Inve US ▾
RLRLJ

RLJ Lodging Trust (RLJ) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Aug 7, 2026

Source: earnings call transcript

Executive summary

RLJ Lodging Trust Q2 FY26 — Strong Performance Exceeds Expectations with RevPAR Outperformance

RLJ Lodging Trust delivered strong Q2 FY26 results, exceeding expectations with broad-based growth across its portfolio, driven by accelerating business travel and robust urban leisure demand. The company raised its full-year outlook, confident in continued tailwinds and the positive impact of its capital investments, while remaining mindful of macro uncertainties. Strategic conversions and renovations continue to unlock significant value and enhance the lifestyle orientation of the portfolio.

Highlights

5

  • RevPAR growth of 6.8%, outperforming the industry by 110 basis points.

  • High single-digit EBITDA growth of 7.1% with 10 basis points of margin improvement.

  • Business transient revenues accelerated by 10%, with demand growth of 6%.

  • High-impact renovations completed last year achieved 22% revenue growth and 50% EBITDA growth.

  • Seven previously completed conversions achieved 8% revenue growth and 12% EBITDA growth.

Concerns

3

  • Expense growth was higher than anticipated, with per-occupied room expenses increasing 4.9% and fixed costs up 6.4% (3.4% ex-tax benefit).

  • Geopolitical uncertainty and limited visibility were noted by management.

  • Q4 booking pace is down year-over-year due to Salesforce shifting from October to September.

Guidance & targets

CategoryTargetConfidence
Comparable RevPAR growth
3.5% to 4.5%
high materiality
High
Comparable Hotel EBITDA
$369 million to $389 million
high materiality
High
Corporate Adjusted EBITDA
$336 million and $356 million
high materiality
High
Adjusted FFO per diluted share
$1.37 and $1.50
high materiality
High
Capital expenditures
$80 million to $90 million
medium materiality
Medium
Cash G&A
$33.5 million to $34.5 million
low materiality
Medium
Net interest expense
$101 million to $103 million
low materiality
Medium
Adjusted EBITDA contribution
about 100 basis points higher than last year's third quarter
medium materiality
Medium
Expense growth
3% at the midpoint and 4% at the top end
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Total Portfolio
Strong second quarter results, outperforming industry RevPAR by 110 basis points. Hotel EBITDA margin improved by 40 bps without prior year tax benefit.
RevPAR: $167RevPAR growth: 6.8%ADR: $217ADR growth: 4.9%Occupancy: 77%Occupancy increase: 130 bpsHotel EBITDA: $119.5 millionHotel EBITDA growth: 7.1%Hotel EBITDA margin: 31%Hotel EBITDA margin improvement: 10 bps
————
Non-World Cup Markets
Achieved strong RevPAR growth, demonstrating broad-based momentum beyond World Cup events.
—6.2%——
Austin
Notable outperformer in RevPAR, benefiting from strong in-house group.
—17%——
Chicago
Strong RevPAR growth driven by a city-wide calendar and significant BT revenue growth.
Business Transient revenue growth: 35%
—15%——
Tampa
Benefited from a healthy event calendar.
—11%——
Orlando
Supported by broad-based improvements in segmentation.
—high single-digit——
Charleston
Supported by broad-based improvements in segmentation.
—high single-digit——
D.C.
Supported by broad-based improvements in segmentation and significant BT revenue growth.
Business Transient revenue growth: 35%
—high single-digit——
Northern California
Recovery underway, benefiting from World Cup matches and AI industry expansion fueling corporate investment and business travel.
Business Transient revenue growth: 12%
—9%——
New York
Strong BT revenue growth.
Business Transient revenue growth: 17%
————
Houston
Strong BT revenue growth.
Business Transient revenue growth: 13%
————
South Florida
Strong BT revenue growth.
Business Transient revenue growth: 10%
————

Deals & partnerships

Regional operator (unnamed) Opportunistic sale of one hotel, Hyatt Place Fremont/Silicon Valley. 29.2x Hotel EBITDA multiple

Sold one hotel at a highly accretive multiple, including required capital expenditures. The market dynamics had moved away from its trajectory.

Marriott Brand conversion of former Renaissance Pittsburgh to Autograph Collection.

Relaunched the hotel as The Atterbury under Marriott's Autograph Collection, reimagining public spaces and guest rooms.

Margaritaville Brand conversion of Fairfield Inn & Suites Key West to Compass by Margaritaville.

Adding Margaritaville to brand affiliations, converting Fairfield Inn & Suites Key West to a Compass by Margaritaville, with re-launch planned for 2027.

Hilton Brand conversion of Wyndham Boston to Tapestry Collection.

Initiating physical renovation at Wyndham Boston, which will join Hilton's Tapestry Collection.

Capital programs

The Atterbury (Pittsburgh Autograph Collection conversion) completed

Benefit:Reimagined public spaces and guest rooms, activated revenue-generating spaces, added The Drafting Room (signature restaurant/bar), The Fulton Room (premium function space), activated historic rotunda with light show. Expected EBITDA upside ~35%.

