Host Hotels & Resorts Reports Mixed Q1 Results with Revenue Growth
Host Hotels & Resorts, Inc., the leading lodging real estate investment trust (REIT) in the United States, disclosed its financial performance for the first quarter of 2024, presenting a blend of increases and decreases in key financial indicators.
The company’s Total RevPAR for comparable hotels witnessed a 0.5% rise to $369.58 million, primarily driven by robust group business contributions and increased food and beverage revenues. Banquet and catering revenues per group room night exceeded previous highs, demonstrating the strength of the group segment.
However, RevPAR for comparable hotels declined by 1.2% to $215.37, attributed to the aftermath of the Maui wildfires, adverse weather conditions impacting short-term leisure demand, and renovation delays. The first quarter of 2023 had witnessed a surge in leisure demand, making for tough comparisons in 2024.
GAAP net income reached $272 million, marking a 6.5% decrease from the same period in 2023. This decline was primarily attributed to a drop in asset sale gains, partially offset by insurance settlement gains. The GAAP operating profit margin witnessed a notable improvement of 180 basis points to 19.8%.
Comparable hotel EBITDA amounted to $435 million, a 2.9% decrease from the first quarter of 2023. This decline was influenced by increased wages and insurance costs, resulting in a 140-basis-point reduction in the EBITDA margin to 31.2%.
In contrast, Adjusted EBITDAre surged by 8.8% to $483 million, driven by the strong performance of The Ritz-Carlton, Naples (which was closed for the first half of 2023 due to Hurricane Ian) and the inclusion of business interruption gains. As of date, the company has received $263 million in insurance proceeds out of the expected $310 million for costs associated with Hurricane Ian damages and disruptions.
In a strategic move, Host Hotels acquired full ownership of two hotels in Nashville on April 15, 2024: the 215-room 1 Hotel Nashville and the 506-room Embassy Suites by Hilton Nashville Downtown, for a combined $530 million. These LEED Silver® certified hotels, situated in a complex within Nashville’s Lower Broadway district, add to the company’s portfolio and establish a presence in a top-performing market.
The ongoing effects of the Maui wildfires from August 2023 continued to impact the company’s Maui properties and golf courses in the first quarter. This resulted in a 170-basis-point negative impact on RevPAR, as well as a reduction in the operating profit margin and comparable hotel EBITDA margin by approximately 50 and 30 basis points, respectively.
Host Hotels maintains a solid balance sheet and executed several transactions during March and April of 2024. These transactions included borrowing $215 million from the revolving credit facility, repaying $400 million 37⁄8% Series G senior notes upon maturity, and issuing a first-quarter common stock dividend totaling $141 million.
As a result of these activities, the company anticipates its financial balances to include total assets of $11.8 billion, a debt balance of $4.0 billion with a weighted average maturity of 4.3 years and an interest rate of 4.7%, and total available liquidity of approximately $1.7 billion.
Host Hotels also issued a cash dividend of $0.20 per common stock share on April 15, 2024, to shareholders registered by March 28, 2024. Future dividends, including special dividends, remain subject to Board approval.
The company’s clientele is segmented into transient, group, and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2023 revenue. With a robust balance sheet, strategic acquisitions, and a positive outlook for the rest of 2024, Host Hotels & Resorts, Inc. remains well-positioned to continue delivering growth and enhancing value for its stakeholders.
