Host Hotels & Resorts, Inc. Reports Results for 2022

RevPAR Exceeds 2019 for Third Consecutive Quarter; Full Year Performance Finishes at High End of Q3 Guidance

Host Hotels & Resorts, Inc. (NASDAQ: HST), the US’s largest lodging real estate investment trust, announced results for fourth quarter and full year 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 and top 40 hotels by Total RevPAR, is available in the Fourth Quarter 2022 Supplemental Financial Information on the Company’s website at www.hosthotels.com.}

^{(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and All Owned Hotel revenues are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission (“SEC”). 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. Additionally, All Owned Hotel results and statistics include adjustments for dispositions and acquisitions. See Hotel Operating Data for RevPAR results of the portfolio based on the Company's ownership period, without these adjustments.}

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

^{N/M = Not Meaningful}

James F. Risoleo, President and Chief Executive Officer, said, “We ended 2022 with strong operating improvements, driven by continued rate strength across our portfolio. In the fourth quarter, our RevPAR was $197, representing a 0.6% increase over the fourth quarter of 2019. Our results this quarter were driven by rate increases of 15.6% compared to the same period in 2019, despite the macroeconomic uncertainty.”

Risoleo continued, “Over the course of the year, we continued to successfully allocate capital through acquisitions, dispositions, and reinvestment in our portfolio. We made additional progress on our three key strategic objectives, which include redefining the operating model, gaining market share through comprehensive renovations, and strategically allocating capital to development ROI projects. We reinstated and twice increased our quarterly dividend, bringing the total dividends declared for the year to $0.53 per share. Subsequent to year end, we amended and restated our existing $2.5 billion credit facility to further enhance the strength and flexibility of our balance sheet. We are optimistic about the future of travel, and believe we are very well positioned to continue to improve the quality and EBITDA growth profile of our portfolio.”

2022 HIGHLIGHTS:

• All Owned Hotel Total RevPAR was $320.39 and All Owned Hotel RevPAR was $196.33 for full year 2022, with each of the second, third and fourth quarters exceeding 2019 results in the respective quarters. Average room rates for full year 2022 exceeded 2019 by 15.3%.
• Achieved GAAP operating profit margin of 15.8% for full year 2022, an improvement of 120 basis points compared to 2019 and All Owned Hotel EBITDA margin of 31.8% for 2022 exceeded the 2019 margin by 220 basis points.
• Acquired the 125-room Four Seasons Resort and Residences Jackson Hole for $315 million in the fourth quarter. The luxury ski resort in Jackson Hole, Wyoming also features an additional 44 private residences, the owners of which may participate in a rental program through the resort.
• Acquired a 49% non-controlling 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. operating partnership units.
• Disposed of four hotels for $672 million, and issued bridge loans to buyers totaling $413 million, further reducing the Company's future capital expenditure needs with regards to those properties.
• Completed projects at four properties under the Marriott Transformational Capital Program, bringing the total completed to 14 of the 16 properties in the program. Also opened the brand-new 2.3-acre River Falls Water Park and the 60,000 square-foot meeting space expansion at the Orlando World Center Marriott, with the projects completed ahead of schedule and under budget.
• Repaid the $683 million outstanding on the revolver portion of the Company's credit facility.
• Reinstated and twice increased the quarterly dividend, resulting in total dividends declared in 2022 of $0.53 per common share, including a $0.20 per share special dividend.
• Introduced the Company's 2050 vision of becoming a net positive company, in conjunction with the issuance of its 2022 Corporate Responsibility Report.

Results for Fourth Quarter 2022

• All Owned Hotel Total RevPAR was $325.88 and All Owned Hotel RevPAR was $196.82 in the fourth quarter, a 0.1% and 0.6% increase, respectively, over the fourth quarter of 2019. Average room rates were 15.6% above fourth quarter 2019, driven by continued strong leisure demand, while also benefiting from growth in urban markets. Fourth quarter and full year operations were affected by Hurricane Ian and the resulting closure of two properties, as discussed in detail below.
• Generated GAAP net income of $149 million in the fourth quarter and GAAP operating profit margin of 14.0%, an improvement of 160 basis points compared to the fourth quarter of 2019.
• Achieved All Owned Hotel EBITDA of $373 million and Adjusted EBITDAre of $364 million, both of which exceeded 2019 fourth quarter results.
• The strong improvement in rate but more normalized staffing levels led to All Owned Hotel EBITDA margin of 29.5% for the fourth quarter, exceeding the fourth quarter 2019 margin by 110 basis points. Food and beverage results benefited from continued strong contributions from group business to Banquet and Catering revenues.

Subsequent Events

• On January 4, 2023, the Company amended and restated its $2.5 billion credit facility, extending the maturities and maintaining similar terms to the prior agreement. The amended facility reflects no increase in pricing and bears interest pursuant to a credit ratings-based grid ranging from 0.725% to 1.600% over the applicable adjusted term SOFR and adds pricing incentives linked to portfolio sustainability initiatives.
• January Comparable hotel RevPAR is estimated to be $184.

