Xenia Hotels & Resorts, Inc. · NYSE:XHR
Xenia Hotels & Resorts — Investor Day (May 2016)
65 slides from Xenia Hotels & Resorts's investor day presentation, May 17, 2016
Slide 1: 2016 Institutional Investor & Analyst Meeting
2016 Institutional Investor & Analyst Meeting May 17, 2016
Slide 2: Welcome
Welcome Presenters Agenda Marcel Verbaas I. Introduction President and Chief Executive Officer II. Company Overview III. Portfolio Overview Barry Bloom Executive Vice President and IV. Portfolio Management Chief Operating Officer V. Financial Profile Atish Shah Executive Vice President and VI. Key T
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation has been prepared by Xenia Hotels & Resorts, Inc. (the “Company” or “Xenia”) solely for informational purposes. This presentation contains, and our responses to various questions from investors may include, “forward-looking statements” within the meaning
Slide 4: Marcel Verbaas
Marcel Verbaas President and Chief Executive Officer RiverPlace Hotel – Portland, OR
Slide 5: At a Glance
At a Glance RiverPlace Hotel – Portland, OR
Slide 6: Company Overview
Company Overview Located in Top 25 Markets and Key Leisure Destinations Premium Full Service, Lifestyle and Urban Upscale Mix Over 75% Luxury and Upper Upscale Hotels Financial Highlights Brand Family Independent 2% 2% Enterprise 5% $2.8B 5% Value 7% Net Debt / 3.8x 49% 2016 EBITDA1 9% 9% Dividend Y
Slide 7: Key Investment Highlights
Key Investment Highlights Broad portfolio mix Focus on quality Differentiated portfolio management Strong financial profile Hyatt Regency Santa Clara Residence Inn Boston Cambridge Canary Hotel 6
Slide 8: Broad Portfolio Mix
Broad Portfolio Mix Hyatt Key West Resort & Spa – Key West, FL
Slide 9: Geographically Diverse Portfolio
Geographically Diverse Portfolio 48 Hotels, comprising 12,107 rooms In 32 markets, including 21 states and the District of Columbia WA MT ND ME VT OR MN NH MA ID SD WI NY WY MI CT RI IA PA NE NJ NV OH DE IL IN UT WV CO MO VA MD CA KS KY DC NC AZ TN OK NM AR SC GA MS AL TX LA FL HI Aston Waikiki Beac
Slide 10: Broad Portfolio Mix Includes Variety of Complimentary Markets
Broad Portfolio Mix Includes Variety of Complimentary Markets Number of % of Total Market Hotels Rooms Rooms Houston 4 1,398 11.5% Dallas 2 961 7.9% Atlanta 2 809 6.7% San Francisco 1 688 5.7% Honolulu 1 645 5.3% Denver 3 565 4.7% Santa Clara 1 505 4.2% Austin 1 492 4.1% Chicago 3 482 4.0% Boston 2
Slide 11: Broad Portfolio Mix includes Projected High RevPAR Growth Markets
Broad Portfolio Mix includes Projected High RevPAR Growth Markets Hotels located in top 10 projected RevPAR growth markets over the next two years Projected 2 year Rank Market RevPAR Growth1 1 Oakland 10.6% 2 San Jose-Santa Cruz 9.9% 3 Sacramento 8.1% 4 Orlando 7.8% 5 San Diego 7.6% 6 Jacksonville 7
Slide 12: Portfolio Mix Provides Various Demand and Revenue Sources
Portfolio Mix Provides Various Demand and Revenue Sources Revenue Mix1 Business Mix2 Other 6% Food and Group Beverage 30% 27% Rooms Transient 68% 70% (1) 10-K Annual Report 2015 (2) STR 11
Slide 13: Leisure as a Driver of Demand
Leisure as a Driver of Demand Key leisure destination hotels have multiple sources of demand resulting in 7-day-a-week business. • In 2015, our key leisure destination hotels achieved • 84.1% Occupancy Marriott Napa Valley Hotel & Spa Hyatt Key West Resort & Spa • $230.35 ADR • $193.82 RevPAR In add
Slide 14: Geographic Diversity + Variety of Hotels = Superior Positioning
Geographic Diversity + Variety of Hotels = Superior Positioning Flexibility to choose the best type of asset in each market Premium Full Lifestyle Urban Upscale Service > 20% of Rooms > 20% of Rooms > 55% of Rooms WA MT ND ME VT OR MN NH MA ID SD WI NY WY MI CT RI IA PA NE NJ NV OH DE IL IN UT WV CO
Slide 15: Premium Full Service with Leading Brands
Premium Full Service with Leading Brands Premium Full Service > 55% of Rooms • Traditional luxury and upper upscale assets featuring restaurants, meeting space and a range of other amenities • Prime locations with corporate, group, and leisure demand generators • Generally larger properties that are
Slide 16: Lifestyle for the Modern Traveler
