SOURAV GHOSH | JAIME MARCUS |
Chief Financial Officer | Investor Relations |
(240) 744-5267 | (240) 744-5117 |
ir@hosthotels.com |
Host Hotels & Resorts, Inc. Reports Strong Second Quarter 2022 Operating Results
Surpassing 2019 RevPAR
Announces Second Consecutive Doubling of Quarterly Dividend to $0.12 Per Share
BETHESDA, MD; August 3, 2022 - Host Hotels & Resorts, Inc. (NASDAQ: HST) (the "Company"), the nation's largest lodging real estate investment trust ("REIT"), today announced results for second quarter of 2022.
OPERATING RESULTS
(unaudited, in millions, except per share and hotel statistics)
Quarter ended June | Percent | Percent | Year-to-date ended | Percent | Percent | ||||||||||||||||||||
30, | Change | Change | June 30, | Change | Change | ||||||||||||||||||||
vs. Q2 | vs. Q2 | vs. 2021 | vs. | ||||||||||||||||||||||
2022 | 2021 | 2021 | 2019 ² | 2022 | 2021 | 2019 ² | |||||||||||||||||||
(6.9⁽ ⁾ | (14.5⁽ ⁾ | ||||||||||||||||||||||||
Revenues | $ | 1,381 | $ | 649 | 112.8% | )% | $ | 2,455 | $ | 1,048 | 134.3% | )% | |||||||||||||
All Owned Hotel revenues ¹ | |||||||||||||||||||||||||
All Owned Hotel Total | ⁽ | ⁾ | 1,373 | 657 | 109.0% | 3.7% | 2,426 | 1,088 | 123.0% | (6.6)% | |||||||||||||||
RevPAR ¹ | )% | ||||||||||||||||||||||||
355.88 | 171.23 | 107.8% | 2.7% | 315.94 | 142.57 | 121.6% | (7.6 | ||||||||||||||||||
All | Owned Hotel RevPAR | ¹ | ⁾ | 219.30 | 110.65 | 98.2% | 3.7% | 193.26 | 91.58 | 111.0% | (7.1)% | ||||||||||||||
⁽ ⁾ | ⁽ | ||||||||||||||||||||||||
Net income (loss) | $ | 260 | $ | (61) | N/M | $ | 378 | $ | (214) | N/M | |||||||||||||||
EBITDAre ¹ | 506 | 111 | 355.9% | 812 | 116 | 600.0% | |||||||||||||||||||
Adjusted | EBITDAre ¹ | 500 | 110 | 354.5% | 806 | 113 | 613.3% | ||||||||||||||||||
⁽ ⁾ | ⁽ ⁾ | ||||||||||||||||||||||||
Diluted earnings (loss) | |||||||||||||||||||||||||
per common share | 0.36 | (0.09) | N/M | 0.52 | (0.30) | N/M | |||||||||||||||||||
NAREIT FFO per diluted | 0.58 | 0.12 | 383.3% | 0.97 | 0.13 | 646.2% | |||||||||||||||||||
share ¹ | |||||||||||||||||||||||||
⁽ ⁾ | |||||||||||||||||||||||||
Adjusted FFO per diluted | |||||||||||||||||||||||||
share⁽¹⁾ | 0.58 | 0.12 | 383.3% | 0.97 | 0.13 | 646.2% |
- Additional detail on the Company's results, including data for 22 domestic markets, is available in the Second Quarter 2022 Supplemental Financial Information available on the Company's website at www.hosthotels.com.
James F. Risoleo, President and Chief Executive Officer, said, "The operational recovery in the lodging sector continued to play out over the first half of the year. During the second quarter, RevPAR was $219 representing a 3.7% increase over the second quarter of 2019, and the first time our quarterly RevPAR exceeded 2019 levels since the onset of the pandemic. We saw significant improvements across markets and business mix during the quarter, driven by an increase in business travel and improvement in group revenues. While macroeconomic concerns are now competing with the lodging recovery, we believe we are very well positioned to continue our strong operating performance in the second half of the year given our portfolio diversification, our reinvestment in our assets, and our investment grade balance sheet."
