Xenia Hotels & Resorts, Inc. Q1 FY2026 earnings call

• First quarter results exceeded expectations across key metrics, driven by strength in group and transient demand segments, especially in March.
• Grand Hyatt Scottsdale Resort continued stabilization post-renovation, with record revenues in hotel EBITDA and improved margins.
• Broad-based strength across the portfolio of luxury and upper upscale hotels and resorts, with Ref Bar and total Ref Bar increases in many markets.
• Capital expenditures: Expected to spend between $70 and $80 million on property improvements during the year. Completed renovation of M Club at Marriott Dallas downtown and guest room renovation at Fairmont Pittsburgh in Q1, and reconcepted food and beverage facilities at W Nashville.
• Expense management: Same property hotel EBITDA margin improved due to rooms revenue growth and disciplined expense management. Food and beverage revenues grew, other operating department income grew, and expenses were controlled to some extent.

For the first quarter of 2026, net income was $19.8 million, adjusted EBITRE was $81.4 million, an increase of nearly 12% from last year, and adjusted FFO per share was 63 cents, 23.5% higher than Q1 2025. Same property RevPAR grew 7.4%, occupancy increased 180 basis points, and average daily rate increased 4.8% compared to Q1 2025. Same property total RevPAR for the quarter was $370.13, an increase of 7.2% year-over-year. Food and beverage revenues grew 6.2% on a same property basis, other revenues were up nearly 11% for the quarter. Same property hotel EBITDA was $87.8 million, an increase of almost 18% compared to the same period last year, with same property hotel EBITDA margin expanding from 27% in Q1 2025 to 29.7% this year. Grand Hyatt Scottsdale Resort achieved record revenues in hotel EBITDA for Q1, with improvements in various operations and a significant improvement in hotel EBITDA margin. There was broad-based strength across the portfolio of luxury and upper upscale hotels and resorts, with Ref Bar and total Ref Bar increases in 15 of 22 markets.

• Raised full year 2026 adjusted EBITRE guidance by $6 million to $266 million at the midpoint. Adjusted FFO per share guidance for full year 2026 is now $1.94 at the midpoint, an increase of approximately 10% over 2025.
• Second quarter to year end outlook is roughly in line with previous guidance. Adjusted REVPAR growth outlook for full year, with a reduction in expected boost from special events, trimming prior expectation of 75 basis points of REVPAR growth from special events to a range of 25-50 basis points.
• Expect less boost from special events, including trimming World Cup REVPAR growth expectation, with six hotels expected to benefit but degree of benefit varying, and some hotels more dependent on transient demand than expected.

• Significant macroeconomic and geopolitical uncertainty remains.
• Uncertainty in special events' impact, including the World Cup, with varying benefit across hotels and some hotels having less definite booking and changing ADR expectations.
• Impact of new supply in some markets, such as Nashville, and the need to balance capital allocation considering market conditions.

Q: Good afternoon, everyone. Afternoon. First, I just want to start on the demand front. Can you talk a little bit more about the urban improvement that you saw? Was that business or leisure picking up any specific markets or comments to add some color that would be helpful?

A: I think when we think about urban, a lot of that is more near urban or suburban than truly Downtown CBD windows across the portfolio, but I think what what we saw, certainly in the quarter, we're continuing to see into the 2nd quarter is improvement in both corporate demand. Certainly on weeknights. I talked about Wednesday night demand being up 11%. For the quarter, in terms of of. Yeah, 11% in terms of demand, which is very significant. Obviously. But I think we were pleasantly surprised to see across the portfolio a relatively even mix between what weekdays were up and what weekends were up, which is one of the things we look at as the primary determinant of how much is really being driven by business versus how much by leisure. So we've seen growth certainly in both segments. I mean, group we always knew would be strong. I think we had a lot of hope heading into Q1 that negotiated corporate demand would continue at the levels that have been growing in Q4. That certainly continued. And I think we had, as we all mentioned in our remarks, some higher than expected growth in leisure in particular, both in the resort-oriented properties, but as well as in our smaller drive-to leisure-focused properties as well.

Q: Maybe first just a clarification on the special event changes. Does the 25 to 50 base points assume any kind of uplift from the World Cup? And then just related to that, where do you think the softness is coming from? Is it on the international side or is it broader based on that, you think?

