Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Host Hotels & Resorts Second Quarter 2023 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the call over to Jaime Marcus, Senior Vice President of Investor Relations.

You may go ahead.

Jaime Marcus

Thank you, and good afternoon, everyone.

note to of federal be please today comments securities begin, considered are forward-looking we that the many made laws. Before statements under

statements not risks statements. in subject differ cause these from described our forward-looking and with publicly to SEC, As we update expressed, are revise filings future results to to uncertainties and these numerous those that obligated could the are or

discuss hotel certain adjusted addition, results. non-GAAP information, we on In FFO, comparable today's such EBITDAre will and level call, as financial

You earnings can our together on the information, with with reconciliations comparable GAAP in to directly information find this and website filed the at information, press X-K and financial most in our hosthotels.com. SEC yesterday's the supplemental release

Chief Chief and President With Executive Vice Officer. Ghosh, Financial Executive Officer; me call President on today's and Sourav are Jim and Risoleo,

With to that, over the to Jim. call I like turn would

Jim Risoleo

everyone Jamie, and thanks you, Thank joining to afternoon. us this for

a compared quarter RevPAR quarter, During hotel improvement comparable second XXXX. X.X% of of we the second the delivered to

Our Seattle RevPAR and primarily transient Francisco came San extent. our performance a resorts demand in lesser of below quarter a to result as for at moderating our the and quarterly guidance in

Comparable the the strength quarter, out-of-room X.X% was continued hotel spend. underscoring growth of RevPAR during

adjusted delivered During the million FFO and adjusted share of quarter, we of EBITDAre $XXX per $X.XX.

hotel For was X% our X% $XXX of comparable second below above quarter million EBITDA XXXX, XXXX. it was

that of hotel pandemic XX.X% ahead This comparable the marks margins XXXX the quarter have RevPAR of the XXXX. EBITDA exceeded of quarter margin onset hotel and Second comparable fifth consecutive achieved EBITDA since levels. and we RevPAR,

of which expected XXXX. approximately July is above for RevPAR Comparable July $XXX, is be hotel X.X% to

midpoint in macroeconomic range to led full us RevPAR RevPAR tighten second to the the year, of guidance Our performance in half, our first full the expected coupled the X%. growth X% year Bringing growth to with year X%. our the to of backdrop half

our be midpoint X% year guidance XXXX, to forecasted for approximately hotel above EBITDA the is XXXX. full of At comparable

current outlook picture, to the macroeconomic consider the look we months. it how important our over shifted six has at As is past

to moderation San Francisco and started hotels we softer progressed, quarter see second demand. volume at our affected in the a were by Seattle, already which As in

same see RevPAR quarter we level leisure inbound volume for high-end corresponding and the of internationally, growth not demand, pleased many Against of positive did XXXX. especially the given the watermark were travelers at second opportunity to TRevPAR a and which this international travel of resorts. At time, to backdrop, we the our quarter the deliver high impacted took

remain the We about optimistic travel state several reasons. for of

improve. to continues business group First,

is we group for the XXXX, as group booked and from of X.X% March up total over rooms revenue During ahead quarter, the and April. of time of as XXX,XXX pace now same X.X% X.X% XXXX

extend continuing The to groups contracted. continue group booking and window than more spend to is

second both during gradual to second were to XX% and Second, the quarter. improved up quarter continued XXXX improvement business XXXX. XXXX demand its X% and the of compared demand transient Rates nearly

is While basis XX% XXX from to improved and the XXXX, demand down first quarter. compared still points

our in levels second well some despite Third, XXXX resorts expected leisure quarter. moderation at rates the remain above

were the forward. resorts international expect data, the an XX% to XX% Fourth, from above increase first a demand our second For at tailwind be in TSA we XXXX by context, evidenced transient rates and airline as going in the quarter. quarter,

are U.S. up gain. In corresponding were bookings while bookings, June, only was U.S. grew This which international international levels, XX%. flight outbound X% up according inbound outbound of while year-over-year, summer air XX% to with to XXX% travel pre-pandemic only aligns rate inbound

over XXXX had expect that U.S. since time time. trends plan unrestricted It travelers first enough is an lead these to we international revert vacation, summer the and will

the evenly consumer not up seeing fairly both beverage outlets by Comparable X% to year, group a spend of Finally, transient at indicating evidence hotels. weakened last customers. and was and driven and of most our hotel strength banquets are importantly, and we food

is portfolio-wide flat occupancy. encouraging X% as despite grew This particularly revenue outlet

fact, resort $XXX. compared occupied year, Other to up all continued second to items room revenue per are for also also XXXX, fees, except in at expected. quarter grew and in the and grow, X% outlet the revenue highest with history cancellation which our over Hosts' moderating line as In it last attrition was

Golf spend spa leisure is ability XXXX, highs growth on revenues and of we and experiences. robust with the record remain over to desire believe evidence which travelers' of the further

