Host Hotels & Resorts, Inc. Reports Third Quarter 2023 Results
- Revenues increased by 2.1% YoY to $1.2 billion in Q3 2023.
- Comparable hotel RevPAR grew by 1.8% in Q3 2023.
- The company repurchased $100 million of common shares in the quarter.
- Host Hotels & Resorts announced the Hyatt Transformational Capital Program to invest $550-$600 million in six properties.
- None.
Maintains Midpoint of Full Year RevPAR Growth Guidance
Repurchases
Announces Hyatt Transformational Capital Program
BETHESDA, Md., Nov. 01, 2023 (GLOBE NEWSWIRE) -- Host Hotels & Resorts, Inc. (NASDAQ: HST) (the “Company”), the nation’s largest lodging real estate investment trust (“REIT”), today announced results for third quarter of 2023.
| OPERATING RESULTS | |||||||||||||||||||||
| (unaudited, in millions, except per share and hotel statistics) | |||||||||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | ||||||||||||||||||||
| 2023 | 2022 | Percent Change | 2023 | 2022 | Percent Change | ||||||||||||||||
| Revenues | $ | 1,214 | $ | 1,189 | 2.1 | % | $ | 3,988 | $ | 3,644 | 9.4 | % | |||||||||
| Comparable hotel revenues⁽¹⁾ | 1,181 | 1,188 | (0.6 | %) | 3,909 | 3,522 | 11.0 | % | |||||||||||||
| Comparable hotel Total RevPAR⁽¹⁾ | 312.35 | 314.25 | (0.6 | %) | 348.41 | 313.90 | 11.0 | % | |||||||||||||
| Comparable hotel RevPAR⁽¹⁾ | 201.32 | 197.76 | 1.8 | % | 214.67 | 194.49 | 10.4 | % | |||||||||||||
| Net income | $ | 113 | $ | 116 | (2.6 | %) | $ | 618 | $ | 494 | 25.1 | % | |||||||||
| EBITDAre⁽¹⁾ | 361 | 328 | 10.1 | % | 1,251 | 1,140 | 9.7 | % | |||||||||||||
| Adjusted EBITDAre⁽¹⁾ | 361 | 328 | 10.1 | % | 1,251 | 1,134 | 10.3 | % | |||||||||||||
| Diluted earnings per common share | 0.16 | 0.16 | — | % | 0.85 | 0.68 | 25.0 | % | |||||||||||||
| NAREIT FFO per diluted share⁽¹⁾ | 0.41 | 0.38 | 7.9 | % | 1.48 | 1.35 | 9.6 | % | |||||||||||||
| Adjusted FFO per diluted share⁽¹⁾ | 0.41 | 0.38 | 7.9 | % | 1.48 | 1.35 | 9.6 | % | |||||||||||||
* Additional detail on the Company’s results, including data for 22 domestic markets, is available in the Third Quarter 2023 Supplemental Financial Information on the Company’s website at www.hosthotels.com.
James F. Risoleo, President and Chief Executive Officer, said, “Host delivered comparable hotel RevPAR growth of
Risoleo continued, “We have also reached an agreement with Hyatt to complete transformational reinvestment capital projects at six properties as we build on our successful capital allocation strategy over the past few years. In addition, we repurchased approximately
_______________________________
(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and comparable hotel revenues are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics include adjustments for dispositions, acquisitions and non-comparable hotels. See Hotel Operating Data for RevPAR results of the portfolio based on the Company’s ownership period without these adjustments.
HIGHLIGHTS:
- Comparable hotel RevPAR was
$201.32 in the third quarter and$214.67 year-to-date, representing an increase of1.8% and10.4% , respectively, compared to the same periods in 2022, primarily driven by an increase in occupancy for the quarter and growth in both occupancy and rate year-to-date. Continued growth in city-center markets fueled by improvements in group business led to the overall improvement, offsetting moderating rates at resorts in comparison to the third quarter of 2022. - Comparable hotel Total RevPAR was
$312.35 for the third quarter and$348.41 year-to-date, representing a decrease of0.6% and an increase of11.0% , respectively, compared to the same periods in 2022. The decrease for the quarter was driven by the impacts of the wildfires in Maui and lower attrition and cancelation fees and group spend in comparison to the third quarter of 2022. - Generated GAAP net income of
$113 million in the third quarter, a slight decrease compared to the third quarter of 2022, while GAAP operating profit margin was12.9% for the quarter, an increase of 50 basis points compared to the third quarter of 2022. For the quarter, business interruption gains of$54 million were offset by the decline in comparable hotel EBITDA, discussed below, and taxes related to the business interruption gains. Year-to-date, GAAP net income of$618 million reflected an increase compared to 2022, primarily due to an increase in operating profit and gain on asset sales, while GAAP operating profit margin remained static compared to 2022 at16.4% . - Comparable hotel EBITDA was
$314 million for the third quarter, representing a decline compared to third quarter 2022 results, and reflecting a decrease in comparable hotel EBITDA margin of 280 basis points to26.6% . As expected, in addition to higher insurance and utility expenses, third quarter margin declines were driven by stabilized staffing levels in comparison to third quarter of 2022, and lower attrition and cancelation fees. Year-to-date, comparable hotel EBITDA was$1,202 million and comparable hotel EBITDA margin was30.8% . - Adjusted EBITDAre was
$361 million for the third quarter and$1,251 million year-to-date, both exceeding the same periods in 2022 and benefiting from the business interruption proceeds discussed below. - As of November 1, 2023, the Company has received insurance proceeds of
$208 million out of the expected potential insurance recovery of approximately$310 million for covered costs related to damage and disruption caused by Hurricane Ian in September 2022. In the third quarter,$54 million of these proceeds were recognized as a gain on business interruption. - Following the August wildfires in Maui, Hawaii, the Company’s three hotels in that region continue to provide food and shelter for employees, their families, and emergency response teams. The Hyatt Regency Maui Resort and Spa began welcoming back new guests on November 1. While there was not any reported property damage to the Company’s hotels or golf courses, the Company estimates that net income and Adjusted EBITDAre from its Maui hotels and joint venture timeshare were impacted by approximately
$7 million in the third quarter, RevPAR was impacted by 60 basis points and Total RevPAR was impacted by 120 basis points. - Reached an agreement with Hyatt to complete transformational reinvestment capital projects at six properties in the Company’s portfolio, the Grand Hyatt Atlanta in Buckhead, Grand Hyatt Washington, Manchester Grand Hyatt San Diego, Hyatt Regency Austin, Hyatt Regency Washington on Capitol Hill, and Hyatt Regency Reston. These investments are intended to position the targeted hotels to compete better in their respective markets while seeking to enhance long-term performance. The total investment is expected to be approximately
$550 -$600 million , two-thirds of which the Company was planning to invest as part of its capital plan over the next few years. The Company expects to invest$125 -$200 million per year over the next three to four years on this program. Hyatt has agreed to provide additional priority returns on the agreed upon investments and operating profit guarantees totaling$40 million to offset expected business disruptions. - Comparable hotel RevPAR for October is estimated to be
$229 , a2.4% improvement over 2022.
BALANCE SHEET
The Company maintains a robust balance sheet, with the following balances at September 30, 2023:
- Total assets of
$12.3 billion . - Debt balance of
$4.2 billion , with a weighted average maturity of 4.5 years, a weighted average interest rate of4.6% , and a balanced maturity schedule with the next significant maturity of$400 million due in April 2024. - Total available liquidity of approximately
$2.6 billion , including furniture, fixtures and equipment escrow reserves of$218 million and$1.5 billion available under the revolver portion of the credit facility.
