Host Hotels & Resorts Inc.
05/08/2026 | Press release | Distributed by Public on 05/08/2026 11:08
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report. Host Inc. operates as a self-managed and self-administered REIT. Host Inc. is the sole general partner of Host L.P. and holds approximately 99% of its partnership interests. Host L.P. is a limited partnership operating through an umbrella partnership structure. The remaining common OP units are owned by various unaffiliated limited partners.
Forward-Looking Statements
In this quarterly report on Form 10-Q, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "could," "expect," "may," "intend," "predict," "project," "plan," "will," "estimate" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are based on management's current expectations and assumptions and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those anticipated at the time the forward-looking statements are made.
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•the effect on lodging demand of (i) changes in national and local economic and business conditions, including concerns about U.S. economic growth, unemployment rates, and the potential for an economic recession in the United States or globally, or as a result of economic uncertainty due to trade disputes, tariffs and other protection measures, the recent high level of inflation, elevated interest rates, global economic prospects, consumer confidence and the value of the U.S. dollar, and (ii) factors that may shape public perception of travel to a particular location, including natural disasters, such as the Maui wildfires in 2023 and Southern California wildfires in 2025, extreme weather events, such as Hurricane Ian in 2022 and Hurricanes Helene and Milton in 2024, or extreme precipitation, such as the March 2026 Hawaii Kona Low rainstorm, and pandemics and other public health crises, such as the COVID-19 pandemic, or the occurrence or potential occurrence of terrorist attacks, all of which will affect occupancy rates at our hotels and the demand for hotel products and services;
•risks that U.S. immigration policies and border closings, visa processing times, travel restrictions or advisories, changes in energy prices or changes in foreign exchange rates will continue to suppress international travel to the United States generally or decrease the labor pool, and risks that the current travel imbalance (i.e., elevated international U.S. outbound travel combined with a decrease in inbound travel to the United States) may remain elevated relative to historic levels;
•the impact of geopolitical developments outside the U.S., such as large-scale wars or international conflicts, slowing global growth, or trade disputes, tariffs or other trade protection measures between the United States and its trading partners, all of which could cause economic volatility and affect global travel and lodging demand within the United States or result in supply chain disruptions;
•volatility in global financial and credit markets, which could materially adversely affect U.S. and global economic conditions, business activity, and lodging demand as well as negatively impact our ability to obtain financing and increase our borrowing costs;
•the impact of future U.S. governmental action to address budget deficits through reductions in spending and similar austerity measures, as well as the impact of U.S. government shutdowns, such as the recent shutdown of the Department of Homeland Security, the furlough of federal employees, and potential future disruption resulting from the failure of the U.S. Congress to enact appropriations bills or raise the federal debt ceiling, all of which could reduce the availability of government services and result in the suspension or delay of activities by key agencies that oversee air travel; the occurrence of any of these events may impact government related travel and leisure travel generally due to air traffic delays and the closures of parks or other tourism destinations, resulting in a decrease in demand at our hotels and which could also materially adversely affect U.S. economic conditions, business activity, credit availability and borrowing costs;
•operating risks associated with the hotel business, including the effect of labor stoppages or strikes, increasing operating or labor costs, including increased labor costs in the recent inflationary environment, the ability of our managers to adequately staff our hotels as a result of shortages in labor supply, including due to changes in
immigration laws or increased enforcement, and severance and furlough payments to hotel employees or changes in workplace rules that affect labor costs;
•the effect of rating agency downgrades of our debt securities or on the cost and availability of new debt financings;
•the reduction in our operating flexibility and the limitation on our ability to incur debt, pay dividends and make distributions resulting from restrictive covenants in our debt agreements and other risks associated with the amount of our indebtedness or related to restrictive covenants in our debt agreements, including the risk that a default could occur;
•our ability to maintain our hotels in a first-class manner, including meeting capital expenditures requirements, and the effect of renovations, including temporary closures, on our hotel occupancy and financial results;
•the ability of our hotels to compete effectively against other lodging businesses in the highly competitive markets in which we operate in areas such as access, location, quality of accommodations and room rate structures;
•our ability to acquire or develop additional hotels and the risk that potential acquisitions or developments may not perform in accordance with our expectations;
•the ability to complete hotel renovations on schedule and on, or under, budget and the potential for increased costs and construction delays due to shortages of supplies as a result of supply chain disruptions;
•relationships with property managers and joint venture partners and our ability to realize the expected benefits of our joint ventures and other strategic relationships;
•risks associated with a single manager, Marriott International, managing a significant percentage of our hotels;
•changes in the desirability of the geographic regions of the hotels in our portfolio or in the travel patterns of hotel customers;
•decreases in the frequency of business travel that may result from hybrid or remote work environments and other changes to business operations, such as alternatives to in-person meetings, including virtual meetings hosted online or over private teleconferencing networks;
•the continued competition from third-party internet travel intermediaries in attracting and retaining customers, which compete with our hotels;
•our ability to recover fully under our existing insurance policies for terrorist acts and natural disasters and our ability to maintain adequate or full replacement cost "all-risk" property insurance policies on our hotels on commercially reasonable terms;
•the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cyber-attacks;
•the effects of tax legislative action and other changes in laws and regulations, or the interpretation thereof, including the need for compliance with new environmental and safety requirements;
•changes in taxes and government regulations that influence or set wages, hotel employee health care costs, prices, interest rates or construction and maintenance procedures and costs;
•the ability of Host Inc. and each of the REITs acquired, established or to be established by Host Inc. to continue to satisfy complex rules in order to qualify as REITs for U.S. federal income tax purposes and Host Inc.'s and Host L.P.'s ability and the ability of our subsidiaries, and similar entities to be acquired or established by us, to operate effectively within the limitations imposed by these rules; and
•risks associated with our ability to execute our dividend policy, including factors such as investment activity, operating results and the economic outlook, any or all of which may influence the decision of our board of directors as to whether to pay future dividends at levels previously disclosed or to use available cash to pay special dividends.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions, including those risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 and in other filings with the Securities and Exchange Commission ("SEC"). We caution you not to
place undue reliance on these forward-looking statements, which reflect our analysis only and speak as of the date of this report. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material.
Operating Results and Outlook
Operating Results
The following table reflects certain line items from our unaudited condensed consolidated statements of operations and significant operating statistics (in millions, except per share and hotel statistics):
| Historical Income Statement Data: | |||||||||||||||||
|
Quarter ended March 31, |
|||||||||||||||||
| 2026 | 2025 |
Change
|
|||||||||||||||
| Total revenues | $ | 1,645 | $ | 1,594 | 3.2 | % | |||||||||||
| Net income | 501 | 251 | 99.6 | % | |||||||||||||
| Operating profit | 319 | 285 | 11.9 | % | |||||||||||||
| Operating profit margin under GAAP | 19.4 | % | 17.9 | % | 150 | bps | |||||||||||
|
EBITDAre⁽¹⁾
|
$ | 537 | $ | 508 | 5.7 | % | |||||||||||
|
Adjusted EBITDAre⁽¹⁾
|
543 | 514 | 5.6 | % | |||||||||||||
| Diluted earnings per common share | 0.72 | 0.35 | 105.7 | % | |||||||||||||
| NAREIT FFO per diluted share⁽¹⁾ | 0.66 | 0.63 | 4.8 | % | |||||||||||||
| Adjusted FFO per diluted share⁽¹⁾ | 0.67 | 0.64 | 4.7 | % | |||||||||||||
| Comparable Hotel Data: | |||||||||||||||||
|
Quarter ended March 31, |
|||||||||||||||||
| 2026 | 2025 |
Change
|
|||||||||||||||
| Comparable hotel revenues⁽¹⁾ | $ | 1,544 | $ | 1,474 | 4.7 | % | |||||||||||
| Comparable hotel EBITDA⁽¹⁾ | 505 | 472 | 7.0 | % | |||||||||||||
| Comparable hotel EBITDA margin⁽¹⁾ | 32.7 | % | 32.0 | % | 70 | bps | |||||||||||
| Comparable hotel Total RevPAR⁽¹⁾ | $ | 418.20 | $ | 399.66 | 4.6 | % | |||||||||||
| Comparable hotel RevPAR⁽¹⁾ | 244.11 | 233.77 | 4.4 | % | |||||||||||||
___________
(1)EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share and comparable hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. See "Non-GAAP Financial Measures" and "Comparable Hotel Operating Statistics and Results" for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics are based on 74 comparable hotels as of March 31, 2026 and include adjustments for non-comparable hotels, dispositions and acquisitions. See Comparable Hotel RevPAR Overview for results of the portfolio based on our ownership period, without these adjustments.
Revenues
Total revenues increased $51 million, or 3.2%, as compared to the first quarter of 2025, primarily due to improvements in room revenues driven by strong leisure transient demand, coupled with increased out-of-room spend driving food and beverage and other revenues. In addition, $26 million of revenues were recognized during the first quarter of 2026 from the sale of four condominium units in the development adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort. Results for the first quarter of 2026 also benefitted from a full quarter of operations following the reopening of The Don CeSar in March 2025. These increases were partially offset by the 2025 and 2026 dispositions of The Westin Cincinnati, Washington Marriott at Metro Center, St. Regis Houston, and the Four Seasons Resort Orlando at Walt Disney World® Resort and the Four Seasons Resort and Residences Jackson Hole. Comparable hotel RevPAR
increased 4.4% for the quarter, primarily due to an increase in average room rates of 3.9%, and a slight increase in occupancy compared to the first quarter of 2025, reflecting strength in both transient and group business.
Comparable hotel Total RevPAR increased 4.6% for the first quarter, compared to 2025, primarily due to the rate increases and improvements in food and beverage revenues driven by strength in transient business and group contribution, as well as strong ancillary revenues. The growth was led by our San Francisco/San Jose market with an increase of 21.4%, driven by both rate and occupancy growth and benefitting from the Super Bowl. All of our Florida markets also delivered strong performances, particularly the Jacksonville and Miami markets with increases of 19.5% and 16.1%, respectively, in the first quarter. These strong performances were partially offset by comparable hotel Total RevPAR declines in our New Orleans and Washington, D.C. markets of 21.3% and 11.2%, respectively, both of which faced difficult comparisons due to special events hosted during the first quarter of 2025 and due to renovation disruption. Additionally, comparable hotel Total RevPAR in our Maui market increased just 1.6% and in our Oahu market declined 8.6%, both affected by the Kona Low rainstorm in March 2026.
Operating profit
For the first quarter of 2026, operating profit margin under GAAP improved 150 basis points to 19.4%, primarily due to improvements in operations. Our comparable hotel EBITDA margin was 32.7%, an increase of 70 basis points compared to the same period in 2025, as improvements in average rates were able to offset an increase in wages expense.
Net income, Adjusted EBITDAre, Diluted Earnings per Common Share, and Adjusted FFO per share
Net income increased $250 million, or 99.6%, for the quarter, primarily due to gains on the sale of assets, combined with the improvements in operations. These changes led to an increase in diluted earnings per share of $0.37, or 105.7%, for the quarter. Adjusted EBITDAre, which excludes gain on sale of assets, among other items, increased $29 million to $543 million, reflecting improvements in revenues from operations and the condominium sales, partially offset by an increase in wages and benefits. Adjusted FFO per diluted share increased $0.03 to $0.67 for the first quarter, reflecting the improvement in Adjusted EBITDAre and the impact of share repurchases in 2025 and 2026, partially offset by an increase in interest expense and income taxes, which are included in Adjusted FFO per diluted share but not Adjusted EBITDAre.
Outlook
During the first quarter of 2026, strong leisure transient demand led to year-over-year comparable hotel RevPAR growth of 4.4%. Results reflect an increase in transient revenue driven by higher average rates and solid group demand. Expectations for the remainder of the year reflect a continuation of this trend in a stable operating environment, with leisure transient strength bolstered by special events, including the FIFA World Cup games, and modest improvements to short-term group booking trends. However, ongoing global conflict has introduced additional uncertainty around the macroeconomic backdrop and international travel.
From a macroeconomic perspective, economic conditions during the first quarter of 2026 remained generally supportive of economic growth. High-end consumers, which represent the majority of the customers at our hotels, continue to benefit from rising stock and asset markets as well as increasing disposable incomes, which has allowed our properties to drive revenue growth. Looking ahead, the divided nature of the economic trends is expected to persist, with discretionary spending and travel demand continuing to be concentrated among higher-income households. At the same time, the conflict in the Middle East, coupled with elevated policy uncertainty domestically and the potential for higher-for-longer interest rates present downside risks to growth. The increased uncertainty during the first quarter of 2026 has led to a decline in the full year GDP growth forecasts, with real GDP now projected to grow by approximately 2.2%. However, business investment remains notably healthy at approximately 3.7%, according to the April 2026 Blue Chip Economic Indicators.
Hotel supply growth expectations remain below the historical average, although we expect to see above-average growth in a few markets where our hotels are located. Supply chain challenges, which may be exacerbated by current tariffs and trade policies, have resulted in new development project delays across the U.S. We anticipate that the construction pipeline will remain modest until macroeconomic uncertainty moderates and interest rates decline further.
Based on the trends noted, we expect comparable hotel RevPAR growth for the full year 2026 will be between 3.0% and 4.5%. We expect year-over-year margin comparisons to moderate as the year progresses, primarily driven by lower rate growth expectations in the second half of the year.
As discussed above, the current outlook for the lodging industry remains uncertain, reflecting varying analyst assumptions surrounding the impact of trade policy, elevated inflation and interest rates, concerns regarding U.S. economic growth, the current travel imbalance due to the decrease in inbound travel to the United States and ongoing geopolitical conflicts. Therefore, there can be no assurances as to lodging demand performance for any number of reasons, including, but not limited to, deteriorating macroeconomic conditions.
Strategic Initiatives
Dispositions. During the first quarter, we sold the Four Seasons Resort Orlando at Walt Disney World® Resort and the Four Seasons Resort and Residences Jackson Hole for a sales price of $1.1 billion. The proceeds are net of $23 million for the buyer's acquisition of the FF&E reserves. We also sold The St. Regis Houston during the first quarter for $51 million.
Capital Projects. Through the first quarter of 2026, we spent approximately $51 million on return on investment ("ROI") capital projects, including the transformation programs discussed below, and $71 million on renewal and replacement projects. We previously completed our restoration efforts at The Don CeSar following Hurricanes Helene and Milton, and as of March 31, 2026, we have received total insurance proceeds of $81 million related to our claims, of which $31 million has been recognized as business interruption proceeds, including $7 million in the first quarter of 2026.
In collaboration with Hyatt, we initiated a transformational capital program in 2023 on six properties in our portfolio. These investments are intended to position the targeted hotels to compete better in their respective markets while seeking to enhance long-term performance. We expect to invest approximately $125 million to $200 million per year on this program through 2027, for a total investment of approximately $550 million to $600 million. Hyatt has agreed to provide additional priority returns on the agreed upon investments and operating profit guarantees totaling $40 million to offset expected business disruptions. Approximately 83% of the total estimated costs of the program have been spent as of March 31, 2026. During the first quarter of 2026, we completed the transformational renovation at the Hyatt Regency Reston.
We also reached an agreement with Marriott International in 2025 to complete a second transformational capital program at four properties over a four-year period. These portfolio investments are designed to better position the assets to compete in their respective markets and enhance long-term performance. We expect to spend between $300 million and $350 million through 2029. In exchange, Marriott has provided enhanced owner priority returns on the agreed upon investments and operating profit guarantees of approximately $18 million, which is net of reductions for incentive management fees, to offset expected business disruption.
For full year 2026, we expect total capital expenditures of $545 million to $655 million, consisting of ROI projects of approximately $250 million to $300 million and renewal and replacement expenditures of $275 million to $325 million. The full year ROI project spend includes approximately $175 million to $210 million for the Marriott and Hyatt transformational capital programs discussed above. Additionally, we have added estimated spend of $20 million to $30 million for restoration work at our Hawaii properties following the Kona Low rainstorm in March. Remediation efforts are substantially complete, and the hotels remained operational with isolated instances of water damage. We are still evaluating the complete property and business interruption impacts of the storm, but currently estimate the total property costs to be approximately $25 million to $35 million, which includes remediation costs of up to $5 million. We expect our insurance coverage to substantially cover the property damage in excess of our insurance deductible.
Construction continued in the first quarter on the development of 40 condominiums on a five-acre development parcel to be Four Seasons-branded and managed residences at the Four Seasons Resort Orlando at Walt Disney World® Resort. Construction of the mid-rise building was completed in 2025, and the villas are expected to be completed by June of 2026. During the first quarter of 2026, we spent $8 million in development costs for this project and expect full year 2026 development costs for this project to be approximately $15 million. We recognized $26 million of revenues from the sale of four condominium units during the first quarter of 2026.
Results of Operations
The following table reflects certain line items from our unaudited condensed consolidated statements of operations (in millions, except percentages):
|
Quarter ended March 31, |
|||||||||||||||||
| 2026 | 2025 |
Change
|
|||||||||||||||
| Total revenues | $ | 1,645 | $ | 1,594 | 3.2 | % | |||||||||||
| Operating costs and expenses: | |||||||||||||||||
| Property-level costs ⁽¹⁾ | 1,284 | 1,288 | (0.3) | % | |||||||||||||
|
Cost of goods sold (2)
|
21 | - | N/M | ||||||||||||||
| Corporate and other expenses | 28 | 31 | (9.7) | % | |||||||||||||
| Net gain on insurance settlements | 7 | 10 | (30.0) | % | |||||||||||||
| Operating profit | 319 | 285 | 11.9 | % | |||||||||||||
| Interest expense | 59 | 57 | 3.5 | % | |||||||||||||
| Other gains | 242 | 4 | 5950.0 | % | |||||||||||||
| Benefit (provision) for income taxes | (17) | 1 | (1800.0) | % | |||||||||||||
| Host Inc.: | |||||||||||||||||
| Net income attributable to non-controlling interests | 7 | 3 | 133.3 | % | |||||||||||||
| Net income attributable to Host Inc. | 494 | 248 | 99.2 | % | |||||||||||||
| Host L.P.: | |||||||||||||||||
| Net income attributable to non-controlling interests | - | - | N/M | ||||||||||||||
| Net income attributable to Host L.P. | 501 | 251 | 99.6 | % | |||||||||||||
___________
(1)Amounts represent total operating costs and expenses from our unaudited condensed consolidated statements of operations, less cost of goods sold, corporate and other expenses and net gain on insurance settlements.