- NAREIT Funds From Operations ("FFO") per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and All Owned Hotel revenues are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission ("SEC"). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, All Owned Hotel results and statistics include adjustments for dispositions and acquisitions. See Hotel Operating Data for RevPAR results of the portfolio based on the Company's ownership period, without these adjustments.
- Presentation includes comparisons to 2019 operating results in order to allow investors to better understand the trajectory and timing of any recovery from the COVID-19 impacts on hotel operations.
N/M = Not Meaningful
HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 3, 2022 |
HIGHLIGHTS:
- All Owned Hotel Total RevPAR was $355.88 and All Owned Hotel RevPAR was $219.30 in the second quarter, reflecting continued sequential improvement. Improvements were driven by leisure travel, which drove strong rates at resort properties leading to average room rates of $296.91 as well as significant improvements in food and beverage and other revenues. At the same time, recovery at the Company's urban markets accelerated, fueled by an increase in group demand compared to the first quarter of 2022.
- Generated GAAP net income of $260 million in the second quarter, an increase of $142 million from the first quarter, driven by the improvement in operations. GAAP operating profit margin for the quarter was 23.7%, an improvement of 480 basis points compared to the second quarter of 2019.
- Achieved All Owned Hotel EBITDA of $510 million and Adjusted EBITDAre of $500 million, both of which exceeded 2019 second quarter results, benefiting from continued positive quarterly sequential improvements in RevPAR and operations.
- The strong improvements in rate combined with a reduction in hotel expenses compared to 2019 led to All Owned Hotel EBITDA margin of 37.1% for the second quarter, exceeding the second quarter 2019 margin by 480 basis points.
- As previously announced, sold the Sheraton New York Times Square Hotel in April for $373 million, which includes a $250 million bridge loan provided by the Company to the buyer, with an initial term of six months and three potential six-month extensions. Also sold YVE Hotel Miami for $50 million, including $1 million of FF&E funds.
- Preliminary forecast All Owned Hotel RevPAR for July is expected to be approximately flat to 2019 with RevPAR of approximately $195, reflecting normal seasonality.
BALANCE SHEET
The Company maintains a robust balance sheet, with the following balances at June 30, 2022:
- Total assets of $12.0 billion.
- Debt balance of $4.2 billion, with an average maturity of 5 years, an average interest rate of 3.7%, and no significant maturities until 2024.
- Total available liquidity of approximately $2.4 billion, including furniture fixtures & equipment ("FF&E") escrow reserves of $179 million and $1.5 billion available under the revolver portion of the credit facility.
DIVIDEND AND SHARE REPURCHASE PROGRAM
The Company paid a second quarter cash dividend of $0.06 per share on its common stock on July 15, 2022 to stockholders of record on June 30, 2022. On August 3, 2022, the Board of Directors authorized a regular quarterly cash dividend of $0.12 per share on its common stock. The dividend will be paid on October 17, 2022 to stockholders of record on September 30, 2022. All future dividends are subject to approval by the Company's Board of Directors.
On August 3, 2022, the Board of Directors authorized an increase in the Company's share repurchase program from the existing $371 million remaining under the prior Board authorization to $1 billion. The common stock may be purchased in the open market or by other means from time to time depending upon market conditions. No shares were repurchased during the second quarter.
OPERATING RESULTS
- All Owned Hotel RevPAR improved 31% compared to the first quarter of 2022 and surpassed second quarter 2019 RevPAR for the first time. Strong leisure demand for resorts and hotels located in the Company's Sunbelt markets and Hawaii continued, while results also benefited from accelerated improvement at the Company's urban markets compared to first quarter of 2022. Hotels in New York, Washington, D.C. and San Francisco/San Jose experienced marked improvement in RevPAR compared to the first quarter, driven by improvements in group and transient business.
