Xenia Hotels & Resorts, Inc.

If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. And I'll hand it over to your host, Aldo Martinez, a finance manager, to begin. Please go ahead.

Thank you, Alex. And welcome to Zinnia Hotels and Resorts first quarter 2024 earnings call and webcast. I'm here with Marcel Verbas, 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. And 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 of 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. Forward-looking statements in the earnings release that we issued yesterday afternoon, along with the comments on this call, are made only as of today, May 3rd, 2024. 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 first quarter earnings release, which is available on our investor relations section of our website. The property level information we'll be speaking about today is on the same property basis for all 32 hotels unless specified otherwise. An archive of this call will be available on our website for 90 days. I will now turn it over to Marcel to get started.

Thanks, Aldo, and good morning, everyone. Our operating results continue to be encouraging in the first quarter, as strong group demand and steady improvement in business transient demands drove same property portfolio REFBAR and total revenues that exceeded our expectations for the quarter. A consistent focus on expense controls by our operators and asset management team in a continued inflationary environment allowed us to also achieve a same property hotel EBITDA margin that was a bit ahead of our expectations. As a result, our adjusted EBITDA RE came in above our internal forecast as well. For the first quarter of 2024, we reported net income of $8.5 million, adjusted EBITDA RE of $65.3 million, and adjusted FFO per share of 44 cents. While adjusted EBITDA RE declined from the first quarter of 2023, we had anticipated this, as Hyde Regency Scottsdale at Ganey Ranch had record high performance last year, when Phoenix hosted the Super Bowl, and overall market demand was extremely strong. Despite the lapping of this outperformance and the high level of EBITDA disruption resulting from the ongoing transformative renovation at our Scottsdale resort during the quarter, our adjusted FFO per share increased by 10% over last year. This was mostly driven by the significant amount of share buybacks we completed in 2023. which we continued at a slower pace during the early part of the first quarter this year. Although same-property REF PAR for our 32-hotel portfolio decreased by 1.5% for the quarter, REF PAR actually increased by a healthy 3.7% when excluding Hyadrine C. Scottsdale, despite the negative impact of the Easter holiday occurring at the end of March this year. This increase was mainly driven by a significant 310 basis point increase in occupancy for these 31 hotels, We saw particular strength in a number of our large group-oriented hotels, such as our Houston hotels, Hyde Regency Portland, and Park Hyatt Aviara, as well as at Marriott San Francisco Airport and Hyde Regency Santa Clara. We continue to believe that these two high-quality hotels possess some of the greatest earnings growth potential within our portfolio. Additionally, Grand Bohemian Hotel Orlando is hitting its stride. Note that the comprehensive renovation is fully behind us. And Canary Hotel Santa Barbara had outsized revenue and earnings growth compared to last year, as we lapped the rooms renovation that took place mainly in the first quarter of last year. On a same property basis, first quarter same property hotel EBITDA of $70.7 million was 8.5% below 2023 levels, and hotel EBITDA margin decreased 228 basis points. Excluding high-agency Scottsdale, first quarter hotel EBITDA increased 4.7 percent, and hotel EBITDA margin decreased just 14 basis points. We continue to be pleased with these margin results as overall inflation remains at an elevated level here in the quarter. As we have noted over the past several quarters, the trends across our portfolio continue to indicate that our demand segmentation mix is reverting towards pre-pandemic levels. with group and business transient demand recovering and leisure demand normalizing. Group demand was a particular bright spot during the first quarter. Same-property group room revenues, excluding high-agency Scottsdale, increased 8.1% as compared to the same period last year. We also saw modest improvement in business transient demands with continued increases in midweek occupancy. And while leisure demand has largely stabilized across the portfolio, We did see some further retracement in a few of our more leisure-dependent assets and markets in the quarter, particularly in Napa and Savannah. Now turning to our capital expenditure projects, we can see how to project that we will spend between $120 and $130 million on property improvements during the year. While Barry will provide additional details on the $33.4 million we invested into the portfolio during the quarter in his remarks, I would like to highlight the progress we are making on the transformational renovation and up branding of Hyde Regency Scottsdale. The project is progressing as planned and we still anticipate a completion by the end of 2024 with approximately 65 to 70 million dollars that will be spent during this year. After completing the adult pool and its H2Oasis pool bar in January, the large family pool and its FMB amenities were fully completed and operational in early April. The new pool complex is spectacular, as significantly improved over the resort's previous