CLDT-PA — Chatham Lodging Trust

Summary of Chatham Lodging Trust 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 YoY
  • Hotel EBITDA Margin: 33.2%, up 70 basis points YoY
  • RevPAR: Declined 1.8% in Q4, with a flat performance across the year.
• 2025 Highlights:
  • Total asset sales amounted to $71.4 million.
  • Net debt reduced by $70 million, achieving a leverage ratio of 20%, down from 35% in 2019.
  • Common dividend increased by 28% in 2025, with total shareholder returns of approximately $35 million.

2. Strategic Updates and Business Highlights:

• Continued focus on operational efficiency led to a slight decline in labor costs despite wage increases.
• Successful share repurchase plan initiated, with approximately 1.8 million shares repurchased at an average price of $6.87.
• Sold four lower RevPAR hotels to reduce debt and fund share repurchases.
• Initiated a hotel development project in Portland, Maine, expected to open before summer 2028.
• Positive performance in Silicon Valley, with a 1% RevPAR growth, driven by strong corporate demand from major tech firms.

3. Forward Guidance and Outlook:

• 2026 Expectations:
  • RevPAR projected to range from -0.5% to +1.5%.
  • Adjusted EBITDA forecasted between $84 million and $89 million.
  • Adjusted FFO per share anticipated between $1.04 and $1.14.
  • Silicon Valley RevPAR expected to increase by 3% to 5%, while Los Angeles is projected to decline by 1% to 3%.
• Continued focus on share repurchases and potential acquisitions as market conditions improve.

4. Bad News, Challenges, or Points of Concern:

• Declining RevPAR in key markets, particularly in San Diego (down 8%) and Los Angeles, due to softer demand and tough comps from previous years.
• Ongoing impacts from corporate client pricing strategies affecting revenue, particularly in Sunnyvale.
• Utility costs expected to rise in early 2026 due to adverse weather conditions.
• Competitive pressures remain, especially in convention-driven markets where demand has fluctuated.

5. Notable Q&A Insights:

• Management expressed cautious optimism regarding potential acquisitions, noting that sellers are becoming more realistic about pricing in a flat RevPAR environment.
• The team is focused on controlling labor costs and maintaining operational efficiencies, with a headcount reduction of 13% year-over-year.
• The World Cup is anticipated to provide a boost in demand, but management remains conservative in their outlook due to uncertainties in ticket sales and event attendance.
• The Portland development costs will be detailed in future guidance, indicating a strategic approach to capital allocation.

Overall, Chatham Lodging Trust demonstrated resilience in a challenging environment, with a focus on operational efficiency, shareholder returns, and strategic growth opportunities while navigating headwinds in key markets.