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Pebblebrook's (PEB) Same-Property Revenues Improve in July

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Pebblebrook Hotel Trust (PEB - Free Report) witnessed same-property total revenues growth of 1.7% in July on a year-over-year basis. Per its recently released update, this was driven by a 4.3% rise in non-room revenue.

The company noted that for the overall portfolio, same-property revenue per available room (“RevPAR”) exhibited a year-over-year increase of 0.3%, mainly driven by a 3.1% rise in occupancy. However, a 2.8% decrease in average daily rate (“ADR”) hurt RevPAR to some extent. Management expects July to be the softest month for RevPAR growth in the third quarter.

Many markets benefited from healthy group bookings and the steady recovery of the business transient segment, while leisure demand remained resilient. Key markets driving performance include Boston, Chicago, Portland and Los Angeles.

Moreover, PEB’s recently redeveloped properties continued to ramp up as they have been very well-received by both new and returning guests.

 

Pebblebrook’s Urban and Resort Properties' Update

While the company’s urban portfolio showed a strong performance in the month, the resort portfolio remained resilient.

For PEB’s urban portfolio, same-property urban occupancy improved 3.5%, while ADR witnessed a marginal decline. This led to a 2.1% increase in same-property RevPAR. PEB’s properties in the Boston market capitalized on strong corporate group bookings, significantly driving performance.

Urban weekday occupancy increased 3.7% compared to July 2023, indicating a continued healthy recovery in business demand. In addition, urban weekend occupancy witnessed a rise of 4.4%, achieving a notable 85.6% occupancy level due to the return of leisure travelers to urban locations this summer.

For the resort portfolio, in July, occupancy increased 1.9% year over year. The rise in occupancy levels led to a 3% growth in Non-Room Revenue, supported by recent property redevelopments, remerchandising initiatives and continued healthy out-of-room spend.

However, resort ADR saw a decline of 5.3% due to demand shifts in the leisure transient segment and continued value shopping by some leisure travelers.

 

Conclusion

Pebblebrook is expected to witness a stable operating environment on the back of continuous improvement in business and leisure segments. However, macroeconomic uncertainty is likely to affect the company’s ability to maintain rates in its resort markets. A high interest rate environment adds to its concerns.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have declined 8.5% against the industry’s growth of 15.6%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

 

Stocks to Consider

Some better-ranked stocks from the REIT sector are Cousins Properties (CUZ - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Cousins Properties’ 2024 funds from operations (“FFO”) per share has been raised marginally over the past month to $2.66.

The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past month to $8.09.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.


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