Xenia Hotels & Resorts, Inc. Price & Performance (XHR)

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 02/25/2025. And we undertake no obligation to publicly update any of these forward looking statements as actual events unfold. You can find a reconciliation of non GAAP financial measures to net income and definitions of certain items referred to in our remarks in our fourth quarter earnings release. Which is available on our 31 hotels unless specified otherwise. An archive of this call will be available on our website for ninety days. I will now turn it over to Marcel to get started. Good morning to everyone joining our call today. We are pleased with our accomplishments during a challenging 2024. And particularly the positive momentum that was generated in the fourth quarter.

As portfolio operating performance improved and the significant capital improvement projects that weighed on our portfolio results during the year, we're largely completed. Most importantly, substantially completed the transformational renovation and upbranding of Grand Hyatt Scottsdale. With just some minor components remaining to be finished in 2025. The expanded Arizona room was completed on schedule in early January. Representing a significant achievement in the overall project. The timely completion of the ballroom allowed us to capture some lucrative last minute group business during the month of January. This outstanding new facility has been extremely well received. By groups that have been able to experience the new space already and by meeting planners who are considering the resort for future business. With the now fully renovated and relaunched Grand Hyatt Scottsdale ramping up operations, we expect this strategic investment to begin delivering meaningful returns over the quarters and ahead. We remain confident that the resort will be able to drive significantly higher cash flow than it did during its prior peak performance years through stabilization and into the future. Now turning specifically to our fourth quarter operating results. This morning we reported a net loss of $638,000 Adjusted EBITDAre was $59,200,000 and adjusted FFO per share was $0.39 for the quarter, which modestly exceeded the midpoint of the guidance range we provided when we announced our Same property RevPAR came in 5.1% higher than the prior year in the fourth quarter of twenty twenty four.

As performance at Grand Hyatt Scottsdale became a tailwind for our overall portfolio RevPAR gains. Encouragingly, we experienced double digit RevPAR growth a number of our markets in the fourth quarter, These outperforming markets include Nashville, Santa Barbara, Pittsburgh, [indiscernible] Salt Lake City, New Orleans, Charleston, and Phoenix, driven by Grand Hyatt Scottsdale, indicating strong demand generated by various segments in these diverse markets.

On a same property basis, fourth quarter hotel EBITDA of $62,900,000 was 0.6% below twenty twenty three levels, and hotel EBITDA margin decreased by 120 basis points. Excluding Grand Hyatt's cost still, fourth quarter same property auto EBITDA was flat compared to last year. And hotel EBITDA margin decreased by 68 basis points. We continue to appreciate our operators' efforts to control costs in a difficult [indiscernible] For the full year 2024, net income was $16,100,000 Adjusted EBITDAre was $237,100,000 and adjusted FFO per share was $1.59 Our same property portfolio achieved a RevPAR in [indiscernible] which was significantly impacted by the Scottsdale renovation. Excluding Grand Hyatt Scottsdale, RevPAR increased by 3.4% driven by solid occupancy gains throughout the year.

As we discussed throughout the year, the Group and Business Transient segments drove these RevPAR and occupancy gains. As leisure demand moderated a bit in 2024, 18 out of the 31 hotels in our same property portfolio achieved RevPAR growth as compared 2023, In addition to significant RevPAR growth, at our recently renovated properties in Salt Lake City, Santa Barbara and Orlando Our hotels in Houston, Dallas, Santa Clara, Pittsburgh and Washington DC were relative outperformance during the year. On a same property basis, 2024 hotel EBITDA of $255,400,000 was 5.5% below 2023 levels and margins were 189 basis points lower as compared to 2023. Excluding Grand Hyatt Scottsdale in both years, same property hotel EBITDA increased 1.3% and margins decreased just 64 basis points in 2024 compared to 2023. As I mentioned earlier, the Group segment has continued to be a relatively strong driver for our portfolio. For the full year, same property group room revenues excluding Grand Hyatt's Costo, increased by 5% as compared to 2023. We continue to be particularly encouraged which while enhanced by returning group demand in Scottsdale is evident throughout the portfolio. Atish will further discuss our group base in his remarks. We also saw a strengthening in corporate transient demand over as evidenced by continued improvement in mid week occupancy.

Looking ahead, we continue to believe that there is still substantial growth for room for growth and revenues generated by this segment as corporate trends in demand throughout our portfolio still lags significantly behind the 2019 levels, particularly on Monday and Thursday nights. And while leisure demand moderated in 2024, we did see signs of stabilization in the fourth quarter. With most of our leisure driven markets experiencing RevPAR growth during the quarter. With Savannah being the notable exception. We are particularly pleased with the CapEx projects that we have completed in recent years. And expect to see meaningful returns from these projects in 2025 and beyond. While we experienced good results at the recently renovated Grand Bohemia in Orlando Hotel Monaco, Salt Lake City, Canary Hotel Santa Barbara in 2024, we believe there is further room for revenue and EBITDA growth at these hotels. Additionally, relatively recent larger projects such as the additional ballroom at Hyatt Regency Grand Cypress are expected to reach their full revenue potential in the coming years. And while most of our focus in 2024 was on the Scottsdale project, there were a number of other projects completed improved the competitive positioning of several of our hotels and resorts.

As we turn to 2025, our total capital expenditures are projected to remain slightly higher than where we expect these to stabilize in the years ahead. This is partially as a result of closing out the expenditures related to the Scottsdale However, we anticipate only minor revenue and EBITDA displacement in 2025. As the projects we intend to undertake will cause very limited disruption to guests given the scope and timing of these projects. Barry will provide details as well as our planned capital expenditures in his remarks. Our initial 2025 guidance is based on a range of 3.5% to 6.5% same property RevPAR growth. Or 5% at the midpoint. Embedded in this outlook is an expectation for further occupancy gains Although we saw solid occupancy gains in 2024, occupancy for our portfolio excluding W. NATIONAL, Hybrid City Portland, and Grand Hyatt Scottsdale, was still approximately seven points behind 2019 levels. We clearly also expect Grand Hyatt Scottsdale to be a significant driver our projected occupancy and RevPAR growth in 2025. As we are now passed on the significant revenue and EBITDA disruption, we experienced during the transformative renovation, that took place in 2023 and 2024. As we begin 2025, we are optimistic about our growth prospects despite continued uncertainty in the overall economic and we are off to an encouraging start to the year.

We estimate that our same property RevPAR increased by 7.3% year to date through February 20, compared to the same period last year.

While these strong results were aided by the Super Bowl taking we also experienced some offsetting negative impact from the winter storms in January, in a number of our Sundal locations. These early results coupled with the completion of the transformational renovation Grand Hyatts Castell give us confidence in our outlook for 2025. And in our portfolio's ability to drive significant revenue and earnings growth in 2025 and beyond. We are proud of all the hard work that was in the last year. Not only as it relates to our asset management and project management initiatives, but also on our financing and capital markets activities. We addressed all near term debt maturities, and have further strengthened our balance sheet positioning us to capitalize on potential strategic opportunities in the years ahead. While it appears that the pipeline of potential acquisitions may be improving some we remain patient as we prudently evaluate and balance all potential capital allocation alternatives. We will continue to focus on improving our portfolio over time. As we have done through our capital expenditures, that are focused on driving strong ROIs, as well as through selective dispositions of properties with significant upcoming capital needs.

That may not meet our investment requirements.

And if market conditions allow, this could also include taking advantage of external growth opportunities as we have done in the past. I will now turn the call over to Barry to provide more details on our operating results, our capital projects. Thanks, Marcel, and good morning, everyone. For the fourth quarter of twenty twenty four, our 31 same property portfolio RevPAR was $165.92 based on occupancy of 64.4% at an average daily rate of $257.52 Same property portfolio RevPAR increased 5.1% in the quarter compared to the same period in 2023. This increase reflected about 2.5 points of occupancy gain and a 1% gain in average daily rate as compared to the fourth quarter of twenty twenty three. Excluding Grand Hyatt Scottsdale, quarter RevPAR was $168.34 an increase of 3.4% as compared to 2023. This increase reflects a two point gain in occupancy and a 0.3% increase in average daily rate as compared to the fourth quarter of twenty twenty three. [indiscernible] During the fourth quarter, same property RevPAR improved each month, sequentially and compared to 2023, with October growing 3.9%, November growing by 4.6%, and December grew by 7.4%. Excluding Grand Hyatt Scottsdale, RevPAR was up 3.325.2% in October, November and December as compared to 2023.

Throughout the year, we continue to see improvement in the business transient and group segment Our leisure business continued to soften from the extreme peaks experienced in 2022. For full year 2024, 31 same property portfolio RevPAR $172.47 based on occupancy of 67.4% at an average daily rate of $255.72 Same property portfolio RevPAR increased 1.6% as compared to 2023.

This reflected a 2.3 gain in occupancy 1.9% decline in average daily rate as compared to full year 2023. Excluding Grand Hyatt Scottsdale, year RevPAR was $176.62 an increase of 3.4% as compared to 2023.

This increase reflects a three point gain in occupancy, and a 1.1% decline in average daily rate as compared to full year 2023. Our properties achieving the strongest RevPAR growth as compared full year 2023 included Grand Bohemian Orlando, with RevPAR up 43% Hampton Hotel Monaco, Salt Lake City of 25.4%, and Kimpton Canary Santa Barbara of 21.2%. Each of these hotels underwent significant renovations during 2023, and each has performed admirably with fully renovated rooms and food and beverage facilities. RevPAR growth was also experienced at the Weston Oaks and Galleria Houston and Hyatt Regency Santa Clara each up 10.1%. Waldorf Astoria Atlanta bucket of 9.1%, and Marriott Dallas Downtown City Center of 8.1%. These properties benefited from improved group demand and recovering business transient demand. Conversely, the greatest RevPAR to decline compared to 2023 was experienced at Grand Hyatt Scottsdale as a result of the ongoing renovation. In addition, our leisure focused properties in Savannah, Phoenix and Napa also experienced declines as leisure business continues to normalize. Andas San Diego and High Realty Grand Cypress also suffered RevPAR declines primarily due to difficult market conditions. Business from large corporate accounts continued to recover throughout the year and improved significantly compared to 2023 in the latter half of the year.

Business for the very largest accounts continues to track well behind 2019 levels, while demand from small and midsize customers has largely recovered to 2019 levels. As noted earlier, both from an occupancy and average rate perspective in markets like Savannah, Napa and Phoenix. Occupancy rate levels in Qwest appear to have stabilized and Charleston and Santa Barbara both grew RevPAR for the year. Our significant resorts in San Diego and Orlando both experienced very competitive leisure environments throughout the year. Now turning to group, For the year, our same property group rooms revenue excluding Scott exceeded 2024 levels by 5%.

Our performance reflected some softening in group business at our large resort hotels, with stronger group results in our urban and suburban markets. Group business in the fourth quarter was generally in line with the full year. Now turning to expenses and profit. Fourth quarter same property hotel EBITDA was $62,900,000 a decrease of 0.6% compared to the fourth quarter of twenty twenty three. Resulting in 120 basis points of margin erosion. Excluding Grand Hyatt Scottsdale, fourth quarter same property hotel EBITDA was $63,000,000 flat as compared to the fourth quarter of twenty twenty three in respect to 68 basis points decline in margin.

On a full year basis, same property hotel EBITDA was $255,400,000 EBITDA margin decreased 189 basis points. Excluding Grand Hyatt Scottsdale, same property hotel EBIT margins decreased 64 basis points as compared to full year 2023. Our fourth quarter and full year 2024 margins continue to normalize as we saw increases in full time equivalent employees and wage rates throughout the year. Expense control improved throughout the year as our hotels lapsed significantly and increases that impacted 2023. In the fourth quarter, food and beverage revenue declined slightly as outlet revenues increased while bank revenues decreased. Revenue from other operating departments grew significantly, particularly in spa and golf which were both up double digits.

On the expense side, rooms departmental profit improved by 49 basis points compared to the fourth quarter of twenty twenty three. With an increase in cost per occupied room of just 1%. Food and beverage margins declined 79 basis points, a result of the mix of outlet versus banquet business.

A and G and utility expenses continued to be well controlled up just 2.21.7% respectively, compared to the fourth quarter of twenty twenty three. While sales and marketing and repairs and maintenance expenses were up 5.98.5% compared to the fourth quarter of twenty twenty three. Continue to see significant increases in sales and marketing expenses as a result of loyalty expenses and digital marketing. Prepares and maintenance expenses continue to increase as costs [indiscernible] and contracted services continue to grow.

