Q1 2025 Host Hotels & Resorts Inc Earnings Call
Good morning, and welcome to the host hotels <unk> resorts first quarter 2025 earnings Conference call. Today's call is being recorded at this time I would like to turn the call over to you Jamie Marcus Senior Vice President of Investor Relations. Please go ahead.
Jamie Marcus: Thank you and good morning, everyone.
Speaker Change: Before we begin please note that many of the comments made today are considered to be forward looking statements under federal Securities laws.
Speaker Change: As described in our filings with the SEC. These statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed.
Speaker Change: And we are not obligated to publicly update or revise these forward looking statements.
Speaker Change: In addition on today's call, we will discuss certain non-GAAP financial information such as <unk> adjusted EBITDA R E and comparable hotel level results.
Speaker Change: You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release.
Speaker Change: In our 8-K filed with the SEC.
Speaker Change: And in the supplemental financial information on our website at host hotels Dot com.
Speaker Change: With me on today's call are Jim Rosolio, President and Chief Executive Officer.
Speaker Change: <unk> Executive Vice President and Chief Financial Officer.
Speaker Change: With that I would like to turn the call over to Jim.
Jim Rosolio: Thank you, Jamie and thanks to everyone for joining us this morning.
Jim Rosolio: In the first quarter, we delivered adjusted EBITDA of $514 million.
Jim Rosolio: An increase of five 1% over last year.
Jim Rosolio: And adjusted <unk> per share of <unk> 64 cents, an increase of four 9% over last year.
Jim Rosolio: First quarter, adjusted EBITDAR, and adjusted <unk> per share benefited from $10 million or business interruption proceeds.
Related to Hurricanes Helene and Milton.
Jim Rosolio: Which is the same amount we recognized in the first quarter of 2024 related to Hurricane Ian.
Comparable hotel total Revpar improved five 8% compared to the first quarter of 2024 and comparable hotel Revpar improved 7%.
Jim Rosolio: Driven by strong rate growth.
Jim Rosolio: Comparable hotel EBITDA margin improved by 30 basis points year over year to 31, 8% as.
Jim Rosolio: As revenue growth outpaced expenses due to higher rates.
Jim Rosolio: As a reminder, the operational results discussed today refer to our 79 hotel comparable portfolio in 2025, which excludes the Lila Ventana Big sur and the Doctor says are.
Jim Rosolio: Additionally, this quarter, we are referring to revenue growth for our business segments as revpar growth.
Due to the leap year in 2024.
Jim Rosolio: Turning to business mix.
Jim Rosolio: Revpar growth in the first quarter was better than expected driven by increases in room rates.
Jim Rosolio: Saw particularly strong performance in Washington D C, New York, New Orleans, Los Angeles and Maui.
Jim Rosolio: Transient revpar grew by 6% driven by resorts, which benefited from a late Easter.
Jim Rosolio: Our three Maui resort accounted for almost half of the transient revpar growth in the quarter alongside strong performance in New York and Los Angeles.
Jim Rosolio: Digging deeper into Maui, the leisure transient recovery continued driving Maui strong results in the first quarter.
Jim Rosolio: Transient rooms sold were up approximately 70%.
Jim Rosolio: Year over year.
Jim Rosolio: Growth in revenues from transient guests more than offset declines from top group comparisons in the first quarter of 2024.
Jim Rosolio: Which included revenue from recovery and relief groups as well as elevated group cancellation revenue.
Jim Rosolio: <unk>, 16% Revpar growth in the first quarter provided a 70 basis point benefit to portfolio Revpar growth.
Jim Rosolio: Total revpar at our three memory resorts was also up nearly 7% due to strong outlet growth and increases in golf and Spa revenue.
Jim Rosolio: Despite collecting $8 million in attrition and cancellation revenue last year.
Jim Rosolio: Taken together, we are encouraged that the recovery is well underway and Maui.
Jim Rosolio: Business transient Revpar grew 2%.
Jim Rosolio: Driven by rate growth as we saw a favorable market mix and a continued shift from government to corporate negotiated customers in the first quarter.
Group Revpar for the quarter was up 7% year over year as special events, the Easter holiday shift and strong corporate group bookings in major markets drove group rate growth.
Jim Rosolio: Our property sold $1 1 million group room nights in the first quarter.
Jim Rosolio: Bringing our definite group room nights on the books for 2025 to $3 6 million or 85% of comparable full year 2020 for group room nights and total group revenue pace is up three 3% for the same time last year.
Jim Rosolio: Turning to ancillary spend.
Jim Rosolio: Revpar growth outpaced total revpar growth in the first quarter.
Jim Rosolio: Great growth achieved around special events, such as the inauguration and the Super Bowl drove outsized revpar growth in the first quarter, while the decline in attrition and cancellation revenue due to Maui tough comparison muted total revpar growth.
Jim Rosolio: Fight a challenging comparison, we still saw solid growth in food and beverage and other revenues.
F&B Revpar grew 5% driven by both banquet and outlet growth in other revenue per available room grew 2%, despite a meaningful decline in attrition and cancellation revenue.
Jim Rosolio: Turning to the Don Cesar.
We were thrilled to welcome guests back to the resort in late March.
Jim Rosolio: After a six month remediation efforts following hurricanes Helene and Milton.
Jim Rosolio: Our team leveraged strong industry relationships and lessons learned from the Ritz Carlton Naples.
Jim Rosolio: The enhanced amenities and rebuild infrastructure to increase resilience.
Jim Rosolio: Including elevating critical equipment and systems.
