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DATE

Monday, May 4, 2026 at 11 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Leslie D. Hale
  • Chief Financial Officer and Treasurer — Nikhil Bhalla
  • Chief Operating Officer — Thomas Bardenett

TAKEAWAYS

  • RevPAR Growth -- 4.8% year over year, balanced between occupancy and average daily rate (ADR) gains.
  • Occupancy -- Increased by 2.6 percentage points to 70.8% for the quarter.
  • ADR -- Rose by 2.1% to $210; both occupancy and ADR contributed to RevPAR results.
  • Urban Portfolio RevPAR -- 4.4% growth, outperforming STR’s comparable markets by 110 basis points.
  • Sequential RevPAR Trends -- Declined 1.9% in January, followed by 6.1% growth in February and 8.9% in March; preliminary April RevPAR grew approximately 4%.
  • Non-Room Revenue -- Increased 8.2%, driven by food and beverage, parking, and ancillary initiatives, exceeding overall RevPAR growth by 3.4 percentage points.
  • Hotel EBITDA -- $89.9 million, up $6.1 million or 7.2% year over year, with hotel EBITDA margins expanding 45 basis points to 26.4%.
  • Adjusted EBITDA -- $80.9 million for the quarter.
  • Adjusted FFO per Diluted Share -- $0.33 for the quarter.
  • Business Transient Revenue -- Increased by 9%, with room nights up almost 700 basis points; strong national account growth and sector diversification (technology, finance, aerospace, life sciences).
  • Leisure Revenue -- Rose 5%, with 3% rate growth and increased demand for urban entertainment and events.
  • Group Segment Bookings -- Revenue pace increased 900 basis points, ADR up 3%; group pace for the second quarter improved 400 basis points, with corporate group mix now exceeding 50% of total group bookings.
  • High-Impact Renovations -- Four completed high occupancy hotel renovations produced 9% RevPAR growth and 10% EBITDA growth; seven conversions delivered 16% EBITDA growth and 8% total revenue growth collectively.
  • Regional Highlights -- Northern California hotels grew RevPAR 27%, South Florida 10%, Houston and Denver each 14%, New York City properties over 8%.
  • Cost Management -- Operating expenses rose 2.1% per occupied room, with margin gains aided by a double-digit decline in property insurance costs and operational efficiencies; energy costs increased due to winter storms and market disruptions but were offset by savings elsewhere.
  • Capital Investment and Returns -- Total capital expenditures projected at $80 million–$90 million in 2026, largely targeting ROI-driven renovations; conversions targeting high double-digit returns and some (e.g., Boston, Pittsburgh) expected to generate 40%+ EBITDA uplift post-conversion.
  • Balance Sheet and Liquidity -- Over $950 million in liquidity, including $600 million undrawn corporate revolver; $2.2 billion total debt with 75% fixed or hedged at an average 4.6% interest rate, weighted average debt maturity extended beyond four years, and 84 of 92 hotels unencumbered by debt.
  • Refinancing Activity -- Expanded undrawn capacity by $500 million to pay off $500 million in senior notes due July 2026; no additional maturities until 2029.
  • Dividend Policy -- Maintained a quarterly dividend of $0.15 per share, described as “well-covered.”
  • Full-Year 2026 Guidance -- RevPAR growth expected between 1.5%–3.5%, comparable hotel EBITDA of $356 million–$380 million, corporate adjusted EBITDA of $324 million–$348 million, adjusted FFO per diluted share of $1.29–$1.45; no new acquisitions or balance sheet changes assumed.
  • Expense and Capital Guidance -- Net interest expense of $101 million–$103 million and cash G&A of $32.5 million–$33.5 million projected for 2026.
  • Event Impacts -- Management expects direct benefit from the FIFA World Cup and the 250th U.S. anniversary, with strategic focus on rate management and teams/media group bookings in major markets.

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RISKS

  • Management highlighted macroeconomic uncertainty and geopolitical factors causing shorter booking windows and limited visibility beyond the near term, but noted, “we have not observed a noticeable impact on our results.”
  • Adjusted EBITDA for the second quarter is anticipated to be “slightly lower than last year,” attributed to outsized first-quarter strength rather than negative trends in business fundamentals.
  • Elevated energy expenses resulted from winter storms and market disruptions linked to war, although these were offset by reductions in property insurance costs.

SUMMARY

RLJ Lodging Trust (RLJ +0.60%) recorded robust quarterly results, with broad-based improvement across urban and key regional markets, underpinned by higher business transient demand and increased non-room revenues. Cash flow and liquidity remain elevated, as substantial refinancing and proactive liability management have deferred material debt maturities to 2029 and fortified the company’s capital flexibility, with liquidity exceeding $950 million. The portfolio’s conversion and renovation initiatives continue to yield outsized EBITDA uplifts and position RLJ to capture event-driven demand from upcoming catalysts such as the FIFA World Cup and the 250th U.S. anniversary, with management emphasizing targeted rate strategies and occupancy optimization for these periods.

