Host Hotels & Resorts, Inc. (HST) Earnings

Management highlights

### Overall Financial Performance - Delivered Q2 2026 adjusted EBITDA RE of $525 million, up 5.8% year-over-year, and adjusted FFO per share of $0.63, up 8.6% year-over-year. - Comparable hotel RevPAR improved 7% and total RevPAR improved 5.9% year-over-year, driven by rate growth and higher food and beverage revenue. - Comparable hotel EBITDA margin expanded 60 basis points year-over-year to 31.9%, driven by rate growth and lower fixed expenses. ### Demand Drivers and Market Strength - Broad-based demand outperformed management expectations, with the 2026 World Cup contributing 160 basis points of Q2 RevPAR growth (70 basis points of full-year 2026 growth, a 10 basis point upward revision from initial forecasts). June RevPAR grew 15% in World Cup host markets, outpacing 12% growth in non-host markets. - Maui continues its market recovery: Q2 RevPAR grew 14%, occupancy increased more than 8 percentage points, and Maui golf revenue is 9% above pre-fire levels. Full-year 2026 EBITDA from Maui properties is still expected to hit $120 million. - Upcoming holiday transient bookings (Labor Day, Thanksgiving, festive period) are pacing double-digit growth across all markets and property types. ### Capital Allocation and Portfolio Strategy - Completed the sale of Sheraton Parsippany in June 2026 for ~$12 million, aligning with the strategy of selling lower-growth assets with high near-term capital expenditure requirements. - Paid a regular quarterly common dividend of $0.20 per share and a special dividend of $0.72 per share in July 2026, distributing the ~$500 million taxable gain from the Q1 2026 sale of two Four Seasons Resorts to shareholders. ### Capital Program Progress - The Hyatt Transformational Capital Program is 90% complete, with renovations finished at 5 of 6 properties, and the final property (Manchester Grand Hyatt San Diego) expected to be substantially complete by end-2026. - The second Marriott Transformational Capital Program is 37% complete, tracking on time and under budget. Approximately $19 million of 2026 operating profit guarantees from brand partners will offset most EBITDA disruption from renovations. - Completed the final phase of the Four Seasons branded condo development at Walt Disney World Resort on time and under budget. 28 of 40 units have closed to date; 2026 EBITDA from the project is now expected to be $16-$20 million (down from prior guidance of $20-$25 million, with the remaining gain expected to be recognized in 2027). ### Corporate Responsibility - Released the 2026 Corporate Responsibility Report, highlighting progress toward the company's 2050 net positive vision. The company received multiple industry recognitions for ESG leadership including NAREIT's 2026 Leader in the Light Award and inclusion in the Dow Jones Best in Class Indices. ### Balance Sheet Strength - After dividend payments, the company holds $3 billion in total available liquidity, with a leverage ratio of 2.2x, a weighted average debt maturity of 4.7 years, and a weighted average interest rate of 4.8%.

Guidance

- The company raised full-year 2026 comparable hotel RevPAR and total RevPAR growth guidance to 4.75% to 5.25% over 2025, representing a 125 basis point improvement to the midpoint from prior guidance. Roughly half of the upward revision reflects Q2 outperformance, and half reflects a stronger outlook for the second half of 2026. - Comparable hotel EBITDA margin is expected to be 40-50 basis points higher than 2025, with a 20 basis point improvement to the midpoint of guidance compared to prior forecasts, resulting in a midpoint margin of 29.7% (50 basis points above 2025). - The full-year 2026 adjusted EBITDA RE midpoint is $1.83 billion, a $20 million (1%) improvement over the prior guidance midpoint. This includes $16-$20 million EBITDA from the Four Seasons condo development, $29 million EBITDA from the sold Don Cesar property, and $7 million in prior hurricane business interruption proceeds. - Full-year 2026 capital expenditure guidance is maintained at $550-$630 million, including $25-$30 million for Kona low rainstorm reconstruction in Hawaii, with most losses above the deductible expected to be covered by insurance. - 2026 full-year wage rate growth is still expected to be 5%, accounting for approximately 50% of total comparable hotel operating expenses. Full-year 2026 total property expense growth is expected to be ~4.2% on 5% total revenue growth. - The company expects a 50 basis point full-year net benefit from special events: 70 basis points from the World Cup, partially offset by a 20 basis point headwind from the 2025 first quarter presidential inauguration. Maui is expected to contribute approximately 45 basis points of full-year 2026 RevPAR growth.

