Xenia Hotels & Resorts: Strong Q2 Earnings Call Highlights

Xenia Hotels & Resorts Inc ((XHR)) has held its Q2 earnings call. Read on for the main highlights of the call.

In the recent earnings call, Xenia Hotels & Resorts Inc. expressed a positive sentiment, highlighting strong financial performance driven by successful renovations and robust group business demand. Despite facing challenges such as softer leisure demand and expense pressures in certain markets, the company remains optimistic about its future growth prospects.

Strong Revenue and EBITDA Growth

Xenia Hotels & Resorts reported a net income of $55.2 million, with adjusted EBITDAre reaching $79.5 million and adjusted FFO per share at $0.57. This marks a 9.6% increase compared to the same quarter last year. The second quarter same-property hotel EBITDA was $84 million, showing a significant 22.2% increase over 2024 levels.

Successful Renovation and Performance of Grand Hyatt Scottsdale

The Grand Hyatt Scottsdale Resort played a crucial role in the company’s performance, contributing to a 4% increase in same-property RevPAR. The resort achieved a remarkable RevPAR increase of nearly 150% and surpassed 2019 group room nights and revenue.

Strong Group Business Demand

Group business demand was notably strong, resulting in a 15.6% increase in same-property group room revenues. The food and beverage revenue from groups was particularly robust, with banquet revenue growing by nearly 20%.

Positive Performance in Key Markets

Xenia experienced strong RevPAR growth in key markets such as Pittsburgh, Orlando, and California. Notably, Fairmont Pittsburgh saw a nearly 30% increase due to the U.S. Open, while properties like Kimpton Canary Santa Barbara experienced a 10% rise.

Efficient Capital Management

The company completed the sale of Fairmont Dallas for $111 million, achieving an unlevered IRR of 11.3%. Additionally, Xenia reduced its projected capital expenditures for the year by $25 million.

Softening Leisure Demand

Despite strong group demand, leisure demand has softened, particularly in the Phoenix Scottsdale market, impacting overall performance.

Challenges in RevPAR Growth

While the second quarter RevPAR was strong, Xenia anticipates muted revenue growth in the third quarter and expects a slowdown in RevPAR growth compared to the second quarter.

Expense Pressures Persist

High wage costs, especially in Northern California, continue to pressure margins despite improvements in demand.

Forward-Looking Guidance

Xenia Hotels & Resorts provided an optimistic outlook for the future, with significant improvements across various metrics. The company reported a 4% increase in same-property RevPAR, driven by a rise in occupancy and average daily rate. Total RevPAR grew by 11% year-over-year, and hotel EBITDA rose by 22.2% to $84 million. Xenia’s guidance for the full year adjusted EBITDAre increased, reflecting the second quarter’s outperformance and an anticipated stronger Q4 due to robust group business.

In conclusion, Xenia Hotels & Resorts Inc.’s earnings call conveyed a strong financial performance with successful renovations and robust group business demand. Despite challenges like softer leisure demand and expense pressures, the company remains optimistic about its growth prospects, backed by strong forward-looking guidance.