Host Hotels & Resorts Q1 2025 Earnings Report

Host Hotels & Resorts EPS Results

• Actual EPS: $0.64
• Consensus EPS: $0.56
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $0.60

Host Hotels & Resorts Revenue Results

• Actual Revenue: $1.59 billion
• Expected Revenue: $1.55 billion
• Beat/Miss: Beat by +$44.57 million
• YoY Revenue Growth: +8.40%

Host Hotels & Resorts Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 11:00AM ET

Host Hotels & Resorts (NASDAQ:HST) is a real estate investment trust, which engages in the management of luxury and upper-upscale hotels. It operates through the following geographical segments: United States, Brazil, and Canada. The company was founded in 1927 and is headquartered in Bethesda, MD.

Host Hotels & Resorts Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to the Host Hotels and Resorts First Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Jamie Marcus, Senior Vice President of Investor Relations. Please go ahead.

[Jaime Marcus, SVP, Investor Relations at Host Hotels & Resorts]

Thank you, and good morning, everyone.

[Jaime Marcus, SVP, Investor Relations at Host Hotels & Resorts]

Before we begin, please note that many of the comments made today are considered to be forward looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward looking statements. In addition, on today's call, we will discuss certain non GAAP financial information such as FFO, adjusted EBITDAre and comparable hotel level results. You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release, in our eight ks filed with the SEC and in the supplemental financial information on our website at hosthotels.com. With me on today's call are Jim Rizzolio, President and Chief Executive Officer and Sarov Ghosh, Executive Vice President and Chief Financial Officer.

[Jaime Marcus, SVP, Investor Relations at Host Hotels & Resorts]

With that, I would like to turn the call over to Jim.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Thank you, Jamie, and thanks to everyone for joining us this morning. In the first quarter, we delivered adjusted EBITDAre of $514,000,000 an increase of 5.1% over last year and adjusted FFO per share of $0.64 an increase of 4.9% over last year. First quarter adjusted EBITDAre and adjusted FFO per share benefited from $10,000,000 of business interruption proceeds related to Hurricanes Helene and Milton, which is the same amount we recognized in the February related to Hurricane Ian. Comparable hotel total RevPAR improved 5.8% compared to the February, and comparable hotel RevPAR improved 7% driven by strong rate growth. Comparable hotel EBITDA margin improved by 30 basis points year over year to 31.8% as revenue growth outpaced expenses due to higher rates.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

As a reminder, the operational results discussed today refer to our 79 hotel comparable portfolio in 2025, which excludes the Alila Ventana Big Sur and the Don Cesar. Additionally, this quarter, we are referring to revenue growth for our business mix segments as RevPAR growth due to the leap year in 2024. Turning to business mix, RevPAR growth in the first quarter was better than expected driven by increases in room rates. We saw particularly strong performance in Washington DC, New York, New Orleans, Los Angeles, and Maui. Transient RevPAR grew by 6% driven by resorts, which benefited from a late Easter.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Our three Maui resorts accounted for almost half of the transient RevPAR growth in the quarter alongside strong performance in New York and Los Angeles. Digging deeper into Maui, the leisure transient recovery continued, driving Maui's strong results in the first quarter. Transient rooms sold were up approximately 70% year over year. Growth in revenues from transient guests more than offset declines from tough group comparisons in the February, which included revenue from recovery and relief groups as well as elevated group cancellation revenue. Maui's 16 Percent RevPAR growth in the first quarter provided a 70 basis point benefit to portfolio RevPAR growth.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Total RevPAR at our three Mari resorts was also up nearly 7% due to strong outlet growth and increases in golf and spa revenue despite collecting $8,000,000 in attrition and cancellation revenue last year. Taken together, we are encouraged that the recovery is well underway in Maui. Business transient RevPAR grew 2% driven by rate growth as we saw a favorable market mix and a continued shift from government to corporate negotiated customers in the first quarter. Group RevPAR for the quarter was up 7% year over year as special events, the Easter holiday shift and strong corporate group bookings in major markets drove group rate growth. Our property sold 1,100,000 group room nights in the first quarter, bringing our definite group room nights on the books for 2025 to 3,600,000.0 or 85% of comparable full year 2024 group room nights.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

