Sunstone Hotel Investors reported second-quarter 2026 earnings that surpassed analyst expectations, backed by a 9.3% year-over-year increase in portfolio revenue per available room (RevPAR) and a 6% rise in adjusted EBITDAre to $77 million. Adjusted funds from operations (FFO) per diluted share climbed 14% to $0.32. The company also repurchased approximately $70 million in common and preferred stock at prices below liquidation value following the July sale of the Hyatt Regency San Francisco.
Resort and Urban Hotel Performance Drives Gains
Resorts led the portfolio’s growth with combined RevPAR increasing nearly 27%, including substantial contributions from Andaz Miami Beach, which generated $2.8 million in EBITDA on 72% occupancy
and a $470 average daily rate. Wailea Beach Resort posted nearly 15% RevPAR growth, a 10 percentage point rise in year-to-date occupancy, and EBITDA gains close to 18% compared to the prior year. Group room-night production at Wailea rose 36% year to date, with the 2027 group pace up more than 10%. Wine Country resorts recorded 5% RevPAR growth driven by stronger group business.
Urban hotels achieved 5.2% combined RevPAR growth primarily through rate increases. JW Marriott New Orleans benefited from increased group demand and out-of-room spending, with second-half group bookings rising by double digits. Boston Marriott Long Wharf experienced
stronger than expected demand across group, corporate, and leisure segments, partly attributed to special events like World Cup tournaments.
Convention Hotels Show Varying Results
Among convention-focused properties, the San Francisco hotel saw a 16% increase in RevPAR during Q2 2026, supported by corporate transient demand despite some rate compression related to the World Cup. In Washington, D.C., transient demand offset weaker government-related group activity, aided by the property’s conversion from Renaissance to Westin and ongoing renovations. Conversely, Hilton San Diego Bayfront’s RevPAR declined 8.4% due to a reduced convention calendar and meeting-space renovations, although transient demand increased by 19%. The hotel recorded a record $26
million in group revenue for the quarter.
Strategic Asset Sale and Capital Expenditure Plans
Sunstone finalized the sale of Hyatt Regency San Francisco in late July at an implied multiple near 20 times trailing EBITDA, reducing exposure to San Francisco market cost pressures. Proceeds funded stock repurchases of about $40 million in common shares at $9.24 apiece and almost $30 million in preferred shares at $20.44 apiece, both at discounts to liquidation value. Capital expenditure forecasts for 2026 increased to $105 million–$115 million, reflecting additional repairs at Wailea Beach Resort due to March storms, with roughly $6 million received in insurance reimbursements.
The company completed renovations to
meeting spaces at Hilton San Diego Bayfront, expected to support booking activities later in 2026 and into 2027. Construction of Bazaar Meat restaurant at Andaz Miami Beach was finished, with an opening planned for fall 2026. Additionally, Oceans Edge Resort was converted to Hilton Key West Resort & Marina on July 1, a move intended to enhance distribution and reduce customer acquisition costs.
Management Commentary and Outlook
CEO Bryan Giglia stated, “Our portfolio benefited from robust leisure demand as a result of increased summer travel and special events, which added to sustained strength in group and corporate demand.” The company projects a 7% to
9% increase in RevPAR across its 13-hotel portfolio for 2026, with total RevPAR expected between $404 and $411. Adjusted EBITDAre is forecasted between $245 million and $255 million, and adjusted FFO per diluted share between $0.93 and $0.98.
Giglia noted that the Westin Washington, D.C. property’s transient business is expected to grow with a 30% rise in transient pace. Management intends to remain opportunistic with stock repurchases while monitoring acquisition opportunities. President and Chief Investment Officer Robert Springer highlighted the Hilton Key West Resort & Marina conversion is aimed at improving earnings and distribution efficiency.
