Pebblebrook Q3 2026 Earnings: RevPAR Growth Lifts Hotel EBITDA

Pebblebrook Hotel Trust (NYSE: PEB) reported Q3 2026 total revenue of $402.7 million, up about 1.0% from $398.7 million a year earlier, while GAAP diluted loss per share available to common shareholders widened to $0.56 from $0.37. Same-property hotel EBITDA increased 15.1% as revenue grew faster than expenses, but a $77.3 million non-cash impairment weighed on GAAP results. Adjusted FFO per diluted share rose 23.5%, and free cash flow increased 24.4%.

Core Financial Results

Pebblebrook’s reported revenue increased modestly, while its same-property portfolio produced faster growth: same-property total revenue rose 6.9% and same-property hotel EBITDA increased 15.1%. These measures use a different portfolio basis from consolidated GAAP revenue and provide a clearer view of hotels included in the company’s current same-property definition.

GAAP profitability moved in the opposite direction. The operating loss and net loss widened, largely reflecting the impairment charge associated with the company’s disposition activity and evaluation of additional property sales.

Adjusted EBITDAre, adjusted FFO, same-property hotel EBITDA, and free cash flow are non-GAAP measures. Pebblebrook defines free cash flow as adjusted FFO less capital investments and common dividends paid.

Hotel and Market Performance

Same-property RevPAR increased 8.3% to $257, led by a 7.0% increase in average daily rate and a 1.2% increase in occupancy. Same-property total RevPAR, which incorporates revenue beyond guestrooms, rose 6.9% to $398.

Demand was broad across the portfolio rather than concentrated in one hotel category. Resort RevPAR increased 8.4%, while urban RevPAR rose 8.3%. Resort food-and-beverage revenue grew 11.2%, and eight of the company’s 13 resorts recorded hotel EBITDA growth of at least 20%.

Several urban markets reported above-portfolio RevPAR growth:

• San Francisco: 14.5%
• Chicago: 12.7%
• Los Angeles: 10.7%
• Boston: 10.6%
• Washington, D.C.: 9.1%

Management said healthy business and leisure demand continued through September, with growth reaccelerating after the World Cup and America 250 events earlier in the quarter. Transient average daily rate increased 8.5%, while group rates also rose despite softer convention calendars in several markets.

Profitability, Cash Flow, and the Balance Sheet

Same-property total revenue increased 6.9% to $400.6 million, while expenses grew 4.0% to $285.3 million. Expenses per occupied room rose 2.7%. This gap between revenue and expense growth generated 58% EBITDA flow-through and expanded same-property hotel EBITDA margin by 205 basis points.

Management attributed the margin improvement to higher room pricing, more compression days, a better demand mix, less discounting, guest spending at the properties, and operating productivity initiatives.

Free cash flow rose to $55.6 million from $44.7 million. Pebblebrook invested $14.8 million in its properties during the quarter and $39.3 million during the first nine months of 2026.

Cash and restricted cash totaled $298 million at September 30. Net debt to trailing-12-month corporate EBITDA declined to 5.1 times from 5.9 times at the end of 2025. The company also had $641 million available through its revolving credit facility and $90 million of available term-loan capacity.

Pebblebrook has $350 million of convertible notes maturing in December 2026. Management expects to fund repayment with existing cash, anticipated free cash flow, and available term-loan capacity; no other debt matures until 2028. Its debt carried an estimated weighted-average interest rate of 4.2%, with 89% effectively fixed and 98% unsecured.

During Q3, the company repurchased 1.2 million common shares for $20.9 million at an average price of $18.12. It also repurchased 0.4 million preferred shares for $7.2 million at an average 23% discount to liquidation preference. The lower common-share count helped adjusted FFO per share grow 23.5%, compared with an 18.9% increase in total adjusted FFO.

Non-Cash Impairment Obscured Better Hotel-Level Economics

The central contrast in the quarter was improving hotel operations alongside a larger GAAP loss. Same-property hotel EBITDA rose by $15.1 million, but Pebblebrook recorded $77.3 million of non-cash impairment charges, about $30.8 million more than the prior-year impairment.

The charges were recorded in connection with the sale of The Hotel Zags Portland and the company’s continuing evaluation of other dispositions. Pebblebrook sold The Hotel Zags for $10.0 million on October 8, after the quarter ended. The property had generated negative EBITDA of $0.6 million for the 12 months ended August 31, so its sale removes a source of hotel-level losses even though the related impairment reduced Q3 GAAP earnings.

Management similarly indicated that the change in its full-year GAAP net-loss outlook primarily reflects the third-quarter impairment charges, partly offset by the improved operating outlook.

2026 Guidance

Pebblebrook raised its full-year operating and cash-flow outlook after Q3 results and improved expectations for the fourth quarter. Of the $16.3 million increase in the adjusted EBITDAre midpoint, $13.4 million came from Q3 performance above the previous quarterly outlook midpoint, while $2.9 million reflected a higher Q4 forecast.

The capital-investment reduction primarily reflects project timing, with some planned spending shifting into 2027. The outlook includes the sale of The Hotel Zags and assumes no acquisitions or additional dispositions.

Pebblebrook’s Q4 guidance incorporates slower year-over-year RevPAR growth than it achieved in Q3, although hotel EBITDA is still expected to increase.

Risks for Investors to Monitor

• Short booking windows and economic uncertainty: Management described current demand and booking trends as constructive but noted macroeconomic, policy, and geopolitical uncertainty. Shorter booking windows can reduce visibility into future hotel demand.
• Slower fourth-quarter growth: The Q4 same-property RevPAR growth outlook of 4.0% to 6.0% is below Q3’s 8.3% increase. Weaker-than-assumed demand would affect revenue growth and hotel-level operating leverage.
• Leverage and the December maturity: Net leverage improved to 5.1 times, but Pebblebrook still needs to repay $350 million of convertible notes in December 2026. Management expects available cash, free cash flow, and term-loan capacity to cover the maturity.
• Disposition-related effects: The company continues to evaluate property sales, while Q3 included $77.3 million of associated impairment charges. Further portfolio changes could affect reported revenue, GAAP results, liquidity, and debt reduction.
• Capital spending shifted into 2027: Part of the reduction in 2026 capital investment reflects delayed projects rather than permanently eliminated spending, which may affect free cash flow in the following year.

Summary

Pebblebrook’s Q3 2026 hotel operations benefited from higher room rates, broad urban and resort demand, and expense growth below same-property revenue growth. Those factors lifted hotel EBITDA, adjusted FFO per share, and free cash flow, while a large non-cash impairment caused the GAAP loss to widen. The main issues to watch are whether demand supports the raised full-year outlook, how much RevPAR growth moderates in Q4, and how the company balances debt repayment, delayed capital projects, dispositions, and share repurchases.