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CEO Suggests Host ‘Only Player’ That Can Make a Big-Ticket, All-Cash Acquisition

Host Hotels & Resorts plans to reopen the Ritz-Carlton Naples in phases beginning this summer. (CoStar)


Regardless of not getting any speedy acquisitions in the will work, Host Inns & Resorts is organized to pounce after sellers’ selling prices appear down a minor bit a lot more.

In November, Host acquired the 125-area 4 Seasons Resort & Residences in Jackson Hole, Wyoming, in an all-funds transaction for $315 million. Asked about the hotel actual estate expense trust’s hunger for additional acquisitions this year, President and CEO Jim Risoleo reported the Bethesda, Maryland-centered organization is patiently awaiting improved ailments in the transactions market place.

“There are a range of homes in the sector right now that we are evaluating. I would just say that the bid-check with spread hasn’t appear to the center yet,” Risoleo mentioned Thursday throughout an earnings meeting connect with. “For the around time period … I’m conversing about the subsequent 60 to 90 days … [we’re] not anticipating attaining any assets, but that could alter.”

If the right asset arrives to current market, Host is ready to shift quickly, Risoleo explained.

“I will just level out that the Four Seasons Jackson Hole [acquisition] was about a 30-working day system for us, which puts us in in a genuinely powerful posture for the reason that we are the only participant out there that can can really do a significant transaction all-cash,” he said.

Host executives are also mindful of the opportunities to obtain distressed lodge property during the 12 months, Risoleo mentioned, noting he anticipates several business mortgage loan-backed securities financial loans will mature this yr and future calendar year.

“We will see if certain homeowners are in a situation wherever they are likely to have to provide the asset, just supplied the recent fascination amount atmosphere relative to wherever the ecosystem was when they place their present credit card debt financing in place, and the actuality that their asset is probable to require substantial [capital expenditure spending] for the reason that they haven’t been able to make investments in excess of the system of the pandemic,” he reported. “And I think you can see us as the calendar year evolves — assuming distress offers itself — investing across marketplaces that are distinct than markets that we invested in 2021 and 2022.”


Host is however sensation the impression of Hurricane Ian, which devastated Florida’s west coastline at the finish of September. The storm considerably destroyed two of Host’s resorts in the spot: the Hyatt Regency Coconut Level Resort and Spa in Bonita Springs, Florida and The Ritz-Carlton, Naples in Naples, Florida.

The Hyatt Regency Coconut Position partially reopened on Nov. 7, but the remaining renovation function on its pool amenities just isn’t scheduled to be done right up until June. The Ritz-Carlton, Naples, in the meantime, is nonetheless closed, but Host hopes to start off a phased reopening this summertime.

“Reconstruction at The Ritz-Carlton will greatly enhance the resilience of the property by elevating essential machines, introducing dry flood-proofing actions and replacing big devices with far more productive machinery,” Risoleo mentioned. “In addition, though the hotel is closed, we are preventing potential disruption by executing prepared cash projects that would have normally impacted functions.”

Host’s preliminary estimates show the full property harm and remediation charges from Hurricane Ian across all of the REIT’s Florida houses range involving $200 million and $220 million, Risoleo claimed. Host is insured for $325 million for each named windstorm with a $15 million deductible, resulting in about $310 million the company ought to recoup by way of insurance coverage.

“Based on our present reopening designs for The Ritz-Carlton Naples, we believe that our coverage protection is enough to deal with considerably all the property destruction as well as a close to-term loss of business enterprise,” Risoleo explained. “Hence considerably this 12 months, we have obtained somewhere around $50 million of insurance proceeds relevant to our promises.”

Irrespective of the insurance policy payments encouraging in the short phrase, Hurricane Ian cost Host $39 million in revenue in 2022, such as $33 million in the fourth quarter. In 2023, Host is anticipating about a $71 million hole in earnings just before curiosity, taxes, depreciation and amortization from these homes weakened by the storm, but Risoleo stated that gap should be limited to this year.

“I do want to position out that $71 million is a significant total of EBITDA that is heading to effect 1 yr. It is just this 12 months, since we’re pretty fired up about the functionality of The Ritz-Carlton for complete-12 months 2024,” he reported. “The assets will be fully reworked and a new tower will be open. We have included 24 rooms and materially elevated the suite rely of that asset and made a number of other enhancements.”


In 2022, Host’s portfolio bought 3.8 million group space nights, which Risoleo claimed represents about 84% of team room evenings offered pre-pandemic in 2019. Overall team profits in 2022 was just 11% at the rear of 2019.

An encouraging signal for 2023 is Host’s hotels previously have 2.9 million definite team space evenings on the books, which puts team demand from customers at about 80% of what Host’s portfolio accomplished in 2022.

“We are really encouraged by the big group foundation we have on the publications, specifically provided shorter-time period booking developments,” Risoleo mentioned.

Questioned if chopping rates to chase occupancy would yield more profits, Risoleo explained that earnings approach is not being thought of.

“It really is quick to purchase occupancy in specified marketplaces at specified hotels,” he reported. “We will not imagine that’s the proper income administration tactic. … We keep on to see occupancy evolve, but we’re likely to carry on to maintain level at superior ranges and carry on to boost fees. We are encouraged in unique by the team fee that we’ve been capable to realize that is locked in with definite [group room nights] on the books.”


In the course of the fourth quarter, Host Motels & Resorts reported profits of $1.3 billion, up 26.6% over the fourth quarter of 2021, but down 5.3% from the fourth quarter of 2019, according to its earnings launch. For the total year, Host’s profits attained $4.9 billion, which was a 69.8% improvement in excess of 2021 but 10.3% driving 2019.

Host’s complete-yr internet money was $643 million, and modified EBITDA for serious estate was $1.5 billion.

The company’s portfolio obtained fourth-quarter RevPAR of $196.82, which was up .6% from the same quarter in 2019. Regular everyday level was $299.58, which was 15.6% higher than the fourth quarter of 2019. Resort occupancy was 65.7%, down 13% from the exact same quarter in 2019. For the total yr, Host’s RevPAR was $196.33, up 63.2% from 2021 but down 2.8% from 2019.

As of press time, Host’s inventory was trading at $17.40 per share, up 8.38% yr to day. The Nasdaq Composite Index was up 13.87% for the similar interval.

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