Host Hotels & Resorts 10-Q 2023 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-14625 (Host Hotels & Resorts, Inc.)

0-25087 (Host Hotels & Resorts, L.P.)

HOST HOTELS & RESORTS, INC.

HOST HOTELS & RESORTS, L.P.

(Exact name of registrant as specified in its charter)

Maryland (Host Hotels & Resorts, Inc.) Delaware (Host Hotels & Resorts, L.P.) (State or Other Jurisdiction of Incorporation or Organization)	53-0085950 52-2095412 (I.R.S. Employer Identification No.)
4747 Bethesda Ave, Suite 1300 Bethesda, Maryland (Address of Principal Executive Offices)	20814 (Zip Code)

(240) 744-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class	Trading Symbol	Name of Each Exchange on Which Registered
Host Hotels & Resorts, Inc.	Common Stock, $0.01 par value	HST	The Nasdaq Stock Market LLC
Host Hotels & Resorts, L.P.	None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Host Hotels & Resorts, Inc.	Yes  ☑	No ☐
Host Hotels & Resorts, L.P.	Yes  ☑	No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Host Hotels & Resorts, Inc.	Yes  ☑	No ☐
Host Hotels & Resorts, L.P.	Yes  ☑	No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Host Hotels & Resorts, Inc.
Large accelerated filer    ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐
Host Hotels & Resorts, L.P.
Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer    ☑	Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Host Hotels & Resorts, Inc.	Yes ☐	No ☑
Host Hotels & Resorts, L.P.	Yes ☐	No ☑

As of August 3, 2022, there were 714,892,621 shares of Host Hotels & Resorts, Inc.’s common stock, $0.01 par value per share, outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. Unless stated otherwise or the context requires otherwise, references to “Host Inc.” mean Host Hotels & Resorts, Inc., a Maryland corporation, and references to “Host L.P.” mean Host Hotels & Resorts, L.P., a Delaware limited partnership, and its consolidated subsidiaries, in cases where it is important to distinguish between Host Inc. and Host L.P. We use the terms “we,” “our” or “the company” to refer to Host Inc. and Host L.P. together, unless the context indicates otherwise.

Host Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”). Host Inc. owns properties and conducts operations through Host L.P., of which Host Inc. is the sole general partner and of which it holds approximately 99% of the partnership interests (“OP units”). The remaining OP units are owned by various unaffiliated limited partners. As the sole general partner of Host L.P., Host Inc. has the exclusive and complete responsibility for Host L.P.’s day-to-day management and control. Management operates Host Inc. and Host L.P. as one enterprise. The management of Host Inc. consists of the same persons who direct the management of Host L.P. As general partner with control of Host L.P., Host Inc. consolidates Host L.P. for financial reporting purposes, and Host Inc. does not have significant assets other than its investment in Host L.P. Therefore, the assets and liabilities of Host Inc. and Host L.P. are substantially the same on their respective condensed consolidated financial statements and the disclosures of Host Inc. and Host L.P. also are substantially similar. For these reasons, we believe that the combination into a single report of the quarterly reports on Form 10-Q of Host Inc. and Host L.P. results in benefits to management and investors.

The substantive difference between the filings of Host Inc. and Host L.P. is that Host Inc. is a REIT with public stock, while Host L.P. is a partnership with no publicly traded equity. In the condensed consolidated financial statements, this difference primarily is reflected in the equity (or partners’ capital for Host L.P.) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital for Host L.P.). Apart from the different equity treatment, the condensed consolidated financial statements of Host Inc. and Host L.P. are nearly identical.

This combined Form 10-Q for Host Inc. and Host L.P. includes, for each entity, separate interim financial statements (but combined footnotes), separate reports on disclosure controls and procedures and internal control over financial reporting and separate CEO/CFO certifications. In addition, with respect to any other financial and non-financial disclosure items required by Form 10-Q, any material differences between Host Inc. and Host L.P. are discussed separately herein. For a more detailed discussion of the substantive differences between Host Inc. and Host L.P. and why we believe the combined filing results in benefits to investors, see the discussion in the combined Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Explanatory Note.”

i

HOST HOTELS & RESORTS, INC. AND HOST HOTELS & RESORTS, L.P.

INDEX

PART I. FINANCIAL INFORMATION

		Page No.
Item 1.	Financial Statements for Host Hotels & Resorts, Inc.:
	Condensed Consolidated Balance Sheets - June 30, 2022 (unaudited) and December 31, 2021	1
	Condensed Consolidated Statements of Operations (unaudited) - Quarter and Year-to-date ended June 30, 2022 and 2021	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarter and Year-to-date ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows (unaudited) - Year-to-date ended June 30, 2022 and 2021	4
	Financial Statements for Host Hotels & Resorts, L.P.:
	Condensed Consolidated Balance Sheets - June 30, 2022 (unaudited) and December 31, 2021	6
	Condensed Consolidated Statements of Operations (unaudited) - Quarter and Year-to-date ended June 30, 2022 and 2021	7
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarter and Year-to-date ended June 30, 2022 and 2021	8
	Condensed Consolidated Statements of Cash Flows (unaudited) - Year-to-date ended June 30, 2022 and 2021	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	45
	PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	47

ii

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2022 and December 31, 2021

(in millions, except share and per share amounts)

	June 30, 2022			December 31, 2021
	unaudited
ASSETS
Property and equipment, net	$	9,538		$	9,994
Right-of-use assets		560			551
Assets held for sale		0			270
Due from managers		164			113
Advances to and investments in affiliates		126			42
Furniture, fixtures and equipment replacement fund		179			144
Notes receivable		413			0
Other		365			431
Cash and cash equivalents		699			807
Total assets	$	12,044		$	12,352
LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY
Debt
Senior notes	$	3,112		$	3,109
Credit facility, including the term loans of $998 and $997, respectively		992			1,673
Mortgage and other debt		108			109
Total debt		4,212			4,891
Lease liabilities		572			564
Accounts payable and accrued expenses		113			85
Due to managers		35			42
Other		167			198
Total liabilities		5,099			5,780
Redeemable non-controlling interests - Host Hotels & Resorts, L.P.		163			126
Host Hotels & Resorts, Inc. stockholders’ equity:
Common stock, par value $.01, 1,050 million shares authorized, 714.9 million      shares and 714.1 million shares issued and outstanding, respectively		7			7
Additional paid-in capital		7,729			7,702
Accumulated other comprehensive loss		(74	)		(76	)
Deficit		(885	)		(1,192	)
Total equity of Host Hotels & Resorts, Inc. stockholders		6,777			6,441
Non-redeemable non-controlling interests—other consolidated partnerships		5			5
Total equity		6,782			6,446
Total liabilities, non-controlling interests and equity	$	12,044		$	12,352

See notes to condensed consolidated financial statements.

1

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter and Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions, except per share amounts)

	Quarter ended June 30,						Year-to-date ended June 30,
	2022			2021			2022			2021
REVENUES
Rooms	$	850		$	423		$	1,505		$	680
Food and beverage		405			137			702			214
Other		126			89			248			154
Total revenues		1,381			649			2,455			1,048
EXPENSES
Rooms		189			109			349			174
Food and beverage		245			105			445			167
Other departmental and support expenses		300			209			573			369
Management fees		62			21			102			32
Other property-level expenses		78			79			162			157
Depreciation and amortization		162			169			334			334
Corporate and other expenses		25			25			48			49
Gain on insurance and business interruption settlements		(7	)		0			(7	)		0
Total operating costs and expenses		1,054			717			2,006			1,282
OPERATING PROFIT (LOSS)		327			(68	)		449			(234	)
Interest income		6			0			7			1
Interest expense		(37	)		(43	)		(73	)		(85	)
Other gains		1			3			14			2
Equity in earnings of affiliates		2			25			4			34
INCOME (LOSS) BEFORE INCOME TAXES		299			(83	)		401			(282	)
Benefit (provision) for income taxes		(39	)		22			(23	)		68
NET INCOME (LOSS)		260			(61	)		378			(214	)
Less: Net (income) loss attributable to non-controlling interests		(4	)		1			(6	)		2
NET INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	256		$	(60	)	$	372		$	(212	)
Basic earnings (loss) per common share	$	0.36		$	(0.09	)	$	0.52		$	(0.30	)
Diluted earnings (loss) per common share	$	0.36		$	(0.09	)	$	0.52		$	(0.30	)

See notes to condensed consolidated financial statements.

2

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter and Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions)

	Quarter ended June 30,						Year-to-date ended June 30,
	2022			2021			2022			2021
NET INCOME (LOSS)	$	260		$	(61	)	$	378		$	(214	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation and other comprehensive income of unconsolidated affiliates		(6	)		6			1			4
Change in fair value of derivative instruments		1			0			1			(1	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		(5	)		6			2			3
COMPREHENSIVE INCOME (LOSS)		255			(55	)		380			(211	)
Less: Comprehensive (income) loss attributable to non-controlling interests		(4	)		1			(6	)		2
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	251		$	(54	)	$	374		$	(209	)

See notes to condensed consolidated financial statements.

3

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions)

	Year-to-date ended June 30,
	2022			2021
OPERATING ACTIVITIES
Net income (loss)	$	378		$	(214	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization		334			334
Amortization of finance costs, discounts and premiums, net		5			5
Stock compensation expense		10			9
Other gains		(14	)		(2	)
Gain on property insurance settlement		(6	)		0
Equity in earnings of affiliates		(4	)		(34	)
Change in due from/to managers		(53	)		(71	)
Distributions from investments in affiliates		20			4
Changes in other assets		43			(64	)
Changes in other liabilities		(5	)		(7	)
Net cash provided by (used in) operating activities		708			(40	)
INVESTING ACTIVITIES
Proceeds from sales of assets, net		217			6
Proceeds from loan receivable		0			9
Advances to and investments in affiliates		(44	)		(8	)
Acquisitions		0			(801	)
Capital expenditures:
Renewals and replacements		(78	)		(63	)
Return on investment		(162	)		(117	)
Property insurance proceeds		7			0
Net cash used in investing activities		(60	)		(974	)
FINANCING ACTIVITIES
Financing costs		0			(3	)
Repayment of credit facility		(683	)		0
Mortgage debt and other prepayments and scheduled maturities		(1	)		0
Issuance of common stock		0			138
Dividends on common stock		(21	)		0
Other financing activities		(10	)		(8	)
Net cash provided by (used in) financing activities		(715	)		127
Effects of exchange rate changes on cash held		(1	)		2
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(68	)		(885	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		953			2,476
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	885		$	1,591

See notes to condensed consolidated financial statements.

