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RLJ Lodging Trust (RLJ)
NYSE:RLJ
US Market
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RLJ Lodging (RLJ) AI Stock Analysis

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RLJ

RLJ Lodging

(NYSE:RLJ)

Rating:59Neutral
Price Target:
$7.50
▼(-4.82% Downside)
RLJ Lodging's overall score reflects a mix of strengths and challenges. Strong financial stability and high dividend yield are offset by limited profitability, bearish technical indicators, and near-term uncertainties highlighted in the earnings call. The stock's valuation suggests it may be overvalued, impacting the overall score.
Positive Factors
Capital Strategy
Proceeds from the asset sale were used to repurchase stock, reflecting a strategic use of capital.
Earnings
RLJ's earnings topped expectations on better top-line performance and better cost controls.
Financial Performance
Margins and expenses were better than anticipated, with Hotel EBITDA surpassing estimates.
Negative Factors
Market Preference
Downgrade of RLJ to Peer Perform is primarily driven by a shift in preference to resorts and group-focused assets.
Outlook
RLJ significantly reduced its 2H24 outlook, which is unchanged today, reflecting 3Q24 outperformance.
Supply Growth
Concerns over supply growth in the select-service segment relative to full-service.

RLJ Lodging (RLJ) vs. SPDR S&P 500 ETF (SPY)

RLJ Lodging Business Overview & Revenue Model

Company DescriptionRLJ Lodging Trust (RLJ) is a real estate investment trust (REIT) that focuses on the ownership, acquisition, and development of premium branded hotels in the United States. The company primarily invests in the hospitality sector, targeting upscale and upper midscale hotels that cater to both business and leisure travelers. RLJ's portfolio includes a diverse range of properties affiliated with major hotel brands, allowing it to capitalize on the growing demand for quality accommodations in key markets.
How the Company Makes MoneyRLJ generates revenue primarily through the operation of its hotel properties, which includes income from room rentals, food and beverage sales, and ancillary services. The company benefits from its strategic partnerships with well-known hotel brands, which enhance its marketability and occupancy rates. Additionally, RLJ engages in property management and leasing, contributing to its revenue streams. The company may also pursue acquisitions of undervalued or distressed properties to enhance its portfolio, driving future earnings through increased occupancy and operational efficiencies.

RLJ Lodging Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mix of positive outcomes, such as strong performance in urban hotels, effective cost management, and successful conversions, balanced against challenges like RevPAR decline, softer group demand, and macroeconomic uncertainties. While there is optimism about the long-term outlook, near-term uncertainties weigh on sentiment.
Q2-2025 Updates
Positive Updates
Urban Hotels Outperformance
Urban hotels achieved significant RevPAR growth, outperforming the overall portfolio by 140 basis points. Notably, San Francisco CBD hotels saw a 20% RevPAR increase.
Positive Results from Conversions
The seven completed conversions collectively achieved 10% RevPAR growth, validating the company's strategy in driving operational upside through its conversion pipeline.
Leisure Revenue Growth
Leisure revenues increased by 5%, driven by events such as the U.S. Open, Formula One, and World Cup games, with urban leisure segments achieving 7% revenue growth.
Cost Management Success
RLJ managed to keep operating expense growth flat through aggressive cost management, limiting margin compression to just 90 basis points.
Strong Balance Sheet
The company reinforced its balance sheet by addressing near-term maturities and paying down the remaining balance on its revolver, ending the quarter with nearly $1 billion in liquidity.
Negative Updates
RevPAR Decline
RevPAR declined by 2.1% in the second quarter, impacted by transformational renovations and the closure of the Austin Convention Center.
Softer Group Demand
Group revenues were affected by holiday shifts and reduced demand from government-related groups, leading to a lack of compression during the quarter.
Macro Environment Uncertainty
The broader macro environment remains uncertain, contributing to shorter booking windows and limited visibility, particularly impacting the third quarter outlook.
International Travel Weakness
International travel demand remains soft, impacting leisure segments and contributing to third-quarter challenges.
Company Guidance
During the RLJ Lodging Trust Second Quarter 2025 Earnings Call, the company provided several key metrics that highlight their financial and operational performance. RLJ achieved a 75.5% occupancy rate, with an average daily rate of $205, leading to a RevPAR of $155, which represented a 2.1% decline from the prior year. Despite a 1.6% drop in occupancy and a 0.5 percentage point decrease in ADR, the company's urban hotels outperformed the overall portfolio with notable RevPAR growth in South Florida and Northern California at 13% and 10.3%, respectively. The company reported a corporate adjusted EBITDA of $104 million and an adjusted FFO per diluted share of $0.48. Non-room revenues grew by 1.5%, driven by ROI initiatives, while hotel EBITDA margins stood at 31.1%. RLJ also reported that their 7 completed conversions achieved a 10% RevPAR growth, and their urban leisure segment saw a 7% revenue increase. The company repurchased 0.8 million shares for $6 million, maintaining a disciplined approach to capital allocation. Looking ahead, RLJ anticipates a challenging third quarter due to various factors, including a 200 basis point impact from renovations and the Austin Convention Center closure, while expecting stronger trends in the fourth quarter supported by favorable calendar shifts and improved group travel dynamics.

