Xenia Hotels & Resorts, Inc. Q2 FY2026 earnings call

• Overall Operating Performance

  • Solid Q2 2026 operating results modestly beat prior expectations, with 5.6% same-property RevPAR growth entirely driven by ADR, and occupancy holding steady year-over-year.
  • Transient demand led growth, partially boosted by the 2026 FIFA World Cup, which was held in 6 of the company's markets; overall World Cup impact was limited, as group demand pulled back in event markets while transient filled gap at the cost of non-room revenue.
  • RevPAR growth was broad-based across markets, led by Philadelphia (22% growth), Salt Lake City (13.1%), Phoenix (12.7%), and Birmingham (12.2%); 19 of 22 markets posted positive RevPAR growth for the quarter.
  • The Grand Hyatt Scottsdale Resort & Spa continues to ramp successfully, and is on track for its strongest group booking year in history, with strong future group pace.

• Margin and Expense Trends

  • Same-property EBITDA margin declined 65 basis points year-over-year, primarily due to lapping a $1.5 million 2025 Q2 real estate tax refund and higher startup expenses for the food and beverage repositioning at W Nashville.
  • Total same-property operating expenses grew 4.2% year-over-year, outpacing 3.3% revenue growth; key expense moves included an 11% increase in energy costs (driven by gas and water price hikes, partially offset by electricity efficiency gains), 7.9% G&A growth (from higher credit card commissions tied to the transient mix), and a 1% decline in property operations and maintenance expenses.

• Capital Projects and Renovations

  • The company invested $15.4 million in portfolio improvements in Q2 2026, bringing year-to-date capital expenditure to $30.6 million; full-year 2026 CapEx guidance is maintained at $70 million to $80 million.
  • Two major renovations are scheduled to begin in Q4 2026: phase one of a two-phase guest room and corridor renovation at Andaz Napa, and a full guest room, corridor, and meeting space renovation at The Ritz-Carlton Denver; projects are timed for low-demand periods to minimize 2026 cash flow disruption.
  • The 4 Autograph Collection hotels have completed a smooth transition of property management to Davidson Hotel Group, and will be renamed to better reflect local market identity while retaining Autograph Collection branding, to drive long-term revenue and operational improvements.

• Transaction Activity

  • The company completed the sale of the 85-room Kimpton RiverPlace Hotel in Portland, Oregon for $11 million ($129,000 per key), at a 19.4x EBITDA multiple; the asset underperformed in recent years due to market challenges, undesirability of its location, new competitive supply, and large upcoming capital requirements.
  • Xenia retains exposure to Portland via ownership of the 600-room Hyatt Regency Portland, which is well-located adjacent to the Oregon Convention Center.
  • The overall transaction environment is more robust than it has been in recent years; the company will continue to prudently evaluate acquisition and disposition opportunities to upgrade portfolio quality and drive FFO growth, while maintaining a strong, flexible balance sheet.

Xenia Hotels & Resorts reports results on a same-property basis for its 30-hotel portfolio (excluding the recently sold Kimpton RiverPlace Hotel). Q2 2026 same-property RevPAR was $206.54, a 5.6% year-over-year increase driven entirely by rate: average daily rate (ADR) rose 5.7% while occupancy remained flat at 72.3%. Transient segment RevPAR grew 6.9% year-over-year, outpacing group segment RevPAR growth of 3.4%. Total same-property revenue (including room, food and beverage, and other) was $366.17 per unit, up 3.3% year-over-year. Adjusted EBITDAre for the quarter was $78.1 million, $1 million ahead of prior guidance. Same-property EBITDA margin was 28.7%, a 65 basis point decline year-over-year. GAAP net loss attributable to common stockholders was $19.3 million, driven by a noncash impairment charge tied to the Kimpton RiverPlace Hotel sale. Adjusted FFO per share was $0.61, a 7% year-over-year increase, supported by a lower share count from 2025 share repurchases. The sold Kimpton RiverPlace Hotel contributed minimal hotel EBITDA in the periods leading up to sale.