Notably, rates of strength we the fact, top acquisitions, resorts In capital were allocation had our five more. strategy. the resorts three $X,XXX still transient underscoring of with or recent opportunistic

nearly Four and Seasons at Orlando Seasons Alila World Sur and Resort Walt Ventana was Big $X,XXX pack Resort Residences Disney the over $X,XXX. at Four the Jackson both at and Leading Resort Hole,

efforts reconstruction completed and at outdoor Ian. dining the with our complex. of work the final Regency we park Coconut June, of phase Hurricane following Point, reopening to Moving Hyatt the In its the restoration water

resort key And XX new last addition Naples, of with month, existing we combined a reopened transformed the tower. renovation of a the completely which the comprehensive Ritz-Carlton

As guest the part of room elevated to the and standard to and of increase combine counts we fixture create the the bathrooms rooms guestrooms suites. multi-base renovation, functionality expanded design

We an a lobby XX outlet eliminates lobby increased lounge the pools, with also Tower suite XX to additional of enhanced cabanas, Vanderbilt upsells. F&B added expanded XX and added count bungalows, a and that pull the The bar arrival and capacity the constraint club development side the from keys, experience with on bar. net the a reimagined new

more In equipment addition of enhance us equipment, the accelerating critical our efforts replacing future and elevating efficient building renovation to dry the flood-proofing waterproofing allowed machinery. to the improving resiliency measures, envelope reconstruction opportunistically by major property with expansion, and

optimistic of resort received to underwriting our reopening, the been transformation exceed are since well that the expectations. is we and the The up extremely set Naples has Ritz-Carlton

XXXX level for facilities inventory pace with As levels an above club suite historical expanded the high season is example, festive and demand. and new well the

bar champagne the seen quickly both lobby to locals. place and be for and new become and see The has Naples guests

years results and to are resort to the this transformation come. of iconic excited the extremely pleased we see are We over delivers with the it

to million The costs. proceeds of date, managed to $XXX proceeds related of far. been potential have have insurance Hurricane all of covered property Ian, million expected received the for thus we approximately allocated terms to insurance recovery In $XXX

Turning X%, XXXX group exceeded to on of XXX% to XX% full as XXXX quarter. exceeded Definite Revenue for second revenue room room year XXXX the consecutive group the XXXX. up books represents by fourth million nights of nights, in quarter, first approximately marking $X.X group increased which group. from the quarter the comparable actual

since on is year same full rate quarter. first X% group to a increase last For year, the up time point XXXX, XX the basis the books

year the same time same X.X% up to revenue In and up addition, is to pace total last group the XXXX. approximately XX% time

we million to room XXXX, ahead definite Looking books. nights have X.X group on the

to pace the time Total the to group up XXXX. up and revenue is year last time same XX.X% same X.X%

We are evidenced ahead year of as both encouraged XXXX. nights ongoing last booking of the by accelerating lengthening activity, strength room tentative by and booking and group windows

reinvestment. quarter. and portfolio renovations and Transformational began comprehensive Metro the We finished the and program, The in to Center the under in during Moving completed assets XXXX, final Marriott the Washington second area at asset budget. public included at guestroom renovations XX which Marriott Capital Program, extensive

range share To we significant reinvestment with required of upside to strategy the above we the renovations. assets date, our and X us completed renovations to believe assets. CapEx, have with of additional to believe up far. X shaping X transformational these near-term X to market so be we that where index capture RevPAR could of During share expanded continue be those case realized incremental targeted X comprehensive enable to points include is gains will pandemic, our We

gain date. to results Of index share at Looking hotels the the operations, have that stabilized X.X is post-renovation points. average RevPAR X

year, repositioning as range million to as For hurricane and work. approximately ROI investment projects XXXX is well full $XXX the million, expenditure million redevelopment, capital reflects our million guidance which to for of million $XXX $XXX for $XXX restoration $XXX

a include at Fairmont projects renovation on Resort Sweet of Island renovation Four the the the Disney Singer ground Orlando condominium Hilton Lani, transformational Walt and luxury Remaining World breaking Canyon repositioning of Seasons villas of development at and finishing a the completion Resort. Kea

will growth. opportunistic we driving strategic broadly, to More EBITDA approach continue our in and be to

independent capabilities, cycles. investment-grade a portfolio team an size, across balance sheet, scale the have We economic diversified and analytic to executing continue and

improving have believe is environment. outperform our Hosts of years shareholder macroeconomic We current past quality the meaningful the by to in created flow, we value and six positioned ideally cash over the

I the will call turn that, over With to Sourav.

