Chatham Lodging Trust (CLDT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive sentiment overall. Financial performance is strong with increased margins and RevPAR growth in key markets like Silicon Valley. The share repurchase plan and acquisition strategy are favorable. Despite some conservative guidance and challenges in specific markets, optimistic outlooks and strategic investments suggest positive stock movement. The Q&A section supports this with insights on acquisitions and share repurchases, reinforcing a positive sentiment.
Key Financial Performance
Common Dividend Increase Increased by 11% in Q1 2026 following a 28% increase in 2025. The payout ratio is 32%, indicating ample room for future growth.
Share Repurchases Repurchased 2.2 million shares (4% of common equity) at an average price of $7.04, equating to a 10% cap rate based on updated 2026 guidance. Additional 200,000 shares repurchased in April at $8.34 per share.
Hotel EBITDA Grew 5% year-over-year on a comparable basis. Margins increased by 135 basis points due to strong operational performance.
RevPAR (Revenue Per Available Room) Increased by 1% in Q1 2026, with Silicon Valley leading at 23% growth. RevPAR in Sunnyvale hotels grew by 26%, and San Mateo hotel grew by 15%.
Silicon Valley Hotels Occupancy and ADR Occupancy at 72% (flat year-over-year), ADR up 10% to $210, and RevPAR at $152, marking the second-best quarter in six years.
Leisure Hotels RevPAR Grew by 2% in Q1 2026, with 6 out of 7 leisure-driven hotels showing growth. Hyatt Place Pittsburgh led with 23% growth.
Government-Oriented Hotels RevPAR Increased by 9% in Q1 2026, despite tough comps from the previous year.
San Diego RevPAR Grew by 5% in Q1 2026, outperforming expectations of a 5% decline.
Coastal Northeast Hotels RevPAR Declined by 8% in Q1 2026 due to tough comps from renovations in the previous year.
Texas Hotels RevPAR Dallas hotel RevPAR declined by 26% due to convention demand falloff, while Austin hotel RevPAR was impacted by renovations and market weakness.
Newly Acquired Hotels Performance RevPAR growth of 6% in Q1 2026 and 7% in April. Occupancy at 74%, 200 basis points higher than portfolio average.
Labor and Benefits Costs Declined by over 1% ($0.50 per occupied room) in Q1 2026, contributing to improved margins.
Utility Costs Increased by 12% in Q1 2026, partially offset by lower property insurance renewal rates and property tax refunds.
Adjusted EBITDA $18.4 million in Q1 2026, with a GOP margin of 40.2% and hotel EBITDA margin of 31.8%.
Property Tax Refunds Contributed $500,000 in Q1 2026, aiding margin improvements.
Acquisition of Hilton-Branded Hotels Acquired 6 hotels for $92 million in March 2026, funded through revolving credit facility at a 5.1% rate. Expected to be accretive to FFO and free cash flow.
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Operating Highlights
Hilton-branded hotels acquisition: Acquired a portfolio of 6 high-quality Hilton-branded hotels comprising 589 rooms for $92 million. These hotels are immediately accretive to operating margins, FFO, and FFO per share. The portfolio diversifies geographic footprint into areas benefiting from expanded investments in manufacturing and distribution.
Portland, Maine hotel development: Development of a new hotel in Portland, Maine is expected to commence this quarter, with an opening planned before the fall season of 2028. Unlevered returns are projected to be strong.
Silicon Valley market performance: RevPAR growth of 23% in Q1, excluding a hotel under renovation. Occupancy at 72% and ADR up 10% to $210. Strong demand from corporate travelers and major tech companies investing heavily in AI infrastructure.
World Cup exposure: Hotels in Dallas, San Francisco, Los Angeles, Seattle, and Fort Lauderdale are positioned to benefit from the 2026 World Cup, with Dallas hosting the international broadcast center.
