Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sunstone Hotel Investors Fourth Quarter 2022 Earnings Call. [Operator Instructions]. I would like to remind everyone that this conference is being recorded today, February 22, 2023, at 11:00 a.m. Eastern Time.

the to turn now will presentation Mr. over I Reyes, Chief Officer. Financial Aaron sir. ahead, go Please

Aaron Reyes

good Thank you, morning, operator, and everyone.

evaluating are these and Before materially to remind our the call caution that SEC, everyone We begin, prospectuses, from that to factors we I other to our cause you this those contains would XX-Qs, XX-Ks which forward-looking forward-looking projected. filings described could including statements. differ those uncertainties, like in and to subject consider in risks with statements results actual

that also financial We adjusted and may information, including this note call property contain adjusted EBITDAre. FFO non-GAAP EBITDAre, adjusted level

are accordance as with We a in accounting accepted information principles. prepared information that generally supplement providing to

The X call, Montage our On references Confidante Resort mean Seasons comparable Beach, to our but Valley. Healdsburg will excludes which and today's portfolio Miami Napa includes XX-hotel portfolio,

Additional in our available provided performance our which have our earnings website. details been are fourth supplemental, on and on quarter release

remarks, additional a some investments. details finally, capital results full on team and recent questions. Officer; recap outlook With by us our be and Springer, other the and our highlights Afterwards, on call Bryan trends. Chief today last quarter will President with are answer on provide your our I fourth quarter activity our Chief summary our XXXX. discuss the commentary recent Robert will Officer. followed And current provide of will year, transaction fourth off position, start and from available will and earnings some us Robert some Investment our Bryan After operations liquidity Executive year and Giglia, to for 'XX

turn Please to like the call would ahead. Bryan. I over go that, to With

Bryan Giglia

everyone. morning, good and Aaron, you, Thank

recap recycling investing a focusing tenants a our began highlights, to portfolio strategy shareholder take strategy, value: XXXX, and some and and in to returning and execution Last in ended to with on the capital, I Before uncertainty reinvigorated firm X we we our create minute into and realize quarterly transition which place. year, get our capital solid with want to shareholders. simple

divesting Chicago. the began On the in by front, we year X of hotels recycling

While view and market capital was pressures, on better Chicago the and and we significant needs on our it redeploy capital long-term recover time decline to XXXX, investments our and return into that cost will continue opportunities. expected the in given future hotels near- XXXX those proceeds the and these growth to to was invested

those of Overall, fortunate Diego Hilton a to and Beach sold real were the the we of just of in XX% the Confidante We nearly San do Bayfront, with Miami and San $XXX million that hotel. acquisition to this this think trade. interest Chicago fantastic XXX% estate ownership was our a giving good The company Beach redeployed and We million acquire capacity sheet Miami $XXX proceeds of Diego. combined balance with

strong resurgence are and benefit Miami a to the starting the the for and performed of we in remains transform us in as second Diego leisure well into Miami Beach a XXXX, hotel corporate demand resort preparing business. sustained to this in in Hilton the from portfolio continues San year. the group standout in-house quarter Andaz

share XXXX, for of implies growth earnings have well-performing consolidated we rate are of to with And our ownership an XX% NOI. The additional cap asset. acquisition hotel XXXX forecasted partner's pleased on X% this

expected gradually business and San market. transient able Regency value as additional investments We Francisco. we and to that in at are identified were our to displacement, to in result positioned renovation is renovate the creation. the also completed existing better In recycling, incurring portfolio and on the addition of active Hyatt all XXXX, without we In returned to now our bathrooms executed of meaningful demand capital and year an several standard guestrooms hotel group

that concept full a completed expanded overall market we increase options, guest Diego, satisfaction dining San Hilton increase operations, the and renovation, an profitability. will At streamline restaurant enhanced including

space All food in continued brand. and We are guestrooms the underway the and beverage be is offerings, to turned the second and repositioning the will D.C. this Westin Renaissance of also are the half complete, completed phase, lobby and of being final meeting the over year.

headwind and renovation earnings expect flagship we to year this Our see is as renovated Westin. from a acceleration we benefit subsiding, later fully

