Host Hotels & Resorts, Inc.

Good morning, and welcome to the Host Hotels and Resorts First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Jamie Marcus, Senior Vice President of Investor Relations. Jamie, please go ahead.

Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward-looking statements on federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDA RE, and comparable hotel-level results. You can find this information together with reconciliations to the most directly comparable gap information in yesterday's earnings press release, in our 8K filed with the SEC, and in the supplemental financial information on our website at hosthotels.com. The operational results discussed today refer to our 74 hotel comparable hotel portfolio in 2026, which excludes the Don Cesar and Sheridan Parsippany. With me on today's call are Jim Rizzolio, President and Chief Executive Officer, and Saurav Ghosh, Executive Vice President and Chief Finance Officer. With that, I would like to turn the call over to Jim.

Thank you, Jamie, and thanks to everyone for joining us this morning. Our first quarter results exceeded our expectations, representing a strong start to 2026. We delivered adjusted EBITDA RE of $543 million, an increase of 5.6% over last year, and adjusted FFO per share of 67 cents, an increase of 4.7% over last year. First quarter adjusted EBITDA RE and adjusted FFO per share benefited from $7 million of business interruption proceeds related to hurricanes Helene and Milton, compared to $10 million in the first quarter of 2025. Comparable hotel total REVPAR improved 4.6% compared to the first quarter of 2025, and comparable hotel REVPAR improved 4.4%, driven by rate growth and continued strength and out-of-room spending. Comparable hotel EBITDA margin improved by 70 basis points year over year, to 32.7% driven by revenue growth. Rep heart growth in the first quarter was meaningfully better than expected. Strong rate growth was enabled by resilient demand despite estimated weather impacts of approximately 120 basis points in tough comparisons to last year. We saw particularly strong performance at our resorts in Florida and Phoenix as well as in San Francisco which benefited from the Super Bowl and the ongoing market recovery. Notably, San Francisco achieved 26% rep part growth and more than 70% EBITDA growth in the quarter, reflecting continued momentum in the market's recovery. Turning to business mix, transient revenue grew by 5.5%, driven by rate growth, particularly at our resorts. First quarter transient results benefited from Easter in early April, which compressed spring break demand in March, contributing to 9% transient revenue growth at our resorts. Feedback from our properties indicates that ongoing geopolitical uncertainty supported travelers favoring U.S. luxury destinations over international destinations. As a result, resort properties delivered particularly strong performance in the first quarter. Briefly touching on Maui, REPPAR grew 1.5% and total REPPAR grew 1.6% as growth was impacted by the Kona low rainstorm in March. Prior to the storm, overall demand at our Maori resorts was tracking ahead of our expectations for the first quarter. It is important to note that the impacts from the storm were contained and are not ongoing. We have also seen strong rebookings since the storm, and as a result, we continue to expect Maui to contribute approximately $120 million of EBITDA in 2026. Business transient revenue grew 4%, driven by strong rate growth. as we saw a continued mix shift from government to corporate negotiated customers in the first quarter. Group room revenue for the quarter was up 2.4% year over year, driven by improvements in both demand and rate. Our property sold 1.1 million group room nights in the first quarter, and definite group room nights on the books for 2026 now stand at 3.5 million. with total group revenue pace up nearly 4% to the same time last year. Turning to ancillary spend, F&B revenue grew 5% and other revenue grew 6%, with broad-based strength across departments, demonstrating the continued strength of the affluent consumer, as well as the benefits of the strategic investments we have made in many of our properties over the last several years. Turning to capital allocation, we repurchased 4 million shares of common stock at an average price of $18.97 per share for a total of $75 million in the first quarter. Since 2017, we have repurchased 73.2 million shares at an average price of $16.76 per share. bringing our total share repurchases to approximately $1.2 billion. Yesterday, the Board of Directors authorized a quarterly common dividend of 20 cents per share and a special dividend of 72 cents per share. The dividend will be paid on July 15th to stockholders of record on June 30th. The special dividend represents the distribution of the approximate $500 million taxable gain from the sale of the two Four Seasons resorts in the first quarter of this year. Creating value for our stockholders remains our top priority. By returning capital