The Host Hotels & Resorts Fourth Quarter 2023 Earnings Conference Call began with a welcome from the operator and an introduction from Senior Vice President of Investor Relations, Jaime Marcus. Marcus reminded listeners that the comments made during the call are considered forward-looking statements and discussed the use of non-GAAP financial information. President and CEO Jim Risoleo then spoke about the company's successful year, highlighting strong operational improvements and the completion of three strategic objectives. These efforts will continue to benefit the company in the future.

In 2023, the company successfully returned capital to stockholders, reinvested in their portfolio, and made an agreement with Hyatt to renovate six properties. They also maintained an investment grade balance sheet and are positioned for potential acquisition opportunities. Their results for the year were above the midpoint of their guidance range, with growth in comparable hotel RevPAR and EBITDA margin. In the fourth quarter, they saw an increase in occupancy and rate, despite the impact of the wildfires in Maui. This marks the seventh consecutive quarter of achieving metrics above 2019 levels. The operational results discussed refer to their comparable hotel portfolio, which excludes Hyatt Coconut Point and Ritz-Carlton Naples in 2023, and only excludes Ritz-Carlton Naples in 2024.

In the fourth quarter, the company's portfolio was affected by the Maui wildfires, resulting in a decrease in RevPAR, total RevPAR, EBITDA, and EBITDA margin. The impact was also felt in the company's joint venture timeshare. However, there was improvement in San Francisco results, with RevPAR and F&B revenue increasing. Group business was a major contributor to this growth. Out-of-room spend was slightly down due to the impact of Maui.

The company has seen positive revenue trends post-pandemic and has been recognized for its corporate responsibility efforts. They have set new environmental and social targets for 2030 and are on track to become a net positive company by 2050. The company also highlighted their efforts towards sustainability, including green building certifications and a climate risk assessment. They have also implemented new social targets, including diversity and community impact initiatives.

In the fourth quarter, the company repurchased shares and declared a dividend, returning over $700 million to shareholders. They also received repayment for a seller financing loan for a recent disposition. The company's business mix was affected by a decrease in leisure transient demand and an increase in group demand, but overall results were as expected. Group room nights sold for the year were 112% of 2022 levels. Business transient and leisure demand showed gradual improvement, with leisure rates at resorts exceeding 2019 levels. The company is optimistic about 2024.

The article discusses the positive outlook for the hotel industry, citing factors such as improved macroeconomic sentiment, low supply levels, increased airline capacity, and expected rate cuts. The company, Host, is well positioned to take advantage of acquisition opportunities with available liquidity and successful renovation projects. The company also plans to continue reinvesting in their portfolio and has completed renovations and restorations at several properties.

In 2024, the company plans to spend $500 million to $605 million on capital expenditures, including renovations and ROI projects. They have already started renovations at two properties and will begin renovations at another in the fourth quarter of this year. They also plan to spend $50 million to $70 million on a luxury condominium development. The company expects to benefit from operating profit guarantees and is confident in their growth opportunities. In the fourth quarter of 2023, overall transient revenue was down 5% due to changes in demand in Maui. This had a 590 basis point impact on transient revenue, split between demand and rate.

The company saw a 2% increase in transient rate at their resorts despite the impact of Maui and renovations. For spring break, transient revenue pace is up 20% outside of Maui. Business transient demand is slowly recovering, with room nights down 15% in the fourth quarter compared to 2019. Group room revenues increased by 21% in 2023, with room night volume recovering to 95% of 2019 levels. Excluding Maui, group room night volume recovered to 94% of 2019 levels. The company has 3.1 million definite group room nights booked for 2024, representing a 16% increase since the third quarter.

The total group revenue pace for the company has increased by 10% compared to the previous year, with strong performance in rate room nights and banquets. Despite margin declines due to various factors, the company has been able to achieve a 60 basis point increase in comparable hotel EBITDA margin compared to 2019. The company's outlook for 2024 predicts stable operating conditions with potential growth in group business and leisure transient demand, as well as continued recovery on Maui. The expected comparable hotel RevPAR growth for 2024 is between 2.5% and 5.5%, with a projected decrease in EBITDA margins ranging from 120 basis points to 40 basis points compared to 2019. However, at the midpoint of the guidance, margins are only expected to be down 20 basis points despite a 50 basis point impact from Maui.

The company expects low single digit RevPAR growth in the first half of the year due to tough comparisons to 2023, but anticipates mid-single digit growth in the second half due to strong group bookings and less renovation disruption. They expect a 4% increase in RevPAR and a 29.3% EBITDA margin for the year, with Maui impacting RevPAR by 100 basis points and EBITDA margin by 50 basis points. They also anticipate wage rate increases and a 15 basis point impact from moderating attrition and cancellation revenues. The adjusted EBITDAre midpoint for 2024 is $1,635 million, with additional business interruption proceeds from Hurricane Ian and contributions from the Ritz-Carlton, Naples. However, no assumptions have been made for business interruption proceeds from the Maui wildfires in 2024.

The company's balance sheet and liquidity position are strong, with a weighted average maturity of 4.2 years and $2.9 billion in total available liquidity. The company recently paid a quarterly cash dividend and a special dividend, and has authorized another quarterly cash dividend for April. Fitch upgraded the company's issuer rating to BBB with a stable outlook. The company believes its portfolio and balance sheet position it well for future growth opportunities. During the ALIS conference, the company had positive conversations about potential mergers and acquisitions.

