OPERATING RESULTS
(unaudited, in millions, except per share and hotel statistics)
Quarter ended |
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2024 | 2023 | Percent Change | |||||||||
Revenues | $ | 1,471 | $ | 1,381 | 6.5 | % | |||||
Comparable hotel revenues⁽¹⁾ | 1,398 | 1,375 | 1.7 | % | |||||||
Comparable hotel Total RevPAR⁽¹⁾ | 369.58 | 367.56 | 0.5 | % | |||||||
Comparable hotel RevPAR⁽¹⁾ | 215.37 | 218.08 | (1.2 | %) | |||||||
Net income | $ | 272 | $ | 291 | (6.5 | %) | |||||
EBITDAre⁽¹⁾ | 504 | 444 | 13.5 | % | |||||||
Adjusted EBITDAre⁽¹⁾ | 483 | 444 | 8.8 | % | |||||||
Diluted earnings per common share | 0.38 | 0.40 | (5.0 | %) | |||||||
NAREIT FFO per diluted share⁽¹⁾ | 0.60 | 0.54 | 11.1 | % | |||||||
Adjusted FFO per diluted share⁽¹⁾ | 0.60 | 0.55 | 9.1 | % |
Risoleo continued, “Subsequent to quarter end, we acquired the 1
_______________________________
(1) NAREIT Funds From Operations (“FFO”) per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and comparable hotel revenues are non-GAAP (
HIGHLIGHTS:
Subsequent Acquisition
Maui Update
BALANCE SHEET
The Company maintains a robust balance sheet and completed several transactions in March and April of 2024. These transactions include:
After adjusting for the above investing and financing activities completed after quarter end, the Company estimates that it has the following balances:
Cash and cash equivalents at |
$ | 1,349 | ||
Repayment of Series G senior notes | (400 | ) | ||
Net repayment on revolver portion of credit facility, post quarter-end | (85 | ) | ||
Cash consideration for the acquisition of 1 Hotel and Embassy Suites Nashville | (530 | ) | ||
First quarter dividend paid on common stock | (141 | ) | ||
Cash and cash equivalents adjusted for subsequent transactions | $ | 193 | ||
DIVIDENDS
The Company paid a first quarter common stock cash dividend of
HOTEL BUSINESS MIX UPDATE
The Company’s customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its full year 2023 room sales.
The following are the results for transient, group and contract business in comparison to 2023 performance, for the Company's current portfolio:
Quarter ended |
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Transient | Group | Contract | |||||||||
Room nights (in thousands) | 1,314 | 1,103 | 172 | ||||||||
Percent change in room nights vs. same period in 2023 | (1.9 | %) | 4.1 | % | 7.5 | % | |||||
Rooms revenues (in millions) | $ | 456 | $ | 324 | $ | 35 | |||||
Percent change in revenues vs. same period in 2023 | (4.7 | %) | 5.3 | % | 18.2 | % | |||||
CAPITAL EXPENDITURES
The following presents the Company’s capital expenditures spend through the first quarter of 2024 and the forecast for full year 2024 (in millions):
Quarter ended |
2024 Full Year Forecast | ||||||||||
Actual | Low-end of range | High-end of range | |||||||||
ROI - Marriott and Hyatt Transformational Capital Programs | $ | 13 | $ | 125 | $ | 150 | |||||
All other return on investment ("ROI") projects | 20 | 100 | 130 | ||||||||
Total ROI Projects | 33 | 225 | 280 | ||||||||
Renewals and Replacements ("R&R") | 58 | 250 | 300 | ||||||||
91 | 475 | 580 | |||||||||
R&R - Insurable Reconstruction | 12 | 25 | 25 | ||||||||
Total Capital Expenditures | $ | 103 | $ | 500 | $ | 605 | |||||
Inventory spend for condo development(1) | 6 | 50 | 70 | ||||||||
Total capital allocation | $ | 109 | $ | 550 | $ | 675 |
__________
(1) Represents construction costs for the development of condominium units on a land parcel adjacent to Four Seasons Resort Orlando at Walt Disney World® Resort. Under
Under the Hyatt Transformational Capital Program, the Company received
2024 OUTLOOK
The 2024 guidance range continues to contemplate steady demand in travel and low supply growth. In addition, the range incorporates continued improvement in group business, a gradual recovery in business transient demand, softer short term leisure transient demand, and the evolution of demand on
Operating profit margin in 2024 is expected to increase slightly compared to 2023, while comparable hotel EBITDA margins are expected to decline compared to 2023, due to the impacts from the
The guidance range for net income and Adjusted EBITDAre includes an additional
The Company anticipates its 2024 operating results as compared to 2023 will be in the following range:
Current Full Year 2024 Guidance | Current Full Year 2024 Guidance Change vs. 2023 | Previous Full Year 2024 Guidance Change vs. 2023 | Change in Full Year 2024 Guidance to the |
||||
Comparable hotel Total RevPAR | 2.7% to 4.6% | 2.9% to 5.8% | (60) bps | ||||
Comparable hotel RevPAR | 2.0% to 4.0% | 2.5% to 5.5% | (100) bps | ||||
Total revenues under GAAP (in millions) | 6.4% to 8.3% | 5.2% to 8.1% | 80 bps | ||||
Operating profit margin under GAAP | 15.4% to 16.1% | (20) bps to 50 bps | (40) bps to 70 bps | (10) bps | |||
Comparable hotel EBITDA margin | 29.3% to 29.8% | (80) bps to (30) bps | (120) bps to (40) bps | 30 bps | |||
Based upon the above parameters, the Company estimates its 2024 guidance as follows:
Current Full Year 2024 Guidance | Previous Full Year 2024 Guidance | Change in Full Year 2024 Guidance to the |
||||
Net income (in millions) | ||||||
Adjusted EBITDAre (in millions) | ||||||
Diluted earnings per common share | ||||||
NAREIT and Adjusted FFO per diluted share | ||||||
See the 2024 Forecast Schedules and the Notes to Financial Information for items that may affect forecast results and the First Quarter 2024 Supplemental Financial Information for additional detail on the mid-point of full year 2024 guidance.
