Pebblebrook Hotel Trust (PEB, Financial) released its 8-K filing on July 24, 2024, reporting its second-quarter earnings for 2024. Pebblebrook Hotel Trust currently owns upper upscale and luxury hotels with 11,924 rooms across 46 hotels in the United States. Pebblebrook acquired LaSalle Hotel Properties, which owned 10,451 rooms across 41 US hotels, in November 2018, though management has sold many of those hotels over the past few years. Pebblebrook's portfolio consists mostly of independent hotels with no brand affiliations, though the combined company does own and operate some hotels under Marriott, Starwood, InterContinental, Hilton, and Hyatt brands.
Financial Highlights
Pebblebrook Hotel Trust reported a net income of $32.2 million for Q2 2024. Same-Property Total RevPAR increased by 2.5% compared to Q2 2023, with urban properties improving by 3.4% and resort properties growing by 0.6%. Same-Property EBITDA rose to $117.2 million, an 8.9% increase from the previous year. Adjusted EBITDAre was $123.5 million, up 6.2% from Q2 2023. Adjusted FFO per diluted share increased by 11.3% to $0.69.
Hotel Operating Trends
Both urban and resort occupancies grew in Q2. Urban Same-Property Occupancy increased by 2.5 percentage points, driven by gains in San Diego, Chicago, Boston, and Washington, D.C. Resort Same-Property Occupancy rose by 3.5 percentage points, bolstered by continued improvement in weekday demand from business transient and groups and weekend occupancy from leisure travelers. Focused efforts to achieve operating cost efficiencies, coupled with reduced expense pressures and better-than-expected progress in realizing real estate tax reductions, resulted in a 0.1% year-over-year decline in Same-Property Total Expenses. This helped to improve Same-Property EBITDA margins by 182 basis points.
Portfolio Updates & Capital Repositionings
Pebblebrook's multiyear comprehensive redevelopment and repositioning projects, totaling over $520 million, have been completed, positioning the company to achieve significant revenue gains and cash flow improvements over the next several years. LaPlaya Beach Resort & Club continues to ramp up its operating performance following its redevelopment and restoration after Hurricane Ian. In Q2, EBITDA reached $7.0 million. Additionally, $7.3 million of business interruption income was recorded, exceeding the company’s Q2 Outlook by $3.3 million. Le Méridien Delfina Santa Monica will be converted and rebranded to Hyatt Centric in mid-September 2024, becoming the first Hyatt-affiliated franchise in this highly desirable beachfront destination.
2024 Outlook
Pebblebrook Hotel Trust has provided a cautious yet optimistic outlook for the remainder of 2024. The company expects a net loss between $13.0 million and $4.0 million. Same-Property RevPAR Growth Rate is projected to be between 1.25% and 2.25%. Adjusted EBITDAre is expected to range from $351.0 million to $360.0 million, and Adjusted FFO per diluted share is anticipated to be between $1.59 and $1.67.
“Second quarter demand was in line with our expectations, with healthy business group, transient and leisure boosting the urban markets, and strong weekday and weekend demand positively affecting our resort portfolio. Our recently redeveloped and repositioned properties are performing well, ramping up successfully and gaining market share,” said Jon E. Bortz, Chairman and Chief Executive Officer of Pebblebrook Hotel Trust.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Income | $32.2 million | $46.2 million | -30.2% |
| Same-Property RevPAR | $234 | $230 | 1.7% |
| Same-Property Total Revenues | $372.8 million | $363.4 million | 2.6% |
| Same-Property EBITDA | $117.2 million | $107.7 million | 8.9% |
| Adjusted EBITDAre | $123.5 million | $116.2 million | 6.3% |
| Adjusted FFO per diluted share | $0.69 | $0.62 | 11.3% |
Analysis
Pebblebrook Hotel Trust's performance in Q2 2024 demonstrates resilience and strategic execution in a challenging market. The increase in Same-Property EBITDA and RevPAR indicates effective cost management and operational efficiency. The company's focus on redeveloping and repositioning its properties has started to yield positive results, positioning it well for future growth. However, the cautious outlook for the remainder of the year reflects the potential impact of geopolitical and economic uncertainties on the hospitality industry.
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Explore the complete 8-K earnings release (here) from Pebblebrook Hotel Trust for further details.
