Skip to content
    RLJ
    Earnings call· Jun 2026(Q2 FY26)

    RLJ Lodging Trust Q2 FY26 earnings call RLJ

    Aug 7, 2026 Source

    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

    9
    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

    12
    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%
    		————

    Operational metrics

    35
    RevPAR growth
    6.8%YoY
    Q2 FY26

    Driven by ADR growth of 4.9% and occupancy increase of 130 bps.

    ADR growth
    4.9%YoY
    Q2 FY26

    Contributed to overall RevPAR growth.

    Occupancy increase
    130YoY
    Q2 FY26

    Better than expected, reflecting acceleration in short-term booking window.

    June RevPAR growth
    12%YoY
    June FY26

    Strongest month of the quarter.

    July preliminary RevPAR growth
    approaching 11%YoY
    July FY26

    Positive trends carrying into July.

    Business transient revenue growth
    10%YoY
    Q2 FY26

    Second consecutive quarter of 10% growth, led by demand growth and rate increase.

    Leisure segment revenue growth
    7%YoY
    Q2 FY26

    Performed well with meaningful pricing improvement and healthy demand.

    Group revenue growth
    6%YoY
    Q2 FY26

    Near-term demand materializing despite short booking window.

    Group in-the-quarter, for-the-quarter pace improvement
    300QoQ
    Q2 FY26

    Demonstrates near-term demand materialization.

    Q3 group booking pace
    110%of last year
    Q3 FY26

    Meaningful pickup in booking pace for the third quarter.

    Full-year group booking pace
    104%of last year
    FY26

    Expected pace for the full year.

    Out-of-room spend growth
    7%YoY
    Q2 FY26

    Exceeded RevPAR growth by 30 basis points, underscoring success of ROI initiatives and renovations.

    EBITDA growth (high-impact renovations)
    50%YoY
    Q2 FY26

    Achieved by 4 high-impact renovations completed last year.

    EBITDA growth (completed conversions)
    12%YoY
    Q2 FY26

    Achieved by 7 previously completed conversions.

    Hotel EBITDA growth
    7.1%YoY
    Q2 FY26

    Translated from strong top-line growth, highlighting benefits of lean operating model.

    Hotel EBITDA margin
    31%improved by 10 bps YoY
    Q2 FY26

    Improved over the prior year, or 40 basis points without the prior year tax benefit.

    Adjusted EBITDA
    $110.4 million
    Q2 FY26

    Reported corporate adjusted EBITDA.

    Adjusted FFO per diluted share
    $0.52
    Q2 FY26

    Reported adjusted FFO per diluted share.

    Debt balance
    $2.2 billion
    Q2 FY26 end

    After paying off senior notes that matured on July 1.

    Liquidity
    ~$1 billion
    Q2 FY26 end

    Solid liquidity position.

    Unencumbered hotels
    81 of 91
    Q2 FY26 end

    Strong balance sheet position.

    Weighted average interest rate
    4.8%
    Q2 FY26 end

    Attractive interest rate.

    Fixed or hedged debt
    72%
    Q2 FY26 end

    Portion of debt that is fixed or hedged.

    Dividend per share
    $0.15
    Q2 FY26

    Well-covered dividend.

    Per-occupied room expenses increase
    4.9%YoY
    Q2 FY26

    Largely reflecting variable expense growth associated with a higher transient mix.

    Fixed costs increase
    6.4%YoY
    Q2 FY26

    Primarily due to the impact of a tax refund recognized in the prior year; 3.4% increase excluding that benefit.

    Weekday revenues growth
    6.3%YoY
    Q2 FY26

    Benefited from accelerating business travel.

    Weekend revenues growth
    8.1%YoY
    Q2 FY26

    Benefited from strong urban leisure demand.

    April RevPAR growth
    5.8%YoY
    April FY26

    Actualized RevPAR growth for April.

    May RevPAR growth
    2.5%YoY
    May FY26

    Actualized RevPAR growth for May despite difficult comps.

    June RevPAR growth
    12.4%YoY
    June FY26

    Actualized RevPAR growth for June, driven by strong fundamentals and World Cup.

    EBITDA upside (Key West conversion)
    ~50%
    future

    Expected EBITDA upside from the Compass by Margaritaville conversion.

    EBITDA upside (Boston conversion)
    ~40%
    future

    Expected EBITDA upside from the Wyndham Boston Tapestry Collection conversion.

    EBITDA upside (Pittsburgh conversion)
    ~35%
    future

    Expected EBITDA upside from The Atterbury (Pittsburgh) conversion.

    Returns on incremental capital (conversions)
    north of 40%
    future

    General return on incremental capital for conversion projects.

    Industry KPIs

    5
    MetricValueDetails
    Occupancy rate77%%
    Revenue growth6.8%%
    Disposition volume1hotel
    Leasing bookings volume signed110%%
    Ffo core ffo normalized ffo per share$0.52USD

    Deals & partnerships

    4
    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.

    MarriottBrand 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.

    MargaritavilleBrand 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.

    HiltonBrand conversion of Wyndham Boston to Tapestry Collection.

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

    Capital programs

    3
    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 conversionunderway
    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 conversionunderway

    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

    4
    Geopolitical uncertaintyongoing

    unquantified

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

    Limited visibility due to short booking windowongoing

    unquantified

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

    Higher operating costsQ2 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-yearQ4 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

    5

    Business Transient (BT) strength continuation

    Q3 FY26
    CurrentBT revenues up 10%, demand up 6% in Q2 FY26.
    TargetContinued 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.

    Q&A highlights

    6

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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%.

    04

    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.

    05

    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.

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