Host Hotels & Resorts, Inc. Q2 FY2025 earnings call

• Business Performance: Strong Q2 results with adjusted EBITDAre and FFO per share growth. Maui had 19% RevPAR growth. Don CeSar saw better-than-expected transient pickup, F&B capture, and group bookings, leading to raised full-year expectations.
• Capital Allocation: Sold Westin Cincinnati in June; repurchased 6.7 million shares in Q2, totaling $105 million year-to-date.
• Portfolio Reinvestment: Hyatt Transformational Capital Program ~50% complete. Progress on development projects like Don CeSar ballroom expansion, Phoenician Canyon Villa suites, and Four Seasons condo development. CapEx guidance $590M-$660M includes property damage reconstruction and redevelopment.
• Insurance: June property renewal better than expected, saving $14M. Collected $19M in business interruption proceeds in H1 2025, with an additional $5M in July.

In the second quarter, Host Hotels & Resorts delivered adjusted EBITDAre of $496 million, a 3.1% increase from the prior year. Adjusted FFO per share was $0.58, up 1.8% year-over-year. Comparable hotel total RevPAR improved 4.2% compared to Q2 2024, with comparable hotel RevPAR up 3% driven by stronger transient demand, higher ADR, and ancillary spend. Comparable hotel EBITDA margin declined 120 basis points year-over-year to 31% due to business interruption proceeds from the prior year. Leisure transient demand drove RevPAR growth, with Maui showing 19% RevPAR growth. Transient revenue grew 7%, with Maui contributing ~40% of the growth. Group room revenue was down 5% year-over-year due to calendar shift, renovation disruption, etc. Ancillary spending was strong: F&B up 4%, banquet up 1%, other revenue up 13%.

Host Hotels & Resorts increased comparable hotel RevPAR and total RevPAR guidance ranges. Full-year 2025 comparable hotel RevPAR growth is expected 1.5%-2.5% year-over-year. The adjusted EBITDAre midpoint is $1.705 billion, up $60M from prior guidance, driven by H1 outperformance, business interruption proceeds, Don CeSar contribution, and Four Seasons condo development. Margin is expected to have negative year-over-year comparisons due to elevated wages, partially offset by operational improvements.

• Macroeconomic Uncertainty: Impact on demand, especially for lower-scale segments. - Insurance Timing and Amounts: Uncertainty around business interruption proceeds and property damage reconstruction coverage. - Airlift for Maui: Dependence on increased airline capacity to support recovery and group bookings.

Q: Room nights on the books up 6% sequentially. Talk about group dynamics.

A: Sourav Ghosh mentioned group room nights on books at 3.8 million, with a full-year expectation of ~4.1 million. Short-term group pickup was soft in Q3, but longer-term bookings were strong with high single-digit growth projected for 2026-2028.

Q: Hawaii performance, Maui recovery.

A: Jim Risoleo stated Maui's recovery is underway with 19% RevPAR growth. Encouraged by marketing efforts, but increased airlift is needed. Spa and golf revenue also saw growth.

Q: Hawaii's Turtle Bay update.

A: Jim Risoleo said Turtle Bay operations exceeded pro forma expectations. The Fazio golf course was leased, and there were no negative surprises on hotel operations.

Q: Wages and benefits.

A: Sourav Ghosh said wages were up 6% year-to-date, expected to be lower next year, but exact numbers were pending manager budgets.

Q: RevPAR growth in Q4, insurance savings.

A: Sourav Ghosh said the $14M insurance savings were for 2025. Q4 growth was driven by Rosh Hashanah timing, Grand Hyatt Manchester renovation impact, and election week effects.

Q: Transaction environment, buying opportunities.

A: Jim Risoleo said debt markets were open, but transaction activity wasn't robust. Acquisitions weren't a current priority, with focus on asset investment, dividends, and share buybacks.

Q: Summer leisure demand, international inbound.

A: Sourav Ghosh said international inbound/outbound trends net-net washed out. New York assets, like the Marriott Marquis, were performing well with RevPAR and EBITDA growth due to renovation.

Q: Maui promotional activity and group replacement.

A: Sourav Ghosh said Maui group pacing was close to pre-fire levels, encouraged by 2026 outlook. Lead times for incentive groups are 9-12 months, with expectations of a better 2026 group year.