Xenia Hotels & Resorts, Inc. Q3 FY2025 earnings call

• Marcel Verbaas noted the lodging industry's challenging operating environment but highlighted strength in group demand and Grand Hyatt Scottsdale's ramp. - Barry Bloom discussed same-property portfolio revenue, with top-performing hotels including Grand Hyatt Scottsdale, Andaz Savannah, etc., and underperforming hotels like Loews New Orleans and Houston properties. He also mentioned expense control efforts and capital expenditures, projecting $90 million in property improvements (a $10 million increase from prior guidance) due to additional projects and W Nashville food and beverage reconcepting. - The W Nashville food and beverage operations will be relaunched with Jose Andres Group, involving new concepts and expected to add $3-$5 million to hotel EBITDA upon stabilization.

For the third quarter of 2025, Xenia Hotels & Resorts reported a net loss of $13.7 million, Adjusted EBITDAre of $42.2 million, and adjusted FFO per share of 23¢, a decrease of 8% compared to the same quarter last year. The same-property RevPAR for the quarter was essentially flat for the 30-hotel portfolio compared to 2024 (occupancy down 100 basis points offset by a 1.6% increase in average daily rate). Excluding the Houston market, same-property RevPAR increased by 0.9%, driven by Grand Hyatt Scottsdale. For the first nine months of 2025, the same-property portfolio achieved a 3.7% increase in RevPAR (80 basis points higher occupancy and 2.4% increase in average daily rate compared to 2024). Third quarter same-property Hotel EBITDA was $47 million (0.7% above 2024 levels, margin down 60 basis points). For the first nine months, same-property hotel EBITDA was $205.4 million, an increase of 12.6% above 2024 levels, with a 101 basis point increase in hotel EBITDA margin. Excluding Grand Hyatt Scottsdale, third quarter EBITDA decreased 7.8% and YTD EBITDA increased 3.9% with essentially flat margin.

• Full-year RevPAR guidance is reduced by 50 basis points at the midpoint due to a 4% point reduction expected in Q4, with full-year RevPAR growth expected 4%-5%. - Adjusted EBITDAre guidance for the full year is now $254 million at the midpoint. - Adjusted FFO per diluted share guidance at the midpoint is $1.01. - For 2026, Grand Hyatt Scottsdale is expected to continue ramping, with robust group demand across the portfolio and stable leisure markets; Grand Hyatt Scottsdale is projected to achieve full-year property-level hotel EBITDA of $20 million.

• Macroeconomic uncertainties impacting leisure demand. - Potential impact of a prolonged government shutdown on travel. - Market stabilization issues, especially in leisure markets. - Tariff-related cost increases affecting capital expenditures.

Q: Michael Bellisario from Baird asked about the dividend payout ratio and group outlook pace increase (price vs volume).

A: Atish Shah mentioned targeting a 50% payout ratio of adjusted FFO. Barry Bloom stated the 2026 group outlook is more volume-driven with good rate growth, and there's a shift from corporate to association business.

Q: Jack Armstrong from Wells Fargo inquired about the impact of the government shutdown and transaction markets.

A: Atish Shah said the government shutdown has had limited impact so far; transaction markets are seeing more activity, but share buybacks are more attractive than acquisitions currently, and they'll continue to evaluate dispositions.

Q: Ari Klein from BMO Capital Markets asked about Q4 expectations and W Nashville EBITDA.

A: Atish Shah said Q4 softness is on the transient side; the W Nashville changes are expected to add $3-$5 million to EBITDA over several years, with the hotel expected to generate over $20 million in EBITDA in the next few years.

Q: David Katz from Jefferies asked about the source of leisure weakness.

A: Marcel Verbaas stated leisure softness is due to normalization from prior years' outsized travel, with less impact on higher-end segments, and some stabilization expected in leisure markets next year.

Q: Austin Wurschmidt from KeyBanc Capital Markets asked about corporate growth and leisure outlook.

A: Barry Bloom mentioned strong corporate growth in Northern California (Santa Clara) and other markets; Marcel Verbaas said leisure could be more on par with other segments in 2026 as group remains strong.