(2)Amounts represent the costs related to the development and sale of condominium units adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort.
N/M = Not meaningful.
Statements of Operations Results and Trends
The following table presents total revenues in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):
|
Quarter ended March 31, |
|||||||||||||||||
| 2026 | 2025 |
Change
|
|||||||||||||||
| Revenues: | |||||||||||||||||
| Rooms | $ | 943 | $ | 938 | 0.5 | % | |||||||||||
| Food and beverage | 517 | 503 | 2.8 | % | |||||||||||||
| Other | 159 | 153 | 3.9 | % | |||||||||||||
| Condominium sales | 26 | - | N/M | ||||||||||||||
| Total revenues | $ | 1,645 | $ | 1,594 | 3.2 | % | |||||||||||
N/M = Not meaningful.
Total revenues for the first quarter increased 3.2% compared to the first quarter of 2025, primarily due to an increase in room rates driven by strong leisure transient demand and continued strength in out-of-room spend driving food
and beverage and other revenues, as well as the reopening of The Don CeSar in March 2025. Total revenues also benefited from $26 million of condominium sales recognized in the first quarter of 2026 from the sale of four condominium units in the development adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort. These increases more than offset the reduction in revenues due to our 2025 and first quarter 2026 dispositions.
Rooms. Total rooms revenues increased $5 million, or 0.5%, for the first quarter compared to 2025, reflecting an increase at our comparable hotels and contribution from the reopening of The Don CeSar in March 2025, partially offset by a reduction in rooms revenues due to our 2025 and first quarter 2026 dispositions. Rooms revenues at our comparable hotels increased $39 million, or 4.5%, for the quarter primarily due to an increase in average room rate of 3.9% driven by leisure transient demand, particularly at our resorts, and an increase in group business, benefitting from event-related demand.
Food and beverage. Total food and beverage ("F&B") revenues increased $14 million, or 2.8%, for the first quarter compared to 2025, reflecting an increase in F&B revenues at our comparable hotels and contribution from the reopening of the Don CeSar, partially offset by a reduction in F&B revenues due to our 2025 and first quarter 2026 dispositions. F&B revenues at our comparable hotels increased $23 million, or 4.9%, which was driven by growth in outlet revenues from completion of ROI projects at several restaurant locations and growth in banquet and audio-visual revenues from strong group contribution.
Other revenues. Total other revenues increased $6 million, or 3.9%, for the first quarter compared to 2025, reflecting an increase at our comparable hotels and incremental revenues following the reopening of The Don CeSar, partially offset by the reduction in other revenues due to our 2025 and first quarter 2026 dispositions. Other revenues at our comparable hotels increased $8 million, or 5.7%, primarily due to an increase in golf, spa and other ancillary revenues.
Condominium sales. We recognized $26 million of revenues in the first quarter of 2026 from the sale of four condominium units in the development adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort.
Property-level Operating Expenses
The following table presents property-level operating expenses in accordance with GAAP and includes all consolidated hotels (in millions, except percentages):
|
Quarter ended March 31, |
|||||||||||||||||
| 2026 | 2025 |
Change
|
|||||||||||||||
| Expenses: | |||||||||||||||||
| Rooms | $ | 224 | $ | 225 | (0.4 | %) | |||||||||||
| Food and beverage | 327 | 323 | 1.2 | % | |||||||||||||
| Other departmental and support expenses | 373 | 364 | 2.5 | % | |||||||||||||
| Management fees | 67 | 69 | (2.9) | % | |||||||||||||
| Other property-level expenses | 103 | 111 | (7.2) | % | |||||||||||||
| Depreciation and amortization | 190 | 196 | (3.1) | % | |||||||||||||
| Total property-level operating expenses | $ | 1,284 | $ | 1,288 | (0.3) | % | |||||||||||
Our operating costs and expenses, which consist of both fixed and variable components, are affected by several factors. Rooms expenses are affected mainly by occupancy, which drives costs related to items such as housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues and are affected by occupancy and the mix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, which comprise approximately 58% of these expenses. For the first quarter of 2026, these expenses generally increased approximately 4.5% across our portfolio compared to 2025, primarily due to an overall increase in general wage rates and benefits. Wage and benefit rate inflation is expected to be approximately 5% in 2026.
Other property-level expenses consist of property taxes, the amounts and structure of which are highly dependent on local jurisdiction taxing authorities, and property and general liability insurance, all of which do not necessarily increase or decrease based on similar changes in revenues at our hotels.
Rooms. Rooms expenses decreased $1 million, or 0.4%, for the quarter, reflecting a reduction in rooms expense resulting from our 2025 and first quarter 2026 dispositions, partially offset by an increase at our comparable hotels. Our comparable hotels rooms expenses increased $6 million, or 2.9%, for the quarter driven by an overall increase in wage rates.
Food and beverage. F&B expenses increased $4 million, or 1.2%, for the quarter, reflecting an increase in F&B expenses for our comparable hotels of $11 million, or 3.7%, and incremental expenses following the reopening of The Don CeSar in March 2025, partially offset by a reduction in F&B expenses due to our 2025 and first quarter 2026 dispositions. Expenses at our comparable hotels increased, reflecting increased F&B revenues, though overall, F&B costs as a percentage of revenues declined approximately 1% year over year as a result of productivity improvements.
Other departmental and support expenses. Other departmental and support expenses increased $9 million, or 2.5%, for the quarter, reflecting an increase at our comparable hotels partially offset by the reduction in expenses due to our 2025 and first quarter 2026 dispositions. The increase at our comparable hotels of $20 million, or 5.9%, was primarily due to higher wage expense.
Management fees. Total management fees decreased $2 million, or 2.9%, for the quarter. Base management fees, which generally are calculated as a percentage of total revenues, were flat for the quarter as a slight increase at our comparable hotels was offset by the reduction in fees due to our 2025 and first quarter 2026 dispositions. Incentive management fees, which generally are based on the amount of operating profit at each hotel after we receive a priority return on our investment, decreased $2 million, or 8.0%, for the quarter, due to the reduction in fees due to our 2025 and first quarter 2026 dispositions, while incentive management fees increased $1 million, or 3.3%, at our comparable hotels.
Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property-level expenses decreased $8 million, or 7.2%, for the quarter, primarily due to a reduction in expenses due to our 2025 and first quarter 2026 dispositions and a $2 million decrease at our comparable hotels. Other property-level expenses were partially offset by the receipt of operating profit guarantees under the transformational capital programs in both 2026 and 2025.
Other Income and Expense
Cost of goods sold. Cost of goods sold totaled $21 million for the quarter ended March 31, 2026, which related to the sale of four condominium units adjacent to the Four Seasons Resort Orlando at Walt Disney® Resort. Cost of goods sold for these condominiums consists primarily of capitalized construction and development costs, which are recognized upon the sale of individual units.
Corporate and other expenses. The following table details our corporate and other expenses for the quarters (in millions):
| Quarter ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| General and administrative costs | $ | 22 | $ | 25 | |||||||
| Non-cash stock-based compensation expense | 6 | 6 | |||||||||
| Total | $ | 28 | $ | 31 | |||||||
Net gain on insurance settlements. During the first quarter of 2026 and 2025, we recorded a gain on insurance settlements of $7 million and $10 million, respectively, for business interruption proceeds received related to Hurricanes Helene and Milton.
Interest expense. The following table details our interest expense for the quarters (in millions):
| Quarter ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash interest expense ⁽¹⁾ | $ | 56 | $ | 54 | |||||||
| Non-cash interest expense | 3 | 3 | |||||||||
| Total interest expense | $ | 59 | $ | 57 | |||||||
_________
(1)Including the change in accrued interest, total cash interest paid was $41 million and $56 million for the quarters ended March 31, 2026 and 2025, respectively.
Other gains. Other gains totaled $242 million for first quarter of 2026, reflecting the sales of The St. Regis Houston, the Four Seasons Resort Orlando at Walt Disney World® Resort and the Four Seasons Resort and Residences Jackson Hole.
Benefit (provision) for income taxes. We lease substantially all our properties to consolidated subsidiaries designated as taxable REIT subsidiaries ("TRS") for U.S. federal income tax purposes. Taxable income or loss generated/incurred by the TRS primarily represents hotel-level operations, net of the aggregate rent paid to Host L.P. by the TRS, on which we record an income tax provision or benefit. For the first quarter of 2026, we recorded a net income tax provision of $17 million, primarily due to the profitability of hotel operations retained by the TRS.
Comparable Hotel RevPAR Overview
We discuss operating results for our hotels on a comparable hotel basis. Comparable hotels are those properties that we consolidate as of the reporting date. Comparable hotels do not include the results of hotels sold or classified as held-for-sale, hotels that have sustained substantial property damage or business interruption, or hotels that have undergone large-scale capital projects, in each case requiring closures lasting one month or longer during the reporting periods being compared. See "Comparable Hotel Operating Statistics and Results" below for more information on how we determine our comparable hotels.
We also include, following the comparable hotels results by geographic location, the same operating statistics presentation on an actual basis, which includes results for our portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition. Lastly, we discuss our hotel results by mix of business (i.e., transient, group, or contract).