And total group revenue pace is up 3.3% to the same time last year. Turning to ancillary spend, RevPAR growth outpaced total RevPAR growth in the first quarter. Rate growth achieved around special events such as the inauguration and the Super Bowl drove outsized RevPAR growth in the first quarter, while the decline in attrition and cancellation revenue due to Maui's tough comparison muted total RevPAR growth. Despite a challenging comparison, we still saw solid growth in food and beverage and other revenues. F and d RevPAR grew 5% driven by both banquet and outlet growth, and other revenue per available room grew 2% despite a meaningful decline in attrition and cancellation revenue.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Turning to the Don Cesar. We were thrilled to welcome guests back to the resort in late March after a six month remediation effort following hurricanes Helene and Milton. Our team leveraged strong industry relationships and lessons learned from the Ritz Carlton Naples to enhance amenities and rebuild infrastructure to increase resilience, including elevating critical equipment and systems. The Dante's are hold a cherished place in the hearts of hotel employees in the Saint Pete Beach community. In fact, majority of associates returned after six months, a testament to their resilience, loyalty, and commitment to the Don Cesar.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Since the reopening, we are seeing stronger than anticipated transient demand, higher average checks in our temporary f and b outlets, increased demand for spa services, and a greater number of plum members reactivating membership. As a reminder, we currently estimate our total property damage and remediation cost at the Don Cesar will be between 100 and 100 and 10 million dollars, and our insurance deductibles are $20,000,000. We collected $10,000,000 of business interruption proceeds in the first quarter. While we expect to collect additional business interruption proceeds, it is too early to estimate the timing or amount of additional payments. Turning to capital allocation.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

During the first quarter, we repurchased 6,300,000.0 shares of common stock at an average price of $15.79 per share for a total of $100,000,000 Since 02/2022, we have repurchased $415,000,000 of stock at an average repurchase price of $16.16 per share. We have $585,000,000 of remaining capacity under our board authorized share repurchase program. Turning to portfolio reinvestment. During the first quarter, we completed comprehensive renovations at the Grand Hyatt, Atlanta and Buckhead, marking the first completion of six properties in the Hyatt transformational capital program. We also completed and reopened The View, a two story rotating restaurant lounge on the 40 Eighth Floor of the New York Marriott Marquis, as well as Aviv, a new restaurant on the lobby level of the one hotel South Beach.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

We continue to make progress on the condo development at the Four Seasons Resort Orlando at Walt Disney World. We expect to complete the mid rise condominium building and begin closing on sales in the fourth quarter of this year. We now have deposits and purchase agreements for 16 of the four units. In 02/2025, our capital expenditure guidance range is 580 to $670,000,000, which includes between 70 and $80,000,000 for property damage reconstruction, majority of which we expect to be covered by insurance. Our CapEx guidance also reflects approximately $270,000,000 to $315,000,000 of investment for redevelopment, repositioning, and ROI projects.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

With the Hyatt transformational capital program, we expect to complete renovations at the Hyatt Regency Austin and the Hyatt Regency Capitol Hill in the second half of this year. As a reminder, we expect to benefit from approximately $27,000,000 of operating profit guarantees related to the Hyatt transformational capital program this year, which we expect will offset the majority of the EBITDA disruption at those properties. Other major ROI projects this year include the construction of the Phoenician Canyon Suites Villa expansion and the Don Cesar Ballroom expansion, which we expect to complete in the February. In addition to our capital expenditure investment, we expect to spend 75 to $85,000,000 on the condo development at the Four Seasons Resort Orlando at Walt Disney World this year. Looking back at prior renovations, we completed 24 transformational renovations between 02/2018 and 02/2023, which we believe are continuing to provide meaningful tailwinds for our portfolio.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Of the 19 hotels that have stabilized post renovation operations to date, the average RevPAR index share gain is over 8.9 points, which is well in excess of our targeted gain of three to five points. As of the first quarter, we are excited to share that all 16 of the Marriott transformational capital program comprehensive renovations have stabilized and are meaningfully contributing to our portfolio performance. As evidenced by our first quarter results, our capital allocation decisions over the past few years continue to serve us well. Turning to our outlook for 2025. While we outperformed our expectations in the first quarter, we remain cautious given the heightened macroeconomic uncertainty.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Demand trends appear to be holding for now, but the potential for deteriorating lodging fundamentals has increased. Based on the information we have today, we are maintaining our comparable hotel RevPAR guidance range with a slight reduction to total RevPAR driven by moderating trends and group lead volume. As Saurabh will discuss in more detail, the low end of our guidance range contemplates a mild slowdown while the high end assumes a more stable macroeconomic environment. In preparing our guidance, we looked at prior downturns, including the recession in the early nineteen nineties, the two thousand eight financial crisis, and the pandemic, which had the most severe impact on the lodging industry. As a result of the wide range of potential economic outcomes, we are also providing an approximate rule of thumb for the current environment based on how our portfolio is positioned today.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

For every 100 basis point change in RevPAR, we would expect to see a $32,000,000 to $37,000,000 change in adjusted EBITDAre. In times like this, it is important to remember that Host is well positioned to weather any environment and continue to thrive as a result of our fortress investment grade balance sheet, a leverage ratio of 2.8 times, our access to capital, our size and scale, our diversified business and geographic mix, and our continued reinvestment in our portfolio. We will continue to utilize our competitive advantages, be disciplined in our capital allocation approach and position Host to outperform in the current environment and over the long term. With that, I will now turn the call over to Saurabh.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our first quarter operations, updated 2025 guidance, and our balance sheet. Starting with total revenue trends, RevPAR growth outpaced total RevPAR for the first time in over a year as outsized rate growth driven by special events boosted RevPAR. Despite challenging comparisons, group and transient guests continue to increase their out of home spend at our hotels. Comparable hotel food and beverage RevPAR grew 5% in the quarter driven by both banquets and outlets.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Banquet revenue increased 5% driven by growth in group room nights and contribution per group room nights outside of Maui. Results were driven by both Ritz Carlton Resorts in Naples, The Phoenician, The New York Marriott Marquis, The Grand Hyatt Manchester San Diego, and our recently acquired One Hotel and Embassy Suites complex in Nashville. Outlet revenue also grew 5% resulting from more normalized operations in Maui, the opening of The View Restaurant at the New York Marriott Marquis, and the repositioned Singer Oceanfront Resort. Other revenue per available room grew 2% in the first quarter despite difficult comparison from record levels of attrition and cancellation collected last year. Golf and spa revenues continue to grow, leaving us encouraged that the affluent consumer is still prioritizing spending on premium experiences.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Overall transient RevPAR was up 6% compared to the first quarter of twenty twenty four, driven by improving leisure transient demand in Maui. Outside of Maui, transient strength was driven by the repositioned Singer Oceanfront Resort, the Four Seasons Orlando Resort at Walt Disney World, the Westin Kearland, and the Four Seasons Jackson Hole. In fact, the year over year, the Four Seasons Jackson Hole held transient rate over $2,800 while increasing transient rooms sold by 15%. Special events and holidays in the quarter showed meaningful growth. For our five hotels in Washington DC, RevPAR for the inauguration was up an impressive 660% over the same time frame last year.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

For Presidents' Day weekend, all hotel types had double digit RevPAR growth resulting in 16% RevPAR growth for the comparable portfolio. Looking ahead to holidays in the second quarter, transient revenue pace is down slightly for Memorial Day weekend compared to the same time last year as convention hotels have opted to take more groups on the books that weekend. Outside of convention hotels, transient revenue is pacing up in the mid single digits with Maui pacing up over 30%. July fourth transient revenue pace is also up 4% over last year, again, driven by MAU. Business transient RevPAR was up 2% to the first quarter of twenty twenty four, driven by nearly 7% rate growth, while volume was down 5%.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

We expect business transient revenue to remain flat for the remainder of this year as a result of the uncertain macroeconomic environment. Turning to group, RevPAR was up 7% year over year, which includes an estimated 200 basis point negative impact from Maui. As expected, group room nights were down compared to the first quarter of twenty twenty four driven by recovery and relief group room nights in Maui last year, which did not repeat in 2025. Group room night volume was up slightly for the portfolio excluding Maui. Group RevPAR growth was driven by broad based corporate group strength across the portfolio as well as association group.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

For full year 2025, we have over 3,600,000 definite group room nights on the book, representing a 12% increase since the fourth quarter. As Jim mentioned, total group revenue pace is up 3.3% over the same time last year. Group lead volume has moderated as association and government related groups paused new bookings due to the heightened uncertainty, but we are encouraged that rates continue to hold across the portfolio for bookings made in the first quarter for the rest of 2025. We also continue to see strong citywide booking pace in many of our key markets, including San Francisco, New Orleans, San Antonio, and Nashville. Shifting gears to margins, comparable hotel EBITDA margin of 31.8% was 30 basis points above the first quarter of twenty twenty four as a result of rate driven total RevPAR growth, which outpaced fixed expense growth.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

We expect year over year margin comparisons to decline as the year progresses, primarily driven by wages and benefits and fixed expense pressures alongside a modest reduction in total RevPAR forecast. Turning to our outlook for 2025. As Jim discussed, we are maintaining our comparable hotel RevPAR guidance range with a slight reduction to total RevPAR driven by moderating group lead volume. It is important to note that the guidance range we are providing is based on the information we have today, and we remain cautious given the heightened uncertainty. As a reminder, we have assumed a gradual improvement at our Maui properties this year and no improvement in the international demand imbalance.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

At the low end of our guidance, we have assumed a mild slowdown driven by deteriorating macroeconomic sentiment and a worsening international demand imbalance. And at the high end, we have assumed a more stable macroeconomic environment driven by clarity on trade policies and improvement in the international demand imbalance. Our full year 2025 guidance contemplates comparable hotel RevPAR growth of between 50 basis points and two and a half percent over 2024. We expect comparable hotel EBITDA margins to be down 160 basis points year over year at the low end of our guidance to down 100 basis points at the high end, a 50 basis point improvement over our prior guidance. In terms of RevPAR growth cadence for the remainder of the year, our guidance reflects quarterly growth in the negative 2% to positive 1% range, with fourth quarter being strongest and third quarter being weaker.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

