Q3 2025 Xenia Hotels & Resorts Inc Earnings Call

Speaker #1: Hello and welcome, everyone, to the Xenia Hotels & Resorts Q3, 2025 earnings conference call. My name is Becky, and I'll be your operator today.

Operator: Hello and welcome, everyone, to the Xenia Hotels & Resorts Q3 2025 earnings conference call. My name is Becky, and I'll be your operator today. During the presentation, you can register a question by pressing Star followed by 1 on your keypad. If you change your mind, please press Star followed by 2. I will now hand over to your host, Aldo Martinez, Manager, Finance, to begin. Please go ahead.

Speaker #1: During the presentation, you can register a question by pressing Start followed by 1 on your keypad. If you change your mind, please press Start followed by 2.

Speaker #1: I will now hand over to your host, Aldo Martinez, Manager Finance, to begin. Please go ahead.

Speaker #2: Thank you, Becky. And welcome to Xenia Hotels & Resorts, third quarter 2025 earnings call and webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer.

Aldo Martinez: Thank you, Becky. Welcome to Xenia Hotels & Resorts Q3 2025 earnings call and webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer, Barry Bloom, our President and Chief Operating Officer, and Atish Shah, our Executive Vice President and Chief Financial Officer. Marcel will begin with a discussion on our performance. Barry will follow with more details on operating trends and capital expenditure projects. Atish will conclude today's remarks on our balance sheet and outlook. We will then open the call 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 other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.

Speaker #2: Barry Bloom, our President and Chief Operating Officer, and Atish Shah, our Executive Vice President and Chief Financial Officer. Marcel will begin with a discussion on our performance.

Speaker #2: 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.

Speaker #2: We will then open the call 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.

Speaker #2: These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.

Speaker #2: 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, October 31st, 2025, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

Aldo Martinez: 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, October 31, 2025, 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 Q3 earnings release, which is available on the Investor Relations section of our website. The property level information we'll 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.

Speaker #2: 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 third quarter earnings release, which is available on the investor relations section of our website.

Speaker #2: The property level information we'll be speaking about today is on the same property basis for all 30 hotels unless specified otherwise. An archive of this call will be available on our website for 90 days.

Speaker #2: I will now turn it over to Marcel to get started.

Speaker #3: Thanks, Aldo. And good morning, everyone. As we reported this morning, our third quarter performance generally met the expectations we outlined during our second quarter earnings call.

Marcel Verbaas: Thanks, Aldo, and good morning, everyone. As we reported this morning, our Q3 performance generally met the expectations we outlined during our Q2 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 Q3 for our portfolio and the industry overall. However, despite these macro challenges, we continue to benefit from the high-end positioning of our portfolio, as well as unique internal growth drivers such as the continued ramp of Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch. We also continue to benefit from strong group demand throughout the portfolio, which was evident again in September and thus far in Q4. We expect group demand to remain strong as we look ahead to next year, which is supported by robust group room revenues already on the books for our portfolio for 2026.

Speaker #3: 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.

Speaker #3: However, despite these macro challenges, we continue to benefit from the high-end positioning of our portfolio, as well as unique internal growth drivers such as the continued ramp-up of Grand Hyatt Scottsdale Resort.

Speaker #3: We also continue to benefit from strong group demand throughout the portfolio, which was evident again in September and thus far in Q4.

Marcel Verbaas: Turning to our Q3 financial results, for Q3 of 2025, we reported a net loss of $13.7 million, adjusted EBITDAre of $42.2 million, and adjusted FFO per share of $0.23, which was a decrease of 8% compared to the same quarter last year. Our same property RevPAR for Q3 was essentially flat for our 30 hotel portfolio compared to the same period in 2024, with an occupancy decrease of 100 basis points, offset by a 1.6% increase in average daily rate. The Houston market in particular was a drag on portfolio performance, as the market and our hotels faced tough comparisons due to a short-term demand lift from the aftermath of Hurricane Beryl in Q3 of last year.

Marcel Verbaas: Additionally, given the seasonality of the various demand segments in our portfolio, group demand, which has been the strongest segment this year, was not as big of a driver for our portfolio in Q3 as it was in the first half of the year and as we expect to see again in Q4. Despite these challenges, when excluding our Houston assets, same property RevPAR increased by 2.9%, which was largely driven by significant year-over-year growth at Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch, as the resort continues its track towards post-renovation stabilization. In addition to the strong growth in Scottsdale during Q3, we experienced double-digit percentage RevPAR growth in Atlanta, Santa Clara, Birmingham, and Savannah. Despite the relatively muted performance in Q3, we are pleased that for the first nine months of the year, our same property portfolio achieved a 3.7% increase in RevPAR.

Marcel Verbaas: Driven by 80 basis point higher occupancy and a 2.4% increase in average daily rate when compared to the same period in 2024. This outperformance was again mostly fueled by the recently renovated and upbranded Grand Hyatt Scottsdale Resort during the early phase of its path towards stabilization, as it continues to perform in line with our underwriting expectations. We continue to be excited about the impact of our stronger group positioning this year, particularly the associated increase in banquet and catering revenues. As a result of a significant increase in food and beverage revenues, our Q3 same property total RevPAR increased by 3.7% in Q3 as compared to last year, despite our RevPAR being flat year-over-year. This Q3 increase was again mainly driven by Grand Hyatt Scottsdale.

As a result of a significant increase in food and beverage re revenues, our third quarter, same property, total rep bar increased by 3.7% in the third quarter as compared to last year.

Despite our ref bar being flat here over here.

This third quarter increase was again, mainly driven by Grand high at Scottsdale.

Marcel Verbaas: For the first nine months of the year, the impact of increased food and beverage revenues was even greater, as same property total RevPAR increased by 8.5%. Our strong group pace for Q4 and for 2026 gives us optimism that we will be able to continue to experience outsized total RevPAR gains in the quarters ahead. Q3 same property hotel EBITDA of $47 million was 0.7% above 2024 levels, and hotel EBITDA margin decreased 60 basis points. Excluding Grand Hyatt Scottsdale, Q3 hotel EBITDA decreased 7.8%, and hotel EBITDA margin decreased 160 basis points. For the first nine months of the year, same property hotel EBITDA of $205.4 million increased by 12.6% above 2024 levels, and hotel EBITDA margin increased 101 basis points. Excluding Grand Hyatt Scottsdale, year-to-date hotel EBITDA increased 3.9%, and hotel EBITDA margin was essentially flat.

For the first 9 months of the year, the impact of increased food and beverage revenues was even greater.

That same property, total ref bar increased by 8 and a half percent.

Our strong group pays for the fourth quarter and for 2026, give us optimism that we will be able to continue to experience outside. Total warfare games in the quarters. I have

third quarter, same property, Hotel ibido, 47 million plus 0.7% above 2024 levels,

And hotel, AA margin decreased 60 basis points.

Excluding Grant Heights, Scottsdale's third quarter hotel revenue decreased 7.8%, and hotel Ava's margin decreased 160 basis points.

For the first 9 months of the year, same property revenue for Hotel Ibida of $205.4 million increased by 12.6% above 2024 levels. Additionally, the Hotel Ibida margin increased by 101 basis points.

Excluding Grand high at Scottsdale.

Year to date Hotel IBA increased 3.9%. And also even on margin was essentially flat.

Marcel Verbaas: We remain pleased with our operators' efforts to control expenses in a continued inflationary environment. Turning to our capital expenditure projects, we now project that we will spend approximately $90 million on property improvements during the year, which is a $10 million increase compared to the midpoint from our prior CapEx guidance. This increase is due to two factors. First, the anticipated completion of some additional capital projects that were originally planned at various properties, as we have been able to mitigate the impact of any potential tariff-related cost increases. Second, the costs we will be incurring in 2025 for a comprehensive reconcepting of the food and beverage operations at W Nashville. Even with this increase, we still anticipate spending approximately $15 million less on capital expenditures in 2025 than we projected at the beginning of the year.

We remain pleased with our operators' efforts to control expenses in a continued inflationary environment.

According to our capital expenditure projects, we now project that we will spend approximately $90 million on property improvements here in the year, which is a $10 million increase compared to the midpoints for my prior capex guidance.

This increases due to 2 factors.

First, the anticipated completion of some additional capital projects that were originally planned at various properties.

as we have been able to mitigate the impact of any potential carrier related cost increases,

And seconds, the cost we will be incurring in 2025 for a comprehensive reconciling of the food and beverage operations at w Nashville.

