RLJ CEO Expects Business Transient To Drive ‘Next Leg of Lodging Recovery’
Real Estate Investment Trust Acquires Atlanta Hotel for $58 Million
By Danielle Hess Hotel News Now August 6, 2021 | 10:24 AM
Leisure travel will come off its summer peak after Labor Day, but RLJ Lodging Trust President and CEO Leslie Hale said it will remain healthy, and expects the next leg of the recovery to be driven by business transient.
On a call with analysts to discuss second quarter earnings, Hale said the real estate investment trust has seen quarter-over-quarter increases in business transient and is seeing more group business outside of social in the form of corporate meetings and training.
Leisure demand will come off the summer peak after Labor Day, but Hale said it's expected to remain healthy as there's continued flexibility in a hybrid work environment.
She added that the company believes the "next leg of the lodging recovery will be driven by business transient" and "will see a step change at some point post the Jewish holidays, the order of magnitude of which will be predicated on the pace of offices reopening and children returning to schools."
The company continues to see improvements in bookings for groups and expects it to gain "further momentum in 2022," Hale said.
While COVID-19's delta variant is a concern, she said her company's portfolio isn't currently seeing meaningful impact.
In the second quarter, RLJ acquired the newly built 186-room Hampton Inn & Suites Atlanta Midtown for $58 million in an off-market transaction, according to the company's earnings release.
"Atlanta is expected to be one of the top growth markets throughout this lodging cycle, the Midtown Atlanta submarket is seeing significant new development activity [with] an influx of new companies including Google, which is currently building a new office just three blocks from our hotel," Hale said.
The property is expected to achieve a stabilized net-operating-income yield of between 8% and 8.5%, she said.
The company also sold the 130-room Residence Inn Chicago Naperville and the 78-room Residence Inn Indianapolis Fishers for $13.3 million during the quarter.
Subsequent to quarter end, it sold the 94-room Fairfield Inn & Suites Chicago Southeast Hammond, the 85-room Courtyard Chicago Southeast Hammond, and the 78-room Residence Inn Chicago Southeast Hammond for $21.8 million.
Second Quarter Results
For the quarter, RLJ achieved revenue per available room of $82.22, occupancy of 57.9% and average daily rate of $142.11.
The company's 97 open hotels representing 98% of the portfolio achieved occupancy of 61%.
RLJ also refinanced $600 million in debt during the quarter, which included issuing $500 million of high-yield bonds and amending its credit facilities, Hale said.
As of press time, RLJ's stock was trading at $14.50 a share, up 2.5% year to date. The New York Stock Exchange Composite was up 15.2% for the same period.