As Jim mentioned, given the uncertainty and range of potential outcomes, we are providing an approximate rule of thumb in the current environment based on how the portfolio stands today. For modeling purposes, we estimate that every 100 basis point change in RevPAR would roughly equate to a $32,000,000 to $37,000,000 change in adjusted EBITDAre. The midpoint assumes comparable hotel RevPAR growth of one and a half percent compared to 2024 and a comparable hotel EBITDA margin of 28%, which is 130 basis points below 2024. As we think about bridging our 2024 results to 2025, we estimate a 110 basis point impact to full year comparable hotel EBITDA margin from wage and benefit rate increases and a 40 basis point impact from lower business interruption proceeds, which is partially offset by a 20 basis point benefit from operational improvement. For the full year, we continue to expect overall wage and benefits expenses to increase over 6%, which comprises approximately 57% of our total hotel operating expenses.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Our 2025 full year adjusted EBITDAre midpoint is $1,645,000,000. This represents a $25,000,000 or one and a half percent improvement over our prior guidance midpoint, driven entirely by first quarter outperformance. It is important to note that we expect to receive additional business interruption proceeds for the Don Cesar, but it is still too early to estimate the timing or amount of any additional payments. Our twenty twenty five full year adjusted EBITDAre midpoint also includes $25,000,000 of estimated EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings in the fourth quarter. Lastly, our midpoint includes an estimated $1,000,000 loss at the Don Cesar and an estimated $13,000,000 contribution from operations at Alila Ventana Big Sur, both of which are excluded from our comparable hotel set in 2025.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Turning to our Fortress balance sheet and liquidity position, our weighted average maturity is five years at a weighted average interest rate of 4.7%. We currently have $2,200,000,000 in total available liquidity, which includes $264,000,000 of SS and E reserves and $1,500,000,000 available under the revolver portion of the credit facility. Our quarter end leverage ratio was 2.8 times. In April, we paid a quarterly cash dividend of 20¢ per share. As always, future dividends are subject to approval by the company's board of directors.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

We will continue to be strategic in managing our balance sheet and liquidity position as we move through the remainder of 2025. Wrapping up, we believe our investment grade balance sheet as well as our size, scale, and diversification uniquely positions Host to successfully navigate in uncertain times while capitalizing on opportunities for growth in the future. With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Ari Klein with BMO. Please go ahead.

[Ari Klein, Director - Equity Research at BMO Capital Markets]

Thank you. I was hoping you could talk a little bit more about some of the recent trends you've been seeing in April from a demand standpoint. And then maybe on a market level, are you expecting some kind of divergence in performance in assets and gateway markets that are more exposed to inbound international travel? And perhaps you can just talk a little bit more broadly about what you're seeing on that front.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Hi, Ari. I'll take the second part of your question. Saurabh can take the first part regarding trends. You know, the top international, the top markets in the country, the top 25 are actually performing really well. And if you look through our first quarter performance, I I know we called out certain markets with one time events like the inauguration in Washington DC and the Super Bowl in New Orleans and Los Angeles and New York City and Maui.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

But if you were to exclude those markets, we still had solid RevPAR performance throughout the rest of the portfolio. So, you know, international inbound is about 8% of our total room nights. And, you know, the the markets that are frankly most affected by Canadian inbound travel are Seattle and New York City. And as you know, we don't have a large presence in Seattle. And New York City has just been performing extremely well.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

And I think that can all be, tied back to the transformational renovation that we undertook at the Marriott Marquis during COVID. And our group business is extremely strong at the Marquis. And, you know, we mentioned it in our prepared comments. We're excited that we have been able to open the view restaurant with Danny Meyer running it. I think it's it's gonna do fantastically well for us.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

So, you know, we're not seeing the the drag on our portfolio from international inbound, that's been talked about across the board. I think the, you know, the the there is a divergence clearly today between, the top 25 markets and luxury resorts that we have a lot of, as you know, and the secondary and tertiary markets, the lower chain scales. And, you know, we're delighted with how the portfolio is positioned today, and we have seen strong leisure demand. I'll let Rob give you some stats around that in the first first quarter across all of our resorts.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Yeah. Ari, as it relates to April, we obviously don't have final numbers for April. But when you look at the the travel data, month to date April for upper tier is up two and a half percent. Luxury is up above that, and upper upscale is effectively flat. On other hand scales, I believe, is down 3%.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

For our portfolio, we are actually trending better than the upper tier performance for April month to date. And it's really being driven by our luxury resorts that had a very strong Easter. So all in all, luxury is holding very strong as we said in our prepared remarks.

[Ari Klein, Director - Equity Research at BMO Capital Markets]

Thank you.

[Operator]

Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Hey, thanks. Maui clearly did a little bit better I think than you think. Can you just talk about your outlook for the remainder of the year? I guess both from a RevPAR perspective, are there any periods that have easier versus tougher comps? And then from a profit growth or EBITDA growth perspective?