Even with this increase, we still anticipate spending dollars Less on Capital expenditures in 2025 than we projected at the beginning of the year.

Marcel Verbaas: We are extremely excited about the upcoming relaunch of the food and beverage venues at W Nashville that we announced in our release this morning. We extensively evaluated several options to increase the appeal of the food and beverage outlets in the hotel, which could drive incremental F&B revenues and further enhance the desirability of the hotel for all demand segments. After completing this thorough process, we are pleased to have reached an agreement with Jose Andres Group, under which Jose Andres Group will operate and/or license essentially all of the food and beverage venues at the hotel. We believe strongly that the combination of the operational and marketing expertise of Marriott and Jose Andres Group will drive incremental revenues in hotel EBITDA and make the hotel an even more exciting destination. We will be making an additional capital investment of approximately $9 million to effectuate this change.

We are extremely excited about the upcoming relaunch of the food and beverage venues at W Nashville that we announced in our release this morning.

Be extensively evaluated, several options to increase the appeal to food and beverage, outlets, and hotel.

Which could drive an incremental F&B revenue and further enhance the desirability of the hotel for all demand segments.

After completing this thorough process.

We are pleased to have reached an agreement with Jose Andres group under which Jose Andres group were operate. Andor license essentially, all of the food and beverage venues at the hotel.

We believe strongly that the combination of the operational and marketing expertise of Marriott and José Andrés Group will drive incremental revenues and hotel EBITDA.

More exciting destination.

We will be making an additional capital investment of approximately $9 million to effectuate this change.

Marcel Verbaas: However, given the already outstanding physical condition and quality of the hotel's existing venues, this capital will be largely spent on FF&E and branding elements, as well as kitchen equipment and back-of-the-house improvements. We are projecting that the relaunch of the F&B outlets will add between $3 and $5 million to hotel EBITDA upon stabilization, through increases in food and beverage and rooms revenues, which we believe should result in the hotel generating in excess of $20 million of hotel EBITDA in the next few years. Barry will provide additional details on his exciting W Nashville F&B relaunch during his remarks. As we look ahead to the remainder of the year, we remain cautious in our near-term outlook, which is reflected by slightly reduced expectations for Q4.

However, given the already outstanding physical condition and quality of the hotel's existing venues, this capital will be largely spent on furniture, fixtures, and equipment (FF&E), branding elements, as well as kitchen equipment and back-of-house improvements.

We are projecting that the relaunch of the FNB outlets will add between $3 and $5 million to Hotel Ibida upon stabilization.

Through increases in food and beverage and rooms revenues, which we believe should result in the hotel generating an excess of $20 million of hotel EBITDA in the next few years.

Barry will provide additional details on this. Exciting W, Nashville, FNB relaunch during his remarks.

As we look ahead to the remainder of the year, we remain cautious in our near-term outlook, which is reflected by slightly reduced expectations for the fourth quarter.

Marcel Verbaas: For the full year, we now expect a same property RevPAR increase of 4% and adjusted EBITDAre of $254 million at the midpoint of our updated full-year guidance. Atish will provide additional details on these modest adjustments to guidance during his remarks. As has been the case for most of the year, group business continues to be a driver of our RevPAR growth, with leisure softening a bit this year, as we had anticipated, while business transient continues to improve gradually. We saw a continuation of this trend again in October. We are encouraged by the approximately 5.8% RevPAR growth that we project our same property portfolio will achieve in October, which represents a meaningful improvement over our portfolio's Q3 performance. With strong overall group pace for Q4, we again anticipate significant growth in food and beverage revenues during the quarter as well.

For the full year. We now expect the same property, refire, increase of 4%, and adjusted the Eid Diary of 254 million at the midpoint of our updated full year guidance.

A teacher provided additional details on these modest adjustments to guidance during his remarks.

As has been the case for most of the Year Group business continues to be a driver of our refire growth with Leisure softening a bit this year as we had anticipated.

While business transient continues to improve gradually.

We saw a continuation of this trend again in October.

We are encouraged by the approximately 5.8% growth that we project our same-property portfolio will achieve in October.

Which represents a meaningful improvement. Over our portfolio's, third quarter performance.

But strong overall group pays for the fourth quarter. We again anticipate significant growth in food and beverage revenues during the quarter as well.

Marcel Verbaas: Looking ahead to 2026, we believe that 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. We continue to believe strongly in the long-term growth prospects for our well-located, diversified, and high-quality portfolio in 2026 and beyond. Barry will now provide more details on our Q3 operating results, the W Nashville food and beverage relaunch, and our other capital projects.

Looking ahead to 2026, we believe that Grant Heights Scottsdale will continue to ramp consistently with our underwriting.

and we expect group demand across the portfolio to be robust and drive outsized, non- rooms Revenue growth

We can continue to believe strongly in the long term growth prospects for our well-located Diversified and high-quality portfolio in 2026 and Beyond.

Barry, I'll provide more details on our third quarter operating results, the W Nashville, food and beverage relaunch, and our other capital projects.

Barry Bloom: Thank you, Marcel, and good morning, everyone. For Q3, our same property portfolio RevPAR was $164.50, flat to Q3 in 2024, based on occupancy of 66.3% and an average daily rate of $248.09. Strength in non-rooms spend, notably banquet revenues, resulted in total RevPAR of $289.76 for the quarter and $329.60 for the year-to-date, an increase of 3.7% and 8.5%, respectively, when compared to the same periods in 2024. Excluding Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch, Q3 RevPAR was $167.87, a decrease of 2.6% as compared to 2024. This reflected a decrease of 289 basis points in occupancy for the period and an increase of 1.5% in average daily rate as compared to Q3 of 2024.

Thank you, Marcel, and good morning everyone. For the third quarter, our same property portfolio RevPAR was $164.50, flat compared to the third quarter in 2024, based on occupancy of 66.3% and an average daily rate of $248.90.

strengthened on room, spend notably banquet revenues resulted in total rep, part of 289.76 for the quarter and 329.60 for the year to date, an increase of 3.7% and 8.5% respectively. When compared to the same periods in 2024,

Excluding Grant height Scottsdale. Third quarter repar was 167.87 a decrease of 2.6% as compared to 2024

Barry Bloom: Our top-performing hotels in the quarter were Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch, with RevPAR up over 270%; Andaz Savannah up 15.3%; Waldorf Astoria Atlanta Buckhead up nearly 14%; Grand Bohemian Hotel Mountain Brook up 13.2%; Hyatt Regency Santa Clara up 12%; Renaissance Atlanta Waverly up 9.5%; Grand Bohemian Hotel Orlando up nearly 9%; Bohemian Hotel Savannah Riverfront up 8.3%; and The Ritz-Carlton Pentagon City up nearly 6%. Strength in group business and continued improvement in corporate demand was the driver behind success at most of these properties. Hotels that experienced RevPAR weakness compared to Q3 of 2024 included Loews New Orleans, all three Houston hotels, Marriott Dallas Downtown, Hyatt Centric Key West, and Kimpton Hotel Palomar Philadelphia.

This reflected, a decrease of 289 basis points in occupancy for the period and an increase of 1.5% in average daily rate as compared to the third quarter of 2024.

Our top performing hotels in the quarter include Grant Height, Scottsdale, with Redart up over 270%. Savannah is up 15.3%, Waldorf Astoria’s Atlanta bucket is nearly 14%, Grand Bohemian Hotel Mountain Brook is up 13.2%, I originally Santa Clara is up 12%, and Renaissance Atlanta Waverly is up 9.5%.

Grand Bohemian Hotel, Orlando up, nearly 9% Bohemian Hotel. Savannah Riverfront up 8.3% and the rich calls and Pentagon City up nearly 6%.

Strength and Group business and continued Improvement in corporate demand was the driver behind success at most of these properties.

Barry Bloom: New Orleans, Dallas, and Philadelphia suffered from a lack of convention center activity relative to last year, and the Houston hotels were challenged by a comparison to the significant amount of business related to Hurricane Beryl that they captured last year. General leisure softness and return of inventory that was offline last summer impacted Key West. Looking at each month of the quarter compared to 2024, July RevPAR was $161.98, down 1.7%. August RevPAR was $154.43, down 1.5%. September RevPAR was $177.52, up 3.2%. Excluding Grand Hyatt Scottsdale Resort & Spa at Gainey Ranch, compared to last year, business declined in July and August, largely due to the weakness in the Houston market and softer leisure demand overall. Performance in September significantly improved as we got out of the leisure-heavy summer months and saw strong group business as well as a significant increase in corporate travel.

