Xenia Hotels & Resorts Delivers Strong Q1 Results Amid Strategic Shifts and Macro Uncertainty

Xenia Hotels & Resorts, Inc. (XHR), a leading luxury hotel REIT, delivered robust financial results for the first quarter of 2025, showcasing resilience in its portfolio and disciplined capital allocation. The company’s earnings call highlighted strong operational metrics, strategic asset moves, and a cautious outlook adjusted for macroeconomic headwinds.

Key Financial Highlights

Xenia reported net income of $15.6 million ($0.15 per share), far exceeding the estimated $0.05 EPS. Revenue surged to $288.93 million, surpassing expectations of $275.38 million. Adjusted EBITDAre rose 11.8% year-over-year to $72.9 million, while Adjusted Funds from Operations (FFO) per diluted share increased 15.9% to $0.51, driven by cost discipline and higher occupancy.

Operational performance was equally impressive:
- Same-Property RevPAR grew 6.3% to $188.73, fueled by a 3.6% rise in ADR to $272.41 and an 180-basis-point occupancy improvement to 69.3%.
- One-third of properties achieved double-digit RevPAR growth, with the renovated Grand Hyatt Scottsdale Resort leading the way.

Strategic Moves: Portfolio Optimization and Capital Efficiency

Xenia’s Q1 was marked by two strategic transactions that underscore its focus on long-term value:
1. Hyatt Regency Santa Clara Land Acquisition: The $25 million purchase of the property’s land eliminated a ground lease costing $1.4 million annually, reducing future costs and avoiding escalating lease terms.
2. Fairmont Dallas Sale: The $111 million sale avoided $80 million in near-term capital expenditures, yielding an 11.3% unlevered IRR during ownership.

The company also returned capital to shareholders:
- Dividend increased 17% to $0.14 per share.
- $35.8 million repurchased via buying 2.7 million shares at an average price of $13.09.

Management Outlook: Caution Amid Economic Uncertainty

CEO Marcel Verbaas emphasized Q1’s success but tempered expectations for 2025:
> "While our premium portfolio remains a growth driver, we’re adjusting guidance due to macroeconomic uncertainty."

Revised full-year projections include:
- Same-Property RevPAR growth: Reduced to 2.5%–6.5% (down from prior targets).
- Adjusted FFO per share: Projected at $1.50–$1.75, reflecting cautious demand assumptions.
- Deferred renovations at Andaz Napa and The Ritz-Carlton, Denver, to prioritize liquidity.

April’s 3.4% RevPAR growth—slower than Q1’s 6.3%—supports this caution.

Financial Position and Liquidity

Xenia maintained a strong balance sheet:
- Total debt: $1.4 billion at a 5.67% weighted-average interest rate.
- Liquidity: $613 million ($113 million cash + $500 million revolving credit line).

Conclusion: A Resilient REIT Navigating Uncertainty

Xenia’s Q1 results affirm its ability to execute in a premium hotel sector, with strategic asset sales and acquisitions enhancing long-term value. The 15.9% growth in Adjusted FFO and robust liquidity position ($613 million) provide a solid foundation. However, the revised guidance underscores risks tied to economic volatility and moderating demand.

Investors should weigh these positives against macroeconomic risks. With one-third of its properties driving double-digit RevPAR growth and a disciplined capital strategy, XHR remains well-positioned for recovery. Yet, its Zacks Rank #3 ("Hold") and the hotel REIT sector’s bottom-35% industry ranking suggest caution.

For income-focused investors, the 17% dividend hike and buyback activity offer appeal, but growth bets may require patience until macro conditions stabilize. Xenia’s Q1 proves its resilience—now, execution in uncertain waters will determine its next chapter.