HOST HOTELS & RESORTS, INC. SOURAV GHOSH | JAIME MARCUS |
Chief Financial Officer | Investor Relations |
(240) 744-5267 | (240) 744-5117 |
ir@hosthotels.com |
Host Hotels & Resorts, Inc. Reports Second Quarter 2023 Results
The Ritz-Carlton, Naples Reopens
Completion of the Marriott Transformational Capital Program
BETHESDA, Md; August 2, 2023 - Host Hotels & Resorts, Inc. (NASDAQ: HST) (the "Company"), the nation's largest lodging real estate investment trust ("REIT"), today announced results for second quarter of 2023.
OPERATING RESULTS
(unaudited, in millions, except per share and hotel statistics)
Year-to-date ended June | |||||||||||||||||||||||||
Quarter ended June 30, | 30, | ||||||||||||||||||||||||
Percent | Percent | ||||||||||||||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||||
Revenues | $ | 1,393 | $ | 1,381 | 0.9% $ | 2,774 | $ | 2,455 | 13.0% | ||||||||||||||||
Comparable hotel revenues ¹ | 1,375 | 1,324 | 3.9% | 2,728 | 2,334 | 16.9% | |||||||||||||||||||
Comparable hotel Total | RevPAR ¹ | 367.54 | 353.95 | 3.8% | 366.74 | 313.73 | 16.9% | ||||||||||||||||||
⁽ | ⁾ | ||||||||||||||||||||||||
Comparable hotel RevPAR ¹ | ⁽ ⁾ | 225.12 | 219.23 | 2.7% | 221.46 | 192.82 | 14.9% | ||||||||||||||||||
⁽ | ⁾ | ||||||||||||||||||||||||
Net income | $ | 214 | $ | 260 | (17.7 | ||||||||||||||||||||
)% $ | 505 | $ | 378 | 33.6% | |||||||||||||||||||||
EBITDAre ¹ | 446 | 506 | (11.9 | )% | 890 | 812 | 9.6% | ||||||||||||||||||
Adjusted | EBITDAre ¹ | 446 | 500 | (10.8)% | 890 | 806 | 10.4% | ||||||||||||||||||
⁽ ⁾ | ⁽ ⁾ | ||||||||||||||||||||||||
Diluted earnings per common share | 0.29 | 0.36 | (19.4 | )% | 0.70 | 0.52 | 34.6% | ||||||||||||||||||
NAREIT FFO per diluted share ¹ | 0.53 | 0.58 | (8.6 | )% | 1.07 | 0.97 | 10.3% | ||||||||||||||||||
Adjusted FFO per diluted share⁽ ¹⁾ | 0.53 | 0.58 | (8.6 | )% | 1.08 | 0.97 | 11.3% | ||||||||||||||||||
⁽ ⁾ |
- Additional detail on the Company's results, including data for 22 domestic markets, is available in the Second Quarter 2023 Supplemental Financial Information on the Company's website at www.hosthotels.com.
James F. Risoleo, President and Chief Executive Officer, said, "Host delivered comparable hotel RevPAR growth of 2.7% over the second quarter of 2022, which is noteworthy given the challenging comparison of the prior year. Our results were driven by improvements in the group business segment and continued rate strength across the portfolio, despite some moderation at our resort properties. Overall, transient demand was affected by headwinds in San Francisco and Seattle and elevated international outbound travel without a corresponding increase in international inbound travel, which led to RevPAR results below our second quarter guidance range. At the same time, comparable hotel Total RevPAR grew 3.8%, which is evidence of the continued strength of out-of-room spend."
Risoleo continued, "During the second quarter, we continued to execute on our capital allocation strategy with the reopening of the transformed Ritz-Carlton, Naples and the completion of the Marriott Transformational Capital Program, further improving the quality of our iconic portfolio. In addition, we tightened our full year RevPAR growth guidance range to 7.0% to 9.0%, based on our performance for the first half of year and the macroeconomic backdrop for the second half of the year. We believe that our balance sheet, diversified portfolio, and renovated assets leave Host uniquely positioned to deliver elevated EBITDA growth in the future."
- NAREIT Funds From Operations ("FFO") per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and comparable hotel revenues are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission ("SEC"). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics include adjustments for dispositions, acquisitions and non-comparable hotels. See Hotel Operating Data for RevPAR results of the portfolio based on the Company's ownership period without these adjustments.
HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 2, 2023 |
HIGHLIGHTS:
- Comparable hotel Total RevPAR was $367.54 for the second quarter and $366.74 year-to-date, representing an increase of 3.8% and 16.9%, respectively, compared to the same periods in 2022. Comparable hotel RevPAR was $225.12 in the second quarter and $221.46 year-to-date, representing an increase of 2.7% and 14.9%, respectively, compared to the same periods in 2022, primarily driven by an increase in average rate of 2.4% for the quarter and 3.5% year-to-date. Growth in city center markets led to the overall improvement, offsetting moderating rates at resorts in comparison to an exceptionally strong second quarter in 2022.