During the third quarter of 2023, the
SHARE REPURCHASE PROGRAM AND DIVIDENDS
During the third quarter of 2023, the Company repurchased 6.3 million shares at an average price of
The Company paid a third quarter common stock cash dividend of
HOTEL BUSINESS MIX UPDATE
The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately
The following are the results for transient, group and contract business in comparison to 2022 performance, for the Company’s current portfolio:
| Quarter ended September 30, 2023 | Year-to-date ended September 30, 2023 | ||||||||||||||||||||||
| Transient | Group | Contract | Transient | Group | Contract | ||||||||||||||||||
| Room nights (in thousands) | 1,526 | 990 | 201 | 4,375 | 3,112 | 533 | |||||||||||||||||
| Percent change in room nights vs. same period in 2022 | 0.4 | % | 1.8 | % | 20.7 | % | 2.5 | % | 15.0 | % | 15.1 | % | |||||||||||
| Rooms revenues (in millions) | $ | 472 | $ | 252 | $ | 37 | $ | 1,465 | $ | 844 | $ | 99 | |||||||||||
| Percent change in revenues vs. same period in 2022 | (3.3 | %) | 9.8 | % | 24.9 | % | 3.0 | % | 23.7 | % | 28.2 | % | |||||||||||
CAPITAL EXPENDITURES
The following presents the Company’s capital expenditures spend through the third quarter of 2023 and the forecast for full year 2023 (in millions):
| Year-to-date ended September 30, 2023 | 2023 Full Year Forecast | |||||||
| Actual | Low-end of range | High-end of range | ||||||
| ROI - Marriott Transformational Capital Program | $ | 22 | $ | 25 | $ | 30 | ||
| All other return on investment ("ROI") projects | 118 | 175 | 200 | |||||
| Total ROI Projects | 140 | 200 | 230 | |||||
| Renewals and Replacements ("R&R") | 194 | 265 | 290 | |||||
| R&R and ROI Capital expenditures | 334 | 465 | 520 | |||||
| R&R - Insurable Reconstruction | 138 | 150 | 175 | |||||
| Total Capital Expenditures | $ | 472 | $ | 615 | $ | 695 | ||
2023 OUTLOOK
Despite the impact of the wildfires in Maui, which is expected to continue into the fourth quarter, and continued macroeconomic concerns, the Company maintained the midpoint of its previous full year expected comparable hotel RevPAR growth at
In comparison to 2019, which the Company believes is the most relevant comparison, operating profit margins and comparable hotel EBITDA margins are expected to increase 110 basis points and 40 basis points, respectively, at the midpoint of guidance. However, as expected, margins for the full year are anticipated to decline in comparison to 2022, driven by closer to stable staffing levels, higher wages, insurance and utility expenses, lower attrition and cancelation fees, and occupancy below 2019 levels. The guidance range for net income and Adjusted EBITDAre includes an additional
The Company anticipates its 2023 operating results as compared to 2022 will be in the following range:
| Current Full Year 2023 Guidance | Current Full Year 2023 Guidance Change vs. 2022 | Previous Full Year 2023 Guidance Change vs. 2022 | Change in Full Year 2023 Guidance to the Mid-Point | ||||
| Comparable hotel Total RevPAR | (30) bps | ||||||
| Comparable hotel RevPAR | 0 bps | ||||||
| Total revenues under GAAP | (10) bps | ||||||
| Operating profit margin under GAAP | (40) bps to (20) bps | (170) bps to (100) bps | 120 bps | ||||
| Comparable hotel EBITDA margin | (210) bps to (170) bps | (210) bps to (170) bps | 0 bps | ||||
Based upon the above parameters, the Company estimates its 2023 guidance as follows:
| Current Full Year 2023 Guidance | Previous Full Year 2023 Guidance | Change in Full Year 2023 Guidance to the Mid-Point | ||||
| Net income (in millions) | $ | 36 | ||||
| Adjusted EBITDAre (in millions) | $ | 60 | ||||
| Diluted earnings per common share | $ | 0.05 | ||||
| NAREIT FFO per diluted share | $ | 0.07 | ||||
| Adjusted FFO per diluted share | $ | 0.06 | ||||
See the 2023 Forecast Schedules and the Notes to Financial Information for items that may affect forecast results and the Third Quarter 2023 Supplemental Financial Information for additional detail on the mid-point of full year 2023 guidance.
ABOUT HOST HOTELS & RESORTS
Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 72 properties in the United States and five properties internationally totaling approximately 42,000 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Four Seasons®, Swissôtel®, ibis® and Novotel®, as well as independent brands. For additional information, please visit the Company’s website at www.hosthotels.com.
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements which include, but may not be limited to, our expectations regarding the impact of the COVID-19 pandemic on our business, the recovery of travel and the lodging industry, the impact of Hurricane Ian and 2023 estimates with respect to our business, including our anticipated capital expenditures and financial and operating results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to, those described in the Company’s annual report on Form 10-K and other filings with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of November 1, 2023 and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
* This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
*** Tables to Follow ***
Host Hotels & Resorts, Inc., herein referred to as “we,” “Host Inc.,” or the “Company,” is a self-managed and self-administered real estate investment trust that owns hotel properties. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Hotels & Resorts, L.P. (“Host LP”), of which we are the sole general partner. When distinguishing between Host Inc. and Host LP, the primary difference is approximately
| HOST HOTELS & RESORTS, INC. Condensed Consolidated Balance Sheets (unaudited, in millions, except shares and per share amounts) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Property and equipment, net | $ | 9,679 | $ | 9,748 | ||||
| Right-of-use assets | 553 | 556 | ||||||
| Due from managers | 78 | 94 | ||||||
| Advances to and investments in affiliates | 139 | 132 | ||||||
| Furniture, fixtures and equipment replacement fund | 218 | 200 | ||||||
| Notes receivable | 322 | 413 | ||||||
| Other | 387 | 459 | ||||||
| Cash and cash equivalents | 916 | 667 | ||||||
| Total assets | $ | 12,292 | $ | 12,269 | ||||
| LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY | ||||||||
| Debt⁽¹⁾ | ||||||||
| Senior notes | $ | 3,119 | $ | 3,115 | ||||
| Credit facility, including the term loans of | 988 | 994 | ||||||
| Mortgage and other debt | 105 | 106 | ||||||
| Total debt | 4,212 | 4,215 | ||||||
| Lease liabilities | 565 | 568 | ||||||
| Accounts payable and accrued expenses | 228 | 372 | ||||||
| Due to managers | 72 | 67 | ||||||
| Other | 184 | 168 | ||||||
| Total liabilities | 5,261 | 5,390 | ||||||
| Redeemable non-controlling interests - Host Hotels & Resorts, L.P. | 157 | 164 | ||||||
| Host Hotels & Resorts, Inc. stockholders’ equity: | ||||||||
| Common stock, par value | 7 | 7 | ||||||
| Additional paid-in capital | 7,588 | 7,717 | ||||||
| Accumulated other comprehensive loss | (73 | ) | (75 | ) | ||||
| Deficit | (652 | ) | (939 | ) | ||||
| Total equity of Host Hotels & Resorts, Inc. stockholders | 6,870 | 6,710 | ||||||
| Non-redeemable non-controlling interests—other consolidated partnerships | 4 | 5 | ||||||
| Total equity | 6,874 | 6,715 | ||||||
| Total liabilities, non-controlling interests and equity | $ | 12,292 | $ | 12,269 | ||||
__________
(1) Please see our Third Quarter 2023 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.
| HOST HOTELS & RESORTS, INC. Condensed Consolidated Statements of Operations (unaudited, in millions, except per share amounts) | ||||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | ||||||||||||||||
| Rooms | $ | 777 | $ | 746 | $ | 2,447 | $ | 2,251 | ||||||||
| Food and beverage | 328 | 330 | 1,174 | 1,032 | ||||||||||||
| Other | 109 | 113 | 367 | 361 | ||||||||||||
| Total revenues | 1,214 | 1,189 | 3,988 | 3,644 | ||||||||||||
| Expenses | ||||||||||||||||
| Rooms | 196 | 190 | 590 | 539 | ||||||||||||
| Food and beverage | 241 | 230 | 773 | 675 | ||||||||||||
| Other departmental and support expenses | 314 | 300 | 952 | 873 | ||||||||||||
| Management fees | 51 | 48 | 185 | 150 | ||||||||||||
| Other property-level expenses | 106 | 90 | 290 | 252 | ||||||||||||
| Depreciation and amortization | 174 | 164 | 511 | 498 | ||||||||||||
| Corporate and other expenses⁽¹⁾ | 29 | 29 | 90 | 77 | ||||||||||||
| Gain on insurance and business interruption settlements | (54 | ) | (10 | ) | (57 | ) | (17 | ) | ||||||||
| Total operating costs and expenses | 1,057 | 1,041 | 3,334 | 3,047 | ||||||||||||
| Operating profit | 157 | 148 | 654 | 597 | ||||||||||||
| Interest income | 22 | 10 | 56 | 17 | ||||||||||||
| Interest expense | (48 | ) | (40 | ) | (142 | ) | (113 | ) | ||||||||
| Other gains | 1 | 5 | 70 | 19 | ||||||||||||
| Equity in earnings (losses) of affiliates | (4 | ) | (1 | ) | 7 | 3 | ||||||||||
| Income before income taxes | 128 | 122 | 645 | 523 | ||||||||||||
| Provision for income taxes | (15 | ) | (6 | ) | (27 | ) | (29 | ) | ||||||||
| Net income | 113 | 116 | 618 | 494 | ||||||||||||
| Less: Net income attributable to non-controlling interests | (2 | ) | (2 | ) | (10 | ) | (8 | ) | ||||||||
| Net income attributable to Host Inc. | $ | 111 | $ | 114 | $ | 608 | $ | 486 | ||||||||
| Basic and diluted earnings per common share | $ | 0.16 | $ | 0.16 | $ | 0.85 | $ | 0.68 | ||||||||
___________
(1) Corporate and other expenses include the following items:
| Quarter ended September 30, | Year-to-date ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| General and administrative costs | $ | 20 | $ | 20 | $ | 61 | $ | 58 | ||||||||
| Non-cash stock-based compensation expense | 6 | 9 | 19 | 19 | ||||||||||||
| Litigation accruals | 3 | — | 10 | — | ||||||||||||
| Total | $ | 29 | $ | 29 | $ | 90 | $ | 77 | ||||||||
| HOST HOTELS & RESORTS, INC. Earnings per Common Share (unaudited, in millions, except per share amounts) | ||||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income | $ | 113 | $ | 116 | $ | 618 | $ | 494 | ||||||||
| Less: Net income attributable to non-controlling interests | (2 | ) | (2 | ) | (10 | ) | (8 | ) | ||||||||
| Net income attributable to Host Inc. | $ | 111 | $ | 114 | $ | 608 | $ | 486 | ||||||||
| Basic weighted average shares outstanding | 709.7 | 714.9 | 711.4 | 714.7 | ||||||||||||
| Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market | 2.2 | 2.7 | 2.2 | 2.7 | ||||||||||||
| Diluted weighted average shares outstanding⁽¹⁾ | 711.9 | 717.6 | 713.6 | 717.4 | ||||||||||||
| Basic and diluted earnings per common share | $ | 0.16 | $ | 0.16 | $ | 0.85 | $ | 0.68 | ||||||||
___________
(1) Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.
