• RevPAR Growth: 2.2% increase over the prior year, driven by a 2.5% increase in ADR.
• Occupancy Rate: 69.2% for the fourth quarter.
• Average Daily Rate (ADR): $198.71.
• RevPAR: $137.53.
• Business Transient RevPAR Growth: 8% above 2023, with a 7% ADR increase and 1% occupancy growth.
• Total Revenue Growth: 3%, outpacing RevPAR growth.
• Hotel EBITDA: $90.4 million, with a margin of 27.4%.
• Adjusted EBITDA: $81.1 million for the fourth quarter.
• Adjusted FFO per Diluted Share: $0.33.
• Liquidity: Over $0.9 billion at the end of the fourth quarter.
• Total Debt: $2.2 billion, with 69% either fixed or hedged.
• Weighted Average Interest Rate: 4.6%.
• Share Repurchase: Approximately 2.3 million shares for $22 million in 2024; 1.2 million shares for $12 million in 2025.
• Quarterly Dividend: $0.15 per share.
• 2025 RevPAR Growth Guidance: Expected to range between 1% and 3%.
• 2025 Comparable Hotel EBITDA Guidance: Between $378 million and $408 million.
• 2025 Corporate Adjusted EBITDA Guidance: Between $345 million and $375 million.
• 2025 Adjusted FFO per Diluted Share Guidance: Between $1.46 and $1.66.
• 2025 Capital Expenditures: Estimated between $80 million and $100 million.
• 2025 Cash G&A: Estimated between $34 million and $35 million.
• 2025 Net Interest Expense: Estimated between $94 million and $96 million.

• Warning! GuruFocus has detected 5 Warning Signs with RLJ.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RLJ Lodging Trust (NYSE:RLJ) achieved top quartile RevPAR growth that outpaced the industry, expanding market share.
• The company completed three successful hotel conversions in Houston, New Orleans, and Pittsburgh, contributing to robust RevPAR growth of over 10% in 2024.
• RLJ addressed all of its 2025 debt maturities, enhancing financial stability.
• The company increased its quarterly dividend by 50%, demonstrating a commitment to enhancing shareholder returns.
• RLJ's urban-centric portfolio showed strong performance, with urban markets achieving 3.7% RevPAR growth in the fourth quarter, driven by improving trends in corporate travel and robust group demand.

Negative Points

• The transaction market remains choppy with a wide bid-ask spread, limiting opportunities for asset sales.
• Occupancy declined slightly by 0.2% in the fourth quarter, despite an increase in ADR.
• The company faces potential displacement from scheduled 2025 renovations in high occupancy markets, which could impact short-term performance.
• The macroeconomic environment remains uncertain, with potential headline volatility affecting lodging fundamentals.
• RLJ's RevPAR guidance for 2025 is relatively modest, with expected growth between 1% and 3%, reflecting cautious optimism amid economic uncertainties.

Q & A Highlights

Q: Can you explain the factors influencing your 1% to 3% RevPAR guidance for 2025, and what are the potential risks or headwinds? A: Our guidance is based on the assumption that the momentum from 2024 continues, with urban markets outperforming due to diverse demand segments. On the high end, we assume stable macro conditions and stronger-than-expected business transient (BT) and group demand. On the low end, slower BT growth and less group rate growth could occur, along with potential displacement from renovations.

Q: How do your capital allocation priorities for 2025 compare to those in 2024? A: We remain flexible with our capital allocation, leveraging our strong balance sheet. In 2024, we repurchased stock, invested in conversions, acquired assets, and increased dividends. We will continue to be nimble, evaluating opportunities based on market conditions and fundamentals.

Q: Given the strong performance of your conversions, do you plan to accelerate your conversion pipeline? A: We believe maintaining a cadence of two conversions per year is optimal for capital allocation and risk management. This approach allows us to consistently introduce growth catalysts without overextending in any single year.

Q: How do you view the transaction market in 2025, and what are the key drivers for improvement? A: The transaction market remains choppy with a wide bid-ask spread. While small deals are happening, there's no clear trend. We expect improvement in the latter half of 2025 as headline volatility decreases and margins stabilize, but we remain opportunistic.

Q: Is the rate-driven RevPAR growth in Q4 2024 expected to continue, and how does it impact margins? A: We anticipate continued rate momentum, driven by strong BT and group demand. Rate-driven RevPAR growth benefits margins more than occupancy-driven growth. If rate growth continues, it could help us achieve the lower end of our margin range.

Q: How did the LA fires impact your hotels, and what are your expectations for transient demand in the area? A: The LA fires positively impacted demand at some of our hotels, but our budgets do not rely on this. We expect conditions to improve as displaced individuals find permanent housing, and our broader performance assumptions do not include fire-related demand.

Q: What are your expectations for urban leisure versus resort leisure demand and rates in 2025? A: We expect urban leisure to outperform broader leisure due to favorable market setups and special events. Our portfolio is well-positioned to benefit from these dynamics.

Q: What is the current occupancy delta relative to 2019 levels, particularly in your urban portfolio? A: Our total portfolio is at 94% of 2019 occupancy levels, with special corporate and group segments around 90%. Urban markets are not materially different, and we see significant demand growth opportunities, especially with the return to office and group travel.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.