- Generated GAAP net income of $214 million in the second quarter, a decline compared to the second quarter of 2022 and reflecting GAAP operating profit margin of 17.9% for the quarter, a decrease of 580 basis points compared to the second quarter of 2022. Year-to-date, GAAP net income of $505 million reflected an increase compared to 2022, primarily due to an increase in operating profit and gain on asset sales, while GAAP operating profit margin declined 40 basis points compared to 2022 to 17.9%.
- Comparable hotel EBITDA was $449 million and Adjusted EBITDAre was $446 million for the second quarter, representing a decline compared to 2022 second quarter results, and reflecting a decrease in comparable hotel EBITDA margin of 440 basis points to 32.7%. Year-to-date, comparable hotel EBITDA was $888 million and Adjusted EBITDAre was $890 million.
- As expected, in addition to higher insurance and utility expenses, second quarter margin declines were driven by stabilized staffing levels in comparison to second quarter of 2022.
- Announced the reopening of The Ritz-Carlton, Naples on July 6, 2023, following restoration efforts as a result of Hurricane Ian in September 2022. The reopening introduced transformational renovations to all guestrooms and suites as well as the new tower expansion and a reimagined arrival experience. The final phase of reconstruction at the Hyatt Regency Coconut Point, the resort's waterpark, was also completed and reopened in June. As of August 2, 2023, the Company has received $113 million of property insurance proceeds from its related claims, of the expected potential insurance recovery of approximately $310 million for covered costs. The proceeds received to date have all been classified as property damage and no gain related to Hurricane Ian has been recognized.
- Completed the final project of the Marriott Transformational Capital Program with the renovation of the Washington Marriott at Metro Center. The program, which began in 2018, included extensive guestroom and public area renovations at 16 assets and finished under budget.
- Achieved a milestone in the Company's progress towards its renewable energy goal, resulting in a 2.5 basis point reduction in the interest rate on the outstanding term loans under the Company's sustainability-linked credit facility.
- Comparable hotel RevPAR for July is estimated to be $209, a 2.5% improvement over 2022.
BALANCE SHEET
The Company maintains a robust balance sheet, with the following balances at June 30, 2023:
- Total assets of $12.4 billion.
- Debt balance of $4.2 billion, with an average maturity of 4.7 years, an average interest rate of 4.5%, and no significant maturities until April 2024.
- Total available liquidity of approximately $2.5 billion, including furniture, fixtures and equipment escrow reserves of $213 million and $1.5 billion available under the revolver portion of the credit facility.
DIVIDENDS
The Company paid a second quarter common stock cash dividend of $0.15 per share, an increase of $0.03 or 25% over its first quarter dividend, on July 17, 2023 to stockholders of record on June 30, 2023. All future dividends, including any special dividends, are subject to approval by the Company's Board of Directors.
HOTEL BUSINESS MIX UPDATE
The Company's customers fall into three broad groups: transient, group and contract business, which accounted for approximately 65%, 32%, and 3% respectively, of its 2022 room sales.
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 2, 2023 |
The following are the results for transient, group and contract business in comparison to 2022 performance, for the Company's current portfolio:
Quarter ended June 30, 2023 | Year-to-date ended June 30, 2023 | |||||||||||||||||
Transient | Group | Contract | Transient | Group | Contract | |||||||||||||
Room nights (in thousands) | 1,517 | 1,085 | 2,849 | 2,123 | 332 | |||||||||||||
174 | ||||||||||||||||||
Percent change in room nights vs. | ||||||||||||||||||
same period in 2022 | (0.8)% | 0.0% | 12.6% | 3.7% | 22.5% | 12.0% | ||||||||||||
Rooms revenues (in millions) | $ | 517 | $ | 292 | $ | 33 | $ | 992 | $ | 593 | $ | 62 | ||||||
Percent change in revenues vs. same | ||||||||||||||||||
period in 2022 | 0.8% | 4.2% | 23.8% | 6.4% | 30.7% | 30.2% |
CAPITAL EXPENDITURES
The following presents the Company's capital expenditures spend through the second quarter of 2023 and the forecast for full year 2023 (in millions):
Year-to-date ended | |||||||||||
June 30, 2023 | 2023 Full Year Forecast | ||||||||||
Actual | Low-end of range | High-end of range | |||||||||
ROI - Marriott Transformational Capital Program | $ | 18 | $ | 25 | $ | 30 | |||||
All other return on investment ("ROI") projects | 79 | 200 | 220 | ||||||||
Total ROI Projects | 97 | 225 | 250 | ||||||||
Renewals and Replacements ("R&R") | 133 | 275 | 300 | ||||||||
R&R and ROI Capital expenditures | |||||||||||
230 | 500 | 550 | |||||||||
R&R - Insurable Reconstruction | 93 | 125 | 175 | ||||||||
Total Capital Expenditures | |||||||||||
$ | 323 | $ | 625 | $ | 725 | ||||||
2023 OUTLOOK
Based on performance in the first half of the year and the macroeconomic backdrop for the second half, the Company tightened its full year comparable hotel RevPAR guidance range to 7.0% to 9.0% growth over 2022, bringing the midpoint of its full year expected RevPAR growth to 8%. At the midpoint of guidance, the Company's full year 2023 expected RevPAR is forecast to be 5.6% above 2019.
