Host Hotels & Resorts, Inc. Reports Results for 2023

Full Year Comparable Hotel RevPAR Growth of 8.1% Exceeded Midpoint of Guidance
Returned More Than $700 Million of Capital to Stockholders in 2023 and Announces $0.20 First Quarter Dividend
Completed Multi-Year Transformational Reinvestment Programs and Development Projects

BETHESDA, Md., Feb. 21, 2024 (GLOBE NEWSWIRE) -- Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results for fourth quarter and full year 2023.

* Additional detail on the Company’s results, including data for 22 domestic markets and top 40 hotels by Total RevPAR, is available in the Fourth Quarter 2023 Supplemental Financial Information on the Company’s website at www.hosthotels.com.

James F. Risoleo, President and Chief Executive Officer, said, "We ended 2023 on a high note, marking the seventh consecutive quarter that Host achieved comparable hotel Total RevPAR, RevPAR, and comparable hotel EBITDA and comparable hotel margins at or above 2019 levels. Full year comparable hotel RevPAR grew 8.1% over 2022, driven by both rate and occupancy increases. In the fourth quarter, our RevPAR grew 1.5% over the fourth quarter of 2022 to $202.92. Our results during the quarter were driven by rate increases of 0.4% and continued occupancy improvements at our convention and downtown hotels.”

Risoleo continued, “Over the course of the year, we continued to successfully allocate capital through reinvestment in our portfolio, share repurchases, and dividend increases. We are especially pleased with the work we have completed on our strategic objectives, which included redefining the hotel operating model with our managers, gaining market share through comprehensive renovations, and strategically allocating capital to development ROI projects. We believe we will continue to benefit from these ongoing efforts, which is underscored by our 2024 comparable hotel RevPAR guidance range of 2.5% to 5.5% growth over 2023. During the quarter, we increased our quarterly cash dividend by 11% to $0.20 per share, returning to our pre-pandemic quarterly dividend level, and declared a $0.25 special dividend. Additionally, we repurchased $31 million of common stock in the fourth quarter, bringing total repurchases for the year to $181 million. We are optimistic on the backdrop for our business, and we will continue to position Host to take advantage of potential opportunities in the future.”

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(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and comparable hotel revenues are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics include adjustments for dispositions, acquisitions and non-comparable hotels. See Hotel Operating Data for RevPAR results of the portfolio based on the Company's ownership period without these adjustments.

2023 HIGHLIGHTS:

• Comparable hotel RevPAR and Total RevPAR were $211.71 and $344.63, respectively, for full year 2023, representing an increase of 8.1% and 8.3%, respectively, compared to 2022, driven by an increase in both occupancy and rate during the year. Growth in city-center markets, fueled by improvements in group business, led to the overall improvement, offsetting moderating rates at resorts in comparison to 2022.
• GAAP net income was $752 million for full year 2023 reflecting a 17.0% increase compared to 2022, primarily due to an increase in operating profit and gain on asset sales, while GAAP operating profit margin declined 20 basis points compared to 2022 to 15.6%. Results included $83 million of business interruption gains.
• Comparable hotel EBITDA was $1,557 million for full year 2023, a 2.4% increase compared to 2022 results, while comparable hotel EBITDA margin declined 170 basis points to 30.1%.
• As expected, margin declines for the year were driven by stabilized staffing levels in comparison to 2022, higher insurance and utility expenses and lower attrition and cancelation fees.
• Adjusted EBITDAre was $1,629 million for full year 2023, exceeding 2022 by 8.7%, reflecting increased operations and the business interruption proceeds discussed below.
• Reopened The Ritz-Carlton, Naples in July 2023 following restoration efforts as a result of Hurricane Ian in September 2022. The reopening introduced transformational renovations to all guestrooms and suites, as well as a new tower expansion, and a reimagined arrival experience. As of December 31, 2023, the Company has received insurance proceeds of $213 million out of the expected potential insurance recovery of approximately $310 million for covered costs related to damage and disruption caused by Hurricane Ian. Of these proceeds, $80 million was recognized as a gain on business interruption in 2023, including $26 million recognized in the fourth quarter.
• Completed the Marriott Transformational Capital Program. The program, which began in 2018, included extensive guestroom and public area renovations at 16 assets and finished under budget. In December 2023, also debuted the renovations at Fairmont Kea Lani, including a transformed lobby and updated guestrooms.
• Reached an agreement with Hyatt to complete transformational reinvestment capital projects at six properties in the Company's portfolio: the Grand Hyatt Atlanta in Buckhead, Grand Hyatt Washington, Manchester Grand Hyatt San Diego, Hyatt Regency Austin, Hyatt Regency Washington on Capitol Hill, and Hyatt Regency Reston.
• Broke ground on the development of 40 fee-simple condominiums on a five-acre development parcel at Golden Oak in Orlando, adjacent to Four Seasons Resort Orlando at Walt Disney World® Resort. Construction is expected to be completed in the fourth quarter of 2025.
• Declared dividends per common share of $0.90 for the full year 2023, including a $0.25 per share special dividend, and returned the quarterly dividend to its pre-pandemic level of $0.20 per share in the fourth quarter.
• Continuing its progress towards the Company's renewable energy goals, five properties achieved LEED® certification during the year, bringing the total to 14, and reached the required milestone for a 2.5 basis point reduction in the interest rate on the outstanding term loans under the Company's sustainability-linked credit facility, per the January 2023 amendments.
• Maintained investment grade balance sheet and attained upgrades to Host Hotels & Resorts, L.P.'s issuer-credit ratings from Fitch to BBB and S&P Global to BBB-.

