Host Hotels & Resorts, Inc. (NASDAQ: HST) yesterday announced that it has acquired the fee simple interest in the Four Seasons Resort and Residences Jackson Hole, a 125-room luxury resort in Jackson Hole, Wyoming, for approximately $315 million in cash. The acquisition price represents a 13.6x EBITDA multiple or a cap rate of approximately 6.6% on the Resort’s 2022 estimated results.
The Resort is expected to be one of Host’s top three assets based on estimated full year 2022 results, with RevPAR of $855, TRevPAR of $1,430, and EBITDA per key2 of $185,000, further improving the quality of the Company’s portfolio.
The Resort is one of only a handful of luxury ski in / ski out resorts in the United States. It sits on 6.3 acres in Teton Village, just steps from the gondola at the base of the Jackson Hole Mountain Resort, one of the top-rated ski destinations in the country. The Resort is near downtown Jackson, in close proximity to Grand Teton and Yellowstone National Parks, a unique feature, making it a year-round destination where future supply is expected to be severely restricted. The Resort, which opened in 2003, underwent a comprehensive guestroom renovation in 2022 and no disruptive capital expenditures are expected in the near term. In addition, the Jackson Hole Airport is undergoing a $65 million renovation and expansion, which is scheduled to complete in 2022, to better accommodate year-round demand, shrinking shoulder seasons, and increasing visitor growth.
The Resort has 125 oversized rooms and suites that average approximately 650 square feet with gas fireplaces, balconies, and dramatic views of the surrounding mountains and valleys. It includes a 5-bedroom, 4,700 square foot penthouse, and offers nearly 9,000 square feet of indoor meeting space, three upscale food and beverage outlets plus a pool café, two retail outlets and a 16-treatment room alpine spa. In addition, the Resort offers an on-site ski concierge, a private ski club, a kids club, and a fitness center. It also features an additional 44 private residences, which are not owned by Host, ranging in size from 1,700 to 3,700 square feet. Of the 44 residences, 30 currently participate in a rental program through the resort.
James F. Risoleo, President and Chief Executive Officer, said, “We are thrilled to add the Four Seasons Resort and Residences Jackson Hole to our portfolio. It is an iconic, irreplaceable asset in a new market for Host, and one of only a handful of luxury ski resorts in the country. From 2014 through 2019 the Resort had a RevPAR CAGR of 5.8%, significantly outperforming the broader ultra-luxury set, which had a RevPAR CAGR of 4.3% over the same time period. With year-round demand generators, no new supply on the horizon and a recent comprehensive guestroom renovation, we believe the Resort is well positioned to continue outperforming over the long term, driving value for our portfolio and our shareholders.”
Host noted it believes the Resort’s 2022 performance is muted, as a result of the guest room renovation during the first half of the year, as well as Jackson Hole Airport being closed for approximately three months during the year. By growing year-round occupancy to historical levels and repositioning the food and beverage outlets and public spaces, the Company expects the Resort to stabilize at approximately 11-13x EBITDA3 in the 2026-2028 timeframe.
1 Consistent with industry practice, Host calculates the EBITDA multiple as the ratio of the purchase price to the property’s EBITDA and the capitalization rate as the ratio of property’s net operating income to its purchase price. EBITDA and net operating income are non-GAAP measures. The comparable GAAP metric to EBITDA multiple is the ratio of the purchase price to net income. The ratio of the purchase price to 2022 net income is 22x based on expected net income of $14 million. 2022 forecast net income per key is $112,000; per key measures do not include the number of rental pool residences in the number of keys. The comparable GAAP metric to capitalization rate utilizing 2022 estimated net income is the ratio of net income to the purchase price, which is 4.5%. The difference between estimated 2022 net income and EBITDA is depreciation expense of $9 million. The difference between EBITDA and net operating income is $2 million for the annual contractual reserve requirements for renewal and replacement expenditures for 2022.
2 RevPAR and TRevPAR reflect 125 hotel rooms plus the number of private residences participating in the resort rental program, which can fluctuate over time. EBITDA/key is based on 125 owned keys.
3 The ratio of the purchase price to stabilized net income is 20x based on forecast stabilized net income of $16 million The difference between stabilized net income and EBITDA is depreciation expense of $9 million. Stabilized results are illustrative only. Our ability to achieve the 2026-2028 stabilized results is subject to various uncertainties and actual results may be materially different.
