Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xenia Hotels & Resorts Inc (XHR, Financial) successfully rebranded the former Hyatt Regency Scottsdale to the Grand Hyatt Scottsdale Resort, completing major renovations that enhance guest experience.
- Same-property RevPAR for the 31 hotel portfolio increased by 1.5% for the quarter, with notable performance from recently renovated properties like Grand Bohemian Hotel Orlando and Hotel Monaco, Salt Lake City.
- The company extended and upsized its corporate credit facility, increasing flexibility and resources, with a maturity date extended to November 2028.
- Group business showed strong performance, with group room revenues excluding Scottsdale up nearly 4% compared to the previous year.
- Future group bookings for the Grand Hyatt Scottsdale are promising, with rates for 2025 group bookings up over 35% from 2019 levels.
Negative Points
- Xenia Hotels & Resorts Inc (XHR) reported a net loss of $7.1 million for the third quarter of 2024, with results below expectations due to several negative factors.
- Leisure demand continued to normalize, impacting overall performance, and hurricanes in the Southeast negatively affected demand at several properties.
- Renovation disruptions, particularly at the Scottsdale property, were greater than anticipated, affecting financial results and guest experience.
- Same-property hotel EBITDA decreased by 6.3% compared to 2023 levels, with a 200 basis point decline in hotel EBITDA margin.
- The company lowered its full-year adjusted EBITDAre guidance due to third-quarter results and a reduced outlook for the fourth quarter, reflecting ongoing challenges.
Q & A Highlights
Q: Can you provide more detail on the pace of how you get to the low $40 million EBITDA range for Scottsdale, and how rates compare to peers?
A: Marcel Verbaas, CEO, explained that it will take a few years to stabilize at the low $40 million EBITDA range. Encouragingly, group revenue pace from Q2 to Q4 is already at 2019 levels, with higher booking rates. The ramp-up is expected to be slower initially but should gain traction deeper into the year.
Q: Regarding the $3 million EBITDA impact from Scottsdale, does this mean the ramp-up is $3 million behind, affecting 2025 expectations?
A: Marcel Verbaas clarified that the $3 million disruption is due to delays in opening facilities, impacting Q3 and October. However, this should not affect 2025 expectations as the meeting space will be available by year-end, allowing for normal ramp-up in 2025.
Q: What is the EBITDA contribution from Scottsdale this year, and are 2019 or 2022 figures realistic for 2025?
A: Marcel Verbaas noted that Scottsdale's EBITDA contribution is minimal this year due to disruptions. They expect to recover this disruption next year, with growth over the disruption number, but it will take a year or two to reach stabilized figures.
Q: What caught you by surprise regarding expenses, and are these trends expected to continue?
A: Barry Bloom, COO, mentioned that the shift to an occupancy-forward strategy by lowering rates was unexpected. This strategy was necessary to drive revenue and ancillary income. They expect a better balance between occupancy and rate in Q4.
Q: How are you thinking about potential acquisitions and capital recycling with the expanded credit facility?
A: Marcel Verbaas stated that while there haven't been many exciting opportunities recently, they expect this to change. They aim to grow the portfolio with assets offering greater growth potential and will continue to evaluate the portfolio for potential dispositions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
