Summary of Pebblebrook Hotel Trust Q3 2025 Earnings Call

1Key Financial Results and Metrics

Same-Property Hotel EBITDA: $105.4 million, in line with expectations.

Adjusted EBITDA: $99.2 million, exceeding midpoint by $2.2 million.

Adjusted FFO per Share: $0.51, $0.03 above midpoint.

Occupancy Rate: Increased by nearly 190 basis points.

Average Daily Rate (ADR): Declined by 5.4%, contributing to a 3.1% decline in RevPAR and a 1.5% drop in same-property total RevPAR.

Out-of-Room Revenues: Grew by 1.7%, driven by stronger event space utilization and food and beverage performance.

Operating Expenses: Increased by only 0.4% year-over-year, with per occupied room expenses declining by about 2%.

2Strategic Updates and Business Highlights

Strong performance from properties in San Francisco and Chicago, with notable contributions from redeveloped resorts like Newport Harbor Island Resort and Jekyll Island Club Resort.

Ongoing redevelopment efforts are yielding market share gains and profitability improvements.

Successful $400 million offering of convertible notes used to retire existing debt at a discount, enhancing balance sheet flexibility.

Agreement to sell one hotel for $72 million, classified as held for sale, with expectations for closing in Q4.

3Forward Guidance and Outlook

Q4 Expectations: Same-property RevPAR projected to range from -1.25% to +2%, total RevPAR between -1.25% and +2.7%. Total hotel expenses expected to grow by 0.8%.

2026 Outlook: Optimistic due to favorable macroeconomic conditions, low new supply, and a robust events calendar including the World Cup and America 250 celebrations. Anticipated demand growth and a favorable holiday calendar are expected to drive performance.

4Bad News, Challenges, or Points of Concern

Market Weakness: Declines in ADR and RevPAR primarily attributed to competitive pricing pressures in Los Angeles and Washington, D.C., exacerbated by government shutdown impacts.

Government Travel Impact: The ongoing government shutdown is negatively affecting travel demand, particularly in D.C., with a noted decline in government-related travel and increased cancellations.

Competitive Pressures: The company faces challenges from pricing competition in lower-tier markets and a mixed performance across urban markets.

Economic Uncertainty: Concerns about macroeconomic factors, including tariff policies and government spending cuts, may impact consumer and business travel sentiment.

5Notable Q&A Insights

San Francisco Market: There is growing confidence among hoteliers to push room rates during high occupancy periods, supported by a strong convention calendar and corporate demand.

Leisure Demand: The leisure customer remains resilient, but there is increased price sensitivity, particularly in lower-tier properties.

Attrition Trends: Increased attrition observed primarily in government-related segments, but overall attrition payments were lower compared to the previous year.

Transaction Market: The transaction market is currently cautious but shows signs of pent-up demand, with expectations for increased activity once macroeconomic clarity improves.

AI and Operational Efficiency: The company is focusing on AI-enabled tools to enhance operational efficiencies and reduce costs, which is expected to continue benefiting the bottom line. Overall, Pebblebrook Hotel Trust reported solid Q3 results amid challenging conditions, with a cautiously optimistic outlook for Q4 and 2026, driven by strategic initiatives and a strong recovery in key markets. However, ongoing economic uncertainties and specific market weaknesses pose risks that the company is actively managing.