Midwest market expansion: Acquired hotels in Joplin, Missouri; Paducah, Kentucky; and Effingham, Illinois, benefiting from proximity to manufacturing and distribution hubs. These markets are also seeing investments in sports complexes and nuclear enrichment facilities.
Operational efficiencies: Hotel EBITDA margins increased by 140 basis points in Q1 due to strong expense control, including a 1% reduction in labor and benefits costs per occupied room. Property tax refunds also contributed to margin improvement.
Share repurchase program: Repurchased 2.2 million shares (4% of common equity) at an average price of $7.04, with plans to complete a $25 million repurchase program in 2026.
Capital recycling strategy: Continued focus on selling older, non-performing assets and reinvesting proceeds into share repurchases or hotel investments.
Tech market focus: Significant exposure to tech markets like Silicon Valley, benefiting from multi-billion dollar investments in AI, semiconductors, and energy infrastructure.
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Risk or Challenges
Adverse repercussions from Middle East turmoil: Potential impact on gas prices and travel, though no meaningful impact observed yet.
Convention demand falloff in Texas: Dallas and Austin hotels affected by convention center renovations and expansions, leading to RevPAR declines.
Weaker Austin market: Overall RevPAR down 6% over the last 12 months, with ongoing challenges in the market.
Snowstorm impact: Massive snowstorm in the middle of the country and Northeast increased utility costs by 12% in comparable hotels.
Renovation disruptions: Renovations at Mountain View and Austin hotels impacted occupancy and performance during the quarter.
Softer convention calendar in San Diego: 2026 convention count is softer than 2025, leading to a forecasted RevPAR decline of 2% for the rest of the year.
High construction costs: Development only justified in a few markets, limiting new supply and impacting growth opportunities.
Utility cost increases: 12% increase in utility costs in comparable hotels due to weather-related factors.
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Guidance & Outlook
Guidance Increase: The company has increased its guidance by approximately 15% since February 2026, reflecting improved outlook for the remainder of the year.
Dividend Growth: The common dividend was increased by 11% in Q1 2026, following a 28% increase in 2025. The dividend payout ratio is 32%, with room for future growth. The quarterly dividend will be reevaluated later this year.
Share Repurchase Plan: The company plans to complete its $25 million share repurchase program in 2026, with $20 million in projected free cash flow for the year. A new repurchase plan will be evaluated in the coming months.
Silicon Valley Market Outlook: Silicon Valley hotels are experiencing strong recovery, with RevPAR growth of 23% in Q1 2026 and further growth expected due to significant investments in AI infrastructure and technology. Major tech companies are driving demand.
World Cup Impact: The company expects to benefit from the 2026 FIFA World Cup, with hotels near key stadiums and media centers projected to see increased demand.
Long-Term Supply-Demand Dynamics: High construction costs and limited new hotel development are expected to benefit existing hotel owners. Demand growth is encouraging, driven by investments in technology and reshoring of manufacturing.
Leisure Travel Trends: Leisure travel, accounting for 18% of hotel EBITDA, is expected to grow due to changing consumer behavior favoring experiences and travel.
Portland, Maine Hotel Development: The company plans to commence development of a new hotel in Portland, Maine, in Q2 2026, with an expected opening before the fall season of 2028. Detailed spending and timing will be provided in Q2 2026 earnings.
Acquisition of Hilton-Branded Hotels: The acquisition of six Hilton-branded hotels for $92 million is expected to be accretive to FFO and free cash flow. These hotels are located in areas benefiting from manufacturing and distribution investments.
2026 Financial Guidance: The company expects RevPAR growth of 0% to 2%, adjusted EBITDA of $95.3 million to $99.6 million, and adjusted FFO per share of $1.21 to $1.29 for the full year.
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Shareholder Return Plan
Dividend Increase: The company increased its common dividend by 11% in the first quarter of 2026, following a 28% increase in 2025.
Dividend Payout Ratio: The common dividend to FFO payout ratio is 32%, indicating the dividend is well covered with room for future growth.
Future Dividend Plans: The company plans to reevaluate the quarterly dividend later in the year.