Hotels had experienced rep. Our weakness compared to the third quarter of 2024 included lows in New Orleans, all three Houston hotels, Marriott, Dallas Downtown, Hyatt Centric, Key West, and Kipton Hotel Palomar in Philadelphia.

New Orleans, Dallas, and Philadelphia suffered from a lack of convention center activity relative to last year. In Houston, hotels were challenged by a comparison to the significant amount of business related to Hurricane Barrel that they captured last year.

General Leisure softness and return of inventory that was offline last summer impacted us.

Looking at each month of the quarter, compared to 2024, the live rep part was 161.98, down 1.7%.

In August, the Repar was $154.43, down 1.5%.

3.2%.

Excluding Grant Heights Scottsdale compared to last year, business declined in July and August, largely due to weakness in the Houston market and softer leisure demand overall.

Performance is September significantly improved as we got out of the Leisure heavy, summer months, and saw strong group business, as well as a significant increase in corporate travel.

Barry Bloom: Business from our largest corporate accounts grew modestly in Q3, with declines in both July and August, but a significant increase in September as compared to Q3 of 2024. Business from the largest volume accounts continued to be down meaningfully from 2019, but has continued to grow throughout the year. Group business continues to be a bright spot across the portfolio, despite the seasonal shift from corporate to association-related group, resulting in the lowest quarterly group growth for the year. For Q3, excluding Grand Hyatt Scottsdale, group room revenues were virtually flat compared to Q3 of last year due to modest declines in both July and August, while September was more in line with the trends we have seen throughout the year, up approximately 5%. Food and beverage revenue from banquets declined slightly during the quarter compared to last year as a result of the mix of group business.

Business from our largest corporate accounts grew modestly in Q3, with declines in both July and August. However, there was a significant increase in September compared to Q3 of 2024.

Business from the largest volume accounts continue to be down meaninglessly from 2019, but has continued to grow throughout the year.

Group business continues to be a bright spot across the portfolio. Despite the seasonal shift from corporate to Association Related Group, resulting in the lowest quarterly group growth for the year.

The third quarter, excluding Grant Heights Scottsdale group room revenues were virtually flat compared to the third quarter of last year due to modest declines in both July and August while September was more in line with the trends. We have seen throughout the year up approximately 5%.

Food and beverage revenue from Banquets declined slightly during the quarter compared to last year. As a result of the mix of Group business,

Barry Bloom: Now turning to expenses and profit, Q3 same property total revenue increased 3.8% compared to Q3 of 2024. Hotel EBITDA margin decreased by 60 basis points, resulting in hotel EBITDA of nearly $47 million, an increase of 0.7%. For the year-to-date, hotel EBITDA increased 12.6%, with margin improvement of 101 basis points compared to the same period in 2024. Since Grand Hyatt Scottsdale was undergoing its transformative renovation last year, the following P&L analysis is presented for the remainder of the same property portfolio compared to last year. Hotel EBITDA for the quarter was $46.7 million, a decrease of 7.8%, on a total revenue decrease of 0.7%, resulting in a margin decline of 160 basis points. However, we are pleased with the ability of our hotels' management teams to control expenses in light of softer revenues. Rooms department expenses increased by 1.5% on a 2.6% decline in RevPAR.

Now, turning to expenses and profit third quarter, same property, total revenue increased 3.8% compared to the third quarter of 2024.

Hotel margins decreased by 60 basis points, resulting in hotel EAV nearly $47 million, an increase of 0.7%.

For the year-to-date, Hotel EPA increased 12.6%, with margin improvement of 101 basis points compared to the same period in 2024.

Since Green height, Scotsdale was undergoing, its transformative renovation. Last year. The following penal analysis is presented for the remainder of the same property portfolio compared to last year.

Hotel ibida for the quarter was 46.7 million. A decrease of 7.8% on a total revenue, decrease of 0.7% resulting in a margin decline of 160 basis points.

However, we are pleased with the ability of our hotels and management teams to control expenses in light of software revenues.

Barry Bloom: Food and beverage growth was muted at 0.4%, with expense growth of 0.8%. Other operating department income, including spa, parking, and golf revenues, was up 6.6%, and miscellaneous income was up 7.8%, resulting in a total RevPAR decline of just 0.7%. In the undistributed departments, expenses in A&G and sales and marketing were well controlled. A&G increased by 1.5% compared to last year, while sales and marketing expenses grew by 2%, continuing the moderating trend we've experienced over the past several quarters. Property operations and utilities expenses were up 2.6% and 0.5%, respectively. Turning to CapEx, during Q3, we invested $19.9 million in portfolio improvements, which brings our total for the year to $70.7 million.

Department expenses increased by 1.5% on a 2.6% decline in revenue.

Food and beverage growth was muted at 0.4% with expense growth of 0.8%.

Other opted Department income, including spa parking and golf revenues, was up 6.6%. Miscellaneous income was up 7.8%, resulting in the total report decline of just 0.7%.

In the undistributed Departments expenses and AMG and sales and marketing were well controlled Angie increased by 1.5% compared to last year while sales and marketing expenses. We write 2%, continuing the moderating trend. We've experienced over the past, several quarters.

Property operations and utilities expenses increased by 2.6% and 0.5%, respectively.

Barry Bloom: These amounts are inclusive of capital expenditures related to the completion of the transformative renovation of Grand Hyatt Scottsdale, where we completed improvements to the building facade and parking lot during Q3, which now mark the full completion of this transformational renovation. During Q3, we made significant progress on select upgrades to guest rooms at several properties, including Renaissance Atlanta Waverly, Marriott San Francisco Airport, Hyatt Centric Key West, Hyatt Regency Santa Clara, Grand Bohemian Hotel Mountain Brook, Grand Bohemian Hotel Charleston, and Kimpton River Place. This work, which is expected to be substantially complete by year-end, is being done during periods of lower occupancy, particularly over the holiday season. We are continuing to perform significant infrastructure upgrades at 10 hotels this year, including facade waterproofing, pillar replacements, elevator and escalator modernization projects, and fire alarm system upgrades as business levels allow.

According to capex between the third quarter, we invested 19.9 million in portfolio improvements which brings our total for the year to 70.7 million.

These amounts are inclusive of capital expenditures related to the completion of the transformative. Renovation of Grant height Scottsdale, we completed improvements in the building facade and parking lot. During the third quarter, which now marked the full completion of this transformational renovation,

During the third quarter, we made significant progress on select upgrades to guest rooms at several properties including Renaissance plan and a Waverly Marriott. San Francisco Airport. I had Centric Key West High, Regency Santa Clara Grand, Bohemian Hotel Mountain, Brook, Grand Bohemian Hotel, Charleston and kimson, River Place.

This work which is expected to be substantially complete by year. End is being done during periods of lower occupancy, particularly over the holiday season.

Barry Bloom: The majority of this work will be completed in Q4 or early 2026. In Q4, we will begin work on a limited guest room renovation at Fairmont Pittsburgh, which will be completed in Q1 of 2026, and a renovation of the M Club at Marriott Dallas Downtown, which we expect to be completed in early 2026. During Q3, we entered into agreements with Jose Andres Group, also known as JAG, pursuant to which JAG will operate and/or license substantially all of the food and beverage outlets at W Nashville. JAG is the restaurant management arm of Jose Andres, a globally acclaimed chef, restaurateur, and media personality that operates nearly 40 restaurants, bars, and lounges across the globe, including several at prominent lodging properties. We believe this comprehensive relationship will leverage the superb physical attributes to create unique destination dining venues at W Nashville.

We are continuing to perform significant infrastructure upgrades at 10 hotels this year, including facade waterproofing, pillow replacements, elevator and escalator modernization projects, and fire alarm system upgrades as business levels allow.

The majority of this work will be completed in the fourth quarter or early 2026.

In the fourth quarter, we will Begin work on a limited guest room renovation at Fairmont Pittsburgh, which will be completed in the first quarter of 2026 and a renovation of the M Club at Marriott Dallas, downtown, which we expect to be completed in early 2026.

During the third quarter, we entered into agreements with the José Andrés Group, also known as JAG, pursuant to which JAG will operate under our license substantially all of the food and beverage outlets at W Nashville.

Jag is a restaurant management. Arm of Jose Andres a globally, acclaimed, Chef respirator a media personality. That operates nearly 40 restaurants bars and lounges around the globe including several prominent lodging properties. We believe this comprehensive relationship, will Leverage The superb. Physical attributes to create unique destination, dining venues at w, Nashville.

