HOST HOTELS & RESORTS L.P.

Previous wording

Host Inc. is the largest lodging REIT in NAREIT’s composite index and one of the largest owners of luxury and upper upscale hotels. As of February 21, 2025, we own 81 hotels in the United States, Canada and Brazil and have minority ownership interests in an additional 40 hotels through joint ventures in the United States and in India. These hotels are operated primarily under brand names that are among the most respected and widely recognized in the lodging industry. Most of our hotels are located in central business districts of major cities, near airports and in resort/conference destinations.

Current wording

Host Inc. is the largest lodging REIT in NAREIT’s composite index and one of the largest owners of luxury and upper upscale hotels. As of February 20, 2026, we own 76 hotels in the United States, Canada and Brazil and have minority ownership interests in an additional 90 hotels through joint ventures in the United States. These hotels are operated primarily under brand names that are among the most respected and widely recognized in the lodging industry. Most of our hotels are located in central business districts of major cities, near airports and in resort/conference destinations.

Previous wording

Our customers fall into three broad groups: transient business, group business and contract business, which accounted for approximately 60%, 36%, and 4%, respectively, of our 2024 room sales. For a discussion of our customer categories, see “Item 1 Business – Our Customers”.

Current wording

Our customers fall into three broad groups: transient business, group business and contract business, which accounted for approximately 61%, 34%, and 5%, respectively, of our 2025 room sales. For a discussion of our customer categories, see “Item 1 Business – Our Customers”.

Previous wording

Operations from our domestic portfolio account for approximately 98% of our total revenues and 2% relate to our five hotels in Canada and Brazil. The following table presents the components of our hotel revenues as a percentage of our total revenue:

Current wording

Hotel revenues represented approximately 98% of our total 2025 revenues, while the remaining 2% related to condominium sales. Operations from our domestic portfolio account for approximately 98% of our total hotel revenues and 2% relate to our five hotels in Canada and Brazil. The following table presents the components of our hotel revenues as a percentage of our total hotel revenues:

Previous wording

Hotel operating expenses represent approximately 99.7% of our total operating costs and expenses. The following table presents the components of our hotel operating expenses as a percentage of our total operating costs and expenses:

Current wording

Hotel operating expenses represent approximately 97% of our total operating costs and expenses. The following table presents the components of our hotel operating expenses as a percentage of our total hotel operating expenses:

Previous wording

The expense components listed above are based on those presented in our consolidated statements of operations. It also is worth noting that wage and benefit costs are spread among various line items. Taken separately, these costs represent approximately 57% of our rooms, food and beverage, and other departmental and support expenses.

Current wording

The expense components listed above are based on those presented in our consolidated statements of operations. It also is worth noting that wage and benefit costs are spread among various line items. Taken separately, these costs represent approximately 58% of our rooms, food and beverage, and other departmental and support expenses.

Previous wording

•NAREIT Funds From Operations (“FFO”) and Adjusted FFO per diluted share. We use NAREIT FFO and Adjusted FFO per diluted share as supplemental measures of company-wide profitability. NAREIT adopted FFO to promote an industry-wide measure of REIT operating performance. We also adjust NAREIT FFO for gains and losses on extinguishment of debt, certain acquisition costs, litigation gains or losses outside the ordinary course of business and severance costs outside the ordinary course of business.

Current wording

•NAREIT Funds From Operations (“FFO”) and Adjusted FFO per diluted share. We use NAREIT FFO and Adjusted FFO per diluted share as supplemental measures of company-wide profitability. NAREIT adopted FFO to promote an industry-wide measure of REIT operating performance. We also adjust NAREIT FFO for gains and losses on extinguishment of debt, non-cash stock-based compensation, certain acquisition costs, litigation gains or losses outside the ordinary course of business and severance costs outside the ordinary course of business.

Previous wording

•EBITDA, EBITDAre and Adjusted EBITDAre. Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) is a supplemental measure of our operating performance and facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. NAREIT adopted EBITDA for real estate (“EBITDAre”) in order to promote an industry-wide measure of REIT operating performance. We also adjust EBITDAre for property insurance gains and property damage losses, certain acquisition costs, litigation gains or losses outside the ordinary course of business and severance costs outside the ordinary course of business (“Adjusted EBITDAre”).

Current wording

•EBITDA, EBITDAre and Adjusted EBITDAre. Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) is a supplemental measure of our operating performance and facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. NAREIT adopted EBITDA for real estate (“EBITDAre”) in order to promote an industry-wide measure of REIT operating performance. We also adjust EBITDAre for property insurance gains and property damage losses, non-cash stock-based compensation, certain acquisition costs, litigation gains or losses outside the ordinary course of business and severance costs outside the ordinary course of business (“Adjusted EBITDAre”).

Previous wording

(1)EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share and comparable hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. See “Non-GAAP Financial Measures” and “Comparable Hotel Operating Statistics and Results” for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics are based on 78 comparable hotels as of December 31, 2024 and include adjustments for non-comparable hotels, dispositions and acquisitions. See "Comparable Hotel RevPAR Overview" for results of the portfolio based on our ownership period, without these adjustments.

Current wording

(1)EBITDAre, Adjusted EBITDAre, NAREIT FFO per diluted share and Adjusted FFO per diluted share and comparable hotel operating results (including hotel revenues and hotel EBITDA and margins) are non-GAAP financial measures within the meaning of the rules of the SEC. See “Non-GAAP Financial Measures” and “Comparable Hotel Operating Statistics and Results” for more information on these measures, including why we believe these supplemental measures are useful, reconciliations to the most directly comparable GAAP measure, and the limitations on the use of these supplemental measures. Additionally, comparable hotel results and statistics are based on 76 comparable hotels as of December 31, 2025 and include adjustments for non-comparable hotels, dispositions and acquisitions. See "Comparable Hotel RevPAR Overview" for results of the portfolio based on our ownership period, without these adjustments.

Previous wording

Comparable hotel Total RevPAR increased 2.1% for the year due primarily to improvements in food and beverage revenues driven by the strength in group business, as well as strong spa and other ancillary revenues. The growth was led by our Denver, Nashville and Northern Virginia markets with increases of 13.2%, 12.9% and 10.3%, respectively, compared to 2023, through a combination of rate and occupancy growth, driven by strong group demand. Our hotels in Jacksonville and New Orleans also outperformed our portfolio with comparable hotel Total RevPAR increases of 7.2% and 7.1%, respectively. These strong performances were offset by comparable hotel Total RevPAR declines at our Atlanta and San Francisco/San Jose markets of 9.4% and 5.3%, respectively. The declines were driven primarily by a decrease in business travel and short-term transient demand, with Atlanta also affected by disruption from renovations. In addition, comparable hotel Total RevPAR at our Maui market declined by 11.0% due to the continuing impacts of the August 2023 Maui wildfires (see “Statement of Operations Results and Trends”).

Current wording

Comparable hotel Total RevPAR increased 4.2% for the year, primarily due to the rate increases and improvements in food and beverage revenues driven by strength in transient business, as well as strong spa and other ancillary revenues. The growth was led by our Atlanta and Maui markets with increases of 16.2% and 13.7%, respectively, compared to 2024, as Atlanta benefitted from the completion of renovation projects underway in 2024 and Maui experienced a strong recovery in 2025 from the 2023 wildfires. In addition, comparable hotel Total RevPAR increased at some of our larger markets, including San Francisco and New York with increases of 12.7% and 12.2%, respectively, due to strong demand from city-wide events and transient demand. These strong performances were partially offset by comparable hotel Total RevPAR declines at our Austin and San Diego markets of 17.2% and 5.3%, respectively. The declines in these markets were driven primarily by large-scale renovation projects at certain properties, while Austin was further impacted by the multi-year closure of the city's convention center that started earlier in 2025.

Previous wording

As expected, we faced higher wages and inflationary pressures compared to 2023. This, coupled with Maui performance, led to an operating profit margin (calculated based on GAAP operating profit as a percentage of GAAP revenues) decline of 20 basis points to 15.4% in 2024, compared to 15.6% in 2023, despite an increase in net gains on insurance settlements. Operating profit margins under GAAP are also significantly affected by several items, including acquisitions, dispositions, depreciation expense and corporate expenses. Our comparable hotel EBITDA margins, which exclude these items, declined 60 basis points to 29.2% for the year, down from 29.8% in 2023 due to the trends discussed above.

Current wording

As expected, margins during the year were affected by an increase in wages expense compared to 2024, though increases in room rates were able to offset the impact. This, coupled with an $86 million decrease in net gains on insurance settlements, led to an operating profit margin (calculated based on GAAP operating profit as a percentage of GAAP revenues) decline of 140 basis points to 14.0% in 2025, compared to 15.4% in 2024. Operating profit margins under GAAP are also significantly affected by several items, including acquisitions, dispositions, depreciation expense and corporate expenses. Our comparable hotel EBITDA margins, which exclude these items, declined 40 basis points to 28.9% for the year, down from 29.3% in 2024 as operational improvements were offset by the increase in wages expense compared to 2024 and a decrease in net gains on insurance settlements of $21 million for comparable hotels.

Previous wording

Net Income, Adjusted EBITDAre and Adjusted FFO per Diluted Share

Current wording

Net Income, Adjusted EBITDAre, Diluted Earnings per Common Share, and Adjusted FFO per Diluted Share

Previous wording

Net income for Host Inc. was $707 million, a decrease of $45 million, or 6.0%, from the prior year, reflecting the decrease in gains on asset sales of $71 million and an increase in interest expense of $24 million, partially offset by an increase in net gains on insurance settlements of $24 million. These results led to a 4.8% decrease in diluted earnings per common share for Host Inc. to $0.99. Adjusted EBITDAre, which excludes gain on sale of assets and interest expense, among other items, increased 1.7% to $1,656 million as a result of operations from our acquisitions and the resumption of operations at The Ritz-Carlton, Naples, which was closed during the first half of 2023, despite a $43 million decrease in business interruption gains. Adjusted FFO per diluted share increased 2.6% to $1.97 in 2024, reflecting the increase in Adjusted EBITDAre as well as the impact of share repurchases in 2024 and 2023.

Current wording

Net income for Host Inc. increased $69 million, or 9.8%, to $776 million, primarily due to improvements in operating results and $148 million of gains on asset sales during the year, partially offset by the decrease in net gains on insurance settlements noted above and increases in wage and benefit expense, interest expense and income taxes. In addition, $17 million of net income was recognized during 2025 from the sale of 16 condominium units in the development adjacent to the Four Seasons Resort Orlando at Walt Disney® Resort. These changes, combined with the benefit of share repurchases in 2025 and 2024, led to an 11.1% increase in diluted earnings per common share for Host Inc. to $1.10. Adjusted EBITDAre, which excludes gain on property insurance, gain on sale of assets and interest expense, among other items, increased 4.6% to $1,757 million, reflecting improvements in revenues from operations and the condominium sales, partially offset by the decline in business interruption proceeds and increases in wages and benefits. Adjusted FFO per diluted share increased 3.5% to $2.07 in 2025, reflecting the changes in Adjusted EBITDAre and the impact of share repurchases in 2025 and 2024, partially offset by increases in interest expense and income taxes.

Previous wording

Hotel supply growth is anticipated to remain below the historical average, although we expect to see above-average growth in a few markets where our hotels are located, such as Nashville and Austin. Supply chain challenges have resulted in project delays across the U.S., and a tight lending environment has created construction financing challenges for future projects. We anticipate that the construction pipeline will remain modest until macroeconomic uncertainty moderates and interest rates decline further.

