管理層發言
Good morning, and welcome to the Host Hotels & 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 Jaime Marcus, Senior Vice President of Investor Relations.
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 under 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 EBITDAre and comparable hotel-level results. You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release, in our 8-K 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 Sheraton Parsippany. With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer. With that, I would like to turn the call over to Jim.
Thank you, Jaime, 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 EBITDAre of $543 million, an increase of 5.6% over last year, and adjusted FFO per share of $0.67, an increase of 4.7% over last year. First quarter adjusted EBITDAre 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 in out-of-room spending. Comparable hotel EBITDA margin improved by 70 basis points year-over-year to 32.7%, driven by revenue growth. RevPAR 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 and 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% RevPAR 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. RevPAR grew 1.5% and total RevPAR grew 1.6% as growth was impacted by the Kona Low rainstorm in March. Prior to the storm, overall demand at our Maui 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 properties 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 $0.20 per share and a special dividend of $0.72 per share. The dividend will be paid on July 15 to stockholders of record on June 30. 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 is 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, D.C., 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. Guestroom renovations at the New Orleans Marriott are in progress and are scheduled to be completed in the third quarter. Renovations at The Ritz-Carlton Naples, Tiburon and The Westin Kierland 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 million to $655 million. This includes approximately $250 million to $300 million of investment focused on redevelopment, repositioning and ROI projects, and $20 million to $30 million of property damage reconstruction associated with the Kona Low 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 RevPAR 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 reinforced 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 World Index for the seventh consecutive year and North America for the ninth consecutive year, ranking #3 globally in our sector.
In fact, Host was one of only two North American companies on the World Index and #1 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 RevPAR guidance range to 3% to 4.5% over 2025, and our comparable hotel total RevPAR 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 Host 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 Sourav.
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 a 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 Rivercenter 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 1 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 Westin Kierland, 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 4 is up nearly 50% over last year, driven by northeastern cities including Philadelphia, Washington, D.C., 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% versus the first quarter of 2025, driven primarily by rate growth. While overall business transient 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 remained strongest for the second and fourth quarters. Shifting gears to margins. Comparable hotel EBITDA margin of 32.7% was 70 basis points above the first 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 RevPAR growth guidance range to 3% to 4.5% and our comparable hotel total RevPAR 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 RevPAR growth cadence for the remainder of the year, we expect second quarter RevPAR growth to be similar to that of the first quarter, driven by the World Cup. We expect comparable hotel RevPAR for April to increase approximately 4.4% year-over-year. RevPAR growth in the second half of the year is expected to be in the low single digits. The midpoint assumes comparable hotel RevPAR growth of 3.75% compared to 2025, a 100 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 RevPAR growth. It is important to point out that the 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 EBITDAre midpoint is $1.810 billion. 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 EBITDAre 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 EBITDAre midpoint includes between $20 million 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 $0.20 per share. Yesterday, as Jim mentioned, the Board of Directors authorized a quarterly dividend of $0.20 per share and a special dividend of $0.72 per share to shareholders of record as of June 30, which is payable on July 15. Payment of these dividends will reduce our total available liquidity by approximately $770 million, bringing our adjusted leverage ratio to 2.5x. 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 Host 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.
分析師問答
Your first question comes from the line of Smedes Rose with Citi.
I wanted to ask you on the World Cup. Sourav, you mentioned that transient 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 basis point benefit from that event?
Yes. Just to back up a little bit, the majority of the bookings really happen within the 45-day window. And in the week leading up to the matches, 40% of the occupancy from the World Cup is actually booked in that last week. So we are pacing well relative to where we stand right now. But it's really a last-minute buildup, literally three weeks leading into it with, as I said, 40% of the occupancy being booked one week out. That is in line with the World Cup occupancy build that we have from the last World Cup in Russia and Qatar. The other thing I would point out is you've seen in the news group block reductions. Those block reductions are not at all indicative of the overall event. That sort of thing happens in the normal course. FIFA always—there is a wash in terms of the overall group bookings that takes place. So it is really much more of a transient play than a group play and it differs from market to market.
