In This Article:
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Comparable Hotel RevPAR Growth: 4.2% year over year.
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Excluding Renovations RevPAR Growth: 6.8% year over year.
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Full-Service Hotels RevPAR Growth: 4.3% year over year.
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Select Service Portfolio RevPAR Growth: 9.6% year over year.
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Extended Stay Portfolio RevPAR Growth: 1.2% year over year.
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Normalized FFO: $28.6 million or $0.17 per share.
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Adjusted EBITDAre: $130.6 million, a decline of 7.4% year over year.
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Interest Expense Increase: $9.4 million.
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Interest Income Decline: $8.4 million.
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Gross Operating Profit Margin: Declined by 160 basis points to 25.3%.
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Adjusted Hotel EBITDA: $43.1 million, a decline of 2.4% year over year.
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Debt Outstanding: $5.8 billion with a weighted average interest rate of 6.4%.
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Cash on Hand: $61 million.
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Capital Improvements: $85 million in Q4, $303 million for the full year 2024.
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Projected Q1 RevPAR: $82 to $84.
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Projected Q1 Adjusted Hotel EBITDA: $20 million to $24 million.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Service Properties Trust (NASDAQ:SVC) reported its strongest hotel revenue growth in almost two years, with comparable hotel RevPAR growing 4.2% year over year.
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The company is successfully executing its strategy to sell 114 Sonesta hotels, expecting to net sales proceeds of at least $1 billion.
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SVC's net lease portfolio remains stable, with a 97.6% lease rate and a weighted average lease term of eight years, providing reliable cash flows.
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The select service portfolio showed exceptional growth, with RevPAR up 9.6% year over year, driven by occupancy growth.
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SVC is focusing on strengthening its balance sheet through asset sales and reinvesting in hotels with the highest opportunity for upside.
Negative Points
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Adjusted hotel EBITDA declined 2.4% year over year, impacted by renovation activities and pressures on expenses such as labor and real estate taxes.
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Normalized FFO decreased to $0.17 per share from $0.30 per share in the prior year quarter.
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Interest expense increased by $9.4 million, and interest income declined by $8.4 million, impacting financial results.
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The extended stay portfolio experienced a decline in ADR, with RevPAR growth of only 1.2%.
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The company faces continued disruption from hotel renovations, with 14 hotels expected to be under renovation in 2025.
Q & A Highlights
Q: Now that you won't be spending CapEx for the 115 assets to be sold, how have your return expectations changed for the remaining assets? A: Brian Donley, CFO, explained that the return expectations remain high single digits, with some projects like the James brand conversions expected to yield 20% to 30% returns. The overall target remains high single digits, varying by property and market.