4

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Year-to-date ended June 30, 2022 and 2021

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:

	June 30, 2022		June 30, 2021
Cash and cash equivalents	$	699	$	1,450
Restricted cash (included in other assets)		7		2
Cash included in furniture, fixtures and equipment replacement fund		179		139
Total cash and cash equivalents and restricted cash shown in the statements of cash flows	$	885	$	1,591

The following table presents cash paid (received) for the following:

	Year-to-date ended June 30,
	2022			2021
Total interest paid	$	69		$	83
Income tax refunds received	$	(7	)	$	0

Supplemental schedule of noncash investing and financing activities:

On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host Hotels & Resorts, L.P. issued approximately 3.2 million OP units valued at approximately $56 million.

In connection with the sales of the Sheraton Boston Hotel in February 2022 and the Sheraton New York Times Square Hotel in April 2022, we issued bridge loans to the buyers for $163 million and $250 million, respectively. The proceeds received from the sales are net of the loans.

In 2021, non-cash consideration for the acquisition of the Four Seasons Resort Orlando at Walt Disney World® Resort included the assumption of hotel-level liabilities of approximately $24 million, consisting primarily of advance deposits received from guests for future stays, the cash related to which was retained by the seller.

See notes to condensed consolidated financial statements.

5

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2022 and December 31, 2021

(in millions)

	June 30, 2022			December 31, 2021
	unaudited
ASSETS
Property and equipment, net	$	9,538		$	9,994
Right-of-use assets		560			551
Assets held for sale		0			270
Due from managers		164			113
Advances to and investments in affiliates		126			42
Furniture, fixtures and equipment replacement fund		179			144
Notes receivable		413			0
Other		365			431
Cash and cash equivalents		699			807
Total assets	$	12,044		$	12,352
LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL
Debt
Senior notes	$	3,112		$	3,109
Credit facility, including the term loans of $998 and $997, respectively		992			1,673
Mortgage and other debt		108			109
Total debt		4,212			4,891
Lease liabilities		572			564
Accounts payable and accrued expenses		113			85
Due to managers		35			42
Other		167			198
Total liabilities		5,099			5,780
Limited partnership interests of third parties		163			126
Host Hotels & Resorts, L.P. capital:
General partner		1			1
Limited partner		6,850			6,516
Accumulated other comprehensive loss		(74	)		(76	)
Total Host Hotels & Resorts, L.P. capital		6,777			6,441
Non-controlling interests—consolidated partnerships		5			5
Total capital		6,782			6,446
Total liabilities, limited partnership interests of third parties and capital	$	12,044		$	12,352

See notes to condensed consolidated financial statements.

6

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter and Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions, except per unit amounts)

	Quarter ended June 30,						Year-to-date ended June 30,
	2022			2021			2022			2021
REVENUES
Rooms	$	850		$	423		$	1,505		$	680
Food and beverage		405			137			702			214
Other		126			89			248			154
Total revenues		1,381			649			2,455			1,048
EXPENSES
Rooms		189			109			349			174
Food and beverage		245			105			445			167
Other departmental and support expenses		300			209			573			369
Management fees		62			21			102			32
Other property-level expenses		78			79			162			157
Depreciation and amortization		162			169			334			334
Corporate and other expenses		25			25			48			49
Gain on insurance and business interruption settlements		(7	)		0			(7	)		0
Total operating costs and expenses		1,054			717			2,006			1,282
OPERATING PROFIT (LOSS)		327			(68	)		449			(234	)
Interest income		6			0			7			1
Interest expense		(37	)		(43	)		(73	)		(85	)
Other gains		1			3			14			2
Equity in earnings of affiliates		2			25			4			34
INCOME (LOSS) BEFORE INCOME TAXES		299			(83	)		401			(282	)
Benefit (provision) for income taxes		(39	)		22			(23	)		68
NET INCOME (LOSS)		260			(61	)		378			(214	)
Less: Net loss attributable to non-controlling interests		1			0			0			0
NET INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.	$	261		$	(61	)	$	378		$	(214	)
Basic earnings (loss) per common unit	$	0.37		$	(0.09	)	$	0.53		$	(0.31	)
Diluted earnings (loss) per common unit	$	0.37		$	(0.09	)	$	0.53		$	(0.31	)

See notes to condensed consolidated financial statements.

7

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Quarter and Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions)

	Quarter ended June 30,						Year-to-date ended June 30,
	2022			2021			2022		2021
NET INCOME (LOSS)	$	260		$	(61	)	$	378	$	(214	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation and other comprehensive income of unconsolidated affiliates		(6	)		6			1		4
Change in fair value of derivative instruments		1			0			1		(1	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		(5	)		6			2		3
COMPREHENSIVE INCOME (LOSS)		255			(55	)		380		(211	)
Less: Comprehensive loss attributable to non-controlling interests		1			0			0		0
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.	$	256		$	(55	)	$	380	$	(211	)

See notes to condensed consolidated financial statements.

8

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year-to-date ended June 30, 2022 and 2021

(unaudited, in millions)

	Year-to-date ended June 30,
	2022			2021
OPERATING ACTIVITIES
Net income (loss)	$	378		$	(214	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization		334			334
Amortization of finance costs, discounts and premiums, net		5			5
Stock compensation expense		10			9
Other gains		(14	)		(2	)
Gain on property insurance settlement		(6	)		0
Equity in earnings of affiliates		(4	)		(34	)
Change in due from/to managers		(53	)		(71	)
Distributions from investments in affiliates		20			4
Changes in other assets		43			(64	)
Changes in other liabilities		(5	)		(7	)
Net cash provided by (used in) operating activities		708			(40	)
INVESTING ACTIVITIES
Proceeds from sales of assets, net		217			6
Proceeds from loan receivable		0			9
Advances to and investments in affiliates		(44	)		(8	)
Acquisitions		0			(801	)
Capital expenditures:
Renewals and replacements		(78	)		(63	)
Return on investment		(162	)		(117	)
Property insurance proceeds		7			0
Net cash used in investing activities		(60	)		(974	)
FINANCING ACTIVITIES
Financing costs		0			(3	)
Repayment of credit facility		(683	)		0
Mortgage debt and other prepayments and scheduled maturities		(1	)		0
Issuance of common OP units		0			138
Distributions on common OP units		(21	)		0
Other financing activities		(10	)		(8	)
Net cash provided by (used in) financing activities		(715	)		127
Effects of exchange rate changes on cash held		(1	)		2
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(68	)		(885	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		953			2,476
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	885		$	1,591

See notes to condensed consolidated financial statements.

9

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Year-to-date ended June 30, 2022 and 2021

(unaudited)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the amount shown in the statements of cash flows:

	June 30, 2022		June 30, 2021
Cash and cash equivalents	$	699	$	1,450
Restricted cash (included in other assets)		7		2
Cash included in furniture, fixtures and equipment replacement fund		179		139
Total cash and cash equivalents and restricted cash shown in the statements of cash flows	$	885	$	1,591

The following table presents cash paid (received) for the following:

	Year-to-date ended June 30,
	2022			2021
Total interest paid	$	69		$	83
Income tax refunds received	$	(7	)	$	0

Supplemental schedule of noncash investing and financing activities:

On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host Hotels & Resorts, L.P. issued approximately 3.2 million OP units valued at approximately $56 million.

In connection with the sales of the Sheraton Boston Hotel in February 2022 and the Sheraton New York Times Square Hotel in April 2022, we issued bridge loans to the buyers for $163 million and $250 million, respectively. The proceeds received from the sales are net of the loans.

In 2021, non-cash consideration for the acquisition of the Four Seasons Resort Orlando at Walt Disney World® Resort included the assumption of hotel-level liabilities of approximately $24 million, consisting primarily of advance deposits received from guests for future stays, the cash related to which was retained by the seller.

See notes to condensed consolidated financial statements.

10

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Organization

Description of Business

Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”), with its operations conducted solely through Host Hotels & Resorts, L.P. and its subsidiaries. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to these unaudited condensed consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” specifically to refer to Host Hotels & Resorts, Inc. and the term “Host L.P.” specifically to refer to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. As of June 30, 2022, Host Inc. holds approximately 99% of Host L.P.’s partnership interests.

COVID-19 Developments

The COVID-19 pandemic has had a significant adverse impact on U.S. and global economic activity and has contributed to significant volatility in financial markets beginning in the first quarter of 2020. There remains a great deal of uncertainty surrounding the trends and duration of the COVID-19 pandemic, including the potential impact of new variants, and we are monitoring developments on an ongoing basis. We, and our hotel managers, may take additional actions in response to future developments.

Consolidated Portfolio

As of June 30, 2022, our consolidated portfolio, primarily consisting of luxury and upper upscale hotels, is located in the following countries:

	Hotels
United States		73
Brazil		3
Canada		2
Total		78

2. Summary of Significant Accounting Policies

We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10–K for the year ended December 31, 2021.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of June 30, 2022, and the results of our operations for the quarter and year-to-date periods ended June 30, 2022 and 2021, respectively, and cash flows for the year-to-date periods ended June 30, 2022 and 2021, respectively. Interim results are not necessarily indicative of full year performance because of the effect of seasonal variations as well as the impact from the COVID-19 pandemic.

