Hotel REITs Are Making More Money Per Room. Are Their Dividends Safe?
Hotel landlords reset their rents every night, and right now that gamble is paying off. Four REITs now face a tougher question: which payouts can survive the next downturn, and which one leans on a business that vanished entirely in…
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Hotel REITs own real buildings, and that makes them equity REITs. Their income works differently from an office or warehouse landlord’s, though. No 10-year lease locks in rent. Revenue resets every night based on two things: what a room fetches and how many rooms get filled. Right now that daily reset is working for owners. Apple Hospitality REIT (NYSE:APLE) reported preliminary October comparable hotel RevPAR (revenue per available room) up about 10%. Even after adjusting for easier comparisons against last year’s government shutdown, management put the underlying gain at roughly 7% to 8%. All four REITs below own hotels, and none are mortgage REITsITs. The dividend-safety test for each is coverage by FFO-based cash flow (MFFO or adjusted FFO). That standard fits REITs better than the earnings payout ratio.
| REIT | Annualized Dividend | Yield | Coverage Read |
|---|---|---|---|
| Apple Hospitality | $0.96 | 5.08% | Distributions at 65% of MFFO after capex year to date |
| Ryman Hospitality Properties (NYSE:RHP) | $4.80 | 3.64% | AFFO per share outlook raised, midpoint means nearly 10% growth |
| Xenia Hotels & Resorts (NYSE:XHR) | $0.56 | ~2.7% | ~27% of Adjusted FFO guidance |
| Sunstone Hotel Investors (NYSE:SHO) | $0.36 | ~2.9% | ~35% of Adjusted FFO guidance |
Apple Hospitality REIT: A Monthly Check Above 5% With Room to Spare
Apple Hospitality operates rooms-focused, select-service hotels under the Hilton, Marriott, and Hyatt brands, including Hampton Inn & Suites, Residence Inn, AC Hotel, Homewood Suites, and SpringHill Suites. As of October 31, 210 of its hotels were unencumbered (free of mortgage debt).
Demand background: Third-quarter comparable hotel RevPAR rose 7.3% to $133.60. Occupancy reached 78.3%, and average daily rate (ADR) rose 4.3% to $170.53. Midweek business travel beat expectations. September RevPAR jumped 11.2%.
Yield: The REIT pays $0.08 monthly, or $0.96 a year. At Friday’s $18.88 close, that works out to about 5.08%. That’s high-yield territory, though the number has come down because the stock has climbed 68.41% this year. In early August, the yield was about 5.8% at $16.56.
Coverage (MFFO): Modified FFO came in at $0.50 per share in the third quarter, up 16.3%. It reached $1.36 per share through nine months. Year-to-date distributions used about 65% of MFFO after capital expenditures. Leverage sits near three times trailing EBITDA, and the REIT has $700 million of undrawn revolver capacity. Chief executive Justin Knight called the distribution “well-covered.”
Bull case: Expense discipline is turning revenue into profit. Knight said the company “converted $0.63 of each incremental revenue dollar into comparable hotels adjusted hotel EBITDA.” Full-year Adjusted EBITDA guidance rose to $482 million to $493 million. Management also says new supply remains limited heading into 2027.
Risk: Just 60% of debt is fixed or hedged, leaving the rest exposed to floating rates. The dividend record also shows how fast hotel payouts can shrink: monthly payments were $0.01 in 2021.
Ryman Hospitality Properties: Convention-Center Giant Paying $4.80 a Share
Ryman has Gaylord Hotels’ huge group-focused resorts: Opryland, Palms, Texan, National and Rockies. The portfolio also includes JW Marriott Hill Country and JW Marriott Desert Ridge. Grande Lakes Orlando joined the portfolio on September 1. A separate entertainment arm includes the Grand Ole Opry and Ryman Auditorium.
Demand background: Third-quarter same-store RevPAR rose 7.9%, with Adjusted EBITDAre benefiting 12%. Banquet and AV revenue grew 14%. In the quarter, Ryman booked more than 653,000 same-store group room nights for future periods at a record third-quarter ADR of $293. Group rooms revenue already on the books for 2027 is running 4.5% ahead of where it stood at the same point last year in 2026.
Yield: The quarterly dividend of $1.20 annualizes to $4.80, about 3.64% at the $131.99 close. Ryman raised it from $1.15 starting with the payment in January.
Coverage (AFFO): After the third quarter, Ryman raised its outlook again. Management said the midpoint of AFFO per-share guidance implies nearly 10% growth, and that figure already includes dilution from the recent equity raise. The dividend policy is to “distribute 100% of our REIT taxable income through dividends over time,” so payouts track taxable income as it grows. Liquidity is close to $1.3 billion.
