Participants

Aldo Martinez

Marcel Verbaas; Chairman of the Board, Chief Executive Officer; Xenia Hotels & Resorts Inc

Barry Bloom; President, Chief Operating Officer; Xenia Hotels & Resorts Inc

Atish Shah; Chief Financial Officer, Executive Vice President, Treasurer; Xenia Hotels & Resorts Inc

Michael Bellisario; Analyst; Baird

Ari Klein; Analyst; BMO Capital Markets

Dori Kesten; Analyst; Wells Fargo

Austin Wurschmidt; Analyst; KeyBanc Capital Markets

Tyler Batory; Analyst; Oppenheimer

Bill Crow; Analyst; Raymond James

Presentation

Operator

Hello, and welcome to the Xenia Hotels & Resorts Inc., Q1 2024 earnings conference call. My name is Alex, and I'll be coordinating the call today. (Operator Instructions)
I'll hand it over to your host, Aldo Martinez, Finance Manager to begin, please go ahead.

Aldo Martinez

Thank you, Alex, and welcome to Xenia Hotels & Resorts First Quarter 2024 earnings call and webcast. I'm here with Marcel Verbaas, our Chair and Chief Executive Officer; Barry Bloom, our President and Chief Operating Officer; and Atish Shah, our Executive Vice President and Chief Financial Officer. Marcel will begin with a discussion on our performance Barry will follow with more details on operating trends and capital expenditure projects, and I teach will conclude today's remarks on our balance sheet and outlook. We will then open the call for Q&A.
Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.
Forward-looking statements in the earnings release that we issued yesterday afternoon, along with the comments on this call are made only as of today, May 3, 2024, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures to net income and definitions of certain items referred to in our remarks in our first quarter earnings release, which is available on our Investor Relations section of our website, the property level information, we'll be speaking about today is on a same-property basis for all 32 hotels unless specified otherwise. An archive of this call will be available on our website for 90 days.
I will now turn it over to Marcel to get started.