HURRICANE IAN UPDATE

As previously discussed, Hurricane Ian caused significant damage at The Ritz-Carlton, Naples and Hyatt Regency Coconut Point Resort and Spa. The Hyatt Regency Coconut Point remained open to first responders and reopened to guests on November 7, 2022, as part of a phased reopening. The pool facilities reopening is currently in progress and targeted for completion by June 2023. The Ritz-Carlton, Naples remains closed, and the Company is targeting a phased reopening strategy beginning in summer 2023. The Company is still evaluating the complete property and business interruption impacts of the storm, but currently estimates the total property damage and remediation costs resulting from the storm to be approximately $200 million to $220 million, across all of the affected Florida properties. The Company is insured for $325 million per named windstorm, with a $15 million deductible, resulting in potential insurance recovery of approximately $310 million for covered costs. Provided planned reopening dates can be maintained, the Company believes this coverage should be sufficient to cover substantially all of the property remediation and reconstruction costs and the near-term loss of business. However, it is possible that the insurance coverage may not be sufficient to cover the entirety of the business interruption caused by the storm. As of February 15, 2023, the Company has received approximately $50 million of insurance proceeds related to these claims.

The Company estimates that Hurricane Ian negatively impacted its full year revenues by approximately $39 million, of which $33 million was in the fourth quarter, All Owned Hotel RevPAR by 60 basis points, with a 220 basis points impact in the fourth quarter, and net income and Adjusted EBITDAre by $18 million, of which $15 million was in the fourth quarter. The impact also reduced full year operating profit margin under GAAP by an estimated 20 basis points, with an 80 basis points impact in the fourth quarter, and All Owned Hotel EBITDA margin by 10 basis points, with a 40 basis points impact in the fourth quarter.

BALANCE SHEET

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

• Total assets of $12.3 billion.
• Debt balance of $4.2 billion, with an average maturity of 5.2 years, an average interest rate of 4.4%, and no significant maturities until April 2024, after taking into account the amended credit facility agreement completed January 4, 2023.
• Total available liquidity of approximately $2.4 billion, including furniture, fixtures and equipment escrow reserves of $200 million and $1.5 billion available under the revolver portion of the credit facility.

SHARE REPURCHASE PROGRAM AND DIVIDENDS

During the fourth quarter, the Company repurchased 1.7 million shares at an average price of $15.93 per share through its common share repurchase program for a total of $27 million. The Company has approximately $973 million of remaining capacity under the repurchase program, wherein the common stock may be purchased from time to time, depending upon market conditions.

The Company paid a fourth quarter cash dividend of $0.32 per share on its common stock on January 17, 2023 to stockholders of record on December 30, 2022, which included a $0.20 per share special dividend. On February 15, 2023, the Company announced a regular quarterly cash dividend of $0.12 per share on its common stock. The dividend will be paid on April 17, 2023 to stockholders of record on March 31, 2023. All future dividends, including any special dividends, are subject to approval by the Company’s Board of Directors.

HOTEL BUSINESS MIX UPDATE

The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 65%, 32%, and 3% respectively, of its 2022 room sales, similar to the mix in 2019.

Leisure demand continued to contribute to improvements in the fourth quarter compared to 2019, while group maintained strong rate increases compared to the fourth quarter of 2019. The following are the results for transient, group and contract business in comparison to 2019 performance, for the Company's current portfolio:

Capital Expenditures

The following presents the Company’s capital expenditures spend for 2022 and the forecast for 2023 (in millions):

The Company invested heavily in capital expenditures in the early phases of the recovery in order to minimize future disruption and believes these renovations will continue to position these hotels to capture additional revenue. The Company received $2 million of operating profit guarantees in the fourth quarter and $10 million for full year 2022 under the Marriott Transformational Capital Program. The Company expects to receive $2 million of operating guarantees in the first half of 2023. The projects at the final two properties, Marriott Marquis San Diego Marina and Washington Marriott at Metro Center, are expected to complete in the first half of 2023. Additionally, the 2023 forecast for capital expenditures includes $100 million to $125 million for hurricane restoration work.

2023 OUTLOOK

Current macroeconomic headwinds and concerns surrounding the potential for an economic slowdown are competing with a lodging recovery. Further improvement in operations will be dependent on the ability to maintain high-rated business in resort markets, as well as the continued improvement of group, business transient and international inbound travel. There is significant uncertainty related to broader macroeconomic trends in the second half of 2023, which is reflected in the wider range included in the guidance provided below.

The full year forecast is bolstered by first quarter RevPAR growth which is anticipated to be between 24% and 27%, as a result of benefiting from easier comparisons due to the impact of the Omicron variant on first quarter 2022 operations. For the remaining three quarters, the Company expects year-over-year RevPAR percentage changes to be:

• Down low-single digits at the low end of the guidance range; to
• Up low-single digits at the high end of the range.

Additionally, margins are expected to decline in comparison to 2022 driven by wage inflation, closer to stable staffing levels, higher insurance and utility expenses, lower attrition and cancelation fees, and occupancy below 2019 levels.

For periods starting on or after January 1, 2023, the Company will cease presentation of All Owned Hotel results and return to a comparable hotel presentation for its hotel level results. Please see Notes to Financial Information for a full description of how the comparable hotel set is determined. Management believes this will provide investors with a better understanding of underlying growth trends for the Company’s current portfolio, without impact from properties that experienced closures lasting one month or longer due to renovations or property damage sustained. The Company has removed Hyatt Regency Coconut Point Resort and Spa and The Ritz-Carlton, Naples from its comparable operations in its full year 2023 forecast due to closures caused by Hurricane Ian.

As a result, the Company anticipates its 2023 operating results as compared to 2022 will be in the following range:

Based upon the above parameters, the Company estimates its 2023 guidance as follows:

See the 2023 Forecast Schedules 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 42,200 rooms. The Company also holds non-controlling interests in seven domestic and one international joint ventures.

HOST HOTELS & RESORTS, INC.

Condensed Consolidated Balance Sheets

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

^{(1) Please see our Fourth 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)

^{(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)

^{(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.}