Host Hotels RevPAR Rises 8.8%, Guidance Raised

Host Hotels & Resorts just had the kind of summer that makes a hotel owner leave the light on. The nation's largest lodging REIT said comparable hotel RevPAR, or revenue per available room, climbed 8.8% to $219.50 in the third quarter, and it raised its full-year RevPAR growth forecast to about 6.75%, according to its Nov. 4 earnings release ^[1].

CEO James Risoleo said "demand remains durable, supported by resilient leisure travel" ^[1].

Where the growth came from

• Room rates rose 5.7% and occupancy gained 2.1 points, while Adjusted EBITDAre reached $347 million, up 8.8% from a year earlier ^[1].
• Transient revenue, from travelers not booked as part of a group, grew about 12%, the fastest pace since early 2023, according to a GuruFocus summary of the call ^[2].
• Host estimates the World Cup added roughly 100 basis points to quarterly RevPAR growth, MarketBeat reported ^[3].
• Maui RevPAR jumped nearly 14% despite weather disruptions, and Host pegs October RevPAR growth at about 6.5% ^[3][1].

But the rebound has soft spots. Business transient room nights still sit about 24% below 2019 levels, and Host expects wage rates to rise roughly 5% this year ^[3]. CFO Sourav Ghosh said the World Cup supplied about 70 basis points of full-year RevPAR growth, a lift that will not repeat in 2027 ^[2]. GAAP net income also fell 56.4% to $71 million, largely because gains from asset sales shrank ^[1].

What it means for you

Host's own shopping list doubles as a price check. It paid $202 million for the 195-room 1 Hotel Brooklyn Bridge at about an 8.2% cap rate and roughly $172 million for the 308-room Renaissance in Plano at about 7.9% ^[1][3]. By our math, an 8.2% cap rate means $82,000 of yearly net operating income on each $1 million of hotel, versus a 10-year Treasury yield of 4.86% ^[4]. That gap of about 3.3 percentage points, by our math, is the premium buyers are taking for nightly pricing and rising labor bills.

Zoom out

Thin supply is helping owners: Ghosh said the hotel construction pipeline remains 31% below pre-pandemic levels ^[2]. Risoleo said the backdrop favors both buying and selling, and he hopes to announce at least one more deal within 60 to 90 days ^[3].