Chatham Lodging Trust (CLDT): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of Chatham Lodging Trust (CLDT), moving past the noise to the core risks and opportunities that matter right now. As a seasoned analyst, I see a company strategically shedding older assets to focus on its core select-service model, but it's still navigating a choppy corporate travel recovery and high-interest rate environment. The key takeaway is that their balance sheet strength, highlighted by the $500 million upsized credit facility, is their biggest buffer against a slowing RevPAR (Revenue Per Available Room) environment, which is projected to decline by up to 0.7% for the full year 2025. This PESTLE breakdown maps the near-term landscape.

Chatham Lodging Trust (CLDT) is positioned in the sweet spot of the select-service market, but macro forces are pushing back on growth. The company's ability to maintain a strong operational margin while navigating a potential 0.7% RevPAR decline in 2025 will define its performance. We need to look beyond the balance sheet to the external pressures-from regulatory policy to the new 'Bleisure' traveler-to see where the real action is. Let's dig into the Political, Economic, Sociological, Technological, Legal, and Environmental factors shaping CLDT's future.

Political Factors: Navigating Regulatory Headwinds

Government actions are not abstract; they hit the bottom line directly. For example, federal travel restrictions severely impacted the Washington, D.C., market's RevPAR in Q3 2025, showing how quickly policy can erode revenue in key urban centers.

Also, Chatham Lodging Trust (CLDT) must strictly adhere to complex Real Estate Investment Trust (REIT) requirements to maintain its favorable tax status. Any change in federal tax or regulatory policy could increase compliance costs or even threaten this status. Local zoning and permit laws also affect the cost and timeline for hotel renovations and new development, making CapEx (Capital Expenditure) planning a political risk.

Economic Factors: The Cost of Capital and Muted Growth

The high-interest rate environment is the primary headwind. While it has slowed hotel transaction volume-which limits CLDT's acquisition opportunities-the company smartly upsized its credit facility to $500 million. This provides a crucial liquidity cushion and flexibility.

Still, the growth outlook is sober. Full-year 2025 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is guided at $89.2 million to $90.8 million, reflecting moderate pressure. The muted pace of U.S. domestic business travel spending, forecast to grow only 1.4% in 2025, means CLDT cannot rely on a rising tide to lift all boats. Moderating but persistent inflation also impacts operating expenses like utilities and labor costs, squeezing the operational margin.

Sociological Factors: The New Business Traveler

Traveler behavior has fundamentally changed, and CLDT's select-service model is well-aligned with the shift. The 'Bleisure' trend-combining business and leisure travel-is mainstream, with 62% of business travelers extending trips for leisure. This strong demand for select-service and extended-stay models, which offer amenities like kitchenettes, is a tailwind.

However, corporations are focusing on 'Return on Trip' (ROT), meaning fewer, more purposeful, and higher-value stays. This puts pressure on CLDT to deliver exceptional service. Labor shortages in the hospitality sector remain a risk; if service quality dips, guest satisfaction and repeat corporate bookings will follow. The modern business trip is a hybrid vacation.

Technological Factors: Efficiency vs. Acquisition Costs

Technology is a double-edged sword: it drives efficiency but also increases guest acquisition costs. Direct digital bookings for corporate travel are up, now accounting for 44% of U.S. corporate room nights. This is a good sign for direct revenue.

The need for seamless, high-speed Wi-Fi and mobile-first platforms is defintely critical for the business traveler segment. Adoption of property management systems (PMS) and AI for labor scheduling drives operational efficiency, helping Chatham Lodging Trust (CLDT) maintain a strong Q3 2025 GOP (Gross Operating Profit) margin of 43.6%. But, Online Travel Agencies (OTAs) and third-party booking platforms still increase guest acquisition costs, which is a constant drag on profitability.

Legal Factors: Compliance and Operating Costs

Legal compliance translates directly into operating and capital costs. Strict adherence to complex Real Estate Investment Trust (REIT) requirements is a non-negotiable, constant administrative burden. Evolving local labor laws, including minimum wage hikes, directly affect the cost structure of hotel operations, especially in key markets.

