Total liabilities, non-controlling interests and equity
$
13,080
$
12,243
See notes to condensed consolidated financial statements.
1
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter and Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions, except per share amounts)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
REVENUES
Rooms
$
825
$
777
$
2,563
$
2,447
Food and beverage
365
328
1,285
1,174
Other
129
109
408
367
Total revenues
1,319
1,214
4,256
3,988
EXPENSES
Rooms
216
196
632
590
Food and beverage
267
241
848
773
Other departmental and support expenses
345
314
1,022
952
Management fees
55
51
193
185
Other property-level expenses
108
106
313
290
Depreciation and amortization
197
174
565
511
Corporate and other expenses
25
29
81
90
Gain on insurance settlements
(29)
(54)
(116)
(57)
Total operating costs and expenses
1,184
1,057
3,538
3,334
OPERATING PROFIT
135
157
718
654
Interest income
11
22
43
56
Interest expense
(59)
(48)
(156)
(142)
Other gains
1
1
1
70
Equity in earnings (losses) of affiliates
2
(4)
12
7
INCOME BEFORE INCOME TAXES
90
128
618
645
Provision for income taxes
(6)
(15)
(20)
(27)
NET INCOME
84
113
598
618
Less: Net income attributable to non-controlling interests
(2)
(2)
(9)
(10)
NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.
$
82
$
111
$
589
$
608
Basic earnings per common share
$
0.12
$
0.16
$
0.84
$
0.85
Diluted earnings per common share
$
0.12
$
0.16
$
0.84
$
0.85
See notes to condensed consolidated financial statements.
2
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Quarter and Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
NET INCOME
$
84
$
113
$
598
$
618
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates
2
(4)
(7)
2
Change in fair value of derivative instruments
1
1
2
—
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
3
(3)
(5)
2
COMPREHENSIVE INCOME
87
110
593
620
Less: Comprehensive income attributable to non-controlling interests
(2)
(2)
(9)
(10)
COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.
$
85
$
108
$
584
$
610
See notes to condensed consolidated financial statements.
3
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions)
Year-to-date ended September 30,
2024
2023
OPERATING ACTIVITIES
Net income
$
598
$
618
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
565
511
Amortization of finance costs, discounts and premiums, net
7
7
Loss on debt extinguishment
—
4
Stock-based compensation expense
17
19
Other gains
(1)
(70)
Gain on property insurance settlement
(76)
—
Equity in earnings of affiliates
(12)
(7)
Change in due from/to managers
51
16
Distributions from investments in affiliates
14
20
Property insurance proceeds - remediation costs
4
101
Payments for inventory costs
(36)
—
Changes in other assets
(14)
(13)
Changes in other liabilities
50
(72)
Net cash provided by operating activities
1,167
1,134
INVESTING ACTIVITIES
Proceeds from sales of assets, net
—
34
Proceeds from (issuance of) loan receivable
(6)
163
Return of investments in affiliates
1
—
Advances to and investments in affiliates
(42)
(22)
Acquisitions
(1,503)
—
Capital expenditures:
Renewals and replacements
(211)
(332)
Return on investment
(164)
(140)
Property insurance proceeds
74
34
Net cash used in investing activities
(1,851)
(263)
FINANCING ACTIVITIES
Financing costs
(12)
(10)
Issuances of debt
1,279
—
Draws on credit facility
890
—
Repayment of credit facility
(890)
—
Repurchase/redemption of senior notes
(400)
—
Mortgage debt and other prepayments and scheduled maturities
(2)
(2)
Debt extinguishment costs
—
(3)
Common stock repurchases
(107)
(150)
Dividends on common stock
(598)
(420)
Distributions and payments to non-controlling interests
(9)
(7)
Other financing activities
(22)
(14)
Net cash provided by (used in) financing activities
129
(606)
Effects of exchange rate changes on cash held
(2)
—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
(557)
265
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
1,363
874
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
$
806
$
1,139
See notes to condensed consolidated financial statements.
4
HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
Year-to-date ended September 30, 2024 and 2023
(unaudited)
Supplemental disclosure of cash flow information (in millions):
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the balance sheet to the amount shown in the statements of cash flows:
September 30, 2024
September 30, 2023
Cash and cash equivalents
$
564
$
916
Restricted cash (included in other assets)
2
5
Cash included in furniture, fixtures and equipment replacement fund
240
218
Total cash and cash equivalents and restricted cash shown in the statements of cash flows
$
806
$
1,139
The following table presents cash paid for the following:
Year-to-date ended September 30,
2024
2023
Total interest paid
$
131
$
129
Income taxes paid
$
6
$
5
Supplemental schedule of noncash investing and financing activities:
In 2024, non-cash consideration for the acquisition of The Ritz-Carlton O'ahu, Turtle Bay included the assumption of hotel level liabilities of approximately $15 million, consisting primarily of advanced deposits received from guests for future stays that were retained by the seller.
In connection with the sale of The Camby, Autograph Collection in March 2023, we issued a $72 million loan to the buyer. The proceeds received from the sale are net of the loan.
See notes to condensed consolidated financial statements.
5
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2024 and December 31, 2023
(in millions)
September 30,
2024
December 31, 2023
unaudited
ASSETS
Property and equipment, net
$
10,962
$
9,624
Right-of-use assets
549
550
Due from managers
77
128
Advances to and investments in affiliates
162
126
Furniture, fixtures and equipment replacement fund
240
217
Notes receivable
78
72
Other
448
382
Cash and cash equivalents
564
1,144
Total assets
$
13,080
$
12,243
LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL
Total liabilities, limited partnership interests of third parties and capital
$
13,080
$
12,243
See notes to condensed consolidated financial statements.
6
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter and Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions, except per unit amounts)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
REVENUES
Rooms
$
825
$
777
$
2,563
$
2,447
Food and beverage
365
328
1,285
1,174
Other
129
109
408
367
Total revenues
1,319
1,214
4,256
3,988
EXPENSES
Rooms
216
196
632
590
Food and beverage
267
241
848
773
Other departmental and support expenses
345
314
1,022
952
Management fees
55
51
193
185
Other property-level expenses
108
106
313
290
Depreciation and amortization
197
174
565
511
Corporate and other expenses
25
29
81
90
Gain on insurance settlements
(29)
(54)
(116)
(57)
Total operating costs and expenses
1,184
1,057
3,538
3,334
OPERATING PROFIT
135
157
718
654
Interest income
11
22
43
56
Interest expense
(59)
(48)
(156)
(142)
Other gains
1
1
1
70
Equity in earnings (losses) of affiliates
2
(4)
12
7
INCOME BEFORE INCOME TAXES
90
128
618
645
Provision for income taxes
(6)
(15)
(20)
(27)
NET INCOME
84
113
598
618
Less: Net income attributable to non-controlling interests
(1)
—
(1)
(1)
NET INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.
$
83
$
113
$
597
$
617
Basic earnings per common unit
$
0.12
$
0.16
$
0.86
$
0.87
Diluted earnings per common unit
$
0.12
$
0.16
$
0.85
$
0.87
See notes to condensed consolidated financial statements.
7
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Quarter and Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
NET INCOME
$
84
$
113
$
598
$
618
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates
2
(4)
(7)
2
Change in fair value of derivative instruments
1
1
2
—
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
3
(3)
(5)
2
COMPREHENSIVE INCOME
87
110
593
620
Less: Comprehensive income attributable to non-controlling interests
(1)
—
(1)
(1)
COMPREHENSIVE INCOME ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.
$
86
$
110
$
592
$
619
See notes to condensed consolidated financial statements.
8
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year-to-date ended September 30, 2024 and 2023
(unaudited, in millions)
Year-to-date ended September 30,
2024
2023
OPERATING ACTIVITIES
Net income
$
598
$
618
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
565
511
Amortization of finance costs, discounts and premiums, net
7
7
Loss on debt extinguishment
—
4
Stock-based compensation expense
17
19
Other gains
(1)
(70)
Gain on property insurance settlement
(76)
—
Equity in earnings of affiliates
(12)
(7)
Change in due from/to managers
51
16
Distributions from investments in affiliates
14
20
Property insurance proceeds - remediation costs
4
101
Payments for inventory costs
(36)
—
Changes in other assets
(14)
(13)
Changes in other liabilities
50
(72)
Net cash provided by operating activities
1,167
1,134
INVESTING ACTIVITIES
Proceeds from sales of assets, net
—
34
Proceeds from (issuance of) loan receivable
(6)
163
Return of investments in affiliates
1
—
Advances to and investments in affiliates
(42)
(22)
Acquisitions
(1,503)
—
Capital expenditures:
Renewals and replacements
(211)
(332)
Return on investment
(164)
(140)
Property insurance proceeds
74
34
Net cash used in investing activities
(1,851)
(263)
FINANCING ACTIVITIES
Financing costs
(12)
(10)
Issuances of debt
1,279
—
Draws on credit facility
890
—
Repayment of credit facility
(890)
—
Repurchase/redemption of senior notes
(400)
—
Mortgage debt and other prepayments and scheduled maturities
(2)
(2)
Debt extinguishment costs
—
(3)
Repurchase of common OP units
(107)
(150)
Distributions on common OP units
(606)
(426)
Distributions and payments to non-controlling interests
(1)
(1)
Other financing activities
(22)
(14)
Net cash provided by (used in) financing activities
129
(606)
Effects of exchange rate changes on cash held
(2)
—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
(557)
265
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
1,363
874
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
$
806
$
1,139
See notes to condensed consolidated financial statements.
9
HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
Year-to-date ended September 30, 2024 and 2023
(unaudited)
Supplemental disclosure of cash flow information (in millions):
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the balance sheet to the amount shown in the statements of cash flows:
September 30, 2024
September 30, 2023
Cash and cash equivalents
$
564
$
916
Restricted cash (included in other assets)
2
5
Cash included in furniture, fixtures and equipment replacement fund
240
218
Total cash and cash equivalents and restricted cash shown in the statements of cash flows
$
806
$
1,139
The following table presents cash paid for the following:
Year-to-date ended September 30,
2024
2023
Total interest paid
$
131
$
129
Income taxes paid
$
6
$
5
Supplemental schedule of noncash investing and financing activities:
In 2024, non-cash consideration for the acquisition of The Ritz-Carlton O'ahu, Turtle Bay included the assumption of hotel level liabilities of approximately $15 million, consisting primarily of advanced deposits received from guests for future stays that were retained by the seller.
In connection with the sale of The Camby, Autograph Collection in March 2023, we issued a $72 million loan to the buyer. The proceeds received from the sale are net of the loan.
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization
Description of Business
Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust (“REIT”), with its operations conducted solely through Host Hotels & Resorts, L.P. and its subsidiaries. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to these unaudited condensed consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” to refer specifically to Host Hotels & Resorts, Inc., and the term “Host L.P.” to refer specifically to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. As of September 30, 2024, Host Inc. holds approximately 99% of Host L.P.’s partnership interests.
Consolidated Portfolio
As of September 30, 2024, our consolidated portfolio, primarily consisting of luxury and upper upscale hotels, is located in the following countries:
Hotels
United States
76
Brazil
3
Canada
2
Total
81
2. Summary of Significant Accounting Policies
We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles, or GAAP, in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10–K for the year ended December 31, 2023.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of September 30, 2024, the results of our operations for the quarter and year-to-date ended September 30, 2024 and 2023, respectively, and cash flows for the year-to-date ended September 30, 2024 and 2023, respectively. Interim results are not necessarily indicative of full year performance because of the effect of seasonal variations.
Four of the partnerships in which we own an interest are considered variable interest entities ("VIEs"), as the general partner of these partnerships maintains control over the decisions that most significantly impact such partnerships. These VIEs include the operating partnership, Host L.P., which is consolidated by Host Inc., of which Host Inc. is the sole general partner and holds approximately 99% of the limited partner interests; the consolidated partnership that owns the Houston Airport Marriott at George Bush Intercontinental; and two unconsolidated partnerships that own hotel properties, of which we hold limited partner interests ranging from 11% - 21%. Host Inc.’s sole significant asset is its investment in Host L.P. and, consequently, substantially all of Host Inc.’s assets and liabilities consists of the assets and liabilities of Host L.P. All of Host Inc.’s debt is an obligation of Host L.P. and may be settled only with assets of Host L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Earnings Per Common Share (Unit)
Basic earnings per common share (unit) is computed by dividing net income attributable to common stockholders (unitholders) by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding. Diluted earnings per common share (unit) is computed by dividing net income attributable to common stockholders (unitholders), as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans or the Host L.P. common units distributed to Host Inc. to support such shares granted, and other non-controlling interests that have the option to convert their limited partner interests to Host L.P. common units. No effect is shown for any securities that are anti-dilutive. There are 9.3 million Host L.P. common units, which are convertible into 9.5 million Host Inc. common shares, that are not included in Host Inc.’s calculation of earnings per share as their effect is not dilutive. The calculation of Host Inc. basic and diluted earnings per common share is shown below (in millions, except per share amounts):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Net income
$
84
$
113
$
598
$
618
Less: Net income attributable to non-controlling interests
(2)
(2)
(9)
(10)
Net income attributable to Host Inc.
$
82
$
111
$
589
$
608
Basic weighted average shares outstanding
700.9
709.7
703.1
711.4
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market
1.5
2.2
1.6
2.2
Diluted weighted average shares outstanding
702.4
711.9
704.7
713.6
Basic earnings per common share
$
0.12
$
0.16
$
0.84
$
0.85
Diluted earnings per common share
$
0.12
$
0.16
$
0.84
$
0.85
The calculation of Host L.P. basic and diluted earnings per unit is shown below (in millions, except per unit amounts):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Net income
$
84
$
113
$
598
$
618
Less: Net income attributable to non-controlling interests
(1)
—
(1)
(1)
Net income attributable to Host L.P.
