Earnings Call Transcript - HST Q2 2025

Operator, Operator

Good morning, and welcome to the Host Hotels & Resorts Second Quarter 2025 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. Please go ahead.

Jaime N. 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. 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.

James F. Risoleo, President and Chief Executive Officer

Thank you, Jaime, and thanks to everyone for joining us this morning. We are proud to have achieved another strong quarter of operating and financial results, leading to outperformance in the first half of 2025. In the second quarter, we delivered adjusted EBITDAre of $496 million, an increase of 3.1% over last year, and adjusted FFO per share of $0.58, an increase of 1.8% over last year. Second quarter adjusted EBITDAre and adjusted FFO per share benefited from $9 million of business interruption proceeds related to Hurricanes Helene and Milton, while the second quarter of 2024 benefited from $30 million of business interruption proceeds related to Hurricane Ian and the Maui wildfires. Comparable hotel total RevPAR improved 4.2% compared to the second quarter of 2024 and comparable hotel RevPAR improved 3%, driven by stronger transient demand, higher ADR and more ancillary spend. Comparable hotel EBITDA margin declined by 120 basis points year-over-year to 31%, driven by a 120 basis point impact from business interruption proceeds that we received last year for the Maui wildfires. The operational results discussed today refer to our 78 hotel comparable portfolio in 2025, which excludes the Alila Ventana Big Sur, the Don CeSar and the Westin Cincinnati, which we sold in June. Turning to business mix. RevPAR growth in the second quarter was better than expected, driven by leisure transient demand and rate growth despite a continuation of the international demand imbalance. We saw particularly strong performance in Maui, Miami, Orlando, Atlanta, New York, the Florida Gulf Coast and San Francisco. Transient revenue grew by 7%, driven by both the Easter calendar shift and the ongoing recovery in Maui, the latter of which accounted for approximately 40% of the transient revenue growth in the quarter. Digging into Maui, the leisure transient demand recovery continued, driving Maui's strong results for the second quarter. Maui's 19% RevPAR growth provided a 100 basis point benefit to portfolio RevPAR growth in the quarter. Total RevPAR at our 3 Maui resorts was also up 19%, driven by robust growth in F&B outlets as well as golf and spa revenue, a clear indication that the recovery in Maui is well underway. Turning to business transient. Revenue was relatively flat in the second quarter as demand decreases were nearly offset by rate. As expected, group room revenue decreased 5% year-over-year, driven primarily by the Easter calendar shift, planned renovation disruption from the Hyatt Transformational Capital Program, business mix shifting from group to transient in Maui and reduced group pickup. Our properties actualized 1.1 million group room nights in the second quarter, and our definite group room nights on the books increased to 3.8 million for 2025. Total group revenue pace is up 1.6% to the same time last year. Ancillary spending by guests at our properties remains strong, as illustrated by our 4% total RevPAR growth in the second quarter. F&B revenue was up 4%, driven by outlet revenues. Banquet revenue grew by 1% as contribution per group room night outpaced absolute group room night declines. We also saw particularly strong growth in other revenue, which was up 13%, including golf and spa. Turning to the Don CeSar. During the second quarter, we completed the north pool and pool bar. In early July, we completed the marketplace and lower-level retail spaces. In the third quarter, we expect to complete the final phase of reconstruction, including the lower-level kitchen and 2 F&B outlets. Since the reopening, we are seeing better-than-expected near-term transient pickup, higher F&B capture and average checks and increased group bookings, which allowed us to raise our full year expectations for the resort to $3 million from negative $1 million. We collected $9 million of business interruption proceeds for Hurricanes Helene and Milton in the second quarter, bringing the total business interruption proceeds collected to $19 million for the first half of the year. We also collected an additional $5 million of business interruption proceeds in July related to those 2 hurricanes, which are included in our updated guidance. While we expect to collect additional business interruption proceeds, the timing and amounts of additional payments are subject to stabilization of the asset and ongoing discussions with our insurance carriers. Turning to capital allocation. In June, we sold the 456 key leasehold interest in the Westin Cincinnati for $60 million or 14.3x trailing 12-month EBITDA. When calculating the EBITDA multiple, we included $54 million of estimated disrupted capital expenditures over the next 5 years. Since 2018, we have disposed of approximately $5.1 billion of hotels at a blended 17.2x EBITDA multiple, including estimated foregone capital expenditures of $1 billion, which compares favorably to our $4.9 billion of acquisitions over the same period at a blended 13.6x EBITDA multiple. In addition to dispositions, we repurchased 6.7 million shares of common stock during the second quarter at an average price of $15.56 per share for a total of $105 million, bringing our total repurchases to $205 million year-to-date at an average price of $15.68 per share. Since 2022, we have repurchased $520 million of stock at an average repurchase price of $16.03 per share, and we have $480 million of remaining capacity under our share repurchase program. Turning to portfolio reinvestment. As of the second quarter, the Hyatt Transformational Capital Program is approximately 50% complete and is tracking on time and under budget. We completed the guest rooms renovations at the Grand Hyatt Washington, D.C., and paused the remaining public space renovations to accommodate group business on the books, while we complete the comprehensive renovations at Hyatt Regency Capitol Hill. We also started comprehensive renovations at the Manchester Grand Hyatt San Diego, the final property in the Hyatt Transformational Capital Program, which we expect to complete in early 2027. We continue to make progress on value-enhancing development projects, including the Don CeSar ballroom expansion and the Phoenician Canyon Villa suites, both of which we expect to complete in the fourth quarter of 2025. We also made progress on the condo development at the Four Seasons Resort Orlando at Walt Disney World Resort. We expect to complete the mid-rise condominium building and begin closing on sales in the fourth quarter of this year. We now have deposits and purchase agreements for 20 of the 40 units, including 8 of the 9 villas. In 2025, our capital expenditure guidance range is $590 million to $660 million, which includes between $70 million and $80 million for property damage reconstruction, the majority of which we expect to be covered by insurance. Our CapEx guidance also reflects approximately $270 million to $305 million of investment for redevelopment, repositioning and ROI projects. As part of our climate risk and resiliency program, we purchased flood barriers for 9 high-risk properties, with measures being put in place for the 2025 hurricane season. We also developed a resiliency ROI method and expanded the program to new hotels, with a focus on emergency power and wildfire risk. Within the Hyatt Transformational Capital Program, we expect to complete renovations at the Hyatt Regency Austin and the Hyatt Regency Capitol Hill in the second half of this year. As a reminder, we expect to benefit from approximately $27 million of operating profit guarantees related to the Hyatt Transformational Capital Program in 2025, which we expect will offset the majority of the EBITDA disruption at those properties. In addition to our capital expenditure investment, we expect to spend $75 million to $85 million on the condo development at the Four Seasons Resort Orlando at Walt Disney World Resort this year. Looking back at prior transformational renovations, we completed investments in 24 properties between 2018 and 2023, which are continuing to provide meaningful tailwinds for our portfolio. Of the 20 hotels that have stabilized post-renovation operations to date, the average RevPAR index share gain is over 8.7 points, which is well in excess of our targeted gain of 3 to 5 points. Turning to our outlook for 2025. Despite the heightened macroeconomic uncertainty, we continue to outperform our expectations in the second quarter. As a result of our strong performance in the first half of the year, we are increasing our comparable hotel RevPAR and total RevPAR guidance ranges. As Sourav will discuss in more detail, the low end of our guidance range contemplates softer demand in the second half of the year, while the high end assumes a more stable macroeconomic environment. Similar to last quarter, we are also providing an approximate rule of thumb for the current environment based on how our portfolio is positioned today. For every 100 basis point change in RevPAR, we would expect to see a $32 million to $37 million change in adjusted EBITDAre, which is consistent with the range we provided last quarter. As we have said many times before, Host is well positioned to weather any environment because of our fortress investment-grade balance sheet, a leverage ratio of 2.8x, our size and scale, our diversified business and geographic mix and our continued reinvestment in our portfolio. We will continue to use our competitive advantages to create value for our shareholders and position Host to outperform over the long term. With that, I will now turn the call over to Sourav.

