Xenia Hotels & Resorts(US:XHR)2023-05-06 10:00Financial Data and Key Metrics Changes - For Q1 2023, the company reported net income of $6.3 million, adjusted EBITDAre of $71.3 million, and adjusted FFO per share of $0.40, all reflecting significant increases over Q1 2022 [9][11] - Same-property RevPAR was $179.55, an increase of 23.9% compared to 2022, driven primarily by a 10-point increase in occupancy and a 5.2% rise in average daily rates [9][10] - Adjusted EBITDAre growth was 42.8% over Q1 2022, with margins improving by 167 basis points despite inflationary pressures [11] Business Line Data and Key Metrics Changes - The demand recovery is broadening, with 8 of the 10 largest markets reporting double-digit RevPAR increases compared to Q1 2022 [12] - Dallas hotels saw RevPAR increase by over 50%, while Houston, Atlanta, and San Francisco/San Mateo hotels experienced more than 30% growth [12] - Leisure-oriented hotels reported rate growth below the same-property portfolio average but still positive compared to Q1 2022, with rates well above 2019 levels [30] Market Data and Key Metrics Changes - Preliminary April same-property RevPAR is estimated at approximately $196, down roughly 2% compared to April 2022, with occupancy nearly flat to 2022 [15][16] - In April, the occupancy rate was 78.7%, and preliminary ADR was down about 2%, reflecting a shift in demand mix [16] - The company noted that RevPAR for the 30 hotels open in 2019 was approximately $197 in April, a 1.1% increase compared to April 2019 [16] Company Strategy and Development Direction - The company is optimistic about long-term growth, citing a return to a more traditional mix of business, with group revenue on the books for 2023 currently about 20% ahead of 2022 levels [18][19] - The company plans to invest approximately $130 million to $150 million in capital expenditure projects in 2023, with significant renovations underway [40] - The company believes its portfolio of high-quality hotels will benefit from reduced new competitive supply, with expected room supply growth of just 1.2% in 2023 [24] Management's Comments on Operating Environment and Future Outlook - Management has not observed signs of broad-based demand slowing despite economic uncertainties, and they remain cautiously optimistic for the balance of 2023 [15][17] - The company expects a strong first quarter followed by lower growth levels in subsequent quarters due to tougher year-ago comparisons and renovation impacts [47] - Management reiterated confidence in the portfolio's embedded growth drivers and the flexibility of the balance sheet to support future investments [23][50] Other Important Information - The company has repurchased nearly 3% of its outstanding shares in 2023 at an average price of about $13.50 per share, with approximately $125 million remaining on its share repurchase authorization [44] - The company paid a $0.10 per share dividend in Q1, reflecting a yield above 3% [45] Q&A Session Summary Question: Can you talk about leverage and where you'd like to be? - Management indicated a target leverage range of low 3x to low 4x net-debt-to-EBITDA, currently running just above that at closer to 5x [53] Question: Would you consider yourself more likely a seller or a buyer in M&A? - Management expressed a preference for being buyers, focusing on existing portfolio growth rather than active dispositions [56] Question: What is driving the higher food and beverage spend? - The increase is attributed to robust group business and significant spending on banquets and catering [62] Question: How sensitive is the leisure consumer to pricing? - Management noted that competition in the market is more influential on pricing than consumer willingness to spend [65] Question: Can you discuss the cadence of RevPAR growth expectations for the rest of the year? - Management expects slightly positive growth in Q2, with flat RevPAR in the second half of the year due to renovation disruptions [100]