Apple Hospitality REIT Inc Q4 2025 Earnings Call Transcript

Apple Hospitality REIT Inc (NYSE: APLE) Q4 2025 Earnings Call dated Feb. 24, 2026

Presentation

Operator

Greetings, and welcome to the Apple Hospitality REIT Fourth Quarter and Full-Year 2025 Earnings Call. [Operator Instructions]

I will now turn the conference over to your host, Kelly Clarke. Thank you. You may begin.

Kelly Clarke — Vice President, Investor Relations

Thank you, and good morning. Welcome to Apple Hospitality REIT’s fourth quarter and full-year 2025 earnings call. Today’s call will be based on the earnings release and Form 10-K, which we distributed and filed yesterday afternoon.

Before we begin, please note that today’s call may include forward-looking statements as defined by federal securities laws. These forward-looking statements are based on current views and assumptions, and as a result, are subject to numerous risks, uncertainties, and the outcome of future events that could cause actual results, performance or achievements to materially differ from those expressed, projected or implied. Any such forward-looking statements are qualified by the risk factors described in our filings with the SEC, including our 2025 Annual Report on Form 10-K, and speak only as of today. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.

In addition, non-GAAP measures of performance will be discussed during this call. Reconciliations of those measures to GAAP measures and definitions of certain items referred to in our remarks are included in yesterday’s earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the Company, please visit applehospitalityreit.com.

This morning, Justin Knight, our Chief Executive Officer; and Liz Perkins, our Chief Financial Officer, will provide an overview of our results for the fourth quarter and full-year 2025 and an operational outlook for 2026. Following the overview, we will open the call for Q&A.

At this time, it is my pleasure to turn the call over to Justin.

Justin Knight — Chief Executive Officer and Director

Good morning, and thank you for joining us today for our fourth quarter and full-year 2025 earnings call.

Against the challenging backdrop in 2025, our corporate management and hotel teams skillfully executed against strategic initiatives to maximize operating performance, manage expenses, capitalize on dislocations in the stock market, optimize our existing portfolio, enhance our growth profile, and position the Company to maximize shareholder value through outperformance in the years ahead.

Our portfolio of efficient, high-quality hotels is broadly diversified across 84 markets with exposure to a variety of demand generators. During the year, leisure travel remained strong across our hotel portfolio, while policy uncertainty and a pullback in government travel impacted midweek demand, temporarily disrupting the steady improvement in midweek occupancy that characterized much of 2024. Our asset management and hotel teams adjusted strategy to optimize the mix of business at our hotels as demand trends shifted, in many cases, layering on additional group business to bolster market share and strengthen overall portfolio performance.

Through the successful navigation of changes in government-dependent demand, combined with continued strength in leisure travel, we achieved comparable hotels RevPAR of $118 for the full-year 2025, down 1.6% to the prior year. Based on preliminary results, comparable hotels RevPAR declined by approximately 1.5% in January 2026 as compared to January 2025, primarily as a result of challenging comps related to wildfire recovery-related business, which benefited a number of our California hotels last year, and the presidential inauguration, which benefited our hotels in the Washington, D.C. area. Winter storms also weighed on January and early February results, but occupancies have improved meaningfully with recent weeks showing significant year-over-year growth.

Together with our management teams, we remain focused on ensuring that we are growing market share and prudently managing expenses to maximize the profitability of our hotels. Variable expense growth for our portfolio has moderated, with higher growth in fixed costs during 2025 largely coming as a result of challenging year-over-year comparisons. We achieved comparable hotels EBITDA of $99 million for the quarter and $474 million for the year, resulting in an industry-leading comparable hotels EBITDA margin of 31.1% for the quarter and 34.3% for the year.

In January, we successfully completed the transition of our 13 Marriott-managed hotels to franchise, consolidating management with third-party management companies who were, in most instances, already operating hotels for us in market in order to realize incremental operational synergies. We are confident these transitions, together with a select number of additional market-level management consolidations, will further drive operating performance at our hotels. In the case of the Marriott-managed assets, the transition away from brand management will also provide us with additional flexibility and increase the marketability of the hotels in the future as we consider select dispositions. The Marriott transition is aligned with Marriott’s publicly stated goal to drive incremental efficiencies in their own business, and we appreciate their willingness to work with us in pursuit of a mutually beneficial outcome.

Our disciplined approach to capital allocation has been a hallmark of our strategy throughout our history, balancing both near- and long-term allocation decisions to capitalize on existing opportunities while securing the long-term relevance, stability and performance of our portfolio and maximizing value for our shareholders. While our long-term goal is to grow our portfolio, our stock has traded at an implied discount to values we can achieve in private market transactions for much of the past year. We prudently capitalize on the disconnect by selectively selling assets and redeploying proceeds into the purchase of our own stock, preserving our balance sheet to safeguard against potential macroeconomic volatility and to protect our ability to act quickly on future accretive acquisition opportunities.

