Pebblebrook Hotel Trust reported third-quarter 2026 results ending September 30 that exceeded the high end of its guidance for the third consecutive quarter. Same-property hotel EBITDA grew 15.1% year over year to $115.2 million. Adjusted EBITDA totaled $107.9 million, and adjusted funds from operations (FFO) were $0.63 per diluted share. Same-property revenue per available room (RevPAR) increased 8.3%, supported by a 7% rise in average daily rate (ADR) and a slight increase in occupied room nights of just over 1%.
Growth Across Transient, Group, and Resort Segments
Transient demand drove significant revenue growth, with transient ADR rising 8.5% and transient room revenue increasing 9.1%. Corporate transient ADR
climbed 9.4%, bolstered by stronger performance in higher-priced consortia channels despite declines in some discount segments. Group room nights increased more than 3%, accompanied by a 1.2% rise in group ADR. Monthly same-property RevPAR growth was 10.1% in July, 5.3% in August, and 9.4% in September.
Resort operations showed robust results, with resort RevPAR up 8.4% and total resort RevPAR increasing 9.2%. Food and beverage revenue grew 11.2%, benefiting from outlet, banquet, and catering demand. Eight out of 13 resorts achieved at least 20% hotel EBITDA growth. Resort EBITDA margins expanded 250 basis points to 32.6%. Newport Harbor Island Resort
led gains with a 14%-plus RevPAR increase, a nearly 20% ADR rise, and hotel EBITDA up 19%. Other resorts including L’Auberge Del Mar, Paradise Point Resort & Spa, and Estancia La Jolla also showed improved profitability.
Urban markets collectively posted an 8.3% increase in RevPAR, generating nearly $7 million in incremental hotel EBITDA. The San Francisco, Boston, and Los Angeles markets combined to add $8.5 million in hotel EBITDA year over year. San Francisco’s RevPAR rose 14.5%, including a 21% ADR increase at 1 Hotel San Francisco. Boston’s RevPAR increased 10.6%, while Los Angeles saw a 10.7% RevPAR gain and
a 60% hike in hotel EBITDA. In contrast, Downtown San Diego experienced a 4.5% RevPAR decline, with hotel EBITDA falling by $1.6 million due to a soft convention calendar, particularly in September.
Margin Expansion, Cash Flow, and Capital Actions
Pebblebrook converted 58% of a $26 million increase in same-property total revenue into $15.2 million of incremental hotel EBITDA. Expenses rose 4%, below the nearly 7% revenue growth, leading to a 205 basis point increase in hotel EBITDA margin to 28.8%. Approximately $1 million in lower property taxes and $1.6 million in reduced property insurance costs supported margin expansion. Free cash flow rose over 24% to $55.6 million
for the quarter and reached $143 million through September, a 45% increase from the prior year after capital investment and dividends.
Capital expenditures for the quarter totaled $14.8 million. Pebblebrook lowered its full-year capital investment forecast by $5 million to a range of $60 million to $70 million, citing timing considerations. After quarter-end, the company sold The Hotel Zags in Portland for $10 million; the property had posted negative EBITDA of $600,000 over the prior 12 months. Non-cash impairment charges of $77.3 million related to this sale and revaluations of other assets were recorded.
Over the past year, Pebblebrook sold
nearly $170 million in hotels at an aggregate 17.4-times trailing EBITDA multiple and 3.9% net operating income capitalization rate. The company raised its net asset value per share estimate by $1 to a range of $23.50 to $27.50. During the quarter, approximately 1.2 million common shares were repurchased at an average price of $18.12 per share. Additionally, $7.2 million of preferred shares were retired at an average 23% discount to liquidation value. The net debt to trailing 12-month corporate EBITDA ratio improved to 5.1 times from 5.9 times at year-end. As of September 30, the company had $298 million in
cash and restricted cash, $641 million in available revolver capacity, and $90 million in undrawn term loan capacity.
Market Influences and Corporate Strategy
Improved results were underpinned by higher room rates, expanding transient demand, increased resort spending, and disciplined cost control. Co-President and CFO Raymond Martz noted that the company shifted from the early lodging recovery phase to focusing on rate increases while maintaining occupancy growth. Chairman and CEO Jon Bortz indicated that industry demand strengthened as economic growth accelerated and new hotel supply remained limited. The company anticipates a stronger convention schedule in Downtown San Diego in 2027 to counteract current softness.
Management highlighted
the potential to evaluate small- to medium-sized property investments, including lodging expansions at Skamania and renewable energy projects, aiming to enhance shareholder returns and cash flow per share. The emphasis remains on capital allocation toward opportunities that increase portfolio value.
Company Profile
Pebblebrook Hotel Trust is a publicly traded real estate investment trust that owns and invests primarily in upscale, full-service hotels and resorts across major U.S. urban and resort destinations. Its portfolio includes properties operated under numerous national, regional, and independent brands, with Pebblebrook typically owning the underlying real estate while hotel operations are managed through third-party agreements.
Founded in 2009,
Pebblebrook concentrates on markets with strong tourism, business travel, and cultural or recreational appeal, including locations such as Newport Harbor Island Resort, L’Auberge Del Mar, Paradise Point Resort & Spa, Estancia La Jolla, San Francisco, Boston, Los Angeles, and Downtown San Diego.
