Q2 2026 Earnings Conference Call

Hello, everyone. Thank you for joining us, and welcome to Xenia Hotels and Resorts Q2 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Aldo Martinez, Director of Finance. Aldo, please go ahead.

Thank you, Jen, and welcome to Xenia Hotels and Resorts' second quarter of 2026 earnings call and webcast. I'm here with Marcel Verboss, our Chairman and Chief Executive Officer, Barry Bloom, our President and Chief Operating Officer, and Atis Shah, our Executive Vice President and Chief Financial Officer. Marcel we'll begin with a discussion on our performance. Barry will follow with more details on operating trends and capital expenditure projects. And Atish will conclude today's remarks on our balance sheet and outlook. We will then open the call up for Q&A. Before we get started let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and and other SEC findings, which could cause or actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued this morning, along with the comments on this call, are made only as of today, July 30, 2026, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find the reconciliation of non-GAAP financial measures to net income, and definitions of certain items referred to in our remarks in our second quarter earnings release, which is available on the Investor Relations section of our website. The property-level information we will be speaking about today is on a same property basis for all 30 hotels, unless specified otherwise. An archive of this call will be available on our website for 90 days. I will now turn it over to Marcel to get started.

Thanks, Aldo, and good afternoon, everyone. We are pleased to report another quarter of solid operating performance, with REFBAR, adjusted EBITDA RE, and adjusted FFO per share modestly exceeding our expectations from when we last reported in May. Same property REFBAR for the quarter was $206.54, an increase of 5.6% compared to the same period last year, driven entirely by rate. Same property ADR was up 5.7% year-over-year, while occupancy held essentially flat. On a gap basis, we reported a net loss attributable to common stockholders for the quarter of $19.3 million, as a result of a non-cash impairment charge related to the sale of Kimpton Riverblaze Hotel, which I will touch on later in my remarks. Adjusting the EBIT IRE for the quarter was $78.1 million dollars. About one million dollars ahead of the expectations we set when we reported first quarter results. Adjusted FFO per share for the second quarter was 61 cents, a 7% increase compared to the second quarter of last year due to our positive operating results and a lower share count after significant share repurchases at a very attractive price in 2025. Our same property The total ref bar grew 3.3% in the quarter, trailing our same property ref bar growth of 5.6%. Food and beverage and other revenues grew only modestly in the second quarter. This modest growth in non-rooms revenues was largely a result of more subdued group demand in the quarter, which faced a tough comparison to last year, and our ref bar growth for a quarter consisting entirely of ADR growth. We expect to see more robust growth in non-rooms revenues again for the remainder of the year. Both our group rooms revenue pace and our banquets and catering pace are quite strong for the third and fourth quarters, which has been reflected in our updated full-year guidance. The transient segments led ref bar growth in the quarter, bolstered by the unique demand dynamics from the FIFA World Cup. Transient same-property ref bar growth of 6.9% outpaced group ref bar growth of 3.4% for the quarter. We had anticipated that the second quarter would be our weakest from a group perspective on a year-over-year basis, particularly after FIFA released a number of large room blocks as the World Cup approached. Despite the slower growth in group REFBAR in the second quarter, it is worth noting that group business continued to build on the 15.6% group room revenue growth we experienced in the second quarter of 2025. Group base for the second half of the year strengthened during the quarter, and we continued to see no signs of pullback from the higher-end consumer, which gives us continued confidence in the health of demand across our portfolio. June was the strongest ref bar growth month of the quarter, somewhat bolstered by the FIFA World Cup, as games were played in six of our markets. Our same property portfolio achieved nearly 9% growth in average daily rate in June versus the same month last year. While the World Cup certainly provided compression and rate growth around game days the overall positive impact on our portfolio was limited group business in most of our world cup markets was weaker not only because of the fifa room blocks issue but also hesitancy from other potential customers to book in those markets during and around the time of the event while transient demand filled the gap this came at the expense of out of room spend that had been very strong in prior quarters as a result most of our large group focused hotels in world cup markets relatively underperformed while some of our transient focused smaller hotels with