Host Hotels & Resorts Q1 2022 Earnings Call Transcript

Quartr
Provided by Quartr
May 5, 2022

Key Takeaways

  • Q1 outperformance: Delivered adjusted EBITDAre of $306 M and FFO per share of $0.39, with pro forma hotel EBITDA at $330 M just 18% below 2019 and March EBITDA 8% above 2019 driven by resort rate growth.
  • April & Q2 outlook: Preliminary April RevPAR of $225–230 marks the first monthly recovery above 2019, while Q2 RevPAR is guided to $195–205 (down 8–3% vs 2019) for adjusted EBITDAre of $375–410 M amid expected May–June seasonality.
  • Group & transient recovery: Q1 group revenue climbed 33% quarter-on-quarter with banquet & AV up 17%, and business transient room nights set a record 100,000 in March, a 28% increase over October 2021.
  • Capital recycling & liquidity: Disposed $1.4 B of non-core assets at a 17.8x EBITDA multiple, maintain $2 B of total liquidity (including cash, reserves and credit facility), no major debt maturities until 2024, and Q2 dividend doubled to $0.06 per share.
  • Strategic investments: Committed $750 M to renovate 16 Marriott flagships (89% complete), $420 M on eight other major upgrades, and $216 M on four ROI development projects, targeting $147–222 M of annual stabilized EBITDA gains.
AI Generated. May Contain Errors.
Earnings Conference Call
Host Hotels & Resorts Q1 2022
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good morning, and welcome to the Host Hotels and Resorts First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Jamie Marcus, Senior Vice President of Investor Relations.

Speaker 1

Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward looking statements under federal securities law. 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 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 8 ks filed with the SEC and in the supplemental financial information on our website at hosthotels .com.

Speaker 1

With me on today's call will be Jim Rizzolio, President and Chief Executive Officer Ansarav Ghosh, Executive Vice President and Chief Financial Officer. With that, I would like to turn the call over to Jim.

Speaker 2

Thank you, Jamie, and thanks to everyone for joining us this morning. We kicked off the Q1 of 2022 With meaningful outperformance and once again substantially beat all consensus metrics for the quarter, We delivered adjusted EBITDAre of $306,000,000 and adjusted FFO per share of $0.39 During the quarter, all owned hotel pro form a EBITDA of $330,000,000 in the first quarter was just 18% below 2019 and March pro form a hotel EBITDA came in 8% above 2019 driven by significant rate growth at our resorts. Pro form a total revenues in the Q1 increased 10% sequentially over the 4th quarter, while pro form a hotel level operating Expenses grew 5%. The increase in revenues was driven by improvements across Rooms, F and B and other departments. Pro form a RevPAR for the Q1 was $167 an 11% improvement from the 4th quarter As rates continue to increase in our Sunbelt markets and hold up at our urban hotels.

Speaker 2

This is the highest Our recent acquisitions, dispositions and renovated properties continued to contribute to our performance during the Q1. And notably, we had 5 hotels with ADRs of over $1,000 Preliminary April RevPAR is expected to be approximately $2.25 to $2.30 which is up slightly to our March RevPAR. It is worth pointing out that our preliminary April monthly RevPAR represents the first time That our monthly RevPAR is expected to exceed 2019 levels since the onset of the pandemic. However, consistent with historical monthly trends, we expect to see a pullback in May June relative to 2019 levels. In addition to Maui and San Diego, we are pleased to see urban markets such as New York, Washington, D.

Speaker 2

C. In San Francisco, driving the outperformance to our forecast. In short, all business segments and markets We sold the 1780 Key Sheraton, New York Times Square Hotel for $373,000,000 For 28 times 2019 EBITDA, when calculating the EBITDA multiple, we included 130 We are providing a $250,000,000 bridge loan to the purchaser. In addition, we sold a 2 43 key hotel EVE Miami for $50,000,000 including $1,000,000,000 for the FF and E replacement funds For 23.2x 20 19 EBITDA. When calculating the EBITDA multiple, we included $9,500,000 of estimated Year to date total dispositions to approximately $1,400,000,000 at a blended 17.8 times EBITDA multiple, 21 acquisitions continued to perform substantially ahead of our underwriting expectations.

Speaker 2

Based on first quarter performance, EBITDA from our 7 new hotel acquisitions and 2 golf courses is on track to meaningfully outperform our underwriting expectations. Looking back on our transaction activities since 2018, we have acquired $3,200,000,000 of assets At a 14 times EBITDA multiple and disposed of $4,900,000,000 of assets at a 17 times EBITDA multiple, Including $938,000,000 of foregone capital expenditures over the next 5 years. Comparing pro form a 2019 results for our current portfolio to 2017, We have increased the RevPAR of our assets by 11%, EBITDA per key by 25%, EBITDA margins by 190 basis points and avoided considerable business disruption Our efforts will remain focused on assets that have the potential to bolster our EBITDA growth profile. Turning to Q1 operations. Our total portfolio pro form a revenue was up 10% sequentially to the 4th quarter, driven by 16% rate growth.

