Xenia Hotels & Resorts, Inc. (XHR) is seeing normalization in lodging demand after several years of volatility during the pandemic. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in 2024.

Xenia Hotels & Resorts is a REIT that specializes in luxury and upper upscale hotels and resorts. It owns 32 hotels comprising 9,514 rooms across 14 states. It's hotels are operated and/or licensed by industry leaders in hospitality such as Marriott, Hyatt, Kimpton, Fairmont, Loews, Hilton, The Kessler Collection and Davidson.

A Beat in the Fourth Quarter of 2023

On Feb 27, 2024, Xenia reported fourth quarter 2023 results and beat on the Zacks Consensus by $0.04. Earnings were $0.41 versus the Zacks Consensus of $0.37.

Same-property RevPAR fell 3.4% to $157.69 year-over-year but excluding Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, which is undergoing a $110 million transformative renovation, it would have seen RevPAR of $162.51. That's an increase of 1.2% compared to the fourth quarter of 2022.

"Reflecting on 2023, our overall performance was supported by ongoing asset management initiatives as lodging demand across our markets started to normalize," said Marcel Verbaas, CEO.

"We benefited from good cost control during a time of continued expense pressures and normalization of staffing levels at our assets," he added.

"On the project management side, we completed several important capital projects, including comprehensive renovations at Kimpton Canary Hotel Santa Barbara, Kimpton Hotel Monaco Salt Lake City and Grand Bohemian Hotel Orlando, and made substantial progress on our largest and most impactful renovation project, the transformative renovation and up branding of Hyatt Regency Scottsdale," continued Mr. Verbaas.

Bullish About 2024

Both the company and the analysts are bullish about 2024. Xenia expects recovery in business transient and group demand as the year progresses.

Additionally, the Hyatt Regency Scottsdale will complete its transformation into a Grand Hyatt luxury resort which should bring extra benefits in the later part of the year.

Xenia also disclosed in Feb 2024, that the quarter-to-date same-property RevPAR, excluding thee Hyatt Regency Scottsdale, was up about 4.9% through Feb 22, 2024, compared to the same period a year ago.

The analysts have raised earnings estimates for both 2024 and 2025.

3 estimates have been raised for 2024 in the last month, pushing the 2024 Zacks Consensus Estimate up to $1.68 from $1.59. That's earnings growth of 9.1% as the company made $1.54 last year.

Here's what it looks like on the price and consensus chart.

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Image Source: Zacks Investment Research

Shares Are Cheap

Shares of Xenia caught a bid after the last earnings report and are up 9.5% year-to-date. They're still cheap, though, with a forward P/E of 8.8.

(Click on image to enlarge)

Image Source: Zacks Investment Research

Xenia also pays a dividend. The Board of Directors increased the quarterly cash dividend for the first quarter by 20% to $0.12 per share. That dividend will be paid on Apr 15, 2024 to all holders of record as of the close of business on Mar 28, 2024.

The dividend is currently yielding 3.2%.

For investors looking for income who also want to own hotels, Xenia should be on your short list.

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