Host Hotels & Resorts Stock

Welcome to the Host Hotels & Resorts Second Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Jaime Marcus, Senior Vice President of Investor Relations.

Thank you, and good morning, everyone. Before we begin, today's call will include forward-looking statements within the meaning of federal securities laws. As described in our filings with the SEC, these statements are subject to risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. On today's call, we will also discuss certain non-GAAP financial information such as FFO, adjusted EBITDAre, and comparable hotel level results.

For reconciliations to the most directly comparable GAAP information, please see yesterday's earnings press release, our 8-K filed with the SEC, and the supplemental financial information on our website at hosthotels.com. The operational results discussed today refer to our 74-hotel comparable hotel portfolio in 2026, which excludes The Don CeSar and Sheraton Parsippany, which we sold in June. With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer. With that, I would like to turn the call over to Jim.

Thank you, Jaime, and thanks to everyone for joining us this morning. We delivered a strong second quarter, building on the momentum of the first quarter and again exceeding our expectations. We delivered adjusted EBITDAre of $525 million, an increase of 5.8% over last year and adjusted FFO per share of $0.63, an increase of 8.6% over last year. Comparable hotel RevPAR improved 7% compared to the second quarter of 2025 and comparable hotel total RevPAR improved 5.9% driven by rate growth and higher food and beverage revenue.

Comparable hotel EBITDA margin improved by 60 basis points year-over-year to 31.9%, driven by rate growth alongside lower fixed expenses. RevPAR growth in the second quarter came in significantly better than our expectations with broad-based strength across markets and business mix. Growth was driven by sustained luxury resort demand, elevated rates associated with the World Cup, and strong group performance.

Looking at World Cup performance, we estimate that the event contributed approximately 160 basis points of RevPAR growth in the second quarter. For June alone, RevPAR in our World Cup markets grew 15% compared to 12% in non-World Cup markets. For the full year, we expect the World Cup to contribute approximately 70 basis points of gross RevPAR growth, a 10 basis point increase over our initial expectation.

Turning to business mix. Transient revenue was up 7%, marking the strongest growth in the past 7 quarters, driven by higher rates as demand remained relatively stable. Rate growth was supported by major events, citywide compression and continued leisure strength at our luxury resorts. Growth was led by Maui, New York, and San Francisco, with improvements in key business transient markets also providing a tailwind to performance.

Briefly touching on Maui. RevPAR grew 14% and total RevPAR grew 11%, reflecting strong demand growth. In fact, occupancy grew more than 8 percentage points in the quarter as the market's recovery continues. We continue to expect our Maui properties to contribute approximately $120 million of EBITDA in 2026. Business transient revenue grew 4%, driven by strong rate growth, and we were encouraged to see an increase in business transient room nights in several key markets from a variety of industries.

Group room revenue for the quarter was up 7% year-over-year, driven fairly evenly by room night and rate growth. Our properties sold 1.1 million group room nights in the second quarter and definite group room nights on the books for 2026 now stand at 3.8 million, with total group revenue pace up more than 5% to the same time last year.

Turning to ancillary spending. Food and beverage revenue grew 6% and other revenue was approximately flat as growth in on-property spending was offset by a decrease in attrition and cancellation revenue compared to last year's tough comparisons. The broad-based growth across food and beverage departments, golf and spa demonstrates the continued strength of the affluent consumer as well as the benefits of the strategic investments we have made in many of our properties over the last several years.

Turning to capital allocation. In June, we completed the sale of the Sheraton Parsippany for approximately $12 million. This disposition reflects our strategy of selling lower growth assets with near-term elevated capital expenditure requirements. In July, we paid a quarterly common dividend of $0.20 per share and a special dividend of $0.72 per share. The special dividend represented the distribution of the approximately $500 million taxable gain from the sale of the 2 Four Seasons Resorts in the first quarter of this year.

This is a great example of our commitment to disciplined and opportunistic capital allocation. By returning capital to shareholders through regular quarterly and special dividends, we are enhancing long-term value for our investors.

Turning to portfolio reinvestment. During the second quarter, we continued the execution of the Hyatt Transformational Capital Program, which is nearly 90% complete and on track for completion by the end of 2026. Transformational renovations are now finished at 5 of 6 hotels in the program, including the Grand Hyatt Atlanta in Buckhead, the Hyatt Regency Capitol Hill, the Hyatt Regency Austin, the Hyatt Regency Reston, and the Grand Hyatt Washington, D.C. The Manchester Grand Hyatt San Diego, the final asset in the program, was phased to mitigate business interruption and is expected to be substantially complete by the end of this year.

We also made progress on the second Marriott Transformational Capital Program, which is approximately 37% complete and is tracking on time and under budget. Guestroom renovations at the New Orleans Marriott are nearing completion. Renovations at the Ritz-Carlton Naples, Tiburon, and Westin Kierland are in progress, and the Ritz-Carlton, Marina del Rey is scheduled to start renovations later this month.

In the second quarter, we received $5 million of operating guarantees related to our transformational capital programs. As a reminder, we expect to benefit from approximately $19 million of operating profit guarantees in 2026 related to our 2 transformational capital programs, which we expect will offset most of the EBITDA disruption at those properties.

Looking at other ROI projects. We completed the final phase of the Four Seasons branded condo development at the Walt Disney World Resort during the second quarter on time and within budget. To date, we have closed on 28 of the 40 units, including 20 of 31 mid-rise units and 8 of 9 villas. As a result of the expected timing of the remaining closings, we now anticipate 2026 EBITDA of $16 million to $20 million compared to our prior expectation of $20 million to $25 million, with the difference expected to be recognized in 2027.

For 2026, our capital expenditure guidance range is approximately $550 million to $630 million. This includes approximately $250 million to $285 million of reinvestment focused on redevelopment, repositioning and ROI projects as well as $25 million to $30 million of property damage reconstruction associated with the Kona Low rainstorm in Hawaii. We also anticipate remediation costs of approximately $2 million, and we expect insurance coverage to substantially cover the losses in excess of our deductible.

In addition to our capital expenditure investment, we spent approximately $17 million to close out the condo development at the Four Seasons Orlando. Our continued reinvestment across the portfolio remains a key differentiator and is an important driver of Host's sustained outperformance. Once the second Marriott Transformational Capital Program is completed in 2029, we will have reinvested approximately $2.1 billion into comprehensive renovations across 34 hotels, which are expected to contribute approximately 60% of our hotel EBITDA in 2026. We have stabilized post-renovation performance at 21 of these properties, where we have seen an average stabilized RevPAR index share gain of nearly 9 points.

These results underscore how our disciplined capital allocation strategy over the past several years is translating into meaningful value creation for our shareholders. Earlier this week, we released our 2026 Corporate Responsibility report, which outlines our CR strategy and performance, highlighting continued progress across environmental stewardship, social impact and governance in support of our long-term responsible investment strategy and 2050 net positive vision.

We are proud to again be recognized for our Corporate Responsibility leadership, including Nareit's 2026 Leader in the Light Award for operations for large-cap REITs, inclusion in the 2026 Dow Jones Best-in-Class World and North American indices, revalidation of our emissions reduction target by the Science Based Targets initiative, and an Advanced Net Zero Assessment rating from Moody's. The CR report can be found on the Corporate Responsibility section of our website at hosthotels.com.

Turning to our full year outlook. We continue to expect strong leisure demand, modest improvements to short-term group booking trends, and stable business transient demand. As a result of our second quarter outperformance and improved outlook for the second half of the year, we are raising our 2026 comparable hotel total RevPAR and RevPAR growth guidance ranges to 4.75% to 5.25% over 2025. It is important to note that our RevPAR and total RevPAR growth guidance ranges are now in line. This reflects the outsized rate growth we achieved in the first half of the year and our expectation that rate growth will normalize in the second half of the year.

Looking ahead, we are optimistic about the travel environment, which is supported by resilient demand trends and a continued preference among high-end consumers for experiential travel. Industry fundamentals in the second quarter reflected strong RevPAR growth driven by sustained rate strength, while new supply across our markets and chain scales remains near historic lows. Against this favorable backdrop, Host's investment-grade balance sheet gives us the flexibility to continue reinvesting in our portfolio, pursue opportunistic acquisitions and dispositions, and return capital to shareholders in the form of dividends and share repurchases. As our results over the past several years have shown, Host's competitive advantages uniquely position the company to continue capturing additional upside in the current environment and over the long term. With that, I will now turn the call over to Sourav.

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our second quarter operations, our financial results, our updated 2026 guidance, and our balance sheet. Starting with total revenue trends, RevPAR growth outpaced total RevPAR as outsized rates driven by special events boosted rooms growth beyond ancillary revenue growth. Comparable hotel food and beverage revenue for the quarter grew 6%, led by widespread improvements in banquet and catering revenues. Banquet and catering revenue increased 7%, driven by increases in both group room night volume and contribution per group room night.

Approximately half of the growth in the second quarter came from our large convention hotels led by Washington, D.C., where a 45% increase in banquet and catering revenue reflected a 20% increase in banquet and catering contribution per group room night from our newly renovated Hyatt properties. Outlet revenue increased 4%, driven by growth across resorts, the ongoing ramp of The View at the New York Marriott Marquis, and our newly renovated Hyatt properties. Maui led outlet growth in the quarter with a 14% increase driven by substantial occupancy increases at the Andaz Maui and Hyatt Regency Maui.

Other revenues were flat in the quarter as a decrease in attrition and cancellation revenue from last year's tough comparisons offset strength in golf and spa growth. Spa revenue was up 4%, driven by increased capture at our resorts. Notably, spa capture at the Ritz-Carlton Naples, Ritz-Carlton Amelia Island, Andaz Maui, and Hyatt Regency Coconut Point was up double digits compared to last year. Golf revenue grew 9%, driven by our courses in Maui and Naples.

Further underscoring Maui's robust recovery, golf revenue in the second quarter was 9% ahead of pre-fire levels. These increases reflect continued demand from premium leisure travelers as guests prioritize spending on wellness and experiential offerings.

Shifting to rooms revenues. Overall transient revenue was up 7% compared to the second quarter of 2025, driven by special events, city-wide compression, and continued leisure strength at our resorts. Resort RevPAR grew 9% in the quarter with Maui accounting for nearly 40% of the growth. Other standout resorts include the 1 Hotel South Beach, which benefited from the F1 Grand Prix, and our Florida Golf resorts, which benefited from an extended spring break. These results continue to underscore the strength of high-end demand. As Jim mentioned, the World Cup contributed approximately 160 basis points to RevPAR growth in the second quarter.

Overall, RevPAR growth in our World Cup markets outperformed our other markets for the month of June. We also saw strength in non-World Cup markets, which benefited from travelers avoiding congestion and pricing in host cities. This trend underscores one of the many advantages of our geographically diverse portfolio. Looking at recent holidays, revenue growth for Easter and Memorial Day was driven by resorts, with Easter room revenue up 11% and Memorial Day weekend room revenue up nearly 5%. Transient revenue was up 27% for July 4 with broad-based growth across our markets and property types driven by America 250 celebrations and multiple World Cup matches.

Looking ahead to upcoming holidays, transient revenue pace for Labor Day weekend, Thanksgiving, and the festive period are all up double digits with strength across property type and markets. Business transient revenue increased 4% compared to the second quarter of 2025, driven by rate growth. Notably, several key markets saw business transient room night growth in the quarter, including New York, Washington, D.C., Chicago, and San Diego. In fact, the New York Marriott Marquis had 14% business transient room night growth in the quarter, driven by demand from tech, consulting, and finance companies.

Turning to group. Revenue was up 7% year-over-year. Growth was driven fairly evenly by rate and room nights, which was supported by renovated properties and strong event-related demand. Corporate groups were the primary driver of revenue growth, accounting for approximately 2/3 of the increase, while associations and other groups also grew in the low- to mid-single digits. For full year 2026, we have 3.8 million definite group room nights on the books, representing an 8% increase since the first quarter. As Jim mentioned, total group revenue pace is up more than 5% over the same time last year.

For the second half of the year, we are seeing meaningful total group revenue pace in the Florida Gulf Coast, Miami, Boston, New York, and Maui, and group booking pace remains strongest for the fourth quarter. Shifting gears to margins. Comparable hotel EBITDA margin of 31.9% was 60 basis points above the second quarter of 2025, driven by outsized rate growth alongside lower total fixed costs. We continue to expect year-over-year margin comparisons to moderate in the second half of the year, primarily due to lower expected rate growth in the second half.

On the insurance front, our June 1 property renewal came in better than expected at down 6% compared to last year, which equates to a $2.5 million expense reduction in 2026 compared to our prior guidance. Those savings are now incorporated in our updated guidance. Turning to our outlook for 2026. As Jim mentioned, we are increasing our comparable hotel total RevPAR and RevPAR growth guidance ranges to 4.75% to 5.25% over the last year. The midpoint of our guidance contemplates a stable operating environment with a continuation of the trends seen in the first half of the year. This includes rate-driven leisure transient strength, modest improvements to short-term group booking trends, and stable business transient demand.

At the low end, we have assumed weaker short-term transient booking trends. At the high end, we have assumed better short-term transient booking trends. We expect comparable hotel EBITDA margins to be up 40 basis points year-over-year at the low end of our guidance to up 50 basis points at the high end, a 20 basis point improvement over our prior guidance at the midpoint. For the remainder of the year, we expect comparable hotel RevPAR growth in the mid-single digits with both quarters above our prior expectations.

Comparable hotel RevPAR for July is expected to increase approximately 10% year-over-year. At the midpoint, our guidance assumes comparable hotel RevPAR growth of 5% versus 2025, representing a 125 basis point improvement from our prior guidance. We estimate that roughly half of the increase reflects our second quarter outperformance with the balance driven by a stronger outlook for the second half of the year. Our guidance also assumes a 50 basis point net benefit from special events for the full year, including an estimated 70 basis point lift from the World Cup, partially offset by a 20 basis point headwind from the presidential inauguration in the first quarter of 2025.

Maui is expected to contribute approximately 45 basis points to full year RevPAR growth. At the midpoint, we expect a comparable hotel EBITDA margin of 29.7%, which is 50 basis points above 2025. Our margin performance reflects our continued success in partnering with our operators to drive productivity gains across our portfolio as well as the capital allocation decisions we have made over the past few years. For the full year, we continue to expect wage rates to increase approximately 5%, which comprises approximately 50% of our total comparable hotel operating expenses.

Our 2026 full year adjusted EBITDAre midpoint is $1.830 billion. This implies a $20 million or 1% improvement over our prior guidance midpoint, driven by outperformance in the first half of the year and a more optimistic view of the second half of the year. Our adjusted EBITDAre midpoint includes $29 million of estimated EBITDA from operations at The Don CeSar, which is excluded from our comparable hotel set in 2026. It also includes approximately $7 million of business interruption proceeds related to Hurricanes Helene and Milton, which we received in the first quarter.

We expect to receive business interruption proceeds for the recent Kona Low rainstorm in Hawaii as well, though it is still too early to estimate the timing or amount of any payments. Lastly, our 2026 full year adjusted EBITDAre midpoint includes between $16 million and $20 million of estimated net EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings. In the second quarter, we recognized $8 million of EBITDA associated with condo sales, bringing the total EBITDA recognized to $12 million for the first half of the year.

Turning to our balance sheet and liquidity position. Our weighted average maturity is 4.7 years at a weighted average interest rate of 4.8%. Adjusted for the regular and special dividend paid on July 15, we currently have $3 billion in total available liquidity, which includes $156 million of FF&E reserves and $1.5 billion available under the revolver portion of the credit facility. In July, we paid a quarterly cash dividend of $0.20 per share and a special dividend of $0.72 per share to shareholders of record as of June 30. Adjusted for this dividend payment, our leverage ratio is 2.2x.

As always, any future dividends are subject to approval by the company's Board of Directors. In closing, we believe our investment-grade balance sheet, combined with our scale, diversification, and platform strength position Host to drive outperformance and continue capturing incremental upside in the current environment and over the long term. With that, we would be happy to answer your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

[Operator Instructions] The first question comes from the line of Aryeh Klein with BMO Capital Markets.

On the guide, the flow-through to EBITDA from the RevPAR update looks like it was a little bit less than we saw previously. And then somewhat relatedly, Marriott announced an ITR incentive program. And broadly, the brand seems to be looking at ways to lower costs. From your perspective, can you talk about what the impact has been or will be for your portfolio?

So in terms of the flow-through for the second quarter, one thing I want to point out is sort of 2 pieces on the expense side. One was just higher IMF. Because of the outperformance of certain properties in terms of top line, we did hit IMF for those assets, and therefore, it did impact overall flow-through. But that's only a piece of it. The other piece was given the short-term pickup in transient demand, particularly related to the World Cup, the travel agent commissions expense that we incurred was a little bit higher than expected, and we don't expect that to continue into the second half.

So that's really what was impacting flow-through. Otherwise, flow-through would have been even better given the overall total revenue increase. In terms of Marriott, I would start off with sort of what we have seen in terms of benefit over the past couple of years. Two specific items. Since January of 2025, that's when Marriott reduced its loyalty charge-out rate by 20 basis points, which is now at 4%. That annualized is worth about $3 million to $3.5 million for our portfolio. The second thing was that -- another reduction over the last several years, call it, 3 to 4 years is the account sales and national group sales, which is a booking fee per booking. That to us, again, approximately $3 million in annual savings.

In terms of what's coming ahead, specifically this year, there was a change to the High Occupancy Reimbursement Policy that was enhanced. That's about a, call it, $0.5 million savings to us for our portfolio. The other thing that's coming forth is they have shifted procurement and it's -- they've taken a lot of that procurement in-house, and we expect to get about a $7 million benefit for our portfolio over the next few years.

And then lastly, what you were speaking to is the Intent to Recommend reimbursement that Marriott talked about on their call in terms of 50 bps back to the owners. That intent to recommend would be a reduction to the Program Services Fund. So effectively, if the intent to recommend is above a certain threshold for a particular asset, there would be a reduction to the PSF. And that's up to 50 basis points. No further details have been provided in terms of what that threshold looks like specifically for the intent to recommend threshold. But obviously, it's going to be a positive impact for our portfolio, particularly given the fact that we have invested significant amount of capital over the years in our -- through our entire portfolio, not just Marriott, but particularly through MTCP I and MTCP II that's ongoing right now.

