How should investors think about expense growth for 2027, expecting similar or different trends?

While it's early for definitive 2027 guidance, management expects similar expense trends to what has been seen year-to-date, particularly on the variable cost side, assuming no meaningful changes to the broader environment. “It's a little early to give definitive guidance on '27, but we have seen fairly consistent performance on the expense side and feel really comfortable that barring any meaningful changes to the environment overall and that would sort of impact things more broadly than just our portfolio, we'd expect similar trends to what we have seen both year-to-date.”

Is the broad-based demand seen across higher-end or lower-end travelers? Are there any segments not performing strongly?

Demand is broad-based across their portfolio, which does not include economy or mid-scale hotels, with an average daily rate of nearly $200. Phoenix was an exception with a 5% RevPAR decrease due to semiconductor-related business pullback, but management remains optimistic about its long-term rebound. The widespread growth across markets, beyond World Cup impact, is a positive indicator. “I think looking across our portfolio, it's been broad-based. I think an important point of clarification is we do not own economy or even mid-scale hotels. So I think can't speak based on our own experience to the performances and behaviors of low-end travelers. Average daily rate was nearly $200 for our portfolio, which I think speaks to the type of travelers staying at our hotels.”

Prospects for accelerating development deals, and what factors (equity, debt, construction costs vs. fundamentals) are creating the biggest gap for new construction broadly?

Management is excited about current development projects but finds new deals difficult to underwrite due to elevated interest rates and rapidly increasing construction costs, which have outpaced hotel fundamental rebounds in many markets. The meaningful pullback in new supply, especially for upscale select-service assets, is seen as a positive for their portfolio, reducing downside risk and increasing upside potential. They expect to be more active in existing asset acquisitions than new forward commitments in the next 6-12 months. “But really, the primary driver of the disconnect has been a really rapid increase in overall construction costs, some of which started before COVID. And certainly, we saw an accelerated runoff afterwards.”

APLE

Apple Hospitality REIT (APLE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Aug 6, 2026

Source: earnings call transcript

Executive summary

Apple Hospitality REIT Q2 FY26 — Strong RevPAR Growth and Raised Full-Year Guidance

Apple Hospitality REIT delivered a strong second quarter, driven by broad-based improvements in business and leisure travel demand, leading to significant RevPAR growth and margin expansion. The company raised its full-year guidance, reflecting continued momentum and outperformance. Strategic capital allocation, including a recent refinancing, has strengthened the balance sheet, providing flexibility for future opportunistic growth despite current challenges in the acquisition market due to valuation gaps.

Highlights

Comparable hotels RevPAR grew over 5% for Q2 FY26, with preliminary July RevPAR growth of over 5.5%.
Adjusted hotel EBITDA margin expanded by 120 basis points in Q2 FY26, converting approximately $0.58 of each incremental revenue dollar.
MFFO per share increased by over 8% to $0.52 in Q2 FY26.
Full-year RevPAR growth guidance raised by 225 basis points to 3.25% at the midpoint.
Refinancing transactions extended debt maturities to nearly 5 years, increased revolving credit facility capacity to $700 million, and improved pricing.

Concerns

Phoenix RevPAR decreased 5% due to a decline in occupancy and rate, driven by a pullback in semiconductor-related business.
Construction costs continue to rise faster than hotel fundamentals in most markets, limiting new development projects.
A gap between seller expectations and buyer willingness to pay persists, making accretive acquisitions challenging in 2026.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Comparable Hotels RevPAR change	between 2.25% and 4.25% high materiality	FY26 · 2026	High
Full-year 2026 Comparable Hotels Adjusted Hotel EBITDA Margin	between 33.7% and 34.7% high materiality	FY26 · 2026	High
Full-year 2026 Adjusted EBITDAre	between $453 million and $476 million high materiality	FY26 · 2026	High
Full-year 2026 Net Income	between $152 million and $180 million medium materiality	FY26 · 2026	High
Full-year 2026 Total Hotel Expense Growth	approximately 4% at the midpoint medium materiality	FY26 · 2026	Medium
Full-year 2026 Hotel Expense Growth per Occupied Room	approximately 2% medium materiality	FY26 · 2026	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Comparable Hotels Strong performance driven by broad-based improvements in business and leisure travel demand, with efficient operating model and prudent expense management contributing to margin expansion. RevPAR: $136RevPAR growth: 5.3%ADR: $170ADR growth: 3.5%Occupancy: 80.1%Occupancy growth: 130 basis pointsAdjusted Hotel EBITDA: $153 millionAdjusted Hotel EBITDA growth: 9.7%Adjusted Hotel EBITDA margin expansion: 120 basis pointsIncremental revenue flow-through to adjusted hotel EBITDA: $0.58	$402 million	6.2%	—	38.1%
Comparable Hotels Continued strength in performance year-to-date, supported by strong other revenues. RevPAR: $125RevPAR growth: 3.8%ADR: $164ADR growth: 1.9%Occupancy: 76.5%Occupancy growth: 140 basis pointsAdjusted Hotel EBITDA: $262 millionAdjusted Hotel EBITDA growth: 7.1%Adjusted Hotel EBITDA margin expansion: 60 basis points	$739 million	5.3%	—	35.4%