Completed the transformative conversion of a former Renaissance Pittsburgh, relaunching as The Atterbury under Marriott's Autograph Collection.

Compass by Margaritaville Key West conversion underway
Start: later this year

Benefit:Reimagination into an island resort with new themed concepts, including 5 o'Clock Somewhere (poolside cabana bar). Expected EBITDA upside ~50%.

Converting Fairfield Inn & Suites Key West to a Compass by Margaritaville, aiming to capture higher-rated leisure demand and drive ancillary revenue growth.

Wyndham Boston Tapestry Collection conversion underway

Benefit:Will join Hilton's Tapestry Collection, opening The Archive. Expected EBITDA upside ~40%.

Making progress towards initiating the physical renovation at Wyndham Boston.

Risks & headwinds

Geopolitical uncertainty ongoing

unquantified

Mitigation:Monitoring for any shifts in demand as the year progresses.

Limited visibility due to short booking window ongoing

unquantified

Mitigation:Monitoring for any shifts in demand as the year progresses.

Higher operating costs Q2 FY26

Per-occupied room expenses increased 4.9% YoY; fixed costs increased 6.4% YoY (3.4% ex-tax benefit).

Mitigation:Focus on lean operating model, but higher occupancy and transient mix led to increased variable costs (credit card, travel agent fees, F&B outlets) and energy costs.

Q4 booking pace down year-over-year Q4 FY26

unquantified

Mitigation:Expect to benefit from the lapsing of the government shutdown, but this will be offset by the election.

What to watch in Q3 FY26

Business Transient (BT) strength continuation

Q3 FY26
Current BT revenues up 10%, demand up 6% in Q2 FY26.
Target Continued strength in BT travel, frequency, and length of stay.

Why it matters

BT is a high-rated customer, benefiting both rate and F&B, and a key driver of urban market recovery.

We expect leisure demand to remain healthy. We expect group to actualize at its current pace. We're looking at, you know, pace for about 104% for the full year, 110% in third quarter. And all of those segments are going to benefit, you know, urban markets, and keep in mind that we still expect our renovations and our conversions to continue to ramp.

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

Q&A highlights

Inquired about whether BT demand is coming through GDS or local accounts, and specific industries/booking patterns.

Leslie Hale and Tom Bardenett confirmed broad-based BT strength, with revenues up 10% and room nights up 6%. Demand is from national accounts and GDS, across tech, finance, and defense industries. It's their highest-rated customer, benefiting both rate and F&B. GDS bookings increased, which is encouraging for this clientele.

“this is our highest-rated customer who's coming back. So this is benefiting us on rate and also benefiting us in F&B as well.”

asked by Michael Bellisario · answered by Leslie D. Hale

2 min read 5 chapters

Detailed narrative

Portfolio Performance and Market Trends

The company's portfolio benefited from strong lodging fundamentals, particularly the acceleration of business travel and robust urban leisure demand. This led to RevPAR growth of 6.8%, with all markets exceeding expectations. Urban markets, which are a key focus for RLJ, are disproportionately benefiting from these trends due to diverse demand drivers and muted supply growth. The strength is broad-based, with non-World Cup markets achieving 6.2% RevPAR growth.

Strategic Capital Investments Driving Value

RLJ's high-impact renovations and conversions continue to drive significant value. Renovations completed last year achieved 22% revenue growth and 50% EBITDA growth, while previously completed conversions saw 8% revenue growth and 12% EBITDA growth. These results reinforce the company's conviction in its investment strategy, which focuses on enhancing lifestyle orientation and driving high-margin out-of-room spend, as evidenced by a 7% increase in out-of-room spend.

Demand Segmentation Insights

Business transient revenues accelerated by 10% in Q2, with demand up 6%, reflecting strong pricing power from high-rated customers across tech, finance, healthcare, and defense. Leisure segment revenues increased by 7% with a 6% rate increase and 1% room night increase. Group revenues grew 6%, with Q3 pacing at 110% of last year, showing a meaningful pickup in booking pace, and full-year pace at 104%.

Key Conversion Projects Underway

The company completed the conversion of the former Renaissance Pittsburgh to The Atterbury under Marriott's Autograph Collection, reimagining public spaces and adding new F&B concepts. Additionally, RLJ announced the conversion of its Fairfield Inn & Suites Key West to a Compass by Margaritaville, aiming to capture higher-rated leisure demand and drive ancillary revenue growth, with a re-launch planned for 2027. The Wyndham Boston will also join Hilton's Tapestry Collection.

Balance Sheet Strength and Capital Allocation

RLJ maintains a strong balance sheet with approximately $1 billion in liquidity, including $600 million of undrawn revolver capacity, and no debt maturities until 2029. The company opportunistically sold one hotel, the Hyatt Place Fremont/Silicon Valley, at a 29.2x Hotel EBITDA multiple. RLJ remains committed to returning capital to shareholders through a well-covered dividend of $0.15 per share, while continuing to evaluate share repurchases and dispositions.

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