HOST HOTELS & RESORTS, INC.
Hotel Operating Data for Consolidated Hotels
Comparable Hotel Results by Location(1)
| As of September 30, 2023 | Quarter ended September 30, 2023 | Quarter ended September 30, 2022 | |||||||||||||||||||||||||||||||
| Location | No. of Properties | No. of Rooms | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Percent Change in RevPAR | Percent Change in Total RevPAR | |||||||||||||||||||||
| Maui/Oahu | 4 | 2,006 | $ | 565.03 | 69.7 | % | $ | 393.67 | $ | 549.52 | $ | 565.30 | 73.6 | % | $ | 416.12 | $ | 643.57 | (5.4 | )% | (14.6 | )% | |||||||||||
| Jacksonville | 1 | 446 | 479.33 | 69.2 | 331.47 | 726.78 | 487.53 | 67.0 | 326.67 | 707.75 | 1.5 | 2.7 | |||||||||||||||||||||
| Miami | 2 | 1,033 | 377.39 | 50.3 | 189.66 | 358.25 | 457.43 | 50.2 | 229.66 | 427.55 | (17.4 | ) | (16.2 | ) | |||||||||||||||||||
| Florida Gulf Coast | 3 | 941 | 309.76 | 62.7 | 194.17 | 381.17 | 327.19 | 62.2 | 203.68 | 386.66 | (4.7 | ) | (1.4 | ) | |||||||||||||||||||
| Phoenix | 3 | 1,545 | 263.79 | 59.6 | 157.18 | 368.20 | 264.31 | 58.4 | 154.24 | 408.94 | 1.9 | (10.0 | ) | ||||||||||||||||||||
| Orlando | 2 | 2,448 | 309.53 | 64.9 | 200.78 | 419.73 | 327.78 | 61.4 | 201.23 | 427.58 | (0.2 | ) | (1.8 | ) | |||||||||||||||||||
| New York | 2 | 2,486 | 334.84 | 87.0 | 291.33 | 387.71 | 309.77 | 84.3 | 260.99 | 351.90 | 11.6 | 10.2 | |||||||||||||||||||||
| Los Angeles/Orange County | 3 | 1,067 | 314.25 | 85.9 | 269.85 | 375.29 | 303.74 | 86.4 | 262.42 | 373.36 | 2.8 | 0.5 | |||||||||||||||||||||
| San Diego | 3 | 3,294 | 295.59 | 83.5 | 246.81 | 441.94 | 292.38 | 85.4 | 249.83 | 440.67 | (1.2 | ) | 0.3 | ||||||||||||||||||||
| Boston | 2 | 1,496 | 273.06 | 83.8 | 228.75 | 291.12 | 263.46 | 63.8 | 167.99 | 223.00 | 36.2 | 30.5 | |||||||||||||||||||||
| Washington, D.C. (CBD) | 5 | 3,240 | 244.50 | 71.5 | 174.94 | 248.36 | 237.56 | 65.7 | 156.01 | 223.72 | 12.1 | 11.0 | |||||||||||||||||||||
| Philadelphia | 2 | 810 | 231.09 | 82.6 | 190.83 | 288.59 | 221.65 | 85.9 | 190.48 | 286.56 | 0.2 | 0.7 | |||||||||||||||||||||
| Austin | 2 | 767 | 225.87 | 59.0 | 133.29 | 242.58 | 233.32 | 68.3 | 159.46 | 289.77 | (16.4 | ) | (16.3 | ) | |||||||||||||||||||
| Northern Virginia | 2 | 916 | 233.30 | 72.0 | 168.00 | 250.70 | 214.33 | 67.2 | 144.06 | 219.78 | 16.6 | 14.1 | |||||||||||||||||||||
| San Francisco/San Jose | 6 | 4,162 | 241.34 | 72.8 | 175.71 | 241.07 | 244.45 | 71.3 | 174.35 | 250.97 | 0.8 | (3.9 | ) | ||||||||||||||||||||
| Chicago | 3 | 1,562 | 253.34 | 79.5 | 201.35 | 280.27 | 263.27 | 79.3 | 208.86 | 286.41 | (3.6 | ) | (2.1 | ) | |||||||||||||||||||
| Seattle | 2 | 1,315 | 271.12 | 81.0 | 219.56 | 285.88 | 264.88 | 81.9 | 216.97 | 274.62 | 1.2 | 4.1 | |||||||||||||||||||||
| Atlanta | 2 | 810 | 182.03 | 75.0 | 136.49 | 210.62 | 183.46 | 72.8 | 133.57 | 199.97 | 2.2 | 5.3 | |||||||||||||||||||||
| Houston | 5 | 1,942 | 191.21 | 66.3 | 126.73 | 172.15 | 176.72 | 62.1 | 109.74 | 149.01 | 15.5 | 15.5 | |||||||||||||||||||||
| San Antonio | 2 | 1,512 | 194.04 | 53.5 | 103.87 | 167.34 | 190.72 | 64.5 | 122.96 | 194.39 | (15.5 | ) | (13.9 | ) | |||||||||||||||||||
| New Orleans | 1 | 1,333 | 147.45 | 58.9 | 86.87 | 133.83 | 163.33 | 63.6 | 103.87 | 158.20 | (16.4 | ) | (15.4 | ) | |||||||||||||||||||
| Denver | 3 | 1,340 | 204.48 | 79.9 | 163.34 | 235.48 | 197.50 | 76.5 | 151.18 | 214.65 | 8.0 | 9.7 | |||||||||||||||||||||
| Other | 10 | 3,061 | 326.91 | 68.5 | 223.86 | 333.59 | 347.16 | 64.3 | 223.09 | 332.55 | 0.3 | 0.3 | |||||||||||||||||||||
| Domestic | 70 | 39,532 | 283.04 | 72.1 | 203.98 | 317.54 | 283.94 | 70.6 | 200.53 | 319.95 | 1.7 | (0.8 | ) | ||||||||||||||||||||
| International | 5 | 1,499 | 199.27 | 65.7 | 130.95 | 174.16 | 200.98 | 62.0 | 124.66 | 162.44 | 5.0 | 7.2 | |||||||||||||||||||||
| All Locations | 75 | 41,031 | 280.24 | 71.8 | 201.32 | 312.35 | 281.27 | 70.3 | 197.76 | 314.25 | 1.8 | (0.6 | ) | ||||||||||||||||||||
Comparable Hotel Results by Location(1)
| As of September 30, 2023 | Year-to-date ended September 30, 2023 | Year-to-date ended September 30, 2022 | |||||||||||||||||||||||||||||||
| Location | No. of Properties | No. of Rooms | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Percent Change in RevPAR | Percent Change in Total RevPAR | |||||||||||||||||||||
| Maui/Oahu | 4 | 2,006 | $ | 588.70 | 73.2 | % | $ | 430.85 | $ | 642.10 | $ | 559.15 | 76.0 | % | $ | 424.91 | $ | 658.15 | 1.4 | % | (2.4 | %) | |||||||||||
| Jacksonville | 1 | 446 | 515.29 | 72.8 | 375.31 | 823.23 | 533.33 | 69.5 | 370.85 | 799.91 | 1.2 | 2.9 | |||||||||||||||||||||
| Miami | 2 | 1,033 | 538.29 | 65.8 | 354.38 | 620.61 | 618.23 | 62.8 | 388.09 | 647.24 | (8.7 | ) | (4.1 | ) | |||||||||||||||||||
| Florida Gulf Coast | 3 | 941 | 398.34 | 74.3 | 295.96 | 624.60 | 403.93 | 73.7 | 297.56 | 594.22 | (0.5 | ) | 5.1 | ||||||||||||||||||||
| Phoenix | 3 | 1,545 | 401.67 | 71.8 | 288.45 | 630.82 | 392.14 | 69.3 | 271.69 | 608.49 | 6.2 | 3.7 | |||||||||||||||||||||
| Orlando | 2 | 2,448 | 369.46 | 71.4 | 263.81 | 533.70 | 395.30 | 64.4 | 254.71 | 498.62 | 3.6 | 7.0 | |||||||||||||||||||||
| New York | 2 | 2,486 | 323.10 | 81.6 | 263.58 | 375.42 | 305.98 | 68.8 | 210.55 | 297.35 | 25.2 | 26.3 | |||||||||||||||||||||
| Los Angeles/Orange County | 3 | 1,067 | 303.01 | 82.8 | 250.80 | 360.45 | 290.28 | 79.6 | 231.14 | 332.23 | 8.5 | 8.5 | |||||||||||||||||||||
| San Diego | 3 | 3,294 | 286.71 | 81.2 | 232.85 | 432.14 | 275.85 | 76.1 | 209.91 | 376.43 | 10.9 | 14.8 | |||||||||||||||||||||
| Boston | 2 | 1,496 | 262.27 | 78.7 | 206.41 | 272.25 | 246.01 | 57.4 | 141.27 | 186.74 | 46.1 | 45.8 | |||||||||||||||||||||
| Washington, D.C. (CBD) | 5 | 3,240 | 276.94 | 71.3 | 197.40 | 285.28 | 258.02 | 60.5 | 156.14 | 222.68 | 26.4 | 28.1 | |||||||||||||||||||||
| Philadelphia | 2 | 810 | 230.17 | 80.1 | 184.43 | 285.52 | 212.19 | 79.8 | 169.40 | 258.46 | 8.9 | 10.5 | |||||||||||||||||||||
