Host Hotels & Resorts, Inc. Reports Results for the Third Quarter 2024

BETHESDA, Md., Nov. 06, 2024 (GLOBE NEWSWIRE) -- Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results for third quarter of 2024.

^{* Additional detail on the Company’s results, including data for 24 domestic markets, is available in the Third Quarter 2024 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 Total RevPAR growth of 3.1% over the third quarter of 2023, driven by improvements in food and beverage revenues from group business. Comparable hotel RevPAR increased 0.8% for the quarter as a result of continued strong group demand and improving trends in Maui."

Risoleo continued, “Despite the impact of the hurricanes in Florida, we are maintaining our previous full year comparable hotel guidance at the midpoint. During the quarter, we repurchased $57 million of common stock, bringing our total repurchases for the year to $107 million at an average price of $16.99, and completed the issuance of $700 million of Series L senior notes at 5.5%. We believe our investment grade balance sheet continues to put us in a position to execute on multiple fronts, leaving Host well positioned for growth in the future.”
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HIGHLIGHTS:

• Comparable hotel Total RevPAR was $328.86 for the third quarter of 2024 and $360.07 year to date, representing an increase of 3.1% and 1.6%, respectively, compared to the same periods in 2023, due primarily to improvements in food & beverage revenues driven by group business, as well as an increase in other revenues from ancillary spend.

• Comparable hotel RevPAR was $206.21 and $218.09 for the third quarter and year-to-date of 2024, respectively, representing an increase of 0.8% and 0.2%, compared to the same periods in 2023 and reflecting continued strong group demand, along with moderating domestic leisure demand and the slow, yet improving, recovery in Maui.

• GAAP net income was $84 million for the third quarter of 2024, reflecting a 25.7% decrease compared to the third quarter of 2023, and GAAP operating profit margin was 10.2%, a decline of 270 basis points compared to the third quarter of 2023, both affected by a $25 million decrease in gains on insurance settlements. Year-to-date GAAP net income was $598 million, a 3.2% decrease compared to 2023, reflecting a decline in gains on asset sales, and operating profit margin was 16.9%, an improvement of 50 basis points compared to 2023, benefiting from a $59 million increase in gains on insurance settlements for year-to-date compared to 2023.

• Comparable hotel EBITDA was $329 million for the third quarter of 2024, a 1.8% decrease compared to the third quarter of 2023, leading to a comparable hotel EBITDA margin decline of 130 basis points to 25.3%. The decline for the quarter was driven by Maui performance and the business interruption proceeds included in 2023, while the revenue improvements described above were offset by increased wages and other inflationary pressures in comparison to third quarter 2023. Year-to-date, comparable hotel EBITDA was $1,261 million, a decrease of 1.1% compared to 2023, leading to a comparable hotel EBITDA margin decline of 90 basis points to 29.8%.

• Adjusted EBITDAre was $324 million for the third quarter of 2024, a decrease of 10.2% compared to 2023. Third quarter 2023 results benefited from business interruption of $54 million, while none were recognized in third quarter 2024. Year-to-date, Adjusted EBITDAre was $1,283 million, exceeding 2023 by 2.6%, driven by operations from the recent acquisitions and The Ritz-Carlton, Naples, which was closed in the first half of 2023 due to Hurricane Ian.

• In July 2024, the Company completed the previously announced acquisitions of the fee simple interest in the 234-room 1 Hotel Central Park for $265 million and the 450-room The Ritz-Carlton O’ahu, Turtle Bay for $680 million, net of key money received from Marriott International.

Hurricane and Maui Update

• Many of the Company's hotels in Florida were affected by Hurricanes Helene and Milton, which made landfall in September and October of 2024, respectively. Due to evacuation mandates and/or loss of commercial power, four of the Company's properties in Florida were temporarily closed, three of which have reopened. The enhanced resilience projects implemented during the reconstruction of The Ritz-Carlton, Naples were successful in minimizing damage to the resort during the two storms. The most significant damage sustained during the storms occurred at The Don CeSar, which remains closed to guests. Due to proximity of the event to quarter end, operating results for the third quarter of 2024 were not materially impacted, however the impact will carry into the fourth quarter as well as 2025. The Company is still evaluating the complete remediation plans and disruption impacts of the storms. The Company currently expects a phased reopening of The Don CeSar beginning in late first quarter of 2025.

• The Company reached a final settlement with its insurance carriers on covered costs related to damage and disruption caused by Hurricane Ian, which totaled $308 million, and received the remaining $29 million of property insurance proceeds in the third quarter, resulting in a gain on property insurance settlement of $25 million. In total, $99 million of the insurance receipts were recognized as a gain on business interruption, and the Company does not expect to recognize any additional gains on business interruption related to Hurricane Ian.

