Xenia (XHR) Q1 2026 Earnings Call Transcript

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DATE

Friday, May 1, 2026 at 1 p.m. ET

Call participants

• Chairman and Chief Executive Officer — Marcel Verbaas
• President and Chief Operating Officer — Barry Bloom
• Executive Vice President, Chief Financial Officer, and Treasurer — Atish Shah

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Takeaways

• Net income -- $19.8 million reported for the quarter.
• Adjusted EBITDAre -- $81.4 million, up nearly 12% year over year.
• Adjusted FFO per share -- $0.63, a 23.5% increase compared to the same period in 2025.
• Same-property RevPAR -- $205.93, a 7.4% increase, with occupancy at 71.4% and average daily rate (ADR) at $288.62.
• Occupancy -- Increased by 180 basis points and ADR by 4.8% compared to 2025.
• Same-property total RevPAR -- $370.13, a 7.2% increase.
• Food and beverage revenue -- Increased 6.2% on a same-property basis; banquet revenue grew nearly 11%, while outlet revenue declined slightly due to closures during renovations.
• Other revenues -- Up nearly 11% year over year, with strength in spa, recreation, parking, and miscellaneous categories.
• Same-property hotel EBITDA -- $87.8 million, up 17.9%, with margin improvement from 27% to 29.7% (expansion of 270 basis points).
• Grand Hyatt Scottsdale Resort -- Achieved record revenues and hotel EBITDA, driven by occupancy ramp-up after renovation and significant transient business growth.
• Double-digit RevPAR growth markets -- Phoenix/Scottsdale, Salt Lake City, Birmingham, Portland, Santa Clara, Santa Barbara, and Houston.
• Group room revenue -- Increased by over 7%, with group room nights up 2.5% and ADR up 4.4%; weekday occupancy rose 210 basis points and weekend occupancy rose 110 basis points.
• March 2026 performance -- RevPAR of $239.08, up 14.3% year over year; occupancy up 540 basis points and ADR up 6.5%.
• First quarter capital expenditures -- $15.2 million invested, including completion of a guestroom renovation at Fairmont Pittsburgh and M Club at Marriott Dallas Downtown.
• W Nashville food and beverage reconcept -- All outlets opened on time and within budget; supported by José Andrés Group’s new concepts, with initial feedback described as “extremely positive.”
• Debt and liquidity -- $1.4 billion outstanding debt (over 75% fixed rate), 4.8x trailing twelve-month net debt to EBITDA, over $100 million in cash, an undrawn $500 million credit line, and total liquidity exceeding $600 million.
• Leverage goals -- Long-term target leverage ratio is sub-4x net debt to EBITDA.
• Recent debt actions -- Paid off $52 million mortgage at Grand Bohemian Orlando and made a $6.3 million principal payment on Andaz Napa’s mortgage to regain covenant compliance.
• Properties without asset-level debt -- 28 out of 30 hotels are unencumbered by property-level debt.
• Full-year 2026 adjusted EBITDAre guidance -- Increased by $6 million to $266 million at the midpoint.
• Full-year 2026 adjusted FFO per share guidance -- Raised to $1.94, approximately 10% higher than 2025.
• RevPAR growth outlook -- Expected full-year growth between 2.75% and 5.25%; total RevPAR growth guidance is 3.75%-6.25%.
• Fiscal 2026 margin guidance -- Margin expansion now expected, up from prior guidance indicating a margin decline; fiscal year ending Dec. 31, 2026.
• Group revenue pace -- For May through December 2026, group revenue pace is up 6%; for the full year, up 9% (excluding Grand Hyatt Scottsdale, pace would be 100 basis points lower).
• Dividend -- $0.14 per share paid in April 2026; current annualized yield is over 3% if maintained.
• Capital expenditures guidance -- $70 million-$80 million for 2026, with major renovations scheduled for Andaz Napa and The Ritz-Carlton, Denver in the fourth quarter.
• Special event RevPAR contribution -- Downward revision to 25-50 basis points from prior 75 basis points, reflecting reduced expected impact from the FIFA World Cup and other events.
• April RevPAR (preliminary) -- Estimated nearly 6% increase compared to April 2025, with March-April blended RevPAR growth “in the teens” percentage range in key hotels.

Summary

Xenia Hotels & Resorts (NYSE:XHR) reported broad-based operational outperformance, with leadership attributing EBITDA and margin expansion to disciplined expense management, successful property renovations, and continued strength in both group and transient demand, particularly in March. Capital deployment focused on value-enhancing renovations and new revenue generation from food and beverage initiatives. Strategic flexibility was highlighted by a well-laddered debt profile, strong liquidity, and an active review of both acquisition and disposition opportunities.

