Host Hotels & Resorts(HST) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Comparable hotel RevPAR improved by 1.8% compared to Q3 2022, driven by a 150 basis point increase in occupancy [9] - Adjusted EBITDAre for the quarter was $361 million, including$54 million from business interruption proceeds due to Hurricane Ian, and adjusted FFO per share was $0.41, beating consensus [10] - Comparable hotel EBITDA margin was 26.6$229, a 2.4% improvement over 2022 [11] - Business transient revenue increased approximately 9% compared to Q3 2022, though still down about 16% compared to 2019 [18] - Group room revenues were 10% above Q3 2022, driven by an 8% rate increase, with definite group room nights for 2023 increasing to 4 million [22][38] Market Data and Key Metrics Changes - International inbound air traffic reached 88% of 2019 levels in September, indicating a positive trend for international demand [19] - Group revenue pace is up approximately 20% compared to the same time last year, and up 6.7% compared to 2019 [23] - The company expects full year RevPAR guidance to be impacted by 50 basis points due to the Maui wildfires [12] Company Strategy and Development Direction - The company announced a transformational capital program with Hyatt, involving approximately $550 million to$600 million in investments across six properties [25][27] - The company is focused on portfolio reinvestment to enhance long-term performance and competitive positioning in respective markets [26][32] - The company is optimistic about the state of travel and believes it is well-positioned to outperform in the current economic environment [32] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about travel demand, citing improvements in group business and leisure rates above 2019 levels [13][15] - The company anticipates a gradual recovery in business transient demand, with room nights improving throughout the year [18] - Management expects the fourth quarter to follow seasonal trends, with potential for slightly positive RevPAR growth despite uncertainties related to Maui [44] Other Important Information - The company has received $208 million of the expected$310 million insurance recovery related to Hurricane Ian, with additional proceeds expected [17] - The company repurchased 6.3 million shares at an average price of $15.90 per share, totaling$100 million for the quarter [53] - A quarterly cash dividend of $0.18 per share was declared, representing a 20$40 million in potential business interruption recoveries could occur next year, with ongoing discussions with insurers [70] Question: Recovery in Maui and fourth quarter guidance - Management explained that recovery efforts in Maui positively impacted Q3 results, but uncertainties remain for Q4 guidance due to the ongoing recovery process [82][84] Question: Urban and business transient demand - Management expressed optimism about the long-term prospects for San Francisco, despite current challenges, and noted a gradual recovery in business transient demand [90][91] Question: Group room nights for next year - Management indicated that 2.6 million group room nights for next year are about 10% down compared to 2019 [99] Question: Potential acquisitions - Management expressed a willingness to be net buyers next year, depending on market conditions and the quality of available assets [103]