James F. Risoleo
President, Chief Executive Officer and Director at Host Hotels & Resorts
Thank you, Jaime. And thanks to everyone for joining us this morning. As the saying goes, the trend is your friend and that has certainly been the case for Host in the broader lodging sector since the first quarter. While we are paying close attention to the delta variant and the potential impacts to our business, we are very pleased with the performance of our portfolio. We are seeing increased demand across all business segments as market restrictions lift and the lodgings recovery gains momentum.
TSA passenger throughput trends have accelerated since Memorial Day and are currently about 80% of 2019 levels, compared to 60% in April. Leisure demand remains resilient and grouping business transient volumes continue to trend in the right direction. We significantly outperformed expectations and meaningfully beat consensus estimates on all metrics in the second quarter. Our RevPAR increased 55% over the first quarter. We delivered positive adjusted EBITDAre of $110 million, pro forma hotel EBITDA of $126 million and adjusted FFO per share of $0.12. Each of these metrics saw a meaningful sequential increases over the first quarter.
For the second quarter, pro forma revenues increased 54% over the first quarter, while hotel level operating expenses grew by only 32%. The increase in revenues was driven by stronger-than-anticipated demand, continued expense savings from redefining the operating model and slower than expected hiring in Sunbelt market. These factors led to a 400% increase in pro forma hotel EBITDA in the second quarter versus the first quarter. We are continuing to see green shoots across all aspects of our business as the lodging recovery gains momentum.
As a result, we are pleased to announce that as of August 1, all of our properties are open and operating with the exception of our latest acquisition, the former Hotel Alessandra, which I'll discuss in more detail shortly. In tandem with the operational recovery, we are continuing to increase the expected EBITDA growth profile of our portfolio and improve the quality of our assets by executing on our three strategic objectives, which are to redefine the hotel operating model, gaining market share of renovated hotels and strategically allocate capital.
As it relates to our capital allocation strategy, we closed on two more off-market acquisitions since our last call in May. The Baker's Cay Resort in Key Largo and a former Hotel Alessandra, a Luxury Downtown Hotel in Houston, Central Business District. Along with our previously announced acquisitions, these 2 hotels, bring our 2021 year-to-date acquisitions to $1.1 billion at a 13.8 times EBITDA multiple, which is based on 2019 EBITDA or projected normalized operations in the case of Baker's Cay and the former Hotel Alessandra.
After taking into account these two acquisitions, we have $1.3 billion of total available liquidity including $139 million of FF&E reserves. As a reminder, we discussed the acquisition of two hotels in two golf courses on Maui on our first quarter earnings call. We purchased the 448-room Hyatt Regency Austin for $161 million or $359,000 per key at a 10% cap rate and 8.8 times multiple on 2019 NOI and EBITDA respectively. We also purchased the 444 key Four Seasons Resort Orlando at Walt Disney World Resorts for $610 million or $1.4 million per key at a 4.7% cap rate and 16.8 times EBITDA multiple on 2019 NOI and EBITDA respectively. We expect this iconic and irreplaceable resorts to stabilize between 12 and 14 times EBITDA in the 2023 and 2025 timeframe. We also acquired the Royal Ka'anapali and Ka'anapali Kai Golf Courses in Maui for $28 million.
All three of these acquisitions are performing meaningfully ahead of our underwriting expectations. As of June, the Hyatt Regency Austin is $4.1 million higher than our full year 2021 EBITDA forecast and the Four Seasons Resort Orlando is $11.7 million higher. Additionally, the golf courses haven't expected cash-on-cash return of approximately 11% for the calendar year 2021.
Turning to our most recent acquisitions. First, the Baker's Cay Resort Key Largo, a beachfront property and our first asset in the Florida Keys. We closed on this off-market acquisition on July 1 for $200 million for a long-standing relationship with the sellers. The resort was attractively priced at an estimated 6.2% cap rate and 14.5 times EBITDA multiple on 2021 forecast. While the property was closed for much of 2019, as it went through an extended renovation, this 2021 forecast performance would rank 8th in our 2019 pro forma portfolio on both RevPAR and EBITDA per key.
Through opportunities we have identified to organically grow EBITDA as a property, we expect it to stabilize at approximately 13 times EBITDA, between 2023 and 2025. The 200-room resort in Hilton's Curio Collection is located on 13 acres of your irreplaceable beachfront land on Ley Largo's Gulf Coast. The resort is in excellent condition after reopening in 2019 following a complete renovation totaling $63 million or $315,000 per room. We are thrilled to have a presence in Key Largo as it benefits from the favorable supply-demand dynamics of the keys, while still being close to Mainland Florida. The resort is about an hour's ride from the Miami Airport and it is within a five-hour drive for over $22 million Florida residents.
This proximity to the mainland also allows for greater access to labor relative to keys that are further south. The Florida Keys are highly desirable from an owners' perspective given the unique supply and demand dynamics in the market. The rate of growth ordinance ensures that new hotel rooms can only be added if they replace existing entitled dwelling units, which has led to a 4% supply increase in the keys from 2000 to 2019 versus 25% for the U.S., according to STR. That in turn has lead the keys consistently having leading upper upscale RevPAR and RevPAR growth as detailed in the Baker's Cay presentation on our website.
Moving on to our most recent acquisition, the former Hotel Alessandra, a Luxury Downtown Hotel in Houston Central Business District. We opportunistically acquired this 223-room hotel for $65 million or $291,000 per room on July 2 prior to a scheduled foreclosure auction. Our ability to source and close on this distressed off-market acquisition is truly a testament to Host's deep industry relationships, strong balance sheet, and ability to close reliably and quickly.
Having recently opened in October 2017, this hotel is in excellent condition and we expect little to no capital to be invested in the near term. At $65 million, we purchased the hotel for an approximate 30% discount to its $90 million development costs. The hotel is currently closed and is fully unencumbered by brand and management. We have engaged ATI to operate this hotel with a nationally recognized brand, reservation system and loyalty program, thereby maximizing its attractiveness to business transient and leisure guests. While this hotel had not reached stabilization in 2019, based on our forecast to normalize operations, which assumes a new manager, brand and operations in line with the 2019 operations of comparable Houston properties, the price would represent a 9.6% cap rate and 9.2 times EBITDA multiple.
Additionally, we have identified a number of opportunities to explore with our new operator, which we believe will increase the EBITDA growth profile of this hotel. We have deep knowledge of the Houston market given our existing ownership of four hotels in the city. The former Hotel Alessandra is part of the Green Street mixed use development in the center of Downtown Houston, which has the second largest concentration of public companies in the U.S., including Fortune 500 companies.
In addition, Houston is the number two U.S. metropolitan area by job growth according to the Bureau of Labor Statistics and the CBD grew RevPAR by 10% from 2016 to 2019. In total, we have invested $1.1 billion in early cycle acquisitions thus far in 2021 at a 13.8 times EBITDA multiple. This compares favorably to the $3.5 billion of assets we disposed of at a blended 17 times EBITDA multiple between 2018 and 2020. We continue to believe this as an opportune time to improve the quality of our portfolio by investing in markets with high expected growth. Our early cycle investments have historically provided years of elevated EBITDA growth alongside periods of strong economic recovery.
Moving on to operations, we are excited to announce that we have reopened the three remaining hotels that have previously suspended operations. The ibis Rio De Janeiro opened on May 10 and the Westin River North opened on May 19. The Sheraton Boston reopened on August 1 well ahead of our expectations due to an increase in group business demand. With the exception of our newly acquired hotel in Houston, which we expect to open later this year, our portfolio is now fully opened and ready to take advantage of the next slides of the cycle.
Looking at second quarter operations, the recovery momentum continue to play out, driven once again by robust rates in our resort market as leisure demand was stronger than anticipated after the spring holidays. Portfolio-wide pro forma RevPAR sequentially improved each month and we ended the second quarter with RevPAR just shy of $100. June RevPAR came in at over $111 representing a 25% increase over March and preliminary July RevPAR is expected to be in the mid $130 range.
Portfolio hotel level EBITDA has remained positive each month since March, with 52 hotels delivering positive EBITDA in the second quarter, representing 56% of rooms, an increase from 31 hotels representing 31% of rooms achieved in the first quarter of '21. We were particularly encouraged that June was the first month that our non-resort portfolio also realized positive hotel EBITDA, driven by our properties in San Diego, San Antonio and New Orleans. As markets have lifted restrictions, demand has also improved at our urban hotels. Transient room nights in New York, New Orleans, San Francisco and Chicago grew significantly from the first quarter to the second quarter with New York up over 200%. Importantly, both room nights and rates have increased steadily each month since March.
Leisure market weekly occupancy ended at 62% the last week in June, a 3 percentage point increase over the end of the first quarter. Urban and downtown market weekly occupancy recovery continues to be promising, finishing the quarter at 43%, up 15 percentage points from the beginning of the quarter with ADR up over 10% quarter-over-quarter.