$
83
$
113
$
597
$
617
Basic weighted average units outstanding
695.5
704.4
697.7
706.4
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Revenue
Substantially all our operating results represent revenues and expenses generated by property-level operations. Payments are due from customers when services are provided to them. Due to the short-term nature of our contracts and the almost concurrent receipt of payment, we have no material unearned revenue at quarter end. We collect sales, use, occupancy and similar taxes from our customers, which we present on a net basis (excluded from revenues) on our statements of operations.
Disaggregation of Revenues. While we do not consider the following disclosure of hotel revenues by location to consist of reportable segments, we have disaggregated hotel revenues by market location. Our revenues also are presented by country in Note 10 – Geographic Information.
By Location. The following table presents hotel revenues for each of the geographic locations in our consolidated hotel portfolio (in millions):
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Property and Equipment
Property and equipment consists of the following (in millions):
September 30, 2024
December 31, 2023
Land and land improvements
$
2,462
$
1,981
Buildings and leasehold improvements
15,452
14,253
Furniture and equipment
2,521
2,331
Construction in progress
244
237
20,679
18,802
Less accumulated depreciation and amortization
(9,717)
(9,178)
$
10,962
$
9,624
6. Debt
Credit Facility. As of September 30, 2024, we had $1.5 billion of available capacity under the revolver portion of our credit facility.
Senior Notes. On August 12, 2024, we issued $700 million of 5.500% Series L senior notes in an underwritten public offering for proceeds of approximately $683 million, net of original issue discount, underwriting fees and expenses. The Series L senior notes are due in April 2035 and interest is payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2025. The net proceeds were used in part to repay all $525 million of borrowings then outstanding under the revolver portion of our senior credit facility, including amounts borrowed during the third quarter in connection with the recent acquisitions of The Ritz-Carlton O’ahu, Turtle Bay and 1 Hotel Central Park. The Series L senior notes are not redeemable prior to 90 days before the April 15, 2035 maturity date, except at a price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest to the applicable redemption date. The Series L senior notes have covenants similar to all other series of our outstanding senior notes.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Deficit
Non-redeemable, non-controlling interests
Total equity
Redeemable, non-controlling interests
Balance, December 31, 2022
$
7
$
7,717
$
(75)
$
(939)
$
5
$
6,715
$
164
Net income
—
—
—
608
1
609
9
Changes in ownership and other
—
12
—
—
(1)
11
(12)
Other comprehensive income
—
—
2
—
—
2
—
Issuance of common stock for comprehensive stock plans, net
—
9
—
—
—
9
—
Dividends declared on common stock
—
—
—
(321)
—
(321)
—
Distributions to non-controlling interests
—
—
—
—
(1)
(1)
(4)
Repurchase of common stock
—
(150)
—
—
—
(150)
—
Balance, September 30, 2023
$
7
$
7,588
$
(73)
$
(652)
$
4
$
6,874
$
157
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Deficit
Non-redeemable, non-controlling interests
Total equity
Redeemable, non-controlling interests
Balance, June 30, 2023
$
7
$
7,671
$
(70)
$
(636)
$
5
$
6,977
$
168
Net income
—
—
—
111
—
111
2
Changes in ownership and other
—
12
—
—
(1)
11
(12)
Other comprehensive loss
—
—
(3)
—
—
(3)
—
Issuance of common stock for comprehensive stock plans, net
—
5
—
—
—
5
—
Dividends declared on common stock
—
—
—
(127)
—
(127)
—
Distributions to non-controlling interests
—
—
—
—
—
—
(1)
Repurchase of common stock
—
(100)
—
—
—
(100)
—
Balance, September 30, 2023
$
7
$
7,588
$
(73)
$
(652)
$
4
$
6,874
$
157
Capital of Host L.P.
As of September 30, 2024, Host Inc. is the owner of approximately 99% of Host L.P.’s common OP units. The remaining common OP units are owned by unaffiliated limited partners. Each common OP unit may be
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
redeemed for cash or, at the election of Host Inc., Host Inc. common stock, based on the conversion ratio of 1.021494 shares of Host Inc. common stock for each common OP unit.
In exchange for any shares issued by Host Inc., Host L.P. will issue common OP units to Host Inc. based on the applicable conversion ratio. Additionally, funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P.
The components of the Capital of Host L.P. are as follows (in millions):
General Partner
Limited Partner
Accumulated Other Comprehensive Loss
Non-controlling interests
Total capital
Limited partnership interests of third parties
Balance, December 31, 2023
$
1
$
6,702
$
(70)
$
4
$
6,637
$
189
Net income
—
589
—
1
590
8
Changes in ownership and other
—
26
—
(1)
25
(24)
Other comprehensive loss
—
—
(5)
—
(5)
—
Distributions declared on common OP units
—
(424)
—
—
(424)
(6)
Distributions to non-controlling interests
—
—
—
(1)
(1)
—
Repurchase of common OP units
—
(107)
—
—
(107)
—
Balance, September 30, 2024
$
1
$
6,786
$
(75)
$
3
$
6,715
$
167
General Partner
Limited Partner
Accumulated Other Comprehensive Loss
Non-controlling interests
Total capital
Limited partnership interests of third parties
Balance, June 30, 2024
$
1
$
6,891
$
(78)
$
3
$
6,817
$
172
Net income
—
82
—
1
83
1
Changes in ownership and other
—
5
—
(1)
4
(3)
Other comprehensive income
—
—
3
—
3
—
Issuance of common OP units to Host Inc. for comprehensive stock plans, net
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
General Partner
Limited Partner
Accumulated Other Comprehensive Loss
Non-controlling interests
Total capital
Limited partnership interests of third parties
Balance, December 31, 2022
$
1
$
6,784
$
(75)
$
5
$
6,715
$
164
Net income
—
608
—
1
609
9
Changes in ownership and other
—
12
—
(1)
11
(12)
Other comprehensive income
—
—
2
—
2
—
Issuance of common OP units to Host Inc. for comprehensive stock plans, net
—
9
—
—
9
—
Distributions declared on common OP units
—
(321)
—
—
(321)
(4)
Distributions to non-controlling interests
—
—
—
(1)
(1)
—
Repurchase of common OP units
—
(150)
—
—
(150)
—
Balance, September 30, 2023
$
1
$
6,942
$
(73)
$
4
$
6,874
$
157
General Partner
Limited Partner
Accumulated Other Comprehensive Loss
Non-controlling interests
Total capital
Limited partnership interests of third parties
Balance, June 30, 2023
$
1
$
7,041
$
(70)
$
5
$
6,977
$
168
Net income
—
111
—
—
111
2
Changes in ownership and other
—
12
—
(1)
11
(12)
Other comprehensive loss
—
—
(3)
—
(3)
—
Issuance of common OP units to Host Inc. for comprehensive stock plans, net
—
5
—
—
5
—
Distributions declared on common OP units
—
(127)
—
—
(127)
(1)
Repurchase of common OP units
—
(100)
—
—
(100)
—
Balance, September 30, 2023
$
1
$
6,942
$
(73)
$
4
$
6,874
$
157
Share Repurchases
During the third quarter of 2024, we repurchased 3.5 million shares of Host Inc. common stock at an average price of $16.33 per share, exclusive of commissions, through our common share repurchase program for a total of $57 million. As of year-to-date September 30, 2024, we have repurchased 6.3 million shares at an average price of $16.99 for a total of $107 million. As of September 30, 2024, there was $685 million available for repurchase under our common share repurchase program.
Issuance of Common Stock
As of September 30, 2024, there was $600 million of remaining capacity to issue common shares of Host Inc. under our "at the market" distribution agreement. There were no shares issued during year-to-date 2024.
Dividends/Distributions
On September 12, 2024, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.20 per share on its common stock. The dividend was paid on October 15, 2024 to stockholders of record as of
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2024. Accordingly, Host L.P. made a distribution of $0.2042988 per unit on its common OP units based on the current conversion ratio.
8. Acquisitions
On July 12, 2024, we acquired the 234-room 1 Hotel Central Park for a total purchase price of $265 million. Additionally, on July 31, 2024, we acquired the 450-room Turtle Bay Resort, including a 49-acre land parcel entitled for development, for a total purchase price of $680 million, net of key money received from Marriott International as part of an agreement to transition management to Marriott and convert the property to The Ritz-Carlton brand. The property has been renamed The Ritz-Carlton O'ahu, Turtle Bay.
9. Fair Value Measurements
We did not elect the fair value measurement option for any of our financial assets or liabilities. The fair values of notes receivable, secured debt and our credit facility are determined based on the expected future payments discounted at risk-adjusted rates. Our senior notes are valued based on quoted market prices. The fair values of financial instruments not included in this table are estimated to be equal to their carrying amounts.
The fair value of certain financial assets and financial liabilities is shown below (in millions):
September 30, 2024
December 31, 2023
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Financial assets
Notes receivable (Level 2)
$
78
$
78
$
72
$
73
Financial liabilities
Senior notes (Level 1)
3,991
3,924
3,120
2,915
Credit facility (Level 2)
991
1,000
989
1,000
Mortgage debt (Level 2)
99
88
100
86
10. Geographic Information
We consider each one of our hotels to be an operating segment, as we allocate resources and assess operating performance based on individual hotels. All of our hotels meet the aggregation criteria for segment reporting and our other real estate investment activities (primarily our retail spaces and office buildings) are immaterial. As such, we report one segment: hotel ownership. Our consolidated foreign operations consist of hotels in two countries as of September 30, 2024. There were no intersegment sales during the periods presented.
The following table presents total revenues and property and equipment, net, for each of the geographical areas in which we operate (in millions):
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
11. Non-controlling Interests
Host Inc.’s treatment of the non-controlling interests of Host L.P.: Host Inc. adjusts the amount of the non-controlling interests of Host L.P. each period so that the amount presented equals the greater of its carrying amount based on accumulated historical cost or its redemption value. The historical cost is based on the proportional relationship between the historical cost of equity held by our common stockholders relative to that of the common unit holders of Host L.P. The redemption value is based on the amount of cash or Host Inc. common stock, at our option, that would be paid to the non-controlling interests of Host L.P. if it were terminated. We have estimated that the redemption value of the common OP units is equivalent to the number of common shares issuable upon conversion of the common OP units held by third parties valued at the market price of Host Inc. common stock at the balance sheet date. One common OP unit may be exchanged for 1.021494 shares of Host Inc. common stock. Redeemable non-controlling interests of Host L.P. are classified in the mezzanine section of our balance sheets as they do not meet the requirements for equity classification because the redemption feature requires the delivery of registered shares.
The table below details the historical cost and redemption values for the non-controlling interests of Host L.P.:
September 30, 2024
December 31, 2023
Common OP units outstanding (millions)
9.3
9.5
Market price per Host Inc. common share
$
17.60
$
19.47
Shares issuable upon conversion of one common OP unit
1.021494
1.021494
Redemption value (millions)
$
167
$
189
Historical cost (millions)
92
93
Book value (millions) ⁽¹⁾
167
189
___________
(1)The book value recorded is equal to the greater of redemption value or historical cost.
Other Consolidated Partnerships. Non-redeemable non-controlling interests - other consolidated partnerships on the balance sheets consists of the third-party partnership interest of one majority-owned partnership.
12. Contingencies
Many of our hotels in Florida were affected by Hurricanes Helene and Milton, which made landfall in September and October 2024, respectively. Due to evacuation mandates and/or loss of commercial power, four of our properties in Florida were temporarily closed, three of which have reopened. The most significant damage sustained during the storms occurred at The Don CeSar, which closed on September 25, 2024, following a mandatory evacuation order prior to the landfall of Hurricane Helene. The Don CeSar sustained extensive damage due to storm surge, which flooded the lower level of the hotel, including the fitness center, two food and beverage ("F&B") outlets, retail outlets and the resort's beach club. Remediation efforts are underway, and we currently expect a phased reopening of the hotel beginning late in the first quarter of 2025. Limited property damage was reported at the other Florida properties within our consolidated portfolio.
We are still evaluating the scope of property damage and business interruption loss at our Florida properties. For Hurricane Helene, which occurred in the third quarter and primarily impacted The Don CeSar, we are unable to estimate the total loss at this time, due to the proximity of the hurricane to quarter end, the added impact of Hurricane Milton in early fourth quarter, and ongoing investigation into remediation and reopening requirements. For the property loss that occurred during the third quarter, we expect our insurance coverage to sufficiently cover the property damage in excess of our insurance deductible; therefore we have not recorded any loss on the condensed consolidated statements of operations as of September 30, 2024. However, we will have ongoing remediation efforts and business interruption at The Don CeSar subsequent to quarter end. Additionally, The Don CeSar and several of our other Florida properties were affected by Hurricane Milton, which occurred in the fourth quarter. For both hurricanes, we will record an insurance receivable based on the anticipated insurance proceeds, not to exceed the expected loss, in the fourth quarter when the loss can be reliably estimated. We are
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
subject to various deductibles on our claims as a result of the two storms and the various properties affected, and costs at certain properties may not meet the deductible threshold.
Additionally, as of September 30, 2024, we have received the total settlement of $308 million of insurance proceeds related to claims resulting from Hurricane Ian, which made landfall in September 2022. The final $29 million of property insurance proceeds were received during the third quarter of 2024, resulting in a $25 million gain on property insurance, which is included in gain on insurance settlements on our unaudited condensed consolidated statements of operations.
13. Legal Proceedings
We are involved in various legal proceedings in the ordinary course of business regarding the operation of our hotels and Company matters. To the extent not covered by insurance, these legal proceedings generally fall into the following broad categories: disputes involving hotel-level contracts, employment litigation, compliance with laws such as the Americans with Disabilities Act, tax disputes and other general matters. Under our management agreements, our operators have broad latitude to resolve individual hotel-level claims for amounts generally less than $150,000. However, for matters exceeding such threshold, our operators may not settle claims without our consent.
Based on our analysis of legal proceedings with which we are involved or of which we currently are aware and our experience in resolving similar claims in the past, we have recorded immaterial accruals as of September 30, 2024 related to such claims. We have estimated that, in the aggregate, our losses related to these proceedings will not be material. We are not aware of any matters with a reasonably possible unfavorable outcome for which disclosure of a loss contingency is required. No assurances can be given as to the outcome of any pending legal proceedings.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report. Host Inc. operates as a self-managed and self-administered REIT. Host Inc. is the sole general partner of Host L.P. and holds approximately 99% of its partnership interests. Host L.P. is a limited partnership operating through an umbrella partnership structure. The remaining common OP units are owned by various unaffiliated limited partners.
Forward-Looking Statements
In this quarterly report on Form 10-Q, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “expect,” “may,” “intend,” “predict,” “project,” “plan,” “will,” “estimate” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are based on management’s current expectations and assumptions and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results to differ materially from those anticipated at the time the forward-looking statements are made.
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•the effect on lodging demand of (i) changes in national and local economic and business conditions, including concerns about U.S. economic growth and the potential for an economic recession in the United States or globally, the recent high level of inflation, elevated interest rates, global economic prospects, consumer confidence and the value of the U.S. dollar, and (ii) factors that may shape public perception of travel to a particular location, including natural disasters, such as the Maui wildfires in 2023, weather events, such as Hurricane Ian in 2022 and Hurricanes Helene and Milton in 2024, or extreme precipitation, pandemics and other public health crises, such as the COVID-19 pandemic, and the occurrence or potential occurrence of terrorist attacks, all of which will affect occupancy rates at our hotels and the demand for hotel products and services;
•risks that U.S. immigration policies and border closings, visa processing times, travel restrictions or advisories, changes in energy prices or changes in foreign exchange rates will suppress international travel to the United States generally or decrease the labor pool, and risks that international U.S. outbound travel may remain elevated relative to historic levels;
•the impact of geopolitical developments outside the U.S., such as large-scale wars or international conflicts, slowing global growth, or trade tensions and tariffs between the United States and its trading partners such as China, all of which could affect global travel and lodging demand within the United States;
•volatility in global financial and credit markets, which could materially adversely affect U.S. and global economic conditions, business activity, and lodging demand as well as negatively impact our ability to obtain financing and increase our borrowing costs;
•future U.S. governmental action to address budget deficits through reductions in spending and similar austerity measures, as well as the impact of potential U.S. government shutdowns, all of which could materially adversely affect U.S. economic conditions, business activity, credit availability and borrowing costs;
•operating risks associated with the hotel business, including the effect of labor stoppages or strikes, increasing operating or labor costs, including increased labor costs in the current inflationary environment, the ability of our managers to adequately staff our hotels as a result of shortages in labor, severance and furlough payments to hotel employees or changes in workplace rules that affect labor costs;
•the effect of rating agency downgrades of our debt securities or on the cost and availability of new debt financings;
•the reduction in our operating flexibility and the limitation on our ability to incur debt, pay dividends and make distributions resulting from restrictive covenants in our debt agreements and other risks associated with the amount of our indebtedness or related to restrictive covenants in our debt agreements, including the risk that a default could occur;
22
•our ability to maintain our hotels in a first-class manner, including meeting capital expenditures requirements, and the effect of renovations, including temporary closures, on our hotel occupancy and financial results;
•the ability of our hotels to compete effectively against other lodging businesses in the highly competitive markets in which we operate in areas such as access, location, quality of accommodations and room rate structures;
•our ability to acquire or develop additional hotels and the risk that potential acquisitions or developments may not perform in accordance with our expectations;
•the ability to complete hotel renovations on schedule and on, or under, budget and the potential for increased costs and construction delays due to shortages of supplies as a result of supply chain disruptions;
•relationships with property managers and joint venture partners and our ability to realize the expected benefits of our joint ventures and other strategic relationships;
•risks associated with a single manager, Marriott International, managing a significant percentage of our hotels;
•changes in the desirability of the geographic regions of the hotels in our portfolio or in the travel patterns of hotel customers;
•the growth of third-party internet and other travel intermediaries in attracting and retaining customers which compete with our hotels;
•our ability to recover fully under our existing insurance policies for terrorist acts and natural disasters and our ability to maintain adequate or full replacement cost “all-risk” property insurance policies on our hotels on commercially reasonable terms;
•the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cyber-attacks;
•the effects of tax legislative action and other changes in laws and regulations, or the interpretation thereof, including the need for compliance with new environmental and safety requirements;
•the ability of Host Inc. and each of the REITs acquired, established or to be established by Host Inc. to continue to satisfy complex rules in order to qualify as REITs for U.S. federal income tax purposes and Host Inc.’s and Host L.P.’s ability and the ability of our subsidiaries, and similar entities to be acquired or established by us, to operate effectively within the limitations imposed by these rules; and
•risks associated with our ability to execute our dividend policy, including factors such as investment activity, operating results and the economic outlook, any or all of which may influence the decision of our board of directors as to whether to pay future dividends at levels previously disclosed or to use available cash to pay special dividends.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions, including those risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other filings with the Securities and Exchange Commission (“SEC”). Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material.
23
Operating Results and Outlook
Operating Results
The following table reflects certain line items from our unaudited condensed consolidated statements of operations and significant operating statistics (in millions, except per share and hotel statistics):
Historical Income Statement Data:
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
Change
2024
2023
Change
Total revenues
$
1,319
$
1,214
8.6
%
$
4,256
$
3,988
6.7
%
Net income
84
113
(25.7
%)
598
618
(3.2
%)
Operating profit
135
157
(14.0
%)
718
654
9.8
%
Operating profit margin under GAAP
10.2
%
12.9
%
(270)
bps
16.9
%
16.4
%
50
bps
EBITDAre⁽¹⁾
$
353
$
361
(2.2
%)
$
1,359
$
1,251
8.6
%
Adjusted EBITDAre⁽¹⁾
324
361
(10.2
%)
1,283
1,251
2.6
%
Diluted earnings per common share
0.12
0.16
(25.0
%)
0.84
0.85
(1.2
%)
NAREIT FFO per diluted share⁽¹⁾
0.36
0.41
(12.2
%)
1.53
1.48
3.4
%
Adjusted FFO per diluted share⁽¹⁾
0.36
0.41
(12.2
%)
1.53
1.48
3.4
%
Comparable Hotel Data:
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
Change
2024
2023
Change
Comparable hotel revenues⁽¹⁾
$
1,299
$
1,259
3.2
%
$
4,235
$
4,151
2.0
%
Comparable hotel EBITDA⁽¹⁾
329
335
(1.8
%)
1,261
1,275
(1.1
%)
Comparable hotel EBITDA margin⁽¹⁾
25.3
%
26.6
%
(130)
bps
29.8
%
30.7
%
(90)
bps
Comparable hotel Total RevPAR⁽¹⁾
$
328.86
$
319.01
3.1
%
$
360.07
$
354.40
1.6
%
Comparable hotel RevPAR⁽¹⁾
206.21
204.56
0.8
%
218.09
217.72
0.2
%
___________
(1)EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share and comparable hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. See “Non-GAAP Financial Measures” and "Comparable Hotel Operating Statistics and Results" for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics are based on 79 comparable hotels as of September 30, 2024 and include adjustments for non-comparable hotels, dispositions and acquisitions. See Comparable Hotel RevPAR Overview for results of the portfolio based on our ownership period, without these adjustments.
Revenues
Total revenues increased $105 million, or 8.6%, and $268 million, or 6.7%, as compared to the third quarter of 2023 and year-to-date 2023, respectively. 2024 results benefited from the 2024 acquisitions of the 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown, 1 Hotel Central Park and The Ritz-Carlton O'ahu, Turtle Bay. Year-to-date 2024 results also benefited from the results of The Ritz-Carlton, Naples, which was closed in the first half of 2023. In addition, group business continues to drive improvements in food and beverage revenues.
Comparable hotel Total RevPAR increased 3.1% and 1.6% for the third quarter and year-to-date 2024, respectively, compared to 2023, due primarily to improvements in food and beverage revenues driven by continued strength in group business, as well as an increase in other revenues from ancillary spend. Comparable hotel RevPAR increased 0.8% and 0.2% for the quarter and year-to-date 2024, respectively, reflecting continued strong group demand, along with moderating domestic leisure demand and the slow, yet improving, recovery in Maui.
24
Comparable hotel Total RevPAR in our New Orleans and Miami markets led the portfolio with increases of 35.2% and 15.7%, respectively, in the third quarter, driven by occupancy growth as a result of strong group demand. Downtown markets such as Houston, Boston and New York also outperformed our portfolio with comparable hotel Total RevPAR growth of 9.8%, 8.8% and 8.3%, respectively, driven by strong group performance, which resulted in both occupancy improvements and rate increases. These strong performances were offset by comparable hotel Total RevPAR declines in our Atlanta, San Francisco/San Jose and Austin markets of 13.6%, 7.0% and 6.7%, respectively. The declines were driven primarily by a decline in business travel. In addition, comparable hotel Total RevPAR at our Maui market declined by 9.8% due to the continuing impacts of the August 2023 wildfires.
Operating profit
For the third quarter of 2024, operating profit margin under GAAP was 10.2%, a decline of 270 basis points compared to the third quarter of 2023, resulting from a $25 million decrease in gains on insurance settlements. Comparable hotel EBITDA margin was 25.3%, a decline of 130 basis points, driven by Maui performance and the business interruption proceeds included in 2023, while the revenue growth was offset by higher wages and other inflationary pressures compared to third quarter of 2023. Year-to-date, operating profit margin under GAAP was 16.9%, an increase of 50 bps over 2023, benefiting from a $59 million increase in gains on insurance settlements year-to-date. Comparable hotel EBITDA margin was 29.8%, a decrease of 90 basis points compared to the same period in 2023, reflecting similar trends to the quarter results.
Net income, Adjusted EBITDAre and Adjusted FFO per share
Net income decreased $29 million for the quarter, reflecting the decline in gains on insurance settlements of $25 million, while the year-to-date decrease of $20 million reflects a decline in gains on asset sales of $69 million, partially offset by an increase in gains on insurance settlements of $59 million. These changes led to a decrease in diluted earnings per share of $0.04, or 25.0%, and $0.01, or 1.2%, for the quarter and year-to-date, respectively. Adjusted EBITDAre, which excludes gain on property insurance, among other items, decreased $37 million for the quarter and increased $32 million year-to-date. Third quarter 2023 results benefited from business interruption gains of $54 million, while none were recognized in third quarter 2024. The year-to-date increase was driven by operations from the recent acquisitions and The Ritz-Carlton, Naples, which was closed in the first half of 2023 due to Hurricane Ian. Adjusted FFO per diluted share decreased $0.05, or 12.2%, for the third quarter and increased $0.05, or 3.4%, year-to-date, reflecting the changes in Adjusted EBITDAre. Adjusted FFO per diluted share was also impacted by an increase in interest expense due to 2024 senior notes issuances, which expense is included in Adjusted FFO per diluted share but not Adjusted EBITDAre.
Outlook
Consistent with the lodging industry, group business at our properties continued to improve and is expected to remain strong in the near-term. In addition, average rates remain elevated at our resorts compared to pre-pandemic levels, though they have moderated from post-pandemic highs. However, further growth has been hampered by the slow recovery from the wildfires in Maui, one of our largest markets by revenues, moderating domestic leisure transient demand driven by elevated travel to international destinations, and slow recovery post-pandemic in certain markets, such as San Francisco. On the macroeconomic front, Blue Chip Economic Indicators consensus improved slightly from previous forecasts, estimating an increase in real U.S. GDP of 2.7% for 2024. Other recent data, particularly the September employment report, have reduced concerns that the labor market may cool too fast. Unemployment remains at low levels, falling for the second consecutive month to 4.1%, and inflation is nearing the Federal Reserve's target of 2%. However, business investment growth is anticipated to slow down for the remainder of the year, averaging 3.9% for 2024. Other risks to economic growth remain, including geopolitical instability throughout the globe and volatile oil prices. As a result, leading indicators point toward slower economic growth in the coming months.
In the long-term, hotel supply growth continues to remain below the historical average, although we expect to see above-average growth in a few markets where our hotels are located, such as Nashville and Austin. Supply chain challenges have resulted in project delays across the U.S., and a tight lending environment has created construction financing challenges for future projects. We anticipate that the construction pipeline will remain modest until macroeconomic uncertainty moderates and interest rates decline further.
Based on the trends noted, we continue to anticipate that comparable hotel RevPAR will be approximately flat to prior year. However, we do anticipate that the closure of The Don CeSar and business interruption at several of our other
25
Florida properties, due to Hurricanes Helene and Milton, will negatively impact net income and Adjusted EBITDAre for 2024 by approximately $15 million.
As noted above, the current outlook for the lodging industry remains uncertain reflecting varying analyst assumptions surrounding the impact of higher interest rates, inflation, ongoing labor shortages in key industries, the recovery in Maui and escalating geopolitical conflicts. Therefore, there can be no assurances as to the continued recovery in lodging demand for any number of reasons, including, but not limited to, slower than anticipated return of group and business travel or deteriorating macroeconomic conditions.
Strategic Initiatives
Acquisitions. During the third quarter, we acquired the fee simple interest in the 234-room 1 Hotel Central Park for a purchase price of $265 million. The hotel features 2,000 square feet of contiguous and flexible meeting space, a naturally lit fitness center and business center, and Jams, a three-meal restaurant and bar.
Additionally, we acquired the fee simple interest in the 450-room, 1,180 acre Turtle Bay Resort, located on the North Shore of Oahu, Hawaii, including a 49-acre land parcel entitled for development, for approximately $680 million, net of key money received from Marriott International as part of an agreement to transition management and convert the property to The Ritz-Carlton brand. The property has been renamed The Ritz-Carlton O’ahu, Turtle Bay and features 450 rooms, all with ocean views, including 42 bungalows with direct beach access, a separate check-in, and a private pool. Other amenities include 18,000 square feet of indoor meeting space, a club lounge, six food and beverage outlets, seven retail spaces, a spa, fitness center, two golf courses, seven beaches, four resort pools, tennis and pickle ball courts, an equestrian center, a working farm, and access to 12 miles of oceanfront trails.
Financing Transactions. During the third quarter, we issued $700 million of 5.500% Series L senior notes for proceeds of $683 million, net of original issue discount, underwriting fees and expenses. The net proceeds from this issuance were used in part to repay all $525 million of borrowings then outstanding under the revolver portion of our credit facility, including amounts borrowed in connection with the acquisitions noted above.
Capital Projects. Year-to-date in 2024, we spent approximately $164 million on return on investment ("ROI") capital projects, $181 million on renewal and replacement projects, and $30 million on hurricane and other restoration work.
In collaboration with Hyatt, we initiated a transformational capital program in 2023 on six properties in our portfolio. These investments are intended to position the targeted hotels to compete better in their respective markets while seeking to enhance long-term performance. Through the third quarter of 2024, we spent approximately $94 million on this program, which is included in ROI capital projects. We expect to invest approximately $125 million to $200 million per year over the next three to four years on this program. Hyatt has agreed to provide additional priority returns on the agreed upon investments and operating profit guarantees totaling $40 million to offset expected business disruptions. The full year ROI project spend below includes approximately $125 million to $140 million for this Hyatt transformational capital program.
For full year 2024, we expect total capital expenditures of $485 million to $580 million, consisting of ROI projects of approximately $225 million to $255 million, renewal and replacement expenditures of $225 million to $275 million, and $35 million to $50 million for reconstruction projects, including the final restoration work for the damage caused by Hurricane Ian, and estimated restoration spend in 2024 related to Hurricanes Helene and Milton. Many of our hotels in Florida were affected by Hurricanes Helene and Milton, which made landfall in September and October 2024, respectively. Due to evacuation mandates and/or loss of commercial power, four of our properties in Florida were temporarily closed, all of which have reopened except The Don CeSar. The enhanced resilience projects implemented during the reconstruction of The Ritz-Carlton, Naples were successful in minimizing damage to the resort during the two storms. While we are still evaluating the complete property and business interruption impacts of the storm, we have included an estimated forecast of reconstruction spend for 2024 and anticipate additional spend in 2025.
26
Results of Operations
The following table reflects certain line items from our unaudited condensed consolidated statements of operations (in millions, except percentages):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
Change
2024
2023
Change
Total revenues
$
1,319
$
1,214
8.6
%
$
4,256
$
3,988
6.7
%
Operating costs and expenses:
Property-level costs ⁽¹⁾
1,188
1,082
9.8
%
3,573
3,301
8.2
%
Corporate and other expenses
25
29
(13.8)
%
81
90
(10.0)
%
Gain on insurance settlements
29
54
(46.3)
%
116
57
103.5
%
Operating profit
135
157
(14.0)
%
718
654
9.8
%
Interest expense
59
48
22.9
%
156
142
9.9
%
Other gains
1
1
—
%
1
70
(98.6)
%
Provision for income taxes
6
15
(60.0)
%
20
27
(25.9)
%
Host Inc.:
Net income attributable to non-controlling interests
2
2
—
%
9
10
(10.0)
%
Net income attributable to Host Inc.
82
111
(26.1)
%
589
608
(3.1)
%
Host L.P.:
Net income attributable to non-controlling interests
1
—
N/M
1
1
—
%
Net income attributable to Host L.P.
83
113
(26.5)
%
597
617
(3.2)
%
___________
(1)Amount represents total operating costs and expenses from our unaudited condensed consolidated statements of operations, less corporate and other expenses and gain on insurance settlements.
N/M = Not meaningful.
Statement of Operations Results and Trends
Hotel Sales Overview
The following table presents total revenues in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
Change
2024
2023
Change
Revenues:
Rooms
$
825
$
777
6.2
%
$
2,563
$
2,447
4.7
%
Food and beverage
365
328
11.3
%
1,285
1,174
9.5
%
Other
129
109
18.3
%
408
367
11.2
%
Total revenues
$
1,319
$
1,214
8.6
%
$
4,256
$
3,988
6.7
%
27
Total revenues for the third quarter and year-to-date increased 8.6% and 6.7%, respectively, compared to 2023, primarily due to the operations of our recent acquisitions, including 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown acquired in April 2024, 1 Hotel Central Park acquired in July 2024, and The Ritz-Carlton O'ahu, Turtle Bay acquired in July 2024 (collectively, the "2024 Acquisitions"). In addition, strong group business led to improvements in food and beverage revenues. The year-to-date increase also reflects the resumption of operations at The Ritz-Carlton, Naples, which was closed during the first half of 2023 as a result of Hurricane Ian.
Rooms. Total rooms revenues increased $48 million, or 6.2%, and $116 million, or 4.7%, for the third quarter and year-to-date, respectively, compared to 2023, reflecting the operations of the 2024 Acquisitions and the reopening of The Ritz-Carlton, Naples. Rooms revenues at our comparable hotels increased $8 million, or 1.0%, for the third quarter and $15 million, or 0.6%, year-to-date driven by an increase in average room rate.
Food and beverage. Total food and beverage ("F&B") revenues increased $37 million, or 11.3%, for the quarter and $111 million, or 9.5%, year-to-date compared to 2023, due to results of the 2024 Acquisitions and the reopening of The Ritz-Carlton, Naples. Comparable F&B revenues increased $21 million, or 6.3%, and $46 million, or 3.8%, for the quarter and year-to-date, respectively, driven by improvements in banquet and audio-visual revenues at resort and convention hotels as group demand remains strong.
Other revenues. Total other revenues increased $20 million, or 18.3%, and $41 million, or 11.2%, for the quarter and year-to-date, respectively, compared to 2023, driven by results from the 2024 Acquisitions and the reopening of The Ritz-Carlton, Naples. Comparable other revenues increased $11 million, or 9.5%, for the quarter and $23 million, or 5.9%, year-to-date, primarily due to an increase in ancillary spend.
Property-level Operating Expenses
The following table presents property-level operating expenses in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
Change
2024
2023
Change
Expenses:
Rooms
$
216
$
196
10.2
%
$
632
$
590
7.1
%
Food and beverage
267
241
10.8
%
848
773
9.7
%
Other departmental and support expenses
345
314
9.9
%
1,022
952
7.4
%
Management fees
55
51
7.8
%
193
185
4.3
%
Other property-level expenses
108
106
1.9
%
313
290
7.9
%
Depreciation and amortization
197
174
13.2
%
565
511
10.6
%
Total property-level operating expenses
$
1,188
$
1,082
9.8
%
$
3,573
$
3,301
8.2
%
Our operating costs and expenses, which consist of both fixed and variable components, are affected by several factors. Rooms expenses are affected mainly by occupancy, which drives costs related to items such as housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues and are affected by occupancy and the mix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, which comprise approximately 57% of these expenses. For both the third quarter and year-to-date of 2024, these expenses increased approximately 5% on a per available room basis compared to 2023, primarily due to an overall increase in general wage rates and benefits. Wage and benefit rate inflation is expected to be approximately 5% in 2024.
Other property-level expenses consist of property taxes, the amounts and structure of which are highly dependent on local jurisdiction taxing authorities, and property and general liability insurance, all of which do not necessarily increase or decrease based on similar changes in revenues at our hotels.
28
The increase in expenses for the third quarter and year-to-date of 2024 compared to 2023 for rooms, food and beverage, other departmental and support, and management fees was generally due to the corresponding increases in revenues due to the 2024 Acquisitions, the reopening of The Ritz-Carlton, Naples, and also reflected increased expenses at our comparable hotels primarily due to increased wages and benefits, as described below:
Rooms. Rooms expenses increased $20 million, or 10.2%, and $42 million, or 7.1%, for the quarter and year-to-date, respectively. Our comparable hotels rooms expenses increased $11 million, or 5.4%, and $23 million, or 3.7%, for the quarter and year-to-date, respectively, driven by an overall increase in wage rates.
Food and beverage. F&B expenses increased $26 million, or 10.8%, and $75 million, or 9.7%, for the quarter and year-to-date, respectively. For our comparable hotels, F&B expenses increased $14 million, or 5.7%, and $34 million, or 4.3%, for the quarter and year-to-date, respectively. Overall, F&B costs as a percentage of revenues remained consistent year over year.
Other departmental and support expenses. Other departmental and support expenses increased $31 million, or 9.9%, and $70 million, or 7.4%, for the quarter and year-to-date, respectively. On a comparable hotel basis, other departmental and support expenses increased $12 million, or 3.6%, and $36 million, or 3.6%, for the quarter and year-to-date, respectively. These increases were primarily due to higher wage expense.
Management fees. Total management fees increased $4 million, or 7.8%, for the quarter and $8 million, or 4.3%, year-to-date. Base management fees, which generally are calculated as a percentage of total revenues, increased $1 million, or 2.8%, and $8 million, or 7.1%, for the quarter and year-to-date, respectively. At our comparable hotels, base management fees increased $2 million, or 5.9%, and $4 million, or 3.9%, for the quarter and year-to-date, respectively. Incentive management fees, which generally are based on the amount of operating profit at each hotel after we receive a priority return on our investment, increased $3 million, or 20.0%, for the quarter and remained flat year-to-date. At our comparable hotels, incentive management fees increased $3 million, or 18.8% for the quarter, and decreased $3 million, or 4.1%, year-to-date.
Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property-level expenses increased $2 million, or 1.9%, and $23 million, or 7.9%, for the quarter and year-to-date, respectively, due primarily to increases in property insurance premiums and property taxes. Other property-level expenses at our comparable hotels decreased $1 million, or 1.0% for the quarter, and increased $16 million, or 5.6%, for the year-to-date.
Other Income and Expense
Corporate and other expenses. The following table details our corporate and other expenses for the quarter and year-to-date (in millions):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
General and administrative costs
$
19
$
20
$
64
$
61
Non-cash stock-based compensation expense
6
6
17
19
Litigation accruals
—
3
—
10
Total
$
25
$
29
$
81
$
90
29
Gain on insurance settlements. The following table details our gain on insurance settlements for the quarter and year-to-date (in millions):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Property insurance
Hurricane Ian
$
25
$
—
$
72
$
—
Other
4
—
4
—
Business interruption
Hurricane Ian
—
54
19
54
Maui wildfires
—
—
21
—
Other
—
—
—
3
Total gain on insurance settlements
$
29
$
54
$
116
$
57
Interest expense. Interest expense increased for the quarter and year-to-date due primarily to higher outstanding debt balances during 2024 as we issued additional series of senior notes to fund our 2024 Acquisitions. The following table details our interest expense for the quarter and year-to-date (in millions):
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Cash interest expense ⁽¹⁾
$
57
$
46
$
149
$
131
Non-cash interest expense
2
2
7
7
Non-cash debt extinguishment costs
—
—
—
1
Cash debt extinguishment costs ⁽¹⁾
—
—
—
3
Total interest expense
$
59
$
48
$
156
$
142
_________
(1)Including the change in accrued interest, total cash interest paid was $40 million and $39 million for the quarters ended September 30, 2024 and 2023, respectively, and $131 million and $129 million year-to-date 2024 and 2023, respectively.
Other gains. Other gains in 2023 reflected the gain on sale of The Camby, Autograph Collection.
Equity in earnings (losses) of affiliates. Equity in earnings of affiliates increased $6 million and $5 million for the quarter and year-to-date, respectively, primarily due to earnings from our investment in the Noble joint venture.
Provision for income taxes. We lease substantially all our properties to consolidated subsidiaries designated as taxable REIT subsidiaries (“TRS”) for U.S. federal income tax purposes. Taxable income or loss generated/incurred by the TRS primarily represents hotel-level operations, net of the aggregate rent paid to Host L.P. by the TRS, on which we record an income tax provision or benefit. For the third quarter and year-to-date of 2024, we recorded a net income tax provision of $6 million and $20 million, respectively, due primarily to the profitability of hotel operations retained by the TRS.
Comparable Hotel RevPAR Overview
We discuss operating results for our hotels on a comparable hotel basis. Comparable hotels are those properties that we consolidate as of the reporting date. Comparable hotels do not include the results of hotels sold or classified as held-for-sale, hotels that have sustained substantial property damage or business interruption, or hotels that have undergone large-scale capital projects, in each case requiring closures lasting one month or longer during the reporting periods being compared. See “Comparable Hotel Operating Statistics and Results” below for more information on how we determine our comparable hotels. Beginning in third quarter of 2024, we have separated the Oahu and Maui markets.
We also include, following the comparable hotels results by geographic location, the same operating statistics presentation on an actual basis, which includes results for our portfolio for the time period of our ownership, including the
30
results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition. Lastly, we discuss our hotel results by mix of business (i.e., transient, group, or contract).
