Officials with RLJ Lodging Trust pointed to strength in leisure and business travel to urban markets as the reason they outperformed the broader hotel industry in the first quarter, bringing in revenue per available room growth of 4.8% to start the year.
Speaking during the company's first-quarter earnings call, President and CEO Leslie Hale said her company is currently benefiting from recent investments in its portfolio, creating an uplift in performance.
"Our favorable footprint, with exposure to many top performing markets such as northern California and south Florida, among others, allowed us to capture the broad-base momentum in all segments of demand, along with a ramp from our recent high-impact renovations and conversions, driving solid results ahead of our expectations," she said.
Events were a strong driver of leisure travel to urban markets, she said.
She also noted business transient demand is seeing strength, boosted by strength in the tech sector and life sciences.
"It's really a function of strong corporate profits," she said of the business travel rebound observed in the first quarter. "It's business investment driving and aligning with what we're seeing. Our midweek trends remain strong."
She said group is currently the weakest of the segments because of a compressed booking window, but 22% of RLJ's group bookings for the first quarter were made in the quarter.
"While [the window] has been short, [demand] has been materializing," she said.
The company's full-year outlook for 2026 now calls for RevPAR growth between 1.5% and 3.5%, with hotel earnings before interest, taxes, depreciation and amortization between $356 million and $380 million.
Hale noted first-quarter results came in stronger than expected, but the company isn't expecting a stronger second quarter than initially projected.
"We really have no change to our perspective on the back half of the year, and the third quarter is benefiting from the World Cup," she said. "We expect the third quarter to benefit more than the second quarter from the World Cup because there's a higher demand for the later stage games. Then you layer in [America's] 250th anniversary on top of an existing holiday and" the Salesforce conference in San Francisco.
While there's been an increasing amount of pessimism on just how strong the World Cup will deliver in terms of hotel demand, Hale said her company remains optimistic in part because they are focused on demand "related to teams, media and sponsors," which they expect to be more resilient and reliable.
"We wanted to have really strong revenue management and focus on the length of stay, making sure that we were disciplined about rate," she said. "So today, what we're seeing is those blocks are actually picking up."
She noted that because the most enticing matches are in the biggest, highest occupancy markets — including Los Angeles, New York City and Miami — success around the World Cup for hotels becomes "a rate game."
"These trends we're seeing are in line with our expectations and our original assumptions that we had in our guidance," she said.
Quarterly performance
With the 4.8% year-over-year increase, RevPAR came in for the quarter at $148.55, according to RLJ's earnings release. That came through increases in both average daily rate and occupancy, up 2.1% and 2.6%, respectively.
Hotel revenues for the quarter came in at $340 million, a 5.4% increase.
Hotel EBITDA was up 7.2% from the prior year to $89.9 million, although the company reported a net loss of roughly $349,000 for the quarter.
As of press time, RLJ's stock was trading at $8.35 a share, up 12.1% year to date and 18.8% year over year. The NYSE Composite is up 4.04% year to date and 18.6% year over year.