Finally, turning to CapEx. The quarter and year ended 12/31/2024, we invested 24,400,000.0 and $140,600,000 in portfolio improvements respectively. In 2024, some of the significant projects be completed included the renovation of all meeting rooms at Waldorf Astoria Buckhead, and substantial restaurant renovations at Ritz Carlton Denver and Bohemian Hotel Savannah Riverfront. In addition, we renovated lobbies and upgraded the heavenly beds at both At Weston Galleria, we also renovated the lobby and restaurant relocated and substantially upgraded the fitness facility, and added a concierge lounge and meeting space.

At the Marriott Woodlands, we renovated the lobby restaurant and bar, and added in M Club.

In addition, we began a comprehensive program of making select upgrades to guest rooms at several of our largest hotels including Hy Veezy Santa Clara, Marriott San Francisco Airport, and Renaissance Atlanta Waverly, These projects will continue into 2025.

We also made progress on several significant infrastructure projects at Honda San Diego, Fairmont Dallas, Marriott Sam's Club Airport, Renaissance Atlanta Waverly and the Ritz Carlton Denver.

We transformative renovation of the former Hybrenity Scottsdale Resort and Spa, Gainey Ranch. 11/01/2024, property is up brand at Grand Hyatt Scottsdale Resort. As a reminder, approximate $150,000,000 project was completed in phases throughout the with the full year as completed in the first quarter of twenty twenty four guest rooms and corridors were completed on a phase basis throughout the year. With certain premium suites and casitas finished in January 2025. Perhaps the most exciting component of the renovation from a revenue generation standpoint was the expansion of the Arizona Ballroom and renovation of all meeting spaces. Renovation of the existing ballrooms, meeting rooms and prefunction spaces were completed in October 2024.

The expansion of the Arizona Ballroom by approximately 12,000 square feet was available for groups in early twenty twenty five.

We're also incredibly excited about the work we completed in the public areas, including the lobby, which has completely changed the look and feel of the resort. All of the hotels, food and beverage venues were reconcepted and redesigned. These venues opened on a phased basis between October 2024 and January 2025 in coordination with business levels. We couldn't be more pleased with the outcome and initial interest in these outlets from both hotel guests the broader Scottsdale community. Finally, upgrades to the building facade, exterior lighting and exterior signage. Were all completed by the end of twenty twenty four, with certain exterior projects including renovation of the parking lots. To be completed in the summer of twenty twenty five. Significant planned renovations for the portfolio 2025 include the first phase of a comprehensive rooms renovation, which begin in the fourth quarter at Andaz Napa, and renovation of guest rooms and quarters at the Rich Carlton Denver also planned to begin in the fourth quarter of the year.

In addition, in 2025, we'll continue our ongoing program incorporating select upgrades to guest rooms and public areas, at a number of our properties.

These projects will be done based on hotel seasonality and are expected to result in minimal disruption. In addition, we expect to perform infrastructure and facade upgrades, in approximately nine hotels throughout the year. With that, I will turn the call over to Atish.

Thanks, Barry, and good morning.

I will provide an update on three items.

Our balance sheet, return of capital and full year 2025 guidance. First on our balance sheet. The credit facility recast and bond issuance we completed in fourth quarter have resulted in greater liquidity and flexibility for the company. We addressed all significant near term debt maturities but for one mortgage loan that matures next year and is at a favorable interest rate.

At present, approximately three quarters of our debt is fixed.

We had approximately $650,000,000 in liquidity at the January inclusive of an undrawn $500,000,000 line of credit. As to specific balance sheet actions since we last reported, the bond financing we completed in November was well received We upsized the issuance to $400,000,000 and utilized proceeds to pay off bonds that were slated to mature in August of this year. In January of this year, the delayed draw [indiscernible] of our term loan was funded thereby taking our term loan outstanding balance to $325,000,000 As to our overall balance sheet position, we continue to have significant flexibility All but three of our assets are unencumbered, We have no senior capital and our net debt to EBITDA ratio was 5.4 times at year end and we expect it to decline as Scottsdale continues to ramp up. [indiscernible] want to now turn to our return of capital. I have two specific items here as follows. During the fourth quarter, we repurchased over 500,000 shares of common stock at an average price of $14.83 per share. In 2024, we repurchased a total of about 1,100,000.0 shares at about $14 per share. Representing about 1% of our outstanding shares at the start of 2020 Our current Board authorization permits the repurchase of an additional $118,000,000 of common stock.

