Sunstone Hotel Investors reported second-quarter 2026 earnings that exceeded expectations, driven by a 9.3% year-over-year increase in portfolio revenue per available room (RevPAR). Adjusted EBITDAre rose 6% to $77 million, while adjusted funds from operations (FFO) per diluted share grew 14% to $0.32, reflecting sustained strength in leisure, group, and corporate travel.
Resort and Urban Hotel Performance
Resort properties led growth within the portfolio, posting nearly 27% RevPAR increase during Q2 2026, including contributions from Andaz Miami Beach. Wailea Beach Resort delivered nearly 15% RevPAR growth and an 18% rise in EBITDA compared to the previous year. Year-to-date group room-night production at Wailea was up
36%, while group bookings for 2027 rose over 10%. Wine Country resorts recorded 5% RevPAR growth fueled by stronger group business.
Andaz Miami Beach generated $2.8 million in EBITDA during Q2 on a 72% occupancy rate and $470 average daily rate. Despite the FIFA World Cup event, occupancy compression was less severe than expected, with stronger fourth-quarter performance anticipated alongside the fall opening of the Bazaar Meat restaurant and the temporary closure of a competing local hotel.
Urban hotels collectively achieved 5.2% RevPAR growth, mostly attributable to rate gains. JW Marriott New Orleans saw a double-digit increase in group pace
for the second half of 2026 driven by robust group demand and out-of-room spending. Boston Marriott Long Wharf benefited from heightened demand across group, corporate, and leisure sectors, including strong World Cup attendance impacts.
Convention Hotels and Operational Challenges
San Francisco convention hotel RevPAR increased 16% in Q2 2026 despite May and June World Cup-related rate compression. The market is expected to see moderated growth for the rest of the year. Washington, D.C. performance surpassed expectations with a 30% increase in transient pace, partly supported by the property’s conversion from Renaissance to Westin and recent renovations, offsetting a decline in government-related group demand.
Hilton San
Diego Bayfront recorded an 8.4% decline in RevPAR due to a weak convention calendar and ongoing meeting-space renovations. Although transient demand increased by 19%, it did not fully compensate for lost group business. The property set a record $26 million in group revenue during the quarter, with management anticipating improvement in the latter part of 2026, particularly in Q4.
Excluding Andaz Miami Beach, comparable portfolio expenses rose 4.4% in absolute terms and 3.6% per occupied room, representing a 100-basis-point margin headwind. Without San Diego’s results, expense growth per occupied room decreased by 120 basis points and margins expanded 10 basis
points.
Asset Sale and Stock Repurchases
Sunstone completed the sale of Hyatt Regency San Francisco in late July 2026 at an implied valuation near 20 times trailing EBITDA, describing it as a low-yielding asset. The transaction allowed the company to capture future growth value immediately while reducing exposure to ongoing cost pressures in the San Francisco market.
Sunstone repurchased about $40 million of common stock at an average $9.24 per share and nearly $30 million of preferred stock at an average $20.44 per share, representing an 18% discount to liquidation value. Management characterized these buybacks as accretive to net asset value and earnings per share,
and plans to remain opportunistic with further repurchases while evaluating other uses of sale proceeds.
Updated 2026 Outlook and Investments
Sunstone revised its full-year 2026 financial guidance, forecasting RevPAR growth between 7% and 9% for its 13-hotel portfolio, reaching $239 to $244. Total RevPAR is expected to increase within the same range to $404 to $411. Adjusted EBITDAre is projected at $245 million to $255 million, with FFO per diluted share estimated between $0.93 and $0.98.
Capital expenditures for 2026 are anticipated at $105 million to $115 million, up from prior estimates due to additional repair work at Wailea Beach Resort caused by severe storms
in March. The company has received around $6 million in insurance reimbursements, including $1.2 million for business interruption, with most additional repair costs expected to be covered by insurance proceeds.
Recent Renovations and Brand Transitions
Sunstone finalized meeting-space renovations at Hilton San Diego Bayfront, aiming to boost bookings through late 2026 and into 2027. Construction of Bazaar Meat restaurant at Andaz Miami Beach concluded, targeting a fall 2026 opening to complement improved demand in the high season.
On July 1, 2026, Oceans Edge Resort was rebranded as Hilton Key West Resort & Marina, a move anticipated to enhance distribution channels, reduce customer acquisition costs, and
augment earnings.
Chief Executive Officer 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.”
Sunstone Hotel Investors is a publicly traded real estate investment trust (NYSE: SHO) that owns and manages a portfolio of 13 wholly-owned upper-upscale hotels across the United States. The company’s operations focus on premium branded hotels with business models anchored in franchise agreements and third-party management relationships.
