RLJ Lodging Trust Q2 Earnings Call Highlights

Strong second-quarter operating performance: Comparable RevPAR rose 6.8% year over year, outperforming the industry by 110 basis points, while business-transient revenue increased 10% and hotel EBITDA grew 7.1% to $119.5 million. Urban and ancillary demand supported growth: Business travel, leisure and group bookings strengthened across key markets, while out-of-room spending climbed 7.1%. Renovations and conversions also delivered significant gains, including 50% EBITDA growth at four high-impact renovated hotels.

RLJ raised its 2026 outlook: The company now expects comparable RevPAR growth of 3.5% to 4.5% and adjusted FFO of $1.37 to $1.50 per diluted share. Its balance sheet remains stable, with $1 billion in liquidity and no debt maturities until 2029.

RLJ Lodging Trust NYSE: RLJ reported second-quarter results that exceeded its expectations, supported by broad-based growth across its urban-focused hotel portfolio, accelerating business travel and higher out-of-room spending. President and Chief Executive Officer Leslie Hale said the company’s comparable revenue per available room, or RevPAR, increased 6.8% from a year earlier, driven by a 4.9% increase in average daily rate to $217 and a 130-basis-point occupancy gain to 77%. The company said its RevPAR growth outperformed the industry by 110 basis points during the quarter.

“Our operating performance reflects broad-based growth across our entire portfolio, as well as the successful ramp of our renovations and conversions,” Hale said. She added that all of the company’s markets exceeded its expectations.

RLJ said business-transient revenue rose 10% in the second quarter, following 9% growth in the first quarter. Business-transient room demand increased 6%, while rates rose 4%. Hale said demand came from national accounts booked through global distribution systems and was broad-based across industries including technology, finance and defense. Several markets recorded double-digit business-transient revenue growth, according to Chief Financial Officer Nikhil Bhalla. Chicago and Washington, D.C., each increased 35%, while New York rose 17%, Houston increased 13%, Northern California gained 12% and South Florida rose 10%.

The portfolio also benefited from urban leisure demand. Weekday revenues increased 6.3%, while weekend revenues rose 8.1%. Leisure revenue increased 7%, with a 6% rise in rate and a 1% increase in room nights. Group revenue grew 6%, evenly split between demand and average daily rate growth. Group booking pace for the third quarter was at 110% of the prior-year level, Hale said, while full-year group pace was about 104%. The company noted that booking windows remain short, but near-term group demand continued to materialize during the quarter.

Among individual markets, Austin posted 17% RevPAR growth, aided by in-house group demand. Chicago’s RevPAR rose 15% on a strong citywide calendar, while Tampa increased 11% on event-driven demand. Orlando, Charleston and Washington, D.C., each generated high-single-digit RevPAR gains. Northern California RevPAR increased 9%, with management citing World Cup matches as well as corporate investment and business travel connected to the expansion of the artificial-intelligence industry. RLJ said June was its strongest month of the quarter, with RevPAR increasing 12.4%. Preliminary July RevPAR growth approached 11%.

Out-of-room spending increased 7.1%, exceeding RevPAR growth by 30 basis points. Management attributed the gain to it...