Host Hotels & Resorts has been on an asset acquisition spree since the beginning of the year and doesn't plan on stopping now.
On the company's second quarter earnings call, President and CEO James Risoleo said the real estate investment trust acquired two properties subsequent to quarter end.
He said the first of those properties is the 200-room Baker's Cay Resort Key Largo, Curio Collection by Hilton, which the REIT purchased for $200 million. The resort was closed for much of 2019 to undergo an extensive renovation.
Host also acquired a 223-room hotel in Houston formerly known as Hotel Alessandra for $65 million. The hotel completed construction and opened in 2017 at a cost of $90 million and is currently closed. Risoleo said the company acquired the property on July 2 prior to a scheduled foreclosure auction.
The hotel needs little to no investment and Host has plans to brand it, he said.
During the quarter, Host acquired the 444-room Four Seasons Resort Orlando at Walt Disney World Resort for $610 million and the Royal Ka’anapali and Ka’anapali Kai Golf Courses for $28 million. Year to date, Host has acquired four assets and land for a total of $1.1 billion, according to the company's earnings release.
While Host currently has a variable acquisitions pipeline with deals coming in and the company deciding whether to pursue them, Risoleo told analysts the REIT continues to look for opportunistic deals and feels like it is in a good spot at the beginning of a new lodging cycle.
There hasn't been much trading in the distressed market, but Host expects to see more assets come to market in urban locations as more markets open up, and Risoleo said his company is still looking at urban assets.
Urban Market Improvement
Host's resort properties and leisure destinations have performed fairly well throughout the pandemic, and the company is starting to see demand improve at its urban hotels, Risoleo said.
"Transient room nights in New York, New Orleans, San Francisco and Chicago grew significantly from the first quarter to the second quarter with New York up over 200%," he said.
He added that room nights and rate have "increased steadily" since March at Host's urban properties.
Group Demand
The REIT's properties sold nearly 344,000 group room nights during the second quarter, which was a 29% increase over the first quarter, Risoleo said.
"As a result, group revenue was up 39% over the first quarter, which includes an 8% rate improvement," he said.
Group demand was "mostly concentrated in Sunbelt markets" during the quarter, he added.
The company saw month-over-month growth in corporate and group business, he said.
Risoleo said Host has roughly 1.2 million group rooms on the books in the second half of 2021, which is up approximately 20% since its first quarter earnings call.
Net booking activity for 2022 also improved in the second quarter, he said.
Results
Host's portfolio achieved revenue per available room of nearly $100 for the quarter, according to the earnings release. Average room rates were only 8.4% below 2019 second quarter rates.
The preliminary forecast for July RevPAR for the company is expected to be $134.
As of press time, Host's stock was trading at $15.10 a share, up 6.7% year to date. The Nasdaq Composite was up 16.4% for the same period.