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Sure,

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Duane. So when you look throughout the year for Maui, obviously, Q1 is very strong for Maui and so is q four. Q '2, q '3 somewhat moderating. But let me walk you through the the Maui the updated Maui Bridge, if you will, because we provided that last quarter. So if you remember, we had sort of restated our 2024 EBITDA at 72,000,000.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

So that was, if you recall, 97,000,000 net of BI, less 17,000,000 from relief and recovery rooms, and then less 8,000,000 from the onetime attrition cancellation revenue that got us to a restated $72,000,000 number. Deduct from that the 7,000,000 for wage and benefit increase in 2025. And now you would add to that 30,000,000 to 40,000,000 estimated for the year in terms of improvement in operations. Last quarter, we had stated instead of 30 to 40, we had stated our estimate at that point in time was fifteen to thirty million. So in other words, our expectation to for Maui from an EBITDA standpoint has gone up by approximately 10,000,000 to the midpoint.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

So in essence, our EBITDA projection for Maui currently stands at the midpoint at about a hundred million dollars. It was previously, what we had said was somewhere around 80 to 95. So certainly, that has improved. I would say majority of that improvement, 10,000,000, is q one. However, we still anticipate a little bit of continued improvement throughout the year as well.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Okay. Very clear. Thank you.

[Operator]

Your next question comes from the line of Chris Woronka with Deutsche Bank. Please go ahead.

[Chris Woronka, Analyst at Deutsche Bank]

Hey, guys. Good morning. Jim, you guys have kind of set yourself apart from your peers a little bit coming out of COVID with lot of acquisitions. And you've been busy in the last couple years. And I I know we're not quite even halfway through the year yet, but, you know, do you think all the uncertainty in the world that that we're we're all talking about, does that, in your mind, create more opportunities on the acquisition front in the in the near term?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Well, Chris, you know, I I wish I had a crystal ball, to really answer that question in a precise manner. You know, I I really don't know what's going to happen. I can only point to what we've done, in the past as maybe a prelude to how we think about markets in deploying capital in the future. But, you know, there's been a lot of talk all throughout COVID regarding distress in the markets and that there were gonna be a lot of asset sales, and, you know, it didn't occur. And, you know, based on what we're seeing, certainly within our portfolio from a operating fundamental perspective, you know, we we hope that that this translates to other owners of hotels as well.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

That the, you know, that the the big r word is a thing of the past and that we see a a shift in policy, which is really causing all the uncertainty out there today and that, you know, we have other great things coming out of Washington, you know, the the tax bill and and the budget bill in the second half of the year, and that the the economy takes off and the uncertainty goes away. So I really think if that does happen, and, obviously, it's dependent somewhat upon interest rates, that you may see a a more active transaction market pick up later this year. But as of as of today, I think the general attitude and mood out there is everyone's in a wait and see mode. There is just not a lot happening in the transaction market, you know, because of the the uncertainty that exists in a macro basis. So, you know, from our perspective, we're gonna continue being opportunistic as we deploy capital.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

We will continue to invest in our portfolio. That has served us very well. You know, we have seen great results of the 16 Marriott transformational capital program assets that we completed as well as eight other assets that we've under taken transformational renovations on. Now we picked up 8.9 points in yield index. I mean, that's very significant, and that flows right to the bottom line.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

We underwrote three to five points. So I think investing in your assets done smartly is a a really good use of capital. You know, buying back stock when we're trading at levels that we are today is also a good use of capital and continuing to, pay a a dividend, is also something that's very important to us. So, we're in a unique position, Chris. You know, given given the balance sheet and the fact that we're sitting here today only 2.8 times leverage and we have $2,200,000,000 of liquidity, we really are in the unique position where we can do it all.

[Chris Woronka, Analyst at Deutsche Bank]

Okay. Very good. Thanks, Jim.

[Operator]

Your next question comes from the line of David Katz with Jefferies. Please go ahead.

[David Katz, Managing Director at Jefferies]

Hi, everyone. Thanks for taking my question. And I'm going to sort of follow on this just a little bit, because, you know, it look. In a in a stable operating environment, you know, without, any prospects for, you know, sizable deals. And I'm not trying to put words in your mouth and suggest that there there aren't.

[David Katz, Managing Director at Jefferies]

But I'd love to get a sense for, you know, when you might consider, perhaps returning some cap some more capital through, you know, repurchases or, you know, other kinda onetime events? Just a thought.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Well, I think that you will see us continue to be thoughtful about purse repurchasing stock and continue to pay our dividend, David. You know, we, we went into blackout on March 24. That was about a week or so before liberation day, when the stock really started to underperform. I think it's, it's safe to say that if we were in a position to buy back additional shares, when when the, the the stock price really weakened, then you would have seen us do that in the marketplace. So, you know, we're gonna keep one eye on operations as we always do because we have a lot of priorities that are important to the long term growth of this business and and to the long term value creation for our shareholders.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

So, you know, I I can't sit here definitively today and and give you a number about, you know, how much we're gonna deploy to buy back shares and, you know, whether or not we're going to be acquiring assets, you know, given the the landscape that's out there today and the fact that there just isn't a lot out there that's exciting. So I I would just tell you, it's a wait and see approach. We'll be opportunistic, and, let's see how the year plays out.

