RLJ Lodging Trust NYSE: RLJ reported first-quarter 2026 results that management said came in ahead of expectations, supported by accelerating business transient demand, resilient leisure travel, and continued growth in non-room revenues. Executives also highlighted balance sheet actions that they said eliminate near-term maturities and increase liquidity, while maintaining a focus on renovations and brand conversions intended to lift earnings power over multiple years.
First-quarter results and demand trends
President and CEO Leslie Hale said the lodging industry started the year strongly, with “the acceleration of business transient demand being a key driver,” and noted RLJ’s “urban-centric portfolio outperformed the industry.” The company posted RevPAR growth of 4.8% in the quarter, which Hale said outperformed the industry by 100 basis points.
CFO Nikhil Bhalla reported that first-quarter occupancy rose 2.6% to 70.8%, ADR increased 2.1% to $210, and RevPAR rose to $149, up 4.8% year over year. Management emphasized improving monthly trends: Bhalla said January RevPAR declined 1.9%, followed by growth of 6.1% in February and 8.9% in March. Bhalla added that the momentum “carried into April,” with preliminary RevPAR growth of about 4%.
Hale attributed February and March strength partly to “a robust calendar of events” and “the favorable timing of holidays.” She also said the company’s portfolio captured “broad-based momentum in all segments of demand,” including benefits from recent renovations and conversions.
Market and segment performance
Management pointed to strong performance in several urban markets. Hale said Northern California delivered RevPAR growth of 27%, citing the Super Bowl, the shift of the RSA conference to March, and “the continued expansion of the AI industry,” which she said is driving corporate investment and business travel. She also highlighted New York City, where properties achieved more than 8% RevPAR growth, supported by corporate and leisure transient demand, events, and the ramp of renovations completed last year.
Bhalla said RLJ’s urban markets produced 4.4% RevPAR growth, outperforming STR’s comparable markets by 110 basis points, and noted double-digit gains in several areas, including approximately 10% RevPAR growth in South Florida and 14% in both Houston and Denver. He also said both weekdays and weekends saw “mid-single-digit” RevPAR growth, underscoring what management described as seven-day-a-week demand.
By segment, Hale said business transient revenue grew 9% in the quarter, “largely demand-driven,” with room nights increasing by nearly 700 basis points. She tied the acceleration in business travel to “AI-related spending as well as record corporate profits,” with strength in technology, finance, aerospace, and life sciences. In Q&A, Hale said the business transient acceleration was “broad-based,” with national accounts continuing to grow.
Leisure revenue grew 5%, Hale said, with rate growth of 3%. She cited a compressed spring break and noted that winter storms across the country drove additional leisure travel at some hotels. In response to an analyst question about booking behavior, Hale said leisure booking windows have been “elongating,” which she attributed more to consumers recognizing strong demand and booking earlier, though she acknowledged airfare dynamics “may be” a factor.
Group demand faced difficult comparisons tied to the prior-year inauguration in Washington, D.C., and the Austin Convention Center, but Hale said booking trends remained healthy. She noted end-of-quarter “fourth-of-quarter revenue pace” increased by 900 basis points and ADR rose 3% versus last year, with second-quarter group pace improving by 400 basis points. Hale also said RLJ is seeing “an increasing share of corporate bookings within our group mix,” which she said supports ADR and out-of-room spending.
Non-room revenue initiatives and profitability
RLJ reported outsized growth in non-room revenue, which management repeatedly tied to ROI initiatives aimed at food and beverage, reconcepting space, and ancillary revenue. Hale said non-room revenue growth was 8.2% and exceeded RevPAR performance by more than 300 basis points, contributing to total revenue growth of 5.4%.
Bhalla said non-room revenues have strong margins, with non-room margins improving by 130 basis points in the quarter. COO Tom Bardenett added that banquet revenue has been growing alongside a larger mix of corporate group, while lounges were up about 12%. He also cited gains in AV, room rental, parking, and “grab and go” consumer trends at full-service properties, which he said has helped profitability.
EBITDA, costs, and balance sheet actions
On profitability, Bhalla said hotel EBITDA was $89.9 million, up $6.1 million, or 7.2%, year over year, and hotel EBITDA margin expanded 45 basis points to 26.4%. Adjusted EBITDA was $80.9 million, and adjusted FFO per diluted share was $0.33.