Marcel Verbaas

Thanks, Paula, and good morning, everyone. Our operating results continued to be encouraging in the first quarter, a strong group demand and steady improvement in business transient demand growth, same-property portfolio RevPAR and total revenues that exceeded our expectations for the quarter, a consistent focus on expense controls by our operators and asset management team and a continued inflationary environment allowed us to also achieve a same-property hotel EBITDA margin that was a bit ahead of our expectations. As a result, our adjusted EBITDA RE came in above our internal forecast as well.
For the first quarter of 2024, we reported net income of $8.5 million, adjusted EBITDA or EBIT of $65.3 million and adjusted FFO per share of $0.44. While adjusted EBITDA declined from the first quarter of 2023, we had anticipated this as Hyatt Regency Scottsdale at Gates Ranch had record high performance last year when Phoenix hosted the Super Bowl and overall market demand was extremely strong despite the lapping of this outperformance and the high level of EBITDA disruption resulting from the ongoing transformative renovation at our Scottsdale resort during the quarter.
Our adjusted FFO per share increased by 10% over last year. This was mostly driven by the significant amount of share buybacks we completed in 2023, which we continued at a slower pace during the early part of the first quarter this year. Although same-property RevPAR for our 32 hotel portfolio decreased by 1.5%. For the quarter, RevPAR actually increased by a healthy 3.7% when excluding Hyatt Regency Scottsdale, despite the negative impact of the Easter holiday occurring at the end of March this year. This increase was mainly driven by a significant 310 basis point increase in occupancy for these 31 hotels.
We saw particular strength in a number of our large group-oriented hotels such as our Houston hotels, Hyatt Regency, Portland and Park Hyatt Aviara, as well as other at Marriott of San Francisco Airport and Hyatt Regency Santa Clara. We continue to believe that these two high-quality hotels, because that's some of the greatest earnings growth potential within our portfolio. Additionally, Grand Bohemian Hotel. Orlando is hitting its stride now that the comprehensive renovation is fully behind us and Canary hotel, Santa Barbara had outsized revenue and earnings growth compared to last year.
As we lapped the rooms renovation that took place mainly in the first quarter of last year on a same property basis, first quarter same property hotel EBITDA of 70.7 million was 8.5% below 2023 levels, and hotel EBITDA margin decreased 228 basis points. Excluding hybrid Scottsdale first quarter hotel EBITDA increased 4.7% and hotel EBITDA margin decreased just 14 basis points. We continue to be pleased with these margin results as overall inflation remained at an elevated level during the quarter.
As we have noted over the past several quarters, the trends across our portfolio continued to indicate that our demand segmentation mix is reverting towards pre-pandemic levels with group and business transient demand recovering and leisure demand. Normalizing group demand was a particular bright spot during the first quarter. Same property group room revenues, excluding hydro Scottsville, increased 8.1% as compared to the same period last year.
We also saw a modest improvement in business transient demand with continued increases in midweek occupancy. And while leisure demand has largely stabilized across the portfolio, we did see some further retracement in a few of our more leisure dependent assets on markets in the quarter, particularly in Napa and Savannah.
Now turning to our capital expenditure projects we continue to project that we will spend between 120 and $130 million on property improvements during the year. Well, Barry will provide additional details on the $33.4 million we invested into the portfolio during the quarter.
In his remarks, I would like to highlight the progress we are making on the transformational renovation and rebranding of Hyatt Regency Scottsdale. The project is progressing as planned, and we still anticipate a completion by the end of 2024 with approximately $65 million to $70 million that will be spent during this year after completing the adult pool and its H2Oasis pool bar in January for large family pool and its F&B amenities were fully completed and operational in early April.
The new pool complex spectacular has significantly improved over the resort's previous amenities. The early reviews have been very positive, and we expect that this new full complex will be well received by our anticipated higher-rated leisure and group demand. We also believe that this upgrade food complex will enable us to attract significant staycation leisure demand during the slower summer season in the years ahead.
We are also continuing to make progress on the renovation of all guest rooms. We have now completed the renovation of 230 rooms, and we anticipate a total of almost 300 out of our current 491 rooms. We'll be fully renovated by the end of May the remaining guest rooms, including the additional five rooms that will be created as part of this project will be completed in continual phase until final completion by the end of the third quarter. We are also making good progress on the approximately 12,000 square foot expansion of the Arizona ballroom.
We continue to expect that this ballroom expansion as well as the renovation of our existing ballrooms meeting spaces and pre-function space, we'll be completed by the end of the year. We have also commenced the renovation of the public space, including the lobby lobby bar hotel markets and our indoor and outdoor dining spaces. As announced last quarter, we are collaborating with celebrity chef Richard place on off on all food and beverage offerings at the relaunch resort.
We are thrilled. We are expanding our relationship with jet base with whom we have developed an excellent working relationship at Park Hyatt, Aviara, Hyatt Regency Grand Cypress and Hyatt Centric Key West. We continue to expect completion of these components by the end of the third quarter. Restaurant concepts and menus are nearly finalized as work has now begun in each of the food and beverage outlets. And finally, we continue to expect completion of all improvements.
The resort's building facade infrastructure and grounds will be completed by the end of 2024. The renovation and transformation of all of these components will continue to displace a significant amount of revenue and EBITDA as the overall guest experience is meaningfully impacted. We expect that the majority of the remaining revenue disruption will occur during the second and third quarters and subside as the fourth quarter progresses, we now expect the impact of renovation disruption to be a bit higher than previously projected as we have gone deeper into the project and the sequencing of demolition and construction has become clear, it is we'll provide further details on our outlooks, including our renovation disruption.
During his remarks, we continue to be extremely excited about this project and the earnings growth potential that we expect will be created by this transformation the Phoenix Scottsdale luxury resort market remain strong and the soon to be launched Grand Hyatt Scottsdale, we'll be a formidable competitor in this luxury peer set.
Looking ahead across the portfolio remain cautiously optimistic for the remainder of 2024. As we have previously outlined, we believe we have significant embedded earnings growth potential within our portfolio, primarily through our recently renovated properties, our hotels that primarily cater to group and business transient customers, and our two most recent acquisitions that we have national and hydrogen support on the Oregon Convention Center.
Additionally, we continue to expect strong RevPAR growth at our properties that are recovering Northern California markets, San Francisco and Santa Clara. We saw these themes play out in the first quarter as we experienced encouraging results at our recently renovated properties, Grand Bohemian, Orlando and Canary Hotel in Santa Barbara, as well as further gains of properties that were renovated in recent years, including Hyatt Regency Grand Cypress, our Houston properties, and Waldorf Astoria Atlanta Buckhead.
We also had strong results at our other large group-oriented hotels, our Northern California assets and our most recently acquired hotels particularly hybrid is important. We are off to a good start in the second quarter. We estimate that excluding Scottsdale same-property RevPAR increased 6.2% in April as compared to the same period in 2023 when including hiring Scottsdale, which continues to deliver very strong results through May of 2023, we estimate that April RevPAR is up 0.9% compared to last year.
Given its performance through May of last year and the renovation disruption we are experiencing this year, we continue to expect that Hyatt Regency Scottsdale will be a drag on RevPAR growth through the first half of the year after which the comparisons we'll become more favorable. We remain particularly optimistic regarding our portfolio performance and earnings growth potential as we look ahead to 2025 and beyond. We expect recent demand trends in our portfolio to continue and are looking forward to the additional growth we expect to get from the completion of the Scottsdale project.
We continue to believe that supply growth will remain muted in our submarkets over the next several years and especially in the upper upscale and luxury segments where our hotels and resorts are positioned. This will provide a very favorable backdrop for potential RevPAR growth as we have seen in previous cycles in the lodging industry, but supply growth has been subdued. With our high quality and further improved portfolio, we expect to be well-positioned. We'll take advantage of the finance.
I will now turn the call over to Barry to provide more details on our operating results and our capital projects.