Jim Rosolio: The dog is our holds a cherished place in the Hearts of hotel employees in St. Pete Beach community.
Jim Rosolio: In fact, the majority of associates returned after six months.
Jim Rosolio: Testament to their resilience loyalty and commitment to the Don Cesar.
Jim Rosolio: Since the reopening we are seeing stronger than anticipated transient demand higher average checks and our temporary F&B outlets.
Jim Rosolio: Kris demand response services and a greater number of club members reactivated membership.
Jim Rosolio: As a reminder, we currently estimate our total property damage and remediation costs at the Dawn CS are will be between 101 hundred $10 million and our insurance deductibles are $20 million.
Jim Rosolio: We collected $10 million of business interruption proceeds in the first quarter.
Jim Rosolio: While we expect to collect additional business interruption proceeds.
Jim Rosolio: It's too early to estimate the timing or amount of additional payments.
Jim Rosolio: Turning to capital allocation.
Jim Rosolio: During the first quarter, we repurchased six 3 million shares of common stock at an average price of $15 79 per share for a total of $100 million.
Jim Rosolio: Since 2022, we have repurchased $415 million of stock at an average repurchase price of $16 16 per share and we have $585 million of remaining capacity under our board authorized share repurchase program.
Jim Rosolio: Turning to portfolio reinvestment.
Jim Rosolio: During the first quarter, we completed comprehensive renovations at the Grand Hyatt Atlanta Buckhead.
Jim Rosolio: Marketing the first completion of six properties and the Hyatt transformational capital program.
We also completed and reopened the view a two storey rotating restaurant inbounds on the 48th floor of the New York Marriott, Marquis as well would it be a new restaurant on the lobby level of the one hotel South Beach.
Jim Rosolio: We continued to make progress on the condo development at a four seasons resort Orlando at Walt Disney World.
Jim Rosolio: We expect to complete the mid rise condominium building and begin closing on sales in the fourth quarter of this year.
Jim Rosolio: We now have deposits and purchase agreements for 16 of the 40 units.
Jim Rosolio: In 2025, our capital expenditure guidance range is $580 million to $670 million.
Jim Rosolio: Which includes between 70 and $80 million for property damage reconstruction <unk>.
Jim Rosolio: Majority of which we expect to be covered by insurance.
Jim Rosolio: Our Capex guidance also reflects approximately $270 million to $315 million of investment where redevelopment repositioning and ROI projects.
Jim Rosolio: With the highest transformational capital program, we expect to complete renovations at the Hyatt Regency, Austin and the Hyatt Regency Capitol Hill in the second half of this year.
Jim Rosolio: As a reminder, we expect to benefit from approximately $27 million of operating profit guarantees.
Jim Rosolio: <unk> to the highest transformational capital program this year, which we expect will offset the majority of the EBITDA disruption at those properties.
Jim Rosolio: Other major ROI projects. This year include the construction of the Phoenician Canyon suites building expansion and they Don sees our ballroom expansion.
Jim Rosolio: Which we expect to complete in the fourth quarter of 2025.
Jim Rosolio: In addition to our capital expenditure investment, we expect to spend $75 million to $85 million on the condo development at the four seasons resort Orlando at Walt Disney World. This year.
Jim Rosolio: Looking back at prior renovations, we completed 24 transformational renovations between 2018 and 2023.
Jim Rosolio: Which we believe are continuing to provide meaningful tailwind for our portfolio.
Jim Rosolio: Of the 19 hotels that have stabilized post renovation operations to date.
Jim Rosolio: The average Revpar index share gains is over eight nine points, which is well in excess of our targeted gain of three to five points.
As of the first quarter, we are excited to share that all 16 of the Marriott transformational capital program comprehensive renovations have stabilized and are meaningfully contributing to our portfolio performance.
Jim Rosolio: As evidenced by our first quarter results, our capital allocation decisions over the past few years continued to serve us well.
Jim Rosolio: Turning to our outlook for 2025.
Jim Rosolio: While we outperformed our expectations in the first quarter, we remain cautious given the heightened macroeconomic uncertainty.
Jim Rosolio: Manned trends appear to be holding for now, but the potential for deteriorating lodging fundamentals has increased.
Jim Rosolio: Based on the information we have today.
Jim Rosolio: We are maintaining our comparable hotel revpar guidance range with a slight reduction to total revpar driven by moderating trends in group lead volume.
Speaker Change: As <unk> will discuss in more detail the low end of our guidance range contemplates a mild slowdown while the high end assumes a more stable macroeconomic environment.
Speaker Change: In preparing our guidance, we looked at prior downturns, including the recession in the early 1990, 2008 financial crisis, and the pandemic, which had the most severe impact on the lodging industry.
Speaker Change: As a result of the wide range of potential economic outcomes. We are also providing an approximate rule of thumb for the current environment based on how our portfolio is positioned today.
Speaker Change: For every 100 basis point change in Revpar, we would expect to see a 32% to $37 million change in adjusted EBITDA R E.
Speaker Change: In times like this it is important to remember that host is well positioned to weather any environment and continue to thrive as a result of our fortress investment grade balance sheet.
Speaker Change: Average ratio of two eight times, our access to capital our size and scale, our diversified business and geographic mix and our continued reinvestment in our portfolio.
Speaker Change: We will continue to utilize our competitive advantages be disciplined in our capital allocation approach and position host to outperform in the current environment and over the long term.
Suraj: With that I will now turn the call over to Suraj.
Suraj: Thank you Jim and good morning, everyone.
Suraj: Building on Jim's comments I will go into detail on our first quarter operations updated 2025 guidance and our balance sheet.