ABOUT
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements which include, but may not be limited to, our expectations regarding the recovery of travel and the lodging industry, the impact of the
*** Tables to Follow ***
Condensed Consolidated Balance Sheets (unaudited, in millions, except shares and per share amounts) |
||||||||
2024 |
2023 |
|||||||
ASSETS | ||||||||
Property and equipment, net | $ | 9,565 | $ | 9,624 | ||||
Right-of-use assets | 551 | 550 | ||||||
Due from managers | 158 | 128 | ||||||
Advances to and investments in affiliates | 147 | 126 | ||||||
Furniture, fixtures and equipment replacement fund | 231 | 217 | ||||||
Notes receivable | 72 | 72 | ||||||
Other | 391 | 382 | ||||||
Cash and cash equivalents | 1,349 | 1,144 | ||||||
Total assets | $ | 12,464 | $ | 12,243 | ||||
LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY | ||||||||
Debt⁽¹⁾ | ||||||||
Senior notes | $ | 3,121 | $ | 3,120 | ||||
Credit facility, including the term loans of |
1,290 | 989 | ||||||
Mortgage and other debt | 99 | 100 | ||||||
Total debt | 4,510 | 4,209 | ||||||
Lease liabilities | 564 | 563 | ||||||
Accounts payable and accrued expenses | 237 | 408 | ||||||
Due to managers | 37 | 64 | ||||||
Other | 176 | 173 | ||||||
Total liabilities | 5,524 | 5,417 | ||||||
Redeemable non-controlling interests - Host Hotels & |
200 | 189 | ||||||
Common stock, par value |
7 | 7 | ||||||
Additional paid-in capital | 7,514 | 7,535 | ||||||
Accumulated other comprehensive loss | (73 | ) | (70 | ) | ||||
Deficit | (712 | ) | (839 | ) | ||||
Total equity of |
6,736 | 6,633 | ||||||
Non-redeemable non-controlling interests—other consolidated partnerships | 4 | 4 | ||||||
Total equity | 6,740 | 6,637 | ||||||
Total liabilities, non-controlling interests and equity | $ | 12,464 | $ | 12,243 |
__________
(1) Please see our First Quarter 2024 Supplemental Financial Information for more detail on our debt balances and financial covenant ratios under our credit facility and senior notes indentures.
Condensed Consolidated Statements of Operations (unaudited, in millions, except per share amounts) |
||||||||
Quarter ended |
||||||||
2024 | 2023 | |||||||
Revenues | ||||||||
Rooms | $ | 853 | $ | 820 | ||||
Food and beverage | 473 | 431 | ||||||
Other | 145 | 130 | ||||||
Total revenues | 1,471 | 1,381 | ||||||
Expenses | ||||||||
Rooms | 202 | 193 | ||||||
Food and beverage | 295 | 269 | ||||||
Other departmental and support expenses | 334 | 315 | ||||||
Management fees | 69 | 65 | ||||||
Other property-level expenses | 104 | 91 | ||||||
Depreciation and amortization | 180 | 169 | ||||||
Corporate and other expenses⁽¹⁾ | 27 | 31 | ||||||
Gain on insurance settlements | (31 | ) | — | |||||
Total operating costs and expenses | 1,180 | 1,133 | ||||||
Operating profit | 291 | 248 | ||||||
Interest income | 18 | 14 | ||||||
Interest expense | (47 | ) | (49 | ) | ||||
Other gains | — | 69 | ||||||
Equity in earnings of affiliates | 8 | 7 | ||||||
Income before income taxes | 270 | 289 | ||||||
Benefit for income taxes | 2 | 2 | ||||||
Net income | 272 | 291 | ||||||
Less: Net income attributable to non-controlling interests | (4 | ) | (4 | ) | ||||
Net income attributable to |
$ | 268 | $ | 287 | ||||
Basic and diluted earnings per common share | $ | 0.38 | $ | 0.40 |
___________
(1) Corporate and other expenses include the following items:
Quarter ended |
||||||||
2024 | 2023 | |||||||
General and administrative costs | $ | 21 | $ | 21 | ||||
Non-cash stock-based compensation expense | 6 | 7 | ||||||
Litigation accruals | — | 3 | ||||||
Total | $ | 27 | $ | 31 |
Earnings per Common Share (unaudited, in millions, except per share amounts) |
||||||||
Quarter ended |
||||||||
2024 | 2023 | |||||||
Net income | $ | 272 | $ | 291 | ||||
Less: Net income attributable to non-controlling interests | (4 | ) | (4 | ) | ||||
Net income attributable to |
$ | 268 | $ | 287 | ||||
Basic weighted average shares outstanding | 704.0 | 713.4 | ||||||
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market | 1.5 | 1.5 | ||||||
Diluted weighted average shares outstanding⁽¹⁾ | 705.5 | 714.9 | ||||||
Basic and diluted earnings per common share | $ | 0.38 | $ | 0.40 |
___________
(1) Dilutive securities may include shares granted under comprehensive stock plans, preferred operating partnership units (“OP Units”) held by non-controlling limited partners and other non-controlling interests that have the option to convert their limited partnership interests to common OP Units. No effect is shown for any securities that were anti-dilutive for the period.
