Apple Hospitality REIT's Q1 2025: Exploring Contradictions in Market Strategy, RevPAR Growth, and CapEx Plans

Transaction market and asset sales strategy, RevPAR growth and demand outlook, Group bookings and demand trends, transaction market activity and appetite, CapEx spending strategy are the key contradictions discussed in Apple Hospitality REIT's latest 2025Q1 earnings call.



Revenue and Earnings Trends:
- Apple Hospitality REIT reported comparable hotels total revenue of $324 million for Q1 2025, down 0.4% year-over-year.
- Earned an adjusted EBITDAre of $95 million, down approximately 5% from Q1 2024.
- Adjusted funds from operations (MFFO) were $76 million, down 9% compared to Q1 2024.

RevPAR and Occupancy Trends:
- Comparable hotels RevPAR was $111, a 0.5% decline year-over-year.
- Occupancy was 71%, down 1.5% from Q1 2024.
- The decline in occupancy was partially offset by a 1% increase in average daily rate (ADR).
- The decrease in occupancy was due to factors such as extreme winter weather, government travel pullbacks, and macroeconomic uncertainties.

Capital Allocation and Asset Transactions:
- Completed the sale of two hotels for $21 million and entered into agreements for additional hotel sales and purchases.
- Repurchased approximately $32 million of its common shares.
- Completed the acquisition of the Homewood Suites Tampa Brandon for $19 million.
- The capital allocation strategy aims to refine and enhance the existing portfolio, drive earnings per share, and maximize long-term value for shareholders.

Favorable Supply Demand Dynamics:
- Apple Hospitality REIT's business benefits from favorable supply-demand dynamics, with limited new supply growth in its markets.
- Nearly 60% of its hotels lack any new upper upscale, upscale, or upper mid-scale product under construction within a 5-mile radius.
- The lack of new supply growth reduces potential downside risk and enhances the upside impact of variability in launching demand.