Jim Risoleo, CEO of Host, discusses how the company's strong balance sheet sets them apart in the market and allows them to pursue opportunities that others may not have. Host plans to continue investing in their portfolio and acquiring assets in 2024. While there are currently few properties for sale, Host is leveraging their relationships and reputation to secure deals and make their balance sheet work for them.

The company is actively searching for assets to add to their portfolio in order to increase EBITDA growth. They prefer assets with diverse demand drivers and are anticipating an increase in competition for assets once interest rates start loosening. The company is confident in their ability to acquire assets and hopes to make acquisitions in the next few months. The group booking side is seeing improvements due to the return of association business and citywide conventions, with corporate group business remaining strong. The 2024 citywide room night pace is around 90% of 2019 actuals, and many cities are pacing ahead.

The corporate group's spending on banquet and catering remains strong, with a 4% increase in ADR and a 3.4% increase in room nights. The company has $3.1 million group room nights booked for 2024, with San Diego, Orlando, D.C., San Francisco, and San Antonio driving the pace. In terms of citywide pace, San Diego, D.C., Seattle, New Orleans, and Miami are also pacing well. The company is tracking CMBS maturities, but has not seen any distress materialize in assets or markets that would interest them.

The company is tracking the market closely and expects pressure from other hotel owners to reinvest in their portfolios. They have invested significant capital in their portfolio and are in a good position to continue gaining yield index and outperforming. They are not counting on distressed assets but are using their relationships, reputation, and balance sheet to be net acquirers this year. They will continue to look for assets where they can add value, such as those with ROI opportunities and new markets. They are also starting to look at urban markets due to solid performance. The company feels good about the macro picture and hopes for a soft landing in the market.

Sourav Ghosh is asked about the low single-digit RevPAR growth in the first half of the year and the expected acceleration in the second half. He explains that this is due to tough comps in the first half and strong group booking pace and renovation tailwinds in the second half. The four hotels that had renovations last year will have a significant impact on the second half's growth, along with other factors.

Sourav Ghosh from the company is answering a question from Michael Bellisario from Baird about their outlook and industry RevPAR forecast. Ghosh mentions that their midpoint number is impacted by 100 basis points due to the impact from Maui and that their portfolio weighting is different from third parties. He also discusses the total expense growth and the split between occupancy and rates. The next question is from Duane Pfennigwerth from Evercore ISI about group pace, which Ghosh says is up 13%.

The company is not approaching revenue management for group bookings any differently than before the pandemic. They prioritize filling hotels with high-rated and high-revenue groups. They already have a significant number of group room nights booked for the year and expect to exceed last year's numbers. However, pickup for the short-term may be lower due to longer lead times, but they are confident in filling the gap with upcoming need dates.

Stephen Grambling from Morgan Stanley asked about the cadence of transient through the year and how the company is modeling for the summer. The company expects a moderation in transient compared to last year, which saw a strong summer with higher outbound than inbound numbers. The company is currently projecting an inbound number of 98% for 2024 compared to 2019. The company's fourth quarter ended with a transient ADR for resorts still up 58% compared to 2019. Spring break is currently pacing up 20% in revenues and 7% in rate, which is encouraging. The company doesn't have enough visibility into the summer yet, but spring break is a good indicator.

Stephen Grambling asks about the return on investment for the Hyatt Transformation and Marriott transformation programs. Jim Risoleo explains that the HTCP is modeled after the Marriott program and has received enhanced owner priorities and operating profit guarantees from Hyatt. The assumptions and expected returns for the two programs are similar.

During a conference call, Jim Risoleo, CEO of Host Hotels & Resorts, discussed the company's 4% RevPAR growth outlook and the factors driving it, including both RevPAR index premium and a significant uplift in food and beverage revenue. He also mentioned that there has been no noticeable slowdown in spend from the affluent leisure consumers, and that spring break revenue is up 20% year-over-year.

The speaker, Jim Risoleo, discusses the impact of the wildfires on Maui and the steps being taken for recovery. He mentions a potential ban on short-term rentals and the efforts being made to provide shelter for displaced residents. He also notes that the properties in Wailea are in good shape and have completed renovations.

The company is confident in the good condition of its assets and expects business to improve as consumers understand the differences between Wailea and the west side in Kaanapali. The company has assumed a 100 basis point impact on Maui, resulting in a decrease in EBITDA, but there is potential for upside if Maui performs better than anticipated. The wildfire on Maui is expected to have a $25-30 million impact on EBITDA for the year. The company is open to all attractive opportunities, regardless of size.

The company focuses on larger and complicated transactions, with diverse demand generators. They are open to buying assets that need to be repositioned and have the ability to do so in-house. Their goal is to improve the EBITDA growth profile of the company. The spread between group and transient rates is not specified, but group rates are prioritized in the yielding process.

The speaker discusses the importance of building a strong group base for their portfolio, as it not only affects rates but also ancillary revenue from things like food and beverage and golf and spa. The group base drives pricing decisions, rather than just focusing on transient business. The speaker also mentions their upcoming conferences and thanks the audience for participating.

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