Sunstone Hotel Investors, Inc. Q2 FY2025 earnings call

• Second quarter operations: Mixed headwinds (tariff announcement, government demand slowdown) but pockets of strength across the portfolio. Urban hotels performed well, convention hotels had varied results, and resorts had challenges but some positives.
• Capital recycling: Sold Hilton New Orleans St. Charles, redeployed proceeds into over $300M in share repurchases since 2022.
• Andaz Miami Beach: Opened in May, initially impacted by late opening but gaining momentum with positive reviews and growing group bookings. Plans to debut signature dining in early 2026.
• Renovations: Ongoing meeting space renovation in San Antonio; planning meeting space renovation in San Diego's Hilton Bayfront.

Urban hotels: Led the portfolio with RevPAR growth over 9%. Marriott Long Beach Downtown saw RevPAR increase nearly 70% due to recent investment and brand conversion. Bidwell Marriott Portland had 10% RevPAR growth. Convention hotels: Mixed performance; San Francisco had RevPAR growth of 6.5% (second consecutive quarter exceeding expectations), while Washington D.C. was hampered by government cancellations. San Antonio is undergoing meeting space renovation. San Diego had softer group ancillary spend. Renaissance Orlando at SeaWorld had strong quarter with 16% year-to-date room night growth and over 30% revenue growth. Resort portfolio: Oceanfront resorts in Wailea and Key West had price sensitivity. Wine Country resorts (Montage Healdsburg and Four Seasons Napa Valley) saw strong revenue and earnings growth. Andaz Miami Beach opened late, impacting Q2-Q3 EBITDA but has positive booking trends and reviews.

• Revised total portfolio RevPAR growth range: 3%-5% compared to 2024. For the balance of the portfolio excluding Andaz, RevPAR is expected to increase 1%-3%.
• Full year adjusted EBITDAre range: $226M-$240M; adjusted FFO per diluted share range: $0.80-$0.87.
• Total portfolio RevPAR growth expected to be flat to slightly positive in Q3, then increase meaningfully in Q4 due to Andaz Miami Beach, Long Beach growth, and easier comps in San Diego. Andaz Miami Beach is expected to generate EBITDA loss of $2M-$3M in Q3.

• Heightened macroeconomic uncertainty which could impact results.
• Volatility related to recent policy changes.
• Limited visibility in markets like Washington D.C. and Wailea, causing short-term challenges.

Q: Elaborate on recent booking trends in Maui and room renovation impact at Wailea Beach Resort?

A: Bryan noted Kaanapali market recovery (occupancy approaching 70%) is benefiting Wailea Beach Resort. Weekly leisure bookings in Maui accelerated in mid-July, and the resort's room renovation was completed late last year/early this year.

Q: Breakdown of EBITDA revision by segments?

A: Aaron explained that softness in Wailea (as Kaanapali normalizes) and D.C. (weaker government business) contribute about a third of the EBITDA revision, and the later start of Andaz Miami Beach contributes the remaining two-thirds.