During the year, we sold seven hotels for a combined gross sales price of approximately $73 million and repurchased 4.6 million common shares for a total of approximately $58 million. Shares repurchased during 2025 were priced at around a 2.4 turn spread to dispositions completed during the year and around a 6.5 turn EBITDA multiple spread after taking into consideration brand-mandated capital investments. Our team has done a tremendous job pursuing opportunistic asset sales that further optimize our portfolio concentration, help to manage portfolio capex needs, and free capital for accretive redeployment at a meaningful spread. Pricing for the individual hotels varies. However, as a group, the seven hotels we sold in 2025 traded at a 6.5% blended cap rate or a 12.4 times EBITDA multiple before capex and a 4.9% cap rate or 16.5 times EBITDA multiple after taking into consideration the estimated $24 million in anticipated capital improvements.

We were able to use 1031 exchanges to reinvest gains on hotel sales, redeploying proceeds into the acquisition of the Homewood Suites Tampa-Brandon, which sits adjacent to our Embassy Suites in market, and the Motto by Hilton Nashville-Downtown, which we acquired in late December upon completion of construction. Recent acquisitions have performed well despite headwinds in several markets. The Embassy in Madison, Wisconsin saw meaningful year-over-year improvement as the hotel completed its first full year of operations. And the AC Hotel in Washington, D.C., which was also purchased in 2024, produced full-year RevPAR of $205 and a 43% house profit margin despite the meaningful pullback in government travel and a weaker convention calendar.

Four of the six hotels we purchased in 2023 achieved yields in excess of 10% last year, including our SpringHill Suites in Las Vegas despite meaningful declines in the performance of that market due to lower inbound foreign travel and a weaker convention calendar. The Nashville Motto is ramping nicely, and we continue to have forward commitments for two future hotel development projects, which are currently in early stages, including a dual brand AC and Residence Inn located adjacent to our SpringHill Suites in Las Vegas and an AC in Anchorage, Alaska. The AC in Anchorage has broken ground and is expected to be delivered in late 2027. Construction has not yet begun on the two Vegas hotels, though current expectations are for the AC and Residence Inn to be completed sometime in the second quarter of 2028. We do not currently have any pending acquisitions slated for 2026.

Through all phases of the economic cycle, we seek to create value for our shareholders by driving incremental earnings per share through accretive transactions that enhance the quality and competitiveness of our existing portfolio and ensure that we are well-positioned for future outperformance. We will continue to adjust tactical capital allocation strategy to account for changing market conditions and to act on opportunities at optimal times in the cycle to maximize total returns for our shareholders. In the near term, we anticipate that we will continue to pursue select asset dispositions, where we can redeploy proceeds at a multiple spread, while, at the same time, managing future capex needs and fine-tuning the distribution of our portfolio to increase exposure to potentially higher-growth markets.

Disciplined reinvestment in our portfolio is another key component of our strategy and ensures that our hotels maintain competitive positioning within their respective markets and present guests with a value proposition that enables our hotels to drive incremental rate. Our historical annual capex spend has been between 5% and 6% of total revenue, which is a significant differentiator for us relative to our full-service peers. Combined with higher margins, the lower capex obligation enables us to produce meaningfully more free cash from operations, which we then use to fund shareholder distributions and strategic investments.

Our experienced capital investments team leverages our scale ownership to reduce costs, maximize the value of reinvested dollars, and minimize revenue displacement by optimally scheduling projects during periods of seasonally lower demand. For the year ended December 31, capital expenditures totaled approximately $88 million. For 2026, we expect to reinvest between $80 million and $90 million in our portfolio with major renovations planned for approximately 21 of our hotels, including the conversion of our Residence Inn Seattle Lake Union to our Homewood Suites beginning in the fourth quarter of this year. The transition of this hotel will happen as it reaches the end of its current franchise term, with the determination to change brands informed by competitive supply dynamics within the market and brand incentives. The hotel will continue to operate as a Residence Inn through the renovation, which is expected to be complete in the second quarter of 2027.

Supported by strong cash flow from our portfolio of hotels, we continue to pay an attractive dividend, which meaningfully enhances total returns for our investors. During the fourth quarter, we paid distributions totaling approximately $57 million or $0.24 per common share. And for the full year, we paid distributions totaling approximately $240 million or $1.01 per share. Based on Friday’s closing stock price, our annualized regular monthly cash distribution of $0.96 per share represents an annual yield of approximately 7.8%. Together with our Board of Directors, we will continue to monitor our distribution rate and timing relative to the performance of our hotels and other potential uses of capital.

Historically, low supply growth continues to materially reduce the overall risk profile of our portfolio, limiting potential downside and enhancing potential upside as lodging demand strengthens. At year end, nearly 59% of our hotels did not have any new upper upscale, upscale, or upper mid-scale product under construction within a five-mile radius. Throughout our 26-year history in the lodging industry, we have refined our strategy, intentionally choosing to invest in high-quality hotels that appeal to a broad set of business and leisure customers, diversifying our portfolio across markets and demand generators, maintaining a strong and flexible balance sheet with low leverage, strategically reinvesting in our hotels, and closely aligning our efforts with the associates and management teams who operate our hotels.

