Sunstone Hotel Investors reported second-quarter 2026 results above expectations, driven by summer leisure travel, special events, and strong group and corporate activity. The company raised parts of its full-year outlook following the quarter and the July sale of its Hyatt Regency San Francisco property.
Chief Executive Officer Bryan Giglia stated that portfolio revenue per available room (RevPAR) increased 9.3% year over year in Q2 2026. Excluding the ramping Andaz Miami Beach, RevPAR growth was 4.3%. Adjusted EBITDAre rose 6% to $77 million, while adjusted funds from operations per diluted share advanced 14% to $0.32.
Strong Performance at Resort and Urban Properties
Resort hotels led the portfolio with
nearly 27% combined RevPAR growth, including Andaz Miami Beach’s contribution. Wailea Beach Resort in Hawaii achieved close to 15% RevPAR growth, a 10 percentage point increase in year-to-date occupancy, and an 18% rise in EBITDA year over year. Group room-night production at Wailea rose 36% year to date, with 2027 group bookings up over 10%.
Sunstone’s Wine Country resorts in California saw a 5% increase in RevPAR, fueled by stronger group business. Andaz Miami Beach generated $2.8 million in EBITDA, reporting 72% occupancy and a $470 average daily rate in Q2. The property encountered less-than-expected occupancy compression from the World
Cup but anticipates improved fourth-quarter results due to the temporary closure of a nearby W Hotel and the planned fall opening of the Bazaar Meat restaurant.
Urban hotels in the portfolio recorded a combined 5.2% RevPAR increase, largely from rate growth. JW Marriott New Orleans saw strong group demand and higher out-of-room spending, with a double-digit uptick in second-half group pace. The Boston Marriott Long Wharf also benefited from group, corporate, and leisure demand, including stronger-than-anticipated activity related to World Cup events.
Mixed Results in Convention-Focused Hotels and Expense Trends
Among convention-driven properties, the San Francisco hotel experienced a 16% RevPAR increase during Q2, supported by World Cup-related
rate compression in June and favorable corporate transient demand. A Washington, D.C. property outperformed expectations as a 30% rise in transient demand offset weaker government-related group business, aided by its conversion from Renaissance to Westin and recent renovations.
Hilton San Diego Bayfront reported an 8.4% decline in RevPAR due to a reduced convention calendar and ongoing meeting-space renovations, though transient demand increased 19%. Despite the RevPAR drop, the property recorded a record $26 million in group revenue in Q2. Sunstone expects sequential improvements for Hilton San Diego Bayfront in the remainder of 2026, especially in the fourth quarter.
Comparable portfolio
expenses, excluding Andaz Miami Beach, rose 4.4% in absolute terms and 3.6% per occupied room, creating a 100 basis point margin headwind. Higher transient mix at large group hotels, particularly San Diego, contributed to this pressure. Excluding San Diego, expense growth per occupied room was 120 basis points lower, allowing margins to expand 10 basis points.
Asset Sales, Buybacks, and Updated Outlook
Sunstone completed the sale of Hyatt Regency San Francisco in late July at an implied multiple close to 20 times trailing EBITDA. CEO Bryan Giglia described the asset as low yielding and noted the transaction allowed the company to realize future growth value immediately
while reducing exposure to San Francisco’s rising costs.
Proceeds from the sale funded stock repurchases including roughly $40 million of common stock at an average $9.24 per share and nearly $30 million of preferred stock acquired at an 18% discount to liquidation value. Management views these buybacks as accretive to net asset value and earnings per share. The company plans to remain opportunistic on future repurchases while weighing other uses for sale proceeds.
Chief Financial Officer Aaron Reyes projected RevPAR growth of 7% to 9% in 2026 for the current 13-hotel portfolio, reaching $239 to $244 per room. Total portfolio
RevPAR is expected to rise 7% to 9% to $404 to $411. Adjusted EBITDAre is forecasted between $245 million and $255 million, with funds from operations per diluted share anticipated at $0.93 to $0.98. Capital expenditures are estimated at $105 million to $115 million, partly reflecting additional repairs at Wailea Beach Resort after March storms. The company has received approximately $6 million in insurance reimbursements, which includes $1.2 million for business interruption.
Sunstone completed renovations to meeting spaces at Hilton San Diego Bayfront, expecting these upgrades to support booking activity later in 2026 and into 2027, according to President and
Chief Investment Officer Robert Springer. The construction of Bazaar Meat restaurant at Andaz Miami Beach was also finalized, with an opening planned for fall 2026. On July 1, Sunstone converted Oceans Edge Resort to Hilton Key West Resort & Marina, a move expected to improve distribution, lower acquisition costs, and boost earnings.