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our second quarter operations, updated 2025 guidance and our balance sheet. Starting with total revenue trends, comparable hotel total RevPAR growth outpaced RevPAR growth as both group and transient guests maintained elevated levels of out-of-room spend. Comparable hotel food and beverage revenue grew 4% in the quarter, driven by outlets. Outlet revenue grew 9%, driven by transient room night growth in Maui as well as recently repositioned outlets, including The View at the New York Marriott Marquis, AVIV at the 1 Hotel South Beach and outlets at The Singer Oceanfront Resort. Properties in Orlando, Nashville and Naples also contributed to outlet growth. Banquet revenue grew 1% as increases in banquet and catering contribution per group room night outpaced decreases in group room night volume. Banquet and catering contribution was up 7% in the quarter, signaling the continued health of group spending. Growth was driven by our large group hotels in San Diego, San Francisco, New York, Orlando and Naples. Other revenue grew 13% in the second quarter as golf and spa revenues continue to grow. This is further indication that the high-end consumer is prioritizing spending on premium experiences. Shifting to business mix. Overall transient revenue was up 7% compared to the second quarter of 2024, driven by higher rates and the continued growth of transient room night at our resorts, led by Maui. During the second quarter, our resorts saw modest transient rate growth year-over-year alongside 21% transient room night growth, which benefited from the Easter calendar shift and the recovery in Maui. Excluding Maui, transient revenue at our resorts was up in the mid-teens, driven by our resorts in Orlando, Oahu and Miami. Looking at recent holidays, revenue for Memorial Day weekend was up over 2%, driven by our resorts in Maui, Miami, Orlando and Naples. Revenue for July 4 was down 1% for the comparable portfolio. Our resorts were up 6%, but storms over the holiday weekend heavily impacted short-term pickup at many of our properties. Business transient revenue was relatively flat to the second quarter of 2024 as 6% rate growth nearly offset business transient room night declines. It is worth noting that corporate negotiated room night volumes were down slightly, which is in line with recent quarters. As a reminder, we expect business transient revenue to remain flat for the remainder of this year as a result of the uncertain macroeconomic environment. Turning to group. As expected, revenue was down 5% year-over-year, driven by planned renovation disruption from the Hyatt Transformational Capital Program and business mix shifting from group to transient in Maui. Group room revenue also faced headwinds from the Easter calendar shift and reduced group pickup. Despite these headwinds, our properties in San Francisco achieved group revenue growth of more than 30%, driven by meaningful citywide recovery. Our Ritz-Carlton resorts in Naples, Florida also benefited by strategically adding high-quality groups in the quarter. For full year 2025, we have over 3.8 million definite group room nights on the books, representing a 6% increase since the first quarter. As Jim mentioned, total group revenue pace is up 1.6% over the same time last year. As we discussed last quarter, we have seen softer short-term group pickup, particularly for the third quarter due to macroeconomic uncertainty. That said, rate continued to grow across the portfolio for bookings made in the second quarter for the rest of 2025. We also continue to see double-digit citywide booking pace in many of our key markets including San Francisco, San Antonio and New Orleans. Shifting gears to margins. Comparable hotel EBITDA margin of 31% was 120 basis points below the second quarter of 2024, which includes a 120 basis point impact from business interruption proceeds we received for the Maui wildfires last year. Outside of the BI proceeds impact, margin performance in the second quarter was the result of strong revenue growth as well as higher HTCP guarantee amounts, which offset headwinds from elevated wage rate growth. We continue to expect negative year-over-year margin comparisons for the remainder of the year, primarily driven by elevated wages and benefits. On the insurance front, our June 1 property renewal came in meaningfully better than expected at down 4% compared to last year, which equates to a $14 million expense reduction compared to our prior guidance. This savings has been reflected in our updated guidance. Turning to our outlook for 2025, as Jim mentioned, we are increasing our comparable hotel RevPAR and total RevPAR guidance ranges as a result of our outperformance in the first half of the year. As a reminder, we have assumed a gradual improvement at our Maui properties this year and no improvement in the international demand imbalance. At the low end of our guidance, we have assumed softer demand in the second half of the year. And at the high end, we have assumed improvement in the overall macroeconomic environment driven by clarity on trade and other policies. Our full year 2025 guidance contemplates comparable hotel RevPAR growth of between 1.5% and 2.5% over 2024. We expect comparable hotel EBITDA margins to be down 90 basis points year-over-year at the low end of our guidance, to down 60 basis points at the high end, a 60 basis point improvement over our prior guidance at the midpoint. Consistent with our prior guidance, we expect negative year-over-year RevPAR in the third quarter, driven by softer short-term group volume and slightly positive RevPAR growth in the fourth quarter. The midpoint assumes comparable hotel RevPAR growth of 2% compared to 2024 and a comparable hotel EBITDA margin of 28.6%, which is 70 basis points below 2024. As we think about bridging our 2024 results to 2025, we estimate a 100 basis point impact to full year comparable hotel EBITDA margin from wage and benefit rate increases, and a 40 basis point impact from lower business interruption proceeds in the comparable portfolio, which are partially offset by an estimated 70 basis point benefit from operational improvements. For the full year, we continue to expect overall wage and benefit expenses to increase 6%, which comprises approximately 50% of our total hotel operating expenses. Our 2025 full year adjusted EBITDAre midpoint is $1.705 billion. This represents a $60 million or 3.6% improvement over our prior guidance midpoint driven by outperformance in the first half of the year. This includes $19 million of business interruption proceeds that were received in the first half of the year for Hurricanes Helene and Milton, and an additional $5 million of business interruption proceeds that were received in July. Our 2025 full year adjusted EBITDAre midpoint also includes $25 million of estimated EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings in the fourth quarter. Lastly, our midpoint includes an estimated $3 million contribution at the Don CeSar, an improvement of $4 million since the last quarter, and an estimated $13 million contribution from the operations at Alila Ventana Big Sur, both of which are excluded from our comparable hotel set in 2025. Turning to our strong balance sheet and liquidity position. In May, we redeemed the $500 million Series E notes, which matured in June, with proceeds from the recent $500 million 5.7% Series M notes issuance. Our weighted average maturity is now 5.4 years at a weighted average interest rate of 4.9%. We currently have $2.3 billion in total available liquidity, which includes $279 million of FF&E reserves and $1.5 billion available under the revolver portion of the credit facility. Our quarter-end leverage ratio was 2.8x. In July, we paid a quarterly cash dividend of $0.20 per share. As always, future dividends are subject to approval by the company's Board of Directors. We will continue to be strategic in managing our balance sheet and liquidity position as we move through the rest of the year. Wrapping up, we believe our strong investment-grade balance sheet as well as our size, scale and diversification uniquely position Host to execute in the current environment while capitalizing on opportunities for growth in the future. With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question.

