For hotel real estate investment trusts, the U.S. deals environment has proved challenging in recent years, with a few exceptions.
During their fourth-quarter and full-year earnings calls, hotel REIT executives spoke about how they have been adjusting their capital strategies to drive the greatest value they can as the deals pace has yet to pick up.
Some have had success picking up new trophy assets while others have sold off non-core properties, but all are seeing opportunities to reinvest into their portfolios to renew their properties and achieve higher rates once they stabilize.
For more on what these REIT execs had to say, read below:
Jim Risoleo, president and CEO, Host Hotels & Resorts
"Turning to capital allocation: In 2024, we completed $1.5 billion of acquisitions across four hotels, including the 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown, the 1 Hotel Central Park and the the Ritz-Carlton O'ahu, Turtle Bay. Thus far, our new acquisitions are performing in line with our underwriting expectations.
"In addition to successfully allocating capital through acquisitions, we also returned capital to stockholders through share repurchases and dividends. In 2024, we repurchased 6.3 million shares at an average price of $16.99 per share for a total of $107 million. Since 2022, we have repurchased $315 million of stock at an average repurchase price of $16.27 per share, and we have $685 million of remaining capacity under our share repurchase program. ...
"Turning to portfolio reinvestment: In 2024, we invested nearly $550 million in capital expenditures and resiliency investments. We completed renovations to approximately 2,100 guestrooms; 213,000 square feet of meeting space; and approximately 93,000 square feet of public space. ...
"In 2025, our capital expenditure guidance range is $580 million to $670 million, which includes between $70 million and $80 million for property damage reconstruction, the majority of which we expect to be covered by insurance.
"Our CapEx guidance also reflects approximately $270 million to $315 million of investment for redevelopment, repositioning and [return-on-investment] projects."
Raymond Martz, co-president and chief financial officer, Pebblebrook Hotel Trust
“On the capital investment front, we invested $91 million in 2024, marking the completion of our multiyear $525 million portfolio-wide redevelopment program. Early returns from these recent investments have been extremely encouraging. …
“In 2025, our capital investments are projected at $65 million to $75 million, reflecting our portfolio's excellent condition and reduced need for additional capital. We expect a similar capital investment level in 2026, excluding the potential Paradise Point Resort redevelopment and conversion in San Diego into a Margaritaville resort, which remains in the review and approval process with the California Coastal Commission."
Jon Bortz, chairman and CEO, Pebblebrook Hotel Trust
"As it relates to what will we do with the capital, we'll decide at the time based upon what the world looks like. But if it looks like today, which is the most confidence we have from a visibility perspective, we'll use a significant amount of that capital to buy our stock back. It's trading at a more than 50% discount to the midpoint of our [net asset value] range. We would expect to be selling our individual assets within their NAV ranges, respectfully. And that is our historical performance. It's what we've achieved in the past. And then we'll use the rest to pay down debt that relates to the loss of that [earnings before interest, taxes, depreciation and amortization]. And so, we want to make sure we remain at least leverage neutral and potentially slightly continue to improve the leverage profile."
Thomas Baltimore Jr., chairman, president and CEO, Park Hotels & Resorts
"As we enter this year, we intend to be more aggressive with our disposition efforts, targeting between $300 million to $400 million of noncore asset sales as we seek to further improve the overall quality of our portfolio, enhance our long-term growth profile and pay down debt.
"As a reminder, since 2017, we have sold or disposed of 45 hotels for over $3 billion, while meaningfully upgraded the quality of our portfolio.
"As we execute our strategy to sell non-core assets, we remain laser focused on allocating capital to maximize shareholder returns, including the reinvestment of proceeds into our core portfolio of iconic hotels."
Sean Dell'Orto, executive vice president, chief financial officer and treasurer, Park Hotels & Resorts
"In terms of CapEx, during 2024, we reinvested approximately $230 million into our portfolio. Prioritizing upgrades and resiliency work aimed at elevating the guest experience and strengthening our assets. This included the first phase of a two-phase comprehensive guestroom renovation at the famed Rainbow Tower in [Hilton Hawaiian Village Waikiki Beach Resort] and the Palace Tower at the Hilton Waikoloa [Village] on the Big Island as well as the first of a three-phase guestroom renovation of the 1,167 room main tower at the Hilton New Orleans Riverside.
"In 2025, we will execute the second and final phase of guest room renovations at both towers in Hawaii with a total investment of $75 million. Both renovations are scheduled to start in [the third quarter] of this year and extend through early 2026.
"Additionally, in New Orleans, we plan to launch Phase 2 of the guestroom renovation, a $31 million investment covering 428 rooms. This project, which has nearly doubled the rooms covered last year in Phase 1 is scheduled to begin in the second quarter of this year and continue through year-end."