Speaker 2

Transient revenue was up over 1% compared to the 4th quarter And rate was up 18%. Putting this into perspective, 1st quarter transient room revenue was 90 7% of First Quarter 2019. Transient was again driven by our Sunbelt and Hawaiian Hotels, Where revenue was up 17% sequentially with a 21% improvement in rate and once again exceeded prior peak levels For the Q4 in a row, drilling down the resorts, outperformance continued as ADR grew by 48%, Leading to a transient revenue increase of 42% compared to 2019. Our 1 Hotel South Beach And Four Seasons Orlando grew transient revenue over $10,000,000 each with ABR up 60% to 2019. Group business continued to improve at our hotels during the Q1.

Speaker 2

Group revenue was up 33%, We saw meaningful improvement in Banquet and AV revenue as group business continued to return. In the Q1, Banquet and AV revenue increased by $24,000,000 up 17% over the 4th quarter. As groups get back to in person meetings, we expect the trend of higher out of room spend to continue. Looking forward to our expectations for group in 2022, we currently have 3,000,000 Definite group room nights on the books, which compares favorably to the 2,700,000 group room nights we had on the books for 2022 As of the Q4, after adjusting for our recent dispositions, group rate in 2022 It's up 4% to the Q1 of 2019, a 300 basis point increase over the last quarter, With 1,000,000 definite group room nights on the books in the 2nd quarter, this represents 82% of Second Quarter 2019 Actual Group Room Nights. Last quarter, our 2022 definite group room nights on the books Represented 60% of 2019 actuals.

Speaker 2

Adjusted for our transactions And including bookings from the Q1, 2022 definite group room nights now stand at approximately 70% Sirab will get into more detail on business mix and markets in a few minutes. All of which are aimed at elevating the EBITDA growth profile of our portfolio. As a reminder, Our objectives include redefining the hotel operating model with our operators, gaining market share at hotels through comprehensive renovations And strategically allocating capital to development ROI projects. As a reminder, we are targeting a range of 147 To $222,000,000 of incremental stabilized EBITDA on an annual basis from the initiatives and projects Underlying our 3 strategic objectives, dollars 100,000,000 to $150,000,000 is expected to come from We have achieved approximately 60% to 70% of these savings to date. Another $22,000,000 to $37,000,000 of incremental stabilized EBITDA is related to our goal of gaining 3 to 5 points of index growth at the 16 Marriott Transformational Capital Program Hotels and 8 other hotels where comprehensive Transformational renovations have been recently completed or are underway.

Speaker 2

Starting with the Marriott transformational capital program This brings the number of completed properties to 12 out of 16 in this program with 89% of the work complete, And we expect to be substantially complete by the end of 2022. The remaining Marriott's transformational Capital program properties include the Boston Copley Marriott, the San Diego Marriott Marquis, the JW Marriott in Houston, which will be substantially completed by year end and the Marriott Metro Center in Washington, D. C, which we expect to complete in the first half of twenty twenty three. We expect to receive over $11,000,000 in operating profit guarantees for Marriott this year related to these renovations. In total, we expect to invest approximately $750,000,000 On the Marriott Transformational Capital Program assets.

Speaker 2

As a reminder, we were planning to invest approximately 70% Of the $750,000,000 as part of our routine cycle based renovations, the remaining 30% is ROI focused CapEx It includes renovation scopes brought forward from future years to create comprehensive transformational renovations. We believe these renovations allow us to capture incremental market share, as is the case at the Ritz Carlton Amelia Island, Where we have seen a RevPAR index share gain of 8 points since May 2021. The Ritz Carlton Amelia Island is now the number one hotel in its competitive set, up from 3 or 4 historically. In addition to the 16 Marriott transformational capital program assets, we have 8 hotels where we have completed or in the process Completing major renovations. The completed hotels include the Don Cesar, Hyatt Regency Maui In Hyatt Regency Coconut Point, the Ritz Carlton Naples Beach Resort and Miami Marriott Biscayne Bay Are both expected to be completed by year end and the Westin Denver Downtown, the Westin Georgetown in Washington D.

Speaker 2

C. And the Fairmont, Keilani and Maui are scheduled to be finished by mid-twenty $420,000,000 on these eight assets over 4 years, dollars 157,000,000 of which we expect to spend in 2022. And finally, we are targeting another $25,000,000 to $35,000,000 I've incremental stabilized EBITDA from 4 major development ROI projects. During the Q1, We completed and opened the 2 acre River Falls Aquatics Park and substantially completed the 60,000 square foot meeting space expansion At our Orlando World Center Marriott, both of these projects came in ahead of schedule and under budget. As mentioned, by year end, we expect to complete the expansion at the Ritz Carlton Naples Beach Resort, which adds to the Endoz Maui Villas And AC Scottsdale North, both of which are complete.