• Portfolio-wide weekday and weekend occupancy both advanced, with notable midweek RevPAR increases driven by growth in corporate and group business.
• March was the strongest month of the quarter, with record RevPAR and occupancy gains compressing corporate and leisure demand into the period due to Easter timing.
• Grand Hyatt Scottsdale and several smaller resort properties delivered significant improvements following renovation completion, with successful ramp-up in both transient and group bookings.
• Urban and suburban markets experienced balanced contributions from both business and leisure guests, aided by positive momentum in negotiated corporate demand.
• The W Nashville food and beverage enhancement is expected to generate incremental EBITDA of $3 million-$5 million over time, supporting the hotel’s long-term earnings stabilization goals.
• Guidance revisions reflect both the outsized first quarter performance and a recalibration of World Cup-related expectations, with durable base business in group and transient segments providing confidence going forward.
• Cost containment was evident as per-occupied room expense growth expectations declined to the mid-2% range for the year, below previous projections.
• Group revenue pace remains healthy, with over 80% of projected May-December business deemed definite, and many hotels seeing double-digit blended RevPAR gains in March and April.
• Management emphasized a balanced capital allocation strategy, weighing debt reduction, share repurchases, and external growth based on relative return potential and market conditions.
• Over 93% of hotel assets are free of property-specific encumbrances, highlighting financial flexibility to pursue internal and external opportunities.

Industry glossary

• RevPAR: Revenue per available room, a key performance metric in the hotel industry calculated by multiplying average daily rate by occupancy rate.
• Adjusted EBITDAre: Earnings before interest, taxes, depreciation, and amortization for real estate, adjusted to exclude certain non-cash or non-recurring items; a commonly used measure by REITs.
• Adjusted FFO: Adjusted funds from operations, a real estate industry measure of operating performance that adjusts FFO for recurring capital expenditures and other items.
• Total RevPAR: Total revenue per available room, including both rooms and ancillary revenues (e.g., food and beverage, spa, parking).
• Group revenue pace: The forward-looking metric measuring the year-over-year change in contracted group room revenues for future periods.
• Occupancy ramp-up: An operational phase in which a newly renovated or repositioned property increases occupancy rates post-renovation to reach stabilized performance.

Full Conference Call Transcript

Marcel will begin with a discussion on our performance. Barry will follow with more details on operating trends and capital expenditure projects. And Atish will conclude today’s remarks on our balance sheet and outlook. We will then open up the call for Q&A. Before we get started, let me remind everyone that certain statements made on the call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our Annual Report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.

Forward-looking statements in the earnings release that we issued this morning, along with the comments on this call, are made only as of today, 05/01/2026, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find the reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in our first quarter earnings release, which is available on the Investor Relations section of our website. The property-level information we will be speaking about today is on a same-property basis for all 30 hotels, unless specified otherwise. An archive of this call will be available on our website for ninety days.

I will now turn it over to Marcel Verbaas to get started.

Marcel Verbaas: Thanks, Aldo Martinez, and good afternoon, everyone. We are pleased to report strong first quarter 2026 results. We exceeded our expectations across all key metrics. Our portfolio delivered exceptional first quarter performance, driven by strength in both the group and transient demand segments, especially in the month of March. We also saw highly encouraging results at Grand Hyatt Scottsdale Resort as it continues on its path towards stabilization following the completion of its transformative renovation. For the quarter, we reported net income of $19.8 million, Adjusted EBITDAre of $81.4 million, an increase of nearly 12% versus last year, and adjusted FFO per share of $0.63, which was 23.5% higher than 2025.

For the first quarter, our same-property RevPAR grew 7.4%, with occupancy increasing 180 basis points and average daily rate increasing 4.8% compared to 2025. Additionally, we continue to benefit from strong growth in non-rooms revenues, as evidenced by our same-property total RevPAR for the quarter growing to $370.13, reflecting an increase of 7.2% as compared to the same quarter last year. Food and beverage revenues increased 6.2% on a same-property basis, reflecting continued growth in banquet and catering revenues as well as our ongoing focus on outlet optimization efforts, while other revenues were up nearly 11% for the quarter. Same-property hotel EBITDA for the quarter was $87.8 million, an increase of almost 18% compared to the same period last year.

Significant growth in rooms revenues, a large portion of which consisted of rate growth, combined with disciplined expense management, drove an improvement in same-property hotel EBITDA margin from 27% in 2025 to 29.7% this year, an expansion of 270 basis points. At Grand Hyatt Scottsdale Resort, record revenues and hotel EBITDA were achieved for the first quarter as ramp-up of the overall resort continues. The resort has seen successful execution of occupancy-driven ramp-up that has produced significant transient business volumes to supplement the growing base of group demand. These improvements have translated throughout the operation into record food and beverage outlet, spa, recreation, parking, and miscellaneous revenues.

