Host Hotels & Resorts, Inc. (NASDAQ:HST) Q4 2022 Earnings Call Transcript

Sourav Ghosh: Sorry, are you asking historically? If you’ve seen occupancy go up and margins go down, I think the way to think about it, Floris, as sort of I have said, relative to ’19, right? Actually, if we see occupancy go up, we would actually expect margin performance to improve from where the occupancy stands as of today. I think that’s where the upside is. The reality is, we don’t have visibility into the second half of the year. Therefore, our assumptions are I think, reasonable at this time with the data that we have available right now. And when you look at the top-end of the guidance, actually, the margins are up relative to ’19. So it really depends on where things shape up for the second half and what kind of in the year for the year pickup we see in group.

And then, you have to remember, business investment sort of non-residential fixed investment, you’re looking at only a 70-basis points growth for the year. So what we can expect, it’s very difficult to predict at this point for the second half. It’s our guidance range is based on the best available data we have today.

Jim Risoleo: Yes, Floris. The one thing I would add is, over the course of 2022, for the second and third quarter call, we were very clear that the margin performance we were seeing was not sustainable. And it wasn’t sustainable for a lot of reasons. We were not at optimal staffing levels. We had a number of hotels where full services were not being offered to customers. Restaurants were closed, club lounges were closed, and we feel that the proper comparison for margins is 2019. And in 2019 levels, even down 10 basis points we’re only down 57 basis points in margin. And just to reiterate, we have seen a 4.1% inflation in CAGR, a CPI CAGR, and our expenses have only gone up 1.1%. So we actually feel that we’re positioned very well. And as Sourav pointed out, every point of occupancy that we get is going to equate to 30 to 40 basis points of margin improvement.

Operator: At this time, I will hand it back to Mr. Risoleo for any closing comments you wish to make.

Jim Risoleo: Thank you very much. I would like to thank everyone for joining us on our fourth quarter call today. We appreciate the opportunity to discuss our quarterly results with you, and we look forward to meeting with many of you in the coming weeks and months. Thank you for your continued support and have a great day.

Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time and have a wonderful day. And we thank you for your participation.