Chatham Sees Improved Market Conditions Across Portfolio
Among the best performing markets in the hotelier’s portfolio was the State of Florida where its hotel properties’ RevPAR increased 10.2%.
WEST PALM BEACH, FL—Chatham Lodging Trust in its second quarter financial report released on Wednesday says that revenue per available room (RevPAR) increased more than 3% at more than half of its 135-hotel properties.
Among the best performing markets in the hotelier’s portfolio was the State of Florida where its hotel properties’ RevPAR increased 10.2%. Other markets mentioned in Chatham Lodging Trust’s report included its four property Houston portfolio, which saw its RevPAR increase 9.6%; its two Los Angeles-area hotels, which experienced a RevPAR increase of 3.5% and its three Washington DC hotels posted a 3.6% increase.
“Our second quarter results finished at the upper end of our FFO per share guidance expectations, driven by a combination of RevPAR growth above the midpoint of our guidance and strong performance by our joint venture portfolios,” says Jeffrey H. Fisher, Chatham’s president and CEO. “In the 2018 second quarter, RevPAR at our joint venture hotels improved 3.3%, benefitting from the significant capital invested into the Inland portfolio in 2016 and 2017.”
He adds that within the REIT’s portfolio, the company is seeing some improving market conditions across the portfolio, particularly in markets that absorbed most of the competitive new supply. Fisher says that approximately one-third of its hotels saw RevPAR hikes of more than 5% and approximately one-half of its portfolio posted RevPAR increases of more than 3%.
“Markets for us where RevPAR grew more than 5% during the quarter were Marina Del Rey and downtown San Diego, CA.; Downtown Washington D.C.; Farmington, CT.; Maitland, FL; Holtsville, New Rochelle and White Plains, NY.; Washington, PA.; and, finally, San Antonio, TX,” Fisher notes. “RevPAR growth remains strong thus far in the third quarter, with July RevPAR up approximately 3 percent.”
He did point out that the firm will face tough comps in September as its results will be compared to the strong results in Houston and Florida due to hurricane related business last year.
The portfolio RevPAR rose 0.8% in the second quarter to $143, compared to the 2017 second quarter, for Chatham’s 40, wholly owned hotels. The average daily rate improved 0.6% to $172, and occupancy rose 0.2% to 83%.
The company’s net income improved $8.4 million to $13.5 million. Net income per diluted share was $0.29 versus $0.13 in the 2017 second quarter.
Gross operating profit margins were down 50 basis points compared to the 2017 second quarter. The company says the primary reason for the margin decline was attributable to payroll and benefit costs that increased 3.5% and reduced margins by 30 basis points. Small increases in repair and maintenance costs were offset by reduced utilities costs and travel agency commissions, Chatham officials state.