Expenses have grown at a slower pace, as much of the occupancy gains have required relatively limited incremental cost. As a result, the resort’s hotel EBITDA margin improved significantly during the first quarter. While Grand Hyatt Scottsdale was a significant driver of our first quarter outperformance, we experienced broad-based strength across our portfolio of luxury and upper upscale hotels and resorts. Increased group and transient demand contributed to RevPAR and total RevPAR increases in 15 of our 22 markets.

In addition to the Phoenix/Scottsdale markets, we experienced double-digit percentage total RevPAR growth in Salt Lake City, Birmingham, Portland, Santa Clara, Santa Barbara, and Houston, indicative of the range of markets and demand segments that contributed to our strong performance for the quarter. Our weakest performance for the quarter on a year-over-year basis was as anticipated, as these properties either benefited from one-time events last year such as the Super Bowl in New Orleans and the presidential inauguration in Washington, D.C., or experienced some disruption due to capital projects—specifically Fairmont Pittsburgh and W Nashville. W Nashville also was impacted by several weather events that negatively impacted performance for the quarter.

We continue to benefit from our portfolio’s favorable positioning and diversification as it relates to the various demand segments. Group rooms revenues increased in excess of 7% for the quarter as compared to the same period last year, bolstering our performance. Transient room revenues also grew approximately 7% for the quarter, primarily driven by extremely strong performance in March, as the timing of Easter in early April appeared to compress high levels of corporate transient and leisure demand into the month of March. Now turning to capital expenditures, we continue to expect to spend between $70 million and $80 million on property improvements during the year.

During the first quarter, we completed the renovation of the M Club at Marriott Dallas Downtown and the guestroom renovation at Fairmont Pittsburgh, which was completed as planned, with limited disruption, on budget, and in advance of the NFL Draft that took place in Pittsburgh last week with record attendance. On our last couple of earnings calls, we expressed our excitement about the reconcepting of the food and beverage outlets at W Nashville. We are pleased to report that all outlets have opened for business and were completed on time and within budget. The new outlets are tremendous new amenities for the hotel, and initial feedback from customers has been extremely positive.

Barry Bloom will provide additional details on our capital, including the Nashville food and beverage reconcepting, during his remarks. Looking ahead to the second quarter, we are encouraged by the continuation of the positive momentum our operators are reporting for April. While calendar shifts related to Easter timing and spring breaks contributed to our outstanding results in the month of March, we estimate that April same-property RevPAR increased nearly 6% as compared to April 2025.

The estimated RevPAR growth of over 10% that our portfolio experienced during the combined months of March and April is a reflection of strong demand in our markets when eliminating the impact of the timing of Easter compared to last year, with our largest resorts benefiting a bit due to safety concerns in Mexico and weather conditions in Hawaii. Turning to our outlook for the remainder of the year, given the stronger-than-projected first quarter results, we have raised our full-year 2026 Adjusted EBITDAre guidance by $6 million to $266 million at the midpoint. Our guidance for adjusted FFO per share for full-year 2026 is now $1.94 at the midpoint. This would represent an increase of approximately 10% over 2025.

While we are encouraged by our first quarter performance as well as demand trends in April, a significant amount of overall market and geopolitical uncertainty continues to exist as we look ahead to the remainder of the year. As such, we have not changed our outlook for the balance of the year when compared to our previously issued guidance. Atish Shah will walk through all of our current 2026 guidance items in more detail, including our updated views of the anticipated demand lift from one-time events such as the FIFA World Cup and America 250.

Although we have not completed any transactions since the sale of Fairmont Dallas last year, we have significantly improved our portfolio through robust acquisition and disposition activity since our listing in 2015. We continue to evaluate potential transactions with an eye towards further portfolio improvements and sustainable earnings growth in the years ahead. The transaction markets and opportunity set appear to be a bit more robust than they have been in the last couple of years, and we will continue to evaluate these opportunities while being mindful of our balance sheet and other capital allocation priorities. While the macroeconomic environment remains fluid and uncertain, we continue to believe our portfolio is very well positioned for continued earnings growth.

The quality of our luxury and upper upscale hotels and resorts in top 25 and key leader markets, combined with our experienced operating partners and a favorable supply backdrop for the next several years, provide a solid platform for continued outperformance in 2026 and in the years ahead. I will now turn the call over to Barry Bloom to provide more details on our first quarter operating results and our capital projects.