Barry Bloom

Thank you, Marcel, and good morning, everyone. For the first quarter, our 32 same-property portfolio RevPAR was $176.86 based on occupancy of 67.4% at an average daily rate of $262.39, a decrease of 1.5% as compared to the first quarter 2023.
Excluding Hyatt Regency Scottsdale first quarter RevPAR was $178.7, an increase of 3.7% as compared to 2023. This increase reflected 3.1 points of occupancy gain and decline of 1% in average daily rate as compared to the first quarter of 2023. As Marshall indicated in his remarks, the same property leaders in terms of RevPAR growth in the quarter included our hotels were lapping First Quarter 2023 renovations at Canary Santa Barbara and Grand Bohemian Orlando.
Additionally, RevPAR grew significantly at high Ritchie Santa Clara of 26.3% Waldorf Astoria Atlanta bucket of 15.9% from our Pittsburgh up 9.8%. Portland, where our two hotels were each up approximately 9.5%. Houston where each of our hotels were up over 8.5%, Park Hyatt ABR of 7.6%, and now it seems to be Airport, which was up 5%. The growth in these markets as a result of clearly improving business transient and group demand. But we are seeing across the portfolio.
Conversely, we experienced RevPAR weakness compared to the first quarter of 2023, a couple of our leisure division properties, including Bohemian Savannah River front and Andaz Napa. As expected, results in the first quarter grew as each month progressed.
Looking at each month of the quarter, excluding hybrid UC Scottsdale, January RevPAR was $157.14, up 11.1% to January 2023, February RevPAR was $171.71, up 0.6% compared to February 2023. And March RevPAR was up was $198.40, up 0.9% compared to March 2023. Notably, occupancy grew each month during the quarter. We are optimistic about the recovery in corporate and group rates as we continued to achieve higher midweek occupancies across the portfolio, particularly on Tuesday and Wednesday.
Nights for these higher occupancies are providing meaningful rate compression opportunities. We note that compared to 2019, which excludes high Ritchie, Scottsdale, Hyatt Regency, Portland and W. Nashville daily occupancy still trail by approximately 5.5 to 7 occupancy points each day of the week with the exception of Mondays and Thursdays, which have been slower to recover drilling 2019 by approximately 10 to 11 occupancy points business from the largest corporate accounts across our portfolio continued to be significantly behind 2019, while corporate business from small and medium-sized accounts has recovered much more significantly.
Group business continues to be a bright spot across the portfolio but we continue to see a reversion to pre-pandemic patterns from the first quarter. Excluding hiring Scottsdale grouping, the revenues were up just over 8% as compared to the first quarter of last year. Notably, much of this gross growth was in occupancy with room nights up approximately 7% with rate up approximately 1%. This reflects a continued trend in our mix of group business with association group business now recovering at a stronger pace than corporate group business.
Now turning to expenses and profit. First quarter same-property hotel EBITDA was $70.7 million, a decrease of 8.5% on a total revenue decline of 0.6% compared to the first quarter of 2023, resulting in 228 basis points of margin decline. Excluding Hyatt Regency Scottsdale hotel EBITDA was $67.2 million, an increase of 4.7% on a total revenue increase of 5.3%, resulting in a margin decline of just 14 basis points. This modest decline in hotel EBITDA margin for the quarter reflected our operators' ability to manage expenses while continuing to improve guest services and satisfaction.
Overall, labor expenses increased over last year, which was expected due to higher occupancy levels. Our operators continue to control overtime more effectively how the staffing levels have normalized in the industry departments. Expenses in ANG. and property operations were well controlled, while sales and marketing expenditures continue to increase as hotels grow their sales teams and controlling continue expenditures on digital marketing efforts. Energy expense for the quarter declined year over year as a result of the warmer weather and reduced pricing in certain markets. Compared to last year.
Turning to CapEx, during the first quarter, we invested $33.4 million in portfolio improvements. As Marcel discussed, we continued our significant work on the approximate $110 million, transformative renovation up branding of the 491 room, Hyatt Regency Scottsdale resort and Spark any range and are pleased that the project continues to be both on time and on budget.
In addition to our work in Scottsdale, in the first quarter, we completed the renovation of all meeting rooms at the Waldorf Astoria, Atlanta Buckhead, a complete renovation and reconcepting of the restaurants, Bohemian Hotel, Savannah and a renovation of always downtown steakhouse at the Ritz-Carlton Denver planned renovations will take place in our Texas hotels during the seasonally slower summer months, including a renovation of the restaurant and creation of an M Club at Marriott Woodlands Waterway, renovation of the lobbies at the Westin Oaks and Galleria Houston, the location of the fitness facility and additional considers launch at the Westin Oaks Houston and continuing with approximately $20 million of infrastructure and sustainability projects across the portfolio. As the year progresses, we are excited about the work our in-house project management team has completed even more excited about the products that we have underway and in various stages of planning in 2024.
With that, I will turn the call over to Atish.

