Chatham Lodging Trust (CLDT) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: RevPAR is expected to decline, but there are positive signs like increased share repurchases and dividends, debt reduction, and stable margins. The Q&A highlights uncertainties in asset sales and the Portland development, while management remains conservative on World Cup impacts. Despite some positive indicators, the overall sentiment is cautious due to RevPAR declines and lack of clarity on certain strategic moves, resulting in a neutral outlook for the stock price.
Key Financial Performance
RevPAR For the fourth consecutive year, RevPAR performance beat the industry. Despite essentially flat RevPAR, GOP margin decline was limited to only 20 basis points due to focused staffing and productivity improvements. Silicon Valley RevPAR grew only 1% in 2025, with a 5% increase in the first half and a 4% decline in the third quarter. San Diego RevPAR declined 8% in 2025 due to a retraction from an all-time best convention calendar in 2024 and other factors. Los Angeles RevPAR increased 4% in 2025 due to fire-related business. Coastal Northeast hotels and D.C. area hotels had easier comps due to renovation and shutdown impacts in 2025.
GOP Margin GOP margin decline was limited to 20 basis points for the year and 30 basis points in Q4 2025, despite a 1.8% RevPAR decline in the quarter. This was achieved through expense control and stabilizing inflationary increases. Labor and benefits costs increased by just under 2% in Q4, and nondepartmental expenses remained flat.
Hotel EBITDA Margin Hotel EBITDA margins increased by 70 basis points in Q4 2025 due to $550,000 of property tax refunds. For the year, GOP margin decline was limited to 40 basis points.
Labor and Benefits Costs Labor and benefits costs declined slightly in 2025, offsetting wage increases of almost 4%. In Q4, labor and benefits costs increased by just under 2%, and headcount decreased by 13% year-over-year for comparable hotels.
Debt and Leverage Net debt was reduced by $70 million in 2025, and the leverage ratio decreased to 20% from 35% in 2019. This was achieved through asset sales and free cash flow.
Share Repurchase Approximately 1.8 million shares (4% of outstanding shares) were repurchased at an average price of $6.87 per share, totaling almost $13 million. This was part of a $25 million plan.
Dividend The common dividend was increased by 28% in 2025. Including the repurchase plan and both common and preferred dividends, approximately $35 million was returned to shareholders.
Property Insurance Property insurance costs declined by 3% in Q4 2025 and are projected to decline a further 15% on a same-store basis in 2026.
CapEx Approximately $4 million was spent on CapEx in Q4 2025. The 2026 CapEx budget is approximately $26 million, including $17 million for three renovations.
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Operating Highlights
New Room Additions: Added 10 rooms to the portfolio by converting excess meeting space and other available spaces.
Hotel Development: Plans to commence Portland, Maine hotel development in the coming months, with opening expected before the 2028 summer.
Market Diversification: Focus on diversification in markets and demand generators, particularly in the Central and Southeastern U.S.
Silicon Valley Performance: RevPAR grew 1% in 2025, with a mixed performance across quarters. Positive outlook due to corporate demand from companies like Google, LinkedIn, and Apple.
World Cup Impact: World Cup expected to boost demand in Sunnyvale, Los Angeles, and Dallas markets.
RevPAR Performance: Outperformed the industry for the fourth consecutive year despite flat RevPAR.
Cost Management: Labor and benefits costs declined slightly, offsetting wage increases of 4%.
Debt Reduction: Reduced net debt by $70 million, lowering leverage ratio to 20% from 35% in 2019.
Sustainability: Ranked 29th out of 95 in the GRESB sustainability benchmark.
Asset Sales: Sold 4 older, lower RevPAR hotels at a 6% cap rate, using proceeds to reduce debt and repurchase shares.
Share Repurchase: Repurchased approximately 1.8 million shares (4% of outstanding shares) at an average price of $6.87 per share, totaling $13 million.
Acquisition Strategy: Plans to make acquisitions in 2026 as financing costs lessen and seller pricing expectations adjust.
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Risk or Challenges
RevPAR Decline: RevPAR declined in several key markets, including San Diego (-8%) and Dallas (mid-single digits projected for 2026), due to factors such as reduced convention demand, new competition, and ongoing renovations.
Silicon Valley Performance: RevPAR in Silicon Valley grew only 1% in 2025, with a decline in the second half of the year due to renovation impacts and loss of business from a key corporate client.
Labor Costs and Wage Pressures: Although wage pressures are moderating, labor costs remain the largest expense, and any unexpected increases could impact profitability.
