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    APLE
    Earnings call· Jun 2026(Q2 FY26)

    Apple Hospitality REIT Q2 FY26 earnings call APLE

    Aug 6, 2026 Source

    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

    5

    • 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

    3

    • 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

    6
    CategoryTargetConfidence
    Full-year 2026 Comparable Hotels RevPAR change
    between 2.25% and 4.25%
    high materiality
    High
    Full-year 2026 Comparable Hotels Adjusted Hotel EBITDA Margin
    between 33.7% and 34.7%
    high materiality
    High
    Full-year 2026 Adjusted EBITDAre
    between $453 million and $476 million
    high materiality
    High
    Full-year 2026 Net Income
    between $152 million and $180 million
    medium materiality
    High
    Full-year 2026 Total Hotel Expense Growth
    approximately 4% at the midpoint
    medium materiality
    Medium
    Full-year 2026 Hotel Expense Growth per Occupied Room
    approximately 2%
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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 million6.2%—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 million5.3%—35.4%

    Operational metrics

    69
    MFFO per share
    $0.52up more than 8%
    Q2 FY26

    Strong flow-through from RevPAR growth and expense management.

    MFFO
    $123 millionup 9%
    Q2 FY26

    Strong flow-through from RevPAR growth and expense management.

    MFFO per share
    $0.86up 7.5%
    YTD June 30, 2026

    Reflects strength of the business model and execution.

    MFFO
    $204 millionup 6.1%
    YTD June 30, 2026

    Reflects strength of the business model and execution.

    Adjusted EBITDAre
    $145 millionup 7.5%
    Q2 FY26

    Strong performance for the quarter.

    Adjusted EBITDAre
    $245 millionup 5.3%
    YTD June 30, 2026

    Strong performance year-to-date.

    Total Debt Outstanding
    $1.5 billion
    as of June 30, 2026

    Balance sheet position.

    Weighted Average Interest Rate
    4.8%
    as of June 30, 2026

    Cost of debt.

    Weighted Average Maturity of Debt
    approximately 2 years
    as of June 30, 2026

    Debt maturity profile before July refinancing.

    Fixed or Hedged Debt
    nearly 60%
    as of June 30, 2026

    Debt structure.

    Cash on Hand
    $10 million
    as of June 30, 2026

    Liquidity position.

    Availability under Revolving Credit Facility
    $602 million
    as of June 30, 2026

    Liquidity position.

    Unencumbered Hotels
    207
    as of June 30, 2026

    Increased after repaying a secured mortgage loan.

    Revolving Credit Facility Capacity
    $700 millionincreased from $1.2 billion total capacity to $1.3 billion total capacity
    post-July refinancing

    Amended and restated primary unsecured credit facility.

    Weighted Average Debt Maturity
    nearly 5 yearsextended from approximately 2 years
    post-July refinancing

    Enhanced financial flexibility after refinancing.

    Next Significant Unsecured Maturity
    2029
    post-July refinancing

    Enhanced financial flexibility after refinancing.

    Regular Monthly Cash Distribution
    $0.24
    Q2 FY26

    Total distributions paid were $57 million.

    Annualized Regular Monthly Cash Distribution
    $0.96
    annualized

    Represents an annual yield of approximately 5.8% based on Monday's closing stock price.

    Annual Yield on Distributions
    approximately 5.8%
    annualized

    Based on Monday's closing stock price.

    Capital Expenditures
    $40 million
    6 months ended June 30

    Reinvestment in portfolio.

    Capital Expenditures
    between $85 million and $95 million$5 million increase to earlier range
    FY26

    Full-year expectation for reinvestment.

    Capital Expenditures as % of Revenues
    approximately 6%consistent with historical average
    FY26

    At the midpoint of the revised range.

    Hotels with no new competitive supply within 5-mile radius
    55%
    quarter end

    Limits potential downside and enhances potential upside.

    Marriott-managed hotels transitioned to franchise
    13
    January 2026

    Consolidated management with third-party operators.

    RevPAR growth for transitioned hotels
    over 7%
    Q2 FY26

    Encouraging results for the group of 13 hotels.

    Adjusted Hotel EBITDA margin expansion for transitioned hotels
    over 300 basis points
    Q2 FY26

    Well ahead of the portfolio overall.

    Contribution of transitioned hotels to Adjusted Hotel EBITDA
    approximately 8%
    Q2 FY26

    Represents approximately 8% of total adjusted hotel EBITDA.

    RevPAR growth in top 30 markets
    5%
    Q2 FY26

    Performance across the portfolio.

    RevPAR growth in all other markets
    5.9%
    Q2 FY26

    Performance across the portfolio.

    Weekday occupancy improvement
    240 basis points
    Q2 FY26

    Outpacing weekend improvement, consistent with strengthening business demand.

    Weekend occupancy improvement
    120 basis points
    Q2 FY26

    Outpaced by weekday improvement.

    Weekday ADR growth
    approximately 350 basis points
    Q2 FY26

    Punctuated by 6% growth in June with the start of FIFA World Cup.

    Weekend ADR growth
    approximately 350 basis points
    Q2 FY26

    Punctuated by 6% growth in June with the start of FIFA World Cup.

    Brand.com share of room nights
    40%up 80 basis points year-over-year
    Q2 FY26

    Largest channel, lowest distribution cost, highest-rated segments.

    GDS bookings share of room nights
    18%grew 100 basis points
    Q2 FY26

    Reflects continued strength in business travel.

    OTA bookings share of room nights
    13%flat
    Q2 FY26

    Part of booking channel mix.