• Effects from the August 2023 wildfires in Maui, Hawaii continued into 2024. In the third quarter, the Company's Maui hotels and golf courses impacted RevPAR by 170 basis points. The impact in the quarter is understated, however, as the Company would have expected Maui to contribute 20 basis points to portfolio RevPAR growth in the third quarter given the renovation disruption at Fairmont Kea Lani in 2023. As a result, the total estimated impact of the wildfires on third quarter RevPAR is 190 basis points. Operating profit margin and comparable hotel EBITDA margin were impacted by Maui's operations by approximately 70 basis points for the third quarter.

• The Company previously settled its claim on the Maui wildfires and recognized $21 million of insurance proceeds as a gain on business interruption in the second quarter of 2024.
  

BALANCE SHEET

In August, the Company issued $700 million of 5.5% Series L senior notes due 2035 in an underwritten public offering for proceeds of approximately $683 million, net of original issue discount, underwriting fees and expenses. The net proceeds were used in part to repay all $525 million of borrowings then outstanding under the revolver portion of the Company's credit facility, including amounts borrowed in connection with recent acquisitions.

The Company maintains a robust balance sheet, with the following balances at September 30, 2024:

• Total assets of $13.1 billion.

• Debt balance of $5.1 billion, with a weighted average maturity of 5.5 years, a weighted average interest rate of 4.8%, and a balanced maturity schedule.

• Total available liquidity of approximately $2.3 billion, including furniture, fixtures and equipment escrow reserves of $240 million and $1.5 billion available under the revolver portion of the credit facility.

SHARE REPURCHASES AND DIVIDENDS

During the third quarter of 2024, the Company repurchased 3.5 million shares of common stock at an average price of $16.33 per share, exclusive of commissions, through its common share repurchase program for a total of $57 million. As of September 30, 2024, the Company has approximately $685 million of remaining capacity under the repurchase program, pursuant to which its common stock may be purchased from time to time, depending upon market conditions.

The Company paid a third quarter common stock cash dividend of $0.20 per share on October 15, 2024 to stockholders of record on September 30, 2024. 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 61%, 35%, and 4%, respectively, of its full year 2023 room sales.

The following are the results for transient, group and contract business in comparison to 2023 performance, for the Company's current portfolio:

CAPITAL EXPENDITURES

The following presents the Company’s capital expenditures spend through the third quarter of 2024 and the forecast for full year 2024 (in millions):

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Forecast spend for property damage reconstruction includes estimated spend in 2024 related to Hurricanes Helene and Milton, however a significant portion of the total spending will occur in 2025 and those amounts are not reflected in the 2024 forecast. Under the Hyatt Transformational Capital Program, the Company received $2 million, of the expected full year $9 million, of operating guarantees in the third quarter of 2024 to offset business disruptions.

2024 OUTLOOK

The Company has maintained its previous midpoint full year comparable hotel guidance, which assumes a continued recovery in Maui and steady demand trends in the fourth quarter, despite the impacts of Hurricanes Helene and Milton. Operating profit margin and comparable hotel EBITDA margins in 2024 are expected to decline compared to 2023, impacted by the Maui wildfires and continued growth in wages, real estate taxes and insurance.

The Company's full year forecast comparable hotel set now includes the operations of The Ritz-Carlton O'ahu, Turtle Bay and 1 Hotel Central Park properties that were acquired in July 2024, and excludes The Don CeSar, which closed on September 25, 2024, as described above. The estimated impact to net income and Adjusted EBITDAre from the loss of business due to the hurricanes for 2024 is approximately $15 million.

The impact from Maui operations is expected to be an approximate decline of 150 basis points in RevPAR and 110 basis points in Total RevPAR. When combined with the expected pre-wildfire Maui contribution, the total impact is estimated to be 220 basis points and 180 basis points, respectively. Net of the benefit of the business interruption gains relating to the wildfires received earlier this year, the year-over-year impact from Maui on net income and Adjusted EBITDAre for full year is expected to be a decline of $25 million, and on margins is expected to be a decline of approximately 20 basis points.

The Company anticipates its 2024 operating results as compared to 2023 will be approximately as follows:

Based upon the above parameters, the Company estimates its 2024 guidance will be approximately as follows:

See the 2024 Forecast Schedules and the Notes to Financial Information for items that may affect forecast results.

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 76 properties in the United States and five properties internationally totaling approximately 43,400 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^®, 1 Hotels®, 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 recovery of travel and the lodging industry, the impact of the Maui wildfires and 2024 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 November 6, 2024, 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 ***

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 September 30, 2024, 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.

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Results by Location - actual, based on ownership period⁽¹⁾

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