exposure to the games boasted strong results ref our strength for the quarter as a whole was broad based from a market perspective with philadelphia leading our portfolio with same property ref bar growth of 22 percent followed by salt lake city at 13.1 phoenix at 12.7 percent and Birmingham at 12.2 percent. We also saw healthy high single digits to double digit percentage ref bar increases in several other markets including Santa Clara, Washington DC, and San Diego. Performance in Phoenix continues to be aided by the successful ramp at Grand Hyatt Scottsdale Resort which is tracking favorably towards stabilization. The year is shaping up to be the strongest group year in the resort's history, while group pays for future periods remains encouraging as well. Turning to margins, same property hotel EBITDA margin was 28.7% in the second quarter, down 65 basis points from a year ago. The lapping of approximately $1.5 million in real estate tax refunds that we received during the second quarter of 2025 and an increase in expenses during the startup phase of the food and beverage repositioning at W Nashville were the most significant reasons for our margin decline for the quarter. We remain focused on the expense levers within our control and continue to work with our operators to manage discretionary spending appropriately. Turning to capital projects, we continue to reinvest in our portfolio during the quarter, and we have two significant renovations set to begin in the fourth quarter. The first phase of a two-phase comprehensive renovation of guest rooms and corridors at Andos Napa and a renovation of guest rooms, corridors and meeting space at the Ritz-Carlton Denver. Both of these renovation projects reflect our ongoing commitment to protecting and growing the long-term value of our portfolio. Given the timing of these renovations during lower demand periods in Napa and Denver, we expect limited cash flow disruption from these projects this year. Barry will provide additional details on all of our capital projects during his remarks. On the transaction front, last week we completed the sale of the 85-room Kimpton River Place Hotel in Portland, Oregon for $11 million or approximately $129,000 per key. The $11 million sale price represented a 19.4 times multiple on Hotel EBITDA and a 2% capitalization rate on net operating income for the trailing 12 months and the June 30th of 2026. River Place was an asset that we acquired in 2015 in a three-property portfolio transaction. While the hotel performed well historically, it significantly underperformed in the last few years due to market challenges, its location becoming less desirable, and new competitive supply additions. The hotel contributed minimal hotel EBITDA and was facing substantial near-term capital expenditure requirements and a challenging outlook over the next several years. We continue to maintain exposure to the recovering Portland market through the ownership of our 600-room Hyatt Regency Portland, which benefits from its location adjacent to the Oregon Convention Center and near the Moda Center. The overall transaction environment appears to be a bit more robust than it has been over the past several years. We continue to evaluate opportunities to further enhance the quality of our portfolio and drive superior FFO growth through both external and internal drivers. Throughout the history of our company, we have been active on both the disposition and acquisition fronts in an effort to achieve these objectives, and we expect to take advantage of similar opportunities when they arise in the years ahead. We will remain prudent in our evaluation of these opportunities and will continue to focus on maintaining a strong and flexible balance sheet to support our capital allocation decisions. Looking ahead, given the strength of our performance in the first half of the year, continued favorable market conditions, and a very strong group demand outlook for the second half of the year, we are raising the midpoint of our current full year 2026 adjusted EBITDA RE guidance by $7 million. Atis will walk through all of our updated 2026 guidance items in more detail during his remarks. We continue to see encouraging trends into the third quarter, which gives us confidence in our improved outlook for the remainder of the year. The third quarter is off to a very strong start as we estimate that July Ref Park growth for our same property portfolio, which now excludes Kimpton River Place, will be approximately 10% compared to the same period last year, with both leisure and group demand contributing to this increase. We believe that our high quality portfolio continues to be well positioned to take advantage of a low supply growth environment and a positive backdrop in all segments of hotel demand, especially on the higher end. We have experienced strength in both transient and group demand this year, and future indicators continue to support our expectation that our portfolio is poised for meaningful growth during the remainder of this year and the years ahead. With that, I'll turn the call over to Barry to walk through our operating results and capital expenditure projects in more detail.