New building codes and ADA (Americans with Disabilities Act) compliance mandates require continuous CapEx for older assets, diverting funds that could otherwise be used for growth or shareholder returns. Plus, government and corporate data privacy regulations impact how guest data is managed and how booking processes are handled, adding another layer of operational complexity.

Environmental Factors: Sustainability as a Capital Cost

Environmental factors are moving from a 'nice-to-have' to a 'must-have' capital cost. There is growing corporate demand for sustainable travel policies and eco-friendly hotel options, which influences where companies book their employees. Increased scrutiny on energy and water consumption requires capital investment in property upgrades to meet new standards and reduce utility costs.

Climate-related risks, like extreme weather events, threaten property insurance costs and operational continuity, especially in coastal or high-risk markets. Companies are also increasingly prioritizing suppliers, including airlines, that use Sustainable Aviation Fuels (SAFs), signaling a broader supply chain shift that will eventually pressure hotel operations to be greener.

Next Step: Portfolio Management: Conduct a sensitivity analysis on the $500 million credit facility, modeling the impact of a 100-basis-point interest rate hike against the 1.4% business travel growth forecast by end-of-quarter.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Political factors

If you're analyzing Chatham Lodging Trust (CLDT) for near-term opportunity, you have to look past the balance sheet and straight at Washington, D.C. The biggest political factor impacting the hotel sector right now isn't a new law; it's the government's own travel budget and administrative stability. Political risk is simply the cost of doing business in a capital-intensive sector.

Government travel restrictions severely impacted Washington, D.C. RevPAR in Q3 2025.

The core issue for CLDT's performance in the third quarter of 2025 was the sharp decline in government-related travel. The uncertainty around federal budget constraints and the political climate-including a government shutdown that began in October 2025-directly hit the Washington, D.C. market, a key area for the company. This isn't just a minor dip; it's a structural headwind.

CLDT's total portfolio Revenue Per Available Room (RevPAR) decreased by 2.5% to $151 in Q3 2025, down from $155 in Q3 2024. However, the D.C. area was a major drag, with its RevPAR declining by approximately 6%. This local performance aligns with the wider trend: the D.C. metro area saw a 20% year-to-date drop in government per-diem transient room nights as of April 2025, signaling a deep, ongoing cut in federal agency travel. The subsequent October shutdown pushed the D.C. hotel RevPAR down by nearly 9%.

Here's the quick math on how the political climate squeezed the company's Q3 financials:

Federal tax and regulatory policy changes influence REIT compliance and operational costs.

The big, positive political news for CLDT and other Real Estate Investment Trusts (REITs)-companies that own income-producing real estate-came from the new federal tax legislation signed in July 2025. This bill provided defintely needed long-term certainty for investors, which helps keep the cost of capital down for CLDT.

The key federal tax changes that impact CLDT's structure and investor appeal are:

• Permanent 199A Deduction: The 20% deduction for qualified REIT dividends is now permanent, ensuring individual shareholders maintain a maximum effective top federal tax rate of 29.6% on this income, a provision that was set to expire at the end of 2025.
• Permanent Bonus Depreciation: The ability to take 100% bonus depreciation on certain property placed in service after January 19, 2025, is now permanent, which significantly enhances the economics of CLDT's renovation and capital expenditure plans.
• FIRPTA Simplification: Proposed Treasury regulations from October 2025 would repeal the controversial look-through rule, making it structurally simpler for foreign investors to invest in domestically controlled REITs without triggering certain U.S. tax liabilities on stock sales.

The only caveat is the increase in the Taxable REIT Subsidiary (TRS) asset test limit, from 20% to 25% of total assets, which offers greater flexibility for hotel management operations, but that change doesn't take effect until the 2026 taxable year.

Geopolitical tensions and trade negotiations create uncertainty for corporate travel budgets.

While CLDT's portfolio is domestic, global political friction still filters down to corporate travel budgets. The general fall-off in foreign tourism and a lack of corporate demand in Q3 2025 were cited as contributing factors to the overall RevPAR decline.