| Austin | 2 | 767 | 259.09 | 66.6 | 172.50 | 309.26 | 261.29 | 70.3 | 183.71 | 319.55 | (6.1 | ) | (3.2 | ) | |||||||||||||||||||
| Northern Virginia | 2 | 916 | 241.35 | 70.5 | 170.04 | 256.35 | 215.60 | 65.3 | 140.83 | 212.13 | 20.7 | 20.8 | |||||||||||||||||||||
| San Francisco/San Jose | 6 | 4,162 | 254.24 | 66.8 | 169.73 | 246.35 | 230.51 | 63.1 | 145.43 | 209.56 | 16.7 | 17.6 | |||||||||||||||||||||
| Chicago | 3 | 1,562 | 244.43 | 69.2 | 169.15 | 240.13 | 238.34 | 64.8 | 154.44 | 212.39 | 9.5 | 13.1 | |||||||||||||||||||||
| Seattle | 2 | 1,315 | 242.11 | 69.1 | 167.33 | 226.93 | 234.51 | 64.1 | 150.37 | 194.36 | 11.3 | 16.8 | |||||||||||||||||||||
| Atlanta | 2 | 810 | 190.91 | 75.0 | 143.15 | 230.87 | 181.26 | 72.2 | 130.94 | 204.64 | 9.3 | 12.8 | |||||||||||||||||||||
| Houston | 5 | 1,942 | 201.57 | 70.6 | 142.37 | 196.37 | 180.33 | 63.4 | 114.29 | 158.00 | 24.6 | 24.3 | |||||||||||||||||||||
| San Antonio | 2 | 1,512 | 217.64 | 62.4 | 135.91 | 217.29 | 194.11 | 67.3 | 130.73 | 201.94 | 4.0 | 7.6 | |||||||||||||||||||||
| New Orleans | 1 | 1,333 | 195.70 | 68.9 | 134.85 | 204.28 | 196.59 | 65.3 | 128.42 | 187.76 | 5.0 | 8.8 | |||||||||||||||||||||
| Denver | 3 | 1,340 | 193.63 | 65.0 | 125.92 | 180.78 | 183.44 | 63.9 | 117.14 | 169.54 | 7.5 | 6.6 | |||||||||||||||||||||
| Other | 10 | 3,061 | 322.01 | 65.5 | 210.89 | 320.75 | 332.09 | 60.8 | 201.98 | 300.75 | 4.4 | 6.6 | |||||||||||||||||||||
| Domestic | 70 | 39,532 | 303.99 | 71.8 | 218.31 | 355.19 | 297.46 | 66.8 | 198.61 | 321.16 | 9.9 | 10.6 | |||||||||||||||||||||
| International | 5 | 1,499 | 188.41 | 62.9 | 118.58 | 168.30 | 159.59 | 53.6 | 85.55 | 120.75 | 38.6 | 39.4 | |||||||||||||||||||||
| All Locations | 75 | 41,031 | 300.28 | 71.5 | 214.67 | 348.41 | 293.40 | 66.3 | 194.49 | 313.90 | 10.4 | 11.0 | |||||||||||||||||||||
___________
(1) See the Notes to Financial Information for a discussion of comparable hotel operating statistics. CBD of a location refers to the central business district. Hotel RevPAR is calculated as room revenues divided by the available room nights. Hotel Total RevPAR is calculated by dividing the sum of rooms, food and beverage and other revenues by the available room nights.
Results by Location - actual, based on ownership period(1)
| As of September 30, | |||||||||||||||||||||||||||||||||
| 2023 | 2022 | Quarter ended September 30, 2023 | Quarter ended September 30, 2022 | ||||||||||||||||||||||||||||||
| Location | No. of Properties | No. of Properties | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Percent Change in RevPAR | Percent Change in Total RevPAR | |||||||||||||||||||||
| Maui/Oahu | 4 | 4 | $ | 565.03 | 69.7 | % | $ | 393.67 | $ | 549.52 | $ | 565.30 | 73.6 | % | $ | 416.12 | $ | 643.57 | (5.4 | )% | (14.6 | )% | |||||||||||
| Jacksonville | 1 | 1 | 479.33 | 69.2 | 331.47 | 726.78 | 487.53 | 67.0 | 326.67 | 707.75 | 1.5 | 2.7 | |||||||||||||||||||||
| Miami | 2 | 2 | 377.39 | 50.3 | 189.66 | 358.25 | 457.43 | 50.2 | 229.66 | 427.55 | (17.4 | ) | (16.2 | ) | |||||||||||||||||||
| Florida Gulf Coast | 5 | 5 | 328.97 | 58.5 | 192.44 | 384.90 | 330.56 | 53.9 | 178.01 | 344.04 | 8.1 | 11.9 | |||||||||||||||||||||
| Phoenix | 3 | 4 | 263.79 | 59.6 | 157.18 | 368.20 | 251.77 | 58.1 | 146.25 | 372.05 | 7.5 | (1.0 | ) | ||||||||||||||||||||
| Orlando | 2 | 2 | 309.53 | 64.9 | 200.78 | 419.73 | 327.78 | 61.4 | 201.23 | 427.58 | (0.2 | ) | (1.8 | ) | |||||||||||||||||||
| New York | 2 | 2 | 334.84 | 87.0 | 291.33 | 387.71 | 309.77 | 84.3 | 260.99 | 351.90 | 11.6 | 10.2 | |||||||||||||||||||||
| Los Angeles/Orange County | 3 | 3 | 314.25 | 85.9 | 269.85 | 375.29 | 303.74 | 86.4 | 262.42 | 373.36 | 2.8 | 0.5 | |||||||||||||||||||||
| San Diego | 3 | 3 | 295.59 | 83.5 | 246.81 | 441.94 | 292.38 | 85.4 | 249.83 | 440.67 | (1.2 | ) | 0.3 | ||||||||||||||||||||
| Boston | 2 | 2 | 273.06 | 83.8 | 228.75 | 291.12 | 263.46 | 63.8 | 167.99 | 223.00 | 36.2 | 30.5 | |||||||||||||||||||||
| Washington, D.C. (CBD) | 5 | 5 | 244.50 | 71.5 | 174.94 | 248.36 | 237.56 | 65.7 | 156.01 | 223.72 | 12.1 | 11.0 | |||||||||||||||||||||
| Philadelphia | 2 | 2 | 231.09 | 82.6 | 190.83 | 288.59 | 221.65 | 85.9 | 190.48 | 286.56 | 0.2 | 0.7 | |||||||||||||||||||||
| Austin | 2 | 2 | 225.87 | 59.0 | 133.29 | 242.58 | 233.32 | 68.3 | 159.46 | 289.77 | (16.4 | ) | (16.3 | ) | |||||||||||||||||||
| Northern Virginia | 2 | 2 | 233.30 | 72.0 | 168.00 | 250.70 | 214.33 | 67.2 | 144.06 | 219.78 | 16.6 | 14.1 | |||||||||||||||||||||
| San Francisco/San Jose | 6 | 6 | 241.34 | 72.8 | 175.71 | 241.07 | 244.45 | 71.3 | 174.35 | 250.97 | 0.8 | (3.9 | ) | ||||||||||||||||||||
| Chicago | 3 | 3 | 253.34 | 79.5 | 201.35 | 280.27 | 253.75 | 77.8 | 197.54 | 269.26 | 1.9 | 4.1 | |||||||||||||||||||||
| Seattle | 2 | 2 | 271.12 | 81.0 | 219.56 | 285.88 | 264.88 | 81.9 | 216.97 | 274.62 | 1.2 | 4.1 | |||||||||||||||||||||
| Atlanta | 2 | 2 | 182.03 | 75.0 | 136.49 | 210.62 | 183.46 | 72.8 | 133.57 | 199.97 | 2.2 | 5.3 | |||||||||||||||||||||
| Houston | 5 | 5 | 191.21 | 66.3 | 126.73 | 172.15 | 176.72 | 62.1 | 109.74 | 149.01 | 15.5 | 15.5 | |||||||||||||||||||||
| San Antonio | 2 | 2 | 194.04 | 53.5 | 103.87 | 167.34 | 190.72 | 64.5 | 122.96 | 194.39 | (15.5 | ) | (13.9 | ) | |||||||||||||||||||
| New Orleans | 1 | 1 | 147.45 | 58.9 | 86.87 | 133.83 | 163.33 | 63.6 | 103.87 | 158.20 | (16.4 | ) | (15.4 | ) | |||||||||||||||||||
| Denver | 3 | 3 | 204.48 | 79.9 | 163.34 | 235.48 | 197.50 | 76.5 | 151.18 | 214.65 | 8.0 | 9.7 | |||||||||||||||||||||
| Other | 10 | 9 | 326.91 | 68.5 | 223.86 | 333.59 | 261.04 | 63.6 | 166.04 | 240.26 | 34.8 | 38.8 | |||||||||||||||||||||
| Domestic | 72 | 72 | 284.23 | 71.7 | 203.67 | 319.19 | 277.68 | 69.9 | 194.13 | 310.91 | 4.9 | 2.7 | |||||||||||||||||||||
| International | 5 | 5 | 199.27 | 65.7 | 130.95 | 174.16 | 200.98 | 62.0 | 124.66 | 162.44 | 5.0 | 7.2 | |||||||||||||||||||||