Thank you, Marcel. Good afternoon, everyone. For the second quarter, our 30-hotel same-quality portfolio rev bar was $206.54, an increase of 5.6% compared to the second quarter of 2025, with growth entirely rate-driven, based on occupancy of 72.3%, flattened last year, and an average daily rate of $285.71, up 5.7%. As Marcel mentioned, the second quarter saw an anticipated shift in non-room spend for the same property total rev bar of $366.17, an increase of 3.3% compared to last year's second quarter. This modest growth in non-neam spend reflects a shift in mix related to an increase in transit demand and the anticipated mix of association versus corporate group demand, resulting in a difficult comparison of the same quarter last year. Moving into quarter compared to 2025 on the same property basis, April rev bar was $219.74, cents, up 6%, and May rev bar was $199.78, up 2.6%. June was the strongest performing month in terms of growth, with rev bar of $200.32, up 8.6%, with occupancy relatively flat. 19 of our 22 markets posted positive rev bar growth for the quarter. Palomar, Philadelphia led our portfolio with same property rev bar growth of 22%, while Monaco, Salt Lake City followed at 13.1%. Our Phoenix properties grew at a combined 12.7 percent. We also saw double-digit percentage growth at Grand Bohemian Mountain Brook of 12.2 percent, Park High at Aviara up 11.3 percent, and High Regency Santa Clara up 11.1 percent. The Ritz-Carlton Pentagon City was up 8.4 percent. The Ritz-Carlton, Denver, and Fairmont-Pittsburgh also posted healthy growth of 7.2 percent and 7.1 percent respectively. Growth was fairly balanced on day of week trends in the quarter. For all segments on the same property basis, weekday rent bar, Sunday through Thursday, was up 5.9%, while weekend rent bar, Friday and Saturday, was up 5.2%. Great growth was broad-based and well-balanced across every day of the week, ranging from just under 5% on Thursdays to nearly 7% on Mondays. On the expense side, total same property hotel operating expenses were $210.6 million for the quarter, an increase of 4.2%, outpacing our 3.3% revenue growth and resulting in 65 basis points of margin decline, with the largest single factor being the lapping of a significant real estate tax credit in the second quarter of last year. Looking at the individual components, rooms expense grew approximately 4% on a preoccupied room basis, while food and beverage expenses grew 3.3%, greater than the 1% growth in food and beverage revenue, which impacted F&B profitability. This was a direct result of a 1.5% increase in less profitable outlet business and a 1.1% decline in typically more profitable banquet business. Miscellaneous income declined nearly 12%, due primarily to less cancellation and attrition revenue compared to last year, but is expected to balance itself out over the course of the full year. A&G expenses grew approximately 7.9% for the quarter, due in large part to higher credit card commissions related to the higher transient things. Sales and marketing expenses continued to be well-controlled and were nearly flat to last year. Property operations and maintenance expenses declined just over 1% for the quarter, while energy expenses increased nearly 11%, viewed primarily to significant increases in gas and water expenses, offset by a more moderate 4% increase in electricity due, in part, to efficiencies from our ongoing refurbishment and replacement of chillers at many of our properties. Same property EBITDA was $84.9 million for the quarter, an increase of 1% and a margin of 28.7%. Turning to CapEx, we invested $15.4 million in portfolio improvements during the second quarter, bringing our year-to-date total to $30.6 million. During the second quarter, we finalized planning at Royal Palms Resort and Spa, the renovation of guest rooms and corridors in the 68-room Monta Vista building, and a renovation of T. Cook's Restaurant, which will take place during the third quarter. Additional ongoing upgrades across the portfolio include upgrading mechanical systems at eight hotels and ongoing minor improvements to guest rooms at three hotels. Looking ahead to the fourth quarter, we have two significant renovations scheduled to begin, both of which are currently on track. who will perform the first two phases of a comprehensive room renovation of corridors and guest rooms at Andaz Napa and a renovation of guest rooms, corridors, and meeting space at the Ritz-Carlton Denver. We continue to expect full-year capital expenditures of between $70 million and $80 million unchanged from our prior guidance. Before I conclude, I want to provide an update on our four Marriott Autograph Collection hotels. These four hotels have been strong performers and we are in the midst of further strengthening these hotels by evolving their individual names and positioning to better tie to their local markets the hotels will continue to maintain their autograph collection branding but the new names and positioning will better fit autograph collections philosophy of each hotel being distinctive in part by capturing the local essence of each market in which they reside the first step of this effort began earlier this year when we transitioned property management to davidson hotel group that transition went smoothly with no disruption to hotel performance. In the next few months, we will be renaming these four unique properties. As with the management transition, we do not anticipate any meaningful disruption to hotel operations and look forward to even stronger performance from each of these hotels under Davidson's management as they continue to be part of Marriott's autograph collection. With that, I will turn the call over to Atish.

