With no single headline event in focus, Xenia Hotels & Resorts (XHR) is drawing attention for its recent performance and fundamentals as investors reassess US-focused lodging REITs in the current market.

The current share price of $16.39 comes after a 14.3% year to date share price return and a 43.4% total shareholder return over the past year, alongside a 50.2% total shareholder return over three years. This suggests building momentum as investors reassess the risk and income profile of lodging focused REITs.

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With Xenia Hotels & Resorts trading at $16.39, a price target of $17.20 and an estimated intrinsic value gap of about 50%, investors now face a key question: is there real value on offer here, or is the market already pricing in future growth?

Most Popular Narrative: 10% Undervalued

At $16.39, Xenia Hotels & Resorts is sitting just below a narrative fair value of $16.40, which is built around a detailed earnings and buyback story.

The portfolio's concentration in luxury and upper-upscale hotels located in high-barrier-to-entry, desirable business and leisure destinations positions Xenia to benefit from the ongoing shift toward experiential spending by Millennials and Gen Z, translating to structural demand tailwinds, higher ADRs, and organic revenue growth.

Want to understand why a company with forecast earnings pressure still lands near this fair value? The core assumptions blend modest top line growth, thinner margins, and an elevated future earnings multiple that leans heavily on ongoing buybacks and a smaller share count.

Result: Fair Value of $16.40 (UNDERVALUED)

However, softer leisure demand and rising labor costs, especially in higher cost markets, could squeeze margins and challenge the assumptions behind that 10% undervaluation story.

Another Angle on Valuation

That 10% undervaluation story leans heavily on earnings, buybacks, and a high future P/E. Yet on current numbers Xenia Hotels & Resorts trades on a P/E of 22.6x, which is slightly higher than its fair ratio of 22.3x and well above the global Hotel and Resort REITs average of 14.5x. Against closer peers on 38.1x, XHR screens cheaper. The question is whether the market edges closer to the fair ratio or to the richer peer group over time.

Next Steps

With sentiment clearly mixed between risks and rewards, it makes sense to look under the hood yourself and not wait on the crowd. To weigh both sides and see how they stack up for your own portfolio, take a closer look at the 2 key rewards and 5 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.