through a regular quarterly cash dividend, special dividends like the one we will pay out this quarter and our share repurchase program We are advancing our objective of delivering long-term value for our investors. Turning to portfolio reinvestment, during the first quarter, we completed the comprehensive renovation at the Hyatt Regency Reston. As of the end of the first quarter, the Hyatt Transformational Capital Program is more than 80% complete, and it's tracking on time and under budget. Transformational renovations are now complete at four of the six hotels in the program, including the Grand Hyatt Atlanta Buckhead, the Hyatt Regency Capitol Hill, the Hyatt Regency Austin, and the Hyatt Regency Reston. We are nearing completion on the Grand Hyatt Washington DC, which is expected to be finished later this month. The Manchester Grand Hyatt San Diego, the final asset in the program, has been phased to mitigate business interruption and is expected to be substantially complete by the end of this year. Additionally, the second Marriott Transformational Capital Program is well underway. Guest room renovations at the New Orleans Marriott are in progress and are scheduled to be completed in the third quarter. And renovations at the Ritz-Carlton Naples Tiburon and the Westing Cureland are scheduled to start later this month. The four asset program is already more than 25% complete, and it is also tracking on time and under budget. In the first quarter, we received $3 million of operating guarantees related to our transformational capital programs. As a reminder, We expect to benefit from approximately $19 million of operating profit guarantees in 2026 related to our two transformational capital programs, which we expect will offset most of the EBITDA disruption at these properties. Looking at other ROI projects, we are nearing completion of the condo development at the Four Seasons Orlando. To date, we have closed on the sale of 20 of 31 units within the mid-rise building and we have deposits and purchase agreements in place for eight of the nine villas, bringing total sales and deposits to 28 of 40 units. Overall, the project is on budget and expected to sell out by the end of this year. For 2026, Our capital expenditure guidance range is $545 to $655 million. This includes approximately $250 to $300 million of investment focused on redevelopment, repositioning, and ROI projects, and $20 to $30 million of property damage reconstruction associated with the Konolo Rainstorm in Hawaii. We also anticipate remediation costs of approximately $5 million. While we are still evaluating the total impacts of the storm, we expect our insurance coverage to cover the losses in excess of our deductible. In addition to our capital expenditure investment, we expect to spend $15 million to complete the condo development at the Four Seasons Orlando in 2026. Our continued reinvestment across our portfolio is a true differentiator for Host. In fact, once the second Marriott Transformational Capital Program is complete, we will have invested $2.1 billion in comprehensive renovations at 34 hotels in our portfolio, which are expected to contribute approximately 60% of our total hotel EBITDA in 2026. We have now stabilized post renovation data on 21 hotels and the average rep part index share gain is nearly nine points. As evidenced by our results, our capital allocation decisions over the past few years are driving value creation for our shareholders. We also reinforce our position as a global leader in corporate responsibility in the first quarter. Last week, Host was proud to be included in the Dow Jones Best in Class Index World for the seventh consecutive year and North America for the ninth consecutive year, ranking number three globally in our sector. In fact, Host was one of only two North American companies on the World Index and number one in our sector among seven companies on the North America Index. Turning to our outlook for 2026, We continue to expect strong leisure demand bolstered by special events, modest improvements to short-term group booking trends, and stable business transient demand. As a result, we are raising our 2026 comparable hotel rep part guidance range to 3% to 4.5% over 2025, and our comparable hotel total rep part growth guidance range to 3.5% to 5% over last year. Looking ahead to the remainder of the year, we are optimistic about the travel environment. High-end consumers continue to prioritize experiences, and supply across our markets and chain scales remains at historically low levels. Against this backdrop, our Fortress balance sheet gives us the flexibility to continuously reinvest in our portfolio while also returning capital to shareholders through a sustainable quarterly dividend periodic special dividends, and share repurchases. As our results over the past few years have shown, our competitive advantages uniquely position hosts to continue to capture additional upside in the current environment and for many years to come. With that, I will now turn the call over to Saurav.

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our first quarter operations, updated 2026 guidance, and our balance sheet. Starting with total revenue trends, total REVPAR growth continued to outpace REVPAR growth due to broad-based strength across food and beverage and other department revenues. Comparable hotel food and beverage revenue for the quarter grew 5% driven by recently repositioned outlets and strong banquet and catering contribution per group room night at convention hotels. As Jim mentioned, this is the benefit of the strategic investments we have made over the last few years, which is clearly evident in out-of-room spending by our guests. Banquet and catering revenue increased 3% led by our San Diego properties, the San Francisco Marriott Marquis, the San Antonio Marriott River Center, and the Ritz-Carlton Amelia Island. These hotels all achieved banquet and catering contribution per group room night growth of over 7%. In fact, banquet and catering contribution at the Ritz Carlton Amelia Island grew 24% driven by incentive groups and upsells. Outlet revenue grew 8% driven by the New York Marriott Marquis, the One Hotel South Beach, and the Grand Hyatt San Diego, all of which have recently renovated restaurants. The San Francisco Marriott Marquis and Santa Clara Marriott also benefited from broad-based improvement in the first quarter, which was further enhanced by the Super Bowl in February. Other revenues increased 6%, once again propelled by strength in golf and spa operations. Spa revenue was up 4% driven by improved capture, particularly at Ritz-Carlton Amelia Island and Weston Cureland, which continue to benefit from recent spa renovations. Golf revenue grew 9% despite impacts in Maui, led by strong performance at our Naples and Phoenix golf courses. Shifting to room revenues, overall transient revenue was up 5.5% compared to the first quarter of 2025, driven by rate growth and leisure demand. Notably, our Florida and Phoenix resorts generated approximately 60% of the transient revenue growth in the quarter. Transient revenue at our resorts increased by more than 9%, underscoring the continued strength of high-end demand. Looking ahead to the upcoming holiday weekends, transient revenue pace is up 6% for Memorial Day weekend compared to the same time last year, driven by resorts. Revenue pace for the weekend of July 4th is up nearly 50% over last year, driven by Northeastern cities, including Philadelphia, Washington, DC, New York, and Boston. While we expect that number to actualize lower, it is encouraging to see early strength in both demand and rate for World Cup matches and the America 250 celebrations. Business transient revenue was up 4% to the first quarter of 2025, driven primarily by rate growth. While overall business trends in demand remains below pre-pandemic levels, government volume has stabilized, and we are encouraged by corporate activity from consulting, technology, and financial services firms. Turning to group, revenue was up 2.4% year over year. Growth was driven by both demand and rate improvements. particularly for association and other groups. Group revenue growth was led by San Francisco, which benefited from strong citywide performance in addition to the Super Bowl. For full year 2026, we have 3.5 million definite group room nights on the books, representing a 12% increase since the fourth quarter. As Jim mentioned, total group revenue pace is up nearly 4% over the same time last year. More specifically, we are seeing meaningful total group revenue pace in San Francisco, New York, the Florida Gulf Coast, and Miami. Group booking pace remains strongest for the second and fourth quarters. Shifting gears to margins, comparable hotel EBITDA margin of 32.7% was 70 basis points above the fourth quarter of 2025 as a result of total revenue growth which outpaced absolute wage and benefit increases. We expect year-over-year margin comparisons to moderate as the year progresses, primarily driven by lower average rate growth expectations in the second half of the year. Turning to our outlook for 2026, we are increasing our comparable hotel rep car growth guidance range to 3% to 4.5%, and our comparable hotel total rep car growth guidance range to 3.5% to 5%. The midpoint of our guidance contemplates a stable operating environment with the continuation of the trends seen in the first quarter. This includes leisure transient strength driven by special events such as the World Cup, modest improvements to short-term group booking trends, and stable business transient demand. At the low end of our guidance, we have assumed no improvement in short-term group booking trends and weaker special events demand. And at the high end, we have assumed improving short-term group booking trends and increased demand around special events. We expect comparable hotel EBITDA margins to be up 20 basis points year over year at the low end of our guidance to up 50 basis points at the high end, a 30 basis point improvement over our prior guidance. In terms of comparable hotel rev par growth cadence for the remainder of the year, we expect second quarter rev par growth to be similar to that of the first quarter, driven by the World Cup. We expect comparable hotel rev par for April to increase approximately 4.4% year over year. Rev par growth in the second half of the year is expected to be in the low single digits. The midpoint assumes comparable hotel rev par growth of 3.75% compared to 2025, a hundred basis point improvement over our prior guidance. We continue to expect an estimated 40 basis point net benefit from special events for the full year with an estimated 60 basis point lift from the World Cup, partially offset by a 20 basis point headwind from the presidential inauguration in the first quarter of 2025. In addition, Maui is expected to contribute approximately 35 basis points to our full-year REFPA growth. It is important to point out that bulk of the demand around the World Cup is expected to materialize within the 30-day booking window. That said, we are encouraged that transient revenue pace for our portfolio in World Cup markets is up nearly 40% year-over-year. and has been steadily picking up occupancy as we get closer to the match dates. At the midpoint, we expect a comparable hotel EBITDA margin of 29.5%, which is 30 basis points above 2025. Our margin performance reflects our continued success in partnering with our operators to drive productivity gains across our portfolio, as well as the capital allocation decisions we have made over the past few years. For the full year, we continue to expect wage rates to increase approximately 5%, which comprises approximately 50% of our total comparable hotel operating expenses. Our 2026 full year adjusted EBITDA RE midpoint is $1,810,000,000. This implies a $40 million or more than 2% improvement over our prior guidance midpoint, driven by first quarter outperformance and a slightly more optimistic view of the second half of the year. Our adjusted EBITDA RE midpoint includes $28 million of estimated EBITDA from operations at the Don Cesar, which is excluded from our comparable hotel set in 2026. It also includes approximately $7 million of business interruption proceeds related to Hurricanes Helene and Milton, which we received in the first quarter. While we also expect to receive business interruption proceeds for the recent Kona low rainstorm in Hawaii, it is still too early to estimate the timing or amount of any payments. Lastly, our 2026 full year adjusted EBITDA RE midpoint includes between $20 and $25 million of estimated net EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings. In the first quarter, we recognized $4 million of EBITDA associated with condo sales. Turning to our balance sheet and liquidity position, our weighted average maturity is 4.9 years at a weighted average interest rate of 4.8%. We currently have $3.4 billion in total available liquidity, which includes $151 million of FF&E reserves and $1.5 billion available under the revolver portion of the credit facility. In April, we paid a quarterly cash dividend of 20 cents per share. Yesterday, as Jim mentioned, the Board of Directors authorized a quarterly dividend of 20 cents per share and a special dividend of 72 cents per share to shareholders of record as of June 30th. which is payable on July 15th. Payment of these dividends will reduce our total available liquidity by approximately $770 million, bringing our adjusted leverage ratio to two and a half times. As always, any future dividends are subject to approval by the company's board of directors. In closing, we believe our investment grade balance sheet, as well as our size, scale, and diversification uniquely position hosts to continue to outperform in the current environment while capitalizing on opportunities for growth in the future. With that, we would be happy to answer your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