Thank you, Barry. I will provide an update on our balance sheet, touch on the second quarter versus our prior expectations, and then walk through our updated 2026 guidance. At quarter end, we had approximately $1.4 billion of outstanding debt. Approximately three quarters of our debt was at fixed interest rates. Our weighted average interest rate at quarter end was about 5.5%. Our leverage ratio, as calculated under our credit facility, was approximately 4.8 times trailing 12-month net debt to EBITDA. Over time, we expect our leverage ratio to achieve our long-term target of sub four times net debt to EBITDA. As a reminder, we have no preferred equity or senior capital. During the quarter, we further resize the Andas Napa mortgage loan by paying it down by approximately $5 million ahead of the hotel's planned renovation, which is scheduled to begin next quarter. Approximately 7% of our debt matures next year with our most significant maturities in 2029 and 30. We continue to believe our capital structure is a source of strength given we have a mostly unencumbered asset base, a well-laddered maturity profile, and a strong syndicate of banking partners. At quarter end, available cash was $112 million dollars, and our $500 million revolving line of credit was fully undrawn, which resulted in total liquidity of $612 million. We did not repurchase or issue any shares during the quarter. We have $97.5 million remaining on our buyback authorization and $200 million of capacity under our ATM offering program. We paid a second quarter dividend of 14 cents per share, If annualized, this reflects an approximate 2.5% yield on our share price. We continue to balance dividend level with the utilization of significant COVID-era NOLs. We also continue to prioritize ways in which we can drive shareholder value, such as investments in our existing assets or share repurchases. As a reminder, in 2025, we finished the Grand Hyatt Scottsdale project, which we are benefiting from now. And as we wrap that up, we turn more aggressively to share repurchases, buying approximately 9% of our outstanding shares last year at a sub-$13 weighted average price per share. Moving ahead to the second quarter relative to prior expectations, just two points to frame the discussion ahead on guidance. First, as Marcel mentioned, second quarter results came in slightly ahead of our expectations with better REVPAR and EBITDA margin than expected, resulting in a $1 million beat to the adjusted EBITDA RE implied by the quarterly weighting that we had previously indicated. Second, as to our expectation for event-driven demand this year, we had previously guided to a range of 25 to 50 basis points of REVPAR growth due to special events. Our current estimate is that event-driven demand materialized at the low end of that range, and the mix of business being more transient than group didn't provide as much of a total revenue lift as had been anticipated. Turning next to our 2026 guidance, we've raised our full-year adjusted EBITDA RE guidance by $7 million to $273 million at the midpoint. The $7 million increase to adjusted EBITDA RE guidance is on top of the $6 million increase we made last quarter. Our adjusted EBITDA RE expectation has moved up approximately 2.5% since last quarter, or 5% since we initially provided full-year guidance in February. As to the weighting by quarter for the remainder of the year, we expect to earn in the high teens percentage range a full-year adjusted EBIT.RE in the third quarter, and just under a quarter of full-year adjusted EBIT.RE in the fourth quarter. As to REVPAR growth, we've increased the midpoint by 150 basis points to 5.5%. As we look ahead, a couple of things give us confidence in our outlook. First, group room revenue pace for the second half was up 12% at the end of June versus the year prior. That reflects a 300 basis point increase from where it stood a quarter ago. The pace increase is 80% demand-driven and 20% rate-driven. This higher pace reflects strong production in the second quarter, with group room revenue production up over 25% for the back half of this year, compared to production in the second quarter of 2025 for the back half of 2025. We have more than three quarters of our expected second half group business already booked. Second, we continue to see strong transient demand reflected both by results from our more transient-oriented hotels and overall transient pace. Based on our July projected REVPAR, several of our transient-oriented hotels, excluding those that benefited from special events, showed strong year-over-year gains. Those properties include our hotels in Salt Lake City, Pittsburgh, and downtown Orlando. As to transient pace, at the end of June, it was up in the high single-digit percentage range for both August and September. Turning next to our expectation for total REVPAR, we have increased our total REVPAR growth guidance by 75 basis points to 5.75% at the midpoint. The variance in growth of REVPAR versus total REVPAR reflects second quarter transient versus group mix. We expect second half total REVPAR to grow about 200 basis points more than REVPAR. None of our other guidance assumptions have changed. Guidance for interest expense, G&A expense, income tax expense, and capital expenditures are all the same as a quarter ago. We expect adjusted FFO per diluted share of $2.02 at the midpoint, which is an increase of eight cents at the midpoint. That expectation reflects about 15% growth in FFO per share relative to 2025. In closing, our high-quality, well-located portfolio of luxury and upper upscale hotels affiliated with strong brands and managers makes us well-positioned for growth, particularly given the supply backdrop and fundamentals.

