RLJ Lodging Trust Raises 2026 Outlook After 9.7% RevPAR Jump

RLJ Lodging Trust lifted its full-year RevPAR growth forecast by 200 basis points at the midpoint after third-quarter comparable RevPAR rose 9.7% year over year to $153, the hotel real estate investment trust said. Hotel-level earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 17.5% to $93.9 million, and the company said its RevPAR growth beat the broader industry by 260 basis points.

For finance teams tracking lodging recoveries, the quarter showed rate power layered on top of demand. President and CEO Leslie Hale said demand strengthened across business, leisure and group travel, particularly in urban markets. Momentum carried into October, with preliminary RevPAR up 6%, she said.

What drove the top line?

Business transient revenue, the corporate-travel segment hotels price most aggressively, increased 15% in the quarter after gains of 10% in each of the previous two quarters. Hale said the increase reflected a 13% rise in average daily rate and 2% demand growth. Leisure and group revenues each grew 10%, with group bookings providing an occupancy base that allowed hotels to raise rates for transient guests.

CFO Nikhil Bhalla reported the portfolio-wide figures:

• Comparable average daily rate rose 6.4% to $203.
• Occupancy increased 230 basis points to 75.4%.
• Non-room revenue, including food, beverage and other guest spending, grew 6.5%.

Leisure demand drew support from travelers attending sports events, concerts and other entertainment in city centers. 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%, and the company still estimates the tournament will contribute roughly 45 basis points to full-year RevPAR growth. Northern California, RLJ's largest market, recorded RevPAR growth above 13%, which Hale attributed partly to artificial-intustry expansion supporting corporate investment, events and business travel.

How did margins and guidance move?

Hotel EBITDA margin widened 190 basis points to 26.5%. Bhalla said cost per occupied room rose approximately 3% while fixed costs came in slightly lower, helped by insurance savings and property tax appeals. Corporate adjusted EBITDA increased 17.3% to $85 million, and adjusted funds from operations (FFO), the REIT earnings measure, per diluted share rose 25.9% to $0.34. Comparable results covered the 91 hotels RLJ owned at quarter-end.

The updated 2026 outlook calls for:

• Comparable RevPAR growth of 5.75% to 6.25%.
• 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 continue through year-end, while noting that geopolitical uncertainty persists.

What do the asset moves change?

Conversions are delivering outsized returns. RLJ's eight completed hotel conversions generated 12% RevPAR growth and 18% EBITDA growth in the quarter, while properties that underwent high-impact renovations last year posted 26% RevPAR growth and more than doubled EBITDA, Hale said. The company has begun renovating the Fairfield Inn & Suites Key West, set to join the Margaritaville family, and is starting work at the Wyndham Boston Beacon Hill, slated for Hilton's Tapestry Collection; both relaunch in 2027. RLJ targets roughly two conversions per year.

In mid-October, RLJ sold seven hotels near Chicago Midway Airport for $110 million, equal to 14 times forecast 2026 EBITDA, or 16 times including required capital expenditures. Bhalla said the deal included $20 million of seller financing with a three-year payback and a high-single-digit interest rate. Hale said RLJ will weigh conversions, acquisitions, share buybacks and debt repayment, focused on increasing FFO per share. At quarter-end the company carried $2.2 billion of debt, no maturities until 2029 and more than $1 billion in liquidity.

Is there room left to run?

Yes, on two fronts. Hale said 2027 group booking pace was ahead by mid-single digits, citing convention calendars in Washington, D.C., Boston and San Diego plus continued Northern California momentum. COO Tom Bardenett said Monday-through-Wednesday occupancy sat about six percentage points below 2019 levels, and Hale noted business transient rates remain below group rates, another potential lever for growth.