Operator, Operator

Your first question comes from Duane Pfennigwerth with Evercore ISI.

Duane Thomas Pfennigwerth, Analyst

Room nights on the books up 6% sequentially versus the last quarter and in your 3Q group commentary. I assume this means you're seeing groups further out for '26 and beyond continue to book. But maybe you could just talk a little bit about the group dynamics that you're seeing second half and then longer term?

James F. Risoleo, President and Chief Executive Officer

Duane, it's Jim. Can you state the question over? We didn't catch the first part of it. I think you're on mute. So if you wouldn't mind restating it, we'd appreciate it.

Duane Thomas Pfennigwerth, Analyst

Sorry about that. Yes, just help us match up the commentary of room nights on the books up 6% versus last quarter versus the 3Q commentary that you're making. I assume that means you're seeing group bookings further out into '26 and beyond.

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Sourav here. To give you an overview, at the beginning of the year, we anticipated about 4.3 million group room nights. However, last quarter we adjusted our forecast down by approximately 100,000 group room nights, bringing it to around 4.2 million. Due to observing weakened short-term group bookings, particularly in the third quarter, we further reduced our estimate by about 75,000 to 77,000 room nights, leaving us with 3.8 million group room nights on the books. We now expect around 4.1 million group room nights for the full year. Looking ahead to 2026 to 2028, we previously mentioned that group booking trends were in the higher single digits, and this has slightly improved since last quarter. We see groups continuing to book for the future, although we've taken some caution regarding short-term bookings, especially for the third quarter. In the second quarter, we picked up 215,000 group room nights for the remainder of the year, with about 20% occurring in the second quarter and 80% for the rest of the year. In comparison, for 2024, we had picked up 311,000 group room nights. While there's a noticeable softening for the third quarter, projections for the future remain strong. Additionally, group rates for the second half are performing exceptionally well.

Operator, Operator

Your next question comes from the line of Chris Woronka with Deutsche Bank.

Chris Jon Woronka, Analyst

Jim or Sourav, I was hoping you could dive in a little bit further on Hawaii. And I think more widely, we've been getting messages through the various news sources about what's going on there. Can you maybe shed a little bit of light on what you're seeing within your portfolio and how confident you feel about that for the back half of the year and maybe any early thoughts on '26?

James F. Risoleo, President and Chief Executive Officer

Yes. Chris, I'll start, and Sourav can feel free to jump in if he has additional color he wants to add. But we are of the opinion that Maui's recovery is firmly underway. We had 19% RevPAR growth in the quarter for our Maui resorts. That was matched by 19% out-of-room spend as well, really driven by outlet growth. The recovery is being fueled by leisure transient, and it's somewhat of a new phenomenon for Maui because the booking window is very short-term. We had said that we anticipated Maui to contribute $100 million of EBITDA this year for the portfolio. We are now assuming that the Maui resorts will contribute $110 million. So we're seeing very positive momentum. There's no question about it going forward. I think this is fueled in large part by a marketing campaign that a group of hotel owners banded together to undertake marketing individual properties, combined with the state of Hawaii, led by the governor, who endorsed and sponsored, I think, about a $6.3 million marketing campaign as well. So when people see what is happening on the island, and you were there in February, you know that it's open for business. And Wailea is a great place to be. The west side where the Hyatt Regency is, is a great place to visit as well. It's, I think, probably the best group hotel on the island. And that's what we have to see happen to really get back to where we were at pre-fire levels. We have to start seeing the incentive groups come back to Hawaii. And we're getting good traction with meeting planners. They're taking trips called FAM trips, F-A-M, familiarization trips so they can just go see what is happening on the island. There's a long lead time for incentive group bookings to occur. It's at least 6 months, and it can be a year or longer in some instances. So we expect to see the group pace pick up as we get into 2026 and '27 and beyond. But Maui is definitely open for business, and we're really pleased with what we're seeing. The other thing that has to happen, Chris, is we have to see additional airlift made available. It's a bit of a chicken and an egg situation, where the airlines are not going to want to bring additional capacity back online until they have a good feeling about their ability to fill those seats and vice versa. We don't want our customers who want to come to Hawaii and not be able to find a seat on an airplane. So compared to where we were pre-wildfire in terms of airline capacity in Maui, we're down about 20%. So we're hopeful that, that's going to change over time. The recovery is well underway. In addition to the outlet revenue, we saw a meaningful pickup in spa revenue and golf revenue as well. So people are definitely coming and they're spending.

Operator, Operator

Your next question comes from the line of David Katz with Jefferies.

David Brian Katz, Analyst

I wanted to ask more about Hawaii, particularly the Turtle Bay. Can you provide an update on its performance? What has been the best surprise, and have there been any negative surprises? Also, could you clarify how we're accounting for that hotel in the RevPAR? Was it excluded in the second quarter, and is it included now in the third quarter? Those are my two questions.

James F. Risoleo, President and Chief Executive Officer

Turtle Bay's hotel operations are exceeding our projections and have been well-integrated into the Ritz-Carlton system. Bonvoy is generating significant business for the property, and there have been no negative surprises regarding hotel operations. The property is performing strongly. We have revised our plans for the repositioning and renovation of the Fazio golf course. As you may remember, the property has two golf courses, the Fazio and the Palmer. We have leased the Palmer course to Areté Development, which is building residential units near the resort, while we continue to own the Fazio course. For various reasons, we've decided not to reposition or upgrade the Fazio course at this time, but we will focus on preparing the site for potential future development. If there is a shortfall in the resort's overall operating performance, it is due to the golf course, not the hotel. I'll let Sourav answer your other question about comp and non-comp.

