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. Once again, we delivered significant outperformance during the second quarter and substantially beat all consensus metrics. During the second quarter, our adjusted EBITDAre was $500 million, and our adjusted FFO per share was $0.58. Our all owned hotel EBITDA of $510 million in the second quarter was 19% above 2019, driven by an accelerating recovery in our urban and downtown markets and continued strength in Sunbelt markets. In addition to exceeding 2019 levels, our second quarter adjusted EBITDAre was also the highest in Host's history. All owned hotel revenues in the second quarter increased 3.7% over the second quarter of 2019, while all owned hotel operating expenses were down 3.8%.
The increase in revenues was driven by strong rates across the portfolio coupled with stronger-than-usual other revenues. All owned hotel RevPAR for the second quarter was $219, a 31% improvement over the first quarter. This represents the first time our quarterly RevPAR has exceeded 2019 levels since the onset of the pandemic. Our recent acquisitions, dispositions and renovated properties continue to contribute to our performance, which I will discuss in a few minutes. Preliminary all owned hotel RevPAR for July is expected to be approximately $195, which is slightly above July of 2019. Consistent with historical seasonal trends and shifting business and market mix, we expect third quarter nominal RevPAR to be below that of the second quarter.
While macroeconomic concerns have been dominating the headlines, we are not seeing any signs of a weakening consumer in our business. As we look to history, it is worth discussing why we think today's macroeconomic environment with respect to lodging is different. First, certain segments of the lodging industry are still recovering, and we believe there is meaningful room for growth, particularly in the business transient and group segments. Even more encouraging, hotels benefit from the ability to reprice rooms on a nightly basis ahead of rising costs, even during periods of high inflation as was the case in the 1970s.
Second, consumers and businesses have significantly more cash on hand with leverage and debt service ratios better than they were prior to the great financial crisis in 2008. The labor market is also exceptionally strong, with over three million more jobs opened than we had at the height of the last expansion and an unemployment rate hovering near a five-decade low. In addition, we have continued to benefit from a consumer spending rotation away from goods and into services, including travel, and we expect this trend to continue. Lastly, we expect to benefit from exceptionally low supply growth for the next several years.
The total pipeline has fallen by 11% since the start of the pandemic and the number of rooms in construction is down 30%. As a result, industry projections suggest annual supply growth of just over 1% through 2023, well below the long-term average of 1.8%. In contrast, supply growth at the start of the last three downturns was running at over 2.5%. The market way to supply growth for Host's portfolio is projected to be approximately 1% as we will benefit from exceptionally low growth in places like San Diego, Hawaii and San Francisco. Despite these tailwinds, many are concerned about the potential impact to our business, which is still in a demand recovery mode.
In the second quarter, group demand was 9% below 2019, while business transient demand was 25% below 2019. These factors could mean that any softening demand simply prolongs the trajectory of the lodging recovery instead of leading to an absolute decline in occupancy and rate. Irrespective of potential future macroeconomic challenges, we believe that Host is well positioned to outperform the broader industry. We have dramatically improved the quality of our portfolio through our capital allocation efforts. We have invested in our assets, and we have an investment-grade balance sheet. Further, we believe the current rising interest rate environment could create opportunities for Host as other buyers may step to the sidelines.
Our 2021 acquisitions continued to perform substantially ahead of our underwriting expectations. Based on updated performance for full year 2022, EBITDA from our seven new hotel acquisitions is expected to be 77% above our underwriting expectations, already putting us within our disclosed stabilization range of 10 times to 12 times EBITDA. Looking back on our transaction activity since 2018, we have acquired $3.2 billion of assets at a 14 times EBITDA multiple and disposed of $4.9 billion of assets at a 17 times EBITDA multiple, including $938 million of estimated foregone capital expenditures. Impairing all owned hotel 2019 results for our 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 associated with capital projects.
Turning to second quarter operations. Our all owned hotel revenue was up nearly 4% to second quarter 2019, driven by 15% rate growth. Transient revenue was up 10% compared to second quarter 2019 and rate was up 22% with growth driven by significant demand across our urban and downtown markets. Our resort properties continue to outperform with transient revenue up more than 50% to second quarter 2019, driven by 70% transient rate growth. We had five resorts with transient rates above $1,000 for the quarter. And of those five, the two highest rates were at hotels we acquired in 2021. The Four Seasons Resort Orlando at Walt Disney World Resort had a second quarter transient average rate that exceeded $1,500, and the Alila Ventana Big Sur had a transient average rate of over $2,000.