Three of the partnerships in which we own an interest are considered variable interest entities (VIEs) as the general partner maintains control over the decisions that most significantly impact such partnerships. These VIEs include the operating partnership, Host L.P., which is consolidated by Host Inc., of which Host Inc. is the sole general partner and holds approximately 99% of its partnership interests; the consolidated partnership that owns the Houston Airport Marriott at George Bush Intercontinental; and the unconsolidated partnership that owns the Philadelphia Marriott Downtown. Host Inc.’s sole significant asset is its investment in Host L.P. and, consequently, substantially all of Host Inc.’s assets and

11

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

liabilities consists of the assets and liabilities of Host L.P. All of Host Inc.’s debt is an obligation of Host L.P. and may be repaid only with assets of Host L.P.

Notes Receivable

At June 30, 2022, our notes receivable consists of bridge loans issued in connection with hotel sales. In conjunction with our dispositions, we may issue a bridge loan to the purchaser to facilitate the sale. These bridge loans are collateralized by the corresponding sold hotel and in the event of a default of the loan, we would seek to enforce our rights against the collateral in accordance with the terms of the loan agreement. The bridge loans are recorded at amortized cost, on an individual asset basis. We recognize interest as it is earned and include accrued interest receivable in other assets on the unaudited condensed consolidated balance sheets. We individually assess our notes receivable for credit losses quarterly and estimate any credit losses based on an analysis of several factors, primarily the value of the hotel collateral, as well as current economic conditions and historical trends.

3. Earnings (Loss) Per Common Share (Unit)

Basic earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders) by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding. Diluted earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders), as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans or the Host L.P. common units distributed to Host Inc. to support such granted shares, and other non-controlling interests that have the option to convert their limited partner interests to Host L.P. common units. No effect is shown for any securities that are anti-dilutive. We have 10.2 million Host L.P. common units, which are convertible into 10.4 million Host Inc. common shares, that are not included in Host Inc.’s calculation of earnings (loss) per share as their effect is not dilutive. The calculation of Host Inc. basic and diluted earnings (loss) per common share is shown below (in millions, except per share amounts):

	Quarter ended June 30,						Year-to-date ended June 30,
	2022			2021			2022			2021
Net income (loss)	$	260		$	(61	)	$	378		$	(214	)
Less: Net (income) loss attributable to non-controlling interests		(4	)		1			(6	)		2
Net income (loss) attributable to Host Inc.	$	256		$	(60	)	$	372		$	(212	)
Basic weighted average shares outstanding		714.8			707.6			714.6			706.6
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market		2.2			0			2.2			0
Diluted weighted average shares outstanding		717.0			707.6			716.8			706.6
Basic earnings (loss) per common share	$	0.36		$	(0.09	)	$	0.52		$	(0.30	)
Diluted earnings (loss) per common share	$	0.36		$	(0.09	)	$	0.52		$	(0.30	)

12

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The calculation of Host L.P. basic and diluted earnings (loss) per unit is shown below (in millions, except per unit amounts):

	Quarter ended June 30,					Year-to-date ended June 30,
	2022		2021			2022		2021
Net income (loss)	$	260	$	(61	)	$	378	$	(214	)
Less: Net loss attributable to non-controlling interests		1		0			0		0
Net income (loss) attributable to Host L.P.	$	261	$	(61	)	$	378	$	(214	)
Basic weighted average units outstanding		710.0		699.9			709.5		699.0
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market		2.2		0			2.1		0
Diluted weighted average units outstanding		712.2		699.9			711.6		699.0
Basic earnings (loss) per common unit	$	0.37	$	(0.09	)	$	0.53	$	(0.31	)
Diluted earnings (loss) per common unit	$	0.37	$	(0.09	)	$	0.53	$	(0.31	)

4. Revenue

Substantially all our operating results represent revenues and expenses generated by property-level operations. Payments are due from customers when services are provided to them. Due to the short-term nature of our contracts and the almost concurrent receipt of payment, we have no material unearned revenue at quarter end. We collect sales, use, occupancy and similar taxes from our customers, which we present on a net basis (excluded from revenues) on our statements of operations.

Disaggregation of Revenues. While we do not consider the following presentation of revenues by location to consist of reportable segments, we have disaggregated hotel revenues by market location. Our revenues also are presented by country in Note 9 – Geographic Information.

13

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

By Location. The following table presents hotel revenues for each of the geographic locations in our consolidated hotel portfolio (in millions):

	Quarter ended June 30,				Year-to-date ended June 30,
Location	2022		2021		2022		2021
Maui/Oahu	$	126	$	98	$	242	$	142
Orlando		129		36		237		45
Florida Gulf Coast		100		85		231		166
Phoenix		101		63		212		117
San Diego		118		41		205		55
Miami		69		56		152		112
New York		93		25		143		36
San Francisco/San Jose		90		25		142		36
Washington, D.C. (Central Business District)		92		20		130		43
Jacksonville		39		29		68		43
Los Angeles/Orange County		35		29		60		39
Houston		31		19		57		32
San Antonio		29		12		56		19
Chicago		39		9		53		13
New Orleans		29		10		49		13
Boston		30		10		48		13
Austin		26		6		46		7
Seattle		27		5		37		7
Philadelphia		23		11		36		16
Denver		24		9		36		12
Northern Virginia		23		12		35		19
Atlanta		17		18		30		29
Other		72		18		123		29
Domestic		1,362		646		2,428		1,043
International		19		3		27		5
Total	$	1,381	$	649	$	2,455	$	1,048

5. Property and Equipment

Property and equipment consists of the following (in millions):

	June 30, 2022			December 31, 2021
Land and land improvements	$	1,965		$	2,310
Buildings and leasehold improvements		13,537			13,636
Furniture and equipment		2,201			2,225
Construction in progress		287			278
		17,990			18,449
Less accumulated depreciation and amortization		(8,452	)		(8,455	)
	$	9,538		$	9,994

6.	Equity of Host Inc. and Capital of Host L.P.
	Equity of Host Inc.

14

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The components of the equity of Host Inc. are as follows (in millions):

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Deficit)			Non-redeemable, non-controlling interests		Total equity			Redeemable, non-controlling interests
Balance, December 31, 2021	$	7	$	7,702	$	(76	)	$	(1,192	)	$	5	$	6,446		$	126
Net income		—		—		—			372			—		372			6
Issuance of common stock for comprehensive stock plans, net		—		3		—			—			—		3			—
Dividends declared on common stock		—		—		—			(65	)		—		(65	)		—
Issuance of common OP units		—		—		—			—			—		—			56
Distributions to non-controlling interests		—		—		—			—			—		—			(1	)
Changes in ownership and other		—		24		—			—			—		24			(24	)
Other comprehensive income		—		—		2			—			—		2			—
Balance, June 30, 2022	$	7	$	7,729	$	(74	)	$	(885	)	$	5	$	6,782		$	163

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Deficit)			Non-redeemable, non-controlling interests			Total equity			Redeemable, non-controlling interests
Balance, March 31, 2022	$	7	$	7,680	$	(69	)	$	(1,098	)	$	5		$	6,525		$	203
Net income (loss)		—		—		—			256			(1	)		255			5
Issuance of common stock for comprehensive stock plans, net		—		12		—			—			—			12			—
Dividends declared on common stock		—		—		—			(43	)		—			(43	)		—
Distributions to non-controlling interests		—		—		—			—			—			—			(1	)
Changes in ownership and other		—		37		—			—			1			38			(44	)
Other comprehensive loss		—		—		(5	)		—			—			(5	)		—
Balance, June 30, 2022	$	7	$	7,729	$	(74	)	$	(885	)	$	5		$	6,782		$	163

15

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Deficit)			Non-redeemable, non-controlling interests		Total equity			Redeemable, non-controlling interests
Balance, December 31, 2020	$	7	$	7,568		$	(74	)	$	(1,180	)	$	5	$	6,326		$	108
Net loss		—		—			—			(212	)		—		(212	)		(2	)
Issuance of common stock for comprehensive stock plans, net		—		2			—			—			—		2			—
Common stock issuances		—		138			—			—			—		138			—
Changes in ownership and other		—		(20	)		—			—			—		(20	)		19
Other comprehensive income		—		—			3			—			—		3			—
Balance, June 30, 2021	$	7	$	7,688		$	(71	)	$	(1,392	)	$	5	$	6,237		$	125

	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Deficit)			Non-redeemable, non-controlling interests		Total equity			Redeemable, non-controlling interests
Balance, March 31, 2021	$	7	$	7,547		$	(77	)	$	(1,332	)	$	5	$	6,150		$	124
Net loss		—		—			—			(60	)		0		(60	)		(1	)
Issuance of common stock for comprehensive stock plans, net		—		6			—			—			—		6			—
Common stock issuances		—		138			—			—			—		138			—
Changes in ownership and other		—		(3	)		—			—			0		(3	)		2
Other comprehensive income		—		—			6			—			—		6			—
Balance, June 30, 2021	$	7	$	7,688		$	(71	)	$	(1,392	)	$	5	$	6,237		$	125

Capital of Host L.P.

As of June 30, 2022, Host Inc. is the owner of approximately 99% of Host L.P.’s common OP units. The remaining common OP units are owned by unaffiliated limited partners. Each common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock, based on the conversion ratio of 1.021494 shares of Host Inc. common stock for each common OP unit. Under the credit facility, all redemptions must be made with Host Inc. common stock if Host L.P.’s leverage ratio (as calculated under the credit facility) exceeds 7.25x.

In exchange for any shares issued by Host Inc., Host L.P. will issue common OP units to Host Inc. based on the applicable conversion ratio. Additionally, funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P.

