RevPAR growth of 6.1 percent, exceeding industry RevPAR performance by approximately 25 percent.
WEST PALM BEACH, FLA. – Chatham Lodging Trust, a lodging real estate investment trust (REIT) that invests in upscale, extended-stay hotels and premium-branded, select-service hotels, today announced results for the fourth quarter ended December 31, 2023.
Fourth Quarter 2023 Key Items
- Portfolio Revenue Per Available Room (RevPAR) – Increased 2.5 percent to $121 compared to the 2022 fourth quarter. Average daily rate (ADR) accelerated 0.5 percent to $173, and occupancy jumped 2 percent to 70 percent for the 39 hotels owned as of December 31, 2023.
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- RevPAR for the Silicon Valley and Bellevue hotels was up 14 percent over the 2022 fourth quarter.
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- Excluding the Silicon Valley and Bellevue hotels, RevPAR was up 5 percent over the 2019 fourth quarter.
- Net Loss – Incurred a $11.0 million net loss applicable to common shareholders compared to a net loss of $4.0 million in the 2022 fourth quarter. Net loss per diluted common share was $(0.23) versus net loss per diluted common share of $(0.08) for the same period last year.
- Hotel EBITDA Margin – Generated margins of 31.6 percent in the 2023 fourth quarter compared to 2022 fourth quarter margins of 33.3 percent.
- Adjusted EBITDA– Rose $0.4 million from $20.4 million last year to $20.8 million in the 2023 fourth quarter.
- Adjusted FFO – Produced AFFO of $9.8 million in the 2023 fourth quarter versus $10.2 million in the 2022 fourth quarter. Adjusted FFO per diluted share was $0.19 compared to $0.20 in the 2022 fourth quarter.
- Asset Sale – Sold the Hilton Garden Inn Denver Tech Center for approximately $18 million subsequent to the end of the quarter. An approximate $6 million renovation of the hotel planned for 2023 was not completed due to the pending sale.
The following chart summarizes the consolidated financial results for the three months and year ended December 31, 2023, and 2022, based on all properties owned during those periods ($ in millions, except margin percentages and per share data):
| Three Months Ended | Year Ended | ||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | 2023 | 2022 | ||||
| Net (loss) income | $(9.3) | $(2.1) | $2.5 | $9.9 | |||
| Diluted net (loss) income per common share | $(0.23) | $(0.08) | $(0.11) | $0.04 | |||
| GOP Margin | 39% | 40% | 43% | 45% | |||
| Hotel EBITDA Margin | 32% | 33% | 36% | 38% | |||
| Adjusted EBITDA | $20.8 | $20.4 | $101.1 | $99.8 | |||
| AFFO | $9.8 | $10.2 | $59.7 | $59.6 | |||
| AFFO per diluted share | $0.19 | $0.20 | $1.18 | $1.19 | |||
| Dividends per common share | $0.07 | $0.07 | $0.28 | $0.07 | |||
2023 Highlights
“The lodging industry in 2023 was interesting given the differing RevPAR trends each segment experienced with leisure, group and business travel behaving independent of each other,” explained Jeffrey H. Fisher, Chatham’s president and chief executive officer. “For Chatham, it was quite the roller coaster, with the beginning of the year meaningfully impacted by significant layoffs in the technology sector, followed by the elimination of internship programs for the summer, all while business travel in most other markets was performing well. After Labor Day, building off the strong business travel undercurrent around the country, our technology markets started to gain traction in the fourth quarter, an encouraging sign as we head into 2024 with momentum.”
Chatham’s 2023 highlights include:
- RevPAR growth of 6.1 percent, exceeding industry RevPAR performance by approximately 25 percent, despite losing approximately $12 million of intern-related room revenue (represents almost 4 percent of 2022 portfolio room revenue)
- 25 percent rise in other department profits due primarily to continued revenue enhancement initiatives within the company’s parking operation and hotel retail markets (combined growth of 21 percent)
- Reduced net debt by $26 million and leverage ratio to 25 percent from 27 percent, marking the lowest level in a decade, based on the ratio of Chatham’s net debt to investment in hotels, at cost
- Repaid $150 million of maturing debt using available liquidity and new debt issuances
- Successfully issued $83 million of fixed-rate debt
- Paid common share dividends of $0.28 per share compared to $0.07 per share in 2022
- Participated in the Global Real Estate Sustainability Benchmark (“GRESB”) for the second time, increasing its overall score by 9 percent from 75 to 82
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- Earned four of five GRESB Stars and was awarded GRESB’s “Green Star”
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- Received an overall score of 82/100, ranking 31st out of 115 listed companies in the Americas region, and 2nd in Chatham’s peer group
“Looking forward to the upcoming year, we are encouraged by the early trends our hotels are experiencing. Technology companies that stay with us are back to growing and investing in the future and requiring their employees to be present in their offices. We expect more deal flow in 2024 and we have the financial flexibility to address all upcoming debt maturities, make acquisitions, grow FFO and increase distributable cash flow,” Fisher added.
Fourth Quarter 2023 Operating Results
Fisher highlighted, “We were pleased to beat fourth quarter consensus estimates as we achieved better-than-expected top- and bottom-line performance. We were able to combine RevPAR growth of 2.5 percent with a 25 percent increase in other operating profit while holding departmental expenses flat year-over-year on a cost per occupied room basis. This quarter felt more stabilized than the last six quarters, and year-over-year RevPAR growth accelerated throughout the quarter and into January. February RevPAR has been adversely impacted by the severe weather across the country as heavy rains in the west and heavy rain and snow across the middle of the country and the northeast impacted travel. Through last week, RevPAR is up 2 percent year-to-date.