Hotel Operating Data by Location
The following tables set forth performance information for our hotels by geographic location for the quarters and year-to-date ended September 30, 2024 and 2023, respectively, on a comparable hotel and actual basis:
Comparable Hotel Results by Location
As of September 30, 2024
Quarter ended September 30, 2024
Quarter ended September 30, 2023
Location
No. of Properties
No. of Rooms
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Percent Change in RevPAR
Percent Change in Total RevPAR
Jacksonville
1
446
$
500.84
71.6
%
$
358.59
$
805.21
$
479.33
69.2
%
$
331.47
$
726.78
8.2
%
10.8
%
Maui
3
1,580
626.00
57.0
%
356.87
569.42
710.27
62.2
%
442.00
631.23
(19.3
%)
(9.8
%)
Oahu (1)
2
876
458.26
81.6
%
373.80
562.08
452.27
82.4
%
372.46
578.74
0.4
%
(2.9
%)
Miami
2
1,038
366.49
59.2
%
216.89
414.64
377.39
50.3
%
189.66
358.25
14.4
%
15.7
%
New York
3
2,720
379.23
87.5
%
331.84
447.06
357.95
86.5
%
309.77
412.96
7.1
%
8.3
%
Nashville
2
721
335.61
80.5
%
270.28
435.21
342.53
78.2
%
267.92
422.57
0.9
%
3.0
%
Phoenix
3
1,545
269.17
54.5
%
146.75
374.60
263.79
59.6
%
157.18
368.20
(6.6
%)
1.7
%
Florida Gulf Coast
4
1,403
272.83
61.2
%
167.03
361.33
279.05
63.9
%
178.25
357.14
(6.3
%)
1.2
%
Orlando
2
2,448
312.21
60.3
%
188.39
426.35
309.53
64.9
%
200.78
419.73
(6.2
%)
1.6
%
San Diego
3
3,294
305.38
84.2
%
257.27
455.83
295.59
83.5
%
246.81
441.94
4.2
%
3.1
%
Los Angeles/Orange County
3
1,067
303.51
81.9
%
248.54
369.47
314.25
85.9
%
269.85
375.29
(7.9
%)
(1.6
%)
Boston
2
1,496
301.09
84.4
%
253.98
316.86
273.06
83.8
%
228.75
291.12
11.0
%
8.8
%
Washington, D.C. (CBD)
5
3,245
261.33
69.0
%
180.29
265.21
244.50
71.5
%
174.94
248.36
3.1
%
6.8
%
Philadelphia
2
810
236.34
83.7
%
197.75
298.37
231.09
82.6
%
190.83
288.59
3.6
%
3.4
%
Northern Virginia
2
916
246.97
74.3
%
183.58
272.79
233.30
72.0
%
168.00
250.70
9.3
%
8.8
%
Chicago
3
1,562
284.56
79.3
%
225.77
302.96
253.34
79.5
%
201.35
280.27
12.1
%
8.1
%
Seattle
2
1,315
278.67
84.2
%
234.60
295.93
271.12
81.0
%
219.56
285.88
6.9
%
3.5
%
San Francisco/San Jose
6
4,162
221.47
71.4
%
158.03
224.25
241.34
72.8
%
175.71
241.07
(10.1
%)
(7.0
%)
Austin
2
767
206.04
60.4
%
124.50
226.42
225.87
59.0
%
133.29
242.58
(6.6
%)
(6.7
%)
Houston
5
1,942
207.33
66.6
%
138.07
189.00
191.21
66.3
%
126.73
172.15
8.9
%
9.8
%
Denver
3
1,342
212.74
82.1
%
174.65
252.81
204.48
79.9
%
163.34
235.48
6.9
%
7.4
%
New Orleans
1
1,333
161.65
68.4
%
110.53
180.91
147.45
58.9
%
86.87
133.83
27.2
%
35.2
%
San Antonio
2
1,512
201.02
56.3
%
113.14
179.56
194.04
53.5
%
103.87
167.34
8.9
%
7.3
%
Atlanta
2
810
193.10
62.3
%
120.29
182.01
182.03
75.0
%
136.49
210.62
(11.9
%)
(13.6
%)
Other
9
3,007
283.60
69.3
%
196.42
303.39
281.41
68.1
%
191.51
287.59
2.6
%
5.5
%
Domestic
74
41,357
290.32
71.9
%
208.61
334.05
287.43
72.1
%
207.22
324.22
0.7
%
3.0
%
International
5
1,499
206.99
67.6
%
140.02
183.91
199.27
65.7
%
130.95
174.16
6.9
%
5.6
%
All Locations
79
42,856
$
287.57
71.7
%
$
206.21
$
328.86
$
284.61
71.9
%
$
204.56
$
319.01
0.8
%
3.1
%
___________
(1) Prior to our ownership of The Ritz Carlton O'ahu, Turtle Bay, golf revenues were recorded by the property based on gross sales. After our acquisition of the property in July 2024, the golf course operates under a lease agreement, under which we record rental income, resulting in lower total revenues when comparing to the periods prior to our ownership.
31
Comparable Hotel Results by Location
As of September 30, 2024
Year-to-date ended September 30, 2024
Year-to-date ended September 30, 2023
Location
No. of Properties
No. of Rooms
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Percent Change in RevPAR
Percent Change in Total RevPAR
Jacksonville
1
446
$
527.92
74.2
%
$
391.58
$
876.65
$
515.29
72.8
%
$
375.31
$
823.23
4.3
%
6.5
%
Maui
3
1,580
658.69
59.3
%
390.76
639.14
716.28
69.5
%
497.61
758.00
(21.5
%)
(15.7
%)
Oahu (1)
2
876
454.33
82.5
%
374.93
589.86
441.48
77.0
%
339.77
549.45
10.3
%
7.4
%
Miami
2
1,038
521.24
70.2
%
365.80
636.48
538.29
65.8
%
354.38
620.61
3.2
%
2.6
%
New York
3
2,720
360.45
82.9
%
298.70
421.87
343.87
81.4
%
279.88
396.80
6.7
%
6.3
%
Nashville
2
721
341.19
80.8
%
275.55
445.00
343.42
76.0
%
260.91
394.85
5.6
%
12.7
%
Phoenix
3
1,545
393.86
69.8
%
275.08
632.88
401.67
71.8
%
288.45
630.82
(4.6
%)
0.3
%
Florida Gulf Coast
4
1,403
357.96
71.5
%
256.00
548.61
359.25
72.8
%
261.52
554.05
(2.1
%)
(1.0
%)
Orlando
2
2,448
363.77
68.3
%
248.43
527.80
369.46
71.4
%
263.81
533.70
(5.8
%)
(1.1
%)
San Diego
3
3,294
298.26
81.5
%
243.21
452.45
286.71
81.2
%
232.85
432.14
4.4
%
4.7
%
Los Angeles/Orange County
3
1,067
297.47
79.1
%
235.16
350.72
303.01
82.8
%
250.80
360.45
(6.2
%)
(2.7
%)
Boston
2
1,496
280.49
79.8
%
223.91
292.37
262.27
78.7
%
206.41
272.25
8.5
%
7.4
%
Washington, D.C. (CBD)
5
3,245
289.07
71.0
%
205.24
298.07
276.94
71.3
%
197.40
285.28
4.0
%
4.5
%
Philadelphia
2
810
233.93
80.5
%
188.37
286.45
230.17
80.1
%
184.43
285.52
2.1
%
0.3
%
Northern Virginia
2
916
255.73
73.0
%
186.80
287.34
241.35
70.5
%
170.04
256.35
9.9
%
12.1
%
Chicago
3
1,562
255.00
70.5
%
179.73
249.82
244.43
69.2
%
169.15
240.13
6.3
%
4.0
%
Seattle
2
1,315
254.22
70.5
%
179.21
239.04
242.11
69.1
%
167.33
226.93
7.1
%
5.3
%
San Francisco/San Jose
6
4,162
245.14
68.2
%
167.30
244.90
254.24
66.8
%
169.73
246.35
(1.4
%)
(0.6
%)
Austin
2
767
247.35
66.2
%
163.68
292.67
259.09
66.6
%
172.50
309.26
(5.1
%)
(5.4
%)
Houston
5
1,942
215.18
70.9
%
152.65
210.55
201.57
70.6
%
142.37
196.37
7.2
%
7.2
%
Denver
3
1,342
201.25
70.5
%
141.92
215.52
193.63
65.0
%
125.92
180.78
12.7
%
19.2
%
New Orleans
1
1,333
191.16
72.3
%
138.16
219.14
195.70
68.9
%
134.85
204.28
2.5
%
7.3
%
San Antonio
2
1,512
216.80
61.4
%
133.13
214.38
217.64
62.4
%
135.91
217.29
(2.0
%)
(1.3
%)
Atlanta
2
810
204.24
61.4
%
125.42
207.89
190.91
75.0
%
143.15
230.87
(12.4
%)
(10.0
%)
Other
9
3,007
285.03
65.7
%
187.28
289.56
287.76
65.1
%
187.34
285.72
—
%
1.3
%
Domestic
74
41,357
308.20
71.9
%
221.50
366.58
308.05
71.8
%
221.31
361.09
0.1
%
1.5
%
International
5
1,499
196.00
63.2
%
123.88
178.79
188.41
62.9
%
118.58
168.30
4.5
%
6.2
%
All Locations
79
42,856
$
304.74
71.6
%
$
218.09
$
360.07
$
304.37
71.5
%
$
217.72
$
354.40
0.2
%
1.6
%
___________
(1) Prior to our ownership of The Ritz Carlton O'ahu, Turtle Bay, golf revenues were recorded by the property based on gross sales. After our acquisition of the property in July 2024, the golf course operates under a lease agreement, under which we record rental income, resulting in lower total revenues when comparing to the periods prior to our ownership.
32
Results by Location - actual, based on ownership period(1)
As of September 30,
2024
2023
Quarter ended September 30, 2024
Quarter ended September 30, 2023
Location
No. of Properties
No. of Properties
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Percent Change in RevPAR
Percent Change in Total RevPAR
Jacksonville
1
1
$
500.84
71.6
%
$
358.59
$
805.21
$
479.33
69.2
%
$
331.47
$
726.78
8.2
%
10.8
%
Maui
3
3
626.00
57.0
%
356.87
569.42
710.27
62.2
%
442.00
631.23
(19.3
%)
(9.8
%)
Oahu
2
1
386.23
82.6
%
318.97
462.52
220.44
97.3
%
214.45
246.44
48.7
%
87.7
%
Miami
2
2
366.49
59.2
%
216.89
414.64
377.39
50.3
%
189.66
358.25
14.4
%
15.7
%
New York
3
2
378.23
87.7
%
331.88
441.73
334.84
87.0
%
291.33
387.71
13.9
%
13.9
%
Nashville
2
—
335.61
80.5
%
270.28
435.21
—
—
%
—
—
—
%
—
%
Phoenix
3
3
269.17
54.5
%
146.75
374.60
263.79
59.6
%
157.18
368.20
(6.6
%)
1.7
%
Florida Gulf Coast
5
5
332.00
57.0
%
189.13
403.96
328.97
58.5
%
192.44
384.90
(1.7
%)
5.0
%
Orlando
2
2
312.21
60.3
%
188.39
426.35
309.53
64.9
%
200.78
419.73
(6.2
%)
1.6
%
San Diego
3
3
305.38
84.2
%
257.27
455.83
295.59
83.5
%
246.81
441.94
4.2
%
3.1
%
Los Angeles/Orange County
3
3
303.51
81.9
%
248.54
369.47
314.25
85.9
%
269.85
375.29
(7.9
%)
(1.6
%)
Boston
2
2
301.09
84.4
%
253.98
316.86
273.06
83.8
%
228.75
291.12
11.0
%
8.8
%
Washington, D.C. (CBD)
5
5
261.33
69.0
%
180.29
265.21
244.50
71.5
%
174.94
248.36
3.1
%
6.8
%
Philadelphia
2
2
236.34
83.7
%
197.75
298.37
231.09
82.6
%
190.83
288.59
3.6
%
3.4
%
Northern Virginia
2
2
246.97
74.3
%
183.58
272.79
233.30
72.0
%
168.00
250.70
9.3
%
8.8
%
Chicago
3
3
284.56
79.3
%
225.77
302.96
253.34
79.5
%
201.35
280.27
12.1
%
8.1
%
Seattle
2
2
278.67
84.2
%
234.60
295.93
271.12
81.0
%
219.56
285.88
6.9
%
3.5
%
San Francisco/San Jose
6
6
221.47
71.4
%
158.03
224.25
241.34
72.8
%
175.71
241.07
(10.1
%)
(7.0
%)
Austin
2
2
206.04
60.4
%
124.50
226.42
225.87
59.0
%
133.29
242.58
(6.6
%)
(6.7
%)
Houston
5
5
207.33
66.6
%
138.07
189.00
191.21
66.3
%
126.73
172.15
8.9
%
9.8
%
Denver
3
3
212.74
82.1
%
174.65
252.81
204.48
79.9
%
163.34
235.48
6.9
%
7.4
%
New Orleans
1
1
161.65
68.4
%
110.53
180.91
147.45
58.9
%
86.87
133.83
27.2
%
35.2
%
San Antonio
2
2
201.02
56.3
%
113.14
179.56
194.04
53.5
%
103.87
167.34
8.9
%
7.3
%
Atlanta
2
2
193.10
62.3
%
120.29
182.01
182.03
75.0
%
136.49
210.62
(11.9
%)
(13.6
%)
Other
10
10
325.57
69.7
%
226.89
348.53
326.91
68.5
%
223.86
333.59
1.4
%
4.5
%
Domestic
76
72
293.06
71.6
%
209.71
336.55
284.23
71.7
%
203.67
319.19
3.0
%
5.4
%
International
5
5
206.99
67.6
%
140.02
183.91
199.27
65.7
%
130.95
174.16
6.9
%
5.6
%
All Locations
81
77
$
290.24
71.4
%
$
207.30
$
331.32
$
281.45
71.4
%
$
201.08
$
314.05
3.1
%
5.5
%
33
Results by Location - actual, based on ownership period(1)
As of September 30,
2024
2023
Year-to-date ended September 30, 2024
Year-to-date ended September 30, 2023
Location
No. of Properties
No. of Properties
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Average Room Rate
Average Occupancy Percentage
RevPAR
Total RevPAR
Percent Change in RevPAR
Percent Change in Total RevPAR
Jacksonville
1
1
$
527.92
74.2
%
$
391.58
$
876.65
$
515.29
72.8
%
$
375.31
$
823.23
4.3
%
6.5
%
Maui
3
3
658.69
59.3
%
390.76
639.14
716.28
69.5
%
497.61
758.00
(21.5
%)
(15.7
%)
Oahu
2
1
286.14
90.3
%
258.41
343.46
210.66
87.0
%
183.19
212.15
41.1
%
61.9
%
Miami
2
2
521.24
70.2
%
365.80
636.48
538.29
65.8
%
354.38
620.61
3.2
%
2.6
%
New York
3
2
347.40
83.0
%
288.45
406.46
323.10
81.6
%
263.58
375.42
9.4
%
8.3
%
Nashville
2
—
355.57
84.0
%
298.70
474.17
—
—
%
—
—
—
%
—
%
Phoenix
3
3
393.86
69.8
%
275.08
632.88
398.12
72.1
%
286.88
619.02
(4.1
%)
2.2
%
Florida Gulf Coast
5
5
474.03
70.0
%
331.62
694.60
371.22
58.6
%
217.52
459.32
52.5
%
51.2
%
Orlando
2
2
363.77
68.3
%
248.43
527.80
369.46
71.4
%
263.81
533.70
(5.8
%)
(1.1
%)
San Diego
3
3
298.26
81.5
%
243.21
452.45
286.71
81.2
%
232.85
432.14
4.4
%
4.7
%
Los Angeles/Orange County
3
3
297.47
79.1
%
235.16
350.72
303.01
82.8
%
250.80
360.45
(6.2
%)
(2.7
%)
Boston
2
2
280.49
79.8
%
223.91
292.37
262.27
78.7
%
206.41
272.25
8.5
%
7.4
%
Washington, D.C. (CBD)
5
5
289.07
71.0
%
205.24
298.07
276.94
71.3
%
197.40
285.28
4.0
%
4.5
%
Philadelphia
2
2
233.93
80.5
%
188.37
286.45
230.17
80.1
%
184.43
285.52
2.1
%
0.3
%
Northern Virginia
2
2
255.73
73.0
%
186.80
287.34
241.35
70.5
%
170.04
256.35
9.9
%
12.1
%
Chicago
3
3
255.00
70.5
%
179.73
249.82
244.43
69.2
%
169.15
240.13
6.3
%
4.0
%
Seattle
2
2
254.22
70.5
%
179.21
239.04
242.11
69.1
%
167.33
226.93
7.1
%
5.3
%
San Francisco/San Jose
6
6
245.14
68.2
%
167.30
244.90
254.24
66.8
%
169.73
246.35
(1.4
%)
(0.6
%)
Austin
2
2
247.35
66.2
%
163.68
292.67
259.09
66.6
%
172.50
309.26
(5.1
%)
(5.4
%)
Houston
5
5
215.18
70.9
%
152.65
210.55
201.57
70.6
%
142.37
196.37
7.2
%
7.2
%
Denver
3
3
201.25
70.5
%
141.92
215.52
193.63
65.0
%
125.92
180.78
12.7
%
19.2
%
New Orleans
1
1
191.16
72.3
%
138.16
219.14
195.70
68.9
%
134.85
204.28
2.5
%
7.3
%
San Antonio
2
2
216.80
61.4
%
133.13
214.38
217.64
62.4
%
135.91
217.29
(2.0
%)
(1.3
%)
Atlanta
2
2
204.24
61.4
%
125.42
207.89
190.91
75.0
%
143.15
230.87
(12.4
%)
(10.0
%)
Other
10
10
312.71
65.8
%
205.79
317.66
322.01
65.5
%
210.89
320.75
(2.4
%)
(1.0
%)
Domestic
76
72
310.56
71.7
%
222.80
370.84
304.28
71.2
%
216.53
353.71
2.9
%
4.8
%
International
5
5
196.00
63.2
%
123.88
178.79
188.41
62.9
%
118.58
168.30
4.5
%
6.2
%
All Locations
81
77
$
306.99
71.4
%
$
219.32
$
364.14
$
300.61
70.9
%
$
213.04
$
347.14
2.9
%
4.9
%
___________
(1)Represents the results of the portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition.
