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DATE

Thursday, July 30, 2026 at 1:00 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Marcel Verbaas
• President and Chief Operating Officer - Barry A. N. Bloom
• Executive Vice President and Chief Financial Officer - Atish D. Shah
• Director of Finance - Aldo Martinez

TAKEAWAYS

• Same-Property RevPAR -- $206.54, representing a 5.6% increase year over year driven entirely by daily rate growth.
• Same-Property ADR -- $285.71, an increase of 5.7% year over year, while occupancy remained essentially flat at 72.3%.
• Adjusted EBITDAre -- $78.1 million for the quarter, which exceeded management expectations by approximately $1 million.
• Adjusted FFO Per Share -- $0.61, a 7% increase year over year supported by positive operating results and a lower share count from prior buybacks.
• GAAP Net Loss -- $19.3 million, primarily resulting from a noncash impairment charge related to the disposition of the Kimpton RiverPlace Hotel.
• Same-Property Total RevPAR -- $366.17, growing 3.3% year over year, which trailed room RevPAR growth due to subdued non-room spending.
• Transient RevPAR -- Increasing 6.9% year over year, outperforming the group segment as leisure demand was bolstered by specific event dynamics.
• Group RevPAR -- Growing 3.4% year over year, facing a difficult comparison against 15.6% growth recorded in the second quarter of 2025.
• Philadelphia Market RevPAR -- Rising 22% year over year, the strongest regional performance within the same-property portfolio.
• Phoenix Market RevPAR -- Increasing 12.7% year over year, supported by the ongoing successful ramp of the Grand Hyatt Scottsdale Resort & Spa.
• Hotel EBITDA Margin -- 28.7%, representing a decline of 65 basis points year over year due to the lapping of a $1.5 million real estate tax refund and Nashville startup costs.
• Asset Disposition -- Completed the sale of the 85-room Kimpton RiverPlace Hotel for $11 million, representing a 2% capitalization rate on trailing net operating income.
• Full Year 2026 EBITDAre Guidance -- $273 million at the midpoint, an upward revision of $7 million based on first-half performance and strong group booking pace.
• Full Year 2026 RevPAR Guidance -- Raised to 5.5% growth at the midpoint, representing a 150-basis-point increase from previous projections.
• Total Debt -- $1.4 billion at quarter end, with a weighted average interest rate of 5.5% and approximately 75% of debt at fixed rates.
• Liquidity Position -- $612 million, consisting of $112 million in available cash and a fully undrawn $500 million revolving line of credit.
• Capital Expenditures -- $15.4 million for the second quarter and $30.6 million year to date, with full-year guidance unchanged at $70 million to $80 million.
• July 2026 RevPAR Estimate -- Approximately 10% growth for the same-property portfolio, excluding the recently sold Portland asset.
• Group Room Revenue Pace -- Up 12% for the second half of 2026 as of June 30, with 80% of the increase driven by demand volume.
• Transient Booking Pace -- Tracking in the high-single-digit percentage range for both August and September as of the end of June.
• Grand Hyatt Scottsdale Contribution -- Estimated to provide approximately $32 million in EBITDA for the full year 2026.
• Leverage Ratio -- 4.8 times net debt to EBITDA, with a long-term management target to achieve a ratio of sub-4 times.

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RISKS

• Verbaas stated, "while transient demand filled the gap, this came at the expense of out-of-room spend that had been very strong in prior quarters," noting that the FIFA World Cup led some group customers to avoid specific markets.
• Bloom stated, "energy expenses increased nearly 11% due primarily to significant increases in gas and water expenses," contributing to the year-over-year decline in hotel operating margins.

SUMMARY

Management reported that second quarter results modestly exceeded internal expectations, leading the company to raise its full-year guidance for earnings and revenue growth. The company stated that while group demand faced challenging year-over-year comparisons and temporary shifts related to major events, the transient segment remained healthy across the high-end portfolio. Xenia completed the sale of an underperforming asset in Portland and is moving forward with planned renovations in Napa and Denver scheduled for late 2026. The company indicated that a strong start to July and an encouraging booking pace for the second half of the year support its improved annual outlook.

• CEO Verbaas attributed the sale of the Kimpton RiverPlace Hotel to it having "significantly underperformed in the last few years due to market challenges, its location becoming less desirable, and new competitive supply additions."
• Management is renaming four Autograph Collection hotels and transitioned management to Davidson Hotel Group to better align the properties with local market identities.
• President Bloom noted that the food and beverage repositioning at W Nashville is expected to have a "halo effect" on room profitability over the next several years as operations stabilize.
• CFO Shah indicated that the current valuation of $350,000 per key and an 11-times EBITDA multiple represents a discount to the company's internal net asset value estimates.
• The company reported that group room revenue production in the second quarter for the second half of 2026 increased over 25% compared to the prior year's production for the same period.
• Management noted that they continue to evaluate external growth opportunities as the transaction market becomes more robust and the company's valuation improves relative to peers.

