Sunstone Hotel Investors reported strong fourth quarter results and high hopes for continued momentum in 2026, with CEO Bryan Giglia pointing to the real estate investment trust's resort portfolio leading the way for gains.
Some of the resort portfolio properties that contributed to growth in the fourth quarter include the Wailea Beach Resort and the Andaz Miami Beach, which reopened in May after a significant delay from its renovation and repositioning.
"Overall, our resorts were our strongest performing segment in [the fourth quarter], and we expect that to continue into 2026, but now with the added benefit of a full-year contribution from Andaz Miami Beach," Giglia said, crediting upcoming events in the Miami market he said "should help the resort further build awareness."
Despite ongoing meeting space renovations in its hotels in San Antonio and San Diego, Sunstone's convention hotels saw "better-than-expected performance" in the fourth quarter.
In Sunstone's urban hotels, cost control was the name of the game. The Portland, Oregon, market continued to recover with the Bidwell Marriott Portland seeing almost 13% growth, but tough comparisons in Boston and New Orleans counteracted Portland's strength, Giglia said.
"While top-line growth was less robust at our urban hotels, we continue to work with our operators to control costs and managed to grow margins during the quarter," he said.
As a whole, Sunstone managed to drive efficiencies amid cost control pressures, delivering "comparable portfolio margin growth of 40 basis points during the year," Giglia said.
"While some of the efficiency measures that were additive in 2025 will be harder to sustain as we move into this year, we will continue to work with our hotel teams to manage costs, increase productivity and defend margins," he said.
Looking to 2026
With the Andaz Miami Beach's successful fourth quarter bringing momentum in the new year, Sunstone President and Chief Investment Officer Robert Springer said the hotel has already brought in year-to-date revenue per available room of nearly $475. This year, the hotel will deliver a new dining concept and a beach club, both of which Sunstone executives said will add value to the resort.
Springer said ongoing projects in San Diego and San Antonio remain on budget, adding that the Renaissance Orlando and Oceans Edge Resort & Marina will also see renovation projects begin in 2026.
Executive Vice President and Chief Financial Officer Aaron Reyes said he expects the first quarter of 2026 to be the strongest growth period for the year, again pointing to the momentum at the resort properties.
"While we see reasons to be optimistic about the year ahead, we remain cautious while still in these initial months. Based on what we see today, we expect that rooms RevPAR for all hotels in the portfolio will increase between 4% and 7% to a range of $234 to $241," Reyes said.
As for the transaction market, Giglia said he sees some small growth in activity, which is being factored into Sunstone's 2026 strategy.
"We are looking for ways to thoughtfully demonstrate the value of our portfolio," he said. "In the meantime, we are focused on delivering profitability growth from operations and realizing the benefits of our investment projects."
By the numbers
In the fourth quarter, Sunstone's net income was $7.2 million, with total RevPAR increasing 9.6% year over year to $220.12, according to the company's earnings release. The average daily rate was $319.01 and occupancy was 69%. The quarter's earnings before interest, taxes, depreciation and amortization for real estate increased 17.6% to $56.6 million.
For the full year, net income was $24.6 million compared to $43.3 million in 2024. If the loss on the sale of the Hilton New Orleans St. Charles in June 2025 were to be excluded, net income for the full-year 2025 would have been $33.3 million.
RevPAR for the total portfolio in 2025 increased 3.8% to $225.12, and the ADR was $317.07 with 71% occupancy. Adjusted EBITDAre increased 3% to $236.6 million.
As of press time, Sunstone's stock was trading at $9.47 per share, down 9.4% year over year. The NYSE Composite Index was up 18.1% for the same period.