RLJ Lodging Trust (NYSE:RLJ) raised its full-year outlook after stronger business travel and higher room rates helped the hotel owner post third-quarter results above its expectations.
Comparable revenue per available room, or RevPAR, rose 9.7% from a year earlier to $153, while hotel earnings before interest, taxes, depreciation and amortization, or EBITDA, climbed 17.5% to $93.9 million. The company said its RevPAR growth outpaced the broader industry by 260 basis points.
President and CEO Leslie Hale said demand strengthened across business, leisure and group travel, particularly in urban markets. She said the momentum continued into October, when preliminary RevPAR grew 6%.
Business Travel Drives Growth
Business transient revenue increased 15% in the third quarter, following growth of 10% in each of the previous two quarters. The latest gain reflected a 13% increase in average daily rate and a 2% rise in demand, Hale said.
Leisure and group revenues each grew 10%. Hale said group bookings provided a base of occupancy that helped hotels raise rates for transient guests. Leisure demand was supported by travelers attending sports events, concerts and other entertainment in city centers.
Across the comparable portfolio, average daily rate rose 6.4% to $203 and occupancy increased 230 basis points to 75.4%, CFO Nikhil Bhalla said. Non-room revenue, including food, beverage and other spending, grew 6.5%.
Several markets benefited from World Cup matches, but Hale said the strength extended beyond the tournament. Non-World Cup markets posted RevPAR growth of nearly 12%, while the company continued to estimate the tournament would contribute approximately 45 basis points to full-year RevPAR growth.
Northern California, RLJ’s largest market, recorded RevPAR growth of more than 13% in the quarter. Hale attributed its performance partly to expansion of the artificial intelligence industry, which she said was supporting corporate investment, events and business travel.
Margins Expand as Outlook Rises
Hotel EBITDA margin widened by 190 basis points to 26.5% in the quarter. Bhalla said cost per occupied room increased approximately 3%, while fixed costs were slightly lower, helped by insurance savings and property tax appeals.
Corporate adjusted EBITDA rose 17.3% to $85 million, and adjusted funds from operations, or FFO, per diluted share increased 25.9% to $0.34. Comparable results reflected the 91 hotels RLJ owned at the end of the quarter; reported adjusted EBITDA and FFO also included results from sold hotels during the company’s ownership.
For 2026, RLJ now expects:
- Comparable RevPAR growth of 5.75% to 6.25%, up 200 basis points at the midpoint from its prior forecast.
- Comparable hotel EBITDA of $377 million to $383 million.
- Corporate adjusted EBITDA of $352 million to $358 million, a $9 million increase at the midpoint.
- Adjusted FFO per diluted share of $1.47 to $1.51.
The forecast includes the subsequent sale of seven Chicago Midway hotels and assumes no further acquisitions, dispositions or balance-sheet activity. Hale said the outlook reflects third-quarter outperformance and expectations that positive trends will continue through year-end, while noting that geopolitical uncertainty persists.
Conversions and Asset Sale
RLJ’s eight completed hotel conversions generated RevPAR growth of 12% and EBITDA growth of 18% in the quarter. Properties that underwent high-impact renovations last year recorded RevPAR growth of 26% and more than doubled EBITDA, Hale said.
The company has begun renovations at the Fairfield Inn & Suites Key West, which is set to join the Margaritaville family, and is initiating work at the Wyndham Boston Beacon Hill, slated to join Hilton’s Tapestry Collection. Both are on track to relaunch in 2027. Hale said RLJ is targeting approximately two conversions per year.
In mid-October, RLJ sold seven hotels near Chicago Midway Airport for $110 million, representing 14 times forecast 2026 EBITDA, or 16 times including required capital expenditures. Bhalla said the transaction included $20 million in seller financing with a three-year payback period and a high-single-digit interest rate.
Hale said RLJ would consider uses for its capital, including conversions, acquisitions, share buybacks and debt repayment, with a focus on increasing FFO per share. At quarter-end, the company had $2.2 billion of debt, no maturities until 2029 and more than $1 billion in liquidity, Bhalla said.
2027 Demand Indicators
Hale said RLJ’s group booking pace for 2027 was ahead by mid-single digits. She cited convention calendars in Washington, D.C., Boston and San Diego, continued momentum in Northern California, and upcoming events across the portfolio as potential supports for demand.
COO Tom Bardenett said Monday-through-Wednesday occupancy remained approximately six percentage points below 2019 levels, leaving room for further recovery. Hale also said business transient rates remained below group rates, providing another potential opportunity for growth.
About RLJ Lodging Trust (NYSE:RLJ)
RLJ Lodging Trust (NYSE:RLJ) is a self-advised real estate investment trust that owns a portfolio of premium-branded, focused-service and compact full-service hotels. The company’s properties primarily operate under brands affiliated with Marriott International, Hilton Worldwide Holdings and Hyatt Hotels, among other major lodging companies.
RLJ’s hotels are generally located in urban and densely populated areas, including major business and leisure markets across the United States. The properties provide guest accommodations and related hospitality services, while independent hotel management companies typically oversee day-to-day operations.
The company was formed in 2011 and is named after Robert L.