Hotel Business Mix
Our customers fall into three broad categories: transient, group, and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of our full year 2023 room sales. The information below is derived from business mix results from the 79 comparable hotels owned as of September 30, 2024. For additional detail on our business mix, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10‑K.
For the third quarter and year-to-date, group revenue increased by 1.0% and 5.3%, respectively, compared to 2023, driven by a 1.1% and 2.7% increase in average rate, respectively, as our convention and downtown properties continued to benefit from group demand. The minimal 0.2% increase for the third quarter and 2.9% decrease year-to-date in transient revenue reflects the impacts of moderating leisure demand and the slow, yet improving, recovery in Maui.
34
The following are the results of our transient, group and contract business:
Quarter ended September 30, 2024
Year-to-date ended September 30, 2024
Transient business
Group business
Contract business
Transient business
Group business
Contract business
Room nights (in thousands)
1,607
1,023
202
4,538
3,320
560
Percent change in room nights vs. same period in 2023
(0.1
%)
(0.1
%)
(0.9
%)
(1.3
%)
2.5
%
3.6
%
Rooms revenues (in millions)
$
509
$
265
$
41
$
1,516
$
933
$
116
Percent change in revenues vs. same period in 2023
0.2
%
1.0
%
8.8
%
(2.9
%)
5.3
%
13.0
%
Liquidity and Capital Resources
Liquidity and Capital Resources of Host Inc. and Host L.P. The liquidity and capital resources of Host Inc. and Host L.P. are derived primarily from the activities of Host L.P., which generates the capital required by our business from hotel operations, the incurrence of debt, the issuance of OP units or the sale of hotels. Host Inc. is a REIT, and its only significant asset is the ownership of general and limited partner interests of Host L.P.; therefore, its financing and investing activities are conducted through Host L.P., except for the issuance of its common and preferred stock. Proceeds from common and preferred stock issuances by Host Inc. are contributed to Host L.P. in exchange for common and preferred OP units. Additionally, funds used by Host Inc. to pay dividends or to repurchase its stock are provided by Host L.P. Therefore, while we have noted those areas in which it is important to distinguish between Host Inc. and Host L.P., we have not included a separate discussion of liquidity and capital resources as the discussion below applies to both Host Inc. and Host L.P.
Overview. We look to maintain a capital structure and liquidity profile with an appropriate balance of cash, debt, and equity to provide financial flexibility given the inherent volatility of the lodging industry. We believe this strategy has resulted in a better cost of debt capital, allowing us to complete opportunistic investments and acquisitions and positioning us to manage potential declines in operations throughout the lodging cycle. We have structured our debt profile to maintain a balanced maturity schedule and to minimize the number of hotels that are encumbered by mortgage debt. Currently, only one of our consolidated hotels is encumbered by mortgage debt. Over the past several years leading up to the COVID-19 pandemic, we had decreased our leverage as measured by our net debt-to-EBITDA ratio and reduced our debt service obligations, leading to an increase in our fixed charge coverage ratio. As a result, we were well positioned at the onset of the COVID-19 pandemic with sufficient liquidity and financial flexibility to withstand the severe slowdown in U.S. economic activity and lodging demand brought on by the pandemic. We intend to use available cash in the near term predominantly to fund, and believe we have sufficient liquidity to fund, corporate expenses, capital expenditures, hotel acquisitions and dividends and remain well positioned to execute additional investment transactions to the extent opportunities arise.
Cash Requirements. We use cash for acquisitions, capital expenditures, debt payments, operating costs, and corporate and other expenses, as well as for dividends and distributions to stockholders and to OP unitholders, respectively, and stock and OP unit repurchases. As a REIT, Host Inc. is required to distribute to its stockholders at least 90% of its taxable income, excluding net capital gain, on an annual basis. Our next significant debt maturity is $500 million of senior notes due in June 2025.
Capital Resources. As of September 30, 2024, we had $564 million of cash and cash equivalents, $240 million in our FF&E escrow reserves and $1.5 billion available under the revolver portion of our credit facility. We depend primarily on external sources of capital to finance future growth, including acquisitions. As a result, the liquidity and debt capacity provided by our credit facility and the ability to issue senior unsecured debt are key components of our capital structure. Our financial flexibility, including our ability to incur debt, pay dividends, make distributions and make investments, is contingent on our ability to maintain compliance with the financial covenants of our credit facility and senior notes indentures, which include, among other things, the allowable amounts of leverage, interest coverage and fixed charges.
35
Two programs are currently in place relating to potential purchases or sales of our common stock. Under our common stock repurchase program, common stock may be purchased from time to time depending upon market conditions and may be purchased in the open market or through private transactions or by other means, including principal transactions with various financial institutions, like accelerated share repurchases, forwards, options, and similar transactions and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The plan does not obligate us to repurchase any specific number or any specific dollar amount of shares and may be suspended at any time at our discretion. During the third quarter of 2024, we repurchased 3.5 million shares of Host Inc. common stock at an average price of $16.33 per share, exclusive of commissions, through our common share repurchase program for a total of $57 million. At September 30, 2024, we had $685 million available for repurchase under our program.
In addition, on May 31, 2023, we entered into a distribution agreement with J.P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million. The sales will be made in transactions that are deemed to be “at the market” offerings under the SEC rules. We may sell shares of Host Inc. common stock under this program from time to time based on market conditions, although we are not under an obligation to sell any shares. The agreement also contemplates that, in addition to the offering and sale of shares to or through the sales agents, we may enter into separate forward sale agreements with each of the forward purchasers named in the agreement. No shares were issued during the third quarter of 2024. As of September 30, 2024, there was $600 million of remaining capacity under the agreement.
Given the total amount of our debt and our maturity schedule, we may continue to redeem or repurchase senior notes from time to time, taking advantage of favorable market conditions. In February 2023, Host Inc.’s Board of Directors authorized repurchases of up to $1.0 billion of senior notes other than in accordance with their respective terms, of which the entire amount remains available under this authority. We may purchase senior notes with cash through open market purchases, privately negotiated transactions, a tender offer, or, in some cases, through the early redemption of such securities pursuant to their terms. Repurchases of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Any retirement before the maturity date will affect earnings and NAREIT FFO per diluted share as a result of the payment of any applicable call premiums and the accelerated expensing of previously deferred and capitalized financing costs. Accordingly, considering our priorities in managing our capital structure and liquidity profile, and given prevailing conditions and relative pricing in the capital markets, we may, at any time, subject to applicable securities laws and the requirements of our credit facility and senior notes indentures, be considering, or be in discussions with respect to, the repurchase or issuance of exchangeable debentures and/or senior notes or the repurchase or sale of our common stock. Any such transactions may, subject to applicable securities laws, occur simultaneously.
We continue to explore potential acquisitions and dispositions. We anticipate that any such future acquisitions will be funded primarily by proceeds from sales of hotels, but also potentially from equity offerings of Host Inc., issuances of OP units by Host L.P., or available cash. Given the nature of these transactions, we can make no assurances that we will be successful in acquiring any one or more hotels that we may review, bid on or negotiate to purchase or that we will be successful in disposing of any one or more of our hotels. We may acquire additional hotels or dispose of hotels through various structures, including transactions involving single assets, portfolios, joint ventures, acquisitions of the securities or assets of other REITs or distributions of hotels to our stockholders.
Sources and Uses of Cash. Our sources of cash generally include cash from operations, proceeds from debt and equity issuances, and proceeds from hotel sales. Uses of cash include acquisitions, capital expenditures, operating costs, debt repayments, and repurchases of shares and distributions to equity holders.
Cash Provided by Operating Activities. Year-to-date in 2024, net cash provided by operating activities was $1,167 million compared to $1,134 million for year-to-date in 2023, an increase reflecting the reopening of The Ritz-Carlton, Naples, which was closed for the first half of 2023, as well as operations from our 2024 Acquisitions.
Cash Used in Investing Activities. Net cash used in investing activities was $1,851 million year-to-date in 2024 compared to $263 million year-to-date in 2023. Cash used in investing activities year-to-date in 2024 and 2023 primarily related to $375 million and $472 million of capital expenditures, respectively, investments in our joint ventures, and the acquisition of four hotels in 2024. Cash provided by investing activities in 2023 included proceeds from the repayment of a
36
note receivable and the sale of The Camby, Autograph Collection, with proceeds of $34 million, which is net of a $72 million loan issued to the buyer in connection with the sale.
The following table summarizes significant acquisitions that have been completed through November 6, 2024 (in millions):
Transaction Date
Description of Transaction
Investment
Acquisitions
July
2024
Acquisition of The Ritz-Carlton O'ahu, Turtle Bay (1)
$
(680)
July
2024
Acquisition of 1 Hotel Central Park
(265)
April
2024
Acquisition of 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown
(530)
Total acquisitions
$
(1,475)
___________
(1)Investment amount represents a sales price of $725 million net of key money received from Marriott International in connection with the conversion of the property to The Ritz-Carlton brand and includes the acquisition of a 49-acre land parcel entitled for development. Investment amount also includes the assumption of $15 million of hotel-level liabilities.
Cash Provided by (Used in) Financing Activities. Year-to-date in 2024, net cash provided by financing activities was $129 million compared to net cash used in financing activities of $606 million for year-to-date in 2023. Cash provided by financing activities in 2024 included proceeds from the issuances of senior notes. Cash used in financing activities in both 2024 and 2023 primarily related to the payment of common stock dividends and common stock repurchases, while 2024 also included the repayment of senior notes.