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Yes, it is actually in our comparable results. We did not own the hotel. However, we do have the actual numbers and performance from that hotel. So it is not comparable numbers. You just have to look at the comp tables.

Operator, Operator

Your next question comes from Smedes Rose with Citigroup.

Smedes Rose, Analyst

I wanted to ask a little more about wages and benefits. You mentioned that they are expected to rise 6% this year. Sourav, could you provide some insights on the components of that increase, such as the proportion of labor versus employee benefits, and how you anticipate this will trend into next year?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Sure. When you think about sort of overall, it really is obviously market dependent. It is being driven by where there were CBA negotiations finalized, and that's driving a big piece of the increase for this year just given the front-loading impact. For next year, all I can tell you is that it is going to be overall lower than where it is this year. That's the expectation. But it's too early to tell, frankly, because we haven't seen budgets from our managers yet, and we will not see that until later. So I can't really comment on an exact number, but the expectation is the growth should be slightly lower than this year. What that is, I can't comment right now.

Operator, Operator

Your next question comes from Aryeh Klein with BMO Capital Markets.

Aryeh Klein, Analyst

Can you talk a little bit about the cadence for RevPAR growth in the second half of the year? And specifically, what might drive Q4 growth relative to the third quarter? And then just a clarification on the insurance savings. Is the $14 million an annualized number or just what you expect to save this year?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

The $14 million is the amount we expect to save for this year, reducing our previous guidance of $1.645 billion by that figure. This savings applies only to this year. Regarding our confidence in fourth quarter growth, we started the year with solid expectations for this period. There are a few factors to consider for the third and fourth quarters. First, Rosh Hashanah last year occurred in October, but this year it falls in September, which benefits the fourth quarter and negatively affects the third quarter. Second, our Grand Hyatt Manchester in San Diego is undergoing renovations, which is impacting our group bookings. Additionally, during election periods, there tends to be a slowdown in bookings, but this year, we expect that to improve our fourth quarter numbers. These are the three main components contributing to our outlook for the fourth quarter.

Operator, Operator

Your next question comes from the line of Robin Farley with UBS.

Robin Margaret Farley, Analyst

Can you provide some insight into the transaction environment? You recently sold an asset, so what is the general atmosphere like for that? Are there any buying opportunities as well? I also have a quick follow-up.

James F. Risoleo, President and Chief Executive Officer

Sure, Robin. I want to begin by noting that the debt capital markets are very active right now, especially in the CMBS market. Over the past 90 days, we've observed a significant increase in transaction activity. While it's not quite robust and doesn't match historical levels, we've seen some instances where the gap between buyers and sellers has narrowed enough for transactions to occur. As we look ahead, we'll see how the macroeconomic landscape unfolds for the remainder of this year and into 2026. It's still somewhat challenging to aggressively underwrite potential acquisitions due to current macro uncertainties, which may be causing some hesitation. However, we believe many assets have not received investment since the onset of COVID—it's been about five years—and these properties are urgently in need of capital expenditure. Something will need to be done with those assets moving forward. Fortunately, we have the balance sheet that has enabled us to invest in our properties. Over the last six years, we've invested $1.7 billion in capital expenditures, completing 24 transformative renovations. Of those, 20 have stabilized operations, and we've seen nearly a nine-point increase in our yield index. This is a key reason why we continue to outperform, thanks to our capital allocation decisions made since 2017. To address the second part of your question regarding our interest in buying hotels, I won't say it's out of the question, but at this moment, it's not our top priority. We believe that our capital is better utilized in investing in our existing assets to sustain the strong returns we're achieving, maintaining a sustainable dividend, subject to board approval, and repurchasing shares. We've bought back $205 million worth of stock in the first half of the year, and we believe our stock is a great value compared to the quality of our portfolio and our strong balance sheet.