A: Yeah, so to answer your first question, there is an assumption that we do have some lift from World Cup. So obviously, you know, the three big events, NFL Draft, America 250, and World Cup are all factored into the initial 75 basis point lift. And we've reduced that to 25 to 50, but we do still expect World Cup to be beneficial in all of the markets, frankly, that, you know, we've talked about in the past, including those six hotels. just not as beneficial as previously expected. Now, digging a little bit deeper, I think the one thing we can see with more accuracy is the group sizing and the group blocks. And obviously, as I mentioned, that's washed. So we have about half the level of group on the books for that period than we did several months ago. So that's the piece that has washed. So, you know, as I mentioned, we're more dependent on transient and that's just more uncertain. And that's why we're both giving a range because it's, you know, we're not really going to know that number until we get much closer. And there is, you know, definitely going to be, um, some variation in performance based on, you know, what the actual teams are and how that lines up. So again, I think, um, That's really what's causing our view to come in on World Cup is really just less visibility and more uncertainty around what actually may materialize. With regard to domestic versus international, I'm just not sure we have enough data and information on that at this point. Certainly, there's still a lot of confidence that these these games are going to be big drivers of inbound activity. But again, we're not quite seeing that in the booking activity to date. So as we get closer, we just want to be very precise about what we are and aren't seeing. And I think the bigger story is that we've obviously, you know, not adjusted our overall guidance downward. So we're seeing business more broadly. That's more than making up for or making up for the special events coming down, which frankly gives us a lot more confidence because that's business that's likely more durable and business that may continue into the fall and into next year as opposed to one-time or tech business.

Q: Marcel, you talked a little bit about that transaction markets opening up. I guess it's been a few years since you've done an acquisition, though I believe the last two new hotels were new hotels and new to Xenia markets. When you think about potential acquisitions moving forward, is there any preference to kind of follow a similar pattern of new markets and newly developed hotels, or is it just really about the opportunity?

A: Yeah, it's really about the opportunity. if you look at kind of what some of the more successful or the most successful acquisitions are that we did essentially, you know, over kind of a five-year timeframe pre-COVID. A lot of them were obviously, all of them really, were branded hotels with good demand segmentation, you know, good group component to them. And in many cases, also some properties that did require some initial capex whether that be, you know, a room renovation or some of the common spaces. So I think that's probably where our preference would lie, you know, but to your point, it's really going to be dependent on the opportunity set. And, you know, we're not really going to limit ourselves to saying, you know, we need to be in X, Y, or Z markets. It's really going to be as long as it fits with our overall long-term strategy. You know, we're open to adding some hotels in certain markets where we are already, you And we certainly would be open to some markets that we're not in yet.

Q: Austin Morishman of KeyBank. Your line is open. Great, thanks. Yeah, Ateesh, just wanted to go back to your comment on the durability of some of the regular way business and then the upward, you know, REVPAR growth guidance revision. So the guidance increase was simply flowing through 1Q. That was then partially offset by a tweak downward from World Cup contribution. But you didn't flow through, you know, that regular way strength of the midweek business you cited through the balance of the year. Is that correct?

A: No, not quite. So the guidance increase reflects first quarter and a smidge more. So that's really, you know, the change to REVPAR and the change to EBITDA. What I was trying to say is, even though our expectation for World Cup has come in, there's other business that we're expecting that over the course of the year that will make up for that. So really, that's that's kind of how you should think about it. The guidance increase was first quarter. Any softness we're seeing on the World Cup, we're making up for that across the business, across the portfolio, and with our big segments, BT and group. And that's the piece that gives us confidence as we look forward even past this year, because obviously so much of our business is BT and group, and those are the biggest pieces of the pie, as opposed to leisure or events specifically.

Q: Austin Morishman of KeyBank. Your line is open. Great, thanks. Yeah, Ateesh, just wanted to go back to your comment on the durability of some of the regular way business and then the upward, you know, REVPAR growth guidance revision. So the guidance increase was simply flowing through 1Q. That was then partially offset by a tweak downward from World Cup contribution. But you didn't flow through, you know, that regular way strength of the midweek business you cited through the balance of the year. Is that correct?

A: No, not quite. So the guidance increase reflects first quarter and a smidge more. So that's really, you know, the change to REVPAR and the change to EBITDA. What I was trying to say is, even though our expectation for World Cup has come in, there's other business that we're expecting that over the course of the year that will make up for that. So really, that's that's kind of how you should think about it. The guidance increase was first quarter. Any softness we're seeing on the World Cup, we're making up for that across the business, across the portfolio, and with our big segments, BT and group. And that's the piece that gives us confidence as we look forward even past this year, because obviously so much of our business is BT and group, and those are the biggest pieces of the pie, as opposed to leisure or events specifically.

Q: Logan Epstein of Wolf Research LLC. Your line is open. Yeah, thanks for taking the question. Maybe one on just because you have the upcoming renovation at the Onda's NAPO, maybe just touch on that market and that hotel specifically on how it's performing and the outlook there given broader Northern California has been performing pretty well so far in the year.

