Earnings Call: Q1 2021

May 5, 2021

And Saurabh Ghosh, Executive Vice President, Chief Financial Officer and Treasurer. And now, I'd like to turn the call over to Jim. Thank you, Tejal, and thanks, everyone, for joining us this morning. Since our earnings call in February, we have made excellent progress On operations and investments and achieved key milestones that we believe will accelerate our EBITDA recovery. To begin with, We significantly outperformed expectations for the Q1, which recorded a GAAP net loss, We delivered positive adjusted EBITDAre and hotel level profitability for the first time Since the onset of the pandemic, we grew 1st quarter total pro form a revenues by 50% sequentially, While holding hotel level operating expense growth to only 15% quarter over quarter, As our operators successfully leveraged existing resources to meet a stronger than expected demand surge in March. As a result, we delivered $21,000,000 of positive hotel EBITDA for the quarter, A significant improvement from the negative $62,000,000 recorded in the 4th quarter on a pro form a basis. In addition, we acquired the Hyatt Regency Austin, the Four Seasons Resort Orlando at Walt Disney World Resort A nearly 300 acres of irreplaceable land adjacent to our Hyatt Regency in Mali, strategically investing Approximately $800,000,000 of capital at prices that are meaningfully below 2019 levels. Following these transactions, we have a substantial $1,500,000,000 of total available liquidity, Including $131,000,000 of FF and E reserves. Operations continue to improve With April RevPAR expected to exceed March as the vaccine driven lodging recovery gains momentum. Finally, in addition to executing substantial strategic investments, we continue to focus on redefining our hotel operating model In positioning our renovated properties to gain market share, key long term strategic objectives that we believe will position us To achieve best in class EBITDA growth through the lodging cycle. Beginning with our latest acquisition, The iconic and irreplaceable Four Seasons Resort Orlando at Walt Disney World Resort. We completed this off market acquisition on April 30 for approximately $610,000,000 $40,000,000 less than the price quoted by Real Estate Alert. The 444 Room Resort Is located on 289 Acres within Disney World, which is one of the world's most visited destination resorts. For context, the Magic Kingdom at Disney World alone attracted nearly 21,000,000 visitors in 2019, According to AECOM and Themed Entertainment Association data, the draw of this one theme park at Disney World It's on par with the approximately 23,000,000 visitors that Boston attracted in 2019 and close to the 24,200,000 Miami drew that year. The Four Seasons Resort Orlando is the only fee simple luxury resort Within Disney World, that's not owned by Disney. It provides complementary transport to Disney World's theme parks And it's the only AAA 5 Diamond rated hotel in Central Florida. Newly developed in 2014, This iconic resort is a market leader with a 2019 RevPAR index of over 215. It is now Host's highest ranked property based on its 2019 RevPAR of $5.61 In total RevPAR of $9.23 Moreover, it ranks 5th highest in our portfolio Based on his 2019 EBITDA per key of $81,500 As with all our strategic objectives, Our capital allocation decisions are designed to grow our long term EBITDA, and we expect this acquisition To elevate the EBITDA growth profile of the existing portfolio. The Four Seasons Resort Orlando Achieved 90 percent EBITDA growth from 2016 to 2019. The hotel was profitable in March and the Q1, And we expect it to be profitable this year, with the latest property forecast indicating that the resort is likely to outperform our underwriting For 20 21, in general, the resort is well positioned to benefit from a surge in travel and leisure demand As the pandemic subsides and the 18 month celebration of Disney World's 50th anniversary begins in October, We believe these demand catalysts will help the Four Seasons Resort Orlando surpass its 20 EBITDA performance sooner than the rest of our portfolio. Shifting to the Hyatt Regency Aussied, We opportunistically acquired this 4 48 Room Sunbelt Market Hotel on March 15 for $161,000,000 Acquired off market at a 10% cap rate and an 8.8x multiple on 2019 EBITDA, The Hyatt Regency Austin's purchase price represents a 20% to 25% discount to estimated pre COVID pricing And a 40% discount to replacement costs. The hotel was profitable in the Q1 of 2021 And it's expected to outperform our underwriting expectations into the Q2. Longer term, We expect the Hyatt Regency Austin to exceed its 2019 EBITDA on a stabilized basis, With profitability to be enhanced by complex and synergies, incremental expense reductions, productivity improvements In ROI Investment Opportunities. Turning to our strategic acquisition of nearly 300 acres of land Adjacent to the Hyatt Regency Mountlake, we acquired the Royal Canapali and Canapali Kai golf courses for $28,000,000 For approximately $95,000 an acre, which represented a discount to pre COVID values, We are evaluating numerous long term value enhancing opportunities for this land, which also provides the near term potential To generate synergies with the Hyatt Regency Moly. To conclude on acquisitions, we have successfully invested $800,000,000 in the first 4 months of 2021 at meaningful discounts to 2019 pricing levels. This is despite a highly competitive investments landscape With an abundance of capital seeking hotel deals, our success is testament to the depth of our industry relationships And the strength of our reputation, which is based on decades of best in class execution. We believe this is an opportune time to strategically grow our portfolio's exposure to markets with high expected growth into superior quality hotels. These early cycle investments have historically provided years of elevated EBITDA growth when timed with a period of strong economic recovery. Turning to operations. Business volumes grew in each month of the first quarter With March achieving a RevPAR of $84.10 which was 115% higher than our December RevPAR of $39 Moreover, we outperformed the industry's luxury and upper upscale hotel RevPAR performance in our markets by over 2 points in March. Our leisure markets such as Miami, Phoenix and Hawaii as well as some urban markets including Washington DC, Northern Virginia, Atlanta and Philadelphia outperformed the industry over the Q1. Our hotel EBITDA turned positive in March, Allowing us to achieve $21,000,000 of positive pro form a hotel EBITDA for the Q1. 