To be fair, a major risk was recently removed: early drafts of the federal tax bill included a proposed Section 899, often called the 'Revenge Tax,' which would have imposed higher U.S. tax rates on investors from countries deemed to impose unfair foreign taxes. This measure, which could have complicated international capital flows into the U.S. lodging sector, was ultimately excluded from the final legislation signed in July 2025. This removal is a clear political win that stabilizes the foreign investment landscape for U.S. REITs.

Local zoning and permit laws affect the cost and timeline for hotel renovations and new development.

The political landscape isn't just federal; it's hyper-local. CLDT is constantly renovating its properties, and local zoning and permitting processes create a non-financial, but very real, operational risk. For example, in jurisdictions like Chatham Borough, New Jersey, the municipal Building Department is relocating for at least a year, which can cause unpredictable delays in permit issuance and construction inspections.

Also, new Unified Development Ordinances (UDOs) in places like Chatham County, North Carolina, effective July 1, 2025, introduce new regulations that could potentially create nonconformities or reduce development density on existing properties. Navigating these local codes requires a dedicated, experienced team, plus patience, as a lengthy permit process can easily push a renovation past its target date, directly impacting a hotel's ability to generate revenue.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Economic factors

Full-year 2025 Adjusted EBITDA is guided at $89.2 million to $90.8 million, reflecting moderate pressure.

You need to see the bottom line to understand the near-term economic reality, and for Chatham Lodging Trust (CLDT), the 2025 outlook is one of resilience despite headwinds. The company's full-year 2025 Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA) is officially guided to be between $89.2 million and $90.8 million. This range, while solid, reflects the moderate pressure on the hotel sector, particularly from a soft RevPAR (Revenue Per Available Room) environment, which is projected to decline between 0.7% and 0.3% for the full year. That's a tight margin of error. The firm is managing this by controlling expenses tightly, as seen in the Q3 2025 Gross Operating Profit (GOP) margin of 43.6%, only a 90 basis point drop despite the RevPAR decline.

Here's the quick math on the expected performance:

High interest rates have slowed hotel transaction volume, but CLDT upsized its credit facility to $500 million.

The high interest rate environment-with the U.S. 10-year Treasury note above 4.5% in early 2025-defintely created a chasm between buyer and seller expectations, which historically slows down hotel transaction volume. However, this macroeconomic pressure is a double-edged sword for CLDT. While overall U.S. hotel investment volume saw a modest decline in the Americas in 2024, it's actually forecasted to accelerate in 2025, potentially increasing by 15% to 30% over 2024 levels, driven partly by loan maturities and strong interest in the select-service and extended-stay sectors where CLDT operates.

CLDT's immediate, proactive move was to secure its financial footing. The company successfully upsized and recast its credit facility, increasing its total capacity to $500 million. This facility is structured with a $300 million revolving credit facility and a $200 million term loan. This financial flexibility is critical, especially with a low net debt to EBITDA leverage of approximately 3.5x as of mid-2025, well below their historical range of 5.5x to 6.0x. They are positioned to be a buyer if distressed assets emerge, or to continue opportunistic share repurchases, having bought back approximately 500,000 shares through Q3 2025.

U.S. domestic business travel spending is forecast to grow only 1.4% in 2025, a muted pace.

The muted recovery in business travel is a direct economic constraint on CLDT, given their focus on premium-branded, select-service hotels that cater heavily to corporate travelers. The U.S. domestic business travel spending is forecast to grow by just 1.4% in 2025. This slow growth, while positive, is a drag on RevPAR, especially when you consider that a significant portion of CLDT's portfolio is in markets like Washington, D.C., which saw RevPAR negatively affected by government travel disruption in Q3 2025.

The slow pace means that the full return to pre-pandemic corporate travel spending levels remains a multi-year effort. This is why CLDT's strategic asset recycling-selling five older hotels in 2025 to enhance liquidity-is smart; you can't wait for the tide to lift all boats when some boats are leaking.

Moderating but persistent inflation still impacts operating expenses like utilities and labor costs.