  • The group segment experienced significant mix improvements, with corporate bookings now comprising over 50% of group revenue and contributing to out-of-room revenue and ADR expansion.
  • Conversion cadence will remain paced at approximately two per year, primarily determined by franchise agreement expirations and seasonal considerations, with new announcements expected on the next call.
  • Non-room revenue growth, particularly from food and beverage, parking, and meeting spaces, continues to deliver incrementally higher margins, evidenced by a 130-basis-point margin improvement in these categories.
  • Exposure to Northern California and key event markets provides RLJ with unique upside from “signature” events that migrate among cities in its agile portfolio, mitigating geographic concentration risk and supporting year-over-year revenue stability.
  • Management signaled a constructive outlook on asset dispositions and will balance use of proceeds between leverage-neutral buybacks and incremental conversion investments as market conditions warrant.

INDUSTRY GLOSSARY

  • RevPAR: Revenue per available room, a key hotel industry performance metric calculated as total room revenue divided by the number of available rooms.
  • BT: Business Transient — refers to individual business travel as distinct from group or leisure segments.
  • ROI Initiatives: Return-on-investment initiatives, indicating capital projects expected to generate substantial incremental income (e.g., renovations, conversions, property enhancements).
  • Adjusted FFO: Adjusted funds from operations, a REIT-specific performance measure reflecting net cash flow from operations excluding certain non-recurring expenses.

Full Conference Call Transcript

Leslie D. Hale: Thanks, John Paul. Good morning, everyone, and thank you for joining us today. We are encouraged to see the lodging industry off to a strong start this year, benefiting from the underlying strength of fundamentals, with the acceleration of business transient demand being a key driver. We are particularly pleased with our first quarter results as our urban-centric portfolio outperformed the industry. Our favorable footprint with exposure to many top-performing markets such as Northern California and South Florida, among others, allowed us to capture the broad-based momentum in all segments of demand along with the ramp from our recent high impact renovations and conversion, driving solid results ahead of our expectations.

During the first quarter, we achieved RevPAR growth of 4.8%. The outperforming the industry by 100 basis points. We delivered robust non-room revenue growth, which exceeded our RevPAR performance by more than 300 basis points, and we drove high single-digit year-over-year EBITDA growth and margin expansion. We also advanced our conversion pipeline and addressed all of our maturities through 2029. Our solid first quarter performance demonstrates the momentum in our urban markets and the growth embedded in our portfolio, while the ongoing execution of our capital allocation and balance sheet initiatives, position us to continue to drive out-performance relative to the industry and create long-term shareholder value. Turning to our operating results.

Our first quarter RevPAR growth of 4.8% was balanced between occupancy and ADR gains. Trends improved sequentially throughout the quarter, with RevPAR, February and March, achieving healthy year-over-year growth of 6% and 9%, respectively, following January's RevPAR decline. Both February and March were aided by a robust calendar of events as well as the favorable timing of holidays, which bolster demand. We were pleased to see this positive momentum carry into April. Our urban markets have been consistently performing well, disproportionately benefiting from positive trends across all demand segments. We were pleased to see our urban footprint outperform the broader industry urban markets, with a number of our markets delivered high single-digit RevPAR growth.

Notably, Northern California achieved outstanding RevPAR growth of 27%, benefiting not only from the Super Bowl and the favorable shift of the [ RNA ] conference to March this year but also from the continued expansion of the AI industry, which is driving significant corporate investment and business travel demand broadly across this market in addition to a better overall environment. New York City was another noteworthy market during the quarter with our properties achieving over 8% RevPAR growth, driven by healthy corporate and leisure-transient demand, a favorable events lineup and the ramp of our high occupancy renovations that we completed last year.

As it relates to segmentation, business travel saw robust growth during the first quarter, with our business-transient revenues growing by 9%, which was largely demand driven, with room nights increasing by nearly 700 basis points. The momentum in Business Travel accelerated throughout the quarter, underpinned by strong growth in business investment, driven by AI-related spending as well as record corporate profits. This is specifically fueling the ongoing strength in sectors such as technology, finance, aerospace and life sciences, which is amplifying overall BT demand. Leisure trends were strong across our portfolio with revenues growing by 5%. Demand remained resilient, and we were encouraged to see rate growth of 3%.

The Leisure segment benefited from a compressed spring break as well as elevated demand at a number of our hotels as winter storms across the country drove additional leisure travel during peak season. Our Urban Leisure once again saw stronger [indiscernible] performance as the hotels and live-workplace [indiscernible] are capturing robust demand around sports, concerts, dining, festivals and entertainment. Importantly, our geographically diversified portfolio continues to benefit year after year from the rotation of signature events within our footprint.

Relative to our group segment, even with difficult comparisons from the inauguration in D.C. and the Austin Convention Center, booking trends remained healthy, evidenced by our end the quarter, for the quarter revenue pace increasing by 900 basis points and ADR increased by 3% over last year. We were especially pleased to see a meaningful pickup in group bookings for the second quarter, which saw pace improved by 400 basis points. We are encouraged by the increasing share of corporate bookings within our group mix, which has positive implications for ADR and out-of-room spend. Our portfolio also generated outsized non-room revenue growth of 8.2%.

Once again, underscoring the momentum behind our ROI initiatives and the investments we have made in expanding ancillary revenue channels. These initiatives allowed us to increase our total revenues by 5.4%. This top line growth, combined with disciplined cost management and a lean operating model, contributed to our significant EBITDA out-performance relative to our initial expectations and our margins expanding by 45 basis points over the prior year. Now turning to capital allocation. Our transformative renovations from last year as well as our completed conversion are delivering tangible results and contributed meaningfully to our outperformance relative to the industry.

