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Real estate investment trusts

Sunstone Hotel Investors Provides Operations Update

Strategic Insights

— 2 min read

Sunstone Hotel Investors, Inc. (NYSE: SHO) has released an update on its operating activity for the third quarter and its estimated impact on its previously provided full-year 2024 outlook. The company's operations for July and August 2024 were consistent with its prior expectations, reflecting continued strength in group activity and an acceleration in business travel. However, the company's operations were impacted by labor activity at the 1,190-room Hilton San Diego Bayfront, which led to the cancellation of certain group events and lower business volume. The hotel has since resumed normal operations after the union ratified a new contract on October 9, 2024.

Key Takeaways:

  • Sunstone Hotel Investors reported a 2.4% growth in total portfolio RevPAR and 6.3% growth in Total RevPAR, excluding The Confidante Miami Beach, during the first two months of the quarter.
  • Adjusted EBITDAre for the first two months of the quarter was approximately $37 million, which was in-line with the company's full-year 2024 outlook as presented in its second quarter earnings release.
  • The labor activity at the Hilton San Diego Bayfront led to the cancellation of certain group events and resulted in approximately $11 million to $13 million lower Adjusted EBITDAre for the year.
  • The company expects a portion of the group events that have been cancelled to be rebooked at the Hotel for a future period.
  • Sunstone remains well positioned to deliver significant earnings growth into 2025 and beyond driven by the contribution from the company's recent brand conversions and the continued ramp-up of multiple assets in the portfolio.

Statistics:

  • Total portfolio RevPAR growth for the first two months of the quarter was 2.4%.
  • Total portfolio Total RevPAR growth for the first two months of the quarter was 6.3% (excluding The Confidante Miami Beach).
  • Adjusted EBITDAre for the first two months of the quarter was approximately $37 million.
  • The labor activity at the Hilton San Diego Bayfront led to approximately $11 million to $13 million lower Adjusted EBITDAre for the year.
  • $6 million to $7 million of the total estimated Adjusted EBITDAre impact relates to business that was disrupted in the third quarter.
  • Approximately $0.06 lower Adjusted FFO Attributable to Common Stockholders per Diluted Share is expected due to the disruption at the Hilton San Diego Bayfront.

Sources:

  • Sunstone Hotel Investors, Inc. (2024, October 10). Sunstone Hotel Investors Provides Operations Update. ENPublishing - http://www.enpublishing.co.uk.
  • Sunstone Hotel Investors, Inc. (2024, August 7). Sunstone Hotel Investors, Inc. Reports Second Quarter 2024 Results. ENPublishing - http://www.enpublishing.co.uk.

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