“Although Silicon Valley and Bellevue RevPAR recovery has been slower than we hoped, the future looks incredibly bright with surging investments being made into artificial intelligence and the processing infrastructure necessary to support those initiatives. Including our Austin hotels, no other lodging REIT has the exposure to this AI based tech resurgence as Chatham does,” Fisher emphasized.
Hotel RevPAR Performance
The below chart summarizes key hotel financial statistics for the 39 comparable hotels owned as of December 31, 2023, compared to the 2022 and 2019 fourth quarters:
| Q4 2023 RevPAR | Q4 2022 RevPAR | Q4 2019 RevPAR | |||
| Occupancy | 70% | 69% | 76% | ||
| ADR | $173 | $172 | $160 | ||
| RevPAR | $121 | $118 | $122 |
The below chart summarizes RevPAR statistics by month for the company’s 39 comparable hotels (38 hotels in January 2024 after the sale of the Hilton Garden Inn Denver Tech Center):
| October | November | December | |||
| Occupancy | 78% | 69% | 63% | ||
| ADR | $187 | $167 | $160 | ||
| RevPAR | $147 | $116 | $101 | ||
| RevPAR – prior year | $145 | $115 | $95 | ||
| % Change in RevPAR vs. prior year | 1% | 1% | 7% |
Fisher continued, “Our fourth quarter RevPAR growth of 2.5 percent was almost double industry-wide RevPAR growth, and as trends normalize for us moving forward, we should continue to outperform the industry given the resurgence of our primarily technology dependent markets. Relative to 2019, fourth quarter ADR was up 8 percent which, again, bodes well as we move ahead into 2024 and business travel demand accelerates.
“Weekday and weekend occupancy was up about 100 basis points in the fourth quarter versus last year and is down approximately 9 and 7 percent versus 2019, respectively. Conversely, weekday ADR was up over 4 percent versus 2019, and weekend ADR was up approximately 20 percent over 2019 levels.”
RevPAR performance for Chatham’s largest markets (markets that account for five percent of hotel EBITDA contribution over the last twelve months) is presented below:
| % OF LTM EBITDA | Q4 2023 RevPAR | Change vs. Q4 2022 | Q4 2022 RevPAR | Q4 2019 RevPAR | |||||
| 39 – Hotel Portfolio | $121 | 3% | $118 | $122 | |||||
| Silicon Valley | 13% | $119 | 11% | $108 | $158 | ||||
| Coastal Northeast | 9% | $152 | (3)% | $156 | $135 | ||||
| Los Angeles | 9% | $147 | (5)% | $155 | $149 | ||||
| Washington D.C. | 8% | $125 | 5% | $119 | $132 | ||||
| Greater New York | 7% | $163 | 16% | $141 | $138 | ||||
| San Diego | 6% | $164 | 1% | $163 | $148 | ||||
| Dallas | 6% | $105 | 8% | $97 | $91 | ||||
| Austin | 5% | $125 | 1% | $124 | $125 |
“Outside of our New York and Los Angeles markets which were oppositely impacted by renovation comparisons, it was encouraging to see all but one market grow in the fourth quarter and great that our largest market produced the strongest growth of all our top markets,” stated Dennis Craven, Chatham’s chief operating officer. “Within Silicon Valley, the underlying demand is strengthening, and fourth quarter occupancy of 65 percent was not far off 2019 fourth quarter occupancy of 69 percent. We expect to see continued demand growth in 2024.
“We continue to monitor deplanements into our tech driven markets. Deplanements into San Francisco were up 12 percent over the 2022 fourth quarter and only down 8 percent to 2019. At SFO, international deplanements were only off 3 percent versus 2019 levels. San Jose deplanements remain off about 27 percent to 2019 levels. Seattle deplanements are only off 2 percent versus 2019 levels.”
Craven commented further, “Washington, D.C., is building momentum heading into 2024 and still has meaningful upside to 2019 levels. Dallas and Austin continue to benefit from corporate relocations. San Diego is poised for a strong 2024 given the increase in large conventions in 2024, although the recent bad weather resulted in the cancellation of some business in February.”
Approximately 63 percent of Chatham’s hotel EBITDA over the last twelve months was generated from its extended-stay hotels. Chatham has the highest concentration of extended-stay rooms of any public lodging REIT at 61 percent.
Fourth quarter 2023 occupancy, ADR and RevPAR for each of the company’s major brands, based on the 39 comparable hotels, is presented below (number of hotels in parentheses):
|
Residence Inn (16) |
Homewood Suites (6) |
Courtyard (4) |
Hilton Garden Inn (4) |
Hampton Inn (3) |
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| Occupancy – 2023 | 73% | 75% | 66% | 61% | 78% | ||||
| ADR – 2023 | $190 | $145 | $144 | $170 | $164 | ||||
| RevPAR – 2023 | $138 | $108 | $95 | $104 | $128 | ||||
| RevPAR – 2022 | $126 | $110 | $92 | $115 | $125 | ||||
| % Change in RevPAR | 9% | (2)% | 3% | (10)% | 2% |
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