Hotel Operating Data by Location
The following tables set forth performance information for our hotels by geographic location for the quarter ended March 31, 2026 and 2025 on a comparable hotel and actual basis:
Comparable Hotel Results by Location
|
As of March 31, 2026
|
Quarter ended March 31, 2026 | Quarter ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Location |
No. of Properties |
No. of Rooms |
Average Room Rate |
Average Occupancy Percentage |
RevPAR | Total RevPAR |
Average Room Rate |
Average Occupancy Percentage |
RevPAR | Total RevPAR |
Percent Change in RevPAR |
Percent Change in Total RevPAR |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Miami | 2 | 1,038 | $ | 723.32 | 87.2 | % | $ | 630.77 | $ | 1,069.78 | $ | 652.77 | 84.1 | % | $ | 548.88 | $ | 921.13 | 14.9 | % | 16.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Florida Gulf Coast | 4 | 1,529 | 693.90 | 79.2 | % | 549.46 | 1,158.45 | 637.22 | 81.6 | % | 519.77 | 1,103.93 | 5.7 | % | 4.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Maui
|
3 | 1,580 | 668.13 | 78.0 | % | 520.91 | 800.88 | 683.78 | 75.0 | % | 513.04 | 788.61 | 1.5 | % | 1.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Phoenix | 3 | 1,565 | 528.97 | 83.2 | % | 439.93 | 922.54 | 500.68 | 81.3 | % | 407.28 | 890.19 | 8.0 | % | 3.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jacksonville | 1 | 446 | 565.94 | 73.3 | % | 414.58 | 989.96 | 524.64 | 68.0 | % | 356.95 | 828.70 | 16.1 | % | 19.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oahu | 2 | 876 | 495.26 | 76.7 | % | 379.96 | 571.86 | 483.66 | 83.8 | % | 405.20 | 625.53 | (6.2 | %) | (8.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New York | 3 | 2,720 | 343.81 | 80.5 | % | 276.66 | 418.04 | 327.97 | 79.0 | % | 258.99 | 382.34 | 6.8 | % | 9.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nashville | 2 | 721 | 339.15 | 76.7 | % | 260.04 | 445.92 | 324.92 | 80.4 | % | 261.13 | 451.22 | (0.4 | %) | (1.2 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Los Angeles/Orange County | 3 | 1,067 | 314.80 | 78.6 | % | 247.31 | 364.97 | 311.12 | 79.2 | % | 246.38 | 368.36 | 0.4 | % | (0.9 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Francisco/San Jose | 6 | 4,162 | 344.91 | 69.6 | % | 239.89 | 346.89 | 300.24 | 63.6 | % | 191.05 | 285.73 | 25.6 | % | 21.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Diego | 3 | 3,294 | 312.85 | 75.1 | % | 234.98 | 463.12 | 301.96 | 72.7 | % | 219.60 | 433.52 | 7.0 | % | 6.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Orlando | 1 | 2,004 | 268.46 | 76.2 | % | 204.64 | 508.55 | 260.42 | 74.9 | % | 195.13 | 488.25 | 4.9 | % | 4.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Washington, D.C. (CBD) | 4 | 2,788 | 304.15 | 62.9 | % | 191.30 | 291.68 | 333.42 | 67.2 | % | 223.90 | 328.62 | (14.6 | %) | (11.2 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northern Virginia | 2 | 916 | 268.57 | 69.2 | % | 185.73 | 287.38 | 271.39 | 65.4 | % | 177.61 | 289.32 | 4.6 | % | (0.7 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Austin | 2 | 769 | 271.16 | 67.6 | % | 183.24 | 330.58 | 267.21 | 67.4 | % | 180.05 | 324.90 | 1.8 | % | 1.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Houston | 4 | 1,710 | 229.11 | 74.7 | % | 171.25 | 235.94 | 220.34 | 74.3 | % | 163.72 | 233.72 | 4.6 | % | 0.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Philadelphia | 2 | 810 | 224.32 | 75.3 | % | 168.99 | 256.23 | 217.69 | 76.8 | % | 167.08 | 260.44 | 1.1 | % | (1.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Antonio | 2 | 1,512 | 241.61 | 65.1 | % | 157.18 | 266.06 | 229.79 | 66.3 | % | 152.40 | 252.38 | 3.1 | % | 5.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Atlanta | 2 | 810 | 222.75 | 68.3 | % | 152.14 | 272.12 | 222.74 | 67.3 | % | 149.83 | 256.93 | 1.5 | % | 5.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boston | 2 | 1,496 | 241.81 | 59.4 | % | 143.75 | 224.63 | 235.02 | 64.9 | % | 152.52 | 223.00 | (5.8 | %) | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Orleans | 1 | 1,333 | 204.42 | 64.0 | % | 130.89 | 218.92 | 256.20 | 71.4 | % | 182.91 | 278.00 | (28.4 | %) | (21.3 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Seattle | 2 | 1,315 | 210.15 | 55.3 | % | 116.32 | 165.55 | 212.06 | 54.7 | % | 116.05 | 159.55 | 0.2 | % | 3.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Denver | 3 | 1,342 | 188.23 | 55.4 | % | 104.22 | 166.69 | 183.68 | 55.6 | % | 102.11 | 159.71 | 2.1 | % | 4.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chicago | 3 | 1,562 | 182.02 | 51.8 | % | 94.38 | 145.04 | 186.39 | 53.0 | % | 98.78 | 147.67 | (4.5 | %) | (1.8 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 7 | 2,110 | 307.33 | 66.7 | % | 205.02 | 299.70 | 303.72 | 64.4 | % | 195.71 | 291.28 | 4.8 | % | 2.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Domestic | 69 | 39,475 | 352.13 | 70.7 | % | 248.82 | 427.75 | 339.59 | 70.3 | % | 238.66 | 409.58 | 4.3 | % | 4.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| International | 5 | 1,499 | 197.46 | 60.8 | % | 120.02 | 165.34 | 172.01 | 61.0 | % | 104.88 | 136.91 | 14.4 | % | 20.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All Locations | 74 | 40,974 | $ | 347.24 | 70.3 | % | $ | 244.11 | $ | 418.20 | $ | 334.24 | 69.9 | % | $ | 233.77 | $ | 399.66 | 4.4 | % | 4.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Results by Location - actual, based on ownership period(1)
|
As of March 31,
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Quarter ended March 31, 2026 | Quarter ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Location |
No. of Properties |
No. of Properties |
Average Room Rate |
Average Occupancy Percentage |
RevPAR | Total RevPAR |
Average Room Rate |
Average Occupancy Percentage |
RevPAR | Total RevPAR |
Percent Change in RevPAR |
Percent Change in Total RevPAR |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Miami | 2 | 2 | $ | 723.32 | 87.2 | % | $ | 630.77 | $ | 1,069.78 | $ | 652.77 | 84.1 | % | $ | 548.88 | $ | 921.13 | 14.9 | % | 16.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Florida Gulf Coast | 5 | 5 | 659.61 | 78.7 | % | 519.00 | 1,084.79 | 626.09 | 69.5 | % | 434.83 | 913.78 | 19.4 | % | 18.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maui | 3 | 3 | 668.13 | 78.0 | % | 520.91 | 800.88 | 683.78 | 75.0 | % | 513.04 | 788.61 | 1.5 | % | 1.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Phoenix | 3 | 3 | 528.97 | 83.2 | % | 439.93 | 922.54 | 500.68 | 81.3 | % | 407.28 | 890.19 | 8.0 | % | 3.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jacksonville | 1 | 1 | 565.94 | 73.3 | % | 414.58 | 989.96 | 524.64 | 68.0 | % | 356.95 | 828.70 | 16.1 | % | 19.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oahu | 2 | 2 | 495.26 | 76.7 | % | 379.96 | 571.86 | 483.66 | 83.8 | % | 405.20 | 625.53 | (6.2 | %) | (8.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New York | 3 | 3 | 343.81 | 80.5 | % | 276.66 | 418.04 | 327.97 | 79.0 | % | 258.99 | 382.34 | 6.8 | % | 9.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nashville | 2 | 2 | 339.15 | 76.7 | % | 260.04 | 445.92 | 324.92 | 80.4 | % | 261.13 | 451.22 | (0.4 | %) | (1.2 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Los Angeles/Orange County | 3 | 3 | 314.80 | 78.6 | % | 247.31 | 364.97 | 311.12 | 79.2 | % | 246.38 | 368.36 | 0.4 | % | (0.9 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Francisco/San Jose | 6 | 6 | 344.91 | 69.6 | % | 239.89 | 346.89 | 300.24 | 63.6 | % | 191.05 | 285.73 | 25.6 | % | 21.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Diego | 3 | 3 | 312.85 | 75.1 | % | 234.98 | 463.12 | 301.96 | 72.7 | % | 219.60 | 433.52 | 7.0 | % | 6.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Orlando | 1 | 2 | 355.01 | 74.5 | % | 264.55 | 596.12 | 435.81 | 73.3 | % | 319.65 | 660.15 | (17.2 | %) | (9.7 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Washington, D.C. (CBD) | 4 | 5 | 304.15 | 62.9 | % | 191.30 | 291.68 | 328.11 | 68.0 | % | 223.24 | 322.78 | (14.3 | %) | (9.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northern Virginia | 2 | 2 | 268.57 | 69.2 | % | 185.73 | 287.38 | 271.39 | 65.4 | % | 177.61 | 289.32 | 4.6 | % | (0.7 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Austin | 2 | 2 | 271.16 | 67.6 | % | 183.24 | 330.58 | 267.21 | 67.4 | % | 180.05 | 324.90 | 1.8 | % | 1.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Houston | 4 | 5 | 229.31 | 74.3 | % | 170.36 | 234.91 | 232.08 | 71.7 | % | 166.43 | 238.70 | 2.4 | % | (1.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Philadelphia | 2 | 2 | 224.32 | 75.3 | % | 168.99 | 256.23 | 217.69 | 76.8 | % | 167.08 | 260.44 | 1.1 | % | (1.6 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Antonio | 2 | 2 | 241.61 | 65.1 | % | 157.18 | 266.06 | 229.79 | 66.3 | % | 152.40 | 252.38 | 3.1 | % | 5.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Atlanta | 2 | 2 | 222.75 | 68.3 | % | 152.14 | 272.12 | 222.74 | 67.3 | % | 149.83 | 256.93 | 1.5 | % | 5.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boston | 2 | 2 | 241.81 | 59.4 | % | 143.75 | 224.63 | 235.02 | 64.9 | % | 152.52 | 223.00 | (5.8 | %) | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Orleans | 1 | 1 | 204.42 | 64.0 | % | 130.89 | 218.92 | 256.20 | 71.4 | % | 182.91 | 278.00 | (28.4 | %) | (21.3 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Seattle | 2 | 2 | 210.15 | 55.3 | % | 116.32 | 165.55 | 212.06 | 54.7 | % | 116.05 | 159.55 | 0.2 | % | 3.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Denver | 3 | 3 | 188.23 | 55.4 | % | 104.22 | 166.69 | 183.68 | 55.6 | % | 102.11 | 159.71 | 2.1 | % | 4.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chicago | 3 | 3 | 182.02 | 51.8 | % | 94.38 | 145.04 | 186.39 | 53.0 | % | 98.78 | 147.67 | (4.5 | %) | (1.8 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 8 | 10 | 357.25 | 63.4 | % | 226.37 | 345.16 | 371.12 | 60.7 | % | 225.44 | 350.98 | 0.4 | % | (1.7 | %) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Domestic | 71 | 76 | 360.68 | 70.4 | % | 253.83 | 437.23 | 352.99 | 69.3 | % | 244.68 | 417.24 | 3.7 | % | 4.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| International | 5 | 5 | 197.46 | 60.8 | % | 120.02 | 165.34 | 172.01 | 61.0 | % | 104.88 | 136.91 | 14.4 | % | 20.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All Locations | 76 | 81 | $ | 355.63 | 70.0 | % | $ | 249.07 | $ | 427.58 | $ | 347.48 | 69.0 | % | $ | 239.86 | $ | 407.62 | 3.8 | % | 4.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