| All Locations | 77 | 77 | 281.45 | 71.4 | 201.08 | 314.05 | 275.25 | 69.6 | 191.66 | 305.69 | 4.9 | 2.7 | |||||||||||||||||||||
Results by Location - actual, based on ownership period(1)
| As of September 30, | |||||||||||||||||||||||||||||||||
| 2023 | 2022 | Year-to-date ended September 30, 2023 | Year-to-date ended September 30, 2022 | ||||||||||||||||||||||||||||||
| Location | No. of Properties | No. of Properties | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Average Room Rate | Average Occupancy Percentage | RevPAR | Total RevPAR | Percent Change in RevPAR | Percent Change in Total RevPAR | |||||||||||||||||||||
| Maui/Oahu | 4 | 4 | $ | 588.70 | 73.2 | % | $ | 430.85 | $ | 642.10 | $ | 559.15 | 76.0 | % | $ | 424.91 | $ | 658.15 | 1.4 | % | (2.4 | %) | |||||||||||
| Jacksonville | 1 | 1 | 515.29 | 72.8 | 375.31 | 823.23 | 533.33 | 69.5 | 370.85 | 799.91 | 1.2 | 2.9 | |||||||||||||||||||||
| Miami | 2 | 2 | 538.29 | 65.8 | 354.38 | 620.61 | 573.01 | 64.5 | 369.80 | 609.25 | (4.2 | ) | 1.9 | ||||||||||||||||||||
| Florida Gulf Coast | 5 | 5 | 371.22 | 58.6 | 217.52 | 459.32 | 442.56 | 65.9 | 291.82 | 574.12 | (25.5 | ) | (20.0 | ) | |||||||||||||||||||
| Phoenix | 3 | 4 | 398.12 | 72.1 | 286.88 | 619.02 | 366.88 | 69.1 | 253.45 | 551.73 | 13.2 | 12.2 | |||||||||||||||||||||
| Orlando | 2 | 2 | 369.46 | 71.4 | 263.81 | 533.70 | 395.30 | 64.4 | 254.71 | 498.62 | 3.6 | 7.0 | |||||||||||||||||||||
| New York | 2 | 2 | 323.10 | 81.6 | 263.58 | 375.42 | 288.08 | 63.5 | 182.96 | 256.78 | 44.1 | 46.2 | |||||||||||||||||||||
| Los Angeles/Orange County | 3 | 3 | 303.01 | 82.8 | 250.80 | 360.45 | 290.28 | 79.6 | 231.14 | 332.23 | 8.5 | 8.5 | |||||||||||||||||||||
| San Diego | 3 | 3 | 286.71 | 81.2 | 232.85 | 432.14 | 275.85 | 76.1 | 209.91 | 376.43 | 10.9 | 14.8 | |||||||||||||||||||||
| Boston | 2 | 2 | 262.27 | 78.7 | 206.41 | 272.25 | 240.93 | 55.5 | 133.65 | 175.93 | 54.4 | 54.8 | |||||||||||||||||||||
| Washington, D.C. (CBD) | 5 | 5 | 276.94 | 71.3 | 197.40 | 285.28 | 258.02 | 60.5 | 156.14 | 222.68 | 26.4 | 28.1 | |||||||||||||||||||||
| Philadelphia | 2 | 2 | 230.17 | 80.1 | 184.43 | 285.52 | 212.19 | 79.8 | 169.40 | 258.46 | 8.9 | 10.5 | |||||||||||||||||||||
| Austin | 2 | 2 | 259.09 | 66.6 | 172.50 | 309.26 | 261.29 | 70.3 | 183.71 | 319.55 | (6.1 | ) | (3.2 | ) | |||||||||||||||||||
| Northern Virginia | 2 | 2 | 241.35 | 70.5 | 170.04 | 256.35 | 215.60 | 65.3 | 140.83 | 212.13 | 20.7 | 20.8 | |||||||||||||||||||||
| San Francisco/San Jose | 6 | 6 | 254.24 | 66.8 | 169.73 | 246.35 | 230.51 | 63.1 | 145.43 | 209.56 | 16.7 | 17.6 | |||||||||||||||||||||
| Chicago | 3 | 3 | 244.43 | 69.2 | 169.15 | 240.13 | 227.82 | 63.1 | 143.86 | 196.43 | 17.6 | 22.2 | |||||||||||||||||||||
| Seattle | 2 | 2 | 242.11 | 69.1 | 167.33 | 226.93 | 234.51 | 64.1 | 150.37 | 194.36 | 11.3 | 16.8 | |||||||||||||||||||||
| Atlanta | 2 | 2 | 190.91 | 75.0 | 143.15 | 230.87 | 181.26 | 72.2 | 130.94 | 204.64 | 9.3 | 12.8 | |||||||||||||||||||||
| Houston | 5 | 5 | 201.57 | 70.6 | 142.37 | 196.37 | 180.33 | 63.4 | 114.29 | 158.00 | 24.6 | 24.3 | |||||||||||||||||||||
| San Antonio | 2 | 2 | 217.64 | 62.4 | 135.91 | 217.29 | 194.11 | 67.3 | 130.73 | 201.94 | 4.0 | 7.6 | |||||||||||||||||||||
| New Orleans | 1 | 1 | 195.70 | 68.9 | 134.85 | 204.28 | 196.59 | 65.3 | 128.42 | 187.76 | 5.0 | 8.8 | |||||||||||||||||||||
| Denver | 3 | 3 | 193.63 | 65.0 | 125.92 | 180.78 | 183.44 | 63.9 | 117.14 | 169.54 | 7.5 | 6.6 | |||||||||||||||||||||
| Other | 10 | 9 | 322.01 | 65.5 | 210.89 | 320.75 | 264.87 | 61.2 | 162.17 | 233.33 | 30.0 | 37.5 | |||||||||||||||||||||
| Domestic | 72 | 72 | 304.28 | 71.2 | 216.53 | 353.71 | 293.77 | 66.1 | 194.23 | 315.02 | 11.5 | 12.3 | |||||||||||||||||||||
| International | 5 | 5 | 188.41 | 62.9 | 118.58 | 168.30 | 159.59 | 53.6 | 85.55 | 120.75 | 38.6 | 39.4 | |||||||||||||||||||||
| All Locations | 77 | 77 | 300.61 | 70.9 | 213.04 | 347.14 | 289.98 | 65.7 | 190.46 | 308.35 | 11.9 | 12.6 | |||||||||||||||||||||
___________
(1) Represents the results of the portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition.
| HOST HOTELS & RESORTS, INC. Schedule of Comparable Hotel Results (1) (unaudited, in millions, except hotel statistics) | |||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Number of hotels | 75 | 75 | 75 | 75 | |||||||||||
| Number of rooms | 41,031 | 41,031 | 41,031 | 41,031 | |||||||||||
| Change in comparable hotel Total RevPAR | (0.6 | %) | — | 11.0 | % | — | |||||||||
| Change in comparable hotel RevPAR | 1.8 | % | — | 10.4 | % | — | |||||||||
| Operating profit margin⁽²⁾ | 12.9 | % | 12.4 | % | 16.4 | % | 16.4 | % | |||||||
| Comparable hotel EBITDA margin⁽²⁾ | 26.6 | % | 29.4 | % | 30.8 | % | 32.5 | % | |||||||
| Food and beverage profit margin⁽²⁾ | 26.5 | % | 30.3 | % | 34.2 | % | 34.6 | % | |||||||
| Comparable hotel food and beverage profit margin⁽²⁾ | 27.6 | % | 31.0 | % | 34.6 | % | 35.1 | % | |||||||
| Net income | $ | 113 | $ | 116 | $ | 618 | $ | 494 | |||||||
| Depreciation and amortization | 174 | 164 | 511 | 498 | |||||||||||
| Interest expense | 48 | 40 | 142 | 113 | |||||||||||
| Provision for income taxes | 15 | 6 | 27 | 29 | |||||||||||
| Gain on sale of property and corporate level income/expense | 10 | 15 | (43 | ) | 32 | ||||||||||
| Severance expense at hotel properties | — | — | — | 2 | |||||||||||
| Property transaction adjustments⁽³⁾ | — | 8 | (3 | ) | 24 | ||||||||||
| Non-comparable hotel results, net⁽⁴⁾ | (46 | ) | — | (50 | ) | (48 | ) | ||||||||
| Comparable hotel EBITDA⁽¹⁾ | $ | 314 | $ | 349 | $ | 1,202 | $ | 1,144 | |||||||
___________
(1) See the Notes to Financial Information for a discussion of comparable hotel results, which are non-GAAP measures, and the limitations on their use. For additional information on comparable hotel EBITDA by location, see the Third Quarter 2023 Supplemental Financial Information posted on our website.