Barry Bloom: Thank you, Marcel Verbaas, and good afternoon, everyone. For the first quarter, our 30 same-property portfolio RevPAR was $205.93, an increase of 7.4% as compared to the first quarter in 2025, based on occupancy of 71.4% and an average daily rate of $288.62. Properties achieving double-digit RevPAR growth as compared to 2025 included Grand Hyatt Scottsdale, RevPAR up 46.2%; Kimpton Hotel Monaco Salt Lake City, up 27.2%; Andaz Savannah, up 16.4%; Hyatt Regency Santa Clara, up 14.7%; Grand Bohemian Hotel Mountain Brook, up 13.9%; and Kimpton Canary Hotel Santa Barbara, up 12%. Growth at these properties was due to a variety of factors, including increased citywide demand, stronger leisure demand in drive-to markets, and one-off major events.

Properties with softer performance in Q1 this year included Loews New Orleans, which hosted the Super Bowl in 2025; The Westin Crystal City Reagan National Airport (formerly described as Pentagon City), which lapped last year’s presidential inauguration; and W Nashville, due to poor weather and anticipated disruption from the José Andrés food and beverage relaunch. Looking at each month of the quarter, January RevPAR was $163.59, up 1.4% versus January 2025, with occupancy flat and ADR up 1.4%. February RevPAR was $216.11, up 4.8% compared to February 2025, with occupancy down 40 basis points and ADR up 5.4%.

March was the strongest month of the quarter across all three metrics, with RevPAR of $239.08, up 14.3% compared to March 2025, with occupancy up 540 basis points and ADR up 6.5%. Group business continued to maintain its recent strength during the quarter, with group rooms revenue up over 7%, reflecting strength in group business that is expected to continue to improve throughout the rest of the year. Overall for the quarter, group room nights were up 2.5%, with ADR up 4.4%. Business levels grew for each night of the week during the quarter compared to 2025.

Occupancy grew by 210 basis points on weekdays and 110 basis points on weekends, with ADR growth of 4.5% on weekdays and 5.3% on weekends. RevPAR on Wednesday nights was up a notable 11% for the quarter. Leisure business during the quarter was consistent across the large resorts in the portfolio, with significant increases at Grand Hyatt Scottsdale and Hyatt Regency Grand Cypress, as well as strength at Park Hyatt Aviara, which lapped a difficult comparison in 2025. At our smaller leisure-focused hotels, leisure business grew significantly at Andaz Savannah, Royal Palms, and Kimpton Canary Hotel Santa Barbara.

Now turning to expenses and profit, first quarter same-property hotel EBITDA was $87.8 million, an increase of 17.9%, driven by a total revenue increase of 7.3% compared to 2025, resulting in 270 basis points of margin improvement. Our operators are now able to better control expenses in a more stable occupancy and growing rate environment. For the 30 same-property portfolio, food and beverage revenues increased 6.2% in the quarter as a result of nearly 11% growth in banquets, while outlet revenues declined slightly, primarily as a result of outlet closures at W Nashville during the quarter. Other operating department income, including parking, spa, and golf revenues, grew by approximately 13%.

Rooms expenses were well controlled, increasing 2.3% on a per occupied room basis, while F&B profit margin improved by approximately 150 basis points. A&G grew by approximately 4.5%. Sales and marketing expenses remained flat during the quarter, in line with recent trends, as strategies have been refined and focused across the portfolio. Property operations and maintenance expenses grew by just 1.3%, due primarily to lower general expenses, while energy expenses across the portfolio grew over 9% due to significant winter storms, which drove higher costs, especially for gas. Turning to CapEx, during the first quarter, we invested $15.2 million in portfolio improvements.

We completed two projects during the first quarter, including the completion of a guestroom renovation at Fairmont Pittsburgh and renovation of the M Club at Marriott Dallas Downtown. More significantly, we reconcepted the food and beverage facilities at W Nashville pursuant to our previously announced agreements with José Andrés Group, which now operates and licenses potentially all of the hotel’s food and beverage outlets. These outlets include Zaytinya, an Eastern Mediterranean concept serving lunch and dinner; Bar Mar, a coastal seafood and premium meat dinner concept; Butterfly, a high-energy rooftop bar with a Mexican-inspired menu; and GloBird, a new pool deck concept with an expanded bar and upgraded food and beverage offerings.