As of |
Quarter ended |
Quarter ended |
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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 |
|||||||||||||||||||||
2 | 1,038 | $ | 635.30 | 82.0 | % | $ | 520.71 | $ | 867.57 | $ | 643.96 | 77.9 | % | $ | 501.89 | $ | 862.22 | 3.7 | % | 0.6 | % | ||||||||||||
3 | 1,545 | 490.11 | 81.3 | % | 398.36 | 854.54 | 529.55 | 82.5 | % | 436.73 | 878.14 | (8.8 | %) | (2.7 | %) | ||||||||||||||||||
4 | 2,006 | 539.98 | 72.6 | % | 391.83 | 631.50 | 605.58 | 76.2 | % | 461.65 | 700.34 | (15.1 | %) | (9.8 | %) | ||||||||||||||||||
4 | 1,403 | 436.83 | 80.1 | % | 350.05 | 739.96 | 435.39 | 80.2 | % | 349.32 | 760.63 | 0.2 | % | (2.7 | %) | ||||||||||||||||||
1 | 446 | 528.66 | 64.6 | % | 341.31 | 774.19 | 510.30 | 67.2 | % | 343.06 | 768.78 | (0.5 | %) | 0.7 | % | ||||||||||||||||||
2 | 2,448 | 407.08 | 74.2 | % | 302.14 | 637.59 | 427.60 | 76.0 | % | 325.11 | 641.80 | (7.1 | %) | (0.7 | %) | ||||||||||||||||||
3 | 3,294 | 294.27 | 77.4 | % | 227.67 | 452.71 | 282.93 | 76.9 | % | 217.70 | 422.03 | 4.6 | % | 7.3 | % | ||||||||||||||||||
3 | 1,067 | 299.02 | 74.8 | % | 223.80 | 334.70 | 296.72 | 79.9 | % | 237.19 | 353.46 | (5.6 | %) | (5.3 | %) | ||||||||||||||||||
2 | 2,486 | 289.59 | 74.0 | % | 214.29 | 317.47 | 281.95 | 73.3 | % | 206.60 | 313.90 | 3.7 | % | 1.1 | % | ||||||||||||||||||
6 | 4,162 | 290.06 | 64.0 | % | 185.67 | 280.40 | 290.85 | 60.8 | % | 176.75 | 267.55 | 5.0 | % | 4.8 | % | ||||||||||||||||||
5 | 3,245 | 275.83 | 66.9 | % | 184.43 | 270.75 | 270.57 | 64.2 | % | 173.81 | 261.11 | 6.1 | % | 3.7 | % | ||||||||||||||||||
2 | 767 | 276.13 | 64.7 | % | 178.72 | 323.83 | 289.30 | 70.1 | % | 202.79 | 358.95 | (11.9 | %) | (9.8 | %) | ||||||||||||||||||
5 | 1,942 | 223.14 | 74.6 | % | 166.45 | 231.31 | 204.18 | 73.4 | % | 149.81 | 209.59 | 11.1 | % | 10.4 | % | ||||||||||||||||||
2 | 916 | 244.11 | 67.8 | % | 165.55 | 265.89 | 227.21 | 65.6 | % | 149.04 | 225.76 | 11.1 | % | 17.8 | % | ||||||||||||||||||
1 | 1,333 | 211.33 | 74.6 | % | 157.65 | 253.56 | 221.98 | 73.0 | % | 161.94 | 238.77 | (2.7 | %) | 6.2 | % | ||||||||||||||||||
2 | 1,496 | 224.11 | 67.9 | % | 152.09 | 221.78 | 210.79 | 69.2 | % | 145.84 | 213.40 | 4.3 | % | 3.9 | % | ||||||||||||||||||
2 | 1,512 | 229.52 | 66.1 | % | 151.75 | 252.73 | 238.60 | 70.1 | % | 167.19 | 266.21 | (9.2 | %) | (5.1 | %) | ||||||||||||||||||
2 | 810 | 202.76 | 72.8 | % | 147.59 | 228.90 | 207.09 | 74.2 | % | 153.60 | 239.52 | (3.9 | %) | (4.4 | %) | ||||||||||||||||||
2 | 810 | 213.56 | 61.6 | % | 131.66 | 227.78 | 196.79 | 74.0 | % | 145.62 | 242.65 | (9.6 | %) | (6.1 | %) | ||||||||||||||||||
2 | 1,315 | 210.91 | 52.7 | % | 111.05 | 162.48 | 197.72 | 53.1 | % | 105.09 | 156.16 | 5.7 | % | 4.1 | % | ||||||||||||||||||
3 | 1,562 | 179.25 | 55.7 | % | 99.76 | 145.54 | 178.91 | 51.6 | % | 92.37 | 135.28 | 8.0 | % | 7.6 | % | ||||||||||||||||||
3 | 1,342 | 177.37 | 55.3 | % | 98.05 | 159.53 | 171.90 | 48.7 | % | 83.66 | 114.72 | 17.2 | % | 39.1 | % | ||||||||||||||||||
