IRVINE,
Calif., Sept. 14, 2022 /PRNewswire/ -- Sunstone
Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO),
the owner of Long-Term Relevant Real Estate® in the lodging
industry, today provided an update on recent operating trends. The
Company's operations for July and August
2022 reflect continued strong rate growth and recovering
occupancy levels. While leisure travel continues to be robust, the
Company is seeing the greatest demand growth at its urban and
group-oriented hotels which are experiencing higher lead volumes,
an increase in near-term booking activity, better than expected
attendance at group events and increased business transient
demand.
Operations Update
- Occupancy for the comparable 13 hotels which include all hotels
currently owned by the Company except Montage Healdsburg and Four
Seasons Resort Napa Valley (the "Comparable Portfolio") was down
1,450 basis points in Q3 2022 QTD as compared to the same period in
2019. Excluding the Renaissance Washington DC, which is undergoing
significant renovation work in advance of its conversion to the
Westin Washington DC in 2023, Comparable Portfolio occupancy was
down only 1,270 basis points as compared to the same period in
2019.
- Average Daily Rate for the Comparable Portfolio in Q3 2022 QTD
was 16.9% higher than the same period in 2019 with nearly every
hotel in the portfolio achieving higher rates than 2019. Excluding
the Renaissance Washington DC, Comparable Portfolio ADR was 16.5%
higher as compared to the same period in 2019.
- RevPAR for the Comparable Portfolio was down 2.7% in Q3 2022
QTD as compared to the same period in 2019. Excluding the
Renaissance Washington DC, Comparable Portfolio RevPAR was down
only 0.4% as compared to the same period in 2019.
- Group booking activity has increased in recent weeks with
Comparable Portfolio group revenue pace for the second half of 2022
now down only 13% as compared to the same time in 2019. This
represents an increase of nearly 200 basis points from June 2022.
- As of September 2022, the
Comparable Portfolio has 86% of total transient room nights
on-the-books for September to December
2022 as compared to the same period in 2019, with average
rates approximately 27% higher than the same period in 2019.
Operating statistics for the Comparable Portfolio presented here
and elsewhere in this release include both prior ownership results
and the Company's results for The Confidante Miami Beach, acquired
by the Company in June 2022. The
Company obtained prior ownership information from the hotel's
previous owner during the due diligence period before acquiring the
hotel. The Company performed a limited review of the information as
part of its analysis of the acquisition. As of August 31, 2022, Comparable Portfolio operating
statistics were as follows:
|
Occupancy
(1)
|
|
ADR
(1)
|
|
RevPAR
(1)
|
|
|
2022
|
|
Change vs.
2019
|
|
2022
|
|
Change vs.
2019
|
|
2022
|
|
Change vs.
2019
|
July
|
|
74.6
|
%
|
|
(1,300)
|
bps
|
|
$
|
292.96
|
|
15.3
|
%
|
|
$
|
218.55
|
|
(1.8)
|
%
|
August
|
|
69.9
|
%
|
|
(1,600)
|
bps
|
|
$
|
277.27
|
|
18.4
|
%
|
|
$
|
193.81
|
|
(3.6)
|
%
|
Q3 2022 QTD
|
|
72.2
|
%
|
|
(1,450)
|
bps
|
|
$
|
285.37
|
|
16.9
|
%
|
|
$
|
206.04
|
|
(2.7)
|
%
|
Q3 2022 QTD Excl.
Conversion (2)
|
|
74.9
|
%
|
|
(1,270)
|
bps
|
|
$
|
292.91
|
|
16.5
|
%
|
|
$
|
219.39
|
|
(0.4)
|
%
|
2022 YTD
|
|
66.5
|
%
|
|
(1,850)
|
bps
|
|
$
|
289.75
|
|
14.2
|
%
|
|
$
|
192.68
|
|
(10.7)