1st quarter revenues were primarily driven by strong leisure demand for our resorts and hotels in the Sunbelt markets and Hawaii, As well as by special group business at several of our urban hotels. As vaccine deployment accelerated through the Q1, Occupancy in our Sunbelt markets in Hawaii rose from an average of 20% in the 1st week of January The 57.4 percent in the last week of March. Compared to 2019, Rate declines improved from negative 12.4 percent for the month of January to negative 6.5% for March On a portfolio wide basis, strong leisure demand over spring break resulted in the portfolio achieving a 12.2% increase And transient rate over spring break 2019. 8 resorts located in Miami, the Florida Gulf Coast, Jacksonville, Phoenix and Maui delivered almost 24% ADR growth over 2019 for the Q1, With average occupancies of approximately 50%. Overall, our luxury Hotels have increased their RevPAR index by 23.1 percent over 2019, with the increase in market share driven by occupancy The 1 Hotel South Beach and the Ritz Carlton Naples were notable outperformers in the quarter, With occupancies ranging between 60% 70% and transient ADR above $1,000 As mentioned last quarter, our hotels in Washington, D. C. Benefited from government agency group demand around inauguration, Making DC one of our highest performing markets based on sequential RevPAR growth. Other urban hotels Also benefited from special group business, which included film production crews and sports groups that collectively Drove urban weekday occupancy 8.5 percentage points higher quarter over quarter. In addition, An uptick in leisure transient, business transient and contract demand supported sequential RevPAR growth in multiple urban markets, Including Chicago, Seattle, New York, Boston and Philadelphia. In terms of business mix, Leisure drove 90% of our Q1 transient room nights. Our operators drove most of our leisure business through direct bookings, With loyalty redemptions increasing 33% sequentially, driven by our resort portfolio, The much talked about pent up leisure demand is evidenced in current holiday travel trends, which reflect lengthening booking windows Progressively higher levels of demand. For instance, at our Marriott Vantage Leisure Market Hotels, Occupancy on the books improved by 8 percentage points 9 weeks out from Memorial Day compared to where those hotels were 9 weeks out from Presidents Thanks. Similarly, holiday travel trends for July 4 weekend are expected to progressively strengthen relative to Memorial Day, After which many of our hotels are likely to revert to pre pandemic cancellation policies for leisure bookings. We expect some of our Sunbelt markets, particularly in Florida and Phoenix, to hold occupancy while rates weaken over the summer. In Hawaii, our Maui resorts are demonstrating continued strength, with occupancy on the books ranging from the mid-80s to the low-90s for June And low to high 70s for July. Remarkably, June ADRs on the books in Maui are nearly 28% higher compared to June 2019, while July ADRs are approximately 50% higher than July 2019. Moreover, we have now completed the development of 19 new luxury 2 bedroom villas at the Andaz Maui. The Villas already have 45% occupancy on the books at an ADR of $1700 for the remainder of the year, And bookings continue to grow. Moving on to group, we achieved 264,000 group room nights in the 1st quarter, With one highlight being a corporate group of over 4,500 room nights at the Orlando World Center Marriott. The lead for this group came from last October's Connect 2020 conference held at that hotel, which demonstrated how a group event About 1,000 in person attendees could be held safely. We currently have 1,500,000 definite room nights On the books for full year 2021, with approximately 1,000,000 of those in the second half of the year. Cancellations remain above 2019 trends, but continue to decline week over week. Encouragingly, our Marriott managed properties booked a total of approximately 144,000 new rooms across the second, 3rd and 4th quarters of 2021 with strong lead conversion rates compared to 2019. Group room nights currently on the books represent approximately 11% of total available rooms in the 3rd quarter And 13% in the 4th quarter. Booking momentum was strong in the Q1 with nearly 100 and 65,154,000 new group room nights booked for 2022 2023, respectively. Importantly, our operators have continued to hold future group rates. Compared to 2019, ADR for definite rooms on the books is flat in 2022 and 1.5% higher in 2023. Turning to business transient. Demand continues to make steady progress and 1st quarter bookings were 20.1% higher Then the Q4 of 2020, driven by steady month over month progression. Our hotels in San Francisco, San Jose Accounted for approximately 30% of the sequential increase in room nights, while ADR rose 17% or $26 Over last quarter, due to increases from high rated markets such as Miami, Florida Gulf Coast and Phoenix, Most of the special corporate business in the quarter was driven by consulting, project business and government accounts. To conclude on operations, there were 76 hotels opened for the Q1. We reopened Hyatt Regency Capitol Hill on May 1 and expect to reopen the Western Chicago River North and the Ibis Rio de Janeiro later this month. By the end of May, We expect only the Sheraton Boston to remain under suspended operations. Reflecting on the last 12 months, Which have been the most difficult in host history. I am proud of all that we have accomplished and excited by the clarity of our mission, Which is to position the company to deliver best in class EBITDA growth through the new lodging cycle. To achieve that goal, our 3 strategic objectives remain: to redefine our operating model with our managers, To position our renovated hotels to gain market share and to allocate our capital strategically through acquisitions as well as through development projects. We have quantified the potential returns expected from these investments in the past, and I am going to put all the numbers together for you now. From redefining our operating model with our managers, we expect to generate $100,000,000 to $150,000,000 Potential long term cost savings based on 2019 revenues. From our goal of gaining 3 to 5 points of weighted index growth at the 16 Marriott transformational capital program hotels As well as 5 other hotels where major renovations have been recently completed or are underway, we expect to generate $21,000,000 to $35,000,000 of incremental EBITDA over time on a stabilized annual basis. And finally, From recently completed and ongoing ROI development projects, we expect to generate $25,000,000 to $35,000,000 I've incremental EBITDA on a stabilized annual basis. It typically takes renovation and development projects 2 to 3 years to stabilize. As these projects are at different stages of renovation and development, stabilization will occur over several years. As a reminder, our recently completed and ongoing development projects include the ground up development the 165 key AC Hotel Scottsdale North, 19 new luxury villas at the Andaz Maui, Repositioning and expanding the Ritz Carlton Naples and 60,000 square feet of additional meeting space as well as an Aquatics Park At the Orlando World Center Marriott. Our acquisitions of the Four Seasons Resort Orlando and the Hyatt Regency Austin Provide us a pro form a 2019 hotel EBITDA base of $1,547,000,000 While it makes sense to think of 2019 as the base year, the timing of a return to 2019 levels of hotel EBITDA Remains highly uncertain, particularly given the unprecedented pandemic driven nature of the downturn. The recovery may span several years, and our portfolio is likely to continue to evolve over that time. However, our goal is for the initiatives and projects underlying our strategic objectives to add a potential $145,000,000 to $220,000,000 of incremental EBITDA over time on a stabilized basis. With the lodging industry's supply demand fundamentals continuing to improve, we remain focused on long term growth And I'm building a business that is stronger than it was in 2019. We are pleased with our execution to date and feel optimistic about our future As the pandemic recedes and travel continues to rebound. With that, I will now turn the call over to Saurav. Thank you, Jim, and good morning, everyone. Building on Jim's comments, I'll provide more color on how we achieved breakeven in the Q1 And how we expect the revenue and expense trends to evolve through the course of the year. We achieved positive hotel EBITDA And positive adjusted EBITDAre for the quarter due to 3 main drivers: a stronger than expected increase in demand throughout the quarter, Particularly in March, our manager's ability to sequentially increase average room rates by 18% and Continued expense control at the property level. As Jim covered the first two drivers in his remarks, I will focus on the 3rd. 1st quarter hotel level operating costs rose by only 15% compared to the Q4 of 2020, Despite an approximately 50% increase in total revenues over the same period, as demand suddenly surged in March, Our operators didn't have the time to adjust staffing and other controllable costs from contingency levels implemented since the onset of the pandemic. As a result, March variable expenses declined by 70% on total revenue declines of only 62% Compared to March 2019, most of the resulting savings were due to cross utilizing hotel employees across various job functions. For the Q1, variable expenses declined by 74% on total revenue declines of 70% compared to the Q1 of 2019. In future quarters, we expect staffing and other controllable costs to adjust to more normalized levels as demand continues to grow. Fixed expenses were 41% lower than the Q1 of 2019. This is a remarkable achievement Considering that nearly 20% of the remaining fixed costs are below GOP and consists mainly of expenses such as property taxes and insurance, Which don't change with business volumes. As part of our goal to redefine the operating model, both Hyatt and Marriott have restructured a number of About property, shared service and allocated costs, which were historically completely fixed. Additionally, We have worked with the brands to achieve greater flexibility to opt in to shared services on an as needed basis, further reducing OpEx costs. Last quarter, we introduced the expense reduction ratio to measure the change in property level expenses against The change in total revenue over a comparable pro form a time period in 2019. The expense reduction ratio In the second through 4th quarters of 2020 was fairly stable at 0.8%. That is for every 10% decline in hotel revenue, Hotel expenses declined 8%. In the Q1, our expense reduction ratio came in at 0.84, Much higher than the 0.65 to 0.7 that we expected on our last call for full year 2021 And the highest achieved at any point during the recovery. The outsized expense reduction ratio combined with ADR being down only 9% So the Q1 of 2019 enabled our portfolio to achieve positive hotel level EBITDA at 26.6 percent occupancy, much better than our previously estimated breakeven range of 35% to 45 percent with ADR down 15% to 30% compared to 2019. Positive hotel EBITDA for the quarter Resulted in positive adjusted EBITDAre for the quarter for the first time since the onset of the pandemic. 30 hotels, representing 30 percent of total rooms within our portfolio, achieved breakeven or positive hotel EBITDA for the full first quarter. 38 hotels, representing 42 percent of rooms, achieved positive hotel EBITDA in March. March saw additional hotels achieve positive EBITDA in Atlanta, Texas markets, San Diego And LA as well as Philadelphia and Hawaii. In fact, all 4 of our Hawaii hotels achieved breakeven of positive hotel EBITDA in March. As I just mentioned, in the Q1, revenue came back quicker than expenses, which did grow commensurately, particularly in March. Going forward, our operators are expected to increase staffing and controllable spending more in line with higher levels of demand. In addition, other departmental and support expenses such as sales and marketing as well as maintenance and other support costs We'll need to ramp up relative to the Q1, while remaining well below 2019 levels. Therefore, on a full year basis, We continue to expect the expense reduction ratio to be closer to 0.7. Shifting to our top line outlook, while we are not providing guidance at this time, I would like to share how we are thinking about our top line trajectory for the rest of the year. We expect RevPAR to continue increasing sequentially throughout the year, We expect growth to be driven by occupancy in the second and third quarters. We think rate could sequentially decline as we move out of peak season In some of our higher rated leisure markets, seasonality in tandem with a normal demand shift toward Lower rated markets could also lead to lower rates in the second and third quarters as we have seen historically. Additionally, the rate could come under pressure as suspended hotels reopen in urban markets. Moving to business mix, We think business transient will continue to make slow and steady progress during the year, with the anticipated return to office late in Q3 Driving a ramp up in business transient demand after Labor Day. While we have benefited from non traditional group demand during the pandemic, we expect Traditional groups, corporate and associations to begin ramping up meaningfully in the Q4 following the expected return to office after Labor Day. Finally, we believe leisure will continue driving total RevPAR at our properties, particularly through the summer. We expect our urban hotels We'll increasingly benefit from leisure demand growth as restrictions in those markets continue to lift and key demand drivers reopen. As it relates to cash flow for the quarter, our cash burn excluding capital expenditures, which deducts corporate level expenses and interest payments, Decreased to $45,000,000 or $138,000,000 including CapEx. These amounts are down meaningfully The Q4 of 2020, driven by the strong Q1 operating performance. We maintained a Strong liquidity position with $1,500,000,000 of cash, including $131,000,000 of FF and E reserve After adjusting for the Four Seasons Disney acquisition announced today, and we have no debt maturities until 2023, There is one accounting item I would like to bring to your attention. Neither we nor our operators expect any furlough accruals, Employee retention credits or timing adjustments for these items moving forward, as COBRA benefits Provided in accordance with the American Rescue Plan from April 1 to September 30 are free to the furloughed associates of our operators And are fully reimbursable for our operators via a credit against their quarterly payroll tax liability. Therefore, There is ultimately no cost to the company for providing COBRA benefits, and it will not have any P and L impact through the Q3 of this year. To conclude, we are very encouraged by the momentum of the lodging recovery, which has driven better than expected sequential revenue growth We resulted in positive first quarter hotel EBITDA and adjusted EBITDAre. We are seeing increased demand across all parts of our business Alongside strong rate integrity, we view an expected increase in expenses favorably too, as that indicates business volumes Our ramping back up to normal levels. Combining that with a strong balance sheet and a focus on our 3 strategic objectives, Redefining the operating model, gaining market share at our renovated hotels and strategically allocating capital, we believe we are well positioned to deliver Best in class EBITDA growth that we expect will continue to be further augmented by external growth opportunities throughout this margin cycle. And with that, we will be happy to take any questions. To ensure we have time to address questions from as many of you as possible, Please limit yourself to one question. Thank you. Ladies and gentlemen, we will now be conducting the question and answer Our first question is coming from Bill Crow of Raymond James. Please go ahead. Good morning. Thanks. Jim, I hesitate to congratulate anybody given the state of the industry, but congratulations, it was much better than expected quarter. I wanted to ask you a question about acquisitions. It just it feels like 3 months ago, 4 months ago, the bid ask spread on deals was fairly significant and there wasn't a lot of movement. And it seems like that bid Our spread has narrowed dramatically and it's not the seller