Sourav Ghosh

Thank demand. you, go XX revenue will business on I our a Jim's driven to growth, afternoon, operations, our Building decrease points basis slight comments, dividends. Jim, our offset in detail quarter up Starting and rate which Overall guidance mix. XXXX, XXXX balance quarter of the sheet transient by into and on was second good everyone. updated with second and

extent. lesser Francisco transient X% San demand drove Results by and quarter the all-time at the second our to primarily the quarter the in transient second to driven revenue RevPAR high resorts XXXX. a of Softening guidance and Seattle of in down over saw miss underperformance

was still at after XXXX XXXX. year-over-year, being compared rate to XX% transient down resorts was While XX% it up above

increased demand. in second revenue first fact, our transient In decrease the quarter despite compared slight to quarter in the at the resorts

hotels and the XX% by rate in last Boston also revenue our York, Washington, XXXX, a transient increased year, above increase. was New by XX% by Business of quarter second Demand D.C. driven nearly driven above X%

majority business businesses today. with Our line XX% of drive demand the which continue trends. downtown medium-sized properties transient transient business accounted to Small the demand, the and representing of for in pre-pandemic is our recovery,

quarter second X.X XXXX, to of the revenues driven was room the The of ahead growth. slightly group by X% XXXX last with aligns the quarter fully nights quarter, year above and million first Turning Group which room trends. seasonal rate sold in group. were both

and XXXX. revenue X% second by revenue corporate driven was Chicago X% group room quarter, the in room Washington, Boston group respect the to growth mix, group growth. to rate D.C., up nearly drove compared With

driven Group's second for down to quarter during second of Association as canceled last anticipated, had the that quarter X% pandemic. elevated almost association rebookings As group year, by compared the volume were was in events revenue XXXX the

in Social, and Smart Group X% X.X% fraternal military, revenue villages or was the rate up quarter, second driven by growth. educational,

pace and XXXX D.C. of Our and encouraged same citywide group Diego, is of the the we ahead last XXXX, group meaningfully which room nights are all citywide have New and by Washington, XXXX booking Orleans, in San both above revenue Seattle total year. pace time

Shifting margin gears to performance.

second below came quarter at in quarter when the at XX Our EBITDA which points quarter hotels high the basis watermark of second staffing hotel comparable than margin lagged but XXXX is XX.X% better of of XXXX, the demand. second

grew XXXX, comparable X.X%. Total revenues just were over X.X% while total up comparable expenses

moderated and As revenue from cancellation the XXXX quarter. second during expected, levels attrition

hotel elevated the occupancy X below EBITDA and points We are above XXXX. comparable that years despite XXXX past margin four still encouraged remains inflation over

range X% we The less points basis guidance high RevPAR at than As full our hotel to our to Jim midpoint. noted, RevPAR is the provided midpoint year comparable XXX of growth prior X% tightened But February. we X%. in the range end of original

approximately that outlook second estimate the results half points We of our of the the attributable year. XX the decline to points is is quarter attributable basis second and midpoint updated XX basis remaining to for

yet not have range year. seen contemplate varying we continues half second signs macroeconomic-driven of growth While the guidance slowdown, a in the to degrees of of moderating our

we result, single hotel expect the changes second the would up comparable be to a digits, year primarily of to driven As low year-over-year percentage half flat RevPAR in occupancy. by

our billion. we midpoint of comparable adjusted hotel of XXXX expect $X.XXX and points ahead basis guidance, At XX of EBITDA which a full XX.X%, would margin year of is the EBITDAre

guidance $XX mind XXXX that original only full guidance in provided $XXX million guidance provided year we from is our EBITDAre revised still and the million in February above the midpoint in down May. Keep of we the adjusted

our Page follow supplemental roughly XX We financial as of information. seasonal expect on trends provided results our quarterly XXXX operational to

both As margins due dollars is to a of third the business year nominal the four mix of weakest quarter reminder, in the quarters seasonal and and market of terms historically the shifts.

both Our includes Coconut $XX excluded year Point Ian. due are to from comparable impacts Hyatt adjusted Naples, the of an Ritz-Carlton from full hotel guidance EBITDAre Hurricane results million contribution our expected from and which XXXX Regency

to be interruption from note estimated Naples in As previously, business is $XX we proceeds discussed not the It an new Ritz-Carlton million Hurricane expected XXXX was pre-hurricane have guidance. Ian that at to any expected also we from these our included including have contribution XXXX. additional the tower in important two hotels

expenses basis margins discussed at the utility to to we attrition EBITDA the and stable to down XXX hotel XXX past down insurance few staffing high at As have quarters, levels our due basis at points guidance our we end lower over year-over-year, fees. end hotels, be of low points cancellation the and higher expect comparable and

with of We expect margin in second differential biggest be year-over-year in the margin to the the a quarter year. narrowing the second spread half

margins. for not XXXX do stabilized a reasons, present believe these we will For comparison

XXXX, elevated basis to past end comparison, despite XX up the at more the this years. we to year year our and points of over occupancy basis is at pressures which be points inflation Relative XX expect representative guidance low margins to end for up lagging X high the margin

Our and hotel the efforts portfolio transform are the enabling operating margin expansion. evolve this to model

particularly As total forecasted core we it past, only have to XXXX the impressive from expense over CAGR XXXX the hotel discussed same X% when of CAGR forecasted you is that in our the versus consider period. X.X% is CPI

and Turning to our liquidity balance sheet position.