This is demonstrated by our 4 major renovations at high occupancy hotels completed last year, achieving 9% RevPAR and 10% EBITDA growth during the quarter. Conversions continues to deliver solid results, with our 7 complete conversions generating EBITDA growth of 16%. Additionally, we made further progress towards our Renaissance Pittsburgh conversion, and we remain on track to relaunch the property under Marriott's Autograph Collection this summer. We advanced preparation of our conversion of the Wyndham Boston Hotel, which will join Hilton's Tapestry Collection, and we are on pace to begin construction later this year, and we look forward to announcing our next conversion in coming quarter.

Collectively, these capital allocation initiatives supported by our strong balance sheet, position us for multiple years of growth in 2026 and beyond. Looking ahead, we recognize that the macro environment remains uncertain, driven by an evolving geopolitical backdrop, which is giving rise to shorter booking windows and limiting visibility beyond the near term. To date, however, we have not observed a noticeable impact on our results. Our first quarter out-performance on both the top and bottom line is encouraging, and we believe the setup continues to favor urban markets for the remainder of the year, supported by sustained strength in Business Transient and robust [indiscernible] for urban leisure experiences, trends that should disproportionately benefit our portfolio.

Overall, we had already anticipated these healthy trends in our original guidance for the remainder of the year. However, given the current uncertainty, we will continue to monitor any shifts in demand. Our outlook assumes, the continuing broad-based strength in BT, supported by healthy corporate profits and growth across a number of industries, reinforcing our view that the recovery in this segment has further room to grow.

The resiliency of leisure demand and expectations for continued rate growth as we approach the peak summer travel season, especially in our urban markets, which have an extensive lineup of events, sports, concerts and entertainment, a positive group pace for the remainder of the year, with ADR demonstrating pricing power and our expectations that even with a shortened booking window, we will continue to see strong, in the quarter, for the quarter bookings, a favorable footprint to capture upcoming catalysts including the World Cup and America's 250th anniversary.

The ongoing momentum in Northern California across all demand segments, further validating the sustainability of this market's recovery, continued growth of non-room revenues from our ROI initiatives as well as tailwinds from the ramp of our 4 significant renovations completed last year and our recently completed conversions which are well positioned to drive multiple years of growth. Our strong results are a direct outcome of the strategic repositioning of our portfolio over the past several years, through asset recycling, targeted acquisition and high impact conversion.

As we look ahead, we remain cautiously optimistic about the long-term durability of the demand trends we are seeing and believe our well-positioned portfolio will support continued strong relative performance and the creation of long-term value for our shareholders. With that, I will turn the call over to Nikhil.

Nikhil Bhalla: Thanks, Leslie. To start, our comparable numbers include our 92 hotels owned at the end of the first quarter. Our reported corporate adjusted EBITDA and AFFO include operating results from all sold hotels during RLJ's ownership period. Our first quarter results came in ahead of our expectations, with occupancy increasing by 2.6% to 70.8%, average daily rate increasing by 2.1% to $210 and our RevPAR of $149, increasing by 4.8% versus the prior year. Fundamentals strengthened throughout the quarter following January's 1.9% RevPAR decline with growth accelerating to a robust 6.1% in February and 8.9% in March. These healthy trends carried into April, which achieved preliminary RevPAR growth of approximately 4%.

During the quarter, we saw meaningful strength within our urban markets, which achieved 4.4% RevPAR growth, outperforming STR's comparable markets by 110 basis points. This growth was broad-based and balanced between approximately a 2-point increase in occupancy and a 2-point increase in ADR. Our strong urban portfolio performance was bolstered by double-digit RevPAR growth in markets such as South Florida, which grew RevPAR by approximately 10% and Houston and Denver which each achieved 14% RevPAR growth. Additionally, demonstrating that our portfolio benefits from 7-days a week demand, both weekdays and weekends saw mid-single-digit RevPAR growth.

Our urban markets benefited from improvements in all segments of demand, notably business travel, the acceleration in BT demand that we are seeing has positive implications for the momentum in out-of-room spend which was evident in the robust growth of 8.2% in our non-room revenues that we saw during the first quarter. We were especially pleased to see the strong revenue growth come on the heels of the robust 7.2% growth we achieved during the prior quarter. Our non-room revenues generate strong margins, which improved by 130 basis points during the quarter, underscoring the success of our ROI initiatives aimed at profitably growing food and beverage, re-concepting underutilized spaces and growing other ancillary revenues.

Overall, non-room revenue growth led our first quarter total revenues to grow by 60 basis points ahead of our RevPAR growth. Turning to bottom line results. Total operating expenses were up 2.1% on a per occupied room basis, underscoring the benefits of our lean operating model and our disciplined approach to managing costs, which allowed for a strong flow to the bottom line. Although energy expenses were elevated due to the winter storms as well as disruption in the energy markets due to the war, these were more than offset by improvements in fixed costs driven by a double-digit decline in property insurance due to a favorable renewal last year and other cost control initiatives.

During the first quarter, our portfolio achieved hotel EBITDA of $89.9 million representing year-over-year growth of $6.1 million or 7.2% and hotel EBITDA margins of 26.4%, which expanded by 45 basis points over the prior year. These results translated to adjusted EBITDA of $80.9 million and adjusted FFO per diluted share of $0.33 for the first quarter. With respect to our balance sheet, as previously announced, during the first quarter, we executed a series of refinancing transactions, which expanded our undrawn capacity by $500 million and created additional flexibility. We intend to use the additional capacity created by these refinancings to pay off our $500 million senior notes that mature on July 1 this year.

