Xenia Hotels & Resorts, Inc. (XHR) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reflects a positive sentiment with strong group business outlook, increased full-year guidance, and improved hotel EBITDA margins. The Q&A section highlights minimal impact from external risks like government shutdowns and emphasizes strong corporate demand in key markets. Despite some softness in leisure demand, the overall guidance and strategic focus suggest positive momentum. Considering the company's market cap, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks.
Key Financial Performance
Net Loss $13.7 million for Q3 2025, compared to the same quarter last year. Reasons for the loss include challenging operating environments, particularly in leisure demand, and tough comparisons in the Houston market due to Hurricane Beryl's impact in 2024.
Adjusted EBITDAre $42.2 million for Q3 2025, an 8% decrease year-over-year. The decrease is attributed to weaker performance in leisure-heavy markets and the Houston market's tough comparisons.
Adjusted FFO per Share $0.23 for Q3 2025, an 8% decrease year-over-year. This decline is linked to the same factors affecting Adjusted EBITDAre.
Same-Property RevPAR Flat year-over-year for Q3 2025. Occupancy decreased by 100 basis points, offset by a 1.6% increase in average daily rate. Excluding Houston, RevPAR increased by 2.9%, driven by growth at Grand Hyatt Scottsdale.
Same-Property Total RevPAR Increased by 3.7% for Q3 2025 compared to last year, driven by strong food and beverage revenues, particularly from Grand Hyatt Scottsdale.
Same-Property Hotel EBITDA $47 million for Q3 2025, a 0.7% increase year-over-year. Excluding Grand Hyatt Scottsdale, EBITDA decreased by 7.8%, with a margin decline of 160 basis points.
Year-to-Date Same-Property Hotel EBITDA $205.4 million, a 12.6% increase year-over-year. This growth was driven by the ramp-up of Grand Hyatt Scottsdale and effective expense control.
Year-to-Date Same-Property Total RevPAR Increased by 8.5% compared to 2024, fueled by higher food and beverage revenues and the performance of Grand Hyatt Scottsdale.
Top-Performing Hotels Grand Hyatt Scottsdale (RevPAR up over 270%), Andaz Savannah (up 15.3%), Waldorf Astoria Atlanta Buckhead (up nearly 14%), and others. Growth was driven by strong group business and corporate demand.
Weaker-Performing Hotels Loews New Orleans, Houston hotels, Marriott Dallas Downtown, and others. Weakness was due to lack of convention center activity, tough comparisons, and general leisure softness.
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Operating Highlights
Grand Hyatt Scottsdale Resort: Continued ramp and post-renovation stabilization driving significant year-over-year growth. Contributed to a 2.9% increase in same-property RevPAR excluding Houston assets.
W. Nashville Food & Beverage Relaunch: Partnership with Jose Andres Group to operate food and beverage venues. Expected to add $3-5 million to hotel EBITDA upon stabilization.
Group Demand: Strong group demand across the portfolio, with robust group room revenues already on the books for 2026. Group pace for November and December up 12%.
Citywide Convention Demand: Anticipated strong citywide convention demand in markets like Houston, Dallas, Philadelphia, Pittsburgh, and Portland for 2026.
Expense Control: Operators effectively controlled expenses in an inflationary environment. A&G expenses increased by only 1.5%, and sales and marketing expenses grew by 2%.
Capital Expenditures: Projected $90 million in property improvements for 2025, including $9 million for W. Nashville F&B relaunch. Spending $15 million less than initially projected for the year.
Share Repurchase: Repurchased $83.8 million of common stock year-to-date, reducing outstanding shares by 6.6%.
Debt Management: Plan to pay off $52 million mortgage loan ahead of maturity, leaving 28 of 30 hotels free of property-level debt.
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Risk or Challenges
Leisure Demand Challenges: The lodging industry is facing a challenging operating environment, particularly with a decline in leisure demand, which is a significant driver for the company's portfolio in the third quarter.
Houston Market Weakness: The Houston market underperformed due to tough comparisons with the previous year's short-term demand boost from Hurricane Beryl, negatively impacting portfolio performance.
Seasonality of Group Demand: Group demand, which has been a strong segment, was less impactful in the third quarter due to seasonal shifts, leading to weaker performance compared to the first half of the year.
Inflationary Environment: The company continues to operate in an inflationary environment, which poses challenges in controlling expenses and maintaining profitability.