In 2025, we skillfully executed strategic initiatives to further maximize operating performance, capitalize on dislocations in the stock market, optimize our existing portfolio, enhance our growth profile, and position the Company for outperformance in the years ahead. Travel demand for our portfolio has remained resilient, further reinforcing the merits of our underlying strategy.

Our guidance for 2026 calls for comparable hotels RevPAR to be flat at the midpoint, which generally aligns with STR forecast for our chain scales. We believe that this represents a measured base-case scenario for our portfolio. With early summer potentially benefiting from incremental leisure travel related to the FIFA World Cup 2026 and easier comparisons to periods adversely impacted by cuts in government spending, tariff announcements, and the government shutdown in late 2025, we acknowledge that this guidance could ultimately prove conservative. With January and February being seasonally lower occupancy months, it is early in the year for us to identify with conviction trends for either business or leisure travel. And as we saw last year, the possibility of policy-related demand disruption is real. We are, however, optimistic about the setup for the year and feel we are well-positioned regardless of how things play out in the broader economy. We remain confident in the long-term outlook for the hospitality industry, the strength of our portfolio specifically, and our ability to drive profitability and maximize long-term value for our shareholders.

It is now my pleasure to turn the call over to Liz for additional details on our balance sheet, financial performance during the quarter, and outlook for the remainder of the year.

Liz Perkins — Senior Vice President and Chief Financial Officer

Thank you, Justin, and good morning.

While the travel industry faced several macroeconomic headwinds in 2025, we are generally pleased with the performance and resilience of our portfolio. Comparable hotels total revenue was $319 million for the quarter and $1.4 billion for the full-year 2025, down approximately 2% and 1% to the same periods of 2024. Comparable hotels adjusted hotel EBITDA was approximately $99 million for the quarter and $474 million for the year, down approximately 8% and 6% as compared to the same periods of 2024. Fourth quarter comparable hotels RevPAR was $107, down 2.6%; ADR was $152, down 90 basis points; and occupancy was 70%, down 1.7% as compared to the fourth quarter 2024. For the year ended December 31, 2025, comparable hotels RevPAR was $118, down 1.6%; ADR was $159, down only 10 basis points; and occupancy was 74%, down 1.6% to 2024.

Our portfolio continues to outperform the industry, where STR reports RevPAR of $100 and average occupancy of 62% for 2025, highlighting the relative strength of our portfolio demand despite year-over-year disruption. Our teams have done a tremendous job adjusting strategy to reoptimize the mix of business at our hotels, where there were meaningful shifts in government and other demand segments, as well as maximizing revenue around special events to strengthen market share and performance for our overall portfolio.

Market performance varied significantly during the quarter, with a mix of strong RevPAR gains in several markets and ongoing headwinds impacting others due to demand shifts and challenging year-over-year comparisons. Our team remains focused on hotel and market-specific strategies as well as operational execution to maximize performance.

Top RevPAR performing hotels during the quarter as compared to the same period last year included our Embassy Suites in Anchorage, Alaska, which was up almost 42%; our Homewood Suites in Tukwila, Washington, which was up 33%; our Courtyard in Franklin, Tennessee, which was up almost 22%; and our Residence Inn in Renton, Washington, which was up over 21%, as the hotel lapsed Boeing strikes in 2024. Other top performers included our Manassas Residence Inn, St. Louis Hampton Inn, and Nashville Airport TownePlace Suites.

Hotels with significant year-over-year RevPAR declines for the quarter included our San Bernardino Residence Inn, our Arlington Hampton Inn and Suites, our Panama City TownePlace Suites, our Huntsville Hampton Inn and Suites, and our Orlando SpringHill and Fairfield Inn and Suites, which benefited from Hurricane Milton business during the fourth quarter of 2024. Based on preliminary results for the month of January 2026, comparable hotel RevPAR [Phonetic] declined by approximately 1.5% as compared to January 2025, impacted by travel disruption related to winter weather, challenging comps related to wildfire recovery related business, and the presidential inauguration last year, as well as ramp from our Nashville Motto, which opened at the end of December. Performance has improved in February, bringing comparable RevPAR growth slightly positive year-to-date.

Turning back to the fourth quarter, weekday occupancy was down 140 basis points and weekend occupancy was down only 50 basis points as compared to the same period last year. Encouragingly, occupancy growth turned positive in December, with weekday occupancy up 10 basis points after being down around 2% in October and November, and weekend occupancy was up 90 basis points after being down around 1% in October and November. ADR declines were more pronounced on weekdays, down 1% for the quarter, while weekend ADR was essentially flat. As previously mentioned, following a pullback in October and November due to travel disruption related to the government shutdown, we began to see improvement in December.