Speaker 2

These four assets make up the current development ROI projects And our 3rd strategic objective, and we continue to identify new development projects that will unlock value within our portfolio. In total, we expect to invest $216,000,000 on these four assets. Stabilization of these projects In addition to the incremental stabilized EBITDA from our 3 strategic objectives, we expect approximately $120,000,000 Our underwriting for 2022. In closing, we continue to improve the quality of our portfolio with our recent dispositions, And we are very pleased with the $1,600,000,000 of acquisitions we closed on in 2021. As the lodging recovery continues to accelerate, we believe Host is very well positioned to capture a greater share of demand Given the investments we have made in our hotels, our improved portfolio quality and our balance sheet strength.

Speaker 2

With that, I will now turn the call over to Saurabh.

Speaker 3

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our Q1 top line performance, margins and balance sheet Before wrapping up with an update on our dividend, starting with top line performance, 1st quarter pro form a RevPAR of $167 Was the highest it has been since the onset of the pandemic. The quarter was a tale of 2 months with March RevPAR of $2.21 More than double that of January. Improvements in the quarter were driven by leisure travel in Sunbelt Markets and Hawaii. These markets achieved a 1st quarter RevPAR of $2.51 a 26% increase over the 4th quarter.

Speaker 3

Our urban markets experienced the brunt of the Omicron impact in the first half of the quarter, but swiftly recovered ending March on a high note. For comparison, March RevPAR at our urban hotels was $132 up nearly 25% to the Q4 of 2021. Turning to transient mix, holidays in the Q1 drove Steady sequential growth in both occupancy and transient ADR with Presidents' Day achieving the highest holiday occupancy since 2019, which was driven by our Sunbelt markets. Our urban hotels achieved 76% occupancy over Easter, which is nearly double that of the MLK holiday weekend. Holiday occupancy in our urban markets Outperformed our Sunbelt markets for the 2nd time since the onset of the pandemic, with a rate improvement of 26% over The MLK Holiday Weekend.

Speaker 3

Business transient revenue was up 2% in the Q1 with a 4% increase in rate. Despite the impact from Omicron and winter storms in January, Business Transient Room Nite set a Recovery record in March, breaking the 100,000 level and encouragingly half of those room nights sold were in urban markets. For comparison, that represents a 28% increase over October 2021, which had 78,000 business transient room nights and was the previous high watermark. Providing a little color on a few of our urban markets. In San Francisco, we saw leisure demand starting to pick up in March.

Speaker 3

Business transient volume was slow for the first 2 months of the quarter, but our hotels saw a significant spike in March from consulting firms and tech clients. In New York, traditionally strong leisure periods have rebounded to levels approaching 2019. While transient demand remains short term in nature, we are starting to see the booking window stretch beyond 30 days. In March, business transient rooms in New York reached a post COVID high and as offices continue to reopen, We expect business transient demand to continue to ramp. Early in the Q1, Washington DC experienced declines related to cancellations, But all of our hotels saw a meaningful improvement in demand in March due to cherry blossoms and spring break.

Speaker 3

As government offices reopen, we expect business trends in volume to continue to improve. Turning to group, Revenue increased 33% over the 4th quarter, driven by 14% demand growth combined with a 17% improvement in rate. Most of the room night increase came from our hotels in Orlando, Maui and San Diego, where we saw incentive business From corporate groups come back into the mix. As it relates to overall group business, banquet and catering revenue It was up 17% over the Q4 and clearly show that groups are willing to spend when they meet in person. Banquet revenue per group room night exceeded 2019 levels in the Q1 for the first time in the recovery, Ending 7% higher, with March Absolute Banquet and Catering revenue down just 10% to 2019.

Speaker 3

Corporate group revenue increased 41% over the 4th quarter, driven by 17% demand growth and a 21% increase in rate. Corporate Group Room Nights picked up meaningfully each month in the quarter and ended at 70% of 2019 levels in March. Orlando and San Diego Hotels drove most of the demand growth in this sub segment. Association Groups also showed steady sequential improvements. First Quarter Association Group Room Nights increased 26% over the 4th quarter with a 13% increase in rate.

Speaker 3

Shifting gears to expenses. Total pro form a expenses were down 17% to Q1 2019, In line with the total revenue decline, staffing at our hotels remains at 94% of desired levels Based on business volumes versus 97% historically, hotels had paused on hiring during Omicron And we're unable to keep up as demand surged back in February March. While our hotels continue to fill open roles, a lag between demand And staffing levels still exist. This has acted as an offset to wages and benefits expense quarter over quarter. Briefly touching on our efforts to redefine the operating model, we have made meaningful progress on evolving brand standards with our operators.

Speaker 3

Marriott recently announced over 200 brand standard revisions that aim to reduce costs, align standards across brands and segments, Enable greater operational flexibility and eliminate outdated standards. Some examples include removing alarm clocks, Our operators have also moved to residential style amenities in luxury hotel rooms And we've asked the food and beverage options and hours of operation in many hotels to align with customer preferences. We expect Brand Centers to continue to evolve as we work with our operators to enhance efficiencies. Taken together, a strong top line and expense controls have allowed our margin to continue to meaningfully improve. Our pro form a hotel EBITDA margin in the Q1 was 31.4%, which is just 10 basis points below that of The Q1 2019.

Speaker 3

For comparison, this represents a 3 50 basis points increase To our 4th quarter hotel EBITDA margin, which was 27.9%. 1st quarter margin improvement was Marsh had the highest monthly hotel EBITDA margin in Host's history for today's pro form a portfolio at 41%. Turning to our outlook for 2022. We are still unable to provide full year operational guidance given the continued volatility surrounding COVID. That said, we believe sequential quarterly RevPAR improvements will continue as declines to 2019 We expect 2nd quarter RevPAR to be between $195 $205 or down 8% to down 3% relative to 2019.

Speaker 3

This RevPAR range implied an adjusted EBITDAre range of $375,000,000 to $410,000,000 for the 2nd quarter. We expect sustained Strength in leisure as well as business transient and group demand to continue accelerating in our urban markets as companies get back on the road And groups get back to meeting in person. We have seen a recovery in international travel, particularly from Canada, Germany and the UK. New York remains the top destination market followed by San Francisco and Seattle, and we expect sequential improvements in international Demand over the course of this year. Given the cadence of the lodging recovery, it is difficult to provide an accurate forecast for the year.

Speaker 3

While we expect sequential RevPAR improvements relative to 2019, seasonality and changing market and business mix Are expected to lead to lower RevPAR and margins for the second half of the year relative to the second quarter. For reference, the Q3 has typically been our weakest quarter of the year. And as is historically the case, we would expect 3rd quarter RevPAR and margins to be below that of the 2nd quarter. Turning to our balance sheet and liquidity position, Our weighted average maturity is 5.3 years at a weighted average interest rate of 3.4% And we have no significant maturities until 2024. After accounting for our 2 hotel dispositions in April, We now have $2,000,000,000 in total available liquidity comprised of approximately $439,000,000 of cash, $162,000,000 of FF and E reserves and a full availability

Speaker 4

of our

Speaker 3

$1,500,000,000 credit facility. Wrapping up, I am pleased to share that the Board of Directors authorized a 2nd quarter dividend of $0.06 per share on Host common stock, A 100% increase over the prior quarter. All future dividends are subject to approval by the company's Board of Directors, But as the operational recovery continues, we expect to be able to grow our dividends to a sustainable level. To conclude, we are optimistic that 2022 will continue to build on the strong momentum of the past few quarters. We remain very well positioned to execute on our goal of increasing the EBITDA growth profile and improving the performance of our portfolio.

Speaker 3

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

Ladies and gentlemen, the floor is now open for questions. Your first question is coming from Chris Willonka from Deutsche Bank. Your line is live.

Speaker 5

Hey, guys. Good morning. Thanks for all the of data points. I guess I'll ask the obvious one, which is the 2Q guidance with what you said about April. And I understand there's normally seasonally a drop In May June, but I think the basic math is suggesting a bigger than normal drop like a double digit drop Versus 2019, can you just give us a little bit of color on how you're thinking about that?

Speaker 2

Sure, Chris. We have talked a lot about the Q1 performance and April performance Internally at Host and we just don't think we're going to be able to sustain The level of rate that we achieved in Q1 and in the month of April At our resort properties, the spring break that occurred this year was off the charts. It really was very, very, very strong. And we expect to see some moderation Back to the mean. As we see a rotation from Spring Breakers back into the urban markets group and business transient coming back.

Speaker 2

So that's the reason why we brought the guidance down for Q2. Strong April, but we expect May June to moderate. May is definitely going to be lower than April. June may be slightly above May at this point in time.

Speaker 5

Okay. Very helpful. Thanks, Jim.

Operator

Sure. Thank you. Your next question is coming from Neil Malkin from Capital One Securities. Your line is live.

Speaker 6

Hi, everyone. Good morning. Jim, question for you, kind of along the same lines, but in terms of maybe just Leisure Resorts or probably more so the other urban or group hotels. Can you just talk about what Out of room total spending looks like, I mean, at least from our expectations, it's continued to just be really strong. And I know that people have, I think, alluded to Even though rate, it may not be sustainable at some of these resorts, the other side of the revenue equation should pick up As group and various other core travel segments come back, so can you just talk about what you're seeing there, The total outer room and how to think about that maybe as we go forward in terms of outer room spending on a per occupied level?

