Pebblebrook Hotel Trust reports that operating trends and financials are on track with prior expectations despite disruptions caused by two major storms.
In an update ahead of its third-quarter earnings call scheduled for Oct. 27, the hotel real estate investment trust reported that Tropical Storm Hilary and Hurricane Idalia did not cause any significant physical damage to their hotels in California or Florida, but storms did lead to a drop in revenue due to cancellations, early check-outs and lower short-term pickup. There were also expenses related to one-time repair, clean up efforts and remediation costs.
As a result of both storms, Pebblebrook executives estimate hotel revenues from late August to early September dropped by $3.5 million, and hotel earnings before interest, taxes, depreciation and amortization declined by $2.5 million.
Despite the effects of the storms, the REIT’s outlook for same-property revenue per available room, EBITDA, adjusted EBITDAre and adjusted funds from operations are still within the ranges forecast in the third quarter.
Comparable RevPAR dipped 1% year over year in August, but without the storms, it would have grown by more than 1%. Similarly, EBITDA fell 1%. Without the impact of the named storms, executives estimate that EBITDA would have increased approximately 6% over the third quarter of 2022.
Revenue from the company's urban hotels grew 7% year over year in August due to the rebound of group and transient business travel as well as improving weekend leisure demand. Occupancy at urban properties improved by about 500 basis points compared to last year while rates remained relatively flat.
Due to the storms, August resort occupancy dropped by about 6% compared to last year. Rates fell 11%. However, despite the nominal decline in ADR, rates across the resort portfolio are still up 40% compared to 2019.
Pebblebrook refinanced its Margaritaville Hollywood Beach Resort on Sept. 7 to extend its debt maturity and preserve liquidity. The new $140 million loan has a three-year initial term with two one-year extension options. The use of interest rate swaps has effectively fixed the interest on the loan at 7%. The property is one of Pebblebrook’s two mortgages in the portfolio, and the other one won’t mature until 2028.