Pebblebrook Hotel Trust (PEB) Q2 2024 earnings summary

Executive summary

• Q2 2024 financial results exceeded outlook, driven by strong corporate, group, transient, and leisure demand in urban and resort markets, with redeveloped and repositioned properties outperforming expectations and improving cash flows.

• Operational efficiencies and cost-saving initiatives led to lower year-over-year operating expenses and boosted profitability.

• Major capital investments and redevelopments, including Newport Harbor Island Resort and LaPlaya Beach Resort & Club, have positioned the company for future EBITDA growth as urban demand recovers.

• Urban markets like San Diego, Boston, Chicago, and Washington, D.C. showed strong recovery, while Portland, L.A., and San Francisco lagged.

• Pebblebrook Hotel Trust is the largest owner of urban and resort lifestyle hotels in the U.S., with a portfolio of 46 hotels and a balanced urban/resort and business/leisure mix.

Financial highlights

• Q2 2024 Same-Property RevPAR increased by 1.7% and total RevPAR by 2.5% year-over-year; occupancy rose to 76.6% while ADR declined.

• Q2 Same-Property EBITDA was $117.2M, up 8.9% year-over-year; Adjusted FFO was $83.8M, up 10.7%.

• Adjusted EBITDA and FFO surpassed the midpoint of Q2 outlook by $10M and the top end by $7.5M.

• Hotel EBITDA margin reached 31.5% in Q2, a 180–182 bps improvement year-over-year.

• FFO available to common share and unit holders was $77.7M for Q2 2024, up from $68.3M in Q2 2023.

Outlook and guidance

• 2024 full-year outlook for Same-Property Hotel EBITDA, adjusted EBITDA, and FFO raised; Adjusted EBITDAre guidance now $351–$360M and Adjusted FFO per diluted share $1.59–$1.67.

• RevPAR growth outlook for 2024 lowered to 1.25%–2.25%, with all growth from occupancy, not ADR.

• Q3 2024 Adjusted EBITDAre expected at $101–$106M; Adjusted FFO per diluted share at $0.49–$0.53.

• LaPlaya Beach Resort & Club expected to contribute $24M EBITDA in 2024, $2M above prior expectations.

• Expects $108M in Hotel EBITDA upside and $0.60/share AFFO upside over the next 3–4 years from urban recovery, ROI investments, and LaPlaya stabilization.