While the overall U.S. inflation rate moderated to about 2.4% by March 2025, the hospitality sector is still grappling with sticky, high operating expenses that compress profit margins. Labor costs remain the most significant and fastest-growing expense. As of June 2025, the average hourly rate for hospitality workers hit $22.78, a staggering 26% increase from the peak rates during the pandemic. This forces tight expense control.

Other key operating costs are also rising faster than revenue growth, eroding the Gross Operating Profit (GOP) margin:

• Labor costs: Increased by 4.8% in 2024, remaining the largest expense.
• Insurance Premiums: Surged by 17.4% in 2024, a major fixed cost hit.
• Operating Supplies: Costs rose by nearly 10% in 2024.
• Property Taxes: Increased by 4.3% as municipalities seek post-COVID revenue.
• Utility Costs: Saw a more modest rise of 2.0%.

CLDT has managed to limit margin degradation through labor efficiencies and expense control, but the persistent rise in these non-negotiable costs means management must continue to be hyper-vigilant on the property level. They can't rely on just top-line revenue growth to deliver profit.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Social factors

The 'Bleisure' trend is mainstream, with 62% of business travelers extending trips for leisure.

The blending of business and leisure travel, or 'bleisure,' is no longer a niche perk; it's a core expectation that directly benefits Chatham Lodging Trust (CLDT)'s model. Honestly, if you're a business traveler, you're looking to tack on a few personal days. Data from 2025 shows that approximately 60% of U.S. business travelers extend their work trips for leisure, accounting for over 243 million journeys annually. This is a massive tailwind for CLDT's upscale, extended-stay properties like Residence Inn by Marriott and Homewood Suites by Hilton.

The key here is that the traveler often pays for the leisure portion, but the company covers the flight and the initial work-related stay. This makes the total trip more affordable for the employee. The average bleisure trip lasts two to three nights, with 42% of travelers extending their stay by at least two days. CLDT's portfolio is perfectly positioned to capture this longer-stay revenue, as the traveler often prefers to stay in the same hotel for the entire duration.

Increased corporate focus on 'Return on Trip' (ROT) leads to fewer, more purposeful, and higher-value stays.

Corporate travel spending is projected to reach $1.45 trillion globally in 2025, a full return to pre-pandemic levels. But the nature of that spending has changed. Companies are now applying a 'Return on Trip' (ROT) metric-a clear-eyed look at the expected business outcome-before approving travel. About 39% of companies now formally evaluate travel based on ROT metrics. This means fewer low-stakes trips, like internal check-ins, but more high-value, longer, and more purposeful journeys for deal-making and critical collaboration.

This shift benefits CLDT because purposeful travel often involves longer, more intensive work periods, which drives demand for the extended-stay format. The traveler is staying longer and spending more on-site, expecting a higher-quality experience that justifies the trip's high ROT hurdle. The business traveler is fewer, but they're staying longer, and that's the opportunity.

Strong demand for extended-stay and select-service models due to traveler preference for amenities like kitchenettes.

The modern traveler, especially the bleisure traveler, wants apartment-like amenities, not just a standard room. This preference for features like full kitchenettes, separate living and sleeping areas, and on-site laundry is why CLDT's core focus on upscale, extended-stay and premium-branded, select-service hotels is a strong strategic fit. The extended-stay portfolio has been a stabilizing influence for the company, even amid broader market softness.

CLDT's portfolio, which includes brands like Homewood Suites by Hilton and Residence Inn by Marriott, directly addresses this need. These properties offer the residential comfort that supports both long-term business projects and extended leisure stays.

Here's the quick math on the value proposition:

Labor shortages in the hospitality sector remain a risk to service quality and guest satisfaction.

The persistent labor shortage in the U.S. hospitality sector is a real, near-term risk to service quality and, ultimately, guest satisfaction. As of Q1 2025, hotel industry employment remains approximately 8% below 2019 levels. This structural gap means existing staff are strained, which can lead to a drop in the quality of the guest experience-a critical factor for CLDT's upscale brands.

