Q & A Highlights

Here are the key highlights from the Pebblebrook Hotel Trust ( NYSE:PEB ) Q2 2026 earnings call, presented as Q&A pairs.

Q: Can you elaborate on the drivers of the better-than-expected pickup you are seeing, which seems to be a key assumption for the second half of the year? A: Jonathan Bortz, Chairman and CEO: The drivers have been fairly broad but are clearly led by the transient side, including both corporate and leisure transient demand. Group stability and predictability in attendance and spend are also positive. Another key driver is our increased ability to drive pricing higher through less discounting and promotions, focusing on higher-rated channels, and reducing reliance on lower-priced wholesale channels.

Q: What do you think the underlying RevPAR growth is for the first half, adjusted for unique tailwinds like the World Cup and calendar shifts? A: Jonathan Bortz, Chairman and CEO: Underlying demand growth seems to be tracking in the 1.5% to 2% range, which is closely aligned with GDP growth. The key change in an upcycle is what happens with rate. The increased rate from events like the World Cup is likely to be more than offset by increasing rate from improving industry fundamentals. As the pie gets bigger, it's easier to price with more confidence, a shift from the environment of the last few years.

Q: How did the upside from redevelopment and the recovery trajectory at your resort properties change following the strong second quarter? A: Jonathan Bortz, Chairman and CEO: The benefit from less price sensitivity applied throughout the portfolio, and our redeveloped properties like Newport and Estancia were able to take advantage of that. They continue to gain share, and it's easier to do so when the market is good. While the pace of recovery for the next $4-6 million of redevelopment upside hasn't materially accelerated, we were very encouraged by the progress. The bridge we laid out for recovery doesn't include increases at the resort level, which will be more macro-related.

Q: You achieved RevPAR well above the high end of your guidance, but expenses were still within the original range. How were you able to achieve that favorable flow-through? A: Raymond Martz, Co-President and CFO: This is a result of our hotel teams and asset managers' hard work on efficiency. We have fewer FTEs on a per occupied room basis than pre-COVID due to technology and other initiatives. Our property-level costs are growing at less than inflation (2%). We also have additional benefits from savings like property insurance. We feel this is a multi-year trend of margin expansion, even at lower revenue growth levels.

Q: You mentioned reducing reliance on discounted channels. Can you provide more color on the historical percentage of demand from OTAs and the difference between urban and resort properties? A: Raymond Martz, Co-President and CFO: Overall, about 25% of our mix comes from OTAs. This is lower for our branded hotels (12-13%) and resorts (20-23%), and higher for urban lifestyle hotels (20-30%). Resorts rely less on OTAs due to their unique buying experience and high direct bookings. However, not all OTA business is negative; it's about managing the mix and not relying on it too heavily. The focus is on net RevPAR and business generation.

Q: Given the meaningful run-up in your share price, has your thinking on capital allocation priorities evolved? A: Jonathan Bortz, Chairman and CEO: Our strategy remains focused on creating value and driving per-share cash flow growth. While the arbitrage opportunity has shrunk, there is still a significant discount as we sell assets within our NAV range. Using those proceeds to buy back stock or preferred shares at a discount, or to pay down debt, remains the best use of capital. We are not prepared to buy new assets when we can buy our existing assets at a more significant discount. NAV is not static and will increase with performance, so we will continue to be opportunistic.

Q: Can you take us through the moving pieces that led you to raise your NAV estimate? A: Raymond Martz, Co-President and CFO: The overall gross property value did not change, but individual market values shifted. Resort values went up due to constructive transaction markets and strong performance. San Francisco was also raised. We took down values in Washington DC, Los Angeles, Boston, and San Diego. The main driver of the NAV increase from $23.50 to $24.50 was the reduction in shares and preferred shares through buybacks, combined with higher cash balances.

Q: What are you seeing in the transactions market? A: Thomas Fisher, Co-President and CIO: The market continues to be more constructive. Capital follows performance, and we are seeing more transactions, larger deals, and more investor depth and conviction. The debt markets remain attractive. However, the market is bifurcated, with activity trending towards luxury and resort assets, and assets in markets with significant growth potential.

Q: Do you find that local convention and visitors bureaus are taking advantage of the positive publicity from the World Cup to promote their cities internationally? A: Jonathan Bortz, Chairman and CEO: Yes. We've seen organizations like SF Travel and the San Diego Authority increasingly put more money and effort into international sales trips and marketing. For example, SF Travel has a major marketing effort in Canada, betting that Canadians are ready to return after positive World Cup experiences. The positive word of mouth is seen as a catalyst.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .