Analyst Note| Kevin Brown |
Third-quarter results for Host Hotels & Resorts were slightly better than our expectations, though we don’t anticipate materially changing our $18.50 fair value estimate for the no-moat company. Occupancy improved to 69.7%, up from the 56.4% reported in the third quarter of 2021 but still below 2019’s 79.5%. Average daily rate was up 14.9% year over year and 15.8% over the third quarter of 2019. As a result, revenue per available room was up 42.0% year over year, which beat our estimate of 27.0% growth and was 1.4% higher than the third quarter of 2019. Hotel EBITDA margins also improved to 28.7% in the third quarter, better than the 24.9% reported in the third quarter of 2021 and also better than the 26.2% reported in the third quarter of 2019. The strong growth in hotel operations led Host to report adjusted funds from operations of $0.38 per share in the third quarter, which was $0.09 better than our $0.29 estimate, $0.18 better than the $0.20 figure reported in the third quarter of 2021, and $0.03 better than the $0.35 figure reported in the third quarter of 2019.