INDUSTRY GLOSSARY

• RevPAR: Revenue per available room, a key performance metric calculated by multiplying a hotel's average daily room rate by its occupancy rate.
• ADR: Average daily rate, the measure of the average rate paid for rooms sold.
• EBITDAre: Earnings before interest, taxes, depreciation, and amortization for real estate, a non-GAAP measure used to evaluate the operating performance of real estate companies.
• FFO: Funds from operations, a measure of the cash flow generated by a REIT's operations.
• Capitalization Rate: Also known as cap rate, the ratio of a property's net operating income to its purchase price or current market value.
• Transient: Hotel guests who are not part of a group or convention, typically consisting of individual business or leisure travelers.
• Group: Business related to blocks of rooms typically booked for meetings, conventions, or organized tours.
• Key: An industry term for an individual guest room in a hotel.
• Unencumbered: Assets that are not pledged as collateral for a specific loan or mortgage.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to Xenia Hotels & Resorts Q2 2026 Earnings Conference Call. After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press 1. To raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Aldo Martinez, Director of Finance. Aldo, please go ahead.

Aldo Martinez: Thank you, Jen. And welcome to Xenia Hotels & Resorts second quarter 2026 earnings call and Webcast. I am here with Marcel Verbaas, 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 our performance. Barry will follow with more details on operating trends and capital expenditure projects. And Atish will conclude today's remarks on our balance sheet and outlook. We will then open the call up for Q&A. Before we get started, let me remind everyone that certain statements made on this call are not historical facts. And are considered forward-looking statements.

These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and 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 this morning along with the comments on this call, are made only as of today, July 30, 2026, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

You can find the reconciliation of non-GAAP financial measures to net income, and definitions of certain items referred to in our remarks in our second quarter earnings release which is available on the Investor Relations section of our website. The property-level information we will be speaking about today is on a same-property basis for all 30 hotels, unless specified otherwise. An archive of this call will be available on our website for 90 days. I will now turn it over to Marcel to get started.

Marcel Verbaas: Thanks, Aldo, and good afternoon, everyone. We are pleased to report another quarter of solid operating performance. With RevPAR, adjusted EBITDAre, and adjusted FFO per share modestly exceeding our expectations from when we last reported in May. Same-property RevPAR for the quarter was $206.54, an increase of 5.6% compared to the same period last year, driven entirely by rate. Same-property ADR was up 5.7% year-over-year, while occupancy held essentially flat. On a GAAP basis, we reported a net loss attributable to common stockholders for the quarter of $19.3 million. A result of a noncash impairment charge related to the sale of Kimpton RiverPlace Hotel, which I will touch on later in my remarks.

Adjusted EBITDAre for the quarter was $78.1 million. About $1 million ahead of the expectations we set when we reported first quarter results. Adjusted FFO per share for the second quarter was $0.61, 7% increase compared to the second quarter of last year. Due to our positive operating results, and a lower share count after significant share repurchases at a very attractive price in 2025. Our same-property total RevPAR grew 3.3% in the quarter, trailing our same-property RevPAR growth of 5.6%. Food and beverage and other revenues grew only modestly in the second quarter. This modest growth in non-room revenues was largely a result of more subdued group demand in the quarter which faced a tough comparison to last year.

And our RevPAR growth for the quarter consisting entirely of ADR growth. We expect to see more robust growth in non-room revenues again for the remainder of the year. Both our group rooms revenue pace and our banquet and catering pace are quite strong for the third and fourth quarters. Which has been reflected in our updated full year guidance. The transient segments led RevPAR growth in the quarter. Bolstered by the unique demand dynamics from the FIFA World Cup. Transient same-property RevPAR growth of 6.9% outpaced group RevPAR growth of 3.4% for the quarter. We had anticipated that the second quarter would be our weakest from a group perspective on a year-over-year basis.

Particularly after FIFA released a number of large room blocks as the World Cup approached. Despite the slower growth in group RevPAR in the second quarter, it is worth noting that group business continued to build on the 15.6% group rooms revenue growth we experienced in the second quarter of 2025. Group base for the second half of the year strengthened during the quarter. And we continue to see no signs of pullback from the higher-end consumer. Which gives us continued confidence in the health of demand across our portfolio. June was the strongest RevPAR growth month of the quarter. Some of this was bolstered by the FIFA World Cup, as games were played in 6 of our markets.

Our same-property portfolio achieved nearly 9% growth in daily rate in June versus the same month last year. While the World Cup certainly provided compression and rate growth around game days, the overall positive impact on our portfolio was limited. Group business in most of our World Cup markets was weaker. Not only because of the FIFA room blocks issue, but also a hesitancy from other potential customers to book in those markets during and around the time of the event. While transient demand filled the gap, this came at the expense of out-of-room spend that had been very strong in prior quarters. As a result, most of our large group-focused hotels and World Cup markets relatively underperformed.