amenities. The early reviews have been very positive, and we expect that this new pool complex will be well-received by our anticipated higher-rated leisure and group demand. We also believe that this upgraded pool complex will enable us to attract significant staycation leisure demand during the slower summer season in the years ahead. We also continue to make progress on the renovation of all guest rooms. We have now completed the renovation of 230 rooms, and we anticipate that a total of almost 300 out of our current 491 rooms will be fully renovated by the end of May. The remaining guest rooms, including the additional five rooms that will be created as part of this project, will be completed in continual phases until final completion by the end of the third quarter. We are also making good progress on the approximately 12,000 square foot expansion of the Arizona ballroom. We continue to expect that this ballroom expansion, as well as the renovation of all existing ballrooms, meeting spaces, and pre-function space, will be completed by the end of the year. We have also commenced the renovation of the public space, including the lobby, lobby bar, hotel market, and all indoor and outdoor dining spaces. As announced last quarter, We are collaborating with celebrity chef Richard Blaze on all food and beverage offerings at the relaunched resort. We are thrilled we are expanding our relationship with Chef Blaze, with whom we have developed an excellent working relationship at Park Hyatt Aviara, Hyatt Regency Grand Cypress, and Hyatt Centric Key West. We continue to expect completion of these components by the end of the third quarter. Restaurant concepts and menus are nearly finalized, as work has now begun in each of the food and beverage outlets. And finally, we continue to expect completion of all improvements to the resort's building facade, infrastructure, and grounds to be completed by the end of 2024. The renovation and transformation of all of these components will continue to displace a significant amount of revenue and EBITDA, as the overall guest experience is meaningfully impacted. We expect that the majority of the remaining revenue disruption will occur during the second and the third quarters and subside as the fourth quarter progresses. We now expect the impact of renovation disruption to be a bit higher than previously projected, as we have gotten deeper into the project and the sequencing of demolition and construction has become clearer. Atiz will provide further details on our outlook, including our renovation disruption, during his remarks. We continue to be extremely excited about this project and the earnest growth potential that we expect will be created by this transformation. The Phoenix Scottsdale luxury resort market remains strong and the soon to be launched Grand Hyatt Scottsdale will be a formidable competitor in this luxury pier set. Looking ahead across the portfolio, we remain cautiously optimistic for the remainder of 2024. As we have previously outlined, we believe we have significant embedded earnings growth potential within our portfolio, primarily through our recently renovated properties, our hotels that primarily cater to group and business transient customers, and our two most recent acquisitions, W National and Hyatt Regency Portland, at the Oregon Convention Center. Additionally, we continue to expect strong rent part growth at our properties in our recovering Northern California markets, San Francisco and Santa Clara. We saw these themes play out in the first quarter as we experienced encouraging results at our recently renovated properties, Grand Bohemian Orlando and Canary Hotel Santa Barbara, as well as further gains of properties that were renovated in recent years, including High Regency Grand Cypress, our Houston properties, and Waldorf Astoria, Atlanta Buckhead. We also had strong results at our other large group-oriented hotels, our Northern California assets, and our most recently acquired hotels, particularly High Regency Portland, We are off to a good start in the second quarter. We estimate that excluding Scottsdale, same property ref bar increased 6.2% in April as compared to the same period in 2023. When including high-agency Scottsdale, which continues to deliver very strong results through May of 2023, we estimate that April ref bar is up 0.9% compared to last year. Given its performance through May of last year and the renovation disruption we are experiencing this year, We continue to expect that high-agency Scottsdale will be a drag on REFBAR growth through the first half of the year, after which the comparisons will become more favorable. We remain particularly optimistic regarding our portfolio performance and earnings growth potential as we look ahead to 2025 and beyond. We expect recent demand trends in our portfolio to continue and are looking forward to the additional growth we expect to get from the completion of the Scottsdale project. We continue to believe that supply growth will remain muted in our submarkets over the next several years, and especially in the upper upscale and luxury segments where our hotels and resorts are positioned. This will provide a very favorable backdrop for potential ref bar growth, as we have seen in previous cycles in the lodging industry when supply growth has been subdued. With our high quality and further improved portfolio, we expect to be well positioned to take advantage of the dynamics. I will now turn the call over to Barry to provide more details on our operating results and our capital projects.