RLJ Lodging Financial Statement Overview

Summary
RLJ Lodging shows a recovering financial position with strong revenue growth and improving operational margins. The absence of debt in 2024 strengthens the balance sheet, ensuring financial stability. However, limited profitability and declining free cash flow growth indicate areas needing improvement.
Income Statement
65
Positive
RLJ Lodging's revenue has shown a positive growth trajectory over recent years, with a notable recovery from pandemic lows. The gross profit margin is strong at 100%, reflecting efficient cost management. However, the net profit margin is relatively low at 3.13% in 2024, indicating limited profitability, which could be a concern if not improved. EBIT and EBITDA margins have improved significantly, showcasing better operational performance.
Balance Sheet
72
Positive
The balance sheet is strong, with no total debt reported in 2024, indicating a solid financial position. The debt-to-equity ratio is notably low, enhancing financial stability. Return on equity is modest at 1.88%, reflecting moderate returns to shareholders. The equity ratio is healthy, suggesting a robust capital structure.
Cash Flow
60
Neutral
RLJ Lodging's cash flow metrics show a mixed picture. Operating cash flow is solid, but there has been a decline in free cash flow growth, down 9.43% from the previous year. The operating cash flow to net income ratio is robust, indicating good cash generation from operations, though the free cash flow to net income ratio could be strengthened for better financial flexibility.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.37B1.37B1.33B1.19B785.66M473.09M
Gross Profit624.25M384.45M390.46M362.26M185.29M-30.23M
EBITDA345.15M335.30M354.64M310.00M137.76M-73.78M
Net Income45.23M68.02M76.41M41.92M-305.17M-404.50M
Balance Sheet
Total Assets4.82B4.88B4.92B4.98B5.15B5.62B
Cash, Cash Equivalents and Short-Term Investments373.90M409.81M516.67M536.39M665.34M899.81M
Total Debt0.002.34B2.34B2.33B2.53B2.71B
Total Liabilities2.58B2.59B2.57B2.55B2.74B2.93B
Stockholders Equity2.23B2.28B2.34B2.41B2.40B2.67B
Cash Flow
Free Cash Flow334.02M285.42M315.14M132.24M-5.30M-242.04M
Operating Cash Flow261.65M285.42M315.14M256.52M42.96M-168.71M
Investing Cash Flow-108.88M-275.73M-134.75M-135.51M-24.63M-66.69M
Financing Cash Flow-165.92M-131.69M-161.45M-298.49M-239.25M243.03M

RLJ Lodging Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.88
Price Trends
50DMA
7.52
Positive
100DMA
7.30
Positive
200DMA
8.17
Negative
Market Momentum
MACD
0.10
Negative
RSI
60.93
Neutral
STOCH
72.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RLJ, the sentiment is Positive. The current price of 7.88 is above the 20-day moving average (MA) of 7.47, above the 50-day MA of 7.52, and below the 200-day MA of 8.17, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 60.93 is Neutral, neither overbought nor oversold. The STOCH value of 72.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RLJ.

RLJ Lodging Risk Analysis

RLJ Lodging disclosed 2 risk factors in its most recent earnings report. RLJ Lodging reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

RLJ Lodging Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$1.38B22.695.00%3.61%4.81%185.08%
66
Neutral
$1.82B448.830.96%3.77%0.37%-97.38%
63
Neutral
$7.09B13.59-0.39%6.85%4.08%-25.24%
62
Neutral
$2.40B45.301.58%11.67%-3.19%-81.33%
61
Neutral
$1.77B30.894.22%4.90%1.72%-3.49%
59
Neutral
$1.20B37.632.53%7.61%1.42%-20.13%
57
Neutral
$1.40B-0.81%0.34%2.00%50.70%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RLJ
RLJ Lodging
7.88
-0.46
-5.52%
DRH
Diamondrock
8.58
0.67
8.47%
SHO
Sunstone Hotel
9.56
0.08
0.84%
PEB
Pebblebrook Hotel
11.79
-0.70
-5.60%
XHR
Xenia Hotels & Resorts
14.41
1.61
12.58%
PK
Park Hotels & Resorts
12.00
-0.62
-4.91%

RLJ Lodging Corporate Events

Executive/Board Changes
RLJ Lodging Executive VP Chad Perry Resigns
Neutral
Apr 15, 2025

On April 9, 2025, Chad Perry, Executive Vice President, General Counsel and Corporate Secretary of RLJ Lodging Trust, announced his decision to resign from his roles effective May 9, 2025, to explore principal investing opportunities. His departure is amicable and not due to any disagreements with the company’s operations, policies, or practices.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 20, 2025