Following this payoff, we will have no maturity due until 2029 and our weighted average maturity will be over 4 years. Our balance sheet remains well positioned with over $950 million of liquidity, including undrawn capacity of $600 million on our corporate revolver, 84 of our 92 hotels unencumbered by debt, an attractive weighted average interest rate of 4.6% and 75% of debt either fixed or hedged. We ended the first quarter with $2.2 billion of debt. In addition to proactively addressing our maturities, we continue to demonstrate our steadfast commitment to returning capital to shareholders by paying an attractive and well-covered quarterly dividend of $0.15 per share. Now turning to our full year outlook.

We are pleased with the strong start to the year. At the same time, we remain mindful of the uncertainty in the overall macro environment. We have incorporated our strong first quarter out-performance into our revised guidance while keeping our expectations for the remainder of the year unchanged from our prior outlook. For 2026, we now expect comparable RevPAR growth to range between 1.5% and 3.5%, comparable hotel EBITDA between $356 million and $380 million, corporate adjusted EBITDA between $324 million and $348 million and adjusted FFO per diluted share to be between $1.29 and $1.45. Our outlook assumes no additional acquisitions, dispositions or balance sheet activity beyond what has been completed today.

We continue to estimate capital expenditures will be in the range of $80 million to $90 million. Cash G&A will be in the range of $32.5 million to $33.5 million and expect net interest expense will be in the range of $101 million to $103 million. We also expect total revenue growth will continue to outpace RevPAR growth due to the success of our initiatives to drive out-of-room spend. With respect to the cadence for the rest of the year, our view of the second quarter has not changed.

However, in light of our strong first quarter results, our adjusted EBITDA contribution for the second quarter will be slightly lower than last year, with the balance of the contribution in the back half of the year. Finally, please refer to our press release from this morning for additional details on our outlook and to our schedule of supplemental information which will include comparable 2026 and 2025 quarterly operating results for our 92 hotel portfolio. Thank you, and this concludes our prepared remarks. We will now open the line for Q&A. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Michael Bellisario with Baird.

Michael Bellisario: Leslie, can you add a little bit to your commentary on the accelerating business demand you mentioned, but it seems to be offset a little bit by a shorter booking window. Did I hear that correctly? And is that shorter booking window -- is that broad-based or specific to a customer segment?

Leslie D. Hale: So I would say on BT, Mike, my comment about the booking window is really more so on group and on leisure. I think as it relates to BT, the acceleration we saw was broad-based. We're continuing to see national accounts grow, which is our highest rated customers. The sectors in tech and aerospace and life sciences continue to be the sectors that we're seeing the strength at. And that's really a function of strong corporate profits, it's business investment, really sort of driving and aligning with what we're seeing. So our midweek trends remain strong relative there. On the booking window side, what we've seen is that group is booking shorter.

As I mentioned on the call or in the quarter for the quarter pace first quarter was strong. We actually saw 22% of our bookings in the quarter for the quarter. And while it's been short, it's still been materializing. And so that gives us comfort as it relates to group. And then on the leisure side, we've actually seen booking window elongate, and so we've seen the opposite relative to group.

Michael Bellisario: Got it. That's helpful. And then just sort of on the same lines, just on the out-of-room spending. How much of that is you're taking price versus an increase in volume? And does that pick up really being driven by business travel?

Leslie D. Hale: It's definitely business travel is playing a key role. And it's not just business transient, its also a business group. Business Group has increased to more than 50% of our overall group mix that bodes well for out-of-room for F&B orders while in their group meetings. And it's in general, as BT continues to increase, they do more in spending in the hotel as well. I'll let Tom add some color.

Thomas Bardenett: So Mike, what we're seeing underneath the F&B hood is we have banquets growing what Leslie was stating about group, we're seeing a much more significant amount of corporate group come -- and with that, banquet goes right along with that. And then when we think about our ROI initiatives, we spent quite a bit of money on making sure that we have a beverage-centric thoughtful food and beverage approach so our lounge up around 12%. And then when we think about AV room rental, when we look at our meeting space and our atrium as well as where we've put some capital.

Those continue to be enhancing our ability on the F&B, which allows us to increase margin by about 50 basis points. Below that, because of the drive to market still being healthy in the first quarter, we had parking revenues up. And then lastly, I would say where we've been spending a lot of time is watching the consumer behavior in and around our lobby and where we have been enhancing, we've kind of taken that select service margin expansion -- excuse me, market expansion to our full-service hotels as well.

And so that grab-and-go consumer trends, total revenues, enhancing by people looking for something in a hurry on the way to the airport and having an opportunity grab that in addition to what we talked about with F&B and parking has really enhanced our profitability on non-room revenue.

Leslie D. Hale: Yes. And Mike, I'll just add what's kind of in our pipeline that kind of bolt on to some of Tom's comments around the thoughtful F&B and how we've approached it. We've talked about on previous calls how we've been really focused on having F&B that attracts guests that are outside the hotel. We did that at Mills House and Mandalay and Nashville, and we still have Pittsburgh and Boston in the pipeline. And just to put some numbers around that, our total revenues for our conversions were up 8% in aggregate. And that's really a function of our ROI investment and demonstrating how thoughtful we've been around the out-of-room spend.