Our weighted no XXXX. average significant years interest is and X.X%, we rate average X.X a weighted at have April maturities maturity until of

We $XXX availability of times $X.X leverage, and our which includes billion available X.X reserves liquidity, billion full of of the second facility. and of quarter have ended at $X.X total we credit million FF&E

goal, in point a progress the credit our rate interest achieved energy facility. we a resulting loans In in our towards outstanding reduction under addition, in term sustainability-linked second quarter, during on basis renewable milestone X.X the our the

We an dividend potential $X.XX macroeconomic paid of July. the quarter a per by of into all the company's sustainable subject Board $X.XX Though at taking maintain XX% dividend increase dividends to of quarterly factors, approval level, to a cash over in share, our future we quarterly are Directors. consideration prior expect or

and and on optimistic the positioned overall. the we we believe balance our and be strategic to our macroeconomic our We In our will remain scenario, to future in sheet current business of outperforming portfolio, continue well are environment. continue team travel any

to we that, questions. Instructions] take With happy be your [Operator would

Operator

with is from question Evercore Duane first ISI. Pfennigwerth coming Our Instructions] [Operator

is Your live. line

Duane Pfennigwerth

levels appreciate percentage you. of track stand that percent shared. Where do your pre-pandemic Thank mix? to any that you the macro way international the of portfolio? inbound you But as as I stats a have own now a does versus

Jim Risoleo

it Yes, XXXX our second international of is in it's accounted quarter Jim. that And compared roughly X.X% was room XX% in night. XXXX, X.X%. Pre-pandemic, inbound In quarter. of to X the for

to So we portfolio our international forward. going feel that performance inbound a is tailwind

in international we've of saw talked as you June where if was only particular, where was was of of XX% In XXXX. it in of inbound Outbound, in June June, the it was about, month XXXX. XXX%

times XXX the we on wait So on out the normalize starts right Visa hopefully, in to sort are it's can real U.S., now international drag as and average, as days a the world and which inbound.

XX they require a for Canada As visa from country a you days. an travel Canada, get example, to can Visa that in

U.S. we, So -- that as is dealing are as and well. -- that's a travel big an through AHLA industry, issue through with that

in other travel flights we The China. is with impediment in Coast and U.S. our point particular, at direct time had week West this the in China. Pre-pandemic, respect to between international XXX from inbound markets, a

'XX. As today, sits it have we

bolster over we're return So of the and are international going we're the our performance. optimistic normalize which that that see to things to will further time, travel, going

Duane Pfennigwerth

my follow-up business the just BI for then And on on interruption.

in the reimbursement be XXXX, contribute from a for Naples fourth year-on-year the ideal you'll being perspective, natural would to from to is you that about the Ritz But in would what timing As online. growth think into growth BI have hit? back My guess recovery begin a quarter.

Jim Risoleo

Sourav I'll our to in of let jump just me related restoration insurance million collected $XXX physical let works. with set kind repair. We the but this, Well, respect all program table to how and damage on

and minimum. million we We have receivable business $XXX interruption at a outstanding, we the a $XXX until recognizing collect won't proceeds million start

Sourav Ghosh

honestly, difficult in have why to that's timing, it the Yes, on forecast. It's our very Duane, we don't say.

how the amount that now We are is. terms insurance BI working of right with in carriers determining much

into QX in into collection the as some QX amount could be as following the it So certainly of well led year.

Orleans this Hurricane just quarter. last million impacted from if got we year, which payment $X.X New got you BI actually a We Ida, recall,

is certainly we said, to The timing as the gauge. out. And exact in to point that be amount. we difficult this very fully meaningful to at very predict time. We expect, would So paid a is difficult it's going be timing

Operator

is Aryeh question next Our Capital with BMO from coming Markets. Klein

Your line live. is

Aryeh Klein

Thanks. Good afternoon.

on I things guidance not assumptions? add the is originally in magnitude impact June it And in second you is, where of underlying may QX. there you you be play the quarter, to that better as in expected? there color second half guess, And implied the impact of some out then was than the the saw Within expected? you really Can less something RevPAR

Jim Risoleo

Is second referring you our are right. -- that? the the All respect half of assumptions clarify you this year? -- Can to to with the

Aryeh Klein

Yes.

