RLJ Lodging Trust delivered an exceptional second quarter in 2026, with financial results exceeding forecasts and demonstrating robust growth across its diverse portfolio. The company's strategic focus on urban markets and targeted capital investments in property renovations and brand conversions has yielded significant dividends, positioning it for continued success. This strong performance has led to an optimistic revision of the full-year outlook, reflecting confidence in ongoing market tailwinds and the effectiveness of its operational strategies.
The second quarter saw a notable 6.8% increase in comparable Revenue Per Available Room (RevPAR), primarily driven by a 4.9% growth in Average Daily Rate (ADR) and a 130 basis point rise in occupancy to 77.0%. These improvements were broadly observed across all markets, with urban centers benefiting disproportionately from a surge in business transient demand and robust leisure activities, including major events like the World Cup. Non-World Cup markets also exhibited strong growth, with Austin's RevPAR soaring by 17% and Chicago experiencing a 15% increase, propelled by a vibrant citywide event calendar. Northern California's 9% RevPAR growth was notably supported by the expanding artificial intelligence industry, suggesting a sustained recovery trajectory for the region.
The acceleration in business transient revenues, marking a 10% increase for the second consecutive quarter, underscored strong demand from high-rated customers across various industries such as technology, finance, healthcare, and defense. Leisure revenue also grew by 7%, with a 6% increase in rates, highlighting the portfolio's ability to capture diverse consumer preferences for urban entertainment. Group revenues increased by 6%, balanced between demand and ADR, with future bookings indicating continued strength. These positive trends contributed to a 7% growth in non-room revenues, a testament to successful return-on-investment initiatives and property enhancements focused on food and beverage and ancillary spending.
RLJ Lodging Trust's capital allocation strategy prioritizes high-impact renovations and conversions, which have consistently generated superior returns. The conversion of the Renaissance in Pittsburgh to The Arrott, an Autograph Collection hotel, and the planned transformation of the Fairfield Inn and Suites Key West into a Compass by Margaritaville resort are prime examples. These projects are projected to deliver substantial EBITDA upside—35% for The Arrott and 50% for the Key West property—by repositioning assets to cater to higher-rated lifestyle segments and enhancing food and beverage profitability. The company also demonstrated proactive portfolio management through the opportunistic sale of the Hyatt Place Fremont, capitalizing on market dynamics and reallocating capital efficiently.
Financially, the company reported adjusted FFO per diluted share of $0.52 and adjusted EBITDA of $110.4 million, reflecting effective cost management despite increased variable expenses due to higher occupancy and transient mix. The balance sheet remains robust with $1.0 billion in liquidity, including $600 million in undrawn revolver capacity. The successful repayment of $500 million in senior notes extended debt maturities to 2029, reinforcing financial stability. The full-year guidance was raised, anticipating comparable RevPAR growth of 3.5% to 4.5% and adjusted FFO per diluted share between $1.37 and $1.50, based on continued business travel recovery, healthy urban leisure demand, and the ramp-up of conversion projects. The company remains committed to disciplined capital allocation and shareholder returns through its dividend, while actively exploring further opportunities for growth and value creation.
The outlook for the remainder of the year and into 2027 remains positive, with strong underlying demand trends, particularly in business transient travel, and a favorable calendar of major events. RLJ Lodging Trust's strategic positioning in urban markets, combined with its ongoing capital investments, ensures a competitive edge amidst muted supply growth. The company is actively managing its pipeline of conversions, targeting 2 to 3 projects annually to optimize returns and adapt to evolving consumer preferences. This balanced approach to growth, alongside a strong financial foundation, positions the trust to achieve sustained high performance in the dynamic hospitality sector.