Atish Shah

Thank you, Barry. I'll provide an update on two items, our balance sheet and our 2024 guidance as to our balance sheet, we continue to have a strong balance sheet with ample liquidity with no near-term maturities, a significant unencumbered asset base and limited interest rate exposure, balance sheet continues to be a point of strength for the company.
At quarter end, our leverage ratio was 5.2 times trailing 12 months net debt to EBITDA. As a reminder, our long-term target is the leverage ratio in the low three to low four times range. We expect to move closer to that range in 2025 as we see the Scottsdale project ramp up post-renovation.
To wrap up the balance sheet discussion, note that we repurchased a small amount of stock about $6 million during the quarter. As you may recall, during 2023, we repurchased about 9% of our outstanding shares and about $12.75 per share. While we continue to consider our stock at the current price level to be an attractive use of our capital. We are balancing that with a few other factors, including liquidity in our stock current year CapEx outlays and reducing our leverage target our leverage ratio to be closer to a target range.
Next, I'll turn to our 2024 guidance. At the midpoint. Our current full year guidance is in line in line with the guidance we provided at the end of February, while the first quarter came in better than expected, given that we are still early in the year and visibility to the back half of the year continues to be limited. We are maintaining guidance midpoints at prior levels. What has increases our level of confidence in achieving full year guidance, and we will continue to monitor recent trends to see the broad momentum over the last several weeks continues over the months ahead.
With regard to our first quarter results, adjusted EBITDA each benefited from nearly 1 million of business interruption insurance proceeds that were recognized quarter earlier than expected. As for our full year RevPAR, we continue to expect same property RevPAR to increase 3.5% at the midpoint of the range for 4% exclusive of Scottsdale.
Looking our business by demand segment on the group side and excluding Scottsdale, our group room revenue pace for the second through fourth quarters is up nearly 4% of the 4% increase. 90% is driven by rate about 25% of expected group room nights for the balance of the year have yet to be booked in terms of booking activity for group production, it continues to increase as group rooms revenue booked in the first quarter for future quarters in the year was ahead of that booked during the first quarter of 2023 for the comparable period as to leisure demand. As we look ahead to the summer, our operators are expecting robust demand, including more international travelers as well as more U.S. travelers staying domestic when compared to trends observed last year.
Finally, at the corporate transient demand during the first quarter, we benefited from higher than expected midweek business transient demand, particularly at some of our larger hotels. And we expect that to continue as to the expense picture we continue to experience moderation in expense pressure relative to last year. For the second to fourth quarter, we expect hotel EBITDA margin to decrease about 25 basis points, excluding the impact of Scottsdale, we expect hotel EBITDA margin for the second to fourth quarters to increase excuse me, decrease about 15 basis.
Yes, as to adjusted EBITDA RE, the midpoint of our full year range is $254 million by quarter. The second quarter weighting is slightly ahead of the weighting we had in the first quarter or in the approximate mid to high 20% range. For the third quarter, we expect to earn about 20% of full year adjusted EBITDA. Our eat in the final quarter of the year we expect to earn nearly 30% of full year adjusted EBITDA RE. This weighting reflects a slightly lower mix of earnings in the second quarter versus prior guidance. One of the drivers of this change is higher than expected renovation disruption in the second quarter. As reflected in last night's release, we now expect renovation disruption for the year to be $16 million versus the 14 million we had previously expected. This change is due to the fine tuning of construction timing and at Scottsdale, and it's more impactful in the second quarter as we get into the second half of 2024, the comps become easier and our renovation activity turns into a comparative tailwind as the year progresses.
And finally, our adjusted FFO per diluted share guidance is unchanged with the midpoint of $1.69, which reflects about 9% growth in adjusted FFO per diluted share versus 2023.
To wrap up during the first quarter, our portfolio benefited from stronger than expected business transient and group demand, particularly in some of our larger hotels. We are hopeful hopeful that this broad momentum continues into the remainder of the year. Our focus on the ramp-up of newer properties, certain markets, which are still in recovery as well as successful execution on Scottsville continues. And we expect that the setup for 2025 and beyond will continue to improve in the months ahead.
And with that, I will turn the call back over begin our Q&A session.

