CLDT-PA — Chatham Lodging Trust

Summary of Chatham Lodging Trust (CLDT-PA) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Performance:
  • Hotel EBITDA: $22.4 million
  • Adjusted EBITDA: $20.2 million
  • Adjusted FFO: $0.21 per share
  • GOP Margin: 40.2%, down 30 basis points year-over-year
  • Hotel EBITDA Margin: 33.2%, up 70 basis points due to property tax refunds
• RevPAR Performance:
  • Flat overall RevPAR for the quarter, with a decline of 1.8%.
  • RevPAR for the year showed a mixed trend: Q1 up 4.4%, Q2 down 0.4%, Q3 down 0.9%, Q4 down 1.8%.

2. Strategic Updates and Business Highlights

• Operational Achievements:
  • Maintained the highest operating margins in the industry for the first time since the pandemic.
  • Successfully reduced labor and benefits costs slightly despite a 4% wage increase in 2025.
  • Completed the sale of four older hotels, generating $71.4 million, with proceeds used to reduce debt and repurchase shares.
• Share Repurchase Program:
  • Repurchased approximately 1.8 million shares (4% of outstanding shares) at an average price of $6.87, totaling $13 million.
• Development Plans:
  • Planned hotel development in Portland, Maine, expected to open before summer 2028.

3. Forward Guidance and Outlook

• 2026 Guidance:
  • Expected RevPAR: -0.5% to +1.5%.
  • Adjusted EBITDA: $84 million to $89 million.
  • Adjusted FFO per share: $1.04 to $1.14.
  • Anticipated RevPAR growth in Silicon Valley of 3% to 5% due to increased business travel and World Cup events.
• Operational Strategy:
  • Focus on continuing share repurchases and opportunistic acquisitions, with a cautious approach to leverage.

4. Bad News, Challenges, or Points of Concern

• Market Challenges:
  • Declining RevPAR in key markets such as San Diego (-8%) and Los Angeles (up 4% but affected by unrest).
  • Ongoing impacts from the pandemic-related shutdowns affecting DC-area hotels.
• Competitive Pressures:
  • Difficulty in achieving growth due to high construction costs and competition from new developments.
• Economic Risks:
  • Potential headwinds from economic fluctuations and uncertainties surrounding the World Cup demand.

5. Notable Q&A Insights

• Asset Dispositions: Management indicated potential for one or two more asset sales in 2026, focusing on reinvestment.
• Acquisition Strategy: There is cautious optimism regarding acquisitions as sellers become more realistic about pricing due to flat RevPAR.
• Expense Management: Continued focus on controlling labor costs and managing utility expenses, with expectations of stable operating expenses outside of wages.
• World Cup Impact: While the World Cup is anticipated to boost demand, management remains conservative about its overall impact due to uncertainties in ticket sales and event attendance.

Overall, Chatham Lodging Trust demonstrated resilience in a challenging environment, with strategic asset management and a focus on shareholder returns, while navigating potential market headwinds and uncertainties.