Pebblebrook Hotel Trust reported third-quarter 2026 financial results surpassing the high end of its outlook for a third consecutive quarter. The period ended September 30 saw same-property hotel EBITDA increase 15.1% year over year to $115.2 million, outperforming projections by $10.7 million, according to co-president and CFO Raymond Martz.
Revenue Growth Driven by Higher Rates and Occupancy
Same-property revenue per available room (RevPAR) rose 8.3%, supported by a 7% increase in average daily rate (ADR) and over 1% growth in occupied room nights. Transient average daily rate increased 8.5%, leading to a 9.1% rise in transient room revenue. Corporate transient ADR grew 9.4%, while group room nights advanced
more than 3%, and group ADR rose 1.2%.
Monthly RevPAR gains were 10.1% in July, 5.3% in August and 9.4% in September. Martz attributed roughly 40 basis points of quarterly RevPAR growth to one-time events. The company’s approach of increasing rates while maintaining occupancy marked a shift from earlier lodging recovery phases.
Strong Resort and Urban Market Performance
Resort RevPAR increased 8.4%, with total resort RevPAR advancing 9.2%, bolstered by an 11.2% increase in food-and-beverage revenue from outlets, banquets and catering. Eight of 13 resorts posted at least 20% growth in hotel EBITDA, and resort EBITDA margins expanded by 250 basis points, reaching 32.6%.
Notable resort
achievements included Newport Harbor Island Resort, which recorded RevPAR growth exceeding 14%, an ADR increase near 20%, and a 19% rise in hotel EBITDA totaling over $2 million. Additional profitability improvements were reported at L’Auberge Del Mar, Paradise Point Resort & Spa, and Estancia La Jolla.
Urban markets saw RevPAR grow 8.3%, generating approximately $7 million in incremental hotel EBITDA. San Francisco, Boston and Los Angeles added $8.5 million of hotel EBITDA combined, with San Francisco RevPAR up 14.5% including a 21% increase at 1 Hotel San Francisco. Boston experienced a 10.6% RevPAR increase, and Los Angeles saw a 10.7%
rise alongside a 60% gain in hotel EBITDA.
Downtown San Diego diverged from this trend, with RevPAR declining 4.5% and a $1.6 million decrease in hotel EBITDA, attributed to a weak convention calendar in September. Pebblebrook anticipates a stronger citywide convention schedule in 2027 to drive market recovery.
Financial Efficiency and Portfolio Management
The company converted 58% of a $26 million increase in same-property total revenue into $15.2 million of additional hotel EBITDA. Expenses grew 4% while revenue increased nearly 7%, resulting in a 205 basis point expansion of hotel EBITDA margin to 28.8%. Lower property taxes and insurance costs contributed approximately $2.6 million to
quarterly results.
Free cash flow rose over 24% to $55.6 million for the quarter and reached $143 million year-to-date through September, a 45% improvement after capital investments and dividends. Capital expenditures totaled $14.8 million for the quarter; the full-year capital investment outlook was reduced by $5 million to a range of $60 million to $70 million primarily due to timing.
After quarter-end, Pebblebrook sold The Hotel Zags in Portland for $10 million. This property had generated negative EBITDA of $600,000 in the prior 12 months, prompting a related $77.3 million non-cash impairment charge. Over the last year, the company sold
close to $170 million of hotels at an aggregate 17.4-times trailing EBITDA multiple and 3.9% net operating income cap rate.
Pebblebrook repurchased about 1.2 million common shares at $18.12 each and retired $7.2 million of preferred shares at a 23% average discount to their liquidation preference. Net debt to trailing 12-month corporate EBITDA fell to 5.1 times from 5.9 times at year-end. The trust ended September with $298 million in cash and restricted cash, $641 million of revolver availability, and $90 million of undrawn term-loan capacity.
Outlook for Q4 2026 and 2027 Expectations
For the fourth quarter of 2026, Pebblebrook projects same-property RevPAR growth between 4% and
6%, same-property hotel EBITDA of $73 million to $77 million, adjusted EBITDA between $66 million and $70 million, and adjusted funds from operations of $0.26 to $0.30 per diluted share. October 2026 RevPAR is tracking toward growth exceeding 6%.
Pebblebrook upgraded its full-year 2026 outlook to same-property RevPAR growth of 7.6% to 8%, same-property hotel EBITDA growth from 12.9% to 14.1%, and adjusted FFO of $1.88 to $1.92 per diluted share.
Looking into 2027, the company anticipates continued urban market recovery supported by stronger convention calendars in San Diego, Boston and Washington, D.C., and demand generated by major events across
various locations. Total group and transient revenue pace for 2027 is nearly 5% ahead of 2026. The company is reviewing potential investments in smaller properties, including lodging units at Skamania and solar projects.