We will now open call for questions jen may we please start the q a session of course we will now begin the q a session please limit yourself to one question and one follow-up if you would like to ask a question please press star one to raise your hand to withdraw your question press star one again we ask that you pick up your handset when asking a question to allow for optimum sound quality If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Chris Darling with Green Street. Chris, your line is open. Please go ahead.

Thanks for taking the question. Marcel, hoping you could talk a little bit more about what you're seeing in the transaction market these days, both maybe from a pricing perspective, but also in terms of depth of the bidding tent and anything else that has caught your eye?

Yeah, sure. Thanks. Thanks for the question, Chris. Yeah, like I said in my prepared remarks, I do think we're seeing a slightly more robust transaction market than we've seen over the past several years. And I think some of that obviously has to do with the fact that we are overall as an industry seeing some pretty good sustained growth over the last couple quarters. I think that this creates an environment where it does become a little bit easier for buyers and sellers to potentially find each other and end up with pricing that could work on both sides. It's obviously a little bit easier to look at a property that you can point a little bit more easily towards growth over the next several years to give you some more confidence about completing a transaction. And it also may end up getting to pricing that actually makes more sense for a seller in that situation. So overall, I think we're just seeing, you know, like I said, a little bit more robust markets certainly allows us to, you know, to build the pipeline a little bit more than what we've seen over the last several years and dig a little bit deeper into some of those opportunities.

Yeah, it's helpful. And, you know, maybe a question for Barry here, But as it relates to expense growth, you spoke about some of the moving pieces this quarter and how that may have been, you know, a bit of a bit of a headwind in the second quarter. How should we be thinking about OPEX per occupied room on a go forward basis for the portfolio, both second half of the year and then sort of on a run rate basis?

Yeah, I think on a preoccupied room basis, I think things are overall relatively normalized in that we're seeing preoccupied room growth in the 3% to 4% range. Now, that's tempered, obviously, and varies by quarter given how much occupancy growth there is. So, obviously, this quarter we had flat occupancy, so the overall expense levels were a little bit higher than we would have hoped for. I think embedded in the guidance and forecast is that we're going to drive a little more occupancy over prior year in Q3 and Q4, and that should help make or certainly assist in, at least on a procurated room basis, the expense levels being kind of toward the lower end of that range.

All right. Understood. Thanks for the time.

Your next question comes from the line of David Katz with Jeffries. David, your line is open. Please go ahead.

Thanks very much for taking my question. I appreciate all the detail. You know, you've, I think, done a very solid job with your existing portfolio, and I know that history suggests, you know, otherwise, but, you know, is the prospect of, you know, any corporate M&A, you know, on or off the table?

Well, I think as we've talked about in the past, corporate M&A is really driven by what the overall environment looks like from potential buyer and seller interest, obviously. I think we've focused very much on continuously upgrading the portfolio, making the portfolio as robust against potential challenges and similarly positioning it well for future FFL growth through continuously upgrading our portfolio and making sure it's an attractive portfolio from whatever perspective. We, as Atisha pointed out, have grown FFL pretty significantly over the past several years. And we're on a day-to-day basis just doing all the things that we think are going to drive value for us in this portfolio over time, no matter in what form that ultimately benefits all of our shareholders. So I think what you've seen in the overall transaction environment is that you're still not seeing a lot of large portfolio transactions that people are pursuing on the buy or sell And there's just been more focus on individual properties or smaller portfolios just overall in the transaction market. And I don't have a – currently, I don't have an expectation of that significantly changing or shifting here in the near term.

Understood. And just in a different direction, you know, the conversation around, generally speaking, around fee structures and what I'll refer to as owner consternation over certain aspects of the fee costs and fee streams, et cetera. I'd love whatever shareable perspective you may have about that issue and whether all of us are spending more time and attention to it than it deserves or, you know, it's really a thing?

Well, from an ownership perspective, obviously we are looking for ways to grow value in a portfolio and that includes every single element of operations. So it's extremely important for us over time to make sure that we keep our expenses under control and that the, you know, the growth in expenses over time has obviously been pretty significant in every aspect of the income statement. and similarly especially in an environment like today we want to make sure that we have all the right channels in place and all the opportunity to drive as much on the sales side as possible at the lowest acquisition cost possible so there's nothing new or different about that I think everyone knows that over time there has been a lot of pressure for owners on you know bringing down revenues you know to the largest percentage as possible to the bottom line. And that's something that we're all focused on, obviously. So I don't think it's anything unusual that we would look at every aspect of that as owners to make sure that we are doing right by ourselves and our shareholders.