The following table summarizes significant debt issuances, net of deferred financing costs and issuance discounts, that have been completed through November 6, 2024 (in millions):
Transaction Date
Description of Transaction
Net Proceeds
Debt issuances
August
2024
Issuance of $700 million 5.5% Series L senior notes
$
683
May
2024
Issuance of $600 million 5.7% Series K senior notes
584
Total issuances
$
1,267
The following table summarizes significant debt repayments, that have been completed through November 6, 2024 (in millions):
Transaction Date
Description of Transaction
Transaction Amount
Debt repayments
April
2024
Repayment of $400 million 3 ⅞% Series G senior notes
$
(400)
Total cash repayments
$
(400)
37
The following table summarizes significant equity transactions that have been completed through November 6, 2024 (in millions):
Transaction Date
Description of Transaction
Transaction Amount
Equity of Host Inc.
January - October
2024
Dividend payments⁽¹⁾⁽²⁾
$
(737)
May - September
2024
Repurchase of 6.3 million shares of Host Inc. common stock
(107)
Cash payments on equity transactions
$
(844)
___________
(1)In connection with the dividend payments, Host L.P. made distributions of $748 million to its common OP unit holders.
(2)Includes the fourth quarter 2023 dividend that was paid in January 2024.
Debt
As of September 30, 2024, our total debt was $5.1 billion, with a weighted average interest rate of 4.8% and a weighted average maturity of 5.5 years. Additionally, 80% of our debt has a fixed rate of interest, and only one of our consolidated hotels is encumbered by mortgage debt.
Senior Notes. On August 12, 2024, Host L.P. issued $700 million of 5.500% Series L senior notes in an underwritten public offering for proceeds of approximately $683 million, net of original issue discount, underwriting fees and expenses. The Series L senior notes are due in April 2035 and interest is payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2025. The net proceeds were used in part to repay all $525 million of borrowings then outstanding under the revolver portion of our senior credit facility, including amounts borrowed in connection with the recent acquisitions of The Ritz-Carlton O’ahu, Turtle Bay and 1 Hotel Central Park. The Series L senior notes are not redeemable prior to 90 days before the April 15, 2035 maturity date, except at a price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest to the applicable redemption date. The Series L senior notes have covenants similar to all other series of our outstanding senior notes.
Financial Covenants
Credit Facility Covenants. Our credit facility contains certain important financial covenants concerning allowable leverage, unsecured interest coverage, and required fixed charge coverage. Total debt used in the calculation of our ratio of consolidated total debt to consolidated EBITDA (our “Leverage Ratio”) is based on a “net debt” concept, pursuant to which cash and cash equivalents in excess of $100 million are deducted from our total debt balance for purposes of measuring compliance.
At September 30, 2024, we were in compliance with all of our financial covenants under the credit facility. The following table summarizes the results of the financial tests required by the credit facility, which are calculated on a trailing twelve-month basis:
Actual Ratio
Covenant Requirement for all years
Leverage ratio
2.7x
Maximum ratio of 7.25x
Fixed charge coverage ratio
5.5x
Minimum ratio of 1.25x
Unsecured interest coverage ratio ⁽¹⁾
7.1x
Minimum ratio of 1.75x
___________
(1)If, at any time, our leverage ratio is above 7.0x, our minimum unsecured interest coverage ratio will decrease to 1.50x.
38
Senior Notes Indenture Covenants
The following table summarizes the results of the financial tests required by the indentures for our senior notes and our actual credit ratios as of September 30, 2024:
Actual Ratio
Covenant Requirement
Unencumbered assets tests
435
%
Minimum ratio of 150%
Total indebtedness to total assets
23
%
Maximum ratio of 65%
Secured indebtedness to total assets
<1%
Maximum ratio of 40%
EBITDA-to-interest coverage ratio
7.0x
Minimum ratio of 1.5x
For additional details on our credit facility and senior notes, see our Annual Report on Form 10-K for the year ended December 31, 2023.
Dividend Policy
Host Inc. is required to distribute at least 90% of its annual taxable income, excluding net capital gains, to its stockholders in order to maintain its qualification as a REIT. Funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P. As of September 30, 2024, Host Inc. is the owner of approximately 99% of the Host L.P. common OP units. The remaining common OP units are owned by unaffiliated limited partners. Each Host L.P. common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock based on the conversion ratio. The current conversion ratio is 1.021494 shares of Host Inc. common stock for each Host L.P. common OP unit.
Investors should consider the non-controlling interests in the Host L.P. common OP units when analyzing dividend payments by Host Inc. to its stockholders, as these Host L.P. common OP unitholders share in cash distributed by Host L.P. to all of its common OP unitholders, on a pro rata basis. For example, if Host Inc. paid a $1 per share dividend on its common stock, it would be based on the payment of a $1.021494 per common OP unit distribution by Host L.P. to Host Inc., as well as to the other unaffiliated Host L.P. common OP unitholders.
Host Inc.’s policy on common dividends generally is to distribute, over time, 100% of its taxable income, which primarily is dependent on Host Inc.’s results of operations, as well as tax gains and losses on hotel sales. On September 12, 2024, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.20 per share on Host Inc.'s common stock. The dividend was paid on October 15, 2024 to stockholders of record on September 30, 2024. All future dividends are subject to Board approval.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Comparable Hotel Operating Statistics and Results
To facilitate a year-to-year comparison of our operations, we present certain operating statistics (i.e., Total RevPAR, RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in our reports on a comparable hotel basis in order to enable our investors to better evaluate our operating performance. We define our comparable hotels as those that: (i) are owned or leased by us
39
as of the reporting date and are not classified as held-for-sale; and (ii) have not sustained substantial property damage or business interruption, or undergone large-scale capital projects, in each case requiring closures lasting one month or longer (as further defined below), during the reporting periods being compared.
We make adjustments to include recent acquisitions to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. Additionally, operating results of hotels that we sell are excluded from the comparable hotel set once the transaction has closed or the hotel is classified as held-for-sale.
The hotel business is capital-intensive and renovations are a regular part of the business. Generally, hotels under renovation remain comparable hotels. A large-scale capital project would cause a hotel to be excluded from our comparable hotel set if it requires the entire property to be closed to hotel guests for one month or longer.
Similarly, hotels are excluded from our comparable hotel set from the date that they sustain substantial property damage or business interruption if it requires the property to be closed to hotel guests for one month or longer. In each case, these hotels are returned to the comparable hotel set when the operations of the hotel have been included in our consolidated results for one full calendar year after the hotel has reopened. Often, related to events that cause property damage and the closure of a hotel, we will collect business interruption insurance proceeds for the near-term loss of business. These proceeds are included in gain on insurance settlements on our condensed consolidated statements of operations. Business interruption insurance gains covering lost revenues while the property was considered non-comparable also will be excluded from the comparable hotel results.
Of the 81 hotels that we owned as of September 30, 2024, 79 have been classified as comparable hotels. The operating results of the following properties that we owned as of September 30, 2024 are excluded from comparable hotel results for these periods:
•Alila Ventana Big Sur (business disruption due to the collapse of a portion of Highway 1, causing closure of the hotel beginning in March 2024, reopened in May 2024);
•The Ritz-Carlton, Naples (business disruption due to Hurricane Ian beginning in September 2022, reopened in July 2023); and
•Sales and marketing expenses related to the development and sale of condominium units on a development parcel adjacent to Four Seasons Resort Orlando at Walt Disney World® Resort.
Additionally, The Don CeSar closed on September 25, 2024, following a mandatory evacuation order prior to the landfall of Hurricane Helene. The hotel experienced substantial damage from the hurricane and has yet to reopen to guests. As a result, the property will be removed from the comparable hotel set starting in the fourth quarter.
Foreign Currency Translation
Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. Therefore, hotel statistics and results for non-U.S. properties include the effect of currency fluctuations, consistent with our financial statement presentation.
Non-GAAP Financial Measures
We use certain “non-GAAP financial measures,” which are measures of our historical financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. These measures include the following:
•Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for real estate (“EBITDAre”)and Adjusted EBITDAre, as a measure of performance for Host Inc. and Host L.P.,
•Funds From Operations (“FFO”) and FFO per diluted share, both calculated in accordance with National Association of Real Estate Investment Trusts (“NAREIT”) guidelines and with certain adjustments from those guidelines, as a measure of performance for Host Inc., and
40
•Comparable hotel operating results, as a measure of performance for Host Inc. and Host L.P.
The discussion below defines these measures and presents why we believe they are useful supplemental measures of our performance.
Set forth below for each such non-GAAP financial measure is a reconciliation of the measure with the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable thereto. We also have included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2023 further explanations of the adjustments being made, a statement disclosing the reasons why we believe the presentation of each of the non-GAAP financial measures provide useful information to investors regarding our financial condition and results of operations, the additional purposes for which we use the non-GAAP financial measures and limitations on their use.
EBITDA, EBITDAre and Adjusted EBITDAre
EBITDA
EBITDA is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners that are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, it is widely used by management in the annual budget process and for compensation programs.
EBITDAre and Adjusted EBITDAre
We present EBITDAre in accordance with NAREIT guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate,” to provide an additional performance measure to facilitate the evaluation and comparison of our results with other REITs. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment expense for depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s pro rata share of EBITDAre of unconsolidated affiliates.
We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s understanding of our operating performance. Adjusted EBITDAre also is similar to the measure used to calculate certain credit ratios for our credit facility and senior notes. We adjust EBITDAre for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDAre:
•Property Insurance Gains – We exclude the effect of property insurance gains reflected in our condensed consolidated statements of operations because we believe that including them in Adjusted EBITDAre is not consistent with reflecting the ongoing performance of our assets. In addition, property insurance gains could be less important to investors given that the depreciated asset book value written off in connection with the calculation of the property insurance gain often does not reflect the market value of real estate assets.
•Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
•Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
41
•Severance Expense – In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to: (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
In unusual circumstances, we also may adjust EBITDAre for gains or losses that management believes are not representative of the Company’s current operating performance. The last adjustment of this nature was a 2013 exclusion of a gain from an eminent domain claim.
The following table provides a reconciliation of EBITDA, EBITDAre, and Adjusted EBITDAre to net income, the financial measure calculated and presented in accordance with GAAP that we consider the most directly comparable:
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.
(in millions)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Net income
$
84
$
113
$
598
$
618
Interest expense
59
48
156
142
Depreciation and amortization
197
174
565
511
Income taxes
6
15
20
27
EBITDA
346
350
1,339
1,298
Gain on dispositions⁽¹⁾
—
—
—
(69)
Equity investment adjustments:
Equity in (earnings) losses of affiliates
(2)
4
(12)
(7)
Pro rata EBITDAre of equity investments(2)
9
7
32
29
EBITDAre
353
361
1,359
1,251
Adjustments to EBITDAre:
Gain on property insurance settlement
(29)
—
(76)
—
Adjusted EBITDAre
$
324
$
361
$
1,283
$
1,251
___________
(1)Reflects the sale of one hotel in 2023.
(2)Unrealized gains of our unconsolidated investments are not recognized in our EBITDAre, Adjusted EBITDAre, NAREIT FFO or Adjusted FFO until they have been realized by the unconsolidated partnership.
FFO Measures
We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. As noted in NAREIT’s Funds From Operations White Paper – 2018 Restatement. NAREIT defines FFO as net income (calculated in accordance with GAAP) excluding depreciation and amortization related to certain real estate assets, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment expense of certain real estate assets and investments and adjustments for consolidated partially owned entities and unconsolidated affiliates. Adjustments for consolidated partially owned entities and unconsolidated affiliates are calculated to reflect our pro rata share of the FFO of those entities on the same basis.
We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in
42
evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of diluted earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor’s understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:
•Gains and Losses on the Extinguishment of Debt – We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs from the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.
•Acquisition Costs – Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
•Litigation Gains and Losses – We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
•Severance Expense – In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to, (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of our current operating performance. For example, in 2017, as a result of the reduction of the U.S. federal corporate income tax rate from 35% to 21% by the Tax Cuts and Jobs Act, we remeasured our domestic deferred tax assets as of December 31, 2017 and recorded a one-time adjustment to reduce our deferred tax assets and to increase the provision for income taxes by approximately $11 million. We do not consider this adjustment to be reflective of our ongoing operating performance and, therefore, we excluded this item from Adjusted FFO.
The following table provides a reconciliation of the differences between our non-GAAP financial measures, NAREIT FFO and Adjusted FFO (separately and on a per diluted share basis), and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable:
43
Host Inc. Reconciliation of Diluted Earnings per Common Share to
NAREIT and Adjusted Funds From Operations per Diluted Share
(in millions, except per share amount)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Net income
$
84
$
113
$
598
$
618
Less: Net income attributable to non-controlling interests
(2)
(2)
(9)
(10)
Net income attributable to Host Inc.
82
111
589
608
Adjustments:
Gain on dispositions⁽¹⁾
—
—
—
(69)
Gain on property insurance settlement
(29)
—
(76)
—
Depreciation and amortization
197
174
564
510
Equity investment adjustments:
Equity in (earnings) losses of affiliates
(2)
4
(12)
(7)
Pro rata FFO of equity investments(2)
5
4
18
20
Consolidated partnership adjustments:
FFO adjustments for non-controlling partnerships
(1)
(1)
(1)
(1)
FFO adjustments for non-controlling interests of Host L.P.
(2)
(2)
(7)
(6)
NAREIT FFO
250
290
1,075
1,055
Adjustments to NAREIT FFO:
Loss on debt extinguishment
—
—
—
4
Adjusted FFO
$
250
$
290
$
1,075
$
1,059
For calculation on a per share basis:⁽³⁾
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO
702.4
711.9
704.7
713.6
Diluted earnings per common share
$
0.12
$
0.16
$
0.84
$
0.85
NAREIT FFO per diluted share
$
0.36
$
0.41
$
1.53
$
1.48
Adjusted FFO per diluted share
$
0.36
$
0.41
$
1.53
$
1.48
___________
(1-2)Refer to the corresponding footnote on the Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.