Other | 10 | 3,061 | 351.34 | 58.4 | % | 205.11 | 320.77 | 357.65 | 58.2 | % | 208.18 | 321.87 | (1.5 | %) | (0.3 | %) | |||||||||||||||||
Domestic | 71 | 40,006 | 318.95 | 68.9 | % | 219.79 | 378.15 | 323.60 | 68.7 | % | 222.38 | 375.83 | (1.2 | %) | 0.6 | % | |||||||||||||||||
International | 5 | 1,499 | 173.64 | 56.1 | % | 97.47 | 139.44 | 171.05 | 60.3 | % | 103.18 | 145.42 | (5.5 | %) | (4.1 | %) | |||||||||||||||||
All Locations | 76 | 41,505 | $ | 314.65 | 68.4 | % | $ | 215.37 | $ | 369.58 | $ | 318.75 | 68.4 | % | $ | 218.08 | $ | 367.56 | (1.2 | %) | 0.5 | % |
___________
(1) See the Notes to Financial Information for a discussion of comparable hotel operating statistics. CBD of a location refers to the central business district.
Results by Location - actual, based on ownership period(1) | |||||||||||||||||||||||||||||||||
As of |
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2024 | 2023 | Quarter ended |
Quarter ended |
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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 |
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2 | 2 | $ | 635.30 | 82.0 | % | $ | 520.71 | $ | 867.57 | $ | 643.96 | 77.9 | % | $ | 501.89 | $ | 862.22 | 3.7 | % | 0.6 | % | ||||||||||||
3 | 3 | 490.11 | 81.3 | % | 398.36 | 854.54 | 506.37 | 81.9 | % | 414.65 | 815.69 | (3.9 | %) | 4.8 | % | ||||||||||||||||||
4 | 4 | 539.98 | 72.6 | % | 391.83 | 631.50 | 605.58 | 76.2 | % | 461.65 | 700.34 | (15.1 | %) | (9.8 | %) | ||||||||||||||||||
5 | 5 | 604.37 | 80.9 | % | 488.72 | 983.10 | 435.50 | 60.8 | % | 264.99 | 577.81 | 84.4 | % | 70.1 | % | ||||||||||||||||||
1 | 1 | 528.66 | 64.6 | % | 341.31 | 774.19 | 510.30 | 67.2 | % | 343.06 | 768.78 | (0.5 | %) | 0.7 | % | ||||||||||||||||||
2 | 2 | 407.08 | 74.2 | % | 302.14 | 637.59 | 427.60 | 76.0 | % | 325.11 | 641.80 | (7.1 | %) | (0.7 | %) | ||||||||||||||||||
3 | 3 | 294.27 | 77.4 | % | 227.67 | 452.71 | 282.93 | 76.9 | % | 217.70 | 422.03 | 4.6 | % | 7.3 | % | ||||||||||||||||||
3 | 3 | 299.02 | 74.8 | % | 223.80 | 334.70 | 296.72 | 79.9 | % | 237.19 | 353.46 | (5.6 | %) | (5.3 | %) | ||||||||||||||||||
2 | 2 | 289.59 | 74.0 | % | 214.29 | 317.47 | 281.95 | 73.3 | % | 206.60 | 313.90 | 3.7 | % | 1.1 | % | ||||||||||||||||||
6 | 6 | 290.06 | 64.0 | % | 185.67 | 280.40 | 290.85 | 60.8 | % | 176.75 | 267.55 | 5.0 | % | 4.8 | % | ||||||||||||||||||
5 | 5 | 275.83 | 66.9 | % | 184.43 | 270.75 | 270.57 | 64.2 | % | 173.81 | 261.11 | 6.1 | % | 3.7 | % | ||||||||||||||||||
2 | 2 | 276.13 | 64.7 | % | 178.72 | 323.83 | 289.30 | 70.1 | % | 202.79 | 358.95 | (11.9 | %) | (9.8 | %) | ||||||||||||||||||
5 | 5 | 223.14 | 74.6 | % | 166.45 | 231.31 | 204.18 | 73.4 | % | 149.81 | 209.59 | 11.1 | % | 10.4 | % | ||||||||||||||||||
2 | 2 | 244.11 | 67.8 | % | 165.55 | 265.89 | 227.21 | 65.6 | % | 149.04 | 225.76 | 11.1 | % | 17.8 | % | ||||||||||||||||||
