Despite some tricky year-over-year comparisons and severe weather in Hawaii and the Northeast, Sunstone Hotel Investors reported a first quarter that exceeded expectations.
CEO Bryan Giglia said that he's pleased with results across the portfolio, but the real estate investment trust's resorts in particular outperformed.
"Our resorts once again led the portfolio with combined comparable [revenue per available room] growth of over 18%," Giglia said.
He added that the company's Wailea Beach Resort in Maui had an impressive quarter, with revenue growing 14%, even in spite of two weather events in Hawaii.
"While we will need to navigate some repair work disruption following the storms, the outperformance in January and February and the trends that we are seeing for the remainder of the year continue to point to a sustained recovery in Maui," Giglia said.
Sunstone's wine country resorts reported a combined 34% growth in RevPAR, while the Andaz Miami Beach's results continue to exceed expectations.
"Our urban hotels had a noisier quarter as we navigated a challenging Super Bowl comp in New Orleans and weather-related headwinds across the East Coast," Giglia said, also nodding to inauguration comps in Washington, D.C.
The urban markets' first quarter was expected to be the toughest, he added, "with sequential growth in RevPAR through the balance of the year."
"Given the cadence of our quarterly revenue growth, we expect that the first quarter will be our strongest margin growth performance of the year," Giglia said about the portfolio as a whole, "but we are continuing to work with our operators to focus on cost controls and drive efficiencies wherever possible."
In light of how Sunstone's properties performed in the first quarter, the REIT raised its outlook. Now, the company expects full-year total RevPAR to grow between 5% to 7.5%, up from the previously announced 3.5% to 6.5%.
Net income outlook for the full year was also raised to be a range of $34 million to $48 million, up from the prior prediction of $21 million to $46 million.
"Given our mix of business, we anticipated that rooms revenue would grow faster than total revenue in the first quarter, which was the case, but ancillary spend performed better than we thought," said Sunstone's Executive Vice President and Chief Financial Officer Aaron Reyes.
He added that the updated outlook will "reflect a more optimistic outlook for out-of-room revenue growth than our prior expectations."
Portfolio updates
Robert C. Springer, president and chief investment officer, shared some updates on recent and ongoing renovations within the portfolio.
"We've gotten off to a busy start on the operations and investment front," Springer said on the call. "Our planned capital projects for 2026 were concentrated in the first half of the year, and I'm pleased to report that we have made solid progress executing them on schedule and on budget."
The Hilton San Diego Bayfront is completing its meeting space renovation, and Springer said the market's recent trends are encouraging for performance for later in the year.
Meanwhile, the Andaz Miami Beach, which reopened in May 2025 after a significant delay from its renovation and repositioning, is expected to deliver its dining concept, The Bazaar by José Andrés, in the "early fall to take advantage of the full high season in the market," Springer said.
Facade and exterior work will kick off at the Oceans Edge Resort & Marina in Florida, and Springer noted that unexpected repairs at the Wailea Beach Resort in Maui will push Sunstone toward the higher end of its expected full-year capital expenditure.
By the numbers
In the first quarter, Sunstone's net income was $16 million, a 253% increase from last year's first quarter, when net income was $5.3 million, according to the company's earnings release.
Total RevPAR for the quarter was $411.28, up 13.4% from the same period last year. Occupancy was 74.1% compared to 69.9% in the first quarter of 2025. Average daily rate was up 8.1% year over year, to $344.19 from $318.26 in 2025.
As of press time, Sunstone's stock was trading at $10 per share, up 16.6% year over year. The NYSE Composite Index was up 19.4% for the same period.