Some of our transient-focused smaller hotels with exposure to the games posted strong results. RevPAR strength for the quarter as a whole was broad-based from a market perspective. With Philadelphia leading our portfolio with same-property RevPAR growth of 22%, followed by Salt Lake City at 13.1%, Phoenix at 12.7%, Birmingham at 12.2%. We also saw healthy high-single-digit to double-digit percentage RevPAR increases in several other markets. Including Santa Clara, Washington, D.C., and San Diego. Performance in Phoenix continues to be aided by the successful ramp at Grand Hyatt Scottsdale Resort & Spa. Which is tracking favorably towards stabilization. The year is shaping up to be the strongest group year in the resort's history.

While group pace for future periods remains encouraging as well. Turning to margins. Same-property hotel EBITDA margin was 28.7% in the second quarter. Down 65 basis points from a year ago. The lapping of approximately $1.5 million in real estate tax refunds that we received during the second quarter of 2025 and an increase in expenses during the startup phase of the food and beverage repositioning at W Nashville were the most significant reasons for our margin decline for the quarter. We remain focused on the expense levers within our control and continue to work with our operators to manage discretionary spending appropriately. To capital projects. We continue to reinvest in our portfolio during the quarter.

We have 2 significant renovations set to begin in the fourth quarter. The first phase of a two-phase comprehensive renovation of guest rooms and corridors at Andaz Napa, and a renovation of guest rooms, corridors, and meeting space at the Ritz-Carlton Denver. Both of these renovation projects reflect our ongoing commitment to protecting and growing the long-term value of our portfolio. Given the timing of these renovations during lower demand periods in Napa and Denver, we expect limited cash flow disruption from these projects this year. Barry will provide additional details on all of our capital projects during his remarks. The transaction front, last week, we completed the sale of the 85-room Kimpton RiverPlace Hotel in Portland, Oregon.

For $11 million or approximately $129,000 per key. The $11 million sale price represented a 19.4x multiple on hotel EBITDA and a 2% capitalization rate on net operating income for the trailing 12 months ended June 30, 2026. RiverPlace was an asset that we acquired in 2015 in a 3 property portfolio transaction. While the hotel performed well historically, it significantly underperformed in the last few years due to market challenges, its location becoming less desirable, and new competitive supply additions. The hotel contributed minimal hotel EBITDA and was facing substantial near-term capital expenditure requirements, and a challenging outlook over the next several years.

We continue to maintain exposure to the recovering Portland market, through the ownership of our 600-room Hyatt Regency Portland, which benefits from its location adjacent to the Oregon Convention Center near the Moda Center. The overall transaction environment appears to be a bit more robust than it has been over the past several years. We continue to evaluate opportunities to further enhance the quality of our portfolio and drive superior FFO growth through both external and internal drivers. Throughout the history of our company, we have been active on both the disposition and acquisition fronts in an effort to achieve these objectives. And we expect to take advantage of similar opportunities when they arise in the years ahead.

We will remain prudent in our evaluation of these opportunities, and we will continue to focus on maintaining a strong and flexible balance sheet to support our capital allocation decisions. Looking ahead, given the strength of our performance in the first half of the year, continued favorable market conditions, and a very strong group demand outlook for the second half of the year, we are raising the midpoint of our current full-year 2026 adjusted EBITDAre guidance by $7 million. Atish will walk through all of our updated 2026 guidance items in more detail during his remarks. In closing, we continue to see encouraging trends into the third quarter.

Which gives us confidence in our improved outlook for the remainder of the year. The third quarter is off to a very strong start, as we estimate that July RevPAR growth for our same-property portfolio which now excludes Kimpton RiverPlace Hotel, will be approximately 10% compared to the same period last year. With both leisure and group demand contributing to this increase. We believe that our high-quality portfolio continues to be well positioned. To take advantage of a low-supply-growth environment and a positive backdrop in all segments of hotel demand especially on the higher-end.

We have experienced strength in both transient and group demand this year, and future indicators continue to support our expectation that our portfolio is poised for meaningful growth during the remainder of this year and the years ahead. With that, I will turn the call over to Barry to walk through our operating results and capital expenditure projects in more detail.

Barry A. N. Bloom: Thank you, Marcel. Good afternoon, everyone. For the second quarter, our 30 hotel same-property portfolio RevPAR was $206.54, an increase of 5.6% compared to the second quarter of 2025. With growth entirely rate-driven. Based on occupancy of 72.3%, flat with last year, and an average daily rate of $285.71. Up 5.7%. As Marcel mentioned, the second quarter saw an anticipated shift in non-room spend with same-property total RevPAR of $366.17. An increase of 3.3% compared to last year's second quarter. This modest growth in non-room spend reflects a shift in mix related to an increase in transient demand and anticipated mix of association versus corporate group demand resulting in a difficult comparison to the same quarter last year.

Looking at the quarter compared to 2025 on a same-property basis, April RevPAR was $219.74 up 6%, and May RevPAR was $199.78, up 2.6%. June was the strongest performing month in terms of growth, with RevPAR of $200.32 up 8.6% with occupancy relatively flat. 19 of our 22 markets posted positive RevPAR growth for the quarter, The Palomar Philadelphia led our portfolio with same-property RevPAR growth of 22%, while Monaco Salt Lake City followed at 13.1%. Our Phoenix properties grew at a combined 12.7%, We also saw double-digit percentage growth at Grand Bohemian Mountain Brook, of 12.2%, Park Hyatt Aviara up 11.3%, and Hyatt Regency Santa Clara up 11.1%.

The Ritz-Carlton Pentagon City was up 8.4%, The Ritz-Carlton Denver and Fairmont Pittsburgh also posted healthy growth of 7.2% and 7.1%, respectively. Growth was fairly balanced on day-of-week trends in the quarter, For all segments on the same-property basis, weekday RevPAR, Sunday through Thursday, was up 5.9% while weekend RevPAR, Friday and Saturday, was up 5.2%. Rate growth was broad-based and well balanced across every day of the week. Ranging from just under 5% on Thursdays to nearly 7% on Mondays. On the expense side, total same-property hotel operating expenses were $211 million for the quarter. An increase of 4.2% outpacing our 3.3% revenue growth resulting in 65 basis points of margin decline.

With the largest single factor being the lapping of a significant real estate tax credit in the second quarter of last year. Looking at the individual components, rooms expense grew 4% on a per-occupied-room basis. While food and beverage expenses grew 3.3%. Greater than the 1% growth in food and beverage revenue. Which impacted F&B profitability. This was a direct result of a 1.5% increase in less profitable outlet business, and a 1.1% decline in typically more profitable banquet business. Miscellaneous income declined nearly 12% due primarily to less cancellation and attrition revenue compared to last year. But is expected to balance itself out over the course of the full year.

G&A expenses grew approximately 7.9% for the quarter, due in large part to higher credit card commissions related to the higher transient mix. Sales and marketing expenses continue to be well controlled and were nearly flat to last year. Property operations and maintenance expenses declined just over 1% for the quarter. While energy expenses increased nearly 11% due primarily to significant increases in gas and water expenses, offset by a more moderate 4% increase in electricity due in part to efficiencies from our ongoing refurbishment and replacement of chillers at many of our properties. Same-property EBITDA was $84.9 million for the quarter, an increase of 1% a margin of 28.7%.

Turning to CapEx, we invested $15.4 million in portfolio improvements during the second quarter, bringing our year-to-date total to $30.6 million. During the second quarter, we finalized planning at Royal Palms Resort and Spa, the renovation of guest rooms and corridors in the 68-room Montavista building and a renovation of T. Cook's restaurant which will take place during the third quarter. Additional ongoing upgrades across the portfolio include upgrading mechanical systems at 8 hotels, and ongoing minor improvements to guest rooms at 3 hotels. Looking ahead to the fourth quarter, we have 2 significant renovations scheduled to begin. Both of which are currently on track.

We will perform the first phase of a two-phase comprehensive room renovation of corridors and guestrooms at Andaz Napa. And renovation of guestrooms, corridors, meeting space at The Ritz-Carlton Denver. We continue to expect full year capital expenditures of between $70 million to $80 million unchanged from our prior guidance. Before I conclude, I want to provide an update on our 4 Autograph Collection hotels.

These 4 hotels have been strong performers, and we are in the midst of further strengthening these hotels by evolving their individual names and positioning, to better tie to their local markets The hotels will continue to maintain their Autograph Collection branding, but the new names and positioning will better fit Autograph Collections philosophy of each hotel being distinctive, in part by capturing the local essence of each market in which they reside. The first step of this effort began earlier this year, we transitioned property management to Davidson Hotel Group. That transition went smoothly with no disruption to hotel performance. In the next few months, we will be renaming these 4 unique properties.

As with the management transition, we do not anticipate any meaningful disruption of hotel operations and look forward to even stronger performance from each of these hotels under Davidson's management. As they continue to be part of Marriott's Autograph Collection. With that, I will turn the call over to Atish.

Atish D. Shah: Thank you, Barry. I will provide an update on our balance sheet touch on the second quarter versus our prior expectations, and then walk through our updated 2026 guidance. At quarter end, we had approximately $1.4 billion of outstanding debt. Approximately three-quarters of our debt was at fixed interest rates. Our weighted average interest rate at quarter end was about 5.5%. Our leverage ratio as calculated under our credit facility approximately 4.8 times trailing-12-month net debt to EBITDA. Over time, we expect our leverage ratio to achieve our long-term target of sub-4x net debt to EBITDA. As a reminder, we have no preferred equity or senior capital.

During the quarter, we further resized the Andaz Napa mortgage loan by paying it down by approximately $5 million ahead of the hotel's planned renovation which is scheduled to begin next quarter. Approximately 7% of our debt matures next year, with our most significant maturities in 2029 and 2030. We continue to believe our capital structure is a source of strength given we have a mostly unencumbered asset base, a low, laddered maturity profile, and a strong syndicate of banking partners. At quarter end, available cash was $112 million, and our $500 million revolving line of credit was fully undrawn. Which resulted in total liquidity of $612 million. We did not repurchase or issue any shares during the quarter.

We have $97.5 million remaining on our buyback authorization, and $200 million of capacity under our ATM offering program. We paid a second quarter dividend of $0.14 per share If annualized, this reflects an approximate 2.5% yield on our share price. We continue to balance dividend level with the utilization of significant COVID-era NOLs. We also continue to prioritize ways in which we can drive shareholder value such as reinvestments in our existing assets or share repurchases. As a reminder, in 2025, we finished the Grand Hyatt Scottsdale project which we are benefiting from now.

And as we wrap that up, we turn more aggressively to share repurchases buying approximately 9% of our outstanding shares last year at a sub-$13 weighted-average price per share. Moving ahead to the second quarter relative to prior expectations, just 2 points to frame the discussion ahead on guidance. First, as Marcel mentioned, second quarter results came in slightly ahead of our expectations with better RevPAR and EBITDA margin than expected. Resulting in a $1 million beat to the adjusted EBITDAre implied by the quarterly weighting that we had previously indicated.

Second, as to our expectation for event-driven demand this year, we had previously guided to a range of 25 to 50 basis points of RevPAR growth due to special events. Our current estimate is that event-driven demand materialized at the low end of that range. And the mix of business being more transient than group did not provide as much of a total revenue lift as had been anticipated. Turning next to our 2026 guidance.

We have raised our full year adjusted EBITDAre guidance by $7 million to $273 million at the midpoint The $7 million increase to adjusted EBITDAre guidance is on top of the $6 million increase we made last quarter, Our adjusted EBITDAre expectation has moved up approximately 2.5% since last quarter or 5% since we initially provided full year guidance in February. As to the weighting by quarter for the remainder of the year, we expect to earn in the high teens percentage range of full year adjusted EBITDAre in the third quarter and just under a quarter of full year adjusted EBITDAre in the fourth quarter.

As to RevPAR growth, we have increased the midpoint by a 150 basis points to 5.5%. As we look ahead, a couple of things give us confidence in our outlook. First, group room revenue pace for the second half was up 12% at the end of June, versus the year prior. That reflects a 300-basis-point increase from where it stood a quarter ago. The pace increase is 80% demand driven and 20% rate-driven. This higher pace reflects strong production in the second quarter with group room revenue production up over 25% for the back half of this year compared to production in the second quarter of 2025 for the back half of 2025.

We have more than three-quarters of our expected second half group business already booked. Second, we continue to see strong transient demand reflected both by results at our more transient-oriented hotels and overall transient pace. Based on our July projected RevPAR several of our transient-oriented hotels, excluding those that benefited from special events, showed strong year-over-year gains. Those properties include our hotels in Salt Lake City, Pittsburgh, and Downtown Orlando. As to transient pace, at the end of June, it was up in the high-single-digit percentage range for both August and September. Turning next to our expectation for total RevPAR, We have increased our total RevPAR growth guidance by 75 basis points to 5.75% at the midpoint.

The variance in growth of RevPAR versus total RevPAR reflects second quarter transient versus group mix. We expect second half total RevPAR to grow about 200 basis points more than RevPAR. None of our other guidance assumptions have changed. Guidance for interest expense, G&A expense, income tax expense, and capital expenditures are all the same as a quarter ago. We expect adjusted FFO per diluted share of $2.02 at the midpoint, which is an increase of $0.08 at the midpoint. That expectation reflects about 15% growth in FFO per share relative to 2025.

In closing, our high-quality, well-located portfolio of luxury and upper-upscale hotels affiliated with strong brands and managers makes us well positioned for growth, particularly given the supply backdrop and fundamentals. We will now open the call for questions. Jen, may we please start the Q&A session.

Operator: Of course. Will now begin the Q&A session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press 1. To raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally please remember to unmute your device. Please standby while we compile the Q and A roster. Your first question comes from the line of Chris Darling with Green Street. Chris, your line is open. Please go ahead.

Chris Darling: Hi. Thanks for taking the question. Marcel, hoping you could talk a little bit more about what you are seeing in the transactions these days, both maybe from a pricing perspective, but also in terms of depth of the bidding pool, and anything else that has caught your eye?

Marcel Verbaas: Yeah, sure. Thanks. Thanks for the question, Chris. Yeah. Like I said in my prepared remarks, I do think we are seeing a slightly more robust transaction market than we have seen over the past several years. And I think, some of that obviously has to do with the fact that, we are overall as an industry, seeing some pretty good sustained growth over the last couple quarters.

I think that creates an environment where it does become a little bit easier for buyers and sellers to potentially find each other and end up with pricing that could work on both sides. it is obviously a little bit easier to look at a property that you can point a little bit more easily towards growth over the next several years. Give you some more confidence about completing a transaction And it also may end up getting to pricing that makes more sense for a seller in that situation. So, overall, I think we are just seeing, like I said, a little bit more robust markets.

Certainly allows us to you know, to build the pipeline a little bit more than what we have seen over the last several years. and dig a little bit deeper into some of those opportunities.

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

Barry A. N. Bloom: Yeah. I think on a per-occupied-room basis, I think things are overall relatively normalized in that we are seeing per-occupied-room growth in the 3 to 4% range. Now that is tempered, obviously, and varies by quarter given how much occupancy growth there is. So obviously, this quarter, we had flat occupancy. So the overall expense levels were a little bit higher than we would have hoped for.

I think embedded in the guidance and forecast is that we are going to drive a little more occupancy over prior year in Q3 and Q4 and that should help make, or certainly assist in at least on a per-occupied-room basis, the expense levels being kind of toward the lower end of that range.

Chris Darling: Alright. Understood. Thanks for the time.

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

David Katz: Thanks very much for taking my question. Appreciate all the detail. You have, I think, done a very solid job with your existing portfolio. And I know that history suggests otherwise. But is the prospect of any corporate M&A on or off the table?

Marcel Verbaas: Well, I think as we have talked about in the past, you know, corporate M&A is really driven by what the overall environment looks like from potential buyer and seller interest, obviously. Think we have focused very much on continuously upgrading the portfolio, making the portfolio as robust against potential challenges. And similarly, positioning it well for future FFO growth through continuously upgrading our portfolio and making sure it is an attractive portfolio from whatever perspective. We as Atish had pointed out, have grown FFO pretty significantly over the past several years. And we are on a day to day basis just doing all the things that we think are gonna drive value for us in this portfolio over time.

No matter no matter on what form that ultimately know, benefits all of our shareholders. So I think what you have seen in the overall transaction environment is that you are still not seeing a lot of large portfolio transactions people are pursuing on the buy or sell side. And there is just been more focus on individual properties or smaller portfolios just overall in the transaction market. And I do not have an-- I do not have an expectation of that significantly changing or shifting here in the near term.

David Katz: Understood. And just in a different direction, you know, the conversation around generally speaking, around you know, fee structures, and what I will refer to as owner consternation over you know, certain aspects of you know, the fee costs and fee streams, etcetera. You know, I would love whatever shareable perspective you know, you may have about that issue and whether all of us are spending more time and attention to it than a than it deserves? Or you know, it is really a thing?

Marcel Verbaas: From an ownership perspective, obviously, we are looking for ways to grow value in a portfolio. And that is that includes every single element of operations. So it is extremely important for us over time to make sure that there we keep our expenses under control and that the growth in expenses over time has obviously been pretty significant in every aspect of the of the income statement. And similarly, especially in an environment today, we want to make sure that we have all the right channels in place and all the opportunity to drive as much on the sales side as possible at the lowest acquisition cost possible. So there is nothing new or different about that.

Think everyone knows that over time, there has been a lot of pressure for owners on you know, bringing down revenues, you know, to the largest percentage possible to the bottom line, and that is something that we are all focused on, obviously. So I do not think it is anything unusual that we would look at every aspect of that as owners to make sure that we are doing right by ourselves and our shareholders. Understood. Thank you.

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

Michael Bellisario: Thanks. Good afternoon, everyone. I want to focus on the second half group pace commentary, of 2 parts here. 1, where are you seeing that pickup in terms of markets? And then 2, how does that pickup maybe change operator confidence or pricing strategies into the back half of the year?

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

Barry A. N. Bloom: No. I think I would emphasize, 1, very broad-based across almost all of our properties, and, 2, certainly a lot of it depends on in terms of rate and how properties maximize rate with group, the question really, at this point, and given the high levels of group business on the books, where those holes are, So if there are holes in places where a market is compressed but maybe our hotel has not been able to yet put a group in.

We are going to be able to capture that group at a very high rate But conversely, when you look at a lot of those markets where we have very good group pace The holes are pieces and places that are hard to fill, so while we may continue to fill more group more room nights, particular in periods coming in and out of holidays, which is obviously prevalent both in the third and fourth quarter, we may or may not achieve significant rate growth on those compared to the overall rate platform, but we are booking business that we otherwise would not book.

And that is really the puzzle for each property is how best to do that and how to drive overall RevPAR.

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

Atish D. Shah: Yeah. So I will take the first part of that. So in terms of funding of deals, as we talked about, a healthy amount of liquidity, leverage ratio that is kind of still above where our target is but certainly sub 5 times, so some capacity there. So I think we would look to, you know, existing resources, if not potentially additional dispositions over time as ways to fund any acquisitions.

Marcel Verbaas: And I think with regard to pipeline, maybe if you have anything to add there. Yeah. You know, as it relates to pipeline and expectations, like I pointed out, I think we are seeing probably a little bit more active, more activity out there that probably gives a little bit more of a an expectation of where things could be pricing. You know, I do not-- I would not say it is hard for me to point to anything specific and say, seller expectations have really dramatically changed over the last, you know, 60, 90 days. it is really hard to point to kind of any individual transactions to really talk about that in detail.

Clearly, you know, to my point, there is obviously a little bit more optimism about the health of the lodging industry overall and the growth that we have seen over the last several quarters. So I think that just provides, in general, generally a bit more of a backdrop to be for some productivity on the transaction side, I would say.

Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin, your line is open. Please go ahead.

Austin Wurschmidt: Thanks. Good afternoon, everyone. Good afternoon. You had referenced that the transient pace for August and September was tracked in the high-single-digit range. I believe you said that was as of the end of June. Can you just give us a sense of how that is materialized for transient pace looking 60 to 90 days out here more recently? And if you think that is-- have you seen things continue to strengthen? Have you given some of that back? And just give us a sense and kind of frame that up.

Atish D. Shah: Yeah. I mean, first, I would preface it by saying transient pace is not necessarily it does move around a bit, so it is not you know, always the best direct indicator, but it has strengthened. it is moving in the right direction. And I think, you know, it reflects kind of the actualized results that we are seeing. So if you look at what our transient pace was going into July, how July came out, I think it is a good indicator. So it is 1 of the things that, frankly, 1 of the many data points we look at to think about our guidance.

And, obviously, since we took it up, we were looking at all the various data points and input we have and that was 1 of the ones I mentioned. So I would view it in the context of that. But also, I would just say that we do have a healthy level of confidence in the outlook and transient's 1 piece of it. And, obviously, what we have been talking about on the group side is the other.

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

Atish D. Shah: Yeah. We are a smidge higher. We are still in the low-$30 million range. But kind of $32-ish million so to speak. So I think we are sort of in the range that we talked about before. I mean, Grand Hyatt Scottsdale is tracking you know, really well. But the guidance revision really has, you know, as much to do with the rest of the portfolio. And what we are seeing, you know, more broadly.

Austin Wurschmidt: that is all for me. Thank you.

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

Aryeh Klein: Thank you and good afternoon. Barry, I think you mentioned some hesitancy amongst groups in the second quarter. Around World Cup markets. Curious what that looked like maybe outside of World Cup markets? And then is some of the strength in group pace you are seeing in the second half of the year related to maybe a shift just in where the group ended up coming in. And just on that topic in general, 2027, how is that shaping up for group or just maybe growth tailwinds in general, how are you thinking about that for next year?

Marcel Verbaas: Well, yeah, let me let me start off with that and then and Barry can jump in. So I did mention in my comments that we certainly saw a little bit of pullback in group around the World Cup markets around the time of the World Cup, which we did attribute to some extent to, groups obviously wanting to stay away from some of those markets and, frankly, that you are also, obviously, driving rates, and trying to get more transient in as a result of that, too. So that definitely was something that impacted June in the world cup markets.

I did mention, and I think it is fair to say, some of the softness in group in the second quarter was not just related to that. May had always shaped up to be 1 of our weaker group markets from a from a growth perspective. We had a particularly strong second quarter last year on the group side. It was hard to replicate some of that, and had some holes in various properties in the month of May that just never really filled. So we saw some weaker group specifically in the World Cup markets around the World Cup, but then also saw some softness in the month of May kind of throughout the portfolio.

So, you know, it is always hard to say whether things shift or not, but we can say is we obviously had a pretty good group base in the first quarter. Second quarter was a little weaker. And that is really how we came into the year already. The quarter always looked to be the weakest quarter from a group perspective. Second half has always looked strong. But what is particularly encouraging, obviously, is that we actually saw group production pick up in the second quarter and even strengthen that into the second half.

Aryeh Klein: So you know, whether that is any kind of shifting, As Barry, I think, pointed out too, it is it is pretty broad-based on the portfolio. So it is not just that you are saying, okay. We lost out in these World Cup markets on group, and now that is kind of picking up there. We really have broad-based strength in the portfolio on the group side. Thanks. And then just maybe on the Autograph Collection name changes and Davidson shift. Just curious, is there anything meaningful that they expect to come out of it? that you can quantify?

Barry A. N. Bloom: I think it is hard to quantify in the near term. Our expectations are really more around a little bit of the mid to longer term in terms of bringing in Davidson as a management company that we have worked with previously with great success. And then really taking this opportunity to rebrand the hotels where or rename the hotels where each property has its own unique identity that is local to its marketplace, but continue to be part of the Autograph Collection.

We think that ultimately pays significant dividends both on driving revenue through connection with local market enhanced level of activity, in the properties and kind of special events programming that fits in with the local markets, attracts guests. And then with Davidson and their ability to both sell that as well as help us on the cost control side. And again, these are properties that have done very well for us. We just think it is an opportunity to really enhance them and drive more out of them going forward. Great. Thank you.

Operator: Next question comes from the line of Jack Armstrong with Wells Fargo. Jack, your line is open. Please go ahead.

Jack Armstrong: Hey. Good afternoon, and thanks for taking the question. Strength in your shares this year, can you talk a little bit about your preferred use of incremental capital at this point and how you might rank acquisitions, ROI CapEx, and deleveraging?