Turning to the second way we have returned capital, our dividend. We expect to pay a first quarter dividend of $0.14 per share up from $0.12 per share last quarter. This dividend level equates to an annualized yield of over 4%. As to our payout ratio, on an annualized basis, the dividend reflects just over 50% of twenty twenty four funds available for distribution or FAD.

Over time, we expect our payout ratio to return to pre pandemic levels in the mid-sixty percent range. The third item I'd like to discuss is our 2025 guidance At the midpoint of the full year guidance we issued this morning, we expect same property RevPAR to grow 5% versus last year, adjusted EBITDAre to increase 7%, and adjusted FFO per share to increase 3.5%. Getting into each of the components a bit more, I will begin with same property RevPAR. We expect RevPAR to increase 5% at the midpoint of the range.

Supporting these expectations for RevPAR growth are three items.

First is the strength of group demand in our portfolio. 2025 group room revenue booking pace as measured at year end 2024 is up 17%. This is driven by a mix of healthy occupancy and rate growth. We expect the growth to be three quarters driven by demand, and one quarter driven by rate. Excluding Scottsdale, group revenue pace is up 12% again about three quarters demand driven and one quarter ADR driven. As to group on the books, about three quarters of our expected 2025 group room revenue is already definite, with one quarter left to book. Which is typical for this time of year. Group revenue production continues to be strong as well, Over the last four months through January of twenty twenty five, group production for 2025 increased 20% versus the same period in the prior year. Excluding Scottsdale, it increased 13% again reflecting continued momentum in near term group booking activity. Second, a continuation of the improvement in business transient demand across our major markets is is expected, excuse me, In the second half of last year, we began to see business transient pick up more and we expect that to continue. Our first quarter to date preliminary RevPAR growth of 7.3% reflects that recovery More specifically, over the first seven weeks of twenty twenty five, our hotels, located in Philadelphia, Denver, Pittsburgh, Nashville and Buckhead, which are five of our urban hotels that have strong appeal to business transient guests, had an average of 13 points of mid week occupancy growth.

Third, Scottsdale is driving over half of our expected 2025 RevPAR growth, as we recover from displacement from last year. Scottsdale reflects approximately 300 basis points of our expected 5% RevPAR growth.

The momentum in Scottsdale is growing. As of the January 2025, group revenue pace is ahead of 2019.

This reflects 2025 group ADR pacing nearly 30% ahead of 2019 levels. Over 75% of our expected group revenues at Scott are already definite. Moving ahead, I'll turn to next to hotel EBITDA margins. For the year, we expect margins to be roughly flat as compared to 2024. While we expect growth in food and beverage and other revenues to we also expect expense pressures I will discuss in a moment. First half margins are expected to decline to decline slightly with growth expected in the second half. Excluding Scottsdale, we expect full year margin to decline approximately 100 basis points due to higher expenses, our expectation that much of our RevPAR growth in 2025 will be driven by occupancy. On operating expenses, on a per occupied room basis, we expect hotel level expenses to increase about 4%. Wages and benefits, which make up 45% of our hotel level expenses are expected increase slightly higher than that All other hotel level expenses, which make up about 55% of our hotel level expenses, are expected to decrease to increase slightly below the 4% level.

As to adjusted EBITDAre, we are guiding to a midpoint of $254,000,000 for 2025. By quarter, the weighting we expect is about 25% for the first quarter about 30% for the second quarter nearly 20% for the third quarter and just above 25% for the fourth quarter. [indiscernible] is more in line with our pre COVID seasonality as we renovation disruption this year. While our full year adjusted EBITDAre benefits from Scott's coming back online and a bit of growth across the remainder of the portfolio, there are some offsets. These four offsetting items totaled $6,000,000 and are as follows: First, as you may recall, we sold the Lorien Hotel last year, It earned $1,000,000 of EBITDA during our ownership period in the first half of the year Second, we received $2,300,000 in business interruption insurance proceeds in 2024 Third, we expect interest income to be $1,000,000 lower in 2025 versus last year And lastly, we expect cash G and A expense to be about $1,500,000 higher in 2025 as compared to last year. To recap, taken together these four items reflect about $6,000,000 of headwind to adjusted EBITDAre. And finally moving on to adjusted FFO per share. Our guidance of $1.64 at the midpoint reflects $17,000,000 expected of an increase in adjusted EBITDAre versus last year.