So certainly expect to be a net benefit for us. And then lastly, I will mention is with the rollout of the new PMS system that's supposed to occur in 2027, we expect that to benefit as well from our Marriott portfolio.

The next question comes from Chris Woronka with Deutsche Bank.

Jim, where do you think we are on kind of the group pricing? I don't want to call it reset, but pricing acceleration, just understanding the lead time that it takes. It seems like you had pretty good rate growth in the quarter on groups. I know there could be a little bit of World Cup noise in that. But I think in the past, you've said as we go through the year here and in '27 and beyond, you expect to see continued momentum on group pricing. So can you just kind of give us maybe a data point or 2 on how that's tracking?

Yes. Chris, we're happy with how group is performing this year. Sourav and I both mentioned that our total group revenue pace is up 5% for the year. And while it's too early to give color on how group is going to perform in 2027, what I can tell you is that our total group revenue pace is positive. So we like the way we're set up for the year. And I think group is starting to normalize in terms of lead times and booking windows.

Yes. And I'll add a couple of adds to that, particularly for the second half of the year, Chris. We talked about how we expected third quarter to be our weakest quarter. What's interesting is that group booking pace since we reported last has actually improved for the third quarter. It was negative low-single digits, and that was really because of the Jewish holiday shift that occurred. Now it is actually positive low-single digits. Additionally, our fourth quarter group pace is now close to almost 10%. Previously, that was about 7%.

So we certainly saw momentum in terms of group in the year -- for the year as well as in future years, as Jim mentioned, 2027 and particularly, we are seeing a positive pace, and we'll certainly provide that specific number on our next earnings call. And just a couple of other points. We picked up about 61,000 group room nights in the second quarter for Q2. But most interestingly, we picked up about 210,000 room nights in the quarter for the remainder of the year. And to put that into perspective, last year, we had picked up for the balance of the year, only 167,000 room nights. So definitely, group is strong, particularly corporate group at our properties.

The next question comes from the line of Chris Darling with Green Street.

Jim, hoping you could elaborate on your capital allocation priorities, how they might have changed given the run-up in your share price year-to-date. And just given the significant available dry powder you have, should we expect to see you go on offense sooner than later?

Sure, Chris. Capital allocation always is one of Host's most important value creation levers. Our approach has not changed. We're focused on maximizing long-term shareholder return by -- we look at every use of capital against the available alternatives, including acquisitions, reinvestment in our existing portfolio, share repurchases, dividends, and asset recycling. So you are correct. We're sitting here with an investment-grade balance sheet and leverage of approximately 2.2x after taking into account the July dividend. And in a portfolio that continues to work and generates strong free cash flow.

So we have a lot of flexibility to play offense when we see opportunities to meet our return thresholds. So we're seeing more activity today. There have been a lot of deals in the market. We've underwritten a lot of transactions. And to date, we haven't been able to cross the bar that we set for ourselves internally. But there are high-quality assets out there, and we will continue to look for assets with multiple demand generators, drivers, attractive market fundamentals and importantly, opportunities where our active management and ownership can create incremental EBITDA.

That's where we can be most opportunistic. We have an advantage over others because we're an all-cash buyer. We can move quickly. We have deep industry relationships and our platform really gives us the opportunity to underwrite complex assets with confidence. So why do we like acquisitions? Because it can do more than just add EBITDA. An acquisition can add to the long-time growth profile of the company and benefit from our expense benchmarking, renovations, as you've seen time and again, branding repositioning opportunities and the like.

I think the 1 Hotel South Beach stands out as one of those acquisitions that has proved out very well for Host. When we bought it, it was doing $35 million in EBITDA. This year, it's going to do $65 million plus. So I would say that we're going to remain disciplined. We're not going to pursue acquisitions simply because we have capital available. We're not going to overpay. The bar remains high. The math needs to work on an unlevered IRR basis, and we need to see a clear path to value creation through market growth, asset management opportunities and portfolio fit and capital investment upside.

The next question comes from the line of David Katz with Jefferies.

Jim, earlier in some of your prepared remarks, you talked about funneling or directing capital into those properties in the portfolio that have the greatest growth or growth. As you look at your portfolio today, assuming there are some properties in there that perhaps don't have the best growth prospects? And how much of your portfolio in qualitative terms, would you consider that to be today? I mean we'll take as much specificity as you can offer.

Let me start by saying that we are very, very happy with the composition of our portfolio today. There's no doubt that the portfolio is working really well for us. I think if you just step back for a moment and look at 2025, I think we did about $1.760 billion of EBITDA in '25. And we sold $84 million of EBITDA where we sold the 2 Four Seasons and the St. Regis in Houston. And this year, our midpoint is $1.830 billion. That's a $73 million increase. despite the sale of $84 million in EBITDA. So the portfolio is working really well, and it will continue to work well. We're not under any pressure to sell anything.

If we think that we can improve the overall free cash flow and EBITDA per key, which free cash flow comes from increasing EBITDA per key, that is something we will do over time. But the pricing has to be right. It's no different than the way we underwrite a potential acquisition. It's how we look at potential dispositions as well. So I would tell you, over time, I've said this before, and we proved out the point we are always testing the market to see if there are opportunities to recycle capital.

Every asset in the portfolio is for sale. I think we proved that out by selling the 2 Four Seasons and returning $0.5 billion in a special dividend to our shareholders. That's one way to create shareholder return and shareholder value. And we'll continue to take a look going forward. But there's no compulsion and we're certainly not under any pressure to sell anything, not sitting here with a solid investment-grade balance sheet at 2.2x leverage.

Understood. I wasn't implying that there should be a lot to sell. Nice quarter.

The next question comes from the line of Smedes Rose with Citi.

I wanted to ask a little bit about on the expense side. It sounds like you had some upside surprises around on the insurance savings this year. And I'm just wondering, could you just remind us what you think the sort of total pace of property level expenses will be this year? And what are kind of the -- I mean, I realize it's early, but how are you sort of thinking about the pace of growth into next year? I guess, particularly anything you're seeing on kind of wages and benefits, but also just overall costs?

Sure. In terms of this year, Smedes, I think at the midpoint of our guidance at a 5% total revenue increase for the year. Our total expense, we are estimating at about 4.2%. So when you look into next year and in terms of wages and benefits for this year, our estimate has not changed. We still expect wage and benefit rate growth of 5%. Looking into next year, we obviously do not have budgets, but I'll tell you what we sort of do expect on the wage and benefit side, it should end up being lower just given the front-loading impact of all the CBA agreements. And if you recall, the prior year was 6% this year is 5%. So net-net, we should be better off relative to this year. I don't have a number for you yet. So that should be a tailwind from a wage and benefit standpoint.

The next question comes from the line of Michael Bellisario with Baird.

My question, I sort of want to follow up on David's prior question a little bit, but I want to focus on sort of the hotels you want to keep, not sell. Just when you guys look back and what you're doing now you've done a lot of heavy lifts and ROI work recently. I guess just sort of what's left for you to do beyond the second Marriott program? Are there more projects in the pipeline? Just sort of trying to understand where and how your excess capital might be spent beyond potential acquisition opportunities.

Sure, Mike. We've talked about the transformational renovations that we've undertaken in the past. I think it's somewhere around 34 hotels that comprise 60% of this year's EBITDA. And that's one of the reasons you continue to see the outperformance in our RevPAR and TRevPAR going forward. There are always opportunities to deploy capital. I would say -- I would agree with you that the heavy lifting is done. But there are other assets in the portfolio where we will take a look and underwrite deployment of capital to see what sort of IRR we can generate.

Certainly, by no means are we where we have been because we have repositioned the assets that are going to provide the highest return to our shareholders. So for a little context, and you can do the math, I'm sure you have, our top 40 hotels generate approximately 80% of our EBITDA. And those are the hotels that we're generally focused on. Not that there's anything wrong with the other 34, 35 that we have, but we'll continue to look at ways to reposition assets, reposition outlets. We will continue to look at land opportunities, value enhancement opportunities like we did at the Westin Kierland, for example, where we built an AC hotel on excess parking lot space and the villas at the Andaz Wailea, the condos at the Four Seasons Orlando. So we're always looking for ways to create value that's embedded in the portfolio.

The next question comes from the line of Duane Pfennigwerth with Evercore.

Just on the Maui recovery, can you just remind us where that market is on group recovery, your views on full stabilization and if those views have changed at all?

So for this year, our estimate hasn't changed at the $120 million of EBITDA that we had spoken to last quarter. In terms of just group pace, pace is pacing really strong. So when you look at the third quarter, our total revenue pace is in the high-single digits and the fourth quarter is meaningfully high-double digits. So for the full year, when you look at sort of total revenue pace, it's at about 7.5%. And our expectation in terms of RevPAR growth for Maui is, call it, 10% for the year. Still going very strong. Obviously, a lot of the group pace is being driven by the continued ramp-up of our Hyatt, and we are seeing success going into next year, our pace for next year is -- we are expected to have a very, very strong pace. Hopefully, we'll give you a number on our call next time, but it is pacing very well for 2027 as well, and we feel that, that recovery is ongoing.

Do you have an estimate for what stabilization EBITDA would look like?

It's a little difficult to give you a precise number just because, obviously, you have expense growth as well every single year. But we feel that we should be able to get another $20 million to $25 million additional. And as to what point that will be will remain to be seen. Once we have budgets for next year, we'll provide a little more clarity in terms of what 2027 looks like.

The next question comes from the line of [ Robin Fraley with Media ].

I think that's me. I wanted to circle back to the comment about the incentive management fees and kind of the flow-through to EBITDA from the RevPAR growth. Can you give us a little bit of color around what kind of EBITDA sensitivity if we think about does RevPAR growth from this point forward kind of have that IMF an expense to you kind of in there and how we should think about flow-through kind of from -- at this level of RevPAR forward?

Sure, [ Robin ]. I will start off by saying it is somewhat of an art, not a perfect science just because every single contract that we have does have a very different IMF calculation and all different thresholds that -- revenue thresholds or GOP thresholds when certain IMF is triggered. And in some cases, if there is like deferred IMF that will be triggered after reaching a certain amount of performance for that property. That said, if you recall, last year, we had talked about how 1 point of RevPAR was somewhere around $32 million to $37 million of EBITDA. That was for last year. And I want to remind you at that point in time, our overall RevPAR and total RevPAR gap was about 40, 50 bps.

So total RevPAR being slightly higher than RevPAR. That rule of thumb is a little bit different now because the portfolio makeup is different. We did sell the 2 Four Seasons. That by in itself brought that point of RevPAR growth equation to EBITDA down. So you're looking at more like $28 million to $30 million of EBITDA. Then you do have to keep in mind as to what total RevPAR does. So for example, we raised our RevPAR guide by 125 bps, but total RevPAR was only raised by 75 basis points. So you have to keep that in mind when you think about sort of the EBITDA impact.

One of the things is once you reach that IMF payment, that will stabilize. So it's not like the IMF continues to have meaningful jumps for the balance of the year. With the outperformance and the trigger of the IMF, I just want to remind folks that we are -- in times of high performance, it is a more normalized IMF that we are seeing. So this is just that certain properties are triggering IMF, which is, frankly, a good thing. That means they're outperforming. And we don't expect that to meaningfully jump once it has been triggered. So in other words, what we saw in Q2 was more and we're not expecting as much of a jump into the second half, if that makes sense, [ Robin ].

The next question comes from the line of Dan Politzer with JPMorgan.

I wanted to just zoom in a little bit in terms of the RevPAR cadence. I think you guys mentioned third quarter would be a little bit softer or maybe the weakest quarter of the year. Maybe I misheard that, and there was a reference to group. But I was just hoping you could kind of talk us through the RevPAR cadence and specifically as it relates to kind of puts and takes, just given July is off to such a strong start thus far.

Sure. Yes. So when we had talked about the cadence of RevPAR last quarter, we had talked about how Q3 was expected to be the slowest -- the weakest quarter, and that typically is for us. With July coming in at 10%, we expect Q3 to be pretty similar to Q4, so not very far off, being really driven by July. We expect August to be -- not have meaningful growth. That always is sort of just a weaker month. And then September, because of the Jewish holiday shift, you do have group pace, which is lower. While that has improved from, as I said earlier, our group pace was negative for the third quarter, that is now actually positive low-single digits.

So it certainly moved in the right direction. But what's really driving third quarter now being similar to fourth quarter in terms of RevPAR is the July outperformance of 10%. And I do want to mention that on the July number of 10%, only 3% of that 10% is really World Cup driven. So the rest of the portfolio is outperforming meaningfully. It wasn't just a World Cup outperformance.

The next question comes from the line of Rich Hightower with Barclays.

So I know transient revenue in the quarter was obviously up very strongly along with the other segments, but room nights were down slightly. And I'm wondering if that was entirely World Cup driven or if there's more sort of going on under the hood there? And then secondly, just on the rate outlook, you said you expect 2H generally to normalize relative to 1H. And so does that sort of indicate you're seeing pushback anywhere in the system from different segments? Or is that just simply a comment that 2Q was insanely good because of World Cup and just that's just not going to be sustainable for that reason?

Yes, Rich, let me start and then Sourav can jump in with additional color. But the rate-driven RevPAR growth was not an accident. That was a revenue management strategy that we employed across the portfolio. We're set up very, very well with the luxury resort market, in particular. We saw a very strong growth in revenues in our luxury resorts. World Cup played out as we anticipated that it would. The bookings were very close to the matches. They were close in. And the intent was to drive rate and take occupancy where you could get premium rate. So I think that's a good strategy and demand is there for it, and that would be our strategy going forward.

And Rich, on the rate front, when you look at sort of first half versus second half, and that's why we call it normalizing, the first half is obviously not only being driven by the outperformance in World Cup, but do remember that given our resort portfolio and the outperformance of resort portfolio is more skewed towards the first half, that also is driving the first half rate higher. So second half rate is strong. It's just not being aided by any special events, but we feel very good about sort of the rate growth in the third quarter and fourth quarter based on the business we have.

Also, and we talked about this in the prepared remarks, is if you look at the holidays and how they are pacing all double digits, Labor Day, festive, Thanksgiving, we are very encouraged with the rate growth we're seeing for those quarters. So all in all, when you look at the 5% midpoint for RevPAR, rate is still a big piece of that. For the full year, it's a 4% rate growth and occupancy is about 60 bps better than last year.

The next question comes from Jack Armstrong with Wells Fargo.

Just jumping back over to the expense side. It seems like the 5% labor expense growth is a little bit higher than what we've seen from your peers. Can you break that growth number down between the wage rate and your level of FTEs and talk about what might be driving that variance versus your peers and how we should expect your labor expense growth to develop in the back half of [ 2027 ]?

Yes. I'm not sure what comparison you're looking at, but our commentary has been pretty consistent in terms of the expected wage rate growth of 5%. We actually -- with the New York CBA coming to a head, that was -- ended up being a slight positive overall in terms -- relative to what we were forecasting. So -- and our 5% hasn't changed throughout the year. And we expect, like I said earlier, that to step -- have a step down next year because of the CB agreements that were done 2 years ago, it was more front-loaded. Therefore, we had a 6% wage rate growth. This year, it's 5%. And next year, at least for certain markets, it is going to be lower just because it's a step down. But overall, our commentary on this wage rate growth has been pretty consistent across the board.

Yes. I guess I was just referring to some of your peers are coming in at closer to 2% or 3% on the labor expense growth, maybe net of some full-time employee cuts. Is that a lever that you're thinking about pulling here over the next 18 months?

Yes. So just to clarify, what I'm referring to in terms of 5% is wage rate growth. It is not absolute wage and benefit growth. That is meaningfully lower. That is why we can achieve a total expense growth of only 4.2% for the year. If we did not have any productivity benefits and we did not have efficiencies, we would not be able to deliver the total expense growth of 4.2%. So the absolute wage and benefit growth is lower. Whenever we talk about the growth in terms of wages, I'm always referring to wage rate growth. So it's not the actual wage and benefit growth. The absolute growth is net of all productivity improvements.

This concludes today's Q&A session. I will now turn the call back to Jim Risoleo for closing remarks.

Well, thank you again for joining us today. We always appreciate the opportunity to discuss our quarterly results, and we look forward to seeing many of you at conferences this fall. Enjoy the rest of your summer.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the Annual Meeting of Stockholders of Host Hotels & Resorts. Please note that today's meeting is being recorded. [Operator Instructions]

It is now my pleasure to turn today's meeting over to Richard Marriott, Chairman of the Board of Host Hotels & Resorts. Mr. Marriott, the floor is yours.

Good day, everyone. Welcome to the 2026 Annual Meeting of Stockholders. I'm Dick Marriott, and I will be presiding over this meeting. We are hosting today's meeting through a virtual online platform. The Annual Meeting of Host Hotels & Resorts is hereby called to order.

We will begin the meeting by reviewing the meeting proposals to be voted on. We will then move to the business update from our President and CEO, Jim Risoleo, followed by a question-and-answer period. Our General Counsel and Corporate Secretary, Julie Aslaksen, who is participating in today's meeting, has reported to me that the notice of the annual meeting was first mailed on April 8, 2026, to our stockholders of record as of March 20, 2026.

Julie will confirm when the polls have closed, report on the preliminary voting results and adjourn the meeting. Computershare, our Inspector of Elections has reported that a majority of the shares are present at the meeting, either in person or by proxy. Accordingly, a quorum is present and we may transact the business before us.

I'd like to remind everyone that some of the remarks made today are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties, which could cause future results to differ from those expressed.

We will also discuss the non-GAAP financial information, such as adjusted EBITDA, which we believe is useful to investors. You can find a description of this information including reconciliations to the GAAP financial measures in our latest earnings press release, which has been posted on our website.

We have 3 proposals to present to you this morning. All proposals are outlined and discussed in the proxy statement. The polls are now open for each matter to be voted upon.

Proposal 1 is the election of the 9 director nominees named in the proxy statement. Proposal 2 is to ratify the recommendations by the Audit Committee to appoint KPMG LLP as independent auditors of the company for 2026. KPMG is represented here today by Tom Gerth and Caitlin Henry. Proposal #3 is an advisory vote on executive compensation.

Your Board recommends a vote for each of the proposals. If you previously voted by proxy, you do not need to vote today unless you wish to change your vote. If you have not voted your shares and you are a stockholder who registered for this meeting, you may vote online now.

