Sunstone Hotel Investors Q1 2025: Unraveling Contradictions in Leisure Growth, Andaz Performance, and Wailea Challenges

2024Q4 leisure growth expectations vs. 2025Q1 leisure growth reality, Andaz Miami Beach opening and EBITDA expectations, Andaz Miami Beach delay and performance expectations, Wailea's performance challenges and market conditions are the key contradictions discussed in Sunstone Hotel Investors' latest 2025Q1 earnings call.



Q1 Performance and EBITDA Growth:
- Sunstone Hotel Investors reported that its first quarter EBITDA and FFO came in above expectations.
- The growth was driven by better out-of-room spend, solid cost controls by operators, and savings at the corporate office, offsetting softer room revenue growth.

Impact of Market Events on RevPAR:
- The inauguration in D.C. drove outsized growth, with a 24% increase in RevPAR, while the Super Bowl in New Orleans resulted in a 25% increase.
- These event-driven impacts were partially offset by a pullback in government and leisure demand in select markets in March.

Capital Investment and Property Openings:
- Sunstone opened the Andaz Miami Beach, contributing to its layered growth strategy.
- Despite permitting and approval delays, the resort is expected to deliver earnings growth for the next several years.

Challenges in Wailea and San Diego:
- Wailea Beach Resorts experienced softer-than-expected performance due to all inventory coming back online on the West side and recovery from fires.
- In San Diego, first quarter results were less robust due to subdued market-wide transient demand, but there is an expected recovery in the second half of the year.

Outlook Adjustment and Economic Uncertainty:
- Sunstone adjusted its full-year outlook due to macroeconomic uncertainty, weaker government business, and subdued demand in Wailea.
- Despite the challenges, the company anticipates strong performance from recent portfolio investments, maintaining growth in FFO and NAV per share.