16

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The components of the Capital of Host L.P. are as follows (in millions):

	General Partner		Limited Partner			Accumulated Other Comprehensive Income (Loss)			Non-controlling interests		Total capital			Limited partnership interests of third parties
Balance, December 31, 2021	$	1	$	6,516		$	(76	)	$	5	$	6,446		$	126
Net income		—		372			—			—		372			6
Issuance of common OP units to Host Inc. for comprehensive stock plans, net		—		3			—			—		3			—
Distributions declared on common OP units		—		(65	)		—			—		(65	)		(1	)
Issuance of common OP units		—		—			—			—		—			56
Changes in ownership and other		—		24			—			—		24			(24	)
Other comprehensive income		—		—			2			—		2			—
Balance, June 30, 2022	$	1	$	6,850		$	(74	)	$	5	$	6,782		$	163

	General Partner		Limited Partner			Accumulated Other Comprehensive Income (Loss)			Non-controlling interests			Total capital			Limited partnership interests of third parties
Balance, March 31, 2022	$	1	$	6,588		$	(69	)	$	5		$	6,525		$	203
Net income (loss)		—		256			—			(1	)		255			5
Issuance of common OP units to Host Inc. for comprehensive stock plans, net		—		12			—			—			12			—
Distributions declared on common OP units		—		(43	)		—			—			(43	)		(1	)
Changes in ownership and other		—		37			—			1			38			(44	)
Other comprehensive loss		—		—			(5	)		—			(5	)		—
Balance, June 30, 2022	$	1	$	6,850		$	(74	)	$	5		$	6,782		$	163

	General Partner		Limited Partner			Accumulated Other Comprehensive Income (Loss)			Non-controlling interests		Total capital			Limited partnership interests of third parties
Balance, December 31, 2020	$	1	$	6,394		$	(74	)	$	5	$	6,326		$	108
Net loss		—		(212	)		—			—		(212	)		(2	)
Issuance of common OP units to Host Inc. for comprehensive stock plans, net		—		2			—			—		2			—
Common OP unit issuances		—		138			—			—		138			—
Changes in ownership and other		—		(20	)		—			—		(20	)		19
Other comprehensive income		—		—			3			—		3			—
Balance, June 30, 2021	$	1	$	6,302		$	(71	)	$	5	$	6,237		$	125

17

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	General Partner		Limited Partner			Accumulated Other Comprehensive Income (Loss)			Non-controlling interests		Total capital			Limited partnership interests of third parties
Balance, March 31, 2021	$	1	$	6,221		$	(77	)	$	5	$	6,150		$	124
Net loss		—		(60	)		—			0		(60	)		(1	)
Issuance of common OP units to Host Inc. for comprehensive stock plans, net		—		6			—			—		6			—
Common OP unit issuances		—		138			—			—		138			—
Changes in ownership and other		—		(3	)		—			0		(3	)		2
Other comprehensive income		—		—			6			—		6			—
Balance, June 30, 2021	$	1	$	6,302		$	(71	)	$	5	$	6,237		$	125

Share Repurchases

As of June 30, 2022, we have $371 million available for repurchase under our common share repurchase program. Subsequent to quarter end, on August 3, 2022, Host Inc.'s Board of Directors authorized an increase in our share repurchase program from the existing $371 million remaining under the prior Board authorization to $1 billion. There have been 0 share repurchases in the first half of 2022.

Issuance of Common Stock

As of June 30, 2022, there was $460 million of remaining capacity under the distribution agreement we entered into in 2021 with various investment banks to sell shares of Host Inc. common stock in "at-the-market" offerings. NaN shares were issued during the first half of 2022.

Dividends/Distributions

On May 4, 2022, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.06 per share on Host Inc.'s common stock. The dividend was paid on July 15, 2022 to stockholders of record as of June 30, 2022. Accordingly, Host L.P. made a distribution of $0.06128964 per unit on its common OP units based on the current conversion ratio.

Subsequent to quarter end, on August 3, 2022, Host Inc.'s Board of Directors authorized a regular quarterly cash dividend of $0.12 per share on Host Inc.'s common stock. The dividend is payable on October 17, 2022, to stockholders of record on September 30, 2022.

7. Dispositions

During the second quarter, we sold the Sheraton New York Times Square Hotel for $373 million, including a $250 million bridge loan we provided to the buyer, and the YVE Hotel Miami for $50 million, including $1 million of FF&E funds retained by us. We recorded a gain on sale of $1 million during the second quarter. The gain on sale is included in other gains on the unaudited condensed consolidated statement of operations. The bridge loan for the Sheraton New York Times Square Hotel, which is included in notes receivable on our unaudited condensed consolidated balance sheets, has an initial interest rate of 5% and an initial scheduled maturity date of October 18, 2022, which date may be extended by up to 18 months by the exercise of three 6-month extensions, each of which provides for an increase to the interest rate.

8. Fair Value Measurements

18

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

We did not elect the fair value measurement option for any of our financial assets or liabilities. The fair values of notes receivable, secured debt and our credit facility are determined based on the expected future payments discounted at risk-adjusted rates. Our senior notes are valued based on quoted market prices. The fair values of financial instruments not included in this table are estimated to be equal to their carrying amounts.

The fair value of certain financial assets and financial liabilities is shown below (in millions):

	June 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Notes receivable (Level 2)	$	413	$	401	$	0	$	0
Financial liabilities
Senior notes (Level 1)		3,112		2,832		3,109		3,255
Credit facility (Level 2)		992		1,000		1,673		1,683
Mortgage debt (Level 2)		103		99		104		105

E

9. Geographic Information

We consider each one of our hotels to be an operating segment, as we allocate resources and assess operating performance based on individual hotels. All of our hotels meet the aggregation criteria for segment reporting and our other real estate investment activities (primarily our retail spaces and office buildings) are immaterial. As such, we report 1 segment: hotel ownership. Our consolidated foreign operations consist of hotels in 2 countries as of June 30, 2022. There were no intersegment sales during the periods presented.

The following table presents total revenues and property and equipment, net, for each of the geographical areas in which we operate (in millions):

	Total Revenues								Property and Equipment, net
	Quarter ended June 30,				Year-to-date ended June 30,				June 30,		December 31,
	2022		2021		2022		2021		2022		2021
United States	$	1,362	$	646	$	2,428	$	1,043	$	9,466	$	9,919
Brazil		3		1		7		2		31		30
Canada		16		2		20		3		41		45
Total	$	1,381	$	649	$	2,455	$	1,048	$	9,538	$	9,994

10. Non-controlling Interests

19

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Host Inc.’s treatment of the non-controlling interests of Host L.P.: Host Inc. adjusts the amount of the non-controlling interests of Host L.P. each period so that the amount presented equals the greater of its carrying amount based on accumulated historical cost or its redemption value. The historical cost is based on the proportional relationship between the historical cost of equity held by our common stockholders relative to that of the common unitholders of Host L.P. The redemption value is based on the amount of cash or Host Inc. common stock, at our option, that would be paid to the non-controlling interests of Host L.P. if it were terminated. Therefore, the redemption value of the common OP units is equivalent to the number of common shares that would be issued upon conversion of the common OP units held by third parties valued at the market price of Host Inc. common stock at the balance sheet date. One common OP unit may be exchanged for 1.021494 shares of Host Inc. common stock. Redeemable non-controlling interests of Host L.P. are classified in the mezzanine section of our balance sheets as they do not meet the requirements for equity classification because the redemption feature requires the delivery of registered shares.

The table below details the historical cost and redemption values for the non-controlling interests of Host L.P.:

	June 30, 2022		December 31, 2021
Common OP units outstanding (millions)		10.2		7.1
Market price per Host Inc. common share	$	15.68	$	17.39
Shares issuable upon conversion of one common OP unit		1.021494		1.021494
Redemption value (millions)	$	163	$	126
Historical cost (millions)		100		66
Book value (millions) ⁽¹⁾		163		126

___________

(1) The book value recorded is equal to the greater of redemption value or historical cost.

Other Consolidated Partnerships. As of June 30, 2022, we consolidate 2 majority-owned partnerships that have third-party, non-controlling ownership interests. The third-party limited partner interests are included in non-redeemable non-controlling interests — other consolidated partnerships on the balance sheets and totaled $5 million as of both June 30, 2022 and December 31, 2021.

11. Legal Proceedings

We are involved in various legal proceedings in the ordinary course of business regarding the operation of our hotels and company matters. To the extent not covered by insurance, these legal proceedings generally fall into the following broad categories: disputes involving hotel-level contracts, employment litigation, compliance with laws such as the Americans with Disabilities Act, tax disputes and other general matters. Under our management agreements, our operators have broad latitude to resolve individual hotel-level claims for amounts generally less than $150,000. However, for matters exceeding such threshold, our operators may not settle claims without our consent.

Based on our analysis of legal proceedings with which we are involved or of which we currently are aware and our experience in resolving similar claims in the past, we have recorded immaterial accruals as of June 30, 2022 related to such claims. We have estimated that, in the aggregate, our losses related to these proceedings will not be material. We are not aware of any matters with a reasonably possible unfavorable outcome for which disclosure of a loss contingency is required. No assurances can be given as to the outcome of any pending legal proceedings.

20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report. Host Inc. operates as a self-managed and self-administered REIT. Host Inc. is the sole general partner of Host L.P. and holds approximately 99% of its partnership interests. Host L.P. is a limited partnership operating through an umbrella partnership structure. The remaining common OP units are owned by various unaffiliated limited partners.

Forward-Looking Statements

In this quarterly report on Form 10-Q, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “expect,” “may,” “intend,” “predict,” “project,” “plan,” “will,” “estimate” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are based on management’s current expectations and assumptions and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results to differ materially from those anticipated at the time the forward-looking statements are made.