The RevPAR year. the basis XX than first impact part the second think I in on another to just the the second the worse was points, the basis when second in expected weakness quarter? the see second is, you half started part XX of and points in then was quarter And

second give anything some there's underlying So you just assumptions more there that expect you some worse if or if can the expected? you out the curious than originally -- and play of how on color half better to

Jim Risoleo

Sure.

of saw in the in majority saw property the We quarter. performance with quarter when at transient we the we and the back That's the forecast it as of the So really the assumptions really June. weekend month went weakness in look to respect -- were for level at that the occur. pickup vast

that You transient up had quarter with high we may pick for and another as recall quarter in the as XX% XX%. quarter the

for While quarter. that materialize didn't second the

And of helpful? to quarter, that second thoughtful talked about pickup this the we a forecast. play at So in we washed And year trend led point is Is as how that in quarter trends amount I the we and expected we a transient for that time. really we the that meaningful the and very, out. out half were normalizing the deliberate is to would revised normalizing, say, of about think our have

Aryeh Klein

quick other a question. color. Yes, I appreciate just the then And

seller Any out? to there up I expect update this play how on you think that year. you coming have later financing some

Jim Risoleo

date a little And matured. X, do the in August Sure. us loan we days they time process to and Boston the maturity Sheraton Yes. few was The it. refinancing on a was out, the borrower the Well, had more need ago. of

So a into agreement we XX-day an entered borrower provide for with to extension. that

And we interest was have received XX% down which it also loan, that XX%. And a receipt on from involved principal to we pay and our the $XX.X X.X% rate million, the money. of restated

we is I our is the it, be confident due position to very financing at am the borrower that loan materially but to going the of able end that and on September, So done. now get improved

that regime X was condo property they nuance are hotel, like longer documents to were a convert effectuate They the it was to to on to the They tower to and effectuate going X the tower. housing get it their a leave plan. were as going convert pursuing and student condo the The a business tower and bit done. to just taking other

the we the actively have market borrower are respect loan the and refinance. they With pursuing with the on a Marquis, contact in in to been

So we get done. deal to they're that be feel to able good going that

Aryeh Klein

color. the Great. Thanks all for

Operator

you. Thank

Our is Barclays. coming next Anthony from question with Powell

line Your is live.

Anthony Powell

good Hi, afternoon.

you resort high able out hotel Just the refi I to May an one rate, cash at of get was in with on other a refinance owner that And the guess but of for me. proceeds. a a side saw a refinancing activity, good

So your number to in do do maybe limit market deals larger of here? terms you some ability of the that of come that of think ability kind acquisitions kind to

Jim Risoleo

And given our get sale very X on something hotel-specific, and we market looked wasn't for is to referring market-specific it at the Maui something really in assets it that Maui that exposure about. occasion, you're on Anthony. excited could more we we had that frankly. It's than think on the own, I the been asset sponsor that that Yeah, and specific, obviously

they sale done. get able they effectuate price not wanted, And that whenever could they at a to were deal the the

really resort it and because market asset renovation well. strong cash unique the you had equity flow, a extremely and a as performance. underlying undergone it -- that's had strong the right it as behind had is It strong, had Now know, capital

deploy or will going where there those get whether be refinance, are to be So circumstances circumstances market asset is been it's not boxes too. performing reinvested lender not property sellers to, but an all well, like so or it's to not the in money also be will would capital or a the where in find Maui attractive that deploy there whether whether are check attractive a to not in, able

still that they that time, into been have their many to the have of opportunities cash are I assets over have this owners/borrowers so year over hotels been course the fact pandemic believe put not there may in as into given that and we the and capital strapped reinvested and see later So that in for XXXX.

Anthony Powell

Thank you.

Operator

Thank you.

coming from is Citi. Smedes next Our with Rose question

is line Your live.

Smedes Rose

to of of their in the in just given San Hi, think And continued ask Francisco, little and lot of Seattle. recovery business Francisco surprising not about of life. thanks. issues you I maybe all ugly delays a San it's more weaker-than-expected a and I transient wanted in around that headline quality kind sort

the to But Or that do in of term you starting city maybe pullback sort issues industry? tech kind going the as of a that are to sort you well? to longer because economic become drag in Seattle, do having more be issues, do on of local might of to that, portfolio? weakness And just a ascribe with you see the is of also

Sourav Ghosh

-- it's with BT we Smedes, actually saw improve. Seattle, Hey,

not for of really certainly the bit there in anticipation the seeing the was we So that It quarter could the June. of at -- into just shift quarter, the trend sort sort started pick of up month, overall May not a much but in was month little of how issue only the was with Seattle. we for an end

Seattle continues market of it with, XXXX, relatively actually you a at a is look this just Citywide to into be to there begin So moving year, is pace, Seattle but especially for weaker and there always forward. when us, strength in was beginning market signs, certainly -- the the

of attribute sort pickup. transient we to really this short-term So

and revenue driven when internal was nights Overall, BT of forecast. revenue about total by rate our Seattle, that grew Group all at X%, year-over-year Amazon. by specifically you look sort and mean, also I production actually room exceeded

all. wasn't do BT group was driven. at with It really it to So anything

BT driven. sort driven versus we overall, sorry, leisure of So --

Smedes Rose

-- to reintroduce then Ritz-Carlton on the how million, Is would I about you thinking the up follow in $XX will expect happen lost recoup -- you I that? time through you that. sort of you can that? talked and you that you When what something about And are disruption. Or that that When XXXX? guess, all Okay. as frame just

