Chatham Lodging: Riding the Business Travel Resurgence, Led by Silicon Valley
Chatham Lodging Trust (CLDT) reported a standout second quarter, prompting a ~20% increase to full-year guidance since January and sending the stock surging 57.7% over the past 90 days. The company is benefiting from a clear acceleration in business travel, particularly in its high-value Silicon Valley and newly acquired Midwest properties. This dossier examines what has changed and why investors should care.
The Business Travel Inflection
Business travel now represents approximately 75% of Chatham's EBITDA, and the company is seeing an acceleration that has not been this pronounced since the pre-pandemic era. Jeff Fisher, CEO, noted on the call, “We are really seeing business travel accelerate even more than it has over the last few years at a faster pace.” — Jeffrey Fisher, Chief Executive Officer · 2026-08-04 This is corroborated by the fact that business travel demand from medium sized businesses is recovering strongly, often staying in upscale and midscale hotels like Chatham's rather than luxury properties. The second quarter saw broad-based RevPAR growth, with July advancing 10% year-over-year. Dennis Craven, COO, highlighted the breadth: “July RevPAR grew in 35 of our 39 hotels, and 14 of our 39 hotels saw RevPAR gains of over 10%.” — Dennis Craven, Chief Operating Officer · 2026-08-04 This is not a narrow recovery; it is a portfolio-wide trend.
Silicon Valley is the standout market, contributing 17% of EBITDA. Mountain View and Sunnyvale hotels are driving exceptional growth. RevPAR in Silicon Valley rose 7% in Q2, boosting portfolio growth by 40 basis points, and July saw a 26% jump, with the two Sunnyvale hotels up 41%. The company's strategic decision to hold rate integrity last year, despite a short-term hit, is bearing fruit. As noted on the November 2025 call, the earlier weakness was partly due to a deliberate pricing choice: “Yes, Tyler, it really comes down to 2 things. It's our decision on the 2 hotels in Sunnyvale and basically the government shutdown impact on August and September.” — Dennis Craven, Chief Operating Officer · 2025-11-05 Now, with corporate clients like Applied Materials, NVIDIA, and Google expanding headcount, the demand is surging.
Supply, Development, and Capital Allocation
One of the most compelling parts of the bull case is the palpable shortage of new hotel supply. Jeff Fisher elaborated,
With portfolio occupancy around 81% versus the historical peak near 83%, hotels are gaining pricing power. This tailwind is complemented by strategic capital deployment. Chatham has repurchased $18 million of stock since May 2025, retiring ~5% of outstanding shares, and is pausing buybacks as the shares rebound. The company also commenced construction on a 130-suite Home2 Suites in Portland, Maine, with an expected ~11% unlevered yield—a high-return project in a supply-constrained market.So it's really lack of construction, prices are high. Other developer friends that I've known for 20, 30 and some 40 years used to build 10, 12, 15 hotels a year as franchisees. Most are building 1 or 2 if that.
Financially, Chatham is in excellent shape. Funds From Operations jumped to $8 million, a 153% increase year-over-year, and adjusted FFO per share reached $0.48. The company raised its full-year guidance to $1.28–$1.34 of adjusted FFO per share, while keeping leverage low at 31.2% of assets. Adjusted EBITDA for the quarter was $32.7 million, as Jeremy Wegner reminded analysts: “Adjusted EBITDA was $32.7 million, and adjusted FFO was $0.48 per share.” — Jeremy Wegner, Chief Financial Officer · 2026-08-04 This financial flexibility allows Chatham to pursue accretive acquisitions or further repurchases opportunistically.
Outlook and Risks
Management remains appropriately cautious, assuming low single-digit RevPAR growth for the second half given the Iran conflict and limited visibility. However, the July run-rate suggests meaningful upside. The company's newly acquired six-hotel Midwest portfolio is outperforming underwriting, with GOP margins 250 basis points above the portfolio average. And the Paducah, Kentucky, nuclear enrichment and data center investments could provide further demand tailwinds. As Dennis Craven observed in May about the acquisition market: “I think it is similar to last quarter, Gaurav. I think it is still a challenged market...” — Dennis M. Craven, Chief Investment Officer (CIO) · 2026-05-07 Yet with a strong balance sheet and rising stock price, Chatham is well-positioned to be a buyer when opportunities arise.
In summary, Chatham Lodging Trust is experiencing a genuine inflection point. The combination of accelerating business travel, supply-driven pricing power, and disciplined capital allocation makes this a name worth watching. The stock's recent rally is not just speculative froth—it is supported by improving fundamentals and a clear path to further upside.