Summary of Chatham Lodging Trust Q3 2025 Earnings Call

1Key Financial Results and Metrics

Hotel EBITDA: $28.8 million

Adjusted EBITDA: $26.2 million

Adjusted FFO per share: $0.32

GOP Margin: 43.6%, down 90 basis points year-over-year

RevPAR: Declined 2.5% in Q3; guidance for Q4 expects a further decline of 3.5% to 2.5%.

Share Repurchases: Approximately 500,000 shares repurchased at an average price of $6.85, with additional repurchases post-Q3.

2Strategic Updates and Business Highlights

Asset Sales: Completed the sale of 5 older hotels and is under contract to sell another for $17 million, enhancing liquidity for future investments.

Share Repurchase Program: Active repurchasing strategy due to perceived undervaluation of stock.

Credit Facility: Upsized and recast syndication of credit facilities, lowering borrowing costs and enhancing financial flexibility.

Development Plans: Upcoming Home2 development in Portland, Maine, with site work expected to start in 2026.

3Forward Guidance and Outlook

Q4 Guidance: RevPAR expected to decline by 3.5% to 2.5%, with adjusted EBITDA projected between $16.7 million and $18.3 million.

Full Year 2025 Guidance: RevPAR growth forecasted at -0.7% to -0.3%, with adjusted EBITDA expected to be between $89.2 million and $90.8 million.

Long-term Outlook: Positive macroeconomic factors anticipated to support RevPAR and margin expansion in 2026 and beyond.

4Bad News, Challenges, or Points of Concern

Declining RevPAR: The company faced a 2.5% decline in RevPAR, with specific challenges noted in Silicon Valley and Washington, D.C. due to corporate rate discounts and government shutdown impacts.

Market Volatility: Ongoing volatility in hotel demand and revenue, attributed to external factors such as international travel declines and economic uncertainties.

Competitive Pressures: The company is navigating a challenging environment with fluctuating demand and pricing pressures, particularly in convention-heavy markets.

5Notable Q&A Insights

Investment Opportunities: Management expressed optimism about potential acquisitions, noting that seller pricing expectations are becoming more reasonable, though they remain cautious due to current market conditions.

RevPAR Variance Explanation: The decline in RevPAR was primarily attributed to the performance of two Sunnyvale hotels and the impact of the government shutdown on D.C. hotels.

Capital Allocation Priorities: The company prioritizes share repurchases, followed by potential acquisitions and its development project in Portland, Maine.

Development Justification: Management emphasized that the decision to proceed with the Portland development is based on its projected returns and the favorable market conditions for new hotel development. Overall, while Chatham Lodging Trust is facing short-term challenges with declining RevPAR and external market pressures, management remains optimistic about long-term growth opportunities and maintaining financial flexibility through strategic initiatives.