Current wording

Hotel supply growth is anticipated to remain below the historical average, although we expect to see above-average growth in a few markets where our hotels are located. Supply chain challenges, which may be exacerbated by current tariffs and trade policies, have resulted in project delays across the U.S., and a prolonged tight lending environment has created construction financing challenges for future projects. We anticipate that the construction pipeline will remain modest until macroeconomic uncertainty moderates and interest rates decline further.

Previous wording

Based on the trends noted, we expect comparable hotel RevPAR growth for the full year 2025 will be between 0.5% and 2.5%. In addition, we expect margins to decline in comparison to 2024, driven by higher wages and benefits, including increases driven by new union contracts in certain cities, as well as growth in insurance and real estate taxes.

Current wording

Based on the trends noted, we expect comparable hotel RevPAR growth for the full year 2026 will be between 2.0% and 3.5%.

Previous wording

As discussed above, the current outlook for the lodging industry remains uncertain, reflecting varying analyst assumptions surrounding the impact of higher interest rates, inflation, the recovery in Maui and escalating geopolitical conflicts. Therefore, there can be no assurances as to lodging demand performance for any number of reasons, including, but not limited to, the slow recovery in Maui or deteriorating macroeconomic conditions. For more information on the risks that can affect our future results, see Part I, Item 1A. “Risk Factors.”

Current wording

As discussed above, the current outlook for the lodging industry remains uncertain, reflecting varying analyst assumptions surrounding the impact of trade policy, elevated inflation and interest rates, concerns regarding U.S. economic growth, the current travel imbalance due to the decrease in inbound travel to the United States and escalating geopolitical conflicts. Therefore, there can be no assurances as to lodging demand performance for any number of reasons, including, but not limited to, deteriorating macroeconomic conditions. For more information on the risks that can affect our future results, see Part I, Item 1A. “Risk Factors.”

Previous wording

For 2025, we intend to continue our disciplined approach to capital allocation to strengthen our portfolio and to deliver stockholder value through multiple levers, which may include, over time, acquiring hotels or investing in our portfolio. We intend to take advantage of our strong capital position and overall scale to acquire upper-upscale and luxury properties, through single asset or portfolio acquisitions, that we believe have sustainable competitive advantages to drive long-term value to the extent favorable pricing opportunities arise. At the same time, we will opportunistically sell hotels when market conditions permit. We also continue to critically analyze our portfolio to seek to take advantage of the inherent value of our real estate for its highest and best use.

Current wording

For 2026, we intend to continue our disciplined approach to capital allocation to strengthen our portfolio and to deliver stockholder value through multiple levers, which may include, over time and dependent on market conditions, acquiring hotels or investing in our portfolio. We intend to take advantage of our strong capital position and overall scale to acquire upper-upscale and luxury properties, through single asset or portfolio acquisitions, that we believe have sustainable competitive advantages to drive long-term value to the extent favorable pricing opportunities arise. At the same time, we will opportunistically sell hotels when market conditions permit. We also continue to critically analyze our portfolio to seek to take advantage of the inherent value of our real estate for its highest and best use.

Previous wording

Capital Projects. We continue to pursue opportunities to enhance asset value through select capital improvements, including projects that are designed to increase the eco-efficiency of our hotels, incorporate elements of sustainable design and replace aging equipment and systems with more efficient technology. During 2024, we spent approximately $548 million on capital expenditures, of which $260 million represented return on investment (“ROI”) capital expenditures, $252 million represented renewal and replacement projects and $36 million was for hurricane restoration work. This included completing the final steps of our restoration efforts following Hurricane Ian of bringing the permanent central energy plant online at The Ritz-Carlton, Naples. For all properties impacted by Hurricane Ian, we estimate the total property reconstruction and remediation costs, including significant enhancements, was approximately $315 million, of which approximately 30% related to remediation costs. In 2024, we reached a final settlement with our insurance providers on covered costs related to damage and disruption caused by Hurricane Ian, which totaled $308 million. In total, $99 million of the insurance receipts were recognized as a gain on business interruption. Another major capital project completed during the year was the repositioning renovations at The Singer Oceanfront Resort, Curio Collection by Hilton, including rooms, public space, and food and beverage outlets.