All reconcepted outlets opened in the first quarter, with the exception of GloBird, which opened in late April. These projects were completed on time and within budget. These outlets are truly beautiful and significantly upgrade the F&B offerings of the property, with menus ideally matched to the market. Each outlet is off to a great start, and we look forward to sharing future progress with you. Our in-house project management team continues work on two important guestroom-corridor renovations that are expected to begin in the fourth quarter at Andaz Napa and The Ritz-Carlton, Denver, as well as ongoing work upgrading our hotels’ infrastructure through physical plant and facade upgrades at 10 hotels this year.

With that, I will turn the call over to Atish Shah.

Atish Shah: Thank you, Barry. I will provide an update on our balance sheet and our current 2026 guidance. At quarter end, we had approximately $1.4 billion of outstanding debt, just over three quarters of which was at fixed rates inclusive of hedges. Our weighted average interest rate at quarter end was 5.5%. Additionally, at quarter end, our leverage ratio, as defined in our corporate credit facility, was approximately 4.8x trailing twelve months net debt to EBITDA. We expect our leverage ratio to further decline as Grand Hyatt Scottsdale stabilizes in the next couple of years. Our long-term leverage target is sub 4x net debt to EBITDA. As a reminder, we have no preferred equity or senior capital.

During the quarter, we paid off the $52 million mortgage loan at the Grand Bohemian Orlando with cash on hand. We also resized the Andaz Napa mortgage loan with a $6.3 million principal payment in March, thereby bringing the loan back into covenant compliance. In total, 28 of our 30 hotels are free of property-level debt, representing a source of balance sheet strength. Our debt maturities are well laddered, with a weighted average duration of over three years. Our available cash at quarter end was over $100 million, and our $500 million line of credit remains undrawn. As such, total liquidity was over $600 million at quarter end. In April, we paid a first quarter dividend of $0.14 per share.

If annualized, our current yield is over 3%, assuming this level of dividend is maintained. Turning next to our current 2026 guidance that we issued this morning, based on the first quarter outperformance, we have raised our full-year outlook. Our overall expectations for the second quarter through year end are roughly in line with where they were when we last issued guidance about two months ago. Specifically, our RevPAR is expected to grow between 2.75% and 5.25% for the full year. This is an increase of 100 basis points at the midpoint. Total RevPAR is expected to grow between 3.75% and 6.25% for the full year. This is an increase of 75 basis points at the midpoint from prior guidance.

While total RevPAR growth was healthy in the first quarter, we saw more growth on the rooms side, particularly in the month of March, which is the reason for the larger increase in our RevPAR outlook. Our Adjusted EBITDAre guidance has increased by $6 million to $266 million at the midpoint. The $6 million increase is a combination of a $7 million increase to hotel EBITDA driven by the top line, offset by $1 million of higher G&A expense. As we look ahead, we are seeing strength in transient and group demand across the portfolio, including in many of our urban markets.

As Marcel Verbaas and Barry Bloom each discussed, that strength has been broad, and we expect it to continue. Based on our preliminary estimate of April RevPAR, our March–April blended RevPAR increased in the teens percentage range at many of our business transient and group-oriented hotels, such as Hyatt Regency Santa Clara, Waldorf Astoria Atlanta Buckhead, Kimpton Palomar Philadelphia, The Ritz-Carlton, Denver, and The Westin Galleria & Westin Oaks in Houston. Offsetting this higher expectation—and the reason why our remainder-of-the-year outlook has not changed much—is that we are now expecting less of a boost from special events.

Specifically, we are trimming our prior expectation of 75 basis points of RevPAR growth from special events to a range of between 25 and 50 basis points. While demand for the NFL Draft in Pittsburgh was strong and we expect America 250 demand to benefit D.C. and Philadelphia, our growth expectation for the FIFA World Cup has come in. Six of our hotels are expected to benefit from the FIFA World Cup, but the degree of benefit varies considerably. Our hotels in Atlanta Buckhead and Philadelphia should do well, but our hotels in Houston, Santa Clara/SFO, and Dallas are less likely to see a strong boost.

Given that our assets in Atlanta Buckhead and Philadelphia are smaller than those in the other markets and represent about 5% of our total room base, the benefit is expected to be more limited than previously expected. To provide a bit more color by segment, on the group side there has been wash on the group blocks over the FIFA World Cup event period, such that about half the prior group business booked currently remains on the books. As such, these six properties will be more dependent on transient demand than expected.

In terms of occupancy and rates on current definite business—and this is for both group and transient—on game days at the six hotels, less than half of our inventory is booked, with more than half remaining to be booked. Some hotels are loosening restrictions, including minimum length of stay requirements. ADR for the business that has booked is up about 50% versus last year; this is likely to come down as we get closer to the event but is obviously a good sign. In addition, our expectations regarding the days before and after game dates have also come in, as definite business on those dates is a bit softer.