Suraj: Starting with total revenue trend.
Suraj: Revpar growth outpaced total revpar for the first time in over a year has outsized rate growth driven by special event boosted revpar.
Suraj: Despite challenging comparison group and transient guests continued to increase their out of room spend at our hotels.
Comparable hotel food and beverage Revpar grew 5% in the quarter driven by both banquet and outlets.
Suraj: Banquet revenue increased 5% driven by growth in group room nights and contribution per group room night outside of Maui.
Suraj: Results were driven by both the Ritz Carlton resort from April.
Suraj: <unk>, The New York Marriott, Marquis the Grand Hyatt, Manchester, San Diego, and our recently acquired one hotel and empathy with complex in Nashville.
Suraj: Outlet revenue also grew 5%, resulting from more normalized operations in Maui.
Suraj: The opening of the restaurant at the New York, Marriott, Marquis and the repositioned singer Oceanfront resort.
Suraj: Other revenue per available room grew 2% in the first quarter, despite difficult comparison from record levels of attrition and cancellation collected last year.
Suraj: Paul and <unk> revenue continue to grow leaving us encouraged that the consumer is still prioritizing spending on premium experiences.
Suraj: Overall transient revpar was up 6% compared to the fourth quarter of 2024, driven by improving leisure transient demand in milk.
Suraj: Outside of Maui transient strength was driven by the reposition finger oceanfront resort the fourth even for Orlando resort at Walt Disney World, The weapon, Carolyn and the foreseeable Jackson hole in fact, the year over year. The four seasons Jacksonville, both transient rate over 2800 <unk>.
Suraj: While increasing transient rooms sold by 15%.
Suraj: Special events and holidays in the quarter showed meaningful growth.
Suraj: For our five hotels in Washington D. C. Revpar for the inauguration was up an impressive 660% over the same timeframe last year.
Suraj: So President's day weekend, all hotels had double digit revpar growth, resulting in 16% revpar growth for the comparable portfolio.
Suraj: Looking ahead, two holidays in the second quarter.
Suraj: <unk> revenue pace is down slightly for memorial day weekend compared to the same time last year.
Suraj: Convention hotels have opted to take more group on the books that weekend.
Suraj: Outside of convention hotels transient revenue is pacing up in the mid single digits with Maui pacing up over 30%.
Suraj: July 4th transient revenue pace is also up 4% over last year again, driven by Malibu.
Suraj: Business transient Revpar was up 2% through the first quarter of 2024, driven by nearly 7% rate growth, while volume was down 5%.
Suraj: We expect business transient revenue remained flat for the remainder of this year as a result of the uncertain macroeconomic environment.
Suraj: Turning to group Revpar was up 7% year over year, which includes an estimated 200 basis point negative impact from Maui.
Suraj: As expected group room nights were down compared to the first quarter of 2024, driven by recovery in the leaf group room night in Maui last year, which did not repeat in 2025.
Suraj: Group room night volume was up slightly for the portfolio excluding Maui.
Suraj: Group Revpar growth was driven by broad based corporate group strength across the portfolio as well as Association group.
Suraj: For full year 2025, we have over $3 6 million definite group room nights on the books.
Suraj: Presenting a 12% increase since the fourth quarter.
Suraj: As Jim mentioned total group revenue pace is up three 3% over the same time last year.
Speaker Change: Lead volume has moderated as association in government related group paused, new bookings due to the heightened uncertainty, but we are encouraged that rate continued to hold across the portfolio for booking made in the first quarter for the rest of 2025.
Speaker Change: We also continue to see strong citywide booking pace in many of our key markets, including San Francisco, New Orleans, San Antonio and Nashville.
Speaker Change: Shifting gears to margins comparable hotel EBITDA margin of 31, 8% was 30 basis points above the first quarter of 2024.
Speaker Change: As a result of weight driven total revpar growth with outpaced expense growth.
Speaker Change: We expect year over year margin comparisons to decline as the year progresses, primarily driven by wages and benefits and fixed expense pressure alongside a modest reduction in total revpar forecast.
Speaker Change: Turning to our outlook for 2025 as Jim discussed we are maintaining our comparable hotel revpar guidance range with a slight reduction to total revpar driven by moderating group lead volume.
Speaker Change: It is important to note that the guidance range. We are providing is based on the information we have today and we remain cautious given the heightened uncertainty.
Speaker Change: As a reminder, we have assumed a gradual improvement at our Maui properties this year and no improvement in the international demand imbalance.
Speaker Change: At the low end of our guidance, we have assumed a mild slowdown driven by deteriorating macroeconomic sentiment and a worsening international demand imbalance and.
Speaker Change: And at the high end, we assumed a more stable macroeconomic environment driven by clarity on trade policy and improvement in the international demand imbalance.
Speaker Change: Our full year 2025 guidance contemplates comparable hotel revpar growth of between 50 basis points and two 5% over 2024.
Speaker Change: We expect comparable hotel EBITDA margin to be down 160 basis points year over year at the low end of our guidance to down 100 basis points at the Hyatt.
Speaker Change: A 50 basis point improvement over our prior guidance.
Speaker Change: In terms of Revpar growth cadence for the remainder of the year, our guidance reflect quarterly growth in the negative 2% to positive 1% range with fourth quarter being stronger and third quarter being weaker.
Speaker Change: As Jim mentioned, given the uncertainty and range of potential outcomes, we are providing an approximate rule of thumb in the current environment based on how the portfolio debt.
