Xenia Hotels & Resorts Q2 2026 Earnings Call Transcript

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Provided by Quartr
July 30, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter performance exceeded expectations: same-property RevPAR increased 5.6% to $206.54, driven by a 5.7% increase in ADR, while Adjusted EBITDAre reached $78.1 million and Adjusted FFO per share rose 7% to $0.61.
  • Positive Sentiment: Management raised full-year 2026 guidance, increasing the midpoint for Adjusted EBITDAre by $7 million to $273 million, RevPAR growth to 5.5%, total RevPAR growth to 5.75%, and Adjusted FFO per share to $2.02. July RevPAR is estimated to be up approximately 10% year over year.
  • Positive Sentiment: Second-half demand indicators are strong: group room revenue pace was up 12% year over year at the end of June, with more than three-quarters of expected second-half group business already booked, while August and September transient pace was up in the high-single-digit range.
  • Negative Sentiment: Same-property Hotel EBITDA margin declined 65 basis points to 28.7% as operating expenses grew faster than revenue. Headwinds included the absence of last year’s $1.5 million real-estate-tax refund, higher energy and credit-card costs, weaker banquet revenue, and start-up expenses at W Nashville’s repositioned food-and-beverage outlets.
  • Neutral Sentiment: Xenia sold the underperforming 85-room Kimpton RiverPlace Hotel for $11 million and said the transaction market is becoming more active, but management expects near-term activity to remain focused primarily on individual properties and smaller portfolios rather than major corporate M&A.
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Earnings Conference Call
Xenia Hotels & Resorts Q2 2026
00:00 / 00:00

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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 question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Aldo Martinez, Director of Finance. Aldo, please go ahead.

Aldo Martinez
Aldo Martinez
Director of Finance at Xenia Hotels & Resorts

Thank you, Jen, and welcome to Xenia Hotels & Resorts second quarter 2026 earnings call and webcast. I'm 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. Atish will conclude today's remarks on our balance sheet and outlook. We will then open the call up for question-and-answer. 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.

Aldo Martinez
Aldo Martinez
Director of Finance at Xenia Hotels & Resorts

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 30th, 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'll be speaking about today is on a same property basis for all 30 hotels, unless specified otherwise.

Aldo Martinez
Aldo Martinez
Director of Finance at Xenia Hotels & Resorts

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
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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 as a result of a non-cash 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.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Adjusted FFO per share for the second quarter was $0.61, a 7% increase compared to the second quarter of last year due to our positive operating results and a lower share count after significant share repurchases at a very attractive price in 2025. Our same property 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-rooms 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 a quarter consisting entirely of ADR growth. We expect to see more robust growth in non-rooms revenues again for the remainder of the year.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Both our group rooms revenue pace and our banquets and catering pace are quite strong for the third quarter and fourth quarter, 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.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Group pace for the second half of the year strengthened during the quarter. We continued to see no signs of pullback from the higher-end consumer, which gives us continued confidence in the health of demand across our portfolio. June was the strongest RevPAR growth month of the quarter, somewhat bolstered by the FIFA World Cup as games were played in six of our markets. Our same property portfolio achieved nearly 9% growth in average daily rate in June versus the same month last year. While the World Cup certainly provided compression and rate growth around game days, the overall positive impact on our portfolio was limited. Group business in most of our World Cup markets was weaker, not only because of the FIFA room blocks issue, but also a hesitancy from other potential customers to book in those markets during and around the time of the event.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

While transient demand filled the gap, this came at the expense of out-of-room spend that had been very strong in prior quarters. As a result, most of our large group-focused hotels in World Cup markets relatively underperformed. While some of our transient-focused smaller hotels with exposure to the games boasted strong results. RevPAR's fourth 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%, and Birmingham at 12.2%. We also saw healthy high single digits 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, which is tracking favorably towards stabilization.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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 start-up phase of the food and beverage repositioning at W Nashville, were the most significant reasons for our margin decline for the quarter. We remain focused on the expense levers within our control and continue to work with our operators to manage discretionary spending appropriately. Turning to capital projects, we continue to reinvest in our portfolio during the quarter, and we have two significant renovations set to begin in the fourth quarter.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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. On 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 30th, 2026.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

RiverPlace was an asset that we acquired in 2015 in a three-property portfolio transaction. While the hotel performed well historically, it significantly underperformed in the last few years due to market challenges, its location becoming less desirable, and new competitive supply additions. The hotel contributed minimal Hotel EBITDA and was facing substantial near-term CapEx requirements and a challenging outlook over the next several years. We continue to maintain exposure to the recovering Portland market through the ownership of our 600-room Hyatt Regency Portland, which benefits from its location adjacent to the Oregon Convention Center and near the Moda Center. The overall transaction environment appears to be a bit more robust than it has been over the past several years. We continue to evaluate opportunities to further enhance the quality of our portfolio and drive superior FFO growth through both external and internal drivers.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Throughout the history of our company, we have been active on both the disposition and acquisition fronts in an effort to achieve these objectives. 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'll 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.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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, 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.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

With that, I'll turn the call over to Barry to walk through our operating results and capital expenditure projects in more detail.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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 an 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%.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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. Kimpton Hotel Palomar Philadelphia led our portfolio with same property RevPAR growth of 22%, while Kimpton Hotel 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 Hotel 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%, and 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 a same property basis, weekday RevPAR, Sunday through Thursday, was up 5.9%, while weekend RevPAR, Friday and Saturday, was up 5.2%.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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 for $210.6 million for the quarter, an increase of 4.2%, outpacing our 3.3% revenue growth and resulting in 65 basis points of margin decline, with the largest single factor being the lapping of a significant real estate tax credit in the second quarter of last year. Looking at the individual components, rooms expense grew approximately 4% on a per occupied room basis, while food and beverage expenses grew at 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.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

Miscellaneous income declined nearly 12%, due primarily to less cancellation and attrition revenue compared to last year, but is expected to balance itself out over the course of the full year. A&G expenses grew approximately 7.9% for the quarter, due in large part to higher credit card commissions related to the higher transient 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%, and a margin of 28.7%.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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 for the renovation of guest rooms and corridors in the 68-room Monte Vista building and a renovation of T. Cook's Restaurant, which will take place during the third quarter. Additional ongoing upgrades across the portfolio include upgrading mechanical systems at eight hotels and ongoing minor improvements to guest rooms at three hotels. Looking ahead to the fourth quarter, we have two significant renovations scheduled to begin, both of which are currently on track. We will perform the first of two phases of a comprehensive room renovation of corridors and guest rooms at Andaz Napa and a renovation of guest rooms, corridors, and meeting space at The Ritz-Carlton, Denver.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

We continue to expect full year capital expenditures of between $70 million and $80 million, unchanged from our prior guidance. Before I conclude, I want to provide an update on our four Marriott Autograph Collection hotels. These four hotels have been strong performers, and we are in the midst of further strengthening these hotels by evolving their individual names and positioning to better tie to their local markets. The hotels will continue to maintain their Autograph Collection branding, but the new names and positioning will better fit Autograph Collection's philosophy, with each hotel being distinctive in part by capturing the local essence of each market in which they reside. The first step of this effort began earlier this year when we transitioned property management to Davidson Hospitality Group. That transition went smoothly with no disruption of hotel performance.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Thank you, Barry. I will provide an update on our balance sheet, touch on the second quarter versus our prior expectations, and then walk through our updated 2026 guidance. At quarter end, we had approximately $1.4 billion of outstanding debt. Approximately three-quarters of our debt was at fixed interest rates. Our weighted average interest rate at quarter end was about 5.5%. Our leverage ratio, as calculated under our credit facility, was approximately 4.8x 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.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

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 well-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.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

We also continue to prioritize ways in which we can drive shareholder value, such as investments in our existing assets or share repurchases. As a reminder, in 2025, we finished the Grand Hyatt Scottsdale project, which we are benefiting from now, and as we wrap that up, we turn more aggressively to share repurchases, buying approximately 9% of our outstanding shares last year at a sub-$13 weighted average price per share. Moving ahead to the second quarter relative to prior expectations, just two points to frame the discussion ahead on guidance. First, as Marcel mentioned, second quarter results came in slightly ahead of our expectations, with better RevPAR and EBITDA margin than expected, resulting in a $1 million beat to the Adjusted EBITDAre implied by the quarterly weighting that we had previously indicated.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Second, as to our expectation for event-driven demand this year, we had previously guided to a range of 25 basis points-50 basis points of RevPAR growth due to special events. Our current estimate is that event-driven demand materialized at the low end of that range, and the mix of business being more transient than group didn't provide as much of a total revenue lift as had been anticipated. Turning next to our 2026 guidance. We've raised our full-year Adjusted EBITDAre guidance by $7 million-$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.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

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've increased the midpoint by 150 basis points to 5.5%. As we look ahead, a couple of things give us confidence in our outlook. First, group room revenue pace for the second half was up 12% at the end of June versus the year prior. That reflects a 300 basis point increase from where it stood a quarter ago. The pace increase is 80% demand-driven and 20% rate-driven.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

This higher pace reflects strong production in the second quarter, with group room revenue production up over 25% for the back half of this year compared to production in the second quarter of 2025 for the back half of 2025. We have more than three-quarters of our expected second half group business already booked. Second, we continue to see strong transient demand reflected both by results from our more transient-oriented hotels and overall transient pace. Based on our July projected RevPAR, several of our transient-oriented hotels, excluding those that benefited from special events, showed strong year-over-year gains. Those properties include our hotels in Salt Lake City, Pittsburgh, and downtown Orlando. As to transient pace, at the end of June, it was up in the high single-digit percentage range for both August and September.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

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.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

We will now open the call for questions. Jen, may we please start the question-and-answer session?

Operator

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

Chris Darling
Chris Darling
Analyst at Green Street

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

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Sure. Thanks for the question, Chris. Like I said in my prepared remarks, I do think we're seeing a slightly more robust transaction market than we've seen over the past several years. 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 of quarters. I think that this creates an environment where it does become a little bit easier for buyers and sellers to potentially find each other and end up with pricing that could work on both sides. It's obviously a little bit easier to look at a property that you can point a little bit more easily towards growth over the next several years to give you some more confidence about completing a transaction.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

It also may end up getting to pricing that actually makes more sense for a seller in that situation. Overall, I think we're just seeing, like I said, a little bit more robust markets. Certainly allows us to build the pipeline a little bit more than what we've seen over the last several years and dig a little bit deeper into some of those opportunities.

Chris Darling
Chris Darling
Analyst at Green Street

That's helpful. Maybe a question for Barry here, 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 Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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

Chris Darling
Chris Darling
Analyst at Green Street

All right. 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
David Katz
Analyst at Jefferies

Thanks very much for taking my question. Appreciate all the detail. You've, 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
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Well, I think as we've talked about in the past, corporate M&A is really driven by what the overall environment looks like from potential buyer and seller interest, obviously. I think we've focused very much on continuously upgrading the portfolio, making the portfolio as robust against potential challenges, and similarly positioning it well for future FFO growth through continuously upgrading our portfolio and making sure it's an attractive portfolio from whatever perspective. We As Atish has pointed out, we've grown FFO pretty significantly over the past several years. We're on a day-to-day basis just doing all the things that we think are going to drive value for us in this portfolio over time, no matter in what form that ultimately benefits all of our shareholders.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

I think what you've seen in the overall transaction environment is that you're still not seeing a lot of large portfolio transactions that people are pursuing on the buy or sell side. There's just been more focus on individual properties or smaller portfolios just overall in the transaction market. Currently, I don't have an expectation of that significantly changing or shifting here in the near term.

David Katz
David Katz
Analyst at Jefferies

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

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Well, from an ownership perspective, obviously, we are looking for ways to grow value in a portfolio, and that includes every single element of operations. It's extremely important for us over time to make sure that we keep our expenses under control and that the growth and expenses over time has obviously been pretty significant in every aspect of the income statement. Similarly, especially in an environment like today, we want to make sure that we have all the right channels in place and all the opportunity to drive as much on the sales side as possible at the lowest acquisition cost possible. There's nothing new or different about that. I think everyone knows that over time there has been a lot of pressure for owners on bringing down revenues to the largest percentage possible to the bottom line.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

That's something that we're all focused on, obviously. I don't think it's anything unusual that we would look at every aspect of that as owners to make sure that we are doing right by ourselves and our shareholders.

David Katz
David Katz
Analyst at Jefferies

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
Michael Bellisario
Analyst at Baird

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

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Yeah, good questions, Mike. The strength is pretty broad-based. As I mentioned, 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 across a variety of markets. Frankly, as you know, group has been a source of strength for us now, in particular last year and this year. Seeing this kind of momentum has been quite positive for us. I don't know, Barry, if you have anything to add on the group side.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

I think I'd emphasize, one, very broad-based across almost all of our properties. Two, certainly, and a lot of it depends on, in terms of rating 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. If there are holes in places where a market's compressed, but maybe our hotel hasn't been able to yet put a group in, we're going to be able to capture that group at a very high rate. Conversely, when you look at a lot of those markets where we have very good group pace, the holes are in pieces and places that are hard to fill.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

While we may continue to fill more room nights, in particular in periods coming in and out of holidays, which is obviously prevalent both in the third quarter and fourth quarter, we may or may not achieve significant rate growth on those compared to the overall rate platform, but we're booking business that we otherwise wouldn't book. That's really the puzzle for each property is how best to do that and how to drive overall RevPAR.