that's moving down. Is that the right way to think about What's going on with the transaction market? Is it the buyers have gotten much more aggressive, maybe much more confident in the outlook? Yes, Bill. Well, thank you for the congratulations. Even though we have a ways to go to get back to 2019 levels of RevPAR and EBITDA and exceed those levels, we really like the trajectory that we're on At this point in time, so I will take the congratulations in a tough environment. With respect to acquisitions, I think we all agreed that, let's call it a year ago, we believed that there was going to be a lot of distress in the marketplace. And I would point to our Hyatt Regency Austin acquisition as an asset that was under distress. The ownership, the borrower in that deal was staring down a UCC foreclosure Action that was going to occur at the beginning of April, as you know, we bought the hotel in mid March or thereabouts And saved that borrower and paid off all of the debt associated with the hotel and Acquired a really good asset at a significant discount to pre COVID valuations. I think that a couple of things are happening now. There is a lot of equity in the marketplace chasing deals. Good deals are going to price At close to where they would have priced in 2019, there's no question About it, solid resorts like the Four Seasons Disney, which are truly iconic and irreplaceable assets, Are going to be fully fairly priced. I am not seeing generally a lot of distress in the Today, particularly for the better quality assets. And we are not really Seeing a lot of distress across the system right now. So I do think that there is a lot of capital out there. I think as you compete more in auction processes, pricing is Going to be aggressive. However, we're coming out of the worst A downturn that we've ever experienced in the lodging industry and the pandemic induced recession in the United States As well, we're turning the corner. And we are firm believers that for the right assets, At this stage of the cycle, it's the time to acquire. It's the time to continue to Shape the quality of the portfolio that we have. We were fortunate that coming into 2020 On a number of different metrics, the company had never been in better shape. We talk a lot about the balance sheet and the firepower that that's given us To deploy $800,000,000 of capital today, what we don't talk about a lot, but I think it's really important That investors understand it is our RevPAR metrics as of January 1, 2020 And our EBITDA per key performance, as well as the fact that over the last several years, over the last 5 years, We have consistently tightened up margins year over year. We've had margin improvement going forward. So We are just delighted with where we are, and we hope that we're going to have the opportunity to acquire additional assets Early in this cycle, so that we can ride the economic wave. Perfect. Thank you. Thank you. Our next question is coming from Robin Farley of UBS. Please go ahead. Great, thanks. A question on a similar topic, Just looking at how asset values have been, as you said, a lot of capital out there, Does that change your expectation about whether you would use I think you said you have $1,500,000,000 still remaining for acquisitions, whether You would actually be able to use that budget here in the next 12 months? And then just a little sort of side question. I'm curious with the Seasons Orlando, you talked about a lot of the acreage there. Is there opportunity to add anything there given its special location, kind of the only thing not Disney owned, Will you kind of monetize that acreage or are there limits on what else you might be able to add to that acreage? Thanks. Sure, Robin. With respect to deploying the remaining capital that we have, the cash that's on the balance sheet, Obviously, we have some restrictions in connection with our bank waiver agreement today. We're Looking forward to the time whenever we're going to come out of that the waiver amendment as operations improve. We're hoping that's going to be Sooner rather than later. It's very difficult to hypothetically Answer the question of whether or not we're going to be investing additional capital because it's really transaction specific, And we are evaluating a number of opportunities now. We've evaluated a number of opportunities over the course of this year that we've let go Because we didn't think they were the right fit for Host for one reason or another. So we have the Teams are back on the road. I'm back on the road looking at assets. We have people on the road today as we speak looking at assets, And we're hopeful that we're going to be able to get some additional capital smartly deployed. With respect to the Four Seasons, Orlando, The resort sits on roughly 289 acres. And the short answer is that on the acreage that We have today, we do not see a current opportunity to redevelop any of that property. It includes If you haven't seen this property, I encourage you to look on the website or better yet go visit it, because it is Really a fantastic, truly iconic and irreplaceable asset. It has an 18 hole golf course. It has 444 rooms, 55,000 square feet of meeting space, A 13,000 square foot spa, it has a 5 acre water park And Tennis Courts and 6 food and beverage outlets. So while the 289 acres sounds like a lot of acreage, It is being fully utilized today in a very efficient and a very Useful manner. Okay, great. Thank you very much. Thank you. Our next question is coming from Phil Malkin of Capital One Securities. Please go ahead. Hey, everyone. Good morning and Great quarter. I'm slow clapping for you over here. My question is on The group side, I think that's sort of the big mystery here, the biggest unknown. I think everything else is Well understood. And