Smedes, just to help you think about it a little more, 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. The third quarter is much more difficult to forecast because of not knowing what teams will show up in the knockout rounds, etc. But we're very pleased with how things are pacing. We have World Cup matches in, I think, ten of our markets, led by New York and Miami in particular, where there are going to be knockout matches occurring. So we feel good about our 60 basis point gross assumption. I do want to point out that that's a 40 basis point net benefit if you take out the inauguration benefit that we had last year.
Your next question comes from the line of Rich Hightower with Barclays.
Back to the significant dollars spent on all the collaborative 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 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 mentioned the significant gain in RevPAR index share. Maybe more general commentary on the non-CapEx competitors as we sit here six years after COVID — what does that dynamic look like? A bit of a multi-part question.
Yes. Rich, there's an awful lot in that question, but let me start by saying that our transformative renovations of over $2.1 billion to date have served Host shareholders very well. The nine points in RevPAR index that we picked up on 21 stabilized assets out of 34 that we'll complete is way above our expectations. 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. For reference, the four Marriott properties are the New Orleans Marriott; The Ritz-Carlton, Tiburon; The Ritz-Carlton, Marina Del Rey; and The Westin Kierland Resort & Spa in Phoenix. We couldn't be more pleased with how assets are performing. We have not stepped back and broken down the various components of where the returns came from in exact detail, but if you look at the numbers, our pickup in banquet and catering revenues and out-of-room spend generally from spa investments has been meaningful.
Our outlet revenue has been very strong, and the outlet renovations are not necessarily tied to the Transformational Capital Program. For example, the AVIV Restaurant at the 1 Hotel South Beach has opened above our pro forma expectations, as has The View at the New York Marriott Marquis. 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 Host. It all began when we went into COVID, and we had just started the Marriott Transformational Capital Program in 2018. One good example is what happened at the Marriott Marquis. We started the transformational renovation there in 2019. While others pulled back when COVID hit, we accelerated the renovation. It's a statistic I talked about at 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, based on a $100 million total transformational renovation. So it's a great use of capital. You can expect to see us continuing to do that going forward.
Your next question comes from the line of Michael Bellisario with Baird.
I want to focus on Hawaii here, two parts. First, could you quantify 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 the fourth quarter and the pickup is going to occur a little bit further out?
Sure, Mike. 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 on the East Coast. So the first quarter 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 around $5 million, and Oahu was about $1 million in negative impact for the quarter.
And then the rebookings?
The rebookings, as Jim mentioned, we are picking some of that up in late April and in May and June. Some of the cancellations did bleed into the beginning of April, but we are seeing those rebookings pick up through the remainder of the year.
Yes, Mike, Maui was pacing ahead of our initial expectations in the first quarter. We're very happy that we're able to maintain our guide for Maui of $120 million in EBITDA contribution to the midpoint. We have also seen a pickup in seat availability from the airlines going into Maui and going into Hawaii in general. So we feel really good about how the market is recovering after some tough years post the wildfires.
Your next question comes from the line of Duane Pfennigwerth with Evercore ISI.
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?
Yes, Duane, we did see a very strong quarter in Florida and Arizona and our resorts in both markets. More broadly, as we think about our customer and the affluent customer who visits our properties, we have not seen a pullback generally. The first quarter really proved that out. There is some tangential evidence that as a result of what happened in Mexico and the conflict in the Middle East damping travel to those regions, and given Dubai's role as a major international transit airport, some travelers chose to stay in the U.S. We're hopeful that as they visited our properties and experienced great service and experiences they'll return. After COVID, there was an imbalance in international inbound versus outbound. Last year, international outbound was about 120% while inbound was about 90%. We saw inbound improve slightly in March, and we're hopeful that it continues to improve going forward.
If you look at upcoming holidays, transient pace is strong, which gives us further confidence. I mentioned in my prepared remarks Memorial Day transient pace is up about 6%. On the group side, we picked up 95,000 rooms in Q1 for Q1, and we picked up 280,000 room nights in the first quarter for the remainder of the year. Group booking pace by quarter shows Q2 and Q4 both in the high single digits, which further supports our outlook for the balance of the year.
