Q2 2026 RLJ Lodging Trust Earnings Call Transcript
Key Points
- RLJ Lodging Trust (RLJ) delivered strong Q2 results with RevPAR growth of 6.8%, outperforming the industry by 110 basis points, and all markets exceeded expectations.
- Business transient revenues accelerated by 10%, driven by a 6% increase in demand and 4% rate growth, reflecting strong pricing power and broad-based corporate travel recovery.
- The company's high-impact renovations and conversions are driving significant value, with four completed renovations achieving 22% revenue growth and 50% EBITDA growth, and seven conversions delivering 8% revenue and 12% EBITDA growth.
- RLJ Lodging Trust (RLJ) is expanding its lifestyle portfolio with new conversions, including the Atterbury in Pittsburgh and the upcoming Margaritaville in Key West, which are expected to drive higher ADR and ancillary revenue growth.
- The company raised its full-year 2026 guidance, reflecting strong Q2 performance and positive momentum, with July RevPAR growth approaching 11% and a favorable outlook for 2027 with major events and constrained supply.
- RLJ Lodging Trust (RLJ) maintains a strong balance sheet with $1 billion in liquidity, no debt maturities until 2029, and 72% of debt fixed or hedged, providing financial flexibility for capital allocation.
- Expense growth was higher than anticipated in Q2 due to occupancy growth exceeding expectations, leading to increased variable costs such as credit card fees, travel agent commissions, and higher F&B expenses.
- The company faces limited visibility due to short booking windows and geopolitical uncertainty, which could impact future demand and performance.
- Fourth quarter group pace is down year-over-year due to the shift of Salesforce from October to September, and the election is expected to offset benefits from the lapsing of the government shutdown.
- Energy costs remained elevated, and fixed costs increased by 6.4% (3.4% excluding a prior-year tax benefit), putting pressure on margins.
- The company is initiating conversion renovations for Boston and Key West in the second half of 2026, which will cause displacement and potentially impact near-term performance.
- RLJ Lodging Trust (RLJ) sold the Fremont Silicon Valley hotel at a high multiple, but this disposition reduces its portfolio and reflects a market that is not expected to recover to the same degree as others.
Greetings and welcome to the RLJ Lodging Trust second quarter 2026 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. I'll now turn the conference over to John Paul Austin, Director of Investor Relations. Thank you, John. You may begin.
Thank you, operator. Good afternoon and welcome to RLJ Lodging Trust's 2026 second quarter earnings call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Nikhil Bala, our Chief Financial Officer, will discuss the company's financial results. Tom Bardinet, our Chief Operating Officer, will also be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what had been communicated.
Factors that may impact the results of the company can be found in the company's 10-Q and other reports filed with the SEC. The company undertakes no
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