Confidante and, the forward at the this Finally, we transformation progress we beach to expect value We the Miami to the look resort sharing significant Beach look to made with planning Miami future. Beach. more for importantly, of Andaz the you create front in The future

of returned to discount $XXX shares meaningful we to In of dividend the to million our element strategy is capital The XXXX, shareholders quarterly our at a reinstated NAV. shareholders. our by our return also last and repurchasing

repurchase our of opportunistic, of times. will stock consistent That have demonstrating ability our common provide remain will continue more repurchase to willingness activity common further $XX million appropriate our While a capital. our dividend XXXX, to in at and share repurchased said, stock, return we

operations. to Now quarterly shifting

with results in pleased fourth quarter that performance We Sunstone. productive an exceeded are added year with that and expectations for our our already the to

our strong quarter, from increase $XXX, rates XXXX. comparable During as with portfolio XX% average to last and year compared command a to the of a XX% continued daily rate increase

rates our urban hotels San grew prior saw to compared that as gains see our to in recently biggest across portfolio we expect year-over-year in XXXX. second year. in growth and for hotel quarter portfolio, well-located meaningful the renovated will rate continue While further our led growth XX% we a row, the a the quarter the Francisco contribute to and our

occupancy soon-to-be Washington, portfolio the and underway XX% Comparable includes our Westin the of impact D.C. was renovation currently rebranded at

year earlier, for this growth forward. going noted will of this us layer completed additional later provide be an I and project As will

the RevPAR near portfolio XXXX XX% revenue, our average of country continued QX in came Banquet levels. portfolio AV generated a was revenues from group up occupancy hotels, $XXX $XXX $XXX quarter Non-room during Including fourth X to up total was fourth compared saw rate. our daily in once XX%. sales We which quarter, a in $XXX from wine the again increases of and contribution spend. strong food per banquet a made significant of benefiting and at in XXXX, comparable for beverage room

which pricing been minimum The group encouraging groups with slower levels. beverage many their up XXXX. Francisco, hotels our banquet site hotels, to exceeding QX saw per and Regency strength larger catering has to activity night upselling been recover driven XX% in contribution Hilton XX% than over menu up on San and exceeding group of Bayfront was Hyatt several Diego food San room pre-pandemic thresholds. has contributions by our XXXX, initiatives, of

of a generated revenue of an Including $XXX. $XXX the available the total room approximately portfolio RevPAR spend, per in additional out-of-room quarter our for

total For than in XX $XXX came XXXX. at X% within XXXX with comparable RevPAR portfolio, occupancy the of points lower

For year, for the came the portfolio. total $XXX at RevPAR total full in

million also collected with revenue of proceeds related business interruption we lost During insurance the pandemic. to associated the quarter, $XX

has While policy, amounts limit, we are recovery no $XX guaranteed. under are continuing which additional a to million the pursue additional

the the for continue to reduce ways expense expense On pressures. last side, to increases we years we've and costs in look navigate the seen creative several over

with to have and We our optimize to offerings operators pricing worked menu and costs. food mitigate beverage rising review

areas ranges, able the hover to continues historic drive in to higher hourly certain high help growth annual While of growth costs. managers been offset labor our end at have to efficiencies wage

installation Wailea, the continued use. which XX% the looking savings, utility our quarter phase later that will energy the solar our investments phase generated of to panel see are energy and of this has resort's to recent valuable. costs, first year, solar our total second makes we to much efficiency production elevated forward significant The In fourth more which completing increase nearly

include hotel comparable our pressures, does business not EBITDA of portfolio fourth interruption cost Despite the XX.X% the margin generated proceeds. benefit any from in quarter, which an

in the basis below with same Excluding our which nearly quarter D.C., achieved for points lower under which was renovation, XX%, EBITDA in hotel XXXX, nearly only is XX that of is XXX occupancy. points margin even

to maximizing we As our optimal is bring level. on focus as into EBITDA each to occupancy XXXX, portfolio its aim hotel move we

to segmentation. turning Now

Our same XXX,XXX volume QX X% the segment XXXX. in group of average night in total room in nights roughly with the amounts XX% XX% than of total comprised higher comparable room approximately quarter, represents portfolio quarter demand. the group rates generated and historical group

QX While the typically Comparable trend for nights, and as XXX,XXX at production in for group higher are XXXX trailing QX is and group in the higher more a books which of Corporate future is continue mix, to to Association comprise groups. the relative still total on all these a rates XXXX, positive production periods room segments and comparable in those revenue rates was QX majority and put revenue than QX current XXXX. increase what XX% we X% to

For year, group rate. the but nights, of at a XXXX room at was higher production XX% XX% full

share. Hilton compression largely in groups and Bayfront's nonholiday market QX, in to was production due periods, created which strong drove

into addition a recent desirable California social to ability is space and layer an Our that event feet result opens a our that highly X,XXX provides waterfront of experience. event events direct and indoor/outdoor signature group a up lawn of square more Southern stunning of

Plaza business our capacity. Park modern flexible its in-house food space strategically to the contribution. overflow, XXXX Boston yielding hotel to placed Again, substantial feet late of citywide beverage X,XXX over increase add meeting and square group investment allowed group

drive Boston Regency and Hyatt contractor continue transient at quarter, government corporate transient business, performed and travel of approximately in rates terms in uptick significant the accounts, negotiated of accounts saw New to business At the levels from at see nights levels XXXX increases special pre-pandemic $XXX XX% quarter came XXXX. our or volume government higher technology, the total consulting leading year. corporate In JW for nights in room participation an the Marriott Francisco, we San consulting and XX% also to professional for of with of the XXXX accounted finance than continued in in in Marriott comparable well the Orleans, bookings. defense from full which business accounts to for services same Wharf Long XX% roughly

the into early we transient seeing move are trends we bookings. XXXX, of pleased we by As the are in part

XXXX. the the urban of XXXX. and business saw robust year, this transient from last levels. our we our as government contribution The from higher booking group increased transient more seeing hovering remain end ahead. we the XXXX point weeks, few is events. about mid-teens see X for the XXXX pickup activity been prominent strength contributions A at volumes to velocity has and year months corporate outlook for improvement to the at XXXX XXXX latter what variance the next the far of performance we hotels Based in short-term most part accounts below are corporate to traditional and with so on relative in levels, in bookings we meaningful just surpass transient continue demand encouraged Lead higher in our For

historical booking closer groups was of their have pickup the averages, group seen underscoring the quarter the in in Our quarter higher for trend to we than events.

with portfolio higher lower is first nights XXXX for Pace to offset XXXX down for by room comparable half the X% of only the rates.

our compared first Excluding undergoing positive our pace significant up half flips renovation, volume. to hotels pre-pandemic X% to

of help While some with of do nature shorter-term the as we patterns progresses. additional work the fourth in have still year fill third second to and the quarters the business the half the group booking year, should in

group at to So in in activity strong our the quarter, compared Washington, far, strong and booking calendars and both San D.C. Diego have we hotels Francisco first QX have last and year. seen Boston citywide for San

our We should see these benefit which from to hotels pricing market strength. expect into translate in some compression, markets

and Group the booking time pace same Renaissance first Bayfront Hilton quarter our of XXXX. ahead Orlando our is in for at

generating these X properties trends spend. and quality of are group positive group is Country in Wine assets meaningful high, at group's also the Our the rates extremely with ancillary seeing booking attractive resort

Montage As of of four more each rates. seasons pace over of are the start a higher significant is the than nearly to properties pleased ramp now group amount up. twice as has the pace XXXX and year, of of for up had combination on in we it and group events last the XX%. for revenue are the the growth the they The with as types of continue Overall, nights attracting start of books booked at year, these resort is

in significant expect morning, this guidance. material earnings As Absent EBITDA of release growth we the a XXXX. in broader economy, our slowdown year-over-year earnings we part reintroduced

across the corporate short-term patterns, booking of Despite providing the level environment the of Given for additional profitability expenses. will guidance and year are the contribution still believe and assets I meaningful this the be soon the will this This of our XXXX potential will from portfolio, the should near-term reflect specific to underway or provide completion portfolio first Later, equate specifics quarter uncertainty will supplemented certain of the to earnings beyond nuances years. full the the results markets earnings our an various our by of year, nature that our the and in layers important and profitability recovery renovations as not ramping for year Sunstone growth in the additional macro benefit recently are full the we estimates developed growth our disparity outlook. current growth distinction, from and Aaron given is year. multiple coming

Our our in and XXXX benefit XXXX portfolio and shareholders balanced allocation in will approach to capital beyond. our

earnings First, work some customer growth from resort out-of-room ramp, the spend. positioned to base our resorts but well will enable with do, continue Both focus luxury strong should we is that year. the to on profitability. wine better now mix, increasing average daily a country XXXX, them to for rate sizable second these resort balancing are and half this saw meaningful each to of There significant business group drive while each more XXXX see resorts in order softness their group leisure resorts amount benefit in a of

acquisition partner's with strongest XXXX. books Diego continues the XXXX, the one group the in of Bayfront meaningful we in-house San earnings of additional assets of ownership in performing to expect XX% and San our exceeded growth on be Diego Hilton for considerable Second, XXXX XXXX. our

we to our across the portfolio San second will into Westin in XXXX. The will provide hotel ability made displacement to The long-term expect a the of the D.C. be Despite the XXXX growth. of add headwind in XXXX. completed investments our to of transformation at is increasing year, last growth that Francisco during continue the earnings headwinds turning we renovation investment business first year over group the half Third, D.C. accelerate tailwind. Renaissance XXXX, during will into half this our still