Current wording

Capital Projects. We continue to pursue opportunities to enhance asset value through select capital improvements, including projects that are designed to increase the eco-efficiency of our hotels, incorporate elements of sustainable design and replace aging equipment and systems with more efficient technology. During 2025, we spent approximately $644 million on capital expenditures, of which $282 million represented return on investment (“ROI”) capital expenditures, $287 million represented renewal and replacement projects and $75 million was for hurricane and other restoration work. This included our restoration efforts at The Don CeSar following Hurricanes Helene and Milton, for which we estimate the total property reconstruction and remediation costs, including resiliency enhancements, was approximately $105 million, of which approximately 30% related to remediation costs. The Don CeSar reopened to guests on March 26, 2025, as part of a phased reopening, with the final amenities reopened during the third quarter of 2025. As of December 31, 2025, we have received total insurance proceeds of $73 million related to our claims, of which $24 million has been recognized as business interruption proceeds. Subsequent to year-end, we received an additional $8 million of insurance proceeds, of which $7 million related to business interruption. Final determination on insurance claims related to The Don CeSar is expected in 2026. In addition to the hurricane restoration at The Don CeSar, in 2025 we also completed a planned 10,000 square foot ballroom expansion at the property and, subsequent to year end, completed the expansion project at The Phoenician, A Luxury Collection Resort, to add a 20-key, eight-villa development at the Canyon Suites.

Previous wording

In addition, hotels within certain regions are subject to environmental and weather-related events, including hurricanes, wildfires, floods, rising sea levels, mudslides, earthquakes, and other natural perils. To mitigate some of these physical risks, we execute capital expenditure projects, including replacements and restorations of exterior walls, doors and windows, roofs, grounds, relocated/elevated critical equipment and distributed energy systems to further increase the resilience of our hotels. A portion of our capital expenditures for 2024 include these types of projects, which we expect to continue in future years. While the number of projects and overall cost varies from year to year, on average approximately 6% our capital expenditures have related to these types of projects over the past six years. The enhanced resilience projects implemented during the reconstruction of The Ritz-Carlton, Naples were successful in minimizing damage to the resort during the two hurricanes that made landfall in 2024; however, no assurances can be made as to whether these enhanced resiliency projects will be successful in mitigating the damage from future environmental and weather-related events, especially as the frequency and severity of these events are expected to increase over time.

Current wording

Hotels within certain regions are subject to environmental and weather-related events, including hurricanes, wildfires, floods, rising sea levels, mudslides, earthquakes, and other natural perils. To mitigate some of these physical risks, we execute capital expenditure projects, including replacements and restorations of exterior walls, doors and windows, roofs, grounds, relocated/elevated critical equipment and distributed energy systems to further increase the resilience of our hotels. A portion of our capital expenditures for 2025 include these types of projects, which we expect to continue in future years. While the number of projects and overall cost varies from year to year, on average approximately 8% of our capital expenditures have related to these types of projects over the past six years. The enhanced resilience projects implemented during the reconstruction of The Ritz-Carlton, Naples were successful in minimizing damage to the resort during the two hurricanes that made landfall in 2024; however, no assurances can be made as to whether these enhanced resiliency projects will be successful in mitigating the damage from future environmental and weather-related events, especially as the frequency and severity of these events are expected to increase over time.

