Strategic Acquisition of JW Marriott Desert Ridge in Phoenix
Completed the acquisition, long on the top of the company's list, with a focus on leisure demand and group rotation opportunities.
Expected to be accretive to FY 2026 results, with an estimated contribution of $18-$22 million in adjusted EBITDAre for 2025.
Renovations and capital enhancements underway, including meeting space upgrades and potential resort expansion to accommodate large groups over 1,000 rooms.
Market dynamics in Phoenix support future resort expansion, with the only larger hotel being a 1,000-room Sheraton in downtown Phoenix.
Ancillary spending remained strong with F&B revenue up 4%, banquet revenue up 1%, and other revenue (including golf and spa) up 13%.
Business interruption proceeds of $9 million related to Hurricanes Helene and Milton benefited Q2 results, compared to $30 million in Q2 2024 from Hurricane Ian and Maui wildfires.
Comparable hotel EBITDA margin declined 120 basis points to 31%, impacted by the absence of prior year business interruption proceeds.
Comparable hotel total RevPAR improved 4.2% year-over-year, driven by stronger transient demand, higher ADR, and increased ancillary spend.
In Q2 2025, Host Hotels & Resorts delivered adjusted EBITDAre of $496 million, a 3.1% increase year-over-year, and adjusted FFO per share of $0.58, up 1.8%.
The Westin Cincinnati was sold for $60 million at a 14.3x trailing EBITDA multiple, and 6.7 million shares were repurchased for $105 million in Q2.
Transient revenue grew 7%, with Maui accounting for approximately 40% of this growth, while group room revenue decreased 5% due to calendar shifts and renovation disruptions.
Significant Recovery in Maui Driven by Marketing Campaigns and Airline Capacity Restoration
Maui's RevPAR grew 19% in the quarter, driven by leisure transient demand and outlet growth.
The recovery is supported by a $6.3 million marketing campaign endorsed by the Hawaii governor and a collaborative marketing effort among hotel owners.
Airline capacity to Maui is down about 20% from pre-wildfire levels, impacting group bookings but expected to improve over time.
The company now projects Maui's contribution to EBITDA to increase from $100 million to $110 million for 2025, indicating strong momentum.
Adjusted EBITDAre decreased by $7.7 million year-over-year to $163.8 million, impacted by an $8.8 million increase in interest expense and lower hotel returns.
Hotel portfolio generated adjusted hotel EBITDA of $73 million, an 11.3% decline year-over-year but towards the high end of guidance.
Net lease portfolio remains stable with 742 properties, 97% leased, $387 million in annual minimum rents, and a 2.04x rent coverage ratio.
Normalized FFO for Q2 2025 was $57.6 million or $0.35 per share, down from $0.45 per share in the prior year quarter.
RevPAR increased 40 basis points year-over-year, outperforming the industry by 90 basis points, driven by occupancy and ADR gains.
The 84 hotels planned for retention showed a 1.5% RevPAR increase but an 11.7% decrease in adjusted hotel EBITDA due to elevated labor costs and renovation disruptions.
Dafinchi