Executive Summary

Q2 2025 delivered mixed results: a slight revenue beat ($305.7M vs $303.5M consensus), an FFO/share beat ($0.35 vs $0.328 consensus), but a small GAAP EPS miss ($0.18 vs $0.186 consensus) and EBITDA below consensus; management raised the midpoint of full-year Adjusted EBITDA and FFO/share guidance . Values retrieved from S&P Global.*
Comparable RevPAR was flat (+0.1% YoY) while total RevPAR rose +1.1% on stronger out-of-room spend; margins compressed 97 bps largely due to a larger-than-expected Chicago property tax increase; excluding that, margins would have expanded ~30 bps .
Strategic balance sheet actions completed: $1.5B unsecured credit facility upsized/extended, no maturities until 2028/2030 (depending on options), intent to prepay the remaining mortgage (Westin Boston Seaport) in September; liquidity supports continued buybacks at ~9.7% implied cap rate and optional preferred redemption (not in guidance) .
Near-term operating narrative: urban hotels led with ~3% RevPAR growth and >5% F&B growth; resorts declined (RevPAR -6.3%), partly due to a delayed certificate of occupancy for the Sedona repositioning; Q3 RevPAR expected down low-single digits on tough comps, particularly Chicago (DNC) .

What Went Well and What Went Wrong

What Went Well

Revenue and FFO/share beat consensus; management raised the midpoint of 2025 Adjusted EBITDA and FFO/share guidance. “We are comfortable raising the midpoint of our 2025 Adjusted EBITDA and FFO per share guidance.” — CEO Jeff Donnelly . Values retrieved from S&P Global.*
Out-of-room spend acceleration: total RevPAR +1.1% YoY; F&B revenues +3.1% with profit +6% and margins +105 bps due to menu/pricing and productivity initiatives .
Urban portfolio strength: ~3% RevPAR growth led by San Francisco, San Diego, New York, Boston, Chicago; tighter expense control ex-Chicago taxes implied margin growth in urban vs reported decline .

What Went Wrong

Margin compression: Comparable Hotel Adjusted EBITDA margin fell 97 bps YoY to 31.19% due to outsized Chicago property tax; Adjusted EBITDA declined 4.7% YoY to $90.5M .
Resorts underperformed: comparable RevPAR -6.3% and total RevPAR -3.9%; Sedona integration delay (12 weeks for certificate of occupancy) weighed; Hythe faced tough prior-year group comp .
Macro/policy uncertainty continued to temper group conversion despite improving lead volumes; Q3 guide implies low-single-digit RevPAR decline on tough event comps (e.g., Chicago DNC) .

Financial Results

Headline P&L vs prior periods

Metric	Q4 2024	Q1 2025	Q2 2025
Total Revenues ($USD Millions)	$279.1	$254.9	$305.7
Diluted EPS ($USD)	($0.07)	$0.04	$0.18
Adjusted EBITDA ($USD Millions)	$68.7	$56.1	$90.5
Adjusted FFO per Share ($USD)	$0.24	$0.19	$0.35

Q2 2025 actuals vs Wall Street consensus

Metric	Q2 2025 Actual	Q2 2025 Consensus	Surprise
Total Revenues ($USD Millions)	$305.7	$303.5*	+$2.2M
Diluted EPS ($USD)	$0.18	$0.1862*	-$0.0062
EBITDA ($USD Millions)	$85.1 (EBITDAre)	$86.6*	-$1.5M
FFO / Share (REIT) ($USD)	$0.35	$0.3278*	+$0.0222

Values retrieved from S&P Global.*

Explanation: revenue beat driven by out-of-room revenue strength; EPS/EBITDA miss reflects property tax headwind in Chicago and mix softening in resorts, partially offset by cost control and F&B margin uplift .

KPIs

KPI (Comparable)	Q2 2024	Q1 2025	Q2 2025
ADR ($)	$292.59	$277.36	$295.78
Occupancy (%)	77.5%	67.1%	76.7%
RevPAR ($)	$226.83	$186.20	$226.95
Total RevPAR ($)	$346.27	$291.56	$350.00
Comparable Hotel Adjusted EBITDA Margin (%)	32.16%	24.36%	31.19%

Portfolio breakdown (Q2 2025)

Segment	RevPAR YoY	Total RevPAR YoY	Notable Performance	Margin/Expense Notes
Urban	~+3%	~+4% (100 bps spread)	SF, SD, NY, BOS, CHI strongest	Expense +5.7% reported; ex-Chicago tax, +2.5% implying ~+95 bps margin growth
Resorts	-6.3%	-3.9%	Florida RevPAR -4.1% but out-of-room +6.7% (Total RevPAR -0.6%)	Tight cost controls kept margins nearly flat; Sedona delay weighed