Lifestyle for the Modern Traveler Lifestyle > 20% of Rooms • Unique luxury and upper upscale assets with smaller footprints and more modern, boutique style • Emphasis on local influence and unmatched experience • One-of-a-kind restaurant and bar experiences • Ability to drive ADR through product dif
Slide 17: Urban Upscale Appeals to Wide Guest Base
Urban Upscale Appeals to Wide Guest Base Urban Upscale > 20% of Rooms • Premium branded select service assets • In proximity to multiple demand generators in urban locations • Select service model allows for efficient cost structure and higher profit margin Hilton Garden Inn Washington DC Downtown 1
Slide 18: Broad Portfolio Mix Limits Exposure to Projected New Supply
Broad Portfolio Mix Limits Exposure to Projected New Supply • Located in only one of the top five projected supply growth markets • Lowest rate of new supply growth among peers • New supply growth rate is 20% below peer average1 Andaz Napa Loews New Orleans Hotel Lorien Hotel & Spa Source: STR as of
Slide 19: Broad Portfolio Mix Protects Against Potential Macro Concerns
Broad Portfolio Mix Protects Against Potential Macro Concerns • International visitor volatility • Potential shadow supply Airbnb Airbnb Risk Rank Market1 Risk Index2 1 New York 81.4 2 San Francisco3 50.4 3 Miami 48.4 4 Oakland 48.0 5 Oahu 46.1 6 Los Angeles 44.8 7 Seattle 44.5 Source: PKF Hospita
Slide 20: Focus on Quality
Focus on Quality Hotel Commonwealth – Boston, MA
Slide 21: Focus on Quality Drives Portfolio Transformation
Focus on Quality Drives Portfolio Transformation Since inception in 2007, transformed portfolio and significantly improved quality through strategic transactions. Only four hotels in current portfolio were owned in 2007 Portfolio RevPAR Acquisitions1 Dispositions $160 Prior Platform2 80 Hotels 0 Hot
Slide 22: Continuing to Upgrade the Portfolio
Continuing to Upgrade the Portfolio Portfolio quality continues to improve through recent transactions 2015 2015 Hotel Rooms RevPAR EBITDA / Key 2015 Adjusted Hotel EBITDA1 12,648 $140.83 $24,093 Pro Forma for Transactions Completed2 11,957 $147.63 $25,577 Total Portfolio Improvement $6.80 $1,484 No
Slide 23: Portfolio Weighted Towards Premium Hotels
Portfolio Weighted Towards Premium Hotels Greater than 75% of Rooms are Luxury or Upper Upscale1 Luxury 13% Upscale 21% Loews New Orleans Upper Midscale Upper Upscale 2% 64% Note: Categories by number of total rooms. Totals may not equal 100% due to rounding (1) As defined by STR; Hotel Commonwealth
Slide 24: High Quality Presence in Markets
High Quality Presence in Markets Own high quality hotels in each market, as reflected by RevPAR premiums 75% Higher RevPAR than market 50% Higher RevPAR than submarket 15% Higher RevPAR than competitive set Over two-thirds of the Company’s hotels rank 1st or 2nd in RevPAR in their competitive set1 S
Slide 25: High Quality Portfolio Compares Favorably
High Quality Portfolio Compares Favorably 2016E EBITDA1 / Key ($ in thousands) Peer Average: $24.1 $33.0 $29.9 $29.2 $24.9 $24.7 $24.1 $20.8 $20.0 $19.2 $15.5 LHO PEB CHSP DRH XHR SHO HT FCH RLJ APLE Sources: SNL Financial (1) SNL consensus estimates as of May 13, 2016 24
Slide 26: Grand Bohemian Hotel Charleston – Charleston, SC
25 Grand Bohemian Hotel Charleston – Charleston, SC
Slide 27: Barry Bloom
Barry Bloom Executive Vice President and Chief Operating Officer RiverPlace Hotel – Portland, OR
Slide 28: Differentiated Portfolio Management
Differentiated Portfolio Management Andaz Napa – Napa, CA
Slide 29: Advantages of Branded Hotels
Advantages of Branded Hotels Brand Family • Larger revenue demand Independent funnels 2% 2% 5% • Greater stability through cycles 5% • Less reliance on OTAs and 7% other high cost channels 49% • Proven guest loyalty 9% 9% 11% Note: Categories by number of total rooms. Totals may not equal 100% due t
Slide 30: Advantages of Manager Diversification
Advantages of Manager Diversification Managers • Best in class managers Other Other 111% 10% • Sharing of best practices across Hilton 5% the portfolio Kessler 5% • Robust acquisition pipeline Urgo Marriott 33% 5% • Optionality upon termination Aston 5% Starwood 7% Hyatt Sage 9% 12% Kimpton 9% Note:
Slide 31: Differentiated Approach Drives Value Creation
Differentiated Approach Drives Value Creation Broad Footprint with Variety of Asset Types Multiple Demand and Revenue Sources Branded Hotels Manager Diversification Portfolio Management Platform Harvests Value 30