1 | 1 | 211.33 | 74.6 | % | 157.65 | 253.56 | 221.98 | 73.0 | % | 161.94 | 238.77 | (2.7 | %) | 6.2 | % | ||||||||||||||||||
2 | 2 | 224.11 | 67.9 | % | 152.09 | 221.78 | 210.79 | 69.2 | % | 145.84 | 213.40 | 4.3 | % | 3.9 | % | ||||||||||||||||||
2 | 2 | 229.52 | 66.1 | % | 151.75 | 252.73 | 238.60 | 70.1 | % | 167.19 | 266.21 | (9.2 | %) | (5.1 | %) | ||||||||||||||||||
2 | 2 | 202.76 | 72.8 | % | 147.59 | 228.90 | 207.09 | 74.2 | % | 153.60 | 239.52 | (3.9 | %) | (4.4 | %) | ||||||||||||||||||
2 | 2 | 213.56 | 61.6 | % | 131.66 | 227.78 | 196.79 | 74.0 | % | 145.62 | 242.65 | (9.6 | %) | (6.1 | %) | ||||||||||||||||||
2 | 2 | 210.91 | 52.7 | % | 111.05 | 162.48 | 197.72 | 53.1 | % | 105.09 | 156.16 | 5.7 | % | 4.1 | % | ||||||||||||||||||
3 | 3 | 179.25 | 55.7 | % | 99.76 | 145.54 | 178.91 | 51.6 | % | 92.37 | 135.28 | 8.0 | % | 7.6 | % | ||||||||||||||||||
3 | 3 | 177.37 | 55.3 | % | 98.05 | 159.53 | 171.90 | 48.7 | % | 83.66 | 114.72 | 17.2 | % | 39.1 | % | ||||||||||||||||||
Other | 10 | 10 | 351.34 | 58.4 | % | 205.11 | 320.77 | 357.65 | 58.2 | % | 208.18 | 321.87 | (1.5 | %) | (0.3 | %) | |||||||||||||||||
Domestic | 72 | 72 | 329.69 | 69.1 | % | 227.73 | 393.64 | 323.61 | 68.0 | % | 220.10 | 371.64 | 3.5 | % | 5.9 | % | |||||||||||||||||
International | 5 | 5 | 173.64 | 56.1 | % | 97.47 | 139.44 | 171.05 | 60.3 | % | 103.18 | 145.42 | (5.5 | %) | (4.1 | %) | |||||||||||||||||
All Locations | 77 | 77 | $ | 325.14 | 68.6 | % | $ | 223.09 | $ | 384.62 | $ | 318.78 | 67.7 | % | $ | 215.94 | $ | 363.65 | 3.3 | % | 5.8 | % |
___________
(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.
Schedule of (unaudited, in millions, except hotel statistics) |
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Quarter ended |
|||||||
2024 | 2023 | ||||||
Number of hotels | 76 | 76 | |||||
Number of rooms | 41,505 | 41,505 | |||||
Change in comparable hotel Total RevPAR | 0.5 | % | — | ||||
Change in comparable hotel RevPAR | (1.2 | %) | — | ||||
Operating profit margin⁽²⁾ | 19.8 | % | 18.0 | % | |||
Comparable hotel EBITDA margin⁽²⁾ | 31.2 | % | 32.6 | % | |||
Food and beverage profit margin⁽²⁾ | 37.6 | % | 37.6 | % | |||
Comparable hotel food and beverage profit margin⁽²⁾ | 37.4 | % | 37.7 | % | |||
Net income | $ | 272 | $ | 291 | |||
Depreciation and amortization | 180 | 169 | |||||
Interest expense | 47 | 49 | |||||
Benefit for income taxes | (2 | ) | (2 | ) | |||
Gain on sale of property and corporate level income/expense | (20 | ) | (59 | ) | |||
Property transaction adjustments⁽³⁾ | — | (3 | ) | ||||
Non-comparable hotel results, net⁽⁴⁾ | (42 | ) | 3 | ||||
Comparable hotel EBITDA⁽¹⁾ | $ | 435 | $ | 448 |
___________
(1) See the Notes to Financial Information for a discussion of comparable hotel results, which are non-GAAP measures, and the limitations on their use. For additional information on comparable hotel EBITDA by location, see the First Quarter 2024 Supplemental Financial Information posted on our website.