Highlighting same-store room night channel mix for the quarter, Brand.com bookings were flat year-over-year at 40%, OTA bookings were up 110 basis points to 14%, Property Direct was up 70 basis points at 25%, and GDS bookings were down 80 basis points to 16%.

Looking at fourth quarter same-store segmentation, bar was around flat at 33% of our occupancy mix, other discounts grew 30 basis points to 31% of mix, corporate and local negotiated declined 150 basis points to 16% of our mix, and government declined 100 basis points to 4% of our mix. Group business mix improved 130 basis points to 15%. Our fourth quarter channel mix and segmentation trends highlight the relative strength of our leisure consumer, the pullback in government and other business transient as a result of the government shutdown, and our team’s ability to reoptimize and grow Property Direct and group business where available. We continue to see growth in other revenues, which were up 5% on a comparable basis during the quarter and up 6% year-to-date, driven primarily by parking revenue and cancellation fees.

Turning to expenses. Comparable hotels total hotel expenses increased by only 1% in the fourth quarter and 1.9% for the year as compared to the same period of last year or 2.5% and 3.3% on a CPOR basis. On a same-store basis, total hotel expenses increased by only 1% for both the fourth quarter and full year. Total payroll per occupied room for our same-store hotels was $43 for the quarter, up 3.5% to the fourth quarter 2024 and $41 for the full year, up 3% versus full year 2024. Our managers continue to achieve reductions in contract labor, which decreased during the quarter to 7% of total same-store wages, down 120 basis points or 14% versus the same period in 2024. Comparable hotels variable hotel expenses increased only 0.5% in the fourth quarter or 1.9% on a per occupied room basis. Cost control efforts amid occupancy softness kept expense growth muted, with only 80 basis points of comparable operating expense growth, 30 basis points of hotel administrative expense, and flat sales and marketing expenses. Comparable utilities and repair and maintenance expense grew slightly higher at 2% and fixed expenses remained an expected headwind at 7% growth.

Our comparable hotels adjusted hotel EBITDA margin was strong at 31.1% for the fourth quarter and 34.3% for the year, down 210 basis points and 190 basis points as compared to the same periods of 2024. Adjusted EBITDAre was approximately $93 million for the quarter and $444 million for the full year, down approximately 3.6% and 5.1% as compared to the same period of 2024. MFFO for the quarter was approximately $73 million or $0.31 per share, down 3.1% on a per share basis as compared to the fourth quarter of 2024. For the full year 2025, MFFO was approximately $361 million or $1.52 per share, down 5.6% on a per share basis as compared to 2024.

Looking at our balance sheet, as of December 31, 2025, we had approximately $1.5 billion of total outstanding debt, approximately 3.4 times our trailing 12 months EBITDA, with a weighted average interest rate of 4.7%. At quarter end, our weighted average debt maturities were approximately three years. We had cash on hand of approximately $9 million, availability under our revolving credit facility of approximately $587 million, and approximately 64% of our total debt outstanding was fixed or hedged. The number of unencumbered hotels in our portfolio as of December 31 was 207. As previously disclosed, in July, we entered into a new unsecured $385 million term loan with a maturity date of July 31, 2030, enabling us to stagger our maturities as we approach a recast of our main credit facility in the coming months.

Turning to our outlook for 2026, provided in yesterday’s press release. For the full year, we expect net income to be between $133 million and $160 million; comparable hotels RevPAR change to be between negative 1% and positive 1%; comparable hotels adjusted hotel EBITDA margin to be between 32.4% and 33.4%; and adjusted EBITDAre to be between $424 million and $447 million. We have assumed for purposes of guidance that total hotel expenses will increase by approximately 3% at the midpoint, which is 2% on a CPOR basis.

Effective January 1, 2026, the Company will begin excluding from the calculation of adjusted EBITDA and MFFO the expense recorded for share-based compensation as it represents a non-cash transaction and the add-back to net income is consistent with the calculation of adjusted EBITDA for the Company’s financial covenant ratios under its credit facilities and is consistent with the presentation of other public lodging REITs. As Justin mentioned earlier, this outlook aligns with STR forecast for our chain scales, and we believe represents a measured base-case scenario for our portfolio.

With early summer potentially benefiting from incremental leisure travel related to the FIFA World Cup 2026 and easier comparisons to periods adversely impacted by cuts in government spending, tariff announcements, and the government shutdown in late 2025, we acknowledge that this guidance could ultimately prove conservative. Our outlook is based on our current view, which is limited, and does not take into account any unanticipated developments in our business or changes in the operating environment, nor does it take into account any unannounced hotel acquisitions or dispositions.

Trends early in the year are always difficult to extrapolate, but we are encouraged by recent improvement in midweek occupancies and GDS bookings. While uncertainty remains elevated and the possibility of policy-related demand disruption continues, including the ongoing partial government shutdown, we believe our experience, discipline and agility will enable us to adapt dynamically to maximize profitability, and we remain confident in our team’s ability to successfully navigate shifting market conditions. The strength of our differentiated strategy has proven resilient across economic cycles, allowing us to preserve equity value in challenging environments and position ourselves to capitalize on emerging opportunities.

