RLJ Lodging Trust executives celebrated relatively strong performance in urban markets — particularly San Francisco — but macroeconomic headwinds including the ongoing government shutdown weighed down performance for the real estate investment trust in the third quarter.
During the company's latest earnings call, President and CEO Leslie Hale said RLJ has been able to increase market share as demand has scaled back.
RLJ posted a 5.1% year-over-year decrease in revenue per available room to $138.51 with a net loss of $3.8 million in the quarter.
San Francisco was clearly the bright spot for the company, despite the fact that Salesforce's Dreamforce conference shifted from the third quarter to the fourth quarter this year.
"We were especially encouraged by the performance of our San Francisco [central business district] hotels, which achieved 19.4% RevPAR growth during the quarter driven by a strong lineup of smaller conferences, concerts and special events, which more than offset the calendar shift of Dreamforce," she said.
Hale described leisure travelers as stable but price-sensitive in the quarter. She noted out-of-room spend has remained strong for the REIT.
"Our urban leisure once again saw stronger relative performance, achieving flat revenue growth led by a 3.2% increase in demand," she said. "Our urban markets are continuing to benefit from strong demand for concerts, sports and special events. Notably today, we were pleased to see positive results from our ongoing strategy to drive out-of-room spend, which grew by 1.3% in the quarter despite lower occupancy."
She noted a 600-basis-point increase in non-room revenues and cost containment efforts helped RLJ exceed its quarterly projections for profitability.
The company's latest full-year 2025 outlook now calls for RevPAR to range between between -1.9% and -2.6% with comparable hotel earnings before interest, taxes, depreciation and amortization in a range of $357.5 million to $365.5 million.
Hale noted the trajectory of the fourth quarter will be once again determined by the large-scale headwinds that both the hotel industry and the broader economy face.
"The broader uncertainty and lack of visibility that has persisted since the end of the first quarter has been recently compounded by the government shutdown, which began in October," she said. "October is the most important month of the fourth quarter, and despite having had an otherwise strong setup, given the holiday shifts and an improved citywide calendar, October saw RevPAR decline year over year, given the lack of compression created by the shutdown. Additionally, we anticipate that current travel-related headwinds created by the shutdown, including the effect it is having on the air traffic control system, will have an impact on consumers' propensity to travel."
Hale added the quarter was affected by renovation work being done at RLJ's hotels in Waikiki, Austin and South Florida.
Third-quarter performance
RLJ posted total revenues of $330 million in the third quarter, a drop from $345.7 million during the same period in 2024, according to its earnings release.
The company's $3.8 million net loss was also a drop from the previous year, when the company recorded $20.6 million in net income.
Adjusted EBITDA for the quarter came in at $72.6 million, compared to $91.2 million the year prior.
During the quarter, the REIT repurchased $1.3 million in shares.
As of press time, RLJ's stock was trading at $6.87 a share, down 32.7% year to date. The NYSE Composite was up 11.6% for the same period.