Barry Bloom: The all-new food and beverage programming will replace the existing venues in the hotel and will include proven JAG concepts such as Zaytinya, an Eastern Mediterranean concept that will serve lunch and dinner; Bar Mar, a coastal seafood and premium meat concept that will be open for dinner; and Butterfly, a high-energy rooftop bar with a Mexican-inspired menu. In addition, there will be a completely new pool experience that will feature an expanded bar, upgraded food offerings, and refreshed outdoor spaces. Modifications will be made to the existing living room, which will become the breakfast venue, while continuing to serve as the hotel's lobby bar, featuring a revised menu of unique cocktails and food offerings. In addition, the hotel will offer premium Jose Andres Group-designed banquet and catering menus, which will complement existing offerings in order to enhance group experiences and drive incremental food and beverage revenues.

The all-new food and beverage programming will replace the existing venues in the hotel and will include proven Jag Concepts, such as Satania, and an Eastern Mediterranean concept that will serve lunch and dinner, Barmar, a Coastal Seafood venue, and a premium meat concept that will be open for dinner.

Rooftop bar with a Mexican inspired menu.

In addition, there will be a completely new pool experience that will feature an expanded bar, upgraded food offerings, and refreshed outdoor spaces.

Modifications will be made to the existing living room, which will become the breakfast menu while continuing to serve as the hotel's Lobby Bar. Featuring a revised menu of unique cocktails and food offerings.

In addition, the hotel will offer premium. Jose Andres group designed banquet and catering menus, which will complement existing offerings in order to enhance group experiences and drive incremental food and beverage Revenue.

Barry Bloom: Modifications to the venues will begin in Q4 in a staggered approach intended to minimize disruption, and all venues are expected to be completed by Q2 of 2026. Our in-house project management team will provide direction and oversight through the renovation process, which gives us significant confidence in achieving on-time project completion and the ability to stay within our budget. We are incredibly excited about this relationship and the repositioning of the F&B outlets at W Nashville. With that, I will turn the call over to Atish.

Modifications to the venues will begin in the fourth quarter in a staggered approach intended to minimize disruption, and all venues are expected to be completed by the second quarter of 2026 for in-house project management. The team will provide direction and oversight through the renovation process, which gives us significant confidence in achieving on-time project completion and the ability to stay within our budget.

We are incredibly excited about this relationship and the repositioning of the FNB outlets at w and Asheville.

With that, I will turn the call over to aish.

Atish Shah: Thanks, Barry. I will provide an update on our balance sheet, discuss our guidance, and provide some early thoughts on 2026. On our balance sheet, it continues to be a source of strength. At quarter-end, we had approximately $1.4 billion of outstanding debt. About one quarter of our debt was at variable rates, and three quarters of our debt was at fixed rates. Our weighted average interest rate at quarter-end was 5.63%. At quarter-end, our leverage ratio was approximately five times trailing 12-month net debt to EBITDA. We expect our leverage ratio to further decline as Grand Hyatt Scottsdale continues to stabilize over the next two years. As a reminder, we have no preferred equity or senior capital. Our debt maturities continue to be well laddered, with a weighted average duration of 3.5 years at quarter-end.

Thanks Barry. I will provide an update on our balance sheet, discuss our guidance and provide some early thoughts on 2026.

On our balance sheet to continues to be a source of strength that quarter end we had approximately 1.4 billion dollars of outstanding debt about 1 quarter of our debt. Was that variable rates and 3/4 of our debt was at fixed rates.

our weighted average interest rate at quarter end was 5.63%

At quarter end, our leverage ratio was approximately 5 times trailing twelve months net debt to EBITDA.

We expect our leverage ratio to further decline as Grand Heights, Scottsdale continues to stabilize over the next 2 years.

As a reminder, we have no preferred equity or senior capital.

Our debt maturities continue to be well, laddered with a weighted average, duration of 3.5 years at quarter end.

Atish Shah: As to the $52 million mortgage loan that matures next March, we intend to pay it off ahead of maturity with cash on hand. After that payoff, 28 of our 30 hotels will be free of property-level debt, reflecting both a source of balance sheet flexibility and strength. As to liquidity, we finished Q3 with $188 million of available cash, excluding restricted cash. Our $500 million revolver remained undrawn. Therefore, total liquidity was $688 million. Our board authorized a Q3 dividend of $0.14 per share. If annualized, this reflects over 4.5% yield on our current share price. As to payout ratio, if annualized, this reflects a payout ratio of just under 50% of funds available for distribution or FAD. Our long-term target is a payout ratio of 60% to 70% of FAD, consistent with our pre-pandemic payout range.

As to the 52 million mortgage loan. That matures next march.

We intend to pay it off ahead of maturity with cash on hand.

After that payoff, 28 of our 30 hotels will be free of property-level debt.

Reflecting.

Both a source of balance sheet, flexibility, and strength.

To liquidity. You finish the third quarter with 188 million of available cash, excluding restricted cash.

Our 500 million revolver remained undrawn.

Therefore, total liquidity was $688 million.

Our board authorized a third-quarter dividend of $0.14 per share.

if annualized, this reflects over 4 and a half percent yield on our current share price,

As to payout ratio, if annualized, this reflects a payout ratio of just under 50% of funds available for distribution.

our long-term Target is a payout ratio of 60 to 70% of fad.

Consistent with our pre-pandemic payout range.

Atish Shah: During the quarter, we repurchased $12.3 million of common stock at a weighted average price of $12.66 per share. Year-to-date, we have repurchased $83.8 million of common stock at a weighted average price of $12.59 per share. Since the beginning of this year, we have repurchased 6.6% of our outstanding shares as of year-end 2024. We have $134.1 million of remaining capacity under our share repurchase authorization. We continue to believe our shares trade at a significant discount to the value of the assets we own, based upon their earnings potential in the years to come. Turning next to my next topic, our current 2025 guidance. We'll start with our full-year RevPAR outlook. We expect RevPAR growth of 4% at the midpoint. The 50 basis point reduction in the midpoint of our full-year guide reflects lower expected RevPAR growth across our portfolio in Q4, exclusive of Grand Hyatt Scottsdale.

During the quarter. We we repurchased 12.3 million of common stock at a weighted average, price of 12.66 per share.

Year to date, we have repurchased 83.8 million shares of common stock at a weighted average price of $12.59 per share.

Since the beginning of this year, we have repurchased 6.6% of our outstanding shares as of year, end 2024

We have 134.1 million of remaining capacity under our share repurchase authorization.

We continue to believe our share is traded at a significant discount to the value of the assets we own, based upon their earnings potential in the years to come.

Turning next to my next topic, our current 2025 guidance.

We'll start with our full-year RevPAR outlook. We expect RevPAR growth of 4% at the midpoint.

The 50 basis, point reduction in the midpoint of our full year guide, reflects lower expected revpar growth across our portfolio in the fourth quarter.

Atish Shah: On a full-year basis, we continue to believe that Grand Hyatt Scottsdale will represent 300 of the 400 basis points of expected growth. Given our preliminary estimate of October RevPAR increasing approximately 5.8%, our full-year guide at the midpoint reflects an estimated RevPAR increase of 4.5% for the last two months of the year. Underpinning our guidance is group pace, which for November and December is up 12%. Excluding Scottsdale, it's up about 5% for the final two months of the year. As to hotel EBITDA margin, we expect full-year same property margin growth of nearly 90 basis points, which is about 60 basis points higher than the margin growth we expected at the beginning of the year. The strength we have seen has been from non-rooms revenue growth and slightly more of our rooms revenue growth coming from rates than originally expected.

Exclusive of grand high in Scottsdale.

On a full-year basis, we continue to believe that Grand High Scottsdale will represent 300 of the 400 basis points of expected growth.

Given our preliminary estimate of October revpar, increasing approximately 5.8%.

Our full year guide at the midpoint reflects an estimated revenue part increase of 4.5% for the last two months of the year.

Underpinning, our guidance is group pace which for November and December is up 12%.

Excluding Scottsdale, it's up about 5% for the final two months of the year.

Basis points.

Which is about 60 basis points. Higher than the margin growth. We expected at the beginning of the year.

The strength we have seen has been from non-rooms revenue growth.

And slightly more of our rooms Revenue growth coming from rates and originally expected.