CapEx Increase: Capital expenditure projections increased by $10 million due to additional projects and reconcepting of food and beverage operations, which could strain financial resources.
RevPAR Stagnation: Same-property RevPAR was flat year-over-year, with some markets experiencing declines, indicating challenges in driving revenue growth.
Convention Center Activity Decline: Hotels in New Orleans, Dallas, and Philadelphia suffered from a lack of convention center activity compared to the previous year, impacting revenues.
Leisure Market Softness: General leisure softness and the return of previously offline inventory negatively impacted performance in Key West and other leisure-heavy markets.
Debt and Interest Rate Exposure: Approximately 25% of the company's debt is at variable rates, exposing it to potential interest rate increases, which could impact financial stability.
Food and Beverage Revenue Decline: Banquet revenues declined slightly during the quarter, reflecting challenges in maintaining food and beverage revenue growth.
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Guidance & Outlook
Group Demand: Group demand is expected to remain strong in 2026, supported by robust group room revenues already on the books for the portfolio.
RevPAR Growth: For the full year 2025, the company expects a same-property RevPAR increase of 4%. October RevPAR is projected to grow approximately 5.8%, reflecting improvement over the third quarter.
Adjusted EBITDAre: The company projects adjusted EBITDAre of $254 million for the full year 2025, reflecting a slight reduction from prior guidance.
Food and Beverage Revenue: Significant growth in food and beverage revenues is anticipated in the fourth quarter of 2025 and throughout 2026, driven by strong group demand and the relaunch of food and beverage venues at W. Nashville.
Grand Hyatt Scottsdale Ramp: Grand Hyatt Scottsdale is expected to continue its ramp consistent with underwriting, contributing significantly to EBITDA growth in 2026, with property hotel EBITDA projected to increase from the low $20 million range in 2025 to the low $30 million range in 2026.
Capital Expenditures: The company plans to spend approximately $90 million on property improvements in 2025, including $9 million for the relaunch of food and beverage venues at W. Nashville. This is $15 million less than initially projected for the year.
2026 Group Pace: Group pace for 2026 is up in the mid-teens percentage range, with strong citywide convention demand in markets like Houston, Dallas, Philadelphia, Pittsburgh, and Portland. The World Cup is expected to boost demand in several markets.
Hotel EBITDA Margin: For 2025, same-property hotel EBITDA margin is expected to grow nearly 90 basis points, driven by non-rooms revenue growth and a favorable mix of rooms revenue.
W. Nashville Food and Beverage Relaunch: The relaunch of food and beverage venues at W. Nashville is projected to add $3 million to $5 million to hotel EBITDA upon stabilization, with completion expected by the second quarter of 2026.
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Shareholder Return Plan
Dividend Yield: The Board authorized a third quarter dividend of $0.14 per share, reflecting an annualized yield of over 4.5% on the current share price.
Payout Ratio: The annualized payout ratio is just under 50% of funds available for distribution (FAD). The long-term target is a payout ratio of 60% to 70% of FAD, consistent with pre-pandemic levels.
Share Repurchase Program: During the quarter, $12.3 million of common stock was repurchased at a weighted average price of $12.66 per share. Year-to-date, $83.8 million of common stock has been repurchased at a weighted average price of $12.59 per share, representing 6.6% of outstanding shares as of year-end 2024.
Remaining Authorization: $134.1 million of capacity remains under the share repurchase authorization.
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Key Q&A
Q:Where is the current dividend payout this year in terms of taxable income?
A:The CFO, Atish Shah, mentioned that they are utilizing NOLs generated post-COVID and balancing payouts relative to past levels. However, he did not provide a specific taxable income number and promised to provide it later.
Q:How much of the pace increase for next year is price versus volume, and what type of accounts are booking?
A:Barry Bloom stated that the setup for next year is strong, with a little more volume than price growth. He noted a shift from corporate business to more normalized association business, particularly in large resorts. Both segments are strong for next year.
Q:What is the impact of the government shutdown on the portfolio and confidence in the full-year RevPAR guide?
A:Marcel Verbaas stated that the impact has been minimal so far, with few cancellations. The portfolio is not heavily dependent on government business. However, a prolonged shutdown could have broader impacts. They are not assuming significant impact on RevPAR for the next few months.
Q:What is the update on transaction markets and interest in dispositions over the next year?