Speaker Change: For modeling purposes, we estimate that every 100 basis point change in Revpar would roughly equate to $832 million to $37 million.
Speaker Change: The change in adjusted EBITDA.
Speaker Change: The midpoint assumes comparable hotel revpar growth of one 5% compared to 2024, and our comparable hotel EBITDA margin of 28%, which is 130 basis points below 2024.
Speaker Change: As we think about raising our 2024 results for 2025.
Speaker Change: We estimate a 110 basis point impact to full year comparable hotel EBITDA margin from wage and benefit rate increases and a 40 basis point impact from lower business interruption proceeds, which is partially offset by a 20 basis point benefit from operational improvements.
Speaker Change: For the full year, we continue to expect overall wage and benefit expenses and increased over 6%.
Speaker Change: Which comprises approximately 57% of our total hotel operating expenses.
Speaker Change: Our 2025 full year adjusted EBITDA midpoint is $1.645 billion.
Speaker Change: This represents a $25 million or one 5% improvement over our prior guidance midpoint driven entirely by first quarter outperformance.
Speaker Change: It is important to note that we expect to receive additional business interruption proceeds for the <unk>.
Speaker Change: But it is still too early to estimate the timing or amount of any additional payments.
Speaker Change: Our 2025 full year adjusted EBITDA midpoint also include $25 million of estimated EBITDA from the four seasons condo development, which we expect to recognize concurrent with condo sale closings in the fourth quarter.
Speaker Change: Lastly, our midpoint includes an estimated $1 million loss at <unk> and an estimated $13 million contribution from operations at 11 ton of Big sur.
Speaker Change: All of which are excluded from our comparable hotel set in 2025.
Speaker Change: Turning to our fortress balance sheet and liquidity position.
Speaker Change: Weighted average maturity of five years at a weighted average interest rate of four 7%.
Speaker Change: We currently have $2 2 billion and total available liquidity, which includes $264 million of.
Speaker Change: As <unk> reserves and $1 5 billion.
Speaker Change: Available under the revolver portion of the credit facility.
Speaker Change: Our quarter end leverage ratio was two eight times.
Speaker Change: In April we paid a quarterly cash dividend of <unk> 20 per share.
Speaker Change: As always future dividends are subject to approval by the Companys board of directors.
Speaker Change: We will continue to be strategic in managing our balance sheet and liquidity position as we move through the remainder of 2025.
Speaker Change: Wrapping up we believe our investment grade balance sheet as well as our size scale and diversification uniquely positioned post to successfully navigate an uncertain times, while capitalizing on opportunities for growth in the future.
With that.
Speaker Change: We would be happy to take your questions.
Speaker Change: To ensure we have time to address as many questions as possible. Please limit yourself to one question.
Speaker Change: Thank you we will now begin the question and answer session. We would like to ask a question. Please press star one on your telephone keypad to raise your hands and join the queue and if you'd like to withdraw your question again Crestar. One we also ask that you limit yourself to one question. Your first question comes from the line of Ari Klein with BMO.
Speaker Change: Please go ahead.
Speaker Change: Okay. Thank you.
Speaker Change: So can you talk a little bit more about some of the recent trends you've been seeing.
Speaker Change: Yet in April from a demand standpoint, and then maybe on a market level are you expecting some kind of diversions in performance and assets in gateway markets that are more exposed to inbound international travel and perhaps you can just talk a little bit more broadly about what youre seeing on that front. Thank you.
Speaker Change: Hi, I'm, sorry, I'll take the <unk>.
Speaker Change: Second part of your question to Rob can take the first part regarding trends.
Speaker Change: Hi.
Speaker Change: The top international the top markets in the country. The top 25 are actually performing really well and if you look through.
Speaker Change: Our first.
Speaker Change: First quarter performance I know, we called out.
Speaker Change: Certain markets with one time events like the inauguration in Washington D C and the Super Bowl in New Orleans.
Speaker Change: And.
Speaker Change: Los Angeles, and New York City in Maui.
Speaker Change: But if.
Speaker Change: If you were to exclude those markets, we still had solid revpar performance.
Speaker Change: Throughout the rest of the portfolio so.
Speaker Change: International inbound is.
Speaker Change: About 8% of our total.
Speaker Change: Room nights and.
Speaker Change: The the markets that are.
Speaker Change: Frankly, most affected by it.
Speaker Change: Canadian inbound travel or Seattle, and New York City, and as you know, we don't have a large presence in Seattle.
Speaker Change: In New York City has just been performing extremely well and I think that can all be.
Speaker Change: Tied back to the transformational renovation that we undertook at the Marriott Marquis.
Speaker Change: During COVID-19.
Our group business is extremely strong at the Marquis in.
Speaker Change: We mentioned it in our prepared comments, we're excited that we have been able to open the view.
Speaker Change: Armed with Danny Meyer.
Speaker Change: Running at I think it's gonna do fantastically well for us.
Speaker Change: So we're not seeing the drag on our portfolio from.
Speaker Change: International inbound that's been talked about across the board I think the.
Speaker Change: There is a divergence clearly today between.
Speaker Change: The top 25 markets and.
Speaker Change: Luxury resorts.
That we have a lot of as you know.
Speaker Change: The secondary and tertiary markets the lower chain scales.
Speaker Change: And we're delighted with that.
Speaker Change: How the portfolio is positioned today.
Speaker Change: And we have seen.
Speaker Change: Strong leisure demand all that Rob gave you some stats around that in the first quarter.
Speaker Change: Across all of our resorts.
Speaker Change: Yes.
Speaker Change: Rates to April.
