RLJ Lodging Trust heads into its third-quarter report with an unusual gap between what management has been saying and what Wall Street appears willing to underwrite. Over the past two calls, the hotel REIT has gone from posting negative RevPAR to raising its full-year outlook twice. Last quarter it flagged preliminary July RevPAR growth approaching 11%. Yet consensus calls for only modest growth in the quarter that contains that July strength. The report, due after the close on November 4, should show whether the Street is being prudent or simply slow to catch up.
Analysts expect earnings of $0.28 per share, up about 3.7% from $0.27 a year ago, on revenue of roughly $339.1 million, a 2.8% gain. Those are low single-digit increases against an easy comparison. Last year's third quarter was the low point of RLJ's slump, with RevPAR down 5.1% amid government-related demand pressure. The full-year picture shows a similar disconnect. Management now guides to funds from operations of $1.37 to $1.50 per share, up from $1.29 to $1.45, while the consensus full-year figure sits near $1.26, below the bottom of the company's range. Some of that difference may reflect differing FFO definitions. Even so, the Street is not leaning into management's optimism.
The core of the bullish case is business transient demand. Revenue from corporate travelers rose about 10% in each of the past two quarters, after barely growing in late 2025. Tech, finance, defense and healthcare led the gains, and high-rated corporate accounts returned on both volume and price. Northern California remains a key swing market. AI-driven business travel lifted the region 9% last quarter, and San Francisco's urban core has posted gains in the high teens to high twenties. If third-quarter business transient growth holds near double digits and July's momentum carried into August and September, the narrative of a durable recovery stays intact. A sharp fade after July would suggest the early-quarter surge leaned more on the soft comparison than on real demand.
Calendar effects and costs complicate the picture. Salesforce's conference moved from October into September, which should help this quarter but leaves fourth-quarter group pace tracking down year over year. A strong third quarter therefore needs to be judged against what management says about the fourth. Expenses are the other pressure point. Management nudged its back-half cost growth outlook higher, citing a richer transient mix, commission and checkout costs, and elevated energy prices. Margins edged up last quarter despite those pressures. Holding margins steady again, while disruption from the Boston and Key West conversions begins, would show that revenue growth is reaching the bottom line. The renovation program offers further evidence. Four renovated hotels lifted EBITDA about 50% last quarter, and the recently completed Atterbury conversion in Pittsburgh should start adding to the results.
The market has been modestly supportive. The stock has gained 2.1% since the last report while the S&P 500 slipped, and at $12.23 it sits well above its 200-day moving average of $9.75. It is also within about 1% of its post-earnings high of $12.38, putting a breakout attempt in play, though it remains below the prior quarter's $12.89 peak. Sentiment has drifted slightly more bearish than before the last report, but the shift is small.
The central question is whether RLJ can turn a front-loaded July into a quarter strong enough to justify a third guidance raise, or at least a firm reaffirmation, despite a softer fourth-quarter calendar. A clear beat with guidance held near the top of the range would challenge the Street's caution. Revenue that only matches consensus, paired with heavier expense commentary, would suggest the recovery is maturing faster than management implied.