The different disruptions to travel demand provided a challenging backdrop for 2025, but Apple Hospitality REIT was able to pull other levers to adapt.
During the hotel real estate investment trust's fourth-quarter and full-year 2025 earnings call, Apple REIT President and CEO Justin Knight said that leisure travel remained strong across its portfolio. Policy uncertainty and a pullback in government travel affected midweek demand, temporarily disrupting the steady improvement in midweek occupancy that characterized much of 2024.
In response, Apple REIT's asset management and hotel teams adjusted their strategy to optimize their business mix, layering on additional group business to bolster market share and strengthen overall portfolio performance, he said. This allowed the company's hotel portfolio to achieve comparable hotel revenue per available room of $118 for the full year, down 1.6% compared to 2024.
Preliminary results show comparable hotel RevPAR dipped 1.6% year over year in January 2026 primarily due to challenging comparisons related to wildfire recovery-related business in California, Knight said. The presidential inauguration also benefited its Washington, D.C.-area hotels a year ago. Winter storms weighed heavily on January and early February results as well.
“But occupancies have improved meaningfully, with recent weeks showing significant year-over-year growth,” he said.
Apple REIT’s outlook for 2026 calls for comparable hotel RevPAR to be flat at its midpoint, falling in line with the STR forecast for its chain scales, Knight said.
“We believe that this represents a measured base case scenario for our portfolio, with early summer potentially benefiting from incremental leisure travel related to the FIFA World Cup 2026 and easier comparisons to periods adversely impacted by cuts in government spending, tariff announcements and the government shutdown in late 2025,” he said.
This outlook may ultimately prove conservative, with January and February seasonally lower occupancy months, he said. It’s early in the year to identify trends for business or leisure travel with conviction.
“As we saw last year, the possibility of policy-related demand disruption is real,” he said. “We are, however, optimistic about the setup for the year and feel we are well-positioned, regardless of how things play out in the broader economy.”
Portfolio update
In January, Apple REIT completed the transition of its 13 Marriott International-managed hotels to franchised consolidated management with third-party management companies, Knight said.
“We are confident these transitions, together with a select number of additional market-level management consolidations, will further drive operating performance at our hotels,” he said. “In the case of the Marriott-managed assets, the transition away from brand management will also provide us with additional flexibility and increase the marketability of the hotels in the future as we consider select dispositions.”
While Apple REIT’s long-term goal is to grow its portfolio, its stock traded at an applied discount to value achievable in private-market deals, Knight said. For much of the past year, it capitalized on the disconnect by selectively selling hotels and redeploying the proceeds into buying back its own stock and preserving its balance sheet as a guardrail against potential macroeconomic volatility and allow for quick responses to accretive acquisition opportunities.
In 2025, Apple REIT sold seven hotels for a combined gross sales price of about $73 million, he said. That allowed it to repurchase 4.6 million common shares for a total of about $58 million.
The REIT was able to use 1031 Exchanges to reinvest gains on hotel sales by redeploying proceeds into acquisitions, including for the Homewood Suites Tampa-Brandon, which is adjacent to its Embassy Suites in the market, and the Motto by Hilton Nashville Downtown that it acquired in late December upon completion of construction.
It still has forward commitments for two future hotel development projects that are currently in the early stages, including a dual-branded AC Hotel and Residence Inn property located adjacent to its SpringHill Suites in Las Vegas, and an AC Hotel in Anchorage, Alaska, he said. The Anchorage project has broken ground and is scheduled to be complete in late 2027.
Construction hasn’t started for its two Las Vegas hotels, but the current timeline shows completion during the second quarter of 2028, he said. There are no pending acquisitions slated for 2026.
Apple REIT will continue to adjust its capital allocation strategy in response to market conditions and act on opportunities when the timing is right, he said. In the near term, that means pursuing select hotel sales to redeploy proceeds at a multiple spread and manage future capital expenditure needs as well as increase its exposure to potentially higher growth markets.
The company’s historical annual capital expenditure spend has ranged between 5% and 6% of its total revenue, Knight said. Combined with higher margins, the lower capital expenditure obligation allows it to produce meaningfully more free cash flow from operations, which it then uses to fund shareholder distribution and strategic investment.
For the full-year 2025, the company spent approximately $88 million on capital expenditures, he said. It expects to reinvest between $80 million and $90 million this year, with major renovations planned for about 21 of its hotels. That includes the conversion of its Residence Inn Seattle Lake Union into a Homewood Suites in the fourth quarter.
By the numbers
For the fourth quarter, Apple REIT reported revenue of $326.4 million, down from $333 million in the fourth quarter of 2024, according to its earnings release. For the full year, it reported revenue of $1.41 billion, down from $1.43 billion the year before.
Apple REIT reported net income of $29.6 million for the quarter, down 0.7% year over year. It reported $175.3 million for the full year, down 18.1% from 2024.
Comparable hotels adjusted hotel earnings before interest, taxes, depreciation and amortization was nearly $99.2 million for the quarter, down 8.4% year over year. Comparable hotels adjust hotel EBITDA for the full year was $474.2 million, a 6.4% year-over-year decrease. Comparable hotels adjusted hotel EBITDA margin for the quarter was 31.1%, down 210 basis points, while it was 34.3% for the full year, down 190 basis points.
As of Dec. 31, 2025, Apple REIT reported cash on hand of approximately $9 million with roughly $587 million through its revolving credit facility. It had approximately $1.5 billion of total outstanding debt with a current combined weighted-average interest rate of approximately 4.7%. Excluding unamortized debt issuance costs and fair value adjustments, its total outstanding debt comprised approximately $184 million in property-level debt secured by 10 hotels and approximately $1.4 billion outstanding under its unsecured credit facilities. Its weighted-average debt maturities were roughly three years.
In July, Apple REIT entered into a new term loan facility with a principal amount of $385 million with a maturity date of July 31, 2030. At closing, it repaid all amounts outstanding under its $225 million term loan facility, resulting in a leftover $160 million used to repay the balance outstanding under its revolving credit facility and general corporate purposes.
During the fourth quarter of 2025, Apple REIT bought back approximately 1.1 million of its common shares at a weighted-average market purchase price of approximately $11.77 per share for a total purchase price of approximately $13.1 million. By the end of 2025, it had repurchased 4.6 million common shares at a weighted-average market purchase price of about $12.55 per share for a total price of about $58.3 million. It had about $242.5 million remaining under its share repurchase program by the end of the year.
As of press time, Apple REIT’s stock was trading at $12.15 per share, down $16.9% year over year. The NYSE Composite Index was up 17.7% for the same period.