Q2 2026 Chatham Lodging Trust Earnings Call Transcript
Key Points
- Chatham Lodging Trust (CLDT) delivered strong Q2 2026 results, with RevPAR growth of 3.3% and significant margin expansion, leading to a 20% increase in full-year guidance since the start of the year.
- The recently acquired six-hotel Midwest portfolio is outperforming expectations, with Q2 RevPAR up 9% and July RevPAR surging 13%, driven by strong demand from small and medium-sized businesses in the manufacturing sector.
- Silicon Valley, the company's largest market, is experiencing a robust recovery, with July RevPAR up 26% and strong corporate demand from major tech accounts like Nvidia, Google, and Applied Materials, positioning the portfolio for continued growth.
- The company's share repurchase program has been highly accretive, with 2.5 million shares bought back at a significant discount to net asset value, representing a 5% reduction in shares outstanding and a strong return on investment.
- The balance sheet remains in excellent condition with low leverage of 31.2% and $225 million of credit facility availability, providing ample flexibility for future acquisitions and the high-yield Portland, Maine development project.
- Effective expense management drove strong profitability, with GOP margins up 170 basis points and hotel EBITDA margins up 220 basis points (excluding one-time items), supported by excellent employee productivity and lower property insurance costs.
- The company's guidance for the second half of 2026 assumes only low single-digit RevPAR growth, reflecting conservatism due to the ongoing conflict in the Middle East and limited forward visibility.
- Convention-oriented hotels underperformed, with RevPAR declining 5% in Q2 due to a soft convention calendar in San Diego and renovation disruptions at convention centers in Dallas and Austin.
- Leisure demand showed signs of softness, particularly at the Portsmouth hotel, which saw RevPAR decline 8% due to reduced Canadian travel, wildfire impacts, and new competitive supply.
- The company has paused its share repurchase program as the stock price has rebounded, reducing the valuation disconnect and limiting the opportunity for further accretive buybacks.
- The company is marketing one of its smaller hotels for sale, with expected proceeds of less than $20 million, indicating a potential reduction in portfolio scale and a need to recycle capital.
- The development project in Portland, Maine, carries execution risk, with total construction costs of $45 million and an expected opening in 2028, meaning it will not contribute to earnings for several years.
Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust Second Quarter 2026 Financial Results Conference Call. ( Operators Instructions ) This call is being recorded on August 4, 2026.
I would now like to turn the conference over to Chris Valley. Please go ahead.
Thank you, Matthew. Good morning, everyone, and welcome to the Chatham Lodging Trust Second Quarter 2026 Results Conference Call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-K and other SEC filings.
All information in this call is as of August 4, 2026, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations. You can find copies of our SEC filings and
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