___________
(1)Represents the results of the portfolio for the time period of our ownership, including the results of non-comparable properties, dispositions through their date of disposal and acquisitions beginning as of the date of acquisition.
Hotel Business Mix
Our customers fall into three broad categories: transient, group, and contract business, which accounted for approximately 61%, 34%, and 5%, respectively, of our full year 2025 room sales. The information below is derived from business mix results from the 74 comparable hotels owned as of March 31, 2026. For additional detail on our business mix, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K.
For the first quarter, transient revenue increased by 5.5%, reflecting growth in average room rates driven by leisure demand, particularly at our resorts. In addition, group revenue increased by 2.4% compared to 2025, due to a combination of rate growth of 1.7% and a 0.7% increase in room nights, driven by the Super Bowl and other city-wide events.
The following are the results of our transient, group and contract business:
| Quarter ended March 31, 2026 | |||||||||||||||||
|
Transient business
|
Group business
|
Contract business
|
|||||||||||||||
| Room nights (in thousands) | 1,286 | 1,106 | 204 | ||||||||||||||
| Percent change in room nights vs. same period in 2025 | (0.6 | %) | 0.7 | % | 8.0 | % | |||||||||||
| Rooms revenues (in millions) | $ | 498 | $ | 356 | $ | 47 | |||||||||||
| Percent change in revenues vs. same period in 2025 | 5.5 | % | 2.4 | % | 10.4 | % | |||||||||||
Liquidity and Capital Resources
Liquidity and Capital Resources of Host Inc. and Host L.P. The liquidity and capital resources of Host Inc. and Host L.P. are derived primarily from the activities of Host L.P., which generates the capital required by our business from hotel operations, the incurrence of debt, the issuance of OP units or the sale of hotels. Host Inc. is a REIT, and its only significant asset is the ownership of general and limited partner interests of Host L.P.; therefore, its financing and investing activities are conducted through Host L.P., except for the issuance of its common and preferred stock. Proceeds from common and preferred stock issuances by Host Inc. are contributed to Host L.P. in exchange for common and preferred OP units. Additionally, funds used by Host Inc. to pay dividends or to repurchase its stock are provided by Host L.P. Therefore, while we have noted those areas in which it is important to distinguish between Host Inc. and Host L.P., we have not included a separate discussion of liquidity and capital resources as the discussion below applies to both Host Inc. and Host L.P.
Overview. We look to maintain a capital structure and liquidity profile with an appropriate balance of cash, debt, and equity to provide financial flexibility given the inherent volatility of the lodging industry. We believe this strategy has resulted in a better cost of debt capital, allowing us to complete opportunistic investments and acquisitions and positioning us to manage potential declines in operations throughout the lodging cycle. We have structured our debt profile to maintain a balanced maturity schedule and to minimize the number of assets that are encumbered by mortgage debt. Currently, only one of our consolidated hotels is encumbered by mortgage debt. We intend to use available cash in the near term predominantly to fund, and believe we have sufficient liquidity to fund, corporate expenses, capital expenditures, hotel acquisitions and dividends and remain well positioned to execute additional investment transactions to the extent opportunities arise.
Cash Requirements. We use cash for acquisitions, capital expenditures, debt payments, operating costs, and corporate and other expenses, as well as for dividends and distributions to stockholders and to OP unitholders, respectively, and stock and OP unit repurchases. Our primary sources of cash include cash from operations, proceeds from the sale of assets, borrowing under our credit facility and debt and equity issuances. Our next significant debt maturity is in January 2027, which is for one of the two $500 million term loans under our credit facility. The maturing term loan has a one-year extension option, subject to certain conditions.
As a REIT, Host Inc. is required to pay dividends to its stockholders in an amount equal to at least 90% of its taxable income, excluding net capital gain, on an annual basis. Host Inc.'s policy on common dividends generally is to distribute, over time, at least 100% of its taxable income, including capital gains. Following the February 2026 sale of the Four Seasons Resort Orlando at Walt Disney World® Resort and the Four Seasons Resort and Residences Jackson Hole for a sale price of $1.1 billion, Host Inc.'s Board of Directors approved a $0.72 special dividend in the second quarter, to be paid on July 15, 2026, representing the distribution of the approximately $500 million taxable gain resulting from the sale. With a portion of the remaining proceeds, we repurchased $75 million of Host Inc. common stock through the first quarter of 2026. We will continue to weigh potential cash uses for the remaining proceeds, which may include, subject to market conditions, acquisitions, other investments in our portfolio, additional common stock repurchases or increased dividends, which dividends could be in excess of taxable income. Any additional special dividend will be subject to approval by Host Inc.'s Board of Directors.
Capital Resources. As of March 31, 2026, we had $1,703 million of cash and cash equivalents, $151 million in our FF&E escrow reserves and $1.5 billion available under the revolver portion of our credit facility. The payment of the first and second quarter regular dividend and the special dividend discussed above will reduce the cash balance by
approximately $767 million. We depend primarily on external sources of capital to finance future growth, including acquisitions. As a result, the liquidity and debt capacity provided by our credit facility and the ability to issue senior unsecured debt are key components of our capital structure. Our financial flexibility, including our ability to incur debt, pay dividends, make distributions and make investments, is contingent on our ability to maintain compliance with the financial covenants of our credit facility and senior notes indentures, which include, among other things, the allowable amounts of leverage, interest coverage and fixed charges.
Two programs are currently in place relating to potential purchases or sales of our common stock. Under our common stock repurchase program, common stock may be purchased from time to time depending upon market conditions and may be purchased in the open market or through private transactions or by other means, including principal transactions with various financial institutions, like accelerated share repurchases, forwards, options, and similar transactions and through one or more trading plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The plan does not obligate us to repurchase any specific number or any specific dollar amount of shares and may be suspended at any time at our discretion. During the first quarter of 2026, we repurchased 4.0 million shares of Host Inc. common stock at an average price of $18.97 per share, exclusive of commissions, through our common share repurchase program for a total of $75 million. At March 31, 2026, we had $405 million available for repurchases under our program.
In addition, on May 31, 2023, we entered into a distribution agreement with J.P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million. The sales will be made in transactions that are deemed to be "at the market" offerings under the SEC rules. We may sell shares of Host Inc. common stock under this program from time to time based on market conditions, although we are not under an obligation to sell any shares. We may sell shares when we believe conditions are advantageous and there is a compelling use of proceeds, including to fund future potential acquisitions or other investment opportunities. The agreement also contemplates that, in addition to the offering and sale of shares to or through the sales agents, we may enter into separate forward sale agreements with each of the forward purchasers named in the agreement. No shares were issued during the first quarter of 2026. As of March 31, 2026, there was $600 million of remaining capacity under the agreement and the agreement expires pursuant to its terms on May 31, 2026.
