Pebblebrook Earnings: Hotel EBITDA Decline Not as Large as Anticipated

Third-quarter results for no-moat Pebblebrook Hotel Trust were better than we anticipated, leading us to reaffirm our $27.50 fair value estimate. Occupancy came in at 75.4% for the third quarter, which is a 260-basis-point improvement over the 72.9% level reported in the third quarter of 2022 but still remains well below the approximately 86% level reported in the third quarter of 2019. Meanwhile, average daily rent fell 4.3% year over year. As a result, revenue per available room fell 1.1% year over year in the quarter, which is in line with our estimate of a 0.9% decline. While room revenues were down, other hotel revenues were up 17.9%, leading to same-store revenues being up 0.3. Same-store operations were up 3.7% in the quarter and led to hotel EBITDA falling 7.1% in the third quarter, though that is better than our estimate of a 12.2% decline. Pebblebrook reported adjusted funds from operations of $0.61 per share, which is $0.05 below the $0.66 figure the company reported in the third quarter of 2022 but is $0.06 better than our $0.55 estimate for this quarter.