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Host Hotels & Resorts Says Geographically Diversified Portfolio Is Key Advantage

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Host Hotels & Resorts first quarter results exceeded expectations and beat consensus estimates for adjusted EBITDAre and adjusted FFO per diluted share. That is according to CEO James Risoleo on the firm’s Q1 earnings call.

Adjusted EBITDAre increased 10% to $406 million for the quarter and adjusted FFO per diluted share grew 11.6% to $0.48, beating consensus estimates by $20 million, and $0.04 respectively, he explained. “While we do not provide quarterly guidance, we indicated in our prepared remarks last quarter that 25% to 26% of EBITDA would be earned in the first quarter, we beat that forecast by $11 million.”

These strong results, he said, were primarily driven by an impressive EBITDA margin improvement of 50 basis points. “Comparable hotel EBITDA margins improved for the sixth consecutive quarter and meaningfully exceeded our expectations, demonstrating the benefits of our scale and integrated platform, key elements underpinning our ability to deliver operational performance.”

According to Risoleo, the firm continued to benefit from internal initiatives, the Marriott, Starwood merger synergies, the receipt of operating profit guarantees from the Marriott transformational capital program and increases in other ancillary revenues. “These bottom line results are remarkable, considering the comparable constant dollar RevPAR decline of 1%.”

Risoleo explained that “The RevPAR results were driven by an occupancy decrease of 180 basis points, which was partially offset by a 1.3% increase in average rate, the factors that affected RevPAR this quarter, including estimated 40 basis points of impact from the disruption related to the Marriott transformational capital program, an estimated 30 basis points impact from the government shutdown and a softer than expected March.”

Despite these headwinds, he said, comparable total RevPAR which includes all hotel level revenues, including food and beverage and other revenues increased 30 basis points to $274 million. “These strong results continue to underscore the advantages of our geographically diversified portfolio of iconic and irreplaceable hotels, our unprecedented scale and platform to drive internal and external growth and the power and flexibility of our investment grade balance sheet. Together these key pillars form the foundation of Host, the premier lodging REIT.”