Host Hotels & Resorts(HST) - 2025 Q4 - Annual Report

Portfolio Overview - The consolidated lodging portfolio consists of 76 luxury and upper-upscale hotels with approximately 41,700 rooms, primarily located in the U.S.[30] - The company owns 76 hotels and has minority interests in an additional 90 hotels through joint ventures[208] - The consolidated portfolio includes 29 hotels with more than 500 rooms, and the average age of the properties is 38 years, benefiting from significant renovations[82] - The hotel portfolio is primarily luxury and upper upscale, with 62.9% of revenues coming from Marriott-branded hotels, including 25 Marriott hotels contributing 35.3% of total revenues[84] - No individual market represents more than 9% of total hotel revenues, indicating a geographically diverse portfolio[89] Financial Performance - Total revenues for 2025 increased by 7.6% to $6,114 million compared to $5,684 million in 2024[216] - Net income rose by 9.8% to $776 million in 2025, up from $707 million in 2024[216] - Operating profit decreased by 2.3% to $855 million, with an operating profit margin under GAAP of 14.0%, down 140 basis points from 15.4% in 2024[216] - Adjusted EBITDAre for 2025 was $1,757 million, reflecting a 4.6% increase from $1,680 million in 2024[216] - Diluted earnings per common share increased by 11.1% to $1.10, compared to $0.99 in 2024[216] - NAREIT FFO per diluted share rose by 3.0% to $2.03, up from $1.97 in 2024[216] Investment Strategy - The company aims to generate superior long-term risk-adjusted returns through asset appreciation, earnings growth, and dividend payments[32] - The strategy includes a geographically diverse portfolio targeting major urban and resort destinations with favorable supply and demand dynamics[32] - The company focuses on acquisitions in the top 25 U.S. markets and considers high-growth potential hotels in other markets[33] - The investment-grade balance sheet allows for a flexible capital structure, targeting a net debt-to-EBITDA ratio to maintain an investment-grade rating[46] - The company plans to continue its capital recycling program, including strategic dispositions of assets that do not meet return expectations[39] Market Conditions - The U.S. lodging industry is experiencing low overall hotel supply growth, influenced by factors such as capital availability, interest rates, and construction costs[59] - In 2025, there was an increase in supply for upscale and luxury properties due to conversions from independent properties, despite overall hotel supply growth remaining low[59] - The company faces competition from online short-term rentals and other REITs for property acquisitions and investment opportunities[99] - The company’s hotel sales are influenced by economic conditions, including inflation, unemployment rates, and potential economic recessions[111] - Hotel supply growth is anticipated to remain below historical averages due to project delays and financing challenges[227] Operational Challenges - Significant capital expenditures are planned for renovations and enhancements to maintain hotel competitiveness, typically occurring every 7 to 10 years[42] - Ongoing renovations and capital expenditures are necessary to maintain competitiveness, but they may lead to reduced operating performance during construction[136] - Labor disputes and negotiations with unionized labor could disrupt hotel operations and increase costs, particularly in New York City[134] - The company does not control hotel operations directly, relying on third-party managers, which may lead to conflicts of interest and operational risks[130] Environmental and Regulatory Factors - The company is committed to responsible investment strategies, focusing on environmental stewardship, social responsibility, and governance[48] - The company is subject to various environmental laws and regulations that may impose liabilities for hazardous substances, although no material claims are currently pending[102] - Environmental liabilities could arise under various laws, potentially leading to significant costs for investigation and remediation of hazardous substances[176] - Changes in government legislation regarding climate change may lead to increased capital expenditures for energy efficiency improvements[151] - Compliance with the Americans with Disabilities Act and other regulations may require substantial capital expenditures, potentially impacting financial condition and results of operations[174] Cybersecurity and Risk Management - Cybersecurity risks pose a significant threat, with past breaches at Marriott highlighting vulnerabilities in information technology systems[144] - The company maintains cyber insurance, but coverage limits may not fully protect against all potential losses from cybersecurity incidents[147] - The company has developed a cybersecurity risk management program aligned with the NIST Cybersecurity Framework to protect critical systems and information[180] - The Audit Committee oversees the cybersecurity risk management program and receives semi-annual updates on information security and cyber risks[185] - The company relies on third-party managers for hotel operations, which may expose it to cybersecurity risks from those managers' systems[183] Employee and Workforce Dynamics - As of February 20, 2026, the company had 162 employees with a voluntary turnover rate of 4% and a total turnover rate of 5% in 2025[104] - The workforce consists of 45% men and 55% women, with 37% minorities, and 21% of management positions held by minorities[105] Joint Ventures and Investments - The company has made a $211.5 million capital commitment to Noble Hospitality Fund V, representing a 21.15% ownership interest in the fund, which owns 87 select service and extended stay hotels[92] - The company owns a 67% interest in a joint venture that includes a 131-unit vacation ownership development in Maui, Hawaii[95] - The joint venture with White Lodging Services owns a 255-room Hyatt Place in Nashville, with a $60 million mortgage loan agreement extended to August 2029[96] - The company has a 49.9% interest in a joint venture owning the 650-room Fort Lauderdale Marriott Harbor Beach Resort & Spa, with a $176 million mortgage loan outstanding[97] - In 2025, the company exited its Asia investment by selling its 36% share in two joint ventures in India[98]