The speaker, Jaime Marcus, introduces the call and notes that forward-looking statements will be made. Non-GAAP financial information will also be discussed. The CEO, Jim Risoleo, acknowledges the recent wildfires on Maui and Host's efforts to support the community. Host has donated money and provided assistance to employees and emergency response teams.

In the third quarter, the Maui community's strength and resilience inspired the company to support them during the recovery. The results for the quarter show a 1.8% improvement in comparable hotel RevPAR, driven by increased occupancy in convention hotels and downtown locations. The impact of Maui on the results was less than expected due to the replacement of high rated transient business with recovery and relief group business. The company delivered strong financial results, beating consensus on adjusted EBITDAre and adjusted FFO per share. The comparable hotel EBITDA margin exceeded 2019 levels for the sixth consecutive quarter. In October, comparable hotel RevPAR is expected to improve by 2.4% over 2022. The Maui wildfires had a negative impact on RevPAR, TRevPAR, and EBITDA, but the company's risk management team is working with insurers for potential business interruption coverage.

Despite the impact of wildfires on Maui, the company maintained their previous full year expected comparable hotel RevPAR growth at 8% and tightened their full year RevPAR growth guidance range. They are optimistic about the state of travel due to improvements in group business and gradual improvement in business transient demand. Leisure rates at their resorts remain well above 2019 levels.

The fourth factor contributing to positive trends for the travel industry is the increase in international demand. Inbound and outbound air traffic have both increased to levels close to or exceeding 2019 levels, indicating a strong desire for travel among consumers. This is reflected in the high occupancy rates and revenue for food and beverage outlets, golf, and small amenities at hotels. The newly renovated Ritz-Carlton Naples has been well received and is expected to exceed expectations. The hotel has regained its AAA five-diamond designation and has received high praise. The company has also received $208 million of the expected insurance recovery for damages caused by Hurricane Ian.

In the third quarter, the company received $54 million in business interruption proceeds and expects to receive an additional $26 million in the fourth quarter. Group revenue has exceeded 2019 for the fifth consecutive quarter and definite group room nights for 2023 have increased. For 2023 and 2024, group revenue pace and rate are both up compared to previous years. The company also announced an agreement with Hyatt to complete reinvestment capital projects at six properties in their portfolio, which is expected to improve long-term performance. Hyatt has agreed to provide priority returns on these investments.

Hyatt plans to invest approximately $550 million to $600 million in their capital plan over the next few years, with $125 million to $200 million per year for the next three to four years. They expect to see low double-digit cash-on-cash returns on this investment through a combination of enhanced owners' priority returns and RevPAR index share gains. They have also tightened their capital expenditure guidance for 2023 to $615 million to $695 million, with major projects including renovations at the Fairmont Kea Lani and the launch of new developments at Finishing Canyon Suites Villas and Four Seasons Resort Orlando at Walt Disney World Resort. They are also repositioning the Hilton Singer Island and partnering with Hilton to top brand the hotel as a Curio Collection Resort. Hyatt believes that these investments will lead to continued EBITDA growth in their portfolio.

In the third quarter, Host announced a capital program with Hyatt and returned capital to shareholders. They are optimistic about the state of travel and believe they are well positioned to outperform. Sourav Ghosh discussed the third quarter operations, updated 2023 guidance, balance sheet, and dividend. The comparison was impacted by Maui, resulting in a decline in transient revenue, but rates at resorts remained higher than 2019. Business transient revenue was above 2022 levels, with New York, San Francisco, and Denver close to 2019 room nights. Large consulting and audit firms drove the biggest share of business travel but also contributed to room night decline. Technology companies showed room night growth compared to 2019. Group room revenues were above 2022 levels due to a rate increase.

The company is pleased that their hotel EBITDA margin remains above 2019 levels despite higher expenses and lower occupancy. They have maintained their expected RevPAR growth for the full year, but have narrowed the range due to uncertainties related to demand on Maui. They expect fourth quarter results to follow 2019 seasonal trends, with slightly positive RevPAR growth. Their adjusted EBITDA guidance includes business interruption proceeds related to Hurricane Ian, which will contribute to EBITDA in 2024.

The company's comparable hotel EBITDA and EBITDA margin are not affected by the operational results of two resorts. Margins are expected to be down compared to last year due to stable staffing levels, higher expenses, and lower attrition and cancellation fees. However, compared to 2019, margins are expected to be slightly higher. The company has a strong balance sheet and liquidity position, with a balanced maturity schedule and available liquidity of $2.6 billion. The company also repurchased 6.3 million shares during the quarter and a total of 9.5 million shares year-to-date.

The company has $823 million remaining in their repurchase program and plans to continue being opportunistic with share repurchases. They also increased their quarterly dividend by 20%. The company remains optimistic about the future of their business and believes they are well positioned to continue outperforming. They have seen a 30% increase in group bookings for next year and have also seen a significant increase in bookings for the third quarter. They are seeing strong group bookings in certain markets and weaker ones in others.

Hyatt Capital program will include six hotels that are in need of a comprehensive renovation. Hyatt and the company believe that these properties require significant work, and they have agreed to invest in them in return for enhanced owner priorities and a $40 million guarantee to support any disruption during the renovations. The specifics of the renovations, including when they were last renovated and the expected lift in RevPAR, will be shared with investors at a later time.

Sourav Ghosh, President and CEO of Hyatt, discusses the expected returns from the Marriott transformational capital program, which are projected to be in the low-teens. The program will be completed over the next three to four years and is expected to deliver outsized yield index gains. There is still potential for $40 million in business interruption (BI) recoveries next year, with a total goal of reaching $310 million. The company is still working with insurers to determine the exact amount of BI recoveries that will be received.

