Apple Hospitality REIT NYSE: APLE reported stronger second-quarter operating results, citing broad-based gains in business and leisure travel, improved weekday occupancy and disciplined expense management. The lodging REIT raised its full-year RevPAR and hotel EBITDA margin outlook after comparable-hotel RevPAR increased 5.3% in the quarter.
Chief Executive Officer Justin Knight said approximately three-quarters of the company’s hotels posted RevPAR growth during the period, compared with roughly two-thirds in the first quarter. Comparable-hotel RevPAR reached $136, supported by a 3.5% increase in average daily rate to $170 and a 130-basis-point increase in occupancy to 80.1%.
“Weekday occupancy improvement outpaced weekend occupancy improvement during the quarter, indicative of strengthening business travel across our portfolio,” Knight said. Preliminary July results pointed to comparable-hotel RevPAR growth of more than 5.5%, he added.
Margins Expand as Revenue Outpaces Expenses
Comparable-hotel revenue rose 6.2% to $402 million in the second quarter, while comparable-hotel adjusted hotel EBITDA increased 9.7% to $153 million. Adjusted hotel EBITDA margin expanded 120 basis points to 38.1%.
Chief Financial Officer Liz Perkins said the company converted approximately $0.58 of each incremental revenue dollar into comparable-hotel adjusted hotel EBITDA. Operating expenses rose 3.5% against 4.7% same-store revenue growth, while fixed expenses declined. Wage growth moderated, with rooms wages rising less than 3%, or less than 1% per occupied room.
Utilities and repairs and maintenance were expense headwinds, increasing 9% and 6%, respectively. However, lower fixed expenses reflected a favorable property insurance renewal that took effect in April and successful real estate-tax appeals, Perkins said.
Modified funds from operations, or MFFO, was $123 million, or $0.52 per share, during the quarter, rising 9% and 8.3%, respectively. For the first six months of 2026, MFFO totaled approximately $204 million, or $0.86 per share, up 6.1% in dollars and 7.5% per share.
Business Travel and Group Demand Support Results
Management pointed to a strengthening mix of business transient and group demand. Same-store weekday occupancy increased 240 basis points in the second quarter, exceeding the 120-basis-point improvement in weekend occupancy. Brand.com accounted for 40% of room nights, up 80 basis points year over year, while global distribution system bookings rose 100 basis points to 18% of room nights.
Source: MarketBeat
