Xenia Hotels & Resorts, Inc. Stock

Thank you, Marcel. Good afternoon, everyone. For the second quarter, our 30-hotel same-property portfolio RevPAR was $206.54, an increase of 5.6% compared to the second quarter of 2025 with growth entirely rate-driven. Based on occupancy at 72.3%, flat with last year at an average daily rate of $285.71, up 5.7%. As Marcel mentioned, the second quarter saw an anticipated shift in room spend for the same-property total RevPAR of $366.17, an increase of 3.3% compared to last year's second quarter. This modest growth in non-room spend reflects a shift in mix related to an increase in transient demand and the anticipated mix of association versus corporate group demand resulting in a difficult comparison to the same quarter last year.

Looking at the quarter compared to 2025 on a same-property basis. April RevPAR was $219.74, up 6% and May RevPAR was $199.78, up 2.6%. June was the strongest performing month in terms of growth with RevPAR of $200.32, up 8.6% with occupancy relatively flat. 19 of our 22 markets posted positive RevPAR growth for the quarter. Palomar Philadelphia led our portfolio with same-property RevPAR growth of 22%, while Monaco Salt Lake City followed at 13.1%.

Our Phoenix properties grew at a combined 12.7%. We also saw a double-digit percentage growth in Grand Bohemian Mountain Brook of 12.2%; Park Hyatt Aviara, up 11.3%; and Hyatt Regency Santa Clara 11.1%. The Ritz-Carlton Pentagon City was up 8.4%. The Ritz-Carlton, Denver and Fermont Pittsburgh also posted healthy growth of 7.2% and 7.1%, respectively. Growth was fairly balanced on day of week trends in the quarter. For all segments on the same property basis, weekly RevPAR, [ Sunday ] was up 5.9%, while weekend RevPAR Friday and Saturday was up 5.2%. Rate growth was broad-based and well balanced across every day of the week, ranging just under 5% on Thursdays to nearly 7% on Mondays.

On the expense side, total same-property hotel operating expenses were $210.6 million for the quarter, an increase of 4.2%, outpacing our 3.3% revenue growth resulting in 65 basis points of margin decline, with the largest single factor being the lapping of a significant real estate tax credit in the second quarter of last year.

Looking at the individual components, rooms expense grew approximately 4% on a per occupied room basis, while food and beverage expenses grew 2.3%, greater than the 1% growth in food and beverage revenue, which impacted F&B profitability. This was a direct result of a 1.5% increase in less profitable outlet business and a 1.1% decline in typically more profitable banquet business. This last income declined nearly 12% due primarily to less cancellation and attrition revenue compared to last year but is expected to balance itself out over the course of the full year.

A&G expenses grew approximately 7.9% for the quarter, to a large part to higher credit card commissions related to the higher transient taxes. Sales and marketing expenses continue to be well controlled and were nearly flat to last year. Property operation and maintenance expenses declined just over 1% for the quarter. While energy expenses increased nearly 11% due primarily to significant increases in gas and water expenses, offset by a more moderate 4% increase in electricity due in part to efficiencies from our ongoing refurbishment and replacement of chillers at many of our properties. Same-property EBITDA was $84.9 million for the quarter, an increase of 1% and a margin of 28.7%.

Turning to CapEx. We invested $15.4 million of portfolio improvements during the second quarter, bringing our year-to-date total to $30.6 million. During the second quarter, we finalized planning at Royal Palms Resort and Spa, the renovation of guest rooms and corridors in the 68-room MontaVista building and renovation of Tea Cooks restaurant, which will take place during the third quarter. Additional ongoing upgrades across the portfolio include upgrading mechanical systems at 8 hotels and ongoing minor improvements to guest rooms at [indiscernible].

Looking ahead to the fourth quarter, we have two significant renovations scheduled to begin, both of which are currently on track. We will perform the first two phases of a comprehensive room renovation of corridors and guest rooms at Andaz Napa and a renovation of guest rooms, corridors and meeting space at the Ritz-Carlton, Denver. We continue to expect full year capital denetures of between $70 million and $80 million unchanged from our prior guidance.

Before I conclude, I want to provide an update on our four Marriott Autograph Collection hotels. These four hotels have been strong performers, and we are in the midst of further strengthening these hotels by evolving their individual names and positioning better tied to their local markets. The hotels will continue to maintain their autograph collection branding, but the new names and positioning will better fit our rep collections philosophy. With hotel being distinctive in part by capturing the local essence of each market in which they reside. The first step of this effort began earlier this year we transitioned property management to Davidson Hotel Group that transition went smoothly with no disruption in hotel performance. In the next few months, we will be renaming these [indiscernible] properties. As with the management transition, we do not anticipate any meaningful disruption of hotel operations. We look forward to even stronger performance from each of these hotels under Davidson's management as they continue to be part of Marriott's Monograph Collection.

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

Thank you, Barry. I will provide an update on our balance sheet, touch on the second quarter versus our prior expectations and then talk though our updated 2026 guidance. At quarter end, we had approximately $1.4 billion of outstanding debt. Approximately 3/4 of our debt was at fixed interest rates. Our weighted average interest rate at quarter end was about 5.5%. Our leverage ratio, as calculated under our credit facility was approximately 4.8x trailing 12-month net debt to EBITDA. Over time, we expect our leverage ratio to achieve our long-term target of sub-4x net debt to EBITDA. As a reminder, we have no preferred equity or senior capital.

During the quarter, we further resized the Andaz Napa mortgage loan by paying it down by approximately $5 million ahead of the hotel's planned renovation, which is scheduled to begin next quarter. Approximately 7% of our debt matures next year with our most significant maturities in 2029 and '30. We continue to believe our capital structure is a source of strength, given we have mostly a mostly unencumbered asset base, a well-laddered maturity profile and a strong syndicate of banking partners. At quarter end, available cash was $112 million, and our $500 million revolving line of credit was fully undrawn, which resulted in total liquidity of $612 million.

We did not repurchase or issue any shares during the quarter. We have $97.5 million remaining on our buyback authorization and $200 million of capacity under our ATM offering program. We paid a second quarter dividend of $0.14 per share. If annualized, this reflects an approximate 2.5% yield on our share price. We continue to balance dividend level with the utilization of significant COVID era NOLs. We also continue to prioritize ways in which we can drive shareholder value such as investments in our existing assets or share repurchases.

As a reminder, in 2025, we finished the Grand Hyatt Scottsdale project, which we are benefiting from now. And as we wrap that up, we turned more aggressively to share repurchases, buying approximately 9% of our outstanding shares last year at a sub $13 weighted average price per share.

Moving ahead to the second quarter relative to prior expectations, just two points to frame the discussion ahead on guidance. First, as Marcel mentioned, second quarter results came in slightly ahead of our expectations with better RevPAR and EBITDA margin than expected, resulting in a $1 million beat to the adjusted EBITDAre implied by the quarterly weighting that we had previously indicated. Second, as to our expectation for event-driven demand this year, we had previously guided to a range of 25 to 50 basis points of RevPAR growth due to special events. Our current estimate is that event-driven demand materialized at the low end of that range. And the mix of business being more transient and group didn't provide as much of a total revenue lift as had been anticipated.

Turning next to our 2026 guidance. We've raised our full year adjusted EBITDAre guidance by $7 million to $273 million at the midpoint. The $7 million increase to adjusted EBITDAre guidance is on top of the $6 million increase we made last quarter. Our adjusted EBITDAre expectation has moved up approximately 2.5% since last quarter or 5% since we initially provided full year guidance in February. As to the weighting by quarter for the remainder of the year, we expect to earn in the high teens percentage range of full year adjusted EBITDA in the third quarter and just under 1/4 of full year adjusted EBITDAre in the fourth quarter.

As to RevPAR growth, we've increased the midpoint by 150 basis points to 5.5%. As we look ahead, a couple of things give us confidence in our outlook. First, group room revenue pace for the second half was up 12% at the end of June versus the year prior. That reflects a 300 basis point increase from where it stood a quarter ago. The pace increase is 80% demand-driven and 20% rate driven. This higher pace reflects strong production in the second quarter with group room revenue production up over 25% for the back half of this year compared to production in the second quarter of 2025 for the back half of 2025. We have more than 3/4 of our expected second half group business already booked.

Second, we continue to see strong transient demand reflected both by results from our more transient-oriented hotels and overall transient pace. Based on our July projected RevPAR, several of our transient-oriented hotels, excluding those that benefited from special events, showed strong year-over-year gains. Those properties include our hotels in Salt Lake City, Pittsburgh and Downtown Orlando. As to transient pace at the end of June, it was up in the high single-digit percentage range for both August and September. Turning next to our expectation for total RevPAR. We have increased our total RevPAR growth guidance by 75 basis points to 5.75% at the midpoint. The variance in growth of RevPAR versus total RevPAR reflects second quarter transient versus group mix. We expect second half total RevPAR to grow about 200 basis points more than RevPAR. None of our other guidance assumptions have changed.

Guidance for interest expense, G&A expense, income tax expense and capital expenditures are all the same as a quarter ago. We expect adjusted FFO per diluted share of $2.02 at the midpoint, which is an increase of $0.08 at the midpoint. That expectation reflects about 15% growth in FFO per share relative to 2025.

In closing, our high-quality, well-located portfolio of luxury and upper upscale hotels affiliated with strong brands and managers makes us well positioned for growth, particularly given the supply backdrop and fundamentals.

We will now open the call for questions. Jen, may we please start the Q&A session.

[Operator Instructions] Your first question comes from the line of Chris Darling with Green Street.

Marcel, hoping you could talk a little bit more about what you're seeing in the transaction market these days, both maybe from a pricing perspective, but also in terms of depth of the bidding tent and anything else that has caught your eye?

Yes, sure. Thanks for the question, Chris. Yes. Like I said in my prepared remarks, I do think we're seeing a slightly more robust transaction market than we've seen over the past several years. And I think some of that obviously has to do with the fact that we are, overall, as an industry, seeing some pretty good sustained growth over the last couple of quarters. I think that creates an environment where it does become a little bit easier for buyers and sellers to potentially find each other and end up with pricing that could work on both sides. It's obviously a little bit easier to look at a property that you can point a little bit more easily towards growth over the next several years to give you some more confidence about completing the transaction and it also make getting to pricing that actually makes more sense for a seller in that situation. So overall, I think we're just seeing, like I said, a little bit more robust markets, certainly allows us to to build the pipeline a little bit more than what we've seen over the last several years and dig a little bit deeper into some of those opportunities.

Yes, it's helpful. And maybe a question for Barry here. But as it relates to expense growth, you spoke about some of the moving pieces this quarter. And how that may have been a bit of a headwind in the second quarter. How should we be thinking about OpEx per occupied room on a go-forward basis for the portfolio, both second half of the year and then sort of on a run rate basis?

Yes. I think on a [indiscernible] room basis, I think things are overall relatively normalized and that we're seeing [indiscernible] room growth in the 3% to 4% range. That's tempered obviously and varies by quarter given how much occupancy growth it is. So obviously, this quarter, we had flat occupancy. So the overall expense levels were a little bit higher than we had hoped for. I think embedded in the guidance and forecast is that we're going to drive a little more occupancy over prior year in Q3 and Q4, and that should help make or certainly assist in, at least on a property room basis, the expense levels being kind of towards the lower end of that range.

Your next question comes from the line of David Katz with Jefferies.

You've, I think, done a very solid job with your existing portfolio. And I know that history suggests otherwise. But is the prospect of any corporate M&A on or off the table?

Well, I think as we've talked about in the past, corporate M&A is really driven by what the overall environment looks like from a potential buyer and solar interest, obviously. I think we've focused very much on continuously upgrading the portfolio, making the portfolio as robust against potential challenges and similarly, positioning it well for future FFO growth through continuously upgrading our portfolio and making sure it's an attractive portfolio from whatever perspective. We -- Atish pointed out, we've grown FFO pretty significantly over the past several years. And we're on a day-to-day basis, just doing all the things that we think are going to drive value for us in this portfolio over time, no matter what form that ultimately benefits all of our shareholders. So I think what you've seen in the overall transaction environment is that you're still not seeing a lot of large portfolio transactions that people are pursuing on the buy or sell side, and there's just been more focus on individual properties or smaller portfolios just overall in the transaction market. And I don't have a -- currently, I don't have an expectation of that significantly changing or shifting here in the near term.

Understood. And just in a different direction, the conversation around generally speaking, around fee structures and what I'll refer to as owner [indiscernible] over certain aspects of the fee costs and fee streams, et cetera. I'd love whatever shareable perspective, you may have about that issue whether all of us are spending more time and attention to it than it deserves or it's really a thing.

Well, from an ownership perspective, obviously, we are looking for ways to grow value in the portfolio, and that includes every single element of operations. So it's extremely important for us over time to make sure there -- we keep our expenses under control and that the growth in expenses over time has obviously been pretty significant in every aspect of the income statement. And similarly, especially in an environment like today, we want to make sure that we have all the right channels in place and all the opportunity to drive as much on the sales side as possible at the lowest acquisition cost possible. So there's nothing new or different about that. I think everyone knows that over time, there has been a lot of pressure for owners on bringing down revenues to the largest percentage possible to the bottom line, and that's something that we're all focused on, obviously. So I don't think it's anything unusual that we would look at every aspect of that as owners to make sure that we are doing right by ourselves and our shareholders.

