Sunstone Hotel Investors raised its 2026 financial outlook after reporting stronger-than-expected demand across its hotel portfolio in the third quarter of 2026. Revenue per available room (RevPAR) increased 11.4% across its portfolio, with Andaz Miami Beach contributing 1.1 percentage points to that growth. Total RevPAR, including revenue beyond rooms, rose 10.5%. Adjusted EBITDAre grew 9% year-over-year to $54.5 million, while adjusted funds from operations (FFO) per diluted share climbed 18% to $0.20.
Resort and Urban Hotel Performance
Resorts continued to lead Sunstone’s portfolio for the fourth consecutive quarter, with urban hotels surpassing company forecasts by delivering a 12.8% increase in total RevPAR. This urban growth
was supported by higher group events and corporate travel volumes. Key properties such as Wailea Beach Resort achieved nearly 27% growth in third-quarter RevPAR, with occupancy improving by 19 percentage points. Wailea’s gains were bolstered by a group pace increase exceeding 20%. Meanwhile, Hilton San Diego Bayfront saw its group revenue pace rise more than 10% year-over-year. In Orlando, group revenue production for future periods increased over 40%, marking a third-quarter booking record.
Updated Full-Year 2026 Forecast
Following robust third-quarter results, Sunstone now projects rooms RevPAR growth between 9.5% and 10.5% for 2026, raising the midpoint by two percentage points from prior guidance. Rooms
RevPAR is forecasted between $245 and $247, and total RevPAR between $409 and $413. The company anticipates adjusted EBITDAre ranging from $254 million to $259 million. Adjusted FFO per diluted share is expected to fall between $1.00 and $1.03. The fourth quarter is projected to deliver mid- to high-single-digit revenue growth, with around 1.5 percentage points of contribution anticipated from Andaz Miami Beach. October 2026 is expected to be the strongest month for RevPAR growth, with occupancy aligned to expectations and slightly improved rates.
Capital Actions and Financial Impact
Sunstone sold the Hyatt Regency San Francisco in July 2026 at a valuation close to 20
times trailing EBITDA. Approximately 70% of the sale proceeds have been used to repurchase common and preferred stock. Through the week of the third-quarter earnings call, the company repurchased about $143 million of common stock at an average price of $10.43 per share and approximately $54 million of preferred stock at $21.03 per share. The preferred stock buybacks have reduced annual dividend obligations by nearly $4 million. Future repurchase efforts will prioritize preferred shares over common stock, according to company executives.
Operational Metrics and Expense Developments
Sunstone’s portfolio-wide group booking pace for 2027 increased by a mid- to high-single-digit percentage. Some large group hotels in
San Diego and Washington, D.C., supplemented weaker event calendars with transient guests, which generally produce lower ancillary revenue. Managing this mix is expected to improve margins next year. Comparable portfolio expenses rose 8.9% in the third quarter, partly due to renovations at Hilton Key West and other one-time items. Despite this, EBITDA margins expanded by 50 basis points, with a margin gain of nearly 200 basis points when excluding these factors. Wailea Beach Resort is finishing storm damage repairs; nearly all incremental capital expenditures for this work are reimbursed by insurance.
Company Leadership Statements and Future Plans
Sunstone’s CEO noted that resorts sustained leadership in portfolio
results, but urban hotels outpaced forecasts. The CFO indicated that the updated 2026 forecast reflects strong hotel operating trends, reduced corporate expenses, and completed stock repurchases, without incorporating further buybacks. The CEO added that at current prices, future repurchases will focus on preferred shares. The board authorized a fourth-quarter common dividend of $0.09 per share, with expected 2027 quarterly dividend distributions between $0.11 and $0.12 per share. The company continues to evaluate acquisitions within a $50 million to $200 million range while maintaining disciplined capital deployment.
Company Profile
Sunstone Hotel Investors is a U.S.-based real estate investment trust specializing in upscale and
upper-upscale hotels located in major business, convention, and leisure destinations. The portfolio consists of full-service hotels operated under prominent hospitality brands and independent properties offering accommodations, dining, event spaces, and amenities for business and leisure travelers. The company targets institutional-quality lodging assets in markets with strong travel demand, including coastal gateway cities and popular resort and urban areas.
