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XH

Xenia Hotels & Resorts, Inc. (XHR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was a clear beat: Revenue of $287.6M vs S&P consensus $273.3M; EPS of $0.61 vs consensus $0.305; EBITDA also exceeded consensus. Drivers were outsized, high‑margin catering revenue, disciplined expense growth, and ~$1.5M property tax refunds boosting margins ~60 bps . EPS and revenue estimates via S&P Global: see disclaimer below.
  • Same‑property metrics strengthened: RevPAR +4.0% YoY to $195.51, Hotel EBITDA +22.2% YoY to $84.0M, and Hotel EBITDA margin up 269 bps to 29.4% .
  • Guidance raised: FY25 Adjusted EBITDAre to $249–$263M (+$14M at low end) and Adjusted FFO to $166–$180M (+$14M at low end); RevPAR growth maintained at 3.5–5.5% .
  • Capital allocation: Sold Fairmont Dallas for $111M (8.6x EBITDA, 10% cap rate) and repurchased 2.95M shares in Q2 for $35.7M; $146.4M remaining buyback capacity .
  • Near‑term narrative: softer summer leisure and strong Q4 group setup; management flagged cadence (Q3 ~15% and Q4 ~25% of FY EBITDAre) and a favorable multi‑year supply backdrop for high‑end hotels (projected new supply ~0.2% by 2028) .

What Went Well and What Went Wrong

  • What Went Well

    • “Outsized gains in highly‑profitable catering revenues... fueled solid operating margins and Hotel EBITDA growth.” – CEO Marcel Verbaas .
    • Strong group demand: same‑property group room revenues +15.6% YoY; excluding Scottsdale +7.6% YoY; banquet revenue growth nearly 20% across portfolio .
    • Margin execution: Hotel EBITDA margin +269 bps YoY to 29.4%; expense control in A&G (-1.1%) and modest +2.1% in sales & marketing in the ex‑Scottsdale portfolio .

  • What Went Wrong

    • Leisure softness: management noted July RevPAR slightly negative including Houston; ex‑Houston +~3% as summer leisure moderated vs 2024 .
    • Market‑specific pressure: Portland RevPAR declines on weaker citywide conventions; Northern California wage pressures temper margin gains despite demand recovery .
    • Sequential top‑line: Total revenue dipped slightly vs Q1 (seasonal), with Q3 expected to be “muted” before stronger Q4 on group base .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$261.9 $288.9 $287.6
Net Income ($USD Millions)$(0.8) $16.5 $58.6
Diluted EPS (GAAP)$(0.01) $0.15 $0.56
Adjusted EBITDAre ($USD Millions)$59.2 $72.9 $79.5
Adjusted FFO / Diluted Share ($USD)$0.39 $0.51 $0.57
Same‑Property Hotel EBITDA Margin (%)24.0% 27.4% 29.4%

Revenue and EPS vs S&P Global Consensus:

MetricS&P ConsensusActual (S&P)Surprise
Primary EPS$0.305*$0.6094*+$0.3044*
Revenue ($USD Millions)$273.35*$287.58*+$14.23*
EBITDA ($USD Millions)$69.82*$73.13*+$3.31*

Values marked with * retrieved from S&P Global.

Revenue composition (segments):

Segment ($USD Millions)Q2 2024Q1 2025Q2 2025
Rooms Revenues$160.8 $159.9 $158.5
Food & Beverage Revenues$89.1 $104.7 $102.2
Other Revenues$23.0 $24.4 $26.9
Total Revenues$272.9 $288.9 $287.6

KPIs:

KPIQ2 2024Q1 2025Q2 2025
Same‑Property Occupancy (%)70.9% 69.3% 72.3%
Same‑Property ADR ($)$265.16 $272.41 $270.42
Same‑Property RevPAR ($)$187.95 $188.73 $195.51
Same‑Property Total RevPAR ($)$319.44 $—$354.50
Same‑Property Hotel EBITDA ($USD Millions)$68.7 $79.3 $84.0
Same‑Property Hotel EBITDA Margin (%)26.7% 27.4% 29.4%