The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•

the duration and scope of the COVID-19 pandemic and its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic, including limiting travel; the ability of our hotel managers to operate hotels in a way that facilitates social distancing, implement enhanced cleaning protocols and other COVID-19 pandemic mitigation practices; and general economic uncertainty in U.S. markets where we own hotels and the potential for low levels of economic growth in these markets;

•

the effect on lodging demand of (i) changes in national and local economic and business conditions, including concerns about U.S. economic growth, an economic recession in the United States or globally, the current high level of inflation, global economic prospects, consumer confidence and the value of the U.S. dollar, and (ii) factors that may shape public perception of travel to a particular location, such as natural disasters, weather events, pandemics and outbreaks of contagious diseases, such as the COVID-19 pandemic, and the occurrence or potential occurrence of terrorist attacks, all of which will affect occupancy rates at our hotels and the demand for hotel products and services;

•

risks that U.S. immigration policies related to the COVID-19 pandemic will suppress international travel to the United States generally or decrease the labor pool;

•

the impact of geopolitical developments outside the United States, such as the pace of economic growth in Europe, the effects of the United Kingdom’s withdrawal from the European Union, trade tensions and tariffs between the United States and its trading partners such as China, or conflicts in Eastern Europe and the Middle East, all of which could affect global travel and lodging demand within the United States;

•

volatility in global financial and credit markets, and the impact of budget deficits and pending and future U.S. governmental action to address such deficits through reductions in spending and similar austerity measures, as well as the impact of potential U.S. government shutdowns, which could materially adversely affect U.S. and global economic conditions, business activity, credit availability, borrowing costs, and lodging demand;

•

operating risks associated with the hotel business, including the effect of labor stoppages or strikes, increasing operating or labor costs or changes in workplace rules that affect labor costs, and risks relating to the response to the COVID-19 pandemic by our hotel managers, such as increased hotel costs for cleaning protocols and severance and furlough payments to hotel employees;

•

the effect of rating agency downgrades of our debt securities or on the cost and availability of new debt financings;

•

the reduction in our operating flexibility and the limitation on our ability to incur debt, pay dividends and make distributions resulting from restrictive covenants in our debt agreements and other risks associated with the amount of our indebtedness or related to restrictive covenants in our debt agreements, including the risk that a default could occur as a result of a decline in operations due to the COVID-19 pandemic;

•

our ability to maintain our hotels in a first-class manner, including meeting capital expenditures requirements, and the effect of renovations, including temporary closures, on our hotel occupancy and financial results;

•

the ability of our hotels to compete effectively against other lodging businesses in the highly competitive markets in which we operate in terms of access, location, quality of accommodations and room rate structures;

21

•

our ability to acquire or develop additional hotels and the risk that potential acquisitions or developments may not perform in accordance with our expectations;

•

the ability to complete hotel renovations on schedule and on, or under, budget and the potential for increased costs and construction delays due to government restrictions on non-essential activities and shortages of supplies as a result of supply chain disruptions;

•

relationships with property managers and joint venture partners and our ability to realize the expected benefits of our joint ventures and other strategic relationships;

•

risks associated with a single manager, Marriott International, managing a significant percentage of our hotels;

•

changes in the desirability of the geographic regions of the hotels in our portfolio or in the travel patterns of hotel customers;

•

the ability of third-party internet and other travel intermediaries to attract and retain customers;

•

our ability to recover fully under our existing insurance policies for terrorist acts and our ability to maintain adequate or full replacement cost “all-risk” property insurance policies on our hotels on commercially reasonable terms;

•

the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cyber attacks;

•

the effects of tax legislative action and other changes in laws and regulations, or the interpretation thereof, including the need for compliance with new environmental and safety requirements;

•

the ability of Host Inc. and each of the REITs acquired, established or to be established by Host Inc. to continue to satisfy complex rules in order to qualify as REITs for U.S. federal income tax purposes and Host Inc.’s and Host L.P.’s ability and the ability of our subsidiaries, and similar entities to be acquired or established by us, to operate effectively within the limitations imposed by these rules; and

•

risks associated with our ability to execute our dividend policy, including factors such as the need to preserve cash and financial flexibility in response to the COVID-19 pandemic, investment activity, operating results and the economic outlook, any or all of which may influence the decision of our board of directors as to whether to pay future dividends at levels previously disclosed or to use available cash to pay special dividends.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions, including those risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2021 and in other filings with the Securities and Exchange Commission (“SEC”). Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material.

22

Operating Results and Outlook

Operating Results

The following table reflects certain line items from our unaudited condensed consolidated statements of operations and significant operating statistics (in millions, except per share and hotel statistics):

Historical Income Statement Data:
	Quarter ended June 30,									Year-to-date ended June 30,
	2022			2021			Change			2022			2021			Change
Total revenues	$	1,381		$	649			112.8	%	$	2,455		$	1,048			134.3	%
Net income (loss)		260			(61	)	N/M				378			(214	)	N/M
Operating profit (loss)		327			(68	)	N/M				449			(234	)	N/M
Operating profit (loss) margin under GAAP		23.7	%		(10.5	)%	N/M				18.3	%		(22.3	)%	N/M
EBITDAre⁽¹⁾	$	506		$	111			355.9	%	$	812		$	116			600.0	%
Adjusted EBITDAre⁽¹⁾		500			110			354.5	%		806			113			613.3	%
Basic and diluted earnings (loss) per common share		0.36			(0.09	)	N/M				0.52			(0.30	)	N/M
NAREIT FFO per diluted share⁽¹⁾		0.58			0.12			383.3	%		0.97			0.13			646.2	%
Adjusted FFO per diluted share⁽¹⁾		0.58			0.12			383.3	%		0.97			0.13			646.2	%

All Owned Hotel Data:
	Quarter ended June 30,									Year-to-date ended June 30,
	2022			2021			Change			2022			2021			Change
All Owned Hotel revenues ⁽¹⁾	$	1,373		$	657			109.0	%	$	2,426		$	1,088			123.0	%
All Owned Hotel EBITDA ⁽¹⁾		510			151			237.7	%		839			200			319.5	%
All Owned Hotel EBITDA margin ⁽¹⁾		37.1	%		23.0	%		1,410 bps			34.6	%		18.4	%		1,620 bps
Change in All Owned Hotel Total RevPAR ⁽¹⁾		107.8	%								121.6	%
Change in All Owned Hotel RevPAR ⁽¹⁾		98.2	%								111.0	%

___________

(1)

EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share and All Owned Hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. All Owned Hotel results exclude the operations of hotels sold or held-for-sale as of June 30, 2022. See “Non-GAAP Financial Measures” and "All Owned Hotel Operating Statistics and Results" for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, All Owned Hotel results and statistics include adjustments for dispositions and acquisitions. See Hotel RevPAR Overview for results of the portfolio based on our ownership period, without these adjustments.

N/M = Not meaningful.

Operations

Total revenues increased $732 million, or 112.8%,and $1,407 million, or 134.3%, as compared to the second quarter of 2021 and year-to-date 2021, respectively, due to strong leisure demand at our resort hotels and continued acceleration in the recovery of business and group travel. All Owned Hotel RevPAR and Total RevPAR for the second quarter increased 98.2% and 107.8%, respectively, compared to the second quarter of 2021 due to both rate and occupancy growth. Year-to-date, All Owned Hotel RevPAR and Total RevPAR has increased 111.0% and 121.6%, respectively, compared to 2021.

While leisure demand, bolstered by spring break during the quarter, continues to drive strong results at resort properties, the pace of recovery at our urban properties significantly accelerated in the second quarter. As a result, Total RevPAR in the quarter for all markets exceeded 2021 levels and the portfolio as a whole exceeded the second quarter 2019 pre-pandemic levels. All Owned Hotel Total RevPAR in our Miami, Orlando and Jacksonville markets increased 54.7%, 41.1% and 29.2%, respectively, compared to 2019, due to continued strength at our leisure properties. While our hotels in San Francisco/San Jose and Washington, D.C., two of our larger markets by room count, experienced All Owned Hotel Total RevPAR declines of 26.5% and 15%, respectively, compared to second quarter 2019, this is an improvement from declines of 59.3% and 49.1% in the first quarter compared to 2019. All Owned Hotel Total RevPAR in our San Diego market, which primarily consists of convention type hotels, nearly reached 2019 levels for the first time, with a decline of only 0.8% compared to the second quarter of 2019. All Owned Hotel Total RevPAR performance was lowest for our Boston market, with a decline of 34.7% compared to 2019.

23

Operating trends overall continued to improve in the second quarter of 2022. At the same time, hotel-level operating costs are increasing at lower rates. While hiring pace improved during the quarter, it continues to lag the improvement in operations. The lag in hiring is due to the challenging labor environment across the industry, which has hindered our managers' ability to adjust staffing levels commensurate with the increase in demand.

As a result of continued operational improvements at our hotels since the onset of the COVID-19 pandemic, second quarter 2022 results improved when compared to 2021 as follows:

•

net income increased $321 million for the quarter and $592 million year-to-date;

•

diluted earnings per share increased $0.45 for the quarter and $0.82 year-to-date;

•

Adjusted EBITDAre increased $390 million for the quarter and $693 million year-to-date; and

•

Adjusted FFO per diluted share increased $0.46 for the quarter and $0.84 year-to-date.

For the second quarter of 2022, operating profit margin under GAAP was 23.7% and All Owned Hotel EBITDA margin was 37.1%, both exceeding the second quarter 2019 pre-pandemic levels. Along with the strong improvements in rates, our hotel margins also have benefited from the implementation of portfolio-wide cost reductions as well as the lag in hiring noted above, resulting in a reduction of All Owned Hotel operating costs across the portfolio by approximately 10% in the first half of 2022, compared to the first half of 2019. While we expect that certain initiatives, including modernized brand standards, streamlined operating departments and accelerated adoption of cost-saving technologies, may lead to long-term expense reductions, we also expect hotel-level operating costs to increase over time at a higher rate, more in line with total revenues, as hotels continue to transition to more normalized levels of operations.

