Host Hotels & Resorts(US:HST)2023-05-05 05:17Financial Data and Key Metrics Changes - The company reported a comparable hotel EBITDA of $439 million in Q1 2023, which is 18% above 2019 and 44% above 2022, driven by occupancy increases and rate strength [26][52] - Comparable hotel RevPAR for Q1 was approximately $218, a 31% improvement over Q1 2022 and a 7.4% improvement over Q1 2019 [31][52] - The first quarter comparable hotel EBITDA margin was 32.5%, exceeding 2019 levels for the fourth consecutive quarter [26][63] Business Line Data and Key Metrics Changes - Group room revenues were 4% above Q1 2019, driven by a 14% rate growth, marking the third consecutive quarter that group revenue exceeded 2019 levels [39][57] - Transient revenue was up 13% compared to Q1 2022, with downtown hotels leading revenue growth due to strong demand [31][61] - Resort properties achieved a RevPAR increase of approximately 5% compared to 2022, despite challenges from Caribbean tourism [38][61] Market Data and Key Metrics Changes - The company noted that leisure rates remain well above 2019 levels, with transient rates at resorts being 54% above 2019 in Q1 [55][61] - Business transient revenue was down 14% compared to Q1 2019, but showed a 400 basis point improvement sequentially from Q4 [62] - Group revenue pace is now 2.5% ahead of the same time in 2019, with total group revenue for Q1 being 7% ahead of 2019 [57][84] Company Strategy and Development Direction - The company is actively evaluating potential investment opportunities, with a focus on acquisitions that will elevate EBITDA growth [2][58] - A significant capital allocation decision was made to develop and sell 40 fee-simple condominiums adjacent to the Four Seasons Resort in Orlando, targeting mid- to high teens cash-on-cash returns [59][72] - The company plans to maintain a balanced approach to capital allocation, including share repurchases and dividends, while pursuing growth opportunities [2][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the state of travel and the company's performance, despite macroeconomic uncertainties [30][67] - The outlook for the rest of the year has improved, with expectations for RevPAR growth of 7.5% to 10.5% [40][64] - Management highlighted the importance of maintaining high-rated business in resort markets and the continued improvement of group and business transient travel [40][67] Other Important Information - The company repurchased 3.2 million shares at an average price of $15.65 per share during the first quarter, with approximately $923 million remaining under the repurchase program [30][43] - The Ritz-Carlton Naples is nearing the end of reconstruction efforts, with expected reopening in July [32][56] - The company has not included any expected business interruption proceeds from Hurricane Ian in its 2023 guidance [65] Q&A Session Summary Question: What are the prospects for acquisitions versus share repurchases? - Management is actively evaluating investment opportunities and believes the strong balance sheet allows for both acquisitions and share repurchases [2] Question: How is the group rate recovery progressing? - Group rates have increased significantly, with a 14% growth compared to 2019, and management is confident in continued rate strength [39][57] Question: What is the outlook for business interruption insurance? - Management stated it is difficult to predict the timing and amount of business interruption insurance recovery, which is not included in the guidance [14] Question: How is the company addressing cost pressures and hiring challenges? - The company expects wage and benefit increases to remain around 5% for the year and is currently fully staffed across the portfolio [80]