The paragraph is a part of the Host Hotels & Resorts Fourth Quarter 2024 Earnings Conference Call. Jaime Marcus, the Senior Vice President of Investor Relations, opens the call by noting that forward-looking statements will be made, which carry risks and uncertainties. Non-GAAP financial information will also be discussed, with reconciliations available in their latest SEC filing. Jim Risoleo, President and CEO, then shares that 2024 was a busy year for the company, marked by operational improvements, significant real estate acquisitions worth $1.5 billion, and reinvestment in their properties. They also progressed on the Hyatt Transformational Capital Program and a condo development at the Four Seasons Resort in Orlando.

In 2024, the company exceeded its guidance estimates, reporting a 1.7% increase in adjusted EBITDAre and a 2.6% increase in adjusted FFO per share compared to 2023. While comparable hotel total RevPAR grew by 2.1%, hotel RevPAR increased by 90 basis points. The hotel's EBITDA margin fell by 60 basis points to 29.2%, primarily due to increased wages, fixed expenses, and performance issues in Maui following wildfires. However, in the fourth quarter, adjusted EBITDAre reached $373 million, with adjusted FFO per share at $0.44. RevPAR growth was driven by strong transient demand, particularly in leisure travel to Maui, and increased ancillary revenues. The operational results exclude specific hotels, with changes anticipated in the comparable portfolio for 2025. RevPAR growth in the fourth quarter surpassed expectations due to over 3% rate growth, with transient revenue seeing an 8% increase, marking the highest improvement in six quarters.

The paragraph highlights revenue growth primarily driven by leisure travel in Maui, New York, and Oahu, with Maui resorts contributing significantly to the transient room revenue increase. Although leisure incentives were offered, transient rates remained strong, surpassing 2019 levels. Business transient revenue grew by 6% due to favorable market shifts, while group room revenue declined by 5% compared to the previous year due to challenging comparisons. Maui experienced considerable leisure recovery, with substantial increases in transient room sales at its Alila resorts and Hyatt Regency Maui. Leisure guests also boosted spending at various amenities, indicating a positive recovery trend. Over the full year, Maui affected RevPAR and EBITDA margin despite receiving business interruption proceeds. Additionally, there were improvements in food, beverage, and out-of-room spending.

In the recent quarter, F&B revenue increased by nearly 3%, primarily due to resort outlets, with banquet revenue rising despite fewer group room nights. For the full year, F&B revenue grew 3.6%, fueled by banquet contributions and improved group room night volumes, indicating the ongoing strength of affluent customers. Reconstruction efforts at The Don CeSar are mostly complete, with a focus on enhancing infrastructure resilience. The property's damage and remediation costs are estimated between $100 million and $110 million, with a $20 million insurance deductible. Business interruption proceeds of $9 million are factored into the 2025 adjusted EBITDAre guidance, though further payments are uncertain. Hurricanes Helene and Milton impacted the 2024 adjusted EBITDAre by $15 million. The company completed $1.5 billion in acquisitions across four hotels in 2024, all of which are meeting performance expectations.

In 2024, the company returned over $844 million to stockholders through share repurchases and dividends, including buying back 6.3 million shares and declaring dividends totaling $0.90 per share. They have $685 million left in their share repurchase program. They also invested nearly $550 million in capital expenditures and renovations, completing significant projects like room and space renovations and a condominium at the Four Seasons Resort in Orlando. Sales for these condo units began in November 2024, with 14 of 40 units already under agreement. For 2025, the company projects capital expenditures between $580 million and $670 million, including $70-80 million for property damage reconstruction, mostly covered by insurance, and $270-315 million for redevelopment and investment projects.

The Hyatt Transformational Capital Program plans renovations at several Hyatt locations and aims to counteract EBITDA disruptions with $27 million in operating profit guarantees by 2025. Significant projects for 2025 include expansions at The Phoenician and The Don CeSar, and a $75-85 million condo development at Four Seasons Resort in Orlando. Since 2018, 24 renovations have been completed, yielding a RevPAR index share gain of over 7.5 points for 16 stabilized hotels. Host has been recognized as a leader in corporate responsibility, ranking 88th on Newsweek's list of America's Most Responsible Companies for 2024 and 4th in the real estate sector. Additionally, four properties have achieved LEED certification, totaling 20 certified properties.

In the paragraph, the company highlights its sustainability achievements in renewable energy and green building certifications, which secured a maximum pricing benefit and reduced interest rates on outstanding loans. The company reflects on its accomplishments in 2024, emphasizing its iconic portfolio, investment-grade balance sheet, and favorable travel conditions. Looking forward to 2025, it expects sustained growth due to a diverse portfolio and robust balance sheet. Sourav Ghosh then discusses fourth-quarter operations and 2025 guidance, noting that revenue growth from group and transient guests was strong, with significant contributions from food and beverage sales at Maui and the Singer Resort. Despite fewer group rooms sold, banquet and catering revenue increased.