Bull case: Few competitors can match this asset class, and no new supply of these properties is in the pipeline. Corporate group mix on the books for 2027 is up about 300 basis points. Grande Lakes also gives JW Marriott customers a three-resort circuit they can rotate through. Shares are up 44.13% this year.
Risk: Ryman depends on group business, and when meetings stop, so does the dividend. Payments ended after the 2020-03-30 record and resumed at $0.10 in late 2022. The company’s leverage has also climbed. Pro forma net leverage stands at 4.4x after Grande Lakes was funded with $700 million of new notes and a stock sale.
Xenia Hotels & Resorts: Smallest Payout, Biggest Cushion
Xenia has 29 hotels with 8,783 rooms across 22 markets, all luxury and upper-upscale. The portfolio includes Grand Hyatt Scottsdale, Royal Palms Resort & Spa, Andaz Napa, and The Ritz-Carlton Denver. Orlando, Houston, and Phoenix generated 17%, 14%, and 11% of 2025 Hotel EBITDA, respectively.
Demand background: Same-property RevPAR rose 12.5% to $184.75, with occupancy at 70.0% and ADR at $264.00. Hotel EBITDA climbed 29.3%. Corporate transient travel was the biggest upside surprise. October RevPAR was up about 8%.
Yield: Xenia pays $0.14 quarterly, or $0.56 annualized. That’s about 2.7% at $20.99, still below the $0.275 quarterly rate it paid from 2016 to 2020.
Coverage (Adjusted FFO): Full-year Adjusted FFO guidance of $2.08 to $2.14 per share places the payout near 27%. Free cash flow should reach about $1.30 per share. The dividend is low partly because Xenia is using net operating losses (NOLs) to offset taxable income. Net leverage fell to 4.4x from 5.2x. After an early-2027 loan payoff, 28 of 29 hotels will carry no property-level debt.
Bull case: Tuesday and Wednesday occupancy is still almost seven points below 2019 levels, which leaves room to recover. Supply growth across Xenia’s markets is planned below 80 basis points in 2027. Grand Hyatt Scottsdale is expected to keep ramping toward a low-$40 million stabilized EBITDA.
Risk: Group pace for 2027 is down 4%, mostly in the second half. Andaz Napa and The Ritz-Carlton Denver both begin renovations in December.
Sunstone Hotel Investors: Buybacks First, With a Bigger 2027 Check Already Flagged
Sunstone has 13 hotels with approximately 6,200 rooms. They include Hilton San Diego Bayfront, Wailea Beach Resort, Andaz Miami Beach, Montage Healdsburg, Four Seasons Resort Napa Valley, and The Westin Washington DC Downtown.
Demand background: RevPAR rose 11.4% to $235.22, with occupancy at 72.7% and ADR at $323.55. Wailea RevPAR jumped nearly 27%. Portfolio-wide group pace for 2027 is up mid- to high-single digits, and management called this its best group-production year “in a decade.”
Yield: The common dividend is $0.09 quarterly, or $0.36 a year. That’s about 2.9% at $12.35. The next payment is January 15, 2027.
Coverage (Adjusted FFO): Guidance of $1.00 to $1.03 per share, raised for a second time this year, means a payout of roughly 35%. Management expects the 2027 quarterly distribution requirement to land between $0.11 and $0.12 per share. Net leverage is 2.8x, or 3.7x considering preferred stock, which gets paid before common shareholders.
Bull case: Sunstone sold Hyatt Regency San Francisco for $279 million and has used much of the money for buybacks, buying back $196.9 million of stock year-to-date. The smaller share count helped lift Adjusted FFO per share 17.6% to $0.20. Andaz Miami Beach still charges rates “several hundred dollars behind” its competitive set, which leaves room to grow as the hotel ramps up.
Risk: With only 13 hotels, one bad market can hurt the whole portfolio. Storms at Wailea and renovation work at Key West held third-quarter margin expansion to 50 basis points, even as expenses rose 8.9%.
Which Hotel REIT Dividends Hold Up Best
Apple Hospitality is the only one of the four yielding above 5% and paying out about 65% of MFFO after capex, which keeps that monthly check well covered. Xenia and Sunstone pay out roughly a quarter to a third of their Adjusted FFO guidance, and Sunstone has already indicated a larger 2027 payout. Ryman pays the largest dollar dividend, supported by a rising AFFO outlook and record forward bookings, but its net leverage ties Xenia’s for the highest of the four. Next, watch for 2027 guidance in each company’s fourth-quarter earnings report.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
