Host Hotels & Resorts, Inc. (HST) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: while transient revenue and Maui recovery are positive, group room revenue has decreased, and EBITDA margins have declined. The Q&A highlights concerns about group dynamics and wage growth, with management showing caution. Despite some optimistic guidance, the lack of robust transaction activity and unclear management responses contribute to a neutral sentiment.
Key Financial Performance
Adjusted EBITDAre $496 million, an increase of 3.1% over last year. The increase was partly due to $9 million of business interruption proceeds related to Hurricanes Helene and Milton, compared to $30 million of such proceeds in the prior year.
Adjusted FFO per share $0.58, an increase of 1.8% over last year. This was also influenced by the business interruption proceeds.
Comparable hotel total RevPAR Improved 4.2% compared to the second quarter of 2024, driven by stronger transient demand, higher ADR, and more ancillary spend.
Comparable hotel RevPAR Improved 3%, attributed to stronger transient demand and higher ADR.
Comparable hotel EBITDA margin Declined by 120 basis points year-over-year to 31%, primarily due to a 120 basis point impact from business interruption proceeds received last year for the Maui wildfires.
Transient revenue Grew by 7%, driven by the Easter calendar shift and the ongoing recovery in Maui, which accounted for approximately 40% of the transient revenue growth.
Maui RevPAR growth 19%, contributing a 100 basis point benefit to portfolio RevPAR growth. This was driven by leisure transient demand recovery and robust growth in F&B outlets, golf, and spa revenue.
Group room revenue Decreased 5% year-over-year, primarily due to the Easter calendar shift, planned renovation disruption, and reduced group pickup.
F&B revenue Increased by 4%, driven by outlet revenues. Banquet revenue grew by 1%, with contribution per group room night outpacing absolute group room night declines.
Other revenue Grew 13%, including golf and spa revenues, indicating strong ancillary spending by guests.
Business transient revenue Relatively flat year-over-year, as demand decreases were nearly offset by rate increases.
Comparable hotel EBITDA margin (insurance impact) 120 basis point impact from business interruption proceeds received last year for the Maui wildfires.
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Operating Highlights
Adjusted EBITDAre: Achieved $496 million in Q2 2025, a 3.1% increase over last year.
Adjusted FFO per share: Increased to $0.58, a 1.8% rise compared to last year.
Comparable hotel total RevPAR: Improved by 4.2% compared to Q2 2024.
Comparable hotel RevPAR: Increased by 3%, driven by transient demand and higher ADR.
Maui market recovery: Maui's 19% RevPAR growth contributed significantly to portfolio RevPAR growth, driven by leisure transient demand and ancillary revenue.
Geographic performance: Strong performance in markets like Miami, Orlando, Atlanta, New York, and San Francisco.
Hyatt Transformational Capital Program: 50% complete, tracking on time and under budget. Renovations ongoing at multiple properties.
Capital allocation: Sold Westin Cincinnati for $60 million and repurchased $105 million in shares during Q2 2025.
Insurance proceeds: Collected $19 million in business interruption proceeds in H1 2025, with an additional $5 million in July.
Portfolio reinvestment: Investing in renovations and new developments, including the Don CeSar ballroom expansion and Four Seasons Resort Orlando condo development.
Climate risk and resiliency program: Implemented flood barriers and emergency power measures for high-risk properties.
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Risk or Challenges
Macroeconomic Uncertainty: The company acknowledges heightened macroeconomic uncertainty, which could lead to softer demand in the second half of the year. This uncertainty impacts group bookings and transient revenue.
Group Revenue Decline: Group room revenue decreased by 5% year-over-year, driven by planned renovation disruptions, business mix shifts, and reduced group pickup. Short-term group pickup remains soft due to macroeconomic uncertainty.
Renovation Disruptions: Planned renovations under the Hyatt Transformational Capital Program are causing temporary disruptions to operations and group bookings.
Wage and Benefit Increases: Wage and benefit expenses are expected to increase by 6% for the year, impacting hotel operating expenses and EBITDA margins.