While we have faced economic headwinds this year, favorable supply-demand dynamics persist. Our recent capital allocation decisions and portfolio adjustments have enhanced our portfolio positioning and performance, and our solid balance sheet continues to provide us with stability and meaningful flexibility to pursue accretive opportunities in the future. Importantly, we remain focused on the long term and committed to executing our strategy with discipline and patience, ensuring our portfolio is well-positioned to deliver growth and value creation for shareholders over time.

That concludes our prepared remarks, and we’ll now open the call for questions.

Question & Answers

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]

And our first question will come from Jack Armstrong with Wells Fargo.

Jack Armstrong

Hey, good morning. Thanks for taking the question. What would you say was the total drag on RevPAR in 2025 from Liberation Day and the government shutdown? And how much of that do you expect to come back as a benefit in 2026?

Liz Perkins — Senior Vice President and Chief Financial Officer

Good morning, Jack. It’s a good question. I think as we’ve progressed through the year and reported on government being pulled back and related business, whether it be government adjacent that we can identify or general BT related to some uncertainty, we’ve been clear it’s hard to quantify completely. If you look at room nights for government on a same-store basis for the full year, they were down about 12% and negotiated was down 5% to 6%, which — really, that trend did not start until DOGE and certainly ebbed and flowed throughout the year, ending the year down a little bit more with the government shutdown.

So, I’d say if you think about it from that perspective and you assume a good portion of that could come back, the total of those could be about 1 point in occupancy. But some of that from a DOGE perspective may not return. And so, that’s why the team worked really, really hard to optimize the mix of business and replace some of that with group business throughout the year.

Jack Armstrong

Okay. Helpful color there. And then, can you take us through some of the building blocks on the expense side on the fixed and variable side to get us to the 3% for the full year?

Liz Perkins — Senior Vice President and Chief Financial Officer

Yes. On a comparable basis at the midpoint, you’re just under 3% for variable expenses, about 2.7%. And then, fixed is just under 5%, so 4.5% or so, for fixed expenses at the midpoint.

Jack Armstrong

Okay. Great. Thank you.

Operator

And our next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Austin Wurschmidt

Great. Thanks. Liz, just you discussed all the moving pieces related to the outlook this year from some of the policy-related disruption that went on last year as well as the event-driven demand coming this year. I’m just wondering if the RevPAR growth guidance assumes any volatility, and if you could just kind of maybe provide some of the cadence of how you’re thinking about the quarters or first half versus back half of this year? Thanks.

Liz Perkins — Senior Vice President and Chief Financial Officer

It’s a good question. I think as we think about FIFA World Cup, to the extent we get benefit from that, that would occur probably mostly in late second quarter. We provided in our prepared remarks as well as in the press release last night that not much of that, if any, is contemplated at the midpoint of our guidance range. It’s a little early to know how that might materialize, though we are optimistic about the potential. So, if you think about cadence sort of outside of the guidance range, I’d say the end of the second quarter is when we’re anticipating for our hotels where we see the most benefit, the way the matches are lining up.

As we think about the midpoint of guidance and what was assumed in guidance, moving throughout the year, the cadence is fairly flat in the middle of the year and then a slight decrease in the first quarter because of the California Wildfire comp to last year where we experienced the most benefit. And certainly, the weather that we’ve experienced so far year-to-date has had some impact, too. And then, the fourth quarter, certainly, we would have a little bit more of an increase due to the government shutdown last year. So, highest growth in the fourth quarter, weakest quarter first quarter.

Austin Wurschmidt

Yeah. That’s helpful. And then, you did reference you were kind of forced to shift the business mix throughout the year given all the things we just discussed last year. How are you approaching this year with respect to business mix versus last year and just the potential benefit that, that could have on ADR from remixing that business last year? Thank you.

Justin Knight — Chief Executive Officer and Director

We’ve actually been incredibly pleased with our team’s ability to bring group into the hotels at attractive rates. And I think as we move forward this year, we expect those efforts to continue, direct sales to group within market. Ideally, we see improvement in government business, which helps to fill in the gaps, but certainly benefiting from the efforts of our property level teams in going out and seeking business to replace the business that was no longer available during the government shutdown.

So, our expectation would be relative to years prior to last year, potentially slightly less government, slightly more group, but we’ll see how the year plays out. I think what we’ve demonstrated is that we have a team at our hotels that has the ability to act on existing demand in market. And we have a product that’s versatile and appeals to a broad variety of potential customers.

Austin Wurschmidt

Thanks for the time.

Liz Perkins — Senior Vice President and Chief Financial Officer

Thanks, Austin.

Operator

Moving on to Ari Klein with BMO Capital Markets.