Given the total amount of our debt and our maturity schedule, we may continue to redeem or repurchase senior notes from time to time, taking advantage of favorable market conditions. In February 2026, Host Inc.'s Board of Directors authorized repurchases of up to $1.0 billion of senior notes other than in accordance with their respective terms, of which the entire amount remains available under this authority. We may purchase senior notes with cash through open market purchases, privately negotiated transactions, a tender offer, or, in some cases, through the early redemption of such securities pursuant to their terms. Repurchases of debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Any retirement before the maturity date will affect earnings and NAREIT FFO per diluted share as a result of the payment of any applicable call premiums and the accelerated expensing of previously deferred and capitalized financing costs. Accordingly, considering our priorities in managing our capital structure and liquidity profile, and given prevailing conditions and relative pricing in the capital markets, we may, at any time, subject to applicable securities laws and the requirements of our credit facility and senior notes indentures, be considering, or be in discussions with respect to, the repurchase or issuance of exchangeable debentures and/or senior notes or the repurchase or sale of our common stock. Any such transactions may, subject to applicable securities laws, occur simultaneously.
We continue to explore potential acquisitions and dispositions. We anticipate that any such future acquisitions will be funded by cash, debt issuances by Host L.P., equity offerings of Host Inc., issuances of OP units by Host L.P., or proceeds from sales of hotels. Given the nature of these transactions, we can make no assurances that we will be successful in acquiring any one or more hotels that we may review, bid on or negotiate to purchase or that we will be successful in disposing of any one or more of our hotels. We may acquire additional hotels or dispose of hotels through various structures, including transactions involving single assets, portfolios, joint ventures, acquisitions of the securities or assets of other REITs or distributions of hotels to our stockholders.
Sources and Uses of Cash. Our sources of cash generally include cash from operations, proceeds from debt and equity issuances, and proceeds from hotel sales. Uses of cash include acquisitions, capital expenditures, operating costs, investments in our joint ventures, debt repayments, and repurchases of shares and distributions to equity holders.
Cash Provided by Operating Activities. In the first quarter of 2026, net cash provided by operating activities was $342 million compared to $305 million for the first quarter of 2025. The increase was attributable to improved operating performance at our properties and sales of condominium units.
Cash Provided by (Used in) Investing Activities. Net cash provided by investing activities was $914 million for the first quarter of 2026 compared to cash used in investing activities of $83 million for the first quarter of 2025. Cash used in investing activities in the first quarter of 2026 and 2025 included $122 million and $146 million of capital expenditures, respectively, as well as investments in our joint ventures. Cash provided by investing activities in 2026 included proceeds from the sale of three hotels.
The following table summarizes significant dispositions that have been completed through May 6, 2026 (in millions):
| Transaction Date | Description of Transaction | Net Proceeds⁽¹⁾ | Sales Price | ||||||||||||||||||||
| Dispositions/Return of Investments in Affiliates | |||||||||||||||||||||||
| February | 2026 | Disposition of Four Seasons Resort and Residences Jackson Hole & Four Seasons Resort Orlando at Walt Disney World® Resort⁽²⁾ | $ | 1,035 | $ | 1,100 | |||||||||||||||||
| January | 2026 | Disposition of The St. Regis Houston | $ | 51 | $ | 51 | |||||||||||||||||
| Total dispositions | $ | 1,086 | $ | 1,151 | |||||||||||||||||||
___________
(1)Proceeds are net of transfer taxes, other sales costs, and FF&E replacement funds deposited directly to the property or hotel manager by the purchaser.
(2)The net proceeds of $1,035 million related to the sale of the two Four Seasons properties is estimated, as proration amounts have not been finalized. The unaudited condensed consolidated statements of cash flows reflect $1,011 million of the estimated net proceeds received in the first quarter of 2026.
Cash Used in Financing Activities. In the first quarter of 2026, net cash used in financing activities was $337 million compared to $327 million for the first quarter of 2025. Cash used in financing activities in both 2026 and 2025 primarily related to the payment of common stock dividends and common stock repurchases.
The following table summarizes significant equity transactions that have been completed through May 6, 2026 (in millions):
| Transaction Date | Description of Transaction | Transaction Amount | |||||||||||||||
| Equity of Host Inc. | |||||||||||||||||
| January - April | 2026 | Dividend payment⁽¹⁾⁽²⁾ | $ | (377) | |||||||||||||
| January - March | 2026 | Repurchase of 4.0 million shares of Host Inc. common stock | (75) | ||||||||||||||
| Cash payments on equity transactions | $ | (452) | |||||||||||||||
___________
(1)In connection with the dividend payments, Host L.P. made distributions of $383 million to its common OP unit holders.
(2)Includes the fourth quarter 2025 dividend that was paid in January 2026.
Debt
As of March 31, 2026, our total debt was $5.1 billion, with a weighted average interest rate of 4.8% and a weighted average maturity of 4.9 years. Additionally, 80% of our debt has a fixed rate of interest, and only one of our consolidated hotels is encumbered by mortgage debt.
Financial Covenants
Credit Facility Covenants. Our credit facility contains certain important financial covenants concerning allowable leverage, unsecured interest coverage, and required fixed charge coverage. Total debt used in the calculation of our ratio of
consolidated total debt to consolidated EBITDA (our "Leverage Ratio") is based on a "net debt" concept, pursuant to which cash and cash equivalents in excess of $100 million are deducted from our total debt balance for purposes of measuring compliance.
At March 31, 2026, we were in compliance with all of our financial covenants under the credit facility. The following table summarizes the results of the financial tests required by the credit facility, which are calculated on a trailing twelve-month basis:
| Actual Ratio |
Covenant Requirement for all years |
||||||||||
| Leverage ratio | 2.1x | Maximum ratio of 7.25x | |||||||||
| Fixed charge coverage ratio | 5.5x | Minimum ratio of 1.25x | |||||||||
| Unsecured interest coverage ratio ⁽¹⁾ | 7.1x | Minimum ratio of 1.75x | |||||||||
___________
(1)If, at any time, our leverage ratio is above 7.0x, our minimum unsecured interest coverage ratio will decrease to 1.50x.
Senior Notes Indenture Covenants
The following table summarizes the results of the financial tests required by the indentures for our senior notes and our actual credit ratios as of March 31, 2026:
| Actual Ratio | Covenant Requirement | ||||||||||
| Unencumbered assets tests | 451 | % | Minimum ratio of 150% | ||||||||
| Total indebtedness to total assets | 22 | % | Maximum ratio of 65% | ||||||||
| Secured indebtedness to total assets | <1% | Maximum ratio of 40% | |||||||||
| EBITDA-to-interest coverage ratio | 7.0x | Minimum ratio of 1.5x | |||||||||
For additional details on our credit facility and senior notes, see our Annual Report on Form 10-K for the year ended December 31, 2025.
Dividend Policy
Host Inc. is required to distribute at least 90% of its annual taxable income, excluding net capital gains, to its stockholders in order to maintain its qualification as a REIT. Funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P. As of March 31, 2026, Host Inc. is the owner of approximately 99% of the Host L.P. common OP units. The remaining common OP units are owned by unaffiliated limited partners. Each Host L.P. common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock based on the conversion ratio. The current conversion ratio is 1.021494 shares of Host Inc. common stock for each Host L.P. common OP unit.
Investors should consider the non-controlling interests in the Host L.P. common OP units when analyzing dividend payments by Host Inc. to its stockholders, as these Host L.P. common OP unitholders share, on a pro rata basis, in amounts being distributed by Host L.P. to all of its common OP unitholders. For example, if Host Inc. paid a $1 per share dividend on its common stock, it would be based on the payment of a $1.021494 per common OP unit distribution by Host L.P. to Host Inc., as well as to the other unaffiliated Host L.P. common OP unitholders.
Host Inc.'s policy on common dividends generally is to distribute, over time, 100% of its taxable income, which primarily is dependent on Host Inc.'s results of operations, as well as tax gains and losses on hotel sales. On February 18, 2026, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.20 per share on Host Inc.'s common stock. The dividend was paid on April 15, 2026 to stockholders of record on March 31, 2026. On May 6, 2026, the Board of Directors authorized a second quarter cash dividend of $0.92 per share on its common stock, consisting of a regular quarterly dividend of $0.20 per share and a special dividend of $0.72 per share. The dividend will be paid on July 15, 2026 to stockholders of record on June 30, 2026. All future dividends are subject to Board approval.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Comparable Hotel Operating Statistics and Results
To facilitate a year-to-year comparison of our operations, we present certain operating statistics (i.e., Total RevPAR, RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in our reports on a comparable hotel basis in order to enable our investors to better evaluate our operating performance. We define our comparable hotels as those that: (i) are owned or leased by us as of the reporting date and are not classified as held-for-sale; and (ii) have not sustained substantial property damage or business interruption, or undergone large-scale capital projects, in each case requiring closures lasting one month or longer (as further defined below), during the reporting periods being compared.
We make adjustments to include recent acquisitions to include results for periods prior to our ownership. For these hotels, since the year-over-year comparison includes periods prior to our ownership, the changes will not necessarily correspond to changes in our actual results. Additionally, operating results of hotels that we sell are excluded from the comparable hotel set once the transaction has closed or the hotel is classified as held-for-sale.