[David Katz, Managing Director at Jefferies]

Okay. Thank you very much.

[Operator]

Your next question comes from the line of Shaun Kelley with Bank of America. Please go ahead.

[Shaun Kelley, Senior Research Analyst & MD - Gaming, Lodging & Leisure Equities at Bank of America Merrill Lynch]

Hi. Good morning, everyone, and thanks for taking my question. Jim, I just or Saurabh, just wanted to go back to the consumer environment a little bit. You called out a couple of data points which are interesting, which were the bookings on those sort of peak weekends, Fourth of July, Memorial Day, which actually sound pretty encouraging. What are you seeing in sort of the off peak periods, be it weekday, weekend or just sort of particularly for some of those same that same portfolio?

[Shaun Kelley, Senior Research Analyst & MD - Gaming, Lodging & Leisure Equities at Bank of America Merrill Lynch]

Are you seeing the question is, are you seeing a high low dynamic where people are coming at those periods but a little softer in the shoulders? Or is it consistent throughout just given your mix and the higher end consumer?

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Hey,

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Sean. I would say so far, it's still been pretty consistent. There hasn't been a meaningful change in trend as we look at weekday, weekend. And, obviously, that does differ from asset to asset and from market to market. But overall, there's nothing meaningful that has really shown up that, you know, we can sort of speak to.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

And like we said, we still have a positive group booking pace. Our total group revenue pace for the year is at 3.3%, and that group rate has held. You might recall we had set up the group rate effectively for the full year was at 4%. We are effectively still there at 3.8%. So and then leisure, as I mentioned earlier, has been holding on pretty strong.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

So you know? And and nothing dramatic on the BT front. Yes. Volume was lower year over year on the BT front, but weight was higher. And we are pretty much seeing the same thing as we look at April as well.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

So nothing unique there.

[Shaun Kelley, Senior Research Analyst & MD - Gaming, Lodging & Leisure Equities at Bank of America Merrill Lynch]

Thank you.

[Operator]

Your

[Operator]

next question comes from the line of Michael Bellisaro

[Michael Bellisario, Senior Research Analyst at Robert W. Baird & Co]

Jim, a question for you on sort of margins and operations. Have you guys implemented broader cost cutting initiatives yet? Are you making any staffing staffing changes or kind of any preemptive cuts at this point to to manage margin for the remainder of the year?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Well, you know, the past downturns have been very instructive and informative, Mike. I mean, we have developed contingency plans property by property, not on a portfolio wide basis because each asset is different. And they the the plans are are are ready to be implemented if and when the need occurs. You know, at this point in time with with how the portfolio is performing, I mean, we always have an eye on expenses. Always.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

And I, you know, I think Srabh mentioned in his remarks that we had a 20 basis point operational improvement based on productivity and and and actions that we've taken at the property level. So if things if things were to go south, and we're not seeing that today, I mean, if, you know, we we are not seeing it today, I wanna emphasize that very, very clearly. We are very comfortable with the guidance that we're maintaining for the balance of this year. But if things were to go south, of course, we would be in a position to very quickly, implement, our contingency planning and and and cut expenses, as needed across the portfolio.

[Michael Bellisario, Senior Research Analyst at Robert W. Baird & Co]

Got it. Thank you.

[Operator]

Your next question comes from the line of Chris Darling with Green Street. Please go ahead.

[Chris Darling, Senior Analyst at Green Street Advisors, LLC]

Hey. Thanks. Good morning. To what extent is your CapEx budget for the year at risk given the tariff situation? And then how has the current backdrop impacted your thinking around planned capital projects in future years?

[Chris Darling, Senior Analyst at Green Street Advisors, LLC]

And is that really where we might see some risk?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Chris, I think it's a it's a little too early to tell, exactly how, tariff policy is going to play out. We are maintaining our, CapEx guidance as we've discussed today. It's same numbers that we gave you on the fourth quarter call in in February. And, you know, we have a diverse group of of suppliers for our products. Obviously, you know, the the tariff risk is is greatest probably whenever you're doing a guest room given the f f and e that's involved, and it becomes less impactful on other spaces in the hotel.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

So we have clearly, you know, developed off ramps for as, you know, referring to Mike's question on contingency planning from an operational perspective, well, you know, to be prudent, we've developed off ramps for our capital projects if if the nature present itself. But, you know, I don't I don't anticipate that happening, at this point in time. We're we're moving full steam ahead, with our Hyatt transformational capital program. We've completed the the the Grand Hyatt in in Buckhead already this year, and, we we will be completing the Hyatt Regency Capitol Hill and the Hyatt Regency Austin this year as well. So and, you know, to answer your question about 02/1926, it's it's a little too early to really start talking about budgeting and and what we're thinking about, on a capital basis, for for next year, we we will do that later in the summer, which is something that we've, done on a historical basis.