Atish Shah: Moving ahead to our estimate for full-year adjusted EBITDAre is now $254 million, or down $2 million from our last guide at the midpoint. This reflects the change in full-year RevPAR, partially offset by continued strong non-rooms revenue generation. Finally, our adjusted FFO per diluted share guidance midpoint is now $1.72, which is a decrease of 1% versus our prior guidance. This reflects the $2 million decrease in full-year adjusted EBITDAre and adjusted FFO, offset by the reduction in weighted average diluted share count. Our current adjusted FFO per share guidance is 4% higher than our guide at the beginning of the year and 8% higher than our 2024 adjusted FFO per share. Our guidance for interest expense, cash G&A expense, and income tax expense are unchanged. Looking ahead to 2026, we would like to provide some initial thoughts.

Moving ahead to our estimate for the full year, adjusted EBITDA is now $254 million, or down $2 million from our last guidance at the midpoint.

This reflects the change in full-year RevPAR, partially offset by continued strong non-rooms revenue generation.

And finally, our adjusted ffo per diluted. Share guidance. Midpoint is now $1.72, which is a decrease of 1 cent versus our prior guidance.

This reflects the $2 million. Decrease in full year adjusted Eva diary and adjusted FFL offset by the reduction by the reduction in weighted average diluted share count

Our current adjusted ffo per share. Guidance, is 4% higher than our guide at the beginning of the year and 8% higher than our 2024 adjusted ffo per share.

Our guidance for interest expense cash, G&A expense, and income tax expense are unchanged.

Looking ahead to 2026, we would like to provide some initial thoughts.

Atish Shah: First, on group demand, which, by way of reminder, is about 35% of our overall demand mix. Pace continues to be healthy. As of the end of September, about 50% of our group rooms revenue for 2026 was definite. Pace for 2026 was up in the mid-teens percentage range. Excluding Grand Hyatt Scottsdale, it was up in the low-teens percentage range. This is consistent with 2026 group pace at the end of Q2. As to group revenue production for next year, it was healthy in Q3. During the quarter, we booked 13% more group revenue than we did in Q3 last year. Even excluding Scottsdale, group revenue production was up 12% versus Q3 of 2024. Looking across our larger group markets, the largest gains in group pace are in Northern California, in part due to the Super Bowl, and in markets such as Houston, Scottsdale, Orlando, and Portland.

First on group, demand, which by by way of reminder is about 35% of our overall demand mix.

Pace continues to be healthy.

as of the end of September about 50% of our groups group rooms revenue for 2026 was definite,

Pace for 2026 was up in the mid-teens percentage range.

Excluding Grande, Heights Scottsdale, it was up in the low teens percentage range.

This is consistent with 2026 group Pace at the end of the second quarter.

As to group revenue production for next year, it was healthy in the third quarter. During the quarter, we booked 13% more group revenue than we did in the third quarter last year.

Even excluding Scottsdale include Revenue production was up, 12% versus the third quarter of 2024

Looking across our larger group markets, the largest range and gains in group, Pace are in Northern California in part due to the Super Bowl. And in markets such as Houston Scottsdale Orlando and Portland,

Atish Shah: Our 2026 group pace reflects anticipated strong citywide convention demand in several of our markets. Citywide convention pace is up in the double-digit % range in Houston, Dallas, Philadelphia, Pittsburgh, and Portland. While our hotels in the aggregate rely more on in-house than citywide business, our hotels in these markets do benefit when citywide calendars are strong and the markets experience compression. In a few cases, citywide pace is being helped by the World Cup, which will come to five of our markets, including Dallas and Atlanta that are hosting semifinals games. In addition to citywide pace, our group outlook reflects our hotel operators' focused pursuit of this demand segment, the capital investments we've made in meeting space and group-focused amenities, and the strength of branded hotels in capturing high-value group business. We expect 2026 to be another record year for group.

Our 2026 group pays reflect anticipated, strong Citywide convention, demand, and several of our markets.

Citywide convention pace is up in the double-digit percentage range in Houston, Dallas, Philadelphia, Pittsburgh, and Portland.

While our hotels, in the aggregate, rely more on in-house than Citywide business, our hotels in these markets benefit from Citywide calendars that are strong, and the markets experienced compression.

In a few cases, citywide pace is being helped by the World Cup, which will come to five of our markets, including Dallas and Atlanta, that are hosting semi-final games.

in addition to Citywide Pace our group Outlook reflects our hotel operators focused, pursuit of this demand segment,

The capital Investments we've made in meeting space and group focused amenities and the strength of branded hotels and capturing high-value Group business.

Atish Shah: As a result, another strong year for total RevPAR growth, which we expect will outpace RevPAR growth again. As to transient demand, on the business side, we continue to see steady improvement in demand from the large accounts. On the leisure side, we've seen the normalization temper in most of our key leisure markets, with several having grown top line during Q3 and year-to-date. As such, the preliminary outlook for 2026 appears to be more stable on the leisure side. Finally, a major driver for growth next year will be the continued ramp at Grand Hyatt Scottsdale. Our initial expectations for 2026 continue to track our underwriting. By way of reminder, our underwriting was that full-year property hotel EBITDA would increase from the low $20 million range this year to the low $30 million range next year.

We expect 2026 to be another record year for group.

And as a result, another strong year for total rev Park growth, which we will, we expect will outpace repairq growth again.

As the transient Demand on the business side, we continue to to see steady Improvement in demand from the large accounts.

On the Leisure side, we've seen the normalization temper and most of our key Leisure markets with several having grown Topline during the third quarter and year to date.

As such, the preliminary outlook for 2026 appears to be more stable on the leisure side.

And finally, a major driver for growth, next year will be the continued ramp at Grande High School.

Our initial expectations for 2026 continue to track our underwriting.

Atish Shah: Given the timing of the completion of the renovation and the seasonality in the market, we expect most of the growth to occur in the first half of the year. With that, we will turn the call back over to Becky to begin our Q&A session.

By way of reminder, our underwriting was that full year property Hotel IBA would increase from the low 20 million dollar range this year to the low 30 million dollar range next year.

Given the timing of the completion of the renovation and the seasonality of in the market. We expect most of the growth to occur in the first half of the year.

Operator: Thank you. If you wish to ask a question, please press Star, followed by 1 on your telephone keypad now. If you feel your question has already been answered, or for any reason you would like to remove yourself from the queue, please press Star, followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Michael Bellisario from Baird. Your line is now open. Please go ahead.

Thank you. If you wish to ask a question, please press star, followed by 1 on your telephone keypad now.

If you feel your question has already been answered, or for any reason you would like to remove yourself from the queue, please press star followed by 2.

When preparing to ask your question, please ensure your device is unmuted locally.

Our first question comes from Michael Bellisario from BED. Your line is now open. Please go ahead.

Michael Bellisario: Thanks. Good morning, everyone. First question for you, Atish, on your dividend. I know you mentioned that you're paying out less than your target, but maybe just where is the current payout this year going to land in terms of where you see this year's taxable income?

Thanks. Good morning, everyone.

First question, uh, for you Ratish and your dividend.

I know you mentioned that you're paying out less than your target, but maybe just where is the current payout this year going to land, in terms of where you see this year's taxable income?

Atish Shah: I don't have that in front of me, but I will say that we continue to utilize NOLs that we generated coming out of COVID. We're finding the balance of providing both a good payout relative to past levels as well as utilizing those NOLs. We'll pull that relative to taxable income number for you and provide that.

Well, um, I don't have that in front of me, but I will say that, um, you know, we continue to utilize nols that we generated, um, you know, coming out of Co so, um, you know, we're finding the balance of, um, providing both a, a good payout, a relative to past levels as well as, um, utilizing those NLS so. Um, and we'll we'll pull that relative to taxable income number for you to provide that

Michael Bellisario: Okay. Thanks. Just a second question, probably for Barry, on the group outlook commentary. How much of the pace increase for next year is price versus volume? In terms of production, what type of accounts, what type of groups are booking, and what are you hearing from meeting planners today? Thanks.

Okay, thanks. And then just a second question, probably for Barry. Just on the group outlook commentary, how much of the pace increase for next year's price versus volume? And then just in terms of production, what type of accounts and what type of groups are booking, and what are you hearing from meeting planners today?

