Xenia Hotels Lifts Outlook After Robust Earnings Call

Xenia Hotels & Resorts Inc ((XHR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Xenia Hotels & Resorts struck a confident tone on its latest earnings call, pointing to broad‑based revenue growth, margin expansion, and stronger cash generation. Management acknowledged headwinds from event timing, weather, and energy costs, along with leverage above its target, but framed these as manageable against solid demand and a more upbeat full‑year outlook.

Profitability Surges on Strong Operating Performance

Xenia reported net income of $19.8 million, with Adjusted EBITDAre climbing nearly 12% year over year to $81.4 million. Same‑property hotel EBITDA jumped about 17.9% to $87.8 million, driving adjusted FFO per share to $0.63, a 23.5% increase versus 2025 that underscores accelerating earnings power.

RevPAR and Top-Line Growth Demonstrate Pricing Power

Across 30 same‑property hotels, RevPAR reached $205.93, up 7.4% from a year ago, helped by a 180‑basis‑point rise in occupancy and a 4.8% gain in ADR. Total RevPAR for the same‑property set came in at $370.13, a 7.2% increase that reflects both room and ancillary revenue strength.

March Delivers Standout Revenue Momentum

March was a clear highlight, with RevPAR of $239.08, up 14.3% compared with March 2025 as occupancy surged 540 basis points. Management cited the timing of Easter and robust transient demand as key drivers, suggesting strong in‑quarter momentum heading into the spring travel season.

Diversified Market Strength Across the Portfolio

The company posted RevPAR or total RevPAR gains in 15 of its 22 markets, showcasing demand breadth rather than reliance on a single city. Double‑digit total RevPAR growth in Phoenix/Scottsdale, Salt Lake City, Birmingham, Portland, Santa Clara, Santa Barbara, and Houston underscored healthy group and transient trends, with each segment’s room revenue up about 7%.

Grand Hyatt Scottsdale Becomes a Star Performer

The Grand Hyatt Scottsdale emerged as a major outperformer after a transformative renovation, delivering record revenues and hotel EBITDA. Property‑level RevPAR soared 46.2%, materially boosting portfolio results and demonstrating the payoff from targeted capital investment in high‑potential assets.

Margin Expansion Highlights Cost Discipline

Same‑property hotel EBITDA margins expanded from 27.0% to 29.7%, a 270‑basis‑point improvement driven by strong revenue growth and tight cost control. Rooms cost per occupied room rose only 2.3%, while food and beverage profit margins improved by roughly 150 basis points, supporting further operating leverage.

Balance Sheet Liquidity Supports Flexibility

Xenia ended the quarter with about $1.4 billion of debt, roughly 75% fixed including hedges, at a weighted average interest rate of 5.5%. Net leverage stood near 4.8x trailing 12‑month net debt to EBITDA, above the long‑term sub‑4x target, but was balanced by more than $100 million of cash, a $500 million undrawn revolver, and over $600 million of total liquidity, with 28 of 30 hotels unencumbered.

Capital Projects Executed On Time and On Budget

First‑quarter capital expenditures totaled $15.2 million, with several key projects completed efficiently. The company finished the M Club renovation at Marriott Dallas Downtown and guestrooms at Fairmont Pittsburgh as planned, and the reconcepted food and beverage outlets at W Nashville largely opened on time and within budget, positioning the assets for improved performance.

Improved Margin and Cost Outlook for the Full Year

Management now expects full‑year margin expansion rather than the previously anticipated decline, signaling growing confidence in operating efficiency. Cost per occupied room is projected to rise in the mid‑2% range, better than the prior roughly 3% outlook, which should support further profitability gains if demand holds.

Special Event Boost from World Cup Now More Modest

The company tempered expectations for special‑event uplift, reducing its projected RevPAR benefit from about 75 basis points to a 25–50 basis point range. Lower‑than‑expected group bookings and uncertainty around transient demand tied to the World Cup mean the upside in key host markets is more limited than initially thought.

Property-Specific and Weather-Related Headwinds

Certain hotels weighed on results, including Loews New Orleans, which faced a tough comparison after hosting the prior year’s Super Bowl, and The Westin Crystal City, which lapped the presidential inauguration. W Nashville was hit by poor weather and renovation‑related disruption, with outlet closures contributing to weaker outlet revenues in the quarter.

Rising Energy Costs Pressure Operating Results

Energy expenses climbed more than 9% during the quarter, with significant winter storms driving usage and costs higher. While not enough to offset broader margin gains, these costs represent a notable headwind that management will need to manage if volatility persists.

Leverage Above Target Adds Deleveraging Focus

Net leverage around 4.8x remains above Xenia’s long‑term goal of less than 4x, keeping balance sheet repair on the strategic agenda. Management emphasized its intention to reduce leverage over time, potentially through earnings growth, disciplined capital spending, and portfolio optimization.

Event-Driven Demand and World Cup Uncertainty

Event‑driven demand, particularly around the World Cup, has become less predictable as definite group bookings have underwhelmed in markets like Houston, Santa Clara/San Francisco, and Dallas. With more reliance on last‑minute transient bookings, earnings visibility around these dates is lower and upside is now viewed as more constrained.

CapEx Needs and Potential Asset Dispositions

Annual capital spending guidance remains $70–80 million, but management flagged several hotels with sizable upcoming CapEx requirements. These needs could prompt asset sales, creating a trade‑off between funding renovations and recycling capital out of more challenged properties to support the overall portfolio and balance sheet.

World Cup Upside Concentrated in Smaller Hotels

Even where World Cup benefits are expected, the impact is likely to be modest at the portfolio level because key benefiting hotels in Atlanta Buckhead and Philadelphia are relatively small. Together they account for roughly 5% of total rooms, limiting the aggregate earnings boost even if those properties perform well during the event period.

Guidance: Stronger 2026 Outlook Despite Event Trim

After a robust start to the year, Xenia raised its 2026 Adjusted EBITDAre guidance by $6 million to a $266 million midpoint and lifted adjusted FFO per share to $1.94, about 10% above 2025. The company now expects full‑year RevPAR growth of 2.75%–5.25% and total RevPAR of 3.75%–6.25%, with anticipated margin expansion and mid‑2% cost growth per occupied room even after lowering its assumed special‑event lift.

Xenia’s latest call painted a picture of a lodging REIT benefiting from broad demand, disciplined cost control, and targeted capital investments, particularly in Scottsdale. While World Cup‑related upside has been dialed back and leverage remains above goal, management’s raised guidance, solid liquidity, and improving margins suggest a constructive setup for investors watching the name over the coming year.