Thank you. We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Smedes Rose with Citi. Your line is open. Please go ahead.

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

Yeah, just to back up a little bit, majority of the bookings really happen within the 45-day window. And believe it or not, in sort of the week leading up to the matches, 40% of the occupancy from the World Cup is actually booked in that last week. So there is, we are pacing well relative to where we stand right now. But it's really a last minute buildup, literally like three weeks leading into it with, like I said, 40% of the occupancy really being booked one week out. And that is in line with the World Cup occupancy bill that we have from stats that we got from the last World Cup in Russia and Qatar. And the other thing I would point out is, you know, you've seen in the news sort of group block reductions, and that block reductions is not at all indicative of overall event. That sort of happens in the normal course. FIBA people always, there is a wash in terms of sort of the overall group bookings that takes place. So it is really much more of a transient play. than a group play, and obviously, it differs from market to market.

Just to help you think about a little more color to it, we think that about two-thirds of that 60 basis point pickup is going to occur in the second quarter and the remainder in the third quarter. And it's, you know, the third quarter is much more difficult to forecast because of not knowing what teams are going to show up in the knockout rounds, etc. But we're very pleased with how things are pacing. I mean, we have World Cup matches in, I think, 10 of our markets, you know, led by New York and Miami in particular, where there are going to be knockout matches occurring. So, yeah. We feel good about our 60 basis point gross assumption. You know, I do want to point out that that's 40 basis point net if you take out the inauguration benefit that we had last year.

Appreciate it. Thank you.

Your next question comes from the line of Rich Hightower with Barclays. Your line is open. Please go ahead.

Hi, good morning, guys. Thanks for taking the question here. Back to the significant dollars spent on all the collective ROI programs, but obviously mainly the Marriott and Hyatt transformational programs. Given the strength that you are obviously seeing on the non-room side, are you able to sort of break out what the returns have been on the non-room side versus the room side? What does that tell us about the business going forward? And, you know, you mentioned the significant gain in REVPAR share index. And I'm just, you know, maybe more general commentary on sort of the non-CAPEX competitors, you know, as we sit here six years after COVID. What does that dynamic look like? So a bit of a multi-parter. Thanks.