Speaker Change: We obviously don't have final numbers for April.
Speaker Change: If you look at the net travel data month to date April for upper tier is up two 5%.
Speaker Change: Luxury is up above that and upper upscale is effectively flat on other hand scales I believe is down 3% for our portfolio.
Speaker Change: We are actually trending better than the upper tier.
Speaker Change: <unk> for April month to date and.
Speaker Change: And it's really being driven by our.
Speaker Change: Largely a resort that had a very strong Easter.
Speaker Change: So all.
Speaker Change: All in all luxury is holding very strong as we said in our prepared remarks.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Duane <unk> with Evercore ISI. Please go ahead.
Duane: Hey, thanks.
Speaker Change: Maui clearly did a little bit better I think than you think can you just talk about your outlook for the remainder of the year.
Speaker Change: I guess, both from a revpar perspective are there any periods that have easier versus tougher comps and then from a profit growth or EBITDA growth perspective. Thank you.
Speaker Change: Sure Duane So would you look.
Speaker Change: Throughout the year for Maui.
Speaker Change: Obviously Q1 is.
Speaker Change: Very strong for Maui, and so is Q4 Q2 Q3 somewhat moderating.
Speaker Change: But let me walk you through the the Maui the updated Maui Bridge, if you will because we provided that last quarter. So if you remember we had sort of restated our 2020 for EBITDA.
Speaker Change: At $72 million. So that was if you recall $97 million net OPI, well that $17 million from relief and recovery rooms, and then less $8 million from the onetime attrition in cancellation revenue that got us to a restated $72 million number.
Speaker Change: From that the $7 million for wage and benefit increases in 2025.
Speaker Change: Now you would add to that 30 million to $40 million estimated for the year in terms of improvement in operations last quarter. We had stated instead of 30 to 40, we updated our estimate at that point in time was 15% to $30 million. So in other words, our expectations for Maui from EBIT.
Speaker Change: <unk> has gone up by approximately $10 million at the midpoint.
Speaker Change: Our EBITDA projection for Maui currently stands at the midpoint at about $100 million.
Speaker Change: It was previously what we have said was somewhere around 80% to 95, certainly that has improved I would say majority of that improvement of $10 million is Q1. However, we still anticipate a little bit of continued improvement throughout the year as well.
Speaker Change: Okay very clear thank you.
Chris: Your next question comes from the line of Chris <unk> with Deutsche Bank. Please go ahead.
Hey, guys good morning.
Speaker Change: Jim you guys, just kind of set yourself apart from your peers, a little bit coming out of Covid with a lot of acquisitions.
Speaker Change: <unk> been busy in the last couple of years and I know, we're not quite even halfway through the year yet but.
Speaker Change: Do you think all the uncertainty in the world that we're all talking about does that in your mind create more opportunities on the acquisition front in the near term.
Speaker Change: Chris.
Speaker Change: I wish I had a crystal ball.
Speaker Change: Two really.
Speaker Change: To answer that question.
Speaker Change: Precise manner.
Speaker Change: I really don't know, what's going to happen I can only point to what we've done.
Speaker Change: In the past as may be a prelude to how we think about markets and deploying capital in the future.
Speaker Change: But there's been a lot of talk all throughout Covid.
Speaker Change: Regarding distressed in the markets and that theyre going to be a lot of asset sales and.
Speaker Change: It didn't occur and.
Speaker Change: Based on what we're seeing.
Speaker Change: Certainly within our portfolio from a operating fundamental perspective.
Speaker Change: No.
Speaker Change: We hope that this translates to other owners of hotels as well.
Speaker Change: That the big our word.
Speaker Change: Is a thing of the past and that we see.
Speaker Change: <unk>.
Speaker Change: A shift in policy, which is really.
Speaker Change: Causing all the uncertainty out there today.
Speaker Change: And that.
Speaker Change: We have other.
Speaker Change: Great things coming out of Washington.
Speaker Change: The tax Bill and the budget Bill in the second half of the year and that the.
Speaker Change: The economy takes off and the uncertainty goes away so.
Speaker Change: I really think if that does happen and.
Speaker Change: Obviously, it's dependent somewhat upon interest rates.
Speaker Change: You may see a more active transaction market.
Speaker Change: Pick up.
Speaker Change: Later, this year, but as of as of today I think the general attitude and mood out. There is everyone is in a wait and see mode. There is just not a lot happening in the transaction market.
Speaker Change: Because of the.
Speaker Change: The uncertainty that exists in a macro basis. So from our perspective, we're going to continue being opportunistic as we deploy capital.
Speaker Change: We'll continue to invest in our portfolio that has served us very well.
Speaker Change: We have seen great results of the.
Speaker Change: 16 Marriott transformational.
Speaker Change: Capital program assets that we completed as well as eight other.
Speaker Change: Assets that we have under taken transformational renovations on now we picked up eight nine points in yield index. I mean, that's very significant and that flows right to the bottom line, we underwrote three to five points. So I think.
Investing in your assets then smartly is a really good use of capital.
Speaker Change: Buying back stock when we're trading at levels that we are today is also a good use of capital continuing to.
Speaker Change: Pay a dividend.
Speaker Change: Is also something that's very important to us so.
Speaker Change: We're in a unique position, Chris given given the balance sheet and the fact that we're sitting here today only two eight times leverage and we have $2 $2 billion of liquidity, we really are around the unique position, where you can do it all.
Chris: Okay very good thanks, Tim.
Speaker Change: Your next question comes from the line of David Katz with Jefferies. Please go ahead.
David Katz: Hi, everyone. Thanks for taking my question.