Sean Mahoney, executive vice president, chief financial officer and treasurer, RLJ Lodging Trust
"Our outlook assumes no additional acquisitions, dispositions or refinancing. We estimate 2025 RLJ capital expenditures will be in the range of $80 million to $100 million. Cash G&A will be in the range of $34 million to $35 million and expect net interest expense will be in the range of $94 million to $96 million.
"We also expect total revenue growth will continue to outpace RevPAR growth due to continued success in our initiatives to drive out-of-room spend.
"Our 2025 outlook ranges incorporated anticipated displacement from scheduled 2025 renovations in certain high occupancy markets such as Waikiki, South Florida and New York. These renovations will be transformational and should create strong growth in 2026 and beyond."
Justin Leonard, president and chief operating officer, DiamondRock Hospitality Company
"Transaction volume is still down significantly from kind of that prior run rate, we see it down about 75% versus kind of like pre-COVID transaction volume. So there are very few transactions that are that are getting done. I think if you really back out some of the very large transactions — which are driving a lot of that volume — I mean, we have not seen a lot of stuff get across the finish line, and there's still a pretty significant bid-ask. So while we're actively out there and sort of soliciting bids, I wouldn't say that we're soliciting bids that, you know, a number that people particularly like, and we haven't seen a lot of forced selling in the market.
"So it's a pretty quiet transaction market, and I think that really is similar to what we saw six months ago. I think people were optimistic we'd see a drop-off in rates, and that might drive, drive some incremental volume, but given what's happened to interest rates, I think the market still seems to be sort of stuck in a holding pattern."
Jonathan Stanner, president and CEO, Summit Hotel Properties
"Over the 18 months, we've done about $300 million worth of deals, and we did it over 10-plus transactions. … A lot of that was being thoughtful around some of the lower [revenue per available room], lower-margin hotels in our portfolio that really needed a lot of capital. And so, I think one of the things we're really proud of has just been the difference in profile of what we bought versus what we've sold. We have less of the low-hanging fruit at the bottom end of our portfolio than we did 18 months ago. That being said, we're always trying to be very thoughtful around how we manage capital needs in the portfolio. And we do have a high-quality portfolio. So, we get a fair amount of reverse inquiry to our portfolio to sell assets. And we try to always be thoughtful around being opportunistic on asset sales and what we ultimately can redeploy those proceeds into. ...
"We'll renovate seven to 10 assets every single year. That's our expectation going into 2025 as well. We do have one big significant transformational renovation going on in Fort Lauderdale that we think there is even more lift than we would expect from a more traditional renovation. But it is a real balance, and we try to take a very objective approach to where we think the return and the lift is from a renovation. The brands have generally been very good supporters. They're obviously pushing to get their hotels renovated, but that isn't the primary input in our determination of when and where to renovate."
Robert Springer, chief investment officer, Sunstone Hotel Investors
"While our total capital investment in 2025 will moderate back to more normalized levels, we will still have some important value-creating initiatives underway. In San Antonio, we will be renovating the meeting space starting in the third quarter, which should wrap up by the end of the year. While the hotel is in great shape, a refresh of the meeting areas will better align them with the already renovated guestrooms and allow our sales teams to market a more cohesive product and drive more group business. In San Diego, we are in the planning stages for a renovation of the meeting space at our Hilton Bayfront."
Aaron Reyes, executive vice president and chief financial officer, Sunstone Hotel Investors
"Our capital investment activity for this year will be lower than our run rate in recent years and is expected to be in the range of $80 million to $100 million. Based on this level of investment and the nature of the projects we have planned, we will have meaningfully less earnings disruption in 2025 relative to what we experienced in the last couple of years."
Justin Knight, director and CEO, Apple Hospitality REIT
"Our disciplined approach to capital allocation and portfolio management has defined our strategy throughout our history and was especially evident in 2024.
"During the year, we acquired two hotels for $196 million, sold six hotels for more than $63 million, repurchased approximately $35 million in common shares and reinvested $78 million in our existing portfolio through capital expenditures.
"While the transaction market continues to be challenging with industry deal volume remaining at historical lows and down meaningfully year-over-year, we have successfully executed on select asset sales in ways that continue to optimize our portfolio concentration in specific markets. Proceeds from these sales were used primarily to fund share repurchases and reduce debt. ...
"During 2024, we invested approximately $78 million in capital expenditures, and we expect to spend between $80 million and $90 million during 2025 with major renovations of approximately 20 of our hotels. These reinvestments in our portfolio are a key component of our overall strategy and ensure our hotels remain competitive in their respective markets to further drive EBITDA growth. Eleven of the anticipated projects this year are part of multiyear franchise extension agreements."
