Sunstone Hotel Investors Q2 2025: Key Contradictions on Andaz Opening, RevPAR Growth, and Market Recoveries

Andaz Miami Beach opening and impact on revenue, RevPAR growth assumptions, wage and benefit increase expectations, San Francisco market recovery and group bookings, Maui market recovery and group bookings are the key contradictions discussed in Sunstone Hotel Investors' latest 2025Q2 earnings call.



RevPAR Trends Across Portfolio:
- Sunstone Hotel Investors' (SHO) total portfolio RevPAR grew 9% in urban hotels and 6.5% in San Francisco, with select hotels like Marriott Long Beach Downtown experiencing significant increases of 70%.
- The growth was driven by healthy corporate group and business travel demand, as well as strong performance in select markets like San Francisco.

Capital Allocation and Share Repurchases:
- The company sold the Hilton New Orleans St. Charles and redeployed the proceeds for $100 million in share repurchases, adding to previously bought shares totaling nearly $300 million.
- This strategy was employed due to better returns achievable through accretive share repurchases compared to the private market valuation for hotel acquisitions.

Andaz Miami Beach Ramp-up Challenges:
- The Andaz Miami Beach hotel experienced a slower ramp-up due to initial operational issues, resulting in a $2 million to $3 million loss in EBITDA for the third quarter.
- The delayed ramp-up was attributed to a later opening and the need for additional operational adjustments, despite positive reviews and increasing transient bookings.

Government and Economic Headwinds:
- Sunstone faced challenges from a continued weakness in government and government-related demand, particularly in Washington, D.C., impacting total portfolio earnings.
- The contraction was driven by government cost-cutting initiatives and reduced government business, affecting performances in several key markets.