Ari Klein

Thanks and good morning. Just going back to the RevPAR outlook. Curious just, at the high end of the range, is that incorporating the fact that comps are getting easier and some of the event tailwinds that you talked about? And then, 2025 was characterized more so by weaker occupancy than ADR growth. Is that your assumption throughout [Phonetic] 2026 will play out as well? Thanks.

Liz Perkins — Senior Vice President and Chief Financial Officer

It’s a good question. Yes. I mean, I think we, at the midpoint of guidance, assumed a little impact or benefit from the special events that may happen this year or a return to some of the business we were missing. As you move higher up the range and hopefully beyond the range, it would anticipate some growth in occupancy as we lap those comps, more so than rate. Though, I think that some of the special events to the extent they materialize should provide some rate opportunity as well.

Ari Klein

Okay. Thank you. And then, Justin, maybe you could talk a little bit about just what you’re seeing as far as the transaction market is concerned. Are you more focused on dispositions at this juncture? Just any color there would be helpful. Thank you.

Justin Knight — Chief Executive Officer and Director

Yeah, absolutely. I’m incredibly pleased with our team’s ability to execute last year, specifically on dispositions. I highlighted numbers during my prepared remarks, but their ability to execute at the multiples they were able to execute at gave us a tremendous amount of flexibility to redeploy at spread multiples, which we think will meaningfully benefit us. I highlighted in my prepared remarks that at this point in time, we do not have any acquisitions under contract or currently contemplated for this year. A lot can change as we move through the year.

And I think we’ve demonstrated an ability to be nimble and to adjust strategy based on existing opportunities. But today, the environment looks very similar to the environment that we experienced last year. And I think in the near term, it’s safe to assume that we will be focused on select dispositions where we have confidence we can redeploy proceeds into higher-producing opportunities. And I think certainly, at current levels, we see our shares as being attractively priced.

Ari Klein

Thank you.

Liz Perkins — Senior Vice President and Chief Financial Officer

Thanks, Ari.

Operator

And moving on to Rich Hightower with Barclays.

Rich Hightower

Hey, good morning, guys. Thanks for taking the questions here. I think you mentioned in the prepared comments that occupancy for sort of midweek transient business got a little bit better in December. And maybe just if we could dig into your outlook specifically for that segment in ’26, better or worse, what trends are you seeing sort of within that core corporate transient group of customers?

Liz Perkins — Senior Vice President and Chief Financial Officer

Good morning, Rich. So, I think we were encouraged, especially post government shutdown that we saw a return to midweek occupancy in December with some slight growth midweek; I mean, it was a little better than flat. And I think as we crossed over into the new year, we’ve had a noisy year-to-date run here with weather, especially. We’ve seen signs of — especially in February, signs of good midweek occupancy growth. So, we’re encouraged there.

As we look at segmentation, we’ll have more data as we round out current months, and we’ll string together a trend. It’s a little early because we’ve had some stops and starts with weather to get too excited about the clean weeks, thinking that there could be some pent-up demand. But what we are seeing is encouraging from a midweek occupancy perspective. We believe that, that translates to business transient or the cause of that is business transient, whether it comes through the negotiated segment or not. And one of the reasons that I highlighted in my prepared remarks that we are seeing an improvement in GDS bookings, which is business-oriented.

So, some positive signs, but as we looked forward and as we contemplated guidance given the stops and starts, and I say every year on this call at this time that it’s just a really — it’s a difficult time to extrapolate the full year and what we anticipate from a business transient standpoint. I think we’re a little gun-shy because we were seeing slow and steady business transient growth up until the announcement of DOGE and those cuts. And that’s really when that trend pulled back. Once we see that trend pick back up and continue, we’ll get a little bit more optimistic.

I think one of the things that’s important is what Justin mentioned earlier, which is the broad diversification from a demand standpoint that our properties attract and that the team has done a really good job finding additional business in market, and we’ll continue to do that, whether it’s midweek occupancy coming through transient and it’s business-oriented, or whether it’s group that we’re able to put on the books at attractive rates and then drive incremental retail. So, the team continues to be really focused. We do believe there’s room to grow from a business transient [Phonetic] standpoint. It is the trend we’re looking for. It’s just a little too early to get excited about the recent things we’ve seen. But we are happy that despite some of the weather that people have gotten out, and we’ve seen some improvement here in February.

Rich Hightower

Okay. That’s helpful, Liz. And then, my second question, I guess, since we’re putting a spotlight on it this quarter, we all noticed that share-based comp is going to go up in ’26 versus ’25. So, maybe just help us understand the mechanical calculation of how that gets put together every year, if you don’t mind.

Liz Perkins — Senior Vice President and Chief Financial Officer

Absolutely. So, the mechanics of how we’re approaching our total G&A, which would be now corporate expense and the share-based compensation line items, combined is the same. We start the year at target compensation and then we adjust throughout the year based on how we’re performing in third-party estimates from a return — total return and relative return metric standpoint. And so, we’re recalibrating to target-based compensation at the beginning of the year like we typically do. Last year, we underperformed. And so, G&A expense, including share-based compensation, was much lower than target. So, that’s the disconnect between last year and where we’re guiding this year at the midpoint.