Moving ahead to our earnings cadence by quarter, we expect full-year Adjusted EBITDAre to be weighted across the remaining quarters as follows: second quarter in the high-20s percentage range, third quarter nearly 20%, and fourth quarter in the low-20s percentage range. On margins, we are now expecting margin expansion for the full year, which is up from our prior expectation for a margin decline. For the full year, we expect cost per occupied room to grow in the mid-2% range, which is below our prior estimate of 3%.

Our operators are doing a better job at managing expenses than expected, and we have confidence that the rate of expense increase that we have experienced over the last several years will continue to decline as we look forward. Our AFFO per share forecast has increased by $0.06 to $1.94 at the midpoint. As projected, this would make for another year of double-digit percentage growth in FFO per share. Our estimates for capital expenditures, income taxes, and interest expense are unchanged. Turning ahead to group room revenue pace for our 30 hotels, our group room revenue pace continues to be healthy.

As of the end of the first quarter, group revenue pace for May through year-end is up 6% compared to the same period in 2025. For the full year, group revenue pace is up 9%. Excluding Grand Hyatt Scottsdale, group pace would be about 100 basis points lower for each period, and that reflects several properties across the portfolio having strong pace growth. Group production was solid in the first quarter: first quarter group room revenue production for May through December increased about 5% compared to production for 2025 for that same May through December period. For the May to December period, over 80% of our projected group business for these months is definite.

In summary, we are very pleased with the strong start to 2026. Our portfolio is performing well across both group and transient segments. Our balance sheet provides meaningful financial flexibility, and our team and operating partners are executing at a high level. We will now open the call for questions.

Operator: Thank you. Our first question comes from the line of Michael Bellisario of Baird. Your line is open.

Michael Bellisario: Afternoon. First, I just want to start on the demand front. Can you talk a little bit more about the urban improvement that you saw? Was that business or leisure picking up? Any specific markets or comments to add some color there would be helpful. And then just one more, probably for you here, Barry: the Hyatt loyalty program changes and the different tiering now—what is your take on how that might impact demand and RevPAR for several of your bigger Hyatt resorts that presumably get a lot of redemption business? Thanks.

Barry Bloom: I think when we think about “urban,” a lot of that is more near-urban or suburban than truly downtown CBD, and it was across the portfolio. What we saw in the quarter—and we are continuing to see into the second quarter—is improvement in both corporate demand. Weeknights, I talked about Wednesday night RevPAR being up 11% for the quarter, which is very significant. We were pleasantly surprised to see across the portfolio a relatively even mix between what weekdays were up and what weekends were up as well. Those are the things we look at as the primary determinant of how much is being driven by business versus leisure. We have seen growth in both segments.

Group, we always knew it would be strong. We had a lot of hope heading into Q1 that negotiated corporate demand would continue at the levels that had been growing in Q4. That certainly continued. We also had, as we all mentioned in our remarks, some higher-than-expected growth in leisure, in particular both in the resort-oriented properties and in our smaller drive-to, leisure-focused properties as well. On the Hyatt loyalty program changes, we are still looking through those, and obviously looking at that on a property-by-property basis. Some of these we had been aware of or anticipating for a while; some of them are changes that we actually had recommended as it relates to our portfolio.

We have in our portfolio a couple of large assets that had very low redemption rates, and we would look to the increase in category to change that dynamic, but it is really too early for us to put anything definitive into our outlook. Overall, we view the change as positive for our larger resorts.

Operator: Our next question comes from the line of Ari Klein of BMO Capital Markets. Your line is open.

Ari Klein: Thank you. Maybe first, just a clarification on the special event changes. Does the 25 to 50 basis points assume any kind of uplift from the World Cup? And then related to that, where do you think the softness is coming from? Is it on the international side, or is it broader based?

Atish Shah: Yes. To answer your first question, there is an assumption that we do have some lift from the World Cup. The three big events—the NFL Draft, America 250, and the World Cup—are all factored into the initial 75 basis point lift, and we have reduced that to 25 to 50, but we do still expect the World Cup to be beneficial in all of the markets we have talked about in the past, including those six hotels—just not as beneficial as previously expected. Digging a little bit deeper, the one thing we can see with more accuracy is the group sizing and the group blocks, and, as I mentioned, those have washed.

We have about half the level of group on the books for that period than we did several months ago. That is the piece that has washed, so we are more dependent on transient, and that is just more uncertain. That is why we are giving a range, because we are not really going to know that number until we get much closer, and there is definitely going to be some variation in performance based on the actual teams and how that lines up. As regards domestic versus international, I am not sure we have enough data on that at this point.