|
%
|
2022 YTD Excl.
Conversion (2)
|
|
68.2
|
%
|
|
(1,740)
|
bps
|
|
$
|
294.28
|
|
14.7
|
%
|
|
$
|
200.70
|
|
(8.6)
|
%
|
Operating statistics for all 15 hotels owned by the Company as
of the date of this release were as follows ($ in millions, except
RevPAR and ADR):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
2022
|
|
August 2022
(1)
|
|
Q3 2022 QTD
(1)
|
|
2022 YTD
(1)
|
Occupancy
|
|
|
73.8
|
%
|
|
|
69.2
|
%
|
|
|
71.5
|
%
|
|
|
66.1
|
%
|
ADR
|
|
$
|
315.59
|
|
|
$
|
297.07
|
|
|
$
|
306.62
|
|
|
$
|
311.91
|
|
RevPAR
|
|
$
|
232.91
|
|
|
$
|
205.57
|
|
|
$
|
219.23
|
|
|
$
|
206.17
|
|
Total
Revenues
|
|
$
|
86
|
|
|
$
|
75
|
|
|
$
|
161
|
|
|
$
|
604
|
|
Hotel Adjusted
EBITDAre
|
|
$
|
27
|
|
|
$
|
20
|
|
|
$
|
47
|
|
|
$
|
177
|
|
|
|
(1)
|
Results for August 2022
are preliminary and may be adjusted during the month end closing
process. Preliminary Q3 2022 QTD and 2022 YTD reflect preliminary
results through August 31, 2022.
|
(2)
|
Excludes the
Renaissance Washington DC which is undergoing significant
renovation work in advance of its conversion to the Westin
Washington DC in 2023.
|
About Sunstone Hotel
Investors
Sunstone Hotel Investors, Inc. is a lodging real estate
investment trust ("REIT"). Sunstone's strategy is to create
long-term stakeholder value through the acquisition, active
ownership and disposition of hotels considered to be Long-Term
Relevant Real Estate®. For further information, please visit
Sunstone's website at www.sunstonehotels.com. The Company's website
is provided as a reference only and any information on the website
is not incorporated by reference in this release.
For Additional
Information
Aaron Reyes
Chief Financial Officer
Sunstone Hotel Investors, Inc.
(949) 382-3018
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of federal securities laws and regulations. These
forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," "will" and other similar terms and phrases,
including opinions, references to assumptions and forecasts of
future results. Forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
uncertainties and other factors that may cause the actual results
to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are
not limited to: the impact the COVID-19 pandemic has on the
Company's business and the economy, as well as the response of
governments and the Company to the pandemic, and how quickly and
successfully effective vaccines and therapies are distributed and
administered; increased risks related to employee matters,
including increased employment litigation and claims for severance
or other benefits tied to termination or furloughs as a result of
temporary hotel suspensions or reduced hotel operations due to
COVID-19; general economic and business conditions, including a
U.S. recession or increased inflation, trade conflicts and tariffs,
regional or global economic slowdowns and any type of flu or
disease-related pandemic that impacts travel or the ability to
travel, including COVID-19; the need for business-related travel,
including the increased use of business-related technology; rising
hotel operating costs due to labor costs, workers' compensation and
health-care related costs, utility costs, property and liability
insurance costs, unanticipated costs such as acts of nature and
their consequences and other costs that may not be offset by
increased room rates; the ground lease for one of the Company's
hotels; the need for renovations, repositionings and other capital
expenditures for the Company's hotels; the impact, including any
delays, of renovations and repositionings on hotel operations; new
hotel supply, or alternative lodging options such as timeshare,
vacation rentals or sharing services such as Airbnb, in the
Company's markets, which could harm its occupancy levels and
revenue at its hotels; competition from hotels not owned by the
Company; relationships with, and the requirements, performance and
reputation of, the managers of the Company's hotels; relationships
with, and the requirements and reputation of, the Company's
franchisors and hotel brands; the Company's hotels may become
impaired, which may adversely affect its financial condition and
results of operations; competition for the acquisition of hotels,
and the Company's ability to complete acquisitions and
dispositions; performance of hotels after they are acquired;
changes in the Company's business strategy or acquisition or
disposition plans; the Company's level of debt, including secured,
unsecured, fixed and variable rate debt; financial and other
covenants in the Company's debt and preferred stock; the impact on
the Company's business of potential defaults by the Company on its
debt agreements or leases; volatility in the capital markets and
the effect on lodging demand or the Company's ability to obtain
capital on favorable terms or at all; the Company's need to operate
as a REIT and comply with other applicable laws and regulations,
including new laws, interpretations or court decisions that may
change the federal or state tax laws or the federal or state income
tax consequences of the Company's qualification as a REIT;
potential adverse tax consequences in the event that the Company's
operating leases with its taxable REIT subsidiaries are not held to
have been made on an arm's-length basis; system security risks,
data protection breaches, cyber-attacks and systems integration
issues, including those impacting the Company's suppliers, hotel
managers or franchisors; other events beyond the Company's control,
including climate change, natural disasters, terrorist attacks or
civil unrest; and other risks and uncertainties associated with the
Company's business described in its filings with the Securities and
Exchange Commission. Although the Company believes the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that the
expectations will be attained or that any deviation will not be
material. All forward-looking information provided herein is as of
the date of this release, and the Company undertakes no obligation
to update any forward-looking statement to conform the statement to
actual results or changes in the Company's expectations.