Rich Hightower

I see. So, there is flexibility throughout the year depending on performance?

Liz Perkins — Senior Vice President and Chief Financial Officer

Yes.

Rich Hightower

So, that could change in other words? Okay. Got it.

Liz Perkins — Senior Vice President and Chief Financial Officer

It will likely change as we move through the year.

Justin Knight — Chief Executive Officer and Director

Meaningfully. If you go back and look at the prior year, the delta is less significant.

Rich Hightower

Got it. Thank you, guys.

Liz Perkins — Senior Vice President and Chief Financial Officer

Absolutely.

Operator

And Michael Bellisario with Baird has our next question.

Michael Bellisario

Thanks. Good morning, everyone.

Liz Perkins — Senior Vice President and Chief Financial Officer

Good morning, Mike.

Michael Bellisario

I want to go back to guidance just on the expense front here. Can you help us bridge the changes in the same-store comp pool? I think New York is having a big impact on the headline growth rate. I think that’s a very low-margin property. And then, also, how is Nashville impacting growth rates and margins in ’26? Any kind of clarification there on sort of like the true comp for comp number would be helpful.

Liz Perkins — Senior Vice President and Chief Financial Officer

Yes. Okay. So, there is a lot of noise, especially since — and thank you for highlighting since I didn’t include it in my prepared remarks, we are adding Hotel 57 back to the comparable set. So, that creates some noise. It is a lower margin asset. And so, normalizing 2025, comparable 457 would have a 40 basis-point impact on 2025 margin. So, that’s one thing to note.

When you look at same-store total hotel expense growth at the midpoint, that’s actually 1.6%. The additional increase comes from Nashville, adding Hotel 57 back in. And then, of course, we have Tampa that’s also not part of the same-store set that we bought earlier last year. So, that’s impacting total growth rates, but same-store is 1.6%, which is something we’re proud of, especially given the top-line at the midpoint. We’re getting some benefit from not having brand conferences in 2026, which we had in 2025. There also have been some fee reductions for the brands, and we’ll benefit from that. That’s probably a net benefit of, all three of those things combined, $5 million.

Michael Bellisario

Got it. That’s helpful. And then, similarly, just on the manager changes, I know, previously, you sort of touched on qualitative expectations, but is there any lift explicitly included in your outlook now for 2026?

Justin Knight — Chief Executive Officer and Director

Not really at this point. And I think we continue to feel good about how the transitions will materialize. Remembering that there are some incremental costs in the beginning of any manager transition. Our base-case expectations are that we will be offsetting transition costs through more efficient operations as we move through the year with the primary benefit of the transactions being realized in future years. I think that is, as is the remainder of our guidance, a reasonable base case or a measured base case as we interact with management at those properties, their expectations for how they might perform are meaningfully higher.

Michael Bellisario

Helpful. That’s all from me. Thank you.

Operator

[Operator Instructions] And we’ll go next to Jay Kornreich with Cantor Fitzgerald.

Jay Kornreich

Hi. Thanks. I just wanted to ask, as we move closer to the World Cup, which I get is tough to pencil, how are you guys thinking about, I guess, just the potential upside to your portfolio either from people attending the games or maybe international travelers extending vacations between games? And what would you estimate as the booking window before the games actually begin?

Justin Knight — Chief Executive Officer and Director

A lot of good questions there. I want to clarify. We are incredibly excited about the potential for incremental business and incremental travel related to the World Cup. Our team is, both at our corporate office and our management teams, are intently focused on working to ensure that we maximize the opportunity, which means layering the appropriate business into the hotels, taking group where appropriate and early bookings and then blocking rooms to maximize rate as we get closer to the games.

The booking window is still short. And so, I think a significant part of the reason that, at the midpoint of guidance, we’re not reflecting the optimism we have about the potential business is because, from our perspective, it’s too soon to tell. As we get closer and are in a better position with more business on the books, we will also be in a better position to quantify the actual impact. I think as we’ve had discussions with our property teams and as we’ve thought more broadly about how things might play out, we anticipate that this could be a meaningful driver of incremental business as we move through the year. We just are not yet based on business that we have on the books in a position to give you a really good estimate.

Jay Kornreich

Okay. That’s it for me. Thank you.

Liz Perkins — Senior Vice President and Chief Financial Officer

Thanks, Jay.

Operator

Our next question comes from Ken Billingsley with Compass Point.

Ken Billingsley

Hi. Good morning. Thanks for taking my questions here. Two of them here, one on EBITDA growth. So, you’ve expressed a lot of conservatism on the call with regard to growth expectations and revenue being lower than expense growth guidance. How much is that conservatism impacting your EBITDA guidance, which is lower than last year? And how much of it is your conservatism versus just fewer hotels that are in the comps?

