Service Properties Trust (SVC) Q4 2024 earnings summary

Executive summary

• Reported strongest hotel revenue growth in nearly two years, with comparable hotel RevPAR up 4.2% year over year, outpacing the industry by 60 basis points.

• Owns 206 hotels with over 35,000 guest rooms and 742 service-focused retail net lease properties as of December 31, 2024.

• Portfolio spans the United States, Puerto Rico, and Canada, with over $11 billion invested in assets.

• Net lease retail properties continued steady performance, with 97.6% leased and a weighted average lease term of eight years.

• Initiated the sale of 114 Sonesta hotels, expecting proceeds of at least $1 billion, and sold additional non-core hotels to strengthen the balance sheet.

Financial highlights

• Normalized FFO for Q4 2024 was $28.6 million or $0.17 per share, down from $0.30 per share year over year.

• Adjusted EBITDA declined 7.4% year over year to $130.6 million.

• Adjusted Hotel EBITDA for 206 hotels was $43.1 million, down 2.4% year over year but above guidance.

• Gross operating profit margin declined by 160 basis points to 25.3%.

• Interest expense increased by $9.4 million and interest income declined by $8.4 million year over year.

Outlook and guidance

• Q1 2025 guidance projects RevPAR of $82-$84 and Adjusted Hotel EBITDA of $20-$24 million, with continued seasonal softness and renovation disruptions expected.

• Full year 2025 capital expenditures expected to be approximately $250 million, with $110-$130 million for maintenance.

• Hotel sales expected to close by Q3 2025, with proceeds prioritized for debt repayment.