With headwinds from a slowdown in travel and tough comparisons in Houston, Xenia Hotels & Resorts executives pointed to steady group performance as a reason for optimism for the remainder of the year.
Marcel Verbaas, chair and CEO of the Orlando, Florida-based hotel real estate investment trust, said on the company's Friday earnings call that Xenia's third-quarter performance generally met expectations he outlined on its previous 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," he said.
Through September and into the fourth quarter, hotel group demand was strong across Xenia's portfolio, which includes 30 hotels with nearly 9,000 rooms in 14 states. Looking into 2026, Verbaas added that Xenia already has "robust group room revenues already on the books" for the new year.
Xenia's three hotels in Houston had among the worst performance for the company with a 21.2% decline in revenue per available room compared to the third quarter 2024. Occupancy also dipped from 66.9% to 53.5% in the same time frame.
"The Houston market in particular was a drag on portfolio performance as the market and our hotels face tough comparisons due to a short-term demand lift from the aftermath of Hurricane Beryl in the third quarter of last year," Verbaas said, adding later that Xenia executives are expecting growth in that market at the end of the year.
Excluding its Houston assets, RevPAR increased 2.9%. Xenia's same-property portfolio achieved a 3.7% RevPAR growth when comparing the first three quarters of 2025 to the same period last year, Verbaas said.
On-property changes
Xenia's recently renovated and up-branded Grand Hyatt Scottsdale Resort continues to stabilize and perform in line with expectations, Verbaas said, crediting the hotel in part for its overall portfolio growth. Previously branded as a Hyatt Regency, the hotel completed its $115 million property-wide renovation last year.
"Looking ahead to 2026, we believe that the Grand Hyatt Scottsdale will continue to ramp consistent with our underwriting, and we expect group demand across the portfolio to be robust and drive outsized non-rooms revenue growth," Verbaas said.
Verbaas also raised Xenia's 2025 estimate for capital expenditure projects by $10 million to $90 million compared to its guidance from the last earnings call. The additional spend comes from previously announced projects mitigating tariff challenges and a repositioning for the W Nashville hotel's food-and-beverage concepts.
"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," Verbaas said.
Xenia also announced Friday that the W Nashville has entered into an agreement with the José Andrés Group to operate all the hotel's food-and-beverage concepts, including two eateries, a rooftop bar and a new pool deck and bar. The REIT expects the repositioning to cost $9 million and conclude construction to relaunch by the second quarter of next year.
"We are extremely excited about the upcoming relaunch of the food-and-beverage venues in W Nashville," Verbaas said. "We extensively evaluated several options to increase the appeal of food-and-beverage outlets in the hotel, which could drive incremental F&B revenues and further enhance desirability of the hotel for all demand segments."
By the numbers
Xenia reported a net loss of $13.7 million for the third quarter, compared to its $7.1 million net loss in the third quarter of 2024. Same-property RevPAR was flat year over year at $164.50, according to the company's earnings release.
Xenia also reported a 0.7% year-over-year increase for same-property hotel earnings before interest, taxes, depreciation and amortization to $47 million in the third quarter. Xenia slightly reduced its expectations for the fourth quarter.
"For the full year, we expect a same-property RevPAR increase of 4% and adjusted EBITDAre of $254 million at the midpoint of our updated guidance," Verbaas said.
As of press time, Xenia stock was trading at $12.39 a share, down 16% year to date. The NYSE Composite Index was up 11.8% for the same period.