Speaker 6

Thanks.

Speaker 2

Sure. At our 16 resorts in the Q1, Neil, we had outlet revenue Per available room of $180 which is clearly a high watermark For our portfolio, and I would say probably industry wide, it's a high watermark. As we look at all that revenue in the aggregate, It was just 7% below quarter 1 of 2019, and that's all driven by 5 Resorts at this point in time. I think Our resort performance was plus 40% on a pro form a basis to quarter 1 of 2019. The same and Saurabh touched on this in his prepared remarks, the same with respect to banquets At our hotels that are driven by group, I mean that bank was for plus $24,000,000 to quarter 4.

Speaker 2

The per group room night, the banquet dollars exceeded 2019 by 7%. So what we're seeing on corporate and it's mostly driven by corporate group at this point in time. And what we're seeing is The groups that are signing up are being cautious regarding what commitments they're making On a spend basis, both from a rooms perspective and out of room spend, given what happened with Omicron in January February and the attendant attrition and cancellation fees, but when they arrive at the hotels, they're spending a lot more money than they contracted for, which makes it a little bit difficult to forecast going forward. That's one of the reasons why we're not comfortable Talking about the second half of the year, but talking about the second quarter at this point in time. Does that answer your question?

Speaker 6

Yes, I think so. I mean, I'm just curious again, I understand like the decline in RevPAR, but I mean, you do expect, just to be clear, Especially given your guidance in terms of bookings or room nights on the group's side, the outer room or the non Room related revenue or trend to continue its upward tact, correct?

Speaker 2

Absolutely. So I only touched on Revenue and Banquet Revenue. I mean, we have seen a very strong upward trajectory on golf revenues And on spa revenues, parking is relatively flat, and we expect We expect that to pick up as people get back on the road and start traveling again. We see no downturn whatsoever in golf or small revenues. The one area that It did have an impact on our Q1 performance for attrition and cancellation fees of $26,000,000 And that's relative to $13,000,000 that we collected in Q1 of 2019.

Speaker 2

So I wouldn't expect to see that level of cancellation and attrition fees going forward. But The other out of room spend should continue to grow.

Speaker 4

Thank you.

Operator

Thank you. Your next question is coming from Smedes Rose from Citi. Your line is live.

Speaker 4

Hi, thank you. I just wanted to ask, Saurav, as you think about, I guess, margin going forward, you noted that margin Came very close to pre pandemic levels and RevPAR is still quite a bit below. As RevPAR continues to improve, even if it's Somewhat seasonal and more choppy going forward. How do you think about the flow through of incremental RevPAR gains? And would it be fair to assume that they might be more occupancy driven at this point versus rate driven?

Speaker 4

Or how are you thinking about that?

Speaker 3

Hey, Smedes. So I would say take a look at sort of how we performed in 2019 on a quarterly basis. And given that we have come back much quicker than expected and in terms of just getting back to normal seasonality, And that's obviously what's impacting our Q2 guidance. When you look at margin performance, it would be very similar to what we saw in Back in 2019, the only thing I would say is obviously when you are growing revenues, rooms revenues more driven by rate That will flow through better. So in other words, you can expect sort of Q2 margins no different from Q1 of 2019, where it's slightly better than the Q1.

Speaker 3

But then if you look at the Q3 of 2019, there is a marked difference And what happens in margins is because rate drops. Back in 2019, if I remember correctly, rate dropped Close to right 10%, and there was a margin drop of about 600 basis points. So similar in terms of seasonality is what we would expect. So you would still expect sequential Top line growth relative to 2019, but you will see the absolute revenue numbers sort of follow the same patterns as we saw back in 2019.

Speaker 4

Okay. And can I just ask you one quick question? You mentioned 3,000,000 group room nights on the books for 23. That looks like Somewhere between maybe 18 points to 19 points of occupancy at this point, where would you be now at a pre pandemic going into the following Yes, in terms of sort of points of occupancy on the books.

Speaker 3

No, what I would say is where we were pre pandemic is at about 3,900,000 group room nights at the same time.

Speaker 4

Okay.

Speaker 3

But what's important to keep in mind here is we are talking about the full year, right? So Q1 obviously was impacted Because of Omicron, so the way to think about it is more the remainder of the year. Reminder of the year, we have 2,300,000 group Room nights, so that's Q2 through Q4. At the same time, back in 2019, for the remainder of the year, we had 2,700,000 group room nights. Does that make sense?

Speaker 3

So obviously, the

Speaker 4

remainder of the call is coming back. Yes, sorry, I

Speaker 3

thought you were talking

Speaker 2

about for 2023. You're talking about for this year group remains. No. Okay.

