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1. Company Snapshot

1.a. Company Description

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust ("REIT") and the largest owner of urban and resort lifestyle hotels in the United States.The Company owns 53 hotels, totaling approximately 13,200 guestrooms across 14 urban and resort markets, with a focus on the west coast gateway cities.

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1.b. Last Insights on PEB

Pebblebrook Hotel Trust's recent performance was negatively impacted by a Moody's credit rating downgrade to Ba3, indicating higher risk compared to peers. The company's liquidity profile improved due to a lower capital investment outlook for 2025 and 2026, but this was not enough to offset the negative sentiment surrounding its credit rating. Additionally, the Series H preferreds are trading at a discount, with a yield of 8.5%, but this may not be enough to compensate for the increased risk.

1.c. Company Highlights

2. Pebblebrook Hotel Trust's Q3 Earnings: A Resilient Performance Amidst Challenges

Pebblebrook Hotel Trust reported a solid third-quarter performance, with same-property hotel EBITDA totaling $105.4 million, in line with expectations, and adjusted EBITDA coming in at $99.2 million, exceeding the midpoint by $2.2 million. Adjusted FFO per share was $0.51, $0.03 above the midpoint, and earnings per share (EPS) also came in at $0.51, slightly beating estimates of $0.5. The company's revenue growth was driven by its properties in San Francisco and Chicago, as well as strong contributions from recently redeveloped resorts.

Publication Date: Nov -30

📋 Highlights
  • Q3 Performance in Line with Outlook: Same-property hotel EBITDA reached $105.4 million, adjusted EBITDA hit $99.2 million (exceeding midpoint by $2.2 million), and adjusted FFO per share was $0.51 ($0.03 above midpoint).
  • Resort Portfolio Resilience: Total RevPAR increased 0.7%, with Newport Harbor Island Resort achieving 29% RevPAR growth and 35.9% total RevPAR surge compared to 2023 pre-renovation levels.
  • Urban Market Disparity: Urban total RevPAR declined 2.7% due to weakness in Los Angeles and Washington, D.C., but San Francisco and Chicago saw strong performance, offsetting losses.
  • 2026 Outlook Positivity: Q4 RevPAR projected to range -1.25% to +2%, with total RevPAR between -1.25% and +2.7%, driven by normalized federal travel, America 250 events, and favorable convention calendars.
  • Cost Efficiency and Redevelopment Gains: Same-property expenses grew just 0.7%, and redeveloped resorts like Jekyll Island Club Resort and LaPlaya in Naples delivered double-digit RevPAR gains, boosting market share and profitability.

Segment Performance

The urban total RevPAR declined 2.7% due to ongoing weakness in Los Angeles and Washington, D.C., offset by strength in San Francisco and Chicago. However, the resort portfolio remained resilient, with total RevPAR increasing by 0.7%, led by exceptional growth at Newport Harbor Island Resort. The company's redevelopment efforts are paying dividends, with a 700-basis-point increase in penetration over the past two years, as noted by Jon Bortz, "Our comprehensively upgraded and transformed hotels and resorts are gaining share and growing cash flow with more runway ahead."

Outlook and Guidance

Looking ahead to 2026, Pebblebrook expects same-property RevPAR to range between minus 1.25% to up 2%, with total RevPAR between a negative 1.25% and a positive 2.7%. The company is cautiously optimistic, believing that macroeconomic uncertainty will fade, hotel demand will normalize with GDP growth, and new supply will remain at historically low levels. Analysts estimate revenue growth at 2.2% for next year.

Valuation and Metrics

With a P/E Ratio of -61.7, P/B Ratio of 0.51, and EV/EBITDA of 14.68, the market is pricing in significant challenges. However, the company's efforts to control costs, redevelop properties, and capitalize on a favorable events calendar in 2026 could drive growth. The Dividend Yield is 0.35%, and the Free Cash Flow Yield is 30.82%, indicating a potentially attractive return for investors.

Key Drivers for 2026

The company's outlook for 2026 is positive, driven by a more favorable holiday calendar, a major events calendar, including the World Cup and America's 250th anniversary celebrations, and the recovery of key markets like San Francisco and Los Angeles. With a robust convention calendar and improving business transient travel, Pebblebrook is well-positioned to capitalize on these tailwinds.

3. NewsRoom

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Pebblebrook Hotel Trust Completes $72.0 Million Sale of The Westin Michigan Avenue Chicago

Dec -04

Source: businesswire.com

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Hudson Pacific Appoints Jon Bortz to Board of Directors

Dec -03

Source: businesswire.com

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Pebblebrook Hotel Trust Completes $44.25 Million Sale of Montrose at Beverly Hills

Nov -20

Source: businesswire.com

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Why Fast-paced Mover Pebblebrook Hotel (PEB) Is a Great Choice for Value Investors

Nov -12

Source: zacks.com

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Increased M&A Bodes Well For Discounted Infrastructure

Nov -11

Source: seekingalpha.com

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Best Value Stocks to Buy for Nov.11

Nov -11

Source: zacks.com

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Pebblebrook Hotel (PEB) Just Flashed Golden Cross Signal: Do You Buy?

