Analyst Note| Kevin Brown |
Host Hotels & Resorts reported a strong second quarter, leading us to reaffirm our $16.50 fair value estimate for the no-moat company. Occupancy came in at 43.0% for the quarter, which is a big improvement over the 8.7% reported in the second quarter of 2020 but below the portfolio's 82.0% in the second quarter of 2019. Average daily rate is similarly up 43.4% year over year but 8.6% the level the company was at in 2019, which leads to revenue per available room up 607.7% year over year but still 52.1% below 2019. While expenses also increased by 93.1% as management brought hotels back on line, Host was able to achieve a 19.1% EBITDA margin and comparable hotel EBITDA of $126 million in the second quarter. The positive operating results from the quarter also allowed Host to report a positive $0.12 funds from operation, which is well below the $0.53 the company reported in the second quarter of 2019 but far better than the $0.26 loss reported last year.