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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