Xenia Hotels Earnings Call Highlights Growth And Risks

Xenia Hotels & Resorts Inc ((XHR)) has held its Q4 earnings call. Read on for the main highlights of the call.

Xenia Hotels & Resorts Inc struck an upbeat tone on its latest earnings call, highlighting broad-based revenue gains, margin expansion and a successful asset ramp in Scottsdale. Management acknowledged elevated leverage, rising labor costs and pockets of market weakness, yet framed 2026 as a year of steady, if modest, growth supported by strong group demand and disciplined capital allocation.

RevPAR and Revenue Growth Driven by Group Strength

Same-property RevPAR rose 4.5% in Q4 2025 and 3.9% for the year, while same-property total RevPAR climbed 6.7% in Q4 and 8.0% for 2025. Management credited robust group demand and higher food, beverage and ancillary revenues for driving revenue outperformance across much of the portfolio.

Food, Beverage and Ancillary Lines Outperform

Full-year food and beverage revenue grew 13.4% and other revenues increased 13.8% versus 2024, underscoring the strength of non-room revenue streams. Banquet and catering revenue jumped about 17.2%, materially boosting total RevPAR and providing an important offset to softer leisure trends in select markets.

Operating Profitability and Margin Expansion

Same-property hotel EBITDA reached $68.8 million in Q4, up 16.3% year over year, with hotel EBITDA margin expanding by 214 basis points. For 2025, same-property hotel EBITDA was $274.3 million, a 13.5% increase, and margins improved by 129 basis points, signaling better cost control and operating leverage.

Adjusted Results Hit or Beat Guidance

For 2025, adjusted EBITDAre came in at $258.3 million and adjusted FFO per share at $1.76, both meeting or exceeding prior guidance ranges. In Q4, adjusted EBITDA of $63.6 million and adjusted FFO per share of $0.45 landed at the top end of implied guidance, reinforcing management’s reputation for conservative forecasting.

Grand Hyatt Scottsdale Ramp a Key Growth Engine

Grand Hyatt Scottsdale delivered standout performance, with RevPAR more than doubling, up over 104% year over year, and meaningfully contributing to group and total RevPAR growth. Management expects continued ramp from the repositioned resort and has underwritten roughly $8 million of incremental EBITDA from the asset in 2026.

Aggressive Share Repurchases and Capital Returns

Xenia leaned heavily on buybacks in 2025, repurchasing about 9.4 million shares at an average price of $12.87 for roughly $121 million in total. The company bought about 2.7 million shares in Q4 alone and has cut its share count by around 20% since 2020, with an additional $97.5 million authorization still in place.

Strong Liquidity and Limited Property Debt

The balance sheet features about $75 million of cash and a fully undrawn $500 million credit facility, giving Xenia total liquidity near $575 million. Twenty-eight of 30 hotels carry no property-level debt, and roughly 75% of total debt is fixed or hedged, with a weighted average rate of 5.51% and average duration of 3.2 years.

Targeted Capital Investment and Portfolio Upgrades

The company invested about $87 million in 2025, including $15.9 million in Q4, across transformative renovations, infrastructure projects and select room refreshes. For 2026, planned capital spending of $70 million to $80 million is expected to cause only about $1 million of EBITDA and FFO displacement, limiting earnings disruption.

Elevated Leverage Above Long-Term Target

Despite solid cash flow, net debt to EBITDA sits around 5.2 times on the credit facility calculation, above management’s preferred low-3 to low-4 times range. Reducing leverage is now a stated priority, and investors will watch how management balances debt paydown against continued buybacks and renovation spending.

Modest 2026 EBITDA Growth and Identified Headwinds

Guidance implies adjusted EBITDAre of roughly $260 million in 2026, just about 1% above 2025’s level, as several headwinds blunt operating gains. These include the loss of roughly $6 million of EBITDA from the sold Fairmont Dallas, a nonrecurring $1 million tax benefit, about $3 million less interest income and about $1 million of renovation-related disruption, partly offset by $8 million from Scottsdale.

Expense Inflation and Margin Pressure Ahead

Same-property hotel expenses are projected to rise about 4.5% in 2026, with cost per occupied room up roughly 3%, putting mild pressure on margins. Wages and benefits, which represent about half of hotel-level costs, are expected to increase around 6%, while other expense categories are forecast to rise near 3%.

Soft Spots in Underperforming Markets

Not all assets are firing, with management citing underperformance in both Portland properties, Royal Palms Resort and Spa, San Diego and all four Texas hotels. Leisure softness in Phoenix and choppier weekend and leisure patterns have weighed on several leisure-focused assets, highlighting competitive and demand challenges in select markets.

Wide Guidance Ranges Reflect Limited Near-Term Visibility

The company’s RevPAR guidance range of 1.5% to 4.5% and total RevPAR range of 2.75% to 5.75% underscore ongoing demand uncertainty. Management noted that much transient business is still unbooked, leaving results sensitive to late-cycle corporate and leisure booking patterns and adding volatility to near-term outcomes.

Reliance on Buybacks and Discount to NAV

Management continues to lean on share repurchases as the preferred capital allocation tool, arguing that the stock trades below estimated net asset value. While this supports per-share metrics and signals confidence, it also suggests a scarcity of compelling external acquisition opportunities in the near term.

Forward-Looking Guidance and Outlook

For 2026, Xenia projects same-property RevPAR growth of 1.5% to 4.5% and total RevPAR growth of 2.75% to 5.75%, with midpoints of 3.0% and 4.25%, respectively. Adjusted FFO per share is expected to rise about 7% to $1.89 at the midpoint, supported by strong group pace, nearly 70% of 2026 group room nights already on the books and disciplined but ongoing capital investment.

Xenia’s earnings call painted a picture of a lodging REIT executing well operationally while navigating macro and property-level headwinds. With strong group demand, a ramping Scottsdale flagship and ample liquidity, management sees room for further per-share growth, but investors will focus on whether leverage falls and margins hold up as costs continue to climb.