Your next question comes from the line of Michael Bellisario with Baird.

I want to focus on the second half group pace commentary, sort of two parts. One, where are you seeing that pickup in terms of markets? And then two, how does that pickup maybe change sort of operator confidence or sort of pricing strategies into the back half of the year?

Yes. Good questions, Mike. So the strength is pretty broad-based. As I mentioned, the pickup was a few hundred basis points from a quarter ago, and the production was pretty evenly distributed between third quarter and fourth quarter and across a variety of markets. And frankly, as you know, group has been a sort of strength for us now in particular last year and this year. So seeing this kind of momentum has been quite positive for for us. So that's -- I don't know, Barry, if you have anything to add on the group side.

No, I think I'd emphasize; one, very broad-based across almost all of our properties; and two, certainly -- and a lot of it in terms of rate and how properties maximize rate with group. The question really at this point and given the high levels of group business on the books where those holes are. So if there are holes in places where markets compressed, but maybe our hotel hasn't been able to yet group in. We're going to be able to capture that group at a very high rate. But conversely, when you look at a lot of those markets where we are, where we have very good mood base, the holes are pieces and places that are hard to fill. So while we may continue to fill more group more room nights in particular in periods coming in and out of holidays, which is obviously prevalent, both in the third and fourth quarter, we may or may not achieve significant rate growth on those compared to the overall rate platform, but we're booking business that we otherwise wouldn't book. And that's really the puzzle for each property is how best to do that, and how to drive overall RevPAR.

Got it. That's helpful. And then just a follow-up on capital allocation. So how do you think about the funding sources for any potential deals? And then for things that are in your pipeline, how we have maybe underwritten returns or maybe seller expectations changed over the last 90 days?

Yes. So I'll take the first part of that. So in terms of funding of deals, as we talked about a healthy amount of it leverage ratio that's kind of still above where our target is, but certainly sub 5x. So some capacity there. So I think we'd look to existing resources, if not potentially additional dispositions over time as ways to fund any acquisitions. And I think with regard to pipeline, maybe if you have anything to add there.

Yes. As it relates to pipeline and expectations, like I pointed out, I think we're seeing probably a little bit more active, more activity out there that probably gives a little bit more of an expectation of where things could be pricing. I don't -- I wouldn't say -- it's hard for me to point to anything specific and say, sell our expectations have really dramatically changed over the last 60, 90 days. It's really hard to point to kind of any individual transactions to really talk about it in detail. Clearly, to my point, there's obviously a little bit more optimism about the health of the lodging industry overall and the growth that we've seen over the last several quarters. So I think that just provides in general -- generally a little bit more of a backdrop to be for some productivity on the transaction side, I'd say.

Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Market.

You had referenced that the transient pace for August and September was tracked in the high single-digit range. I believe you said that was as of the end of June. Can you just give us a sense how that's materialized for transient pace, looking 60 to 90 days out here more recently. And if you think that's -- have you seen things continue to strengthen, have you given some of that back, and just give us a sense and kind of frame that...

Yes. I mean, first, we preface it by saying transient pace is not necessarily -- it does move around a bit. So it's not always the best direct indicator, but it has strengthened. It's moving in the right direction. And I think it reflects kind of to actualize results that we're seeing. So if you look at what our transient pace was going into July and how July came out, I think it is a good indicator. So it's one of the things that, frankly, one of the many data points we look at to think about our guidance and obviously, since we took it up, we were looking at all the various data points and input we have, and that was one of the ones I mentioned. So I would view it in the context of that. But also, I would just say that we do have a healthy level of confidence in the outlook and transients one piece of it. And obviously, what we've been talking about on the group side is the other.

Very helpful. And then with respect to the guidance revision, can you talk a little bit about how the contribution at the Grand Hyatt Scottsdale has changed for this year? I think initially, at the outer of the year, you had around that hotel contributing towards the low $30 million range. What's sort of the new expectation given it seems like things are trending well there.

Yes. We're a smidge higher. We're still in the low $30 million range, but kind of $32-ish million, so to speak, so I think we're sort of in that...

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quarter, and even strengthen that. they have broad-based strength in the portfolio on the group side.

And then just maybe on tool.

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Your next question comes from the line of Jack Armstrong with Wells Fargo.

Incremental capital at this point, and how you might rank acquisitions, ROI CapEx and deleverage

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Now being able to buy back as much as we did at the

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We certainly still believe that there's value in the stock. We are still -- and Atish can certainly jump in there as well. But again, we'll continue to look at it on a balance basis, to the extent that we now find an opportunity that we think is going to drive good external

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Step on the gas pedal, so to speak, for share repurchases. I think now we're in an environment where it's definitely more opportunistic, and it's case by case. And will toggle between those levers as we have historically done. I will say just in terms of current valuation since you mentioned it, we currently trade at about $350,000 .

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Now after the appreciation, we're still trading kind of at a very reasonable them.

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is getting kind of rightsized over time. And as the revenues are obviously building up. So we certainly expect that shorter term, that obviously puts a little bit of pressure on those numbers. But then over time, we expect the revenue to grow to really get to the right margins there and make sure that not only we see more profitability on the F&B side. But much more importantly, how this is going to have this halo effect for the property overall and start really building up the room side over the next several...

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as to build and really kind of help us much more from a profitability standpoint.

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Good afternoon, everyone, and thank you for joining the Xenia Hotels & Resorts, Inc. Q1 2026 Earnings Conference Call. My name is Regan, and I'll be your moderator today. [Operator Instructions]

I would now like to pass the conference over to our host, Aldo Martinez, Director of Finance. Please proceed.

Thank you, Regan, and welcome to Xenia Hotels & Resorts First Quarter 2026 Earnings Call and Webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer; Barry Bloom, our President and Chief Operating Officer; and Atish Shah, our Executive Vice President and Chief Financial Officer. 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 this 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, May 1, 2026, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

You can find a 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'll 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 90 days.

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

Thanks, Aldo, and good afternoon, everyone. We are pleased to report strong first quarter 2026 results that 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 first quarter of 2026, we reported net income of $19.8 million, adjusted EBITDAre of $81.4 million, an increase of nearly 12% to last year and adjusted FFO per share of $0.63, which was 23.5% higher than the first quarter of 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 the first quarter of 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 the first quarter of 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 plans that have 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 resorts 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 market, we experienced double-digit percentage total RevPAR growth in Salt Lake City, Birmingham, Portland, Santa Clara, Santa Barbara and Houston, which is 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 were 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 guest room 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 will provide additional details on our capital projects, 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 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 improvement 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 leisure 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 to provide more details on our first quarter operating results and our capital projects.

Thank you, Marcel, 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 the first quarter of 2025 included Grand Hyatt Scottsdale, with RevPAR up 46.2%; Kimpton Hotel Monaco Salt Lake City, 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 Q1 of 2025; Ritz-Carlton, 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% to 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 3 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 nights were up 2.5% with ADR up 4.4%. Business levels grew for each night of the week during the quarter compared to the first quarter of 2025. Occupancies 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 increase in leisure business at Grand Hyatt Scottsdale and Hyatt Regency Grand Cypress as well as strength at Park Hyatt Aviara, which lapped a difficult comparison in the first quarter of 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 the first quarter of 2025, resulting in 270 basis points of margin improvement. Our operators are now able to better control expenses in a more stable occupancy and a 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 growth 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%, while 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 at 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 2 projects during the first quarter, including the completion of a guest room renovation at Fairmont Pittsburgh and a 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 JAG now operates and/or licenses to substantially 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 Glowbird, 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 Glowbird, 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 properties by menu 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 to work on 2 important guest room and 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.

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 3/4 of our debt 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 12 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 3 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 from where they were when we last issued guidance about 2 months ago. In specific, 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 room 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 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 and Barry 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 Hotel -- Kimpton Palomar Philadelphia, The Ritz-Carlton Denver and Westin Galleria and 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're 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 as we look 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 6 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 6 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. Now 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, I want to take a moment to provide this info to assist with your modeling. 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've 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 December of this year was up approximately 6% compared to the same period in 2025. For the second half of this year, group pace was up about 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 the first quarter of 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.

And with that, we will turn the call back over to Regan to begin our Q&A session.

[Operator Instructions] Our first question comes from the line of Michael Bellisario of Baird.

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.

Yes. I think when we think about urban, a lot of that is more near urban or suburban than truly downtown CBD when it was across the portfolio. But I think what we saw certainly in the quarter and we're continuing to see into the second quarter is improvement in both corporate demand, certainly on week nights. I talked about Wednesday night demand being up 11% for the quarter in terms of -- yes, 11% in terms of demand, which is very significant, obviously. But I think we were pleasantly surprised to see across the portfolio a relatively even mix between what weekdays were up and what weekends were up is one of the things we look at as the primary determinant of how much is really being driven by business versus how much by leisure.

So we've seen growth certainly in both segments. I mean group, we always knew it would be strong. I think we had a lot of hope heading into Q1 that negotiated corporate demand would continue at the levels that have been growing in Q4. That certainly continued. And I think we had, as I think we all mentioned in our remarks, some higher-than-expected growth in leisure, in particular, both in the resort-oriented properties, but as well as in our smaller drive-to leisure-focused properties as well.

That's helpful. And then just one more probably for you here, Barry. Just the Hyatt loyalty program changes and the different tiering now. I guess what's 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?

Yes. Thanks, Mike. We're still looking through and obviously looking at that on a property basis. Some of these we've been aware of or anticipating for a little while. Some of them are changes that we actually had recommended as it relates to our portfolios. We have our portfolio -- we have a couple of large assets that had very low redemption rates, and we'd look to the increase in category changing that dynamic, but it's really too early for us to put that into anything definitive, but we certainly -- overall, we view the change as positive for our larger resorts.

Our next question comes from the line of Aryeh Klein of BMO Capital Markets.

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

Yes. So to answer your first question, there is an assumption that we do have some lift from World Cup. So obviously, the 3 big events, NFL Draft, America 250 and World Cup are all factored into the initial 75 basis point lift, and we've reduced that to 25 to 50, but we do still expect World Cup to be beneficial in all of the markets, frankly, that we've talked about in the past, including those 6 hotels, just not as beneficial as previously expected.

Now digging a little bit deeper, I think the one thing we can see with more accuracy is the group sizing and the group blocks. And obviously, as I mentioned, that's washed. So we have about half the level of group on the books for that period than we did several months ago. So that's the piece that has washed. So as I mentioned, we're more dependent on transient, and that's just more uncertain. And that's why we're both giving a range because we're 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 what the actual teams are and how that lines up. So again, I think that's really what's causing our view to come in on World Cup is really just less visibility and more uncertainty around what actually may materialize.

As -- with regard to domestic versus international, I'm just not sure we have enough data and information on that at this point. Certainly, there's still a lot of confidence that these games are going to be big drivers of inbound activity. But again, we're not quite seeing that in the booking activity to date. So as we get closer, we just want to be very precise about what we are and aren't seeing.

And I think the bigger story is that we've obviously not adjusted our overall guidance downward. So we're seeing business more broadly that's more than making up for -- or making up for the special events coming down, which frankly gives us a lot more confidence because that's a business that's likely more durable and business that may continue into the fall and into next year as opposed to one-timer type business.

And then maybe shifting gears a little bit, Marcel, you talked a little bit about that transaction markets opening up. I guess it's been a few years since you've done an acquisition. I believe the last 2 new hotels were new hotels and new to Xenia markets. When you think about potential acquisitions moving forward, is there any preference to kind of follow a similar pattern of new markets and new hotel -- newly developed hotels? Or is this just really about the opportunity?

Yes. It's really about the opportunity. Obviously, if you look at kind of what some of the more successful or the most successful acquisitions are that we did essentially over kind of a 5-year time frame pre-COVID, a lot of them were, obviously all of them really were branded hotels with good demand segmentation, good group component to them. And in many cases, also some properties that did require some initial CapEx, whether that be a room renovation or some of the common spaces.

So I think that's probably where our preference would lie. But to your point, it's really going to be dependent on the opportunity set. And we're not really going to limit ourselves to saying we need to be in X, Y or Z markets. It's really going to be as long as it fits with our overall long-term strategy, we're open to adding some hotels in certain markets where we are already, and we certainly would be open to some markets that we're not in.

Our next question comes from the line of Austin Wurschmidt of KeyBanc.

Yes, 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, that was then partially offset by a tweak downward from World Cup contribution, but you didn't flow through that regular way strength of the midweek business you cited through the balance of the year. Is that correct?

No, not quite. So the guidance increase reflects first quarter and a smidge more. So that's really the change to RevPAR and the change to EBITDA. What I was trying to say is even though our expectation for World Cup has come in, there's other business that we're expecting that over the course of the year that will make up for that. So really, that's kind of how you should think about it. The guidance increase was first quarter. Any softness we're seeing on the World Cup, we're making up for that across the business, across the portfolio and with our big segments, BT and group.