This release should be read together with the consolidated
financial statements and notes thereto included in our most recent
reports on Form 10-K and Form 10-Q. Copies of these reports are
available on our website at www.sunstonehotels.com and through the
SEC's Electronic Data Gathering Analysis and Retrieval System
("EDGAR") at www.sec.gov.
Non-GAAP Financial
Measures
We present the following non-GAAP financial measure that we
believe is useful to investors as a key supplemental measure of our
operating performance: hotel adjusted earnings before interest
expense, taxes, depreciation and amortization for real estate, or
Hotel Adjusted EBITDAre. This measure should not be
considered in isolation or as a substitute for measures of
performance in accordance with GAAP. In addition, our calculation
of this measure may not be comparable to other companies that do
not define the term exactly the same as the Company. This non-GAAP
measure is used in addition to and in conjunction with results
presented in accordance with GAAP. It should not be considered as
an alternative to net income (loss), cash flow from operations, or
any other operating performance measure prescribed by GAAP. This
non-GAAP financial measure reflects additional ways of viewing our
operations that we believe, when viewed with our GAAP results and
the reconciliations to the corresponding GAAP financial measure,
provides a more complete understanding of factors and trends
affecting our business than could be obtained absent this
disclosure. We strongly encourage investors to review our financial
information in its entirety and not to rely on a single financial
measure.
We present EBITDAre in accordance with guidelines
established by the National Association of Real Estate Investment
Trusts ("NAREIT"), as defined in its September 2017 white paper "Earnings Before
Interest, Taxes, Depreciation and Amortization for Real Estate." We
believe EBITDAre is a useful performance measure to help
investors evaluate and compare the results of our operations from
period to period in comparison to our peers. NAREIT defines
EBITDAre as net income (calculated in accordance with GAAP)
plus interest expense, income tax expense, depreciation and
amortization, gains or losses on the disposition of depreciated
property (including gains or losses on change in control),
impairment write-downs of depreciated property and of investments
in unconsolidated affiliates caused by a decrease in the value of
depreciated property in the affiliate, and adjustments to reflect
the entity's share of EBITDAre of unconsolidated
affiliates.
We make additional adjustments to Hotel EBITDAre to
exclude the amortization of our right-of-use assets and related
lease obligations as these expenses are based on historical cost
accounting and do not reflect the actual rent amounts due to the
respective lessors or the underlying performance of our hotels. To
derive Hotel Adjusted EBITDAre, we also exclude
Hurricane-related uninsured losses that we believe are outside the
ordinary course of business and do not reflect the actual
performance of our hotels.
Hotel
Adjusted EBITDAre Reconciliation
|
(Unaudited and in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
2022
|
|
August 2022
(1)
|
|
Q3 2022
QTD (1)
|
|
2022 YTD
(1)
|
|
Net income
|
|
$
|
16
|
|
$
|
9
|
|
$
|
25
|
|
$
|
87
|
|
Depreciation and other
adjustments
|
|
|
11
|
|
|
11
|
|
|
22
|
|
|
90
|
|
Hotel Adjusted
EBITDAre
|
|
$
|
27
|
|
$
|
20
|
|
$
|
47
|
|
$
|
177
|
|
|
|
(1)
|
Results for August 2022
are preliminary and may be adjusted during the month end closing
process. Preliminary Q3 2022 QTD and 2022 YTD reflect preliminary
results through August 31, 2022.
|
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SOURCE Sunstone Hotel Investors, Inc.