In many ways, the second quarter was better than expected for Pebblebrook Hotel Trust's portfolio.
Not only did things go mostly well, the geopolitical issues and policy events that could have negatively affected the U.S. economy or travel during the second quarter did not have those effects, at least not yet, Pebblebrook Chairman and CEO Jon Bortz said during the hotel real estate investment trust's second-quarter earnings call.
“As a result, industry demand growth was healthy in the quarter, and with little new supply being added, occupancies rose and [average daily rate] growth accelerated due to the better setup, more compression days, less price sensitivity by higher-end consumers in particular, all of which led to more pricing confidence,” he said.
All the major hotel demand segments remained favorable during the quarter, he said. Group, corporate transient and leisure travel all grew on weekdays and weekends alike. The international travel balance improved as well in June, with inbound travel becoming positive for the first time in a while likely due to 2026 FIFA World Cup visitors and a decrease in outbound travel.
Performance review
Pebblebrook’s resort portfolio and properties in San Francisco lead the way, said Raymond Martz, president and chief financial officer. At the portfolio level, same-property occupancy grew by about 130 basis points to 79.4%, average daily rate grew 4.7% and revenue per available room grew by 6.5%. Total RevPAR increased by 4.7%.
“Nearly three quarters of our RevPAR growth came from rate, a meaningful shift from recent quarters when occupancy gains did most of the work,” he said. “As occupancy rebuilds, greater compression is giving our teams more pricing confidence, which is supporting higher room rates.”
San Francisco was once again Pebblebrook’s top urban market, he said. Occupancy increased nearly 500 basis points, and ADR rose almost 9%, driving RevPAR 16% higher and hotel earnings before interest, taxes, depreciation and amortization 24.6% higher, roughly 250 basis points of margin expansion. That was accomplished without the RSAC Conference, which moved to March this year, as the Snowflake Summit and Databricks conferences in June more than made up the difference.
Beyond the citywide events, business transient and leisure demand were strong, he added. EBITDA year to date at its seven San Francisco hotels was up by more than $13 million, or 110% compared to last year, making progress against its $18 million recovery opportunity expectations.
Los Angeles is on a similar but less intense path, Martz said. RevPAR is up 8.5% with hotel EBITDA growing almost 14% with year-to-date EBITDA higher by about $6 million, he said. Capturing the larger $22 million upside opportunity for the entire LA portfolio will require continued market recovery and property level execution, but the momentum is building.
“And the 2027 Super Bowl and the 2028 Olympics will provide a big push,” he said.
During the second quarter, in-the-quarter-for-the-quarter pickup was strong, exceeding last year by $8.4 million, Bortz said. There wasn’t any increase in group cancellations or attrition, and attendance level for group meetings has been more predictable compared to 2025.
“We continue to watch for signs of weakening, but pickup in- and for-the-month, quarter and year has remained favorable,” he said.
The World Cup matches delivered a modest benefit to room revenues, Bortz said. Pebblebrook saw an estimated increase of about $1.5 million to $2.5 million, or about 60 to 100 basis points, for the quarter in RevPAR.
“The incremental World Cup demand was largely offset by corporate group and transient business that stayed away due to higher rates and many booking restrictions,” he said. “So, the net room benefit came primarily from rate, not occupancy.”
This also explains the slight dip in June occupancy, he added. The change in mix from group to transient had a negative impact on food and beverage revenues in its match markets, particularly for banquet and catering, which declined enough on a year-over-year basis to offset much of the room revenue gain.
Overall, Pebblebrook’s team estimates the net benefit to hotel EBITDA from the World Cup was between $500,000 and $1 million, he said, calling it a “relatively minor benefit overall but a benefit nonetheless.”
Company outlook
Pebblebrook raised its full-year same-property total RevPAR growth rate outlook by 70 basis points at the midpoint to 4.1% to 5.3%. It increased its adjusted EBITDAre by $8.5 million at the midpoint to $345 million to $353 million.
“With a strong economy that remains resilient and with corporate profit growth at high levels and accelerating, there are fundamental reasons to be encouraged about positive industry trends continuing in the second half of this year,” Bortz said.
There are still concerns about the potential negative effects from the protracted and widening Middle East conflict, policy changes, geopolitical instability and another potential government shutdown in the fall, he said.
Even so, Bortz said he believes the industry is at the start of a strong, multi-year upcycle. Supply should remain limited throughout most of the rest of the decade. The country is at the start of a major, multi-year capital investment cycle in artificial intelligence and the reshoring of manufacturing, and there’s another large investment cycle following with the creation and buildout of the robotics industry.
There is also a significant and growing benefit from the massive wealth created over the past 15 years for investors and employees as well as the largest transfer of wealth in global history as baby boomers begin to pass on what they’ve amassed, he said.
“We believe the prospects for healthy multi-year demand growth have never been stronger or clearer in the last 30 years, nor has supply growth been so limited at the same time,” he said. “These are incredibly positive multi-year fundamentals.”
For the third quarter specifically, July is proving to be stronger than expected, Bortz said. Short-term pickup has surprised to the upside, a potential sign summer vacation travel is starting strong and continuing the leisure trends from the second quarter.
The Fourth of July holiday falling on a Saturday was a big lift across the portfolio, probably bigger than the weekend-related America 250 events, he said.
Group pace for the third quarter is favorable, and corporate travel growth remains strong, he said. Leisure is accelerating, allowing Pebblebrook to average higher prices through less discounting, fewer promotions and reduced use of lower-priced wholesale channels.
Preliminary results through July 25 show the month’s RevPAR is on pace to grow between 7% to 8% year over year, he said. However, the team isn’t prepared to extrapolate July’s “unusually strong” short-term pickup across the entire quarter.
The company expects same-property RevPAR growth of 1% to 3%, same-property hotel EBITDA of $100.5 million to $104.5 million and adjusted EBITDA of $92.5 million to $96.5 million for the third quarter, he said.
By the numbers
For the second quarter, Pebblebrook reported net income of $24.9 million, a 29.2% increase year over year, according to the company’s earnings report. It reported total revenue of $407.1 million, down from $407.5 million the year before.
The REIT reported same-property hotel EBITDA of $123.3 million, a 7.1% year-over-year increase and $6.6 million over the high end of its prior outlook. Adjusted EBITDAre was $116.2 million, $6.2 million above the high end of its outlook.
Same-property RevPAR was $259, a 6.5% year-over-year increase. Same-property total RevPAR was $405, a 4.7% increase.
As of June 30, Pebblebrook’s cash, cash equivalents and restricted cash grew to $270.4 million with an additional $641 million of available capacity in its $650 million senior unsecured revolving credit facility and $90 million of available capacity in its senior unsecured 2031 term loan.
Its consolidated debt and convertible notes have an estimated weighted-average interest rate of 4.1% and a weighted-average maturity of 2.7 years, and 98% of the debt is effectively fixed and 98% is unsecured. The remaining $350 million of 2026 convertible notes that mature in December are fully funded through its existing cash, expected cash free cash flow and available term loan capacity. It has no other maturities through 2028.
During the second quarter of 2026, Pebblebrook repurchased 500,000 common shares for $8 million at an average share price of $14.77. Through the first half of 2026, it has repurchased 900,000 shares at an average price of $13.62 per share. It also repurchased 1.5 million preferred shares for $28.6 million, including the preferred shares retired as part of the Chamberlain West Hollywood Hotel disposition, at a 23% average discount to liquidation preference, reducing total outstanding preferred equity securities to $717.2 million.
As of press time, Pebblebrook's stock was trading at $18.44 a share, up 62.9% year to date. The NYSE Composite Index was up 9.7% for the same period.