Yeah, Rich, there's an awful lot in that question. But, you know, let me start by saying that You know, our transformative renovations of over $2.1 billion to date have served host shareholders very well. The nine points in yield index that we picked up on 21 stabilized assets out of, you know, 34 that we'll complete is way above our expectations. And, you know, we continue to see that run rate improving as we have the six properties from the Hyatt Transformational Capital Program coming back online, and we complete the work at the four Marriott properties. Just for reference, the four Marriott properties are the New Orleans Marriott, the Ritz-Carlton Tiburon, the Ritz-Carlton Marina Del Rey, and the West St. Kirland Resort and Spa in Phoenix. So we couldn't be more pleased with how assets are performing, and we have not really stepped back and broken down you know, the various components of where the returns came from. I think if you just look at the numbers, you know, our pickup, our continued pickup in banquet and catering revenues, you know, out of room spend generally, you know, from spa investments, you know, has been meaningful. Our outlet spend has been really quite good. And, you know, the outlet renovations are not necessarily tied to the transformational capital program. I mean, the Aviv restaurant at the One Hostel South Beach has opened above our pro forma expectations, as has the view at the New York Marriott Marquis. So we think this is a really strong use of capital. We have clear sight lines to generating mid-teens cash-on-cash returns. And it's something we're going to continue to do going forward. It's clearly a differentiator for hosts. And, you know, it all began when we went into COVID and, you know, we had just started the Marriott Transformational Capital Program in 2018. You know, one good example, Rich, is what happened at the Marriott Marquis. We started the transformational renovation there in 2019. And while others pulled back, when COVID hit, we accelerated the renovation. So it's a statistic I talked about in our recent general managers meeting that I think is worth repeating. In 2018, the Marriott Marquis generated $65 million in EBITDA. In 2025, it generated $100 million in EBITDA. And that's based on $100 million total transformational renovation. It's a great use of capital. You can expect to see us continuing to do that going forward.

Thanks.

Your next question comes from the line of Michael Bisario with Baird. Your line is open. Please go ahead.

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

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

And then the rebookings?

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

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

Your next question comes from the line of Duane Fenigworth with Evercore ICI. Your line is open. Please go ahead.

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

Thank you. Yeah, Dwayne, you know, we did see, you know, a very, very strong quarter in Florida and Arizona and our resorts in both markets. And, you know, More broadly, as we think about our customer and the affluent customer who visits our properties, we have not seen a pullback generally. That's a broad-based statement. The first quarter really proved that out. There is some tangential evidence that as a result of what happened in Mexico, and the Iran war, you know, dampening travel to certainly to the Middle East and anybody who was transiting through Dubai, which was the number one major international transit airport, caused people to stay in the U.S. So, you know, we're hopeful that as they visited our properties and they saw what great shape they're in and they had fantastic experiences that we're going to they were going to be able to retain those guests and get them to come back. I mean, we saw a shift in an imbalance in international inbound versus international outbound right after COVID hit, if you recall. And, you know, there was a lot of pent-up demand on the part of affluent U.S. travelers, U.S. consumers who couldn't travel to Europe and who couldn't travel to other international destinations due to quarantine restrictions and testing requirements and things of that nature. And as soon as those restrictions came up, you know, people went. I think, you know, we were like 120% international outbound last year relative to, you know, 90% international inbound. We saw that number improve just a slight bit in the month of March. And, you know, we're hopeful that it's going to continue to improve going forward.

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

Your next question comes from the line of Floris Van Dykem with Leidenberg. Your line is open. Please go ahead.