It also reflects higher interest expense and higher income tax expense. As to interest expense, our full year estimate is $4,000,000 higher than last year due to a mix a greater mix of variable rate debt, and less capitalized interest. As to income tax expense, our full year estimate is $7,000,000 higher than last year. Recall, we had $5,000,000 of favorability due to the release of allowance in 2024. Our 2025 estimate reflects income tax 2024 guide. Income tax expense is expected to be at a lower level than pre COVID both due to the use of NOLs and additional tax work that are Year over year, our guidance reflects a $6,000,000 increase in FFO, On a per share basis, that is about 3.5% of an increase at the midpoint. As we look ahead, we remain confident in the longer term earnings power the company, the completion of Grand Hyatt Scottsdale, its renovation and its early ramp overall strong group [indiscernible] and the rest of the portfolio holding its own in the face of expense pressure gives us confidence in our expectations for the year. Beyond that, we expect our investments over the last few years to drive superior earnings growth as we look ahead.

We expect FFO per share to grow more the supply backdrop continues to be favorable and our hotel operators continue their efforts to manage expenses. And with that, we will turn the call back over to Lydia to begin our and A session.

Thank you. Our first question comes from Ari Klein with BMO market Your line is open. Please go ahead.

Thank you and good morning. I was hoping maybe you can help on pack the RevPAR guide a little bit. Obviously, group pace is up 12%, I think excluding Scottsdale.

You talked about improving [indiscernible] Business transient, but I guess the RevPAR guide ex Scottsdale is around 2%. Can you just provide a little more insight into how you came up with that Forecast?

Sure, Eric. Good morning and thanks for the question.

Yes, as you pointed out, obviously, our group page is very strong going into the year and continues to be strong.

So that is definitely encouraging as we look at our guidance for the year. As you recall, group business is about 30% of our business overall. So it's nice to feel good about where we are on that piece. Obviously, the economic climate overall just creates a little bit more uncertainty still on these other components. If we look at this year versus last year, we are encouraged by some improvement that we've seen the corporate transient side and that we've talked about clearly, we're still expecting leisure demands to lag where we were. So you kind of put all the pieces together, We obviously have a good amount of confidence in the guidance we put out today. But we don't want to completely hang our hat on Group A's this early in the year.

Because we still want to see where that plays out as we go along throughout the year. And clearly, it's just a lot more uncertainty of these other segments.

Understood. And then maybe just on Scottsdale, obviously, a nice contributor this year. How much are you I think the hotel did $23,000,000 in 2019. And then given some of the broader challenges, that you alluded to on leisure, have your views on the timeframe to get towards that stabilization number of $42,000,000 changed in any way?

Yes. What we expect Scottsdale to essentially take about three years to get the stabilization. So kind of a shorthand way of looking at it is probably kind of low 20s and EBITDA hopefully getting to low 30s next year and then getting to that stabilized number that we talked about for [indiscernible] strategy here was that we really looked at where we were in 2019 before we got a lot of strength from Clearly how leisure demand propped up a lot of markets, not only Phoenix, Scottsdale, when you looked at specifically 2022, which was more of a high watermark for the hotel. So the way we're looking at getting to that stabilized number is really looking back a lot more on what our business mix was in 2019 and how we improved from there.

So as you know, a big component of what we did here was expanding the Arizona ballroom. And Barry talked a little bit about that.

So from our perspective, the thesis is intact as far as where we want to get to and what our mix should be going forward between group and leisure as we stabilize the hotel. So So really what we're seeing in the short term, a little bit of pullback on the leisure demand and [indiscernible] is not unexpected. Certainly, it wasn't unexpected from the heights that we saw coming out of COVID. So getting kind of back to that more normalized level that we saw in 2019. Is not something that would undermine what we think we will get to with this resort. Yes. And the two things I would add. One, One, Marcel mentioned getting into the low $20,000,000 range for this year. Just one thing to keep in mind with regard to the seasonality of the property Historically, if you'd looked at the business we make 70% to 75% of our EBITDA in the first five months or so of the year. So obviously, with the completion of the ballroom taking place towards the end of last year, January. We're not going to see full maximum earnings in the first five months of this year just given the ramp there.

