Apple Hospitality REIT (APLE) Q4 FY25 earnings call: guidance and Q&A

What was the total RevPAR drag in 2025 from Liberation Day and the government shutdown, and how much of that is expected to return as a benefit in 2026?

Government room nights were down about 12% and negotiated business down 5-6% in 2025, which could represent about 1 point in occupancy if it returns. However, some of the 'Doge' related business may not return, and the team actively replaced this with group business.

“If you look at room nights for government on a same-store basis for the full year, they were down about 12% and negotiated was down 5% to 6%, which really that trend did not start until Doge and certainly ebbed and flowed throughout the year.”

asked by Jackson Armstrong · answered by Liz Perkins

Can you detail the building blocks for the 3% total expense growth guidance for 2026, specifically for fixed and variable expenses?

At the midpoint of guidance, variable expenses are expected to increase just under 3% (2.7%), and fixed expenses are expected to increase just under 5% (4.5%).

“On a comparable basis at the midpoint, you're just under 3% for variable expenses, about 2.7%. And then fixed is just under 5%, so 4.5% or so, for fixed expenses at the midpoint.”

asked by Jackson Armstrong · answered by Liz Perkins

Does the RevPAR guidance assume any volatility, and what is the expected cadence of growth throughout 2026? How is the company approaching business mix this year compared to last?

The midpoint of guidance assumes little impact from special events like the FIFA World Cup. Cadence is fairly flat mid-year, with a slight decrease in Q1 due to challenging comps and weather, and highest growth in Q4 due to easier government shutdown comps. The company expects slightly less government business and slightly more group business, leveraging its teams' ability to find demand.

“So highest growth in the fourth quarter, weakest quarter, first quarter.”

asked by Austin Wurschmidt · answered by Liz Perkins

What is the company seeing in the transaction market, and is it more focused on dispositions at this time?

The company is incredibly pleased with its disposition execution in 2025 and currently sees the environment similar to last year. The near-term focus will likely remain on selective dispositions where proceeds can be redeployed into higher-producing opportunities, as individual assets still command more attractive pricing than portfolio deals.

“But today, the environment looks very similar to the environment that we experienced last year. And I think in the near term, it's safe to assume that we will be focused on select dispositions where we have confidence we can redeploy proceeds into higher producing opportunities.”

asked by Aryeh Klein · answered by Justin Knight

Are there any explicit lifts included in the 2026 outlook from the recent Marriott manager changes?

Not really at this point. While there are incremental costs initially, the base case expectation is to offset transition costs through more efficient operations in 2026, with primary benefits realized in future years. The underwriting was primarily based on anticipated cost savings.

“Our base case expectations are that we will be offsetting transition costs through more efficient operations as we move through the year with the primary benefit of the transactions being realized in future years.”

asked by Michael Bellisario · answered by Justin Knight

The percentage of hotels with no new construction within a 5-mile radius has slightly decreased. What is driving this change, and what is the overall supply outlook?

The company feels very good about the supply picture, which reduces risk. The subtle adjustment in the percentage is due to nuanced changes in the overall portfolio, such as selling assets in lower supply markets and increasing concentration in some individual markets. The dynamics between construction costs and profitability continue to impede increased supply growth.

“Some of the subtle adjustments are nuanced and driven by changes to our overall portfolio. So when you look at the assets that we've been selling and the types of markets that we've been selling out of, those are, in some instances, lower supply markets.”

asked by Chris Darling · answered by Justin Knight