(2) Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:
| Quarter ended September 30, 2023 | Quarter ended September 30, 2022 | |||||||||||||||||||||||||||||||||
| Adjustments | Adjustments | |||||||||||||||||||||||||||||||||
| GAAP Results | Non-comparable hotel results, net ⁽⁴⁾ | Depreciation and corporate level items | Comparable Hotel Results | GAAP Results | Property transaction adjustments ⁽³⁾ | Non-comparable hotel results, net ⁽⁴⁾ | Depreciation and corporate level items | Comparable Hotel Results | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||
| Room | $ | 777 | $ | (16 | ) | $ | — | $ | 761 | $ | 746 | $ | 15 | $ | (13 | ) | $ | — | $ | 748 | ||||||||||||||
| Food and beverage | 328 | (13 | ) | — | 315 | 330 | 5 | (9 | ) | — | 326 | |||||||||||||||||||||||
| Other | 109 | (4 | ) | — | 105 | 113 | 4 | (3 | ) | — | 114 | |||||||||||||||||||||||
| Total revenues | 1,214 | (33 | ) | — | 1,181 | 1,189 | 24 | (25 | ) | — | 1,188 | |||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||
| Room | 196 | (5 | ) | — | 191 | 190 | 2 | (4 | ) | — | 188 | |||||||||||||||||||||||
| Food and beverage | 241 | (13 | ) | — | 228 | 230 | 4 | (9 | ) | — | 225 | |||||||||||||||||||||||
| Other | 471 | (18 | ) | — | 453 | 438 | 10 | (12 | ) | — | 436 | |||||||||||||||||||||||
| Depreciation and amortization | 174 | — | (174 | ) | — | 164 | — | — | (164 | ) | — | |||||||||||||||||||||||
| Corporate and other expenses | 29 | — | (29 | ) | — | 29 | — | — | (29 | ) | — | |||||||||||||||||||||||
| Gain on insurance and business interruption settlements | (54 | ) | 49 | — | (5 | ) | (10 | ) | — | — | — | (10 | ) | |||||||||||||||||||||
| Total expenses | 1,057 | 13 | (203 | ) | 867 | 1,041 | 16 | (25 | ) | (193 | ) | 839 | ||||||||||||||||||||||
| Operating Profit - Comparable hotel EBITDA | $ | 157 | $ | (46 | ) | $ | 203 | $ | 314 | $ | 148 | $ | 8 | $ | — | $ | 193 | $ | 349 | |||||||||||||||
| Year-to-date ended September 30, 2023 | Year-to-date ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||
| Adjustments | Adjustments | ||||||||||||||||||||||||||||||||||||||||||
| GAAP Results | Property transaction adjustments ⁽³⁾ | Non-comparable hotel results, net ⁽⁴⁾ | Depreciation and corporate level items | Comparable hotel Results | GAAP Results | Severance at hotel properties | Property transaction adjustments ⁽³⁾ | Non-comparable hotel results, net ⁽⁴⁾ | Depreciation and corporate level items | Comparable hotel Results | |||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||||||||||
| Room | $ | 2,447 | $ | (5 | ) | $ | (34 | ) | $ | — | $ | 2,408 | $ | 2,251 | $ | — | $ | 2 | $ | (71 | ) | $ | — | $ | 2,182 | ||||||||||||||||||
| Food and beverage | 1,174 | (2 | ) | (31 | ) | — | 1,141 | 1,032 | — | 5 | (51 | ) | — | 986 | |||||||||||||||||||||||||||||
| Other | 367 | — | (7 | ) | — | 360 | 361 | — | 8 | (15 | ) | — | 354 | ||||||||||||||||||||||||||||||
| Total revenues | 3,988 | (7 | ) | (72 | ) | — | 3,909 | 3,644 | — | 15 | (137 | ) | — | 3,522 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||
| Room | 590 | (1 | ) | (9 | ) | — | 580 | 539 | — | (10 | ) | (13 | ) | — | 516 | ||||||||||||||||||||||||||||
| Food and beverage | 773 | (1 | ) | (26 | ) | — | 746 | 675 | — | (1 | ) | (34 | ) | — | 640 | ||||||||||||||||||||||||||||
| Other | 1,427 | (2 | ) | (36 | ) | — | 1,389 | 1,275 | (2 | ) | 2 | (42 | ) | — | 1,233 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 511 | — | — | (511 | ) | — | 498 | — | — | — | (498 | ) | — | ||||||||||||||||||||||||||||||
| Corporate and other expenses | 90 | — | — | (90 | ) | — | 77 | — | — | — | (77 | ) | — | ||||||||||||||||||||||||||||||
| Gain on insurance and business interruption settlements | (57 | ) | — | 49 | — | (8 | ) | (17 | ) | — | — | — | 6 | (11 | ) | ||||||||||||||||||||||||||||
| Total expenses | 3,334 | (4 | ) | (22 | ) | (601 | ) | 2,707 | 3,047 | (2 | ) | (9 | ) | (89 | ) | (569 | ) | 2,378 | |||||||||||||||||||||||||
| Operating Profit - Comparable hotel EBITDA | $ | 654 | $ | (3 | ) | $ | (50 | ) | $ | 601 | $ | 1,202 | $ | 597 | $ | 2 | $ | 24 | $ | (48 | ) | $ | 569 | $ | 1,144 | ||||||||||||||||||
(3) Property transaction adjustments represent the following items: (i) the elimination of results of operations of our hotels sold or held-for-sale as of the reporting date, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) the addition of results for periods prior to our ownership for hotels acquired as of the reporting date.
(4) Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable.
| HOST HOTELS & RESORTS, INC. Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre (1) (unaudited, in millions) | |||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income | $ | 113 | $ | 116 | $ | 618 | $ | 494 | |||||||
| Interest expense | 48 | 40 | 142 | 113 | |||||||||||
| Depreciation and amortization | 174 | 164 | 511 | 498 | |||||||||||
| Income taxes | 15 | 6 | 27 | 29 | |||||||||||
| EBITDA | 350 | 326 | 1,298 | 1,134 | |||||||||||
| Gain on dispositions⁽²⁾ | — | (5 | ) | (69 | ) | (18 | ) | ||||||||
| Equity investment adjustments: | |||||||||||||||
| Equity in (earnings) losses of affiliates | 4 | 1 | (7 | ) | (3 | ) | |||||||||
| Pro rata EBITDAre of equity investments⁽³⁾ | 7 | 6 | 29 | 27 | |||||||||||
| EBITDAre | 361 | 328 | 1,251 | 1,140 | |||||||||||
| Adjustments to EBITDAre: | |||||||||||||||
| Gain on property insurance settlement | — | — | — | (6 | ) | ||||||||||
| Adjusted EBITDAre | $ | 361 | $ | 328 | $ | 1,251 | $ | 1,134 | |||||||
___________
(1) See the Notes to Financial Information for discussion of non-GAAP measures.
(2) Reflects the sale of one hotel in 2023 and four hotels in 2022.
(3) Unrealized gains of our unconsolidated investments are not recognized in our EBITDAre, Adjusted EBITDAre, NAREIT FFO or Adjusted FFO until they have been realized by the unconsolidated partnership.
| HOST HOTELS & RESORTS, INC. Reconciliation of Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share (1) (unaudited, in millions, except per share amounts) | |||||||||||||||
| Quarter ended September 30, | Year-to-date ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income | $ | 113 | $ | 116 | $ | 618 | $ | 494 | |||||||
| Less: Net income attributable to non-controlling interests | (2 | ) | (2 | ) | (10 | ) | (8 | ) | |||||||
| Net income attributable to Host Inc. | 111 | 114 | 608 | 486 | |||||||||||
| Adjustments: | |||||||||||||||
| Gain on dispositions⁽²⁾ | — | (5 | ) | (69 | ) | (18 | ) | ||||||||
| Gain on property insurance settlement | — | — | — | (6 | ) | ||||||||||
| Depreciation and amortization | 174 | 164 | 510 | 497 | |||||||||||
| Equity investment adjustments: | |||||||||||||||
| Equity in (earnings) losses of affiliates | 4 | 1 | (7 | ) | (3 | ) | |||||||||
| Pro rata FFO of equity investments⁽³⁾ | 4 | 4 | 20 | 21 | |||||||||||
| Consolidated partnership adjustments: | |||||||||||||||
| FFO adjustment for non-controlling partnerships | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
| FFO adjustments for non-controlling interests of Host L.P. | (2 | ) | (2 | ) | (6 | ) | (6 | ) | |||||||
| NAREIT FFO | 290 | 275 | 1,055 | 970 | |||||||||||
| Adjustments to NAREIT FFO: | |||||||||||||||
| Loss on debt extinguishment | — | — | 4 | — | |||||||||||
| Adjusted FFO | $ | 290 | $ | 275 | $ | 1,059 | $ | 970 | |||||||
| For calculation on a per share basis:⁽⁴⁾ | |||||||||||||||
| Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO | 711.9 | 717.6 | 713.6 | 717.4 | |||||||||||
| Diluted earnings per common share | $ | 0.16 | $ | 0.16 | $ | 0.85 | $ | 0.68 | |||||||
| NAREIT FFO per diluted share | $ | 0.41 | $ | 0.38 | $ | 1.48 | $ | 1.35 | |||||||
| Adjusted FFO per diluted share | $ | 0.41 | $ | 0.38 | $ | 1.48 | $ | 1.35 | |||||||
___________
(1-3) Refer to corresponding footnote on the Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre.
