Xenia Hotels & Resorts, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Xenia is a U.S. hotel REIT that owns luxury and upper-upscale hotels and resorts and relies on third-party managers to operate them. At year-end, it owned 32 properties with 9,514 rooms across 14 states.
Financial and operating performance
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $1,025.4 million | $997.6 million | +2.8% |
| Operating income | $97.6 million | $111.4 million | Down $13.8 million |
| Net income | $19.9 million | $57.6 million | Down 65.5% |
| Net income attributable to common stockholders | $19.1 million | $55.9 million | EPS: $0.17 vs. $0.49 |
| Adjusted EBITDAre | $251.7 million | $257.0 million | Down 2.0% |
| Adjusted FFO | $170.2 million | $177.3 million | Down 4.0% |
| Net cash from operating activities | $198.1 million | $187.1 million | Up $10.9 million |
| Capital expenditures | $120.9 million | $70.4 million | Up $50.5 million |
Portfolio RevPAR increased 4.1% to $169.46; occupancy rose to 65.1% from 62.9%, while ADR increased 0.6% to $260.40. Comparable-hotel RevPAR rose 3.6%, with occupancy growth and flat ADR. Total hotel operating expenses increased 4.7% to $703.8 million, exceeding revenue growth; hotel operating income fell 1.1% to $321.7 million.
Year-end cash and cash equivalents were $164.7 million, plus $58.4 million of restricted cash, much of it reserved for property improvements. Cash and restricted cash totaled $223.1 million, down from $365.9 million a year earlier. Gross debt was approximately $1.407 billion ($1.395 billion net carrying amount), with a 5.47% weighted-average interest rate and 3.3-year weighted-average maturity. The $450 million revolving facility was undrawn and available.
Changes, capital allocation, and unusual items
- Net income fell mainly because 2022 included $27.3 million of gains on hotel sales; 2023 also had lower operating income and business-interruption proceeds and higher corporate costs and interest expense.
- Higher labor and other operating costs, insurance premiums, and real estate taxes pressured results. Interest expense rose 2.7% to $85.0 million, partly offset by interest-rate swaps and retirement of $35.3 million principal of the 6.375% 2020 Senior Notes.
- Xenia repurchased 10.4 million shares for $132.7 million at a weighted-average $12.74 per share, leaving approximately $133.7 million authorized. It paid $0.40 per share in 2023 dividends, versus $0.20 in 2022.
- The company invested $120.9 million in property improvements. A major renovation and rebranding of the Hyatt Regency Scottsdale to a Grand Hyatt began in June 2023; completion was expected by the end of 2024, with five additional rooms planned. Renovation disruption contributed to lower operating performance.
- In January 2023, Xenia refinanced its corporate credit facilities with a $675 million unsecured facility, including $225 million of term loans, and repaid a $99.5 million mortgage on the Renaissance Atlanta Waverly. It also amended the Andaz Napa mortgage, increasing it to $55 million and extending maturity to January 2028.
- At year-end, Xenia was not compliant with a covenant on one mortgage loan because of renovation disruption. This was not an event of default; the lender waived the covenant through March 31, 2024, with cash-sweep rights otherwise available. The filing states Xenia was current on payments and in compliance with its other debt covenants.
- Renovation contracts carried $67.8 million of remaining commitments at year-end. No numerical 2024 financial guidance is provided in the supplied filing text; management says available cash, operating cash flow, borrowing capacity, and capital-market access are expected to meet funding needs, subject to market conditions.
Risks and contingencies
Results are exposed to lodging cycles, economic conditions, business and group travel demand, inflation, labor costs, interest rates, fixed hotel expenses, and renovation-related disruption. Portfolio concentration is notable: Marriott and Hyatt brands account for about 80.2% of rooms; Texas, California, and Florida account for approximately 55% of rooms; and the five largest hotels generated more than 30% of revenue. The company also highlights weather and climate risks, insurance availability and costs, reliance on third-party managers, and REIT qualification and distribution requirements. Management believes routine legal proceedings will not have a material adverse effect. The auditors issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether renovation-related disruption at the Scottsdale property and the mortgage covenant waiver affected subsequent operating results, cash flow, or lender rights.
- The funding plan for the $67.8 million of remaining renovation commitments alongside ongoing capital spending and distributions.
- The ability to address significant debt maturities, particularly approximately $469.2 million in 2025 and $280.4 million in 2026, on acceptable terms.
- Whether revenue and hotel-level margins can improve if labor, insurance, and property-tax costs continue to rise or travel demand softens.
- How continued share repurchases and dividends will be balanced against liquidity, debt reduction, and property investment.