Michael Bellisario
Michael Bellisario
Analyst at Baird

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

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Yeah. I'll take the first part of that. In terms of funding of deals, as we talked about, healthy amount of liquidity, leverage ratio that's kind of still above where our target is, but certainly sub 5x, some capacity there. I think we'd look to existing resources, if not potentially additional dispositions over time as ways to fund any acquisitions. I think with regard to pipeline, maybe if you have anything to add there.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Yeah. As it relates to pipeline and expectations, like I pointed out, I think we're seeing probably a little bit more activity out there that probably gives a little bit more of an expectation of where things could be pricing. It's hard for me to point to anything specific and say seller expectations have really dramatically changed over the last 60 days-90 days. It's really hard to point to any individual transactions to really talk about that in detail. Clearly, to my point, there's obviously a little bit more optimism about the health of the lodging industry overall and the growth that we've seen over the last several quarters. I think that just provides, in general, generally a little bit more of a backdrop to be for some productivity on the transaction side, I'd 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
Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Thanks. Good afternoon, everyone.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Afternoon.

Austin Wurschmidt
Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Atish, you had referenced that the transient pace for August and September was tracking the high single-digit range. I believe you said that was as of the end of June. Can you just give us a sense how that's materialized for transient pace, looking 60 days-90 days out here more recently, and if you've seen things continue to strengthen, have you given some of that back? Just give us a sense and frame that up.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

First, I would preface it by saying transient pace, it does move around a bit, so it's not always the best direct indicator. It has strengthened, it's moving in the right direction, and I think reflects the actualized results that we're seeing. If you look at what our transient pace was going into July and how July came out, I think it is a good indicator. It's one 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 one of the ones I mentioned. I would view it in the context of that.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

I would just say that we do have a healthy level of confidence in the outlook, and transient's one piece of it, and obviously what we've been talking about on the group side is the other.

Austin Wurschmidt
Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Very helpful. With respect to the guidance revision, can you talk a little bit about how the contribution at the Grand Hyatt Scottsdale has changed for this year? I think initially, at the outset of the year, you had around that hotel contributing towards the low $30 million range.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Yeah.

Austin Wurschmidt
Austin Wurschmidt
Analyst at KeyBanc Capital Markets

What's the new expectation given it seems like things are trending well there?

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Yeah. We're a smidge higher. We're still in the low $30 million range. Kind of $32 million, so to speak. I think we're sort of in the range that we talked about before. Grand Hyatt Scottsdale is tracking really well, but the guidance revision really has as much to do with the rest of the portfolio and what we're seeing more broadly.

Austin Wurschmidt
Austin Wurschmidt
Analyst at KeyBanc Capital Markets

That's all from me. Thank you.

Operator

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

Ari Klein
Ari Klein
Analyst at BMO Capital Markets

Thank you, 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. Then if some of the strength in group pace you're seeing in the second half of the year related to maybe a shift, in where the group ends up coming in. On that topic in general, 2027, how is that shaping up for group, or maybe growth tailwinds in general, how are you thinking about that for next year?

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Yeah. Let me start off with that, and then Barry can jump in. I did mention in my comments that we certainly saw a little bit of a pullback in group in 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're also obviously driving rates and trying to get more transient in as a result of that, too. That definitely was something that impacted June in the World Cup markets. I did mention, and I think it's fair to say that some of the softness in group in the second quarter wasn't just related to that. May had always shaped up to be one of our weaker group markets from a growth perspective.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

We had a particularly strong second quarter last year on the group side. It was hard to replicate some of that, and we had some holes in various properties in the month of May that just never really filled. 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 throughout the portfolio. It's always hard to say whether things shift or not, but what we can say is we obviously had pretty good group pace in the first quarter. Second quarter was a little weaker. That's really how we came into the year already. The second quarter always looked to be the weakest quarter from a group perspective. Second half has always looked strong.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

What's particularly encouraging, obviously, is that we actually saw group production pick up in the second quarter, and even strengthen that into the second half. Whether that's any kind of shifting, as Barry, I think, pointed out too, it's pretty broad-based in the portfolio. It's not just that you're saying, "Okay, we lost out in these World Cup markets and group, and now just kind of picking up there." We really have broad-based strength in the portfolio on the group side.

