Host Hotels & Resorts (HST) 1 Aug 24 2024 Q2 Earnings call transcript

Host Hotels & Resorts recently held their second quarter 2024 earnings call, providing insights into their operational performance and strategic outlook. The call, led by Jim Risoleo, President and Chief Executive Officer, and Sourav Ghosh, Executive Vice President and Chief Financial Officer, highlighted several key themes and trends.

Financial Performance

The company reported adjusted EBITDAre of $476 million and adjusted FFO per share of $0.57, reflecting a 6.7% year-over-year increase in adjusted EBITDAre. This growth was driven by a 50 basis points improvement in comparable hotel total RevPAR, underscoring the strength of out-of-room revenue. However, the company faced challenges in Maui, which had a 250 basis points impact on portfolio RevPAR due to a slower-than-anticipated recovery from wildfires and a shift in leisure demand to international destinations without a corresponding increase in international inbound demand.

Strategic Initiatives

The company's strategic initiatives include the acquisition of fee simple interest in the 1 Hotel Central Park and the 450-room Ritz Carlton O'ahu Turtle Bay, which are expected to improve the quality of their portfolio and diversify their presence in New York City and Hawaii, respectively. These acquisitions demonstrate Host Hotels & Resorts' focus on acquiring one-of-a-kind properties with growth potential.

Market Trends

Key trends in the second quarter included group revenue growth, driven by rate growth alongside demand growth, and food and beverage revenue growth. The company noted that nearly 40% of their total revenue in 2023 came from food and beverage and other revenue, emphasizing the importance of out-of-room spend in their portfolio.

Challenges and Opportunities

The company faced challenges in Maui, where recovery has been slower than anticipated due to a perception that the island is not yet ready to welcome guests back. However, they are optimistic about the future, particularly in light of recent holiday weekends that outperformed expectations and the planned marketing campaign to promote Maui as a safe and welcoming destination.

Looking Ahead

Looking forward, Host Hotels & Resorts is focused on integrating their recent acquisitions and investing in their portfolio to drive EBITDA growth and elevated free cash flow. They are also exploring potential dispositions if the market conditions align with fair pricing. The company remains optimistic about the future of travel and is well-positioned to benefit from a diversified portfolio and strategic investments.

In conclusion, the earnings call provided a comprehensive overview of Host Hotels & Resorts' financial performance, strategic initiatives, and market trends. Despite challenges, particularly in Maui, the company remains optimistic about the future and is focused on leveraging their portfolio and strategic investments to drive growth and shareholder value.