Xenia's Q4 Beat Hides the Number That Actually Matters for 2026

Xenia's Q4 same-property RevPAR hit $176.45, up 4.5% year-over-year, with adjusted FFO of $0.45 per diluted share (beating consensus by $0.03). Same-property hotel EBITDA jumped 16.3% to $68.8 million with a 214 basis point margin improvement. The stock touched a 52-week high. Everybody's happy.

Let's decompose this. Full-year net income was $63.1 million, but tucked inside is a $40.5 million one-off gain. Strip that out and you're looking at roughly $22.6 million in recurring net income on $1.08 billion in revenue. That's a 2.1% net margin on a recurring basis. The adjusted metrics look better (they always do... that's what "adjusted" is for). But if you're an owner or an investor trying to understand what this portfolio actually earns on a normalized basis, the gap between $63.1 million and $22.6 million is not a rounding error. It's the difference between a story and a finding.

The 2026 guidance is where things get interesting. RevPAR growth projected at 1.5% to 4.5%. Operating expenses projected up approximately 4.5%, with wages and benefits growing around 6%. Run that math at the midpoint. You're looking at 3% RevPAR growth against 4.5% expense growth. That's negative flow-through unless non-rooms revenue (currently 44% of total revenue, highest among lodging REIT peers) continues to outperform. The company is betting heavily on group demand and F&B to bridge that gap. It's a reasonable bet. It's still a bet.

The capital allocation picture is more compelling than the operating picture. The Fairmont Dallas sale at $111 million avoided an estimated $80 million PIP and generated an 11.3% unlevered IRR. That's a clean exit. The Grand Hyatt Scottsdale renovation drove a 104% RevPAR increase for the full year. And 28 of 30 properties sit unencumbered by property-level debt, with $640 million in total liquidity. The balance sheet is positioned for a downturn that hasn't arrived yet. At $1.4 billion in total debt with a 5.51% weighted-average rate, the carrying cost isn't cheap, but the structure is defensible.

The share repurchase program tells you what management thinks about the stock. They bought back 9.4 million shares at a weighted-average price of $12.87. The stock is trading above $16. That's $30 million in paper gains on the buyback alone. Whether that's smart capital allocation or a signal that management sees limited acquisition opportunities at current pricing depends on where you sit. $97.5 million remains authorized. The question for 2026 isn't whether the hotels perform. It's whether expense growth eats the RevPAR gains before they reach the owner's line... and whether the capital recycling strategy (sell the capital-intensive assets, reinvest in higher-margin ones) generates enough momentum to offset a decelerating top line.