Pebblebrook Earnings: EBITDA Decline Smaller Than Anticipated; LA Wildfires Lowers 2025 Outlook

Pebblebrook Hotel Trust reported fourth-quarter results that were slightly ahead of our expectations, giving us confidence in our $23.50 for the no-moat company. Same-store occupancy improved 310 basis points year over year to 67.4%, though average daily rate was down 3.7% in the fourth quarter. Combined, revenue per available room increased just 0.9%, though that was in line with our estimate of 1.1% growth. While hotel operating expenses increased 4.0% in the quarter and caused hotel EBITDA margins to fall 170 basis points to 19.4% and hotel EBITDA to fall 6.1%, that was better than our estimate of EBITDA margins of 18.4% and a hotel EBITDA decline of 8.2%. As a result, Pebblebrook reported adjusted funds from operations of $0.20 per share in the fourth quarter that beat our $0.11 estimate for the quarter.