Summit Hotel Properties (NYSE:INN) reported first-quarter 2026 results that management said exceeded expectations, supported by improving demand trends as the quarter progressed and a sharp acceleration in March. President and CEO Jon Stanner said the company saw “a meaningful sequential improvement in operating fundamentals throughout the quarter,” with pro forma RevPAR turning positive and rising 20 basis points year over year.
Stanner said the RevPAR outcome was more than 200 basis points better than the company had communicated on its fourth-quarter 2025 call, driven by broad-based strength across markets and demand segments. “Operating fundamentals improved each month as the quarter progressed,” he said, noting that January and February declines were offset by March RevPAR growth of 4.1%, which was driven by a 5.6% increase in average rate.
March acceleration and segment mix shift
Stanner said the company’s strongest performance came from higher-rated demand segments, allowing Summit to “yield out a portion of lower rated business in a reversal of the prevailing pricing trends we experienced for most of last year.” He highlighted an improving business transient backdrop, with negotiated segment RevPAR up 3% for the quarter and up 10% in March. Summit cited double-digit March RevPAR growth in 12 markets, including Baltimore, Charlotte, Cleveland, Miami, Pittsburgh, San Francisco, and Washington, D.C.
Executive Vice President and CFO Trey Conkling said first-quarter pro forma RevPAR increased 0.2% year over year, “driven exclusively by growth in average daily rate.” Conkling said nearly all segments posted year-over-year gains, with retail and negotiated segments delivering RevPAR growth of 7% and 8% for the quarter, respectively, and accelerating to 11% and 16% in March.
On the mix of future growth, Stanner said Summit now expects RevPAR gains to be “predominantly rate driven” for the remainder of the year. He told analysts that the company’s initial expectations had been closer to a 60/40 rate-versus-occupancy split, but that has shifted toward rate.
Headwinds ease as government demand stabilizes
Summit said the first quarter faced several portfolio-specific headwinds, including a difficult Super Bowl comparison in New Orleans (where the company owns six hotels), weakness in government demand tied to DOGE-related travel cuts, and disruption from Winter Storm Fern and civil unrest in Minneapolis.
Stanner estimated these items created an “approximately 140 basis point headwind” to first-quarter RevPAR growth, concentrated in January and February. He said government demand trends are improving as comparisons ease, with government-related demand down 12% year over year in the first quarter—better than the “20%+ declines” experienced through most of 2025. Conkling said government-related demand within the qualified segment “inflected positively” in March, with approximately 3% RevPAR growth for the month.
In Q&A, Stanner said March government-related revenue was up 3% and that second-quarter government pace is currently trending up “mid-single digits,” compared with the company’s earlier expectation that government demand would be roughly flat once it reached the second quarter. He described the improvement as “fairly broad-based,” while noting strength in markets including Tucson and Washington, D.C. Government demand represents roughly 5% to 7% of the company’s total guest room and revenue mix, Stanner said.
Market performance highlights and ancillary revenue growth
Conkling cited strong results in San Francisco and South Florida. In San Francisco, he said the company’s three hotels benefited from a strong citywide calendar and major demand events, including the J.P. Morgan Healthcare Conference in January, the Super Bowl in February, and RSA in March. Conkling said RevPAR in San Francisco increased 27% for the quarter, and management expects momentum to continue into the second quarter, particularly June, supported by technology conferences, Pride, and World Cup-related activity.
In South Florida, Conkling said Miami and Fort Lauderdale hotels delivered RevPAR growth of more than 14%, driven by a 9% increase in average daily rate. He attributed Miami’s results to peak season demand, January events such as the NHL Winter Classic and the College Football Playoff National Championship, and a more condensed spring break calendar tied to Easter shifting into early April.
Conkling also highlighted the repositioning of the Oceanside Fort Lauderdale Beach. He said the hotel generated first-quarter revenue growth of 56% and EBITDA growth of 90%, helped by renovated rooms and expanded food-and-beverage amenities. Group demand is also accelerating at the property due to its location next to the Fort Lauderdale Aquatic & Diving Center, he said.
Across the portfolio, Conkling said non-rooms revenue increased 10% year over year, with food-and-beverage revenue a meaningful contributor. He noted that food-and-beverage revenue at the Oceanside Fort Lauderdale Beach increased four-fold year over year and drove the majority of the company’s overall increase in food-and-beverage sales. He also cited growth in marketplace sales, parking income, and resort and amenity fees.
Capital allocation, balance sheet actions, and updated guidance
On capital allocation, Stanner said Summit closed the previously announced sale of a 122-room Hilton Garden Inn in Longview, Texas, owned in a joint venture with GIC, for $12.3 million at a 6.8% capitalization rate based on trailing 12-month NOI after considering foregone near-term CapEx. He also said the company entered into an agreement in April to sell its wholly owned Courtyard and Residence Inn Dallas Arlington South hotels for a combined $19 million, reflecting a 5% cap rate on the same basis. The transaction is expected to close in the third quarter, and Stanner said the timing would allow Summit to capture demand from FIFA matches in the market.
Summit continued share repurchases in the first quarter, buying back 1.4 million shares for $6 million at a weighted average price of about $4.17 per share. As of March 31, the company had about $29 million remaining under the program. Since launching the program in 2025, Stanner said Summit has repurchased about 5 million shares, or roughly 4% of shares outstanding, at an average price of $4.26 per share.
Conkling said the company fully repaid its $288 million 1.5% convertible senior notes that matured in mid-February, using a $275 million delayed draw term loan and the corporate revolver. Pro forma for the refinancing, he said Summit has no debt maturities until 2028. Including swaps, about 50% of pro rata debt is fixed, and including preferred equity, the capital structure is “over 60% fixed” on a pro rata basis, he said.
The board declared a quarterly common dividend of $0.08 per share on April 23, 2026. Conkling said this represents a dividend yield of about 6.4% based on an annualized $0.32 per share dividend, and he described the payout ratio as modest relative to trailing 12-month AFFO.
For the first quarter, Conkling reported Adjusted EBITDA of $44.2 million and Adjusted FFO of $25.5 million, or $0.21 per share. He said RevPAR index increased to 116% of fair share.
Management raised full-year guidance. Conkling said Summit now expects:
- RevPAR growth: 0.5% to 3%
- Adjusted EBITDA: $170 million to $181 million
- Adjusted FFO: $0.75 to $0.85 per share
Conkling said the company expects nominal expense growth of about 3% for 2026 and hotel EBITDA margins ranging from flat to down 75 basis points, including about 25 basis points of headwind from higher property taxes. He also guided to pro rata interest expense (excluding amortization of deferred financing costs) of $58 million to $62 million and preferred distributions of $18.5 million.
Looking ahead, Stanner said the company expects April RevPAR to rise about 3.5% and said second-quarter revenue pace is trending about 4% ahead of the same time last year, with particularly strong pace in June tied to World Cup demand. He also cited expected incremental demand from U.S. 250th anniversary celebrations in Boston, Washington, D.C., and Baltimore.
About Summit Hotel Properties (NYSE:INN)
Summit Hotel Properties is a real estate investment trust (REIT) that acquires, owns and operates branded select-service hotels and extended-stay properties across the United States. The company focuses on upper-midscale and upscale lodging segments, targeting established national brands to combine the operational efficiencies of limited-service properties with strong franchise affiliation.
The company’s portfolio comprises over thirty hotels carrying well-known flags such as Marriott, Hilton, Hyatt and IHG.