Results for Fourth Quarter 2023

• Comparable hotel RevPAR and Total RevPAR were $202.92 and $333.43, respectively, in the fourth quarter representing an increase of 1.5% and 0.7%, respectively, compared to the same period in 2022, driven by an increase in both occupancy and rate, while the increase in Total RevPAR was slightly lower due to a decline in attrition and cancelation fees.
• GAAP net income was $134 million in the fourth quarter, a decrease from the fourth quarter of 2022 of 10.1%, while GAAP operating profit margin was 13.1% for the quarter, a decrease of 90 basis points compared to the fourth quarter of 2022. Business interruption gains of $26 million in the quarter were offset by the decline in comparable hotel EBITDA, which is discussed below, as well as taxes related to the business interruption gains.
• Comparable hotel EBITDA was $355 million for the fourth quarter, representing a decline compared to fourth quarter 2022 results, primarily driven by the evolving nature of demand in Maui and reflecting a decrease in comparable hotel EBITDA margin of 180 basis points to 28.1%.
• Adjusted EBITDAre was $378 million for the fourth quarter, exceeding the same period in 2022 by 3.8% and benefiting from business interruption proceeds.

Maui Update

• As a result of the August wildfires in Maui, Hawaii, and the resulting impact on the Company's Maui hotels, golf courses and joint venture timeshare, the Company estimates that, in the fourth quarter, net income and Adjusted EBITDAre were impacted by approximately $15 million, RevPAR was impacted by 130 basis points, and Total RevPAR was impacted by 150 basis points. Operating profit margin and comparable hotel EBITDA margin are estimated to have been impacted by approximately 40 basis points and 30 basis points, respectively, for the fourth quarter.
• For the full year, the estimated impact to net income and Adjusted EBITDAre was approximately $22 million, RevPAR was impacted by 50 basis points, and Total RevPAR was impacted by 70 basis points. Operating profit margin and comparable hotel EBITDA margin are both estimated to have been impacted by approximately 10 basis points for the year.

BALANCE SHEET

The Company maintains a robust balance sheet, with the following balances at December 31, 2023:

• Total assets of $12.2 billion.
• Debt balance of $4.2 billion, with a weighted average maturity of 4.2 years, a weighted average interest rate of 4.5%, and a balanced maturity schedule with the next significant maturity of $400 million due in April 2024. Following the Company's ratings increase, the spread on the credit facility term loans was reduced by 25 basis points.
• Total available liquidity of approximately $2.9 billion, including furniture, fixtures and equipment escrow reserves of $217 million and $1.5 billion available under the revolver portion of the credit facility.
  

During the fourth quarter of 2023, the $250 million loan to the buyer of the Sheraton New York Times Square Hotel was repaid in full.

SHARE REPURCHASE PROGRAM AND DIVIDENDS

During the fourth quarter of 2023, the Company repurchased 1.9 million shares at an average price of $16.50 per share through its common share repurchase program for a total of $31 million. For full year 2023, the Company repurchased 11.4 million shares at an average price of $15.93 per share for a total of $181 million. The Company has approximately $792 million of remaining capacity under the repurchase program, pursuant to which its common stock may be purchased from time to time, depending upon market conditions.

The Company paid a fourth quarter common stock cash dividend of $0.45 per share on January 16, 2024 to stockholders of record on December 29, 2023, which included a $0.25 per share special dividend. The Company's regular quarterly cash dividend of $0.20 per share represented an 11% increase over the prior quarter. On February 21, 2024, the Company announced a regular quarterly cash dividend of $0.20 per share on its common stock. The dividend will be paid on April 15, 2024 to stockholders of record on March 28, 2024. All future dividends, including any special dividends, are subject to approval by the Company’s Board of Directors.

HOTEL BUSINESS MIX UPDATE

The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its full year 2023 room sales.

The following are the results for transient, group and contract business in comparison to 2022 performance, for the Company's current portfolio:

CAPITAL EXPENDITURES

The following presents the Company’s capital expenditures spend for 2023 and the forecast for full year 2024 (in millions):

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(1) Represents construction costs for the development of condominium units on a land parcel adjacent to Four Seasons Resort Orlando at Walt Disney World® Resort. Under U.S. GAAP, costs to develop units for resale are considered an operating activity on the statement of cash flows, and categorized as inventory. This spend is separate from payments for capital expenditures, which are considered investing activities.

