[Management View]
Xenia Hotels & Resorts reported a net loss of $13.7 million for Q3 2025, citing challenges in leisure demand and hurricane-related impacts in the Houston market. Adjusted EBITDAre reached $42.2 million, contributing to a revised full-year guidance of $254 million. Adjusted FFO per share was 23¢, down 8% YoY, but still 4% higher than initial 2025 guidance. Management emphasized the strategic importance of group and non-room revenue segments, with strong performance from Grand Hyatt Scottsdale and other top-performing hotels. Share buybacks remain a priority over acquisitions due to perceived portfolio undervaluation.

[Outlook]
Management expects group demand to remain robust in 2026, with 35% of group room nights already booked and 50% of group revenues definite. The W Nashville food and beverage renovation, in partnership with Jose Andres Group, is projected to add $3-$5 million to hotel EBITDA upon stabilization, with the hotel expected to generate over $20 million in EBITDA in the coming years. Leisure demand is anticipated to stabilize, while business transient and group segments are expected to drive growth.

[Financial Performance]
- Net loss: $13.7 million in Q3 2025.
- Adjusted EBITDAre: $42.2 million in Q3 2025; full-year guidance revised to $254 million.
- Adjusted FFO per share: 23¢ in Q3 2025, down 8% YoY; full-year guidance at $1.01, 4% higher than initial 2025 guidance.
- Same-property RevPAR: Flat in Q3 2025; excluding Houston, up 0.9%.
- Same-property total RevPAR: Up 3.7% in Q3 2025, driven by food and beverage revenue growth.
- Same-property hotel EBITDA: $47 million in Q3 2025, up 0.7% YoY; margin decreased by 60 basis points.

[Q&A Highlights]
Question 1: On the dividend payout ratio, where will the current payout land in terms of tax implications?
Answer: Atish Shah clarified that the company is targeting a payout ratio of approximately 50% of adjusted FFO but did not provide an exact number.

Question 2: Regarding the group outlook for next year, how much of the pace increase is price versus volume? What type of accounts and groups are booking?
Answer: Barry Bloom explained that the pace increase is slightly more volume-driven, but rate growth is better than in the last year or two. There is a shift from corporate business to more normalized association business, particularly at larger resorts. Corporate demand had filled gaps post-COVID, but association business is now rebounding.

Question 3: What impact has the government shutdown had on the portfolio, and how confident are you in the full-year RevPAR guidance?
Answer: Atish Shah stated that the impact has been minimal, with few cancellations. The portfolio is not heavily dependent on government business. However, a prolonged shutdown affecting air travel could have broader implications. The company remains confident in its full-year RevPAR guidance based on current conditions.

Question 4: What is the company’s view on hotel transaction markets and interest in dispositions?
Answer: Atish Shah noted an increase in hotel transactions but stated that share buybacks are currently more attractive than acquisitions due to the cost of capital and portfolio undervaluation. Dispositions may occur selectively over the next 12-18 months to refine the portfolio, particularly for assets requiring significant capital investment.

Question 5: What is contributing to the softer Q4 expectations, and is this broad-based?
Answer: Atish Shah attributed the softer Q4 expectations to transient demand weakness, particularly in Houston, which faced additional challenges beyond initial forecasts. Non-room spend strength helped offset some of the impact.

Question 6: Regarding the W Nashville renovation, how will the changes impact EBITDA, and what are the expectations for the hotel’s performance?
Answer: Atish Shah explained that the $9 million investment in food and beverage outlets is expected to add $3-$5 million to hotel EBITDA upon stabilization. The hotel is projected to generate over $20 million in EBITDA in the next few years, with improvements in both F&B and room revenues.

Question 7: What is the source of leisure demand weakness, and how does the company view leisure demand for 2026?
Answer: Marcel Verbaas stated that leisure demand softness aligns with initial expectations due to normalization after outsized levels of travel in prior years. Factors include economic uncertainty, international travel trends, and alternative travel options. Leisure demand is expected to stabilize in 2026, with potential for growth alongside business transient and group segments.

Question 8: Which markets are seeing outsized corporate demand increases, and is the pace of improvement meeting expectations?
Answer: Barry Bloom highlighted Northern California, particularly Santa Clara, as a standout market due to tech and AI-driven corporate growth. Other strong markets include Pittsburgh, DC, and Atlanta. Corporate demand is improving monthly, with some seasonal fluctuations in markets like Houston and Dallas.

Question 9: Will leisure demand continue to lag the overall portfolio in 2026?
Answer: Marcel Verbaas suggested that leisure demand may stabilize and align more closely with transient segment growth in 2026. Group business is expected to lead growth, with leisure and business transient segments potentially achieving more balanced performance.

[Sentiment Analysis]
Analysts expressed cautious optimism, focusing on leisure demand normalization and the impact of strategic initiatives like the W Nashville renovation. Management maintained a confident tone, emphasizing strong group demand and non-room revenue growth as key drivers for future performance.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|----------------------------|-----------------|-----------------|------------|
| Net Loss | $13.7M | N/A | N/A |
| Adjusted EBITDAre | $42.2M | N/A | N/A |
| Adjusted FFO per Share | $0.23 | $0.25 | -8% |
| Same-property RevPAR | Flat | Flat | 0% |
| Same-property Total RevPAR| $289.76 | $279.40 | +3.7% |
| Same-property Hotel EBITDA| $47M | $46.7M | +0.7% |

[Risks and Concerns]
1. Leisure demand softness continues to impact portfolio performance, particularly in leisure-heavy markets.
2. Houston market remains a drag due to hurricane-related comparisons and transient demand weakness.
3. Prolonged government shutdowns could affect air travel and consumer confidence, potentially impacting transient demand.
4. The W Nashville renovation requires significant capital investment and may take years to stabilize and achieve projected EBITDA growth.

[Final Takeaway]
Xenia Hotels & Resorts faced challenges in Q3 2025, including leisure demand softness and hurricane-related impacts in Houston. Despite these headwinds, the company demonstrated resilience through strong group demand and non-room revenue growth, particularly in food and beverage segments. Strategic initiatives, such as the W Nashville renovation, are expected to drive long-term EBITDA growth, while share buybacks remain a priority due to portfolio undervaluation. Looking ahead to 2026, management anticipates robust group demand and stabilization in leisure and business transient segments, setting the stage for improved performance. However, risks such as leisure demand uncertainty and external factors like government shutdowns remain key concerns for investors.