Pebblebrook Hotel Trust(PEB) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Same-property RevPAR increased by 2.2%, which would have exceeded 2.4% without the impact of hurricanes [7] - Total RevPAR rose by 2.7%, driven by increased occupancy and a 3.8% growth in out-of-room spending [8] - Adjusted EBITDA exceeded the midpoint of Q3 outlook by $8.7 million, and adjusted FFO beat the midpoint by$ 9.7 million or $0.08 per share [9] Business Line Data and Key Metrics Changes - Urban properties saw a 3.7% year-over-year occupancy increase, with urban weekend occupancy exceeding 85% [12] - Resort same-property occupancy declined by 5.9% year-over-year, reaching 74.3%, but weekday occupancy improved by 6.7% [14] - Same-property resort total RevPAR increased by 2.5%, significantly higher than the 0.8% increase in same-property resort RevPAR alone [18] Market Data and Key Metrics Changes - Strongest urban markets included Chicago, San Diego, and Boston, benefiting from active convention calendars and improved weekday business travel [11] - Combined RevPAR for San Francisco, Los Angeles, and Portland declined by 5.7% in Q3, with a forecasted decline of 5.6% for the full year [49] - Urban properties in Boston, San Diego, and Chicago grew combined RevPAR by 9.6% in Q3, forecasted to achieve 8.1% growth for the full year [50] Company Strategy and Development Direction - The company is focused on capital reinvestments to enhance property appeal and gain market share [15] - Major capital investment program is largely complete, with expectations for significantly lower CapEx over the next few years [26] - The company plans to continue leveraging its redeveloped properties to drive significant RevPAR growth and EBITDA gains [56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting demand growth to align with GDP growth, leading to higher occupancies [42] - The company anticipates headwinds in urban markets turning into tailwinds, with significant growth from ongoing share gains in redeveloped properties [59] - Management noted that the normalization of leisure demand and the return of international inbound travel could further benefit urban markets [60] Other Important Information - The company has strengthened its financial position by extending debt maturities and reducing bank term loans [35] - The decision to discontinue monthly operating updates signals confidence in the improved stability of the industry and portfolio [36] - The company expects a combined impact of hurricanes to reduce Q4 same-property RevPAR by approximately 100 basis points [31] Q&A Session Summary Question: Will LaPlaya exceed this year's original$ 24 million EBITDA expectation next year? - Management believes it is reasonable to expect LaPlaya to return to its original EBITDA expectations due to increased group bookings and club growth [63] Question: What are the expectations for leisure customers and pushing rates at resorts in 2025? - Management indicated that while average rates are stabilizing, they expect to push rates higher as occupancy increases, particularly with group bookings [66] Question: What are the expectations for wages and benefit growth next year? - Management anticipates average wage increases to be slightly lower than last year, with union markets potentially seeing larger increases [68] Question: How do you rank San Francisco, Portland, and LA for long-term prospects? - Management is optimistic about the underlying fundamentals of these markets and believes they will recover, although it may take time [72] Question: What is the update on Curator's progress and goals? - Curator has around 100 members and is expected to grow, providing significant cost savings and value creation for properties [83] Question: What are the expectations for CapEx spending in 2025? - Management expects a run rate of $65 million to$ 75 million for CapEx in 2025, significantly lower than previous years [90]