The following is a summary of the Summit Hotel Properties, Inc. (INN) Q1 2024 Earnings Call Transcript:
Financial Performance:
Summit Hotel Properties reported a 10% increase in adjusted EBITDA and a 14% rise in adjusted FFO compared to Q1 of the previous year.
Hotel EBITDA grew by 6%, indicating an 80 basis point margin expansion from Q1 the previous year.
Q1 2024 results noted a year-over-year increase of 1.5% in Pro forma RevPAR, surpassing the total US lodging industry and upscale chain scale by 130 and 140 basis points respectively.
Adjusted EBITDA for Q1 2024 totaled $48.8 million, marking a 10% year-over-year increase, while adjusted FFO was $30 million or $0.24 per share, up 14% from last year.
A reduction of $55 million was witnessed in the company's corporate credit facility balance, following the sales of assets in New Orleans and College Station.
The company's net debt-to-EBITDA fell by one turn over the last year, thanks to beneficial non-core asset sales and continued growth in hotel EBITDA.
Business Progress:
As part of Summit Hotel Properties' strategy, three more assets were sold, leading to an updated 2024 guidance range.
The lagging markets of San Francisco Bay Area, New Orleans, Baltimore, Minneapolis, and Louisville recorded 12% RevPar growth and 44% hotel EBITDA growth, signaling increased future growth potential.
An increase of $0.02 per share in the common dividend was approved by the board, reaching $0.08 per share or $0.32 per share on an annual basis. This reflects a 33% increase in efforts to prioritize capital returns to shareholders.
The company's urban and suburban portfolios emerged as key performers, each presenting around 2.5% RevPAR increase in Q1.
Owing to strong passenger growth and positive comments from major carriers about corporate transient demand and a promising summer travel season, the company's airport hotels were among the top performers.
The company maintains its full-year guidance for RevPAR growth of 2% to 4% and an adjusted EBITDA range of $188 million to $200 million.
As part of its ongoing strategic asset sales, the company is liquidating non-core assets that would require a substantial renovation capital.
Operating expenses have risen by about 2.5% in Q1 2024, and there is a continuous progression on the contract labor front.
Despite the substantial rise in renovation costs, the company strives to maintain a well-maintained portfolio to avoid deferred CapEx buildup. The company is also optimistic about potential cost decreases.
More details: Summit Hotel Properties Inc IR
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