APLE operating KPIs by quarter

APLE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Occupancy rate	70% ADR was $152, down 90 basis points, and occupancy was 70%, down 1.7% as compared to the fourth quarter 2024. Source: earnings call transcript	73% ADR was $157, up 0.1% and occupancy was 73%, an increase of 2.1%. Source: earnings call transcript	80.1% For the quarter, comparable hotels RevPAR was $136, up 5.3%, with ADR of $170, up 3.5%, and occupancy of 80.1%, up 130 basis points. Source: earnings call transcript	+7.1 pt
Properties Unencumbered	207 The number of unencumbered hotels in our portfolio as of December 31 was 207. Source: earnings call transcript	207 At the end of the first quarter, we had 207 unencumbered hotels in our portfolio. Source: earnings call transcript	207 During the quarter, we repaid one secured mortgage loan for a total of approximately $19 million, bringing the number of unencumbered hotels in our portfolio to 207. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Development project: AC Hotel in Anchorage, Alaska null Q2 FY26

Expected to be delivered in late 2027

Development project: Dual-branded AC and Residence Inn in Las Vegas null Q2 FY26

Expected to be delivered in the second quarter of 2028

Deals & partnerships

null Sale of Hampton Inn & Suites in Rochester, Minnesota. $9 million

Completed in April.

Capital programs

Full-year 2026 Capital Expenditures underway between $85 million and $95 million

Spent to date: $40 million

Funding: free cash flow from operations

Start: FY26

Benefit:comprehensive renovations at 18 hotels

A $5 million increase to the earlier range, prioritizing 2 larger projects: Embassy Suites in Anchorage and rebranding of Seattle Residence Inn. Represents approximately 6% of revenues.

Embassy Suites Anchorage renovation planned

Start: Q4 FY26

One of the strongest performing hotels in a market with exceptional demand.

Seattle Residence Inn rebranding planned

Start: Q4 FY26

Benefit:meaningfully improve its competitive position

Anticipate a ramp period for this hotel beyond renovation disruption.

Risks & headwinds

Potential impact of escalating energy costs on consumer spending

should this begin to impact consumer spending

Mitigation:Company's hotels offer a value proposition that has historically held up well during periods of economic uncertainty.

Rising construction costs ongoing

construction costs continue to rise faster than hotel fundamentals

Mitigation:Limits new projects, keeping industry supply growth near historic lows, which benefits existing hotels. Company uses fixed-price forward purchase contracts for development.

Gap between seller expectations and buyer willingness to pay for acquisitions ongoing

bid-ask spread as much as 200 or 300 basis points from a cap rate standpoint

Mitigation:Company remains actively engaged and has a flexible balance sheet to act quickly as conditions change. Focus on existing deals rather than new forward commitments in the near term.

Phoenix market RevPAR decrease Q2 FY26

RevPAR decrease 5%

Mitigation:Driven by pullback in semiconductor-related business; company is encouraged by announcements of continued investment and believes long-term fundamentals remain strong.

Utilities and repair & maintenance cost increases Q2 FY26

growing 9% and 6%, respectively

Mitigation:These were primary headwinds, but overall expense control delivered margin expansion.

