Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Host Hotels & Resorts Inc (HST, Financial) delivered adjusted EBITDAre of $324 million and adjusted FFO per share of $0.36, showing resilience despite challenges.
- The company reported a year-over-year comparable hotel total RevPAR improvement of 3.1%, highlighting strong out-of-room revenue.
- Thanksgiving and festive revenue pace for the three Maui resorts is up over 35% and 65%, respectively, indicating a positive recovery trend.
- Host Hotels & Resorts Inc (HST) repurchased 3.5 million shares of stock, demonstrating a commitment to returning capital to shareholders.
- The Ritz-Carlton, Naples showed minimal water intrusion during hurricanes due to prior resilience investments, underscoring effective risk management.
Negative Points
- Hurricanes Helene and Milton caused significant disruptions, with The Don CeSar remaining closed and impacting full-year guidance.
- Maui wildfires resulted in a 190 basis point drag on third-quarter RevPAR, with group bookings expected to take longer to recover.
- Comparable hotel EBITDA margin declined by 130 basis points due to increased wages and benefits, and impacts from Maui and hurricanes.
- The company revised its 2024 full-year adjusted EBITDAre guidance down by approximately 1% due to hurricane impacts.
- Business transient demand was down 2% in the third quarter, driven by fewer government room nights, indicating challenges in this segment.
Q & A Highlights
Q: How is the transaction market evolving, and is Host Hotels more likely to be a buyer or seller currently?
A: James Risoleo, CEO, noted that both buyers and sellers have been on the sidelines due to a wide bid-ask spread. However, with the election over and more favorable debt capital markets, private equity may re-enter the market. Host Hotels plans to test the market with non-core assets and may sell if pricing is attractive. The company aims to be a net acquirer, leveraging its strong balance sheet and low leverage ratio.
Q: What is the underlying EBITDA run rate for Host Hotels, considering recent acquisitions and disruptions?
A: Sourav Ghosh, CFO, stated the underlying EBITDA run rate is approximately $1.75 billion. This figure accounts for various adjustments, including business interruption proceeds and contributions from recent acquisitions. The recovery in Maui is expected to take time, particularly for group bookings, which are crucial for the area's revenue.
Q: What is the current performance and outlook for leisure rates and demand?
A: Leisure rates have remained relatively flat year-over-year, maintaining a 50% increase over 2019 levels. Demand has been stable, and the company expects leisure travel to continue at this baseline, supported by a strong consumer outlook and potential normalization of international travel patterns.
Q: Can you provide more details on the Orlando condo development and any similar opportunities in the portfolio?
A: The Orlando condo development has a construction budget of $150 million to $170 million, with expected returns in the mid to high teens cash on cash. Host Hotels is also exploring a significant residential development opportunity at The Ritz-Carlton O'ahu, Turtle Bay, which includes 49 acres of entitled land for residential units.
Q: How is the labor market affecting Host Hotels, and what is the outlook for 2025?
A: James Risoleo, CEO, expressed confidence in the labor market, noting that Marriott and Hyatt, which manage most of Host's portfolio, are employers of choice. The company has returned to optimal staffing levels and does not foresee labor issues impacting operations in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