Question and Answer Session

Operator

(Operator Instructions) Michael Bellisario of Baird.

Michael Bellisario

Thanks, everyone. First first question's probably for Barry here at the slide that references calling leisure demand in Nashville, not totally surprising given the recent data, but you only mentioned Napa antibody, Savannah in your prepared remarks and maybe help us understand what you're seeing at the W how that hotel performed in the quarter and relative to your expectations and the broader market?

Barry Bloom

Yes, sure. When we think about Postmates, you generally talk about transient hotels. Those are generally are smaller, leisure-focused hotels which is why the commentary on NAB and Savannah, obviously, heavy nationalism, very diversified demand base. And one that we've talked about historically is where we've really refocused the hotel and trying to achieve better penetration in the corporate transient and group segments, which it has done the overall backdrop in Nashville, particularly with the number of luxury hotels or that unmarked last year's resulted in both in the market and the W. Nashville soften a little softness in it, leisure demand during the first quarter. But leisure demand is not the primary driver in the first quarter, Nashville really never has been.
So we'll have a much better indication as we move through Q2 and Q3, which are much, much stronger months in the market overall. And have historically been a much stronger periods of time for the W. Nashville as well.

Michael Bellisario

Got it. Understood. And then a bigger picture question for Marcel on just capital allocation and strategies. Remind us how you and the Board are thinking about value creation for shareholders. What metrics are you focused on and sort of what are the risk adjusted returns that you're targeting when looking at investment opportunities. That's all for me. Thank you.

Marcel Verbaas

No, thanks, Mike. Attention has obviously spoken about this in his remarks, too, and we continue to look at capital allocation as needed to be balanced between the various levers that we can pull to drive value for shareholders.
Obviously, last year, we talked quite a bit about not seeing a lot of acquisition opportunities and being very focused on value that we saw and potential share buybacks, which we obviously were very active in last year. And also, as you pointed out, we still believe that there is good value in the stock where we are today. But we are balancing that with the needs that we have, which cash outlays for CapEx and clearly Scottsdale was a big part of that for this year and also wanting to maintain a good amount of dry powder going forward for potential acquisitions.
So clearly, as we kind of worked through the main expenditures we have this year. We also are keeping that very close eye on what's out there in the acquisition markets. And clearly you haven't seen us be active on that side yet here in recent times. But we do feel like the pipeline is building a little bit a little bit better now where there may be some opportunities for us here going forward.
And clearly interest rates are higher than where they were previously, as everyone knows. So that's probably moved up the debt requirements a little bit on what kind of returns we're looking for, but we're certainly looking kind of for that unlevered double-digit type returns. And obviously, to the extent that there's more risk and there's more and more renovation risk or any other risks related to that here, you're going to look for some some better returns to get to those risk-adjusted returns in that range.

Operator

Ari Klein of BMO Capital Markets. Your line is now open.

Ari Klein

Please go ahead but Thanks and good morning. Maybe just on the high Scottsdale, curious what you're seeing, but from a bookings set from a group bookings standpoint as you look beyond this year? And what kind of what kind of uplift are you seeing on the rate side? And maybe if you can talk to is that at that assay now even acknowledging that still pretty early?