I'd like to now turn the floor over to Jim Risoleo, our President and CEO, to provide a business update.

Thank you, Dick. Welcome to the Host Hotels & Resorts Annual Meeting. I'd like to thank everyone for joining us today and for your continued support of Host Hotels & Resorts.

On the cover, you will see a photo of the Don CeSar in St. Pete Beach, Florida. We were thrilled to welcome guests back to the resort in early 2025 after a 6-month remediation effort following Hurricanes Helene and Milton. Our team leveraged strong industry relationships and lessons learned from prior hurricanes to enhance amenities, rebuild infrastructure and increased resilience, including elevating critical equipment and systems.

The Don CeSar holds a [ cherished ] place in the hearts of hotel employees and the St. Pete Beach community. In fact, many of the associates returned after 6 months, a testament to their resilience, loyalty and commitment to this historic property.

Moving to the next slide. Today, I will give a brief overview of Host and highlight some of our 2025 accomplishments, including our operational improvements, our successful capital allocation execution and our fortress balance sheet. I will then discuss progress on our portfolio reinvestments and our corporate responsibility initiatives before wrapping up with the Host investment thesis.

Next slide, please. Starting with a brief overview of the company. Host Hotels & Resorts owns the largest portfolio of luxury and upper upscale hotels in the public markets. We have a geographically diverse portfolio of iconic and irreplaceable assets located in prime locations and markets in the United States and a strong analytics platform to support our capital allocation strategy. As of February 18, 2026, our portfolio comprised 76 hotels totaling 41,700 rooms. In addition, we are the only investment-grade lodging REIT and the only lodging REIT in the S&P 500.

Next slide, please. Over the course of 2025, we delivered operational improvements, driven by strong transient demand, a continued recovery in Maui and healthy out-of-room spending. During the year, we completed approximately $237 million of asset sales, made progress on our transformational capital program with Hyatt and commenced a second program with Marriott.

We also returned significant capital to our stockholders in the form of dividends and share repurchases while maintaining our investment-grade balance sheet and positioning Host to take advantage of potential opportunities in the future.

Highlighting a few stats here. First, we delivered comparable hotel total RevPAR, which stands for total revenue per available room and includes ancillary spending of 4.2% over 2024. This increase was largely driven by improvements in transient demand, continued rate strength and increases in ancillary spending.

In addition to our operational improvements, we continue to successfully allocate capital through reinvestments in our portfolio. In 2025, we invested $644 million in capital expenditures, resiliency initiatives and hurricane restoration.

We ended the year with $2.4 billion of total available liquidity, including $1.5 billion of availability under our credit facility and returned $860 million of value to our stockholders in the form of dividends declared and share repurchases.

Next slide, please. Turning to our portfolio performance. A continued recovery in Maui, increases in room rates and strong transient demand offset the anticipated decrease in group demand, while total RevPAR grew at a faster pace than RevPAR for most of the year, driven by out-of-room spending. As expected, margin declined in 2025, primarily as a result of business interruption proceeds that were received from Maui wildfires in 2024.

Next slide, please. As part of our successful capital allocation efforts, we significantly reinvested in our portfolio through capital expenditures. In 2025, we invested $644 million in capital expenditures, resiliency initiatives and hurricane restoration. We completed renovations to approximately 2,190 guestrooms, 433,000 square feet of meeting space and approximately 109,000 square feet of public space.

In addition, we completed renovations at 3 of the 6 assets under the Hyatt transformational capital program and commenced a second transformational capital program with Marriott International at 4 properties.

We also completed several major ROI projects over the course of 2025, including the Oceanfront ballroom expansion at the Don CeSar, villa development at the Phoenician Canyon Suites, the new AVIV restaurant at the 1 Hotel South Beach and the meeting space expansion and reopening of the View restaurant at the New York Marriott Marquis. We are also nearing completion of the condo development at the Four Seasons, Orlando, which we retained following the sale of the adjacent hotel in early 2026. We believe these reinvestments will continue to position our portfolio to outperform in the future.

Next slide, please. Over the course of 2025, we maintained our investment-grade balance sheet and a consolidated portfolio that is 99% unencumbered by debt, which provides us with substantial flexibility and optionality. We also issued $900 million of senior notes through 2 separate underwritten public offerings and repaid $900 million of maturing senior notes, maintaining a well-laddered maturity schedule. Additionally, the company's credit rating was upgraded by Moody's to Baa2 with a stable outlook.

Next slide, please. We continue to be recognized as a global leader in corporate responsibility in 2025. We were named to the Dow Jones Best-in-Class World Index, which recognizes global sustainability leaders across all industries for the seventh consecutive year, and we were included in the DJSI North America for the ninth consecutive year. We were also once again included in the world's most sustainable companies in S&P's Global Sustainability Yearbook.

Next slide, please. As a reminder, our corporate responsibility program is focused on responsible investment across our business, sustainability, our people and our community. As part of our climate risk and resiliency program, we completed the purchase and preinstallation of modular flood barriers that exceed FEMA 100-year flood elevation for 6 high-risk properties. We are also working to formalize the connection between our climate risk program and our property insurance premiums to validate proactive resilience investment opportunities, quantify the impact and return on investment and scale efforts across our portfolio where we see elevated climate risk. Our efforts on the corporate responsibility front are overseen by the Board's Nominating, Governance and Corporate Responsibility Committee, which also continues to provide valuable insights to bolster our program.

Next slide. Wrapping up. We are extremely proud of the results we achieved in 2025. While there continues to be heightened uncertainty in the macroeconomic environment, we believe our disciplined capital allocation efforts over the past few years, combined with the expected growth profile of our portfolio, our diversification across geographic markets and business mix, our investment-grade balance sheet and our size, scale and reputation leave us very well positioned to outperform in 2026 and beyond.

Thank you for your continued support of Host. That concludes our annual meeting presentation.

Thank you, Jim. We will now move to questions and the closing of the polls. Are there any questions regarding the proposals or any general questions or comments?

We have not received any questions. So that concludes our question-and-answer period, and the polls are now closed.

I have the preliminary results of the votes on the proposals contained in the proxy statement. I am pleased to report that all directors were elected and the proposals on KPMG's appointment and executive compensation were approved. Final voting results will be filed with the SEC on a Form 8-K and will be available on our website. Thank you for participating in our annual meeting today.

This concludes the meeting. You may now disconnect.

Good morning, and welcome to the Host Hotels & Resorts First Quarter 2026 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the call over to Jamie Marcus, Senior Vice President of Investor Relations. Jaime, please go ahead.

Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward-looking statements under federal securities laws. 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, and we are not obligated to publicly update or revise these forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDAre and comparable hotel level results. You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release and our 8-K filed with the SEC and in the supplemental financial information on our website at hosthotels.com.

The operational results discussed today refer to our 74-hotel comparable hotel portfolio in 2026, which excludes the Don CeSar and Sheraton Parsippany.

With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer.

With that, I would like to turn the call over to Jim.

Thank you, Jaime, and thanks to everyone for joining us this morning. Our first quarter results exceeded our expectations, representing a strong start to 2026. We delivered adjusted EBITDAre of $543 million, an increase of 5.6% over last year, and adjusted FFO per share of $0.67, an increase of 4.7% over last year. First quarter adjusted EBITDAre and adjusted FFO per share benefited from $7 million of business interruption proceeds related to Hurricanes Helene and Milton compared to $10 million in the first quarter of 2025.

Comparable hotel total RevPAR improved 4.6% compared to the first quarter of 2025, and comparable hotel RevPAR improved 4.4% driven by rate growth and continued strength in out-of-room spending. Comparable hotel EBITDA margin improved by 70 basis points year-over-year to 32.7%, driven by revenue growth.

RevPAR growth in the first quarter was meaningfully better than expected. Strong rate growth was enabled by resilient demand despite estimated weather impacts of approximately 120 basis points and tough comparisons to last year. We saw particularly strong performance at our resorts in Florida and Phoenix as well as in San Francisco, which benefited from the Super Bowl and the ongoing market recovery. Notably, San Francisco achieved 26% RevPAR growth and more than 70% EBITDA growth in the quarter, reflecting continued momentum in the market's recovery.

Turning to business mix. Transient revenue grew by 5.5%, driven by rate growth, particularly at our resorts. First quarter transient results benefited from Easter in early April, which compressed spring break demand in March, contributing to 9% transient revenue growth at our resorts. Feedback from our properties indicates that ongoing geopolitical uncertainty supported travelers favoring U.S. luxury destinations over international destinations. As a result, resort properties delivered particularly strong performance in the first quarter.

Briefly touching on Maui. RevPAR grew 1.5% and total RevPAR grew 1.6% as growth was impacted by the Kona Low rainstorm in March. Prior to the storm, overall demand at our Maui resorts was tracking ahead of our expectations for the first quarter. It is important to note that the impacts from the storm were contained and are not ongoing. We have also seen strong rebookings since the storm. And as a result, we continue to expect Maui to contribute approximately $120 million of EBITDA in 2026.

Business transient revenue grew 4%, driven by strong rate growth as we saw a continued mix shift from government to corporate-negotiated customers in the first quarter. Group room revenue for the quarter was up 2.4% year-over-year, driven by improvements in both demand and rate. Our properties sold 1.1 million group room nights in the first quarter, and definite group room nights on the books for 2026 now stand at 3.5 million, with total group revenue pace up nearly 4% to the same time last year.

Turning to ancillary spend. F&B revenue grew 5% and other revenue grew 6% with broad-based strength across departments, demonstrating the continued strength of the affluent consumer as well as the benefits of the strategic investments we have made in many of our properties over the last several years.

Turning to capital allocation. We repurchased 4 million shares of common stock at an average price of $18.97 per share for a total of $75 million in the first quarter. Since 2017, we have repurchased 73.2 million shares at an average price of $16.76 per share, bringing our total share repurchases to approximately $1.2 billion. Yesterday, the Board of Directors authorized a quarterly common dividend of $0.20 per share and a special dividend of $0.72 per share. The dividend will be paid on July 15 to stockholders of record on June 30. The special dividend represents the distribution of the approximate $500 million taxable gain from the sale of the 2 Four Seasons resorts in the first quarter of this year.

Creating value for our stockholders remains our top priority. By returning capital through a regular quarterly cash dividend, special dividends like the one we will pay out this quarter, and our share repurchase program, we are advancing our objective of delivering long-term value for our investors.

Turning to portfolio reinvestment. During the first quarter, we completed the comprehensive renovation at the Hyatt Regency Reston. As of the end of the first quarter, the Hyatt Transformational Capital Program is more than 80% complete and is tracking on time and under budget. Transformational renovations are now complete at 4 of the 6 hotels in the program, including the Grand Hyatt Atlanta, Buckhead; the Hyatt Regency, Capitol Hill; the Hyatt Regency Austin; and the Hyatt Regency Reston. We are nearing completion on the Grand Hyatt, Washington, D.C., which is expected to be finished later this month. The Manchester Grand Hyatt San Diego, the final asset in the program, has been phased to mitigate business interruption and is expected to be substantially complete by the end of this year.

Additionally, the second Marriott Transformational Capital Program is well underway. Guestroom renovations at the New Orleans Marriott are in progress and are scheduled to be completed in the third quarter. And renovations at The Ritz-Carlton Naples, Tiburon and the Westin Kierland are scheduled to start later this month. The 4-asset program is already more than 25% complete, and it is also tracking on time and under budget.

In the first quarter, we received $3 million of operating guarantees related to our Transformational Capital Programs. As a reminder, we expect to benefit from approximately $19 million of operating profit guarantees in 2026 related to our two Transformational Capital Programs, which we expect will offset most of the EBITDA disruption at these properties.

Looking at other ROI projects, we are nearing completion of the condo development at the Four Seasons Orlando. To date, we have closed on the sale of 20 of 31 units within the mid-rise building, and we have deposits and purchase agreements in place for 8 of the 9 villas, bringing total sales and deposits to 28 of 40 units. Overall, the project is on budget and expected to sell out by the end of this year.

For 2026, our capital expenditure guidance range is $545 million to $655 million. This includes approximately $250 million to $300 million of investment focused on redevelopment, repositioning and ROI projects, and $20 million to $30 million of property damage reconstruction associated with the Kona Low rainstorm in Hawaii. We also anticipate remediation costs of approximately $5 million.

While we are still evaluating the total impacts of the storm, we expect our insurance coverage to cover the losses in excess of our deductible. In addition to our capital expenditure investment, we expect to spend $15 million to complete the condo development at the Four Seasons Orlando in 2026.

Our continued reinvestment across our portfolio is a true differentiator for Host. In fact, once the second Marriott Transformational Capital Program is complete, we will have invested $2.1 billion in comprehensive renovations at 34 hotels in our portfolio, which are expected to contribute approximately 60% of our total hotel EBITDA in 2026. We have now stabilized post-renovation data on 21 hotels, and the average RevPAR index share gain is nearly 9 points. As evidenced by our results, our capital allocation decisions over the past few years are driving value creation for our shareholders.

We also reinforced our position as a global leader in corporate responsibility in the first quarter. Last week, Host was proud to be included in the Dow Jones Best-in-Class index world (sic) [ Best-in-Class World Index ] for the seventh consecutive year and North America for the ninth consecutive year, ranking #3 globally in our sector. In fact, Host was one of only two North American companies on the world index and #1 in our sector among seven companies on the North America index.

Turning to our outlook for 2026. We continue to expect strong leisure demand, bolstered by special events, modest improvements to short-term group booking trends and stable business transient demand. As a result, we are raising our 2026 comparable hotel RevPAR guidance range to 3% to 4.5% over 2025, and our comparable hotel total RevPAR growth guidance range to 3.5% to 5% over last year.

Looking ahead to the remainder of the year, we are optimistic about the travel environment. High-end consumers continue to prioritize experiences and supply across our markets and chain scales remains at historically low levels. Against this backdrop, our fortress balance sheet gives us the flexibility to continuously reinvest in our portfolio while also returning capital to shareholders through a sustainable quarterly dividend, periodic special dividends and share repurchases. As our results over the past few years have shown, our competitive advantages uniquely position Host to continue to capture additional upside in the current environment and for many years to come.

With that, I will now turn the call over to Sourav.

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our first quarter operations, updated 2026 guidance and our balance sheet.

Starting with total revenue trends, total RevPAR growth continued to outpace RevPAR growth due to broad-based strength across food and beverage and other department revenues. Comparable hotel food and beverage revenue for the quarter grew 5%, driven by recently repositioned outlets and strong banquet and catering contribution per group room night at convention hotels.

As Jim mentioned, this is the benefit of the strategic investments we have made over the last few years, which is clearly evident in out-of-room spending by our guests. Banquet and catering revenue increased 3%, led by our San Diego properties, the San Francisco Marriott Marquis, the San Antonio Marriott Rivercenter and the Ritz-Carlton, Amelia Island. These hotels all achieved banquet and catering contribution per group room night growth of over 7%. In fact, banquet and catering contribution at the Ritz-Carlton, Amelia Island grew 24%, driven by incentive groups and upsells.

Outlet revenue grew 8%, driven by the New York Marriott Marquis, the 1 Hotel South Beach and the Grand Hyatt San Diego, all of which have recently renovated restaurants. The San Francisco Marriott Marquis and Santa Clara Marriott also benefited from broad-based improvement in the first quarter, which was further enhanced by the Super Bowl in February.

Other revenues increased 6%, once again propelled by strength in golf and spa operations. Spa revenue was up 4%, driven by improved capture, particularly at Ritz-Carlton, Amelia Island and Westin Kierland, which continue to benefit from recent spa renovations. Golf revenue grew 9% despite impacts in Maui, led by strong performance at our Naples and Phoenix golf courses.

Shifting to room revenues. Overall transient revenue was up 5.5% compared to the first quarter of 2025, driven by rate growth and leisure demand. Notably, our Florida and Phoenix resorts generated approximately 60% of the transient revenue growth in the quarter. Transient revenue at our resorts increased by more than 9%, underscoring the continued strength of high-end demand.

Looking ahead to the upcoming holiday weekends, transient revenue pace is up 6% for Memorial Day weekend compared to the same time last year, driven by resorts. Revenue pace for the weekend of July 4 is up nearly 50% over last year, driven by northeastern cities, including Philadelphia, Washington, D.C., New York and Boston. While we expect that number to actualize lower, it is encouraging to see early strength in both demand and rate for World Cup matches and the America 250 celebrations.

Business transient revenue was up 4% to the first quarter of 2025, driven primarily by rate growth. While overall business transient demand remains below pre-pandemic levels, government volume has stabilized, and we are encouraged by corporate activity from consulting, technology and financial services firms.

Turning to group. Revenue was up 2.4% year-over-year. Growth was driven by both demand and rate improvements, particularly for association and other groups. Group revenue growth was led by San Francisco, which benefited from strong citywide performance in addition to the Super Bowl. For full year 2026, we have 3.5 million definite group room nights on the books, representing a 12% increase since the fourth quarter.

As Jim mentioned, total group revenue pace is up nearly 4% over the same time last year. More specifically, we are seeing meaningful total group revenue pace in San Francisco, New York, the Florida Gulf Coast and Miami. Group booking pace remains strongest for the second and fourth quarters.

Shifting gears to margins. Comparable hotel EBITDA margin of 32.7% was 70 basis points above the first quarter of 2025 as a result of total revenue growth, which outpaced absolute wage and benefit increases. We expect year-over-year margin comparisons to moderate as the year progresses, primarily driven by lower average rate growth expectations in the second half of the year.

Turning to our outlook for 2026. We are increasing our comparable hotel RevPAR growth guidance range to 3% to 4.5% and our comparable hotel total RevPAR growth guidance range to 3.5% to 5%. The midpoint of our guidance contemplates a stable operating environment with the continuation of the trends seen in the first quarter. This includes leisure transient strength driven by special events such as the World Cup, modest improvements to short-term group booking trends and stable business transient demand.

At the low end of our guidance, we have assumed no improvement in short-term group booking trends and weaker special events demand. And at the high end, we have assumed improving short-term group booking trends and increased demand around special events. We expect comparable hotel EBITDA margins to be up 20 basis points year-over-year at the low end of our guidance to up 50 basis points at the high end, a 30 basis point improvement over our prior guidance.