David Katz: I'm going to sort of follow on this just a little bit.
David Katz: Look in a in a stable operating environment.
Without.
David Katz: Any prospects for.
David Katz: <unk>.
David Katz: Sizable deals and I'm not trying to put words in your mouth and suggests that there arent.
David Katz: But I'd love to get a sense for when you might consider.
David Katz: Perhaps returning some cash to some more capital through repurchases or.
David Katz: Other kind of onetime events just a thought.
David Katz: Well I think that you will see us.
David Katz: Continue to be thoughtful about.
David Katz: <unk>.
David Katz: Repurchasing stock and continuing to pay our dividend David.
David Katz: We.
David Katz: We went into blackout on March 2014.
David Katz: That was about a week or so before liberation day, when the stock really started to underperform.
David Katz: I think it is.
David Katz: To say that if we were in a position to buy back additional shares.
David Katz: When when the.
The stock price really weakened.
David Katz: Then you would have seen us do that in the marketplace. So we.
David Katz: We're going to keep one eye on operations as we always do because we have a lot of priorities that are important to the long term growth of this business and into the long term value creation for our shareholders.
David Katz: So.
David Katz: I can't sit here definitively bleed today and give you a number about.
David Katz: Sure.
David Katz: How much we're going to deploy to buy back shares and.
David Katz: Whether or not we're going to be acquiring assets.
David Katz: Given the landscape that's out there today.
David Katz: And the fact that there just isn't a lot out there that's exciting so.
David Katz: I would just tell you, it's a wait and see approach, we'll be opportunistic and.
David Katz: Let's see how the year plays out.
David Katz: Okay. Thank you very much.
David Katz: Your next question comes from the line of Shaun Kelley with Bank of America. Please go ahead.
Shaun Kelley: Hi, good morning, everyone and thanks for taking my question.
Jim Rosolio: Jim I.
Speaker Change: Just wanted to go back to the.
Speaker Change: Consumer environment, a little bit you called out a couple of data points that are interesting, which where the.
Speaker Change: The bookings on those sort of peak weekends fourth of July Memorial day.
Speaker Change: Which actually sounds pretty encouraging.
Speaker Change: What are you seeing in sort of the off peak periods be at weekday weekend or just sort of particularly for some of the same that same portfolio are you seeing a question is are you seeing a high low dynamic where people are coming at those periods, but a little softer in the shoulders or is it consistent throughout just given your mix in the higher end consumer thanks.
Speaker Change: Hey, Sean.
Speaker Change: I would say so far it's still been pretty consistent there hasn't been a meaningful change in trend as we look at our weekday weekend and obviously that does differ from asset to asset and from market to market, but overall there is nothing meaningful that has really shown up.
Speaker Change: That we can sort of speak to and like we said.
Speaker Change: We still have a positive group booking pace, our total group revenue pace for the year is at three 3% and.
Speaker Change: And that group rate has held you might recall, we have set up the group rate effectively for the full year was at 4% we are effectively still there at three 8%.
Speaker Change: And then leisure as I mentioned earlier has been holding on pretty strong.
Speaker Change: No.
Speaker Change: Nothing dramatic on the BT front, yet volume was lower year over year on the BD front, but rate was higher and we are pretty much seeing the same thing as we look at April as well so nothing unique there.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Michael Bellisario with Baird. Please go ahead.
Michael Bellisario: Thanks, Good morning, guys.
Speaker Change: Jim a question for you on sort of margins and operations.
Speaker Change: Implemented broader cost cutting initiatives, yet are you, making any staffing staffing changes or kind of any preemptive cuts at this point.
Speaker Change: Managed margin for the remainder of the year.
Speaker Change: Well.
Speaker Change: In the past downturns.
Speaker Change: It had been very instructive and informative Mike I mean, we have that.
Speaker Change: Develop contingency plans property by property.
Speaker Change: Not on a portfolio wide basis, because each asset is different.
Speaker Change: And are they.
Speaker Change: The plans are ready to be.
Speaker Change: Implemented.
Speaker Change: If and when the need occurs.
At this point in time with with how the portfolio is performing I mean, we always have an eye on expenses always and I you know.
Speaker Change: I think Rob mentioned in his remarks that.
Speaker Change: We added 20 basis points operational improvement based on productivity and.
Speaker Change: And actions that we've taken at the property level, So if things.
Speaker Change: If things were to go south and we're not seeing that today I mean, we.
Speaker Change: We are not seeing it today I want to emphasize that very very clearly we are very comfortable with the guidance that we're maintaining for the balance of this year.
Speaker Change: But if things were to go South of course, we would be in a position to very quickly.
Speaker Change: Implement our contingency planning and.
Speaker Change: And cut expenses.
Speaker Change: As needed across the portfolio.
Speaker Change: Got it thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Chris Darling with Green Street. Please go ahead.
Chris Darling: Hey, Thanks, good morning.
Chris Darling: To what extent is your capex budget for the year at risk given the tariff situation and then how is the current backdrop impacted.
Chris Darling: Impacted your thinking around planned capital projects in future years, and is that really where we might see some risk.
Yes, Chris I think it's a little too early to tell.
Chris Darling: Exactly how tariff policy is going to play out.
Chris Darling: Sure.
Chris Darling: We are maintaining our capex guidance.
Chris Darling: As we've discussed today the same numbers that we gave you on the fourth quarter call in.
Chris Darling: In February.
Chris Darling: And we have a diverse group of suppliers.
Chris Darling: For our products.