- All Owned Hotel average room rates continued to hold strong, surpassing 2019 rates throughout the quarter, and average occupancy continued to close the gap to 2019.
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 3, 2022 |
- Food and beverage revenues for the Company's current portfolio improved approximately 37%, compared to the first quarter. Banquet and Catering revenues improved as group room nights were down only 8.5% to 2019, compared to being down 42% to 2019 in the first quarter of 2022.
- Hiring pace improved in the second quarter compared to the first quarter, but continues to lag demand. The Company expects hotel operating costs to increase as hiring pace catches up with demand.
HOTEL BUSINESS MIX UPDATE
The Company's customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2019 room sales.
While leisure demand continued to contribute to improvements in the second quarter compared to the first quarter of 2022, a resurgence in group demand also helped shift the second quarter mix of business closer to 2019 levels. The following are the sequential results for transient, group and contract business in comparison to 2019 performance, for the Company's current portfolio:
Quarter ended June 30, 2022 | Quarter ended March 31, 2022 | |||||||||||||||
Transient | Group | Contract | Transient | Group | Contract | |||||||||||
Room nights (in thousands) | 1,592 | 1,118 | 138 | 1,278 | 682 | 123 | ||||||||||
Percentage change in room nights | ||||||||||||||||
vs. same period in 2019 | (10.3)% | (8.5)% | 12.4% | (19.1)% | (42.0)% | (1.4)% | ||||||||||
Rooms Revenues (in millions) | $ 531 | $ | 288 | $ | 26 | $ 432 | $ 184 | $ | 21 | |||||||
Percentage change in revenues vs. | ||||||||||||||||
same period in 2019 | 9.6% | (2.9)% | 2.1% | (3.2)% | (39.2)% | (12.7)% |
CAPITAL EXPENDITURES
The following presents the Company's capital expenditures spend for the second quarter and the forecast for full year 2022 (in millions):
Year-to-date ended | |||||||||||
June 30, 2022 | 2022 Full Year Forecast | ||||||||||
Actual | Low-end of range | High-end of range | |||||||||
ROI - Marriott Transformational Capital Program | $ | 46 | $ | 90 | $ | 115 | |||||
ROI - All other ROI projects | 116 | 230 | 240 | ||||||||
Total ROI project spend | 162 | 320 | 355 | ||||||||
Renewals and Replacements | 78 | 180 | 220 | ||||||||
Total Capital Expenditures | $ | 240 | $ | 500 | $ | 575 | |||||
The Company invested heavily in capital expenditures in the early phases of recovery in order to minimize future disruption and believes these renovations will position these hotels to capture additional revenue during the lodging recovery. In 2022, the Company expects to complete renovations to 4,400 guestrooms, approximately 49,000 square feet of meeting space and approximately 123,000 square feet of public space. The Company received $3 million of operating profit guarantees in the second quarter and $7 million year-to-date and expects to receive approximately $11 million in total operating profit guarantees in 2022 under the Marriott Transformational Capital Program. The program is expected to be substantially complete by the end of 2022.