In the paragraph, several key financial highlights are noted for various hospitality locations. Notable group strength and banquet revenue growth were seen at properties like Manchester Grand Hyatt San Diego and the Four Seasons Orlando. Spa revenues increased by 18% due to the expansion at The Ritz-Carlton, Amelia Island, and golf revenues grew by 6%, with 2024 figures significantly above pre-pandemic levels. Transient room revenue increased by 8%, driven by leisure demand in Maui and strong rates portfolio-wide. Thanksgiving and festive season RevPAR rose by 8% and 12%, respectively, particularly in Maui and New York. Additionally, business transient revenue grew by 6%, with expectations for further growth driven by corporate accounts in 2025. Despite a 5% decline in group room revenue in the fourth quarter due to tough comparisons, notable increases were seen in San Diego, New Orleans, San Antonio, and Phoenix.

The corporate group segment displayed solid growth with a 6% revenue increase, balanced between room nights and rates. For 2025, there are 3.2 million confirmed group room nights, up 16% since the third quarter and nearly 3% above last year, with total group revenue up 5.6% due to both rate and demand growth, particularly in San Francisco, San Antonio, and New York. San Francisco hotels notably booked over 70% more group rooms for 2025 in the fourth quarter compared to the previous year. The group business remains strong, backed by citywide room night increases in key markets like San Francisco, San Antonio, New Orleans, and Denver. However, the 2024 comparable hotel EBITDA margin decreased to 29.2%, 60 basis points below 2023, mainly due to wages, benefits, fixed expenses, and impacts from Maui. For 2025, the business outlook predicts a stable environment with improved group business, gradual business transient recovery, and steady leisure demand. The forecasts account for a gradual recovery at Maui properties and ongoing international demand imbalance, with variable growth expectations for RevPAR between 0.5% and 2.5% over 2024.

The company anticipates a decline in hotel EBITDA margins in 2024, with RevPAR (Revenue Per Available Room) growth expected to be mid-single digits in Q1 and low-single digits for the rest of the year. Comparisons are challenging due to the Easter holiday shift and uncertain international travel trends. They expect a 1.5% increase in RevPAR compared to 2024, with a hotel EBITDA margin decrease of 180 basis points. Wage and benefit increases, lower business interruption funds, and impacts from Maui operations are expected to affect margins. They forecast a 6% rise in wages and benefits for 2025, which were 57% of operating expenses in 2024. The company's 2025 adjusted EBITDAre midpoint is $1.620 million, factoring in a $140 to $160 million impact from wage hikes, operational factors like The Don CeSar and Maui, reduced business interruption proceeds, and decreased interest income. They expect $9 million in business interruption proceeds by mid-year but are unsure of additional payments for The Don CeSar.

The paragraph outlines the company's financial projections and strategy for 2025, including a targeted adjusted EBITDAre which accounts for contributions from a condo development and restricted stock-based compensation, as well as anticipated losses and contributions from specific properties. It highlights the company's strong balance sheet with $2.3 billion in available liquidity and a leverage ratio of 2.7. It mentions recent dividends and the planned quarterly dividend for April 2025. The overall message is confidence in the company's financial health and preparedness to seize future opportunities, concluding with an invitation for questions from stakeholders.

In the conference call, Michael Bellisario from Baird asks about guidance and macroeconomic assumptions impacting the company's performance. Jim Risoleo responds that their guidance is based on current knowledge of GDP growth and non-residential fixed investment. He highlights the strong performance and potential upsides in group bookings, with a significant year-over-year increase in group rates, room nights, and total group revenue pace, particularly strong in the first and fourth quarters. He also notes the potential for increased banquet and catering business, and the possibility of increased business transient travel if corporate sentiment remains strong. The operator then moves to Smedes Rose at Citigroup, who inquires about business interruption insurance related to Maui.

The paragraph is a discussion about financial projections related to Maui's performance in 2024 and 2025. Jim Risoleo and Sourav Ghosh talk about adjusting the 2024 EBITDA of $97 million by deducting $17 million for non-recurring relief and recovery and $8 million for one-time cancellation revenues. This restates the 2024 EBITDA to $72 million. They then factor in a $7 million increase for wage and benefits in 2025 and estimate an operational improvement of $15 million to $30 million, leading to a projected 2025 EBITDA range of $80 million to $95 million. This suggests that while some one-time revenues won't recur, operational improvements are expected. Smedes Rose and Chris Woronka inquire further, with Chris asking about how leisure, group, and BT segments performed relative to expectations in 2024, implying that they might have exceeded initial projections.

The paragraph discusses a positive outlook for business transient (BT) travel and group business in 2025. BT revenues saw a 6% increase last year, with consulting and tech companies resuming travel. While it is difficult to forecast BT with certainty due to its short-term nature, the return of businesses to travel and office work is encouraging. Group business, particularly banquet and catering revenues, continues to perform well, driven by affluent consumers and incentive groups. Additionally, Maui resorts had a successful festive season, although it is too early to predict their performance for the year. Overall, the sentiment is optimistic for both BT and group business in 2025.