A:Marcel Verbaas noted an increase in potential hotel transactions compared to 6-12 months ago. However, given their cost of capital, share buybacks are more attractive than acquisitions. They may consider dispositions for assets needing additional capital, with potential for 1-2 dispositions in the next 12-18 months.
Q:Where are the softer expectations for 4Q playing out the most, and is leisure expected to weaken further?
A:Atish Shah mentioned that the softness is more on the transient side, including leisure and business transient, and is broad-based across markets. Houston was a headwind in Q3 but is expected to show slight growth in Q4. Leisure is stabilizing and not expected to weaken further.
Q:What are the expected changes at the W. Nashville for F&B, and how will it impact EBITDA?
A:Marcel Verbaas stated that changes in F&B operations are expected to add $3-5 million in incremental EBITDA over the next few years. The hotel is expected to stabilize in the low $20 million range, down from the original $25-30 million range, due to market stabilization and supply absorption.
Q:What is the source of weakness in leisure demand?
A:Marcel Verbaas explained that leisure demand is normalizing after outsized levels in prior years. Consumer spending concerns, international travel trends, and alternative travel options like cruises are factors. Higher-end segments are less impacted, and leisure is stabilizing in their portfolio.
Q:Which markets are seeing significant corporate growth, and how does it align with transient demand expectations?
A:Barry Bloom highlighted Northern California, particularly Santa Clara, due to tech and AI-driven accounts, as well as markets like Pittsburgh, D.C., and Atlanta. Corporate demand is improving monthly, with strong Tuesday and Wednesday night bookings driving compression.
Q:Will leisure demand lag the overall portfolio in 2026?
A:Marcel Verbaas expects group business to lead growth next year, with leisure and business transient potentially being on par. Stabilization in leisure-oriented markets and strong group pace contribute to this outlook.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the specific taxable income number related to the dividend payout, promising to provide it later.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AG sale
Beryl
Bohemian Hotel
Centric
FB outlet
Hotel Mountain
JAG
Key West
Modifications
Mountain Brook
RevPAR increase
RevPAR weakness
agreement Group
bar
beverage outlet
beverage revenue
beverage venue
concept
date hotel
demand segment
destination
dinner
food offering
group increase
hotel comparison
increase food
increase rate
menu
outlet hotel
period occupancy
project property
property RevPAR
relationship
relaunch
revenue property
room revenue
stabilization
venue hotel
XHR Transcript
Xenia Hotels & Resorts, Inc. (XHR) Q1 2026 Earnings Call Transcript
Unknown5-1
The earnings call summary reveals a mixed outlook. While there is a positive financial performance with year-over-year increases in revenue, net income, and EBITDA, significant risks such as fluctuating market conditions, increased competition, and economic uncertainties are present. The lack of strategic initiative discussion and unclear management responses further contribute to a neutral sentiment. Given the company's market cap, the stock price is likely to remain stable, resulting in a neutral prediction for the next two weeks.
Xenia Hotels & Resorts, Inc. (XHR) Q4 2025 Earnings Call Transcript
Positive2-24
The earnings call shows strong group demand, increased food and beverage revenue, and improved EBITDA margins, suggesting positive financial health. The Q&A section highlighted optimism in RevPAR growth and asset acquisitions, despite some vague management responses. The market cap indicates moderate volatility. Overall, the positive factors outweigh the negatives, leading to a likely positive stock price movement of 2% to 8%.
Xenia Hotels & Resorts, Inc. (XHR) Q3 2025 Earnings Call Transcript
Positive10-31
The earnings call summary reflects a positive sentiment with strong group business outlook, increased full-year guidance, and improved hotel EBITDA margins. The Q&A section highlights minimal impact from external risks like government shutdowns and emphasizes strong corporate demand in key markets. Despite some softness in leisure demand, the overall guidance and strategic focus suggest positive momentum. Considering the company's market cap, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks.
Xenia Hotels & Resorts, Inc. (XHR) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call summary presents a mixed picture. Positive factors include a dividend increase and strong group revenue growth. However, lowered guidance for RevPAR and Adjusted EBITDAre, alongside concerns about expense pressures and unclear management responses on consumer behavior, offset these positives. The Q&A revealed no major negative surprises but highlighted some uncertainties. Given the company's market cap of $1.4 billion, the overall sentiment is neutral, with no strong catalysts for significant stock price movement.
XHR Report
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