Convention Demand Decline: Markets like Dallas and Austin are experiencing reduced convention demand due to ongoing renovations and expansions of convention centers.
Economic and Market Volatility: The company faced extreme volatility in 2025, which adversely impacted the industry and top-line performance.
Asset Sales and Acquisitions: The company was unable to make external acquisitions in 2025 due to high financing costs and seller pricing expectations, which could limit growth opportunities.
Geopolitical and Local Market Risks: Unrest in Los Angeles and shutdown-related impacts in Washington, D.C., affected RevPAR and overall performance in these markets.
Interest Rate Sensitivity: The company has $200 million in floating rate debt, and its financial performance is sensitive to changes in interest rates.
Supply Chain and Development Risks: High construction costs limit new development opportunities, and the company’s planned Portland, Maine hotel development carries inherent risks.
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Guidance & Outlook
Hotel wages and labor costs: Hotel wages are reassessed in July each year, and wage increases for the second half of 2025 are up only 2% versus the first half of the year, indicating moderating wage pressures throughout 2026.
Share repurchase plan: The company plans to continue repurchasing shares and intends to utilize most, if not all, of its $25 million plan in 2026.
Operational performance: The company is positioned to outperform the industry on both top and bottom lines, with expectations of calmer market conditions in 2026 compared to 2025.
Asset sales and acquisitions: The company will continue to opportunistically sell older nonperforming assets and reinvest proceeds into share repurchases or hotel investments. Acquisitions are expected in 2026 as financing costs lessen and seller pricing expectations adjust.
Market diversification: The company aims to invest in markets benefiting from increased business investments, particularly in the Central and Southeastern U.S.
Portland, Maine hotel development: The company expects to commence its Portland, Maine hotel development in the coming months, with an opening planned before the 2028 summer.
Silicon Valley market outlook: RevPAR in Silicon Valley is projected to grow 3% to 5% in 2026, supported by increasing business travel demand and a favorable World Cup schedule.
Los Angeles market outlook: RevPAR in Los Angeles is projected to decline 1% to 3% in 2026 due to tough comparisons from wildfire-related demand in 2025.
Coastal Northeast market outlook: RevPAR in the Coastal Northeast portfolio is projected to be flat to up 2% in 2026, with Greater New York hotels expected to finish flat.
Washington, D.C. market outlook: RevPAR in Washington, D.C. is projected to grow 2% to 4% in 2026 as the market recovers from shutdown effects in 2025.
San Diego market outlook: RevPAR in San Diego is projected to decline slightly in 2026 due to a reduction in conventions from 46 in 2025 to 43 in 2026.
Dallas market outlook: RevPAR in Dallas is projected to decline mid-single digits in 2026 due to lost business related to convention center expansion and renovation.
Bellevue market outlook: RevPAR in Bellevue is expected to grow mid- to upper single digits in 2026, supported by increased business travel demand and World Cup-related activity.
Austin market development: A planned $3 billion MD Anderson Hospital and Research Center is expected to break ground in The Domain, Austin, in 2026, benefiting the company's two Austin hotels.
2026 RevPAR guidance: RevPAR is expected to range from -0.5% to +1.5% for the full year 2026.
Adjusted EBITDA and FFO guidance: Adjusted EBITDA is projected to range from $84 million to $89 million, and adjusted FFO per share is expected to range from $1.04 to $1.14 for 2026.
Interest expense: Interest expense is expected to decline over the course of 2026, assuming SOFR rates decrease as projected.
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Shareholder Return Plan
Dividend Increase: The company increased its common dividend by 28% in 2025.
Total Shareholder Returns: Including the repurchase plan and both common and preferred dividends, the company returned approximately $35 million to shareholders in 2025.
Future Dividend Plans: The company plans to return more money to shareholders via further increased dividends in 2026.
Share Repurchase Plan: The company initiated a $25 million share repurchase plan in 2025, repurchasing approximately 1.8 million shares (4% of outstanding shares) at an average price of $6.87 per share, totaling almost $13 million.
Future Share Repurchase Plans: The company intends to utilize most, if not all, of the $25 million plan in 2026.
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Key Q&A
Q:Do you think there's room to sell any more assets in 2026?
A:Dennis Craven mentioned that they might opportunistically look at selling 1 or 2 more assets in 2026, but the majority of trimming has already been done with the sale of half a dozen hotels over the last 18 months.
Q:Can you provide more color on deploying disposition proceeds from last year and taking leverage back to historical levels?