Bhalla said total operating expenses rose 2.1% on a per occupied room basis. He noted energy expenses were elevated due to winter storms and energy market disruption “due to the war,” but said these pressures were more than offset by lower fixed costs, including a “double-digit decline in property insurance due to a favorable renewal last year,” as well as other cost controls.
On the balance sheet, Bhalla said RLJ executed refinancing transactions in the first quarter that expanded undrawn capacity by $500 million. The company intends to use that incremental capacity to pay off $500 million of senior notes maturing July 1, after which Bhalla said RLJ will have no debt maturity until 2029 and a weighted average maturity of more than four years.
Bhalla reported more than $950 million of liquidity, including $600 million of undrawn revolver capacity, with 84 of 92 hotels unencumbered by debt. He said weighted average interest rate was 4.6% and 75% of debt was fixed or hedged. RLJ ended the quarter with $2.2 billion of debt and paid a quarterly dividend of $0.15 per share, which Bhalla described as “well-covered.”
Conversions, renovations, and 2026 outlook
Management said recently completed projects are contributing to results and remain a core capital allocation focus. Hale said four major renovations at high-occupancy hotels completed last year delivered 9% RevPAR growth and 10% EBITDA growth in the quarter. She added that seven completed conversions generated 16% EBITDA growth, and said the company remains on track to relaunch the Renaissance Pittsburgh Hotel under Marriott’s Autograph Collection this summer.
Hale said RLJ is preparing to convert the Wyndham Boston Beacon Hill to Hilton’s Tapestry Collection, with construction expected to begin later this year, and stated the company expects to announce its next conversion in the coming quarter. In Q&A, she said the cadence is generally about two conversions per year, influenced by franchise expirations and seasonality.
For capital spending, Hale reiterated 2026 capital expenditures guidance of $80 million to $90 million, saying “the vast majority” is focused on ROI-related renovations. She said the company generally targets “high double-digit returns” on these investments and cited “north of 40% returns” on incremental capital for conversions. Regarding Boston, Hale said management believes there is “40% upside in the EBITDA on that asset” post-conversion, while noting that at Mills House, EBITDA doubled following conversion.
Looking ahead, Hale acknowledged macro uncertainty and said it is contributing to shorter booking windows for group and leisure, though she said RLJ has not observed a noticeable impact on results to date. Bhalla said the company incorporated first-quarter outperformance into revised full-year guidance while keeping expectations for the remainder of the year unchanged.
RLJ’s updated 2026 guidance includes:
- Comparable RevPAR growth of 1.5% to 3.5%
- Comparable hotel EBITDA of $356 million to $380 million
- Corporate adjusted EBITDA of $324 million to $348 million
- Adjusted FFO per diluted share of $1.29 to $1.45
- Capital expenditures of $80 million to $90 million
- Cash G&A of $32.5 million to $33.5 million
- Net interest expense of $101 million to $103 million
Management also discussed event-driven demand catalysts embedded in expectations, including the World Cup and America’s 250th anniversary. Hale said RLJ’s World Cup strategy has focused on blocks for teams, media, and sponsors, with deposits beginning to come in, while also emphasizing that the benefit in high-occupancy markets is expected to be “a rate game” in places like Los Angeles, New York, and Miami. Bardenett added RLJ has locked in team deposits in three of the nine markets where it has exposure, and said teams can spur fan demand to stay nearby.
In closing remarks, Hale said RLJ remains “cautiously optimistic” about demand durability and believes its portfolio positioning and capital allocation initiatives support continued outperformance relative to the industry.
About RLJ Lodging Trust NYSE: RLJ
RLJ Lodging Trust is a self-managed, publicly traded real estate investment trust (REIT) that acquires, owns and operates premium-branded, focused-service and compact full-service hotels. The company's portfolio is concentrated in major U.S. markets, targeting properties that benefit from strong corporate and leisure demand, limited new supply and established brand affiliations.
The trust's hotels are affiliated with leading global lodging brands across the spectrum of service levels, including lifestyle and upscale segments.
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