(2) 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 |
Quarter ended |
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Adjustments | Adjustments | |||||||||||||||||||||||||||||||
GAAP Results | Non-comparable hotel results, net ⁽⁴⁾ |
Depreciation and corporate level items |
Comparable hotel Results |
GAAP Results | Property transaction adjustments ⁽³⁾ |
Non-comparable hotel results, net ⁽⁴⁾ |
Depreciation and corporate level items |
Comparable hotel Results |
||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Room | $ | 853 | $ | (38 | ) | $ | — | $ | 815 | $ | 820 | $ | (5 | ) | $ | 1 | $ | — | $ | 816 | ||||||||||||
Food and beverage | 473 | (29 | ) | — | 444 | 431 | (2 | ) | — | — | 429 | |||||||||||||||||||||
Other | 145 | (6 | ) | — | 139 | 130 | — | — | — | 130 | ||||||||||||||||||||||
Total revenues | 1,471 | (73 | ) | — | 1,398 | 1,381 | (7 | ) | 1 | — | 1,375 | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Room | 202 | (5 | ) | — | 197 | 193 | (1 | ) | — | — | 192 | |||||||||||||||||||||
Food and beverage | 295 | (17 | ) | — | 278 | 269 | (1 | ) | (1 | ) | — | 267 | ||||||||||||||||||||
Other | 507 | (19 | ) | — | 488 | 471 | (2 | ) | (1 | ) | — | 468 | ||||||||||||||||||||
Depreciation and amortization | 180 | — | (180 | ) | — | 169 | — | — | (169 | ) | — | |||||||||||||||||||||
Corporate and other expenses | 27 | — | (27 | ) | — | 31 | — | — | (31 | ) | — | |||||||||||||||||||||
Gain on insurance settlements | (31 | ) | 10 | 21 | — | — | — | — | — | — | ||||||||||||||||||||||
Total expenses | 1,180 | (31 | ) | (186 | ) | 963 | 1,133 | (4 | ) | (2 | ) | (200 | ) | 927 | ||||||||||||||||||
Operating Profit - Comparable hotel EBITDA | $ | 291 | $ | (42 | ) | $ | 186 | $ | 435 | $ | 248 | $ | (3 | ) | $ | 3 | $ | 200 | $ | 448 |
(3) Property transaction adjustments represent the following items: (i) the elimination of results of operations of our hotels sold or held-for-sale as of the reporting date, 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 the reporting date.
(4) 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 condensed consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable.
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre (1) (unaudited, in millions) |
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Quarter ended |
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2024 | 2023 | ||||||
Net income | $ | 272 | $ | 291 | |||
Interest expense | 47 | 49 | |||||
Depreciation and amortization | 180 | 169 | |||||
Income taxes | (2 | ) | (2 | ) | |||
EBITDA | 497 | 507 | |||||
Gain on dispositions⁽²⁾ | — | (69 | ) | ||||
Equity investment adjustments: | |||||||
Equity in earnings of affiliates | (8 | ) | (7 | ) | |||
Pro rata EBITDAre of equity investments⁽³⁾ | 15 | 13 | |||||
EBITDAre | 504 | 444 | |||||
Adjustments to EBITDAre: | |||||||
Gain on property insurance settlement | (21 | ) | — | ||||
Adjusted EBITDAre | $ | 483 | $ | 444 |
___________
(1) See the Notes to Financial Information for discussion of non-GAAP measures.
(2) Reflects the sale of one hotel in 2023.
(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.
Reconciliation of Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share (1) (unaudited, in millions, except per share amounts) |
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Quarter ended |
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2024 | 2023 | ||||||
Net income | $ | 272 | $ | 291 | |||
Less: Net income attributable to non-controlling interests | (4 | ) | (4 | ) | |||
Net income attributable to |
268 | 287 | |||||
Adjustments: | |||||||
Gain on dispositions⁽²⁾ | — | (69 | ) | ||||
Gain on property insurance settlement | (21 | ) | — | ||||
Depreciation and amortization | 180 | 168 | |||||
Equity investment adjustments: | |||||||
Equity in earnings of affiliates | (8 | ) | (7 | ) | |||
Pro rata FFO of equity investments⁽³⁾ | 9 | 10 | |||||
Consolidated partnership adjustments: | |||||||
FFO adjustments for non-controlling interests of |
(2 | ) | (1 | ) | |||
NAREIT FFO | 426 | 388 | |||||
Adjustments to NAREIT FFO: | |||||||
Loss on debt extinguishment | — | 4 | |||||
Adjusted FFO | $ | 426 | $ | 392 | |||
For calculation on a per share basis:⁽⁴⁾ | |||||||
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO | 705.5 | 714.9 | |||||
Diluted earnings per common share | $ | 0.38 | $ | 0.40 | |||
NAREIT FFO per diluted share | $ | 0.60 | $ | 0.54 | |||
Adjusted FFO per diluted share | $ | 0.60 | $ | 0.55 |
___________
(1-3) Refer to the corresponding footnote on the Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre.
(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 partnership interests to common OP units. No effect is shown for securities if they are anti-dilutive.
Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2024 Forecasts (1) (unaudited, in millions) |
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Full Year 2024 | |||||||
Low-end of range | High-end of range | ||||||
Net income | $ | 719 | $ | 775 | |||
Interest expense | 181 | 183 | |||||
Depreciation and amortization | 719 | 719 | |||||
Income taxes | 25 | 27 | |||||
EBITDA | 1,644 | 1,704 | |||||
Equity investment adjustments: | |||||||
Equity in earnings of affiliates | (14 | ) | (15 | ) | |||
Pro rata EBITDAre of equity investments | 42 | 43 | |||||
EBITDAre | 1,672 | 1,732 | |||||
Adjustments to EBITDAre: | |||||||
Gain on property insurance settlement | (32 | ) | (32 | ) | |||
Adjusted EBITDAre | $ | 1,640 | $ | 1,700 |
Full Year 2024 | |||||||
Low-end of range | High-end of range | ||||||
Net income | $ | 719 | $ | 775 | |||
Less: Net income attributable to non-controlling interests | (11 | ) | (12 | ) | |||
Net income attributable to |
708 | 763 | |||||
Adjustments: | |||||||
Gain on property insurance settlement | (32 | ) | (32 | ) | |||
Depreciation and amortization | 717 | 717 | |||||
Equity investment adjustments: | |||||||
Equity in earnings of affiliates | (14 | ) | (15 | ) | |||
Pro rata FFO of equity investments | 24 | 25 | |||||
Consolidated partnership adjustments: | |||||||
FFO adjustment for non-controlling partnerships | (1 | ) | (1 | ) | |||
FFO adjustment for non-controlling interests of |
(9 | ) | (9 | ) | |||
NAREIT and Adjusted FFO | $ | 1,393 | $ | 1,448 | |||
Diluted weighted average shares outstanding - EPS, NAREIT FFO and Adjusted FFO | 707.4 | 707.4 | |||||
Diluted earnings per common share | $ | 1.00 | $ | 1.08 | |||
NAREIT and Adjusted FFO per diluted share | $ | 1.97 | $ | 2.05 |
_______________
(1) The Forecasts are based on the below assumptions:
For a discussion of items that may affect forecast results, see the Notes to Financial Information.
Schedule of (unaudited, in millions) |
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Full Year 2024 | |||||||
Low-end of range | High-end of range | ||||||
Operating profit margin(2) | 15.4 | % | 16.1 | % | |||
Comparable hotel EBITDA margin(2) | 29.3 | % | 29.8 | % | |||
Net income | $ | 719 | $ | 775 | |||
Depreciation and amortization | 719 | 719 | |||||
Interest expense | 181 | 183 | |||||
Provision for income taxes | 25 | 27 | |||||
Gain on sale of property and corporate level income/expense | 30 | 28 | |||||
Forecast results for |
(29 | ) | (29 | ) | |||
Non-comparable hotel results, net(3) | (77 | ) | (78 | ) | |||
Comparable hotel EBITDA(1) | $ | 1,568 | $ | 1,625 |
___________
(1) See "Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre and Diluted Earnings per Common Share to NAREIT and Adjusted Funds From Operations per Diluted Share for Full Year 2024 Forecasts" for other forecast assumptions. Forecast comparable hotel results include 75 hotels (of our 77 hotels owned at
(2) 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:
Low-end of range | High-end of range | ||||||||||||||||||||||||||||||||||||||
Adjustments | Adjustments | ||||||||||||||||||||||||||||||||||||||
GAAP Results | Forecast results for |
Non-comparable hotel results, net |
Depreciation and corporate level items |
Comparable hotel Results |
GAAP Results | Forecast results for |
Non-comparable hotel results, net |
Depreciation and corporate level items |
Comparable hotel Results |
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Revenues | |||||||||||||||||||||||||||||||||||||||
Rooms | $ | 3,416 | $ | (51 | ) | $ | (116 | ) | $ | — | $ | 3,249 | $ | 3,481 | $ | (51 | ) | $ | (117 | ) | $ | — | $ | 3,313 | |||||||||||||||
Food and beverage | 1,707 | (19 | ) | (84 | ) | — | 1,604 | 1,737 | (19 | ) | (85 | ) | — | 1,633 | |||||||||||||||||||||||||
Other | 527 | (10 | ) | (21 | ) | — | 496 | 535 | (10 | ) | (21 | ) | — | 504 | |||||||||||||||||||||||||
Total revenues | 5,650 | (80 | ) | (221 | ) | — | 5,349 | 5,753 | (80 | ) | (223 | ) | — | 5,450 | |||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||
Hotel expenses | 4,014 | (51 | ) | (162 | ) | — | 3,801 | 4,059 | (51 | ) | (163 | ) | — | 3,845 | |||||||||||||||||||||||||
Depreciation and amortization | 719 | — | (719 | ) | — | 719 | — | (719 | ) | — | |||||||||||||||||||||||||||||
Corporate and other expenses | 118 | — | — | (118 | ) | — | 118 | — | (118 | ) | — | ||||||||||||||||||||||||||||
Gain on insurance settlements | (70 | ) | — | 18 | 32 | (20 | ) | (70 | ) | — | 18 | 32 | (20 | ) | |||||||||||||||||||||||||
Total expenses | 4,781 | (51 | ) | (144 | ) | (805 | ) | 3,781 | 4,826 | (51 | ) | (145 | ) | (805 | ) | 3,825 | |||||||||||||||||||||||
Operating Profit - Comparable hotel EBITDA | $ | 869 | $ | (29 | ) | $ | (77 | ) | $ | 805 | $ | 1,568 | $ | 927 | $ | (29 | ) | $ | (78 | ) | $ | 805 | $ | 1,625 |
(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 condensed consolidated statements of operations as continuing operations, and (ii) gains on business interruption proceeds relating to events that occurred while the hotels were classified as non-comparable. The following are expected to be non-comparable for full year 2024:
Notes to Financial Information |
FORECASTS
Our forecast of net income, earnings per diluted share, NAREIT and Adjusted FFO per diluted share, EBITDA, EBITDAre, Adjusted EBITDAre and comparable hotel results are forward-looking statements and are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause actual results and performance to differ materially from those expressed or implied by these forecasts. Although we believe the expectations reflected in the forecasts are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that the results will not be materially different. Risks that may affect these assumptions and forecasts include the following: potential changes in overall economic outlook make it inherently difficult to forecast the level of RevPAR; the amount and timing of debt payments may change significantly based on market conditions, which will directly affect the level of interest expense and net income; the amount and timing of transactions involving shares of our common stock may change based on market conditions; and other risks and uncertainties associated with our business described herein and in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the
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 gain on insurance settlements on our condensed consolidated statements of operations. Business interruption insurance gains related to a hotel that was excluded from our comparable hotel set also will be excluded from the comparable hotel results.