I understand. Thank you.

Your next question comes from the line of Michael Bellisario with Baird. Michael, your line is open. Please go ahead.

Thanks. Good afternoon, everyone. I want to focus on the second half group pace commentary, sort of two parts. One, where are you seeing that pickup in terms of markets? And then two, how does that pickup maybe change sort of operator confidence or sort of pricing strategies into the back half of the year?

Yeah, good questions, Mike. So, you know, the strength is pretty broad based. As I mentioned, you know, the pickup was a few hundred basis points from a quarter ago. And the production was pretty evenly distributed between third quarter and fourth quarter and across a variety of markets. And frankly, as you know, you know, group has been a source of strength for us now, you know, in particular last year and this year. So seeing this kind of momentum has been quite positive for for us. So, you know, that's I don't know, Barry, if you have anything to add on the group side.

No, I think I'd emphasize one, very broad based across almost all of our properties and two, certainly, and a lot of it depends on in terms of rate and how properties maximize rate with group. the question really at this point and given the high levels of group business on the books where those holes are so if there are holes in places where a market's compressed but maybe our hotel hasn't been able to yet put a group in we're going to be able to capture that group at a very high rate but conversely when you look at a lot of a lot of those markets where we are where we have very good group pace the holes are pieces and places that are hard to fill so while we may continue to fill more group more room nights in particular good periods coming in and out of holidays which is obviously prevalent both in the third and fourth quarter we may or may not achieve significant rate growth on those compared to the overall rate platform but we're booking business that we otherwise wouldn't book and that's that's really the puzzle for each property is how best to do that and how to drive overall revenue.

Got it. That's helpful. And then just a follow-up on capital allocation. How do you think about the funding sources for any potential deals? And then for things that are in your pipeline, how have maybe underwritten returns or maybe seller expectations changed over the last 90 days? Thank you.

Yeah. So I'll take the first part of that. So in terms of funding of deals, as we talked about, healthy amount of liquidity, uh leverage ratio that's uh you know kind of still above where our target is but you know certainly sub uh five times so some capacity there so i think we'd look to you know existing uh resources if not um potentially you know additional dispositions over time as ways to to fund any acquisitions um and um i think with regard to pipeline maybe if you have anything to there yeah um you know as it relates to pipeline and expectations uh like i like i pointed out i

think we're seeing probably a little bit more you know active you know more activity out there that that probably gives a little bit more of a uh an expectation of where things could be pricing um you know i don't i wouldn't say it's hard for me to point to anything specific and say you know seller expectations have really dramatically changed over the last 60, 90 days. It's really hard to point to any individual transactions to really talk about that in detail. Clearly, to my point, there's obviously a little bit more optimism about the health of the lodging industry overall and the growth that we've seen over the last several quarters.

So I think that just provides in general generally a little bit more of a backdrop to be you know for for some for some productivity on the on the transaction side i'd say your next question comes from the line of austin for schmidt with key bank capital market austin your line is open please go ahead thanks good afternoon everyone um you had referenced that the the transient pace for august and september um was tracking the high single digit range um i believe you said that was as of the end of june can you just give us a sense how you know that's materialized for transient pace you know looking 60 to 90 days out um you know here you know more recently and if you think that's you know have you seen things continue to strengthen have you given some of that back um just give us a sense and kind of frame that yeah i mean first i would preface it by saying transient pace is not necessarily, it does move around a bit, so it's not, you know, always the best direct indicator, but it has strengthened, it's moving in the right direction, and I think, you know, reflects kind of the actualized results that we're seeing.

So, you know, if you look at what our transient pace was going into July and how July came out, I think it is a good indicator. So, you know, it's one of the things that frankly, you know, one of the many data points we look at to think about, you know, our guidance. And obviously, since we took it up, we were, you know, looking at all the various data points and input we have, and that was one of the ones I mentioned. So I would view it in the context of that. But also, I would just say that, you know, we do have a healthy level of confidence in the outlook and transient is one piece of it. And obviously, what we've been talking about on the group side is the other.

Very helpful. And then with respect to the guidance revision, can you talk a little bit about how the contribution at the Grand Hyatt Scottsdale has changed this year? I think, you know, initially at the outset of the year, you had around, you know, that hotel contributing towards the low $30 million range. What's sort of the new expectation, given it seems like things are trending well there?