In terms of comparable hotel RevPAR growth cadence for the remainder of the year, we expect second quarter RevPAR growth to be similar to that of the first quarter, driven by the World Cup. We expect comparable hotel RevPAR for April to increase approximately 4.4% year-over-year. RevPAR growth in the second half of the year is expected to be in the low single digits.

The midpoint assumes comparable hotel RevPAR growth of 3.75% compared to 2025, a 100 basis point improvement over our prior guidance. We continue to expect an estimated 40 basis point net benefit from special events for the full year with an estimated 60 basis point lift from the World Cup, partially offset by a 20 basis point headwind from the presidential inauguration in the first quarter of 2025. In addition, Maui is expected to contribute approximately 35 basis points to our full year RevPAR growth.

It is important to point out that bulk of the demand around the World Cup is expected to materialize within the 30-day booking window. That said, we are encouraged that transient revenue pace for our portfolio in World Cup markets is up nearly 40% year-over-year, and has been steadily picking up occupancy as we get closer to the match dates. At the midpoint, we expect a comparable hotel EBITDA margin of 29.5%, which is 30 basis points above 2025. Our margin performance reflects our continued success in partnering with our operators to drive productivity gains across our portfolio as well as the capital allocation decisions we have made over the past few years.

For the full year, we continue to expect wage rates to increase approximately 5%, which comprises approximately 50% of our total comparable hotel operating expenses. Our 2026 full year adjusted EBITDAre midpoint is $1.810 billion. This implies a $40 million or more than 2% improvement over our prior guidance midpoint, driven by first quarter outperformance and a slightly more optimistic view of the second half of the year.

Our adjusted EBITDAre midpoint includes $28 million of estimated EBITDA from operations at the Don CeSar, which is excluded from our comparable hotel set in 2026. It also includes approximately $7 million of business interruption proceeds related to Hurricanes Helene and Milton, which we received in the first quarter. While we also expect to receive business interruption proceeds for the recent Kona Low rainstorm in Hawaii, it is still too early to estimate the timing or amount of any payments.

Lastly, our 2026 full year adjusted EBITDAre midpoint includes between $20 million and $25 million of estimated net EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings. In the first quarter, we recognized $4 million of EBITDA associated with condo sales.

Turning to our balance sheet and liquidity position. Our weighted average maturity is 4.9 years at a weighted average interest rate of 4.8%. We currently have $3.4 billion in total available liquidity, which includes $151 million of FF&E reserves and $1.5 billion available under the revolver portion of the credit facility.

In April, we paid a quarterly cash dividend of $0.20 per share. Yesterday, as Jim mentioned, the Board of Directors authorized a quarterly dividend of $0.20 per share and a special dividend of $0.72 per share to shareholders of record as of June 30, which is payable on July 15. Payment of these dividends will reduce our total available liquidity by approximately $770 million, bringing our adjusted leverage ratio to 2.5x. As always, any future dividends are subject to approval by the company's Board of Directors.

In closing, we believe our investment-grade balance sheet as well as our size, scale and diversification uniquely position Host to continue to outperform in the current environment while capitalizing on opportunities for growth in the future.

With that, we would be happy to answer your questions. [Operator Instructions]

[Operator Instructions] Your first question comes from the line of Smedes Rose with Citi.

I guess I wanted to ask you on -- I'll ask on the World Cup. Sourav, you mentioned that I think transient revenues or -- I'm not sure if it's revenues or bookings are up 40% in World Cup markets. Where does that have to get to in order to achieve your gross RevPAR expectations for a 60 bps benefit from that event?

Yes. Just to back up a little bit, majority of the bookings really happen within the 45-day window and believe it or not, in sort of the week leading up to the matches, 40% of the occupancy from the World Cup is actually booked in that last week. So there is -- we are pacing well relative to where we stand right now. But it's really a last-minute buildup, literally like 3 weeks leading into it with, like I said, 40% of the occupancy really being booked 1 week out. And that is in line with the World Cup occupancy build that we have from -- stats that we got from the last World Cup in Russia and Qatar.

And the other thing I would point out is you've seen in the news sort of group block reductions. And that block reduction is not at all indicative of overall event. That sort of happens in the normal course. FIFA always -- there is a wash in terms of sort of the overall group bookings that takes place. So it is really much more of a transient play than a group play and obviously, it differs from market to market.

Smedes, just to help you think about a little -- add a little more color to it. We think that about 2/3 of that 60 basis point pickup is going to occur in the second quarter and the remainder in the third quarter. And it's -- the third quarter is much more difficult to forecast because of not knowing what teams are going to show up in the knockout rounds, et cetera. But we're very pleased with how things are pacing.

I mean we have World Cup matches in, I think, 10 of our markets, led by New York and Miami, in particular, where there are going to be knockout matches occurring. So we feel good about our 60 basis point gross assumption. I do want to point out that that's 40 basis point net if you take out the inauguration benefit that we had last year.

Your next question comes from the line of Rich Hightower with Barclays.

Back to the significant dollars spent on all the collective ROI programs, but obviously, mainly the Marriott and Hyatt transformational programs. Given the strength that you're obviously seeing on the non-room side, I mean, are you able to sort of break out what the returns have been on the non-room side versus the room side? What does that tell us about the business going forward?

And you mentioned the significant gain in RevPAR share index. And I'm just -- maybe more general commentary on sort of the non-CapEx competitors as we sit here 6 years after COVID, what does that dynamic look like? So a bit of a multi-parter.

Yes. Rich, there's an awful lot in that question, but let me start by saying that our transformative renovations of over $2.1 billion to date have served Host shareholders very well. The 9 points in yield index that we picked up on 21 stabilized assets out of 34 that we'll complete is way above our expectations. And we continue to see that run rate improving as we have the 6 properties from the Hyatt Transformational Capital Program coming back online, and we complete the work at the 4 Marriott properties. Just for reference, the 4 Marriott properties are the New Orleans Marriott; the Ritz-Carlton, Tiburon; the Ritz-Carlton, Marina Del Rey and the Westin Kierland Resort & Spa in Phoenix.

So we couldn't be more pleased with how assets are performing. And we have not really stepped back and broken down the various components of where the returns came from. I think if you just look at the numbers, our pickup -- our continued pickup in banquet and catering revenues, out-of-room spend generally from spa investments has been meaningful. Our outlet spend has been really quite good.

And the outlet renovations are not necessarily tied to the Transformational Capital Program. I mean the AVIV Restaurant at the 1 Hotel South Beach has opened above our pro forma expectations as has the View at the New York Marriott Marquis. So we think this is a really strong use of capital. We have clear sight lines to generating mid-teens cash-on-cash returns. And it's something we're going to continue to do going forward. It's clearly a differentiator for Host. And it all began in -- when we went into COVID, and we had just started the Marriott Transformational Capital Program in 2018.

One good example, Rich, is what happened at the Marriott Marquis. We started the transformational renovation there in '19. And while others pulled back when COVID hit, we accelerated the renovation. So it's a statistic I talked about at our recent general managers' meeting that I think is worth repeating. In 2018, the Marriott Marquis did -- generated $65 million in EBITDA. In 2025, it generated $100 million in EBITDA. And that's based on $100 million total transformational renovation. So it's a great use of capital. You can expect to see us continuing to do that going forward.

Your next question comes from the line of Michael Bellisario with Baird.

I want to focus on Hawaii here, two parts. Just first, could you quantify the RevPAR and EBITDA impacts in both Maui and Oahu? And then the rebookings that you mentioned. Are those getting pushed into the second quarter? Or is it more that you're seeing a shift into 4Q and the pickup is going to occur a little bit further out?

Sure, Mike. So the overall impact from weather was 120 basis points. And that actually includes 80 basis points of RevPAR impact for Hawaii and 40 basis points from Winter Storm Fern. Just so clear, it's -- the Q1 impact is not just the Hawaii storm, but also the winter storm that took place on the East Coast. In terms of EBITDA impact, Maui was, call it, around $5-ish million and then Oahu was about $1 million or so in terms of impact -- negative impact for the quarter.

And then the rebookings?

The rebookings, as Jim mentioned, that is -- we are picking some of that up in sort of late April and May and June. So certainly, some of it did bleed into the beginning of April in terms of cancels, but we are seeing those rebookings pick up through the remainder of the year.

Yes, Mike, Maui was pacing ahead of our initial expectations in the first quarter. And we're very happy that we're able to maintain our guide for Maui of $120 million in EBITDA contribution to the midpoint. So we've also seen a pickup in seat availability from the airlines going into Maui and going into Hawaii in general. So we feel really good about how the market is recovering after some tough years post the wildfires.

Your next question comes from the line of Duane Pfennigwerth with Evercore ICI (sic) [ Evercore ISI. ]

Appreciate it's tough to know the precise drivers of why somebody checks in or why demand was stronger in 1Q. But if we think about a real winter in the Northeast, no snow in the Rockies, safety concerns in Mexico, at least for a period of the quarter, this may have been a good combination that funneled more demand to warm weather destinations in the U.S. So I wonder, what do you think of that premise? And more importantly, what are you seeing in your bookings that convinces you better demand is sustaining going forward?

Yes, Duane, we did see a very, very strong quarter in Florida and Arizona and our resorts in both markets. And more broadly, as we think about our customer and the affluent customer who visits our properties, we have not seen a pullback generally. I'd say a broad-based statement. The first quarter really proved that out.

There is some tangential evidence that as a result of what happened in Mexico and the Iran war dampening travel to -- certainly to the Middle East and anybody who was transiting through Dubai, which was the #1 major international transit airport, caused people to stay in the U.S. So we're hopeful that as they visited our properties and they saw what great shape they're in, and they had fantastic experiences that we're going to be able to retain those guests and get them to come back.

I mean we saw a shift in and an imbalance in international inbound versus international outbound right after COVID hit, if you recall. And there was a lot of pent-up demand on the part of affluent U.S. travelers, U.S. consumers who couldn't travel to Europe and who couldn't travel to other international destinations due to quarantine restrictions and testing requirements and things of that nature. And as soon as those restrictions came off, people went. I think we were like 120% international outbound last year relative to 90% international inbound. We saw that number improve just a slight bit in the month of March, and we're hopeful that it's going to continue to improve going forward.

And I would add, like if you look at sort of our holiday -- upcoming holidays, the transient pace is really strong. So that gives us further confidence. I believe I mentioned in my prepared remarks, Memorial Day room revenue is -- overall transient is pacing, it's like 6%. So high single digits. When you look at on the group side, what also gives us confidence in the first quarter, we picked up 95,000 rooms in Q1 for Q1. And despite Q2 with World Cup and being more heavily transient-focused, Q2 to Q4, we picked up 280,000 room nights in the first quarter for the remainder of the year. So we're really encouraged by that.

So when you look at our group booking pace by quarter, Q2 and Q4 are both in the high single digits. So that further gives us confidence in terms of our outlook for the balance of the year.

Your next question comes from the line of Floris Van Dijkum with Ladenburg.

Jim, I'm curious if you could touch a little bit on the transaction markets. Obviously, you've been very successful in selling your Four Seasons hotels. There are a number of hotels on the market. One of the hotel REITs is selling stuff, there's some private equity investors that are -- put in markets -- or some assets on the market. Could you talk a little bit about what you see in terms of returns available and where your most attractive investment opportunities are? Are they continuing to be in the -- in your core portfolio in the ROI projects or share buybacks or new assets? If you can give a little bit more color, that would be great.

Sure, Floris. Let me start by talking a bit about how we think about capital allocation. And then I can talk about both acquisitions and dispositions. But our focus remains unchanged. I mean, we're disciplined, we're return-focused, and we're very cycle-aware when it comes to capital allocation. And every decision is evaluated against the same yardstick, and that is long-term total shareholder return.

So we think about it by four primary uses of capital, I would say: dividends, share repurchases, portfolio reinvestment and opportunistic acquisitions. So we're in a great place with our fortress investment-grade balance sheet. We have low leverage. Even after we pay the dividend, we'll still be at 2.5x leverage. So our balance sheet allows us to be opportunistic, and we're not being forced into any single capital decision.

So I think the fact that we paid -- elected to pay a special dividend of $0.72 in connection with the sale of the 2 Four Seasons, it speaks loudly to the discipline that we have. There are a lot of acquisitions out there, a lot of potential acquisitions out there. We'll see what clears the market. I don't know, the guide -- the pricing guide is pretty high. It's a bar that we're not able to reach. We look at everything that comes into the market, but risk-adjusted returns are just not there for us.

So we like to stay by the hoop. We'd like to hang around, and we'll see what happens. We're the best buyer for a lot of these assets because of the fact that we can do transactions on an all-cash basis, we don't have to access the debt markets, and we can move quickly. And we've proved that time and time again.

But given the uncertain macro picture, I think discipline matters more than activity at this stage of the cycle. So how are we thinking about deploying capital? We do have $500 million left. We continue to view the dividend as a core component of shareholder returns. I mentioned the $0.72 special. We also declared a $0.20 quarterly regular dividend. And the special reflects our commitment to returning excess capital when appropriate, while maintaining the flexibility in the cap stack.

Another place that we've been very active on deploying capital is on share buybacks. Share buybacks are always evaluated alongside all other capital uses. And we don't talk about this that often, but since 2017, we bought back 72.3 million (sic) [ 73.2 million ] shares of stock at an average price of $16.67. That's $1.2 billion of capital return. So you can expect us to continue to tap the buyback market based on market conditions, our view of operations and alternative uses of capital.

So I mean capital allocation at Host is really -- it's all encompassing. It's acquisitions, it's dividends, it's share buybacks. It's dispositions, as you saw what we did with the 2 Four Seasons, and we're constantly testing the market, and we're willing to sell assets at the right price up and down the portfolio. So portfolio investment has served us really well. I mentioned in my remarks that -- or maybe Sourav did, I don't remember, 60% of our EBITDA this year is expected to come from hotels that have undergone or undergoing transformational renovations.

And all this comes down to one thing, Floris. Ultimately, our goal is to grow free cash flow over time. And we lead the full-service lodging REITs in cumulative free cash flow since 2019. And capital allocation decisions, they're made through that lens, not just growth but durable, repeatable cash flow generation. So to answer your question, on the acquisition side, I think it's just wait and see.

Your next question comes from the line of Chris Woronka with Deutsche Bank.

Jim, I wanted to ask a little bit more about San Francisco. Great quarter, obviously, Super Bowl there. I think you have 6 assets in the market, 4 kind of downtown, 2 outside. There's a lot going on there. I think the market is in a pretty good recovery in the CBD, but also some of the AI now closer to the airport in Silicon Valley. So I guess if you break those two apart, which one do you think is more sustainable? Which one are you more excited about? Which one kind of helps your bottom line out there the most?

Yes. Sure, Chris. We've been a big believer on San Francisco. We haven't given up. We haven't sold any assets. We continuously are looking at potential opportunities in that market because there is a clear recovery, it's underway and it's accelerating. San Francisco is -- we're seeing office fundamentals improving meaningfully entering 2026. And a pundit used the phrase that it is now a boom loop as opposed to a gloom loop. I can't take credit for that. But it is a boom loop.

I mean San Francisco had outstanding growth in the first quarter. As I mentioned, we delivered a RevPAR of 26% in the quarter, benefiting from the Super Bowl and continued demand recovery and generated over 70% EBITDA growth. It's a diversified demand base. We like the assets we own in San Francisco. You've seen them, I'm sure, because they're well located, they're in great physical shape, and they can gear off of multiple demand generators, including leisure, group and business transient. Importantly, our assets are well positioned to take on in-house medium and large groups, helping offset citywide demand gaps.

So AI is real. The office recovery supports lodging fundamentals. Leasing activity and net absorption improved in early '26 driven by AI-related companies. And that is benefiting not only our properties in city center, but also the Hyatt Burlingame, which is out by the airport and the Santa Clara Marriott. So we couldn't be happier with what's happening in that market and look forward to continued growth going forward.

Your next question comes from the line of Dan Politzer with JPMorgan.

I know we've talked a bit about it, but I just wanted to circle back on Maui. I think RevPAR there was up 1.5%, 1.6%. You mentioned, I think, 120 basis points of disruption. So close to 3%. I think RevPAR growth, like as we think about that path to $120 million, right, it seems like you already saw a bit of a deceleration there. So I guess that -- what's the level of confidence in getting that $120 million for the year? And can you go -- maybe it's booking window or just the level of visibility in that path?

Yes. Just to be clear, the 120 basis points impact for the quarter was for Hawaii, the Kona Low storm as well as the Winter Storm Fern. It was really 80 bps. And that's to the portfolio, not to Maui. So Maui would have effectively been in the higher single digits if it wasn't for the storm. So when you're looking at Maui RevPAR in the low single digits, that would have been in the high single digits. The impact that we were talking about is really the impact of the portfolio RevPAR for the first quarter.

In terms of how much confidence we do have, as Jim mentioned, we started the year off really well. We were really pacing ahead of what our expectations were before the storm hit. And when we are looking at sort of the rebookings that are taking place from the cancels from the storm, that gives us further confidence as well as the overall group booking pace for Maui. And when we look at it by quarter, like fourth quarter is probably the strongest, close to nearly 20% in terms of group booking pace. So our expectation for Maui RevPAR for the full year in order to get to the $120 million is almost close to 9%, I would say. Hopefully, that helps.

Your next question comes from the line of Robin Farley with UBS.

Most of my questions have been answered already. I guess just a small one. I think you're still the largest hotel owner for Marriott. And I wonder if you could quantify if the recent change in the split of economics of the Bonvoy program, did that help or hurt you for Q1 or for the full year in either direction?

Robin, overall, it has helped us, because not only are we the largest, we also have a very high redemption of hotels within our portfolio. And certainly, the way the program works, it has been beneficial to us with the changes that have occurred both in Q1 and that expectation is that it would continue to benefit us for the full year.

And is there any way to quantify kind of roughly what that benefit is from that change? Because I think it's sort of -- I don't know if it's for you as well a one-time step-up or if it is something that would kind of recur in your base. I know for them, it's kind of a one-time step-up. So I just want to think about the -- if you can quantify.

It's tough to exactly quantify. We can maybe provide some ranges for you at some point in time, but I don't have that handy at this moment.

Your next question comes from the line of Logan Epstein with Wolfe Research.