    Property Direct share of room nights
    25%declined 140 basis points
    Q2 FY26

    Part of booking channel mix.

    BAR share of occupancy mix
    33%grew 120 basis points
    Q2 FY26

    Shift indicates incremental business travel at retail rates.

    Negotiated share of occupancy mix
    15%declined 160 basis points
    Q2 FY26

    Shift indicates incremental business travel at retail rates.

    Group share of occupancy mix
    18%grew 60 basis points
    Q2 FY26

    Provides a base of occupancy and is the second highest rated segment.

    Government share of occupancy mix
    nearly 5.5%grew 30 basis points
    Q2 FY26

    Part of segmentation mix.

    Discount share of occupancy mix
    28%declined 50 basis points
    Q2 FY26

    Part of segmentation mix.

    Operating expenses growth (same-store)
    3.5%
    Q2 FY26

    Against same-store revenue growth of 4.7%.

    Total same-store hotel expenses growth
    3.3%
    Q2 FY26

    Fixed expenses declined.

    Total same-store hotel expenses growth
    3%
    YTD June 30, 2026

    Fixed expenses declined.

    Total same-store hotel expenses growth per occupied room
    1.3%
    Q2 FY26

    Reflects discipline in expense control.

    Total same-store hotel expenses growth per occupied room
    0.6%
    YTD June 30, 2026

    Reflects discipline in expense control.

    Rooms wages growth
    less than 3%
    Q2 FY26

    Wage growth continued to moderate.

    Rooms wages growth per occupied room
    less than 1%
    Q2 FY26

    Wage growth continued to moderate.

    Utilities growth
    9%
    Q2 FY26

    Primary headwind.

    Repair and maintenance growth
    6%
    Q2 FY26

    Primary headwind.

    RevPAR growth excluding World Cup markets
    nearly 5%
    Q2 FY26

    Demonstrates broad-based improvement not tied to temporary catalyst.

    World Cup contribution to June RevPAR growth
    approximately 150 basis points
    June 2026

    Impact from World Cup events in host markets.

    World Cup contribution to Q2 RevPAR growth
    approximately 50 basis points
    Q2 FY26

    Impact from World Cup events in host markets.

    Preliminary July RevPAR growth
    more than 5.5%
    July 2026

    Reflects continued momentum across the portfolio.

    RevPAR growth in Anchorage
    nearly 17%
    Q2 FY26

    Strong performance in a market with exceptional demand.

    Occupancy in Anchorage hotels
    approximately 95%
    Q2 FY26

    Operating at high occupancy.

    Average Daily Rate in Anchorage hotels
    $346
    Q2 FY26

    High ADR.

    RevPAR growth in Las Vegas SpringHill Suites
    nearly 5%
    YTD

    Strong performance in a market where new development is planned.

    ADR for Motto Nashville Downtown
    approximately $243
    Q2 FY26

    Meaningful premium to the Nashville market.

    RevPAR growth in Kansas City
    17%
    Q2 FY26

    Driven by ADR growth of 16% due to World Cup.

    RevPAR growth in Fort Worth Arlington
    16%
    Q2 FY26

    Driven by ADR growth of 14% due to World Cup.

    RevPAR growth in South Bend
    24%
    Q2 FY26

    Driven by midweek group demand tied to Notre Dame.

    RevPAR growth in Washington, D.C.
    nearly 8%
    Q2 FY26

    As National Guard deployment compressed the market.

    RevPAR growth in St. Louis
    13%
    Q2 FY26

    Recovering from a softer period last year and aided by group business.

    RevPAR growth in Chicago
    13%
    Q2 FY26

    On strong leisure trends and continued recovery in midweek demand.

    RevPAR decrease in Phoenix
    5%
    Q2 FY26

    Due to decline in occupancy and rate, driven by pullback in semiconductor-related business.

    Yield on South Jordan Embassy acquisition
    11%
    current

    Yield on acquisition price.

    Yield on Downtown Salt Lake Courtyard and Hyatt House acquisition
    just under 11%
    current

    Yield on acquisition price.

    Industry KPIs

    6
    MetricValueDetails
    Occupancy rate80.1%%
    Revenue growth5.3%%
    Disposition volume$9 millionUSD
    Net debt adjusted EBITDA3.2xx
    Ffo core ffo normalized ffo per share$0.52USD/share
    Development pipeline under construction—

    Orderbook & backlog

    2
    Development project: AC Hotel in Anchorage, AlaskanullQ2 FY26

    Expected to be delivered in late 2027

    Development project: Dual-branded AC and Residence Inn in Las VegasnullQ2 FY26

    Expected to be delivered in the second quarter of 2028

    Deals & partnerships

    1
    nullSale of Hampton Inn & Suites in Rochester, Minnesota.$9 million

    Completed in April.

    Capital programs

    3
    Full-year 2026 Capital Expendituresunderwaybetween $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 renovationplanned
    Start: Q4 FY26

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

    Seattle Residence Inn rebrandingplanned
    Start: Q4 FY26

    Benefit: meaningfully improve its competitive position

    Anticipate a ramp period for this hotel beyond renovation disruption.

    Risks & headwinds

    5
    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 costsongoing

    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 acquisitionsongoing

    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 decreaseQ2 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 increasesQ2 FY26

    growing 9% and 6%, respectively

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

    What to watch in Q3 FY26

    5

    Phoenix market RevPAR recovery

    Next quarter
    CurrentRevPAR decrease 5%
    TargetRebound 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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%.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.