(4) Diluted earnings per common share, NAREIT FFO per diluted share and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP units. No effect is shown for securities if they are anti-dilutive.
| HOST HOTELS & RESORTS, INC. Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2023 Forecasts (1) (unaudited, in millions) | |||||||
| Full Year 2023 | |||||||
| Low-end of range | High-end of range | ||||||
| Net income | $ | 741 | $ | 781 | |||
| Interest expense | 189 | 189 | |||||
| Depreciation and amortization | 683 | 683 | |||||
| Income taxes | 31 | 31 | |||||
| EBITDA | 1,644 | 1,684 | |||||
| Gain on dispositions | (69 | ) | (69 | ) | |||
| Equity investment adjustments: | |||||||
| Equity in earnings of affiliates | (9 | ) | (9 | ) | |||
| Pro rata EBITDAre of equity investments | 36 | 36 | |||||
| EBITDAre | 1,602 | 1,642 | |||||
| Adjustments to EBITDAre: | |||||||
| Gain on property insurance settlement | (2 | ) | (2 | ) | |||
| Adjusted EBITDAre | $ | 1,600 | $ | 1,640 | |||
| Full Year 2023 | |||||||
| Low-end of range | High-end of range | ||||||
| Net income | $ | 741 | $ | 781 | |||
| Less: Net income attributable to non-controlling interests | (12 | ) | (12 | ) | |||
| Net income attributable to Host Inc. | 729 | 769 | |||||
| Adjustments: | |||||||
| Gain on dispositions | (69 | ) | (69 | ) | |||
| Gain on property insurance settlement | (2 | ) | (2 | ) | |||
| Depreciation and amortization | 682 | 682 | |||||
| Equity investment adjustments: | |||||||
| Equity in earnings of affiliates | (9 | ) | (9 | ) | |||
| Pro rata FFO of equity investments | 25 | 25 | |||||
| Consolidated partnership adjustments: | |||||||
| FFO adjustment for non-controlling partnerships | (1 | ) | (1 | ) | |||
| FFO adjustment for non-controlling interests of Host LP | (9 | ) | (9 | ) | |||
| NAREIT FFO | 1,346 | 1,386 | |||||
| Adjustments to NAREIT FFO: | |||||||
| Loss on extinguishment of debt | 4 | 4 | |||||
| Adjusted FFO | $ | 1,350 | $ | 1,390 | |||
| Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO | 712.1 | 712.1 | |||||
| Diluted earnings per common share | $ | 1.02 | $ | 1.08 | |||
| NAREIT FFO per diluted share | $ | 1.89 | $ | 1.95 | |||
| Adjusted FFO per diluted share | $ | 1.90 | $ | 1.95 | |||
_______________
(1) The Forecasts are based on the below assumptions:
• Comparable hotel RevPAR will increase
• Comparable hotel EBITDA margins will decrease 210 basis points to 170 basis points compared to 2022 for the low and high ends of the forecasted comparable hotel RevPAR range, respectively.
• We expect to spend approximately
• Assumes no acquisitions and no additional dispositions during the year.
• Assumes the receipt of an additional
For a discussion of items that may affect forecast results, see the Notes to Financial Information.
| HOST HOTELS & RESORTS, INC. Schedule of Comparable Hotel Results for Full Year 2023 Forecasts (1) (unaudited, in millions) | |||||||
| Full Year 2023 | |||||||
| Low-end of range | High-end of range | ||||||
| Operating profit margin (2) | 15.4 | % | 16.0 | % | |||
| Comparable hotel EBITDA margin (2) | 29.7 | % | 30.1 | % | |||
| Net income | $ | 741 | $ | 781 | |||
| Depreciation and amortization | 683 | 683 | |||||
| Interest expense | 189 | 189 | |||||
| Provision for income taxes | 31 | 31 | |||||
| Gain on sale of property and corporate level income/expense | (31 | ) | (31 | ) | |||
| Property transaction adjustments⁽³⁾ | (3 | ) | (3 | ) | |||
| Non-comparable hotel results, net⁽⁴⁾ | (90 | ) | (92 | ) | |||
| Comparable hotel EBITDA(1) | $ | 1,520 | $ | 1,558 | |||
___________
(1) See “Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2023 Forecasts” for other forecast assumptions. Forecast comparable hotel results include 75 hotels (of our 77 hotels owned at September 30, 2023) that we have assumed will be classified as comparable as of December 31, 2023.
(2) Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:
| Low-end of range | High-end of range | ||||||||||||||||||||||||||||||||||||||
| Adjustments | Adjustments | ||||||||||||||||||||||||||||||||||||||
| GAAP Results | Property transaction adjustments | Non-comparable hotel results, net | Depreciation and corporate level items | Comparable hotel Results | GAAP Results | Property transaction adjustments | Non-comparable hotel results, net | Depreciation and corporate level items | Comparable hotel Results | ||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||||||
| Rooms | $ | 3,220 | $ | (5 | ) | $ | (64 | ) | $ | — | $ | 3,151 | $ | 3,266 | $ | (5 | ) | $ | (66 | ) | $ | — | $ | 3,195 | |||||||||||||||
| Food and beverage | 1,550 | (2 | ) | (52 | ) | — | 1,496 | 1,575 | (2 | ) | (54 | ) | — | 1,519 | |||||||||||||||||||||||||
| Other | 478 | — | (13 | ) | — | 465 | 480 | — | (13 | ) | — | 467 | |||||||||||||||||||||||||||
| Total revenues | 5,248 | (7 | ) | (129 | ) | — | 5,112 | 5,321 | (7 | ) | (133 | ) | — | 5,181 | |||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||
| Hotel expenses | 3,718 | (4 | ) | (114 | ) | — | 3,600 | 3,751 | (4 | ) | (116 | ) | — | 3,631 | |||||||||||||||||||||||||
| Depreciation and amortization | 683 | — | — | (683 | ) | — | 683 | — | — | (683 | ) | — | |||||||||||||||||||||||||||
| Corporate and other expenses | 123 | — | — | (123 | ) | — | 123 | — | — | (123 | ) | — | |||||||||||||||||||||||||||
| Gain on insurance and business interruption settlements | (85 | ) | — | 75 | 2 | (8 | ) | (85 | ) | — | 75 | 2 | (8 | ) | |||||||||||||||||||||||||
| Total expenses | 4,439 | (4 | ) | (39 | ) | (804 | ) | 3,592 | 4,472 | (4 | ) | (41 | ) | (804 | ) | 3,623 | |||||||||||||||||||||||
| Operating Profit - Comparable hotel EBITDA | $ | 809 | $ | (3 | ) | $ | (90 | ) | $ | 804 | $ | 1,520 | $ | 849 | $ | (3 | ) | $ | (92 | ) | $ | 804 | $ | 1,558 | |||||||||||||||
(3) Property transaction adjustments represent the following items: (i) the elimination of results of operations of our hotels sold or held-for-sale as of the reporting date, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations and (ii) the addition of results for periods prior to our ownership for hotels acquired as of the reporting date.
(4) Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable. The following hotels are expected to be non-comparable for full year 2023:
• Hyatt Regency Coconut Point Resort & Spa (business disruption due to Hurricane Ian beginning in September 2022, reopened in November 2022); and
• The Ritz-Carlton, Naples (business disruption due to Hurricane Ian beginning in September 2022, reopened in July 2023).
HOST HOTELS & RESORTS, INC.
Notes to Financial Information
FORECASTS
Our forecast of net income, earnings per diluted share, NAREIT and Adjusted FFO per diluted share, EBITDA, EBITDAre, Adjusted EBITDAre and comparable hotel results are forward-looking statements and are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause actual results and performance to differ materially from those expressed or implied by these forecasts. Although we believe the expectations reflected in the forecasts are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that the results will not be materially different. Risks that may affect these assumptions and forecasts include the following: potential changes in overall economic outlook make it inherently difficult to forecast the level of RevPAR; the amount and timing of debt payments may change significantly based on market conditions, which will directly affect the level of interest expense and net income; the amount and timing of transactions involving shares of our common stock may change based on market conditions; and other risks and uncertainties associated with our business described herein and in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC.
COMPARABLE HOTEL OPERATING STATISTICS AND RESULTS
Effective January 1, 2023, the Company ceased presentation of All Owned Hotel results and returned to a comparable hotel presentation for its hotel level results. Management believes this provides investors with a better understanding of underlying growth trends for the Company’s current portfolio, without impact from properties that experienced closures due to renovations or property damage sustained.