The paragraph discusses the current state and future expectations for business on Maui, particularly focusing on the return of incentive groups, which requires a longer booking window of over six months. Maui recently reopened for business, and there is optimism due to positive feedback from visiting meeting planners. The conversation then shifts to a question from David Katz regarding rumors of selling non-core assets. Jim Risoleo clarifies that they did not hire an advisor for asset sales but are open to selling assets if it benefits shareholders. However, there is no pressure to sell as they are satisfied with their current portfolio, its condition, and the significant performance improvements from recent renovations.

The paragraph discusses the current state of the transaction market, noting that it hasn't become as active as expected due to high 10-year treasury rates and a wide bid-ask spread between sellers and buyers, particularly those not obligated to sell. This situation is favorable for the speaker's firm due to its strong balance sheet and liquidity, allowing them to potentially capitalize on market opportunities. Subsequently, Duane Pfennigwerth from Evercore ISI inquires about the unexpectedly positive performance in the fourth and first quarters and asks about the company's guidance, which appears conservative given the positive trends observed. Jim Risoleo explains that it's early in the year for guidance, indicating uncertainty regarding the recovery in Maui and international travel demand.

The paragraph discusses financial projections and operations, focusing on improvements from the previous year and key assumptions like international flight dynamics and consumer travel trends. It highlights a target operational improvement between $15 million and $30 million, with international inbound flights seen as stable. Although outbound flights are higher, this number has weakened slightly since the last quarter. Two major drivers affecting forecasts are American consumer travel and RevPAR (revenue per available room) guidance. In January, RevPAR increased by 9.5%, aided by increased activity in Washington, DC due to inauguration events. Removing the DC impact, growth was 6%. The group pace for the first quarter is strong, and the timing of Easter affects performance, with expectations of Q1 outperforming Q2. Additionally, at the midpoint of the financial guidance with a 1.5% RevPAR growth, there's a projected 4.3% hotel expense increase, accounting for differences between the two years.

The paragraph provides a financial overview related to business interruption proceeds and hotel expense growth. It explains a $31 million difference between 2024 and 2025 due to $40 million in business interruption proceeds in 2024 versus $9 million in 2025. Adjusting for these proceeds, total hotel expense growth is only 3.7%, despite a wage and benefit growth over 6%. For margin break-even, a 4.3% RevPAR growth (including BI) or 3.7% (excluding BI) is needed. Chris Darling from Green Street asks about labor availability given current administration rhetoric. Jim Risoleo notes no concerns on labor availability, given partnerships with Marriott and Hyatt, and highlights these companies as desirable places to work. He emphasizes the importance of working with these managers to ensure capable staffing and leaves productivity enhancements to Sourav to discuss.

The paragraph discusses the evolving use of artificial intelligence in hotels to aid customers in booking non-room services, such as spa or golf, thereby enhancing labor efficiency and generating additional revenue. It highlights the importance of total revenue per available room (RevPAR), noting that 40% of the year's revenue is expected from non-rooms sources. Although margins are different for non-rooms revenue, they contribute positively to EBITDA. The focus is on using advanced tools for productivity and talent management, particularly in major hotel chains like Marriott. Additionally, during a Q&A with Robin Farley from UBS, it was clarified that the guidance on condo sales assumes more sales than the 14 deposits already received, and there was an inquiry about the expected corporate negotiated rate increase for 2025.

The paragraph discusses expectations for condo sales and revenue recognition, noting that EBITDA from condo sales won't be seen until the fourth quarter as revenue can only be recognized after handing over keys. Aryeh Klein asks about recovery expectations for group activities and revenue in Maui, specifically for 2025 and indications for 2026, given previous noted delays. Sourav Ghosh responds affirmatively about potential recovery to $172 million despite wage headwinds, reflecting pre-fire performance levels, and highlights investments in Maui assets. He confirms an improvement in group activity bookings for Maui.

The paragraph discusses the company's plans for capital deployment in 2025. Jim Risoleo responds to a question from Jay Kornreich about their strategy, noting their investment grade balance sheet and flexibility in capital allocation. The focus includes buying back stock, considering additional acquisitions, and investing in their portfolio. They have seen positive results from previous renovation programs and are excited about upcoming projects in 2025, specifically mentioning the Hyatt Transformational Capital Program. They plan to start projects at several Hyatt locations and are in discussions with brand partners about repositioning other properties to gain market share.

The paragraph is a conversation between various individuals about the financial performance and strategic decisions of a company. Floris van Dijkum asks about peak occupancy rates for the company's domestic portfolio, distinguishing between resorts and urban hotels. Sourav Ghosh indicates an 8-point gap to peak occupancy, with expectations for this year similar to 2024. Smedes Rose inquires about capital deployment, noting the company's stock is trading at a lower valuation than the private market and suggesting a programmatic stock buyback. Jim Risoleo agrees the stock represents good value and states that while stock buybacks are considered, a programmatic approach is not favored.

In the paragraph, the speaker emphasizes the importance of maintaining an investment-grade balance sheet while also being open to buying back shares when circumstances allow. They explain that although they wanted to repurchase stock in the fourth quarter, they were unable to do so due to being in a blackout period, which currently persists as they have not yet filed their 10-K report. The discussion concludes with a summary of the conference call, thanking participants and looking forward to upcoming meetings.

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