Marcel Verbaas: Yeah. I think thanks, Jack, for the question. Appreciate it. Atish spoke about it a little bit earlier. Clearly, you know, we are quite pleased with the result of our elevated CapEx spending that we had a few years ago that was particularly tied to Grand Hyatt Scottsdale. So, if you look at the last couple years, if you kind of look at the trajectory of where kind of the focus has been, it was obviously a good amount of capital going out for those ROI projects. We kind of followed that up as that started coming down. By using some more capital for share repurchases like we did last year.

And certainly, we thought the pricing was pretty attractive back then and then obviously feels so even more strongly now being able to buy back as much as we did at that sub 13 level. Clearly, the stock price has moved up. So it becomes, you know, a little bit more interesting to looking at potential acquisitions and external growth as kind of part of the capital allocation decision going forward. Whereas, before, that was really clearly a much inferior, way to spend our capital than things that we did over the last several years. So we will continue to look at it from a very balanced perspective. Certainly still believe that there is value in the stock.

We are still and Atish can certainly jump in there as well, but again, we will continue to look at it on a balanced basis. To the extent that we now find an opportunity that we think is gonna drive external growth for us, it just becomes a little bit more likely than what we have seen over the last several years.

Atish D. Shah: Yeah. I mean, the only thing I would add is, you know, if you look back historically, we have taken sort of a balanced approach and utilize kind of all those tools to grow value, whether it be, you know, transactions, share repurchases, deploying capital into our assets. I think as we look back over the last couple of years, obviously, some of these tools were just much more desirable in terms of a value accretion perspective. And so you saw us step on the gas pedal, so to speak, for share repurchases. I think now we are in an environment where it is definitely more opportunistic and it is case by case.

And we will toggle between those levers as we have historically done. I will say just in terms of current valuation since you mentioned it, we currently trade at $350,000 per key. With a portfolio cap rate in the mid sevens, and a hotel EBITDA multiple south of 11x. So you know, as you think about that, I mean, certainly, while the share prices have moved, we are still trading within the range of, you know, more broadly in a historic range. And if you think about the fundamentals and the supply outlook and kinda where we trade relative to NAV, both our internal NAV and the freshest external NAV estimates.

I think you will find that even now, after the appreciation, we are still trading kind of at a very reasonable level, and there is still a gap between where we currently trade and you know, NAV. So I think that also maybe is helpful. To you as you think about how we think about the stock price and capital allocation.

Jack Armstrong: Really helpful there. And then just 1 follow-up. Can you talk a little bit about what you are seeing in the Nashville market and when we should expect to see the incremental EBITDA from the F&B CapEx you put in at W?

Barry A. N. Bloom: Yeah. So, obviously, we are very pleased with how smoothly the transition went. The work that we did on the capital side, the look and feel of the restaurants is tremendous. And the initial reviews in the local market have been great. As I think you know, 2 of the outlets are run by Marriott, 2 are run by José Andrés Group, and each of those outlets has had, I think, really good success in terms of connecting the local community. Obviously, outlet when you are opening 4 outlets really at the same time, Each is coming online at kind of a different pace based in part on what its demand generators are.

What our team's done, I think, a really good job on working with both Marriott and José Andrés' Group on looking at how we can drive revenue into those outlets. So in some cases where an outlet may have not gotten off to exactly the same start we had expected, spent a huge amount of time working with the JAG team on local influencers, social media marketing, things like that, and have seen really immediate kind of returns from those. We had always forecasted this year to be really a ramp year in terms of food and beverage operation.

I think as we look ahead to 2027, that is kind of when we are going to get to the point of what we expect the restaurants to do in the beginning, both the contribution from the restaurants, but more importantly, getting to the contribution we expect from the hotel side. And we have had some great success so far.

In terms of what we expected, which is the ability of using each of the outlets for private events related to in part to both outside catering but more importantly to in-house group business that we have seen significant uplift and interest in our group leads that relate to groups that are generally smaller size but want to take advantage of the opportunity to dine in the José Andrés outlets, experience those menus and things like that. On the leisure side, we have got a lot of creative offerings in the market, are driven around experiencing each or all of the José Andrés outlets as part of promotions and packages. Hope that hope that answers the question.

Marcel Verbaas: Yeah. I would just add that I mentioned in my remarks, too, that the part of the pressure on our margins in the second quarter was because we have some higher expenses. Related to the food and beverage operations there. Particularly as things are just starting up and everything is getting kind of right-sized over time. As the revenues are obviously building up. So we are certainly that, shorter-term, that obviously puts a little bit of pressure on those numbers.

But then over time, we expect the revenue to grow to really know, to get to the right margins there and make sure that not only we see more profitability on the F&B side, but much more importantly, how this is gonna have this halo effect for the for the property overall start really building up on the room side over the next several years. So there is certainly not a it is not a this year story. it is not even really a, you know, fully getting their next year story. that is gonna take a couple of years.

I mean, that is just has to build and really kind of help us much more from a profitability standpoint on the room side even more so than on the F&B side.

Jack Armstrong: Appreciate the color. Thanks for the time.

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

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

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