In addition to completing the Marriott Transformational Capital Program in 2023, the Company completed transformational renovations at eight other hotels, which started in 2020, and believes the renovations will continue to position these hotels to capture additional revenue. Under the new Hyatt Transformational Capital Program, the Company expects to receive $9 million of operating guarantees in 2024 to offset expected business disruptions. The 2024 forecast for capital expenditures also includes an estimated $25 million for final restoration efforts at The Ritz-Carlton, Naples.

2024 OUTLOOK

The 2024 guidance range contemplates a stable operating environment with a continued improvement in group business, a gradual recovery in business transient, steady leisure demand, and continued evolution of demand on Maui as the island recovers from the recent wildfires. Growth in the first half of 2024 is expected to be in the low single-digits, with January 2024 comparable hotel RevPAR estimated to be $187, representing a 140 basis point increase to 2023. The first half of the year faces difficult comparisons to 2023, which saw a surge in the recovery of downtown markets, driven by group business improvements, and elevated leisure demand. The second half of the year is expected to have stronger year-over-year improvements due to better group booking pace, less renovation disruption compared to the second half of 2023 and diminishing impacts from the wildfire event in Maui, which occurred in early August of 2023.

Operating profit margin in 2024 is expected to remain static to 2023, while comparable hotel EBITDA margins are expected to decline compared to 2023, due to the impacts from the Maui wildfires and continued growth in wages, real estate taxes and insurance. At the midpoint of guidance, the impact from the Maui wildfires is expected to be an approximate decline of 100 basis points in both RevPAR and Total RevPAR and 50 basis points in margins. At the midpoint, in comparison to 2019, operating profit margin is expected to increase 120 basis points and comparable hotel EBITDA margins are expected to be down only 20 basis points compared to 2019, as portfolio-wide cost reductions continue to curb inflation.

The guidance range for net income and Adjusted EBITDAre includes $10 million of gains from business interruption proceeds expected to be received in 2024 related to Hurricane Ian and an estimated contribution from operations at The Ritz-Carlton, Naples, which is excluded from the comparable hotel set in 2024, of $12 million to net income and $60 million to Adjusted EBITDAre. The guidance range does not include any assumption for business interruption proceeds from the Maui wildfires, and any additional insurance receipts related to Hurricane Ian are still under discussion with insurance carriers, with the majority of the remaining proceeds expected to be related to property damages.

The Company anticipates its 2024 operating results as compared to 2023 will be in the following range:

Based upon the above parameters, the Company estimates its 2024 guidance as follows:

See the 2024 Forecast Schedules and the Notes to Financial Information for items that may affect forecast results and the Fourth Quarter 2023 Supplemental Financial Information for additional detail on the mid-point of full year 2024 guidance.

ABOUT HOST HOTELS & RESORTS

Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 72 properties in the United States and five properties internationally totaling approximately 42,000 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Four Seasons®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company’s website at www.hosthotels.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements which include, but may not be limited to, our expectations regarding the recovery of travel and the lodging industry, the impact of the Maui wildfires and 2024 estimates with respect to our business, including our anticipated capital expenditures and financial and operating results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to, those described in the Company’s annual report on Form 10-K and other filings with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of February 21, 2024, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

* This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

*** Tables to Follow ***

Host Hotels & Resorts, Inc., herein referred to as “we,” “Host Inc.,” or the “Company,” is a self-managed and self-administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately 1% of the partnership interests in Host LP held by outside partners as of December 31, 2023, which are non-controlling interests in Host LP in our consolidated balance sheets and are included in net (income) loss attributable to non-controlling interests in our condensed consolidated statements of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

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(1) Please see our Fourth Quarter 2023 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.

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(1) Corporate and other expenses include the following items:

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(1) Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.

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(1) See the Notes to Financial Information for a discussion of comparable hotel operating statistics. CBD of a location refers to the central business district. Hotel RevPAR is calculated as room revenues divided by the available room nights. Hotel Total RevPAR is calculated by dividing the sum of rooms, food and beverage and other revenues by the available room nights.

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(1) Represents the results of the portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition.

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(1) See the Notes to Financial Information for a discussion of comparable hotel results, which are non-GAAP measures, and the limitations on their use. For additional information on comparable hotel EBITDA by location, see the Fourth Quarter 2023 Supplemental Financial Information posted on our website.
(2) Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:

(3) Property transaction adjustments represent the following items: (i) the elimination of results of operations of our hotels sold or held-for-sale as of the reporting date, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) the addition of results for periods prior to our ownership for hotels acquired as of the reporting date.
(4) Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable.

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(1) See the Notes to Financial Information for discussion of non-GAAP measures.
(2) Reflects the sale of one hotel in 2023 and four hotels in 2022.
(3) Unrealized gains of our unconsolidated investments are not recognized in our EBITDAre, Adjusted EBITDAre, NAREIT FFO or Adjusted FFO until they have been realized by the unconsolidated partnership.