Operator: Our next question comes from the line of Austin Wurschmidt with KeyBanc.

Austin Wurschmidt: Leslie, you highlighted some high-level details about the outlook across various segments. Could you just walk through the cadence of RevPAR growth guidance over the balance of the year and maybe how some of those building blocks between segments are expected to play out at this point?

Leslie D. Hale: Yes. Sure. So Austin, what I would say is that clearly, Q1 came in better than we expected. But that our view for second quarter really hasn't changed. The trends that we're seeing right now are coming in line with our expectations. We mentioned in our prepared remarks that April was up around 4%. We know that Easter was going to move up in the month. And so we're seeing strength in business and group filling in that space has been moved up. May within that quarter is going to be a softest month because of the tough comps. And then as you know, June is going to benefit from the World Cup.

And then what I would say is that within that month -- within the second quarter, group pace was already pacing ahead of 2025. And then we really have no change to the -- our perspective on the back half of the year, again, third quarter benefiting from World Cup. We expect third quarter benefit more than [indiscernible] quarter from the World Cup because there's a higher demand for the later-stage games. And then you layer in the 250th anniversary on top of an existing holiday and obviously, sales force, fourth quarter, we'll see a lapping of the shutdown, government shutdown. But that's going to be offset by the election. So this setup was already anticipated in our original guidance.

And what we're seeing today is in line with our expectations. In particular, I would also just sort of say, as it relates to World Cup, it's still early, but we are encouraged by what we're seeing we were very thoughtful in how we approach our perspective around building our blocks and on World Cup. For example, we were really thoughtful about focusing on blocks related to teams, media and sponsors, and we wanted to have really strong revenue management, and focusing on length of stay and making sure that we were disciplined about rate.

So today, what we're seeing is that those blocks that we anticipated are actually picking up because we were thoughtful and we're getting deposits around teams and media -- and then as it relates to transient, what we're seeing today is promising. It's early -- but around game day, we are seeing ADR come in line with our expectations. I think that the World Cup and when you look at high occupancy market, it's really a rate game in markets like L.A., New York and Miami. But overall, these trends we're seeing are in line with our expectations and our original assumptions that we had in our guidance.

Austin Wurschmidt: That's helpful detail on World Cup. Just switching for a comment you had on leisure and the elongated booking window. Just wondering how much of that you think is sort of sensitivity to change in airfare given what's happened with energy costs? And how does that inform your view on sort of pace as you look out within this segment and what that could look like just given the resiliency in the consumer?

Leslie D. Hale: I think that the elongated booking window, some of it may be related to airfare, but I actually think it's around the strength of demand that people are recognizing and they may want to not be able to get the room that they wanted. And so they're recognizing they need to book a little bit earlier. As we mentioned before, a lot of these special events are happening on top of timings that were already -- windows that already had high occupancy. And so I think that's affecting psychology of the consumer today. I would also say that a lot of our leisure again, urban leisure is seeing urban entertainment ramp up around the lifestyle consumer.

And so as a result, i think they're trying to get ahead of what they saw in the first quarter around leisure travel. And so I think that's what's causing it to elongate. Could there be some airline implication in that, for sure. But I think that's part of it.

Thomas Bardenett: The other thing I would add, Austin, to what we're seeing is there's a shift going on in regards to the ability to drive rate with leisure. If you recall last year was primarily demand and there was rate sensitivity. Right now, we're seeing growth in both midweek as well as weekend demand. And then we're also seeing growth in rate. And so we're pricing ourselves appropriately based on that 7-day heart of demand. and these events that are taking place that our footprint is pretty diversified, as you know.

So when a special event moves from one location to another, whether it was, let's say, the NBA All-Star game that went from San Francisco to L.A., we get the benefit of that because of our diversified portfolio. Same thing with Super Bowl. It was in New Orleans last year, San Francisco this year. So we're able to capture a lot of those instead of anomalies, they're just moving around the country where we're able to capitalize based on our diversification and our footprint.

Leslie D. Hale: And I think Tom's point around rate is another example of the consumer not being price sensitive and which is why I was suggesting that it's more around them seeing the strength of demand.

Operator: Our next question comes from the line of Tyler Batory with Oppenheimer.

Tyler Batory: And congrats on the strong results here and some really good execution. Just a follow-up on Austin's question. Can you put a finer point on how you define leisure travel? I'm not sure if World Cup-related travel -- if that's all leisure. I'm assuming there might be a portion of that, that group and maybe even business travel too?

Thomas Bardenett: Yes. I'll give you an example since you asked about World Cup. So when Leslie was speaking about the difference between group and leisure, group would be the team, the media, the sponsors where we've actually locked in blocks and have deposits. What's still to come and what we're finding on the transient pace, specifically in the last 3 to 4 weeks, is around the game days, ticket sales, searches around where do I want to stay. You're going to book your airfare, you're going to make sure that you've got travel and then you're going to look at hotels. So what we're seeing is the ADR growth around that, that would be leisure around World Cup.

Same thing with 250th anniversary. We do have activation. There is marketing programs around the 4 cities, which are New York, Philadelphia, D.C., as well as Boston. And when we see that, you're also seeing now more demand coming in that will all be pretty much leisure-related based on how we code when people are booking from the outside in.

