Michael Hirsh

Michael Hirsh asked about the specific events or macro environmental factors contemplated in the 2026 guidance that could positively or negatively impact performance. He also inquired about the timing and allocation of the $95 million-$115 million CapEx guidance.

Answer

CEO Bryan Giglia discussed the cautious D.C. outlook due to past government impacts and tough comps, while also noting positive signs like America 250 celebrations and stronger transient pickup in early 2026. For CapEx, he highlighted the San Diego meeting space renovation ($25 million, primarily Q1/Q2), Andaz finish-up work, and other projects spread throughout the year. CFO Aaron Reyes confirmed approximately one-third of CapEx in Q1, with Q2 being the second largest contributor.

Michael Hirsh, on behalf of Daniel Politzer, asked about the specific external events or macro environmental factors that were considered when formulating the current year's guidance, which could positively or negatively impact the operating environment. Michael also requested details on the timing and allocation of the $95 million-$115 million CapEx guidance across various projects.

Answer

Bryan Giglia (CEO, Sunstone Hotel Investors) used D.C. as an example, noting cautious expectations due to past government business impacts and upcoming events, but also highlighted positive signs such as America 250 celebrations and stronger-than-expected transient pickup. Regarding CapEx, Bryan Giglia explained that a significant portion is for finishing the meeting space renovation in San Diego, with other projects spread throughout the portfolio. Aaron Reyes (CFO, Sunstone Hotel Investors) added that the largest projects would be front-loaded, with about a third in Q1, Q2 being the second largest contributor, and the rest trickling into the back half of the year.

Michael Hirsh from Wells Fargo inquired about the objectives for the planned summer Investor Day, asking if it would include new long-term financial targets. He also asked about the monetization strategy for the LT Digital app.

Answer

CEO Bahram Akradi stated the Investor Day is intended to unveil new, asset-light growth opportunities built around the Life Time brand, particularly its digital platform. He explained that the LT Digital app will be monetized through an ecosystem that includes nutritional supplement sales (LTH), athletic event registration, and other health and wellness services, guided by an AI companion named "Lacy."

Michael Hirsh asked how to think about the 4-5% growth target for ramped centers in 2025, given 2024's outperformance, and questioned the reason for only seven new openings in 2024 versus the 10-12 target.

Answer

EVP and CFO Erik Weaver confirmed the 4-5% growth rate for mature centers remains the long-term model and expects performance to normalize to that range in 2025. Founder, Chairman and CEO Bahram Akradi explained that the lower number of 2024 openings was due to project delays, with those clubs now expected to open in future years, particularly strengthening the 2026 pipeline. He stressed that the company manages to its overall financial commitments regardless of opening cadence.