Xenia Hotels & Resorts, Inc.

Hello and welcome to the Xenia Hotels and Resorts fourth quarter and full year 2021 earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star 1 on your telephone keypad. If you'd like to withdraw your question, you can press star 2. I will now hand over to your host, Aldo Martinez, Senior Financial Analyst. Over to you, Aldo.

Thank you Alex. Good afternoon and welcome to Xenia Hotels and Resorts fourth quarter and full year 2021 earnings call and webcast. I'm here with Marcel Verbas, our Chairman 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 industry fundamentals, our quarterly and annual performance, and an update on our portfolio strategy. Barry will follow with more details about our operating results, recent operating trends, and status of our capital expenditure projects. And Ateesh will conclude our remarks with an update on our balance sheet. 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 findings. which could cause our 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 comments on this call, are made only as of today, March 1, 2022, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find the reconciliation of our non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in this morning's earnings release. The property now portfolio information we'll be speaking about today is on the same property basis for 33 hotels. Subsequent to the sale of Hotel Monaco Chicago in January, certain information is for current same property set reflecting 32 hotels. And our chart that is called 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 to all of you joining our call today. We are pleased to be sharing our fourth quarter and full year 2021 results with you today, as well as some recent developments that we believe to be very positive for our growth outlook over the next several years. After a slow start to 2021, industry fundamentals gradually improved as the year progressed. Particularly after the vaccine rollout accelerated in the second quarter, lever demand increased significantly, while corporate and group demand started recovering at a more moderate pace. Despite the emergence of the Delta variant over the summer and the Omicron variant post-Thanksgiving, we experienced an upward trend in occupancy throughout the year, and the gap to 2019 REV part diminished substantially as we finished out 2021. Importantly, we were able to return to positive adjusted EBITRE in March, and we were able to maintain and grow this positive cash flow through the remainder of the year. During the fourth quarter, we recorded a net loss of $22.9 million. Adjusted EBITDA RE and adjusted FFO per share each remained positive at $48.9 million and 25 cents respectively. We are pleased that 31 of our hotels and resorts achieved positive hotel EBITDA for the year, which translated to adjusted EBITDA RE of $108.1 million and adjusted FFO per share of 28 cents. Our same property portfolio generated a hotel EBITDA margin of 27.2% for the quarter as a result of a continued focus on cost controls by our operators and benefits from real estate tax reductions and cancellation fees. Our same property REF PAR for the fourth quarter was only 17.5% below the same period in 2019, representing another sequential improvement over the first three quarters of the year when we experienced REF PAR declines 63.3%, 38.6%, and 22.9% in the first, second, and third quarter respectively. Average rates remain a bright spot as our same property ADR increased 7.1% compared to the fourth quarter of 2019. An impressive 25 of our hotels and resorts achieved ADRs that surpassed those reached during the same quarter in 2019. The fourth quarter was our strongest quarter of the year, despite the typical seasonal slowdown in December and the early impact from the Omicron variant. The two highest ADR and RETBAR months of 2021 were both in the fourth quarter, with October being the strongest month of the year and November not far behind. Impressively, ADRs for every month during the second half of the year surpassed those achieved during the same months of 2019. The emergence of the Omicron variants and resulting spikes in positive COVID-19 case counts throughout the country, coupled with a typical seasonal decline in leisure travel, caused a slowdown in overall demand in January. The incorporating group segments were most significantly impacted, and we were confronted with a meaningful number of group cancellations and postponements. As a result, our current same property portfolio record in January was markedly lower than we experienced in December, and Ref Bar was approximately 37% below January 2019 Ref Bar. This decline was substantially greater than the approximately 8% decline we achieved in December, which was the smallest gap since the beginning of the pandemic. However, travel patterns have improved significantly over the past several weeks, as case counts have fallen dramatically, and evidence has mounted of the new variant causing less severe illness and lower percentages of hospitalizations and deaths. Based on our preliminary estimates, February REF BAR should be approximately $157, which represents an approximate 19% decline versus a very strong February of 2019, with ADR of approximately 6% over 2019 levels. The projected REF BAR for the month represents the highest absolute REF BAR since the onset of the pandemic. with both Occupancy and ADR surpassing the levels achieved in October.