A May 2024 survey showed that 76% of hoteliers reported staffing shortages, with housekeeping being the most pressing need for 50% of respondents. This forces operational changes, like reducing the frequency of daily room cleaning, which can be a point of friction for guests. To be fair, CLDT has shown strong expense control, holding the year-over-year increase in labor and benefits cost per occupied room to just 1.7% in Q3 2025. Still, managing costs while maintaining brand-standard service in a market where labor is scarce is a defintely difficult balancing act.

Key labor pressure points for CLDT include:

• Retention Challenge: Quitting accounts for nearly 88% of all separations in the accommodation and food services industry, emphasizing retention issues.
• Wage Growth: Average hourly earnings in the broader food services sector reached $22.53, an 8% year-over-year increase, reflecting the acute competition for staff.
• Service Reduction: 36% of hotels have already had to reduce services due to staffing shortages.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Technological factors

Direct Digital Bookings and the Corporate Traveler

The shift to direct digital booking channels, especially among business travelers, is a major technological force reshaping Chatham Lodging Trust's (CLDT) distribution strategy. You're seeing corporate travelers increasingly bypass traditional, managed travel systems for convenience and personalized loyalty perks. This decentralization means CLDT must compete on every digital front, not just through its brand partners' central reservation systems.

In the U.S. corporate travel market, the trend toward non-compliance with mandated booking tools is significant. Data shows that approximately 44% of business travelers either never use or only sometimes use their company's designated corporate booking platforms. This figure highlights a massive pool of room nights that are booked digitally but outside of the corporate travel manager's direct control, often via the hotel's direct website or an Online Travel Agency (OTA). This is a clear opportunity to capture higher-margin direct bookings, but it requires a superior, mobile-first digital experience.

The Criticality of Seamless Connectivity and Mobile Platforms

For Chatham Lodging Trust's core segment-the upscale, extended-stay, and premium-branded select-service traveler-technology is not a feature; it is a utility. Business travelers demand seamless, high-speed Wi-Fi and mobile-first platforms as a non-negotiable amenity. Mobile apps and digital tools are now integral to the guest journey, from check-in to service requests.

Travel apps are a massive market, generating revenues over $2 billion globally in 2024, and approximately 80% of travelers consider the ability to complete their booking entirely online to be important. If your hotel's mobile experience is clunky, you lose the guest before they even arrive. This requires continuous capital investment in network infrastructure and user experience (UX) design, which CLDT addresses through its capital expenditure budget, which is approximately $26 million for 2025, including renovations at three hotels expected to cost around $16 million. You simply must offer a fast, frictionless digital stay.

Operational Efficiency Through AI and PMS Adoption

The adoption of advanced Property Management Systems (PMS) and Artificial Intelligence (AI) for operational tasks is defintely critical for maintaining profitability in a high-cost labor environment. These tools drive efficiency by automating routine tasks, optimizing pricing, and, most importantly, streamlining labor scheduling.

CLDT's operational performance in Q3 2025 clearly shows the impact of strong expense control, which is heavily supported by technology. Despite a challenging RevPAR (Revenue Per Available Room) decline of 2.5%, the company was able to limit its year-over-year increase in labor and benefits cost per occupied room to just 1.7%. This efficiency helped CLDT maintain a robust Gross Operating Profit (GOP) margin of 43.6% for the third quarter of 2025. This margin maintenance is a direct result of using technology to match staffing levels precisely to forecasted demand, which is a key function of modern AI-driven scheduling systems.

Here's the quick math on how tight expense control helped CLDT's margins:

The Growing Cost of Online Travel Agencies (OTAs)

While Online Travel Agencies (OTAs) like Expedia and Booking.com remain essential for visibility and filling rooms, their increasing dominance continues to pressure CLDT's net profitability. OTAs are a necessary evil that significantly increase guest acquisition costs (GAC) through high commissions and paid search competition.

