up 8.1%, muted supply trends,
and continued growth in transient
demand, we remain positive in
our outlook for 2013 and
beyond, says Cruse.
ALISO VIEJO, CA-Locally based Sunstone Hotel Investors Inc.’s third quarter portfolio benefitted from solid demand trends and continued improvements in operational efficiency, according to the firm’s president and CEO, Ken Cruse. “Those factors helped drive a 130-basis-point increase in our Comparable Hotel EBITDA Margin and a 15% increase in our Adjusted FFO per diluted share,” he says.
Also during the third quarter, Cruse explains, the firm continued to improve its portfolio quality while deleveraging its balance sheet by acquiring an unlevered primary-market hotel and divesting of four highly levered, low-RevPAR secondary-market hotels.
Cruse states that the firm “continues to make value-adding investments into our portfolio.” As an example, he points to Sunstone’s recently completed a $25-million full guestroom and bathroom renovation of its 807-room Renaissance Washington DC. “While the renovation resulted in short-term displacement—negatively impacting our portfolio’s Comparable Hotel RevPAR by 170 basis points and Hotel EBITDA Margins by 60 basis points in the third quarter—we believe the project will drive material outperformance at this hotel going forward. To this point, our 2013 group booking pace at the Renaissance Washington DC is now up more than 22% year-over-year, and the hotel now has more group rooms on the books for 2013 than in any year since 2007.”
According to the company CEO, “In spite of solid industry fundamentals, with any cyclical recovery there will be periods of softer-than-anticipated growth in select markets.” Accordingly, he says, the company has moderated its guidance for RevPAR and profitability growth for the remainder of 2012. “With 2013 group booking pace up 8.1%, muted supply trends, and continued growth in transient demand, we remain positive in our outlook for 2013 and beyond.”