• RevPAR Growth: Increased by 2.2%, outperforming the industry's growth of 0.9%.
• Total RevPAR: Rose by 2.7%, driven by increased occupancy and strong out-of-room spending.
• Same Property Hotel EBITDA: Reached $110.8 million, despite a $1.2 million negative impact from storms.
• Adjusted FFO: Exceeded the midpoint of Q3 outlook by $9.7 million or $0.08 per share.
• Urban Properties Occupancy: Increased by 3.7% year over year in Q3.
• Resort Occupancy: Improved by 6.7%, with a 5.2% growth in resort RevPAR.
• Same Property Occupancy: Climbed by 5.9% year over year, reaching 74.3%.
• Group Revenue: Increased by 1.2%, accounting for about 24% of total group revenues in the quarter.
• Hotel Expenses: Total same property hotel expenses increased by 3.2%.
• Debt Maturities: No significant maturities until December 2026, with a weighted average interest rate of 4.3%.

• Warning! GuruFocus has detected 2 Warning Sign with PEB.

Release Date: November 08, 2024

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

Positive Points

• Pebblebrook Hotel Trust (NYSE:PEB) reported third-quarter hotel operating results in line with their outlook, despite the negative impact of two named storms.
• The company's RevPAR growth outpaced the industry's growth, driven by occupancy increases at both urban and resort properties.
• Pebblebrook Hotel Trust (NYSE:PEB) achieved significant market share gains, particularly in recently redeveloped properties.
• Urban properties showed promising recovery, with cities like Chicago, San Diego, and Boston benefiting from active convention calendars and improved business travel.
• The company successfully extended debt maturities, with no significant maturities until December 2026, and a weighted average interest rate of just 4.3%.

Negative Points

• The impact of hurricanes Debbie and Helene resulted in a negative financial impact, reducing Q4 same property RevPAR and hotel EBITDA.
• The brand transition of Delfina Santa Monica Hotel to a Hyatt Centric caused significant disruption, impacting property performance.
• Urban markets like San Francisco, Los Angeles, and Portland faced challenges, with San Francisco experiencing a decline in convention business.
• International inbound demand remains below pre-pandemic levels, affecting overall leisure demand.
• Wage and benefit cost pressures are anticipated to continue, particularly in unionized markets, impacting overall cost structure.

Q & A Highlights

Q: Do you think LaPlaya should be able to exceed this year's original $24 million EBITDA expectation next year, and what changes are being made to mitigate future storm impacts? A: Jonathan Bortz, CEO, stated that if the timeline is met, LaPlaya should return to expected levels due to increased group bookings and club growth. Enhancements include relocating systems above storm surge levels, rebuilding dunes, and adding hurricane-proof features. Additional protections are planned to further mitigate storm impacts.

Q: Can you provide more details on the 2025 outlook for leisure customers and rate expectations at resorts? A: Jonathan Bortz, CEO, explained that leisure demand is stabilizing post-pandemic. Group bookings are increasing, and while average rates are uncertain, the focus is on building occupancy and achieving higher rates through compression and high occupancy periods.

Q: What are your expectations for wage and benefit growth and overall cost growth next year? A: Jonathan Bortz, CEO, noted that wage increases are expected to be slightly lower due to reduced inflation. Union markets may see higher increases, impacting overall costs. Raymond Martz, CFO, added that other input costs are decreasing, helping to manage overall expenses.

Q: How do you view the long-term prospects of urban markets like San Francisco, Portland, and LA, and are you comfortable with your current exposure? A: Jonathan Bortz, CEO, expressed confidence in the long-term fundamentals of these markets, citing improvements in business-friendly policies and quality of life. The company is comfortable with its exposure and expects a rebound, although it may take time.

Q: Can you provide an update on the progress and goals with Curator, and does the sale of Davidson impact your operations? A: Raymond Martz, CFO, mentioned that Curator's growth is slower than expected but remains a significant cost saver. The sale of Davidson is not expected to impact operations or relationships with Curator.

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