Of the 77 hotels that we owned as of
Additionally, following the collapse of a portion of
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-
NON-GAAP FINANCIAL MEASURES
Included in this press release are certain “non-GAAP financial measures,” which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable
NAREIT FFO AND NAREIT FFO PER DILUTED SHARE
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 believe that NAREIT FFO per diluted share is a useful supplemental measure of our operating performance and that the presentation of NAREIT FFO per diluted share, when combined with the primary GAAP presentation of diluted earnings per share, provides beneficial information to investors. By excluding the effect of real estate depreciation, amortization, impairment expense and gains and losses from sales of depreciable real estate, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that such measures can facilitate comparisons of operating performance between periods and with other REITs, even though NAREIT FFO per diluted share does not represent an amount that accrues directly to holders of our common stock. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. As noted by NAREIT in its Funds From Operations White Paper – 2018 Restatement, the primary purpose for including FFO as a supplemental measure of operating performance of a REIT is to address the artificial nature of historical cost depreciation and amortization of real estate and real estate-related assets mandated by GAAP. For these reasons, NAREIT adopted the FFO metric in order to promote a uniform industry-wide measure of REIT operating performance.
Adjusted FFO per Diluted Share
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:
In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that management believes are not representative of the Company’s current operating performance. For example, in 2017, as a result of the reduction of the
EBITDA
Earnings before Interest Expense, Income Taxes, Depreciation and Amortization (“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 the Company’s capital structure (primarily interest expense) and its 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 our compensation programs.
EBITDAre and Adjusted EBITDAre
We present EBITDAre in accordance with NAREIT guidelines, as defined in its
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:
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.
Limitations on the Use of NAREIT FFO per Diluted Share, Adjusted FFO per Diluted Share, EBITDA, EBITDAre and Adjusted EBITDAre
We calculate EBITDAre and NAREIT FFO per diluted share in accordance with standards established by NAREIT, which may not be comparable to measures calculated by other companies that do not use the NAREIT definition of EBITDAre and FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. In addition, although EBITDAre and FFO per diluted share are useful measures when comparing our results to other REITs, they may not be helpful to investors when comparing us to non-REITs. We also calculate Adjusted FFO per diluted share and Adjusted EBITDAre, which measures are not in accordance with NAREIT guidance and may not be comparable to measures calculated by other REITs or by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP. Cash expenditures for various long-term assets (such as renewal and replacement capital expenditures), interest expense (for EBITDA, EBITDAre and Adjusted EBITDAre purposes only), severance expense related to significant property-level reconfiguration and other items have been, and will be, made and are not reflected in the EBITDA, EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share presentations. 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 consolidated statements of operations and consolidated statements of cash flows in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures. Additionally, NAREIT FFO per diluted share, Adjusted FFO per diluted share, EBITDA, EBITDAre and Adjusted EBITDAre should not be considered as measures of our liquidity or indicative of funds available to fund our cash needs, including our ability to make cash distributions. In addition, NAREIT FFO per diluted share and Adjusted FFO per diluted share do not measure, and should not be used as measures of, amounts that accrue directly to stockholders’ benefit.
Similarly, EBITDAre, Adjusted EBITDAre, NAREIT FFO and Adjusted FFO per diluted share include adjustments for the pro rata share of our equity investments, and NAREIT FFO and Adjusted FFO per diluted share include adjustments for the pro rata share of non-controlling partners in consolidated partnerships. Our equity investments consist of interests ranging from 11% to 67% in eight domestic and international partnerships that own a total of 35 properties and a vacation ownership development. Due to the voting rights of the outside owners, we do not control and, therefore, do not consolidate these entities. The non-controlling partners in consolidated partnerships primarily consist of the approximate 1% interest in
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 the Company’s capital structure (primarily interest expense) and its 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 the Company’s 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.
Chief Financial Officer (240) 744-5267 |
Investor Relations (240) 744-5117 ir@hosthotels.com |
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Source: Host Hotels & Resorts, L.P.