Yeah, we're a smidge higher. We're still in the low $30 million range, but, you know, kind of $32-ish million, so to speak. So I think we're sort of in that, in the range that we talked about before. I mean, Grand Hyde Scott still is tracking, you know, really well. But the guidance revision really has, you know, as much to do with the rest of the portfolio and what we're seeing, you know, more broadly.

That's all for me. Thank you.

A reminder, if you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. Your next question comes from the line of Ari Klein with BMO Capital Markets. Ari, your line is open. Please go ahead.

Thank you and good afternoon. Barrett, I think you mentioned some hesitancy amongst groups in the second quarter around World Cup markets. Curious what that looked like maybe outside of World Cup markets and then just is some of the strengths in group case you're seeing in the second half of the year related to maybe a shift just in where the group ends up coming in and you know just on that topic in general 2027 how is that shaping up for a group or you know just maybe growth tailwinds in general how are you thinking about that for next year well yeah let me let me start off with that and then barry can jump in so i did mention in my comments that um we certainly saw a little bit of a pullback in group around uh in the world

cup markets around the time of the world cup which we did attribute to some extent to uh groups obviously wanting to stay away from some of those markets and frankly that you're also um obviously driving rates uh in and trying to get more transient in as a result of that too so that definitely was something that impacted june in the world cup markets um i did mention and i think it's fair to say that some of the softness in group in the second quarter wasn't just related to that may had always shaped up to be one of our weaker group markets from a from a growth perspective we had a particularly strong second quarter last year on the group side it was hard to replicate some of that and we had some holes in various properties in the month of may that just never really filled so so we saw some weaker group specifically in the world cup markets around the world cup but then also saw some softness softness in the month of may kind of kind of throughout the portfolio so um you know it's always hard to say you know things whether things shift or not but what we can say is we obviously had you know pretty good group base in the in for in the first quarter second quarter was a little weaker um and that's really how we came into the year already you know the second quarter always looked to be the weakest quarter from a group perspective. Second half has always looked strong. What was particularly encouraging, obviously, is that we actually saw group production pick up in the second quarter and even strengthened that into the second half. So, you know, whether that's any kind of shifting, as Barry, I think, pointed out too, it's pretty broad based in the portfolio. So it's not just that you're saying, okay, we lost out in these World Cup markets and group, and now that's kind of picking up there.

We really have broad based strengths in the portfolio on the group side. thanks and then just maybe on the autograph collection name changes and davidson shift just curious is there any anything meaningful that they expect to come out of it um right now you can quantify i think it's hard to quantify in in the near term our expectations are really more around a little bit of the mid to longer term in terms of bringing in davidson as a management company that we've worked with previously with great success, and then really taking this opportunity to rebrand the hotels where, to rename the hotels, where each property has its own unique identity that's local to its marketplace, but continue to be part of the autograph collection. We think that ultimately pays significant dividends, both on driving revenue through connection to local market, enhanced level of activity in the properties and kind of special events programming that fits in with the local markets and attracts guests. And then with Davidson and their ability to both sell that as well as help us on the cost control side. And again, these are properties that have done very well for us. We just think it's an opportunity to really enhance them and drive more out of them going forward.

Great. Thank you.

Your next question comes from the line of Jack Armstrong with Wells Fargo. Jack, your line is open. Please go ahead.

Hey, good afternoon, and thanks for taking the question.

Given the strength in your shares this year, can you talk a little bit about your preferred use of incremental capital at this point and how you might rank acquisitions, ROI, CapEx, and deleveraging? yeah i think uh thanks jack for the question appreciate it um atish spoke about it a little bit earlier um clearly you know we're we're quite pleased with um the result of our elevated capex spending that we had a few years ago that was particularly tight to to grant hyatt scottsdale so uh if you look at the last couple years if you kind of look at the trajectory of where kind of focus has been it was obviously a good amount of capital going out for those roi projects we kind of followed that up as that's as that started coming down by using some more capital for share repurchases like we did last year and certainly we thought the pricing was pretty attractive back then and obviously feel so even more strongly now being able to buy back as much as we did at that sub 13 level um you know clearly the price the stock price has moved up moved up so it becomes you know a little bit more interesting to start looking at potential acquisition acquisitions and external growth as uh you know kind of part of the capital allocation decision going forward whereas before that was really clearly a much inferior uh way to spend our capital than the few things that we did over the last several years So we'll continue to look at it from a very balanced perspective. We certainly still believe that there's value in the stock. We are still, and Tish can certainly jump in there as well. But again, we will continue to look at it on a balanced basis to the extent that we now find an opportunity that we think is going to drive good external growth for us. It just becomes a little bit more likely than what we've seen over the last several years.