For CLDT, guest acquisition-related commission costs were up approximately 15% year-over-year in Q3 2025, representing an increase of about $0.5 million. This is a tangible drag on the bottom line. Industry-wide, the true cost of an OTA booking can be up to 35% of gross room revenue when you factor in commissions, tiered pricing, and visibility boosts. Furthermore, OTAs are driving up the cost of direct marketing: when they undercut hotel rates, they force hotels to pay an average of 47% more for their own branded search ad clicks. The key action here is to use AI-driven revenue management to optimize the channel mix and reduce reliance on these high-cost platforms, with some hotels seeing a 7-10% reduction in commission leakage by doing so.

The technological risk is clear: rely too much on third parties, and you lose margin, data, and the direct customer relationship. The opportunity is to invest in your own digital channels to convert the 44% of corporate travelers who are already booking off-platform.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Legal factors

Strict adherence to complex Real Estate Investment Trust (REIT) requirements to maintain tax status.

For Chatham Lodging Trust (CLDT), the most fundamental legal constraint is maintaining its status as a Real Estate Investment Trust (REIT). This isn't just a tax break; it's the core of the business model. You must ensure that at least 90% of the company's taxable income is distributed to shareholders annually, and that at least 75% of gross income comes from real estate-related sources, like rents or mortgage interest.

If CLDT fails to satisfy these complex rules, the financial fallout would be catastrophic, leading to the loss of its tax-advantaged status, meaning corporate income tax would be applied at the entity level. This is a continuous, high-stakes compliance process that requires constant monitoring of revenue streams and asset composition. Honestly, this is the one legal factor that could wipe out shareholder value overnight.

Evolving local labor laws, including minimum wage hikes, affect the cost structure of hotel operations.

The patchwork of state and local labor laws, particularly minimum wage increases, is a near-term risk that directly impacts your operating margins. While the federal minimum wage is still low, states and major cities where CLDT operates-like California, New York, and Texas-have mandates pushing wages higher, with some state minimum wages reaching $15 per hour by 2025.

To be fair, CLDT has done a defintely solid job managing this pressure. In the third quarter of 2025, the year-over-year increase in labor and benefits cost per occupied room was held to only 1.7%, which shows effective expense control and labor efficiencies. Still, this is a perpetual headwind that requires continuous cost management and operational streamlining.

Here's the quick math on the operational impact:

New building codes and ADA compliance mandates require continuous capital expenditure (CapEx) for older assets.

The Americans with Disabilities Act (ADA) and evolving local building codes are a major driver of capital expenditure (CapEx), especially for a portfolio that includes older assets. You have to ensure both physical accessibility (ramps, grab bars, 32-inch door clearances) and digital accessibility (website compliance).

CLDT is actively addressing this, as evidenced by its 2025 CapEx program. The company's total 2025 capital expenditure budget is approximately $26 million, with renovations at three hotels alone expected to cost around $16 million. This is necessary maintenance CapEx, but it's also a legal mandate to avoid costly lawsuits. The uncertainty is compounded by the U.S. Department of Justice removing some ADA guidance in March 2025, placing a greater burden on businesses to proactively seek legal counsel to ensure compliance.

The company is also recycling older assets to manage this CapEx burden:

• Sold five older hotels with an average age of 25 years.
• Proceeds from these sales totaled $83 million.
• This strategy helps fund the necessary upgrades for the remaining, higher-performing assets.

Government and corporate data privacy regulations impact guest data management and booking processes.

The legal environment for guest data is becoming a minefield, and the hospitality industry is a prime target. You are dealing with a patchwork of regulations, including the California Consumer Privacy Act (CCPA) and the potential for a federal American Privacy Rights Act (APRA).

The core requirement is empowering the guest with control over their Personally Identifiable Information (PII). This means you must have systems in place to handle requests for:

• Accessing their data.
• Correcting inaccurate information.
• The 'right to be forgotten' (data deletion).

The financial risk of non-compliance is enormous. Marriott's 2024 settlement of $52 million with 50 US states over a data breach that impacted 131.5 million American customers is a clear example of the exposure. For CLDT, this translates into a need for continuous investment in secure Property Management Systems (PMS) and staff training, plus managing the risk from third-party booking engines and vendors who also touch guest data. Your compliance efforts must extend to every vendor. Finance: allocate a minimum of $500,000 for a full-scale, third-party data privacy audit and system upgrade by Q1 2026.