Speaker 4

I'm talking about 2022. Got it. Thank you. Sorry, I misunderstood.

Operator

Thank you. Your next question is coming from Bill Crow from Raymond James. Your line is live.

Speaker 7

Good morning. Thank you. Jim, just to put a little finer point on this whole sequential discussion. How much of this change in RevPAR is mix driven, more group on the books for June, for example, than there was in the Q1? So more mix, more business transient group or how much of it is just Travel demand in some of those Sunbelt markets that caused all the compression and the pricing is just being more Dispersed to New York, Boston or Chicago?

Speaker 2

I think it's a combination of all the above, Bill. Clearly, I don't want to give the impression that our 16 resorts in those five properties that had over $1,000 In ADR for the quarter are going to fall off the face of the earth. They're not. I mean, the demand is still there. We're still seeing it.

Speaker 2

But I think as we get past we got past April, we're going to get As we get into June, we have some seasonality issues associated with the resorts. As an example, The 1 Hotel South Beach in Miami, the Ritz Carlton in Naples, Four Seasons Orlando, Just natural seasonality, we think will may temper some of the demand at those properties. And then we are seeing group and business transient come back, which is going to clearly result in A RevPAR that in the aggregate is lower than what we saw in the Q1 and in the month of April. So We're delighted to have the business, make no mistake about it. We're very excited to see group in BT Come back as strong as they have been coming back.

Speaker 2

And having the resort portfolio that we do And having put $1,600,000,000 to work last year with assets that have really meaningfully outperformed our expectations has In our minds served as a good bridge to get us to the point where business transient and group recover. So it's a combination of all of the above.

Speaker 3

If I could just ask a follow-up on kind of

Speaker 7

the health of the consumer, I'm curious whether you're seeing points redemptions picking up. And if so, Does that represent some pushback on these rates at the resorts or maybe a concession The inflation is starting to eat away at consumers' wallet?

Speaker 2

I'll let Saurabh get into The short answer is no. We have looked at redemption numbers and we don't think that that is Having an impact at all at this point in time. In fact, as an example, for Lila Ventana, we're delighted that that hotel is It's part of the world of Hyatt, because that's a the redemption numbers at that property really go a long way to Allowing us to drive outsized RevPAR, just given the small number of rooms that are there and when we can Really revenue managed, the last down to the last room, that is how our redemption Rate is set. So it's been very positive for us. And Saurabh, I don't know if you want to add a little bit of color on what we're seeing?

Speaker 3

Sure. Net net, it's actually incremental for us because if you think about sort of where we are getting those redemption room nights, they're primarily in the resort destinations, Which has very high occupancy and majority of our hotels in our portfolio are high redemption hotels. And we actually get a higher reimbursement rate at those hotels and obviously at a higher occupancy threshold, it ends up being incremental in terms of Revenue that's being driven by those redemption of nights.

Speaker 7

Okay. Thank you all for your time.

Operator

Thank you. Your next question is coming from David Katz from Jefferies. Your line is live.

Speaker 8

Good morning. Thanks for taking my question. I wanted to you've talked quite a bit about the strength of the balance sheet. And I think The presumption is that there would be other properties out there that would be viable targets in the next 12 months. And I'm just wondering If we can expand that view a little bit, whether there are portfolios or Whether corporate M and A would even be within or outside the boundaries?

Speaker 2

We are constantly evaluating investment opportunities, David, and I think what has happened at least through our lens is we view the world today, As other hotel owners have seen the cadence of the recovery, we're seeing 1 of 2 things happening. Pricing expectations for a number of the properties that have been in the market early in this year Have been beyond our reach. We just have not been able to pencil the underwriting to make sense. Other assets that we would like to buy, and that's because everyone is expecting a strong recovery, which Obviously, our Q1 results and our April numbers are validating as we move Into 2022 and beyond. Other assets that are That we might want to acquire just aren't available for sale right now as owners sit and wait until cash flow recovers.

Speaker 2

We are very well positioned. There's no question about it. We have $2,000,000,000 of available liquidity today. As the year progresses, that liquidity position will grow. And it puts us in A very strong position as we get later into this year and opportunities become available To really pivot and again be the buyer of choice as we were last year And take deals down all cash and not have to worry about the state of the debt capital markets today, which have gotten A little bit choppy, less loan to value proceeds, higher interest rates, given The commentary and actions that the Fed has taken and I think that patience warranted at this point in time.

Speaker 2

We clearly are going to use the balance sheet, delight beyond delighted that we were able to do what we did last year And get ahead of the curve and put $1,600,000,000 to work early in the cycle. So I think everything is on the table, But it's very difficult to speculate on what might become available That meets our underwriting criteria.