Guidance Changes

MetricPeriodPrevious Guidance (May 2)Current Guidance (Aug 1)Change
Net Income ($M)FY 2025$43–$69 $58–$72 Raised (low end +$15; high end +$3)
Same‑Property RevPAR ChangeFY 2025 vs 20242.5%–6.5% 3.5%–5.5% Narrowed, midpoint unchanged
Adjusted EBITDAre ($M)FY 2025$235–$261 $249–$263 Raised (low end +$14; high end +$2)
Adjusted FFO ($M)FY 2025$152–$178 $166–$180 Raised (low end +$14; high end +$2)
Adjusted FFO / Diluted Share ($)FY 2025$1.50–$1.75 $1.66–$1.80 Raised (low end +$0.16; high end +$0.05)
Capital Expenditures ($M)FY 2025$75–$85 $75–$85 Maintained
G&A (cash, excl. SBC)FY 2025~$23M ~$24M Raised +$1M
Interest Expense (cash)FY 2025~$81M ~$81M Maintained
Income Tax ExpenseFY 2025~$2M ~$2M Maintained
Diluted Shares/Units (WAS)FY 2025101.6M 99.9M Lowered by 1.7M
DividendQ2 2025$0.14 declared $0.14 paid for Q2 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Current Period (Q2 2025)Trend
Group demandH2 group pace up ~30%; ex‑Scottsdale +20%; strong production; no uptick in cancellations H2 group room revenue pace +16%; ex‑Scottsdale +7%; Q4 particularly strong Moderating pace vs Q1 but still strong, Q4 set‑up positive
Leisure demandMixed by market; implied low single‑digit decline for year Softer summer; July RevPAR slightly negative including Houston; ex‑Houston +~3% Softer in Q3; expected improvement into fall
Pricing vs volume (Group)Mix skewed to corporate/association; shorter booking cycles H2: ~2/3 volume, ~1/3 rate; ex‑Scottsdale ~50/50; investments enable higher‑rated groups Volume‑led growth with selective rate gains
Out‑of‑room/cateringF&B and banquet strength; per group night catering up vs 2019 Outsized catering revenue beat in Q2; expected muted in Q3, potential pickup in Q4 Strong in Q2; seasonal normalization
Tariffs / CapExDeferred room projects (Andaz Napa, Ritz‑Carlton Denver) due to tariff uncertainty Reiterated tariff uncertainty; reduced FY25 CapEx by ~$25M vs start‑of‑year; continued selective upgrades Prudent CapEx pacing continues
Northern California tech/AI tailwindsEarly corporate recovery Strong weekday corporate demand tied to tech/AI; wage pressure headwinds on margins Demand improving; margin pressure persists
Portfolio strategyFee simple land purchase at Hyatt Regency Santa Clara Fairmont Dallas sale (avoid ~$80M near‑term CapEx; 11.3% IRR) Quality upgrade, reduced disruption
Supply outlook—High‑end lodging supply expected to slow to ~0.2% by 2028; overall industry ~0.1% Constructive multi‑year backdrop

Management Commentary

  • “Our second quarter results surpassed our expectations... outsized gains in highly‑profitable catering revenues... coupled with lower‑than‑expected expense growth... fueled solid operating margins and Hotel EBITDA growth.” – Marcel Verbaas, CEO .
  • “We are increasing our current full‑year guidance for adjusted EBITDAre by $8 million at the midpoint to $256 million... Our expected adjusted EBITDAre weighting is... Q3 ~15%, Q4 ~25%.” – Atish Shah, CFO .
  • “Group business continues to be a bright spot... we remain on track to have a stellar group year.” – Atish Shah, CFO .
  • “Northern California demand tied to tech/AI is growing... but high wage costs challenge margins.” – Barry Bloom, COO .

Q&A Highlights

  • Buybacks: CFO reiterated active use of repurchases to drive shareholder value with $146M remaining authorization; leverage considerations remain a counterbalance .
  • Out‑of‑room spend: Q2 catering beat was above expectations; muted in Q3 with potential upside in Q4 on strong group base .
  • Group rate vs volume: H2 growth driven ~2/3 by volume, ~1/3 by rate; investments in meeting spaces allow optimization and higher‑quality groups .
  • Northern California: Weekday corporate demand improving; wage inflation constrains margins at Santa Clara and SFO .
  • Consumer behavior/booking windows: Leisure softer in July; expectation for stronger August/September; limited visibility given transient patterns .

Estimates Context

  • Revenue beat: $287.58M actual vs $273.35M consensus; EPS beat: $0.6094 actual vs $0.305 consensus; EBITDA beat: $73.13M actual vs $69.82M consensus. These S&P Global figures indicate broad‑based outperformance vs Street expectations.*
  • Street likely to revise FY25 models modestly higher for EBITDAre and FFO given raised guidance and lower share count from buybacks .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 was a high‑quality beat: revenue, EPS, and EBITDA above consensus; margin expansion supported by catering mix and expense control – a constructive signal for H2 earnings cadence .
  • Guidance raised across Net Income, Adjusted EBITDAre, and Adjusted FFO with RevPAR midpoint unchanged; lower diluted share count enhances per‑share metrics .
  • Near‑term set‑up: Q3 muted on leisure seasonality; Q4 advantaged by strong group base and banquet profitability; model quarterly cadence accordingly .
  • Structural positives: reduced CapEx/disruption (Dallas sale), fee‑simple land control (Santa Clara), and multi‑year supply deceleration in high‑end lodging support medium‑term margin and rate power .
  • Watchlists: Northern California wage inflation vs demand recovery; Portland and leisure‑heavy assets performance; Houston comps normalization .
  • Capital allocation remains supportive: buybacks at attractive valuations with $146M remaining authorization, 27/30 assets unencumbered, liquidity $673M .
  • Actionable: Position for stronger Q4; sensitivity to group pace and banquet mix; monitoring summer leisure trends and wage inflation to calibrate margin expectations .