Xenia Hotels & Resorts Q3 2025 Earnings Call: Contradictions in Leisure Demand, Group Pace Metrics, and Scottsdale Stabilization Timelines

Date of Call: October 31, 2025

Financials Results

• EPS: $0.23 adjusted FFO per share, down 8% YOY
• Operating Margin: Hotel EBITDA margin decreased 60 basis points vs Q3 2024; year-to-date hotel EBITDA margin up 101 basis points vs 2024

Guidance:

• Full-year same property REvPAR growth midpoint ~4%.
• Full-year adjusted EBITDAre midpoint $254M (down $2M vs prior guide).
• Adjusted FFO per diluted share midpoint $1.72.
• Full-year same-property hotel EBITDA margin growth expected ~90 bps vs prior year.
• 2025 property CapEx projected ~ $90M (including ~$9M for W Nashville relaunch); W Nashville relaunch expected to add $3–5M hotel EBITDA upon stabilization.
• Group pace strong (Nov/Dec +12%; 2026 group pace up mid-teens).

Business Commentary:

* Operational Challenges and Market Conditions: - Xenia Hotels & Resorts reported a net loss of $13.7 million for Q3 2025, with adjusted EBITDAre of $42.2 million, and adjusted FFO per share of $0.23, down 8% year-over-year. - The lodging industry faced a challenging environment, particularly with leisure demand, affecting the company's portfolio and industry overall.

• Impact of Hurricane Beryl and Market Performance:
• The Houston market experienced a decline in performance due to tough comparisons from the aftermath of Hurricane Beryl in Q3 2024.

• Excluding Houston assets, same property REvPAR increased by 2.9%, driven by strong growth at Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch.

• Group Demand and Food and Beverage Growth:

• Group demand remained strong, with robust group room revenues already on the books for 2026, supporting a 5.8% REvPAR growth projection for October.

• Food and beverage revenues significantly increased, contributing to a 3.7% rise in same property total REvPAR for Q3.

• Capital Expenditure and Property Improvements:

• The company projected capital expenditure for the year to be approximately $90 million, a $10 million increase from prior guidance.
• The increase was due to additional capital projects and a comprehensive reconcepting of food and beverage operations at W Nashville.

Sentiment Analysis:

Overall Tone: Neutral

• Mixed results: management reported a Q3 net loss of $13.7M and adjusted FFO $0.23 (-8% YOY) but highlighted strong group demand, stabilization at Grand Hyatt Scottsdale, and reiterated optimism for 2026 growth. They also noted caution with slightly reduced Q4 expectations and modest guide reductions, balancing near-term softness with long‑term confidence.

Q&A:

• Question from Michael Bellisario (Baird): Where will this year’s dividend land relative to taxable income, and on group outlook is the pace increase next year more price or volume-driven and what types of groups are booking?
  Response: Company is using COVID-era NOLs to manage payouts and will provide the taxable-income detail; group growth is driven more by volume with improving rate, and a shift back toward association business alongside corporate demand.

• Question from Jack Armstrong (Wells Fargo): What impact has the government shutdown had on the portfolio and confidence in the full‑year REvPAR guide; and what is your view of transaction markets and disposition appetite?
  Response: Shutdown impact minimal so far given limited government exposure; remain confident in guide assumptions; broker activity has increased but management prefers share buybacks over acquisitions today and may execute selective dispositions over the next 12–18 months.

• Question from Ari Klein (BMO Capital Markets): Where is the softer Q4 expectation showing up most—leisure or specific markets—and will leisure continue to weaken as it stabilizes?
  Response: Softness is broad-based across transient (both leisure and business transient) rather than concentrated in one market; Scottsdale remains strong and Houston’s Q3 drag has largely dissipated heading into Q4.

• Question from Ari Klein (BMO Capital Markets): How quickly will the W Nashville changes drive the $3–5M incremental EBITDA and is the hotel expected to stabilize in the low $20M hotel EBITDA range?
  Response: The José Andrés Group relaunch is expected to drive $3–5M incremental hotel EBITDA upon stabilization over the next several years; management now expects the hotel to generate north of $20M EBITDA in the coming years (ramp takes time).

• Question from David Katz (Jefferies): What is causing leisure weakness—are travelers deferring travel, trading down, or balking at price?
  Response: Leisure softness reflects normalization from post‑pandemic peaks, affecting lower-end segments more than the high-end portfolio; management expects stabilization and improvement into 2026 while group will remain the primary growth driver.

