Chatham Lodging Trust reported third‑quarter 2025 results that showed net income of $1.5 million, or $0.03 per diluted share, down from $2.3 million and $0.05 a year earlier. Revenue fell to $78.4 million, missing the consensus estimate of $79.6 million, while portfolio RevPAR slipped to $151 from $155, reflecting a 2.5 % decline driven by a 1.8 % drop in average daily rate and a 60‑basis‑point fall in occupancy.
Gross operating profit margins contracted by 90 basis points to 44 % and hotel EBITDA margins fell 30 basis points to 37 %. The compression was largely a result of weaker RevPAR and higher operating costs, offset only by modest labor efficiencies and lower-than‑expected property taxes. Adjusted EBITDA was $26 million, down from $29.6 million a year earlier, and adjusted FFO was $16.4 million, or $0.32 per share, which sits at the upper end of management’s guidance range.
Adjusted FFO per share beat analysts’ consensus of $0.32, a result that the company attributes to disciplined cost management. Labor costs grew only 2 % on a cost‑per‑occupied‑room basis, and the company’s focus on optimizing staffing levels helped keep operating margins from deteriorating further. The strong AFFO performance also reflects the company’s ability to generate cash flow from its core extended‑stay portfolio, which accounts for roughly two‑thirds of total EBITDA.
Management lowered its guidance for the fourth quarter and full year. Q4 adjusted FFO per share is now projected at $0.14 to $0.17, and full‑year guidance is $0.96 to $0.99 per share, down from the previous $0.14 to $0.17 and $0.96 to $0.99 range. The downgrade signals concern over weaker demand in convention‑heavy markets and a slower recovery in the tech‑centric portfolio, while still maintaining confidence in cost discipline and portfolio optimization.
The balance sheet remains strong, with net debt at $330 million and a leverage ratio of 21 % as of September 30, 2025. A new $500 million unsecured credit facility, up from $400 million, provides up to $650 million of available borrowing under an accordion feature. The company has sold five older hotels for $83 million and listed two more for sale, using proceeds to invest in higher‑yielding assets such as the Home2 Portland development and to fund share repurchases. Share buybacks totaled 255,213 shares in Q3, adding to $3.5 million year‑to‑date under the $25 million program.
Investors reacted cautiously, with the stock trading slightly higher in pre‑market activity. The market’s focus on the AFFO beat and cost‑control achievements, rather than the revenue miss, underscores the importance of cash‑flow metrics for REITs. CEO Jeffrey H. Fisher noted that “despite weaker than expected RevPAR, we delivered adjusted FFO per share toward the upper end of our guidance range as our operating margins benefited from labor efficiencies and lower-than-expected property taxes.” COO Dennis Craven highlighted that “excluding sold hotels, hotel EBITDA was down only $1 million versus last year as we minimized labor and benefit cost increases to a mere 2 % on a cost‑per‑occupied‑room basis.”
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