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

Sure, Flores. you know, let me start by talking a bit about how we think about capital allocation. And then I can talk about both acquisitions and dispositions. But, you know, our focus remains unchanged. I mean, we're disciplined, we're return focused, and we're very cycle aware when it comes to capital allocation. And every decision is evaluated against the same same yardstick, and that is long-term total shareholder return. So we think about it by core primary uses of capital, I would say, dividends, share repurchases, portfolio reinvestment, and opportunistic acquisitions. So we're in a great place with our Fortress investment grade balance sheet. We have low leverage even after we pay the dividends. We'll still be at 2.5 times leverage. So our balance sheet allows us to be opportunistic. And, you know, we're not being forced into any single capital decision. So, you know, I think the fact that we paid, elected to pay a special dividend of 72 cents in connection with the sale of the two, four seasons, it speaks loudly to the discipline that we have. There are a lot of acquisitions out there, a lot of potential acquisitions out there. We'll see what clears the market. I don't know. The pricing guide is pretty high. It's a bar that we're not able to reach. We look at everything that comes into the market, but risk-adjusted returns are just not there for us. We like to stay by the hoop. We like to hang around, and we'll see We'll see what happens. You know, we're the best buyer for a lot of these assets because of the fact that we can do transactions on an all-cash basis. We don't have to access the debt markets, and we can move quickly. And we've proved that time and time again. But given the uncertain macro picture, I think discipline matters more than activity at this stage of the cycle. So, you know, How are we thinking about deploying capital? We do have $500 million left. You know, we continue to view the dividend as a core component of shareholder returns. I mentioned the 72-cent special. We also declared a 20-cent quarterly regular dividend. And, you know, the special reflects our commitment to returning excess capital when appropriate while maintaining the flexibility in the cap stack. Another place that we've been very active on deploying capital is on share buybacks. And share buybacks are always evaluated alongside all other capital uses. And we don't talk about this that often, but since 2017, we bought back 72.3 million shares of stock at an average price of $16.67. That's $1.2 billion of capital return. So you could expect us to continue to tap the buyback market based on market conditions, our view of operations, and alternative uses of capital. So, I mean, capital allocation at host is really, you know, it's all-encompassing. It's acquisitions, it's dividends, it's share buybacks, it's dispositions, as you saw what we did with the two four seasons, and we're constantly testing the market, and we're willing to sell assets at the right price up and down the portfolio. So portfolio investment has served us really well. I mentioned in my remarks that, or maybe Saurabh did, I don't remember, 60% of our EBITDA this year is expected to come from hotels that have undergone or are undergoing transformational renovations. And, you know, all this comes down to one thing for us. Ultimately, our goal is to grow free cash flow over time. And, you know, we lead the full-service lodging and recent cumulative free cash flow since 2019. Capital allocation decisions are made through that lens, not just growth, but, you know, durable, repeatable cash flow generation. So to answer your question, you know, on the acquisition side, I think it's just wait and see.

Thanks, Tim.

Your next question comes from the line of Chris Woronka with Deutsche Bank. Your line is open. Please go ahead.

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

Yeah, sure. Chris, uh, you know, we've been a big believer on San Francisco, uh, uh, We haven't given up. We haven't sold any assets. We continuously are looking at potential opportunities in that market because there's a clear recovery. It's underway, and it's accelerating. San Francisco is, you know, we're seeing office fundamentals improving meaningfully entering 2026. And, you know, a pundit... use the phrase that it is now a boom loop as opposed to a gloom loop. I can't take credit for that, but it is a boom loop. I mean, San Francisco had outstanding growth in the first quarter. As I mentioned, we delivered a red par of 26% in the quarter, benefiting from the Super Bowl and continued demand recovery and generated over 70% EBITDA growth. It's a diversified demand base. We like the assets we own in San Francisco. You've seen them, I'm sure, because they're well located, they're in great physical shape, and they can gear off of multiple demand generators, including Leisure Group and Business Transient. You know, importantly, our assets are well positioned to take on in-house medium and large groups, helping offset citywide demand gaps. So AI is real. The office recovery, you know, supports lodging fundamentals. Leasing activity and net absorption improved in early 26, driven by AI-related companies. And that is benefiting not only our properties in city center areas, but also the Hyatt-Berling game, which is out by the airport, and the Santa Clara Marriott. So we couldn't be happier with what's happening in that market and look forward to continued growth going forward.

Great. Thanks, Jim.

Your next question comes from the line of Dan Pulitzer with JP Morgan. Your line is open. Please go ahead.