A:Jeffrey Fisher stated that they are comfortable with historical leverage levels from 2010 to 2020. He noted that sellers are becoming more realistic about hotel valuations due to flat RevPAR and declining EBITDA, which may create opportunities for deals.
Q:Where do you expect to see expense and margin pressures in 2026?
A:Dennis Craven highlighted utility pressures in early 2026 due to cold storms but noted that operating expenses are otherwise stable. Wage control remains a key focus.
Q:How much room is left for productivity improvements and cost control?
A:Dennis Craven mentioned that headcount is down 13% year-over-year, and they are continuously adjusting models to control wages and headcount. Jeffrey Fisher added that the focus is on flowing nominal RevPAR increases to the bottom line rather than finding additional cuts.
Q:What are your expectations for the impact of the World Cup and the costs associated with the Portland, Maine development?
A:Dennis Craven stated that the Portland development costs are not included in CapEx and guidance will be provided in the next earnings call. Regarding the World Cup, they are taking a conservative approach due to uncertainties in demand in certain cities.
Q:What is the expected cadence for RevPAR growth in 2026?
A:Dennis Craven explained that Q1 will see low single-digit declines due to tough comps, while the last three quarters are expected to have 0-2% RevPAR growth due to easier comps and specific events like the NFL draft in Pittsburgh.
Q:What is the mix of occupancy and ADR growth in 2026, and how does it influence margin expectations?
A:Dennis Craven stated that 2026 will primarily see ADR growth with flattish occupancy, which will influence margins positively.
Q:How aggressively do you plan to deploy the share repurchase authorization, and how will you balance it with acquisitions?
A:Dennis Craven mentioned that they intend to utilize most, if not all, of the repurchase authorization in 2025, using excess cash flow after dividends. They have been patient with acquisitions, focusing on deals that make financial sense.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific costs and timing of the Portland, Maine development, stating that guidance will be provided in the next earnings call. Additionally, their response to the World Cup impact was conservative and lacked detailed projections due to uncertainties in demand.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Anaheim
Chatham
Coastal Northeast
Cup schedule
LA area
LinkedIn
Los Angeles
Portland RevPAR
Residence Inns
RevPAR hotel
RevPAR market
Sunnyvale hotel
Valley RevPAR
Valley market
White Plains
World Cup
accomplishment
comp
convention calendar
convention center
course
decade
del Rey
demand World
demand hotel
digit
financing
foot
hotel RevPAR
impact
opening
owner
profit
repurchase plan
return
shutdown
wage
CLDT Transcript
Chatham Lodging Trust (CLDT) Q4 2025 Earnings Call Transcript
Unknown2-25
The earnings call presents a mixed picture: RevPAR is expected to decline, but there are positive signs like increased share repurchases and dividends, debt reduction, and stable margins. The Q&A highlights uncertainties in asset sales and the Portland development, while management remains conservative on World Cup impacts. Despite some positive indicators, the overall sentiment is cautious due to RevPAR declines and lack of clarity on certain strategic moves, resulting in a neutral outlook for the stock price.
Chatham Lodging Trust (CLDT) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call reveals mixed results: while some regions show growth, others like Sunnyvale and D.C. face declines. Financial performance is stable with controlled expenses, but GOP margin decline raises concerns. The Q&A highlights cautious optimism in acquisitions and strategic developments, but RevPAR guidance is weak. Share repurchases and a strong financial position offer some positive aspects, balancing the negative trends. Without a clear market cap, the overall sentiment is neutral, indicating a potential stock movement between -2% to 2%.
Chatham Lodging Trust (CLDT) Q2 2025 Earnings Call Transcript
Unknown8-6
The earnings call presents a mixed bag: strong financial metrics such as GOP margin improvement and positive shareholder return initiatives like share buybacks and dividend increases are countered by market challenges, including RevPAR declines in key markets and increased booking channel costs. The Q&A reveals management's lack of specificity on future plans, adding to uncertainty. Overall, the positive financial measures and shareholder returns are tempered by market softness and vague guidance, leading to a neutral stock price prediction.
Earnings call transcript: Chatham Lodging beats Q1 2025 EPS expectations
Positive5-6
The earnings call reflects a positive sentiment overall. Key factors include a 29% dividend increase, a substantial share buyback plan, and strong operational performance with RevPAR growth and improved margins. Despite some inflationary pressures, the company has managed costs effectively. The guidance for 2025 is optimistic, and the company's financial health is strong, with reduced leverage. The Q&A section reveals cautious optimism, with management addressing potential risks. These factors suggest a potential stock price increase in the range of 2% to 8% over the next two weeks.
CLDT Report
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