So -- and that's the piece that gives us sort of confidence as we look forward even past this year because, obviously, so much of our business is BT and group, and those are the biggest pieces of the pie as opposed to leisure or events specifically.

Got it. Understood. And then just switching gears, going back to the commentary on the transaction market. I guess, Atish, Marcel, as you think about potential opportunities out there to acquire or transact, how are you thinking about funding? And is there anything across the portfolio that you're seeing a good opportunity maybe to reshape the portfolio or sell maybe something with a little bit slower growth or CapEx needs? And is there anything today that you're looking to test the waters a little bit on the marketing side to fund any future acquisitions?

Yes. Obviously, as we're talking about the overall transaction market, my commentary is really around the fact that we are seeing some more assets that could be interesting and are building a bit more of a pipeline. We're still going to have to be very mindful of our overall different ways to allocate capital, obviously. We've paid down some debt like we did earlier in the year. Obviously, we were very active buying back stock last year.

So it still would have to be something that really is additive to the portfolio, gives us better growth going forward. Long term improves the quality of -- continues to improve the quality of the portfolio. So it's not to say like I expect some kind of flood of acquisitions coming up, obviously.

As far as the funding element of it, as Atish pointed out, we have about $600 million of liquidity through both cash on hand and our fully undrawn line of credit. So that's available as a potential source. Obviously, we could look at property-specific financing to the extent that that's something that looks appealing.

And on the disposition side, it's -- really think about it in kind of a continuation of what we've done throughout our history. We're certainly looking at a few hotels where we think we may want to potentially sell those over the next -- in the relatively near to medium term. When there are some significant CapEx coming up, we don't feel we're going to get the appropriate return. That's not going to be any kind of seismic level of volume that we would be doing. I mean that's just around the margin because we've clearly fine-tuned the portfolio quite a bit over the last several years, I mean, over the last decade, really.

Our next question comes from the line of Logan Epstein of Wolfe Research LLC.

Maybe one on -- just because you have the upcoming renovation at the Andaz Napa, maybe just touch on that market and that hotel specifically on how it's performing and the outlook there given broader Northern California has been performing pretty well so far in the year.

Yes. It's -- as I think you know, it's been a very good performer for us for -- this year will be our 13th year of ownership of that hotel. It's been a good performer. It's certainly well located within Downtown Napa and Downtown Napa has experienced tremendous growth over that period of time in terms of amenities and tasting rooms and things like that. It's a market -- the Napa market overall has certainly been a little bit challenged. We think we're at the right price point in that market because we offer a high-end product at a price point below some of the more resort-oriented assets.

Having said that, the wine business has struggled a lot this year, both on the commercial side, which we play quite a bit in, in terms of serving the wine industry itself and people that come to visit and do business in Napa. But we're certainly seeing some renewed strength in the leisure market in part due to growth coming out of San Francisco and more people being in the city, obviously means more people taking time to do add-on pre and post downtown San Francisco visits to the hotel. It's an asset we believe in, which is why we had committed to this renovation over a year ago and then put it on hold for a year as a result of concern over tariffs and tariff impact, but it's been a good performing hotel for us, continues to be so and look forward to getting it in top shape post the renovation.

Maybe a follow-up, just a broader big picture question similar to Aryeh's question earlier. Just taking a step back from the quarter, just can you touch on what markets in your portfolio specifically you're expecting to kind of benefit over the next 3 to 5 years from the low supply environment? And on the flip side, any markets like Nashville or others that you're watching that maybe new supply over the last few years has impacted the portfolio?

Yes, I'll start. I mean, I think certainly, we have continued growth -- we have expectations for continued growth in Northern California. So they are talking about Andaz Napa, Marriott San Francisco Airport and Hyatt Regency Santa Clara, where we continue to see -- we talked about Napa, but we continue to see growth and recovery in corporate transient demand clearly through the Bay Area in general, but in particular, in Santa Clara, which has become kind of one of the hubs and focus given the Silicon Valley location for all of the AI activity that's gone on and the hotel is showing pretty remarkable year-over-year growth even ex the benefit we had from Super Bowl in Q1.

I think longer term, many of our assets are in markets that have a lot of protection from supply. When I think about some of those markets, I think about Atlanta, I think about Houston to a lesser extent, but assets that are the quality assets within each of those markets, both in the Woodlands and Galleria. We feel still really good about growth and recovery in the Phoenix and Scottsdale markets, both related to general market conditions and market recovery, but in addition, related to, obviously, the growth we're going to get -- continue to get as Grand Hyatt Scottsdale ramps back up. I think those touch certainly on a few of those.

Yes. And as it relates to Nashville, I mean, obviously, as you know, there has been very significant supply additions over the past several years. It's not -- certainly not completely ended. I mean there's obviously going to be some -- there have been some things announced that will be added to the supply over the next several years, but it has certainly slowed from kind of the peak of when a lot of new supply came in. So -- and we've talked about that before. I mean that has certainly made it a little bit tougher for us in the early going because the market really needed to absorb a lot of this new luxury supply that has come in over the last several years.

So we expect that absorption to continue over the next several years because there's still a lot of very positive momentum in Nashville on the demand side as well. So yes, there is some more supply coming, but I think we feel like we're going to be pretty well positioned to deal with that over the next several years.

Our next question comes from the line of Jack Armstrong of Wells Fargo.

You touched on it briefly, but could you walk us through how you're thinking about the best uses of incremental capital right now given where your shares are trading? Would you say that repurchases are likely still at the top of that list? Or is there more debt you'd like to pay down or maybe another big ROI project that you'd like to pursue?

Yes. Thanks for the question, Jack. I think we take a balanced approach. So obviously, internal growth, external growth, share repurchases, debt reduction. You've seen us do all of that over the last several years. And it's going to vary a little bit based on what we see in terms of outlook, what we see in terms of opportunities, certainly share price. So it's hard to give you a definitive priority because it does change.

I would say a few things. I mean, one, the portfolio is generally in really good condition. So we've put capital behind the portfolio over the last several years, done some big renovations. We have kind of CapEx coming down now to more of a normalized level. So that's one. Two, you've seen us pay down some debt. And as I mentioned, we feel like we'll naturally deleverage over time here as Grand Hyatt Scottsdale picks up. So there's not sort of an immediate pressure to pay down debt, but certainly having a little bit more dry powder and resources would be good, particularly as we expect the acquisition market, transaction market to loosen over the next several years.

And then finally, on the share repurchase side, as you mentioned, I mean, we bought a lot of stock back last year, almost 9% -- roughly 9% of the company. We feel really good about those purchases given where the stock is trading now. We obviously felt like that was the right thing to do. And it continues -- we continue to trade below NAV. So it's not off the table. I just think we're going to balance all those various things to drive the strongest returns and the best capital allocation for the owners of the company. And that's really something we've done pretty consistently since we've been public over the years, and we've kind of played in all of those various areas depending on the timing to drive long-term shareholder returns, and that continues to be the mantra and the focus.

That's really helpful. And then one on the W Nashville. Obviously, some really exciting stuff on the horizon there with the new F&B offerings. Can you talk to us a little bit about how you're thinking about how the asset is positioned in that market and when we might see it return to RevPAR growth and how you're thinking about where it's going to stabilize in terms of earnings and how long it will take to get there?

Yes, sure. I think in terms of the market and market positioning, the hotel and the submarket of the Gulch continues to come into, I think, better focus and has become a more desirable destination even in the couple of years -- a few years that we've now owned the asset. I think what you see is, obviously, people choosing to stay in the Gulch as opposed to staying out of kind of the [indiscernible] of Broadway if they're there for leisure. It's a very -- it's an upscale residential style neighborhood.

So I think people really like what the other attractions and amenities are. I think as we've talked about before, the -- in terms of corporate demand that I think the corporate market really recognizes it is the top-tier Marriott hotel to stay in within the submarket and has been able to capture a lot of longer-term traditional kind of consulting and accounting firm consulting type business, which has been great for the hotel. It continues to be a good strong leisure destination.

And the hotels figured out and continues to figure out really how to balance group within the hotel. We think the outlets, the new outlets give us a great opportunity to sell a little more into the private dining market, which the small groups that favor our hotel seem to really enjoy the opportunity to enjoy the José Andrés custom banquet menus within the hotel's environment, whether in the private dining rooms of the restaurant or within the meeting space itself.

Yes. And on the financial side of it, I think we spoke about this a little bit last quarter, too. We expect through this change in the outlets, incremental EBITDA of somewhere between $3 million and $5 million over time. That's not going to happen overnight, but it is really based on not only certainly greater revenues and getting some profitability out of the actual outlets, but it's also about continuing to improve the appeal of the property and getting the type of customers that Barry was talking about.

So we think that getting that incremental EBITDA will get us somewhere in the low 20s over time, million of EBITDA. But again, I mean, it's hard to put an exact time line on this because it's really something that kind of needs to start building upon itself as the reputation of the property grows.

[Operator Instructions] Our next question comes from the line of Alex Hino of Jefferies.

I'm on for David, but just wanted to dive into kind of the state of the union for luxury and upper upscale. I know over the last couple of months, we've heard a lot about the K-shaped economy. And this week, we got a little bit of commentary around kind of the C-shaped economy suggesting some deceleration at the top end. So just wanted to get your reaction there and any commentary you can provide.

Yes. What we've obviously seen and is that luxury and upper upscale continue to perform really well. And we've seen -- clearly, you've seen it in our portfolio being 100% focused on luxury and upper upscale. We've seen very good growth in group demand over the last couple of years. Certainly, that's going to, at some point, start leveling off a little bit. But simultaneously, now we're starting to see some pretty good momentum on the transient side, and particularly on business transient continuing to build.

So if you look at the supply backdrop for luxury and upper upscale, it's still extremely benign for the next several years. So it's setting up pretty nicely for not only the industry overall with overall supply being pretty modest, supply growth being pretty modest, but particularly in our segments, too. So we talked about it quite a bit today, and we're seeing a lot of strength in all these different demand segments. Certainly, the higher-end consumer doesn't seem to be pulling back yet. So we're pretty optimistic that, that will continue going forward.

I would also add, these properties, as we've demonstrated over the last couple of years, have a lot of levers to pull and in terms of driving food and beverage and ancillary revenue. So we've been able to optimize them over the last couple of years, and we think it speaks well to where the consumer is headed and our ability with these properties to keep driving cash flows in this environment. So we really saw a lot of strength in the quarter and even subsequent to the quarter, nothing changing. The trajectory looks quite strong.

That will conclude our Q&A session. So I'll now pass it back over to Marcel, if you would like to give any closing or further remarks.

Thanks, Regan. Thanks, everyone, for joining us today. Appreciate the interest. I appreciate the questions. Obviously, 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 the various conferences coming up. And thank you for being as attentive as you were today after many hotel earnings calls over the last couple of days. So -- with that, we'll conclude our call.

Thank you. That will conclude today's call. Thank you for your participation. You may now disconnect your lines.

Hello, and welcome to the Xenia Hotels & Resorts, Inc. Q4 2025 Earnings Conference Call. My name is Carl and I will be on you to your call today.

[Operator Instructions]

I will now hand you over to your host, Aldo Martinez, Manager Finance, to begin. Please go ahead when you're ready.

Thank you, Carla, and welcome to Xenia Hotels & Resorts Fourth Quarter 2025 Earnings Call and Webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer; Barry Bloom, our President and Chief Operating Officer; and Atish Shah, our Executive Vice President and Chief Financial Officer. 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 this 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, February 24, 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 fourth quarter earnings release, which is available on the Investor Relations section of our website. The property level information we'll 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 90 days.

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

Thanks, Aldo, and good afternoon, everyone. As we reflect back on 2025, we are proud of the performance that our portfolio of high-quality hotels and resorts achieved during the year. Adjusted EBITDAre exceeded our expectations set at the beginning of the year as well as our more recent outlook. Significant growth in food and beverage and other revenues contributed to total RevPAR growth of 8% for the year. This was driven by strong group demand throughout the portfolio. and bolstered by encouraging results at the recently transformed and up-branded Grand Hyatt Scottsdale, which ramped up in line with our underwriting expectations in 2025.

Our operating results for the year together with over $120 million in share repurchases at meaningful discounts to NAV and our current share price allowed us to deliver double-digit percentage growth in adjusted FFO per share as compared to 2024. In 2025, we continue to build on our track record of continuous portfolio improvement. We sold Fairmont Dallas at an attractive price, resulting in a strong unlevered IRR during our ownership period and allowing us to avoid an estimated $80 million of required capital expenditures over the next several years.

We also acquired the land under Hyeredency Santa Clara, removing future uncertainty regarding lease renewal and rent escalations. Additionally, we invested approximately $87 million in our portfolio during 2025 to further improve our assets. These capital expenditures consisted of both gas-facing enhancements as well as substantial investments in property infrastructure that have enhanced the resiliency and efficiency of many of our hotels and resorts.

Now turning to our fourth quarter results. This morning, we reported net income of $6.1 million for the quarter. Adjusted EBITDA was $63.6 million and adjusted FFO per share was $0.45. With both results, either meeting or exceeding the top end of the implied fourth quarter guidance range we provided when we announced our third quarter results. Strong group and transient demand drove a same-property RevPAR increase of 4.5%, building on the 5.6% growth, our same-property portfolio achieved in the fourth quarter of 2024. We continued substantial growth in non-room revenues contributed to a 6.7% increase in same-property total RevPAR for the quarter.

