PEB-PE — Pebblebrook Hotel Trust

Summary of Pebblebrook Hotel Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Same Property Hotel EBITDA: Increased by 27.6% to $82.2 million, exceeding expectations by $8.2 million.
• Adjusted EBITDA: Rose 29.5% year-over-year to $73.3 million, $9.3 million above the high end of guidance.
• Adjusted FFO per Diluted Share: Doubled to $0.32, surpassing guidance by $0.09.
• Occupancy: Same-property occupancy increased by 550 basis points.
• Average Daily Rate (ADR): Increased by 2.8%.
• Revenue per Available Room (RevPAR): Grew by 11.8%.
• Total Revenue: Increased by 10.1%, while same-property total expenses rose only 5.6%, leading to a 327 basis point expansion in hotel EBITDA margin.

2. Strategic Updates and Business Highlights

• Strong performance across the portfolio, with 32 properties exceeding revenue forecasts.
• Notable recovery in key markets:
  • Los Angeles: RevPAR increased 44.5%, benefiting from major events like the Super Bowl.
  • San Francisco: Continued recovery with RevPAR up 14.3%.
  • Resorts: Strong performance with RevPAR up 7.5%.
• Successful rebranding of Mondrian Los Angeles to Valor Los Angeles, leveraging Hilton's distribution network.
• Continued focus on operational efficiencies, with total expenses growing slower than revenue.

3. Forward Guidance and Outlook

• Q2 Expectations: Anticipate RevPAR growth of 3% to 5%, with cautious optimism due to potential geopolitical risks.
• Full-Year Guidance: Increased RevPAR and total RevPAR growth outlook by 75 basis points, now expecting RevPAR growth of 2.75% to 4.75%.
• Same-Property EBITDA Growth: Forecasted at 5.2% to 8.6%, reflecting a midpoint increase to nearly 7%.
• Room Revenue Pace: As of March, room revenue pace is $33.5 million ahead of last year, indicating strong demand trends.

4. Bad News, Challenges, or Points of Concern

• Geopolitical Risks: Ongoing conflict in the Middle East could impact travel demand and airline operations.
• Market Challenges: Washington D.C. and Boston markets remain under pressure, with RevPAR declines of 24.1% and 3%, respectively, due to weak government travel and adverse weather conditions.
• Visibility Concerns: Shortened visibility in booking trends and potential economic slowdown could affect future performance.
• Expense Growth: While expenses are controlled, rising oil prices could impact travel demand and operational costs.

5. Notable Q&A Insights

• Impact of Oil Prices: Higher oil prices could affect travel demand, particularly for middle-income travelers, but the company is monitoring the situation closely.
• Expense Guidance: Labor costs are expected to grow in the low single digits, with efficiencies being pursued to counterbalance rising costs in other areas like utilities and insurance.
• World Cup Outlook: Anticipated positive impact from the World Cup, but caution remains regarding potential disruptions from geopolitical events.
• San Francisco Recovery: Strong recovery expected, with RevPAR growth projected between 12% and 15% for the year, driven by a resurgence in business and leisure travel.

Overall, Pebblebrook Hotel Trust reported a strong first quarter, exceeding expectations across key metrics, while maintaining a cautious outlook for the remainder of the year due to external risks.