Jim Risoleo

receipt Well, timing And interruption know I be most, forecast associated we're haven't the the course Ritz in through able business XXXX, receive the the But goes regarding very Hurricane not we going with of think Regency proceeds. we if of the because of to this certainly next close to strong performance should Hyatt out hopeful to don't put well. Ian, from earlier when just all, question BI do it. as our and I'm claim that of year anticipate the we and the both we

Smedes Rose

But lost business XXXX? more that's the that mean back and EBITDA about operations. a getting think you and Okay. you getting was was about interruption the Do I from think I -- back to asking recouping that do million $XX just

Jim Risoleo

a period property. throughout of a really and barring happen in meltdown, will very that -- of the in off XXXX. seeing mean February the is that pleased that seasonal the quarter. pace December, January, -- that around property really we're takes then time festive, which first it's the course That is We're I certainly macroeconomic December, January with

that And we $XX XXXX, to. should assets Naples. the property, our the the that those is optimistic It's two incredible at between of very hotel, well. there million So rebuild resort at the we very lost and a new we're unique in course enthusiasm it's really going to this due year for over offerings perform

Sourav Ghosh

for EBITDA Ritz Smedes, are we hotels, to million just the a here includes you combined in clarify adjusted Naples want $XX for non-comparable up number. Point actually which and picking understand, Coconut

in That's in not hotel XXXX. is our EBITDAre, for it EBITDAre. it's our but adjusted So

XXXX, None really sense. the 'XX we're the that which number, $XX million in So that's million. makes $XX if incremental to that that million, $XX saying, of is

Smedes Rose

you. Thank Okay.

Operator

Thank you.

question David Our Katz Jefferies. with from next coming is

is line live. Your

David Katz

of One, my year, good a it's I wanted the for comparable versus times per labor. up. two, being of Hi, just expense basis side the on up afternoon, and around cost going handful as of to taking a question. cost that's function the come Thanks it fully to actual last back whether go person staffed everyone. a because but of

And about well, an secondarily, get wanted talked before as please. we've there insurance, I update and cost to the just of

Sourav Ghosh

Sure.

before we we that that. wage look have I X%. year, we actually performed relative And when well messaged see you think thus be had to we XXXX. expansion to expect through holding far, and it our in margin expenses, our And growth that are this rate that you on can to expenses, around pretty for still our our

For quarter XX midpoint year full we as the expecting are what for as points. second the the well being to basis

So labor-wise, we still growth. expect a X% rate

which We are certainly holding seeing sustainable, driving that we of the improvements something all expansion is the still XXXX. operating made our as result is a redefining productivity improvement margin model, and to

As far as insurance increase. goes, premium we had baked into XX% the forecast approximately

had we X. coverage the that previously. and our June limits in We was renewal maintained Our

to was was the premium XX%, like said, overall rate I increase to close XX%. increase, about no The that. So change and

XX% already So and expected year-over-year, for expense is forecast, to our approximately the full to million year, XXXX. in insurance was go about which forecast in $XX is our equates for which up

David Katz

much. Thank you very

Operator

Thank you.

Michael coming from Baird. is Bellisario question next Our with

Your live. line is

Michael Bellisario

everyone. afternoon Good Thanks.

just for there you're Just markets were Can softer seeing booking just year up you the you. on 'XX? markets one maybe as the pick to see front. provide you leveling the portfolio or in are of me question on group in that you back out some the softening either what off Thank also half look momentum? or color And any

Sourav Ghosh

Sure.

pace group mentioned, is in to first XXXX, when by XXXX to double down as positive. X.X%. actually revenue -- about ahead to to were of remind for it's actually X.X% in our For digits revenue total specifically And total we we year, last you, of pace that just Jim the were down and end sort in quarter, improved now and 'XX looking the

it to momentum we're positive when XXXX So seeing and activity comes really pace.

positive are specific Orleans, improvement very well, citywide and PACE better city-wise, with that our where New of seeing Washington, Seattle New D.C. seeing Seattle Diego, earlier, strong is where Chicago, New And San we sort Orleans, portfolio, Phoenix, San D.C. as wraps Atlanta, for For we're 'XX and York, and the as pace than mentioned Diego,

Operator

Thank you.

Bill question Crow is from James. Our with next Raymond coming

Your live. line is

Bill Crow

help rate to least Is Jim, it took from Is of that about. out is remarks, on morning out the Is seeing afternoon. is demand good but guess We strong. I it in a on said, down this demand strong, demand that XX% their normalization is at there. your I Because trying rate the you're on Thanks, markets, I'm implicit normalization? all side? off. in it me side? it this but we're leisure what maybe understand heard one leisure peer figure rate talking is staying that both

Jim Risoleo

Bill. that anticipated Sure, fronts, believe was was to many certainly, forecasting was anomaly relative to rate always to rate in given QX. it had -- going an bit. XXXX in mean in off never XXXX. quarter in a second where I be we was our on Omicron going And back sustainable We that many,

