Host Hotels & Resorts(HST) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDAre for Q3 2025 was $319 million, a decrease of 3.3% year-over-year, while adjusted FFO per share was $0.35, down 2.8% compared to Q3 2024 [4][5] - Year-to-date, Adjusted EBITDAre and adjusted FFO per share were up 2.2% and 60 basis points, respectively, compared to 2024 [4] - Comparable hotel total RevPAR improved by 80 basis points compared to Q3 2024, driven by better-than-expected transient demand and higher rates [5][6] Business Line Data and Key Metrics Changes - Transient revenue grew by 2%, with double-digit growth at resort properties, particularly in Maui, San Francisco, New York, and Miami [6][7] - Group room revenue decreased approximately 5% year-over-year due to renovation disruptions and the Jewish holiday calendar shift, although definite group room nights on the books increased to 4 million for 2025 [7][22] - F&B revenue was flat, with outlet revenue growing 6% but banquet and catering revenue declining due to lower group business volume [18][19] Market Data and Key Metrics Changes - Maui experienced a 20% RevPAR growth driven by increased occupancy and strong out-of-room spending [7] - San Francisco's total group revenue pace for 2026 is up over 20%, indicating a strong recovery [56] - The overall transient revenue for resorts was up approximately 2%, with significant growth in luxury leisure travel [21] Company Strategy and Development Direction - The company is focusing on capital allocation decisions that enhance long-term shareholder value, including transformational renovations and strategic asset sales [10][11] - A second agreement with Marriott for transformational renovations at four properties is expected to enhance long-term performance and market competitiveness [11] - The company aims to leverage its investment-grade balance sheet and diversified portfolio to outperform in the current environment [16][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued recovery of leisure travel and the performance of upper-upscale and luxury hotels [16] - The company raised its full-year 2025 guidance for comparable hotel RevPAR and total RevPAR to approximately 3% and 3.4%, respectively, reflecting strong performance year-to-date [15][24] - Management noted that the bifurcation of consumer spending is likely to benefit the company due to its focus on higher-end properties [16] Other Important Information - The company collected $5 million in business interruption proceeds for Hurricanes Helene and Milton, bringing the total for the year to $24 million [9] - Capital expenditure guidance for 2025 is set at $605 million to $640 million, including significant investments for redevelopment and repositioning projects [13][26] - The company has a strong liquidity position with $2.2 billion in total available liquidity and a leverage ratio of 2.8 times [27] Q&A Session Summary Question: Can we expect more asset trading in the market based on current performance? - Management indicated they will be opportunistic with capital allocation regarding dispositions and acquisitions, highlighting successful asset sales this year [33][34] Question: How are you selecting hotels and markets for investment? - The company screens assets to determine where to invest capital, focusing on transformational renovations that reposition properties for better performance [42][44] Question: What is the outlook for group booking pace in 2026? - Group revenue pace for 2026 is up 13% compared to last year, with strong bookings already in place [48] Question: How is the company managing wage and benefits increases? - Wage rate growth is expected to be around 6% for 2025, with a potential decrease in growth for 2026 [82] Question: What are the expectations for growth potential in 2026 without major storms? - Management expressed optimism about performance in 2026, particularly for properties like The Don CeSar and the Ritz Naples, which are expected to benefit from strong consumer demand [90]