Summit Hotel Properties Reports Record High EBITDAre

Summit Hotel Properties Reports Strong Q2 2024 Financial Performance

Summit Hotel Properties has announced impressive financial results for the second quarter of 2024, achieving a record high adjusted EBITDAre and notable growth in adjusted funds from operations (FFO).

The company’s pro forma revenue per available room (RevPAR) exceeded the overall performance of the U.S. lodging sector, driven by occupancy increases in both urban and suburban areas. Although the firm adjusted its full-year RevPAR growth forecast downward due to reduced demand, it sustained its adjusted FFO ranges and continued to declare dividends for shareholders.

Key Highlights

• Adjusted EBITDAre climbed 6% to nearly $56 million, marking a new quarterly record.
• Adjusted FFO rose by 10% year-over-year, representing the second consecutive quarter of double-digit growth.
• Pro forma RevPAR improved by 3.4% year-over-year, outpacing the national average in the lodging industry.
• Nine hotel sales concluded for a total of $131 million, helping lower the net debt-to-EBITDA ratio.
• The full-year guidance for RevPAR growth was revised to a range of 1% to 2.5%, but adjusted FFO projections were retained.
• Operating expenses per occupied room are nearing pre-pandemic levels, aided by reductions in turnover and reliance on contract labor.
• A slight decline of 25 basis points in hotel EBITDA margin is expected, though flat to 2.5% growth in RevPAR is anticipated for the latter half of the year.
• A quarterly common dividend of $0.08 per share was declared.

Company Outlook

• Updated full-year RevPAR growth expectations set between 1% to 2.5%.
• Adjusted FFO and AFFO per share ranges were retained.
• The company expects steady RevPAR growth through year-end.
• Anticipates lower-than-average industry supply growth over the next few years.

Bearish Highlights

• The full-year RevPAR growth forecast was lowered due to weaker demand.
• A predicted 25 basis point decrease in hotel EBITDA margin is anticipated for the full year.

Bullish Highlights

• Continued growth in pro forma RevPAR and EBITDA in previously lagging markets.
• Strong balance sheet with a total liquidity exceeding $325 million.
• Positive effects observed from hotel sales and deleveraging strategies.

Misses

• The revised RevPAR growth range indicates a decline from initial expectations.

Q&A Highlights

• Expense management is being achieved through lower contract labor and turnover rates.
• The company expressed optimism for room rate growth as business and group travel increase in the fall.
• Concerns regarding new hotel brands potentially impacting rates were addressed, suggesting that urban market positioning might help mitigate these risks.

Summit Hotel Properties’ second quarter earnings call reflected its capability to adapt to a challenging economic environment with solid financial outcomes and effective portfolio management. The company’s strategic focus on urban and suburban markets has yielded increased occupancy and RevPAR growth, despite a more cautious outlook for the remainder of the year. With a solid balance sheet and proactive expense management, the firm is well-prepared to navigate reduced demand while continuing its growth trajectory.

This article provides a comprehensive overview of Summit Hotel Properties’ recent quarterly performance and outlook without referencing external sources.