Slide 32: Relationship Focused Team Drives Performance
Relationship Focused Team Drives Performance Team of asset and project managers with diverse background and depth of experience Asset Project Combined Management Management Average tenure in Lodging Industry 28 years 18 years 25 years Average tenure in Asset/Project Mgmt. 13 years 17 years 14 years
Slide 33: Aggressive Asset Management Maximizes Profit
Aggressive Asset Management Maximizes Profit Optimize Maximize Business Revenue Forecasting Generation Westin Oaks Houston at The Galleria Residence Inn Baltimore Downtown/Inner Harbor Marriott Chicago at Medical District/UIC Hotel Monaco Denver Minimize Expenses and Control Costs 32
Slide 34: Property Optimization Process Adds Incremental Value
Property Optimization Process Adds Incremental Value The Property Optimization Process (“POP”) includes an intensive site visit by industry veteran team members, followed by a period of analysis, research, and implementation $2.5 million Total enhancements and reductions from 2014 & 2015 POP Reviews
Slide 35: In-House Project Management Enhances Control
In-House Project Management Enhances Control Allows for more nimble execution People of projects • Experienced hospitality-based design, development and construction staff • Develop and maintain 1-year, 5-year and 10-year capital plans Process Planning • Bottom-up development of project budgets and
Slide 36: Asset Management Platform with Integrated Capabilities
Asset Management Platform with Integrated Capabilities Integrated Capabilities 35
Slide 37: Asset Management Platform Drives Performance
Asset Management Platform Drives Performance Properties Acquired Between 2010-20131 $700 38.5% 39.0% 38.0% $600 36.6% 37.0% $500 36.0% $400 34.7% 35.0% $ Millions $300 34.0% 33.4% 33.0% $200 32.0% $100 31.0% $0 30.0% Year Prior to Acquisition Acquisition Year Acquisition Year +1 Acquisition Year +2
Slide 38: Highly Successful Acquisitions
Highly Successful Acquisitions RevPAR GOP Property CAGR Margin Growth Andaz San Diego 6.3% 1,514 bps Hyatt Regency Santa Clara 11.6% 1,182 bps Marriott San Francisco Airport Waterfront 14.5% 1,135 bps Marriott Napa Valley Hotel & Spa 11.2% 572 bps Fairmont Dallas 7.5% 549 bps Andaz Savannah 9.7% 441
Slide 39: Case Study: Marriott Dallas City Center
Case Study: Marriott Dallas City Center Acquisition September 2010 $50 million - $120,200 per key Total Current Investment: $70 million Improvement Opportunity • Converted from Westin to Marriott, including full hotel renovation • 9 keys added to inventory • Enhancing leisure and group mix balance •
Slide 40: Case Study: Hyatt Key West Resort & Spa
Case Study: Hyatt Key West Resort & Spa Acquisition November 2013 $76 million - $644,100 per key Total Current Investment: $80 million Improvement Opportunity • Reviewed and applied improved rate strategy • Added ancillary revenue streams • 2 keys added to inventory • Significant guestroom upgrades
Slide 41: Future Upside: 2015 Renovations – Marriott San Francisco Airport Waterfront
Future Upside 2015 Renovations – Marriott San Francisco Airport Waterfront Before After 40
Slide 42: Future Upside: 2015 Renovations – Hyatt Regency Santa Clara
Future Upside 2015 Renovations – Hyatt Regency Santa Clara Before After 41
Slide 43: Future Upside: 2016 Renovations – Marriott Napa Valley
Future Upside 2016 Renovations - Marriott Napa Valley Resort & Spa Before After Rooms Renovation Before Project Rendering Pool and Outdoor 42
Slide 44: Future Upside: Implementation of Best Practices
Future Upside Implementation of Best Practices Canary Hotel Hotel Palomar RiverPlace Hotel 43
Slide 45: Future Upside: Stabilization of Developments
Future Upside Stabilization of Developments Grand Bohemian Hotel Charleston Grand Bohemian Hotel Mountain Brook 44
Slide 46: Future Upside: Stabilization of Expansion
Future Upside Stabilization of Expansion Hotel Commonwealth 45
Slide 47: Hotel Palomar Philadelphia - Philadelphia, PA
46 Hotel Palomar Philadelphia - Philadelphia, PA
Slide 48: Atish Shah
Atish Shah Executive Vice President and Chief Financial Officer RiverPlace Hotel – Portland, OR
Slide 49: Strong Financial Profile
Strong Financial Profile Hilton Garden Inn Washington D.C.