XXXX In Long XXXX, Renaissance which construction of investment begin it and XXXX. this will we Marriott complete in the will we multiyear we remain for on layered our experience thoughtful add during that the Beach. is value displacement have our while importantly, the And will We begin Andaz the quarter. the allocation rebranding Miami year, Beach believe second and creation. provide growth more and rebranding Long Last capital the growth will to additional and Beach, to

move the things quarter in up, sum us To as performance confidence XXXX. gives into fourth better-than-expected we

our for growth will continued in Our group-oriented the years travel business properties. resort corporate catch and robust well-located at events assets and coming demand urban see to up demand with the continues already as leisure

quarter year, last in our growth Given a across well for in the remaining Omicron and ongoing are year-over-year opportunities XXXX. see positioned quarters earlier the portfolio growth for headwinds we strong the first of

portfolio and our turn last some long-term give Additionally, actively opportunities Sunstone sales continues to Robert, that allocate growth We additional capital, transactions winning value investing over on with new that, repurchase thoughts capital to it upcoming owners. and proceeds capital to will our a this is shareholders the share formula I'll over our recycling dividends. And believe returning in Robert through to into year to ahead. our provide go investments. and

Robert Springer

Brian. Thanks,

in the those growth in has transaction which did believe are which and Early higher The long-term proceeds Miami Midyear, not will XXXX. we purchased which opportunities. pleased offer year, Andaz growth we potential the completed Chicago market, Miami the exceeding transforming be and activity been into we recycle Confidante Beach, our soon sufficient the we underwriting with into Beach. We exited

project this this As property. year. renovation beachfront next the of we We remain earnings potential year enthusiastic this well-located significant previously, and and hotel begin this will and about of conclude shared repositioning the

end basis. beverage at approval quarter. be We a for highly attractive product some are luxury and second with completing phase beachfront the during food resort design the to a all-in potential construction start will exciting and working partners preparing and The

implied better NAV a EBITDA. resort great bought San Diego believe in of attractive partner for convention sub Overall, value activity growth our Hilton XXXX recycling market-leading, also thoughtful $XXX higher consolidate well-located and per an to ownership capital for of dispositions a and represents in Bayfront on an asset or share a premier was opportunities. we at into the multiple XXx our destination. enhancing This million XXXX investment and JV out We us opportunity

We look lifestyle it would revenue generate the provide who experience. only the to not enhance access, in a and and will investing the incremental spring. guests will actively new a appeal the from also into transactions, Olakino Wailea Resort later of health resort debuting the pool focused high-end but this The with addition overall to forward pool like back asset. purchase investment guests This addition In at to portfolio new XXXX. will Beach we of improve our further and were experience value

Washington, completed help resort Work progressing Additionally, lowering on and installation costs. to conversion while is half and the third Westin the of brand. sustainable be the year second the Renaissance our the quarter XXXX. in second contribute completed this phase utility will the to solar to expected the make is be growth will more of also D.C. The of later project year-over-year by

the of to relaunch Westin in expect We XXXX. as hotel QX the

this We our that Marriott, are to Long be and project kicking Beach Renaissance will year. also off converting later in a

We for significant will expect the and begin a by better end which earnings. rate investments hotel and year does The occupancy. the of work to grow to completed second The Marriott do is performed. the not and group year, flag, in approaching compete of incremental be secure disruption we to renovation the was investment cyclical quarter and hotel and this while the not higher anticipate the the transient enable renovation drive a should require business meaningful

will The uncertainty given we investments considerable proceeds activity and to and capacity, we allow of we benefits of That markets. layer into an new a to harvest which continue lay will to begin growth the gains groundwork XXXX for advantage to said, markets recent conversion growth major restrictive remain balance us dislocation. capital sheet of the will as the next of to start as realize portfolio. important look and be and economic the component transaction be and year for financing Recycling in challenging be opportunities. opportunistic us take will redeploy strategy our maintain our

our and our progresses. over constantly and turn for to we sharing we the year it of creatively portfolio, ways activity that, With Aaron. I'll forward the look value on grow Additionally, as investment enhance to look to updates

Aaron Reyes

Robert. Thanks,

capacity facility, $XXX quarter, to cash. As total and of on equivalents, of approximately of cash of including on our fourth equates of end credit nearly million $XXX retained cash cash hand, had restricted million $XX with we total full liquidity. the the million which, together We