Barry Bloom

Yes. Thanks, Charles, for the question. And it's a good question is one that that data moves so much when you're looking at really kind of small numbers, if you will, and different booking patterns.
As we look into 25, we buy in another quarter to obviously have a much, much better sense of how that's really shaping up for 25 rate is up significantly. Booking pace in terms of room nights is where we expected it to be recognizing that a lot of groups, particularly higher end groups, they're waiting till closer to the finish line and looking to see the product before they really start putting business on the books for the the very latter part of 2014 will have a lot of product available for them and then into 25 as well.

Ari Klein

Got it. Thanks. Thanks. And then a tissue thing. I think you mentioned expectations for inbound international travel recovery, maybe maybe helping leisure a bit in the summer. I'm curious how that disease may have changed or if they've changed at all given given the US?

Aldo Martinez

It's a good question, Ari. And I think but there are certain markets which are still very significantly off where they were in pre-COVID.
In terms of international inbound, we think about some of the markets and in Asia, some of it European and Latin American markets that might come into market like Orlando. So and I think even despite kind of a move on the currency side, there's still sentiment that there's a lot more potential for inbound business. And certainly, if you look at the list going into markets like San Francisco that has increased quite a bit as well as international Bliss coming into a market like Orlando. International is not a huge driver of our portfolio. But certainly in those two markets, we do see some international business that comes into the market. So and that's just another point around confidence and leisure business this summer.

Ari Klein

Thanks. And if I could just go back to the Hyatt Scottsdale, can you just talk a little bit about the cadence of the? Yes, I think you took up the EBITDA impact for the year, just the cadence of that or how things may be shifted around impact first half of the year versus second?

Marcel Verbaas

Yes, yes, sure. I mean, the 16 million by quarter on maybe we'll just give you that. So $4 million in the first quarter, seven in the second four in the third and in the last quarter, of the year. So that's that's how you get to the 16 million. And as we have mentioned, the increase from 14 to 16 billion is more oriented around the second quarter and year over year. So it's slightly different.
Obviously, we had 12 million of disruption last year on how that shook out by quarter was there was no disruption in the first quarter, $1 million of disruption in the second quarter, 5 million in the third quarter ends in the fourth quarter.
So the year over year change, obviously 4 million more disruption this year than last year in branch, but you can just subtract those two and you get to whatever how that 4 million it comes in. Obviously 10 million more disruption in the first half and $6 million of a tailwind in the second half, barely four in the fourth quarter than in the third. So hopefully that helps.

Ari Klein

Thanks. Appreciate the color.

Operator

Dori Kesten, Wells Fargo.

Dori Kesten

On the W. Nashville, has your has your outlook for the remainder of the year shifted at all within the updated guidance? And then I'm just wondering if you have finalized plans for the new F&B, is there?

Barry Bloom

I'd note our outlook and how we perform there in Q1. And what we're seeing through the rest of the year is right in line with our expectations coming into the year, which can we feel very good about the market and particularly particularly good about the property and the ability they've had to to grow the segments where they need to do. And we've also as we enjoyed in the first quarter, I think of some better focus on the middle of the P&L where we're driving a little more EBITDA and more EBITDA margin then than we might have expected coming into the year.
In terms of food and beverage, we've not outlined a plan for a long-term replacement for the Dutch, which is the three meal restaurant, which left in the very beginning of this year. We're still looking at a number of different concepts, but the property has performed acceptably, certainly and to our expectation with the unbranded restaurant which has been very successful for breakfast and lunch and is working on strategies while we figure out a long-term strategy for lunch and dinner.

Dori Kesten

Okay. And then just back on gaining Ranch. At what point do you do bring in a majority of meeting planners to show them the renovated space? I'm just I'm trying to determine like in what timeframe you'd see a real solidification of your 25 rooms on the books.