Robin Margaret Farley, Analyst

Right. That's super helpful. Just one quick clarification following up and maybe one for Sourav. With the guidance change, you're getting a little more cautious on that sort of close-in Q3 group bookings. And I know that's relative to what you said 3 months ago. Some have sort of pointed to things picking up a little bit in July. Are you seeing at least in the very near term, something maybe a little bit better than the sort of delta you're talking about versus April?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Because it's such a short-term business, I think that's kind of why we have taken some of the risk out of Q3. Is July trending well? I'm not in a position to give a number for July. But yes, it has been certainly trending well relative to our expectations. So could it get better? There is certainly a possibility, but it's really tough because these groups are sometimes literally booking 1 week out or even a couple of days out. So we want to make sure we are appropriately cautious as we were doing our forecast.

Operator, Operator

Your next question comes from the line of Dan Politzer with JPMorgan.

Daniel Brian Politzer, Analyst

I just wanted to follow up on the group commentary. Is there any more detail in terms of lead volumes, corporate versus association? And then are you seeing actual changes in terms of the spending patterns from these groups in terms of some of that ancillary or F&B?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Yes. So it's very similar to what we had talked about on the first quarter in terms of where we are seeing some of the weakness in groups. It certainly is a little more on the association side, particularly as it relates to associations that either rely on government funding or somehow tied to government funding. In terms of the folks that are actually showing up to the hotels, they're spending well. So if you look at our second quarter results, group volume was down, but our banquet and catering revenue was actually up. And we look at the banquet and catering revenue on a per group room night basis, that was up 7%. So overall groups, when they're coming to the hotels, are actually spending and spending well and continue to spend. So that trend really hasn't changed. And it's certainly has the same momentum as it did, which we saw in the first quarter, and we have that same expectation going into the groups that are going to be coming in, in the third and fourth quarter as well.

Operator, Operator

Your next question comes from the line of Daniel Hogan with Baird.

Daniel Hogan, Analyst

Just quickly on the Cincinnati sale. Looking at the rest of the portfolio, how many more assets are in need of that amount of CapEx or would be potential noncore sale candidates? And how are both you and potential buyers thinking about that amount of CapEx needs differently? And is that able to then get a deal across the line?

James F. Risoleo, President and Chief Executive Officer

The Cincinnati, I would say, probably ranked at the bottom of our portfolio, Dan, from a CapEx perspective. It's in a tough market, a very low RevPAR asset. It's subject to a ground lease, what we sold was a leasehold interest, and we really hadn't invested in that property since 2009. So I don't know of any other hotel in our portfolio that is in that dire need of CapEx. So we like what we own. Obviously, if you look at the makeup of our portfolio, our top 40 assets account for over 80% of our EBITDA. We have 78 comparable hotels plus the Alila Ventana and the Don in noncomparable. But that should give you a sense of the magnitude of EBITDA that something like a Westin Cincinnati contributes to the overall earnings of Host.

Operator, Operator

Our next question comes from the line of Chris Darling with Green Street.

Chris Darling, Analyst

Jim, can you comment on the relative strength across sort of the high-end luxury hotel segment relative to what's really been a more sluggish demand backdrop for seemingly most of the rest of the industry? To be candid with you, I'm kind of surprised the dynamic has lasted as long as it has. And I wonder what your perspective is on whether it persists, and also how your perspective may or may not inform your portfolio positioning going forward?

James F. Risoleo, President and Chief Executive Officer

We started the process of repositioning this portfolio in 2017 and 2018. The performance we see today is influenced as much by what we sold as by what we acquired. We sold $5.1 billion in assets with similar initial purchase prices, which required significant capital expenditures of about $1 billion at a 17.2x EBITDA multiple. During the same period, we acquired $4.9 billion in assets at a 13.6x EBITDA multiple, with a clear emphasis on luxury. We believe that luxury properties, especially resorts, will see higher long-term RevPAR growth rates compared to other segments in the hotel industry. This has been evident as our resort portfolio shows no resistance to rate increases today, and we are also witnessing a rise in out-of-room spending by guests on a per occupied room basis across various amenities. The affluent consumer is in a strong position, prioritizing experiences and willing to spend on them. In the second quarter, luxury led the performance, followed by upper upscale, where most of our portfolio lies, and we outperformed the industry overall due to our past investments. However, as we move down the scale to where consumers are facing economic stress, such as in the economy segment, we are seeing negative RevPAR growth. We believe there has been substantial wealth created in the U.S. through housing and the stock market, and we are confident in our portfolio's long-term positioning. Of course, any changes in consumer confidence about their financial situation could impact the business, but we are not seeing signs of that at this time.