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

Yeah, just to be clear, the 120 basis points impact for the quarter was for Hawaii, the Kona low storm as well as the winter storm for and it was really um 80 bps and that's to the portfolio not to to maui so now we would have effectively been in the higher single digits if it wasn't uh for the storm so when you're looking at maui rev par in the low single digits that would have been in the high single digits the impact that we were talking about is really the impact of the portfolio rep for the first quarter um in terms of how much confidence we do have as jim mentioned we started the year off really well we were really pacing ahead of what our expectations were before the storm hit. And when we are looking at sort of the rebookings that are taking place from the cancels from the storm, that gives us further confidence as well as the overall group booking pace for Maui. And we look at it by quarter, like fourth quarter is probably the strongest close to nearly 20% in terms of group booking pace. So our expectation for Maui Maui RevPAR for the full year in order to get to the $120 million is almost close to 9%, I would say. Hopefully that helps.

Got it. Thanks so much.

Sure.

Your next question comes from the line of Robin Farley with UBS. Your line is open. Please go ahead.

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

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

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

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

Okay, great. Thank you.

Thanks. Your next question comes from the line of Logan Epstein with Wolf Research. Your line is open. Please go ahead.

Thanks for taking the question, and good morning. Maybe just one. You talked about the rate growth in the quarter. obviously strong, and then you touched on some expected deceleration there for the rest of the year. Just curious if you could break out for the implied 2Q to 4Q rev par of 3.5%. How is it breaking out between rate and occupancy growth, and maybe how did that trend also in April up 4.4 too? Thank you.

Sure. When you're looking at the second half, I would say that occupancy is growing about 80 bps or so, and the remainder is rate. The rate for the second half is almost a point lower than the rate growth that we saw in the first half, and that's primarily because when you think about our portfolio, a lot of our resorts, the high season is Q1, and we saw that outperformance in the first quarter. Obviously, there was a compressed spring break that also helped drive the Q1 results up, particularly at our resorts. And then with World Cup, that's a meaningful transient rate pickup that we are expecting. So overall, that's why you just see much higher rate in the first half versus the second half. In terms of first half occupancy, I would say the pickup was about 70 bps is what we're expecting for the first half. And so it's very similar to the second half in terms of occupancy or demand pickup. But the rate is going to be about, you know, the expectation is about a point lower or so.

Thank you.

Your next question comes from the line of Jack Armstrong with Wells Fargo. Your line is open. Please go ahead.

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

So for us in the first quarter, absolute wage and benefit growth was only 4.5%. And that really is being driven by productivity improvements. I mean, we work extremely closely with the operators and are very, very focused in terms of how they are leveraging their labor management systems. In the case of Marriott, that's Atlas, and you have Olympia. In the case of Hyatt, particularly focused on a really driving labor standards. And each of the labor standards, given how unique our properties are, they are very unique to each property and to setting sort of best in class labor standards and then scheduling and forecasting based on the labor standards becomes critical. So there is, as you will see in the income statement, our comp numbers, rooms profit margin improved meaningfully. soda, food, and beverage profit margin. It's all being driven by this honed in focus on productivity across the portfolio. So that's why despite wage rates going up 5%, and that's what the expectation that we set out at the beginning of the year for the full year. And we saw that as wage rates are sort of sticking to that 5% increase. Our absolute dollar amount, when you look at wage and benefit, that was only a 4.5% increase. So I would say it's really driving more productivity and efficiencies across the portfolio.

Really helpful. Thank you.

Your next question comes from the line of Chris Darling with Green Street. Your line is open. Please go ahead.

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

I'll answer the second question first, Chris, because that's the easier one of the two. No, it would not deter us. If we thought it was the right capital allocation decision to sell assets that would result in a special dividend in the event we couldn't do a like-kind exchange and we created significant shareholder value, that is certainly something we would do. On On dispositions versus acquisitions, you know, we constantly test the market with dispositions all the time. And, you know, we have, as I mentioned earlier in the call, our key focus is on generating free cash flow. We think that's a good metric, and it adds to growth in FFO per share, which has – know done quite well over uh over time i mean from 2019 to 2025 our ffo per share was 19 percent our growth and you know relative to the other full service lodging reads uh they had minus 33 percent ffo per share so as we're thinking about how we uh uh approach capital allocation uh Dispositions are many times as beneficial, if not more beneficial, than acquisitions. So stay tuned. We'll see how the year plays out. But we are prepared to be sellers. We're also hopeful at some point in time that we can get back into the market and be a buyer.

Okay. Understood. Thank you.

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

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

Thank you for attending. You may now disconnect.