Marcel Verbaas

I mean, obviously, there we're actively in the market. The sales teams are doing site tours every day. There's just not a lot for the guests to see, particularly in terms of the expansion of the main space, although we're now at a point where you can actually see the structure. So that's actually a huge plus as opposed to a cleared land next to the existing loan facilities. So we've actually seen a pretty good uptick in terms of number of site visits and things like that at the at the encouragement of hotel.
So I guess the simple answer is there is no particular point in time and we had a lot of experiences when we did the ballroom expansion at Grand Cypress is no particularly mark in time when when there's a huge flood of business, it's a continual effort and focus on getting people excited about the product. There are some people that simply won't book the product until it's done, but that's not where the focus is. And that would be business to be out in the latter half of 25 and 26 and 27 and a property like this and on the positive side.
So as we as we talk about how we talk about the various components that we're doing there. There's obviously continuous progress that we're making. I mean, when someone goes sort of property, no, they can see the newer rooms because we have a good number of our rooms that are completing its vacancy to pool complex, which like I said, is spectacular at this point.
And I can see the true progress like Barry just pointed out and what's going on with the meeting space and the biggest challenge here for the next two quarters. Really the second quarter in the third quarter is working our way through these public spaces and the lobby and all the F&B offerings. And that's obviously very impactful to the guest experience.
So as we get done with this, which really remains on target to be done by the end of the third quarter. We're getting into the fourth quarter within essentially a fully renovated property, with the exception of finishing up the meeting spaces and then some of the interim, the infrastructure and and external facade work that will still be going on some. So it's going to be a points here kind of towards the end of the third quarter, where people will be able to come into the property and get a real good sense of what the final product is going to look like.

Dori Kesten

Okay, great. Thanks so much.

Operator

Austin Wurschmidt, KeyBanc Capital Markets.

Austin Wurschmidt

Great. Thanks and good morning, everybody. Wanted to hit a little bit on some of the markets that have been slower to recover. And I'm just curious if these in our regions and markets like the Bay Area and Portland to name a couple are seeing a more durable recovery at this point demand and Howard, our booking pace on our group and or transient continuing to ramp as you look out through the rest of the year?

Marcel Verbaas

Yes. Thanks, Austin. Appreciate the question. I think if you look at each of those markets and the growth we achieved in those in Q1. So Santa Clara and Portland, in particular to two, I think you referenced in two of our I think, really good success stories for the quarter. Not only show, obviously the gap, but we've not talked about in getting back to stabilized levels, but we're achieving those significantly and we're seeing continued growth, certainly in terms of Santa Clara, the tech business has been as is the biggest piece that obviously has come back.
And there are some particular demand generators and specific companies in our in our backyard there that have really increased their amount of travel by individual travelers, their amount of group travel. We've never really talked about booking pace kind of buy by property or by market, but suffice it to say that the that we continue to indicate those markets not only have an opportunity for recovery, but they're doing substantial demand, driving substantial improvement toward that recovery.

Austin Wurschmidt

So what do you think you need to see to really capture the occupancy point differential that you highlighted in your prepared remarks. What's sort of that next leg up to keep the momentum going?

Marcel Verbaas

We certainly think the momentum is going, and we're seeing obviously, quarter by quarter, we're seeing across the portfolio that corporate transient demand, both at both in the smaller companies and medium-sized companies, which are generally more recovered from the larger companies that are less recovered every quarter.
We're seeing that business and move up in terms of the dynamic of Mondays and Thursday nights having a bigger gap than been Tuesdays and Wednesdays too, our pre-COVID. That's just a view that also just a matter of time and that ultimately in part travel patterns will change when people realize they may not be able to get rooms on Tuesday and Wednesday nights.
If you're coming to do a business trip in any market, whether it's a compression, whether it's a strong market, a weak market, most of our markets are doing unbelievably well on on Tuesdays and when Tuesday and Wednesday nights and that there's opportunity for us to drive rate as that business compresses and that there's opportunity and we'll ultimately in part shift business back out to Mondays and Thursdays and what's particularly been encouraging as far as kind of going on going on that path like you are describing as first kind of narrowing that gap in occupancy is how much of our RevPAR growth in the first quarter was occupancy-driven, obviously versus rate really all of it essentially.
And we're seeing that continue with our April results. So most of our growth that we saw in the April RevPAR number that we quoted was really driven by by occupancy as well.

Austin Wurschmidt

That's really helpful. And then just last one for me on maybe protease on. Can you provide some additional detail around your comment about sort of fine tuning the construction on timing and what's really accounting for, you know, the additional disruption now embedded in it sounds like second quarter and in particular from the Hyatt Regency Scottsdale. I mean, was it pulling forward some room renovation or just performance in the market that's impacting that, that's creating some additional disruption? Any detail would be helpful. Thanks.