Chris Darling: Obviously, the tariff risk is is greatest probably whenever you're doing a guest room given the <unk>.
Chris Darling: Thats involved and it becomes a less impactful.
Chris Darling: On other spaces in the hotel. So we have clearly developed off ramps for.
Chris Darling: As referring.
Chris Darling: Referring to Mike.
Chris Darling: Mike a question on contingency planning from an operational perspective, well you know to.
Chris Darling: To be prudent we've developed off ramps for our capital projects, if they need to present itself.
Chris Darling: Right.
Chris Darling: I don't I don't anticipate that happening.
Chris Darling: At this point in time.
Chris Darling: We're moving full steam ahead with our Hyatt transformational capital program, we've completed the.
Chris Darling: The Grand Hyatt in.
Chris Darling: In Buckhead.
Chris Darling: Already this year and.
Chris Darling: We will be completing the Hyatt Regency Capitol Hill, and the Hyatt Regency Austin this year as well.
Chris Darling: So and.
Chris Darling: To answer your question about 2026.
Chris Darling: A little too early to really start talking about budgeting and what we're thinking about on a capital.
Chris Darling: Basis for for next year, we will do that later in the summer, which is something that we've.
Chris Darling: On a historical basis.
Chris Darling: Understood. Thank you.
Speaker Change: Your next question comes from the line of Jay Kornreich with Wedbush Securities. Please go ahead.
Jay Kornreich: Alright. Thanks. Good morning, you commented on the current economic uncertainty leading to visit business transient revpar statistics to be flat for the year or at the rest of the duration of the year and group new bookings moderating. So I'm wondering if you can just drill a little bit further down to providing more details into those two legs of demand and then specifically on the group side.
Jay Kornreich: Are you seeing the moderation coming in more for the in the year for the year bookings or more as Youre looking out to 2026 bookings and beyond.
Jay Kornreich: So when we're looking at group it is really more in the year for the year. So we are speaking to lead volumes in the year for the year in the quarter for the core.
Jay Kornreich: For the quarter in the month for the month.
Jay Kornreich: The lead time is effectively shrinking in other words folks are certainly taking a pause and I would say specifically at government groups, which is not a surprise and associations.
Jay Kornreich: Thats why we are seeing.
Moderation of lead volumes, but it really is a 2025 phenomenon.
Jay Kornreich: We actually picked up about 470000 group room nights for 2026 through.
Jay Kornreich: 2028.
Jay Kornreich: And we are pacing 26 to 28 in the high single digits.
Jay Kornreich: So it is certainly not as much of an issue for future years, but more so what we are seeing.
Jay Kornreich: In the year for the year and in the month for the month as well.
Jay Kornreich: As it relates to business transient like I mentioned earlier Q1 volume was down year over year, we were down about 5% or so in terms of BT room night.
Jay Kornreich: Majority of that decline I would say a level of 50% was really driven by a government to government falls under our BT a room night, our rate was up six 5% for us in Q1.
Jay Kornreich: And even government rate actually was was up about 4% or so are we.
Jay Kornreich: We expect that the volume in our previous guidance, we had anticipated that you would continue to see the steady recovery.
Jay Kornreich: BT as we had seen last year right now we are assuming that's not going to be the case effectively the decline in volume we saw year over year will continue throughout the year and.
Jay Kornreich: And we will see a moderate year over year rate increase similar to what we saw in Q1, so effectively not much of a change in BT just given the macroeconomic uncertainty.
Jay Kornreich: Alright, thank you so much.
Speaker Change: Your next question comes from the line of Jack Armstrong with Wells Fargo. Please go ahead.
Hey, good morning, Thanks for taking the question.
Speaker Change: <unk> seen the administration's policies now that you had a few months to see them play out impact you in terms of supply and labor markets are you seeing incremental pressure on margins there and then on the Aero side, how have your expectations for tariffs shape your full year margin guidance.
Speaker Change: The first part of your question Jack was that regarding supply or was it a supply of labor.
Speaker Change: Yes labor supply.
Speaker Change: Labor supply.
Speaker Change: We were.
Speaker Change: We're fortunate that we have.
Speaker Change: The majority of our properties managed by Marriott and Hyatt.
Speaker Change: Two really.
Speaker Change: Solid employers.
Speaker Change: That.
Speaker Change: When people go to because they want to have hospitality as a career and we.
Speaker Change: We have not seen any pressure on our.
Speaker Change: On the labor front.
Speaker Change: And that's been consistent I mean, we were able to recover coming out of Covid pretty quickly.
Speaker Change: And re staff our hotels as needed so.
Speaker Change: No issue there whatsoever. So.
Speaker Change: There is there.
Speaker Change: There is no at this point in time.
Speaker Change: No indication that the tariffs.
Speaker Change: Tariffs are going to impact our margins at the hotel level.
Speaker Change: We.
Speaker Change: We've given you guidance on how we think margins are going to perform over the course of this year.
Speaker Change: Of course, if things change then then we will change accordingly, but as we sit here right now.
Speaker Change: Comfortable with.
The margin guidance that we provided.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Floris Van <unk> with Compass point. Please go ahead.
Speaker Change: Hey, Thanks for taking my question Jim.
Speaker Change: A question for you on the transaction market.
Speaker Change: Yeah.
Speaker Change: We've been hearing some signs that some buyers.
Speaker Change: Pulling out of transactions.
Speaker Change: Assets in the markets.
Speaker Change: What do you think is good.
Speaker Change: From a pricing expectation.
Speaker Change: Yes.
Speaker Change: I think I got your question Youre, breaking up a little bit over your line. It was about the transaction market.