So we it going to assume did. and come down, rate was

I leisure rate X% all think our came about all. down in

than don't the softness they're the anticipated we is the was the by That because leisure and rental desire didn't up XX% And said, abroad. of travel-related that it think at I pick we the we where was XXXX. business in airlines was U.S. saw in the that QX general, that if anticipate, our whether consumer where or travel didn't commentary to companies anticipated you in it we volume would. What anybody still the higher car look companies we

by down percentage total point. one occupancy our was think leisure I

are any at nothing levels. it So the Rates was record still of imagination. stretch meaningful by

release, was X.X%. in saw TRevPAR up you the As

the whether record spend, occupied we're golf $XXX or seeing of still room, per I spa think, So healthy outlet $XXX in had otherwise. at mean a very we and outlets quarter. spend I it's out-of-room or

people are if the a second every next this clearly, quarter go going going to to quarter Europe know or to was in to if Europe don't they're think general. we're in I of But I that slowdown year. So the perspective, rate go really the just performed how missed very -- everyone with very have resorts -- Certainly, was a issue volume. comfortable from a and we're in phenomena

Bill Crow

it's But international travel the of about If normalization talked and we just kind little bit years imbalance. because this -- been I of a that you call it could kind demand. just pursue the pent-up three of more travel

curious, could a is mine. it while just next be to talking for yours continued And we probably an have So don't that than about like you year? going but I'm longer. answer, Are and better normalization seems continue

Jim Risoleo

beyond Bill, we -- say, we our new XXXX frankly, in look talking and XXXX forward. okay, benchmark and can is can in I we year going XXXX hope and get hope about I a get the year new base it's at,

second quarter. us. in normalization that's is we're XXXX, think it tailwind occur And performed a because a in I tailwind So that, inbound international to the to really frankly

and properties we travel. And frankly, flights resort about we X.X%. issues and China XXXX. with our see of that of or I in pickup in some the we the I visa respect inbound wait things didn't room elsewhere, international to mean nights any of in times mean, just We XX% from had talked from nature. were our

anyone We're very think remain positive forward. them it's seeing us think And going for So not their in healthy. the in the certainly seeing again, positive is going not for I forward. rein spending. We're a industry consumer I it's

Bill Crow

thanks. appreciated. Great, Jim,

Jim Risoleo

Sure, Bill.

Operator

you. Thank

Batory Oppenheimer. question is from next coming Our with Tyler

live. is line Your

Tyler Batory

a the stick you. relates lot just question. to afternoon. here. the want urban mean I resort the terms Thank properties. multipart leisure just And to of on experiencing what in a similar the that's commentary trajectory a that your on I resort topic a on you're also minute following interested of softness side. you're Good specifically leader, for weekends, I'm in a seeing

slows follow-up, occupancy? some then lower from to hold maybe some scenarios sacrificing and and hold about through your Just the to further of rates to trying rate resort to of occupancy think to at properties? demand And want you're on or okay here kind there. you If a you thinking management. look Would just revenue on

Jim Risoleo

second Yeah. and leisure. I to part at your will talk about answer urban of regarding That's strategies. I'll the answer to the part the proper first really yield looking tricky question first, question a Sourav let management

And rate one I is much that, the of encouraging several across of than that course really things the think of the you years a intact. last the percentage flow the You bottom have integrity over rates do remained and plan properties greater has occupancy. generally, fact held line to been board, has ADR a the

rate, occupancy pickup direction. cut we to real would before to once i.e., a cutting significant you go be trade-off, there rate. meaningful Because consider it's have would the And to other in difficult back

a it still meaningful And was occupancy in a of XXXX. X% on performance. reduction as it second in flows and bottom impact we in margin QX where quarter And was the saw XX% and said, I to rate above the really has just line

Sourav Ghosh

San overall. at in same demand. as see We short pickup the for of quarter you on a we were will, pretty we exception, drop the the mentioned. the of And term level and hotels, in of leisure quarter actually with you're terms obviously, more the if off little urban the And saw Yeah. consistent Francisco Seattle, didn't the consistent looking they when front,

when about you down that. and was actually market while at sort X.X% XX%. of other in overall, overall overall resort up for for convention performance, And rate our portfolio, we look were about X.X% actually But a

the had we performance definitely stable holiday So looked a quarter. when at more even the performance during

Tyler Batory

you. that Okay. Thank I appreciate detail.

Operator

Thank you.

Bank. from Our Deutsche Chris next coming Woronka with question is

line live. Your is

Chris Woronka

Hey, Thanks Question get is capital good afternoon, transformation the to far. all that on tail guys. detail from so for expect the you program. the

think getting mentioned and you're X stabilized fully the of points. I hotels are you eight the

eight fully as owners hotels? or look does long to other, you renovated I original the last? I maybe hotels make nine that at were the then others mentioned and how make and capital? two -- even What keeping Just you, on does about program. own their Jim, you in want other more weren't up to And dealing that that there not That issues with you are think guess, that want

Jim Risoleo

of stabilized transformational to second where achieving that is think we will to renovated the opportunity an seeing opportunistic I continue Chris, your because underline recently a properties. are and are see we want why word and be do the I in The transformational we short answer and outperformance renovation the to the question, we to is part that

the balance We sheet. have

We have the capital.

and team where will capital to to on opportunities, look those deploy have types X X than index. achieve yield in points certainly to better internally we of execute We the we think can we

last eight to a hard, it how to again. have looks question rooms answer I talking years, with until renovate that's a last? renovation To probably roughly. the it could seven-year tell to And does would property long Well, and it that you I we suppose your for seven cycle respect generally you're

we the outperformance properties were forward. really to that of the we deploy future able and are we into our So pandemic, the strong optimistic we see over expect type going that of to did capital course

Chris Woronka

very Thanks, Jim. Okay, helpful.