Outlook

We have experienced a significant improvement in revenues and earnings during the first half of the year. However, current macroeconomic headwinds and concerns surrounding the potential for an economic slowdown are now competing with an accelerating lodging recovery. Further improvement in operations will be dependent on our ability to maintain high-rated business in our resort markets, the continued acceleration of group and business transient demand and the return of international inbound travel. Blue Chip Economic Indicators consensus currently estimates an increase in real U.S. GDP of 2.0% for 2022, while business investment is anticipated to increase 5.0%. However, accelerating inflation, high energy prices and geopolitical uncertainty have led to increased risks in recent months and elevated concerns surrounding the Federal Reserve's ability to execute a soft landing for inflation and economic growth. The range of potential outcomes on the economy and the lodging industry specifically remains exceptionally wide, reflecting varying analyst assumptions surrounding the impact of inflation, supply chain disruptions, labor shortages in key industries, geopolitical conflicts, interest rate expectations and the unpredictability of new COVID-19 variants.

Hotel supply growth is anticipated to remain below the long-term historical average in 2022, as supply chain challenges have resulted in project delays across the U.S. We anticipate that many of these projects will continue to be delayed or cancelled, while the new project pipeline will remain suppressed until supply chain issues and other macroeconomic concerns abate. While the pandemic has had an outsized impact on our industry, particularly in luxury and upper upscale hotels in top U.S. markets, where a majority of our hotels are located, leisure travel continues to outperform expectations due to pent-up demand, high personal savings and waning virus fears. We have also seen a significant acceleration in group and business transient demand in the first half of the year, leading to improving trends in our urban markets.

Despite strong results for the first half of the year, significant uncertainties remain related to broader macroeconomic trends, recession concerns and the impact of new virus variants. We believe that the continued strength within the lodging industry is highly dependent on the broader overall economy, consumer confidence and the continued acceleration of corporate and group travel now that leisure demand is exceeding pre-pandemic levels in many markets. Accordingly, we believe that operations in specific markets and asset types will continue to be uneven.

Based on these trends, we expect full year RevPAR of between $191 and $195, representing an increase from 2021 of 62.5% to 65.9%, respectively, and a decrease from 2019 of 4.5% to 2.5%, respectively. Seasonality and changing market and business mix are expected to lead to lower RevPAR in the second half of the year compared to the second quarter.

As noted above, the current outlook for the lodging industry remains highly uncertain. There can be no assurances as to the continued recovery in lodging demand for any number of reasons, including, but not limited to, slower than anticipated return of group and business travel or deteriorating macroeconomic conditions.

Strategic Initiatives

24

Dispositions. During the second quarter, we sold the Sheraton New York Times Square Hotel for $373 million, including a $250 million bridge loan we provided to the buyer, and the YVE Hotel Miami for $50 million, including $1 million of FF&E funds retained by us.

Capital Projects. During the first half of 2022, we spent approximately $162 million on ROI capital projects and $78 million on renewal and replacement projects. For full year 2022, we expect total capital expenditures of $500 million to $575 million. This total amount consists of ROI projects of approximately $320 million to $355 million and renewal and replacement expenditures of $180 million to $220 million. ROI projects include approximately $90 million to $115 million for the Marriott transformational capital program discussed below.

In 2022, we expect to complete renovations to 4,400 guestrooms, approximately 49,000 square feet of meeting space and approximately 123,000 square feet of public space.

We have made substantial progress on the Marriott transformational capital program, which began in 2018 and is expected to be substantially complete by the end of 2022, and includes 16 of our hotels. We believe this program will position these hotels to be more competitive in their respective markets and will enhance long-term performance through increases in RevPAR and market yield index. We agreed to invest amounts in excess of the FF&E reserves required under our management agreements and, in exchange, Marriott has provided additional priority returns on the agreed upon investments and operating profit guarantees of up to $83 million, before reductions for incentive management fees, to offset expected business disruption.

Approximately 91% of the total estimated costs of the program have been spent as of June 30, 2022. Of the 16 hotels included in the program, we have completed projects at the Coronado Island Marriott Resort & Spa, New York Marriott Downtown, San Francisco Marriott Marquis and Santa Clara Marriott in 2019; projects at the Minneapolis Marriott City Center, San Antonio Marriott Rivercenter and JW Marriott Atlanta Buckhead in 2020; and projects at The Ritz-Carlton Amelia Island, New York Marriott Marquis and Orlando World Center Marriott in 2021. In 2022, we completed projects at the Houston Marriott Medical Center and Marina del Rey Marriott. We also expect to substantially complete projects at Boston Marriott Copley Place, JW Marriott Houston by the Galleria, Marriott Marquis San Diego Marina and Washington Marriott at Metro Center during 2022.

Results of Operations

The following table reflects certain line items from our unaudited condensed consolidated statements of operations (in millions, except percentages):

	Quarter ended June 30,									Year-to-date ended June 30,
	2022			2021			Change			2022			2021			Change
Total revenues	$	1,381		$	649			112.8	%	$	2,455		$	1,048			134.3	%
Operating costs and expenses:
Property-level costs ⁽¹⁾		1,036			692			49.7			1,965			1,233			59.4
Corporate and other expenses		25			25		—				48			49			(2.0	)
Gain on insurance and business interruption settlements		(7	)		—		N/M				(7	)		—		N/M
Operating profit (loss)		327			(68	)	N/M				449			(234	)	N/M
Interest expense		37			43			(14.0	)		73			85			(14.1	)
Other gains		1			3			(66.7	)		14			2			600.0
Benefit (provision) for income taxes		(39	)		22		N/M				(23	)		68		N/M
Host Inc.:
Net income (loss) attributable to non-controlling interests		4			(1	)	N/M				6			(2	)	N/M
Net income (loss) attributable to Host Inc.		256			(60	)	N/M				372			(212	)	N/M
Host L.P.:
Net loss attributable to non-controlling interests		(1	)		—		N/M				—			—		—
Net income (loss) attributable to Host L.P.		261			(61	)	N/M				378			(214	)	N/M

25

___________

(1) Amount represents total operating costs and expenses from our unaudited condensed consolidated statements of operations, less corporate and other expenses and gain on insurance and business interruption settlements.

N/M=Not meaningful.

Statement of Operations Results and Trends

Hotel Sales Overview

The following table presents total revenues in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):

	Quarter ended June 30,							Year-to-date ended June 30,
	2022		2021		Change			2022		2021		Change
Revenues:
Rooms	$	850	$	423		100.9	%	$	1,505	$	680		121.3	%
Food and beverage		405		137		195.6			702		214		228.0
Other		126		89		41.6			248		154		61.0
Total revenues	$	1,381	$	649		112.8		$	2,455	$	1,048		134.3

Operations have improved significantly in the second quarter of 2022 compared to 2021 due to the ongoing recovery of the lodging industry from the COVID-19 pandemic. In addition to the improved operations, acquisitions that occurred in 2021 contributed $90 million and $197 million to the growth in revenues in the second quarter and year-to-date 2022, respectively, and more than offset the negative impact to revenues resulting from dispositions of $29 million and $23 million, respectively.

Rooms. Total rooms revenues increased $427 million, or 100.9%, and $825 million, or 121.3%, for the second quarter and year-to-date, respectively, as average room rates for our portfolio have exceeded pre-pandemic levels. While operations remain strong at our leisure properties, operations in urban markets continued to accelerate with increases in group and transient revenues compared to the first quarter of 2022.

Food and beverage. Total food and beverage (“F&B”) revenues increased $268 million, or 195.6%, and $488 million, or 228.0%, for the quarter and year-to-date, respectively, due to strong outlet, banquet and audio visual revenues, reflecting the return of group room nights, which were down only 8.5% to 2019 levels for the quarter.

Other revenues. Total other revenues increased $37 million, or 41.6%, and $94 million, or 61.0%, for the quarter and year-to-date, respectively, which was driven by an increase in attrition and cancellation fees, as well as strong golf, spa and other ancillary revenues.

Property-level Operating Expenses

The following table presents property-level operating expenses in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):

	Quarter ended June 30,							Year-to-date ended June 30,
	2022		2021		Change			2022		2021		Change
Expenses:
Rooms	$	189	$	109		73.4	%	$	349	$	174		100.6	%
Food and beverage		245		105		133.3			445		167		166.5
Other departmental and support expenses		300		209		43.5			573		369		55.3
Management fees		62		21		195.2			102		32		218.8
Other property-level expenses		78		79		(1.3	)		162		157		3.2
Depreciation and amortization		162		169		(4.1	)		334		334	—
Total property-level operating expenses	$	1,036	$	692		49.7		$	1,965	$	1,233		59.4

Our operating costs and expenses, which have both fixed and variable components, are affected by several factors. Rooms expenses are affected mainly by occupancy, which drives costs related to items such as housekeeping, reservation systems, room

26

supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues and are affected by occupancy and the mix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, which comprise approximately 55% of these expenses. During the second quarter of 2022, these expenses increased 78% compared to 2021, reflecting the increase in hiring as operations have recovered.

Early in 2022, hiring was temporarily paused in many areas due to the Omicron variant, as well as the seasonality of the industry. While hiring pace improved during the quarter, the significant acceleration in demand further challenged the ability of our hotel managers to increase hotel staffing commensurate with the increase in demand, which may continue for the remainder of 2022. In aggregate, wage and benefit rate inflation is expected to be in the 4% to 5% range in 2022.

Other property-level expenses consist of property taxes, the amounts and structure of which are highly dependent on local jurisdiction taxing authorities, and property and general liability insurance, all of which do not necessarily increase or decrease based on similar changes in revenues at our hotels.

The increase in expenses for the second quarter of 2022 compared to 2021 for rooms, food and beverage, other departmental and support, and management fees was generally due to the corresponding increase in revenues from improvements in occupancy and hotel operations, as follows:

Rooms. Rooms expenses increased $80 million, or 73.4%, and $175 million, or 100.6%, for the quarter and year-to-date, respectively, reflecting an increase in staffing commensurate with the improvements in occupancy, while commission costs remain below pre-pandemic levels.