Chatham Lodging Trust (CLDT) - PESTLE Analysis: Environmental factors

Growing corporate demand for sustainable travel policies and eco-friendly hotel options.

You are defintely seeing a major shift in how large corporations book travel, and it's putting direct pressure on your revenue. This isn't just about tree-hugging anymore; it's about fiduciary duty and risk management, especially as new regulations like the European Union's Corporate Sustainability Reporting Directive (CSRD) start requiring detailed disclosure of business travel emissions in 2025.

Sustainability is now a priority for a massive 92% of Global Business Travel Association (GBTA) members and stakeholders. That means the travel manager is actively looking for your environmental data. Nearly three-quarters of travel buyers, 73%, are building sustainability right into their travel programs, often by limiting choices to less carbon-intensive options. For Chatham Lodging Trust, whose portfolio includes premium-branded select-service hotels like Residence Inn by Marriott and Hilton Garden Inn, meeting these brand-level and corporate-buyer standards is critical to maintain occupancy and average daily rate (ADR) with high-value business travelers.

• 73% of corporate travel programs now include sustainability.
• 92% of GBTA members prioritize sustainability in travel.
• Corporate clients want proof, not just promises.

Increased scrutiny on energy and water consumption requires capital investment in property upgrades.

The push for operational efficiency is a capital expenditure (CapEx) reality for a hotel REIT like Chatham Lodging Trust. You are the owner responsible for major renovations and efficiency improvements, and the numbers show you are spending money to meet your own ambitious goals.

Chatham Lodging Trust has set a target to reduce both energy intensity and water usage by 30% by 2030. To get there, you have to spend money now. For context, in 2023, CLDT invested approximately $4 million in efficiency improvements for energy and water reduction across its properties. This is a recurring cost of doing business, plus, the total 2025 capital expenditure budget for the company is approximately $26 million, with $16 million earmarked for renovations at just three hotels, including the Residence Inn Austin. A significant portion of that $16 million will be directed toward modernizing HVAC, lighting, and water fixtures to hit those 2030 targets.

Climate-related risks, like extreme weather events, threaten property insurance costs and operational continuity in coastal markets.

This is the most immediate financial risk you face. Extreme weather events were twice as frequent in 2024 as they were in the previous two decades, and the insurance market is reacting violently. This is not a theoretical risk for CLDT; your 2021 Corporate Responsibility Report indicated that almost half of your portfolio was considered at high risk from climate-related events.

The numbers on insurance are brutal. Commercial property insurance rates rose steadily into 2025, and while the rate of increase slowed to 5.3% in Q1 2025 for commercial lines overall, double-digit hikes are the norm in high-risk property. For the hotel industry specifically, insurance expenses increased by 15.3% for all hotels through October 2024, with midscale and small economy hotels seeing even sharper increases of over 19.6%. Some competitors have seen much worse, with other hotel REITs reporting property insurance cost increases of 50% to 60% year-over-year in 2023. J.P. Morgan estimates that commercial property premiums will rise by 80% by 2030. You are paying more for less coverage, and that impacts your net operating income (NOI) directly.

Companies are increasingly prioritizing suppliers, including airlines, that use Sustainable Aviation Fuels (SAFs).

The focus on Sustainable Aviation Fuels (SAFs) by airlines might seem distant, but it creates a ripple effect right down to your hotel selection. Corporate travel programs are now viewing their entire travel supply chain-flights, ground transport, and lodging-as one carbon footprint.

The data shows a clear trend: 55% of corporate travel buyers are looking to decarbonize their travel through the purchase of SAF. When companies commit to SAF, they are simultaneously scrutinizing their other suppliers. 42% of buyers report that their company sources carbon-neutral suppliers and service providers, which means they are checking your hotel's sustainability rating before they book. The push for SAF means the carbon conversation is now front-and-center in every procurement meeting, and if your hotel doesn't have a verifiable, low-intensity footprint, you will lose business to a competitor who does.