The continued successful ramp at Grand Hyatt Scottsdale, as well as strong performance by our properties in Santa Barbara, Orlando, San Diego and Santa Clara, we're the most significant components of our same-property RevPAR and total RevPAR growth for the quarter. Encouragingly, our hotels in the Houston market also experienced growth in RevPAR and total RevPAR as market performance improves after facing difficult year-over-year comparisons in the third quarter. On a same property basis, fourth quarter hotel EBITDA of $68.8 million was 16.3% above 2024 levels and hotel EBITDA margin was 214 basis points higher as compared to 2024 as revenue growth meaningfully outpaced our increases in hotel operating expenses.

For the full year 2025, net income was $63.1 million. Adjusted EBITDAre was $258.3 million, and adjusted FFO per share was $1.76. With both measures meeting or exceeding the top end of the guidance ranges we provided after our third quarter results as well as the midpoint of the initial guidance we provided at the beginning of the year.

Our same-property portfolio achieved a RevPAR increase of 3.9% in 2025, which was just shy of the midpoint of our last issued guidance. Strong growth in food and beverage and other revenues, contributed to total RevPAR growth of 8% for the year. Food and beverage revenue for the full year was up a considerable 13.4% when compared to 2024, driven by significant increases in banquet and catering revenues while other revenues were also up 13.8%.

In 2025, about half of our 30 hotels are resource achieved RevPAR growth as compared to 2024. Our properties in Scottsdale, Denver, Santa Clara, Orlando, San Diego, Santa Barbara and San Francisco delivered the most substantial increases in total RevPAR during the year, and we believe that these markets remain poised for continued growth in the years ahead.

On a same property basis, 2025 hotel EBITDA of $274.3 million was 13.5% above 2024 levels, and hotel EBITDA margin was 129 basis points higher as compared to 2024. Our operators continue to do a good job controlling expenses in a continued inflationary environment. Additionally, our corporate initiatives related to real estate taxes, property insurance and infrastructure ROI projects contributed to our margin improvement in 2025.

From a demand segment perspective, 2025 largely played out as we anticipated at the beginning of the year with group bringing the leading growth segment, corporate transient showing steady improvement and leisure demand stabilizing. Group demand was a bright spot for us in 2025. A as same-property group room revenues increased by 12.8% as compared to 2024. While Grand Hyatt Scottsdale was a significant driver of this increase, we saw strength in group demand throughout the portfolio. Strong group demand is particularly positive for our high-end portfolio, a significant ancillary revenues generally accompany room revenues. As a result, our banquet and catering revenues increased by 17.2% in 2025. And as compared to the prior year. And this increase was a significant contributor to our impressive total RevPAR increase for the year.

We continue to reap the benefits from our investments into upgrades and expansions of the meeting spaces in our portfolio in recent years. Most notably, the additional barroom with Hyatt Regency Grand Cypress and the meeting space expansion and upgrades at Grand Hyatt Scottsdale. After a stellar group year in 2025, we are expecting to build on this in 2026 as our group room revenue base continues to be a positive data point for the year. Atish will provide details on our forward group base during his remarks.

In 2025, we invested approximately $87 million in capital projects, which included expenditures related to the completion of the final components of the Grand Hyatt Scottscdale innovation. We completed a number of meaningful infrastructure projects throughout the portfolio as well as minor guest room renovations at 7 of our properties with minimal disruptions to operations. While these renovations were limited in scope, we expect that the refreshed rooms product of these 7 hotels will positively impact the guest experience and the competitive positioning of these properties.

We are currently completing a limited guestroom and corridor renovation at Fairmont Pittsburgh, which after renovating the meeting space and lobby and adding a Starbucks in recent years, will further cement the hotel status as the preeminent luxury hotel in the market. This renovation will be completed in the next few weeks, well in advantage of the NFL draft taking place in Pittsburgh in April. We are also in the year in completion of the construction of the enhanced food and beverage outlets at Nashville. We are extremely excited about the quality and a view of the new spaces and believe the collaboration with Jose and Grace Group will be highly beneficial for the hotel as Barry will solve in more detail during his remarks.

As we turn to -- we project that we will invest between $70 million and $80 million in total capital expenditures this year. We anticipate that we will incur approximately $1 million of adjusted EBITDA and adjusted FFO displacement in 2026. And as our renovation projects are expected to cause limited disruption to guests given their scope and timing. In addition to the completion of the Nashville and Pittsburgh projects, the most significant projects will be the commencement of the guest room renovations at Condos Napa and the Ritz Carlton Denver that we postponed last year. These renovations are scheduled to commence late in the year during a time when disruption is expected to be minimal.

Turning to our outlook for 2026. Our initial guidance is based on a range of 1.5% to 4.5% same-property RevPAR growth or 3% at the midpoint, and 2.75% to 5.75% total RevPAR growth or 4.25% at the midpoint. Most importantly, our guidance on adjusted FFO per share reflects a 7% increase over 2025 at the midpoint, building on the almost 11% growth we delivered last year. Embedded in this outlook is the expectation of a continued ramp-up in revenues at Grand capsule and an expectation of modest RevPAR growth for the remainder of the portfolio. Atish will provide more detailed information on our guidance assumptions during his remarks.

Looking ahead, we are optimistic about our future growth prospects as lodging demand remains resilient despite continued uncertainty in the broader overall economic and political climate. We believe that the continued strength in group business, the ongoing recovery in corporate transient demand and the potential incremental leisure demand from large events, such as the FIFA World Cup, the NFL Draft and America 250 will be positive for high-quality and well-located portfolio in 2026.

We estimate the same-property RevPAR for the first quarter through February 19, grew approximately 4.6% versus the comparable period in 2025, which is a positive start to the year. We continue to believe that Xenia has planned for meaningful revenue growth in the future and that we will be able to continue to deliver FFO growth in the years ahead as we build on the positive momentum we experienced in 2025. I Barry will now provide more details on our fourth quarter and full year operating results, the W Nashville Food and Beverage relaunch and our recently completed and upcoming capital projects.

Thank you, Marcel, and good afternoon, everyone. For the fourth quarter, our 30-hotel same-property portfolio RevPAR was $176.45, an increase of 4.5% compared to the fourth quarter of 2024, based on occupancy of 66.1% at an average daily rate of $266.88. Strength in non-room spend, notably banquet revenues, which were up 17.2% and resulted in total RevPAR of $325.52 for the quarter, an increase of 6.7% when compared to the fourth quarter of 2024.

For full year 2025, our same-property portfolio RevPAR was $181.97, an increase of 3.9% compared to 2024 based on occupancy of 68.6% at an average daily rate of $265.3 he Full year total RevPAR of $328.57 increased 8% when compared to 2024. Our properties achieving the strongest RevPAR growth as compared to 2024 for the full year for Grand Hyatt Scottsdale, with RevPAR up over 104% as we lap the transform of renovation, Kimpton Canary Hotel Santa Barbara up approximately 10%; Gronboemin, Orlando, up 8%; among Pittsburgh of nearly 8% and High Regency Santa Clara and the Ritz-Carlton Pentagon City, each up 7.5%. Strengthen group business and continued improvement in corporate demand was a driver behind success in most of these properties.

Conversely, hotels have experienced RevPAR weakness compared to full year 2024 included both Portland hotels, Royal Palms Resort and Spa, and San Diego and all 4 Texas hotels. The Portland, San Diego and Dallas markets had significantly softer citywide convention calendars in 2025 and in 2024 as did Houston, where in addition to a softer citywide convention calendar, our hotels faced a tough comparison to 2024 and a result of the positive impact from Hurricane Beryl last year.

Looking at each month of the quarter compared to 2024, October RevPAR was $21.36, up 5.9% and November RevPAR was $176.8 up 5.1%, and December RevPAR was $140.9 up 1.9%. October and November benefited from significant strength in group business, which was up approximately 20% in each month, while December group business were virtually flat to 2024, with the increase coming from improved leisure demand over the holiday period. Business from large corporate accounts continue to recover throughout the year and improved significantly compared to 2024 in the latter half of the year.

Combined, Tuesday and Wednesday net RevPAR for the year was up 6% compared to 2024. Across the portfolio, room night demand from our hotel's largest accounts grew at a mid-teens percentage rate in the fourth quarter as compared to the fourth quarter of 2024, giving us confidence about the ongoing recovery in the segment. Overall, leisure business was mixed throughout the year with primarily leisure-driven markets, including Napa, Charleston, Savannah and Key West, being generally flat in RevPAR growth for the year, while we experienced significant growth in Santa Barbara. The Phoenix market exhibited weakness in leisure business throughout the year. Weekend business throughout the portfolio was roughly flat to prior year, with occupancy declines largely offset by rates with combined RevPAR for Friday and Saturday nights of 1.5% compared to 2024. We noted significant strength in weekend business in the last 2 months of 2025 as compared to 2024.

Turning to group. For the year, our same property group rooms revenue exceeded 2024 levels by nearly 13% and or just over 6%, excluding Grand Hit Scottsdale. This increase in group business drove significant ancillary spend in banquets, medium rental and audiovisual commissions. Now turning to expenses and profit. Fourth quarter same-property total revenue increased 6.7% compared to the fourth quarter of 2024. Hotel EBITDA margin increased by 214 basis points, resulting in hotel EBITDA of $68.8 million, an increase of 16.3%. For the full year, hotel EBITDA increased 13.5% with margin improvement of 129 basis points compared to the same period in 2024.

For the fourth quarter, rooms department expenses increased by 5.5% and on a 4.5% increase in RevPAR. Food and beverage revenue growth increased by 9.4% with expense growth of 5.7%. Other operate department income, including SPA, parking and golf revenues was up 6% and listens income was up 12.4%, resulting in a total RevPar increase of 6.7%. Neandistributed departments, expenses in A&G and sales and marketing were well controlled. A&G increased by 2.7% compared to last year, while sales and marketing expenses grew by just 1.6%, continuing the moderating trend we've experienced over the past several quarters. Property operations expenses were flat for the quarter but Utilities expenses decreased by 2.7%.

Turning to CapEx. During the quarter and year ended December 31, 2025, we invested $15.9 million and $86.6 million in portfolio improvements, respectively. The full year 2025 amount is inclusive of capital expenditures related to the completion of the transformative renovation of Grand hit Scottsdale Resort earlier in the year. In addition to the completion of the Grand Hyatt Scottsdale transformative renovation, for the full year 2025, we completed significant select upgrades to guestrooms at several important properties, including Renaissance Atlanta Waverly, Marriott, San Fransico Airport, Hyatt Centric Key West, HytRegency Santa Clara, ratable hemin Mountain book, Graben in Charleston and Kimpton River Place, all of which were substantially completed during the fourth quarter.

Over the course of the year, we performed significant infrastructure upgrades to 10 hotels, including facade waterproofing, filler replacements, elevator and escalator modernization projects and fire alarm system upgrades. We commenced a limited guest room renovation at Fairmont Pittsburgh, which we expect to complete in the first quarter of 2026 as well as our innovation of the M Club at Marriott Dallas Downtown, which was completed in early 2026. Most significantly, we commenced work we announced last quarter related to a major reconcepting the food and beverage facilities at W. Nashville, pursuant to agreements with Jose Andres Group, in which they'll operate and/or license substantially all the hotels, food and beverage outlets. This includes the Genia and Eastern Mediterranean concepts serving lunch and dinner, which opened in mid-February, Farma, a coastal seafood and premium meat dinner concept, which will open in late March, Butterfly, a high-energy rooftop bar with a Mexican-inspired menu, which will also open in late March, and Globe, a new pool deck concept with an expanded bar and upgraded food and beverage offerings, which is expected to open by the end of April.

By partnering with this world-class operator, we believe the refined food and beverage platform will create an attractive destination for hotel guests, national visitors and locals as well as strength in transient and group demand. We are projecting the relaunch of the F&B outlets will add between $3 million and $5 million to hotel EBITDA upon stabilization through increases in food and beverage and rooms revenues, which we believe should result in the hotel generating in excess of $20 million of hotel EBITDA in the next few years.

We are excited about our planned renovations for 2026, which include the first phase of a comprehensive rooms and quarter renovation at Andaz Napa expected to begin in the fourth quarter renovation of guest rooms, corridors and meeting space at the Ritz-Carlton, Denver, which is also expected to begin in the fourth quarter. At Royal Palms, we expect to perform a limited renovation of 70 guestrooms and the corridors in the MontaVista building as well as a tea Cooks restaurant during the second and third quarters. Continuing our comprehensive maintenance and upgrading of our hotels physical plants, we expect to perform infrastructure and facade upgrades at 10 hotels this year.

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

Thanks, Barry. I will provide an update on our balance sheet and discuss our initial 2026 guidance. At year-end, we had approximately $1.4 billion of outstanding debt just over 3/4 of our debt was fixed or hedged to fixed. Our weighted average interest rate at quarter end was 5.51%. Additionally, at quarter end, our leverage ratio as calculated for our credit facility was approximately 5.2x trailing 12-month net debt to EBITDA. We expect our leverage ratio to decline over the next few years and have a long-term leverage target in the low 3 to low 4x range.