So that's that's one piece and why the number is kind of in the low $20,000,000 range. And the second thing I'll add is the the production on the group side has been very strong. If you look at the last four months that we have data for, so that October through 120% higher than it was in that comparable period at the end of twenty nineteen January of twenty twenty. So and that reflects 60% growth in room nights, being booked and 40% higher rate. So So that combination we think bodes well and we're just getting going on the group side. In terms of having the expanded ballroom And so so, all indicators are good in terms of the traction we're seeing.

Thanks. Appreciate the color.

Our next question comes from Michael Bellisario with your line is open.

Good morning, everyone.

Couple of questions for couple of questions for Barry here. Just back to your prepared remarks, I think you mentioned softening group sort of outside of the urban and suburban locations. Can you expand on that? What markets, what assets, why do you think that occurred? Yes. It was a trend that we had seen kind of set up 2024 and a couple of of markets in particular, specifically in Orlando and at Park Hyatt Aviara in Colesbad, We've never had a great setup for Group. As we look at it kind of as we looked at it both in foresight, but now look at it at the benefit of hindsight, We in those hotels, we clearly had big benefit coming out of COVID in terms of Demand from corporate customers in particular that really kind of piled into the hotels in 2022 and 2023 And while they didn't necessarily take a break in 2024, it was not as robust in terms of what our expectations were and a lot of the the holes were backfilled with association business. Had not been as evident in those markets in 'twenty two and 'twenty three. Looking ahead to 'twenty five, both of those properties have excellent group prospects and are back to a much more normalized mix of corporate versus association business.

Got it. That's helpful. I just wanted to clarify that.

And then also on the loyalty cost, that you mentioned, any way you can quantify that in terms of margin path you or your operators can do with kind of the on peak, off peak pricing to to mitigate some of these cost pressures?

It's really hard to put a number to it or track it in a meaningful way. Some of the things that we know and I think it's in many cases, it's part of why we're we're happy to have branded portfolio, Now it's now in its entirety. We generate a lot of loyalty and those programs for us particularly with our largest brands, Marriott and Hyatt, are driving a lot of loyal customers into our hotels. The offset is that we're paying when they're in the hotel. So are there and so that's not I'm not talking about this is not about the redemption side, this is really about the the cost of what we pay to provide points for guest stays. And we talk a lot about how with the brands, some of the brands as you know are lowering those costs this year. To to us as the as the payer of those points lowering the percentage of folio that you're paying. But as we continue to drive that business and get the benefit of the brands, kind of the offset we're seeing And in particular, in addition, as we drive more out of room spend, we're driving and spending more dollars on those loyalty costs as well.

So it's more about volume increasing than the underlying like for like [indiscernible] per room increasing at least in '24, correct? Yes, for sure.

Yes. And that's right. [indiscernible] [indiscernible] are carrying loyal members of these programs and we're paying the cost of providing them their points.

Got it. Understood. Thank you.

Our next question comes from Kesten with Wells Fargo. Please go ahead. Your line is open. Thanks. Good morning. You mentioned in your prepared remarks that the pipeline of what you're underwriting right now has grown versus the last few years. Can you provide a little bit more detail around that? Thanks, Dorey.

Probably won't give you detail on what's in the pipeline, but what I will say is that's just a number of opportunities that are out there seems to have increased a little bit. So things that we would underwrite and that we would consider that could be interesting additions to the portfolio. And that's not saying March because there wasn't a whole lot in the pipeline the last couple of years. We're just seeing I've seen kind of a modest improvement there of deals that seem worthy of underwriting. Now also obviously mentioned in my remarks that we're going to be looking at that in conjunction with all other capital allocation decisions And clearly, we continue to believe that there's a lot of value in our existing portfolio So you've seen us over the last couple of years be more active on the share buyback side than we've been in the acquisition side. So we'll clearly look at both of those to see how we drive shareholder value going forward.

Okay. And then I think it was back in January you drew down $100,000,000 or so for the delayed term loan. Should we for now just view that as funding funding CapEx near term or should a REIT be more about share repurchases or being closer on an acquisition?

Well, I think I would just at this point, it's general corporate purposes. I mean, we have it on the balance sheet. As cash and we'll look to utilize that if something compelling comes across in terms of acquisitions. But also consider that some of the other capital allocation tools we've employed employed in the past. So nothing more to say about that this point.