What to watch in Q3 FY26

Phoenix market RevPAR recovery

Next quarter

Current RevPAR decrease 5%

Target Rebound in RevPAR growth

Why it matters

Phoenix is a key market, and its recovery from semiconductor-related business pullback is important for overall portfolio performance.

Phoenix saw RevPAR decrease 5% with a decline in both occupancy and rate, driven in part by a pullback in semiconductor-related business. That said, we are encouraged by announcements of continued investment in the market and believe this segment's long-term fundamentals remain strong.

Find out whether APLE delivers this. Inve re-checks your case every morning.

Q&A highlights

Elaborate on BT trends, drivers (SMB vs. broader), and what's driving group business.

Management noted strong BT trends since March, with a shift from negotiated corporate rates to retail rates, evidenced by increased Brand.com and GDS bookings. Growth is widespread across various industries and geographies. Group business is also strong, reaching 18% of occupancy mix (historically 15-16%) and is the second highest-rated segment, benefiting from both corporate and leisure small groups.

“We have been very encouraged by the business transient trends that we've seen really since March. And while we began to see in Q1 some ability to shift the mix of our business outside of negotiated corporate rates into retail, we really started to see that continue to amplify in Q2.”

asked by Aryeh Klein · answered by Liz Perkins

2 min read 6 chapters

Detailed narrative

Strong Q2 Performance and Outlook

Apple Hospitality REIT reported robust Q2 FY26 results with comparable hotels RevPAR growth exceeding 5%, driven by broad-based improvements in business and leisure travel. This performance led to a 120 basis point expansion in adjusted hotel EBITDA margin and an 8% increase in MFFO per share to $0.52.

The company raised its full-year RevPAR growth guidance by 225 basis points to 3.25% at the midpoint, reflecting continued momentum and strong forward bookings, with preliminary July RevPAR growth at over 5.5%.

Strategic Capital Allocation and Balance Sheet Strength

The company completed significant refinancing transactions in July, extending debt maturities to nearly 5 years and increasing the revolving credit facility capacity to $700 million, enhancing financial flexibility. While the acquisition market remains challenging due to a bid-ask spread, the company continues to evaluate select asset dispositions, such as the $9 million sale of Hampton Inn & Suites in Rochester, Minnesota, at a 5% cap rate.

The focus remains on maximizing shareholder value through strategic capital deployment.

Development Pipeline and Supply Dynamics

Apple Hospitality REIT has forward contracts for two development projects: an AC Hotel in Anchorage (late 2027 delivery) and a dual-branded AC and Residence Inn in Las Vegas (Q2 2028 delivery). These projects are secured under fixed-price contracts, limiting capital outlay until completion.

The company notes that rising construction costs continue to limit new hotel projects, keeping industry supply growth near historic lows, which benefits its existing portfolio. 55% of its hotels have no new upper upscale, upscale, or upper mid-scale product under construction within a 5-mile radius.

Portfolio Reinvestment and Operational Efficiency

The company plans to reinvest between $85 million and $95 million in capital expenditures for FY26, a $5 million increase from prior guidance, with comprehensive renovations at 18 hotels. This includes larger projects like the Embassy Suites in Anchorage and the rebranding of the Seattle Residence Inn.

The efficient design of its rooms-focused hotels and experienced in-house project management allow for cost-effective renovations, contributing to exceptional free cash flow from operations.

Business Transient and Group Demand Recovery

Weekday occupancy improvement outpaced weekend occupancy in Q2, indicating strengthening business travel. This is supported by growth in GDS bookings (up 100 bps to 18% of mix) and Brand.com (up 80 bps to 40% of mix), with incremental business travel captured at retail rates.

Group business also showed strong trends, increasing to 18% of occupancy mix, providing a high-rated base of occupancy that supports overall RevPAR growth.

Expense Management and Margin Expansion

Disciplined expense management led to operating expenses growing 3.5% against same-store revenue growth of 4.7%, resulting in an 80 basis point adjusted hotel EBITDA margin expansion. Wage growth moderated to less than 3% for rooms wages, while fixed expenses declined due to a favorable property insurance renewal and successful real estate tax appeals.

The transition of 13 Marriott-managed hotels to franchise resulted in over 7% RevPAR growth and over 300 basis points of adjusted hotel EBITDA margin expansion for those assets.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.