As a reminder, we have no preferred equity or senior capital. Last week, we fully paid off the $52 million mortgage loan at Grand Bohemian Orlando that was due to mature in March with cash on hand. At present, 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 3.2 years. As to current liquidity, after the Grand Bohemian Orlando loan payoff, our available cash is $75 million, excluding restricted cash. our $500 million line of credit remains undrawn. Therefore, total liquidity is approximately $575 million.

I want to now turn to our return of capital. During the fourth quarter, we repurchased approximately 2.7 million shares of common stock at an average price of $13.56 per share. In 2025, over the full year, we repurchased a total of about 9.4 million shares at an average price of $12.87 per share, representing about 9.2% of our outstanding shares at the start of 2025. Over the last 4 years, we repurchased a significant portion of our outstanding shares with our share count declining by 20% from year-end 2020 to year-end 2025.

Our current Board authorization permits the repurchase of an additional $97.5 million of common stock. We continue to believe that we trade at a discount to NAV, given our favorable outlook and strong balance sheet, share buybacks continue to be a good tool to drive value relative to other uses of capital. Turning to our other approach to returning capital, our dividend. This morning, we announced a quarterly dividend of $0.14 per share for the first quarter of 2026, if annualized, this reflects a yield of approximately 3.5%.

Now to my second topic, our full year 2026 guidance as issued this morning. I'll start with the punchline, which is that we expect adjusted FFO per share to increase nearly 7% from 2025 to $1.89 at the midpoint. Driving this level of strong adjusted FFO per share growth is the ramp on Grand Hyatt Scottsdale, healthy level of share repurchases last year as well as some favorability on interest expense.

Moving ahead to adjusted EBITDAre. We expect to generate approximately $260 million of adjusted EBITDA are at the midpoint of the guidance range in 2026. This reflects approximately 1% growth relative to 2025. A few points to keep in mind as we walk from 2025 to 2026 as it relates to growth in adjusted EBITDAre. First, Fairmount Dallas earned nearly $6 million in EBITDA in 2025 prior to our disposition in April. Second, we had approximately $1 million of nonrecurring property tax refunds in the fourth quarter of 2025. Third, we generated about $3 million more in interest income in 2025 than we expect to generate in 2026. And -- and fourth, we had no renovation disruption in 2026 but we expect about $1 million of renovation disruption during the course of 2020 -- sorry, we had no renovation disruption in 2025. And but we would expect about $1 million in renovation disruption in 2026.

In total, these 4 items represent an $11 million adjusted EBITDAar headwind and this is offset by about $8 million of year-over-year EBITDA growth coming from Grand Hyatt Scottsdale. If we exclude the 4 items as well as Grand Hyatt Scottsdale, the implied EBITDA growth is a or $5 million on a normalized basis. As to our expense outlook, we expect cost per occupied room to increase approximately 3% in 2026, given that we expect occupancy to increase during 2026, our same-property hotel expense is expected to increase about 4.5%, resulting in a slight margin contraction for 2026. The pressure on the expense side continues to be from wages and benefits, which represent approximately 50% of our hotel level cost base and are expected to grow approximately 6%.

The other costs, which represent the other half of hotel level costs and include a broad range of items such as inventory, utilities, property taxes, et cetera, are expected to grow in the approximately 3% range. While some expense areas were a tailwind for 2025, including property insurance and real estate taxes, in the fourth quarter, we saw an overall decrease in undistributed hotel operating expenses reflected in the decline in other indirect expenses. As we look forward, we expect this indirect expense growth to further moderate.

As I wrap up the adjusted EBITDA guidance, I want to provide some waiting to held for modeling purposes. I will provide this by quarter. Our waiting for adjusted EBITDA or lead is nearly 30% for the first quarter about 30% for the second quarter in the high teens percentage range for the third quarter and nearly 25% for the fourth quarter. As to total RevPAR, which we are now guiding to for the first time, the midpoint of our guidance is an increase of 4.25% versus 2025. Excluding Grand Hyatt Scottsdale, the midpoint of our total RevPAR growth guidance is 2.75%. F&B and other revenues are expected to grow at a faster pace than wounds revenues as they did in 2025. As to RevPAR, the midpoint of our guidance is an increase of 3% versus 2025. Excluding Grand Hyatt Scottsdale, the midpoint of our RevPAR growth guidance is 1.75%.

Now I would like to discuss our thoughts on the demand segments as they underpin our revenue guidance. Starting with group. Last year, group demand represented 37% of our rooms revenue, and we expect a similar mix again in 2026. As of the end of January 2026, nearly 70% of our group for the year was definite. For the March through December 2026 period, group revenue pace is up about 10%, and versus the same time last year for those 10 months of 2025. Excluding Grand Hyatt Scottsdale, group room revenue pace was up 8%, again for the balance of the year from March onwards.

Working across our larger group markets, the largest increases in group pace are in some of our most significant markets, namely Orlando, Northern California, Nashville and of course, Scottsdale. At Grand Hyatt Scottsdale, we continue to see strong ramp, which is bolstering our confidence in our full year guidance. Groups are really enjoying the resort reflected in revenue pace up about 50% with good early indications for 2027 as well.

Next, turning to leisure, which we estimate at roughly 25% of our demand mix. We expect this year to be better -- to be a better leisure year than last year. Events such as the FIFA World Cup and America 250 are expected to drive strong demand in many of our markets. Our preliminary estimate is that these unique events are anticipated to drive about 75 basis points or approximately 1/4 of our expected 2026 RevPAR growth. These estimates are preliminary as much of the demand is likely to be transient has yet to book. We expect varying degrees of benefit across the portfolio depending on distance from the venues and other factors.

Lastly, on the business transient side, we expect demand to steadily improve as occupancy is still below 2019 levels every night of the week. We are seeing good momentum in Northern California and some of our other urban locations. Our hotel operators are expecting corporate negotiated rates up in the low single-digit percentage range, and we continue to be focused on recovery of business transient occupancy relative to prior levels. As we look further ahead, we are encouraged by the supply side, which continues to be quite benign relative to levels just a few years ago. As to our outlook on the supply side of the equation, our market tracks look very well positioned with expected weighted supply growth of about 1% in 2026 and even less in 2027.

Many of our hotels are located in market tracks with no new supply growth specifically in each of 2026 and 2027, approximately half of our rooms are in market tracks with 0 expected new hotel supply. By every measure, the supply outlook is better now than at any other time in our decade-plus history as a public company.

And with that, we will turn the call back over to Carlo to begin our question-and-answer session.

[Operator Instructions] Our first question comes from the line of Ari Klein with BMO Capital Markets.

I was hoping maybe you can provide a little bit more color or context around kind of the RevPAR guide ranges, particularly at the low end, high end. I think you mentioned about 1/4 of the guide is from the special events, but any additional color would be helpful.

Yes, sure. Why don't I start on that 1 and then Marcelo or Barry, you can join in. But certainly, the couple of things bolstering the RevPAR outlook One is the special events, as you mentioned, and second would be Grand Hyatt Scottsdale, where we have a lot of visibility based on the pace. And then more broadly, the group revenue pace that we talked about continues to be a source of strength for us. So really, those are some of the main components that give us confidence. The markets where we expect the strongest levels of RevPAR growth our markets like Houston, like Northern California, obviously, Scottsdale, Orlando as well. So markets that are quite meaningful to us and have a significant group component. So I would say that's really what gives us confidence overall in the RevPAR outlook.

In terms of the high end and low end, as you know, I mean, we're very early in the year, and much of our business primarily on the transient side has yet to book. So really, the range that we're reflecting is pretty consistent with what we've done in the last couple of years and just reflects kind of the natural volatility in the business and the fact that our visibility particularly to the second half of the year outside of food business is much more limited either of you. Okay. It seems -- are there any other follow-ons on that one?

Not on that one, but I had a different question just around -- Barry, you mentioned some of the positive trends in large corporate account growth. Just curious if you can unpack more recent trends there. And just the incremental opportunity, just I think that segment has kind of lagged from a recovery standpoint. So just the incremental opportunity there.

Yes. I mean it's definitely lagged. We're certainly still below 2019 levels in that segment. But I think the growth we saw quarter-by-quarter last year really gives us a much more positive feeling about it, and particularly the growth we saw in Q4. Really, the it was very consistent growth throughout the year with the exception of Q3, which obviously always feels a little bit different. But we just feel like things are getting better. Our hotels are able to better capture more business from more of the large accounts. And some of that is intentionally really going after them, I think, more aggressively but we're also seeing more project work from the big 4 accounting firms and the big 4 consulting firms that just speaks volumes to what's going on as well as some of the very key in our case, Fortune 100 accounts that have just, I mean, really grown remarkably, I think I mentioned mid-teens growth in those accounts in the largest accounts in the portfolio in Q4, we think gives us a good setup for this year.

And certainly, we've -- part of what we've seen that's contributed to the strong quarter-to-date performance thus far.

And our next question comes from David Katz with Jeffries.

I wanted to just talk about the asset trading market, and we've spent a lot of time talking about that $50 million in sweet spot. We have seen some deals and/or been hearing from some of the peers about deals that are in some state of process. One, are you seeing a little more activity? And two, should we -- is it fair of us to expect a little more activity from you as we progress through the year?

Yes. Thanks for the question, David. I think the way you described it is accurate. I think there is some more product out there than what we've seen over the last few years. Certainly, the broker community seems to be a little bit more optimistic going into this year. Now brokers are hugely optimistic. But so far, it does seem like there's a bit more product out there, and there could be some more opportunities out there. S&P's obviously pointed out in his comments, we for active on the share repurchase side. I just felt like there has been over the last few years, a pretty big gap between where we could essentially acquire our own assets versus what external growth opportunities were out there.

So to the extent that to dig a little bit deeper and harder into that are out there. So Clearly, over the next few years, we'd like to see some external growth opportunities come to fruition, and that's going to be really driven by the opportunity set for pricing and certainly our own shares are valued.

Understood. And I think you started down the road of answering the next part of the question, which is how do we think about setting boundaries for you in terms of what would interest you? I know that obviously, you look at everything, it's what -- it's what's usual and required but what kinds of things would you like to add as you start looking and seeing more stock?

Yes, sure. I mean we -- I think kind of the numbers you were talking about. I mean, clearly, the kind of $50 million to $200 million range is kind of the sweet spot for a company like ours with the size of our company. I think we've done a very good job of increasing the quality level of our portfolio and just kind of over what a portfolio is positioned currently from both a quality and a location standpoint. So as I've said many times in the past, when we've talked about these questions, we don't necessarily say, hey, the next acquisition needs to be in market A, B or C. We want to make sure that we look at the opportunity set that's out there. Clearly, there are 3 markets where we have a pretty good concentration at this point, really between Orlando, Houston, Phoenix, those are obviously some of the big drivers for our portfolio.

So with the percentage that we're already in those markets, I don't necessarily see us looking in those markets unless there's some great opportunity that kind of force us to look at do we replace an asset in 1 of those markets? So it's really about some of the other markets that we are still somewhat under concentrated in and maybe some markets that we're not in. So we really want to be opportunistic. We want to make sure it's an asset that fits well with our overall strategy of being able to pivot between different demand segments.

Clearly, the group segment has been something that's been very beneficial to us over the last few years. So we'd be very interested in potentially adding a little bit there. But -- it's not to say that if there is just a great opportunity for an asset that's a little bit more focused on corporate transient or leisure that we wouldn't take a look at that.

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And the next question comes from Michael Bellisario with Baird.

To First question is on Nashville. Just first on Nashville, just 4Q, how did that market perform? And then looking out to 26, what are you guys seeing on both the leisure and BT fronts, just relative to the market having been relative underperformed recently. .

Yes, Q4 was really tough for the market. We certainly participated in that toughness, unfortunately, where we continue to see opportunity to improve our focus, both pre and post the restaurant food and beverage transformations is really on the midweek corporate customer and on the midweek group customer is really a sweet spot for the hotel where we've continued to experience growth despite some of the challenges and softening we've seen in leisure there over time. We think the 2026 setup is certainly expect to be improved over 2025 but not significantly, quite frankly. But with our -- where we do think we're going to see growth is, again, is that is in midweek corporate and midweek group as we really kind of continue our efforts in that area.

We do think -- longer term, we think that we're going to have the opportunity to, as I mentioned, really enhance the profile of the property in a way that appeals to -- that we gather a little more appeal to the leisure guests as a destination hotel because of the food and beverage platform. which we've seen in some of our other hotels, and we've certainly seen an experience with -- in other hotels operated or licensed by Josiane Group.

Got it. That's helpful. And then just maybe more conceptual here, just on sort of the RevPAR versus total RevPAR split, I guess, how long could that positive spread persist? And then within the F&B and other lines, are you actually raising prices? Or are you just seeing volume pick up? Just sort of any thoughts on that spread there, the performance in the non-range lines would be helpful.

