Sunstone Hotel 2025 Q2 Earnings Net Income Drops 58.8% Amid Mixed Performance

Sunstone Hotel reported its 2025 Q2 earnings, showing a revenue increase of 5.1% to $234.07 million, but net income fell sharply to $10.77 million, down 58.8% year-over-year. The company's EPS also declined by 72.7% to $0.03. While corporate and business travel demand supported performance in key markets, softer leisure demand and challenges in specific locations weighed on results. Management revised its 2025 outlook, acknowledging near-term headwinds and adjusting guidance downward across multiple metrics.

Revenue
Sunstone Hotel's total revenue for 2025 Q2 increased by 5.1% to $234.07 million, up from $222.66 million in 2024 Q2.

Earnings/Net Income
Sunstone Hotel's EPS declined 72.7% to $0.03 in 2025 Q2 from $0.11 in 2024 Q2. Meanwhile, the company's net income declined to $10.77 million in 2025 Q2, down 58.8% from $26.14 million reported in 2024 Q2. The sharp decline in earnings reflects weaker leisure demand, market-specific challenges, and operational headwinds.

Price Action
The stock price of Sunstone Hotel has climbed 3.06% during the latest trading day, has edged down 0.34% during the most recent full trading week, and has edged down 0.45% month-to-date.

Post Earnings Price Action Review
The strategy of buying Sunstone Hotel (SHO) shares after a revenue drop quarter-over-quarter on the financial report release date and holding for 30 days resulted in a significant underperformance. The strategy had a CAGR of -11.69% over the past three years, with a total return of -30.25% compared to a benchmark return of 48.58%. The strategy had a maximum drawdown of 0.00%, indicating that it did not experience any significant losses during the period, but it also failed to capture any gains, resulting in a Sharpe ratio of -0.36 and a volatility of 32.25%.

CEO Commentary
CEO Bryan A. Giglia noted that the portfolio performed in-line with expectations, with strong corporate group and business travel demand offsetting weaker leisure and government business. He highlighted solid performance in Long Beach, San Francisco, and Wine Country, while acknowledging headwinds in Maui, Andaz Miami Beach, and Washington, DC. Giglia emphasized a cautious outlook for the second half due to softer demand trends but expressed optimism about recovery at Wailea Beach Resort and improved booking momentum at Andaz Miami Beach. The CEO also underscored $100 million in share repurchases at $8.83 per share and a focus on unlocking portfolio growth and value creation.

Guidance
The company expects weaker leisure demand in Maui, slower near-term performance at Andaz Miami Beach, and subdued government business in Washington, DC to pressure second-half results. Giglia noted recent booking trends at Wailea Beach Resort are encouraging, indicating potential market recovery, but included variability in the outlook for the remainder of 2025. Andaz Miami Beach is expected to realign with performance expectations and deliver solid growth into 2026. The company did not provide updated quantitative guidance for 2025.

Additional News
Sunstone Hotel Investors announced the sale of the Hilton New Orleans St. Charles for $47.0 million, utilizing proceeds for $100 million in share repurchases. The company repurchased 10.3 million shares at $8.76 per share during the second quarter, with $327.5 million remaining in its buyback authorization. Additionally, the company authorized a $0.09 per share cash dividend for common stockholders, with $0.382813 and $0.356250 per share for Series H and I preferred stockholders, respectively, payable in October. The board also updated 2025 guidance, narrowing expected RevPAR growth and Adjusted EBITDAre due to ongoing market challenges. Management remains focused on capital recycling, strategic renovations, and unlocking shareholder value through disciplined investment and cost management.