Host Hotels & Resorts : Fourth Quarter 2020 Earnings Press Release

SOURAV GHOSH	TEJAL ENGMAN
Chief Financial Officer	Investor Relations
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Host Hotels & Resorts, Inc. Reports Results for 2020

BETHESDA, MD; February 18, 2021 - Host Hotels & Resorts, Inc. (NASDAQ: HST) (the "Company"), the nation's largest lodging real estate investment trust ("REIT"), today announced results for the fourth quarter and full year 2020.

OPERATING RESULTS1

(unaudited, in millions, except per share and hotel statistics)

Quarter ended December 31,2020

2019

Percent ChangeYear ended December 31,2020

2019

Percent ChangeRevenues ............................................. $ All owned hotel revenues (pro forma) (1) Net income (loss) .................................. EBITDAre (1) ......................................... Adjusted EBITDAre (1) ........................... All owned hotel (pro forma) Total

• 267 $

1,334

• (80.0)% $

• 1,620 $

• 5,469 (70.4)%

  266

  1,308

  (66)

  81

  (53)

  355

  (32)

  RevPAR - Constant US$ ................ All owned hotel (pro forma) RevPAR -

  Constant US$ .................................

  61.49 38.09

  355 306.42 187.83

  (79.7)% N/M N/M N/M

  1,604

• 5,190 (69.1)%

  (741)

  (233)

  (168)

  932 1,538 1,534

  N/M N/M N/M

  (79.9)%

  (79.7)%

  93.70 57.17

• 306.40 (69.4)%

• 192.45 (70.3)%Diluted earnings (loss) per common share .............................................. NAREIT FFO per diluted share (1) ......... Adjusted FFO per diluted share (1) ........

(0.09) (0.07) (0.02)

0.11 0.33 0.41

N/M N/M N/M

(1.04) (0.31) (0.17)

1.26 1.70 1.78

N/M N/M N/M

*Additional detail on the Company's results, including data for 22 domestic markets and top 40 hotels by Total RevPAR, is available in the Year End 2020 Supplemental Financial Information available on the Company's website atwww.hosthotels.com.

James F. Risoleo, President and Chief Executive Officer, said, "We continued to grow sequential revenues while minimizing operating expenses in the fourth quarter and further reduced our net loss and hotel-level operating losses from third-quarter levels. With accelerating vaccine deployment, decreasing weekly COVID-19 case counts and the easing of lockdowns, we are encouraged by recent booking activities. In January, we saw year-over-year increases in group bookings for future periods and near-term transient demand is continuing to show signs of improvement. We are optimistic that travel and tourism will continue to pick up as the pandemic recedes and expect our hotel portfolio to return to profitability in the aggregate sometime during the second half of 2021 based on hotel-level EBITDA."

Risoleo continued, "We entered 2021 with $2.5 billion dollars in total available liquidity and remain focused on minimizing cash burn and preserving liquidity while increasing financial flexibility to create long-term value for our stockholders. On this front, we have secured a best-in-class second amendment to our credit agreement that extends our covenant waiver period while further enhancing our ability to opportunistically invest in value-creation opportunities. We also remain focused on our key strategic objectives of redefining our operating model and strategically allocating capital to accelerate our EBITDA recovery and deliver long-term growth for our stockholders."

(1)NAREIT Funds From Operations ("FFO") per diluted share, Adjusted FFO per diluted share, EBITDAre, Adjusted EBITDAre and all owned hotel results (pro forma) are non-GAAP (U.S. generally accepted accounting principles) financial measures within the meaning of the rules of the Securities and Exchange Commission ("SEC"). See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

N/M = Not meaningful

HIGHLIGHTS:

Results for Fourth Quarter 2020

• • Recorded a GAAP net loss of $66 million in the fourth quarter 2020 compared to a net loss of $316 million in the third quarter, reflecting a relative improvement in hotel results and a fourth quarter gain on asset sales.

• • Reduced hotel-level operating loss by 23% compared to third quarter 2020 due to a sequential improvement in RevPAR and operations and improved year-over-year RevPAR declines each quarter since the second quarter of 2020.

• • Achieved break-even or positive hotel-level operating profit at 20 of its hotels, representing 24% of rooms, in the fourth quarter of 2020, an increase from 14 hotels, representing 13% of rooms, achieved in the third quarter.

• • Recorded a gain on sale of assets of approximately $195 million in the fourth quarter as a result of completing the previously announced sales of the Newport Beach Marriott Hotel & Spa for $216 million and 29 acres of land adjacent to The Phoenician hotel for approximately $66 million.

• • Ended the quarter with total available liquidity of approximately $2.5 billion, including FF&E escrow reserves of $139 million.