Yes, sure. I mean it's -- obviously, there've been significant beneficiaries across the industry, but I think we have a couple of unique pieces that we think are going to give us continued growth there. A lot of it is related to our continued growth and success in group business, a lot of which is still being driven by the new ballroom at brand site, which although it's not that new, we're really seeing the benefits of that come to fruition now as the hotel continues to be able to stack more group in the property. The property is also similar story, certainly in in Scottsdale as well.

And while we're seeing some growth in restaurant business, it's really been the growth in banquet and catering, food and members. It's really been the star performer in those hotels and across the portfolio. I think some of it is driven by our conscious decision to group up across the portfolio. Some of it is related to kind of as that business has grouped up. It's been largely in corporate business as opposed to association business, which has shown a great willingness right now to spend on food and beverage and continue to spend on food and beverage for programs.

Our hotels are capturing a lot more group meals on site than than off-site. That's because certainly a trend we've seen in the largest sorts, whereas historically, some groups might have gone off property for a night or 2. They're choosing to say on property for more evening functions in particular, which is driving revenues significantly in the larger resorts. So think about Hysan Cypress, hives Scottsdale and Park Hyan Aviara have been the most significant beneficiaries of that trend.

And then finally, the -- absolutely, the hotels are taking advantage of pricing and are finding more opportunities to get groups both to spend more but there's also been incremental pricing increases across all of those. So across all of our group-focused hotels as it relates to break catering prices.

[Operator Instructions] The next question comes from Cooper Clark with Wells Fargo.

I appreciate some of the earlier comments on the RevPAR complexion. So thinking about group PACE ex Scottsdale up about 8% from March to December but RevPAR ex Scottsdale only up about 1.75%. Just curious about some of the puts and takes there and any kind of drivers we should be thinking about?

Yes, that's a great question. So thanks, Cooper. So I would say a few things. I mean, first, as the year goes on, we expect that group number to come down given that we're pretty booked up for group and there's less space and dates available for groups. So that's 1 thing to keep in mind. Secondly, I would say, we expect obviously, some growth out of business transient and leisure but much lower levels. So when you mix it all together and blend it, that's where you get to the full year forecast being significantly lower than the current pace number. And if you think about the evolution of our business last year and where we started in terms of group pace, how group performed for the full year, how business transient and leisure came in, we expect sort of a similar prioritization where group would likely be the strongest performer, followed by business transient and then leisure I will say though that for this year, the outlook for leisure does appear better, as I mentioned in the prepared remarks, given both the special events and hopefully our properties that were normalizing a bit last year have now finished really the normalization process.

So that's really kind of how we think about both the segments and some of the inputs and where you get to the total number that we referenced.

Great. That's very helpful. And then curious if you could talk about the time line around the Nashville F&B ramp towards stabilization.

Sure. I mean I talked about the timing of each outlets opening. We're seeing a pretty quick ramp-up on Zatenia, which has now been open, I think, for days or so, a little less than 2 weeks. What we've seen in other Jose Andres operations is they tend to ramp up quite quickly. But I think it's hard given where we are today to really think about when we kind of hit stabilization, but we've certainly underwritten some pretty fair performance in the asset for this year in terms of the growth in ramp-up.

Yes, I'll just add to that, that obviously, we'll get the initial bump of kind of the excitement and the marketing of it being added to the property. But the real benefit is going to be in the next several years as the property just gained some more momentum as far as being kind of the destination hotel like Barry was talking about. So we love the incremental revenues that we're looking to achieve at the property is not necessarily a massive improvement in food and beverage profitability. It's really coming from how it all plays together with the hotel operation and how the hotel just becomes a more attractive destination for every segment. So it's a great selling point for the group segment. Obviously, it's going to be very attractive for corporate transient.

And for leisure, it also will become a much more interesting destination. So we think what it's going to do for the overall performance of the hotel is going to be something that's going to play out over the next several years.

And the next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

I was just wondering on the operating expense growth outlook of 4.5% I mean, how much of an impact is the Grand Hyatt Scottsdale having on that? And I guess, what's kind of the expectation on that sort of moderating more towards inflationary levels -- just wondering what some of the other -- some of those moving pieces are.

Yes, sure. Why don't I start that and then maybe Barry and Marcel could add to it. So Certainly, the numbers that I provided on the expense outlook include Grand Hyatt Scottsville, and I referenced a slight margin contraction expected for the full year. If you factor in Grand Hyatt Scottsdale or look at that separately, it's a little bit more margin contraction expected. So we've really seen most of the expenses come in on the Grand Hyatt Scottsdale. I don't think that's having as outsized an impact as it had over the course of the last year. Obviously, business is continuing to pick up from an occupancy perspective.

And that's why you have more of an impact on overall expenses coming from Grand Hyatt Scottsdale and the rest of the portfolio because we're still adding to the occupancy of the asset.

Yes. I think this also mentioned in his remarks that if you look at it were occupied room basis, we're essentially kind of at that inflationary number right were at above that 3% increase on a per occupied room basis. So a lot of the -- a lot of the increased expenditures to get to that 4.5% number is more just because of occupancy building. And some of that clearly is related to Grand Hyatt costs.

That's all helpful. And then I'm just wondering, it sounds like the group pace at the Grand Hyatt continues to ramp on par with what you had underwritten. The outlook seems really positive in the 27%. I'm just curious on the transient side for that hotel, how the ramp; has been and then just how that's factoring into the ADR pickup that was underwritten in the initial outlook prior to the renovation.

Yes, sure. Obviously, this really is our first season at the property, given kind of an came online last year and where we were in terms of, although we were completed we're not really ahead of the curve on marketing during the peak season that we're seeing fantastic results this year. This year-to-date so far and really good pace for March and April and the hotel has been able to I think, step up its game as it relates to being able to charge the premium rates at the property and facility deserve.

So we feel really good about it. Are we going to get all the way to where we want to get this year in terms of transient positioning in season? Probably not. But I think that also gives us the opportunity. We've always looked at for further growth as we head into its second half season in the first 4 months of 2027.

I think what we saw in in '26 coming this first year, really pose renovation is we essentially got to our number that we had underwritten for the first year but we did get there a little bit differently. Clearly, the the leisure demand in Phoenix cost sale was a little bit softer last year than in prior years. But we definitely made up for that on the group side and really got to the numbers that we were able to deliver. So I think that's kind of the backdrop that we're still dealing with as we go forward. That's clearly to get to that stabilized number it'd be nice to see if the leisure demands come back a little bit more strongly here over the next 12, 24 months but we feel good about the forecast of where we are for this year based on that very strong group base and just all the recent trends we've been seeing there.

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[Operator Instructions] And as we have no further questions in the queue, I will hand back over to the Chair and CEO, Marcel Verbaas for any final comments.

Thank you, Carla. Thanks, everyone, for joining us today. We're obviously a solid to start this year. I appreciate all the questions today, and we look forward to connecting with everyone else here moves along.

Thank you, everyone, for joining today's call. You may now disconnect. Have a great rest of your day.

Hello, and welcome, everyone, to the Xenia Hotels & Resorts Q3 2025 Earnings Conference Call. My name is Becky, and I'll be your operator today. [Operator Instructions] I will now hand over to your host, Aldo Martinez, Manager of Finance, to begin. Please go ahead.

Thank you, Becky, and welcome to Xenia Hotels & Resorts Third Quarter 2025 Earnings Call and Webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer; Barry Bloom, our President and Chief Operating Officer; and Atish Shah, our Executive Vice President and Chief Financial Officer. 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 the call for Q&A. Before we get started, let me remind everyone that certain statements made on this 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, October 31, 2025, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

You can find a reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in our third quarter earnings release, which is available on the Investor Relations section of our website.

The property level information we'll 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 90 days.

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

Thanks, Aldo, and good morning, everyone. As we reported this morning, our third quarter performance generally met the expectations we outlined during our second quarter earnings call. The lodging industry continues to experience a challenging operating environment, particularly as it relates to leisure demand that generally is a significant driver in the third quarter for our portfolio and the industry overall. However, despite these macro challenges, we continue to benefit from the high-end positioning of our portfolio as well as unique internal growth drivers, such as the continued ramp of Grand Hyatt Scottsdale Resort. We also continue to benefit from strong group demand throughout the portfolio, which was evident again in September and thus far in the fourth quarter.

We expect group demand to remain strong as we look ahead to next year, which is supported by robust group room revenues already on the books for our portfolio for 2026.

Turning to our third quarter financial results. For the third quarter of 2025, we reported a net loss of $13.7 million, adjusted EBITDAre of $42.2 million, adjusted FFO per share of $0.23, which was a decrease of 8% compared to the same quarter last year.

Our same-property RevPAR for the third quarter was essentially flat for our 30-hotel portfolio compared to the same period in 2024, with an occupancy decrease of 100 basis points, offset by a 1.6% increase in average daily rate. The Houston market, in particular, was a drag on portfolio performance as the market and our hotels faced tough comparisons due to a short-term demand lift from the aftermath of Hurricane [indiscernible] in the third quarter of last year.

Additionally, given the seasonality of the various demand segments in our portfolio, group demand, which has been the strongest segment this year, was not as big of a driver for our portfolio in the third quarter as it was in the first half of the year and as we expect to see again in the fourth quarter. Despite these challenges, when excluding our Houston assets, same-property RevPAR increased by 2.9%, which was largely driven by significant year-over-year growth at Grand Hyatt Scottsdale as the resort contains its track towards post-renovation stabilization.

In addition to the strong growth in Scottsdale during the third quarter, we experienced double-digit percentage RevPAR growth in Atlanta, Santa Clara, Birmingham and Savannah.

Despite the relatively muted performance in the third quarter, we are pleased that for the first 9 months of the year, our same-property portfolio achieved a 3.7% increase in RevPAR, driven by 80-basis-point higher occupancy and a 2.4% increase in average daily rate when compared to the same period in 2024. This outperformance was again mostly fueled by the recently renovated and up-branded Grand Hyatt Scottsdale Resort during the early phase of its path towards stabilization as it continues to perform in line with our underwriting expectations.

We continue to be excited about the impact of our stronger group positioning this year and particularly the associated increase in banquet and catering revenues. As a result of a significant increase in food and beverage revenues, our third quarter same-property total RevPAR increased by 3.7% in the third quarter as compared to last year, despite our RevPAR being flat year-over-year. The third quarter increase was again mainly driven by Grand Hyatt Scottsdale. For the first 9 months of the year, the impact of increased food and beverage revenues was even greater as same-property total RevPAR increased by 8.5%.

Our strong group base for the fourth quarter and for 2026 give us optimism that we will be able to continue to experience outsized total RevPAR gains in the quarters ahead.

Third quarter same-property hotel EBITDA of $47 million was 0.7% above 2024 levels, and hotel EBITDA margin decreased 60 basis points. Excluding Grand Hyatt Scottsdale, third quarter hotel EBITDA decreased 7.8% and hotel EBITDA margin decreased 160 basis points.

For the first 9 months of the year, same-property hotel EBITDA of $205.4 million increased by 12.6% above 2024 levels, and hotel EBITDA margin increased 101 basis points. Excluding Grand Hyatt Scottsdale, year-to-date hotel EBITDA increased 3.9% and also EBITDA margin was essentially flat.

We remain pleased with our operators' efforts to control expenses in a continued inflationary environment.

Turning to our capital expenditure projects. We now project that we will spend approximately $90 million on property improvements during the year, which is a $10 million increase compared to the midpoint from our prior CapEx guidance. This increase is due to 2 factors: First, the anticipated completion of some additional capital projects that were originally planned at various properties as we have been able to mitigate the impact of any potential tariff-related cost increases. And second, the costs we will be incurring in 2025 for a comprehensive reconcepting of the food and beverage operations at W. Nashville. Even with this increase, we still anticipate spending approximately $50 million less on capital expenditures in 2025 than we projected at the beginning of the year.

We are extremely excited about the upcoming relaunch of the food and beverage venues at W. Nashville that we announced in our release this morning. We extensively evaluated several options to increase the appeal of food and beverage outlets in hotel, which could drive incremental F&B revenues and further enhance the desirability of the hotel for all demand segments. After completing this thorough process, we are pleased to have reached an agreement with Jose Andres Group, under which Jose Andres Group will operate and/or license essentially all of the food and beverage venues at the hotel. We believe strongly that the combination of the operational and marketing expertise of Marriott and Jose Andres Group will drive incremental revenues and hotel EBITDA and make the hotel an even more exciting destination. We will be making an additional capital investment of approximately $9 million to effectuate this change. However, given the already outstanding physical condition and quality of the hotel's existing venues, this capital will be largely spent on FF&E and branding elements as well as kitchen equipment and back-of-the-house improvements.

We are projecting that the relaunch of the F&B outlets will add between $3 million and $5 million to hotel EBITDA upon stabilization through increases in food and beverage and rooms revenues, which we believe should result in the hotel generating in excess of $20 million of hotel EBITDA in the next few years. Barry will provide additional details on this exciting W. Nashville F&B relaunch during his remarks.

As we look ahead to the remainder of the year, we remain cautious in our near-term outlook, which is reflected by slightly reduced expectations for the fourth quarter. For the full year, we now expect a same-property RevPAR increase of 4%, and adjusted EBITDAre of $254 million, at the midpoint of our updated full year guidance. Atish will provide additional details on these modest adjustments to guidance during his remarks.