[Chris Darling, Senior Analyst at Green Street Advisors, LLC]

Understood. Thank you.

[Operator]

Your next question comes from the line of Jay Kornrich with Wedbush Securities. Please go ahead.

[Jay Kornreich, VP - Equity Research at Wedbush Securities]

Hi, thanks. Good morning. You commented on the current economic uncertainty leading to business transient RevPAR expectations to be flat for the year or the rest of the duration of the year and group new bookings moderating. So I'm wondering if you can just drill a little bit further down to provide more details into those two legs of demand. And then specifically on the group side, are you seeing the moderation coming in more for the in the year for the year bookings or more as you're looking out to twenty twenty six bookings and beyond?

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

Sure. So when we're looking at group, it is really more in the year for the year. So when we're speaking to lead volumes, it's in the year for the year. It's in the quarter for the for the quarter, in the month for the month. The lead time is effectively shrinking.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

In other words, folks are certainly taking a pause. And I would say, specifically, it's government groups, which is not a surprise, and associations. That's where we are seeing a sort of moderation of of lead volumes, but it really is a 2025 phenomenon. We actually picked up about 470,000 group room nights for 2026 through 2028, and, you know, we are pacing '26 to 28 in the high single digits. So it is certainly not a you know, as much of a issue for future years, but more so what we are seeing in the year for the year and in in the month for the month as well.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

As it relates to business transient, like I mentioned earlier, you know, q one volume was down year over year. We were down about 5% or so in terms of BT room nights. Majority of that decline, I would say a little over 50%, was really driven by government. So government falls under our BT room night. Rate was up six and a half percent for us in q one, and even government rate actually was was up about 4% or so.

[Sourav Ghosh, Executive VP & CFO at Host Hotels & Resorts]

We expect that the volume you know, in our previous guidance, we had anticipated that you would continue to see the steady recovery of VT as we had seen last year. Right now, we are assuming that's not gonna be the case. Effectively, the decline in volume we saw year over year will continue throughout the year, and we will see a moderate year over year rate increase similar to what we saw in Q1. So effectively, not much of a change in BT just given the macroeconomic uncertainty.

[Jay Kornreich, VP - Equity Research at Wedbush Securities]

All righty. Thank you so much.

[Operator]

Your next question comes from the line of Jack Armstrong with Wells Fargo. Please go ahead.

[Jack Armstrong, Equity Research Associate at Wells Fargo]

Good morning. Thanks for taking the question. How have

[Jack Armstrong, Equity Research Associate at Wells Fargo]

you seen the administration's policies now that you had a few months to see them play out impact you in terms of supply and labor markets? Are you seeing incremental pressure on margins there? And then on the tariff side, how have your expectations for tariffs shape your full year margin back?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

The first part of your question, Jack, was that regarding supply? Or was it supply of labor?

[Jack Armstrong, Equity Research Associate at Wells Fargo]

Yeah. Labor supply.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Labor supply. You know, we're we we're fortunate that we have the majority of our properties managed by Marriott and Hyatt, You know, two really solid employers that that people go to because they wanna have hospitality as a career. And we have not seen any pressure on our on the labor front, and and that's been consistent. I mean, we were able to recover coming out of COVID pretty quickly and restaff our hotels as needed. So no issue there whatsoever.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

So, you know, there's there there is no, at this point in time, no indication that tariffs are going to impact our margins at the hotel level. You know, we we've given you guidance on how we think margins are gonna perform over the course of this year. Of course, if things change, then we will change accordingly. But as we sit here right now, we're comfortable with the margin guidance that we provided.

[Jack Armstrong, Equity Research Associate at Wells Fargo]

Thank you.

[Operator]

Your next question comes from the line of Floris Van Dijkum with Compass Point. Please go ahead.

[Floris van Dijkum, Managing Director at Compass Point Research & Trading]

Hey. Thanks for taking my question. Jim, I have a question for you on the transaction market. What we've been hearing some signs that some buyers could be could be pulling out of transactions. Do you currently have assets in the market?

[Floris van Dijkum, Managing Director at Compass Point Research & Trading]

And what do you think is is gonna happen in terms of pricing expectation?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Yeah. Boris, I I I think I got your question. You're you're breaking up a little bit over your line. It was about the transaction market, and you're hearing that buyers are are pulling out of transactions. That's that's happen long term.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

I mean, if there's something else. Okay. Yeah. So look. I I I think I mentioned it earlier.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

It is a wait and see approach right now for the most part in the marketplace. You know, there were the CMBS market had backed up. It had closed down for a period of time. It's it's it's back now. It's open.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