December one and to address have We debt next the maturity in few months. year this of in expect refinancing the

of our the And EBITDA fourth us one the strongest As of at quarter, the end and to Xx, net EBITDA the net was stood our preferred sheets in debt to debt of sector. than X.Xx. less balance only giving equity

Shifting initial the was which and Adjusted corporate results growing of COVID-related a quarter details quarterly continued provided expenses our in diluted in financial EBITDAre $X.X for release to per our received of The The fourth expectations the interruption FFO which $X.XX adjusted our results, demand. and our fourth of group are claim. include net travel business leisure share. in from strength results, surpassed million $XX and was reflect proceeds full supplemental. million approximately quarter insurance earnings

financial comparability, hotel presented data revenue have our For release from removed net package. margin better and level press reporting in calculation supplemental we and this the

total are to we what first earnings increase today, expect while portfolio first providing between the XXXX. compared first and of RevPAR challenging, Based visibility As remains as quarter. the mentioned XX% we quarter XX% for to see Brian guidance on forward quarter earlier, we

QX year. growth the easier variant of for first the full RevPAR will of impact the Omicron in year the an While in and comparison concentrate makes part

the in growth deliver Assuming the meaningful steady which renovation. RevPAR each in we quarter mid-teens, our RevPAR year low hotel from in economic be year-over-year will our could of year, the result believe ranging digits full portfolio environment, excluding undergoing that double growth Miami, can total a to portfolio

adjusted to adjusted $XX quarter, per $XX $X.XX. ranges first the million, guidance $X.XX diluted to and For FFO our our from share from million ranges EBITDAre

connection between invest our some incur and this $XXX larger into to will expect portfolio displacement We projects. million in with and our million $XXX year

of million Our first hotel quarter D.C. related the to in conversion in-process at work includes EBITDA outlook displacement approximately $X our

not For completion estimate the the of conversion full to year, Westin incur the work EBITDA at we the interruption between as begin Beach The guidance assume hotel. repurchases. related proceeds we million will conversion additional collection of Note Confidante and Miami or that business the displacement of $XX that million incremental the work that at renovation any we insurance $XX to stock our D.C. does

dividends. to Now turning

the possible. now has limit securities. Operator, able to open declared our the many questions dividend you the Board quarter, please I of H $X.XX for We call with please share And as Our to with common Series are first go that, that as one that and with routine participants can speak along so for we we preferred ask distributions ahead. a to yourself question. per

Operator

Instructions]. [Operator

from Our first from comes question Rose Citi. Smedes

Smedes Rose

rate? more mid-teens. I you to just could you're cost by that's you about year the margin? double speak ask overall of and year more versus when could property this said wanted you low that to the growth occupancy digits this thinking to kind how little just the be maybe growth you level Do a you think RevPAR And driven think

Bryan Giglia

RevPAR -- the year. see the the So buildup, when year-over-year the last quarter-to-quarter, a first the looking to the half from Omicron comp majority the with coming you're the there's RevPAR look for you at to going cadence year distribution or in, -- in of of at

and than rate more we urban growth -- leisure the QX. occupancy, coming that hotels hotels from while occupancy. as then at anticipate more those the will rest skewed look the composition in definitely group be our meaningfully growth, to in and more up rate anticipate the year, also we will group So And and through especially QX urban hotels we pick of do

and that to end right costs look We're came look towards expectation Now EBITDA mean in margins. last certain better X% there. lower rent other that labor of of for we When done in, at year-over-year significantly better. ground does taxes, and year such the look as came then over hotel on actually hotels have also at that what real that done was that's we year. probably up They fixed that costs when X%. We've Diego have we better. our been those are kind insurance, the participating, San ones estate are this There as

given at you of but some need was It's hotels at QX hotel different also are both certain look best in which both San renovation impact will stages we some throughout we the is, expect, some hotels in hotel be at trajectory the we needs will looking year. be year. slower urban Confidante the its QX, their this for will best expectation portfolio back that the contribution, gains and hotel by in other back in banquet and having at of in the level size providing the impact our noise There's the to minimal than is growth hotels, that will D.C., driven even with group it a margins out, Francisco, 'XX of growth especially -- -- continue group have when 'XX the contribution over the If hotels, margin year our those and composition. our hotels the but There some increase still to occupancy, good of but growth got those it's we increase. will very

predicated margin more ex should gain. get renovation we to a and hotels, be more the RevPAR occupancy So year-over-year, can skewed increase some on much able we

Operator

comes question Michael next Baird. Our from from Bellisario

Michael Bellisario

year. the maybe your over about what a the misses look shifted those for forward, give and were can Brian, forward side would look how hits and you seat last us been now particularly capital the you've quick year? a back Maybe And on the outlook, CEO things? allocation of in

Bryan Giglia

Sure.

I but of Last say in allocation, some capital our quickly we on there -- focus. shareholders. returning portfolio got capital in the had we set when work wouldn't at focusing as to the really the transition as capital strategy -- could beginning, sense that's recycling, step since and looking reinvigorated it then was So but our to year, investing to and makes our strategy then

said on that when maybe recycling would this able the absolutely -- was the asked them, the Chicago when on capital we may sold there divest the expectation or have while hotels. you start front. in And So investment market. and were even question we front We on let's Chicago -- growth be our to this,

the maybe that why combination divest and staffing especially And where a short-term we we quickly. knew come labor, But there earnings other levels though were back tenure we knew things. taxes weren't the saw would our with with that term, in there of be was market, estate headwinds leisure near -- up, to even based with we that what on look would capital in them real but of fully needs longer reason that and term, and some gains investment

growth. So that we thought markets them in those where of life time give right hotels was based it investment and divest were reinvest our more on the that to believe cycle in where we we could

asset and recently allow had profitability. it's to to it put for transient of asset wasn't repositioning how more increase have an Diego, to group that think into but component, really meaningful XX% in really -- it is It's there and to a then which there, an and into that which more money there performing ready been was San meeting sizable but a did significant asset, needs add which was -- will well, was that do a performing very a we're stabilized, bought. major we with getting And those there, And Miami, went happy well we that over proceeds interest that which space its it demand that was meaningful few added leisure the still years amount hotel San leisure last group with value. Diego

comes that there's traditional hotel or hotel increase. and seeing to the on leisure pace continued you out-of-room spend, more XXXX, for even growth saw out shift some of based its that QX, started And last think of more there. that profitability of more a in group And the with discounted meaningful we the you corporate that

the a that's and a hotel to let yield of to continue where -- and near-term was while very Andaz flow cash were to upside. so grow, yield yield decent acquire cash And near-term longer-term hotel play grow. good we that Diego that with and at a where expect we San we investment, more our was a able continue

the looking XXXX acquisitions you didn't was that the half later second of in things happened had assets, -- year have while that of at well. last wine year, The some the go previous as the elsewhere. compression On that quite some incredible leisure went X country compression, other -- of said the you

hotels, group. spent to those ongoing and geared maybe this so up a set of they advantage And demand, while maybe little focusing leisure on time were take less

changed we last that what it Seasons group half Four the appropriate really Montage's where is year, year hotels to focus. have pace XX%. double was a And Second added of and of up business ago is amount the

earlier? look at Is to leisure markets continue benefit that something that's we Yes. that something our demand. should from that other have done And we

near-term lot disciplined something leisure we're While its strong, very want the leisure. make to it but give on yes, -- make -- a That's mix always that the it not in somewhere where, up the example there and for group and an and leisure hotel is is that demand. right focused remaining sure it we the that remain The not rely is solely hotel have that is right group on of did demand. to rate has sure

actually something what there On to on and through we continued out year. not throughout endless sheet -- that while to dividend, do buy acquired balance And and capital we'll hand, the stock dispositions, as all is -- happy are something we We've into in said that's year. time We the go our we also the would through cash stock that continue year. with or side, that and capital do. capacity additional I'm that's the last we very our returning this did went reinstated we

sense. in We more to what also -- our balance leisure, need then I need probably how right we're the the one capital. the in those when proud but just thing portfolio to balanced capital. to and we amount of most -- we're to of to producing returns We forever that and last think proud We the assets recycling and our to the the make year of make We be be decline not right every of focus, that and want sitting a then assets have want be group, the business right portfolio on we return sure in returns And of watching growth amount is allocating sentence. need investing we had portfolio. that amount

So hopefully, sort way, question. a but of your long-winded that answers

Operator

question next Duane from Our comes from Evercore ISI. Pfennigwerth

Duane Pfennigwerth

touched Just significant you versus with group pretty term? on longer like think about you should longer close you're the how steps do and gap? how about the And average those thinking it And about assets. country required that X one margin but gap? just what's the wonder the the margins on a on to investors I profile the how close of focus, assets portfolio thinking assets required sounds to be the wine those term

Bryan Giglia

Okay. Thanks, Duane.

