Apple Hospitality REIT Roars Ahead in Q4 2024: Strong RevPAR Growth, Robust Earnings, and Enhanced Dividend Yields
Apple Hospitality REIT has reported a stellar performance for the fourth quarter and full year 2024, with significant growth in revenue per available room (RevPAR), robust earnings, and enhanced dividend yields. In a recent conference call, the company's leadership provided an update on its operations, highlighting key trends and initiatives that are driving success.
The company's comparable hotels RevPAR grew by approximately 3% for the fourth quarter and more than 1% for the full year as compared to the same periods of 2023. This growth was driven by improvements in both average daily rate (ADR) and occupancy, reflecting steady improvement in business transient demand, continued strength in leisure travel, and muted supply growth. Business travel continues to be the primary driver of overall growth for Apple Hospitality's portfolio, while leisure travel demand has been resilient.
Justin Knight, Chief Executive Officer, acknowledged the company's support for the courageous and dedicated teams at its hotels in Southern California, which remained operational despite recent wildfires. He also highlighted the strong performance from its hotels in the broader L.A. and D.C. markets, offsetting weather-related disruption elsewhere.
The company's adjusted EBITDAre was up approximately 7% and modified funds from operations (MFFO) was up approximately 6% as compared to the fourth quarter of 2023. Apple Hospitality's recent acquisitions have contributed to these strong bottom-line results, along with continued strength in ADR and moderating expense growth.
Supply-demand dynamics remain favorable for the company, with approximately 55% of its hotels not having any new upper upscale, upscale, or upper mid-scale product under construction within a 5-mile radius. This limited supply growth improves the overall risk profile of Apple Hospitality's portfolio by reducing potential downside and enhancing the upside impact of variability in lodging demand.
The company continues to pay an attractive dividend, with distributions totaling $0.24 per common share during the fourth quarter. This brings the annual payout to approximately $244 million or $1.01 per common share, representing an annualized regular monthly cash distribution of $0.96 per share and an annual yield of approximately 6.5%. The Board of Directors will continue to monitor the distribution rate and timing relative to the performance of Apple Hospitality's hotels and other potential uses of capital.