Okay. And then can you give us an update on how you're thinking about the trajectory of the W Nashville EBITDA just after a a flat EBITDA year in 2024? [indiscernible] As we've talked before, I think 2024 was very much transitional year for the property in terms of getting the mix right, as we've talked about before, the market as you likely know, was very soft on the leisure side compared to prior year. Did have good growth on the group side. Group was up almost 6% last year, which was a very definite part of our strategy. And we also had growth in business transient, which is a mark again another market that we had intentionally pursued. So we feel good about the mix of the hotel. Group business on the books for 2025 without giving a specific number is up much more than portfolio average overall. We think bodes well and again was part of really a multiyear strategy to to position the hotel properly. So we think as we can layer We can layer business transient on top of that mid week at compressed pricing and hope for a better recovery in the market overall and continued absorption of the other luxury hotels on the leisure side.

We think we're set up for a much better year there.

Okay. So much.

Thank you. And just as a reminder to ask Our next question comes from Austin Wurschmidt with KeyBanc. Your line is open.

Hey, it's Josh Friedman on for Austin.

Excluding the Grand Hyatt Scottsdale, which markets do you expect to drive above average RevPAR growth in 2025?

So outside of Scottsdale, some of the markets that obviously have big group components, given the strong bench of group base that we have.

We think we'll help us drop be at the top end of RevPAR performance. So that would include some of our properties in Houston, as well as Orlando, Barry just mentioned Nashville, so that's another market which we think will perform well this year. So those are a few that give you a little bit of a sense of kind of how RevPAR across the portfolio might shake out. And what I would say is that I think as we've looked at 2025, kind of the spread between the moderate performers and the out performers is much, much tighter than it has been the last few years and is really back at the almost at the 2019 levels Other than Scottsdale, obviously, but it's a very tight range of anticipated performance between the assets. So there are no huge outliers where we're expecting really significant growth nor are there market Looking at two things decline either, and that's very different in the way we've looked at guidance. In 2023 and 2024.

Okay. That's helpful. Thanks. And as a follow-up, what are you assuming for the West Coast markets in 2025?

Based on what we saw continued through last [indiscernible] through 2024, we look to see continued growth, particularly on the business transient side the Northern California market. So for us, San Francisco and Hymerich in Santa Clara, where we expect to see continued strength and rebound from tech business, it's off a very low base. So but we have seen last year and continue to see in the early part of this year a recovery in that as well. Obviously, our other markets, we expect some recovery in our leisure assets in California, particularly Napa, Canary Hotel in Santa Barbara, and then we're actually set up for a very good year at Park Hyatt Abiara. In terms of group and are hopeful that we'll be able to drive transient through there as well.

Great.

Thanks for the color.

Our next question comes from David Katz with Jefferies. Your line is open.

Hi. This is Rita Chen on for David. Just wondering if you can unpack a little bit on your assumptions at the low end and the high end of your guidance particularly around your comment on macroeconomic uncertainty and leisure moderation.

Yes, sure. When we look at at the high end versus the low end, clearly, Scottsdale was one component of that and how that's if that comes in a little bit stronger than what our current expectations are that will certainly help get us closer to the higher end.

The other piece of it is as we talked about, we have very strong group base right now. So if it turns out that business transients continues some bit of recovery that we've seen in the earlier part of the year but will certainly be helpful too. And the leisure demands piece is really kind of a question mark here. So Clearly, we don't necessarily deal with the same trends that some of our peers do as it relates to international visitation. But just in general, how strong the leisure market is over the summer, have some impact on whether we get we get a little bit above the midpoint of the guidance versus the first to below the guidance. So it's more about some uncertainty around the transient side of the business while we feel very good about where group stands right now?

Great. Thank you for the color. Thank you. We have no further questions. So I'll pass the call back to Marcel Labas Chair and CEO for closing comments.

Thanks, Lydia. Thanks everyone for joining us today. As we mentioned in our remarks, we're very excited about we are with Scottsdale, the finished product, when we ended up there, I'd like to thank our project management group for the hard work that went in getting that project complete. Everyone that I've seen the asset is extremely proud of the work that we've done there and excited about what that can do for us going forward Clearly, we are still in an uncertain environment from an economic standpoint, but we feel very good about the quality of the portfolio, where we've positioned it going forward. I think we are well positioned to to outpace the industry over the next few years.

Thanks again for joining us and look forward to seeing many of you over the next few weeks concludes today's call. Thank you very much for joining. You may now disconnect your line.