Slide 50: Strong Financial Profile
Strong Financial Profile Company Metrics • Leverage and liquidity profile • Unencumbered assets • Debt maturity profile Hotel Monaco Chicago Disciplined Approach • Capital expenditures • Return of capital • Transactions Courtyard Kansas City Country Club Plaza 49
Slide 51: Leverage and Liquidity Profile
Leverage and Liquidity Profile Conservative leverage profile and strong liquidity position Conservative Leverage Cash 3 3.8x Net Debt to 2016 EBITDA1 $245M 3.52% weighted average interest rate Line of 55% fixed rate debt2 Credit Availabi lity $400M Over $600M of Liquidity (1) SNL consensus EBITDA es
Slide 52: Conservative Leverage Profile
Conservative Leverage Profile Net Senior Capital / 2016E EBITDA1 Peer Average: 4.6x 8.1 x 6.9 x 5.3 x 4.4 x 4.1 x 3.8 x 3.6 x 3.6 x 2.9 x 2.7 x HT FCH PEB CHSP LHO XHR RLJ DRH APLE SHO Sources: SNL Financial (1) SNL consensus EBITDA estimates as of 5/13/2016; net debt as of 3/31/2016 51
Slide 53: Unencumbered Assets Enhance Flexibility
Unencumbered Assets Enhance Flexibility Unencumbered assets represent: 25 hotels ~50% of rooms ~50% of Hotel EBITDA Property Keys Property Keys Marriott San Francisco Airport Waterfront 688 Hilton Garden Inn Chicago North Shore/Evanston 178 Aston Waikiki Beach Hotel 645 Homewood Suites by Hilton Hou
Slide 54: Debt Maturity Profile
Debt Maturity Profile Strong balance sheet with manageable near-term debt maturities Fixed1 $350 Floating2 $300 $250 $136 $200 $284 $150 $100 $180 $175 $125 $50 $34 $73 $60 $63 $60 $56 $36 $17 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 WA Fixed Rate 5.50% 4.46% NA NA 3.85% 2.89% 3.73%
Slide 55: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation Responsible and strategic capital allocations to increase value and returns Since listing Capital Reinvestment Continually reviewing opportunities to invest and recycle capital to maintain ~$50 quality, as well as increase long-term value and generate attra
Slide 56: Capital Reinvestment to Maintain Durability of Earnings
Capital Reinvestment to Maintain Durability of Earnings Hotels are well-maintained and competitively positioned • Annual capital expenditures of approximately 5% of revenue, but can range from 4% to 7% based on timing and complexity of projects • No deferred maintenance $53.8 $49.8 $47.3 2013 2014 2
Slide 57: Dividends and Share Repurchases Drive Shareholder Value
Dividends and Share Repurchases Drive Shareholder Value Dividend Yield1 Payout Ratio2 Strong 7.0% 58.9% 2nd Highest among peers Bottom 1/3 among peers and Stable Progression Dividend Increased 20% after first year as public company Executing against share repurchase authorization Approximately $55 m
Slide 58: Dispositions Demonstrate Disciplined Capital Allocation
Dispositions Demonstrate Disciplined Capital Allocation Since October sold four hotels for $258 million that generated EBITDA/ key 35%+ below the remaining portfolio Wtd. Average Disposition Multiple: Wtd. Average Disposition 11.7x 2015 EBITDA 2015 EBITDA / Key: $16,438 >20% Below XHR 2015 Subpar Ma
Slide 59: Compelling Drivers of Value
Compelling Drivers of Value • Internal Growth • 7.0% Yield • 3.8x Leverage Ratio • Share Repurchase Westin Galleria Houston Grand Bohemian Hotel Orlando 58
Slide 60: Fairmont Dallas – Dallas, TX
59 Fairmont Dallas – Dallas, TX
Slide 61: Key Takeaways and Opportunities
Key Takeaways and Opportunities Renaissance Atlanta Waverly Hotel & Convention Center – Atlanta, GA
Slide 62: What You Can Continue to Expect from Us
What You Can Continue to Expect from Us Transaction-oriented mindset with focus on quality Opportunistic investing Aggressive asset management initiatives Leveraging relationships with brands and managers Healthy balance sheet throughout the cycle 61
Slide 63: Key Investment Highlights
Key Investment Highlights Broad portfolio mix Focus on quality Differentiated portfolio management Strong financial profile Hyatt Regency Santa Clara Residence Inn Boston Cambridge Canary Hotel 62
Slide 64: Non-GAAP Financial Measures
Non-GAAP Financial Measures We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our operating performance: Gross Operating Profit (GOP), GOP margin, EBITDA, Adjusted EBITDA, FFO and Adjusted FFO. These non-GAAP financial measures should be consid
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