The hotel business is capital-intensive, and renovations are a regular part of the business. Generally, hotels under renovation remain comparable hotels. A large-scale capital project would cause a hotel to be excluded from our comparable hotel set if it requires the entire property to be closed to hotel guests for one month or longer.
Similarly, hotels are excluded from our comparable hotel set from the date that they sustain substantial property damage or business interruption if it requires the property to be closed to hotel guests for one month or longer. In each case, these hotels are returned to the comparable hotel set when the operations of the hotel have been included in our consolidated results for one full calendar year after the hotel has reopened. Often, related to events that cause property damage and the closure of a hotel, we will collect business interruption insurance proceeds for the near-term loss of business. These proceeds are included in net gain on insurance settlements on our condensed consolidated statements of operations. Business interruption insurance gains covering lost revenues while the property was considered non-comparable also will be excluded from the comparable hotel results.
Of the 76 hotels that we owned as of March 31, 2026, 74 have been classified as comparable hotels. The operating results of the following properties that we owned, and that were not classified as held-for-sale, as of March 31, 2026 are excluded from comparable hotel results for these periods:
•The Don CeSar (business disruption due to Hurricane Helene resulting in closure of the hotel beginning at the end of September 2024, reopened in March 2025); and
•Operations related to the development and sale of condominium units on a development parcel adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort.
At March 31, 2026, the Sheraton Parsippany Hotel was classified as held-for-sale. Therefore, the results of this hotel are also excluded from comparable hotel operating statistics and results.
Foreign Currency Translation
Operating results denominated in foreign currencies are translated using the prevailing exchange rates on the date of the transaction, or monthly based on the weighted average exchange rate for the period. Therefore, hotel statistics and
results for non-U.S. properties include the effect of currency fluctuations, consistent with our financial statement presentation.
Non-GAAP Financial Measures
We use certain "non-GAAP financial measures," which are measures of our historical financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. These measures include the following:
•Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization ("EBITDA"), Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for real estate ("EBITDAre") and Adjusted EBITDAre, as a measure of performance for Host Inc. and Host L.P.,
•Funds From Operations ("FFO") and FFO per diluted share, both calculated in accordance with National Association of Real Estate Investment Trusts ("NAREIT") guidelines and with certain adjustments from those guidelines, as a measure of performance for Host Inc., and
•Comparable hotel operating results, as a measure of performance for Host Inc. and Host L.P.
The discussion below defines these measures and presents why we believe they are useful supplemental measures of our performance.
Set forth below for each such non-GAAP financial measure is a reconciliation of the measure with the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable thereto. We also have included in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, 2025 further explanations of the adjustments being made, a statement disclosing the reasons why we believe the presentation of each of the non-GAAP financial measures provide useful information to investors regarding our financial condition and results of operations, the additional purposes for which we use the non-GAAP financial measures and limitations on their use.
EBITDA, EBITDAre and Adjusted EBITDAre
EBITDA
EBITDA is a commonly used measure of performance in many industries. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other lodging REITs, hotel owners that are not REITs and other capital-intensive companies. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Adjusted FFO per diluted share, it is widely used by management in the annual budget process and for compensation programs.
EBITDAre and Adjusted EBITDAre
We present EBITDAre in accordance with NAREIT guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate," to provide an additional performance measure to facilitate the evaluation and comparison of our results with other REITs. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment expense for depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's pro rata share of EBITDAre of unconsolidated affiliates.
We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is beneficial to an investor's understanding of our operating performance. Adjusted EBITDAre also is similar to the measure used to calculate certain credit ratios for our credit facility and senior notes. We
adjust EBITDAre for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDAre:
•Property Insurance Gains and Property Damage Losses - We exclude the effect of property insurance gains reflected in our condensed consolidated statements of operations because we believe that including them in Adjusted EBITDAre is not consistent with reflecting the ongoing performance of our assets. In addition, property insurance gains could be less important to investors given that the depreciated asset book value written off in connection with the calculation of the property insurance gain often does not reflect the market value of real estate assets. Similarly, losses from property damage or remediation costs that are not covered through insurance are excluded.
•Acquisition Costs - Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
•Litigation Gains and Losses - We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
•Severance Expense - In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to: (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
•Non-Cash Stock-Based Compensation - We exclude the expense recorded for non-cash stock-based compensation, as it represents a non-cash transaction and the add-back is consistent with the calculation of Adjusted EBITDA for our financial covenant ratios under our credit facility and senior notes indentures and consistent with the presentation of Adjusted EBITDAre for the majority of other lodging REIT filers.
In unusual circumstances, we also may adjust EBITDAre for gains or losses that management believes are not representative of the Company's current operating performance. The last adjustment of this nature was a 2013 exclusion of a gain from an eminent domain claim.
The following table provides a reconciliation of EBITDA, EBITDAre, and Adjusted EBITDAre to net income, the financial measure calculated and presented in accordance with GAAP that we consider the most directly comparable:
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.
(in millions)
| Quarter ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income⁽¹⁾ | $ | 501 | $ | 251 | |||||||
| Interest expense | 59 | 57 | |||||||||
| Depreciation and amortization | 190 | 196 | |||||||||
| Income taxes | 17 | (1) | |||||||||
| EBITDA⁽¹⁾ | 767 | 503 | |||||||||
| Gain on dispositions⁽²⁾ | (242) | - | |||||||||
| Equity investment adjustments: | |||||||||||
| Equity in earnings of affiliates | (4) | (10) | |||||||||
| Pro rata EBITDAre of equity investments⁽³⁾ | 16 | 15 | |||||||||
| EBITDAre⁽¹⁾ | 537 | 508 | |||||||||
| Adjustments to EBITDAre: | |||||||||||
| Non-cash stock-based compensation expense | 6 | 6 | |||||||||
| Adjusted EBITDAre⁽¹⁾ | $ | 543 | $ | 514 | |||||||
___________
(1)Net income, EBITDA, EBITDAre, Adjusted EBITDAre, NAREIT FFO and Adjusted FFO for the quarter ended March 31, 2025 include a gain of $4 million from the sale of land adjacent to The Phoenician hotel.
(2)Reflects the sale of three hotels in the first quarter of 2026.
(3)Unrealized gains of our unconsolidated investments are not recognized in our EBITDAre, Adjusted EBITDAre, NAREIT FFO or Adjusted FFO until they have been realized by the unconsolidated partnership.
FFO Measures
We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of our performance in addition to our earnings per share (calculated in accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT FFO (defined as set forth below) for a given operating period, as adjusted for the effect of dilutive securities, divided by the number of fully diluted shares outstanding during such period, in accordance with NAREIT guidelines. As noted in NAREIT's Funds From Operations White Paper - 2018 Restatement. NAREIT defines FFO as net income (calculated in accordance with GAAP) excluding depreciation and amortization related to certain real estate assets, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment expense of certain real estate assets and investments and adjustments for consolidated partially owned entities and unconsolidated affiliates. Adjustments for consolidated partially owned entities and unconsolidated affiliates are calculated to reflect our pro rata share of the FFO of those entities on the same basis.
We also present Adjusted FFO per diluted share when evaluating our performance because management believes that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance, in our annual budget process and for our compensation programs. We believe that the presentation of Adjusted FFO per diluted share, when combined with both the primary GAAP presentation of diluted earnings per share and FFO per diluted share as defined by NAREIT, provides useful supplemental information that is beneficial to an investor's understanding of our operating performance. We adjust NAREIT FFO per diluted share for the following items, which may occur in any period, and refer to this measure as Adjusted FFO per diluted share:
•Gains and Losses on the Extinguishment of Debt - We exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of the write-off of deferred financing costs from the original issuance of the debt being redeemed or retired and incremental interest expense incurred during the refinancing period. We also exclude the gains on debt repurchases and the original issuance costs associated with the retirement of preferred stock. We believe that these items are not reflective of our ongoing finance costs.
•Acquisition Costs - Under GAAP, costs associated with completed property acquisitions that are considered business combinations are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.
•Litigation Gains and Losses - We exclude the effect of gains or losses associated with litigation recorded under GAAP that we consider to be outside the ordinary course of business. We believe that including these items is not consistent with our ongoing operating performance.
•Severance Expense - In certain circumstances, we will add back hotel-level severance expenses when we do not believe that such expenses are reflective of the ongoing operation of our properties. Situations that would result in a severance add-back include, but are not limited to, (i) costs incurred as part of a broad-based reconfiguration of the operating model with the specific hotel operator for a portfolio of hotels and (ii) costs incurred at a specific hotel due to a broad-based and significant reconfiguration of a hotel and/or its workforce. We do not add back corporate-level severance costs or severance costs at an individual hotel that we consider to be incurred in the normal course of business.
•Non-Cash Stock-Based Compensation - We exclude the expense recorded for non-cash stock-based compensation, as it represents a non-cash transaction and the add back is consistent with the calculation of Adjusted EBITDA for our financial covenant ratios under our credit facility and senior notes indentures and consistent with the presentation of Adjusted FFO per diluted share for the majority of other lodging REIT filers.
In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of our current operating performance. For example, in 2017, as a result of the reduction of the U.S. federal corporate income tax rate from 35% to 21% by the Tax Cuts and Jobs Act, we remeasured our domestic deferred tax assets as of December 31, 2017 and recorded a one-time adjustment to reduce our deferred tax assets and to increase the provision for income taxes by approximately $11 million. We do not consider this adjustment to be reflective of our ongoing operating performance and, therefore, we excluded this item from Adjusted FFO.