Share Repurchase Program: The company repurchased 2.2 million shares (approximately 4% of common equity) at an average price of $7.04 during the first quarter of 2026.
Share Repurchase Plan Details: The $25 million repurchase plan initiated in 2025 is expected to be completed in 2026, with $15 million free cash flow in 2025 and projected $20 million in 2026.
Additional Share Repurchases: In April 2026, the company repurchased approximately 200,000 shares at an average price of $8.34 per share.
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Key Q&A
Q:Was the portfolio acquisition an off-market deal or a fully marketed deal? What were the CapEx rates like, and what contributed to the portfolio's outperformance?
A:The transaction was a brokered deal sent to a group of parties. The performance of the portfolio is slightly above underwriting expectations, with RevPAR growth being $1 or $2 higher than anticipated. The portfolio's outperformance is attributed to diversification into other industries and regions, particularly the Midwest.
Q:Is there more activity in the acquisition market compared to the previous quarter?
A:The acquisition market activity is similar to the previous quarter. It remains challenging, especially for individual transactions. However, public companies' multiples are adjusting, potentially lowering the cost of capital and generating additional interest. Deal flow is higher than a year ago.
Q:Are there plans for asset recycling or dispositions?
A:The company is considering selling 1 or 2 assets for the remainder of the year, with proceeds to be reinvested into share repurchases or new acquisitions. The previous asset sale program was high volume, but future sales will be limited.
Q:Is there any supply growth in the new acquisition markets?
A:There is very little supply growth in the new acquisition markets, with only one new hotel recently opened in Paducah.
Q:What are the expectations for the World Cup, and how is it factored into the guidance?
A:The company is taking a conservative approach to World Cup expectations due to high ticket prices and travel costs. Growth is projected, but the guidance of 1% to 1.5% to 2% for the rest of the year reflects conservatism, with potential upside from easier comps and World Cup-related activity.
Q:How is the interim business in Silicon Valley performing?
A:Interim business in Silicon Valley has significantly declined from pre-pandemic levels. However, there is some interim business expected this summer, with one block of interns booked from late May to mid-August.
Q:Do share repurchases still make sense given the current stock price?
A:Yes, share repurchases are still considered an attractive investment. The company is trading at a 9% cap on corporate NOI and a 10% cap on hotel NOI. The $25 million repurchase plan is expected to continue through the third quarter.
Q:What is included in the outlook for Silicon Valley, and is the renovation a catalyst for growth?
A:The Mountain View renovation has been disruptive but is expected to drive growth. For the rest of the year, the 4 Silicon Valley hotels are projected to achieve mid- to upper single-digit RevPAR growth, with potential upside depending on demand trends.
Q:Review of Unclear Management Responses
A:Management avoided providing specific CapEx rates for the portfolio acquisition and did not offer detailed valuation multiples or cap rates for the portfolio. Additionally, their guidance for the World Cup and Silicon Valley operations was conservative and lacked precise data, reflecting a cautious approach.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Austin
Doge
Frito Lay
Gatehouse
Inn Fort
Inn San
Inn hotel
Interstates
Joplin
Missouri
Paducah
Residence Inn
RevPAR hotel
Rivers
San Mateo
St Louis
View hotel
area country
center
construction
convention
country investment
course
distribution
end
facility
footprint
hotel RevPAR
hotel renovation
hotel room
manufacturing
night
player
property
sport complex
strength
tech
tournament
weekend
CLDT Transcript
Chatham Lodging Trust (CLDT) Q1 2026 Earnings Call Transcript
Positive5-8
The earnings call presents a positive sentiment overall. Financial performance is strong with increased margins and RevPAR growth in key markets like Silicon Valley. The share repurchase plan and acquisition strategy are favorable. Despite some conservative guidance and challenges in specific markets, optimistic outlooks and strategic investments suggest positive stock movement. The Q&A section supports this with insights on acquisitions and share repurchases, reinforcing a positive sentiment.
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.
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