Food and beverage. F&B expenses increased $140 million, or 133.3%, and $278 million, or 166.5%, for the quarter and year-to-date, respectively. Overall, F&B costs as a percentage of revenues declined, benefiting from improved banquet revenues and ongoing productivity improvement.

Other departmental and support expenses. Other departmental and support expenses increased $91 million, or 43.5%, and $204 million, or 55.3%, for the quarter and year-to-date, respectively, due primarily to improved operations.

Management fees. Base management fees, which generally are calculated as a percentage of total revenues, increased $20 million, or 105.3%, and $39 million, or 130.0%, for the quarter and year-to-date, respectively. Incentive management fees, which generally are based on the amount of operating profit at each hotel after we receive a priority return on our investment, increased $21 million and $31 million for the quarter and year-to-date, respectively, due primarily to the improved operations at our resort properties.

Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property level expenses decreased $1 million, or 1.3%, for the quarter, due to a decrease in property taxes, while year-to-date the increase of $5 million, or 3.2%, was due to increases in sales and general excise taxes at our hotels, and rent on a portion of our ground leases that are based on a percentage of sales not fully offset by the decrease in property taxes. Other property-level expenses partially were offset by the receipt of operating profit guarantees received from Marriott under the transformational capital program in both 2022 and 2021.

Other Income and Expense

Corporate and other expenses. The following table details our corporate and other expenses for the quarter and year-to-date (in millions):

	Quarter ended June 30,				Year-to-date ended June 30,
	2022		2021		2022		2021
General and administrative costs	$	20	$	20	$	38	$	40
Non-cash stock-based compensation expense		5		5		10		9
Total	$	25	$	25	$	48	$	49

27

Interest expense. Interest expense decreased for the quarter due to the repayment of the revolver portion of the credit facility. The following table details our interest expense for the quarter and year-to-date (in millions):

	Quarter ended June 30,				Year-to-date ended June 30,
	2022		2021		2022		2021
Cash interest expense ⁽¹⁾	$	35	$	40	$	68	$	80
Non-cash interest expense		2		3		5		5
Total interest expense	$	37	$	43	$	73	$	85

_________

(1)

Including the change in accrued interest, total cash interest paid was $41 million and $48 million for the quarters ended June 30, 2022 and 2021, respectively, and $69 million and $83 million for year-to-date 2022 and 2021, respectively.

Other gains. Other gains decreased $2 million for the quarter and increased $12 million year-to-date. The year-to-date increase reflects the sale of the Sheraton Boston Hotel in the first quarter of 2022.

Equity in earnings of affiliates. Equity in earnings of affiliates decreased $23 million for the quarter and $30 million year-to-date, primarily due to unrealized losses on our investment in Fifth Wall Ventures, L.P. in 2022 compared to unrealized gains in 2021, partially offset by improved operations at our non-consolidated properties.

Benefit (provision) for income taxes. We lease substantially all our properties to consolidated subsidiaries designated as taxable REIT subsidiaries (“TRS”) for U.S. federal income tax purposes. Taxable income or loss generated/incurred by the TRS primarily represents hotel-level operations and the aggregate rent paid to Host L.P. by the TRS, on which we record an income tax provision or benefit. For the second quarter and year-to-date, we recorded an income tax provision of $39 million and $23 million, respectively, due primarily to the profitability of hotel operations retained by the TRS.

Hotel RevPAR Overview

To facilitate a quarter-to-quarter comparison of our operations, we typically present certain operating statistics for the periods included in this presentation on a comparable hotel basis. However, due to the COVID-19 pandemic and its effects on operations, there is little comparability between periods. For this reason, we are revising our operating statistics presentation to instead present All Owned Hotel operating results. See “All Owned Hotel Operating Statistics and Results” for a complete description of our methodology. We also include, following the All Owned Hotels results, the same operating statistics presentation on an actual basis, which includes results for our portfolio for the time period of our ownership, including dispositions through their date of disposal and acquisitions beginning as of the date of acquisition. Lastly, we discuss our Hotel RevPAR results by geographic location and mix of business (i.e., transient, group, or contract).

28

Hotel Operating Data by Location

The following tables set forth performance information for our hotels by geographic location for the quarter and year-to-date ended June 30, 2022 compared to 2021 and to 2019, respectively, to provide a comparison of hotel statistics in the current period to last year as well as pre-pandemic levels:

All Owned Hotel Results by Location Compared to 2021

	As of June 30, 2022				Quarter ended June 30, 2022									Quarter ended June 30, 2021
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
Miami		2		1,033	$	618.60		67.4	%	$	416.89	$	697.72	$	574.38		60.9	%	$	349.81	$	550.03		19.2	%		26.9	%
Maui/Oahu		4		2,007		567.20		78.0			442.56		690.02		457.70		78.5			359.35		543.98		23.2			26.8
Jacksonville		1		446		572.46		81.1			463.99		974.04		559.42		68.9			385.55		730.42		20.3			33.4
Florida Gulf Coast		5		1,850		411.67		70.2			288.94		596.48		404.15		66.5			268.58		506.14		7.6			17.8
Phoenix		4		1,822		367.35		75.5			277.29		612.01		311.33		61.6			191.85		382.50		44.5			60.0
Orlando		2		2,448		402.61		73.8			297.06		580.59		427.88		27.0			115.67		204.69		156.8			183.6
Los Angeles/ Orange County		3		1,067		278.61		87.4			243.48		354.78		210.29		57.0			119.76		164.13		103.3			116.2
Austin		2		767		272.13		80.7			219.57		383.03		200.85		56.9			114.34		174.39		92.0			119.6
San Diego		3		3,288		271.84		81.0			220.07		391.37		194.88		46.0			89.63		134.93		145.5			190.1
New York		2		2,486		326.39		80.3			261.97		385.41		181.25		38.5			69.86		79.52		275.0			384.7
Philadelphia		2		810		229.82		86.6			199.08		303.95		160.86		59.6			95.82		147.30		107.8			106.4
Washington, D.C. (CBD)		5		3,238		286.32		77.0			220.58		312.13		152.55		40.4			61.69		68.15		257.6			358.0
New Orleans		1		1,333		219.22		76.4			167.55		237.37		125.59		44.8			56.27		77.37		197.8			206.8
Northern Virginia		2		916		228.38		75.8			173.05		266.99		178.08		42.2			75.16		112.17		130.2			138.0
San Antonio		2		1,512		202.69		70.3			142.44		213.86		154.53		39.2			60.58		87.18		135.1			145.3
San Francisco/ San Jose		6		4,162		237.03		72.7			172.26		236.43		147.45		30.6			45.12		59.89		281.8			294.7
Atlanta		2		810		186.06		77.5			144.28		236.30		154.11		55.3			85.28		114.63		69.2			106.1
Boston		2		1,495		277.40		60.7			168.38		223.59		145.54		37.1			53.93		70.34		212.2			217.9
Chicago		4		1,816		240.04		71.8			172.32		237.59		149.79		33.2			49.78		59.22		246.2			301.2
Houston		5		1,942		184.11		67.1			123.53		175.70		141.99		61.3			87.08		117.76		41.9			49.2
Seattle		2		1,315		228.80		74.6			170.62		218.92		166.90		22.2			37.13		45.54		359.6			380.7
Denver		3		1,340		188.02		69.4			130.52		189.86		133.42		43.3			57.76		74.07		126.0			156.3
Other		9		2,936		262.88		69.1			181.67		265.61		250.31		47.6			119.18		172.74		52.4			53.8
Domestic		73		40,839		301.01		74.4			223.98		363.76		249.31		45.8			114.26		176.81		96.0			105.7
International		5		1,499		155.80		59.0			91.91		140.79		66.34		19.2			12.75		19.99		620.8			604.4
All Locations		78		42,338		296.91		73.9			219.30		355.88		246.52		44.9			110.65		171.23		98.2			107.8

29

All Owned Hotel Results by Location Compared to 2019

	As of June 30, 2022				Quarter ended June 30, 2022									Quarter ended June 30, 2019
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
Miami		2		1,033	$	618.60		67.4	%	$	416.89	$	697.72	$	339.61		80.5	%	$	273.24	$	450.92		52.6	%		54.7	%
Maui/Oahu		4		2,007		567.20		78.0			442.56		690.02		384.31		92.3			354.62		577.55		24.8			19.5
Jacksonville		1		446		572.46		81.1			463.99		974.04		414.11		84.1			348.40		753.61		33.2			29.2
Florida Gulf Coast		5		1,850		411.67		70.2			288.94		596.48		313.53		73.9			231.56		496.76		24.8			20.1
Phoenix		4		1,822		367.35		75.5			277.29		612.01		277.88		74.6			207.40		488.38		33.7			25.3
Orlando		2		2,448		402.61		73.8			297.06		580.59		280.14		72.2			202.14		411.47		47.0			41.1
Los Angeles/ Orange County		3		1,067		278.61		87.4			243.48		354.78		255.87		84.6			216.50		326.84		12.5			8.5
Austin		2		767		272.13		80.7			219.57		383.03		248.55		91.2			226.69		382.10		(3.1	)		0.2
San Diego		3		3,288		271.84		81.0			220.07		391.37		257.34		83.0			213.66		394.65		3.0			(0.8	)
New York		2		2,486		326.39		80.3			261.97		385.41		317.33		82.7			262.29		420.05		(0.1	)		(8.2	)
Philadelphia		2		810		229.82		86.6			199.08		303.95		247.35		89.7			221.94		366.74		(10.3	)		(17.1	)
Washington, D.C. (CBD)		5		3,238		286.32		77.0			220.58		312.13		278.76		91.5			255.04		367.23		(13.5	)		(15.0	)
New Orleans		1		1,333		219.22		76.4			167.55		237.37		196.98		81.0			159.65		233.90		5.0			1.5
Northern Virginia		2		916		228.38		75.8			173.05		266.99		224.95		80.6			181.28		299.04		(4.5	)		(10.7	)
San Antonio		2		1,512		202.69		70.3			142.44		213.86		186.37		75.1			139.94		200.21		1.8			6.8
San Francisco/ San Jose		6		4,162		237.03		72.7			172.26		236.43		272.24		83.4			227.04		321.62		(24.1	)		(26.5	)
Atlanta		2		810		186.06		77.5			144.28		236.30		180.64		82.7			149.41		248.11		(3.4	)		(4.8	)
Boston		2		1,495		277.40		60.7			168.38		223.59		277.53		87.6			243.15		342.58		(30.8	)		(34.7	)
Chicago		4		1,816		240.04		71.8			172.32		237.59		237.05		82.5			195.46		278.10		(11.8	)		(14.6	)
Houston		5		1,942		184.11		67.1			123.53		175.70		181.69		74.6			135.49		193.31		(8.8	)		(9.1	)
Seattle		2		1,315		228.80		74.6			170.62		218.92		234.35		85.1			199.47		271.52		(14.5	)		(19.4	)
Denver		3		1,340		188.02		69.4			130.52		189.86		176.07		79.4			139.88		210.69		(6.7	)		(9.9	)
Other		9		2,936		262.88		69.1			181.67		265.61		196.30		81.4			159.88		238.44		13.6			11.4
Domestic		73		40,839		301.01		74.4			223.98		363.76		261.79		82.2			215.26		353.07		4.1			3.0
International		5		1,499		155.80		59.0			91.91		140.79		158.97		69.7			110.79		169.04		(17.0	)		(16.7	)
All Locations		78		42,338		296.91		73.9			219.30		355.88		258.66		81.8			211.52		346.49		3.7			2.7

