Host Hotels & Resorts, Inc. Reports Strong First Quarter 2022 Operating Results Surpassing 2019 Room Rates

Announces Doubling of Quarterly Dividend to $0.06 Per Share

Host Hotels & Resorts, Inc. (NASDAQ: HST), the nation’s largest lodging real estate investment trust, yesterday announced results for first quarter of 2022.

OPERATING RESULTS

(unaudited, in millions, except per share and hotel statistics)

* Additional detail on the Company’s results, including data for 22 domestic markets, is available in the First Quarter 2022 Supplemental Financial Information available on the Company’s website at www.hosthotels.com.

James F. Risoleo, President and Chief Executive Officer, said, “We ended the first quarter on a high note, as we continued to see strong operational improvements across our portfolio. RevPAR was $167 during the first quarter representing an 11% increase over the prior quarter, and the highest quarterly RevPAR we have seen in the recovery. We saw meaningful improvements within the quarter in transient and group business segments, driven by both demand and significant rate growth.”

Risoleo continued, “In addition, subsequent to quarter end, we sold two hotels, bringing our total dispositions to $1.4 billion since the beginning of 2021. These sales represent another important step in the transformation of our portfolio as we continue to elevate our EBITDA growth profile."

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^{(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and all owned hotel results (pro forma) are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). The pro forma all owned hotel results exclude the operations of hotels sold or held-for sale as of March 31, 2022. Held-for-sale properties at March 31, 2022 included the Sheraton New York Times Square Hotel and the YVE Hotel Miami. See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.}

^{(2) Presentation includes comparisons to 2019 operating results in order to allow investors to better understand the trajectory and timing of any recovery from the COVID-19 impacts on hotel operations.}

^{N/M = Not Meaningful}

HIGHLIGHTS:

Results for First Quarter 2022

• RevPAR continued to improve sequentially to $166.93 in the first quarter. Improvements were primarily driven by leisure travel, with strong rates at resort properties leading to average room rates of $305.63 for the quarter. At the same time, urban markets began to see improvement, with an increase in group revenues compared to the fourth quarter of 2021.
• Generated GAAP net income of $118 million in the first quarter, a decrease of $205 million from the fourth quarter of 2021, as the improvement of operations in the first quarter was offset by the gain on sale of assets in the fourth quarter of 2021.
• Achieved All Owned Hotel Pro Forma EBITDA of $330 million and Adjusted EBITDAre of $306 million, which, after interest expense of $36 million, exceeded the Company's capital expenditures of $122 million in the quarter by $148 million. The results benefited from continued positive quarterly sequential improvements in RevPAR and operations.
• Sold the Sheraton Boston Hotel for $233 million, including a $163 million bridge loan provided by the Company to the buyer, and recorded a gain on sale of approximately $12 million.
• Acquired a 49% ownership interest in a joint venture with Noble Investment Group, a leading private hospitality asset manager, for $35 million of cash and the issuance of approximately $56 million of Host L.P. OP units.
• Opened the brand-new 2.3-acre River Falls Water Park at the Orlando World Center Marriott and substantially completed the 60,000 square-foot meeting space expansion, with the project completed ahead of schedule and under budget.
• Repaid the remaining $683 million on the revolver portion of the Company's credit facility during the quarter.

Subsequent Events

• Sold the Sheraton New York Times Square Hotel for $373 million, which includes a $250 million bridge loan provided by the Company to the buyer, with an initial term of six months and three potential six-month extensions.
• Preliminary forecast RevPAR for April is expected to be between $225 and $230.

BALANCE SHEET

The Company maintains a robust balance sheet, with the following balances at March 31, 2022:

• Total assets of $11.8 billion.
• Debt balance of $4.2 billion, with an average maturity of 5.3 years, an average interest rate of 3.4%, and no significant maturities until 2024.
• Total available liquidity of approximately $1.9 billion, including furniture fixtures & equipment ("FF&E") escrow reserves of $163 million and $1.5 billion available under the revolver portion of the credit facility.

Sourav Ghosh, Executive Vice President, Chief Financial Officer, stated, “Our first quarter results are reflective of continued positive sequential improvements in RevPAR with average room rates exceeding the first quarter of 2019. We also announced a quarterly cash dividend of $0.06, a 100% increase over the prior quarter, as the trajectory of the lodging recovery has accelerated. We will continue to build on the strong momentum of the past few quarters as we look to improve the performance of our portfolio.”