Operator, Operator

Your next question comes from the line of Gregory Miller with Truist Securities.

Gregory Poole Miller, Analyst

Could you provide some detail on how summer leisure demand from international inbound is performing relative to your expectations a few months ago? Are there certain markets or property types performing better or worse?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Sure. So when you look at what happened with international outbound, inbound, in first quarter, we had talked about our, I would say, hope that, that would somewhat moderate and it would effectively be a wash. We were expecting lower inbound travel, but we were also expecting lower outbound travel. In a way, that's kind of what happened not to a very large degree, but net-net, it was effectively a wash. You may recall that in the fourth quarter when it peaked in 2024, outbound relative to 2019 was at 125% and inbound was at 94%. That progressed. In Q1 2025, outbound became 124%. So it came down a little bit. In Q2, it went down to 122%. And actually, in June, it came down a little bit further to 120%. In the same token, your inbound also reduced. So while outbound did go down, the inbound cadence was Q4 of '24, it was 94%, and this is all relative to '19 levels, Q1 '25, 89%, and then Q2, 86%. So when you think about the actual change in inbound and also change in outbound, it's net-net sort of washed out. So overall, as we look at international demand, I mean at least specifically for our portfolio, it has been relatively strong overall. I mean there are certain markets really driving that. I mean New York is driving that. While Seattle did see Canadian visitors significantly decline, our Westin overall actually did well. A lot of these markets where we've seen a decline in Canadian travel, it has been made up by other European markets. So thus far, it hasn't had a meaningful impact one way or the other, and kind of what we expected, no real change in the international inbound, outbound imbalance, that's sort of coming to fruition thus far.

James F. Risoleo, President and Chief Executive Officer

Greg, I want to provide some insight regarding New York. Our portfolio is structured such that over 90% of our revenue is generated from domestic U.S. travel, with approximately 8.5% to 9% coming from international visitors. Following up on what Sourav mentioned about New York, I’d like to share how our assets are performing there. The New York Marriott Marquis began a major renovation in 2019. Using 2018 as a reference year, our RevPAR this year is expected to increase by 16%. Additionally, our EBITDA at the Marriott Marquis is projected to rise by 46% compared to 2018. We generated $66 million in EBITDA in 2018 and are on track to reach $96 million this year, which is alongside the 16% RevPAR growth. Overall, the performance of our New York assets is very strong.

Operator, Operator

Our final question comes from the line of Jack Armstrong with Wells Fargo.

Jackson G. Armstrong, Analyst

Just returning to Maui again here briefly. We've heard from you and some of your peers that some of the strength you've been having there is related to promotional activity. And obviously, you've seen an uptick in transient demand. What's the plan for rolling off that promotional activity and then kind of replacing that demand with group? Is that a late '25 event or 2026? And is there a chance you kind of get stuck in between those 2?

Sourav Ghosh, Executive Vice President and Chief Financial Officer

Yes. To clarify, we are actively engaging with meeting planners and conducting FAM trips at these properties. Progress is being made, and we are optimistic about the pacing for 2026. We will share specific numbers for Maui group pace in the future. Currently, both Wailea and Hyatt Regency Ka'anapali are tracking close to pre-fire and pre-pandemic levels. This is encouraging news. It's important to remember that the lead times for these incentive groups are 9 to 12 months, so while recovery will take some time, we fully anticipate a much stronger group year in 2026. To give you some context, in 2019, Maui peaked at around 100,000 group room nights. This year, we expect about 81,000, and we aim to improve on that next year.

James F. Risoleo, President and Chief Executive Officer

Well, thank you all for joining us. We appreciate the opportunity to discuss our quarterly results with you. Enjoy the rest of your summer, and we look forward to seeing many of you at conferences this fall.

Operator, Operator

That concludes today's presentation. You may now disconnect.