Insurance and Business Interruption Proceeds: The company is reliant on business interruption proceeds for hurricane-related damages, but the timing and amounts of additional payments are uncertain.
International Demand Imbalance: The company continues to face challenges from an imbalance in international demand, which has not shown improvement.
Weather-Related Risks: Storms during key holiday periods, such as July 4th, have negatively impacted short-term bookings and revenue.
Elevated Operating Costs: Elevated wage and benefit costs, along with other operational expenses, are expected to negatively impact margins for the remainder of the year.
Supply Chain and Renovation Costs: Ongoing capital expenditure projects, including renovations and new developments, could face cost overruns or delays, impacting financial performance.
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Guidance & Outlook
Comparable Hotel RevPAR Growth: The company expects comparable hotel RevPAR growth of between 1.5% and 2.5% over 2024.
Comparable Hotel EBITDA Margins: Margins are expected to be down 90 basis points year-over-year at the low end of guidance, to down 60 basis points at the high end, with a 60 basis point improvement over prior guidance at the midpoint.
Adjusted EBITDAre Midpoint: The full year 2025 adjusted EBITDAre midpoint is $1.705 billion, representing a $60 million or 3.6% improvement over prior guidance midpoint.
Capital Expenditure Guidance: Capital expenditure guidance for 2025 is $590 million to $660 million, including $270 million to $305 million for redevelopment, repositioning, and ROI projects.
Four Seasons Condo Development: The company expects to complete the mid-rise condominium building and begin closing on sales in the fourth quarter of 2025, with deposits and purchase agreements for 20 of the 40 units already secured.
Hyatt Transformational Capital Program: Renovations at the Hyatt Regency Austin and Hyatt Regency Capitol Hill are expected to be completed in the second half of 2025, with the entire program expected to complete by early 2027.
Don CeSar Resort: The final phase of reconstruction is expected to be completed in the third quarter of 2025, with full-year expectations for the resort raised to $3 million from negative $1 million.
Business Interruption Proceeds: The company has collected $19 million in the first half of 2025 and an additional $5 million in July, with further collections expected but not yet finalized.
Wage and Benefit Expenses: Overall wage and benefit expenses are expected to increase by 6% in 2025, impacting full-year comparable hotel EBITDA margin by 100 basis points.
Macroeconomic Assumptions: The low end of guidance assumes softer demand in the second half of 2025, while the high end assumes a more stable macroeconomic environment.
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Shareholder Return Plan
Quarterly cash dividend: In July, the company paid a quarterly cash dividend of $0.20 per share. Future dividends are subject to approval by the company's Board of Directors.
Share repurchase program: In the second quarter, the company repurchased 6.7 million shares of common stock at an average price of $15.56 per share, totaling $105 million. Year-to-date, total repurchases amount to $205 million at an average price of $15.68 per share. Since 2022, the company has repurchased $520 million of stock at an average price of $16.03 per share, with $480 million of remaining capacity under the share repurchase program.
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Key Q&A
Q:Can you discuss the group dynamics for the second half of the year and longer-term trends?
A:The company initially expected 4.3 million group room nights for the year but revised it down to 4.1 million due to softening short-term group pickup, particularly in Q3. However, group bookings for 2026-2028 have improved slightly, with strong group rates and future bookings remaining robust.
Q:Can you provide insights into the recovery in Maui and its impact on your portfolio?
A:Maui's recovery is underway, with 19% RevPAR growth and $110 million EBITDA expected for the year, up from $100 million. Recovery is driven by leisure transient bookings and marketing campaigns. Group bookings are expected to pick up in 2026-2027, but additional airline capacity is needed to support growth.
Q:What is the update on the Turtle Bay property and its performance?
A:Turtle Bay's hotel operations are exceeding expectations, with strong performance driven by integration into the Ritz-Carlton system. Plans to reposition the Fazio golf course have been paused, focusing instead on preparing the site for potential future development. The property is included in comparable results.
Q:Can you elaborate on wages and benefits trends and expectations for next year?
A:Wages and benefits are up 6% this year, driven by finalized CBA negotiations. Growth is expected to be lower next year, but exact numbers are not available as budgets from managers are pending.