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 3, 2022 |
2022 OUTLOOK
The Company anticipates its full year 2022 operating results, as compared to 2021 and 2019, will be in the following range:
Full Year 2022 | Guidance | ||||||||||
Low-end of | High-end of | Change vs. 2021 | Change vs. 2019 | ||||||||
range | range | ||||||||||
All Owned Hotel Total RevPAR | $ | 307 | $ | 314 | 66.6% | to 70.4% | (5.5)% to (3.3)% | ||||
All Owned Hotel RevPAR | 191 | 195 | 62.5% | to 65.9% | (4.5)% to (2.5)% | ||||||
Total revenues under GAAP | 4,781 | 4,889 | 65.4% | to 69.2% | (12.6)% to (10.6)% | ||||||
Operating profit margin under GAAP | 15.1% | 16.1% | 2,380 bps to 2,480 bps | 50 bps to 150 bps | |||||||
All Owned Hotel EBITDA margin | 31.5% | 32.1% | 810 bps to 870 bps | 190 bps to 250 bps |
Based upon the above parameters, the Company estimates its full year 2022 guidance as follows:
Full Year 2022 Guidance | ||||||
Low-end of range | High-end of range | |||||
Net income (in millions) | $ | 588 | $ | 652 | ||
Adjusted EBITDAre (in millions) | 1,445 | 1,510 | ||||
Diluted earnings per common share | 0.81 | 0.90 | ||||
NAREIT FFO per diluted share | 1.71 | 1.80 | ||||
Adjusted FFO per diluted share | 1.71 | 1.80 |
See the 2022 Full Year Forecast Schedule and the Notes to Financial Information for items that may affect forecast results.
ABOUT HOST HOTELS & RESORTS
Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 73 properties in the United States and five properties internationally totaling approximately 42,300 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Four Seasons®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company's website at www.hosthotels.com.
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements which include, but may not be limited to, our expectations regarding the impact of the COVID-19 pandemic on our business, the recovery of travel and the lodging industry and 2022 estimates with respect to our business, are identified by their use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "plan," "predict," "project," "will," "continue" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the duration and scope of the COVID-19 pandemic and its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic, including limiting travel or the size of gatherings; general economic uncertainty in U.S. markets where we own hotels and a worsening of economic conditions or low levels of economic growth in these markets; other changes (apart from the COVID-19 pandemic) in national and local economic and business conditions and other factors such as natural disasters and weather that will affect occupancy rates at our hotels and the demand for hotel products and services; the impact of geopolitical developments outside the U.S. on lodging demand; volatility in global financial and credit markets; operating risks associated with the hotel business; risks and limitations in our operating flexibility associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; risks associated with our relationships with property managers and joint venture partners; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; the effects of hotel renovations on our hotel occupancy and financial results; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; risks associated with our ability to complete acquisitions and develop new properties and the risks that acquisitions and new developments may not perform in accordance with our expectations; our ability to continue to satisfy complex rules in order for us to remain a REIT for federal income tax purposes; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board's decision whether to pay further dividends at levels previously disclosed or to use available cash to make special dividends; and other risks and uncertainties associated with our business described in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of August 3, 2022 and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
- This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
- Tables to Follow ***
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HOST HOTELS & RESORTS, INC. NEWS RELEASE | August 3, 2022 |
Host Hotels & Resorts, Inc., herein referred to as "we," "Host Inc.," or the "Company," is a self-managed and self- administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. ("Host LP"), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of June 30, 2022, which are non-controlling interests in Host LP in our consolidated balance sheets and is included in net (income) loss attributable to non-controlling interests in our consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.
2022 OPERATING RESULTS | PAGE NO. |
Condensed Consolidated Balance Sheets (unaudited) | |
June 30, 2022 and December 31, 2021 | 6 |
Condensed Consolidated Statements of Operations (unaudited) | |
Quarter and Year-to-date ended June 30, 2022 and 2021 | 7 |
Earnings (Loss) per Common Share (unaudited) | |
Quarter and Year-to-date ended June 30, 2022 and 2021 | 8 |
Hotel Operating Data | |
Hotel Operating Data for Consolidated Hotels (by Location) | 9 |
Schedule of All Owned Hotel Results | 14 |
Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre | 17 |
Reconciliation of Diluted Earnings (Loss) per Common Share to NAREIT and Adjusted Funds From Operations | |
per Diluted Share | 18 |
2022 FORECAST INFORMATION | |
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per | |
Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2022 | |
Forecasts | 19 |
Schedule of All Owned Hotel Results for Full Year 2022 Forecasts | 20 |
Notes to Financial Information | 21 |
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Host Hotels & Resorts Inc. published this content on 03 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2022 21:13:45 UTC.