Providing some detail on a few of our urban markets. San Francisco saw continued positive momentum throughout the second quarter with many groups performing at pre-pandemic levels on peak nights. Some of these are picking up on weekends, and business transient picking up with the return of big tech and consulting companies. In addition, San Francisco citywide throughout the quarter created a compression on peak nights for our downtown hotels. In New York, second quarter RevPAR was flat to 2019 and business transient rooms sold increased more than 75% compared to the first quarter. 2022 group pace for our New York hotels is up over 5% to 2019, and our New York Marriott Marquis is on track to exceed 2019 group room nights, driven by two significant bookings within the past 60 days.
In total, these two groups booked 17,000 room nights and are expected to contribute approximately $5 million in the second half of 2022. Turning to group. Business surged back at our hotels during the second quarter. Group revenue was down just 3% to second quarter 2019, driven by 6% rate growth. In the second quarter, our hotels sold 1.1 million group room nights, a 64% increase over the first quarter, and we continue to be encouraged by net booking activity in the quarter for the quarter. Looking forward to our expectations for group in 2022, we currently have three and a half million definite group nights on the books with 1.7 million coming in the second half.
This is a meaningful increase to the three million group room nights we had on the books for 2022 as of the first quarter, and it represents approximately 80% of 2019 actual group room nights, up from 70% last quarter. For comparison, at the end of the second quarter of 2019, we had 94% of 2019 actual group room nights on the books. Group rate on the books for 2022 is up 5% to the same time 2019, a 30 basis point increase over last quarter. For the remainder of the year, total group revenue pace is down just 30 basis points to the same time in 2019. As we look forward to 2023, we currently have 2.2 million definite group room nights on the books, which is down 16% to the second quarter of 2019.
Our operators saw an acceleration in group bookings during the second quarter for 2023, that meeting planners are not hitting pause on future bookings. That said, we do expect the short-term nature of group bookings to continue over the near term. In addition to delivering significant operational improvements, we continue to execute on our three strategic objectives, 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 managers, gaining market share at hotels through comprehensive renovations and strategically allocating capital to development ROI projects.
We are targeting a range of $147 million to $222 million of incremental stabilized EBITDA on an annual basis from the initiatives and projects underlying our three strategic objectives. Sourav will get into more detail on business mix, markets and redefining our operating model in a few minutes. We have completed 12 out of 16 properties in the Marriott Transformational Capital Program and we expect to substantially complete three additional properties by the end of this year. We believe these renovations allow us to capture incremental market share as is the case at the New York Marriott Marquis. It is evident that the renovated hotel is attracting new groups.
Booking activity in the year for the year is two and a half times the three-year pre-COVID average and year-to-date group room revenue is 24% higher than 2019. In addition to the positive momentum we are seeing at the New York Marriott Marquis, we have seen a RevPAR index share gain of 8.8 points at the Ritz-Carlton, Amelia Island on a trailing 12-month basis compared to its pre-renovation index, a 12.7-point gain at the New York Marriott Downtown and an 11.9-point gain at the JW Marriott Buckhead, all far exceeding our targeted range of three to five points of RevPAR index gains at renovated assets. In addition to the 16 Marriott Transformational Capital Program assets, we have eight hotels where we have completed or are in the process of completing major renovations.
One of these is the Hyatt Regency Maui, where we have seen a RevPAR index share gain of 8.5 points since completed the transformational renovation in December of 2020. This hotel is expected to contribute $80 million in EBITDA in 2022 and is expected to be the largest EBITDA contributor to our portfolio this year. In total, the 16 Marriott Transformational Capital Program assets, the eight hotels where we have completed or are completing comprehensive renovations and the seven hotels we recently acquired are expected to comprise over 50% of our 2022 all owned hotel EBITDA.
From 2020 through the end of this year, we will have invested approximately $1.5 billion in our hotels, which equates to $35,000 per key.
This compares favorably to our lodging REIT peer average of just $19,000 per key. We believe our meaningful investments throughout the pandemic and the recovery position our portfolio to outperform. When the 24 comprehensive renovations are complete, the average age of our guest rooms will have decreased by over 25%. As it stands today, over the next five years, we estimate that less than 1/4 of our portfolio will require disruptive guestroom renovations. In closing, we believe we are very well positioned to outperform as the lodging recovery continues. We have significantly improved the quality of our portfolio through our capital allocation efforts, meaningfully reinvested in our assets and maintained a strong investment-grade balance sheet. As macroeconomic concerns play out, we will continue to be opportunistic and position our portfolio for outperformance.
With that, I will now turn the call over to Sourav.