• RevPAR Growth: 3% for the year, 4% in Q4, exceeding industry performance.
• GOP Margin: 43% for the year, with a 150 basis point expansion in Q4.
• Net Debt Reduction: $29 million in 2024, following a $26 million reduction in 2023.
• Leverage Ratio: Reduced to 23% from 25% in the previous year.
• Dividends Returned: $22 million to shareholders in 2024.
• Hotel EBITDA: $24.3 million in Q4 2024.
• Adjusted EBITDA: $21.4 million in Q4 2024.
• Adjusted FFO: $0.20 per share in Q4 2024.
• Operating Margins: Increased by 150 basis points in Q4.
• Room Count: Expected to be 5,475 in Q1 2025, reducing to 5,168 for the remainder of the year.
• CapEx Budget: $26 million for 2025, including three hotel renovations.
• Debt Repayment: $297 million of maturing debt repaid in 2024.
• Asset Sales: Proceeds of $101 million from selling six hotels.
• Q1 2025 Guidance: RevPAR growth of 3% to 4%, adjusted EBITDA of $16.7 million to $18.3 million, and adjusted FFO per share of $0.12 to $0.15.
• Full Year 2025 Guidance: RevPAR growth of 1% to 3.5%, adjusted EBITDA of $92 million to $97 million, and adjusted FFO per share of $1.01 to $1.11.

• Warning! GuruFocus has detected 3 Warning Signs with CLDT.

Release Date: February 26, 2025

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

Positive Points

• Chatham Lodging Trust (NYSE:CLDT) achieved a RevPAR growth of 3%, surpassing industry performance by 56%.
• The company successfully reduced its net debt by $29 million in 2024, following a $26 million reduction in 2023.
• Chatham Lodging Trust (NYSE:CLDT) completed a multi-year balance sheet repositioning, reducing its leverage ratio to 23% from 25% a year ago.
• The company participated in the global real estate sustainability benchmark, achieving a score of 83 and earning 4 out of 5 GRESB stars.
• Chatham Lodging Trust (NYSE:CLDT) returned $22 million in dividends to shareholders, reflecting strong cash flow management.

Negative Points

• The company faces challenges in the acquisition market, with a thin supply of desirable assets and a 100 basis point bid-ask gap.
• RevPAR growth in Dallas declined due to the nearby convention center's closure for expansion.
• Chatham Lodging Trust (NYSE:CLDT) experienced increased payroll-related costs, such as medical insurance and workers' compensation, which rose by 19% in Q4.
• The company did not include any acquisitions in its 2025 guidance, indicating potential limitations in growth opportunities.
• Chatham Lodging Trust (NYSE:CLDT) has not seen significant upward movement in its stock price over the past 12 to 18 months, reflecting market valuation challenges.

Q & A Highlights

Q: Can you provide more details on your asset recycling strategy and expectations for redeploying capital into acquisitions? A: Jeffrey Fisher, CEO, mentioned that the acquisition market is thin for the type of assets they want. They are actively seeking replacement assets for the hotels sold and are confident about completing acquisitions this year, though not likely in the first quarter.

Q: Could you elaborate on the development plans for the Portland, Maine hotel? A: Fisher explained that they are looking for a premium over existing hotel acquisition rates. The Portland, Maine Hampton Inn is a high-performing asset, and they are working on entitlements to build on their parking lot next to the existing hotel. Dennis Craven, COO, added that the market is strong, and they feel positive about the development.

Q: What drove the disparity in occupancy versus ADR performance in the quarter, and how do you see rate growth with improving occupancy? A: Dennis Craven noted that business travel demand is driving occupancy growth, especially in markets like Silicon Valley. ADR typically lags behind occupancy growth, but they are optimistic about future rate increases as occupancy improves.

Q: Can you provide more color on the RevPAR guidance range and the potential impact of tech intern business this year? A: Craven stated they are cautiously optimistic with a RevPAR growth range of 1% to 3.5%. They expect some ADR growth and are monitoring leisure travel trends. Regarding tech intern business, they don't expect significant changes from last year due to companies offering stipends instead of hotel stays.

Q: How much dry powder do you have for potential transactions in 2025, and is the Portland development included in the CapEx budget? A: Jeremy Wegner, CFO, indicated they could acquire up to $200 million in hotels while maintaining comfortable leverage. The Portland development is not included in the $26 million CapEx budget, as they are still working on city approvals and expect minimal cash outflow in 2025.

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