Barry Bloom: Yeah. The setup for next year, obviously, as Atish mentioned, is really good. It's quite strong. It's a little more in volume, but rate growth is good. I mean, better rate growth than we've seen in the last year or two. It's a very, very nice setup on the group side. We are continuing to see a little bit of a shift from corporate business back into more normalized association business within the portfolio, particularly at the largest resorts. If you look back, right, we were really coming out of COVID, corporate wanted every date, and they were ready to fill in. Associations were a little slow in rebooking, but we're seeing that come through now.

Yeah. Um,

Barry Bloom: I think that's part of what you saw in our mix in Q3 was that whereas corporates had kind of filled Q3 in the last couple of years, that's really where we first started seeing the shift back to the more normalized relative ratios of association versus corporate. Both segments are quite strong looking into next year.

To set up for next year. Obviously is as a teacher mentioned, is, is really good. It's quite strong. It's a little more in volume. But rate growth is good. I mean better rate better rate growth than we've than we've seen in the last year or 2. So it's a very, very nice setup on the group side. Uh, we are continuing to see a little bit of a shift from, uh, corporate business. Back into more normalized Association business within the portfolio, particularly the largest Resorts. And because I think if you look back, right, we were really coming out of Co corporate was wanted every day and they were ready to fill in associations with a little slow and rebooking. But we're seeing that come through now. And I think that's part of what you saw in, in our mix, in the in Q3 was that whereas corporates had kind of filled Q3 in the last couple of years. That's really where we first started seeing the shift back to the more normalized relative ratios of Association versus Corporate. But both both segments are are, are quite strong looking into next year.

Michael Bellisario: Thank you.

Thank you.

Operator: Thank you. Our next question comes from Jack Armstrong from Wells Fargo. Your line is now open. Please go ahead.

Thank you. Our next question comes from Jack Armstrong from Wells Fargo. Your line is now open. Please go ahead.

[Company Representative]: Hey, good morning. Thanks for taking the question. Could you break out what the impact of the government shutdown has been, if any, on the portfolio? With the uncertainty there, how confident you're feeling in the full-year RevPAR guide?

Hey, good morning. Thanks for checking the question. Could you break out the impact of the government shutdown? Has it been, if any, on the portfolio? And with the uncertainty there, how confident are you feeling in the full year of park guide?

Marcel Verbaas: Thus far, it's been fairly limited within our portfolio. We've spoken before about the fact that we are not heavily dependent on government business. Obviously, we continue to check with all of our properties to see if we're seeing any particular impact. There have been a few cancellations, but it's been relatively minimal thus far. I think if you kind of contrast our portfolio to some of the peers, our exposure to that type of business is probably a little bit more limited. If there is a prolonged shutdown that is causing more issues as it relates to air traffic control issues and people being more concerned about being able to travel and those type of things, then obviously, it could impact us as well going forward. So far, we're not assuming any very significant impact from the government shutdown over the next few months.

Well, thus far it's been, it's been fairly limited within our portfolio. We've spoken before about the fact that we are not not heavily dependent on government business. Um, obviously we, we continue to check with with all of our properties to see if we're seeing any particular impact. There have been uh, you know, a few cancellations but it's been but it's been relatively relatively minimal, uh, thus far. So I think if you kind of contrast, you know, our portfolio to, to some of the peers, uh, our exposure to that type of business is probably a little bit more limited. Um, now, you know, if there's a prolonged shutdown, that is causing more issues as it relates to, uh, air traffic control issues and people being more concerned about being able to travel and those type of things that obviously, it could impact us, uh, as well, uh, going forward. So, um, you know, so far we we're, we're not. Um, we're not assuming any very, you know, very significant impacts from the government shutdown.

Marcel Verbaas: That's really based on kind of the situation as we see it today.

Over the next few months, um, and that's really based on kind of the situation as we see it today.

[Company Representative]: Thank you. Could you maybe provide an update for us on what you're seeing in transaction markets and also what your level of interest is in trying to get some more dispositions done over the next year?

Oh well thank you. And could you maybe provide an update for us on what you're seeing in transaction markets and also what your level of interest is and trying to get some more dispositions done over the next year.

Marcel Verbaas: Yeah, sure. I mean, it seems like, kind of contrasting it to where things were maybe 6 to 12 months ago, it does seem like there are some more hotel transactions coming to market. It does seem like there's a little bit more volume that the broker community is seeing. As it relates to us, I mean, obviously, we're still looking at the various ways how we can allocate capital. Given our cost of capital at this point, and especially with how attractive our own portfolio looks, share buybacks continue to look probably more attractive than acquisitions at this point. I wouldn't expect us to be really active on the acquisition side here in the very near future. I think a lot of that's going to have to do with what happens with pricing in the private markets.

Yeah, sure. I mean it's it's it seems like um, you know, kind of contrasting it to where things were maybe, you know, 6 to 12 months ago. It does seem like there are some more, um, more Hotel.

Marcel Verbaas: If there is maybe a little bit more softness, if you will, if prices are coming down a little bit and they come a little bit closer to what we view to be something that is a good use of capital for us. I don't foresee that here, really, in the very short term. As it relates to dispositions, we'll continue to look at what we've always done. It does make sense to continue to fine-tune the portfolio slightly, especially when it comes to assets that may need some additional capital where we don't feel the appropriate ROI might be, we might be able to get the right appropriate ROI on those projects. We'll continue to evaluate that. I wouldn't expect any wholesale changes, but we certainly could see another disposition or two over the next 12, 18 months as we continue to fine-tune and review our portfolio.

Um, and, um, you know, as it relates to us. I mean, obviously, we're still looking at the various ways, how we can allocate capital, and, um, given our cost of capital at this points. Um, and especially with how attractive our own portfolio looks, uh, and and share, BuyBacks continue to look, uh, probably more attractive than Acquisitions at this point. Um, I wouldn't expect us to be, you know, really active on on the acquisition side here in the in the very near future. I think a lot of that is going to have to do with what happens with pricing in the private markets. Um if there is maybe a little bit more you know softness if you will if prices are coming down a little bit and and they come a little bit closer to what we view to be something that is a good use of capital for us. Uh but I don't I don't foresee that here really in the in the very short term um as it relates to this positions, you know, we'll continue to look at what we've always done is doesn't make sense to continue to fine-tune the portfolio slightly especially when it comes.

To uh assets that may need some additional Capital where we don't feel. Uh, the appropriate Roi might be. Um, we might be able to get the right appropriate, our Roi on those projects. So uh, you know, we'll continue to evaluate that. I wouldn't expect any wholesale changes but um, we certainly could see another, you know, disposition or 2 over the next. Um, you know, uh, over the next 12 to 18 months as we as we continue to fine-tune and review our portfolio.

[Company Representative]: Really helpful. Thanks for the color.

Really helpful. Thanks for the call.

Operator: Thank you. Our next question comes from David Katz from Jefferies. Your line is now open. Please go ahead. David, your line is now open. Please ensure you're not muted. We are not getting any audio, so we will move on to our next question from Ari Klein from BMO Capital Markets. Your line is now open. Please go ahead.

Thank you. Our next question. Comes from David Katz from Jeffrey's. Your line is now open. Please go ahead.

David, your line is now open, please ensure you're not muted.

We are not getting any audio, so we will move on to our next question. From Ari Kline from BMO Capital Markets, your line is now open. Please go ahead.

Ari Klein: Thanks, and good morning. With regards to the somewhat softer expectations for Q, where are you seeing that play out the most? It sounds like it's predominantly leisure, but is it broad-based across markets? I guess as leisure stabilizes, do you still see it getting weaker? Thanks.

Thanks, and good morning. Um, with regards to this Summit, after expectation, for Q. Where have you seen that play out the most? It sounds like it's predominantly leisure, but it's broad-based across markets. And I guess as leisure stabilizes, do you still see it getting weaker? Thanks.

[Company Representative]: Yeah, thanks, Ari, for that question. With regard to the Q4, it is certainly more on the transient side, a combination of leisure and business transient that we've nudged down our expectations ever so slightly. It's not any particular market. As I mentioned, Scottsdale continues to show a lot of strength. The gap is really more broad-based. There's no specific market. I will point out that Houston was a pretty big headwind for us in the Q3, and that certainly is something in the past. As we look at the Q4, we're expecting a little bit of growth in Houston. In the month of October, we were actually about flattish in Houston. That big drag that we had in the Q3 for Houston because of the tough comparison dissipates for the Q4, and it's actually positive.