• Question from Austin Virshmit (KeyBanc Capital Markets): Any markets showing outsized corporate account growth and is improvement pace below expectations?
  Response: Strong corporate growth in Northern California (Santa Clara) and other business markets like Pittsburgh, Pentagon City and Atlanta; corporate demand is improving month-over-month with better midweek (Tue/Wed) pickup and generally tracking in line with expectations.

Contradiction Point 1

Leisure Travel Demand Expectations

It involves changing expectations about leisure travel demand, which can impact revenue projections and investor confidence.

How are you assessing the current weakness in leisure demand—due to travelers delaying trips, avoiding travel altogether, or price sensitivity leading to lower-tier choices? - David Katz(Jefferies)

2025Q3: It hasn’t changed that much from what our initial expectations were. There is more in the lower segments that have been impacted more significantly than the higher end. - Marcel Verbaas(CEO)

Can you provide an update on consumer behavior and shifts in the booking window? - Jackson G. Armstrong(Wells Fargo)

2025Q2: We've seen some weakening on the leisure side. Our expectation is that July might have been the lowest point, with potential improvement in August and September. - Marcel Verbaas(CEO)

Contradiction Point 2

Group Pace Metrics

It involves differing descriptions of the composition of group pace growth, which can impact understanding of revenue drivers.

How much of next year's growth is driven by price versus volume increases? What types of accounts and groups are currently booking, and what are meeting planners saying about current trends? - Michael Bellisario(Baird)

2025Q3: The setup for next year is quite strong, a little more in volume, but rate growth is good. - Barry Bloom(COO)

Is the group's growth primarily driven by volume or rate, considering Scottsdale's ramp-up? - Austin Todd Wurschmidt(KeyBanc Capital Markets)

2025Q2: It's 2/3 volume, 1/3 rate for the second half and moving into next year. Scottsdale contributes more volume, but the balance elsewhere is closer to half volume, half rate. - Atish Shah(CFO)

Contradiction Point 3

Group Bookings and Economic Uncertainty

It highlights a shift in the company's outlook regarding the impact of economic uncertainty on group bookings, which can influence revenue projections and investor expectations.

How much of next year's growth is driven by price versus volume? Which account types and group types are booking, and what feedback are meeting planners providing? - Michael Bellisario(Baird)

2025Q3: We continue to see strong group on-books. Though we are closely monitoring the situation, current group booking activity remains strong. - Atish Shah(CFO)

Have group booking trends shifted due to current uncertainty? Are cancellations increasing or are groups waiting to see? - Josh Friedland(KeyBanc Capital)

2025Q1: No uptick in cancellations or attrition. Group production in the first quarter was healthy. While we're closely monitoring the situation, current group booking activity remains strong without any notable impact from economic uncertainty. - Atish Shah(CFO)

Contradiction Point 4

Scottsdale Hotel Stabilization Timeline

It involves differing timelines and expectations for the stabilization of the Scottsdale hotel, which can impact financial planning and investor expectations.

How quickly can you achieve $3–$5 million incremental EBITDA from W Nashville changes for FMV? - Ari Klein (BMO Capital Markets)

2025Q3: It is going to take a little bit of time to stabilize here. We’ve given it time with Marriott to improve food and beverage operations. We expect this to help drive not just food and beverage revenues but also make the hotel more desirable. It is something that’s going to take a little bit of time to stabilize. - Marcel Verbaas(CEO)

What is the expected EBITDA contribution from Scottsdale in 2025, and what is the timeline for stabilization? - Aryeh Klein (BMO Capital Markets)

2024Q4: Scottsdale is expected to take about 3 years to stabilize. We anticipate EBITDA in the low $20 million range this year, increasing to low $30s next year, and reaching stabilized levels by 2026. - Marcel Verbaas(CEO)

Contradiction Point 5

Group Business Demand and Recovery

It involves differing expectations regarding the recovery of group business demand, which is crucial for revenue projections and market positioning.

How much of next year's growth is due to price versus volume? - Michael Bellisario (Baird)

2025Q3: The setup for next year is quite strong, a little more in volume, but rate growth is good. We are continuing to see a shift from corporate business back into more normalized association business. Both segments are quite strong looking into next year. - Barry Bloom(COO)

Can you explain the decline in group business activity in non-urban and non-suburban areas? - Michael Bellisario (Baird)

2024Q4: We've seen softening in some large resorts like Orlando and Park Hyatt Aviara, mainly due to a shift from strong corporate demand to more association business. These properties are expected to normalize in 2025. - Barry Bloom(COO)