Progress in 2021

• • Achieved RevPAR of approximately $42 for January 2021 based on preliminary estimates, with performance driven by Sun Belt markets as well as Washington, D.C.

• • On January 21, 2021, celebrated the opening of the AC Hotel Scottsdale North, a 165-room select-service hotel that was developed by the Company on an underutilized parking lot alongside The Westin Kierland Resort & Spa. The Company now has a total of 80 consolidated hotels, of which 76 hotels, representing 94% of the Company's room count, are open as of February 18, 2021.

• • On February 9, 2021, the Company amended its credit facility to extend the covenant waiver period through the first quarter of 2022 as well as to further modify the covenant levels required after the waiver period ends and to provide additional flexibility with regard to acquisitions, asset sales, capital expenditures and mandatory prepayment without any changes to the existing pricing grid. Additional details of the terms were provided in a press release published February 10, 2021.

OPERATING ACTIVITIES CASH AND CASH BURN2

Significant components of the Company's total cash burn are (in millions):

Quarter ended	Quarter ended
December 31, 2020	September 30, 2020
Net loss ................................................................................................................ $	(66)	$	(316)
GAAP net cash used in operating activities ..........................................................	(143)	(149)
Cash burn from operations ...................................................................................	(149)	(183)
Cash burn (2) .........................................................................................................	(264)	(267)
Components of cash burn:
Hotel-level operating loss (2) ............................................................................	(75)	(97)
Interest payments (3) ........................................................................................	(50)	(27)
Cash corporate and other expenses ...............................................................	(12)	(15)
Net proceeds from (payments to) unconsolidated operations .........................	9	(1)
Severance at hotel properties .........................................................................	(21)	(43)
Cash burn from operations ........................................................................	(149)	(183)
Capital expenditures .......................................................................................	(115)	(84)

For the fourth quarter, improvement in RevPAR and operations offset the anticipated increase in cash expenditures for interest and capital expenditures, as well as less Employee Retention Credit ("ERC") received. Fourth quarter cash burn

• (2) Hotel-level operating loss and cash burn are non-GAAP financial measures within the meaning of the rules of the SEC. See the Notes to Financial Information on why the Company believes these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures.

• (3) Interest payments for the fourth and third quarter do not include cash debt extinguishment costs of $8 million and $26 million, respectively, which are considered a financing activity on the Company's statement of cash flows.

also benefited from a $10 million distribution received from the Company's joint venture that owns a timeshare in Hawaii. Until such time as COVID-19 case counts and hospitalizations decline, the Company anticipates that operations will continue to be significantly reduced at its hotel properties. Therefore, while forecasting remains difficult due to the uncertainty surrounding the on-going pandemic and minimal visibility into future results, the Company believes that hotel-level operations in the first quarter of 2021 will be commensurate with the fourth quarter of 2020 and anticipates the portfolio will return to profitability in the aggregate based on hotel-level EBITDA sometime during the second half of the year when vaccines for COVID-19 are expected to become more widely available. The Company estimates in the first quarter of 2021:

• (i) the average monthly GAAP cash used in operating activities would be approximately $57 million at the midpoint, which includes estimated interest, corporate-level expenses, and cash timing adjustments;

• (ii) monthly cash burn from operations would be approximately $49 million to $54 million, and total cash burn, which includes estimated monthly capital expenditures, would be $83 million to $93 million(2).

OPERATING RESULTS

Due to low occupancy levels and/or state mandates, operations remain suspended at four hotels in the Company's portfolio as of February 18, 2021. The Company has provided a complete list of these suspended hotels on page 31 of its Year End 2020 Supplemental Financial Information available on the Company's website atwww.hosthotels.com.

The following presents the monthly pro forma hotel operating results for the full portfolio during the periods presented:

October October 2020 2019

ChangeNovember November December December 2020 2019 Change 2020 2019

Change

Number of hotels ........................ Number of rooms ........................

79 46,142

79 46,142

79 46,142

79 46,142

79 46,142

79 46,142

Average Occupancy Percentage

21.3 %

82.5%

(61.2pts)Average Room Rate ................... $ 177.67

• $ 254.80 (30.3)% $

  RevPAR .....................................

  $ 37.77

• $ 210.10 (82.0)% $

19.7% 189.67 37.38

75.8%

(56.1 pts)

$ $

• 238.93 (20.6 )% $

• 181.15 (79.4 )%

$

17.3% 226.32 39.10

70.3%

(53.0pts)

$ $

• 244.88 (7.6)%

• 172.04 (77.3)%

The following presents the monthly pro forma hotel operating results for the hotels without suspended operations during the periods presented:3

October 2020

November 2020

December 2020

Number of hotels(4) ............................................................................... Number of rooms ...................................................................................