You know? So I would expect after we get a little more clarity on policy that and and we can get through this period of of uncertainty that my expectation would be later in this year that we could see the transaction market continue to open up and some of the deals that have been out there yeah, that are on pause right now, I, you know, I I think that they're likely to get done. I I think, you know, certain buyers of assets that I'm aware of, which I'm not at liberty to speak about, not our assets, but other assets in the marketplace, just need a little more time. And it was really, driven by the debt markets, not necessarily by the equity markets. So I think pricing is going to depend on, you know, the type of asset that you're looking at.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

With with luxury, still commanding very high prices and, you know, upper upscale assets as well commanding high prices. You know, one one of the one of the really, really positive factors that I don't think we talk about enough, that, has happened in, the hotel space is, very, very low levels of new supply. We're just not seeing levels of new supply, certainly not in the luxury and abrupt abrupt sales space, which is where our exposure is. And I think that will, you know, drive in in part pricing for transactions because people are not gonna have to worry about a a new luxury resort being built right next to them or, you know, a another upper upscale major city center hotel being built as well. So I I think it's just, it's a little too soon to say at this point in time, how this is all gonna play out, but, you know, I think it's wait and see across the board.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

You know, the good news is operations are still strong, and, you know, hotels are cash flowing. And, you know, this is a a a a a policy self made policy issue that is creating all the uncertainty, and that can change very quickly. That can change on a dime. You know? So let's just sit back and see what happens and run the business the best we can going forward.

[Floris van Dijkum, Managing Director at Compass Point Research & Trading]

Are you testing any assets in the market right now, Jim?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

We always test assets, Boris. Of course. You know? We we would not be prudent if we weren't testing assets. The good news is for Host that we don't have to sell any assets.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

I mean, you know, given the the quality of the portfolio that we have and the balance sheet that we have, you know, we we are under no stress, no pressure to do anything. And if we don't get the the pricing that we think is appropriate for our assets, we're not gonna sell anything. It's really that simple. So, you know, we have nothing nothing of any meaningful size out there that we've listed with brokers. We've talked to some people on an off market basis about buying assets from us, and, you know, we're very respectful that it's difficult to navigate waters when you're deploying new capital a day.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

So, again, wait and see. We'll see how it plays out.

[Floris van Dijkum, Managing Director at Compass Point Research & Trading]

Thanks, Jim.

[Operator]

We have time for one more question, and that question comes from the line of Smedes Rose with Citigroup. Please go ahead.

[Smedes Rose, Director at Citi]

Hi, thanks. I just wanted to ask you, you spoke a lot about Maui, which was really helpful. But just in terms of what you're seeing in Oahu, specifically with the Rich Carlton, Turtle Bay, how is that, I guess, performing relative to your expectations? And any change in kind of your initial underwriting there given the more uncertainty in the market?

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

No. I think I think Turtle Bay was up 13% in the quarter, Smedes. Mhmm. RevPAR was up 13% at the hotel level. You know, we we have made a decision, a strategic decision.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

As you know, there there are two golf courses there. One is the Fazio Course, and the other was the Palmer Course. And you may recall from your visit to the island that there's another party that is developing some residential, and they have a they would have a lease on the Palmer Course, and they're gonna renovate it and do a a bunch of different things to it. So we made a decision that we were going to delay the transfer and of the Palmer Course and expedite the renovation of the Fazio Course, which we own today while we had the opportunity to. So it's about a six month delay.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

The hotel itself is performing very well. We're we're very happy with what we're seeing in

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

terms

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

of Oahu performance just like Maui for for our assets. So nothing nothing but positive news there, and we're excited to to get the Fazio course redesigned and put the money that we anticipated we would have to put into it when we bought it done.

[Smedes Rose, Director at Citi]

Perfect. Thank you.

[Operator]

That will conclude our question and answer session. And I will now turn the conference back over to Jim for closing comments.

[James Risoleo, President, CEO & Director at Host Hotels & Resorts]

Well, thank you all for joining us today. We really appreciate the opportunity to discuss our quarterly results with you. I look forward to seeing many of you at conferences in the coming months. And have a great summer and great rest of the year. Thank you.

[Operator]

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Jaime Marcus, SVP, Investor Relations
• James Risoleo, President, CEO & Director
• Sourav Ghosh, Executive VP & CFO

Analysts

• Ari Klein, Director - Equity Research at BMO Capital Markets
• Duane Pfennigwerth, Senior Managing Director at Evercore ISI
• Chris Woronka, Analyst at Deutsche Bank
• David Katz, Managing Director at Jefferies
• Shaun Kelley, Senior Research Analyst & MD - Gaming, Lodging & Leisure Equities at Bank of America Merrill Lynch
• Michael Bellisario, Senior Research Analyst at Robert W. Baird & Co
• Chris Darling, Senior Analyst at Green Street Advisors, LLC
• Jay Kornreich, VP - Equity Research at Wedbush Securities
• Jack Armstrong, Equity Research Associate at Wells Fargo
• Floris van Dijkum, Managing Director at Compass Point Research & Trading
• Smedes Rose, Director at Citi