There is still a lot of confidence that these games are going to be big drivers of inbound activity, but we are not quite seeing that yet in the booking activity to date. As we get closer, we want to be very precise about what we are and are not seeing. The bigger story is that we have not adjusted our overall guidance downward. We are seeing business more broadly that is making up for the special events coming down, which frankly gives us a lot more confidence because that is business that is likely more durable and may continue into the fall and into next year, as opposed to one-time event-driven business.

Ari Klein: Thanks for that. And then maybe shifting gears a little bit. Marcel, you talked about the transaction market opening up. It has been a few years since you have done an acquisition. When you think about potential acquisitions moving forward, is there any preference to follow a similar pattern of new markets and newly developed hotels, or is it really about the opportunity?

Marcel Verbaas: It is really about the opportunity. If you look at some of the most successful acquisitions we did over a five-year time frame pre-COVID, they were branded hotels with good demand segmentation, a solid group component, and in many cases properties that required some initial CapEx—whether a room renovation or common spaces. That is probably where our preference would lie, but it will depend on the opportunity set, and we are not going to limit ourselves to specific markets. As long as it fits with our overall long-term strategy, we are open to adding hotels in markets where we already operate, and we would also be open to markets we are not in yet.

Operator: Our next question comes from the line of Austin Wurschmidt of KeyBanc. Your line is open.

Austin Wurschmidt: Great, thanks. Atish, just wanted to go back to your comment on the durability of some of the regular-way business and then the upward RevPAR growth guidance revision. So the guidance increase was simply flowing through 1Q, then partially offset by a tweak downward from World Cup contribution, but you did not flow through that regular-way strength of the midweek business you cited through the balance of the year. Is that correct? And then switching gears to the transaction market, as you think about potential opportunities to acquire or transact, how are you thinking about funding? Is there anything across the portfolio you are seeing to reshape the portfolio or sell assets with slower growth or CapEx needs?

Anything you are looking to test the waters on to fund future acquisitions?

Atish Shah: Not quite. The guidance increase reflects first quarter and a smidge more—that is the change to RevPAR and the change to EBITDA. Even though our expectation for the World Cup has come in, there is other business we are expecting over the course of the year that will make up for that. So the guidance increase was first quarter; any softness we are seeing on the World Cup, we are making up across the portfolio with BT and group. That is what gives us confidence as we look forward, even past this year, because BT and group are the biggest pieces of the pie.

On funding and transactions, we have about $600 million of liquidity through cash on hand and our fully undrawn line of credit. That is available as a potential source. We could look at property-specific financing to the extent that is appealing.

Marcel Verbaas: And on dispositions, we think about it as a continuation of what we have done throughout our history. We are looking at a few hotels where we may want to potentially sell over the near to medium term when there is significant CapEx coming up and we do not feel we will get the appropriate return. That will be around the margins; we have fine-tuned the portfolio quite a bit over the last several years.

Operator: Our next question comes from the line of Analyst of Wolfe Research LLC. Your line is open.

Analyst: Thanks for taking the question. Because you have the upcoming renovation at the Andaz Napa, maybe touch on that market and that hotel specifically—how it is performing and the outlook there, given broader Northern California has been performing pretty well so far this year. And a broader, big-picture follow-up: which markets in your portfolio are you expecting to benefit over the next three to five years from the low supply environment? And on the flip side, any markets like Nashville where new supply over the last years is impacting the portfolio?

Barry Bloom: Andaz Napa has been a very good performer for us—this year will be our thirteenth year of ownership. It is well located within Downtown Napa, which has experienced tremendous growth over that period in terms of amenities and tasting rooms. The Napa market overall has been a little bit challenged. We think we are at the right price point, offering a high-end product below some of the more resort-oriented assets. The wine business has struggled this year, both on the commercial side—which we play in, serving the wine industry—and leisure. We are seeing renewed strength in leisure in part due to growth coming out of San Francisco.

More people being in the city means more people adding pre- and post-San Francisco visits to the hotel. It is an asset we believe in, which is why we committed to this renovation. It was put on hold for a year due to tariff concerns, but it continues to perform well and we look forward to getting it in top shape post-renovation. On markets benefiting from a low supply environment over the next three to five years, we expect continued growth in Northern California—Andaz Napa, Marriott San Francisco Airport Waterfront, and Hyatt Regency Santa Clara.

We continue to see growth and recovery in corporate transient demand through the Bay Area, particularly in Santa Clara, which has become one of the hubs given its Silicon Valley location and the AI activity; the hotel is showing remarkable year-over-year growth even excluding the Super Bowl benefit in Q1. Many of our assets are in markets with a lot of protection from supply. In Atlanta and, to a lesser extent, Houston, our quality assets in The Woodlands and Galleria submarkets are well positioned. We feel really good about growth and recovery in Phoenix and Scottsdale, both related to general market recovery and the continued ramp at Grand Hyatt Scottsdale.