• Full-year 2026 adjusted EBITDAre guidance midpoint was raised by $7 million to $273 million, following a $6 million increase in the prior quarter, representing a 2.5% increase from last quarter's midpoint and a 5% increase from the initial February 2026 guidance.
• Same-property RevPAR growth guidance midpoint was increased 150 basis points to 5.5%, and total RevPAR growth guidance midpoint was increased 75 basis points to 5.75%.
• Adjusted FFO per diluted share guidance midpoint was raised $0.08 to $2.02, representing approximately 15% year-over-year growth compared to 2025.
• All other guidance assumptions (interest expense, G&A expense, income tax expense, and capital expenditures) remain unchanged from prior guidance.
• The company expects to generate approximately 18-19% of full-year adjusted EBITDAre in Q3 2026, and just under 25% in Q4 2026.
• The upward guidance revision is supported by strong group booking pace for the second half of 2026 (group room revenue pace is up 12% year-over-year as of end of June, with over 75% of expected second half group business already booked), and strong high-single-digit transient booking pace for August and September. July 2026 same-property RevPAR is tracking approximately 10% year-over-year growth, with both leisure and group demand contributing.

• Group demand was weaker than expected in Q2 2026, particularly in FIFA World Cup markets, where customers avoided booking due to event-related uncertainty and rate expectations; softness also stemmed from a difficult year-over-year comparison following exceptionally strong group results in Q2 2025.
• Margin pressure in Q2 2026 from one-time items (lapping prior-year real estate tax refunds) and startup costs for the W Nashville food and beverage repositioning, which will continue to pressure near-term margins during the ramp-up period.
• Transaction pricing expectations between buyers and sellers may still not align sufficiently to enable a high volume of large portfolio deals, limiting near-term external growth opportunities.
• Energy and other operating expenses have seen meaningful upward pressure, which could pressure margins if revenue growth does not offset cost increases.
• Forward-looking results are subject to uncertainties that could cause actual performance to differ materially from guidance, including changes in demand trends, competitive market dynamics, and broader economic conditions.

Q: What is the current state of the hotel transaction market, in terms of pricing and bidding activity? / A: Management notes the transaction market is noticeably more robust than it has been over the past several years, driven by sustained positive industry performance over recent quarters. This improved environment makes it easier for buyers and sellers to agree on pricing that works for both sides, and has allowed Xenia to build a larger pipeline of potential opportunities to evaluate. Large portfolio transactions remain uncommon, with most activity centered on individual assets or small portfolios, a trend management does not expect to change near-term.

Q: How should investors expect operating expense per occupied room to trend for the second half of 2026 and beyond? / A: Management expects per-occupied-room operating expense growth to stay in the 3% to 4% range on a run-rate basis. Q2 2026 expense levels were higher than this trend because occupancy was flat year-over-year; management expects modest occupancy growth in the second half of 2026, which will pull per-occupied-room expense toward the lower end of the 3-4% range.

Q: How is group demand strength distributed across markets, and how is it impacting pricing strategy for the second half? / A: The recent pickup in group booking pace is broad-based across nearly all properties and markets, with gains split evenly between Q3 and Q4 2026. With high levels of group business already on the books, hotels focus on filling remaining open slots: available space in compressed markets can be booked at very high rates, while remaining hard-to-fill slots around holidays are still booked at more modest rates, adding incremental revenue that would otherwise be lost.

Q: How does Xenia rank the uses of incremental capital today, between acquisitions, ROI CapEx, share repurchases, and deleveraging? / A: After prioritizing ROI CapEx for major projects like Grand Hyatt Scottsdale, then share repurchases in 2025 at attractive sub-$13 prices, capital allocation is now balanced and opportunistic. Higher current share prices make external acquisitions a more compelling option than in recent years, but the stock still trades at a reasonable discount to net asset value, so share repurchases remain an option. Management will toggle between all capital allocation levers as it has done historically, maintaining a balanced approach to driving shareholder value.