Marcel Verbaas

Yes, sure, Allison, this is Marcel. I'll actually answer that for you. So we are obviously very, very focused on making sure this project gets done on the time line that we that we've outlined and that we want to make sure we hit. So in order to feel as good as possible about getting all these components done by the time frames that we've talked about. We decided to pull forward into the second quarter a little bit earlier in the second quarter.
Some of the renovations that we're doing on the public spaces, particularly so lobby, F&B spaces. And that is pretty impactful to the guest experience and will will impact a little bit more on the leisure side, particularly than what we initially had projected. So that's really the main driver between that's it's really making sure that we hit these time lines and we get these projects done specifically on the times we talked about and having some more comfort around pulling that forward a little bit to start for those particular components.

Barry Bloom

Understood. Appreciate the detail. Thank you.

Operator

Tyler Batory, Oppenheimer

Tyler Batory

Thank you and good morning. This is Jonathan on for Tyler. Thanks for taking my questions and congrats on the quarter. And most of my questions have been answered, but maybe one for Barry. You noted the discrepancy between large Corporate and Small Mid accounts. I'm curious how you think about that gap closing in and large corporates returning to at pre-COVID levels?

Barry Bloom

Yes. I mean, as I said in part response to Austin's question, we're certainly seeing that recover and for larger accounts are improving quarter over quarter, which obviously we think is a positive. I think it's a little hard to look to think about when they come closer to closing the gap to back to pre-COVID levels. But again, I think some of that has to do with just business expanding and then people are are are more are becoming seemingly more willing to travel on the Monday and Thursday nights or at least the Monday nights in addition to Tuesdays and Wednesdays.
So that's certainly part of what's going to close the gap. And I think just as more people get back to more normalized patterns that are making more traditional business travel. We think that's coming and we don't interface directly with the big four accounting firms. The big three consulting firms or the Fortune 100 companies, which is really makes up kind of that pool as we analyze it. But all of our operators tell us that that people want to be on the road more. They want to be out. They want to earn their points. They want to meet with customers. They want to meet with their own internal teams. So again, it's we think it's it's a it's a time and matter of time issue, not whether demand ultimately comes back or not.

Tyler Batory

Okay, great. Very helpful. That's all for me. Thank you.

Operator

(Operator Instructions) Bill Crow, Raymond James. Your line is open. Please go ahead.

Bill Crow

As you all cited, weakness in leisure demand in a couple of markets which sells isolated. But then the peers have also identified one or two markets each where they're seeing some some weakness in leisure demand. And I'm just leaning into your experience what do you think the odds are that a quarter or two from now? We're talking about, you know, more challenges in the leisure space than but less challenges, I guess is there a way to think about it?

Marcel Verbaas

I guess I mean, when I think about as it relates to our portfolio and the markets do we're in the drive leisure business in the larger hotel side of things really think about it two ways, one, larger hotels and then our smaller market leisure driven hotels. But when I when we think certainly near term and midterm about Orlando, Phoenix, Scottsdale, and are that we think those properties all have really good attributes to them that will continue to drive performance and are not seeing anything that resembles softness in leisure in those in those higher-end resort properties. So and we feel good about that.
Again, they're not efficient. They're not positioned at the Super ultra luxury level, their position at a level that that guests really like and want to visit those resorts. And if there's sufficient demand in those markets, we'll keep driving those. And I think the we're certainly seeing normalization of of demand in our on our leisure markets like Key West and Savannah and Northern California, I mean, Napa in our case, but nothing that is truly problematic in terms of the leisure downturn. Napa, for example, had a very another very, very tough quarter in terms of weather, which was no doubt part of the challenge there.
But I think as we look across the portfolio, our assets are really desirable within their markets. We've not seen leisure, we've seen leisure. So I mean, we used the word normalized really for a reason that it's a normalization. The part that we're also particularly continue to be pretty enthusiastic about is, is it in general, we've been able to hold to the rate levels that we started to achieve during COVID. They softened a little bit in some markets, yes, sure they have. But the guest has really been retrained very accustomed to paying a much much higher rate for their leisure stays.

Bill Crow

Okay. I appreciate that. We're just we're trying to dissect as much information on the consumers, but can a lot of uncertainty out there. So I appreciate your commentary. Thank you.

Operator

Thank you. At this time, we currently have no further questions. So I'll hand back to Marcel Verbaas for any further remarks.

Marcel Verbaas

Thanks, Alex, and thanks, everyone for joining us today. And we're certainly pleased with the continued momentum that we're seeing within our portfolio and in our markets. And we look forward to seeing many of you at day rates or any other conferences coming up or meeting opportunities. So thanks again for joining us today. Look forward to speaking to you next.

Operator

Thank you for joining today's call. You may now disconnect your lines.