During a conference call, Bill Crow asks Jim Risoleo about the company's expected EBITDA margins for next year. Risoleo explains that it's difficult to predict at this time, but they anticipate wage growth of 4-5% and are unsure about insurance costs. He also mentions that the $80 million received from business interruption this year is not a one-time event, as two hotels will be back in operation next year. Sourav Ghosh adds that they need to determine the base level before considering EBITDA growth for next year.

The midpoint of the guidance for the company is at 16.20 and has a $30 million negative impact from Maui, with $25 million from hotels and $5 million from timeshare. The $80 million BI proceeds for this year would have been received as EBITDA from the Ritz-Carlton Naples and the Hyatt Coconut Point if not for Hurricane Ian. The base before any growth is starting at $1.6 billion plus. The company is working on initiatives to mitigate inflationary expense pressures and will provide guidance for next year in February. The recovery in Hawaii was better than anticipated in the third quarter, and the delta in fourth quarter guidance is mainly due to Hawaii. The high end of the guidance could be reached with strong performance in Hawaii.

The company's guidance range for the full year is wider due to uncertainties surrounding the recovery in Maui. The west side of Maui just reopened to tourists on November 1 and it will take time for people to feel comfortable rebooking their stays. The company saw a decline in TRevPAR in the third quarter due to cancellations from pronouncements made by the governor. However, their performance was better than anticipated due to recovery first responders taking rooms at their property and providing housing for displaced residents. The company remains optimistic for the long-term future in Maui and will support the recovery efforts. The delta in the fourth quarter's range is difficult to determine at this time.

The company discussed the impact of the disaster recovery business on their numbers and how the opening of the west side of the island will affect demand. They also mentioned that without the impact of Maui, their numbers would have been slightly higher. The anticipated impact on RevPAR and EBITDA from Maui is 50 basis points and $25 million for the full year. The company also provided updates on the acceleration of urban and business transient demand in September, which has returned to 17% of 2019 levels. They expect this trend to continue in the future and discussed their assets in San Francisco.

The paragraph discusses the positive outlook for San Francisco as a long-term market, with the Marriott and Grand Hyatt hotels in excellent condition and showing strong performance. Business travel is slowly returning, and 2024 may be a challenging year for citywide events, but there is optimism for the market beyond that. The lead volume and group room nights at the San Francisco Marriott Marquis are up from last year, and the upcoming Asia Pacific economic conference is expected to have a positive impact. The BP hotel has been slow to recover in terms of room nights, but the special corporate rate has helped to mitigate this.

The portfolio's room night recoveries have improved, with major markets like San Francisco, New York, and Denver only down 10-19%. However, the recovery is expected to continue at a slow pace in 2024. The company expects group bookings for next year to be 10% lower than 2019. The Sheraton Boston loan was repaid in full, and the Sheraton Times Square loan is expected to be paid off by next Wednesday with a restated interest rate of 13%.

The speaker, Jim Risoleo, is hopeful that the company will be a net buyer next year. They have a strong balance sheet and the ability to allocate capital, but there is currently a significant bid-ask spread in the market. They are talking to many hotel owners and will have to wait and see how pricing trends in 2024. The company is also focused on buying back stock, investing in assets, paying dividends, and being acquisitive. The next question is about out-of-room spend and potential strategic moves to modify brand standards.

The speaker discusses the impact of cost pressures on food and beverage revenue, citing a strong contribution from banqueting and catering. They mention that the excess amount of group demand during COVID made it difficult to compare Q3 results from this year to last year. They expect food and beverage revenue to moderate in the future, particularly in terms of attrition and cancellation revenue. The speaker also mentions ongoing discussions with managers about evaluating brand standards in light of the pandemic.

The speaker discusses changes made by Marriott and Hyatt to their brand standards post-pandemic and their ongoing efforts to improve customer experience through technology. They also mention a strong demand for leisure and resort properties, with rates 56% above 2019 levels in the third quarter. They anticipate a slowdown in growth in the coming quarters but are pleased with current performance.

The company is confident that their properties will continue to perform well, as they have high-quality assets and strong booking pace. They are optimistic about the expansion of the Vanderbilt Tower and are not seeing any signs of weakness during the holiday season, aside from uncertainty in Maui. The Q4 holidays are presenting a tough comparison to last year, but Christmas is currently pacing flat and Thanksgiving is slightly off due to timing.

Jim Risoleo, answering a question from Anthony Powell, explains that the Austin market has two properties, the Hyatt Regency and the Hotel Van Zandt. The Hyatt Regency is doing well due to its location and ability to take in-house groups. However, the Van Zandt is more leisure-driven and has been impacted by construction in the area. In the long-term, the development in the area will be beneficial, but for now, it is causing challenges. Additionally, the tech industry has also had an impact on the Van Zandt property.

The company is actively pursuing potential acquisitions, including portfolios and assets that require significant capital investment, if they are deemed to be accretive to shareholder value and have the potential for near-term performance. The Phoenician is an example of a successfully repositioned asset.

The speaker discusses their purchase of an asset in 2015 and the subsequent $120 million investment to improve it. They mention the success of the asset and their interest in finding similar opportunities. They also mention their open-mindedness towards portfolio deals and their willingness to take on accretive transactions. The speaker thanks the participants for joining the call and looks forward to seeing them at upcoming conferences.

This summary was generated with AI and may contain some inaccuracies.