RLJ Lodging Trust: A 2026 World Cup-Driven REIT Turnaround Story

The hotel REIT sector has long been a battleground for value investors, with undervalued assets and cyclical demand patterns creating opportunities for those who can anticipate macroeconomic shifts. RLJ Lodging Trust, a REIT with a concentrated portfolio in urban markets, is poised to benefit from a confluence of strategic tailwinds in 2026, including the FIFA World Cup and a broader sector valuation correction. As the company navigates near-term challenges, its positioning in high-demand urban corridors and proactive capital allocation strategies suggest a compelling turnaround narrative.

Strategic Tailwinds: The 2026 World Cup as a Catalyst

RLJ Lodging Trust's exposure to the 2026 World Cup is a critical differentiator. With 72 matches scheduled in its markets, including high-profile venues like New York, Dallas, and Kansas City, the company is uniquely positioned to capitalize on event-driven demand. According to a report by CoStar, U.S. host cities could see average daily rate increases of 20% to 45% and occupancy gains of 5–15 percentage points during the tournament. While U.S. markets face headwinds such as visa restrictions and slower inbound travel compared to Canadian and Mexican host cities, RLJ's focus on urban hubs mitigates these risks.

The company's recent strategic renovations and conversions in key locations have already demonstrated efficacy, with a 6% REVPAR growth in renovated properties despite a 5.1% industry-wide decline in Q3 2025. CEO Leslie Hale has emphasized the strength of urban markets, which she believes will outperform the broader industry in 2026. This optimism is grounded in data: U.S. REITs with urban exposure have historically outperformed during major events, as seen in the 2022 FIFA World Cup and the 2024 Paris Olympics.

Sector Undervaluation and Valuation Metrics

The hotel REIT sector remains significantly undervalued relative to the broader market. As of late 2025, U.S. REITs have lagged behind tech stocks, with valuations "stuck in neutral" for much of the year. This divergence mirrors patterns from the late 1990s tech boom, suggesting a potential correction is overdue. For RLJ, this undervaluation presents an opportunity. The company's 2025 guidance-projecting hotel EBITDA of $357.5 million to $365.5 million and adjusted FFO per share of $1.31 to $1.37-indicates operational resilience despite a 1.9% to 2.6% REVPAR decline for the year.

Analysts project that Fed rate cuts in 2026 will further catalyze the sector. Lower borrowing costs are expected to spur hotel transaction activity and renovation projects, particularly in luxury and urban markets. RLJ's recent share repurchases-executed at a discount to net asset value-signal management's confidence in its long-term value and align with broader REIT trends of capital return to shareholders.

Risk Mitigation and Long-Term Positioning

While the 2026 World Cup offers a near-term boost, RLJ's long-term success hinges on its ability to navigate structural challenges. The company's Q3 2025 results highlighted a 3.1% occupancy decline and 2.1% average daily rate drop, underscoring the need for continued operational discipline. However, its focus on high-growth urban markets-where demand is less sensitive to macroeconomic fluctuations-provides a buffer. For instance, New York and Chicago, two of RLJ's core markets, have maintained occupancy rates above 85% year-to-date, outperforming secondary markets.

Moreover, the REIT sector's broader valuation gap-driven by a 6.2% increase in funds from operations (FFO) and a 6.3% rise in total dividends in 2025-suggests that RLJ's current discount to intrinsic value could narrow as investor sentiment shifts. This dynamic is particularly relevant for REITs with strong cash flow visibility, such as RLJ, which has maintained a conservative leverage profile and a 70% occupancy rate across its portfolio.

Conclusion: A Compelling Turnaround Thesis

RLJ Lodging Trust embodies the intersection of strategic positioning and undervaluation in the hotel REIT sector. Its exposure to the 2026 World Cup, combined with a focus on urban markets and proactive capital allocation, creates a compelling case for investors seeking long-term growth. While near-term challenges persist, the alignment of macroeconomic tailwinds-Fed rate cuts, tax clarity, and event-driven demand-positions RLJ to outperform in 2026. For value-conscious investors, the REIT's current valuation offers an attractive entry point into a sector poised for a valuation catch-up.