As has been the case for most of the year, group business continues to be a driver of our RevPAR growth, with leisure softening a bit this year, as we had anticipated, while business transient continues to improve gradually. We saw a continuation of this trend again in October. We are encouraged by the approximately 5.8% RevPAR growth that we project our same-property portfolio will achieve in October, which represents a meaningful improvement over our portfolio's third quarter performance.

With strong overall group base for the fourth quarter, we again anticipate significant growth in food and beverage revenues during the quarter as well.

Looking ahead to 2026, we believe that Grand Hyatt Scottsdale will continue to ramp consistent with our underwriting, and we expect good demand across the portfolio to be robust and drive outsized non-rooms revenue growth. We continue to believe strongly in the long-term growth prospects for our well-located, diversified and high-quality portfolio in 2026 and beyond. Barry when will provide more details on our third quarter operating results, the W. Nashville Food & Beverage relaunch and our other capital projects.

Thank you, Marcel, and good morning, everyone. For the third quarter, our same-property portfolio RevPAR was $164.5, flat to the third quarter in 2024 based on occupancy of 66.3% at an average daily rate of $248.09. Strength in non-room spend, notably banquet revenues, resulted in total RevPAR of $289.76 for the quarter and $329.6 for the year-to-date, an increase of 3.7% and 8.5%, respectively, when compared to the same periods in 2024. Excluding Grand Hyatt Scottsdale, third quarter RevPAR was $167.87, a decrease of 2.6% as compared to 2024. This reflected a decrease of 289 basis points in occupancy for the period and an increase of 1.5% in average daily rate as compared to the third quarter of 2024.

Our top performing hotels in the quarter were Grand Hyatt Scottsdale with RevPAR up over 270%, [indiscernible] Savannah, up 15.3%, [indiscernible] Astoria Atlanta Buckhead of nearly 14%, Grand Bohemian Mountain Brook up 13.2%, Regency Santa Clara up 12%, Renaissance Atlanta Waverly up 9.5%, and Grand Bohemian Hotel Orlando up nearly 9%, Bohemian Hotel Savanna Riverfront up 8.3% and the Ritz-Carlton Pentagon City up nearly 6%. Strengthen group business and continued improvement in corporate demand was a driver behind success at most of these properties.

Hotels have experienced RevPAR weakness compared to the third quarter of 2024 included Loews New Orleans, all 3 Houston hotels, Marriott Dallas Downtown, Hyatt Centric Key West and Kimpton Hotel Palomar, Philadelphia. New Orleans, Dallas and Philadelphia suffered from a lack of convention center activity relative to last year. And the Houston hotels were challenged by a comparison with significant amount of business related to Hurricane Barrel that they captured last year. General leisure softness and return of inventory that was offline last summer impacted Key West.

Looking at each month of the quarter compared to 2024, the live RevPAR was $161.98, down 1.7%, August RevPAR was $154.43, down 1.5%, and September RevPAR was $177.52, up 3.2%. Excluding Grand Hyatt Scottsdale, compared to last year, business declined in July and August, largely due to the weakness in the Houston market and softer leisure demand overall. Performance in September significantly improved as we got out of the leisure-heavy summer months and saw strong group business as well as a significant increase in corporate travel.

Business from our largest corporate accounts grew modestly in Q3 with declines in both July and August, but a significant increase in September as compared to Q3 of 2024. Business from the largest volume accounts continued to be down meaningfully from 2019, but has continued to grow throughout the year. Group business continues to be a bright spot across the portfolio despite the seasonal shift from corporate to association-related group resulting in the lowest quarterly group growth for the year. For the third quarter, excluding Grand Hyatt Scottsdale, group room revenues were virtually flat compared to the third quarter of last year due to modest declines in both July and August, while September was more in line with the trends we have seen throughout the year, up approximately 5%.

Food and beverage revenue from banquets declined slightly during the quarter compared to last year as a result of the mix of group business.

Now turning to expenses and profit. Third quarter same-property total revenue increased 3.8% compared to the third quarter of 2024. The hotel EBITDA margin decreased by 60 basis points, resulting in hotel EBITDA of nearly $47 million, an increase of 0.7%. For the year-to-date, hotel EBITDA increased 12.6%, with margin improvement of 101 basis points compared to the same period in 2024.

Since Grand Hyatt Scottsdale was undergoing its transformative renovation last year, the following P&L analysis is presented for the remainder of the same-property portfolio compared to last year. Hotel EBITDA for the quarter was $46.7 million, a decrease of 7.8% on a total revenue decrease of 0.7%, resulting in a margin decline of 160 basis points. However, we are pleased with the ability of our hotels management teams to control expenses in light of softer revenues. Rooms department expenses increased by 1.5% on a 2.6% decline in RevPAR. Food and beverage growth was muted at 0.4% with expense growth of 0.8%. Other operating department income, including SPA, parking golf revenues was up 6.6%. Miscellaneous income was up 7.8%, resulting in a total RevPAR decline of just 0.7%.

In the undistributed departments, expenses in A&G and sales and marketing were well controlled. A&G increased by 1.5% compared to last year, while sales and marketing expenses grew by 2%, continuing the moderating trend we've experienced over the past several quarters. Property operations and utility expenses were up 2.6% and 0.5%, respectively.

Turning to CapEx. During the third quarter, we invested $19.9 million in portfolio improvements, which brings our total for the year to $70.7 million. These amounts are inclusive of capital expenditures related to the completion of the transformative renovation of Grand Hyatt Scottsdale. We completed improvements in the building facade and parking lot during the third quarter, which now marks the full completion of this transformational renovation.

During the third quarter, we made significant progress on select upgrades to guestrooms at several properties, including Renaissance Plano Waverly, Marriott San Jasco Airport, Hyatt Centric Key West, Hyatt Regency Santa Clara, Gram Bohemian Hotel Mountain Brook, Grand Bohemian Charleston and Kimpton River Place. This work, which is expected to be substantially complete by year-end is being done during periods of lower occupancy, particularly over the holiday season.

We are continuing to perform significant infrastructure upgrades at 10 hotels this year, including facade waterproofing, filler replacements, elevator and escalator monetization projects and fire alarm system upgrades as business levels allow. The majority of this work will be completed in the fourth quarter or early 2026.

In the fourth quarter, we will begin work on a limited guest room renovation of Fairmont Pittsburgh, which will be completed in the first quarter of 2026, and renovation of the mClub at Marriott Dallas Downtown, which we expect to be completed in early 2026.

During the third quarter, we entered into agreements with Jose Andres Group, also known as JAG, pursuant with Chegg will operate in or license substantially all of the food and beverage outlets at W. Nashville. JAG is restaurant management arm of Jose Andres, a globally acclaimed chef respiratory and media personality that operates nearly 40 restaurants, bars and lounges across the globe, including several prominent lodging properties. We believe this comprehensive relationship will leverage the superb physical attributes to create unique destination dining venues at W. Nashville.

The all new food and beverage programming will replace the existing venues in the hotel, and will include proven Jag concepts such as Zatania, and Eastern Mediterranean concept that will serve lunch and dinner. [indiscernible], a coastal seafood and premium meat concept that will be open for dinner; and Butterfly, a high-energy rooftop bar with a Mexican inspired menu. In addition, there will be a completely new pool experience that will feature an expanded bar, upgraded food offerings and refreshed outdoor spaces. Modifications were made at the existing living room, which will become the [indiscernible] venue, while continuing to service the hotel's lobby bar, featuring a revised menu of unique cocktails and food offerings.

In addition, the hotel will offer premium Jose Andres Group design banquet and catering menus, which will complement existing offerings in order to enhance group experiences and drive incremental food and beverage revenues. Modifications to the venues will begin in the fourth quarter in a staggered approach intended to minimize disruption, and all venues are expected to be completed by the second quarter of 2026.

Our in-house project management team will provide direction and oversight to the renovation process, which gives us significant confidence in achieving on-time project completion and the ability to stay within our budget. We are incredibly excited about this relationship and the repositioning of the F&B outlets at W. Nashville.

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

Thanks, Barry. I will provide an update on our balance sheet, discuss our guidance and provide some early thoughts on 2026. On our balance sheet, it continues to be a source of strength. At quarter end, we had approximately $1.4 billion of outstanding debt. About 1/4 of our debt was at variable rates and 3/4 of our debt was at fixed rates. Our weighted average interest rate at quarter end was 5.63%.

At quarter end, our leverage ratio was approximately 5x trailing 12-month net debt to EBITDA. We expect our leverage ratio to further decline as Grand Hyatt Scottsdale continues to stabilize over the next 2 years. As a reminder, we have no preferred equity or senior capital.

Our debt maturities continue to be well laddered with a weighted average duration of 3.5 years at quarter end. As to the $52 million mortgage loan that matures next March, we intend to pay it off ahead of maturity with cash on hand. After that pay off, 28 or 30 hotels will be free of property level debt, reflecting both a source of balance sheet flexibility and strength.

As to liquidity, we finished the third quarter with $188 million of available cash, excluding restricted cash. Our $500 million revolver remained undrawn. Therefore, total liquidity was $688 million.

Our Board authorized a third quarter dividend of $0.14 per share. If annualized, this reflects over 4.5% yield on our current share price. As to payout ratio, if annualized, this reflects a payout ratio of just under 50% of funds available for distribution, or FAD. Our long-term target is a payout ratio of 60% to 70% of FAD, consistent with our pre-pandemic payout range.

During the quarter, we repurchased $12.3 million of common stock at a weighted average price of $12.66 per share. Year-to-date, we have repurchased $83.8 million of common stock at a weighted average price of $12.59 per share. Since the beginning of this year, we have repurchased 6.6% of our outstanding shares as of year-end 2024. We have $134.1 million of remaining capacity under our share repurchase authorization. We continue to believe our shares trade at a significant discount to the value of the assets we own based upon their earnings potential in the years to come.

Turning next to my next topic, our current 2025 guidance. We'll start with our full year RevPAR outlook. We expect RevPAR growth of 4% at the midpoint. The 50-basis-point reduction in the midpoint of our full year guide reflects lower expected RevPAR growth across our portfolio in the fourth quarter, exclusive of Grand Hyatt Scottsdale. On a full year basis, we continue to believe that Grand Hyatt Scottsdale will represent 300 of the 400 basis points of expected growth.

Given our preliminary estimate of October RevPAR increasing approximately 5.8%, our full year guide at the midpoint reflects an estimated RevPAR increase of 4.5% for the last 2 months of the year. Underpinning our guidance is group pace, which, for November and December, is up 12%. Excluding Scottsdale, it's up about 5% for the final 2 months of the year.

As to hotel EBITDA margin, we expect full year same-property margin growth of nearly 90 basis points, which is about 60 basis points higher than the margin growth we expected at the beginning of the year. The strength we have seen has been from non-rooms revenue growth and slightly more of our rooms revenue growth coming from rate than originally expected.

Moving ahead to our estimate for full year adjusted EBITDAre is now $254 million or down $2 million from our last guide at the midpoint. This reflects the change in full year RevPAR, partially offset by continued strong non-rooms revenue generation.

And finally, our adjusted FFO per diluted share guidance midpoint is now $1.72, which is a decrease of $0.01 versus our prior guidance. This reflects the $2 million decrease in full year adjusted EBITDAre and adjusted FFO, offset by the reduction -- by reduction in weighted average diluted share count.

Our current adjusted FFO per share guidance is 4% higher than our guide at the beginning of the year and 8% higher than our 2024 adjusted FFO per share.

Our guidance for interest expense, cash G&A expense and income tax expense are unchanged.

Looking ahead to 2026, we would like to provide some initial thoughts. First, on group demand, which by way of reminder, is about 35% of our overall demand mix. Pace continues to be healthy. As of the end of September, about 50% of our group's group rooms revenue for 2026 was definite. Pace for 2026 was up in the mid-teens percentage range.

Excluding Grand Hyatt Scottsdale, it was up in the low teens percentage range. This is consistent with 2026 group pace at the end of the second quarter.

As to group revenue production for next year, it was healthy in the third quarter. During the quarter, we booked 13% more group revenue than we did in the third quarter last year. Even excluding Scottsdale, group revenue production was up 12% versus the third quarter of 2024.

Looking across our larger group markets, the largest gains in group pace are in Northern California, in part due to the Super Bowl, and in markets such as Houston, Scottsdale, Orlando and Portland. Our 2026 group pace reflects anticipated strong citywide convention demand in several of our markets. Citywide convention pace is up in the double-digit percentage range in Houston, Dallas, Philadelphia, Pittsburgh and Portland. While our hotels in the aggregate rely more on in-house than citywide business, our hotels in these markets do benefit when citywide calendars are strong and the markets experience compression.

In a few cases, citywide pace is being helped by the World Cup, which will come to 5 of our markets, including Dallas and Atlanta that are hosting semifinal games.

In addition to citywide pace, our group outlook reflects our hotel operators focused pursuit of this demand segment, the capital investments we've made in meeting space and group focused amenities and the strength of branded hotels and capturing high-value group business.