DIVIDEND

The Company paid a first quarter cash dividend of $0.03 per share on its common stock on April 15, 2022 to stockholders of record on March 31, 2022. On May 4, 2022, the Board of Directors announced a regular quarterly cash dividend of $0.06 on its common stock. The dividend will be paid on July 15, 2022 to stockholders of record on June 30, 2022. All future dividends are subject to approval by the Company’s Board of Directors.

OPERATING RESULTS

The following presents the monthly pro forma hotel operating results for the full portfolio as of March 31, 2022 compared to 2021 and 2019 for the months presented⁽³⁾:

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^{(3) The AC Hotel Scottsdale North is a new development hotel that opened in January 2021 and The Laura Hotel in Houston re-opened under new management in November 2021. Therefore, no adjustments were made for results of these hotels for periods prior to their openings. Results exclude hotels that were classified as held-for-sale at March 31, 2022.}

First Quarter 2022 Hotel Operating Performance

• All Owned Hotel Pro Forma RevPAR improved 11% compared to the fourth quarter of 2021, with average room rates exceeding first quarter 2019 rates. While strong leisure demand for resorts and hotels located in the Company’s Sunbelt markets and Hawaii continued to drive the sequential improvement, the Company's downtown and non-resort hotels also saw improvement in the first quarter compared to fourth quarter of 2021.
• Food and beverage pro forma revenues improved approximately $32 million, or 12%, compared to the fourth quarter of 2021. Continued improvement in Banquet and Catering revenues benefited from higher contributions from group business on a per room night basis relative to 2019.
• Hiring pace continued to lag demand in the first quarter, primarily in markets where performance has returned to 2019 levels. The Company expects hotel operating costs to increase more in line with total revenues over time as hotels continue to increase staffing levels.

HOTEL BUSINESS MIX UPDATE

The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2019 room sales.

During the first quarter, demand continued to be primarily driven by leisure at drive-to and resort destinations. The following are the sequential results of the Company’s consolidated portfolio, excluding hotels held-for-sale at March 31, 2022 on a pro forma basis, for transient, group and contract business in comparison to 2019 performance:

CAPITAL ALLOCATION STRATEGY

As previously announced, the Company sold the Sheraton Boston for $233 million, including a $163 million bridge loan provided by the Company to the buyer. Additionally, the Company acquired a 49% ownership interest in a joint venture with Noble Investment Group, a private hospitality asset manager with a focus on upscale select-service and extended stay properties. The agreement provides for the opportunity to acquire interests in future funds and represents a new platform for potential growth.

Subsequent to quarter end, the Company sold the Sheraton New York Times Square Hotel for $373 million, including a $250 million bridge loan provided to the buyer, and YVE Hotel Miami for $50 million, including $1 million of FF&E funds.

CAPITAL EXPENDITURES

The following presents the Company’s capital expenditures spend for the first quarter and the forecast for full year 2022 (in millions):

The Company invested heavily in capital expenditures in the early phases of recovery in order to minimize future disruption and believes these renovations will position these hotels to capture additional revenue during the lodging recovery. The Company received $4 million of operating profit guarantees in the first quarter and expects to receive approximately $11 million in operating profit guarantees in 2022 under the Marriott Transformational Capital Program. The program is expected to be substantially complete by the end of 2022.

2022 OUTLOOK

Leisure demand is exceeding pre-pandemic levels in many markets, however the Company believes that a continued recovery within the lodging industry is highly dependent on the strength of the economy, consumer confidence and the return of corporate and group travel. Accordingly, the Company believes that the impact of the recovery on specific markets and industries will be uneven.

Given broader macroeconomic trends in 2022, the timing and trajectory of the expected recovery remains difficult to forecast. While the Company expects sequential RevPAR improvements relative to 2019, seasonality and changing market and business mix are expected to lead to lower RevPAR in the second half of the year compared to the second quarter. Although the Company cannot provide a full year forecast at this time, it anticipates that for the second quarter of 2022, as compared to the second quarter of 2021 and 2019, RevPAR will be in the following range:

Based upon the above parameters, the Company estimates its second quarter 2022 guidance as follows (in millions):

In addition, while not providing full year guidance on operations at this time, the Company estimates that for full year 2022, interest expense and corporate and other expenses will be in the following ranges (in millions):

See the Q2 2022 Forecast Schedule and the Notes to Financial Information for items that may affect forecast results.