Maybe just one, you talked about the rate growth in the quarter, obviously strong. And you touched on some expected deceleration there for the rest of the year. Just curious if you could break out for the implied 2Q to 4Q RevPAR of 3.5%, how is it breaking out between rate and occupancy growth? And maybe how did that trend also in April, up [ 4.4%, too? ]

Sure. When you're looking at the second half, I would say about occupancy is growing about 80 bps or so, and the remainder is rate. The rate for the second half is almost 1 point lower than the rate growth that we saw in the first half. And that's primarily because when you think about our portfolio, a lot of our resorts, the high season is Q1, and we saw that outperformance in the first quarter.

Obviously, there was a compressed spring break that also helped drive the Q1 results, particularly at our resorts. And then with World Cup, that's a meaningful transient rate pickup that we are expecting. So overall, that's why you just see a much higher rate in the first half versus the second half.

In terms of first half occupancy, I would say the pickup was about 70 bps is what we're expecting for the first half. And so it's very similar to the second half in terms of occupancy or demand pickup, but rate is going to be about -- the expectation is about 1 point lower or so.

Your next question comes from the line of Jack Armstrong with Wells Fargo.

Can you take us through some of the building blocks on the expense side that are assumed in your annual guidance? And we've heard from some of your peers over the last few days, the total wage and benefits came in below expectations in the first quarter, but partially as a function of lower head count. Is that something you're seeing in your portfolio?

So for us, in the first quarter, absolute wage and benefit growth was only 4.5%. And that really is being driven by productivity improvements. I mean, we work extremely closely with the operators and are very, very focused in terms of how they are leveraging their labor management systems. In the case of Marriott, that's ATLAS, and you have Olympia in the case of Hyatt, particularly focused on really driving labor standards and each of the labor standards, given how unique our properties are, they are very unique to each property and to setting sort of best-in-class labor standards and then scheduling and forecasting based on the labor standards becomes critical.

So there is -- as you will see in the income statement or our comp numbers, rooms profit margin improved meaningfully, so did food and beverage profit margin, and it's all being driven by this honed-in focus on productivity across the portfolio. So that's why despite wage rates going up 5%, and that's what the expectation that we set out at the beginning of the year for the full year. And we saw that as wage rates are sort of sticking to that 5% increase. Our absolute dollar amount when you look at wage and benefit, that was only a 4.5% increase. So I would say it's really driving more productivity and efficiencies across the portfolio.

Your next question comes from the line of Chris Darling with Green Street.

A couple of follow-ups related to capital allocation. First, Jim, I think you mentioned a high bar for acquisitions today. Does that suggest that incremental dispositions might be more likely through the rest of the year? And then secondly, from a tax efficiency standpoint, would the potential need for another special dividend deter you from pursuing that strategy?

I'll answer the second question first, Chris, because that's the easier one of the two. No, it would not deter us. If we thought it was the right capital allocation decision to sell assets that would result in a special dividend in the event we couldn't do a like-kind exchange and we created significant shareholder value, that is certainly something we would do.

On dispositions versus acquisitions, we constantly test the market with dispositions all the time. And we have -- as I mentioned earlier in the call, our key focus is on generating free cash flow. We think that's a good metric, and it adds to growth in FFO per share, which has done quite well over time. I mean, from 2019 to 2025, our FFO per share was 19%, our growth. And relative to the other full-service lodging REITs, they had minus 33% FFO per share.

So as we're thinking about how we approach capital allocation, dispositions are at many times as beneficial, if not more beneficial than acquisitions. So stay tuned. We'll see how the year plays out, but we are prepared to be sellers. We're also hopeful at some point in time that we can get back into the market and be a buyer.

We have reached the end of the Q&A session. I will now turn the call back to Jim Risoleo for closing remarks.

Well, as always, folks, we really appreciate you joining us. We appreciate the opportunity to discuss our quarterly results with you and how we're thinking about the balance of 2026. And we look forward to seeing many of you at conferences in the coming months.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to the Host Hotels & Resorts Fourth Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Jaime Marcus, Senior Vice President of Investor Relations.

Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward-looking statements under Federal Securities Laws. 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, and we are not obligated to publicly update or revise these forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDAre and comparable hotel level results. You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release and our 8-K filed with the SEC and in the supplemental financial information on our website at hosthotels.com.

The operational results discussed today refer to our 76 hotel comparable portfolio in 2025, which excludes Alila Ventana Big Sur, the Don CeSar and St. Regis Houston, which we sold in January.

With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer.

With that, I would like to turn the call over to Jim.

Thank you, Jaime, and thanks to everyone for joining us this morning. 2025 was another strong year for Host. We delivered operational improvements across our portfolio driven by rate growth and out-of-room spending, and we continue to successfully allocate capital through dispositions, portfolio reinvestment, share repurchases and dividends. We also maintained an investment-grade balance sheet while positioning Host to take advantage of future opportunities.

Turning to our results, we finished 2025 meaningfully above our most recent guidance estimates. For the full year, we delivered adjusted EBITDAre of $1,757 million, a 4.6% increase over 2024, and adjusted FFO per share of $2.07, a 3.5% increase year-over-year. Comparable hotel total RevPAR grew 4.2% and comparable hotel RevPAR grew 3.8% compared to 2024. Comparable hotel EBITDA margin of 28.9% was down 40 basis points year-over-year, driven by $21 million of business interruption proceeds that we received in 2024 for the Maui wildfires. Our full year RevPAR and adjusted EBITDAre exceeded our initial 2025 guidance by 2.3 percentage points and 8.5%, respectively. Notably, our portfolio outperformed the upper tier industry RevPAR growth by approximately 200 basis points for the year.

During the fourth quarter, we delivered adjusted EBITDAre of $428 million and adjusted FFO per share of $0.51. Comparable hotel total RevPAR improved 5.4% compared to the fourth quarter of 2024 and comparable hotel RevPAR was up 4.6%, driven by strong leisure transient demand, higher room rates and increased out-of-room spending. Comparable hotel EBITDA margins declined by 30 basis points to 28% as these operational improvements were offset by certain onetime benefits in the fourth quarter of 2024.

Turning to business mix. RevPAR growth in the fourth quarter was better than expected, driven by resilient transient demand, particularly at our luxury resorts. Transient revenue grew by 6% driven almost entirely by rate increases. In terms of markets, we saw particularly strong transient performance in Maui, New York and San Francisco. In fact, Maui was a standout market, contributing more than 1/3 of the transient revenue growth in the fourth quarter.

RevPAR grew 15% and TRevPAR grew 13%, driven by strong demand growth. For context, Maui contributed $111 million of EBITDA for the year, which was slightly ahead of our most recent forecast and significantly ahead of our initial $90 million expectation at the start of 2025. Looking forward, we expect Maui to contribute approximately $120 million of EBITDA in 2026.

Turning to business transient. Revenue was up 1% in the fourth quarter as increases in rate offset a decline in room nights. Group revenue for the quarter was up approximately 1% year-over-year as rate increases offset group room night declines, which were driven by renovations and citywide softness in several markets. Our properties sold 900,000 group rooms in the fourth quarter, bringing our total group room nights sold for 2025 to $4.1 million.

Ancillary spending remained strong in the quarter with continued growth in food and beverage revenues and out-of-room spending. Comparable hotel F&B revenue grew 6%, driven by strong outlet performance and banquet contribution per group room night. We also saw particularly strong growth in other revenue, which was up 10% in the quarter, including growth in golf and spa. Taken together, we continue to benefit from the strength of the affluent consumer across properties in our portfolio.

Turning to capital allocation. In 2025, we sold The Westin Cincinnati and Washington Marriott at Metro Center for a combined $237 million. We also provided $114 million of seller financing for the Washington Marriott at Metro Center transaction at a 6.5% interest rate.

Yesterday, we announced the sale of the Four Seasons Resort Orlando at Walt Disney World Resort and the Four Seasons Resort and Residences Jackson Hole for $1.1 billion, which represents a 14.9x EBITDA multiple on trailing 12-month EBITDA. The multiple includes approximately $88 million of estimated foregone capital expenditures over the next 5 years. We purchased the hotels in 2021 and '22, respectively, for a total of $925 million with no significant capital expenditures required under our ownership. The $1.1 billion sale price represents an 11% unlevered IRR and an EBITDA multiple that is more than 4 turns higher than our company's recent trading multiple. The IRR includes $58 million of capital expenditures, which was funded within the FF&E reserve as well as transaction costs. These items negatively impacted the IRR calculation by approximately 170 basis points.

We are retaining the ongoing condo development at the Four Seasons Orlando, which is excluded from the sale. In 2025, we recognized $17 million of net adjusted EBITDAre from the sale of 16 condo units, and we expect to recognize an additional $20 million to $25 million when the remaining units are sold.

As we assess the best use of capital in the current environment, our investment-grade balance sheet provides meaningful financial flexibility to pursue the highest return opportunities. We expect to recognize a taxable gain of approximately $500 million from the sale of the 2 hotels, subject to funnel prorations, and we have 45 days to identify a potential like-kind exchange. If we are unable to identify an accretive acquisition within that time frame, we would intend to return the taxable gain to shareholders through a special dividend. For the remaining sale proceeds, we will evaluate the best path forward based on market conditions, which could include returning additional capital to shareholders through special dividends or share repurchases, reinvesting in our portfolio or pursuing accretive acquisitions.

We also completed the previously announced sale of the St. Regis Houston for $51 million. The sale price represents a 25x EBITDA multiple on trailing 12-month EBITDA. The multiple includes approximately $49 million of estimated foregone capital expenditures over the next 5 years. Finally, the Sheraton Parsippany is under contract to sell for $15 million with an expected close in the second quarter.

Since 2018, we have disposed of approximately $6.4 billion of hotel assets at a blended 16.7x EBITDA multiple, including estimated foregone capital expenditures of $1.2 billion. This compares favorably to the $4.9 billion of acquisitions we completed over the same period at a blended 13.6x EBITDA multiple.

In addition to successfully allocating capital through dispositions, we also returned capital to shareholders through share repurchases and dividends. In 2025, we repurchased 13.1 million shares at an average price of $15.68 per share for a total of $205 million. For context, we have repurchased 69.2 million shares at an average price of $16.63 per share for a total of approximately $1.2 billion since 2017. In the fourth quarter, we declared a quarterly common dividend of $0.20 per share and announced a special dividend of $0.15 per share, bringing the total dividends declared for the year to $0.95 per share. In total, we returned nearly $860 million of capital to shareholders in 2025, including share repurchases.

Turning to portfolio reinvestment. In 2025, we invested approximately $644 million in capital expenditures, resiliency initiatives and hurricane restoration across our portfolio. As of the end of the fourth quarter, the Hyatt Transformational Capital Program is more than 75% complete and is tracking on time and under budget. Transformational renovations have been completed at the Grand Hyatt Atlanta Buckhead, the Hyatt Regency Capitol Hill and the Hyatt Regency Austin. We are nearing completion of the Hyatt Regency Reston and Grand Hyatt Washington D.C., both of which are expected to be finished in the first half of 2026.

The Manchester Grand Hyatt San Diego, the final asset in the program has been faced to mitigate business interruption and is expected to be substantially complete by the end of 2026. Additionally, we started the transformational renovation of the New Orleans Marriott in the third quarter of 2025, which is part of the second Marriott transformational capital program. In the fourth quarter, we received $3 million of operating guarantees related to our transformational capital programs, bringing the total received to $26 million in 2025.

We also completed several major ROI projects over the course of 2025, including the oceanfront ballroom expansion at the Don CeSar, villa development at The Phoenician Canyon Suites, the new Aviv Restaurant at the 1 Hotel South Beach, and the meeting space expansion and reopening of The View restaurant at the New York Marriott Marquis.

We are nearing completion of the condo development at the Four Seasons Orlando, having completed the 31 unit mid-rise building, and we began closing on unit sales in the fourth quarter. To date, we have deposits and purchase agreements in place for 28 of the 40 units, including 8 of the 9 villas, which are expected to complete in the first half of this year.

In 2026, our capital expenditure guidance range is $525 million to $625 million. This includes approximately $250 million to $300 million of investment focused on redevelopment, repositioning and ROI projects. As I just mentioned, we expect to substantially complete the Hyatt Transformational Capital Program renovations by the end of 2026. The second Marriott Transformational Capital Program is also well underway. We expect to start construction at the Ritz-Carlton Naples, Tiburon and Westin Kierland in the second quarter.

As a reminder, we expect to benefit from approximately $19 million of operating profit guarantees in 2026 related to our Transformational Capital Programs, which we expect will offset the majority of the EBITDA disruption at these properties. In addition to our capital expenditure investment, we expect to spend $15 million to complete the condo development at the Four Seasons Orlando in 2026.

Looking back on our portfolio reinvestments, we completed 23 transformational renovations between 2018 and 2023, which continue to provide meaningful tailwinds for our portfolio. Of the 21 hotels that have stabilized post renovation operations to date, the average RevPAR index share gain is 8.7 points, which is well in excess of our targeted gain of 3 to 5 points. As evidenced by our results, the continued reinvestments we have made in our portfolio yield strong returns and drive value creation for our shareholders.

We continue to be recognized as a global leader in corporate responsibility over the course of 2025. As part of our climate risk and resiliency program, we completed the purchase and preinstallation of modular flood barriers that exceed FEMA 100-year flood elevation for 8 high-risk properties. We are also working to formalize the connection between our climate risk program and our property insurance premiums to validate proactive resilience investment opportunities, quantify the impact and return on investment and scale efforts across our portfolio where we see elevated climate risk.

Wrapping up, we are very proud of the continued outperformance we delivered in 2025, which reflects the disciplined capital allocation decisions we have made since 2017. Our recent transactions represent an important step in advancing our capital allocation strategy and underscore our ability to generate meaningful shareholder value by monetizing assets at attractive returns and accretive multiples with an eye towards maximizing total shareholder returns.

Looking ahead, we are optimistic about the travel environment, particularly at the upper end of the chain scale, and we are confident that Host is well positioned to capitalize on future opportunities. With our geographically diversified portfolio, ongoing reinvestment in our properties and fortress balance sheet, we will continue to leverage our competitive advantages to create value for our shareholders in 2026 and beyond.

With that, I will now turn the call over to Sourav.

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our fourth quarter operations, full year 2026 guidance and our balance sheet.

Starting with total revenue trends. Total RevPAR growth continued to outpace RevPAR growth as transient guests maintained elevated levels of out-of-room spending. Comparable hotel food and beverage revenue for the quarter grew approximately 6%, driven by outlet revenue and banquet contribution per group room night. Outlet revenue grew 9% driven by resorts and new restaurants at the 1 Hotel South Beach and the New York Marriott Marquis. Resort outlet growth was led by the ongoing recovery in Maui as well as the Ritz-Carlton Naples and the continued ramp-up of the Singer Island Oceanfront Resort and the Ritz-Carlton Turtle Bay.

Comparable banquet and catering revenue increased 4% in the fourth quarter driven by 6% growth in banquet contribution per group room night. Other revenues increased 10%, propelled by sustained strength in golf and spa operations. Spa revenue was up 6%, driven by higher occupancy at luxury resorts and improved capture, particularly at the Ritz-Carlton, Amelia Island and Fairmont Kea Lani. Golf revenue grew 14% due to strong performance at our Maui and Naples golf courses.

Shifting to rooms revenues. Overall transient revenue grew 6% compared to the fourth quarter of 2024, driven by improving leisure trends in demand and rate growth across the portfolio. Notably, resorts generated 80% of the transient revenue growth in the quarter. Transient revenue at luxury properties increased by more than 10%, underscoring the strength of high-end demand. The Ritz-Carlton Naples and Fairmont Kea Lani delivered double-digit room night growth while maintaining rates above $1,000, representing a 5% increase year-over-year, further validating the meaningful impact of our transformational reinvestment strategy.

Looking at holidays in the fourth quarter. Thanksgiving revenue grew 3%, while festive season revenue grew 9%. Festive season revenue growth, which includes the 2-week period around Christmas and New Year's was broad-based across the portfolio, but led by resorts with 4 resorts generating more than $1 million of incremental revenue over the festive period.

Looking at recent and upcoming 2026 holidays, current booking pace is up meaningfully. For President's Day weekend, transient revenue pace was up approximately 8% compared to the same time last year, driven by rate and occupancy growth at our convention properties. For the spring break and Easter period, which runs from the end of March through the end of April, transient revenue pace is up 17%. Strength is broad-based across property type and led by hotels in Maui, Orlando and New York.

Business transient revenue grew approximately 1% versus the fourth quarter of 2024, driven primarily by rate growth as our managers continued shifting towards corporate negotiated business. Group revenue in the fourth quarter was up 1% year-over-year as 3% rate growth outpaced group room night declines. Corporate groups led growth in the quarter, particularly at our properties in New York, Boston, San Diego and San Francisco.

For 2026, we have 3.1 million in definite group room nights on the books, representing a 16% increase since the third quarter of 2025 and putting us slightly ahead of where we were this time last year.

Total group revenue pace is up 5% over the same time last year, driven by rate and banquet growth. More specifically, we are seeing meaningful total group revenue pace in San Francisco, Washington, D.C., Nashville, Miami, New York, Austin and Atlanta. Group booking pace is strongest for the second and fourth quarters driven by World Cup bookings and a beneficial holiday calendar shift in October. We are encouraged by citywide room night pace in key markets such as San Antonio, San Francisco and Washington, D.C.

Shifting gears to margins. Full year 2025 comparable hotel EBITDA margin of 28.9% was 40 basis points below 2024. The [indiscernible] by the $21 million of business interruption proceeds that we received for the Maui wildfires as well as certain onetime benefits in 2024.

Turning to our outlook for 2026. The midpoint of our guidance contemplates a stable operating environment with a continuation of trends seen through the second half of 2025. This includes leisure transient strength driven by special events such as the World Cup, modest improvements to short-term group booking trends and stable business trends in demand. At the low end of our guidance range, we have assumed no improvement in short-term group booking trends and weaker special events demand. And at the high end, we have assumed improving short-term group booking trends and increased demand around special events.

For full year 2026, we anticipate comparable hotel total RevPAR growth of between 2.5% and 4%, and comparable hotel RevPAR growth of between 2% and 3.5% over 2025. Year-over-year, we expect comparable hotel EBITDA margins to be down 20 basis points at the low end of our guidance to up 20 basis points at the high end. In 2026, our 74 hotel comparable portfolio now includes the Alila Ventana Big Sur, but excludes the Don CeSar due to its closure in 2025.