We expect 2026 to be another record year for group and, as a result, another strong year for total RevPAR growth, which we expect will outpace RevPAR growth again.

As to transient demand on the business side, we continue to see steady improvement in demand from the large accounts. On the leisure side, we've seen the normalization temper in most of our key leisure markets with several having grown top line during the third quarter and year-to-date. As such, the preliminary outlook for 2026 appears to be more stable on the leisure side.

And finally, a major driver for growth next year will be the continued ramp at Grand Hyatt Scottsdale. Our initial expectations for 2026 continue to track our underwriting. By way of reminder, our underwriting was that full year property hotel EBITDA would increase from the low $20 million range this year to the low $30 million range next year.

Given the timing of the completion of the renovation and the seasonality in the market, we expect most of the growth to occur in the first half of the year. And with that, we will turn the call back over to Becky to begin our Q&A session.

[Operator Instructions] Our first question comes from Michael Bellisario from Baird.

First question for you, Atish, on your dividend. I know you mentioned that you're paying out less than your target, but maybe just where is the current payout this year going to land in terms of where you see this year's taxable income?

Well, I don't have that in front of me, but I will say that we continue to utilize NOLs that we generated coming off of COVID. So we're finding the balance of providing both a good payout relative to past levels as well as utilizing those NOLs. So -- and we'll pull that relative to taxable number for you and provide that.

Okay. And then just a second question, probably for Barry, just on the group outlook commentary. How much of the pace increase for next year's price versus volume? And then just in terms of production, what type of accounts, what type of groups are booking? And what are you hearing from meeting planners today?

Yes. The setup for next year, obviously, as Atish mentioned, is really good and it's quite strong. It's a little more in volume, but rate growth is good. I mean better rate growth than we've than we've seen in the last year or 2. So it's a very, very nice setup on the group side. We are continuing to see a little bit of a shift from corporate business back into a more normalized association business within the portfolio, particularly at the largest resorts. And I guess I think if you look back, right, we were really, coming out of COVID corporate was wanted every day, and they were ready to fill in. Association is a little slow in rebooking, but we're seeing that come through now. And I think that's part of what you saw in our mix in Q3 was that whereas corporates had kind of filled Q3 in the last couple of years. That's where we were start seeing the shift back to the more normalized relative ratios of association versus corporate. But both segments are are quite strong looking into next year.

Our next question comes from Jack Armstrong from Wells Fargo.

Could you break out what the impact of the government shutdown has been, if any, on the portfolio? And with the uncertainty there, how confident you're seeing in the full year RevPAR guide?

Well, thus far, it's been fairly limited within our portfolio. We've spoken before about the fact that we are not heavily dependent on government business. Obviously, we continue to check with all of our properties to see if we're seeing any particular impact. There have been a few cancellations, but it's been relatively minimal thus far. So I think if you kind of contrast our portfolio to some of the peers, our exposure to that type of business is probably a little bit more limited.

Now if there is a prolonged shutdown that is causing more issues as it relates to air traffic control issues and people being more concerned about being able to travel and those types of things, then obviously, it could impact us as well going forward. So, so far, we're not assuming any very significant impact from the government shut down over the next few months. And that's really based on kind of the situation as we see it today.

Helpful. And could you maybe provide an update for us on what you're seeing in transaction markets, and also what your level of interest is? I'm trying to get some more dispositions done over the next year.

Yes, sure. I mean it seems like kind of contrasting it to where things were maybe 6 to 12 months ago. It does seem like there are some more hotel transactions coming to -- potential hotel transactions coming to market. It does seem like there's a little bit more volume that the broker community is seeing. And as it relates to us, I mean, obviously, we're still looking at the various ways how we can allocate capital, and given our cost of capital at this point, especially with how attractive our own portfolio looks and share buybacks continue to look probably more attractive than acquisitions at this point, I wouldn't expect us to be really active on the acquisition side here in the very near future.

I think a lot of that's going to have to do with what happens with pricing in the private markets if there is maybe a little bit more now softness, if you will, if prices are coming down a little bit, and they come a little bit closer to what we view to be something that is a good use of capital for us. But I don't foresee that here really in the very short term.

As it relates to dispositions, we'll continue to look at what we've always done. This doesn't make sense to continue to fine-tune the portfolio slightly, especially when it comes to assets that may need some additional capital where we don't feel the appropriate ROI might be -- we might be able to get the right appropriate ROI on those projects. So we'll continue to evaluate that. I wouldn't expect any wholesale changes, but we certainly could see another disposition or 2 over the next 12, 18 months as we continue to fine-tune and review our portfolio.

Our next question comes from David Katz from Jefferies.

We are not getting any audio, so we will move on to our next question from Aryeh Klein from BMO Capital Markets.

With regards to the Somatoster expectations for 4Q, where do you see that play out the most? It sounds like it's predominantly leisure, but broad-based across markets? And I guess, as leisure stabilize, do you still see it getting weaker?

Yes. Thanks, Aryeh, for that question. So with regard to the fourth quarter, it is certainly more on the transient side combination of leisure and business transient that we nudged down our expectations ever so slightly. And really, it's not any particular market. As I mentioned, Scottsdale continues to show a lot of strength because gap is really more broad-based. There's no specific market. I will point out that Houston was a pretty big headwind for us in the third quarter, and that certainly something in the past. As we look at the fourth quarter, we're expecting a little bit of growth in Houston, and in the month of October, we were actually about flattish in Houston. So that big drag that we had in the third quarter for [indiscernible] tough prison dissipates for the fourth quarter, and it's actually positive.

Yes. I will just add that as Atish really points out there, is that part of the reduction in our RevPAR guidance for the full year is obviously also attributable to what we -- what happened in the third quarter. So it's not that we've brought our RevPAR down entirely in the fourth quarter, and that's what got us down essentially 50 basis points at the midpoint. Some of that was some of the additional weakness that we saw in Houston a little bit in excess of what we anticipated. The reason why we still got to our numbers meeting our expectations was because we saw some some greater strength on the out-of-room spend that really got us back to the total RevPAR number that we -- that was more closely matching what we were expecting in the third quarter.

And then maybe just on the changes at the W. Nashville for F&B. I guess that piece of the business has been a struggle for a while. How quickly do you think you can get to that $3 million to $5 million of incremental EBITDA from the changes? And I think I heard [indiscernible] now you expect the hotel to ultimately stabilize in the low 20s. I just wanted to make sure that's correct. And I guess the prior range, or the original range of 25% to 30%. I just want to double check on that.

Yes, sure. I mean, obviously, it's going to take a couple of few years to get to that stabilized number. We -- as I pointed out and as Barry kind of spoke about in his comments too, we really anticipate this to help drive not just the F&B revenues, but also just make the hotel a more desirable location overall and more of a destination even than it has been to date.

As you point out, I mean, clearly, we've given a time here. We've worked kind of tirelessly with Marriott to try to improve the F&B operations, and and jointly with them, have worked on coming to a solution that we believe is going to be very attractive for to over the next few years.

So I think that is something that's going to take a little bit of time to stabilize here. We've essentially, they've been running in the mid-teens of EBITDA over the last few years. So clearly, we were looking to -- for ways to drive what we think that this hotel can produce for us over the next few years. We have, to your point, tempered our expectations from where we started our underwriting since we aren't close to those numbers that you quoted yet. We do think that this will give us that additional lift of $3 million to $5 million as a result of this this F&B change over the next several years.

And what's still going on in the Nashville market overall, obviously, is that we're still going through some stabilization in the markets with with the supply that's getting -- the high-end supply that was added over the last several years that are still getting absorbed into the market. So over the next several years, we expect to see kind of the bump coming from the F&B change that we're doing here, but also with the markets kind of improving and stabilizing.

It's been a tougher leisure year, especially in that market as well. So we do expect that to get better over the next several years. We're obviously not saying we're going to put a ceiling on where we think the earnings can go here, but just realistically looking at where the earnings have been over the last several years, what we think the F&B will do to help the operations there. We've set our expectations now to say over the next several years, we expect to get kind of north of that $20 million number. And then hopefully, we'll grow from there. And that's -- it's a great asset. It's a great market, still a lot of positivity as far as what's going on in the market. So we continue to have high hopes for how ultimately -- where ultimately this property will go.

Our next question comes from David Katz from Jefferies.

I wanted to just get your perspective on leisure. We've obviously been hearing about some of the weakness in leisure. In your opinion or from your perspective, is it travelers who are choosing not to travel to defer to travel, are they backing at price and perhaps trading down? What would you classify as the weakness -- the source of the weakness as far as you can tell?

Well, I'll start off with kind of a global comment on it. I think when we looked at -- when we look at the setup for this year, and I'm sure you recall when we even spoke at the beginning of the year, our expectation was really kind of the way it has played out for every segment, which was strong group business for us this year. We did expect business transient to kind of slowly keep recovering. And we did expect some softness in leisure compared to prior years because there is still this normalization that was kind of going on from these kind of outsized levels of leisure travel that we saw over the last few years.

So I would say that it hasn't changed that much from what our initial expectations were. I think what you've seen overall is that there's obviously been a lot of discussion this year about consumer spending overall, about consumer spending on travel. There has been -- it appears to have been clearly more in the lower segments that have been impacted more significantly than the higher segments like where we play. So it hasn't been quite a severe on the higher end, but we are still dealing with with a lot of uncertainty out there in the market on various economic issues, obviously, dealing with the fact that international outbound is still greater than international inbound, alternative travel that obviously has been also appealing for people, whether that's cruises or other things. So I think all of those things kind of play into it.

Now that being said, and Atish pointed this out in his comments, as we look ahead to next year and going a little bit more granular as it relates to us, I think that we are still seeing a very similar setup on the group side. We're -- we've got a really good group base going into next year. Business transient that is subject to some of the macroeconomic issues, obviously, whether that continues to kind of gradually improve, but that's still our expectation at this point. And we do think that leisure has probably kind of found its -- found more of its footing in our portfolio where some of these markets are as stabilized and where we do think that we could hopefully see some growth on that again going into next year. And I'll just kind of leave it at that. I don't know, Barry or Atish wants to add anything to that. But that's our view of kind of what we're seeing happening in the market at this point.

[Operator Instructions] Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets.

Barry, you had commented the business from your large corporate accounts was up significantly in September. I guess, first, any markets you'd call out as seeing sort of an outsized increase? And then second, is the pace of that improvement still less than you may have expected given the comments that Atish made about just transient demand broadly? You had kind of dialed expectations back on both the business and the leisure side?

Yes. In terms of strength, no doubt, Northern California and Santa Clara in particular are seeing significant corporate growth. I mean we all know what's kind of gone on in tech this year, and Santa Clara is ideally positioned both for tech as well as specifically within some of the -- some specific AI-driven accounts that are maybe either directly or indirectly focused on that. I think we've seen some other markets that -- where we've seen a good quality corporate demand. We see it in some of the smaller markets like Pittsburgh, we're seeing that. We're seeing it in D.C. where Ritz-Carlton, Pentagon City is a little bit outside of the government -- of direct government business. So with the strong accounts that we have in Pentagon City. We're seeing it in Atlanta.

So markets like that are kind of a traditionally strong business markets. That's where we've seen the strength in in corporate demand this year.

In terms of across the portfolio, it continues to improve every month. I think relative to expectations, overall, it's probably where we want to be. There are still some markets that are -- that ebb and flow, I think particularly based on seasonality. It's part of -- in addition to the impact from Hurricane Barrel in Houston, we did see a little bit softer corporate demand in the quarterly, we expected in both Houston and Dallas. But again, we feel like that segment clearly is growing. We're particularly getting -- we're starting to -- or continuing to sell out more Tuesday and Wednesday nights, which is also great because not only does it drive volume, but it enables the hotel to really drive compression on those nights as well. So it's a good setup and we certainly see that continuing into next year.

That's helpful. And then just going back to leisure demand, Marcel, you provided a lot of good detail to the earlier question. But I guess, at a high level, would you still expect leisure to lag the overall portfolio in 2026? Or could the demand normalization provide a little bit better pricing power? And maybe it's a little more on par of what you're seeing in just the transient segment overall?

Yes, I think we could. I think Atish pointed it out that we've definitely seen some stabilization in some of the more leisure-oriented markets Clearly, we still expect group to be the leading segment for us as it relates to growth next year. Our setup on the group side is obviously very strong. Grand Hyatt Scottsdale has a lot to do with that too, continues to ramp and continues to build greater group base at that property, obviously. But even throughout the rest of the portfolio, as Atish pointed out, our group basis is very, very strong going into next year. So I kind of expect a similar results next year as it relates to the segments.

Group will continue to lead. And I do think that we could see that there certainly could be a scenario where leisure and business transient are more on par as it relates to what kind of growth we can see out of those segments.

Thanks, everyone. We currently have no further questions. So I'll hand back to Chair and CEO, Marcel Verbaas, for closing remarks.

Thanks, Becky. Thanks, everyone, for joining us today. Appreciate your interest in the company. Appreciate the opportunity to share our results for the third quarter and what we believe is a very good setup going into next year. We have a great portfolio that we'll continue to see the benefits from that going forward and hope everyone has a great Halloween.

This concludes today's call. Thank you for joining. You may now disconnect your lines.