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 guidance by $2.2 million.

Adjusted FFO per share: $0.51, $0.03 above midpoint guidance.

Occupancy: Increased by nearly 190 basis points.

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

Out-of-room revenues: Grew by 1.7%.

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 in San Francisco and Chicago, with San Francisco seeing an 8.3% increase in RevPAR.

Notable contributions from redeveloped properties, particularly Newport Harbor Island Resort, which reported a 29% increase in RevPAR.

Continued focus on cost management and operational efficiencies, with successful implementation of AI tools for improved productivity.

Capital investments of $14.2 million in Q3, with a total expected investment of $65 million to $75 million for the year.

3Forward Guidance and Outlook

Q4 2025 Guidance: Same-property RevPAR expected to range from -1.25% to +2%, with total RevPAR between -1.25% and +2.7%. Anticipated total hotel expenses to grow by 0.8%.

2026 Outlook: Optimistic due to favorable macroeconomic conditions, a robust events calendar (including the World Cup), and easier comps in challenged markets like Los Angeles and Washington, D.C.

Expectation of over $100 million in free cash flow by the end of 2026.

4Bad News, Challenges, or Points of Concern

Declining ADR: Primarily due to competitive pricing pressures in Los Angeles and Washington, D.C., exacerbated by geopolitical tensions and a federal government shutdown.

Weakness in Group Demand: Notable declines in group occupancy and attendance, particularly in government-related sectors.

Ongoing Challenges in D.C. and L.A.: D.C. RevPAR down 16.4% due to reduced government travel; L.A. faced a 10.4% decline due to weather and safety perceptions.

Market Uncertainty: Concerns about the impact of the government shutdown on travel demand and overall economic conditions.

5Notable Q&A Insights

San Francisco Market Confidence: Executives expressed optimism about the ability to push room rates during high occupancy periods, with significant demand from corporate events and conventions.

Transient Corporate Demand: Increased bookings from emerging tech companies in the AI sector, indicating a shift in demand dynamics.

Expense Management: Continued focus on operational efficiencies, with expectations of moderated labor costs in 2026 due to improved scheduling and productivity.

Transaction Market: Mixed signals with a cautious approach to asset sales; however, there is pent-up demand among investors for quality assets.

Leisure Customer Sensitivity: While leisure demand remains resilient, there is increased price sensitivity among lower-tier customers, impacting overall pricing strategies. Overall, Pebblebrook Hotel Trust demonstrated solid operational performance amidst challenging market conditions, with a cautiously optimistic outlook for the upcoming quarters and 2026.