(3)Diluted earnings per common share, NAREIT FFO per diluted share and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partner interests to common OP units. No effect is shown for securities if they are anti-dilutive.
Comparable Hotel Property-Level Operating Results
We present certain operating results for our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or "same store," basis as supplemental information for our investors. Our comparable hotel results present operating results for our hotels without giving effect to dispositions or properties that experienced closures due to renovations or property damage, as discussed in “Comparable Hotel Operating Statistics and Results” above. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable hotels after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization expense). Corporate-level costs and expenses also are
44
removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information about the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by location and for our properties in the aggregate. We eliminate from our comparable hotel level operating results severance costs related to broad-based and significant property-level reconfiguration that is not considered to be within the normal course of business, as we believe this elimination provides useful supplemental information that is beneficial to an investor’s understanding of our ongoing operating performance. We also eliminate depreciation and amortization expense because, even though depreciation and amortization expense are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. As noted earlier, because real estate values historically have risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient.
Because of the elimination of corporate-level costs and expenses, gains or losses on disposition, certain severance expenses and depreciation and amortization expense, the comparable hotel operating results we present do not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our condensed consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.
We present these hotel operating results on a comparable hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable hotels (which represent the vast majority of our portfolio) or from other factors. While management believes that presentation of comparable hotel results is a supplemental measure that provides useful information in evaluating our ongoing performance, this measure is not used to allocate resources or to assess the operating performance of each of our hotels, as these decisions are based on data for individual hotels and are not based on comparable hotel results in the aggregate. For these reasons, we believe comparable hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.
The following tables present certain operating results and statistics for our hotels for the periods presented herein and a reconciliation of the differences between comparable Hotel EBITDA, a non-GAAP financial measure, and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable. Similar reconciliations of the differences between (i) hotel revenues and (ii) our revenues as calculated and presented in accordance with GAAP (each of which is used in the applicable margin calculation), and between (iii) hotel expenses and (iv) operating costs and expenses as calculated and presented in accordance with GAAP, also are included in the reconciliation:
45
Comparable Hotel Results for Host Inc. and Host L.P.
(in millions, except hotel statistics)
Quarter ended September 30,
Year-to-date ended September 30,
2024
2023
2024
2023
Number of hotels
79
79
79
79
Number of rooms
42,856
42,856
42,856
42,856
Change in comparable hotel Total RevPAR
3.1
%
—
1.6
%
—
Change in comparable hotel RevPAR
0.8
%
—
0.2
%
—
Operating profit margin⁽¹⁾
10.2
%
12.9
%
16.9
%
16.4
%
Comparable hotel EBITDA margin⁽¹⁾
25.3
%
26.6
%
29.8
%
30.7
%
Food and beverage profit margin⁽¹⁾
26.8
%
26.5
%
34.0
%
34.2
%
Comparable hotel food and beverage profit margin⁽¹⁾
27.5
%
27.1
%
33.9
%
34.1
%
Net income
$
84
$
113
$
598
$
618
Depreciation and amortization
197
174
565
511
Interest expense
59
48
156
142
Provision for income taxes
6
15
20
27
Gain on sale of property and corporate level income/expense
(18)
10
(51)
(43)
Property transaction adjustments⁽²⁾
4
26
42
66
Non-comparable hotel results, net⁽³⁾
(3)
(51)
(69)
(46)
Comparable hotel EBITDA
$
329
$
335
$
1,261
$
1,275
___________
(1)Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:
Quarter ended September 30, 2024
Quarter ended September 30, 2023
Adjustments
Adjustments
GAAP Results
Property transaction adjustments⁽²⁾
Non-comparable hotel results, net ⁽³⁾
Depreciation and corporate level items
Comparable hotel Results
GAAP Results
Property transaction adjustments⁽²⁾
Non-comparable hotel results, net ⁽³⁾
Depreciation and corporate level items
Comparable hotel Results
Revenues
Room
$
825
$
10
$
(20)
$
—
$
815
$
777
$
50
$
(20)
$
—
$
807
Food and beverage
365
4
(12)
—
357
328
19
(11)
—
336
Other
129
3
(5)
—
127
109
11
(4)
—
116
Total revenues
1,319
17
(37)
—
1,299
1,214
80
(35)
—
1,259
Expenses
Room
216
3
(5)
—
214
196
12
(5)
—
203
Food and beverage
267
4
(12)
—
259
241
15
(11)
—
245
Other
508
6
(17)
—
497
471
27
(17)
—
481
Depreciation and amortization
197
—
—
(197)
—
174
—
—
(174)
—
Corporate and other expenses
25
—
—
(25)
—
29
—
—
(29)
—
Gain on insurance settlements
(29)
—
—
29
—
(54)
—
49
—
(5)
Total expenses
1,184
13
(34)
(193)
970
1,057
54
16
(203)
924
Operating Profit - Comparable hotel EBITDA
$
135
$
4
$
(3)
$
193
$
329
$
157
$
26
$
(51)
$
203
$
335
46
Year-to-date ended September 30, 2024
Year-to-date ended September 30, 2023
Adjustments
Adjustments
GAAP Results
Property transaction adjustments⁽²⁾
Non-comparable hotel results, net ⁽³⁾
Depreciation and corporate level items
Comparable hotel Results
GAAP Results
Property transaction adjustments⁽²⁾
Non-comparable hotel results, net ⁽³⁾
Depreciation and corporate level items
Comparable hotel Results
Revenues
Room
$
2,563
$
93
$
(91)
$
—
$
2,565
$
2,447
$
136
$
(33)
$
—
$
2,550
Food and beverage
1,285
39
(67)
—
1,257
1,174
52
(15)
—
1,211
Other
408
22
(17)
—
413
367
30
(7)
—
390
Total revenues
4,256
154
(175)
—
4,235
3,988
218
(55)
—
4,151
Expenses
Room
632
23
(17)
—
638
590
33
(8)
—
615
Food and beverage
848
32
(49)
—
831
773
42
(18)
—
797
Other
1,528
57
(59)
—
1,526
1,427
77
(32)
—
1,472
Depreciation and amortization
565
—
—
(565)
—
511
—
—
(511)
—
Corporate and other expenses
81
—
—
(81)
—
90
—
—
(90)
—
Gain on insurance settlements
(116)
—
19
76
(21)
(57)
—
49
—
(8)
Total expenses
3,538
112
(106)
(570)
2,974
3,334
152
(9)
(601)
2,876
Operating Profit - Comparable hotel EBITDA
$
718
$
42
$
(69)
$
570
$
1,261
$
654
$
66
$
(46)
$
601
$
1,275
(2)Property transaction adjustments represent the following items: (i) the elimination of results of operations of hotels sold or held-for-sale as of the reporting date, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) the addition of results for periods prior to our ownership for hotels acquired as of the reporting date.
(3)Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our condensed consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds covering lost revenues while the property was considered non-comparable.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
All information in this section applies to both Host Inc. and Host L.P.
Interest Rate Sensitivity
As of September 30, 2024 and December 31, 2023, 80% and 76%, respectively, of our outstanding debt bore interest at fixed rates. To manage interest rate risk applicable to our debt, we may enter into interest rate swaps or caps. The interest rate derivatives into which we may enter are strictly to hedge interest rate risk and are not for trading purposes. As of September 30, 2024, we do not have any interest rate derivatives outstanding.
See Item 7A of our most recent Annual Report on Form 10–K.
Exchange Rate Sensitivity
As we have operations outside of the United States (specifically, the ownership of hotels in Brazil and Canada and a minority investment in a joint venture in India), currency exchange risks arise in the normal course of our business. To manage the currency exchange risk, we may enter into forward or option contracts or hedge our investment through the issuance of foreign currency denominated debt. During the third quarter of 2024, three foreign currency forward purchase contracts matured, with a total notional amount of CAD 99 million ($74 million), and we received $1.4 million in the aggregate upon settlement of these contracts. To replace the maturing contracts, we entered into two new foreign currency forward purchase contracts with a total notional amount of CAD 99 million ($73 million), which will mature in August 2025. The foreign currency exchange agreements into which we have entered are strictly to hedge foreign currency risk and are not for trading purposes.
See Item 7A of our most recent Annual Report on Form 10-K.
47
Item 4. Controls and Procedures
Controls and Procedures (Host Hotels & Resorts, Inc.)
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes to Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Controls and Procedures (Host Hotels & Resorts, L.P.)
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including Host Inc.’s Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, Host Inc.’s Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes to Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
48
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (Host Hotels & Resorts, Inc.)
On August 3, 2022, the Board of Directors authorized a $1 billion share repurchase program. The common stock may be purchased from time to time depending upon market conditions, and repurchases may be made in the open market or through private transactions or by other means, including principal transactions with various financial institutions, accelerated share repurchases, forwards, options and similar transactions, and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not obligate us to repurchase any specific number of shares or any specific dollar amount and may be suspended at any time at our discretion.
Period
Total Number of Host Inc. Common Shares Purchased
Average Price Paid per Common Share*
Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
July 1, 2024 - July 31, 2024
—
$
—
—
$
742
August 1, 2024 - August 31, 2024
3,072,051
16.28
3,072,051
692
September 1, 2024 - September 30, 2024
432,260
16.68
432,260
685
Total
3,504,311
$
16.33
3,504,311
$
685
___________
*Prices shown are exclusive of commissions paid.
Issuer Purchases of Equity Securities (Host Hotels & Resorts, L.P.)
Period
Total Number of Host L.P. Common OP Units Purchased
Average Price Paid per Common OP Unit
Total Number of OP Units Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Units that May Yet Be Purchased Under the Plans or Programs (in millions)
July 1, 2024 - July 31, 2024
83,966
*
1.021494 shares of Host Hotels & Resorts, Inc. common stock
—
—
August 1, 2024 - August 31, 2024
3,052,493
**
1.021494 shares of Host Hotels & Resorts, Inc. common stock
—
—
September 1, 2024 - September 30, 2024
423,544
***
1.021494 shares of Host Hotels & Resorts, Inc. common stock
—
—
Total
3,560,003
—
—
___________
*Reflects common OP units offered for redemption by limited partners in exchange for shares of Host Inc.'s common stock.
** Reflects (i) 3,007,410 common OP units repurchased to fund the repurchase by Host Inc. of 3,072,051 shares of common stock as part of its publicly announced share repurchase program, and (ii) 45,083 common OP units redeemed by holders in exchange for shares of Host Inc.'s common stock.
*** Reflects (i) 423,165 common OP units repurchased to fund the repurchase by Host Inc. of 432,260 shares of common stock as part of its publicly announced share repurchase program, and (ii) 379 common OP units redeemed by holders in exchange for shares of Host Inc.'s common stock.
49
Item 5. Other Information
On August 26, 2024, Mr. Walter Rakowich, a director of Host Inc., adopted a Rule 10b5-1 trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c). Under the trading plan, Mr. Rakowich will sell 40% of the shares of Host Inc.'s common stock he receives as part of his annual director stock award following the annual meetings in 2025 and 2026, to the extent he is elected as a director at those meetings. As described in the Company’s proxy statement for its annual meeting, non-employee directors receive an annual director stock award effective after election at the annual meeting. Because the number of shares that non-employee directors receive is calculated by dividing a dollar amount ($180,000 for 2024) by the share price of Host Inc.'s common stock on the date of the annual meeting, the aggregate number of shares to be sold under the trading plan is not currently ascertainable. However, if we assume the director stock award remains $180,000 in 2025 and 2026, and we estimate using Host Inc.'s closing share price of $17.24 on October 31, 2024, the aggregate number of shares to be sold under the trading plan is estimated to be 8,352 shares. The trading plan will have a duration of 641 days based on the latest termination date of the plan of May 29, 2026.
Item 6. Exhibits
In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the company, its subsidiaries or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
•should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
•have been qualified by disclosures that were made to other parties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
•may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
•were made only as of the date of the applicable agreement or such other date or date as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representation and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
The exhibits listed on the accompanying Exhibit Index are filed as part of this report and such Exhibit Index is incorporated herein by reference.
Inline XBRL Taxonomy Extension Schema Document. Submitted electronically with this report.
101.CAL
Inline XBRL Taxonomy Calculation Linkbase Document. Submitted electronically with this report.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document. Submitted electronically with this report.
101.LAB
Inline XBRL Taxonomy Label Linkbase Document. Submitted electronically with this report.
101.PRE
Inline XBRL Taxonomy Presentation Linkbase Document. Submitted electronically with this report.
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
The following materials, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the Quarter and Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, Inc.; (ii) the Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023, respectively, for Host Hotels & Resorts, Inc.; (iii) the Condensed Consolidated Statements of Comprehensive Income for the Quarter and Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, Inc.; (iv) the Condensed Consolidated Statements of Cash Flows for the Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, Inc.; (v) the Condensed Consolidated Statements of Operations for the Quarter and Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, L.P.; (vi) the Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023, respectively, for Host Hotels & Resorts, L.P.; (vii) the Condensed Consolidated Statements of Comprehensive Income for the Quarter and Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, L.P.; (viii) the Condensed Consolidated Statements of Cash Flows for the Year-to-date ended September 30, 2024 and 2023, respectively, for Host Hotels & Resorts, L.P.; and (ix) Notes to Condensed Consolidated Financial Statements.
†This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
51
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOST HOTELS & RESORTS, INC.
November 8, 2024
/s/ Joseph C. Ottinger
Joseph C. Ottinger
Senior Vice President,
Corporate Controller
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOST HOTELS & RESORTS, L.P.
By: HOST HOTELS & RESORTS, INC., its general partner
November 8, 2024
/s/ Joseph C. Ottinger
Joseph C. Ottinger
Senior Vice President,
Corporate Controller of Host Hotels & Resorts, Inc.,