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Comparable RevPAR Growth	FY 2025	(1.0)% to 1.0%	(1.0)% to 1.0%	Maintained
Comparable Total RevPAR Growth	FY 2025	(1.0)% to 1.0%	(0.5)% to 1.5%	Raised midpoint by 50 bps
Adjusted EBITDA ($M)	FY 2025	$270 to $295	$275 to $295	Midpoint +$2.5M
Adjusted FFO ($M)	FY 2025	$198 to $223	$200.5 to $220.5	Midpoint modestly higher
Adjusted FFO per Share ($)	FY 2025	$0.94 to $1.06	$0.96 to $1.06	Midpoint +$0.01
Cash Interest Expense ($M)	FY 2025	$60.5 to $61.5	$63 to $64	Raised $2.5M due to upsized facility
Corporate Expenses (ex SBC) ($M)	FY 2025	~$24 to $25	~$24 to $25	Maintained
Available Rooms	FY 2025	3,502,175	3,502,175	Maintained
Dividends	Q3 2025	N/A	$0.08/common; $0.515625 preferred declared	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Macro/policy uncertainty	Lowered top-line outlook by 200 bps for FY25 on unsettled environment	“Feels incrementally less cloudy” than 3 months ago; stabilization signs in higher-end portfolio	Improving tone
Group demand & pace	Q4 group +8%; Q1 group pickup tempered by macro; FY25 group pace ~+1% entering year	Lead volumes improving; pace moved from -20 bps to +1%; Q3 tough comps; 2026 group pace up ~12%	Near-term soft; 2026 strengthening
Out-of-room spend	Emphasis on F&B and ancillary monetization	New quarterly high of $160 per occupied room; F&B margins +105 bps	Positive momentum
Resorts/Sedona ROI	2025 capex plan includes Sedona integration	12-week CO delay; bookings accelerating; rates +$150–$200 YoY; expected >10% yield on cost	Execution delayed; tailwind building
Capital allocation	2024 buybacks, debt maturity actions	$1.5B refi; no maturities until 2028; YTD 3.6M shares repurchased; optional preferred redemption not in guide	Flexibility improved
Asset recycling	D.C. hotel sold in Feb; focus on accretive recycling	Expect to be more active in 12–24 months despite policy/credit market noise	Pipeline building

Management Commentary

“We are beginning to see signs of a stabilization in travel patterns in our higher end portfolio and expect out-of-room revenues to remain a bright spot… We are comfortable raising the midpoint of our 2025 Adjusted EBITDA and FFO per share guidance.” — CEO Jeffrey Donnelly .
“Excluding a larger than expected property tax increase in Chicago, our operating expenses increased only 0.7%… margins would have increased 30 bps.” — CFO Briony Quinn .
“Our best use of capital has been and continues to be repurchasing our shares at just under a 10% cap rate and funding our ROI project in Sedona.” — CEO Jeffrey Donnelly .

Q&A Highlights

Share buybacks vs preferred redemption: Buybacks remain attractive near a ~10% implied cap rate; preferred redemption is optional and not in guidance, decision will be dynamic through year-end .
Q3 RevPAR decline drivers: Tough event comps (e.g., Chicago DNC) and group mix vs last year, not a deterioration in underlying trends; August most affected .
Sedona (The Cliffs at L’Auberge) update: Booking pace encouraging; Q4 rates +$150–$200 YoY; partial-year wedding revenues expected to more than double 2024; >10% stabilized yield expected .
Urban vs resort demand: Urban led growth in Q2; resorts mixed with Florida improving in out-of-room spend; costs well-controlled keeping margins near flat in resorts .
Transaction environment: Acquisition cap rates often tighten 100–150 bps after upfront capex/tax resets; asset sales more active expected over next 12–24 months; refi unencumbers assets and allows operational/transactional flexibility .

Estimates Context

Q2 revenue beat and FFO/share beat likely support modest upward revisions to full-year FFO/share; GAAP EPS and EBITDA misses reflect transient cost/mix pressures (Chicago tax, resort softness). Values retrieved from S&P Global.*
Management raised FY25 guidance midpoints for Adjusted EBITDA and FFO/share despite higher interest expense from the upsized facility, suggesting stronger out-of-room monetization and cost controls offset macro headwinds .

Key Takeaways for Investors

Revenue and FFO/share execution outperformed consensus; guidance midpoint raises despite higher interest expense signal improving operational confidence . Values retrieved from S&P Global.*
Margin headwind was idiosyncratic (Chicago taxes); excluding this, margins would have expanded, underscoring effective cost management .
Urban markets are the current engine; resorts will benefit as Sedona completes integration and bookings accelerate; expect a 2026 tailwind from 2025 renovations .
Balance sheet flexibility and no maturities until 2028/2030 (with options) enable opportunistic buybacks and asset recycling; portfolio will be fully unencumbered after Westin Boston Seaport prepayment in September .
Near-term trading: Q3 softness on event comps is known; watch for continued out-of-room spend strength and urban momentum; buyback activity and any preferred actions could be catalysts .
Medium-term thesis: Focus on free cash flow per share growth via ROI projects (Sedona >10% yield), disciplined capex, and recycling into higher-yield assets; 2026 group pace up ~12% is a positive setup .
Monitoring items: Chicago property tax normalization, progress on dispositions/acquisitions, and any updates on the three franchise expirations (2025–2027), including the ~800-room Westin Boston Seaport District (agreement expires Dec 2026) .

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