Speaker 8

I appreciate that. And if I can follow-up briefly, Just with respect to the kinds of markets where you would or wouldn't be, there's an argument, Right. We've that we see where companies are buying more Sunbelt oriented. I wonder if there isn't a contrarian view Where some markets that may be under some pressure or duress today or underperforming today Might be some places to hunt for value. I just wonder what your thoughts are on that.

Speaker 2

Let me start by saying that we don't have a red line through any market. And it really is dependent upon our view of value And likely performance going forward. So I agree with you that I think the puck is still going to the Sunbelt markets. I don't think that's going to change. And Resorts in particular, for a number of reasons.

Speaker 2

Number 1 is low very, very low levels of supply In those markets, in the resort markets in general. But if opportunities presented themselves in some of the markets that are At the bottom of the recovery list and we thought that they were priced fairly and that we could add value And that the investment would serve to elevate the EBITDA growth profile of the portfolio, which is what we're really focused on doing, We would certainly be prepared to transact.

Speaker 8

Understood. Thank you very much. I appreciate it.

Operator

Thank you. Your next question is coming from Ari Klein from BMO. Your line is live.

Speaker 9

Thanks and good morning. Just following up on the resort rates, clearly, it seems like there's some seasonality at play over the next few months. But As you look further ahead and comps begin to get much tougher kind of in the second half of the year and I guess the beginning of next year, Are you expecting rates to actually decline a bit?

Speaker 3

Hey, Ari, it's Saurabh. So I think while Rates will temper, and a lot will be just natural business mix and market mix. So shifting of demand to different markets As opposed to the strength of the leisure rate in those specific markets. So we will we still expect and just based on the demand that we are seeing Into the next quarter and even the second half of the year, we are of the belief that the leisure rates are still going to hold pretty strong. And probably, frankly, well into next year, there's still a lot of pent up demand.

Speaker 3

And once international borders really open up To the U. S, we think there is a meaningful amount of demand that's going to help sort of sustain those rates. Obviously, very difficult to tell to what magnitude. It will be tempered as sort of the market mix takes place, But we still feel pretty strong about the leisure rates going through the rest of this year and into next year.

Speaker 9

Great. Thanks for the color.

Speaker 6

Sure.

Speaker 10

Leisure performance in May June, but I kind of want to ask another question on that. So we've seen strong pricing and demand on holiday weekends. There The 2 weekends coming up is Memorial Day and also Juneteenth. Just checking some of your properties on both of those weekends, they seem to be asking for very high pricing. So what are you seeing The booking window for those 2 specific weekends and are you seeing any, I guess, incremental weakness or softness or price resistance as we approach those time periods?

Speaker 3

Specifically for Memorial Day, and this is again going back to sort of still the short term, lead time, we are seeing actually pace of 12% above 2019 levels. So still holding very strong for holidays. Sunbelt markets are pushing rates really nicely with rates on the books up 44% versus same time 2019. But overall, still very strong performance for the upcoming holidays.

Speaker 10

And what about Juneteenth?

Speaker 3

I don't specifically have Juneteenth numbers handy, but we can certainly get back to you.

Speaker 10

So I guess you're not really seeing, I guess, in the upcoming week holiday weekends, any kind of, I guess, relative price softening Great. Thank you.

Operator

Thank you. Your next question is coming from JJ Kornitsch from SMBC. Your line is live.

Speaker 6

Hey, good morning. It's Jay. But I was going to follow-up to a previous question. With the strong recovery in business transient urban demand, was interesting to see your Boston and New York asset dispositions. So kind of just curious how you think about your asset allocation plan and Let me shift back to preserving your urban footprint, which is recovering versus maybe disposing in those markets and focusing more on the outperforming Sunbelt and resort assets.

Speaker 2

Sure, Jay. Those two assets were they each had a unique set of And let me say before I get into specifics about each of these two assets, we still have a healthy presence in both markets. In Boston, we have the Boston Copley Marriott, which is part of the Marriott transformational capital Program, we're in the midst of a complete renovation of that asset. So clearly, We are committed to the Boston market, but the Sheraton, given its location in the Back Bay and the size of the hotel and The plans on the part of the State of Massachusetts to sell the Hines Center, Which the hotel was very dependent upon for groups. It doesn't have an adequate meeting space platform to service groups.

Speaker 2

And the group business in Boston now has moved to the main convention center. The hotel needed a lot of capital, Significant amount of deferred CapEx at that property. It just made a lot more sense for us to dispose of that asset. And Similarly with the Sheraton in New York, we have the New York Marriott Key and Times Square and the Financial Center Marriott in Downtown New York, both are in incredible shape. They were both part of the Marriott Transformational Capital Program, the assets are well primed to really outperform as the recovery Continues apace, whereas the Sheraton, again, an older hotel in need of substantial CapEx.