Tyler Batory: Okay. Switching gears to capital allocation. You rank order your priorities right now. I'm curious if capital recycling is something that might look a little more interesting? Just given your fundamental outlook.

Leslie D. Hale: Sure, Tyler. What I would say is that we're constructive on the transaction market. And as we become more active with dispositions, we will be balanced between taking advantage of the dislocation in our stock, maintaining a strong balance sheet and executing on our conversion strategies. We strive to execute buybacks on a leverage-neutral basis. And so when we use disposition proceeds, that allows us to do that. And obviously, we didn't have any dispositions in Q1. Relative to our conversions, our results are very tangible. As I mentioned before, total revenues for our 7 completed conversions are up 8%, and our EBITDA was up 16% in the quarter.

And this is a direct result of the investment we're making in the ROI as we recycle assets, you're going to see us be balanced and that would include activity on the buyback side.

Operator: Our next question comes from the line of Gregory Miller with Truist.

Gregory Miller: I'd like to ask a couple of questions on specific markets. And maybe to start off, could you provide your thoughts about how Louisville is performing this year and expectations for the rest of the year? Particularly on the convention group rent.

Thomas Bardenett: Sure, Greg. As you know, we have our Marriott as well as a Residence in Louisville, and the Marriott is connected to the Convention Center. What we're finding at our Marriott is that it's had back-to-back significant growth years. We just came off of Kentucky Derby, which was another major success for us. And what we're finding is agriculture, some of the type of accounts that go to Louisville that are attracted to Louisville are all Midwest based, if you will. It competes with Nashville, competes with other regional locations. And so we get the benefit of that because we're connected to the Convention Center.

And a long time ago, probably about 5, 6 years ago, when they added additional space, they really change the way we can sell our hotel where we can actually have 2 conventions at the same time because of the exhibit space they added right across the street, which is connected. In addition to that, we were looking at the beginning of the year pretty strong results in regards to what we're seeing on the pace side. We're also -- because of the size of the asset, we look out to '27 and '28 in we're very encouraged in regards of what the pace looks like going forward for this asset.

And what I would say is the big top accounts that come into Louisville like Healthcare, Humana, the University of Louisville continues to spend and look to add research. And so we're seeing our top accounts come back into the city as well. So feel very strong about where we're positioned. And then the Residence Inn also does very well being just a couple of blocks away from our Marriott with overflow when we have those types of groups.

Gregory Miller: Thanks, Tom. Shifting gears, I'd like to ask you about another market with some changes to their convention pace, and that's Austin. And now we were past the 1-year mark since the temporary closure of the Austin Convention Center for its renovation. Could you provide an update on how your downtown hotel is performing and sort of expectations for the rest of the year in that market as well?

Thomas Bardenett: And again, we're adjacent to the convention center for two of our assets, as you know. And then we have one other asset that's right by the state capital near University of Texas. To your point, the closure occurred in March of 2025 right after the South by Southwest and the new construction is underway in regards to the convention center. I think what we're most excited about with Austin is it's going to double the size on the square footage, and more importantly, it's going to have the ability to host over 1,200 exhibits. And that's really important when you think about association business.

For instance, Austin, which is the 11th largest city in the country, had the 59th largest convention center. So now it's going to be more appropriately aligned with the space and the size of what's needed. As an example, Greg, 50% of the leads in the past couldn't even be accommodated based on the space that we didn't have. In addition to the convention center, we're excited about the fact that Austin continues to grow. People want to live there.

The airport expansion is going to have more flights and 20 more gates will be aligned with the convention center opening, that's going to bring 22 million passengers up over 30 million passengers, which is going to be a highlight in regards to the more demand that's going to come in because of that convention center. But in the interim, to your point, we are focused on self-contained group business at our two assets adjacent to the center.

There's been great campaign on marketing and dollars that are allowing us to offer incentives to groups, not only for our hotels, but for the city because of the opening right now that we have for the next few years, then the double trade that we have over by the capital, that was renovated about a year ago, so the property looks great. It's getting really nice ramp from University of Texas as well as being adjacent to the capital. So this year, the first quarter had the legislation. And so every other year, as we did the renovation to make sure that we benefited from that will happen in 2027.

Leslie D. Hale: The only thing I would add is that based on all the good nuggets that Tom laid out, we are expecting Austin to be positive for the remainder of the year.

Operator: Our next question comes from the line of Ken Billingsley with Compass Point.

Kenneth Billingsley: Two quick questions. One, just a follow-up. You said second quarter adjusted EBITDA is expected to be below last year. Is that just primarily on room count being down?

Leslie D. Hale: It's a function of Q1 being stronger than our original expectations. And so last quarter, we had guided that Q2 would be in line with last year's contribution, and now it's going to be slightly below because Q1 is stronger.

Kenneth Billingsley: Okay. And the other question I have is could you just talk about Pittsburgh, the draft occurred? And had record numbers. Can you just talk about how that translated into your expectations and maybe the results of what developed out of Pittsburgh?

Thomas Bardenett: Yes. I'm glad you were paying attention. The draft was a great event for us. We have three assets in Pittsburgh, if you, Ken, you're aware that Leslie earlier stated about our opportunity to convert a renaissance to an autograph. And that is downtown looking over Three Rivers in the ball field where the pirates play as well as [ Hinzfield ]. So the draft was closer to the [ Heinz field ] this year, outdoor arena, but the activation was all in and around the convention center and as well as our location there. Not only...