amenities, that even -- easiest the answer not limited service a guess of margins watch closely, that margins more the large and I going level something So lower or just hotels because while margin -- efficient box are is it's improvement, than same their transient a the to on fine luxury to run very will business the the we're services run value. it's we or we're is hotel focused or absolutely margins, box and group we're on because working of which that we'll -- not on run

those city upper other your than bottom is hotels that urban-type center, average differently And be line will upscale resorts. valued even so or hotel the

work to the can, on with leisure. put flow, a make the little And the Again, confidence much sure so was too last that near-term bit the what we year, cash we operators. we maximize want best there

continues hotels have these strong, components it. have Now to but be to to leisure

for so right room the the And than That $XXX last on year. X,XXX nights spend. year. had a Maybe very now. comes ancillary spend. has XX last Montage not little it's maybe something books around this time XX,XXX it rate, with the comes X,XXX it's of or books we rate on. for a but and That's plus $X,XXX but lower rate nights It $X,XXX focus transient with $XXX $X,XXX, of XXXX rate, that have bit transient room a that's strong X,XXX ancillary has Seasons at and $X,XXX on $XXX Four they a the rate.

much profitable right food which more of maybe group other a the has is getting So banquet bar. the hotel getting each than of it, outlets the mix component, spend exception with that beverage which in the it's and

but growth And that -- in to getting the if our and where in and far but next as focus put you'll hitting out that are stabilized, see year, we And when other be do hotel -- their hotels margin still so margin as years portfolio. growth looking really than probably couple a where lower we're see hotels and into that each or considerable of year the this to so. are it's -- then growth right, going out, year, even you is the margins considerable in see that get it these starting of we EBITDA that's park, last -- where you'll will see

Operator

question from Miller Our from Securities. comes next Gregory Truist

Gregory Miller

I Boston could your Wharf exposure more detailed Plaza and and missed but there? some market share you current if the apologies I your thoughts this, Park about of sentiment Long

Bryan Giglia

markets, urban market a other has us. Like Yes. been Boston great for

far market it of Diego where will in farther and maybe cadence San goes and the Diego as ahead Francisco maybe D.C. but not Orlando, our urban San As San recovery, behind than where

have market being to The hotel invested the with in had far Both rooms as of into hotels happy the increasing bit now are Wharf, very the We a different the hotels. on Long the both quite quality very par. hotel of capital -- hotels able So as bathroom, expanding level of absolutely of fantastic. with the the location room, high-end other compete really is strategies.

doing we've at because mindful occupancy that. really been Wharf, rate been little And the at we've of bit very been Long a more successful pushing and so

is transient Plaza more group box. a Park and of

to or the be there invested We the to we of adding 'XX, corporate successful well so the of functional where really end through of historic need where at And more we meeting group rest the was group overflow feet in-house that from building. put on right have another relying the with space space not and there. the additional space. there citywide. And square X,XXX allows And and mixes more very push modern it us making added we sure we that

corporate very a So pace pace a be strong we great -- compelling have and that's the the 'XX for events. The should at very for when Park year hotel. we now it's to offering look Plaza, great

And very are so very the that far well. as we're The the highly market, Boston a and -- performing as of. think market the within term, well market long has market we is hotels performed

Operator

Anthony comes from Barclays. from question Powell next Our

Anthony Powell

hotel recycling or disposition capital line down a to match order acquiring curious one, would road? would a to maybe have good maybe a sell forward to and another or acquisitions. especially in we and how X quick a about sight proceeds those big Just need question hotel up going In a hotel wait larger hotel, remiss a you have willing going the sell be you those forward? to Just to acquired

Bryan Giglia

In those Good perfect up morning, close. a world, you Anthony. match very

think over of we've learned a world. perfect not what couple years I the we're last is in

have we to a little bit be So flexible. more

I want divest what asset. a reasons recycling while for is is there's focuses maybe little episodic, an by that -- routine it mean bit previously And more function to our And to so capital us that for company. was more the X of to one we of a make

one is that opportunistic. it's first The

where unencumbered creates For Embassy can hotel buy we and we've Suite is have value more example there's whatever that going -- value events that. unencumbered than buyer an it Portfolio some reason, or that's someone is of it a to way. that or something

especially time, Those like hotels one they the defensive. to you're more hotel the other look and hotels, return then into will investment offensive dollars. have city pinpoint to those in covers. get good may those the this us the REITs a better on reaching is is capital time, the you're at starts you harder certain return more have from your your some high point -- assets switch more you -- to when decline end center, invested lodging hotel more The for at the putting defensive where putting because at for horizon to luxury to Typically, RevPARs. on on is over They little look of the hotel. that and the in capital, is our And into point being hang