72 41,822

75 43,383

75 43,383

Average Occupancy Percentage ........................................................... Average Room Rate .............................................................................. RevPAR ................................................................................................

$ $

22.9 % 175.45 40.22

20.9%

18.3%

$ $

189.67 $ 226.43

39.56 $ 41.54

The Company has worked with its hotel operators to take the following actions to mitigate the operational impact of the COVID-19 pandemic:

• • Reduced portfolio-wide hotel operating costs by over 65%, excluding severance, in the fourth quarter compared to the prior year, by continuing to suspend or scale back operations at hotels.

  • o Furloughed employees received healthcare benefits of approximately $27 million in the fourth quarter and approximately $112 million for the full year.

  • o During the fourth quarter 2020, approximately $13 million of furlough costs were accrued, to be paid in the first quarter of 2021.

  • o In addition, the Company's hotel operators recorded a $15 million credit related to the ERC in the fourth quarter and $39 million for the full year, that, under the CARES Act, partially offset the costs for the operator's furloughed hotel employees and reduced hotel-level operating expenses.

  • o Furlough costs are expected to continue to decline as a result of the workforce reconfigurations, noted below. The related ERC is also expected to decline.

(4)Represents the hotels that were accepting reservations during the entirety of the month. Excludes the seven, four, and four hotels with suspended operations in the months of October, November and December, respectively.

• • Re-evaluated the workforce structure and implemented changes that are expected to lead to a more efficient operating model in the long term. As a result, the Company recorded severance costs of approximately $21 million in the fourth quarter of 2020 and $65 million for the full year, with no further severance currently expected.

• • Reduced full year 2020 corporate expenses by nearly 17% compared to the prior year.

HOTEL BUSINESS MIX UPDATE

The Company's customers fall into three broad groups: transient, group and contract business, which accounted for approximately 61%, 35%, and 4%, respectively, of its 2019 room sales.

During the fourth quarter, demand continued to be primarily driven by drive-to and resort destinations. The following are the sequential results of the Company's consolidated portfolio, including all owned hotels at December 31, 2020, for transient, group and contract business:

Quarter ended December 31, 2020

Quarter ended September 30, 2020

Room nights (in thousands) ........... Percentage change in room nights vs. same period in 2019 Room Revenues (in millions) ......... Percentage change in revenues vs. same period in 2019 ..........

Transient 585

GroupContractTransientGroupContract

156

83

523

127

74

(70.1)%

(86.0)%

(47.1)%

(75.4)%

(88.7)%

(57.7)%

$

126

$

24

$

12

$

96

$

17

$

11

(74.9)%

(91.0)%

(63.6)%

(81.1)%

(93.0)%

(68.7)%

CAPITAL EXPENDITURES

The following presents the Company's 2020 capital expenditures spend and forecast for 2021 (in millions):

Year ended December 31, 2020 Actuals

2021 Full Year ForecastLow-end of rangeHigh-end of rangeROI - Marriott transformational capital program ............. $ ROI - All other ROI projects ............................................ Total ROI project spend .................................................. Renewals and Replacements .........................................

175

$

110 $ 140

168

165 185

343

275 325

156

100 150

Total Capital Expenditures .............................................

$

499

$

375 $ 475

In 2020, the Company prioritized major capital projects in assets and markets that are expected to recover faster, such as leisure and drive-to destinations, as well as previously announced major return on investment projects and continued completion of the Marriott transformational capital program to take advantage of reduced demand. The Company is utilizing the low occupancy environment to accelerate certain projects and minimize future disruption. The Company believes the renovations will position these hotels to capture additional revenue during the economic recovery. Major projects completed in 2020 include:

• • Marriott transformational capital program completions at the Minneapolis Marriott City Center, San Antonio Marriott Rivercenter, and JW Marriott Atlanta Buckhead;

• • Resort renovations at the Hyatt Regency Maui Resort and Spa and The Don Cesar in St. Pete Beach; and

• • New hotel construction completion of the AC Hotel Scottsdale North.

Planned 2021 projects include:

• • Marriott transformational capital program completions at The Ritz-Carlton Amelia Island, New York Marriott Marquis, Houston Marriott Medical Center, and Orlando World Center Marriott;

• • Value enhancing investments including completion of the luxury villa expansion at Andaz Maui at Wailea Resort and a new waterpark at The Ritz-Carlton Golf Resort, Naples;

• • Commencement of a tower expansion and extensive guestroom renovation at The Ritz-Carlton, Naples; and

• • Resort renovations at the Hyatt Regency Coconut Point Resort and Spa.

The Company received approximately $19 million in operating profit guarantees in 2020, under the Marriott transformational capital program, including $6 million that was received in the fourth quarter, and expects to receive approximately $16