Uh, yeah, thanks, Ari, for that question. So, uh, with regard to the fourth quarter, it is, uh, you know, certainly more on the transient side, a combination of leisure and business transient. We've nudged down our expectations ever so slightly. Um, and really, you know,

It's not, uh, any particular Market. Um, you know, as I mentioned, Scottsdale continues to show a lot of strength. Uh, the the uh, Gap is really more broad-based. There's no specific Market. I will point out that um, Houston was a pretty big headwind for us in the in the third quarter and that, uh, certainly something in the past uh,

Marcel Verbaas: Yeah, I'll just add that, as Atish really points out there, is that part of the reduction in our RevPAR guidance for the full year is obviously also attributable to what happened in the Q3. It's not that we brought our RevPAR down entirely in the Q4, and that's what got us down essentially 50 basis points at the midpoint. Some of that was some of the additional weakness that we saw in Houston, a little bit in excess of what we anticipated. The reason why we still got to our numbers, meeting our expectations, was because we saw some greater strength on the out-of-room spend that really got us back to the total RevPAR number that was more closely matching what we were expecting in the Q3.

As we look at the fourth quarter, we're expecting a little bit of growth in Houston and and, and, uh, in the month of October we were actually, uh, about flat-ish in Houston. So, um, that big drag um, that we had in the third quarter for the whole city because of the South comparison uh dissipates for the for the fourth quarter and it's actually positive.

Yeah, I I was just at that, um, as, as a teacher really points out there, is that part of the reduction in our Refuge bar gun is for the full year is obviously also a tributable to what we, what happened in the third quarter. So it's not that. We've brought our ref bar down entirely in the fourth quarter and that's what got us down essentially. 50 base points at the mids at the midpoint sum of that was, you know, some of the additional weakness that we saw in Houston a little bit uh in excess of what we what we anticipated the reason why we still got to our numbers, um, meeting our expectations was because we saw some some greater strength on the out out of room spend, uh, that really got us back to the total ref Bar number that we that was um, more closely matching. What we were expecting in the third quarter.

Ari Klein: Thanks. Maybe just on the changes at the W Nashville for FMV, I guess that piece of the business has been a struggle for a while. How quickly do you think you can get to that $3 to $5 million of incremental EBITDA from the changes? I think I heard you mention that now you expect the hotels to ultimately stabilize in the low $20 millions. I just wanted to make sure that that's correct. I guess the prior range or the original range was $25 to $30 million. I just want to double-check on that.

At the prior range, or the original range of 25 to 30. So, just want to double-check on that.

Marcel Verbaas: Yeah, sure. I mean, obviously, it's going to take a couple of few years to get to that stabilized number. As I pointed out and as Barry kind of spoke about in his comments too, we really anticipate this to help drive not just the FMV revenues, but also just make the hotel a more desirable location overall and more of a destination, even than it has been to date. As you point out, I mean, clearly, we've given it time here. We've worked kind of tirelessly with Marriott to try to improve the FMV operations. Jointly with them, have worked on coming to a solution that we believe is going to be very attractive for the hotel over the next few years. I think that it is something that's going to take a little bit of time to stabilize here.

Marcel Verbaas: We've essentially been running in the mid-teens of EBITDA over the last few years. Clearly, we were looking for ways to drive what we think that this hotel can produce for us over the next few years. We have, to your point, tempered our expectations from where we started our underwriting. Since we aren't close to those numbers that you quoted yet. We do think that this will give us that additional lift of $3 to $5 million as a result of this FMV change over the next several years. What's still going on in the national market overall, obviously, is that we're still going through some stabilization in the markets with the supply that's getting the high-end supply that was added over the last several years that is still getting absorbed into the market.

Yeah, sure. I mean obviously it's going to take, it's going to take, you know, a couple few years to to get to that stabilized. Number we um, as I as I pointed out and it's it's very kind of spoke about in his comments too. We we really anticipate this to help drive, not just the FNB revenues, but also we just make the hotel a more uh more desirable location overall and more of a destination even though it has been today. Um, as you as you point out, I mean clearly we've we've given a time here, we've worked um you know kind of tirelessly with Marriott's uh to try to improve the f&b operations. And um and jointly with them have worked on you know coming to A solution that we believe is going to be very attractive for the hotel over the next few years. So I think that is something that's going to take a little bit of time to stabilize here. Um

We've essentially be been running in the mid- teens of ibida over the last few years. So clearly we were looking to, uh, for ways to to drive. What we think that this hotel can produce for us over the next few years. We have 2 your points. Tempered our expectations from where we started our underwriting. Uh, since we aren't close to those numbers that you that you quoted yet. We do think that this will give us that additional lift of 3 to 5 million as a result of this. This FNB change over the next several years. Um and and what's still going on in the National Market.

Marcel Verbaas: Over the next several years, we expect to see kind of the bump coming from the FMV change that we're doing here, but also with the markets kind of improving and stabilizing. It's been a tougher leisure year, especially in that market as well. We do expect that to get better over the next several years. We're obviously not saying we're going to put a ceiling on where we think the earnings can go here, but just realistically looking at where the earnings have been over the last several years, what we think the FMV will do to help the operations there. We've set our expectations now to say over the next several years, we expect to get kind of north of that $20 million number. Hopefully, we'll grow from there. It's a great asset. It's a great market.

Marcel Verbaas: Still a lot of positivity as far as what's going on in the markets. We continue to have high hopes for how ultimately this property will go.

Overall obviously, is that we're still going through some stabilization in the markets with um with the supply that's getting the the high-end Supply that was added over the last several years that are still getting absorbed into the market. So, over the next several years, we expect to see kind of the bump coming from from the FMB change that we're doing here. But also with the markets, kind of improving and stabilizing, it's been, you know, it's been a tougher Leisure year especially in that market as well. So we do expect that that to get that to get better over the next several years. Um, you know, we're obviously not saying we're going to put a ceiling on where we think the earnings can go here. But just realistically, looking at where the earnings have been over the last several years, what we think the FNB will will do to help the operations there. Um, we've set our expectations now to say over the next several years. We expect to get kind of north of that 20 million dollar number and then, you know, hopefully we'll grow from there and that's uh, it's a great asset. It's a great Market still a lot of positivity as far as what's going on in the markets. Um, so

Um you know, we can continue to have high hopes for how ultimately we're ultimately this property will go.

Ari Klein: Thanks for all the color. Appreciate it.

Thanks for all the caller, appreciate it.

Operator: Thank you. Our next question comes from David Katz from Jefferies. Your line is now open. Please go ahead.

Thank you. Our next question comes from David Katz from Jefferies. Your line is now open. Please go ahead.

Marcel Verbaas: Good morning. Thank you for taking my question again. Appreciate it. I wanted to just get your perspective on leisure. We've obviously been hearing about some of the weakness in leisure. In your opinion or from your perspective, is it travelers who are choosing not to travel, to defer travel? Are they balking at price and perhaps trading down? What would you classify as the weakness, the source of the weakness as far as you can tell? I’ll start off with kind of a global comment on this. I think when we looked at the setup for this year, and I'm sure you recall when we even spoke at the beginning of the year, our expectation was really kind of the way it has played out for every segment, which was strong group business for us this year.

Good morning. Thank you for, uh, taking my question again. Um, appreciate it. Um, I I wanted to just get your perspective on Leisure. We've obviously been hearing about some of the weakness, you know, in Leisure, uh, in your opinion, or from your perspective, uh, is it, uh, Travelers, who are choosing not to travel to defer to travel? Are they blocking at price and perhaps trading down? Um, you know what, what would you classify as the weakness? Um, you know, the source of the weakness, as far as you can tell?

Marcel Verbaas: We did expect business transient to kind of slowly keep recovering, and we did expect some softness in leisure compared to prior years because there's still this normalization that was kind of going on from these kind of outsized levels of leisure travel that we saw over the last few years. I would say that it hasn't changed that much from what our initial expectations were. I think what you've seen overall is that there's obviously been a lot of discussion this year about consumer spending overall, about consumer spending on travel. There has been, it appears to have been, clearly more in the lower segments that have been impacted more significantly than the higher segments like where we play.

Well, I'll I'll I'll I'll start off with a kind of a global comment on that. I, I think when we looked at, when we looked at the setup for this year and I'm sure you recall, when we when we even spoke at the beginning of the year, our expectation was really kind of the way it has played out for every segment, which was strong group business for us this year. Uh, we did expect business strategy and to kind of slowly keep recovering. And we did expect some softness and Leisure compared to the prior years because there are still this normalization. That was kind of going on from these uh, kind of outside levels of of leisure travel that we saw over the last few years. So I would say that it, it hasn't, it hasn't changed that much. From what our initial expectations were, I think what you've seen overall is that there's obviously been a lot of discussion this year about consumer spending overall about consumer spend

On travel, there has been, it appears to have been.

