Xenia Hotels & Resorts, Inc. Q4 FY2024 earnings call

• Substantially completed the transformational renovation and upbranding of Grand Hyatt Scottsdale, with the expanded Arizona ballroom completed in early January 2024.
• Fourth quarter RevPAR growth was driven by Grand Hyatt Scottsdale, and several markets had double-digit RevPAR growth.
• Continued to see improvement in business transient and group segments, with group room revenues excluding Grand Hyatt Scottsdale increasing 5% full year over 2023.
• Completed significant capital expenditures in 2024, including renovations at various hotels, and projected capital expenditures for 2025 with minimal disruption to guests.
• Strengthened balance sheet by addressing near-term debt maturities and having significant liquidity and flexibility.

In the fourth quarter of 2024, the company reported a net loss of $638,000. Adjusted EBITDAre was $59.2 million, and adjusted FFO per share was $0.39, modestly exceeding the midpoint of the guidance range. Same property RevPAR came in 5.1% higher than the prior year. Fourth quarter hotel EBITDA was $62.9 million, 0.6% below 2023 levels. Excluding Grand Hyatt Scottsdale, fourth quarter same property hotel EBITDA was flat. For the full year 2024, net income was $16.1 million, adjusted EBITDAre was $237.1 million, and adjusted FFO per share was $1.59. Same property portfolio RevPAR increased 1.6% in 2024. Excluding Grand Hyatt Scottsdale, RevPAR increased by 3.4%. 18 out of 31 hotels in the same property portfolio achieved RevPAR growth in 2024.

• Initial 2025 guidance is a range of 3.5% to 6.5% same property RevPAR growth, midpoint 5%, expecting occupancy gains.
• Estimated same property RevPAR increased by 7.3% year-to-date through February 20th, 2025.
• Adjusted EBITDAre midpoint for 2025 is $254 million, with adjusted FFO per share midpoint $1.64.
• Scottsdale expected to be a significant driver of RevPAR and occupancy growth in 2025.

• Macro-economic uncertainty impacting leisure and business demand.
• Potential moderation in leisure demand, as seen in some markets like Savannah.
• Impact of winter storms on performance in certain Sunbelt locations.
• Uncertainty in capital allocation and potential competition for acquisitions.

Q: Please help unpack the RevPAR guidance a little bit, especially on group pace excluding Scottsdale and Scottsdale's EBITDA contribution.

A: Marcel Verbaas mentioned group pace is strong but there's uncertainty in other segments. Scottsdale is expected to take about three years to reach stabilization, with low twenties in EBITDA in 2025, aiming for low thirties next year and $42 million stabilized in 2026.

Q: Michael Bellisario asked about group softening in certain markets and loyalty cost margin impact.

A: Barry Bloom said group softening was in markets like Orlando and Park Hyatt Aviara due to change in business mix, and loyalty costs are related to volume of loyal customers using points programs with offsetting costs for providing points.

Q: Dori Kesten inquired about the pipeline of opportunities and the term loan drawdown.

A: Marcel Verbaas said the pipeline of potential acquisitions has improved slightly, and Atish Shah stated the term loan drawdown is for general corporate purposes with consideration of capital allocation tools.

Q: Josh Friedman asked about markets driving above-average RevPAR growth excluding Scottsdale and West Coast markets in 2025.

A: Marcel Verbaas mentioned markets like Houston, Orlando, Nashville. Barry Bloom said West Coast markets like San Francisco, Santa Clara expect continued strength on business transient side, and leisure assets in California have recovery potential.

Q: Rita Chen asked about assumptions at the low end and high end of guidance.

A: Marcel Verbaas said the high end could be boosted by stronger Scottsdale performance and business transient recovery, while the low end is affected by leisure demand moderation uncertainty.