Host Hotels and Resorts ((HST)) has held its Q1 earnings call. Read on for the main highlights of the call.
Host Hotels & Resorts’ recent earnings call painted a picture of cautious optimism, underscored by strong financial performance and a notable recovery in key segments such as Maui and group bookings. Despite the positive developments, the company acknowledged economic uncertainties and challenges in the business transient segment, which could pose risks moving forward. Nevertheless, Host Hotels remains optimistic, leveraging its robust balance sheet and strategic capital allocation to navigate these challenges.
Strong Financial Performance
Host Hotels & Resorts reported a commendable financial performance with an adjusted EBITDAre of $514 million, marking a 5.1% increase from the previous year. Additionally, the adjusted FFO per share rose by 4.9% to $0.64. The company also saw a 5.8% improvement in comparable hotel total RevPAR, highlighting its resilience and growth in a competitive market.
Maui Recovery
The recovery in Maui was a significant highlight, with transient rooms sold up approximately 70% year-over-year. This surge contributed to a 16% RevPAR growth in the first quarter, positively impacting the overall portfolio growth and demonstrating the region’s strong rebound.
Successful Reopening of Don CeSar
The reopening of the Don CeSar exceeded expectations, driven by stronger-than-anticipated transient demand. The hotel also experienced higher average checks in its food and beverage outlets and increased demand for spa services, indicating a successful comeback.
Capital Allocation and Share Repurchases
Host Hotels continued its strategic capital allocation by repurchasing 6.3 million shares of common stock at an average price of $15.79 per share, totaling $100 million. The company still has $585 million remaining capacity under its share repurchase program, showcasing its commitment to enhancing shareholder value.
Positive Group Booking Trends
The company reported a 7% year-over-year increase in Group RevPAR, supported by strong corporate group bookings. The total group revenue pace also rose by 3.3% compared to the previous year, reflecting a positive trend in group bookings.
Impact of Economic Uncertainty
Despite the strong performance, Host Hotels maintained its RevPAR guidance due to heightened macroeconomic uncertainty. The company noted a slight reduction in total RevPAR, driven by moderating trends in group lead volume, highlighting the cautious approach amid economic challenges.
Challenges in Business Transient Segment
The business transient segment faced challenges, with RevPAR growing only 2% due to a 5% decline in volume. Host Hotels expects business transient revenue to remain flat for the remainder of 2025, indicating ongoing difficulties in this area.
Cost and Margin Pressures
The company anticipates a decline in comparable hotel EBITDA margin by 160 basis points year-over-year at the low end of guidance. This is attributed to wage and benefit expenses and fixed expense pressures, which could impact profitability.
Potential Delays in Capital Projects
Concerns were raised over potential delays in capital projects due to tariff impacts on the CapEx budget. Host Hotels is considering potential off-ramps for capital projects if economic conditions worsen, reflecting a cautious approach to capital expenditure.
Forward-Looking Guidance
Looking ahead, Host Hotels & Resorts is maintaining its comparable hotel RevPAR guidance for 2025, with expectations of a 50 basis point to 2.5% growth over 2024. Despite macroeconomic uncertainties, the company remains committed to its strategic goals, including a capital expenditure guidance set between $580 million and $670 million for 2025.
In summary, Host Hotels & Resorts’ earnings call conveyed a balanced sentiment of optimism and caution. The company’s strong financial performance and strategic initiatives in key segments like Maui and group bookings are promising, yet economic uncertainties and challenges in the business transient segment remain areas of concern. Host Hotels’ proactive approach to capital allocation and strategic planning positions it well to navigate the evolving market landscape.