Our 2026 comparable portfolio also removed the Four Seasons Resort Orlando at Walt Disney World Resort, the Four Seasons Resort and Residences Jackson Hole and Sheraton Parsippany, which is under contract and expected to be sold in the second quarter.

In terms of comparable hotel RevPAR growth cadence for the year, we expect the first quarter to be the weakest with growth in the low single digits due to tough comparisons related to the presidential inauguration and pickup from the Los Angeles wildfires last year.

January's 2026 performance exceeded expectations with comparable hotel RevPAR declining only 40 basis points despite challenging comparisons to January 2025. We expect the second quarter to be the strongest of the year with mid-single-digit RevPAR growth driven by the World Cup and an earlier Easter. RevPAR growth in the second half of the year is expected to be between first and second quarter growth.

At the midpoint of our guidance range, we anticipate comparable hotel RevPAR growth of 2.75% compared to 2025. This includes an estimated 40 basis point net benefit from special events for the full year with an estimated 60 basis point lift from the World Cup, partially offset by a 20 basis point headwind from last year's presidential inauguration. In addition, Maui is expected to contribute approximately 35 basis points to our full year RevPAR growth.

At the midpoint, we expect a comparable hotel EBITDA margin of 29.2%, which is flat to 2025. Our margin performance reflects our continued success in partnering with our operators to drive productivity gains across our portfolio as well as the value-enhancing capital allocation decisions we have made over the past few years.

In 2026, we expect wage rates to increase approximately 5%. For context, in 2025, wages grew at slightly over 6%. As a reminder, wages and benefits comprise approximately 50% of our total comparable hotel operating expenses.

Our 2026 full year adjusted EBITDAre midpoint is $1,770 million. On a year-over-year basis, this reflects an expected 1% increase despite a decline of $87 million from dispositions, a $17 million net decline in business interruption proceeds and a $7 million net decline in transformational renovation program operating profit guarantees.

Our adjusted EBITDAre midpoint includes $28 million of estimated EBITDA from operations at the Don CeSar, which is excluded from our comparable hotel set in 2026, as previously mentioned. It also includes approximately $7 million of business interruption proceeds related to Hurricanes Helene and Milton, which we already received in January. Lastly, our 2026 full year adjusted EBITDAre midpoint includes between $20 million and $25 million of estimated net EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings.

Turning to our balance sheet and liquidity position. Our weighted average maturity is 5.1 years at a weighted average interest rate of 4.8%. We have no debt maturities in 2026. We ended 2025 at a leverage ratio of 2.6x, and we have $2.4 billion in total available liquidity including $167 million of FF&E reserves and $1.5 billion of availability on our credit facility. Our fortress balance sheet continues to be a distinct competitive advantage for Host.

Wrapping up, in January, we paid a quarterly cash dividend of $0.20 per share and a special dividend of $0.15, bringing the total dividends declared in 2025 to $0.95 per share. On February 17, the Board of Directors authorized a quarterly cash dividend of $0.20 on our common stock to be paid on April 15 to shareholders of record on March 31. As always, future dividends are subject to approval by the company's Board of Directors.

To conclude, we are proud of our accomplishments in 2025, and we believe that our diversified portfolio, continued reinvestment in our assets and strong balance sheet uniquely position Host to capitalize on future opportunities.

With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

[Operator Instructions] Our first question comes from Michael Bellisario from Baird.

Jim, on the Four Season sales, certainly great execution there and you're proving out value. Sort of two parts here. One, how deep is that buyer pool today? And then two, can you, and maybe, would you sell more of your top assets, sort of what's the outlook and thinking around more high-value dispositions going forward?

Sure, Mike. Good questions. As you always have good questions for us, and we appreciate that very much. Before I talk about the Four Seasons specifically, I just want to take a moment and go back and highlight our performance in 2025 and our guide in 2026. We -- Sourav said it. I said it as well. We're very proud of our '25 performance. TRevPAR of 4.2%, RevPAR, 3.8% and adjusted EBITDAre of $1,757 million. And our '26 guide, I think, is very strong with TRevPAR at the midpoint of 3.25% and RevPAR 2.75% and adjusted EBITDAre of $1,770 million.

I think it is worth noting again, saying again that, that $1,770 million is after we sold $87 million of hotel EBITDA, and we won't benefit from BI proceeds and operating partner guarantees, disruption guarantees of $24 million. So the run rate is really closer to $1.9 billion for 2025. And that didn't happen by accident. That's a result of all the capital allocation decisions that we made over the last 9 years. And as you know, we have been exploring ways to unlock the value embedded in our shares. In other words, looking for ways to expand our trading multiple with the goal of maximizing total shareholder returns.

In addition to acquiring $4.9 billion of assets at 13.6x, we sold $6.4 billion of assets with $1.2 billion of avoided CapEx at 16.7x. The shares haven't really responded. We haven't received credit for portfolio recycling despite buying well below where we were selling on a blended basis.

So I think it goes back to a healthy amount of skepticism with regard to some of the large acquisitions that we made, starting with the 1 Hotel South Beach, which in 2018, had $46 million of EBITDA. And in 2025, we ended the year with $65 million of EBITDA. So the story is solid, and it holds together very well.

But to answer your question, is there a market for these assets? If so, at what valuation? Are we sellers of "the crown jewels" to realize the value that we've created. And the short answer is, yes. I mean you've heard us say that we're constantly testing the market with dispositions and that everything is for sale at the right price, and we mean it. This was an opportunistic transaction to create immediate and tangible value for our shareholders. We were looking for an opportunity to realize that value and we found one and we executed on it.

So even though the 2 Four Seasons were top performers for Host, and we fully expect luxury to continue outperforming, we believe that it was prudent to maximize value for our shareholders by selling these assets at an attractive profit and accretive multiple.

A quick summary of the transaction. We sold these 2 assets for $175 million more than where we bought them. A 14.9 multiple, which is a 5.9 cap rate that is 4 turns higher than where [ co-shares ] have been trading. And we think that provides a really favorable read-through on the value of our portfolio. We generated an 11% unlevered IRR for our ownership period, which clearly demonstrates our ability to create value. That includes $58 million of CapEx, which was funded within the FF&E reserve as well as transaction costs that hit the IRR by 170 basis points.

We kept the condos in Orlando, and we expect the IRR and the condos to be above 11% with our guide to roughly $40 million of net EBITDA in total. And as you said in one of your notes, Mike, we sold 6.5% of enterprise value, but only 4.7% of our consolidated hotel EBITDA. So we think this was a really fantastic trade, the Four Seasons Orlando, based on 2019 year-end EBITDA saw an 18.4% CAGR from the time we bought it to our ownership period through '25, so it's performed very well. And we're very, very happy with the round trip investment we made with these 2 resorts.

Not only we feel that the transaction demonstrates the value of our portfolio, it also shows the value that we create for shareholders as a management team, and including our unwavering focus on maximizing total shareholder return, which is what we've done here, we believe.

So are there other opportunities to maximize value within the portfolio? I think there is, we'll be opportunistic. The buyer pool for these type of assets is, I think, a lot deeper than people realize. There are a lot of [ sovereigns ] out there who are very interested in luxury hotels. They're high net worth individuals who are interested in luxury properties as well. And there are a couple of big private equity firms that have a lot of capital that have been sitting on the sidelines waiting to -- waiting for the inflection point to jump back into the market. And we're hopeful that this is the inflection point that we can prove out that there is value here, value to be created, and we're certainly hopeful that we're going to get the read through and see some multiple expansion as a result of not only this decision, but all the capital allocation decisions that we've made over the last 9 years.

Our next question comes from David Katz from Jefferies.

I apologize if I missed it in your prepared remarks, but the Transformational Capital Program you included in the release with Marriott. Can you just put a little more color around that and sort of why those hotels, why now and what we can expect on the back end of that endeavor?

Sure. Why those hotels, David. They're great assets, and they need to be repositioned, and we believe that by investing in these assets in a transformational way that we're going to meaningfully increase our yield index and realize mid-teens cash-on-cash returns as a result of our incremental investment that will benefit our shareholders. So the thesis is that we prove this out very strongly in our first Marriott Transformational Capital Program, which was 16 assets as well as 8 additional assets. We underwrote 3 to 5 points increase in yield index on the stabilized hotels to date, we picked up 8.7 points in yield index, which means other hotels in the market have lost yield index to our properties. And we think that this is a very, very solid use of our capital, and it's a clear read-through to our ability to really invest wisely for the benefit of our shareholders and see the proceeds drop right to the bottom line.

And the brands see it as well with Host. I mean we have not only is this our second Transformational Capital Program with Marriott. After we did 16 in the first round, we did 4 in this round. But we are in the midst of finishing up 6 properties with Hyatt. So it's great to be able to partner with the brands. And they provide the support that we need to effectuate these transformational renovations while covering off anticipated disruption involved with the renovation and providing enhanced owner priority returns. So we couldn't be happier with our relationship with the brands and the support that they give us and the fact that we are investing in these assets, which elevates not only the EBITDA profile for Host, but the EBITDA profile for the brand as well, and we benefit from that all the way around. It's a round trip investment, if you will.

And have you shared with us what the sort of reimbursement for Marriott will be and sort of how that cadence works for our model?

Well, I'm sorry, the reimbursement, when we talk about the operating profit guarantees. Sure. And Sourav can give you color on what they are, what we got last year, what we'll get this year. And the -- our anticipated property performance is reflected in our guidance. So that's already there for you.

And just to expand on the guarantees. In 2025, we did receive some operating guarantee from the MTCP2, that was about $2 million. It was $1 million in the third quarter, $1 million in the fourth quarter. But remember, we did get a $24 million for HTCP, the Hyatt Transformational Capital Program, throughout 2025. In 2026, we will get operating profit -- guarantee for HTCP, that's about $7 million, and that's really for the Hyatt Manchester in San Diego. And the MTCP2, we will get about $12 million through the year. So that's a total of $19 million. So in other words, it's about a $7 million delta in terms of what we'll get for '26 versus '25, so $7 million lower.

Our next question comes from Dan Politzer from JPMorgan.

I wanted to touch on Maui a bit here. You came into last year forecasting, I think, $90 million of EBITDA, ended at $110 million, and now you're forecasting $120 million for 2026. I guess what's -- is there some element of conservatism in there as we think about the path getting back to $160 million? And what are the puts and takes to that 2026 outlook?

Sure. So when you look at -- you're right, we started off like last year at forecasting $90 million for 2025, and we ended up at $111 million. And now we are forecasting an additional $9 million. Based on the current booking pace and how things are shaping up, we feel pretty confident in terms of the $120 million guide. The reality is, as we had talked about earlier, that the Hyatt Regency, that's the one in Ka'anapali, that's the one which is going to take a little bit of time to come back because of the lead time required for the groups to come back in a meaningful way.

I will say that the Wailea Hotel, the Fairmont Kea Lani actually reached a high watermark in 2025 with $49 million of EBITDA, and Andaz as well on the way there as well. So the Wailea side is almost completely recovered, if you will, relative to pre-fire. The Hyatt Regency has a little ways to go and has made meaningful progress, and we are expecting a significant amount of growth for the Hyatt Regency Maui. I mean just to put it into perspective, that property, we're expecting to go from about $28 million of EBITDA to close to $34 million for 2026.

So significant growth there, and we're making considerable progress. At this point in time, we feel comfortable with the $120 million. Does that change over the course of the year as we see potential group pace pick up and short-term pick up? Absolutely. So we will provide an update on the next call. So there could be potential upside in those numbers.

Our next question comes from Smedes Rose from Citigroup.

I just wanted to ask a little bit about as these CapEx programs that you're doing with the brands kind of finish up over the course of this year, and it looks like total CapEx spending is kind of on a downward trend. Is it fair to think that, that could continue to kind of move down slightly? And does that change the way you're thinking about -- you and the Board are thinking about your quarterly dividend payments versus kind of year-end true-ups?

See, Smedes, we're always looking for opportunities to invest in our assets if we can generate an acceptable return on that investment. So we have done a lot of transformational renovations in the portfolio. I think it's a total of about 33 assets will have been transformationally renovated now, and that excludes the Washington Marriott Metro Center, which we sold or would have been 34, that was 1 of the original 16 programs. So I think stay tuned. We'll look for other opportunities after we complete these assets going forward. The portfolio is in terrific shape given the amount of capital that we put in it. And you can see that in the performance that we've been able to generate.

So with respect to the dividend, our objective is to pay out our taxable income and to pay a sustainable dividend going forward. So it's something that we will revisit from time to time. And if a policy change is warranted, that's something we'll discuss with the Board of Directors, and we will inform you at that point in time. But at this point in time, we are on track for our $0.20 dividend that's paid this quarter coming up and stay tuned for the next dividend announcement.

Our next question comes from Aryeh Klein from BMO Capital Markets.

Jim, you talked a bit about selling the Four Seasons and your general view on realizing value within the portfolio. I was hoping maybe you can talk a little bit about the other side of that and what you're seeing out there on the acquisition side, particularly with the $500 million of capital gains that could theoretically go towards acquisition.

Sure, Aryeh. I would say that the acquisition market generally is better than it was last year, but it's still not robust. And we do have an opportunity to effectuate a reverse like-kind exchange. If we were in a position to identify assets, accretive asset acquisitions within 45 days, and I want to make that point very clear. If we do a reverse like kind of change, it's going to be an accretive transaction. We're not going to acquire an asset just to effectuate a like-kind exchange. I think the proof is in the pudding, and I've talked about it earlier today and talked about it in the past. So we are going to look at what's out there relative to our current trading multiple.

And generally, most of the deals that we've done, Aryeh, have been based on relationships that we have in the industry. So we're thinking about it as a team, the investments team and others here at Host are thinking about what assets might be available to us to effectuate this. But we're perfectly comfortable returning $0.5 billion in the form of a special dividend to our shareholders. I mean that is tangible. It's $0.72 a share roughly, it's meaningful, and it is a piece of total shareholder return. So I'd say, stay tuned. But at this point in time, I think it's more likely than not that we will pay the special dividend.

Our next question comes from Cooper Clark from Wells Fargo.

As we think about the $600 million in proceeds outside of the taxable gains, you noted a few options as it relates to allocation in terms of returning capital through dividend and buybacks, reinvesting in the portfolio and potentially acquisitions. As you sit here today, can you talk about which one of those options looks most attractive and where you're seeing the best opportunity?

Cooper, this is going to evolve. It's not something that we have to -- we don't have to act on the balance of the proceeds in any short-term time frame. So we're going to sit back and take measure of how the market evolves, how our operating performance evolves over the course of the year, what happens in the acquisition market. And at the appropriate point in time, we will make some decisions with respect to what we do with the incremental cash that's left over. But I can't sit here today and tell you what the highest and best use of that cash is. It's something that we're going to take a measured approach to as we always do, and we'll just have to wait and see how the year plays out.

Our next question comes from Chris Darling from Green Street.

Jim or Sourav, I'd like to dive a little bit deeper on the expense outlook for the year. I think you mentioned wage and benefit expected to grow about 5%. Anything you can share on labor availability, whether you're seeing sort of an easing in the market? And then if you're able, it'd be helpful to break down some of your other expenses, any other major line items where you have visibility.

Sure thing, Chris. So obviously, given at the midpoint, we're expecting flat margins or expense growth. There's this total expense growth that's assumed at 3.3% with total revenue growth of 3.3%. Yes, the wage rates are expected to go up 5% for the year. But obviously, we do have certain other benefits that are overall expenses can be lower for the year. That's being driven by a few things. It's productivity enhancements. There's a lot of focus on really honing in on what the best labor standards should be. And we literally are going position by position and working with our managers to make sure that there is keen focus on the ideal standards that drive scheduling and forecasting for labor. So that's a big piece of it.

The other thing is insurance should be down for the year. Obviously, we did not have any weather-related events in 2025. So hoping for a good outcome for our insurance renewal. So that should help our overall expense growth as well.

In terms of labor availability, we have not seen any challenges. And honestly, didn't see any challenges at all even coming out of COVID. And that's primarily because, as we have stated earlier, we are really predisposed to brand-managed hotels, which really do a great job with talent acquisition and talent retention. So from that perspective, we haven't really had any issues being able to sort of staff at the hotel level.

Our next question comes from Duane Pfennigwerth from Evercore ISI.

Just headwinds and tailwinds from a markets perspective. You've talked pretty consistently about Maui tracking better, maybe San Francisco. Maybe you could just comment on group pacing in Maui and for those 2 markets, what you expect the level of improvement to be? And then, I guess, away from those 2 markets, any markets you'd highlight in your portfolio that you think are going to be a material driver this year?

I'll let Sourav get into the pacing on Maui and some of the other markets, Duane. But one thing that we're excited about for the year that should be a benefit for our portfolio is the World Cup matches. So World Cup, we expect 60 basis points of full year RevPAR benefit from the World Cup. That's a net 40 basis point pickup if you take into consideration that 2025 benefited from the inauguration to the tune of 20 basis points. So we have -- given the geographic diversification of our portfolio, we have World Cup matches in 10 of our markets, which is, I think, really quite attractive for us going forward.

So we would expect a benefit in quarter 2 as there are more matches -- more markets in quarter 2 than in quarter 3. At this point in time, we don't have a good handle on how things are going to evolve because we believe that the booking pace is going to be 30 to 60 days out. And we'll have a much better indication in our May earnings call how World Cup is going to affect our performance for the year. So that's a big plus for us.

I'll let Sourav talk about pace in Maui and maybe pace in San Francisco as well because those are 2 other really strong markets for us in 2026.

Yes. Overall, just as a reminder, group makes up about only 22% in Maui. So the big push is really getting that group at the Hyatt Regency, and our RevPAR expectations right now for the Hyatt Regency is north of 10%. [indiscernible] and it's close to 11.5%. And we are pleased with how that is pacing.

Overall, Maui pace is relatively flat to last year, but that's just given how well we have performed and where pace was last year for the 2 hotels in Wailea. But Hyatt Regency where the group matters meaningfully, we are pacing really strong.

In terms of other markets where we're pacing really well, and this is specifically for the Host portfolio, we did mention Nashville, Atlanta, Miami, San Francisco, D.C. and Austin, which is benefiting just from the [indiscernible] at the Hyatt Regency. Nashville, we were expecting to pace up 13%. Atlanta, we are pacing up right now close to 10%. Miami is double digits, close to 15%. And San Francisco is almost pacing 20%. This is all total group revenue. D.C. is double digit as well at 10%. And Austin is at 26%. And the ones which are pacing behind are where there is a citywide impact. So specifically, San Diego, which you all know about, to some extent, Chicago, Boston and Seattle.

