Q4 results beat expectations despite a protracted government shutdown: occupancy was 68.7%, ADR $199 and RevPAR $137 (down 1.5% year‑over‑year), with outperformance driven by urban markets, renovated/converted hotels and stronger non‑room revenue.
Non‑room revenue and conversions bolstered margins: non‑room revenue rose 7.2%, helping total revenue grow 0.2%; comparable hotel EBITDA was $87.8M and adjusted FFO per diluted share was $0.32, while conversions/renovations delivered sizable RevPAR uplifts (recent conversions +15%, conversions avg nearly +700 bps).
Stronger liquidity and conservative debt posture going into 2026: RLJ extended its revolver to 2031, added term loans and refinanced maturities (no maturities before 2029), ended the quarter with >$1 billion of liquidity and returned $120M to shareholders; 2026 guidance calls for comparable RevPAR +0.5% to +3% and adjusted FFO $1.21–$1.41.
RLJ Lodging Trust (NYSE:RLJ) reported fourth-quarter and full-year 2025 results that management said came in ahead of expectations despite what it described as a “choppy operating environment” that was pressured by a protracted government shutdown. Executives attributed the quarter’s outperformance to relative strength in urban markets, accelerating results at recently renovated and converted hotels as the shutdown ended, and continued growth in non-room revenue, alongside disciplined cost control.
Chief Financial Officer Nikhil Bhalla said fourth-quarter occupancy was 68.7%, average daily rate (ADR) was $199, and RevPAR was $137, representing a 1.5% year-over-year RevPAR decline. The RevPAR contraction reflected a 0.9% decline in occupancy and a 0.7% decline in ADR. Bhalla and CEO Leslie Hale noted the government shutdown weighed on October and November results, while December faced a difficult comparison to the prior year.
Hale said the fourth quarter benefited from urban-market outperformance, a stronger-than-expected renovation ramp as the shutdown ended, and “robust growth” in non-room revenues. Among the company’s urban markets, she highlighted San Francisco’s central business district as the top performer, with 52% RevPAR growth in the quarter, supported by growth across demand segments and a calendar shift of the Dreamforce conference into the fourth quarter. Bhalla added other urban markets cited as outperformers included Northern California, Denver CBD, and New York City, with RevPAR growth of 18.5%, 10.1%, and 4.7%, respectively.
By segment, Hale said non-government business transient revenue grew 5% in the quarter and corporate rates increased 2%. Government demand was pressured by the shutdown, particularly in Washington, D.C., and Southern California. Group revenue declined 3% due to shutdown-related disruption in October and November, though group ADR rose 4%. Leisure demand increased 1%, and Hale said urban leisure again outperformed, supported by holiday demand, though she noted continued consumer price sensitivity.
RLJ emphasized that non-room revenue remained a key contributor. Hale said non-room revenue rose 7.2% in the quarter—nearly 900 basis points ahead of RevPAR—helping the company generate positive total revenue growth. Bhalla said total revenues increased 0.2% year over year, supported by growth in food and beverage, parking, and other revenues.
On expenses, Bhalla said total operating costs increased 0.8% in the quarter and 1.6% for the full year. Fixed expenses benefited from a favorable insurance renewal and $4.7 million of real estate tax benefits from successful appeals that were not included in the company’s outlook. Excluding the tax benefits, Bhalla said total expenses increased 2.1% for the full year.
RLJ reported fourth-quarter comparable hotel EBITDA of $87.8 million and hotel EBITDA margins of 27%, down 44 basis points from the prior year. Adjusted EBITDA was $80.4 million, and adjusted FFO per diluted share was $0.32.
Management reiterated its focus on conversions and high-occupancy renovations as key drivers of performance. Hale said the company delivered its Nashville conversion and continued ramping completed conversions, which she said averaged RevPAR growth nearly 700 basis points ahead of the broader portfolio. On the call, management said the company has completed seven conversions to date, with two more underway, including a planned relaunch of Renaissance Pittsburgh as part of Marriott’s Autograph Collection later this year. RLJ also advanced plans to convert the Wyndham Boston Beacon Hill to Hilton’s Tapestry Collection, with construction expected to begin later this year.