Ari Klein
Ari Klein
Analyst at BMO Capital Markets

Thanks. 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 right now that you can quantify?

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

I think it's 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've worked with previously with great success, then really taking this opportunity to rename the hotels, where each property has its own unique identity that's local to its marketplace, but continue to be part of the Autograph Collection. We think that ultimately pays significant dividends, both on driving revenue through connection with local market, enhanced level of activity in the properties, and special events programming that fits in with the local markets and attracts guests, and then with Davidson and their ability to both sell that as well as help us on the cost control side. Again, these are properties that have done very well for us.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

We just think it's an opportunity to really enhance them and derive more out of them going forward.

Ari Klein
Ari Klein
Analyst at BMO Capital Markets

Great. Thank you.

Operator

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

Jack Armstrong
Jack Armstrong
Analyst at Wells Fargo

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

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Yeah, I think, thanks, Jack, for the question. Appreciate it. Atish spoke about it a little bit earlier. Clearly, we're 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. If you look at the last couple of years, if you look at the trajectory of where the focus has been, it was obviously a good amount of capital going out for those ROI projects. We followed that up as that started coming down by using some more capital for share repurchases like we did last year. Certainly, we thought the pricing was pretty attractive back then, and obviously feel so even more strongly now, being able to buy back as much as we did at that sub 13 level.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

Clearly, the stock price has moved up, it becomes a little bit more interesting to start looking at potential acquisitions and external growth as part of the capital allocation decision going forward. Whereas before, that was really clearly a much inferior way to spend our capital than the few things that we did over the last several years. We'll continue to look at it from a very balanced perspective. We certainly still believe that there's value in the stock. Atish can certainly jump in there as well, again, we will continue to look at it on a balanced basis to the extent that we now find an opportunity that we think is going to drive good external growth for us. It just becomes a little bit more likely than what we've seen over the last several years.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

Yeah. The only thing I would add is, if you look back historically, we have taken a balanced approach and utilized all those tools to grow value, whether it be 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, you saw us step on the gas pedal, so to speak, for share repurchases. I think now we're in an environment where it's definitely more opportunistic, it's case by case, we'll toggle between those levers as we have historically done. I will say, just in terms of current valuation, since you mentioned it, we currently trade at about $350,000 a key with a portfolio cap rate in the mid sevens, and a Hotel EBITDA multiple south of 11x.

Atish Shah
Atish Shah
EVP, CFO, and Treasurer at Xenia Hotels & Resorts

As you think about that, certainly, while the share prices have moved, we're still trading within the range of, more broadly, a historic range. If you think about the fundamentals and the supply outlook and where we trade relative to NAV, both our internal NAV and the freshest external NAV estimates, I think you'll find that even now after the appreciation, we're still trading at a very reasonable level, and there's still a gap between where we currently trade and NAV. I think that also may be as helpful to you as you think about how we think about the stock price and capital allocation.

Jack Armstrong
Jack Armstrong
Analyst at Wells Fargo

Really helpful there. Just one follow-up. Can you talk a little bit about what you're seeing in the Nashville market and when we should expect to see the incremental EBITDA from the F&B CapEx you've put in at the W?

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

Obviously, we're 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, two of the outlets are run by Marriott, two are run by José Andrés Group, and each of those outlets has had, I think, really good success in terms of connecting with the local community. Obviously, each outlet, when you're opening four outlets really at the same time, each outlet is coming online at a different pace, based in part on what its demand generators are. What our team's done, I think, has done a really good job on working with both Marriott and José Andrés Group on looking at how we can drive revenue into those outlets.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

In some cases, where an outlet may have not gotten off to exactly the same start we had expected, we 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 returns of those. We had always forecasted this year to be really a ramp-up year in terms of the food and beverage operation. I think as we look ahead to 2027 there, that's when we're going to get to the point of what we expect the restaurants to do, and be getting both the contribution from the restaurants, but more importantly, getting to the contribution we expect from the hotel side.

Barry Bloom
Barry Bloom
President and COO at Xenia Hotels & Resorts

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

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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

Jack Armstrong
Jack Armstrong
Analyst at Wells Fargo

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 Chief Executive Officer, for closing remarks.

Marcel Verbaas
Marcel Verbaas
Chairman and CEO at Xenia Hotels & Resorts

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

Operator

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

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