RLJ Lodging Trust Q3 2025 Earnings Call Highlights

RLJ Lodging Trust ((RLJ)) has held its Q3 earnings call. Read on for the main highlights of the call.

RLJ Lodging Trust’s recent earnings call for the third quarter of 2025 presented a mixed sentiment, highlighting both resilience and challenges. The company demonstrated strategic achievements in non-room revenue growth and successful renovations, yet faced significant hurdles such as a decline in RevPAR, the impact of the government shutdown, and delays in the ramp-up of renovated properties. While urban hotel performance and an improved debt position were positive, broader industry headwinds and uncertainties cast a shadow over the fourth-quarter outlook.

RevPAR Index Gain

Despite experiencing a 5.1% decline in RevPAR, RLJ Lodging Trust managed to gain market share with an increase in the RevPAR index. This achievement underscores the resilience and quality of the company’s assets, even amidst challenging market conditions.

Strong Non-Room Revenue Growth

RLJ Lodging Trust reported a 1.3% growth in non-room revenue, outperforming RevPAR by over 600 basis points. This growth was driven by return on investment initiatives in areas such as food and beverage, parking, and expanded market offerings, highlighting the company’s strategic focus on diversifying revenue streams.

Successful Renovations and Conversions

The company has substantially completed transformative renovations in locations like Waikiki, Key West, and Fort Lauderdale. Recent conversions have achieved a 6% growth, and new projects in Pittsburgh and Boston are expected to unlock significant EBITDA upside, showcasing RLJ’s commitment to enhancing property value.

Urban Hotel Performance

Urban markets outperformed the broader portfolio with a 50 basis points lead. Notably, San Francisco CBD hotels achieved a remarkable 19.4% RevPAR growth, driven by conferences and events, indicating strong demand in urban centers.

Improved Debt Position

RLJ Lodging Trust ended the quarter with $1 billion in liquidity and successfully addressed all 2025 debt maturities. With 74% of its debt fixed or hedged, the company has fortified its financial position against market volatility.

RevPAR Decline

The company faced a 5.1% decline in RevPAR, attributed to a 3.1% drop in occupancy and a 2.1% decline in ADR. These declines were influenced by ongoing renovations and broader industry headwinds, reflecting the challenges RLJ is navigating.

Impact of Government Shutdown

The government shutdown in October led to a 2% decline in RevPAR for the month, affecting the company’s fourth-quarter outlook and prompting a revision of its full-year guidance. This external factor has added to the uncertainties RLJ faces in the near term.

Delayed Ramp of Renovated Properties

Current travel-related headwinds and macroeconomic uncertainties are delaying the anticipated contributions from major renovations in Key West and Waikiki. These delays pose challenges to realizing the full benefits of the company’s investments.

Softer Business Travel and Group Demand

Group revenues were impacted by calendar shifts, and non-government-related business travel only achieved a 2.4% revenue growth. Government-related demand was significantly below last year, indicating a softer business travel environment.

Forward-Looking Guidance

RLJ Lodging Trust adjusted its full-year guidance, anticipating RevPAR growth to range between negative 1.9% and negative 2.6%, with adjusted FFO per diluted share between $1.31 and $1.37. Looking ahead to 2026, the company expects positive industry tailwinds, including a more stable economic environment and significant events like the World Cup, to drive improved performance.

In conclusion, RLJ Lodging Trust’s earnings call painted a picture of resilience amid challenges. While the company has made strategic strides in non-room revenue growth and renovations, it continues to face significant industry headwinds. The outlook remains cautious, with hopes pinned on future industry tailwinds to bolster performance.