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Pebblebrook's (PEB) Operating Trend Metrics Dip in October

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Per Pebblebrook Hotel Trust’s (PEB - Free Report) recently released operating update, the company’s same-property operating results for October came in line with its expectations.

The business and leisure travel demand remained healthy throughout October, with out-of-room spend and pricing increases remaining strong. However, Halloween negatively impacted the business and leisure travel demand for the week ended Oct 30, 2022.

PEB’s same-property average daily rate (ADR) for October came in at $310, declining from September’s tally of $318. The same at the end of the third quarter was $321.

Nonetheless, same-property ADR increased 15% from the October 2019 level. Also, October was the ninth consecutive month the company achieved same-property ADR of more than $300.

Pebblebrook’s revenue per available room (RevPAR) for October was recorded at $226, down from $234 for September. The same at the end of the third quarter was $233. It was also 3% lower than the October 2019 level.

The Hotel EBITDA was $41.2 million, down from $43 million in September.

Occupancy for October came in at 73%, consistent with September. The occupancy at the end of the third quarter was 73%.

Additionally, while none of PEB’s resorts experienced any notable physical damage from Hurricane Nicole, several of its resorts in the southeast witnessed cancellations and lower demand in the first half of November.

Speaking of the weekly operating trend for PEB’s total and resort portfolios, in accordance with the historical seasonal patterns for the end of October and early November, leisure travel dipped compared with business travel. Further, leisure demand is expected to moderate for the remainder of 2022, in line with the pre-pandemic demand trends.

The weekday operating trend for PEB’s total and urban portfolios portrayed robust demand growth in October 2022. This resulted in an average improvement of 9% in rate compared with the levels in October 2019. However, owing to slower business travel during the holiday season, the rates and demand mellowed down in November.

Further, the increase in layoffs and expense reductions taking place in several companies, especially the technology industry, is raising concerns for PEB. This is likely to affect the business transient and group bookings, hurting business and group travel demand in the upcoming period.

Analysts, too, seem bearish on the Zacks Rank #4 (Sell) company. The Zacks Consensus Estimate for the company’s fourth-quarter 2022 FFO per share has been revised 13.2% downward over the past month to 33 cents.

Its shares have lost 16.1% in the past three months compared with the industry’s decline of 11.6%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , Lamar Advertising (LAMR - Free Report) and Chatham Lodging Trust REIT (CLDT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is currently pegged at $1.91.

The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share presently stands at $7.34.

The Zacks Consensus Estimate for Chatham Lodging Trust REIT’s ongoing year’s FFO per share is pegged at $1.17, presently.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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