The following table provides a reconciliation of the differences between our non-GAAP financial measures, NAREIT FFO and Adjusted FFO (separately and on a per diluted share basis), and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable:
Host Inc. Reconciliation of Diluted Earnings per Common Share to
NAREIT and Adjusted Funds From Operations per Diluted Share
(in millions, except per share amount)
| Quarter ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income⁽¹⁾ | $ | 501 | $ | 251 | |||||||
| Less: Net income attributable to non-controlling interests | (7) | (3) | |||||||||
| Net income attributable to Host Inc. | 494 | 248 | |||||||||
| Adjustments: | |||||||||||
| Gain on dispositions⁽²⁾ | (242) | - | |||||||||
| Tax on dispositions | 5 | - | |||||||||
| Depreciation and amortization | 189 | 195 | |||||||||
| Equity investment adjustments: | |||||||||||
| Equity in earnings of affiliates | (4) | (10) | |||||||||
| Pro rata FFO of equity investments⁽³⁾ | 11 | 10 | |||||||||
| Consolidated partnership adjustments: | |||||||||||
| FFO adjustment for non-controlling interests of Host L.P. | 1 | (3) | |||||||||
| NAREIT FFO⁽¹⁾ | 454 | 440 | |||||||||
| Adjustments to NAREIT FFO: | |||||||||||
| Non-cash stock-based compensation expense | 6 | 6 | |||||||||
| Adjusted FFO⁽¹⁾ | $ | 460 | $ | 446 | |||||||
| For calculation on a per share basis:⁽⁴⁾ | |||||||||||
| Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO | 689.3 | 698.3 | |||||||||
| Diluted earnings per common share | $ | 0.72 | $ | 0.35 | |||||||
| NAREIT FFO per diluted share | $ | 0.66 | $ | 0.63 | |||||||
| Adjusted FFO per diluted share | $ | 0.67 | $ | 0.64 | |||||||
___________
(1-3)Refer to the corresponding footnote on the Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.
(4)Diluted earnings per common share, NAREIT FFO per diluted share and Adjusted FFO per diluted share are adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, preferred OP units held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partner interests to common OP units. No effect is shown for securities if they are anti-dilutive.
Comparable Hotel Property-Level Operating Results
We present certain operating results for our hotels, such as hotel revenues, expenses, food and beverage profit, and EBITDA (and the related margins), on a comparable hotel, or "same store," basis as supplemental information for our investors. Our comparable hotel results present operating results for our hotels without giving effect to dispositions or properties that experienced closures due to renovations or property damage, as discussed in "Comparable Hotel Operating Statistics and Results" above. We present comparable hotel EBITDA to help us and our investors evaluate the ongoing operating performance of our comparable hotels after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization expense). Corporate-level costs and expenses also are removed to arrive at property-level results. We believe these property-level results provide investors with supplemental information about the ongoing operating performance of our comparable hotels. Comparable hotel results are presented both by location and for our properties in the aggregate. We eliminate from our comparable hotel level operating results severance costs related to broad-based and significant property-level reconfiguration that is not considered to be within the
normal course of business, as we believe this elimination provides useful supplemental information that is beneficial to an investor's understanding of our ongoing operating performance. We also eliminate depreciation and amortization expense because, even though depreciation and amortization expense are property-level expenses, these non-cash expenses, which are based on historical cost accounting for real estate assets, implicitly assume that the value of real estate assets diminishes predictably over time. As noted earlier, because real estate values historically have risen or fallen with market conditions, many real estate industry investors have considered presentation of historical cost accounting for operating results to be insufficient.
Because of the elimination of corporate-level costs and expenses, gains or losses on disposition, certain severance expenses and depreciation and amortization expense, the comparable hotel operating results we present do not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our condensed consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.
We present these hotel operating results on a comparable hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable hotels (which represent the vast majority of our portfolio) or from other factors. While management believes that presentation of comparable hotel results is a supplemental measure that provides useful information in evaluating our ongoing performance, this measure is not used to allocate resources or to assess the operating performance of each of our hotels, as these decisions are based on data for individual hotels and are not based on comparable hotel results in the aggregate. For these reasons, we believe comparable hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.
The following tables present certain operating results and statistics for our hotels for the periods presented herein and a reconciliation of the differences between comparable Hotel EBITDA, a non-GAAP financial measure, and net income, the financial measure calculated and presented in accordance with GAAP that we consider most directly comparable. Similar reconciliations of the differences between (i) hotel revenues and (ii) our revenues as calculated and presented in accordance with GAAP (each of which is used in the applicable margin calculation), and between (iii) hotel expenses and (iv) operating costs and expenses as calculated and presented in accordance with GAAP, also are included in the reconciliation:
Comparable Hotel Results for Host Inc. and Host L.P.
(in millions, except hotel statistics)
| Quarter ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Number of hotels | 74 | 74 | |||||||||
| Number of rooms | 40,974 | 40,974 | |||||||||
| Change in comparable hotel Total RevPAR | 4.6 | % | - | ||||||||
| Change in comparable hotel RevPAR | 4.4 | % | - | ||||||||
| Operating profit margin⁽¹⁾ | 19.4 | % | 17.9 | % | |||||||
| Comparable hotel EBITDA margin⁽¹⁾ | 32.7 | % | 32.0 | % | |||||||
| Food and beverage profit margin⁽¹⁾ | 36.8 | % | 35.8 | % | |||||||
| Comparable hotel food and beverage profit margin⁽¹⁾ | 37.2 | % | 36.5 | % | |||||||
| Net income | $ | 501 | $ | 251 | |||||||
| Depreciation and amortization | 190 | 196 | |||||||||
| Interest expense | 59 | 57 | |||||||||
| Provision (benefit) for income taxes | 17 | (1) | |||||||||
| Gain on sale of property and corporate level income/expense | (230) | 9 | |||||||||
| Property transaction adjustments⁽²⁾ | (11) | (34) | |||||||||
| Non-comparable hotel results, net⁽³⁾ | (17) | (6) | |||||||||
|
Condominium sales (4)
|
(4) | - | |||||||||
| Comparable hotel EBITDA | $ | 505 | $ | 472 | |||||||
___________
(1)Profit margins are calculated by dividing the applicable operating profit by the related revenue amount. GAAP profit margins are calculated using amounts presented in the unaudited condensed consolidated statements of operations. Comparable hotel margins are calculated using amounts presented in the following tables, which include reconciliations to the applicable GAAP results:
| Quarter ended March 31, 2026 | Quarter ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Adjustments
|
Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
GAAP Results
|
Property transaction adjustments⁽²⁾ |
Non-comparable hotel results, net ⁽³⁾ |
Condominium sales (4)
|
Depreciation and corporate level items |
Comparable hotel Results
|
GAAP Results
|
Property transaction adjustments⁽²⁾ |
Non-comparable hotel results, net ⁽³⁾ |
Depreciation and corporate level items |
Comparable hotel Results
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Room | $ | 943 | $ | (30) | $ | (12) | $ | - | $ | - | $ | 901 | $ | 938 | $ | (73) | $ | (3) | $ | - | $ | 862 | |||||||||||||||||||||||||||||||||||||||||||
| Food and beverage | 517 | (15) | (7) | - | - | 495 | 503 | (31) | - | - | 472 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 159 | (7) | (4) | - | - | 148 | 153 | (13) | - | - | 140 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Condominium sales | 26 | - | - | (26) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 1,645 | (52) | (23) | (26) | - | 1,544 | 1,594 | (117) | (3) | - | 1,474 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Room | 224 | (6) | (2) | - | - | 216 | 225 | (14) | (1) | - | 210 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Food and beverage | 327 | (11) | (5) | - | - | 311 | 323 | (22) | (1) | - | 300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 543 | (24) | (6) | (1) | - | 512 | 544 | (47) | (5) | - | 492 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 190 | - | - | - | (190) | - | 196 | - | - | (196) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | 21 | - | - | (21) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate and other expenses | 28 | - | - | - | (28) | - | 31 | - | - | (31) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net gain on insurance settlements | (7) | - | 7 | - | - | - | (10) | - | 10 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | 1,326 | (41) | (6) | (22) | (218) | 1,039 | 1,309 | (83) | 3 | (227) | 1,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Profit - Comparable hotel EBITDA | $ | 319 | $ | (11) | $ | (17) | $ | (4) | $ | 218 | $ | 505 | $ | 285 | $ | (34) | $ | (6) | $ | 227 | $ | 472 | |||||||||||||||||||||||||||||||||||||||||||
(2)Property transaction adjustments represent the following items: (i) the elimination of results of operations of hotels sold or held-for-sale as of March 31, 2026, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) the addition of results for periods prior to our ownership for hotels acquired as of March 31, 2026.
(3)Non-comparable hotel results, net, includes the following items: (i) the results of operations of our non-comparable hotels, which operations are included in our unaudited condensed consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds covering lost revenues while the property was considered non-comparable.
(4)Includes revenues and costs, including marketing and administrative expenses of approximately $1 million in 2026, related to the development and sale of condominium units adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort.
Host Hotels & Resorts Inc. published this content on May 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 08, 2026 at 17:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]