Q:What is the cadence for RevPAR growth in the second half of the year, and what drives Q4 growth?
A:Q4 growth is supported by solid pace, calendar shifts (e.g., Rosh Hashanah), and the impact of elections. The Grand Hyatt Manchester renovation affects group pace in Q3 but benefits Q4. Insurance savings of $14 million are expected for this year.
Q:What is the current transaction environment, and are there opportunities to buy or sell assets?
A:The debt capital markets are active, but transaction activity is not robust due to bid-ask spreads. The company focuses on investing in its assets, paying dividends, and buying back shares rather than acquiring new hotels. Recent asset sales, like the Westin Cincinnati, were driven by high CapEx needs.
Q:What are the trends in group bookings, including lead volumes and spending patterns?
A:Weakness is seen in association groups tied to government funding, but groups that do book are spending well, with banquet and catering revenue up 7% per group room night. This trend is expected to continue into Q3 and Q4.
Q:How is summer leisure demand from international inbound travel performing?
A:International inbound and outbound travel have effectively balanced out, with no significant impact on the portfolio. Markets like New York have performed well, with strong RevPAR and EBITDA growth at properties like the New York Marriott Marquis.
Q:What is the plan for transitioning Maui from promotional transient demand to group bookings?
A:Group bookings in Maui are progressing, with strong pacing for 2026. Current group room nights are around 81,000, compared to 100,000 in 2019. Efforts include engaging meeting planners and hosting familiarization trips, with expectations for a better group year in 2026.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers or details on certain topics, such as exact wage growth expectations for next year and July group booking trends. They also used cautious language regarding short-term group bookings and the transaction environment, reflecting uncertainty.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Capital Program
Capitol Hill
CeSar
Chris
Division Brian
Easter calendar
FB outlet
Grand Hyatt
Hyatt Regency
Hyatt Transformational
Inc Research
LLC Research
Program mix
Regency Capitol
Research Division
Securities
Sourav
Transformational Capital
Westin Cincinnati
calendar shift
disruption Hyatt
environment
hotel RevPAR
mix group
multiple
pool
proceeds interruption
renovation Hyatt
renovation disruption
resiliency
HST Transcript
Host Hotels & Resorts, Inc. (HST) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call reflects a positive sentiment with strong group revenue growth in key markets, optimistic 2026 outlook, and increased EBITDA guidance. Despite some uncertainties in specific metrics, management's focus on strategic capital investments and strong liquidity position supports a positive outlook. The Q&A session further reinforced optimism with stable bookings and positive market dynamics, contributing to a positive stock price movement prediction over the next two weeks.
Host Hotels & Resorts, Inc. (HST) Q2 2025 Earnings Call Transcript
Unknown7-31
The earnings call presents a mixed picture: while transient revenue and Maui recovery are positive, group room revenue has decreased, and EBITDA margins have declined. The Q&A highlights concerns about group dynamics and wage growth, with management showing caution. Despite some optimistic guidance, the lack of robust transaction activity and unclear management responses contribute to a neutral sentiment.
Earnings call transcript: Host Hotels Q1 2025 earnings beat expectations
Positive5-1
The earnings call indicates strong financial performance with increased EBITDA and RevPAR, a robust share repurchase program, and a positive outlook for key markets like Maui. Despite some uncertainties in acquisitions and tariffs, management remains confident, and no immediate cost-cutting is needed. The Q&A section highlighted stable demand trends and positive market sentiment, reinforcing a positive outlook. The combination of strong financials, shareholder returns, and optimistic guidance suggests a likely positive stock price movement in the near term.
Host Hotels & Resorts, Inc. (HST) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed picture. While there are positive aspects like strong RevPAR growth, increased EBITDA, and a solid balance sheet, there are concerns about rising expenses and international demand imbalance. The Q&A reveals cautious optimism but also highlights uncertainties in acquisitions and capital returns. The company's strategic actions, such as share repurchases and dividends, provide some support, but the lack of clear guidance on capital projects and margin pressures tempers the outlook, leading to a neutral sentiment.
HST Slides
HST Report
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