In the second half of the year, the Company expects year-over-year comparable hotel RevPAR percentage changes to be up low-single digits at the midpoint of guidance.
In comparison to 2019, which the Company believes is the most relevant comparison, operating profit margins are expected to decrease 10 basis points and comparable hotel EBITDA margins are expected to increase 40 basis points at the midpoint of guidance. However, as expected, margins declined in the second quarter in comparison to 2022, driven by closer to stable staffing levels, higher wages, insurance and utility expenses, lower attrition and cancelation fees, and occupancy below 2019 levels. The second quarter decline is expected to be the largest year-over-year decline and margins are expected to continue to moderate for the remainder of the year. In addition, the guidance range does not include any expected gains from business interruption proceeds related to Hurricane Ian at this time, as timing of any recognition is uncertain.
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 2, 2023 |
The Company anticipates its 2023 operating results as compared to 2022 will be in the following range:
Current Full Year | Previous Full Year | Change in Full | |||
Current Full Year | Year 2023 | ||||
2023 Guidance | 2023 Guidance | ||||
2023 Guidance | Guidance to the | ||||
Change vs. 2022 | Change vs. 2022 | ||||
Mid-Point | |||||
Comparable hotel Total RevPAR | $341 to $347 | 7.2% to 9.0% | 7.7% to 10.5% | (80) bps | |
Comparable hotel RevPAR | $210 to $214 | 7.0% to 9.0% | 7.5% to 10.5% | (100) bps | |
Total revenues under GAAP | $5,246 to $5,338 | 6.9% to 8.8% | 7.3% to 10.1% | (80) bps | |
(170) bps to (100) | (140) bps to (30) | ||||
Operating profit margin under GAAP | 14.1% to 14.8% | bps | bps | (50) bps | |
(210) bps to (170) | (200) bps to (130) | ||||
Comparable hotel EBITDA margin | 29.7% to 30.1% | bps | bps | (30) bps |
Based upon the above parameters, the Company estimates its 2023 guidance as follows:
Current Full Year 2023 | Previous Full Year | Change in Full Year | ||
2023 Guidance to | ||||
Guidance | 2023 Guidance | |||
the Mid-Point | ||||
Net income (in millions) | $700 to $748 | $713 to $793 | $ | (28) |
Adjusted EBITDAre (in millions) | $1,535 to $1,585 | $1,545 to $1,625 | $ | (25) |
Diluted earnings per common share | $0.97 to $1.03 | $0.98 to $1.09 | $ | (0.04) |
NAREIT FFO per diluted share | $1.82 to $1.88 | $1.83 to $1.94 | $ | (0.04) |
Adjusted FFO per diluted share | $1.82 to $1.89 | $1.84 to $1.95 | $ | (0.04) |
See the 2023 Forecast Schedules and the Notes to Financial Information for items that may affect forecast results and the Second Quarter 2023 Supplemental Financial Information for additional detail on the mid-point of full year 2023 guidance.
ABOUT HOST HOTELS & RESORTS
Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 72 properties in the United States and five properties internationally totaling approximately 41,900 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Four Seasons®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company's website at www.hosthotels.com.
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements which include, but may not be limited to, our expectations regarding the impact of the COVID-19 pandemic on our business, the recovery of travel and the lodging industry, the impact of Hurricane Ian and 2023 estimates with respect to our business, including our anticipated capital expenditures and financial and operating results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to, those described in the Company's annual report on Form 10-K and other filings with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of August 2, 2023 and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
- This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
- Tables to Follow ***
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 2, 2023 |
Host Hotels & Resorts, Inc., herein referred to as "we," "Host Inc.," or the "Company," is a self-managed and self- administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. ("Host LP"), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of June 30, 2023, which are non-controlling interests in Host LP in our consolidated balance sheets and are included in net (income) loss attributable to non-controlling interests in our condensed consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.
2023 OPERATING RESULTS | PAGE NO. |
Condensed Consolidated Balance Sheets (unaudited) | |
June 30, 2023 and December 31, 2022 | 6 |
Condensed Consolidated Statements of Operations (unaudited) | |
Quarter and Year-to-date ended June 30, 2023 and 2022 | 7 |
Earnings per Common Share (unaudited) | |
Quarter and Year-to-date ended June 30, 2023 and 2022 | 8 |
Hotel Operating Data | |
Hotel Operating Data for Consolidated Hotels (by Location) | 10 |
Schedule of Comparable Hotel Results | 13 |
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre | 15 |
Reconciliation of Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per | |
Diluted Share | 16 |
2023 FORECAST INFORMATION | |
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per | |
Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2023 | |
Forecasts | 17 |
Schedule of Comparable Hotel Results for Full Year 2023 Forecasts | 18 |
Notes to Financial Information | 19 |
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Host Hotels & Resorts Inc. published this content on 02 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2023 21:21:09 UTC.
