Host Hotels & Resorts(HST) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted EBITDAre of $324 million for Q3 2024, a 10% decrease year-over-year due to$ 54 million in business interruption insurance proceeds received in the previous year [11] - Adjusted FFO per share was $0.36, with a year-over-year increase of 9% when excluding the business interruption proceeds [11] - Comparable hotel total RevPAR improved by 3.1% year-over-year, with comparable hotel RevPAR up 80 basis points [12] Business Line Data and Key Metrics Changes - Group room night revenue increased by 1% in Q3, driven by rate growth, while group room nights were flat [19] - Business transient revenue grew by 5% in Q3, supported by strong rate growth [19] - Comparable hotel food and beverage revenue grew by 6%, with banquet and catering revenue achieving the strongest third quarter in the company's history [31] Market Data and Key Metrics Changes - The company noted a year-over-year decline in RevPAR for Maui, which negatively impacted overall portfolio results by approximately 190 basis points [15] - Transient room nights sold at comparable resorts were up 4%, driven by recovery in Maui [20] - The sales and marketing efforts in Maui resulted in a revenue pace increase of over 35% for Thanksgiving and over 65% for the festive period compared to the previous year [18] Company Strategy and Development Direction - The company plans to continue prioritizing resiliency investments across its portfolio following the success of enhancements made at the Ritz-Carlton, Naples [10] - The updated capital expenditure guidance for 2024 is between$ 485 million and $580 million, focusing on redevelopment and ROI projects [25] - The company aims to maintain a strong balance sheet and is likely to test the market with non-core assets while remaining opportunistic in acquisitions [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the labor market, noting that staffing levels have returned to optimal levels post-pandemic [76] - The company anticipates a comparable hotel total RevPAR growth of approximately 1% for 2024, despite the impact of recent hurricanes [39] - Management highlighted that the group business in Maui is expected to take longer to recover, with a focus on improving group booking activity in 2025 [58] Other Important Information - The company repurchased 3.5 million shares at an average price of$ 16.33 per share, totaling $57 million in repurchases for the quarter [22] - The company completed the issuance of$ 700 million of Series L senior notes at 5.5%, enhancing its liquidity position [44] - The anticipated returns for the residential condo development at Four Seasons Resort Orlando are projected to be in the mid to high-teens cash on cash [86] Q&A Session Summary Question: Thoughts on the transaction market and future buying/selling strategy - Management noted that both buyers and sellers had been on the sidelines due to a wide bid-ask spread but expects increased activity in the market next year as conditions improve [49][50] Question: Clarification on underlying EBITDA and Maui recovery - Management confirmed that the underlying EBITDA remains at $1.75 billion, factoring in expected recovery in Maui [54][56] Question: Current performance of the portfolio and growth rates - Management indicated that the portfolio would have seen closer to 3% RevPAR growth without the drag from Maui, with total expenses up 2.8% [68] Question: Expectations for group and transient recovery in Maui - Management highlighted that transient revenue is recovering well, while group bookings are lagging and expected to improve in 2025 [91][92] Question: Commentary on leisure rates and demand - Management reported that leisure transient ADRs are up 50% compared to 2019, with expectations for stabilization in 2025 [80][102]