Our next question comes from Robin Farley from UBS.

Great. Most of my questions have been asked already. But just circling back to what you're looking to do with the proceeds from the Four Season sale. I know you mentioned you're maybe even leaning towards the dividend. But just wondering if you could talk a little bit about what type of assets you're looking at to use those proceeds for?

Robin, that's a broad question. So let me answer it in the context of the types of assets that we feel that we can create value with and also think about as we're deploying capital, maintaining our geographic diversification, which has served us very well over the course of the last 9 years or so.

So it's an asset that we believe will have meaningful upside opportunities from our asset management platform and our enterprise analytics platform. It will have diverse demand generators, a combination of group, leisure transient and business transient, and in a market that we feel has strong growth drivers going forward. So I can't get more specific in that because I don't have a specific asset in mind today, but those are the types of properties that we would be looking to acquire.

And we are out of time for questions. I would like to turn the call back over to Jim Risoleo.

Well, thank you again for joining us today. We always appreciate the opportunity to discuss our quarterly results with you and our -- in this case, our full year 2025 results, and we look forward to seeing many of you at conferences in the coming weeks. Have a great day, and thanks again.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, and welcome to the Host Hotels & Resorts Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the call over to Jamie Marcus, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward-looking statements under federal securities laws. 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, and we are not obligated to publicly update or revise these forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDAre and comparable hotel level results. You can find this information, together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release, in our 8-K filed with the SEC and in the supplemental financial information on our website at hosthotels.com.

With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer.

With that, I would like to turn the call over to Jim.

Thank you, Jamie, and thanks to everyone for joining us this morning. We continue to outperform our expectations in the third quarter, building on strong operating and financial results in the first half of 2025. In the third quarter, we delivered adjusted EBITDAre of $319 million a decrease of 3.3% over last year, and adjusted FFO per share of $0.35, which is down 2.8% compared to the third quarter of 2024. Year-to-date compared to 2024, adjusted EBITDAre and adjusted FFO per share were up 2.2% and 60 basis points respectively.

The operational results discussed today refer to our 76 hotel comparable portfolio in 2025, which excludes the Alila Ventana Big Sur and the Don CeSar. Additionally, we have removed the Washington Marriott and Metro Center, which was sold in the third quarter, and the St. Regis Houston, which was held for sale as of the third quarter and is expected to be sold in the fourth quarter.

Comparable hotel total RevPAR improved by 80 basis points compared to the third quarter of 2024, and comparable hotel RevPAR improved by 20 basis points, due to better-than-expected short-term transient demand pickup and higher rates across our portfolio. Comparable hotel EBITDA margin for the quarter declined by 50 basis points year-over-year to 23.9%, driven by expense increases in wages and benefits.

Turning to business mix. RevPAR growth in the third quarter exceeded our expectations at our resort properties, driven by short-term leisure transient demand pickup and rate growth despite headwinds from transformational renovations, the Jewish holiday shift and lingering impacts from macroeconomic uncertainty. Transient revenue grew by 2%, driven by double-digit growth at our resorts. We saw particularly strong performance in Maui, San Francisco, New York and Miami.

Digging into Maui, the leisure transient demand recovery continued. Maui's 20% RevPAR growth and 19% [indiscernible] growth were driven by a substantial increase in occupancy and strong out-of-room spending on [ F&B ], golf and spa services. Looking forward, total group revenue pace in Maui is up 13% for 2026, reflecting continued momentum behind the recovery.

Turning to business transient. Revenue was down 2% in the third quarter, driven by a continued reduction in government room nights. As expected, group room revenue decreased approximately 5% year-over-year driven primarily by planned renovation disruption, the Jewish holiday calendar shift and reduced short-term group pickup. Our definite group room nights on the books increased to $4 million for 2025. In full year 2025 total group revenue pace is up 1.2% to the same time last year.

Ancillary spending by guests remains strong, as evidenced by our 80 basis point total RevPAR growth in the third quarter. F&B revenue was flat as increases in outlet revenue were offset by decreases in banquet and catering revenue from lower group business volume. We also saw particularly strong growth in other revenue which was up 7%, including growth in golf and Spa.

Turning to the Don CeSar. We completed the final phase of reconstruction in the third quarter, reopening 2 restaurant outlets and the lower-level kitchen. During the reconstruction, we rebuilt infrastructure to increase resilience, including elevating critical equipment and systems and incorporating flood barriers. We are continuing to see better-than-expected near-term transient pickup, higher F&B capture and increased group bookings, which allowed us to raise our full year EBITDA expectations for the resort to $6 million from $3 million.

We collected $5 million of business interruption proceeds for Hurricane Helene and Milton in the third quarter, which we discussed on our second quarter call, bringing the total business interruption proceeds collected to $24 million this year. While we expect to collect additional business interruption proceeds, the timing and amounts of additional payments are subject to ongoing discussions with our insurance carriers.

Turning to capital allocation. In August, we sold the Washington Marriott Metro Center for $177 million, or 12.7x trailing 12-month EBITDA. As part of the transaction, we provided $114 million of seller financing at a 6.5% interest rate in order to facilitate a [ 1031 ] exchange for the buyer in a timely manner. Since 2018, we have disposed of approximately $5.2 billion of hotels at a blended 17.1x EBITDA multiple, including estimated foregone capital expenditures of $1 billion, which compares favorably to our $4.9 billion of acquisitions over the same period at a blended 13.6x EBITDA multiple.

Turning to portfolio reinvestment. As of the third quarter, the Hyatt Transformational Capital program is approximately 65% complete, and is tracking on time and under budget. Renovations at the Hyatt Regency Capitol Hill are complete, and subsequent to quarter end, we substantially completed the Hyatt Regency Austin. Renovation of the public and meeting spaces at the Grand Hyatt Washington, D.C. has resumed now that the Hyatt Regency Capitol Hill is complete. Renovations are also well underway at the Hyatt Regency [ Reston ] and the Manchester Grand Hyatt San Diego. The final property and the Hyatt Transformational Capital program which we expect to complete in early 2027.

Building on the success of our prior transformational capital programs, we are excited to announce that we have reached a second agreement with Marriott to complete transformational renovations at 4 properties in our portfolio. The properties include the Ritz-Carlton Marina [ Delray ], the Ritz-Carlton Naples resort at [ Tiburon ], the Westin Caroline and the New Orleans Marriott, which is already underway. We believe these reinvestments will position the hotels to outperform competitors in their respective markets while enhancing long-term performance.

Marriott has agreed to provide $22 million in operating profit guarantees to cover the anticipated disruption associated with our investment, which is expected to be between $300 million and $350 million over the next 4 years. We are targeting stabilized annual cash-on-cash returns in the mid-teens through a combination of RevPAR index share gains and enhanced owner priority returns. Similar to the first Marriott transformational capital program, we are targeting average RevPAR index share gains of 3 to 5 points.

We also continue to make progress on value-enhancing development projects, including the new ballroom at the Don CeSar, and the [indiscernible] Canyon [ Sweets ] villas, both of which are expected to complete in the fourth quarter of 2025. We also completed the meeting space expansion project at the New York Marriott Marquis and made additional progress on the condo development at the Four Seasons Resort Orlando at Walt Disney World Resort. Construction on the mid-rise condominium building at the Four Seasons, Orlando is substantially complete, and we are on track to begin closing on sales this quarter. We now have deposits and purchase agreements for 23 of the 40 units, including 8 of the 9 villas.

In 2025, our capital expenditure guidance range is $605 million to $640 million, which includes between $75 million and $80 million for property damage reconstruction, the majority of which we expect to be covered by insurance. Our CapEx guidance also reflects approximately $280 million to $295 million of investment for redevelopment, repositioning and ROI projects. We expect to benefit from approximately $24 million of operating profit guarantees related to the Hyatt Transformational Capital program in 2025, which will offset the majority of the EBITDA disruption at those properties. We also expect to receive $2 million in operating profit guarantees related to the second Marriott Transformational Capital program this year. In addition to our capital expenditure investment, we expect to spend $80 million to $85 million on the condo development at the Four Seasons Resort Orlando at Walt Disney World Resort in 2025.

Looking back at prior transformational renovations and adjusting for the sale of Marriott Metro Center, we completed investments in 23 properties between 2018 and 2023, which are continuing to provide meaningful tailwinds for our portfolio. Of the 20 hotels that have stabilized post-renovation operations to date, the average RevPAR index share gain is over 8.5 points, which is well in excess of our targeted gain of 3 to 5 points. In short, the continued reinvestments we make in our properties yield strong returns and drive continued value creation for shareholders.

In August, we released our 2025 corporate responsibility report, which details our [ CR ] program, our key impact initiatives and industry-leading accomplishments. The report also provides an update on our performance and progress toward our 2030 CR goals, which are aligned with our long-term vision to create lasting value and drive positive outcomes for all stakeholders. The CR report can be found on the Corporate Responsibility section of our website at hosthotels.com.

Turning to our outlook for the full year. We once again outperformed our expectations in the third quarter. As a result of our strong performance year-to-date and improved expectations for the fourth quarter, we are increasing our comparable hotel RevPAR and total RevPAR guidance estimates to approximately 3% and 3.4%, respectively. We are also increasing our adjusted EBITDAre guidance to [ $1.730 billion ], representing a $25 million, or 1.5%, improvement. Sourav will discuss the assumptions behind these updated estimates in more detail. It is worth noting that since we laid out our initial full year 2025 guidance in February, we have increased our RevPAR expectations by 150 basis points and our adjusted EBITDA expectations by $110 million.

Wrapping up our third quarter commentary. We are pleased with our operating and financial outperformance this year, which we believe is a direct result of the capital allocation decisions we have made over the last 8 years. The bifurcation of the consumer is likely to lead to continued outperformance for upper upscale and luxury hotels, and we believe Host will be a beneficiary given our higher-end properties, our size and scale, our diversified business and geographic mix and our continued reinvestment in our portfolio. With our strong investment-grade balance sheet and access to many capital allocation levers, we will continue to use our competitive advantages to create value for our shareholders and position Host to outperform over the long term.

With that, I will now turn the call over to Sourav.

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our third quarter operations, our updated 2025 guidance and our balance sheet.

Starting with total revenue trends, comparable hotel total RevPAR growth continued to outpace RevPAR growth in the third quarter as both group and transient guests maintained elevated levels of out-of-home spend. Comparable hotel food and beverage revenue was flat in the quarter as growth in outlets offset declines in banquet and catering. Outlet revenue grew 6% driven by resorts, particularly in Maui, Phoenix and Orlando, as well as the newly renovated view at the New York Marriott Marquis, and [indiscernible] at the [ One Hotel ] South Beach. Overall, outset revenue per occupied room was up in the high single digits across our portfolio.

Banquet revenue was down 4% as decreases in group room night volume outpaced increases in banquet and catering contribution per group room night. Additional headwinds to growth included a tough comparison from a record banquet revenue in 2024 and planned renovation disruption this year. However, growth in banquet and catering contribution per group room night was up in the mid-single digits, driven by our hotels in Orlando, New York, Naples, Nashville, Chicago and [indiscernible].

Other revenue grew 7% in the third quarter as golf and spa revenues continued to grow. In fact, spa revenue was up double digits, driven by strength across the portfolio and continued tailwinds from recent [ Spa ] renovations at our Westin [ Kierland ] and Ritz-Carlton [indiscernible]. A further indication that affluent consumers are continuing to prioritize spending on premium experiences.

Shifting to business mix. Overall transient revenue was up approximately 2% compared to the third quarter of 2024, driven by higher rates and the continued growth of transient room nights at our resorts, led by Maui. During the third quarter, our resorts saw 3% transient rate growth year-over-year, alongside 10% transient room night growth driven by Maui, the recently repositioned Singer Island Resort, the [ One Hotel ] South Beach, and both of our Four Seasons resorts. Excluding Maui, transient revenue at our resorts was up 8%, indicating broad-based strength in luxury [indiscernible] travel.

Looking at recent holidays, resort revenue for the 4th of July and Labor Day weekend grew 8% and 13%, respectively. Maui drove results in both cases with other resorts up in the mid-single digits. Looking forward, transient revenue pace for the total portfolio is up 5% for Thanksgiving week compared to the same time last year. And the festive period is up 9%, driven by strength across the portfolio.

Business transient revenue was down 2% to the third quarter of 2024 as a decline in government room nights outpaced government and special corporate rate increases. For context, government room nights were down 20% in the third quarter, which is in line with decreases we saw in the second quarter.

Turning to group. As expected, revenue was down approximately 5% year-over-year, driven by planned renovation disruption, the Jewish holiday calendar shift and a reduced short-term group pickup. We estimate that approximately 70% of the group revenue decline was attributable to planned renovation disruption. Despite these headwinds, our properties achieved group rate growth of 3%. Additionally, we remain encouraged by the ongoing recovery in San Francisco, where group room revenue was up 14% in the quarter, driven by association group room night growth.

For full year 2025, we have 4 million definite room nights on the books, representing a 5% increase since the second quarter. As Jim mentioned, total group revenue pace is up 1.2% over the same time last year. Total group revenue pace is strong in the fourth quarter, driven by rate and banquet strength at our resorts. Looking ahead, our 2026 total group revenue pace is approximately 5% ahead of the same time last year, driven by rate, room nights and banker contribution. In fact, 2026 [indiscernible] group room night pace in key markets, including New Orleans, Washington, D.C. and San Francisco is up meaningfully compared to the same time last year.

Shifting gears to margins. Comparable hotel EBITDA margin of 23.9% was 50 basis points below the third quarter of 2024, driven primarily by elevated [indiscernible] growth. We continue to expect negative year-over-year margin comparisons for the fourth quarter, again primarily driven by elevated wages and benefits growth.

Turning to our outlook for 2025. As Jim mentioned, we are increasing our comparable hotel RevPAR and total RevPAR guidance estimates as a result of our outperformance year-to-date, and improved expectations for the fourth quarter. We now expect comparable hotel RevPAR growth of approximately 3%, and comparable hotel total RevPAR growth of 3.4% compared to 2024. We expect low single-digit RevPAR growth in the fourth quarter, an improvement over our prior guidance, partially driven by strong estimated RevPAR growth of 5.5% in October.

Our guidance assumes a continued recovery in Maui, no improvement in the international demand imbalance, and steady demand trends in the fourth quarter. Our guidance also takes into account the limited impact we saw from the government shutdown in October, primarily in Washington, D.C. and San Diego. If the government shutdown continues through the end of the year, full year RevPAR growth could be negatively impacted. We expect a comparable hotel EBITDA margin of approximately 28.8%, a 20 basis point improvement over our prior guidance midpoint, which is 50 basis points below 2024. Our 2025 full year adjusted EBITDAre guidance is [ $1.730 billion ]. This represents a $25 million, or 1.5% improvement over our prior guidance midpoint, driven by outperformance in the third quarter and improved expectations for the fourth quarter. As a reminder, this includes $24 million of business interruption proceeds that we received for Hurricanes Helene and Milton in 2025.

Our 2025 full year adjusted EBITDAre guidance also includes $6 million of estimated EBITDA from the Four Seasons Condo development which we expect to recognize concurrent with condo sales closings in the fourth quarter. The expected 2025 EBITDA contribution from the condo development has declined by $5 million, as 8 of the 23 contracts signed thus far have been for the villas, which are expected to close in 2026. It is important to note that we have not changed our overall EBITDA expectations for the project as sales prices and project costs remain on target.

Lastly, our adjusted EBITDAre guidance includes an estimated $6 million contribution from the Don CeSar, an improvement of $3 million since last quarter, and an estimated $14 million contribution from Alila Ventana, Big Sur, an improvement of $1 million since last quarter. As a reminder, both properties are excluded from our comparable hotel set in 2025.

Turning to our strong balance sheet and liquidity position. Our weighted average maturity is 5.2 years at a weighted average interest rate of 4.9%. We currently have $2.2 billion in total available liquidity, which includes $205 [ million ] of FF&E reserves and $1.5 billion available under the revolver portion of the credit facility. Our quarter end leverage ratio was 2.8x, and since our last call, Moody's upgraded the company's issuer rating from BAA3 to BAA2 with a stable outlook.

Our strong balance sheet is an important competitive advantage facilitating many of the capital allocation decisions that are contributing to our outperformance in the current environment. In October, we paid a quarterly cash dividend of $0.20 per share. As always, future dividends are subject to approval by the company's Board of Directors. We will continue to be strategic in managing our balance sheet and liquidity position over the near term.

Wrapping up, we believe our investment-grade balance sheet as well as our size, scale and diversification uniquely position Host to outperform in the current environment while capitalizing on opportunities for growth in the future. With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

[Operator Instructions] Our first question comes from the line of David Katz with Jefferies.

Look, a couple of things. And this is, I hope, the broad question, Jim and team that you like to answer. But the asset sale during the quarter, the investments in what you've done and sort of the outperformance that we're seeing in the portfolio, it does suggest some differentiation of yourselves versus the group overall.

Part one of the question is can we take this to expect that there might be some more asset trading in the market based on what you're seeing? And second, how are you thinking broadly about valuation and other ways that you can capture a little differentiated value for Host in the public market? I know there's a lot in there, but I'll take what you got.

I'll start, David, and then Sourav, feel free to jump in along the way. I'll answer your first question regarding the asset sales that we have completed year-to-date and the setup in the market generally for transactions.

So on many occasions, both in meetings and on earnings calls, I've said that we will be opportunistic with our capital allocation when it comes to dispositions and acquisitions. And the two deals that we've already announced and provided metrics on this year, I think, are really strong indications of our ability to execute. To sell the Washington Marriott Metro Center at 12.7x trailing 12 months EBITDA, a 6.5% cap rate. Urban hotel is, I think, a solid read through in many ways with respect to what sort of value is locked in this company. I mean that's not one of our best assets. And we're trading at 9.4x plus EBITDA plus or minus, and [ we're ] able to execute on that deal at 12.7x. Come on, guys, where's the multiple. Let's go.

