The following is a summary of the Chatham Lodging Trust (CLDT) Q3 2024 Earnings Call Transcript:
Financial Performance:
Chatham Lodging reported Q3 2024 revenue primarily driven by selling 5 hotels which are expected to close in Q4, with proceeds of approximately $80 million.
Reported EBITDA and FFO were at the upper range of guidance, with RevPAR growing by 2.1% exceeding industry growth.
Q3 RevPAR of $150 surpassed 2019 levels, indicating strong recovery post-COVID, with expectations to exceed 2019 levels fully in 2024.Q3 hotel EBITDA was $32.2 million with adjusted EBITDA at $29.6 million and adjusted FFO at $0.35 per share.
Business Progress:
Chatham Lodging is reducing its leverage, having the lowest in over a decade and repaying a maturing mortgage, enhancing financial stability.
Planned renovations for multiple properties aim to improve competitiveness and guest experience.
Divestiture of older, lower-performing hotels allows reallocation of capital to higher quality assets, potentially enhancing portfolio quality and growth.
Opportunities:
With strong liquidity and low leverage, Chatham is well-positioned to benefit from declining interest rates, which could further boost FFO.
The asset recycling strategy, focusing on selling certain assets and reinvesting in higher-quality ones, is expected to enhance future EBITDA and FFO.
Expected increase in corporate demand and strong business travel growth presents potential for revenue growth across key markets, especially with lesser expense pressures.
Risks:
Variability in RevPAR influenced partly by external factors such as elections and the leisure summer component can impact short-term performance.
Ongoing renovations could disrupt operations and impact short-term financials, although they are expected to be beneficial in the long run.
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