Your next question comes from the line of Floris Van Dijkum with Ladenburg.
Jim, I'm curious if you could touch a little bit on the transaction markets. You've been very successful in selling your Four Seasons hotels. There are a number of hotels on the market. Could you talk a 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, share buybacks or new assets? If you can give a little more color, that would be great.
Sure, Floris. Let me start by talking about how we think about capital allocation and then acquisitions and dispositions. Our focus remains unchanged: disciplined, return-focused and cycle-aware. Every decision is evaluated against long-term total shareholder return. We think about four primary uses of capital: dividends, share repurchases, portfolio reinvestment and opportunistic acquisitions. Our fortress investment-grade balance sheet allows us to be opportunistic; we're not forced into any single capital decision. The fact that we elected to pay a special dividend of $0.72 in connection with the sale of the two Four Seasons speaks to our discipline. There are a lot of potential acquisitions out there, but pricing is high and risk-adjusted returns are not there for us today. We can be the best buyer for some assets because we can transact on an all-cash basis and move quickly, but given the uncertain macro picture, discipline matters more than activity at this stage of the cycle.
We have $500 million left from that sale. The dividend remains a core component of shareholder returns, and we will continue to evaluate share buybacks alongside all other capital uses. Since 2017, we've repurchased approximately 73.2 million shares at an average price of $16.76, about $1.2 billion in capital returned. Capital allocation at Host is all-encompassing: acquisitions, dividends, share buybacks and dispositions. We will continue to test the market and sell assets at the right price. Portfolio investment has served us well; I mentioned 60% of our EBITDA this year is expected to come from hotels that have undergone or are undergoing transformational renovations. Our goal is to grow free cash flow over time. We lead the full-service lodging REITs in cumulative free cash flow since 2019. Capital allocation decisions are made through that lens, not just growth but durable, repeatable cash flow generation. On acquisitions, for now, it's wait and see.
Your next question comes from the line of Chris Woronka with Deutsche Bank.
Jim, I wanted to ask a little bit more about San Francisco. Great quarter, obviously, Super Bowl there. You have six assets in the market, four downtown and two outside. There's a lot going on there with office recovery and AI-related activity near the airport and Silicon Valley. If you break those two apart, which one do you think is more sustainable? Which one are you more excited about? Which one helps your bottom line the most?
Yes. We've been a big believer in San Francisco. We haven't given up or sold assets. We continuously look at potential opportunities because there's a clear recovery underway and it's accelerating. Office fundamentals improved meaningfully entering 2026. One commentator used the phrase that it is now a boom loop rather than a gloom loop. San Francisco had outstanding growth in the first quarter; we delivered 26% RevPAR 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 — they're well located and in great physical shape, and they can draw from multiple demand generators including leisure, group and business transient. Importantly, our assets are well positioned to host medium and large groups in-house, helping offset citywide demand gaps. AI-related leasing activity and net absorption improved in early 2026, driven by AI-related companies. That benefits not only city center properties but also the Hyatt in Burlingame, which is near the airport, and the Santa Clara Marriott. We couldn't be happier with what's happening in the market and look forward to continued growth.
Your next question comes from the line of Dan Politzer with JPMorgan.
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 120 basis points of disruption to the portfolio. So close to three percent RevPAR impact as a result. As we think about the path to $120 million in EBITDA, it seems like you already saw a bit of a deceleration there. What's the level of confidence in getting to that $120 million for the year? Can you provide booking window detail or the level of visibility on that path?
Just to be clear, the 120 basis points impact for the quarter was the combined impact from the Kona Low storm in Hawaii and Winter Storm Fern. Of that, 80 basis points was attributable to Hawaii. That 80 basis points is to the portfolio, not to Maui alone. Maui itself would have been in the higher single digits without the storm; instead it was in the low single digits for the quarter. Regarding confidence in the $120 million EBITDA expectation, we started the year pacing ahead of our initial expectations before the storm. The rebookings from cancellations give us further confidence, as does the overall group booking pace for Maui. We look at bookings by quarter and see the fourth quarter as probably the strongest, close to nearly 20% in group booking pace. Our expectation for Maui to reach the $120 million contribution for the year implies roughly 9% RevPAR for the full year.