Speaker 2

So In that part, the Sheraton was forecasted to lose $15,000,000 at the EBITDA line in 2022. I think those two dispositions will go a long way to allowing us Elevate the EBITDA growth profile of the company, taking the capital from those sales and investing that capital either in our existing portfolio through ROI projects or making additional acquisitions going forward is part of our capital allocation strategy.

Speaker 6

Great. That's really helpful. And if I could just ask one follow-up. As we've seen a nice recovery

Speaker 4

in the business In all

Speaker 6

the urban markets, can you just give us a little perspective on how San Francisco is shaping up and how you expect the market to perform in the second half of the year?

Speaker 3

Yes, sure. San Francisco is actually shaping up better than we were expecting. The San Francisco I'll give you an example. San Francisco Marriott Marquis Actually had 1,000 rooms per night midweek, last 3 weeks of March. BT on the books for the last week of April is almost flat to 2019.

Speaker 3

So overall, pretty good See throughput San Francisco in terms of BT pickup.

Speaker 6

Okay. Really helpful. Thanks. Thanks very much.

Operator

Thank you. Your next question is coming from Floris Van Dijkkem from Compass Point. Your line is live.

Speaker 11

Great. Thanks guys for taking my question. If I look at your EBITDA numbers, If I look at your resort markets relative to 2019, obviously, the resorts have been really strong. San Francisco has been lagging, D. C.

Speaker 11

Has been lagging. New York is not really that big, but That has also been a troubled market. As you think about the recovery that we're seeing in the urban markets, I mean, in your view, I know that people are talking a little bit about sequential growth here, but 83 percent of your EBITDA, hotel EBITDA already in the U. S. In the first quarter.

Speaker 11

Some of your competitors think they can achieve that by the Q4 Of this year, are you is that your house view of potential? I know you're not giving guidance, but certainly is that How comfortable are you being able to achieve those kinds of levels by the Q4 of this year?

Speaker 2

I don't think we're really comfortable talking about The second half of the year, it's very difficult at this point in time to Forecast how this recovery is going to continue to unfold. So much of the business is being booked short term, although we are starting to see the booking window extend. As I mentioned, a very valid point we think is on the corporate group business that we're seeing. The contracts that are being signed are for lower levels of food and beverage spend and Smaller numbers of attendees that are then that are showing up because they just don't want to be dealing with attrition and cancellation fees If they have to cancel or if they if there is another event that as we saw in January February. So At this point in time, I think we're confident and we feel really good about What we're seeing in terms of group bookings for the balance of this year, We had a nice pickup over Q4, where we had 2,700,000 definites on the books at the end of Q1.

Speaker 2

We had 3,000,000 definite room nights on the books that compares I think to 3,900,000 in Q1 of 2019 for 2020. So we continue to close the gap going forward and the same with Business Transient. It's coming back. We think it's going to continue to evolve as offices open and we feel good about it, but we're not in a position to give any guidance for the balance of the year.

Speaker 4

I was just to add,

Speaker 3

I mean, If there is any indication in terms of what we did in March as a presentation of where we see the trends heading, I think we mentioned in our prepared remarks how March was Over 100,000 room nights, which is now the high watermark. So if you remember back in 2021, we hit The last high watermark was at 78,000 room nights in October of 2021. So that's a 28% increase. And what we can say is we see that trend continuing into April. As Jim said, since the lead times are short, it's difficult to have visibility on BT well into the second half, but the trends are at least positive.

Speaker 3

And March ADR for BT was $2.23 and that's down only 1.6% to 2019.

Speaker 11

Thanks, Rob. Appreciate it.

Operator

Thank you. Your next question is coming from Chris Darling from Green Street.

Speaker 6

Just to put a finer point on what you're seeing on BT and group demand, I'm hoping you could just Walk through how weekday occupancy specifically is trending relative to 2019 in some of your major urban markets.

Speaker 3

So for the major urban markets, the week a day occupancy It's still lower than what where we would like it to be, but it's trending in the right direction. I think that's the important point. From the last time we spoke from the Q4 call, there has been like a 4 to 5 point improvement in midweek occupancies. So that's where sort of we've been focused. Weekend occupancy has obviously improved meaningfully in those urban markets, Well, that trend continues.

Speaker 6

Fair enough. And I don't know if you have the numbers in front of you, but just Curious how that might compare to kind of pre COVID levels?

Speaker 3

We are still down, I would say, about sort of high double digits or 18 percentage points, 20 percentage points in occupancy in those markets midweek.

Speaker 4

Got you. Appreciate it. Thank you. Sure.

Operator

Thank you. That concludes our Q and A session. I will now hand the conference back to Jim Rosolio, Chief Executive For closing remarks, please go ahead.

Speaker 2

Thank you. And I would like to thank everyone for joining us on our call today. We appreciate the opportunity to discuss our quarterly results with you, and we all look forward to meeting with many of you in person in the coming weeks months. We really appreciate your continued support. Have a great day.

Operator

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

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