Speaker Change: Youre hearing the buyers are pulling out of transactions.
Speaker Change: And would that have happened a long term basis.
Speaker Change: Okay. Yeah. So look I think I'd mentioned it earlier.
Speaker Change: It is a wait and see approach right now for the most part.
Speaker Change: In the marketplace.
Speaker Change: Sure.
Speaker Change: The MBS market had backed up it had closed down for a period of time.
Speaker Change: It's back now it's open.
Speaker Change: Yeah.
Speaker Change: So I would expect after we get a little more clarity on policy.
Speaker Change: That.
Speaker Change: And we can get through this period of uncertainty that.
Speaker Change: My expectation would be later in this year that we can see the transaction market continue to.
Speaker Change: Open up and some of the deals that had been out there.
Speaker Change: Yeah that are on pause right now.
Speaker Change: I think that they're likely to get done.
Speaker Change: <unk>.
Speaker Change: Certain.
Speaker Change: Buyers of assets that I'm aware of which I'm not at Liberty to speak about not our assets, but other assets in the marketplace.
Speaker Change: I just needed a little more time.
Speaker Change: It was really.
Speaker Change: Driven by the debt markets not necessarily by the equity markets. So I think pricing is going to depend on.
Speaker Change: The type of asset that you are looking at with luxury still commanding very high prices and upper.
Speaker Change: <unk> assets as well a commanding high prices one of it one of the really really positive factors that I don't think we talk about enough.
Speaker Change: That has happened in.
Speaker Change: The hotel space is very very low levels of new supply, we're just not seeing.
Speaker Change: Our levels of new supply certainly not in the luxury and upper up upper upscale space, which is where our exposure is and I think that will.
Speaker Change: So drive in part pricing for transactions because people are not going to have to worry about.
Speaker Change: Our new luxury resort being built right next to them or.
Speaker Change: Another upper upscale made.
Speaker Change: A major city Center hotel.
Speaker Change: Being built.
Speaker Change: As well so I think it's just it's a little too soon to say at this point in time.
Speaker Change: How this is all going to play out but.
Speaker Change: I think it's wait and see across the board.
Speaker Change: The good news is operations are still strong and.
Speaker Change: Hotels are cash flowing and you know.
Speaker Change: This is a.
Speaker Change: Yeah.
Speaker Change: A policy self made policy issue that is creating all the uncertainty and that can change very quickly that can change on a dime.
Speaker Change: So lets just sit back and see what happens in the run the business. The best we can going forward.
Speaker Change: Are you testing any assets in the market right now Jim.
Jim Rosolio: We always test assets for us of course, we would not be prudent if we werent testing assets. The good news is for host that we don't have to sell any assets I mean.
Speaker Change: Given the quality of the portfolio that we have and.
Jim Rosolio: The balance sheet that we have.
Jim Rosolio: We are under no stress no pressure to do anything.
Jim Rosolio: And if we don't get the pricing that we think is appropriate for our assets, we're not going to sell anything it's really that simple.
Jim Rosolio: So.
Jim Rosolio: We have nothing.
Jim Rosolio: Nothing of any meaningful.
Jim Rosolio: Guys out there.
Jim Rosolio: That we've listed with brokers that we've talked to some people.
Jim Rosolio: On an off market basis about buying assets from us and.
Jim Rosolio: So we're very respectful of that.
Jim Rosolio: It's difficult to navigate waters, when youre deploying new capital to date.
Jim Rosolio: So again wait and see we'll see how it plays out.
Tim: Thanks, Tim.
Speaker Change: We have time for one more question and that question comes from the line of Smedes Rose with Citigroup. Please go ahead.
Speaker Change: Hi, Thanks, I just wanted to ask you you spoke a lot about Maui, which was really helpful. But just in terms of what you're seeing in Oahu, specifically with the Ritz Carlton.
Speaker Change: Turtle buried.
Speaker Change: Is that performing relative to your expectations and any change in kind of your initial underwriting there given no more uncertainty in the market.
Speaker Change: No I think.
Speaker Change: Thank turtle Bay was up 13% in the quarter Smedes Revpar was up 13% at the hotel level.
Speaker Change: We have made a decision a strategic decision as you know.
Speaker Change: There are there are two golf courses there.
One is the fazio of course and the other was the palm of course and.
Speaker Change: You may recall from your visit to the island that there's.
Another party that is developing some residential and they have a there you'll have a lease on the Palmer course, and theyre going to renovate it and do a bunch of different things to it so.
Speaker Change: We made a decision that we were going to delay that.
Speaker Change: Transfer.
Speaker Change: And.
Speaker Change: The palm recourse and expedite the renovation departure of course, which we own.
Speaker Change: Today, while we had the opportunity to so it's about a six month delay.
The hotel itself is performing very well.
Speaker Change: Very happy with what we're seeing.
Speaker Change: In terms of Wahoo performance.
Speaker Change: Just like Maui for our assets so.
Speaker Change: Nothing nothing but positive news there and we're excited too.
Speaker Change: To get the positive of course.
Speaker Change: Redesigned and put the money that we anticipated we would have to put into it when we bought it done.
Speaker Change: Okay. Thank you.
Speaker Change: That will conclude our question and answer session and I will now turn the conference back over to Jim for closing comments.
Jim Rosolio: Well. Thank you all for joining US today, we really appreciate the opportunity to discuss our quarterly results with you.
Speaker Change: I look forward to seeing many of you at conferences in the coming months.
Jim Rosolio: And have a great summer and great rest of the year.
Jim Rosolio: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.