Introduction & Market Context
RLJ Lodging Trust (NYSE:RLJ) recently presented its Q1 2025 earnings results, revealing a mixed performance characterized by modest revenue growth but declining margins. The lodging REIT, which closed at $7.03 on May 5, 2025, down 3.17% for the session, continues to navigate a challenging hospitality environment with its portfolio of 94 properties comprising 20,982 rooms.
The company’s stock has experienced significant volatility, trading well below its 52-week high of $10.87 and currently hovering near the lower end of its 52-week range. According to the earnings call, RLJ outperformed EPS expectations with a loss of $0.02 per share versus the forecasted loss of $0.0402, despite revenue coming in slightly below analyst projections.
Quarterly Performance Highlights
RLJ Lodging Trust’s Q1 2025 performance showed modest growth in key revenue metrics despite occupancy challenges. The company reported RevPAR (Revenue Per Available Room) of $141.23, representing a 1.6% increase compared to Q1 2024. This growth was primarily driven by a 2.1% improvement in ADR (Average Daily Rate) to $204.31, which helped offset a slight 0.5% decline in occupancy to 69.1%.
As shown in the following comprehensive operating statistics table, the company’s quarterly performance metrics reveal the balance between rate growth and occupancy challenges:
Total revenue for the quarter reached $327 million, a 1.2% increase from the $323.23 million reported in Q1 2024. However, despite this revenue growth, Comparable Hotel EBITDA declined to $85.3 million from $88.34 million in the prior year period, resulting in EBITDA margin compression of 120 basis points to 26.1%.
Detailed Financial Analysis
RLJ’s portfolio performance varied significantly across markets, with certain regions demonstrating robust growth while others faced headwinds. The Los Angeles/Anaheim market was a standout performer, achieving 6.8% RevPAR growth driven by an 8.0% increase in occupancy, despite a slight 1.1% decline in ADR.
The following market breakdown illustrates the varying performance across RLJ’s geographic footprint:
From a financial perspective, RLJ provided a detailed reconciliation of its Comparable Hotel EBITDA, starting with net income of $66.6 million for the trailing twelve months ending Q1 2025. After accounting for depreciation, interest expenses, and various adjustments, the company reported Comparable Hotel EBITDA of $394.3 million for the trailing twelve-month period.
The EBITDA reconciliation provides insight into the company’s underlying financial performance:
Strategic Initiatives & Debt Management
A critical aspect of RLJ’s current financial strategy involves managing its debt maturity schedule. The company faces significant near-term maturities, with $181 million (31% of total debt) coming due in 2025. This represents a key challenge for management in the current interest rate environment.
The following overview highlights RLJ’s debt maturity schedule and key financial metrics:
During the earnings call, CEO Leslie Hale emphasized the company’s strategic positioning, noting that "Our urban centric portfolio is geographically diverse and benefits from its hard of demand locations with seven day a week demand generators." She also highlighted the company’s resilience, stating, "We have curated a portfolio and capital structure which positions us to navigate this choppy environment and create value in all phases of a lodging cycle."
Forward-Looking Statements
RLJ Lodging Trust has provided a cautious outlook for the remainder of 2025, expecting comparable RevPAR growth between -1% to +1% and adjusted FFO per share ranging from $1.38 to $1.58. Management indicated that Q2 2025 is anticipated to be the weakest quarter, with expectations for flat RevPAR in the latter half of the year.
The company faces several challenges moving forward, including economic uncertainty impacting travel demand, rising operating costs (which grew by 2.9% in Q1), shortened booking windows complicating revenue forecasting, and competitive pressures in urban markets. Additionally, managing the significant debt maturities in 2025 and early 2026 will require careful financial management in the current interest rate environment.
Despite these challenges, RLJ’s management remains confident in the company’s ability to navigate the current market conditions, pointing to its diversified urban-centric portfolio and strategic capital structure as key advantages. The company continues to focus on operational excellence and strategic asset management to drive performance in a challenging lodging environment.
Full presentation:
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