Xenia Hotels & Resorts Inc ((XHR)) has held its Q4 earnings call. Read on for the main highlights of the call.
Xenia Hotels & Resorts Inc.’s recent earnings call painted a mixed picture, with both positive developments and challenges highlighted. The company celebrated the successful completion of the Grand Hyatt Scottsdale renovation and reported strong fourth-quarter performance, along with positive group demand and bookings for 2025. However, they also faced hurdles such as a net loss in Q4, declining EBITDA margins, and softening leisure demand. Despite these issues, the outlook for 2025 remains optimistic.
Successful Completion of Grand Hyatt Scottsdale Renovation
The transformative renovation and upbranding of the Grand Hyatt Scottsdale was substantially completed, with the expanded Arizona ballroom finished on schedule. This project is expected to drive significantly higher cash flow and returns, marking a positive step forward for Xenia Hotels & Resorts.
Strong Fourth Quarter Performance
In the fourth quarter of 2024, Xenia Hotels & Resorts reported a 5.1% increase in same property RevPAR compared to the previous year. Markets such as Nashville, Santa Barbara, and Phoenix experienced double-digit growth, contributing to the strong performance.
Positive Full Year 2024 Metrics
For the full year, the company achieved an adjusted EBITDAre of $237.1 million and a net income of $16.1 million. The same property portfolio saw a RevPAR increase of 1.6%, reflecting steady growth across their properties.
Strong Group Demand and Bookings for 2025
Group room revenue, excluding Scottsdale, increased by 5% in 2024 compared to 2023, with a robust group bookings pace for 2025. This trend underscores the company’s strong positioning in the group bookings market.
Improved Balance Sheet and Capital Allocation
Xenia Hotels & Resorts addressed all near-term debt maturities, increased liquidity to $650 million, and repurchased 1.1 million shares in 2024 at an average price of $14 per share, showcasing effective capital management.
Net Loss and Decline in EBITDA Margin
The company reported a net loss of $638,000 in Q4 2024, with hotel EBITDA margin decreasing by 120 basis points compared to 2023. This highlights some of the financial challenges faced during the quarter.
Leisure Demand Softening
Leisure demand moderated in 2024, with declines in leisure-focused markets like Savannah, Phoenix, and Napa. This trend indicates a shift in consumer behavior that the company will need to address.
Lower Full Year EBITDA Margins
For 2024, hotel EBITDA was 5.5% below 2023 levels, with margins 189 basis points lower compared to the previous year. This decline points to operational challenges that need to be managed.
Challenges in West Coast Markets
RevPAR declines were noted in properties like Andaz San Diego and Hyatt Regency Grand Cypress due to difficult market conditions, particularly on the West Coast.
Forward-Looking Guidance
Looking ahead to 2025, Xenia Hotels & Resorts projected a 3.5% to 6.5% increase in same property RevPAR, with a midpoint of 5%, and anticipated adjusted EBITDAre growth of 7%, reaching a midpoint of $254 million. The Grand Hyatt Scottsdale is expected to significantly contribute to RevPAR growth, adding approximately 300 basis points. The company also expects hotel-level expenses to rise by about 4% per occupied room, with wages and benefits increasing slightly higher. The guidance reflects optimism for continued improvement in business transient demand and strong group booking momentum.
In conclusion, Xenia Hotels & Resorts Inc.’s earnings call highlighted a mix of achievements and challenges. While the company celebrated significant milestones like the Grand Hyatt Scottsdale renovation and strong group bookings, they also faced financial hurdles such as a net loss and declining margins. Nonetheless, the forward-looking guidance for 2025 remains positive, with expectations of growth driven by strategic investments and market demand.