phased closings through Q2–Q3	Scope broadened; timeline phasing
Renovation program / post-reno lift	Ongoing; drag in focused-service	Renovation-driven RevPAR outperformance in Q4 despite displacement	Renovations weighed on margins; Hyatt Place post-reno strong (+35% RevPAR YoY)	Near-term drag, selective lift
Demand/macro (gov’t, intl, airlines)	Macro headwinds noted	Seasonal strength in Q4; monitoring inflation/rates	RevPAR decelerated Mar; April −1% prelim; gov’t/international/airline crew softness	Softening intra-quarter
Net lease durability	97.6% leased; coverage ~2.16x	97.6% leased; coverage 2.10x	97.8% leased; coverage 2.07x; minimal 2025 expiries (2.1%)	Stable/high occupancy; slight coverage drift
Capital allocation / financing	ABS in place; deleveraging priority	Raised $ via asset sales; revolver usage	New $45M VFN secured by net lease portfolio; proceeds to acquisitions/debt	Incremental secured flexibility
Tariffs / supply chain	—	—	Monitoring tariffs/FF&E sourcing; cost contingencies in capex	Proactive mitigation

Management Commentary

Strategy: “We are confident that our portfolio optimization initiatives, durable cash flows from our triple net lease assets and effective capital management will be significant drivers of long-term value creation.” — CEO Chris Bilotto .
Lodging trends: “RevPAR softened as the quarter progressed…pullback in government and inbound international travel as well as airlines reducing flight commitments and crew business.” — CEO .
Dispositions: “We plan to sell 125 hotels in 2025 for approximately $1.1 billion…portfolio awarded to four buyers…sales will be completed in phases over the next few quarters.” — CEO .
Net lease: “Aggregate coverage…2.07x…nearly 98% leased…only 2.1% of minimum rents scheduled to expire in 2025.” — VP Jesse Abair .
Q2 outlook: “Projecting second quarter RevPAR of $99 to $102 and adjusted hotel EBITDA of $69 million to $74 million…headwinds in travel and lodging…renovation revenue displacement.” — CFO Brian Donley .

Q&A Highlights

Intra-quarter RevPAR cadence: ~+2.5% YoY in January, decelerating to ~+0.5% in March; April prelim −1% YoY, with expected ramp through Q2 .
Demand mix: Government cancellations (~~$2.5M) and airline crew pullback; group pace +6.5% (~~$9M) YoY provides offset .
Disposition timing: Majority of the 114-hotel Sonesta pool closing in phases across Q2–Q3; robust buyer interest and diligence driving timeline .
Use of proceeds / balance sheet: Plan to address 2026 note maturities using asset-sale proceeds remains unchanged .
Capex and tariffs: 2025 capex ~$250M; pricing largely locked for 2025 projects; pursuing sourcing and scope adjustments to mitigate tariff/supply-chain risk .
Impairment context: Impairments tied to a subset of the 114-hotel pool where fair value < carrying value; overall expects net gain on sale when the full pool closes .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue $435.2M actual vs $430.7M est (+1.0%), EBITDA $114.0M actual vs $114.0M est (in line), Primary EPS −$0.48 actual vs −$0.52 est (+$0.04*). Values retrieved from S&P Global.*
Note: S&P’s Primary EPS and EBITDA frameworks differ from SVC’s GAAP EPS and Adjusted EBITDAre. SVC reported Adjusted EBITDAre of $115.8M and net loss/share of $(0.70) for Q1 2025 . This definitional gap can drive differences between company-reported figures and S&P’s “actuals.”

Key Takeaways for Investors

Near-term: Results were steady against lowered expectations, but margins remain pressured by renovations and macro softness; Q2 guide embeds continued headwinds and ongoing displacement, arguing for conservative near-term estimates .
Medium-term: The $1.1B hotel sale program (deck ~123; call ~125) is the key deleveraging catalyst; execution phasing into Q3 should be the main stock driver, alongside visibility on 2026 maturities .
Mix shift: As the portfolio tilts toward net lease (high occupancy, long WALT, stable coverage), valuation could migrate toward net lease REIT peers, potentially improving the multiple over time if execution holds .
Capital flexibility: New $45M VFN and existing ABS program highlight financing optionality from the net lease platform; proceed prudently with small, accretive retail acquisitions during the transition .
Watchlist items: (1) Disposition closings/timing and realized proceeds, (2) RevPAR trajectory after April softness, (3) renovation completion and post-reno uplift, (4) net lease coverage trends, especially TA, and (5) tariff/supply chain impacts on capex and timing .

Additional Notes and References

Dividend: $0.01/share quarterly distribution declared April 10, 2025 (payable ~May 15) .
Liquidity & leverage: Liquidity ~$680M; net debt/TTM Adjusted EBITDAre 9.9x; rolling four-quarter interest coverage 1.5x .
Dispositions executed in Q1: four hotels (514 keys) for $19.6M and three vacant net lease properties (103,043 sf) for $3.1M; additional four hotels under agreement for $26.5M .

Footnote on estimates: All items marked with an asterisk (*) are Values retrieved from S&P Global.

Service Properties Trust (SVC)·Q1 2025 Earnings Summary