ABOUT HOST HOTELS & RESORTS

Host Hotels & Resorts, Inc. is an S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The Company currently owns 73 properties in the United States and five properties internationally totaling approximately 42,300 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures. Guided by a disciplined approach to capital allocation and aggressive asset management, the Company partners with premium brands such as Marriott, Ritz-Carlton, Westin, Sheraton, W, St. Regis, The Luxury Collection, Hyatt, Fairmont, Hilton, Four Seasons, Swissôtel, ibis and Novotel, as well as independent brands.

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets

(unaudited, in millions, except shares and per share amounts)

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^{(1) Please see our First Quarter 2022 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.}

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Statements of Operations

(unaudited, in millions, except per share amounts)

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^{(1) Corporate and other expenses include the following items:}

HOST HOTELS & RESORTS, INC.

Earnings (Loss) per Common Share

(unaudited, in millions, except per share amounts)

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^{(1) Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by minority partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.}

HOST HOTELS & RESORTS, INC.

Hotel Operating Data for Consolidated Hotels ⁽¹⁾⁽²⁾

All Owned Hotels (pro forma) by Location Compared to 2021

All Owned Hotels (pro forma) by Location Compared to 2019

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^{(1) To facilitate a quarter-to-quarter comparison of our operations, we typically present certain operating statistics and operating results for the periods included in this presentation on a comparable hotel basis. However, due to the COVID-19 pandemic and its effects on operations there is little comparability between periods. For this reason, we temporarily are suspending our comparable hotel presentation and instead present hotel operating results for all consolidated hotels and, to facilitate comparisons between periods, we are presenting results on a pro forma basis including the following adjustments: (1) operating results are presented for all consolidated properties owned as of March 31, 2022 but do not include the results of operations for properties sold or held-for-sale as of the reporting date; and (2) operating results for acquisitions as of March 31, 2022 are reflected for full calendar years, 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. See the Notes to Financial Information – All Owned Hotel Pro Forma Operating Statistics and Results for further information on these pro forma statistics. The AC Hotel Scottsdale North is a new development hotel that opened in January 2021 and The Laura Hotel in Houston re-opened under new management in November 2021. Therefore, no adjustments were made for results of these hotels for periods prior to their openings. The Sheraton New York Times Square Hotel and YVE Hotel Miami were classified as held-for-sale at March 31, 2022, and are therefore excluded from these results. CBD of a location refers to the central business district.}

^{(2) Hotel RevPAR is calculated as room revenues divided by the available room nights. Hotel Total RevPAR is calculated by dividing the sum of rooms, food and beverage and other revenues by the available room nights.}

^{N/M = Not meaningful}

HOST HOTELS & RESORTS, INC.

Schedule of All Owned Hotel Pro Forma Results ⁽¹⁾

(unaudited, in millions, except hotel statistics)

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^{(1) See the Notes to Financial Information for a discussion of non-GAAP measures and the limitations on their use.}

^{(2) 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. Hotel margins are calculated using amounts presented in the above tables.}

^{(3) Pro forma adjustments represent the following items: (i) the elimination of results of operations of our hotels sold or held-for-sale as of March 31, 2022, 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 March 31, 2022. All Owned Hotel Pro Forma results also include the results of our leased office buildings and other non-hotel revenue and expense items.}

^{(4) The AC Hotel Scottsdale North is a new development hotel that opened in January 2021 and The Laura Hotel in Houston re-opened under new management in November 2021. Therefore, no adjustments were made for results of these hotels for periods prior to their openings.}

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income (Loss) to

EBITDA, EBITDAre and Adjusted EBITDAre ⁽¹⁾

(unaudited, in millions)

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^{(1) See the Notes to Financial Information for discussion of non-GAAP measures.}

^{(2) Reflects the sale of one hotel in 2022.}

^{(3) 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.}

HOST HOTELS & RESORTS, INC.

Reconciliation of Diluted Earnings (Loss) per Common Share to

NAREIT and Adjusted Funds From Operations per Diluted Share ⁽¹⁾

(unaudited, in millions, except per share amounts)

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^{(1-3) Refer to corresponding footnote on the Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre.}

^{(4) Diluted earnings (loss) 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 partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP units. No effect is shown for securities if they are anti-dilutive.}

HOST HOTELS & RESORTS, INC.

Reconciliation of Net Income to

EBITDA, EBITDAre and Adjusted EBITDAre for Q2 2022 Forecasts ⁽¹⁾

(unaudited, in millions)

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^{(1) Forecasts are based on the assumption that all owned hotel (pro forma) RevPAR will increase 76% to 85% compared to second quarter 2021 for the low and high end of the forecast range and there will be no additional hotel acquisitions or dispositions in the second quarter. For a discussion of items that may affect forecast results, see the Notes to Financial Information.}