Sunstone Hotel Investors Reports Q1 2025 Revenue Growth but Declining Net Income

Sunstone Hotel Investors, Inc. reported its financial results for the first quarter of 2025, revealing total revenues of $234.1 million, a 7.8% increase from $217.2 million in the same period of 2024. The growth was primarily driven by a 6.7% rise in room revenue, which reached $144.9 million, and a 9.4% increase in food and beverage revenue, totaling $67.1 million. However, net income fell significantly to $5.3 million, down 59.7% from $13.0 million year-over-year, resulting in income attributable to common stockholders of $1.3 million, or $0.01 per share, compared to $9.4 million, or $0.05 per share, in the prior year.

The company experienced notable operational changes, including the acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024, which contributed $7.7 million to room revenue. Additionally, the ongoing renovations at The Confidante Miami Beach and the Renaissance Long Beach impacted operations, with the former reopening as Andaz Miami Beach in May 2025. These renovations, while enhancing the portfolio, also contributed to increased operating expenses, which rose by 8.8% to $217.6 million, driven by higher costs associated with the new acquisition and increased occupancy rates.

In terms of operational metrics, the company reported an occupancy rate of 68.6% and an average daily rate (ADR) of $196.95, leading to a revenue per available room (RevPAR) of $135.11. The Comparable Portfolio, which includes hotels owned throughout both periods, saw a 2.0% increase in RevPAR, reflecting a slight improvement in occupancy and ADR. However, the company noted challenges in certain markets, particularly in Maui, where leisure demand moderated.

Sunstone's balance sheet as of March 31, 2025, showed total assets of $3.1 billion, with total debt standing at $845 million. The company maintained a cash balance of $72.3 million, alongside $76.5 million in restricted cash. The company also repurchased 821,771 shares of its common stock for $8.0 million during the quarter, leaving $419.5 million available under its stock repurchase program. Looking ahead, Sunstone anticipates continued challenges from inflation and rising interest rates, which may impact operational costs and financing conditions. The company remains focused on leveraging its portfolio's strengths while navigating the evolving market landscape.