Operator

Thank you.

Robin is from UBS. coming with Farley Our question next

is line Your live.

Robin Farley

just little understand for second guidance better a bit wanted I Thanks. Great. to your margin. half

kind stronger. have of You declines not but from QX, RevPAR moderating much necessarily

you of the of think -- just So cancellation cancellations would and kind tough still labor you mentioned, are how lot factors wondering have in terms I fewer a comfortable fees. comps because of costs could

just give us? color any there you can So

Sourav Ghosh

the our it I call And for to you we then million, Robin. $X million, speak Yeah, million when mean, would to prepared in second sorry, attribute at million took and I'll guidance mentioned for quarter basically $XX -- $X look sort and and remarks. about the $XX it, dollars perspective, million you second of about what, our as down, quarter really second about $XX the we half.

expected we get of we're effectively really for sort market look to RevPAR second pickup the half. the we pickup by looked to single-digit in that quarter way the scrubbed growth the growth the at and growth the quarter assuming, and low market RevPAR short-term at that the you And for of

the all expense through drivers driven. that On the flowed side, revenue was we expense effectively

the look you guided was the all quarter when of we more at to XX% had in terms well, margin relative revenue what to drop than second driven. as So

we all beverage flows that. and have The we line So very thing food the obviously given well as That did is comfortable that moderated only as and impact just we the department through which revenue, moderate feel also with there. expense in we growth food margins. beverage ends, QX

So terms have. forecast relative half. for we expense second we that revenue of to in growth very the the feel comfortable our

Robin Farley

Okay. know for you guys I year? Great. if corporate negotiated next heard Thank you. for expectation mention And I rate don't an

Sourav Ghosh

That in will later really No, until we did August. not. not start

call as that So do. shaping we'll we like probably what as our quarter up have third will typically more be color on to

Robin Farley

Okay, great. Thank you.

Operator

much. Thank you so

will from Dori question final Our be of coming Wells Kesten Fargo.

live. is line Your

Dori Kesten

second short-term washing look transient few out XXXX? a like year. the pickup the times comparable in the half if pickup your of to guidance was would mentioned You What the

Sourav Ghosh

would by if the off. The to BT being it we're look group from meaningfully of pickup we terms XX%. in off on like obviously off transient comparable perspective, a was for XXXX because it What night also are

our to room resin. and 'XX rate, 'XX, because of don't So exactly So same have was It's I had held terms be, we number rate the up kind right? of that what at of in relative difficult are if night in exactly would to say amount

Dori Kesten

second one. I a Okay. ask I'll guess

basis you've So I room to to out about of year-to-date, RevPAR talked healthy spend. the growth think RevPAR And the about XXX spreads points.

in I'm by that trying -- converge? them room leads of see like believe just so out spend grout the second what And of and year do should growth half you to the you year-end,

Sourav Ghosh

lower, look of you at It actually groups QX. got quarter by during in was in rebookings in lot 'XX. to came we when relative second certainly food and of a the sort the place quarter and being the that of second the type that where for So beverage were that driven pandemic the was that and really took

our our look as and is -- -- forward quarter group you earlier, quarter. weakest QX, When mentioned QX third into we

is should QX, food well have. food and QX fourth beverage like So we catering just strong as the but and and the group be for that's based will us. beverage on a pace where Banco lower quarter in in well we that And perform quarter feel

in as that was metric I've XX% And QX a up at, up banking which is contribution well. with been look QX the X% you over as reminder, catering in

XX% building and per way, occupied a which, still on second above we well half have XXXX. the was the strength the we performance our banquet still as on AV of by that basis outlook resorts, going in forward the So room of as

Dori Kesten

thanks. Okay,

Operator

Thank you.

the reached question-and-answer session. of end have We our

So closing any I Mr. have. Jim Risoleo will may now to turn for the comments over you call back

Jim Risoleo

in of We like rest to forward you person joining . thank second opportunity appreciate look quarter seeing hope I'd fall. we discuss again. call and on you -- your to this us many quarterly our with our today. the for you enjoy results of Thanks summer, we the everybody to

Operator

for Thank and call, participation. you. We disconnect your your this may today's time. concludes you at lines This you thank

Host Hotels & Resorts (HST) 3 Aug 232023 Q2 Earnings call transcript