And the same with the disposition of the [ Westin ] Cincinnati, as well as when we're in a position to talk about it, I think you'll be pleased with the metrics on the same [indiscernible] in Houston as well. We're not in a position to talk about that today. So we continue to test the market. We don't have to sell anything. I'll make that perfectly clear. We're sitting here with over $2 billion of liquidity today and a leverage ratio of 2.8x, a true differentiator not only among lodging REITs, the only investment-grade balance sheet, but among REITs in general.

It is truly a fortress balance sheet. And that leads to what we've been able to accomplish with the portfolio. We are -- we have a differentiated portfolio. I mean, the performance is proof that the capital allocation decisions that we made since 2018 have paid off in a material way. We have raised guidance both RevPAR and EBITDA every quarter this year. We went from 1.5% RevPAR guide in the February call, and [ $1.620 billion ] of EBITDA guide to the bottom line. Today, we raised that to 3% RevPAR guide top line. And we raised our EBITDA guide by $110 million. So the investments we made in our assets from 2019 to 2023, we've invested over $2 billion in ROI projects throughout the portfolio.

Marriott transformational capital program, 16 hotels. We completed another 8 properties that were outside of the [ MTCP ] program. As Sourav mentioned, and we both mentioned in our comments, we anticipated 3 to 5 points in yield index gains. Well, for the for the 23 properties that are left, I mean, Metro Center was one of them, we've achieved 8.5 points in yield index gains. That is meaningfully above mid-digit -- mid-teens cash-on-cash returns.

So if you look at the composition of our portfolio, our top 40 assets contribute 80% of our EBITDA. An you can do the math. I mean we did 24 assets already transformational. We're doing 6 with Hyatt. We're doing another 4 with Marriott. We're well on the way, and we will continue to deploy capital in our assets because it's our clearest line of sight to see improvements in bottom line performance.

And that coupled with, I would say what we acquired, but as importantly what we sold, is really leading to the outperformance today. And we're just really excited with how things are evolving here. And what we're seeing in 2026, the setup going forward. So the transaction market itself is, I would say, still tepid. There is not a lot of flow. Going back to Metro Center -- I'll end with how I began. I mean the fact that we have relationships and that people see [indiscernible] When they need an asset to effectuate a lifetime exchange, and we have the balance sheet that allows us to provide seller financing to give that buyer the added assurance that there's not going to be a hiccup and they're going to miss a window differentiator, 100%.

Our next question will come from the line of Michael Bellisario with Baird.

Jim, my question is on CapEx. It kind of seems broadly that renovation returns have been coming down, but you've been bucking that trend. So I guess two parts. I guess, one, how are you picking the hotels and markets to invest in? And two, is it fair to assume that maybe you didn't buy back stock in the quarter because you see better returns on these transformational CapEx projects?

Sure, Mike. Yes. We obviously screen all of our assets to determine what assets we should be putting capital in. And the level of CapEx that should be invested in any particular property. So as an example, the 4 new assets in the Marriott Transformational Capital program were decided upon after we, as a team, our design and construction group, our asset management group, our enterprise analytics group really looked at what sort of lift we believe that we could get through transformational renovations. And I do want to emphasize the word transformational.

Because it's one thing to just do a rooms redo. That could be deemed to be somewhat defensive. You have to do it. But if we see an opportunity to completely reposition a property, including a new arrival experience, a new lobby, new F&B platform. And at Kierland, we redid the spa, and now we're doing the rest of the hotel. That is how our decision is made to allocate capital. And obviously, we work very collaboratively with our operators. We work collaboratively with Hyatt on the 6 assets that we selected and the scope of the renovation, and we work collaboratively with Marriott as well. So we're delighted that not only given our size and scale, but our relationships, and our ability to perform has allowed us to, again, distinguish ourselves through the MTCP program, HCCP program and now [ MTCP 2 ] where the operators support our capital investment.

And I think that's really important to stay focused on. Are they supported through providing operating profit guarantees for anticipated disruption and enhanced [indiscernible] priority returns, which gives us an opportunity to really kind of anchor the underwriting for the capital that we're putting into these assets. So we'll continue to do this going forward. It's the clearest line of sight we have to strong cash-on-cash returns in this environment.

And yes, you're absolutely right. We didn't buy back stock in the quarter. We bought back $200 million of stock this year. But capital allocation in our mind, is a decision of where are we going to drive the greatest long-term value for our shareholders. And we believe investing in our assets, at least at this point in time, with our stock price not disrupted is where we will derive the better returns.

We bought back $200 million worth of stock, and there is a methodology to determine what the IRR is on those stock buybacks. It's what you can reissue the stock price at down the road over a period of time. Well, the multiple hasn't moved anything. So we're still where we were, and it's very difficult to see a clear line of sight to underwrite a strong IRR on a stock buyback when we have a clear line of sight to investing in our assets.

Our next question will come from the line of Cooper Clark with Wells Fargo.

Maui continues to have strong momentum and appreciate the early color on occupancy and out-of-room spend. Could you provide any early thoughts and color about how we should be thinking about the pace of recovery into '26 from an earnings perspective within the context of the $110 million guide implied in '25 guidance, and then the strong '26 group pace?

Sure. So Mali continues to recover really well. Our total group revenue pace for 2026 is a positive 13% versus same time last year. Just to put this into perspective, in terms of group room nights, we already have 67,000 group room nights on the books for 2026. And last year, at the same time, we had 55,000 on the books.

Compare that to back in 2019, at the same time, we had 73,000 group room nights on the books. So in other words, we're effectively 92% of the way already there relative to 2019 at a pretty attractive rate. So we feel pretty confident that Maui is going to continue to recover.

In terms of exactly how much incremental EBITDA we expect in addition to the $110 million of EBITDA that we are forecasting for this year? Obviously, we are still very preliminary reviews of the budgets. We don't have an exact number, but we are very hopeful that it's going to be positive. And it's going to be -- right now, I'll just say it's a wide range between the $110 million and the $160 million that we talked about. So hopefully, we will make incremental progress next year, but things are looking really good as it relates to group pace for 2026.

Our next question will come from the line of Chris Darling with Green Street.

Jim, you alluded to feeling good about Host setup for 2026. Hoping you could elaborate just in anecdotal fashion. And specifically, I'm thinking about some of the lower-hanging items across your portfolio, whether it be Maui, the Don, [ Turtle Bay ], maybe there's others that you'd call out. So any way you could speak to that and perhaps quantify to some extent as well?

Sure. Happy to, Chris. We have a number of our key markets, we are seeing really strong total group revenue pace for 2026. So Rob touched on Maui as one example. San Francisco is another one. I mean San Francisco is recovering really well. It's recovering nicely. 2026 total group revenue pace for San Fran is up over 20% for our portfolio. And group rate is pacing up 10%. Group room nights are pacing up 3%. So we feel really good about that. And the [ '26 ] citywide group room night pace is up 7% to last year in following a 54% increase in 2025.

So San Fran has, I think, turned the corner. It really has. The Mayor and the President of the San Francisco travel are really out there taking the lead for positive change for the city. Violent crime is down 22% in the city and property [indiscernible] crime is down 25%. So we're optimistic about San Francisco. And we also have Super Bowl in San Francisco as well next year.

And the other the broad positive for our portfolio. And I'll give you some color on a couple of other major markets. But we have 10 markets where we're going to see benefits from the World Cup as well. And that's going to provide a big positive for us. As an example, I think in New York, World Cup should be very positive for the market. Hosting a total of 8 games, including the final. So it's going to bring additional tourism to New York City as well.

Washington, D.C. is another bright star for us next year. Total group revenue pace is up 13%. So we feel good about that. Nashville total group revenue pace is up 26%. So there are a lot of really positive things out there on the group side of the business. And we're about 36% group. So it's meaningful to us, absolutely. Our total group revenue pace for the year at this point is up 5%, mid-single digits. We'll be watching that very closely to see how it evolves over the next couple of months.

But with all that said, we do believe that the assets that we have -- the fact that we have strong geographic diversification, we have no one market that delivers more than 8% of our EBITDA, and that's been very thoughtful as we assembled this portfolio and as we run the business. And the quality of the assets we have and the -- where customers are staying today, and where they're spending money? The fact that the affluent customer continues to prioritize premium experiences. And we see it not only quarter by quarter or year-over-year. We see it weekly. We track our properties weekly to see what is happening with RevPAR and we're not seeing any slowdown, Chris. I'll tell you that. We just continue to see the affluent customers spend money. So that's what gives us confidence that we're set up well for 2026.

Our next question will come from the line of [ Aryeh ] Klein with BMO Capital Markets.

On the group side, near-term group bookings, it sounds like they've been maybe a touch softer. Hoping you can provide a little bit more color on that, and maybe how broad-based that might be across business verticals? And any change in cancellation, or attrition, or lead volumes more broadly from a forward booking standpoint?

[ Ary ], there hasn't really been any sort of meaningful cancellation besides maybe a little bit what we have seen in D.C. tied with government business. But in general, I would say there is not a significant drop in terms of group pace by any means for Q4, we are set up really well. Our fourth quarter group pace is actually up over 7%. It's almost 8%. So still have a very strong group quarter.

The third quarter, we always knew going in that it would be a soft group quarter given the shift in Jewish holidays. And you saw that with the outperformance of October at 5.5%. You kind of have to look at sort of September, October together to see the Jewish holiday shift impact. But that's really why group was down in the third quarter. And some of the softness is really related more to government and government adjacent businesses.

Otherwise, overall, even though group volume was down, as you saw in Q3, which was expected, our banquet and catering revenue per group room night was actually up, so which shows that the groups are still willing to spend when they do show up with the properties. So we don't see any specific [indiscernible] in terms of driving group volume as we look at our group pace numbers into Q4 and into the future.

Our next question comes from the line of Chris Woronka with Deutsche Bank.

Congratulations on a very good year-to-date. Just wanted to ask on the -- you guys have, I think, over time see more success on some of the [indiscernible] spend growth, especially on the -- I think on the group side. Can you maybe talk a little bit about what's driving that and what [indiscernible] into that and what it's comprised of, whether it's just more higher menu prices, or more ancillary spend on things like retail and spa, and just your level of comfort that, that can continue?

There definitely is just increased spend. And whether that's spa, whether that's golf, obviously, resort destination fee is a component of it as well. As we get into next year, you'll obviously get into tougher comps, just given how much we have moved, particularly on the ancillary revenue and the banquet and catering group room night.

So if you're looking at next year, we had almost 1 point of delta between RevPAR and total RevPAR for this year, that is probably going to shrink for next year just given the tougher comps. But we -- just given the consumer that we are we are seeing, they continue to spend more. And the other thing is us also reinventing and repositioning our outlets, which has really benefited this year with the view at the Marriott Marquis and [indiscernible], the [ One Hotel ] South Beach, obviously, that's driven meaningful growth. So we're continuing to look at outlet opportunities where we could really drive incremental returns and incremental EBITDA from repositioning these outlets. So while there are other opportunities, I think, next year, certainly, you will run into just tougher year over your comps just given a ton of the initiatives that came to fruition for 2025.

Our next question will come from the line of Robin Farley with UBS.

I just wanted to get a little more insight into the group booking pace for next year. And when you mentioned it's up 5% for 2026. And that's room nights and rate, and I think forward banquet revenues. Just wondering if you could give us a little color on the nights increase versus rate increase. Just since it feels like overall group, not just for Host, but across the industry, just wondering if we're seen real room night demand recovery there? Or if it's still sort of mostly rate driven, which has kind of been the case this year?

Robin, so as of where we stand right now, it is more room night-driven. It's effectively almost all room night-driven. Rate is a very slight improvement year-over-year. And I'm talking about the pace, so the 5% that Jim referred to. We have effectively the same amount of group room nights on the books, it's slightly above relative to last year in terms of percentage of what we are expecting for next year. But we would expect the group room nights to be more just given the current pacing. But right now, as we stand on the 5%, just over 3% is group room nights.

Okay. Great. Super helpful. And maybe just as a quick follow-up. I know you talked about your priorities and seen your own multiple be so low. When you do think about potential asset acquisitions that [indiscernible] what could interest you. Is there anything -- can you characterize if you feel like there's a market or a type of -- just anything that you feel like would enhance your portfolio just to give us a sense of where your interest might lie?

I would tell you, Robin, that asset acquisitions today are a very low priority for us. Its just -- we don't think today in this environment with what we're seeing in the marketplace that we can generate the types of returns through acquisitions that we can generate through other capital allocation decisions. So that includes continuing to invest in our assets, continue to pay a sustainable dividend to our shareholders, which we have done consistently since we exited COVID, and we'll be thoughtful about dispositions in this environment.

I think if we saw a path forward to really doing an accretive acquisition, of course we would consider it, but we evaluate everything that's out there in the marketplace, and we're just not seeing anything that will underwrite at this point in time.

Our next question will come from the line of Smedes Rose with Citi.

I was just hoping maybe you could talk a little bit -- maybe more -- Sourav, about kind of any updated thoughts you have on kind of wages and benefits increases in 2026? And besides New York, are there any major markets where labor contracts are coming due, or have to be renegotiated?

Yes. So for 2025, we are still expecting wage rate growth, which we had messaged earlier on the year at about 6%. Just given that a lot of the contracts were front-end loaded, our expectation is that for next year, the wage rate growth is going to be lower. How much lower, I still don't know yet. We're still, as I said, going through budgets, will have a better indication and we'll provide that information on our next call next year.

In terms of contracts that are coming up, New York is really the only one that is coming up for next year -- mid next year. Obviously, we are not party to those negotiations with the union. It is our operators that negotiate with the union, and we will see where that ends up. It's too early to say at this point in time.

Our next question comes from the line of Duane Pfennigwerth with Evercore ISI.

This feels like the first clean fall in a while on the Gulf Coast without any major storms. I understand there are several puts and takes with operational impacts versus [ PI ]. But can you maybe frame the tailwinds to growth potential in 2026 from those storms on the Gulf Coast?

Well, Duane, we have, I think, 24 days left till the end of the -- official end of the hurricane season. So let's keep our fingers crossed that when we talk in February that this will hold true to form, and we won't see anything happen on the Gulf Coast this year.

The -- the tailwinds for us will be really -- the Don CeSar is performing extremely well. It's beating our expectations. We raised our assumption for performance this year from $3 million in Q2 to $6 million this year, and we're excited with how the Don is set up for 2026. The Ritz Naples continues to really perform quite well, and a lot of you have seen that property, a lot of you seen [indiscernible] as well, which we're going to be -- with [indiscernible] going to be undergoing a completely transformational renovation. So that will -- and we will receive the operating profit guarantees for the anticipated disruption, but that will likely have an impact on RevPAR for the Gulf Coast, but it's fully anticipated, and it's fully baked in.

And I think that the Gulf Coast. The Gulf Coast of Florida, generally, when storms come, it affects everything in Florida. So we're excited with how the [ One Hotel ] South Beach is performing, with how the Ritz-Carlton [indiscernible] is performing. Singer. The Singer resort is still ramping after a complete repositioning there as well. And this is all being driven by the type of customer that is continuing to prioritize experiences, premium experiences because these properties are all really high-end assets.

And so -- let's get through November, and we'll see how the assets perform into 2026. We did talk a bit about festive being up. And a lot of those assets are part of festive, I think, was at 9% for this year. Festive pace is up 9%, which is very positive. So again, I think this helps us set up the company very well into 2026.

And Duane, I'll just add there, right? When you think about all the benefit we'll see from [ HDCP ] next year, we will still obviously be under renovation at the Grand Hyatt, Manchester, but every other [ HCCP ] project effectively will be done. We should see a lift from that. As Jim mentioned earlier, Super Bowl's in San Francisco, which we'll see a lift from that. We have 10 cities where World Cup is going to be played depending on what teams play, in which cities, we should see lift from that.

So we feel really good about our setup for next year to be able to drive incremental top line. So not just organic in the market, but all the capital investments that we have made in those specific markets.

Our final question will come from the line of Jay [indiscernible] with Cantor Fitzgerald.

Just circling back to the EBITDA guidance raised by $25 million. Was that more of a portfolio-wide story, or certainly key markets to call out like Maui? And then with the strong October up 5.5% on RevPAR, how is November, December shaping up? If you can give any commentary on that?

Sure thing. I'll provide the -- provide the bridge on the guidance. So it's just clear in terms of the [ 1,705 ], how we got to the [ 1,730 ]. When you take the [ 1705 ], you're going to add $26 million in terms of just comparable operations lift. And that's $21 million in Q3 and $5 million in Q4. It is really across the portfolio. Our guide for Maui has not changed for the full year. That's primarily because even though we have outperformed on the top line for Maui, given that it's -- we have added a ton of room nights, there have been incremental variable costs associated with that. So that guide from Maui at [ 110 ] has effectively remained the same for the balance of the year. So that's $26 million overall comparable operations lift.

Another $3 million. As Jim mentioned, we have taken Don CeSar from $3 million to $6 million, so $3 million incremental for Don. Interest income of $6 million. And then -- those are all the adds. The deducts are $5 million from the dispose. That's about $4 million for Metro Center and $1 million for St. Regis, and then about $5 million that we talked about for the Four Seasons condos. So that will get you to the [ 1,730 ].

As it relates to November and December, right, at this point, you provided October numbers, obviously, the implied Q4 is around 1.5%. So when you look at the blended November, December, it's effectively slightly negative. Now that is fully expected. And I will say that in our increased guide for fourth quarter, it's not all October. 2/3 is October, 1/3 is November, December. We actually took up our guide for November, December as well. The reason is slightly negative, it's twofold.

One is, just last year, we had Christmas week overlap with [indiscernible]. So you didn't have a [indiscernible] a separate week, which obviously impacts travel. This year, it's a tougher comp [indiscernible] does not overlap with Christmas week. Secondly, last year, right after elections, we had, you may recall, short-term group pickup. And we did quite a bit of group business towards the end of November, beginning of December. So that helped 2024. So it's really tougher comps. But overall, at this point in time, assuming government [indiscernible] gets resolved, and we don't have any issues with travel and airports, we are well positioned to be able to achieve our forecast.

And that will conclude our question-and-answer session. I'll turn the call back over to Jim for any closing comments.

Well, everyone, thank you again for joining us today. We really appreciate the time that you spend with us, and we appreciate the opportunity to discuss our quarterly results with you and look forward to see many of you at upcoming conferences. I want to wish everyone a very wonderful Thanksgiving with your family and friends. Take care.

This concludes our call today. Thank you for joining. You may now disconnect.