Host Reports 4Q Results In Line With Expectations, Though 2023 Guidance Disappoints

Host Hotels and Resorts reported fourth-quarter earnings that were in line with our expectations, leading us to reaffirm our $24 fair value estimate for the no-moat company. Occupancy improved to 65.7% in the fourth quarter compared with 57.0% in the fourth quarter of 2021, though that is still below the 75.5% occupancy level reported in the fourth quarter of 2019. The average daily rate was up 11.7% year over year and 15.6% relative to the fourth quarter of 2019. As a result, revenue per available room increased 28.7% year over year, which is relatively in line with our estimate of 32.7% growth, and is now 0.6% higher than the fourth quarter of 2019. Hotel EBITDA margins also improved 110 basis points year over year to 29.5%, leading to hotel EBITDA growth of 36.3% that was relatively in line with our estimate of 34.8% growth. Host reported adjusted funds from operations of $0.44 per share in the fourth quarter that matched our estimate and was 51.7% higher than the $0.29 per share figure the company reported in the fourth quarter of 2021.