Summit Hotel Properties Q3 2024 Earnings Call Overview

Summit Hotel Properties (NYSE: INN) reported a slight increase in revenue per available room (RevPAR) and continued growth in adjusted funds from operations (FFO) during its Q3 2024 earnings call on November 5, 2024. CEO Jon Stanner and CFO Trey Conkling provided insights into the company's performance, highlighting a 0.2% rise in RevPAR for the same-store portfolio and a 4% increase in adjusted FFO to $27.6 million. The call also addressed the impact of natural disasters on operations, the successful sale of 10 hotels, and the company’s strong liquidity position.

Key Takeaways

• Summit Hotel Properties reported a 0.2% increase in same-store RevPAR, driven by a 1.2% rise in average rates.
• Adjusted FFO grew by 4% to $27.6 million, marking the third consecutive quarter of growth.
• The company sold the Four Points by Sheraton San Francisco Airport Hotel for $17.7 million, contributing to almost $150 million gain from 10 hotel sales over 18 months.
• Strong liquidity was reported, with over $400 million available and a reduction in the net debt to EBITDA ratio.
• The company revised its 2024 guidance, projecting a RevPAR growth range of 1% to 2% and adjusted EBITDA between $188 million and $194 million.

Company Outlook

• Summit Hotel Properties remains optimistic about future demand trends, especially in urban markets.
• The company expects a hotel EBITDA margin contraction of approximately 25 basis points year-over-year.
• For 2025, they anticipate managing expense growth between 2.5% to 3% and achieving 1.5% RevPAR growth.

Bearish Highlights

• September saw a 3% decline in RevPAR due to lower occupancy around Labor Day and hurricane disruptions.
• Proforma hotel EBITDA for the quarter decreased by 3%, affected by the occupancy declines noted.
• Adjusted EBITDA for the quarter was down 2% year-over-year.

Bullish Highlights

• Urban and suburban hotels experienced RevPAR growth of 1.3% and 3.9%, respectively.
• October showed a preliminary 2% year-over-year increase in RevPAR.
• Year-to-date adjusted FFO increased over 9%.

Misses

• Hurricanes displaced an estimated $400,000 in revenue.
• The company experienced a slight decline in proforma hotel EBITDA and adjusted EBITDA for the quarter.

Q&A Highlights

• CEO Jon Stanner expressed optimism about capital redeployment acquisitions, emphasizing a market-agnostic approach to transactions.
• The company has limited exposure to union markets, with 65% of their portfolio in the Sunbelt region.
• There are no current plans to divest all Hyatt Place properties, even after selling four due to lower RevPAR and high capital needs.

In conclusion, Summit Hotel Properties continues to demonstrate financial resilience and strategic growth amidst market challenges. The company's proactive asset management and cost control measures position it well for the upcoming fiscal year, with a cautiously optimistic outlook for 2025.

InvestingPro Insights

Summit Hotel Properties' (NYSE: INN) Q3 2024 earnings report reveals the company navigating a complex hospitality landscape with a mix of challenges and opportunities. According to InvestingPro, Summit Hotel Properties boasts a market capitalization of $755.54 million and a revenue total of $736.29 million for the last twelve months.

Notable InvestingPro Tips include:
– Summit has raised its dividend for three consecutive years, with a current dividend yield of 5.28%, appealing to income-focused investors.
– The stock is trading at a low EBITDA valuation multiple, suggesting potential undervaluation of the company's earnings.
– However, the stock has seen a disappointing -15.13% total return in the past month.

For investors wanting deeper analysis, InvestingPro offers 11 additional tips on Summit Hotel Properties, enhancing understanding of the company's financial position and market dynamics.

Full transcript – Summit Hotel Properties Inc (NYSE:INN) Q3 2024

Operator: Good day and thank you for standing by. Welcome to the Summit Hotel Properties Q3 2024 Earnings Conference Call. At this time, participants are in a listen-only mode. Following the speakers' presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded.

Adam Wudel: Thank you, and good morning. I am joined today by Summit Hotel Properties’ President and CEO, Jon Stanner; and CFO, Trey Conkling. Please note that comments today are considered forward-looking statements.

Jon Stanner: Thanks, Adam, and thank you for joining us for our third-quarter 2024 earnings call. Our results showcased the ongoing strength of group demand and the recovery of business travel. This led to a 0.2% increase in RevPAR despite challenges from natural disasters impacting our operations.

The company's operational trends highlighted resilience, particularly in our urban and suburban hotels, which exhibited overall RevPAR growth during the third quarter.

Closing Remarks

Ultimately, our results illustrate our commitment to effectively manage operations and capitalize on opportunities, setting a solid foundation for continued growth in both 2024 and beyond.

Operator: Thank you for participating. You may now disconnect.