Turning to business mix. Pent up leisure demand at our resorts has spilled over into the summer months and continues to lead the operational recovery. In the second quarter both rates and revenue at all of our resorts, not only exceeded our first quarter results, but also surpassed 2019 levels. Resort revenue increased approximately $50 million over 2019, driven by 35,000 more room nights sold with a remarkable $95 increase in rate. This is particularly noteworthy as substantial room night increases have historically resulted in rate erosion. In the second quarter, 11 of our resorts had rates more than 25% above the second quarter of 2019.
Transitioning to group demand, our hotel sold nearly 344,000 group room nights in the second quarter, up 29% to first quarter. As a result, group revenue was up 39% over the first quarter, which includes an 8% rate improvement. Group demand in the second quarter was mostly concentrated in Sunbelt markets, although Boston and Denver were also contributors. We were encouraged to see meaningful month-over-month growth in both corporate and association group business.
Looking forward, we currently have 1.2 million group rooms booked in the second half of the year, which is up approximately 20% since our last earnings call. Of the roughly 200,000 net group room nights booked in the second quarter for the second half of 2021, we are encouraged that over two-thirds of them were booked in Houston, Boston, New York, and Denver. Net booking activity for 2022 also improved each month in the second quarter, resulting in 213,000 room nights booked. Our managers remain focused on holding future group rates. Thus ADR on the books is slightly higher than the same period in 2019.
We now have 2.4 million definite group room nights on the books, which represents 50% of 2019 actual group room nights. For comparison, in the second quarter of 2019, definite group room nights on the books for 2020 were 60% of 2019 actuals. Our group bookings for 2023 are echoing a very similar story. As of the second quarter, our net booking activity for 2023 totaled 109,000 rooms, which sequentially increased each month in the quarter. In addition, our average rate on the books is slightly above levels for the same time in 2019.
Finishing with business transient, we remain encouraged by the sequential growth we are seeing in this segment. Special corporate rooms sold in the second quarter were up over 100% compared to the first quarter, driven by growth in Denver. Texas, California, New York and Atlanta. We are also seeing booking activity come back from traditional top accounts, which include a mix of financial, government and consulting companies. We continue to believe that business transient demand will evolve post Labor Day, with school back in sessions and the return to office for many companies. We are pleased to have shown a monthly average growth rate of nearly 30% in business transient room nights and revenue since January of this year.
As I wrap up my comments, I would like to reiterate the incremental EBITDA we expect to achieve as we emerge from the pandemic into a new lodging cycle. Our acquisitions year-to-date provide us an estimated pro forma 2019 hotel EBITDA base of $1,570 million while it makes sense to think of 2019 as the base year, the timing of a return to 2019 levels at the hotel EBITDA remains highly uncertain, particularly given the unprecedented pandemic driven nature of the downturn. The recovery may span several years and our portfolio is likely to continue to evolve over that time.
In addition, we expect $145 to $220 million of annual incremental EBITDA on a stabilized basis over time coming from three strategic directives. First, redefining the operating model with our managers which is expected to generate $100 to $150 million of potential long-term expense savings based on 2019 revenues. We have taken initial steps towards 50% to 60% of these savings to date. Second, gaining an expected 3 to 5 points of weighted RevPAR index growth at the 16 Marriott transformational capital program hotels as well as five other hotels where major renovations have recently been completed or are underway.
As part of the Marriott program, during the second quarter, we completed the Ritz Carlton, Amelia Island and we will complete the multi-year transformation of the New York Marriott Marquis in two weeks. We expect to complete approximately 85% of the Marriott transformational capital program by year end. The five other major renovations have expected completion dates through 2023. We expect these repositionings to generate $21 to $35 million of annual incremental EBITDA on a stabilized basis over time.
And finally, we expect to generate $25 to $35 million of annual incremental EBITDA on a stabilized basis from recently completed and ongoing ROI development projects with expected completion dates by the end of 2022. Renovation and development projects typically take two to three years to stabilize after completion and as these projects are at different stages of the process, stabilization will occur over several years. During the quarter, we completed the development of a new water park at the Ritz-Carlton Golf Resort in Naples and additional villas at the Andaz Maui at Wailea Resort. The 19 two bedroom luxury villas achieved occupancy of 73% in the first full month of operation at an average rate of over $1600. This compares favorably to our underwriting assumptions of mid 30% occupancy at an average rate of over $1400 for the full year 2021.
To conclude my remarks, we are very encouraged by the operational recovery we are seeing in our hotels and across the lodging industry as demand accelerates. While we continue to monitor the potential impacts of the delta variant, we remain optimistic and well positioned to execute on our long-term goal of increasing the EBITDA growth profile and improving the quality of our portfolio.
With that, I will now turn the call over to Sourav.