A: It's, as I think you know, it's been a very good performer for us for a, for this year will be our 13th year of ownership of that hotel. It's been a good performer. It's certainly well located within downtown Napa and downtown Napa has experienced tremendous growth over that period of time in terms of amenities and tasting rooms and things like that. It's a market, the Napa market overall has certainly been a little bit challenged. We think we're at the right price point in that market because we offer a high end products at a price point below some of the more resort oriented assets. Having said that, the wine businesses struggled a lot this year, both on the commercial side, which we play quite a bit in in terms of serving the wine industry itself and people that come to visit and do business in Napa. But we're certainly seeing some some renewed strength in the leisure market, in part due to growth coming out of San Francisco. More people being the city obviously means more people taking time to do add-on pre and post downtown San Francisco visits to the hotel. It's an asset we believe in, which is why we had committed to this renovation over a year ago and then put it on hold for a year as a result of concern over tariffs and tariff impact. But it's been a good performing hotel for us, continues to be so, and look forward to getting it in the top shape post the renovation.

Q: Jack Armstrong of Wells Fargo. Your line is open. Hey, good afternoon. Thanks for taking the question. You touched on it briefly, but could you walk us through how you're thinking about the best uses of incremental capital right now, given where your shares are trading? would you say that repurchases are likely still at the top of that list, or is there more debt you'd like to see down, or maybe another big ROI project that you'd like to pursue?

A: Yeah, thanks for the question, Jack. You know, I think we take a balanced approach, so obviously internal growth, external growth, share repurchases, debt reduction. You've seen us do all of that over the last several years, and You know, it's going to vary a little bit based on what we see in terms of outlook, what we see in terms of opportunities, certainly share price. So it's hard to give you a, you know, a definitive priority because it does change. I would say a few things. I mean, one, the portfolio is generally in really good condition. So, you know, we've put capital behind the portfolio over the last several years, done some big renovations we have. you know, kind of capex coming down now to, you know, more of a normalized level. So that's one. Two, you've seen us pay down some debt. And as I mentioned, we feel like we'll naturally do leverage over time here as Grant Hyde-Scott still picks up. So there's not sort of an immediate pressure to pay down debt, but certainly having a little bit more dry powder and resources would be good, particularly as, you know, we expect the acquisition market, transaction market to loosen over the next several years. And then finally on the share repurchase side, as you mentioned, I mean, we bought a lot of stock back last year, almost 9%, roughly 9% of the company. We feel really good about, you know, those purchases given where the stock's trading now. We obviously felt like that was the right thing to do. And it continues, you know, we continue to trade below NAV, so it's not off the table. I just think we're going to balance all those various things to drive the strongest returns and the best capital allocation for the owners of the company. And that's really something我们've done pretty consistently since we've been public over the years. And we've kind of played in all of those various areas, depending on the timing, to drive long-term shareholder returns. And that continues to be the mantra and the focus.

Q: Alex Hino of Jefferies. Your line is open. Great thanks for taking the question guys i'm on for David but just wanted to you know dive into kind of the state of the Union for luxury and abrupt scale, I know. The last couple months we've heard a lot about the K shaped economy and this week we got a little bit of commentary around kind of the C shapes economy suggesting some acceleration at the top end so just wanted to get your reaction there and any commentary, you can provide A: Yeah, well, you know, what we've obviously seen is that luxury and upper upscale continue to perform really well. And we've seen, clearly you've seen it in our portfolio, being 100% focused on luxury and upper upscale. We've seen very good growth in group demand over the last couple of years. Certainly, you know, that's going to at some point start leveling off a little bit, but Simultaneously, now we're starting to see some pretty good momentum on the transient side, and particularly on business transient, continuing to build. So, if you look at the supply backdrop for luxury and upper upscale, you know, it's still extremely benign for the next several years. So, you know, it's setting up pretty nicely for not only the industry overall, with the overall supply being pretty modest, supply growth being pretty modest, but particularly in our segments, too. You know, we talked about it quite a bit today, and we'll be seeing a lot of strength in all these different demand segments. Certainly the higher end consumer doesn't seem to be pulling back yet. So we're pretty optimistic that that will continue going forward. You know,我 would also add, you know, these properties, as we've demonstrated over the last couple of years, have a lot of levers to pull. And in terms of driving, you know, food and beverage and ancillary revenues. We've been able to optimize them over the last couple of years, and we think it speaks well to where the consumer is headed and our ability with these properties to keep driving cash flows in this environment. So we really saw a lot of strength in the quarter and even subsequent to the quarter. Nothing changing. The trajectory looks quite strong.