Marcel Verbaas: As it relates to Nashville, there has been very significant supply added over the past several years. It is not completely ended, but additions have slowed from the peak. That made it tougher in the early going because the market needed to absorb a lot of new luxury supply. We expect that absorption to continue over the next several years. There is still a lot of positive momentum in Nashville on the demand side as well. We feel we will be well positioned to deal with the remaining supply additions.

Operator: Our next question comes from the line of Jack Armstrong of Wells Fargo. Your line is open.

Jack Armstrong: Hey, good afternoon. Thanks for taking the question. You touched on it briefly, but could you walk us through how you are thinking about the uses of incremental capital right now given where your shares are trading? Are repurchases likely still at the top of the list, or is there more debt you would like to see paid down, or maybe another big ROI project you would like to pursue? And then on the W Nashville, can you talk about how the asset is positioned in that market and when we might see it return to RevPAR growth? Where do you think it will stabilize in terms of earnings and how long will it take to get there?

Marcel Verbaas: We take a balanced approach—internal growth, external growth, share repurchases, and debt reduction. You have seen us do all of that over the last several years, and priorities vary based on outlook, opportunities, and share price. The portfolio is generally in really good condition. We have put capital behind the portfolio, completed big renovations, and CapEx is coming down toward a more normalized level. We have paid down some debt, and we feel like we will naturally deleverage over time as Grand Hyatt Scottsdale picks up, so there is not immediate pressure to pay down more, but having more dry powder would be good as we expect the acquisition market to loosen over the next several years.

On share repurchases, we bought roughly 9% of the company last year and feel really good about those purchases given where the stock is trading now. We continue to trade below NAV, so it is not off the table. We will balance all of those to drive the strongest returns. On W Nashville positioning, the Gulch has become a more desirable destination even in the few years we have owned the asset. Leisure guests choose the Gulch over the Broadway area. It is an upscale residential-style neighborhood with strong amenities. On corporate, it is the top-tier Marriott choice within the submarket and has captured longer-term consulting-type business.

It continues to be a strong leisure destination, and the hotel has figured out how to balance group. The new outlets give us great opportunities in private dining—small groups favor the José Andrés custom banquet menus within the hotel’s environment.

Barry Bloom: On the financial side, through the outlets change, we expect incremental EBITDA of somewhere between $3 million and $5 million over time. It will not happen overnight. It is based on greater outlet revenues and profitability and on improving the appeal of the property and attracting the type of customers we discussed. Achieving that incremental EBITDA would get the hotel somewhere in the low $20 millions of EBITDA over time. It is hard to put an exact timeline on it because it needs to build as the property’s reputation grows.

Operator: Our next question comes from the line of Analyst of Jefferies. Your line is open.

Analyst: Great, thanks for taking the question. I am on for David. I wanted to dive into the state of the union for luxury and upper upscale. We have heard a lot about the K-shaped economy, and some recent commentary suggests some deceleration at the top end. What is your reaction there and any commentary you can provide?

Marcel Verbaas: Luxury and upper upscale continue to perform really well, which you can see in our portfolio, which is 100% focused on those segments. We have seen very good growth in group demand over the last couple of years, and while that may level off at some point, we are simultaneously seeing good momentum on the transient side, with business transient continuing to build. The supply backdrop for luxury and upper upscale remains extremely benign for the next several years, which sets up nicely for the industry overall and particularly for our segments. We are seeing strength across demand segments, and currently the higher-end consumer does not seem to be pulling back. We are optimistic that will continue.

Barry Bloom: I would add that these properties have a lot of levers to pull for food and beverage and ancillary revenues. We have been able to optimize them over the last couple of years, which speaks well to where the consumer is headed and our ability to keep driving cash flows. We saw a lot of strength in the quarter and subsequent to the quarter—the trajectory looks quite strong.

Operator: Thank you so much. That will conclude our Q&A session. I will now pass it back over to Marcel Verbaas for any closing remarks.

Marcel Verbaas: Thanks, Regan. Everyone, thank you for joining us today. We appreciate the interest and the questions. It was a great quarter for us, and we look forward to the rest of the year. We look forward to seeing many of you at various conferences coming up. Thank you for being as attentive as you were today after many hotel earnings calls over the last couple of days. We will conclude our call.

Operator: That concludes today’s call. Thank you for your participation. You may now disconnect your line.

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