Marcel Verbaas: It hasn't been quite as severe on the higher end, but we are still dealing with a lot of uncertainty out there in the markets on various economic issues, obviously dealing with the fact that international outbound is still greater than international inbound. Alternative travel that obviously has been also appealing for people, whether that's cruises or other things. I think all of those things kind of play into it. That being said, and Atish pointed this out in his comments, as we look ahead to next year and going a little bit more granular as it relates to us, I think that we are still seeing a very similar setup on the group side. We've got really good group base going into next year.

Marcel Verbaas: Business transient is subject to some of the macroeconomic issues, obviously, whether that continues to kind of gradually improve, but that's still our expectation at this point. We do think that leisure has probably kind of found. More of its footing in our portfolio where some of these markets have stabilized and where we do think that we could hopefully see some growth on that again going into next year. I'll just kind of leave it at that. I don't know if Barry or Atish wants to add anything to that. That's our view of kind of what we're seeing happening in the market at this point. Okie doke. Thank you.

Um, so I think all of those things kind of play into it. Um, now that being said that and I I teach born today this out in his comments as we look ahead to next year and, and, and going a little bit more granular as it relates to us. I think that we are still seeing a very, you know, similar setup on the group side. You know, we're we've got really good group, based going into next year, um, business strategy. And that's, you know, is subject to some of the macroeconomic issues, obviously, whether that continues to kind of gradually improve, but that's still our expectation that this point. And we do think that Leisure is probably kind of found its, you know, found more of its footing in our portfolio. Where some of these markets are have stabilized and where we do think that, we could hopefully see some growth on that again, going into next year. Um, and I'll just kind of leave it at that and know the barrier that the teacher wants to add anything to that. Um, but that's that, that's our view of kind of what we're seeing happening in the Market at this point.

Okay, thank you.

Operator: Thank you. As a reminder, if you wish to ask a question on today's call, please press star followed by one on your telephone keypads. Our next question comes from Austin Virshmit from KeyBanc Capital Markets. Your line is now open. Please go ahead.

Thank you.

As a reminder, if you wish to ask a question on today's call, please press Start. Followed by 1 on your telephone keypad.

Our next question comes from Austin. Vmit from keybanc Capital markets. Your line is now open. Please go ahead.

Marcel Verbaas: Thanks. Good morning, everyone. Barry, you had commented that business from your large corporate accounts was up significantly in September. I guess, first, any markets you'd call out as seeing sort of an outsized increase? Second, is the pace of that improvement still less than you may have expected given the comments that Atish made about just transient demand broadly? You had kind of dialed expectations back on both the business and the leisure side. Thanks.

Thanks. Uh, good morning, everyone. Um, Barry, you had commented that the business from your large corporate accounts was up significantly in September. I guess, first, are there any markets you’d call out as seeing sort of an outsized increase? And then, second, is the pace of that improvement still less than you may have expected, given the comments that Atish made about transient demand broadly? You had kind of dialed expectations back on both the business and the leisure side. Thanks.

[Company Representative]: Yeah. In terms of strength, no doubt Northern California and Santa Clara in particular are seeing significant corporate growth. I mean, I think we all know what's kind of gone on in tech this year. Santa Clara is ideally positioned both for tech as well as specifically within some specific AI-driven accounts that are maybe either directly or indirectly focused on that. I think we've seen some other markets where we've seen a good quality corporate demand. We see it in some of the smaller markets like Pittsburgh. We're seeing that. We're seeing it in DC, where our Ritz-Carlton Pentagon City is a little bit outside of the direct government business. With the strong accounts that we have in Pentagon City, we're seeing it in Atlanta. Markets like that are kind of traditionally strong business markets. That's where we've seen the strength in corporate demand this year.

Yeah, I think in terms of, uh, in terms of strength, no doubt, Northern California and Santa Clara in particular are seeing significant corporate growth. I mean, we all know what's kind of gone on in tech this year.

And Santa Clara's, ideally positioned, both for Tech, as well as specifically within, some of the, uh, some specific AI driven accounts or that are maybe either directly or or indirectly, uh, focused on that. I think we've seen, um, some other markets that where we've seen a good quality corporate demand. Um, we see it in, uh, some of the smaller markets like Pittsburgh we're seeing that we're seeing it in DC where our Ritz Carlton. Pentagon City is a little bit outside of the government of of direct.

Government business. So with a strong accounts that we have in Pentagon City, uh, we're seeing it in Atlanta.

Um, so markets like that are kind of traditionally strong business markets. That's where we've seen the strength in corporate demand this year.

[Company Representative]: In terms of across the portfolio, it continues to improve every month. I think relative to expectations, overall, it's probably where we wanted to be. There are still some markets that ebb and flow. I think that particularly based on seasonality, it's part of, in addition to the impact from Hurricane Beryl in Houston, we did see a little bit softer corporate demand in the quarter that we expected in both Houston and Dallas. Again, we feel like that segment clearly is growing. We're particularly getting, we're starting to or continuing to sell out more Tuesday and Wednesday nights, which is also great because not only does it drive volume, but it enables the hotel to really drive compression on those nights as well. It's a good setup, and we certainly see that continuing into next year.

Um, in terms of across the portfolio, it continues to improve every month. I think, well, as the expectations overall, it's probably where we wanted to be. There are still some markets that are are that EB and flow. I think that, uh, you know, particularly based on seasonality, it's part of in addition to the impact from from Hurricane Barrel in Houston. We did see a little bit softer, corporate demand and the quarterly. We expected in both Houston and Dallas. Um, but again we we feel like that segment clearly is growing for a particularly getting we're starting to or continuing to sell out, more Tuesday and Wednesday nights, which is also great. Because not only does it drive volume, but it enables the hotel to really Drive compression on those nights as well. So I it's a good setup and we certainly see that continuing into next year,

Marcel Verbaas: That's helpful. Just going back to leisure demand, Marcel, you provided a lot of good detail to the earlier question. I guess at a high level, would you still expect leisure to lag the overall portfolio in 2026, or could the demand normalization provide a little bit better pricing power? Maybe it's a little more on par with what you're seeing in just the transient segment overall. Thanks.

That's helpful. And then just going back to Leisure demand, you know, Marcel, you provided a lot of good detail to the earlier question. But I guess at a high level, would you still expect Leisure to lag the overall portfolio in 2026, or could the demand normalization provide a little bit better pricing power and maybe it's a little more on par with what you're seeing in the transient second overall? Thanks.

Marcel Verbaas: Yeah. I think we could. I think Atish pointed it out too. We've definitely seen some stabilization in some of the more leisure-oriented markets. Clearly, we still expect group to be the leading segment for us as it relates to growth next year. Our setup on the group side is obviously very strong. Grand Hyatt Scottsdale has a lot to do with that too, continues to ramp and continues to build a greater group base at that property, obviously. Even throughout the rest of the portfolio, as Atish pointed out, our group base is very, very strong going into next year. I kind of expect a similar result next year as it relates to the segments. Group will continue to lead.

Marcel Verbaas: I do think that we could see there certainly could be a scenario where leisure and business transient are more on par as it relates to what kind of growth we can see out of those segments.

I could see that certainly could be a scenario where leisure and business strategies are more on par as it relates to what kind of growth we can see out of those segments.

Marcel Verbaas: Very helpful. That's all for me. Thanks, everyone.

Very helpful. That's all for me. Thanks, everyone.

Operator: Thank you. We currently have no further questions, so I'll hand back to Aldo Martinez and CEO Marcel Verbaas for closing remarks.

We currently have no further questions so I'll hand back to you chat and see you myself for bass for closing remarks.

Marcel Verbaas: Thanks, Becky. Thanks, everyone, for joining us today. Appreciate your interest in the company. Appreciate the opportunity to share our results for the third quarter and what we believe is a very good setup going into next year. We have a great portfolio that will continue to see the benefits from that going forward. Hope everyone has a great Halloween.

Thanks Becky. Uh,

Thanks everyone for joining us today. Um,

I appreciate your interest in the company.

The opportunity to share our our results for the third quarter and and what we believe is a very good setup going into next year, we have a great portfolio that can will continue to see the benefits from that going forward. And uh hope everyone has a has a great Halloween.

Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.

This concludes today's call, thank you for joining. You may now disconnect your lines.