In Q&A, management said its most recently completed conversions generated 15% RevPAR growth, while conversions overall were up about 5% last year. Regarding renovations, Hale cited completed work at high-occupancy hotels in Waikiki and Deerfield Beach, which generated more than 10% RevPAR growth in December as they resumed ramping after the shutdown.
RLJ also discussed asset sales. Bhalla said the company sold three properties for $73.7 million in aggregate at a projected 2025 hotel EBITDA multiple of 17.7x, including required capex. In Q&A, Hale said recent dispositions were influenced by market demand drivers, forward capital needs, and in one case an opportunistic alternative-use buyer. Management also said it remains constructive on additional asset sales and plans to recycle proceeds while maintaining balance sheet strength.
RLJ highlighted refinancing and debt-management actions intended to increase flexibility. Bhalla said that after year-end, RLJ completed four financing transactions that address debt maturities through 2028 and expand capacity, including:
Recasting the company’s $600 million revolving credit facility to extend maturity to 2031
Upsizing and extending an existing $225 million term loan
Adding a new $150 million term loan
Refinancing two mortgage loans maturing in April
Bhalla said the term loans created approximately $500 million of new capacity expected to be used under delayed draws to repay $500 million of senior notes at maturity in July. He said the refinancing is expected to result in a minimal increase in annual interest expense despite the higher-rate environment and would leave the company with no maturities due before 2029.
At quarter end, Bhalla said RLJ had more than $1 billion of liquidity, $2.2 billion of debt, $600 million available under its undrawn revolver, and 84 of 92 hotels unencumbered by debt. Weighted average interest rate was 4.6%, and 73% of debt was fixed or hedged.
On capital returns, management said RLJ returned $120 million to shareholders during 2025 through share repurchases and dividends. Bhalla said RLJ repurchased 3.3 million shares for $28.6 million and continues to pay a quarterly dividend of $0.15 per share.
RLJ provided full-year 2026 guidance that management said assumes a continuation of the current operating environment. The company guided to comparable RevPAR growth of 0.5% to 3%, comparable hotel EBITDA of $344 million to $374 million, corporate adjusted EBITDA of $312 million to $342 million, and adjusted FFO per diluted share of $1.21 to $1.41 (assuming no additional repurchases). The outlook also included expected capital expenditures of $80 million to $90 million, cash G&A of $32.5 million to $33.5 million, and net interest expense of $101 million to $103 million.
Management said it expects total revenue growth to outpace RevPAR growth due to continued success in driving out-of-room spend, with Bhalla citing an expectation that total revenue outperformance could be about 50 basis points. Executives also discussed expense expectations, with assumptions of roughly 3% total expense growth for 2026 and wage and benefit growth of about 3% to 4%.
On cadence, Bhalla said the first quarter is expected to be the softest, as the company laps difficult comparisons in Washington, D.C., from the inauguration and increased demand at Southern California hotels following wildfires. January RevPAR was down 1.9%, and RLJ expects first-quarter adjusted EBITDA to represent about 22% of the full-year outlook.
Management pointed to several potential demand catalysts in 2026, including World Cup games across nine RLJ markets and events tied to the 250th anniversary of America. In Q&A, the company said it expects World Cup-related benefits to contribute about 45 basis points of RevPAR pickup, with an additional roughly 40 basis points from the benefit of lapping high-occupancy renovation disruption in Waikiki, Deerfield Beach, and Key West.
RLJ Lodging Trust is a self-managed, publicly traded real estate investment trust (REIT) that acquires, owns and operates premium-branded, focused-service and compact full-service hotels. The company’s portfolio is concentrated in major U.S. markets, targeting properties that benefit from strong corporate and leisure demand, limited new supply and established brand affiliations.
The trust’s hotels are affiliated with leading global lodging brands across the spectrum of service levels, including lifestyle and upscale segments.