Previous wording

In collaboration with Hyatt, we initiated a transformational capital program in 2023 at six properties in our portfolio, the Grand Hyatt Atlanta in Buckhead, Grand Hyatt Washington, Manchester Grand Hyatt San Diego, Hyatt Regency Austin, Hyatt Regency Washington on Capitol Hill, and Hyatt Regency Reston. These investments are intended to position the targeted hotels to compete better in their respective markets while seeking to enhance long-term performance. During 2024, we spent approximately $155 million on this program, which is included in ROI capital projects. The total investment is expected to be approximately $550 million to $600 million, two-thirds of which we were planning to invest as part of our capital plan over the next few years. We expect to invest between $125 million and $200 million per year on this program. Hyatt has agreed to provide additional priority returns on the agreed upon investments and operating profit guarantees totaling $40 million to offset expected business disruptions. We received approximately $9 million of the operating profit guarantees in 2024 from Hyatt and expect to receive approximately $27 million in 2025.

Current wording

In collaboration with Hyatt, we initiated a transformational capital program in 2023 at six properties in our portfolio. These investments are intended to position the targeted hotels to compete better in their respective markets while seeking to enhance long-term performance. The total investment is expected to be approximately $550 million to $600 million, two-thirds of which we were planning to invest as part of our capital plan over the next few years. We expect to invest between $125 million and $200 million per year on this program. Hyatt has agreed to provide additional priority returns on the agreed upon investments and operating profit guarantees totaling $40 million to offset expected business disruptions. Of the six properties included in the program, we completed the projects at Grand Hyatt Atlanta in Buckhead,

Previous wording

For 2025, we expect total capital expenditures of $580 million to $670 million, consisting of ROI projects of approximately $270 million to $315 million, renewal and replacement expenditures of $240 million to $275 million, and $70 million to $80 million for the restoration work from the damage caused by Hurricanes Helene and Milton. The ROI projects include approximately $170 million to $180 million for the Hyatt transformational capital program.

Current wording

For 2026, we expect total capital expenditures of $525 million to $625 million, consisting of ROI projects of approximately $250 million to $300 million, renewal and replacement expenditures of $275 million to $325 million. The ROI projects include approximately $175 million to $210 million for the Hyatt and Marriott transformational capital programs. We also plan to commence a comprehensive renovation at The Westin South Coast Plaza consisting of rooms, meeting space and lobby updates.

Previous wording

Also in 2023, we announced and broke ground on a project to develop and sell 40 fee-simple condominiums on a five-acre development parcel to be Four Seasons-branded and managed residences at the Four Seasons Resort Orlando at Walt Disney World® Resort. Construction of the mid-rise building is expected to be completed in the fourth quarter of 2025 and the villas are expected to complete in the first half of 2026. In 2024, we spent $64 million in development costs for this project and began marketing the units, resulting in buyer commitments for nearly one-third of the units. For 2025, the development costs for this project are expected to be $75 million to $85 million.

Current wording

Construction continued on the development of 40 fee-simple condominiums on a five-acre development parcel to be Four Seasons-branded and managed residences adjacent to the Four Seasons Resort Orlando at Walt Disney World® Resort. Construction of the mid-rise building was completed in 2025, with condominium closings commencing in the fourth quarter, and the villas are expected to be completed in the first half of 2026. In 2025, we spent $88 million in development costs for this project and expect development costs of approximately $15 million in 2026 to complete the project. In 2025, we recognized $99 million of revenues from the sale of 16 condominium units.

Previous wording

We believe that our ability to maintain an investment grade balance sheet and well-laddered maturity schedule is an important factor in our investment strategy. As of December 31, 2024, we have a debt balance of $5.1 billion, our weighted average interest rate is 4.7%, and our weighted average debt maturity is 5.2 years.

Current wording

We believe that our ability to maintain an investment grade balance sheet and well-laddered maturity schedule is an important factor in our investment strategy. As of December 31, 2025, we have a debt balance of $5.1 billion, our weighted average interest rate is 4.8%, and our weighted average debt maturity is 5.1 years.

Previous wording

Share Repurchase and Dividends. In 2024, we repurchased 6.3 million shares at an average price of $16.99 per share, exclusive of commissions, for a total of $107 million, under our share repurchase program. As of December 31, 2024, we have $685 million available for repurchase under the program.