All Owned Hotel Results by Location Compared to 2021

	As of June 30, 2022				Year-to-date ended June 30, 2022									Year-to-date ended June 30, 2021
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
Miami		2		1,033	$	677.26		69.1	%	$	468.18	$	758.30	$	618.08		57.7	%	$	356.49	$	554.37		31.3	%		36.8	%
Maui/Oahu		4		2,007		556.16		77.2			429.37		665.43		440.07		59.4			261.61		401.86		64.1			65.6
Jacksonville		1		446		555.35		70.8			393.31		846.75		534.27		52.3			279.35		539.18		40.8			57.0
Florida Gulf Coast		5		1,850		485.09		72.1			349.66		687.58		455.98		59.7			272.11		497.88		28.5			38.1
Phoenix		4		1,822		412.40		74.7			307.94		643.07		330.65		55.8			184.62		359.23		66.8			79.0
Orlando		2		2,448		427.24		66.0			281.89		534.73		454.91		22.2			101.17		180.02		178.6			197.0
Los Angeles/ Orange County		3		1,067		282.52		76.2			215.25		310.70		206.74		39.4			81.50		111.51		164.1			178.6
Austin		2		767		274.92		71.3			196.03		334.68		177.66		48.8			86.61		134.48		126.3			148.9
San Diego		3		3,288		265.79		71.3			189.62		343.77		184.52		31.6			58.33		91.91		225.1			274.0
New York		2		2,486		303.32		61.0			184.91		269.63		169.79		29.1			49.48		58.28		273.7			362.6
Philadelphia		2		810		206.81		76.7			158.68		244.18		151.04		48.3			72.98		108.91		117.4			124.2
Washington, D.C. (CBD)		5		3,238		269.82		57.9			156.21		222.15		152.25		44.9			68.30		73.29		128.7			203.1
New Orleans		1		1,333		212.83		66.2			140.90		202.78		121.54		29.1			35.40		52.52		298.0			286.1
Northern Virginia		2		916		216.27		64.4			139.18		208.25		170.43		38.5			65.58		96.09		112.2			116.7
San Antonio		2		1,512		195.73		68.8			134.67		205.78		142.95		33.2			47.42		67.74		184.0			203.8
San Francisco/ San Jose		6		4,162		221.94		58.9			130.72		187.71		144.98		21.9			31.82		42.11		310.8			345.7
Atlanta		2		810		180.13		72.0			129.60		207.01		145.54		49.3			71.70		94.90		80.8			118.1
Boston		2		1,495		235.57		54.2			127.70		168.31		137.77		25.8			35.60		46.33		258.7			263.3
Chicago		4		1,816		210.41		56.0			117.93		161.24		138.56		24.7			34.28		41.10		244.0			292.4
Houston		5		1,942		182.12		64.0			116.60		162.56		134.73		56.1			75.63		102.44		54.2			58.7
Seattle		2		1,315		211.55		55.1			116.53		153.56		162.69		14.8			24.06		30.12		384.4			409.9
Denver		3		1,340		173.91		57.4			99.84		146.61		127.52		30.3			38.66		49.03		158.3			199.1
Other		9		2,936		266.94		60.0			160.20		229.80		238.33		40.2			95.81		137.29		67.2			67.4
Domestic		73		40,839		305.26		64.8			197.94		323.87		252.11		37.5			94.51		147.17		109.4			120.1
International		5		1,499		133.14		49.3			65.66		99.56		75.57		16.1			12.19		17.74		438.6			461.2
All Locations		78		42,338		300.59		64.3			193.26		315.94		249.34		36.7			91.58		142.57		111.0			121.6

30

All Owned Hotel Results by Location Compared to 2019

	As of June 30, 2022				Year-to-date ended June 30, 2022									Year-to-date ended June 30, 2019
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
Miami		2		1,033	$	677.26		69.1	%	$	468.18	$	758.30	$	402.26		82.9	%	$	333.47	$	524.52		40.4	%		44.6	%
Maui/Oahu		4		2,007		556.16		77.2			429.37		665.43		410.35		90.6			371.89		589.24		15.5			12.9
Jacksonville		1		446		555.35		70.8			393.31		846.75		391.86		81.4			318.88		722.04		23.3			17.3
Florida Gulf Coast		5		1,850		485.09		72.1			349.66		687.58		379.76		78.4			297.90		612.66		17.4			12.2
Phoenix		4		1,822		412.40		74.7			307.94		643.07		327.86		78.6			257.82		566.03		19.4			13.6
Orlando		2		2,448		427.24		66.0			281.89		534.73		299.99		75.6			226.78		461.20		24.3			15.9
Los Angeles/ Orange County		3		1,067		282.52		76.2			215.25		310.70		257.81		83.8			215.95		330.77		(0.3	)		(6.1	)
Austin		2		767		274.92		71.3			196.03		334.68		262.77		87.8			230.62		390.95		(15.0	)		(14.4	)
San Diego		3		3,288		265.79		71.3			189.62		343.77		255.23		80.0			204.18		372.23		(7.1	)		(7.6	)
New York		2		2,486		303.32		61.0			184.91		269.63		290.28		77.3			224.37		362.87		(17.6	)		(25.7	)
Philadelphia		2		810		206.81		76.7			158.68		244.18		220.90		83.9			185.41		304.83		(14.4	)		(19.9	)
Washington, D.C. (CBD)		5		3,238		269.82		57.9			156.21		222.15		265.11		82.5			218.62		312.73		(28.5	)		(29.0	)
New Orleans		1		1,333		212.83		66.2			140.90		202.78		203.37		81.3			165.38		241.84		(14.8	)		(16.2	)
Northern Virginia		2		916		216.27		64.4			139.18		208.25		223.51		76.4			170.75		279.04		(18.5	)		(25.4	)
San Antonio		2		1,512		195.73		68.8			134.67		205.78		191.24		76.2			145.81		215.02		(7.6	)		(4.3	)
San Francisco/ San Jose		6		4,162		221.94		58.9			130.72		187.71		291.25		80.8			235.43		330.93		(44.5	)		(43.3	)
Atlanta		2		810		180.13		72.0			129.60		207.01		198.45		84.2			167.15		275.94		(22.5	)		(25.0	)
Boston		2		1,495		235.57		54.2			127.70		168.31		240.24		80.6			193.67		283.11		(34.1	)		(40.5	)
Chicago		4		1,816		210.41		56.0			117.93		161.24		199.76		71.5			142.77		203.93		(17.4	)		(20.9	)
Houston		5		1,942		182.12		64.0			116.60		162.56		182.15		75.2			136.92		197.16		(14.8	)		(17.5	)
Seattle		2		1,315		211.55		55.1			116.53		153.56		215.31		81.3			174.95		237.90		(33.4	)		(35.5	)
Denver		3		1,340		173.91		57.4			99.84		146.61		169.71		72.1			122.41		184.62		(18.4	)		(20.6	)
Other		9		2,936		266.94		60.0			160.20		229.80		191.01		75.2			143.57		212.39		11.6			8.2
Domestic		73		40,839		305.26		64.8			197.94		323.87		266.87		79.4			211.99		348.75		(6.6	)		(7.1	)
International		5		1,499		133.14		49.3			65.66		99.56		151.58		68.7			104.09		155.00		(36.9	)		(35.8	)
All Locations		78		42,338		300.59		64.3			193.26		315.94		263.29		79.1			208.13		341.83		(7.1	)		(7.6	)

Results by Location Compared to 2021 - actual, based on ownership period(1)

	As of June 30,
	2022		2021		Quarter ended June 30, 2022									Quarter ended June 30, 2021
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
Miami		2		3	$	596.12		68.2	%	$	406.35	$	676.00	$	496.88		61.3	%	$	304.64	$	469.79		33.4	%		43.9	%
Maui/Oahu		4		4		567.20		78.0			442.56		690.02		457.70		78.5			359.35		543.98		23.2			26.8
Jacksonville		1		1		572.46		81.1			463.99		974.04		559.42		68.9			385.55		730.42		20.3			33.4
Florida Gulf Coast		5		5		411.67		70.2			288.94		596.48		404.15		66.5			268.58		506.14		7.6			17.8
Phoenix		4		4		367.35		75.5			277.29		612.01		311.33		61.6			191.85		382.50		44.5			60.0
Orlando		2		2		402.61		73.8			297.06		580.59