Segment performance

The company reports results for a comparable portfolio of 74 hotels, excluding two sold properties (Don Cesar and Sheraton Parsippany). Key segment performance by business type: 1) Transient: Transient revenue grew 7% year-over-year, the strongest growth in seven quarters, driven by higher rate growth from major events, citywide compression, and sustained leisure demand at luxury resorts. Business transient revenue grew 4%, driven by rate growth, with room night increases recorded in key markets including New York, Washington D.C., Chicago, and San Diego. Resort RevPAR grew 9% in the quarter, with Maui accounting for nearly 40% of this growth. 2) Group: Group room revenue grew 7% year-over-year, with growth split fairly evenly between rate and room night gains. Corporate groups drove two-thirds of the revenue increase, while associations and other groups grew 2-4%. The company sold 1.1 million group room nights in Q2 2026, with 3.8 million definite group room nights booked for the full year 2026 (an 8% increase from Q1 2026), and total full-year group revenue pacing 5% above 2025 levels. 3) Ancillary: Food and beverage revenue grew 6% year-over-year, with 7% growth in banquet and catering and 4% growth in outlet revenue. Other revenue was flat: lower attrition and cancellation revenue (compared to 2025's tough comparisons) offset gains of 4% in spa revenue and 9% in golf revenue.

Risks & headwinds

- Incentive management fees (IMF) are triggered when individual properties outperform performance thresholds, which reduces EBITDA flow-through from top-line RevPAR outperformance, particularly in high-performing quarters. - Short-term transient demand spikes from events like the World Cup can lead to temporarily higher travel agent commission expenses that are not expected to recur, but still pressure near-term margins. - The timing of condo sale closings for the Four Seasons Orlando development can cause expected EBITDA to shift between reporting years, leading to lower-than-expected EBITDA in 2026. - Future wage and benefit growth for 2027 remains uncertain, though management expects it will be lower than 2026's 5% rate. - Final details of Marriott's planned 50 basis point Program Services Fund reimbursement for hotel owners have not yet been released, so the full magnitude of benefit to Host cannot be quantified at this time.

Analyst Q&A

• Q: Why is EBITDA flow-through from the RevPAR guidance update lower than expected, and what impact will Marriott's new cost-cutting incentive programs have on Host's portfolio? /

  A: Lower flow-through in Q2 was driven by two one-time factors: triggered IMF for outperforming properties and higher than expected travel agent commissions tied to World Cup transient demand, neither of which are expected to continue in H2 2026. Marriott has already delivered cost savings to Host: a 20 basis point loyalty charge cut is worth ~$4 million annually, and reduced booking fees save ~$3 million annually. Planned future changes including the 50 basis point PSF reimbursement are expected to be a net positive for Host, particularly as Host has invested heavily in its Marriott portfolio, though full details are not yet available.

• Q: How is group pricing and booking momentum tracking, especially for the second half of 2026? /

  A: Full year 2026 total group revenue is pacing 5% above 2025, and group booking lead times and windows are now normalizing after pandemic disruptions. Third quarter group booking pace has improved from negative low single digits to positive low single digits, and fourth quarter group pace is now near 10% (up from 7% previously). Host added 210,000 room nights for the remainder of 2026 in Q2, compared to 167,000 added in the same period last year, with corporate groups driving most of the strength.

• Q: Has Host's capital allocation strategy changed given its strong balance sheet and dry powder, and will the company pursue acquisitions soon? /

  A: Host's core capital allocation strategy remains unchanged: maximize long-term shareholder return by evaluating all options (acquisitions, reinvestment, dividends, share repurchases, asset recycling) against internal return thresholds. While Host has ample liquidity and flexibility to pursue acquisitions, it will remain disciplined and will not overpay for assets. The company continues to underwrite potential deals but has not yet found opportunities that meet its return hurdles, and will prioritize high-quality assets with multiple demand generators where Host's active management can create incremental value.

• Q: What is the current state of Maui's recovery, what is full year 2026 EBITDA guidance, and what is the potential long-term stabilized EBITDA? /

  A: Full year 2026 Maui EBITDA guidance remains unchanged at $120 million. Maui's full year 2026 total revenue is pacing 7.5% above 2025, with RevPAR expected to grow 10% for the full year: third quarter revenue is pacing high single digits, and fourth quarter revenue is pacing strong double digits. 2027 group bookings are also off to a strong start. Long-term, Maui is expected to add an additional $20-$25 million in EBITDA once recovery is fully complete, though precise numbers are hard to forecast due to ongoing annual expense growth.