do not for to for that try to maybe in us, look it's end look hotel, to more return couple really future an for to else. the so and the to of here the do is our risk-adjusted next years. us out or each investment And now maybe life is say, no is its what look okay, someone come over going cycle, we of try There's at at investment

that. matching in go easier acquisition the can see more that, and let's monetize we're up And of phases and the so becomes -- we becomes starting -- more natural. if targets just of that regular, more Once once

and And so hard match asset. some we assets have it's do a large to sometimes up large

to have than you sometimes just into does more to find time put work those takes that's more and it more X different it one And for take asset assets. assets one. and And

continue for to a will this us. of try we process regular So make to more

the something, have it of well, some we match have ways ways divest NOLs we time anything some stop always a best while right creation, shield make No, if don't it's up have to that's the term, we for line possible, us other But -- the earnings, it. decision, for earnings, -- to gains our but things investment knowing near and value in lumpiness the investments, creates investment. and not In we as ideally our for we to things to because that transaction as give to close but it's next right possible. our with in

Operator

comes question next Jefferies. Katz from Our from David

David Katz

that how market? something if how be supportive just how be sit you're And done, of the or about talked will this they will markets and sure and important pivotal not the that where you've credit I'm year? say, are M&A getting for sort

Bryan Giglia

which especially there deals, majority to transactions, Yes. on hotel that I markets the important. of mean, credit are are means side levered David, private debt. The has the be

functioning in year. first the months to, a quarter maybe And markets so a the or were think, fourth back wide, not couple ago, others which not even quarter the led went and the were of commentary, you really if well spreads of there's and I our probably commentary lot those happening

they have in moving there move. more debt have debt to need really that But quarter, first the right been the but are direction. into got markets to we've not transactions, to to The transactions more things happening. as think functioning, start becoming for think be they're are I where I

are there once that you on need values discovery the debt you type what know of and price and a important And to what debt couple -- When and of yields you where figure asset get. to can that's going LTVs to validation you be need out and things. need then markets

the right moving we're think direction. So It ago though. XX months than it, I challenging XX, it in call is was, more

Operator

from Our question next Compass Point. from Van Dijkum Floris comes

Floris Van Dijkum

I 'XX mean, all look made at this, Hilton are -- a -- Bayfront, hotels on are of looks levels I EBITDA. the ahead I I San your -- fronts. of couple really of firing the if both it you've look Diego as at Wailea and of them The mean

in XX% call RevPAR positive as year, again, very downtime potential redevelopment for margins some and, Obviously, first of attractive. encouraging. take consideration That you've for the pretty to the year your well, So it, prognosis new you EBITDA implies which, got throughout a XX% rising have to looks quarter ANDAs. XX% But XX% into the to growth. the for the

time on I'm the last to if would already, have and it's couple -- triple. the more -- imply in the I could of a touched at I I What yield upon get happen? know cost, very than sort to times but returns, would it's expect EBITDA been that, EBITDA. of target I wine country year curious assets, very, just terms of mean mean, that frame minutes your you that do look

Bryan Giglia

year different at there that at of you answer will up have growth to market fantastic happen X into opened big hotels. the that leisure But a along we residences the separate, at are participate X Again, these ask the to end or different in growth for both question, expectation this up. to their mean hotel the Montage to that of see component rates right And there. is starting program it's then piece meaningful -- you look, I hotel, the compression we're hotels EBITDA we've that's another can Yes. first that the a very the in each of least beginning components but or is models bring think and to at at this open has that pace, far Montage. leg going it. readjust your look And of if mix. the hotels. are And group brand-new were That's different be luxury to accomplished then going next year way to -- year,

grow, XXX% to continue Four the and going And the in hotels -- of X continue that is in XX to as where But is, establish to too. it, then we point, it Seasons, are somewhere our were to grow, our to will -- call your expectation previous year. XX they it,

X luxury It's happening. awarded perspective, the is of were the both growth contribution status, a group set world. the important up that diamond in their function. at that have So is, is fact somewhat step from which group hotels where a when very But what we we look

our to hotels shareholders value on strong it value as And as it when is our to serve confidence are ever creation, and these comes Our very conviction going well. these was. hotels in

Operator

Bryan for remarks. to further over have turn We I closing the Giglia would like call to no back questions.

Bryan Giglia

thank forward conferences their you look at company to various for interest coming the with couple Thank of the over like meeting months and the everyone of coming We'd up. in to you. many

Operator

for Thank This call. your concludes today's conference you participation.

disconnect. may now You

Sunstone Hotel Investors (SHO) 22 Feb 232022 Q4 Earnings call transcript