leisure is going to be fantastic for you guys. Just Jim, if you could or Saurabh, If you could put some color or maybe what you're underwriting for this year in terms of Group, I think in the Q1, you were at about, I don't know, 20% or 25% of 2019 levels for group. How do you see that shaping up maybe over the through 2022? And more specifically, What are you underwriting for the Q4 of this year? You said things are coming back or you're more bullish on that quarter. I mean, can you kind of just Benchmark or Couch, what you see as the performance relative to 'nineteen in the 4th quarter and more Specifically, into 2022 as well. Sure. Neil, I will I'll start and maybe I can Have Shahab chime in as well. For the second half of twenty twenty one, We have 1,000,000 group room nights on the books. And we have at our Marriott Landis properties, We booked 144,000 new room nights this year for 2Q for the Q2 through the Q4 of the year. Of those 144,000 new room nights, about 70% of those were for the second half of the year. So that 1,000,000 room nights that we have on the books for the second half of twenty twenty one equates to 50% The room nights we had in 2019, same time In 2019, so the split between The bookings is really leaning 4th quarter a little bit, not a lot, call it 54% in the 4th quarter. And the other thing I'd like to add is that we have a high degree of confidence that those groups are going to show up Because our managers have just scrubbed all the bookings and to make certain that people aren't just hanging in there, are going to cancel at some point in time. So it's not great, but it's good. The fact that 1,000,000 room nights are still there and holding up It's encouraging. As we look out to 2022, It is we have, what, about 2,000,000 room nights on the books 2022, Sharav, I think something like that. And it is very dependent at this point in time On when restrictions are going to be lifted in key markets. To just put some Back around it, some of the markets in Chicago, I think, just announced yesterday when they're going to reopen. California is expecting to fully reopen on June 15 Boston, August 1 New York, July 1. And I think that as markets reopen, that's the first thing that has to happen. But More importantly, what has to happen for the business transient traveler to return and the In groups to start booking into next year in a more meaningful way is we have to continue to get the pace of vaccines Out there, get to herd immunity in the country and very importantly, get our children back to school. And I think that we're hopeful that that's all going to happen come September. I don't know, Saurabh, do you have anything you want to add on this The only thing I would add, Pat, is in terms of booking activity. So our properties booked 440,000 room nights for the next 3 years. So that's 22 to 24. And to put that into perspective, that's 17% Better than 2019 levels. So we're certainly encouraged by the booking activity that's taking place and hope that continues As we go into the second and third quarters for future views as well. Okay. Thank you, guys. Thank you. Our next question is coming from Thomas Allen of Morgan Stanley. Please go ahead. Thank you. On the Four Seasons Orlando acquisition, having stayed there, I'll agree that a really special property. Can you talk a little bit more about where you see opportunities? Like do you see the opportunity to make changes to that property To grow EBITDA longer term and you bought it at a 4.7% 2019 cap rate or 16.8x EBITDA Multiple. Do you have a view on where stabilized returns will be? Thank you. Sure, Thomas. We do have a view obviously in our underwriting. We put a lot of thought into it as we do in every acquisition. Let me start by saying that this is the type of hotel that we have a lot of experience with And that we have in the past delivered a lot of value to our shareholders through our asset management and enterprise analytics capabilities. As we look at this property, out of the box, it's profitable as we speak. And we're optimistic that the performance of the asset is going to exceed our Underwriting expectations for 2021, for sure, the way it's going. There are a lot of things that Robin and I will kind of tag team this a little bit in a moment. But as we look at what's happening In Disney and in the country, we're very optimistic that we're going to see strong performance at this hotel Going forward, we believe that this property is in a position to perform Better from an EBITDA growth profile than the rest of our portfolio and to recover to 2019 levels of EBITDA and beyond Sooner than the rest of our portfolio does. Additionally, and I'll let Saurabh put some color on this, we feel that the asset has Multiple asset management opportunities to advance margin and operational improvement. One other point I'd like to make is that October 1 this year is the 50th anniversary of Walt Disney World, The Magic Kingdom. And Disney is planning an 18 month celebration starting October 1. So we expect that we're going to see incredible demand flowing to this hotel. One of the things that we looked at is the performance of ultra luxury assets. And if you look at ultra luxury assets over the last 20 years From 1990 to 2019, those are defined as hotels with a RevPAR of $500 or greater. The CAGR was 6.2%. If you look at the top 25 markets over that timeframe, the CAGR was 3.2%. So we think that there is incredible demand out there for this. The resort is Becoming a destination unto itself, not only a destination for people who want to stay to Disney, but Vacation destination given the amenities that are on property. I've heard from some people that they take their family to I'd say it's the Four Seasons and the kids only want to go to Magic Kingdom. So all