Nov -10

Source: zacks.com

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Pebblebrook Hotel (PEB) Recently Broke Out Above the 50-Day Moving Average

Nov -10

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.69%)

6. Segments

Room

Expected Growth: 2.5%

Pebblebrook Hotel Trust's 2.5% room growth is driven by increasing demand from business and leisure travelers, particularly in urban markets. RevPAR (Revenue per Available Room) growth is fueled by a strong economy, low supply growth, and effective revenue management strategies. Additionally, the company's focus on repositioning and renovating its portfolio, as well as its strategic acquisitions, contribute to the growth.

Food and Beverage

Expected Growth: 3.5%

Pebblebrook Hotel Trust's Food and Beverage segment growth of 3.5% is driven by increasing demand for experiential travel, rising average daily rates, and strategic investments in restaurant and bar renovations. Additionally, the company's focus on local and seasonal menu offerings, as well as partnerships with popular food and beverage brands, contribute to the segment's growth.

Other

Expected Growth: 2.0%

Pebblebrook Hotel Trust's 2.0% growth is driven by increasing RevPAR (Revenue per Available Room) due to strong demand, effective pricing strategies, and a favorable mix of business and leisure travelers. Additionally, the company's strategic asset management initiatives, cost savings, and accretive capital investments contribute to its growth momentum.

7. Detailed Products

Luxury Hotels

Pebblebrook Hotel Trust owns and operates luxury hotels and resorts, offering high-end accommodations and amenities to guests.

Upscale Hotels

The company's upscale hotels offer stylish rooms, modern amenities, and exceptional service, catering to discerning travelers.

Lifestyle Hotels

Pebblebrook's lifestyle hotels blend stylish design, vibrant atmosphere, and modern amenities, appealing to travelers seeking unique experiences.

Food and Beverage

The company's hotels offer a range of dining options, from fine dining to casual eateries, providing guests with diverse culinary experiences.

Meeting and Event Spaces

Pebblebrook's hotels feature modern meeting and event spaces, ideal for corporate events, weddings, and social gatherings.

Wellness and Recreation

The company's hotels offer fitness centers, spas, and recreational activities, promoting relaxation and well-being.

8. Pebblebrook Hotel Trust's Porter Forces

Forces Ranking

Threat Of Substitutes

Pebblebrook Hotel Trust operates in the hospitality industry, which is characterized by a moderate level of substitutes. While there are alternative accommodations available, such as Airbnb and vacation rentals, hotels remain a popular choice for travelers. The company's focus on luxury and upscale hotels helps to differentiate it from substitutes.

Bargaining Power Of Customers

Pebblebrook Hotel Trust's customers have limited bargaining power due to the fragmented nature of the hospitality industry. Individual customers have little influence over the company's pricing and services. However, the rise of online travel agencies and review platforms has increased customers' ability to compare prices and services, which could potentially impact the company's pricing power.

Bargaining Power Of Suppliers

Pebblebrook Hotel Trust's suppliers, including food and beverage providers, linen suppliers, and maintenance contractors, have a moderate level of bargaining power. While the company has some flexibility in choosing suppliers, it is still dependent on these vendors to operate its hotels efficiently. The company's scale and reputation help to mitigate supplier power, but it is still subject to market fluctuations and supplier negotiations.

Threat Of New Entrants

The threat of new entrants in the hospitality industry is relatively low due to the high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for established relationships with travel agencies and online booking platforms. While new hotels and chains may enter the market, Pebblebrook Hotel Trust's established brand and scale provide a competitive advantage.

Intensity Of Rivalry

The hospitality industry is highly competitive, with many established players and a constant influx of new entrants. Pebblebrook Hotel Trust operates in a crowded market, with numerous luxury and upscale hotels competing for customers. The company's focus on unique amenities and services helps to differentiate it from competitors, but the industry's high level of rivalry puts pressure on pricing, occupancy rates, and customer loyalty.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 48.86%
Debt Cost 4.04%
Equity Weight 51.14%
Equity Cost 13.10%
WACC 8.67%
Leverage 95.55%

11. Quality Control: Pebblebrook Hotel Trust passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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RLJ Lodging

A-Score: 6.1/10

Value: 8.3

Growth: 4.7

Quality: 6.1

Yield: 8.0

Momentum: 2.5

Volatility: 7.0

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Chatham Lodging

A-Score: 5.5/10

Value: 6.2

Growth: 5.3

Quality: 4.7

Yield: 6.0

Momentum: 2.5

Volatility: 8.0

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Braemar Hotels & Resorts

A-Score: 5.1/10

Value: 9.1

Growth: 3.0

Quality: 3.7

Yield: 9.0

Momentum: 3.0

Volatility: 2.7

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SVC

A-Score: 4.9/10

Value: 9.8

Growth: 3.2

Quality: 5.2

Yield: 6.0

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

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Pebblebrook Hotel

A-Score: 4.1/10

Value: 8.2

Growth: 4.4

Quality: 3.3

Yield: 0.0

Momentum: 3.5

Volatility: 5.0

1-Year Total Return ->

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Sotherly Hotels

A-Score: 2.6/10

Value: 7.2

Growth: 4.0

Quality: 3.2

Yield: 0.0

Momentum: 1.0

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.79$

Current Price

10.79$

Potential

-0.00%

Expected Cash-Flows