Your next question comes from the line of Robin Farley with UBS.
Most of my questions have been answered already. A smaller one: I think you're still the largest hotel owner for Marriott. Could you quantify whether Marriott's recent change in the split of economics with the Bonvoy program helped or hurt you for Q1 or for the full year? Is it a one-time benefit or recurring?
Robin, overall, it has helped us. Not only are we the largest owner, but we also have a very high redemption of Bonvoy rewards within our portfolio. The way the program changes were implemented has been beneficial to us in Q1, and we expect it to continue to be beneficial for the full year.
Is there any way to quantify roughly what that benefit is? Is it a one-time step-up or does it recur?
It's tough to exactly quantify at this moment. We could consider providing some ranges at a later time, but I don't have that handy right now.
Your next question comes from the line of Logan Epstein with Wolfe Research.
You talked about rate growth in the quarter and mentioned expected deceleration for the rest of the year. For the implied full-year RevPAR growth of about 3.5% when broken out by quarter (Q2 to Q4), how is that splitting between rate and occupancy growth? Also, how did that trend look in April, up 4.4%?
When looking at the second half, occupancy is expected to grow about 80 basis points and the remainder of RevPAR growth is from rate. Rate for the second half is expected to be about one percentage point lower than the rate growth in the first half, primarily because many of our resorts' high season is in Q1 and we saw strong outperformance in the first quarter. The World Cup will drive transient rate pickup in the first half as well. For the first half, occupancy pickup is about 70 basis points, which is similar to the second half in terms of occupancy or demand pickup, but rate is expected to be about one point lower in the second half versus the first half.
Your next question comes from the line of Jack Armstrong with Wells Fargo.
Can you take us through some of the building blocks on the expense side that are assumed in your annual guidance? Peers have said total wage and benefits came in below expectations in the first quarter partially due to lower head count. Is that something you're seeing in your portfolio?
For us in the first quarter, absolute wage and benefit growth was only 4.5%, driven by productivity improvements. We work closely with our operators and are focused on leveraging labor management systems — ATLAS for Marriott and Olympia for Hyatt — to drive labor standards. Given how unique our properties are, labor standards are tailored to each property. Setting best-in-class labor standards and then scheduling and forecasting based on those standards becomes critical. As you'll see in the income statement, rooms profit margin improved meaningfully, and so did food and beverage profit margin. That's driven by a honed-in focus on productivity across the portfolio. That's why despite wage rate increases of around 5% for the full year, the absolute dollar increase in wage and benefit expense in Q1 was only 4.5%.
Your next question comes from the line of Chris Darling with Green Street.
A couple follow-ups related to capital allocation. First, Jim, you mentioned a high bar for acquisitions today. Does that suggest that incremental dispositions might be more likely through the rest of the year? Second, from a tax efficiency standpoint, would the potential need for another special dividend deter you from pursuing that strategy if you were disposing of assets?
I'll answer the second question first: No, it would not deter us. If selling assets that create significant shareholder value and result in a taxable gain makes sense, we would consider a special dividend. On dispositions versus acquisitions, we constantly test the market with dispositions. Our key focus is generating free cash flow. Dispositions can be as beneficial, if not more so, than acquisitions. From 2019 to 2025, our FFO per share grew 19%, while other full-service lodging REITs saw declines. As we approach capital allocation, dispositions, acquisitions, dividends and buybacks are all on the table. We're prepared to be sellers and hopeful that we can be buyers when pricing and returns make sense.
We have reached the end of the Q&A session. I will now turn the call back to Jim Risoleo for closing remarks.
Well, as always, folks, we really appreciate you joining us. We appreciate the opportunity to discuss our quarterly results with you and how we're thinking about the balance of 2026. We look forward to seeing many of you at conferences in the coming months.
This concludes today's call. Thank you for attending. You may now disconnect.