RLJ Lodging Trust

Greetings and welcome to the RLJ Lodging Trust first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Paul Austin, Director of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator. Good morning and welcome to RLJ Lodging Trust's 2026 First Quarter Earnings Call. On today's call, Leslie Hale, our President and Chief Executive Officer, will discuss key highlights for the quarter. Nikhil Bala, our Chief Financial Officer, will discuss the company's financial results. Tom Bardinet, our Chief Operating Officer, will also be available for Q&A. Forward-looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results to differ materially from what has been communicated. Factors that may impact the results of the company can be found in the company's 10-Q and other reports filed with the SEC. The company undertakes no obligation to update forward-looking statements. Also, as we discuss certain non-GAAP measures, it may be helpful to review the reconciliations to GAAP located in our press release. Finally, please refer to our schedule of supplemental information, which includes pro forma operating results for our current hotel portfolio. I'll now turn the call over to Leslie.

Thanks, John-Paul. Good morning, everyone, and thank you for joining us today. We are encouraged to see the lodging industry off to a strong start this year. benefiting from the underlying strength of fundamentals, with the acceleration of business transient demand being a key driver. We are particularly pleased with our first quarter results, as our urban-centric portfolio outperformed the industry. 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-based 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. During the first quarter, we achieved REVPAR growth of 4.8%, outperforming the industry by 100 basis points. We delivered robust non-room revenue growth, which exceeded our REVPAR performance by more than 300 basis points. And we drove high single-digit year-over-year EBITDA growth and margin expansions. We also advanced our conversion pipeline and addressed all of our maturities through 2029. Our solid first quarter performance demonstrates the momentum in our urban markets and the growth embedded in our portfolio, while the ongoing execution of our capital allocation and balance sheet initiative position us to continue to drive out performance relative to the industry and create long-term shareholder value. Turning to our operating results, Our first quarter RETPAR growth of 4.8% was balanced between occupancy and ADR gains. Trends improved sequentially throughout the quarter, with RETPAR in February and March achieving healthy year-over-year growth of 6% and 9% respectively following January's RETPAR decline. Both February and March were aided by a robust calendar of events as well as the favorable timing of holidays, which bolstered demand. We were pleased to see this positive momentum carry into April. Our urban markets have been consistently performing well, disproportionately benefiting from positive trends across all demand segments. We were pleased to see our urban footprint outperform the broader industry urban markets, with a number of our markets delivering high single-digit REVPAR growth. Notably, Northern California achieved outstanding REVPAR growth of 27%. benefiting not only from the Super Bowl and the favorable shift of the RSA Conference to March this year, but also from the continued expansion of the AI industry, which is driving significant corporate investment and business travel demand broadly across this market, in addition to a better overall environment. New York City was another noteworthy market during the quarter, with our properties achieving over 8% REF PAR growth, driven by healthy corporate and leisure transient demand. a favorable events lineup, and a ramp of our high-occupancy renovations that we completed last year. As it relates to segmentation, business travel saw robust growth during the first quarter, with our business transient revenues growing by 9%, which was largely demand-driven, with room nights increasing by nearly 700 basis points. The momentum in business travel accelerated throughout the quarter, underpinned by strong growth in business investments driven by AI-related spending, as well as record corporate profits. This is specifically fueling the ongoing strength in sectors such as technology, finance, aerospace, and life sciences, which is amplifying overall BT demand. Leisure trends were strong across our portfolio, with revenues growing by 5%. Demand remained resilient, and we were encouraged to see rate growth of 3%. The leisure segment benefited from a compressed spring break as well as elevated demand at a number of our hotels as winter storms across the country drove additional leisure travel during peak season. Our urban leisure once again saw stronger relative performance, as our hotels and live-workplace submarkets are capturing robust demand around sports, concerts, dining, festivals, and entertainment. Importantly, Our geographically diversified portfolio continues to benefit year after year from the rotation of signature events within our footprint. Relative to our group segment, even with difficult comparisons from the inauguration in D.C. and the Austin Convention Center, booking trends remained healthy, evidenced by our in-the-quarter, for-the-quarter revenue pace increasing by 900 basis points and ADR increasing by 3% over last year. We were especially pleased to see a meaningful pickup in group bookings for the second quarter, which saw pace improve by 400 basis points. We are encouraged by the increasing share of corporate bookings within our group mix, which has positive implications for ADR and out-of-room spend. Our portfolio also generated outsized non-room revenue growth of 8.2%, once again, underscoring the momentum behind our ROI initiative. and the investments we have made in expanding ancillary revenue channels. These initiatives allowed us to increase our total revenues by 5.4%. This top-line growth combined with disciplined cost management and a lean operating model contributed to our significant EBITDA outperformance relative to our initial expectations and our margins expanding by 45 basis points over the prior year. Now turning to capital allocation. Our transformative renovations from last year, as well as our completed conversions, are delivering tangible results and contributed meaningfully to our outperformance relative to the industry. This is demonstrated by our four major renovations at high-occupancy hotels completed last year, achieving 9% REVPAR and 10% EBITDA growth during the quarter. Our conversions continue to deliver solid results, with our seven completed conversions generating EBITDA growth of 16%. Additionally, we made further progress towards our Renaissance Pittsburgh conversion and remain on track to relaunch the property under Marriott's autograph collection this summer. We advanced preparation of our conversion of the Wyndham Boston Hotel, which will join Hilton's tapestry collection, and we are on pace to begin construction later this year. And we look forward to announcing our next conversion in the coming quarter. Collectively, these capital allocation initiatives, supported by our strong balance sheets, position us for multiple years of growth in 2026 and beyond. Looking ahead, we recognize that the macro environment remains uncertain, driven by an evolving geopolitical backdrop, which is giving rise to shorter booking windows and limiting visibility beyond the near term. To date, however, we have not observed a noticeable impact on our results. Our first quarter outperformance on both the top and bottom line is encouraging. and we believe the setup continues to favor urban markets for the remainder of the year, supported by sustained strength in business transient and robust demand for urban leisure experiences, trends that should disproportionately benefit our portfolio. Overall, we had already anticipated these healthy trends in our original guidance for the remainder of the year. However, given the current uncertainty, we will continue to monitor any shifts in demand. Our outlook assumes that The continuing broad-based strength in BT, supported by healthy corporate profits and growth across a number of industries, reinforcing our view that the recovery in this segment has further room to grow. The resiliency of leisure demand and expectations for continued rate growth as we approach the peak summer travel season, especially in our urban markets, which have an extensive lineup of events, sports, concerts, and entertainment. A positive group pace for the remainder of the year with ADR demonstrating pricing power and our expectations that even with a shortened booking window, we will continue to see strong in-the-quarter, for-the-quarter bookings. A favorable footprint to capture upcoming catalysts, including the World Cup and America's 250th anniversary. The ongoing momentum in Northern California across all demand segments further validating the sustainability of this market's recovery. Continued growth of non-room revenues from our ROI initiatives, as well as tailwinds from the ramp of our four significant renovations completed last year and our recently completed conversions, which are well positioned to drive multiple years of growth. Our strong results are a direct outcome of the strategic repositioning of our portfolio over the past several years. through asset recycling, targeted acquisition, and high-impact conversion. As we look ahead, we remain cautiously optimistic about the long-term durability of the demand trends we are seeing and believe our well-positioned portfolio will support continued strong relative performance and the creation of long-term value for our shareholders. With that, I will turn the call over to Nikhil.