To facilitate a year-to-year comparison of our operations, we present certain operating statistics (i.e., Total RevPAR, RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in our reports on a comparable hotel basis in order to enable our investors to better evaluate our operating performance. We define our comparable hotels as those that: (i) are owned or leased by us as of the reporting date and are not classified as held-for-sale; and (ii) have not sustained substantial property damage or business interruption, or undergone large-scale capital projects in each case requiring closures lasting one month or longer (as further defined below) during the reporting periods being compared.
We make adjustments to include recent acquisitions to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. Additionally, operating results of hotels that we sell are excluded from the comparable hotel set once the transaction has closed or the hotel is classified as held-for-sale.
The hotel business is capital-intensive and renovations are a regular part of the business. Generally, hotels under renovation remain comparable hotels. A large-scale capital project would cause a hotel to be excluded from our comparable hotel set if it requires the entire property to be closed to hotel guests for one month or longer.
Similarly, hotels are excluded from our comparable hotel set from the date that they sustain substantial property damage or business interruption if it requires the property to be closed to hotel guests for one month or longer. In each case, these hotels are returned to the comparable hotel set when the operations of the hotel have been included in our consolidated results for one full calendar year after the hotel has reopened. Often, related to events that cause property damage and the closure of a hotel, we will collect business interruption insurance proceeds for the near-term loss of business. These proceeds are included in gain on property insurance and business interruption settlements on our consolidated statements of operations. Business interruption insurance gains related to a hotel that was excluded from our comparable hotel set also will be excluded from the comparable hotel results.
Of the 77 hotels that we owned as of September 30, 2023, 75 have been classified as comparable hotels. The operating results of the following hotels that we owned as of September 30, 2023 are excluded from comparable hotel results for these periods, due to closure of the property:
- Hyatt Regency Coconut Point Resort & Spa (business disruption due to Hurricane Ian beginning in September 2022, reopened in November 2022); and
- The Ritz-Carlton, Naples (business disruption due to Hurricane Ian beginning in September 2022, reopened in July 2023).
Following the wildfires in Maui in August 2023, the Hyatt Regency Maui Resort & Spa remained in our comparable hotel set based on the overall performance of the property despite business interruption sustained by the property in August and September. There continues to be a significant level of uncertainty as to the extent of continued business interruption for the fourth quarter as the hotel reopened to guests on November 1, 2023. Therefore, we will continue to evaluate the overall impact of the wildfires on the property’s operations and its comparable status through the remainder of the year.
FOREIGN CURRENCY TRANSLATION
Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. Therefore, hotel statistics and results for non-U.S. properties include the effect of currency fluctuations, consistent with our financial statement presentation.
NON-GAAP FINANCIAL MEASURES
Included in this press release are certain “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. They are as follows: (i) FFO and FFO per diluted share (both NAREIT and Adjusted), (ii) EBITDA, (iii) EBITDAre and Adjusted EBITDAre, and (iv) Comparable Hotel Operating Statistics and Results. The following discussion defines these measures and presents why we believe they are useful supplemental measures of our performance.
NAREIT FFO AND NAREIT FFO PER DILUTED SHARE
We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. Effective January 1, 2019, we adopted NAREIT’s definition of FFO included in NAREIT’s Funds From Operations White Paper – 2018 Restatement. NAREIT defines FFO as net income (calculated in accordance with GAAP) excluding depreciation and amortization related to certain real estate assets, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment expense of certain real estate assets and investments and adjustments for consolidated partially-owned entities and unconsolidated affiliates. Adjustments for consolidated partially-owned entities and unconsolidated affiliates are calculated to reflect our pro rata share of the FFO of those entities on the same basis.
We believe that NAREIT FFO per diluted share is a useful supplemental measure of our operating performance and that the presentation of NAREIT FFO per diluted share, when combined with the primary GAAP presentation of earnings per share, provides beneficial information to investors. By excluding the effect of real estate depreciation, amortization, impairment expense and gains and losses from sales of depreciable real estate, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that such measures can facilitate comparisons of operating performance between periods and with other REITs, even though NAREIT FFO per diluted share does not represent an amount that accrues directly to holders of our common stock. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. As noted by NAREIT in its Funds From Operations White Paper – 2018 Restatement, the primary purpose for including FFO as a supplemental measure of operating performance of a REIT is to address the artificial nature of historical cost depreciation and amortization of real estate and real estate-related assets mandated by GAAP. For these reasons, NAREIT adopted the FFO metric in order to promote a uniform industry-wide measure of REIT operating performance.
Adjusted FFO per Diluted Share
We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of diluted earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor’s understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:
- Gains and Losses on the Extinguishment of Debt – We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs from the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.
- Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
- Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
- Severance Expense –In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to, (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of the Company’s current operating performance. For example, in 2017, as a result of the reduction of the U.S. federal corporate income tax rate from
EBITDA
Earnings before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”) is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners that are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, it is widely used by management in the annual budget process and for our compensation programs.
EBITDAre and Adjusted EBITDAre
We present EBITDAre in accordance with NAREIT guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate,” to provide an additional performance measure to facilitate the evaluation and comparison of the Company’s results with other REITs. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment expense for depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s pro rata share of EBITDAre of unconsolidated affiliates.
We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s understanding of our operating performance. Adjusted EBITDAre also is similar to the measure used to calculate certain credit ratios for our credit facility and senior notes. We adjust EBITDAre for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDAre:
- Property Insurance Gains – We exclude the effect of property insurance gains reflected in our consolidated statements of operations because we believe that including them in Adjusted EBITDAre is not consistent with reflecting the ongoing performance of our assets. In addition, property insurance gains could be less important to investors given that the depreciated asset book value written off in connection with the calculation of the property insurance gain often does not reflect the market value of real estate assets.
- Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
- Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
- Severance Expense – In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to, (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
In unusual circumstances, we also may adjust EBITDAre for gains or losses that management believes are not representative of the Company’s current operating performance. The last adjustment of this nature was a 2013 exclusion of a gain from an eminent domain claim.
Limitations on the Use of NAREIT FFO per Diluted Share, Adjusted FFO per Diluted Share, EBITDA, EBITDAre and Adjusted EBITDAre
We calculate EBITDAre and NAREIT FFO per diluted share in accordance with standards established by NAREIT, which may not be comparable to measures calculated by other companies that do not use the NAREIT definition of EBITDAre and FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. In addition, although EBITDAre and FFO per diluted share are useful measures when comparing our results to other REITs, they may not be helpful to investors when comparing us to non-REITs. We also calculate Adjusted FFO per diluted share and Adjusted EBITDAre, which are not in accordance with NAREIT guidance and may not be comparable to measures calculated by other REITs or by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP. Cash expenditures for various long-term assets (such as renewal and replacement capital expenditures), interest expense (for EBITDA, EBITDAre and Adjusted EBITDAre purposes only), severance expense related to significant property-level reconfiguration and other items have been, and will be, made and are not reflected in the EBITDA, EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share presentations. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statements of operations and consolidated statements of cash flows in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures. Additionally, NAREIT FFO per diluted share, Adjusted FFO per diluted share, EBITDA, EBITDAre and Adjusted EBITDAre should not be considered as a measure of our liquidity or indicative of funds available to fund our cash needs, including our ability to make cash distributions. In addition, NAREIT FFO per diluted share and Adjusted FFO per diluted share do not measure, and should not be used as a measure of, amounts that accrue directly to stockholders’ benefit.
Similarly, EBITDAre, Adjusted EBITDAre, NAREIT FFO and Adjusted FFO per diluted share include adjustments for the pro rata share of our equity investments and NAREIT FFO and Adjusted FFO per diluted share include adjustments for the pro rata share of non-controlling partners in consolidated partnerships. Our equity investments consist of interests ranging from
Comparable Hotel Property Level Operating Results
We present certain operating results for our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or "same store," basis as supplemental information for our investors. Our comparable hotel results present operating results for our hotels without giving effect to dispositions or properties that experienced closures due to renovations or property damage, as discussed in “Comparable Hotel Operating Statistics and Results” above. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable hotels after removing the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization expense). Corporate-level costs and expenses also are removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information about the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by location and for the Company’s properties in the aggregate. We eliminate from our comparable hotel level operating results severance costs related to broad-based and significant property-level reconfiguration that is not considered to be within the normal course of business, as we believe this elimination provides useful supplemental information that is beneficial to an investor’s understanding of our ongoing operating performance. We also eliminate depreciation and amortization expense because, even though depreciation and amortization expense are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. As noted earlier, because real estate values historically have risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient.
Because of the elimination of corporate-level costs and expenses, gains or losses on disposition, certain severance expenses and depreciation and amortization expense, the comparable hotel operating results we present do not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.
We present these hotel operating results on a comparable hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable hotels (which represent the vast majority of our portfolio) or from other factors. While management believes that presentation of comparable hotel results is a supplemental measure that provides useful information in evaluating our ongoing performance, this measure is not used to allocate resources or to assess the operating performance of each of our hotels, as these decisions are based on data for individual hotels and are not based on comparable hotel results in the aggregate. For these reasons, we believe comparable hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.
SOURAV GHOSH
Chief Financial Officer
(240) 744-5267
JAIME MARCUS
Investor Relations
(240) 744-5117
ir@hosthotels.com
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