Xenia Hotels & Resorts: Group Demand Drives 4.5% RevPAR Growth Amid Economic Uncertainty

Xenia Hotels & Resorts (XHR) has emerged as a resilient player in the hospitality sector, reporting robust first-quarter 2025 results that position the company to achieve its 2025 RevPAR growth target of 4.5%, even as it navigates macroeconomic headwinds. With group bookings now surpassing 2019 levels and strategic investments paying dividends, Xenia’s curated portfolio of luxury and upper-upscale properties is proving its mettle in a volatile market.

The Group Booking Surge: A Post-Pandemic Recovery

The company’s group segment has become the linchpin of its growth strategy. In Q1 2025, group room nights rose by 6.6% year-over-year, while group ADR increased by 4.1%, fueled by a 15% revenue surge from corporate accounts. By the end of March, over 80% of expected group room revenue for the remainder of 2025 had been secured, with the balance of the year’s group pace up 22% overall compared to 2024. Even more striking, group production for the second half of 2025 is up 30% (excluding the newly renovated Grand Hyatt Scottsdale).

The Grand Hyatt Scottsdale, which underwent a $50 million renovation in late 2024, exemplifies Xenia’s ability to capitalize on group demand. Its Q1 RevPAR soared 60% year-over-year, driven by special events and corporate bookings. The hotel now contributes 3% of Xenia’s full-year RevPAR growth guidance, underscoring the impact of targeted capital projects.

RevPAR Drivers: Occupancy Gains Outpace Rate Increases

Xenia’s Q1 RevPAR growth of 6.3% was driven by a 3.6% rise in ADR and an 80-basis-point increase in occupancy to 69.3%. Management emphasized that occupancy gains, not rate hikes, will be the primary RevPAR driver in 2025. This focus aligns with the company’s strategy to prioritize demand over pricing in an uncertain economic environment.

While luxury leisure demand at properties like the Park Hyatt Aviara and Grand Hyatt Scottsdale showed resilience, broader leisure RevPAR is expected to dip slightly due to macroeconomic pressures. However, Xenia’s Sunbelt-focused portfolio—minimally exposed to international inbound demand—mitigates risks.

Challenges and Adjustments: Navigating Uncertainty

Xenia has not been immune to headwinds. It lowered its full-year adjusted EBITDA guidance by $6 million, citing tariff-related uncertainties and deferred capital projects. Renovations at the Andaz Napa and Ritz-Carlton Denver were postponed to avoid disruptions and cost overruns, with remaining capital spending focused on infrastructure upgrades at properties like the Renaissance Atlanta Waverly.

CEO Marcel Verboss highlighted the importance of operational discipline:
> “Our balance sheet remains a source of strength, with $750 million in liquidity, allowing us to prioritize high-impact investments while managing risks.”

Financial Fortitude and Dividend Resilience

Xenia’s financial health remains robust. It reported Q1 revenue of $288.9 million, beating estimates by 4.2%, and raised its quarterly dividend by 17% to $0.14 per share. Additionally, the company repurchased 2.7% of its shares, signaling confidence in its cash flow. Strategic divestitures, such as the sale of the Fairmont Dallas for $111 million, further underscored its focus on portfolio optimization.

Conclusion: A Balanced Outlook for Growth

Xenia Hotels & Resorts is navigating 2025 with a clear-eyed strategy: leveraging group demand, geographic diversity, and disciplined capital allocation to sustain growth. With group bookings exceeding 2019 levels and 4.5% RevPAR growth guidance, the company is positioned to outperform peers in a challenging environment.

Key data points reinforce this optimism:
- Group pace for 2025 is up 22% (excluding Scottsdale, +13%), with second-half demand surging 30%.
- The Grand Hyatt Scottsdale alone accounts for 3% of RevPAR growth, with banquet revenue up 60% since its renovation.
- Liquidity remains strong ($750 million), supporting dividend hikes and strategic moves like the $25 million acquisition of the land under Grand Hyatt San Francisco to reduce lease risks.

However, risks persist. Tariff delays could inflate project costs, and leisure demand volatility may test margins. Yet, Xenia’s focus on high-quality, Sunbelt-centric assets and its track record of adaptive decision-making—evident in its Q1 performance—suggest it can weather these challenges.

Investors seeking exposure to a resilient hospitality player with a strong balance sheet and group-driven growth should take note: Xenia’s fundamentals align with a cautious yet optimistic outlook for 2025 and beyond.