Chatham Lodging Trust Q2 Earnings Call Highlights

Key Points

• Chatham Lodging Trust raised its 2026 outlook after second-quarter results exceeded expectations, including $35.7 million in hotel EBITDA, $32.7 million in adjusted EBITDA and adjusted FFO of $0.48 per share. Full-year adjusted EBITDA is now projected at $99.2 million to $102.3 million, with RevPAR growth of 1.5% to 3%.
• Operating momentum strengthened significantly: comparable RevPAR rose 3.3% in the second quarter, accelerating to 8.7% in June and 9.7% in July. Silicon Valley and the recently acquired six-hotel Midwest portfolio were major contributors, while hotel EBITDA margin expanded 220 basis points year over year.
• Chatham began construction on a 130-suite Home2 Suites hotel in Portland, Maine, and has repurchased more than $18 million of stock since May 2025. The company paused further buybacks as its share price recovered and plans to use potential hotel-sale proceeds to reduce its revolving credit facility balance.

Chatham Lodging Trust NYSE: CLDT raised its full-year outlook after reporting second-quarter results that exceeded its expectations, supported by RevPAR growth, margin expansion, contributions from a recently acquired Midwest portfolio and continued strength in Silicon Valley.

Chairman, President and Chief Executive Officer Jeff Fisher said the company has increased its guidance by approximately 20% since the start of 2026, citing “a great acquisition together with strong operating results and share repurchases.” He said Chatham believes the lodging industry is entering the early stages of a prolonged upcycle, although the company remains cautious about near-term uncertainty related to the Iran conflict.

For the second quarter, Chatham reported hotel EBITDA of $35.7 million, adjusted EBITDA of $32.7 million and adjusted funds from operations of $0.48 per share, according to Senior Vice President and Chief Financial Officer Jeremy Wegner. Comparable RevPAR increased 3.3% from the prior year, exceeding the company’s expectations entering the quarter.

July Performance Accelerates

Chatham’s RevPAR growth accelerated during the quarter, rising 8.7% in June and 9.7% in July. Executive Vice President and Chief Operating Officer Dennis Craven said July RevPAR increased at 35 of the company’s 39 hotels, while 14 properties posted gains of more than 10%.

July occupancy rose 5% and average daily rate increased 4%, Craven said. June and July RevPAR of $175 and $169, respectively, represented all-time highs for those months, according to the company.

Silicon Valley remained a major contributor. The market accounts for approximately 17% of Chatham’s EBITDA, Fisher said, and posted 7% RevPAR growth during the second quarter. July RevPAR across Chatham’s four Silicon Valley hotels increased 26%, including a 41% increase at its two Sunnyvale hotels.

Fisher attributed demand in the region primarily to corporate transient travel and cited double-digit demand growth from accounts including Applied Materials, Palo Alto Networks, NVIDIA and Google. He also pointed to recent office leasing announcements by Databricks, Amazon and OpenAI near the company’s Sunnyvale and Mountain View hotels.

Chatham said its second-quarter Silicon Valley average daily rate increased 10% to $212, while quarterly RevPAR reached $164, its highest level in six years. Fisher said the company expects additional upside at its Sunnyvale and Mountain View hotels as performance moves closer to 2019 levels.

Midwest Acquisition and Operating Margins

The six-hotel portfolio in Missouri, Illinois and Kentucky acquired in March produced $3.2 million of hotel EBITDA in the second quarter. The portfolio posted RevPAR growth of 8.6%, while Fisher said its RevPAR rose 9% on an even split between occupancy and average daily rate.

The acquired hotels recorded 83% occupancy during the quarter, 200 basis points above Chatham’s portfolio average, and generated gross operating profit margins of 49.3%. Fisher said the properties benefit from favorable labor dynamics and lower operating costs per room, despite RevPAR being about 20% below the companywide average.

Management also highlighted a planned data-center development at the U.S. Department of Energy site in Paducah, Kentucky, near one of the acquired properties. Fisher said the project involves more than $100 billion of investment and is expected to create 8,000 construction jobs and 600 permanent jobs.

Chatham generated a 46.8% gross operating profit margin and a 40.8% hotel EBITDA margin in the second quarter. Hotel EBITDA margin increased 220 basis points from a year earlier. Excluding the effect of a $900,000 workers’ compensation benefit recorded in the second quarter of 2025, gross operating profit margin would have increased 170 basis points and hotel EBITDA margin would have risen 330 basis points, Wegner said.

Craven said employee productivity, property tax refunds, lower insurance costs and expense controls contributed to profitability. He said property insurance costs were down about 10% for the full year, while the company has used longer-term fixed-rate utility contracts in certain markets to help manage energy costs.

Development, Capital Allocation and Outlook

Chatham has begun construction on a 130-suite Home2 Suites hotel adjacent to its Hampton Inn in downtown waterfront Portland, Maine. The project is expected to cost about $45 million, or approximately $350,000 per room, before proceeds from the planned sale of roughly 5,500 square feet of commercial space. The company expects the hotel to open shortly before summer 2028 and estimates an unlevered stabilized year-two yield of about 11%.

The company repurchased another $3 million of stock in the second quarter, bringing total repurchases since the program began in May 2025 to more than $18 million. Chatham has repurchased 2.5 million shares, or about 5% of outstanding shares and units, at an average price of $7.29 per share. Fisher said the company has paused repurchases as its share price recovered and the valuation gap narrowed.

Chatham is also marketing one smaller hotel for sale and expects proceeds of less than $20 million. Craven said the potential disposition is not included in guidance and that proceeds would initially be used to reduce the company’s revolving credit facility balance.

As of the second quarter, Chatham’s leverage ratio under its credit facility was 31.2%, and it had $225 million of availability on its revolving credit facility, Wegner said.

For 2026, Chatham now expects RevPAR growth of 1.5% to 3%, adjusted EBITDA of $99.2 million to $102.3 million, and adjusted FFO of $1.28 to $1.34 per share. The company expects third-quarter RevPAR to increase approximately 4%.

Management said its second-half assumptions remain conservative, with low-single-digit RevPAR growth expected from September through December despite the strong July performance.

About Chatham Lodging Trust (NYSE:CLDT)

Chatham Lodging Trust is a self-advised, publicly traded real estate investment trust (REIT) focused primarily on investing in upscale, extended-stay hotels and premium-branded, select-service hotels. The company owns 39 hotels totaling 5,915 rooms/suites in 16 states and the District of Columbia.

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