Yeah, I mean, the only thing I would add is, you know, if you look back historically, we have taken sort of a balanced approach and, you know, utilized kind of all those tools to grow value, whether it be, you know, transactions, share repurchases, deploying capital under assets. I think, you know, as we look back over the last couple of years, obviously, some of these tools were just much more desirable in terms of a value accretion perspective. And so you saw us, you know, step on the gas pedal, so to speak, for share repurchases. I think now we're in an environment where it's, you know, it's definitely more opportunistic and it's case by case. And we'll, you know, toggle between those levers as we have historically done. I will say just in terms of current valuation, since you mentioned it, we currently trade at about $350,000 a key with a portfolio cap rate. in the mid sevens and Hotel Ibita multiple, you know, south of 11 times. So, you know, as you think about that, I mean, certainly, you know, while the share prices have moved, we're still, you know, trading within the range, you know, more broadly, historic range. And if you think about the fundamentals and the supply outlook, and kind of where we trade relative to NAV, both our internal NAV and the freshest external NAV estimates, I think you find that even now after the appreciation, we're still trading at a very reasonable level and there's still a gap between where we currently trade and NAV.

So I think that also maybe is helpful to you as you think about how we think about the stock price and capital allocation. now really helpful there and then just one follow-up can you talk a little bit about what you're seeing in the nashville market and when we should expect to see the incremental ebitda from the f and b capex you put in at the w yeah so obviously we're very pleased with how smoothly the transition went the work that we did on the capital side the look and feel the restaurants is tremendous and the initial reviews in the local market have been great as you as i I think you know two of the outlets are run by Marriott, two are run by Jose Andres Group, and each of those outlets has had, I think, really good success in terms of connecting with the local community. Obviously, each outlet, when you're opening four outlets really at the same time, each outlet is coming online at kind of a different pace, based in part on what demand generators What our team has done, I think, has done a really good job on working with both Marriott and Jose Andres group on looking at how we can drive revenue into those outlets. So in some cases where an outlet may have not gotten off to exactly the same start we'd expected, spent a huge amount of time working with the JAG team on local influencers, social media marketing, things like that, and have seen really immediate kind of returns of those. We had always forecasted this year to be really a ramp up year in terms of the food and beverage operation. But I think as we look ahead to 27 there, that's kind of when we're going to get to the point of what we expect the restaurants to do and be getting both the contribution from the restaurants, but more importantly, getting to the content you expect from the hotel side. And we've had some great success so far in terms of what we expected, which is the ability of using each of the outlets for private events related to, in part, to both outside catering, but more importantly, to in-house group business and that we've seen significant uplift and interest in our group leads that relate to groups that are generally smaller size but want to take advantage of the opportunity to dine in the Jose Andres outlets, experience those menus and things like that. And on the leisure side, we've got a lot of creative offerings in the market that are driven around experiencing each or all of the Jose Andres outlets as part of promotions and packages. So I hope that answers the question.

Yeah, I would just add that I mentioned in my remarks, too, that part of the pressure of margins in the second quarter was because we have some higher expenses related to the food and beverage operations there, particularly as things are just starting up and everything is getting kind of right-sized over time and as the revenues are obviously building up. So so we certainly expect that, you know, shorter term that obviously puts a little bit of pressure on on those numbers. But then over time, we expect the revenue to grow, to really, you know, get to the right margins there and make sure that not only we see more profitability on the F&B side, but much more importantly, how this is going to have this halo effect for the for the property overall and start really, really building up to the room side of the next several years. So that is certainly not a, it's not a this year story. It's not even really a, you know, fully getting there next year story. That's going to take a couple of years. I mean, that's just has to build and really kind of help us much more from a profitability standpoint on the room side, even more so than on the F&B side.

Appreciate the caller. Thanks for the time.

There are no further questions at this time. I will now turn the call back to Marcel Verbass, chairman and CEO for closing remarks.

Thank you, Jen. Thanks, everyone, for joining us today. I hope everyone enjoys the rest of their summer, and we look forward to speaking with you again over the next several months and look forward to hopefully what is a very promising second half of the year. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.