Host Hotels & Resorts, Inc. HST came out with better-than-expected first-quarter results in terms of adjusted funds from operations (FFO) per share and revenues. The hotel REIT reported first-quarter 2021 adjusted FFO per share of a cent. The Zacks Consensus Estimate for the same was negative 15 cents. It generated total revenues of $399 million, which surpassed the Zacks Consensus Estimate of $313 million.

However, the company’s adjusted FFO per share declined 95.7% from 23 cents reported in the prior-year quarter. The top line also declined 62.1% year over year.

While the company achieved hotel-level profitability for the first time since the onset of the pandemic, revenue per available room (RevPAR) continued to witness a significant year-over-year decline.

Per management, “as vaccine deployment accelerated and lockdowns eased across the nation, our portfolio continued to gather revenue momentum through February and inflected sharply upward in March, with Spring break travel driving high-rated leisure demand to our luxury resorts in the Sunbelt and other key leisure destinations.”

The company also announced the acquisition of a fee-simple interest in the 444-room Four Seasons Resort Orlando at Walt Disney World Resort for around $610 million in cash.

Behind the Headlines

In the first quarter, all owned-hotel pro-forma RevPAR (on a constant-dollar basis) fell 58.4% year over year to $61.43. All owned-hotel pro-forma EBITDA was $21 million for the first quarter.

As of the first-quarter end, room revenues from the transient business were $205 million, indicating a plunge of 55.3% as compared with revenues in the same period in 2019. Room revenues from group and contract businesses declined 87% and 62.1% from first-quarter 2019 to $41 million and $13 million, respectively.

Moreover, room nights for its transient, group and contract business declined 56.4%, 79.2% and 43%, respectively, from the same period in 2019. Notably, the company’s transient, group and contract businesses accounted for roughly 61%, 35% and 4%, respectively, of its 2019 room sales.

Balance Sheet Position

Host Hotels exited the first quarter with liquidity of $2.1 billion, including cash and cash equivalents of more than $2 billion, and FF&E escrow reserves of $131 million. As of the same date, the company’s debt balance amounted to $5.5 billion. It has no maturities until 2023.

Capital Expenditure

In first-quarter 2021, the company incurred around $93 million of capital expenditure. Of this, $61 million was return on investment capital projects spend, and $32 million was renewal and replacement project expenditure.