By just about every metric, 2024 was a banner year for Host Hotels & Resorts.
During the hotel real estate investment trust’s fourth-quarter and full-year earnings call, company executives pointed to its $1.5 billion in hotel acquisitions last year, performance coming in above guidance and improving demand at its Maui resorts.
Revenue per available room growth during the fourth quarter was better than expected, driven by 3% rate growth, Host President and CEO Jim Risoleo said. Transient revenue drove the outperformance during the quarter, growing 8% — its highest improvement in the past six quarters.
Maui, New York and Oahu drove leisure revenue growth thanks to their strong festive seasons, he said.
“Notably, our three Maui resorts accounted for nearly half of the transient room revenue growth in the fourth quarter,” he said.
Transient rates at Host’s comparable resorts came in 44% above 2019 levels even with leisure incentives offered at its Maui resorts, he said. When excluding its Maui properties, transient rates at its comparable resorts were in line with recent quarters.
Business transient revenue grew about 6% due to strong rate growth as its hotels benefited from the continued shift from the government- to the corporate-negotiated segment.
As expected, group revenue during the quarter was down about 5% year over year due to tough comparisons in San Francisco and Maui, Risoleo said. Maui had benefited in 2023 from recovery and relief group room nights related to the wildfires.
Overall, however, Host’s properties sold 960,000 group roomnights during the quarter, bringing the full-year total for roomnights sold to 4.3 million, a 101% increase over comparable 2023 group roomnights, he said.
In a deeper look at Maui, Risoleo said the leisure recovery is underway. Total RevPAR for its three Maui resorts was up 6.4% in the fourth quarter as leisure guests’ total spend exceeded the recovery and relief group business from the year before. The number of transient rooms sold was up 50% year over year at its two Wailea resorts, and the number of transient rooms sold at its Hyatt Regency Maui was up 325%.
“The leisure guest continues to spend at our [food and beverage] outlets, spas and golf courses, leaving us encouraged by the leisure recovery that is beginning to take shape in Maui,” he said.
For the full year, the company estimates Maui affected its comparable hotel total RevPAR by 110 basis points, RevPAR by 160 basis points and earnings before interest, taxes, depreciation and amortization margin by 20 basis points, which includes the business interruption proceeds received during the year.
Portfolio management
During the year, Host bought four hotels for a combined $1.5 billion: the 1 Hotel Nashville; the Embassy Suites by Hilton Nashville Downtown; the 1 Hotel Central Park; and the Ritz-Carlton O'ahu Turtle Bay.
“Thus far, our new acquisitions are performing in line with our underwriting expectations,” Risoleo said.
Host always tests the market with different groups of assets to see what sort of pricing might be available, he said. That said, the team is comfortable with its portfolio as it's in great physical condition. It plans to continue investing in the properties as those investments have provided strong returns so far.
"Host is in a unique position where if we have an opportunity to sell something that we feel is good value for our shareholders, we will, but we're certainly under no compulsion to do so, and that's how we will continue to approach the market," he said.
The transaction market generally hasn't opened up as much as many thought it would, Risoleo said. There's a bit of a damper given where the 10-year U.S. Treasury bond is trading currently. There's also still a wide spread between buyers and sellers, particularly with respect to sellers who don't have to sell.
"That is actually good for us, given our balance sheet and the liquidity that we have," he said. "If we were to see an opportunity in the marketplace that made sense for us, we certainly could transact."
Throughout the year, Host invested nearly $550 million in capital expenditures and resiliency investments, Risoleo said. It completed renovations on approximately 2,100 guestrooms, 213,000 square feet of meeting space and about 93,000 square feet of public space.
It completed the repositioning renovation of its Singer Oceanfront Resort, Curio Collection by Hilton, and has made progress in its Hyatt transformational capital program, he said. It’s also completed the vertical construction of the mid-rise condominium building at its Four Seasons Resort Orlando at Walt Disney World Resort.
The company’s 2025 outlook range for capital expenditures is $580 million to $670 million, which includes $70 million to $80 million for property damage reconstruction, most of which will be covered by insurance. The outlook also reflects about $270 million to $315 million of investment for redevelopment, repositioning and return-on-investment projects.
With the Hyatt transformational capital program, the company expects to start renovations at the Hyatt Regency Washington on Capitol Hill, the Manchester Grand Hyatt San Diego and the Hyatt Regency Austin, Risoleo said. The company expects to benefit from approximately $27 million of operating profit guarantees in 2025 that should offset the majority of its earnings before interest, taxes, depreciation and amortization disruption at the properties.
Other major ROI projects this year include the construction of the canyon suites villa expansion at the Phoenician, a Luxury Collection Resort, in Scottsdale, Arizona, he said. It will spend $75 million to $80 million on the condo development of its Four Seasons Resort Orlando this year, he said.
Host continues its reconstruction efforts at the Don CeSar in St. Pete Beach, Florida, from hurricane damage, Risoleo said. It has substantially completed its remediation work and is shifting its focus to rebuilding the compromised infrastructure to increase resilience. That includes elevating critical equipment and systems, much like the company did with its Ritz-Carlton Naples property. The property should begin a phased reopening later this quarter.
The company estimates total property damage and remediation cost at the Don CeSar will be between $100 million to $110 million with a total insurance deductible of $20 million, he said. The company expects to collect business interruption proceeds as well. It included about $9 million of business interruption proceeds in its 2025 adjusted EBITDA and real estate, which it should receive in the first half of the year. The total adjusted EBITDARe impact for both hurricanes Helene and Milton is $15 million.
The expansion of the Don CeSar ballroom is expected to finish during the fourth quarter of 2025, in addition to the company’s capital expenditure investment, he said.
Since 2018, Host has completed 24 transformational renovations that should provide meaningful tailwinds to its portfolio, he said. Of the 16 hotels that have stabilized since their renovations, the average RevPAR index share gain is 7.5 points, above its target of 3 to 5 points.
By the numbers
For the fourth quarter, Host reported $1.4 billion in revenue, a 7.9% year-over-year increase, according to the company’s earnings release. For the full year, revenue amounted to nearly $5.7 billion, a 7% increase.
Fourth-quarter comparable hotel total RevPAR grew 3.3% year over year to $351.01. For 2024, TRevPAR grew 2.1% to $355.88. Comparable hotel RevPAR grew 3% during the quarter to $212.86 while growing 0.9% for the full year to $216.06.
The REIT reported net income of $109 million during the quarter, an 18.7% decrease. For the year, it reported a net income of $707 million, down 6% from 2023.
Adjusted EBITDARe during the fourth quarter amounted to $373 million, down 1.3% year over year. For the full year, adjusted EBITDARe was $1.7 billion, up 1.7%.
The REIT repurchased 6.3 million shares during the year at an average price of $16.99 per share for a total of $107 million. It had about $685 million remaining capacity in its repurchase program by the end of the year.
As of Dec. 31, 2024, Host had $554 million in cash and cash equivalents on hand. It reported total assets value of $13 billion and total liabilities of $6.2 billion.
As of publication time, Host's stock was trading at $16.79 per share, down 14.62% year over year. The Nasdaq Composite Index was up 27.74% for the same period.