good stuff as we see it going forward. And I'll let Saurabh Talk a little bit about some of the things we're looking at. Yes. So we like with any acquisition, We have a best practices playbook that we will share with the property and then work collaboratively with the management team to implement those best practices. For example, we have a best in class functional space management strategy to maximize revenue per available space. The meetings stay that exist on property, we've obviously done a lot with our existing luxury resorts in Florida as well as across our portfolio. Additionally, given that this is a resort and it has a ton of ancillary income as well, it's going to be all about maximizing Total RevPAR, which we have again successfully done in implementing at whether it's the 1 South Region, most one of our recent acquisitions or it's Naples and Florida as well. So a lot will be a lot of focus on total RevPAR and driving ancillary income. We will also work and the Four Seasons actually has a very experienced management team work with them to identify any operating model opportunities As we have successfully again done across our luxury resorts and implement them as soon as possible. So we look forward to working with the team. The other piece is obviously we're evaluating multiple ROI opportunities, particularly as it relates to food and beverage, Which we are excited to move forward on as well. Thank you. Thank you. Our next question is coming from Smedes Rose of Citi. Please go ahead. Hi, thanks. I just wanted to first, I just wanted to clarify something. Did you say you have 2,000,000 group room nights on the Now for 2022? Correct, Smedes. Yes. Okay. So is that running at about a third of what You would have done in 2019 or is it running at a higher pace? I'm just trying to get a sense of what Potential upside be there? Yes. Yes, sure, sweet. So relative to 'nineteen, when you think about it at this point in time, We would have about 60% on the books for the following year. We have approximately 45% on the books For 2022. Okay. Okay. And then I just wanted to ask you, you mentioned $100,000,000 to $150,000,000 in cost savings. And you've talked a lot about just being more efficient at the property level in order to achieve some of those savings. But Has there been any more thought, I guess, coming out of the brands around the way that housekeeping will be Execute going forward, and is that another potential opportunity for significant savings? Or would you not expect to see any kind of meaningful changes in that Cost item? It is certainly an ongoing dialogue, and it is going to be on a case by case basis. As you can imagine, at resort properties, it's going to be somewhat different than with urban hotels. And also business mix is also very So it's something that we are constantly, we are having conversations with our managers to see how That brand standard will evolve as we get into more stabilized operations. So it's a continuing dialogue and it definitely is going to be on a market by market basis. But There certainly is opportunity to modify housekeeping relative to what it was pre pandemic. Okay. Thank you. Thank you. Our next question is coming from Lukas Hartwich of Green Street. Please go ahead. Thanks. Good morning. Can you talk a little bit more about the long term optionality with the 300 acres acquired in Maui? Sure, Lucas. Again, 95,000 an acre Currently being utilized for 2 golf courses and a couple of restaurants On that site, it's immediately adjacent to the Hyatt Regency Maui, an asset that we have just Completely repositioned. It was one of the assets that was under A multiyear repositioning program and when COVID hit, we were able to go back to our general contractor And renegotiate the contract, just to give you context and accelerate the renovation and repositioning of that asset. So it was completed in November Of last year as opposed to a year later, plus or minus. We see opportunities going forward subject to zoning and doing Additional development in Maui takes time. There's a long process, but we have experience with that, Given what we were able to do at the Andas with the addition of our Villa units and there are opportunities on that land To add rooms to the existing hotel, to build another hotel, to build a select serve hotel, as we think about it And use the Fenition as the playbook playbook and blueprint where we took 27 holes of golf and I shrunk it to 18 holes. Those are things that we're going to think about going forward in Mali. Great. Thank you. Thank you. Our next question is coming from Chris Woronka of Deutsche Bank. Please go ahead. Hey, good morning, guys. I think back in the prepared comments, you mentioned that as part of the long term EBITDA Improvement Plan, you're looking at $21,000,000 to $35,000,000 coming from 3 to 5 points of index growth at some of your Recently renovated Marriott Hotels. Can you kind of give us a sense as for is that 3 to 5 points of index growth relative to 2019 or pre renovation? And just Where do you think that lift comes from? Is it from other Marriott properties in the market? Or is it from other brands? Just any additional Details you can give us on that would be terrific. Yes. It is 3 to 5 points of yield index growth Relative to where the asset was performing pre renovation. And The assets that we're talking about are not only the 16 Marriott transformational capital program assets, but other assets where we've Invested ROI money such as the Don Cesar and what we're Going to be doing at the Ritz and Naples and other hotels across the portfolio. Where does it come from? It's tough to say, Chris. We think that In the middle of the pandemic, the one asset that we can point to that has really captured a lot of incremental market Here