Operator: Your conference will resume momentarily. Once again, ladies and gentlemen, please continue to hold. Your conference will resume momentarily.

Thomas Bardenett: Can you hear us, operator?

Operator: Yes, you are live.

Thomas Bardenett: So we were just finishing up Pittsburgh, and I wanted to make sure you heard the last piece, which was -- we're excited about what's happening, but the NFL Draft was very successful this year and our 3 assets saw significant demand due to that. So I'll go back to the operator for future questions.

Operator: Mr. Billingsley, does that complete your question?

Kenneth Billingsley: It does.

Leslie D. Hale: And then Ken, I just want to make sure that on your prior question that you were talking about contribution for second quarter. That's what we were referring to in our prepared remarks Its contribution for the year.

Operator: Our next question comes from the line of Floris Van Dijkum with Ladenburg Thalman.

Floris Gerbrand Van Dijkum: Question on the capital allocation, getting back to the capital allocation. Could you maybe just remind us of your -- what you spent on your renovations, what the EBITDA return or yield is on those renovations today as we stand? And also, what -- you mentioned two more projects that you're going to announce later on this year. What's sort of the aggregate amount that we could expect RLJ to invest in repositioning assets and relative to the sort of the maintenance CapEx?

Leslie D. Hale: Yes. I would say that, in general, Floris, that we gave an item of $80 million to $90 million of capital spend for 2026, and the vast majority of that is focused on ROI-related renovations from there. We generally target high double-digit returns on general investments and on our ROI conversions originally seeing north of 40% returns on the incremental capital that we're putting in the assets in order to effectuate these -- the conversion.

Thomas Bardenett: We mentioned one additional conversion that will be announced. I just want to correct you on that in regards to later this year.

Floris Gerbrand Van Dijkum: Got it. And so -- but the 40% is what we should be expecting from the Wyndham Boston conversion? Or is that just for the Renaissance in that's going to become the Marriott Autograph in Pittsburgh?

Leslie D. Hale: So what we've talked about with Boston is that we think that there is a 40% upside in the EBITDA on that asset. Again, keep in mind that on some of these conversions, in the case of [indiscernible], we doubled the EBITDA on that asset. Boston is in that category of how strong we think the asset will perform in a post-converted state.

Floris Gerbrand Van Dijkum: And then the -- how -- you did mention the dispositions, obviously, as well. And I suspect if the disposition market were to pick up a little bit later this year. Would that cause you to accelerate some of your re-positionings as well? Or is that still the buybacks, obviously being another potential source? But 40% returns are just tough to beat that anywhere else. I mean why wouldn't you lean into that even more?

Leslie D. Hale: Yes. I think what we've said before, Floris, is that we try to strive to have 2 conversions per year. Our conversion cadence is influenced by when franchise agreements expire and other elements that have a back up at about 2 per year. We're on that pace. We're going to be announcing our next conversion on our next earnings call. And so I think that when we look at when the franchises becomes available and when it makes sense from a seasonality perspective, -- for example, we wanted to wait until after World Cup for Boston. So we're trying to be strategic and thoughtful about when we execute the conversion.

Floris Gerbrand Van Dijkum: And maybe last question, just a follow-on. The actual demand from -- everybody's been talking about the fact that there's going to be last-minute bookings presumably to watch the World Cup. Can you talk maybe about some of the -- you mentioned some of the FIFA bookings that you've already done. Do you have any teams or anything like that, staying in your hotels? Or what tangible information, can you give us on the potential upside it sounds like from the World Cup on your expectations?

Leslie D. Hale: Yes. As I mentioned before, Floris is that it's early, but we're encouraged because we were very thoughtful about making sure that the types of blocks we took, we're focused on teams and media. We're starting to see those blocks pick up and we started to receive deposit. I'll let Tom give some color on that. And then as it relates to the transient demand, what I said is that what we're seeing is very promising, but it's really early, and that we expect most of the benefit to really come in rate because these are happening in high occupancy markets for us. And the market I was talking about was L.A., New York and Miami.

Thomas Bardenett: And just to give you a little color on the group side, it's interesting, Floris, when groups teams stay with you, they actually encourage fans to stay where the team stay. So that's a positive and we actually have locked-in deposits for teams in 3 of those 9 markets that we have. So we're really encouraged that not only will you have teams, but you'll have fans that will want to stay with the teams.

We're also encouraged, as Leslie talked about, on the transient pace, when you think about the leisure side and where ticket sales as well as how we're doing length of stay, so we're seeing ADR increasing in those time frames when people are going to have the most amount of demand and then making sure that we're providing the opportunity to take other business outside of those games, whether it's group or BT to make sure that we're layering in the process of making sure we take advantage of not only the special event, but other demand as it comes because those are high occupancy locations that Leslie mentioned earlier. So it's a busy time of year.

In addition to 250th anniversary will be over that same time frame. So we're really doubling down on strategy.

Operator: Our next question comes from the line of Chris Woronka with Deutsche Bank.

Chris Woronka: I was hoping we could spend a minute talking about kind of the Silicon Valley market. You talked about with growth in AI, I think you guys have probably 4 or 5 hotels in that area, proper. You mentioned you saw nice [indiscernible] in the first quarter. Kind of curious what's embedded in your outlook for the rest of the year? And you -- may sound like a silly question now that you worry at all, are you seeing the froth kind of that area had some extremely high RevPAR growth back in 1999 and 2000 as i recall. So any thoughts on your outlook beyond the current quarter?