Liz Perkins — Senior Vice President and Chief Financial Officer

A portion of it will be that we sold assets last year, though we also are adding the Motto and Hotel 57 back into the pool of assets. So, I think for the most part, it’s revenue driven and it’s top-line driven. But certainly, there are some puts and takes with hotels sold and, again, the new properties as well.

Ken Billingsley

Okay. Thank you. And then, on the Marriott franchise transitions, I think it’s 13 of them. You mentioned — how do you expect — by doing that transition, I believe you talked about maybe improved returns. Can you talk about where you see that opportunity? And then, the other part is, does it make them more marketable assets by having them under the franchise agreement?

Justin Knight — Chief Executive Officer and Director

So, to answer the second part of your question first, it makes them infinitely more marketable. We have tremendous amount of flexibility to sell at this point those assets unencumbered by management, which meaningfully increases the potential buyer pool. And even assuming operations remain constant in terms of net income produced by the assets, we see an ability to the extent we were to sell any of these assets to unlock significant value.

Outside of that, I think there are two primary drivers of — that we anticipate for incremental profitability from these assets. The first is that we are, in most cases, consolidating management within markets with management companies that we already have operating in market, which we believe will drive cost savings, both on the formerly Marriott-managed assets as well as our other assets in market as we share expenses and build presence with specific management companies in those markets.

And then, outside of that, Marriott from an efficiency standpoint, that has not been one of their strengths, especially as they work to deploy themselves against the types of assets that we own. And so, we also anticipate meaningful reductions in overhead allocations to the properties, which will support a stronger bottom-line. I think outside of that, we expect that our managers will bring increased focus and attention to the properties, which has potential to drive incremental top-line results, meaning stronger rate and occupancy at the hotels. But our primary underwriting was on the cost side and easily justified the transition just through anticipated cost savings.

Ken Billingsley

Great. Thank you.

Operator

And moving on to Chris Darling with Green Street.

Chris Darling

Thanks. Good morning. Justin, in the prepared remarks, I want to say you said that 59% of your hotels have no new construction within, I believe, five-mile radius. If I think back over the last couple of years, I think that number has sort of consistently gone higher, although sequentially, it looks like it went lower this quarter. Wondering if you could dig in a little bit. Anything idiosyncratic driving that change? And maybe just a broad overview of what you’re seeing in the supply backdrop would be helpful.

Justin Knight — Chief Executive Officer and Director

Absolutely. So, from a supply standpoint, we continue to feel incredibly good about the supply picture. And I’ve highlighted on past calls and continue to believe that it meaningfully changes the risk profile of our portfolio, reducing downside risk and improving upside potential as the demand picture improves. Some of the subtle adjustments are nuanced and driven by changes to our overall portfolio. So, when you look at the assets that we’ve been selling and the types of markets that we’ve been selling out of, those are, in some instances, lower supply markets. And the net result has been shrinking the total number of assets, increasing our concentration in some individual markets. And so, on the margin, the difference that you’re seeing between the number we reported last and the number now has as much to do with kind of subtle shifts in our portfolio as it does a change in outlook or incremental supply.

I think what we have historically been accustomed to in terms of supply growth in our markets is meaningfully greater exposure than we have now. And given the dynamics that continue to exist between construction costs and profitability, we see a meaningful impediment to increased supply growth for the foreseeable future.

Chris Darling

Okay. That makes sense. Helpful to hear sort of the nuance there. As a follow-up, if we circle back to the capital allocation discussion, what’s the level of appetite you’re seeing among private buyers for portfolio deals these days, or is it safe to say one-off deals still represent best execution?

Justin Knight — Chief Executive Officer and Director

We — and I’ve commented in the past, our team continues to probe the market with various sized potential portfolio transactions. To date, we continue to see more attractive pricing for individual assets. I think that potentially shifts as we see industry numbers improve more universally. As investors — in order for us to achieve portfolio premiums, generally speaking, investors need to see an industry-level trend that would advantage them from buying in scale.

And what we’re finding more often is that we’re able to maximize value by creating a story around an individual asset for often a local owner operator that has ties to the individual market and an ability to bring incremental efficiencies to the property. So, I think you — based on our track record over a more extended period of time, I think we have demonstrated an ability to pivot as we see changes in the overall marketplace. For the near term, my expectations are that we’ll be likely transacting on individual assets, but we’ll continue to probe and look for other opportunities.

Chris Darling

All right. Understood. I appreciate the time.

Justin Knight — Chief Executive Officer and Director

Thanks.

Operator

And this now concludes our question-and-answer session. I would like to turn the floor back over to Justin Knight for closing comments.

Justin Knight — Chief Executive Officer and Director

We appreciate you taking the time to join with us this morning and are excited about the year ahead of us. As always, I hope that as you’re traveling, you’ll take the opportunity to stay with us at one of our hotels, and we look forward to providing you with updates as we continue through the year.

Operator

[Operator Closing Remarks]