is the Coronado Island Resort and Spa in San Diego. I think the yield index stands for well over 9 points At that hotel. So it's going to be case by case. And I don't want to promise anything, but as we are putting money in our hotels renovating our properties and repositioning them, we're going to have a distinct advantage as business gets back to normal. And I personally believe that we should be able to achieve more than 3 to 5 points of yield index growth because we're going to be competing with hotels That haven't been renovated, that are going to have to be renovated going forward, and there's going to be incremental disruption Associated with those renovations, when they do occur, and it's going to have to happen, or We're just going to be competing with a tired property. So we are very fortunate to have had the ability to continue to invest in our assets Over the course of 2020, and we're doing the same thing this year going forward. Okay. Very good. Thanks, Jim. You bet. Thank you. Our next question is coming from Ari Klein of BMO Capital Markets. ABR Resorts have been incredibly strong through the pandemic. Do you view this as the new normal and a run rate maybe moving forward? I guess when you look ahead over the next year or 2, Can this be sustainable and that we build off of this year? Yes. I don't know that It's going to be sustainable, Ari. I think that this year was a unique point in time with Businesses closed and people working from home and people being in a position where they can work from anywhere. As Children get back into schools and as our offices open, I think you're going to see a return of Business transient traveler, a return on group business, and we are just very Fortunate that our resort portfolio and our assets in the Sunbelt Have carried us through in a material way. We never thought that we would be profitable in the Q1. We had 30 hotels that were profitable for the entire quarter, and I don't know that we've talked about this before, but we had 38 hotels, 42% of our rooms that were profitable for the month of March. So do we think that We're going to continue to see this outsized performance. I think For the near term, the answer is yes. And when I say near term, we're talking about another year or so There's so much pent up demand out there. There is so much money in savings. There is $6,000,000,000,000 That individuals have in their bank accounts today, they want to spend it. For sure, they want to experience it. They're happy to get on an airplane and go. One of the other interesting data points that we look at Is air capacity. And surprisingly for Maui, our 3 resorts, I gave you some numbers on how they're trending for June July, which I don't think anybody would have believed that sitting here a year ago That we'd be seeing 80% to 90% occupancy at an ADR up 28% at our 3 resorts on Mountain. It's the only market in the country, the only air market in the country being Maui that has more capacity right now than It did in 2019. Air capacity for Maui is up 4%. So For the near term, I think you're going to see incredible pent up demand, reventaged travel, we are seeing it. That's going to continue. But is it sustainable over the next 3 to 5 years? It's hard to say, but I doubt it. At that point in time, we are really going to be able to Compressed rates as we have group business and business transient business back in the hotels. Got it. Appreciate all the color. Thank you. We're showing time for one last question today. Our last question will be coming from Powell of Barclays. Please go ahead. Hi, good afternoon. You talked a lot about the strength Then ultra luxury properties over the past several years, the past cycle, does that shift does that signal a shift for you to focus more on those properties and buying more of those Over the cycle or would you prefer or even try to do more deals like the Austin property, which is more of a discounted Yes, group convention hotel in a kind of a growing market. Anthony, I think that we are very open minded to investing in both types of assets. We're comfortable with a hotel like Austin that fits the profile All the assets that we own today that we know how to effectively asset manage, as I've talked earlier on this call, we're very comfortable with an asset like the Four Seasons Orlando. And it really comes down to what I said in my prepared remarks regarding improving the EBITDA growth profile of the company. So that's where you're going to see us putting capital into assets where we feel that we can improve The overall EBITDA growth profile, as I mentioned on our Q4 call, We're prepared to look beyond the top 25 markets. We did that with Austin. We're continuing to do that today. The demographic trends are changing in this nation, and a lot of people and a lot of businesses are relocating to Cities in Sunbelt states, and we're going to follow the demand. So I think you can expect to see us Invest in a myriad array of properties so long as they're all going to improve The overall growth profile of Host. Thank you. Thank you. Ladies and gentlemen, this concludes the question and answer session. At this time, I'd like to turn the floor back over to Mr. Risoglio for closing comments. Well, everyone, thank you for joining us on the call today. We really appreciate the opportunity to discuss our Q1 results with you. I look forward to talking with many of you over the coming weeks and at NAREIT in June and at REIT World in person at the Wynn Hotel in November. Just ask I'm going to ask you to just do a couple of things. If you haven't gotten vaccinated, please get vaccinated. Enjoy your summer travels and go out and visit some of our hotels. Lastly, be well and stay healthy. Thank you very much. Ladies and gentlemen, thank you for your interest in