Leslie D. Hale: Yes. I mean we are very encouraged by what we're seeing in San Francisco area, the Northern California market for us broadly. Clearly, the recovery is well underway. As we mentioned before, all of our assets were up 27%, in the first quarter. Clearly, it was benefiting from Super Bowl and some major conventions in [indiscernible] and JPMorgan. But I would also say more broadly, and this goes to your Silicon Valley comment, BT is very much in full swing, given the fact that you have a better overall environment, you have better local advocacy with good policy. You talked about the AI investment. We're seeing clearly return to office trends and record office leasing.

And so the BT momentum is strong, and we're also starting to see pricing power return. Let Tom add some comments.

Thomas Bardenett: Yes. The campaign that they're really behind in San Francisco is "Believe in San Francisco". And when you think about what Leslie was talking about, it's happening locally from a community as well politically where Bart Ridership is up, foot traffic is increasing in CBD. When you think about what's happening around [indiscernible], they got a healthy pace for '27, '28 and the type of conventions that are coming, our association, corporate medical and then most importantly, high tech to your point. Just as an example, to give you an idea on growth, Databricks in 2023 had about 11,000 room nights. And in 2026, they're going to have 25,000 room nights.

So you can see there's an evolution happening because venture capital money is all coming to San Francisco. And it's basically when you think about where the city is thriving, it's also spilling out the Silicon Valley and the outlying areas, where we have a bigger footprint, as you know, where we have some airport hotels as well as Silicon Valley and CBD.

So we're encouraged with what's happening, and we're trying to make sure that we're capturing all the different types of demand that's now coming there with the last catalyst hopefully being international, we are seeing some growth coming from Mexico, U.K., India, and China will be the last step, hopefully, where we can see that start to come back as it's still a significant amount of spend that comes to San Francisco.

Chris Woronka: Okay. Super helpful. And then just another question on conversion. When you guys talked about planned conversions, can we generally assume that refers to the Wyndham that you still have on converted or either a few independents and things affiliated with non-Marriott, Hilton, Hyatt brands? Just hoping to get a little bit of clarification.

Leslie D. Hale: Yes. I mean we have -- we've published in our management presentation a list of potential conversions in our portfolio. We're obviously looking at the Wyndhams', but we're also looking at current assets as the franchise agreements expire to see what else -- what other lifestyle brands are available that makes sense for that physical asset. So it's not just all Wyndham assets, it's other assets within our portfolio where the franchise agreement may be expiring.

Operator: Our next question comes from the line of Chris Darling with Green Street.

Chris Darling: Just a couple of quick follow-ups for me. First, Leslie, you mentioned being constructive on asset sales. Hoping you could just give an update on the broader transaction market, whether you've seen anything change on the margin given a more favorable RevPAR backdrop rather that's pricing, depth of the bidding tent, anything else?

Leslie D. Hale: Yes, sure, Chris. For sure, the transaction market has improved. Obviously, it's still not as robust as it was in the past, but it's definitely approved in general. And what I would say the key driver of that is really the debt market. There are so many debt providers today as people have tried to play sort of the credit trade, if you will. It's creating competition and it's helping spreads tighten. So even though the Fed has not cut rates because there's competition among providers, we've seen spreads tightened. And so that's allowing buyers potential buyers to still underwrite lower interest expense.

And then you layer on better fundamentals, which is giving potential buyers confidence in the ability to underwrite. So I think that's just a better overall sentiment relative to the transaction environment. I think owner operators continue to be the primary buyer, but we're seeing the buying pool span, single assets are still more prevalent, but you could see some small portfolios start to emerge later this year. But in general, I would just say that the transaction market has improved.

Chris Darling: Okay. I appreciate those thoughts. And then just to put a finer point on the guidance discussion. If I look at the midpoint of the revised hotel EBITDA range, it suggests a modest decline, I think, for the rest of the year. Hoping you could frame this outlook. And in particular, I'm thinking about the third quarter, where, at least in theory, I think you'd be lapping an easier comp. So maybe just a discussion of some of the puts and takes that maybe I'm not totally thinking about.

Leslie D. Hale: Well, I would say, in general, don't forget that we had a tax credit in last year. So when you look over -- look year-over-year, we actually have EBITDA growth. And even without that, we still at the midpoint, are having EBITDA growth. What was the second part of your question related to third quarter?

Chris Darling: Well, I think last year, you had a particularly tough year-over-year growth percentage in 3Q '25. And so I would think in theory, it might be an easier comp this year. And that's where I wanted to get a little bit of context.

Leslie D. Hale: Yes. I would say that in the third quarter, as I mentioned before, that we do expect the third quarter to benefit from World Cup. It is also going to benefit from the 250th Anniversary, which is on top of 4th of July weekend, and then we also have Salesforce that we were benefiting from in the third quarter.

Operator: We have no further questions at this time. Ms. Hale, I'd like to turn the floor back over to you for closing comments.

Leslie D. Hale: Thank you all for your interest today and joining our call. We look forward to connecting with you at our upcoming conferences. And I hope all of you have some summer travel planned over the next few months. And have a good day. Thanks, everybody.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.