Current wording

Share Repurchase and Dividends. In 2025, we repurchased 13.1 million shares at an average price of $15.68 per share, exclusive of commissions, for a total of $205 million, under our share repurchase program. As of December 31, 2025, we have $480 million available for repurchase under the program.

Previous wording

During 2024, Host Inc.'s Board of Directors declared dividends totaling $0.90 per share on its common stock, including a fourth quarter special dividend of $0.10 per share. Accordingly, Host L.P. made distributions of $0.9193446 per unit with respect to its common OP units for 2024. On February 19, 2025, we announced a regular quarterly cash dividend of $0.20 per share on our common stock. The dividend will be paid on April 15, 2025 to stockholders of record on March 31, 2025. The amount of any future dividends will be based on our policy of distributing, over time, 100% of our taxable income and will be determined by Host Inc.’s Board of Directors.

Current wording

During 2025, Host Inc.'s Board of Directors declared dividends totaling $0.95 per share on its common stock, including a fourth quarter special dividend of $0.15 per share. Accordingly, Host L.P. made distributions of $0.9704193 per unit with respect to its common OP units for 2025. On February 18, 2026, we announced a regular quarterly cash dividend of $0.20 per share on our common stock. The dividend will be paid on April 15, 2026 to stockholders of record on March 31, 2026. The amount of any future dividends will be based on our policy of distributing, over time, 100% of our taxable income and will be determined by Host Inc.’s Board of Directors.

Previous wording

(1)Amounts represent total operating costs and expenses from our audited consolidated statements of operations, less corporate and other expenses and net gain on insurance settlements.

Current wording

(1)Amounts represent total operating costs and expenses from our audited consolidated statements of operations, less cost of goods sold, corporate and other expenses and net gain on insurance settlements.

Previous wording

Statement of Operations Results and Trends

Current wording

Statements of Operations Results and Trends

Previous wording

Operations improved in 2024 compared to 2023, reflecting (i) the operations of our recent acquisitions, including 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown acquired in April 2024, 1 Hotel Central Park acquired in July 2024, and The Ritz-Carlton O'ahu, Turtle Bay acquired in July 2024 (collectively, the "2024 Acquisitions"); (ii) strong group business which led to improvements in food and beverage revenues, and (iii) the resumption of operations at The Ritz-Carlton, Naples, which was closed during the first half of 2023 as a result of Hurricane Ian. The improvements were partially offset by a slow recovery in Maui and the closures of Alila Ventana Big Sur, which closed at the end of March 2024 and reopened on May 22, 2024, following the collapse of a portion of Highway 1 in California, and The Don CeSar, which closed on September 25, 2024 and remains closed due to Hurricanes Helene and Milton.

Current wording

Operations improved in 2025 compared to 2024, reflecting (i) an increase in room rates driven by strong transient demand and continued strength in out-of-room spend; (ii) the continuing recovery on Maui; (iii) a full year of operations for our 2024 acquisitions, including 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown acquired in April 2024, 1 Hotel Central Park acquired in July 2024, and The Ritz-Carlton O'ahu, Turtle Bay acquired in July 2024 (collectively, the "2024 Acquisitions"); and (iv) $17 million of net income recognized during 2025 from the sale of 16 condominium units in the development adjacent to the Four Seasons Resort Orlando at Walt Disney® Resort. These improvements more than offset the negative impact on operations resulting from our 2025 dispositions of The Westin Cincinnati and Washington Marriott Metro Center (collectively, the "2025 Dispositions") and the closure of The Don CeSar from September 2024 to March 2025 due to Hurricanes Helene and Milton.

Previous wording

Rooms. Total rooms revenues increased $182 million, or 5.6%, in 2024, reflecting the operations of the 2024 Acquisitions and the reopening of The Ritz-Carlton, Naples. Rooms revenues at our comparable hotels increased $40 million, or 1.2%, driven by an increase in average room rates compared to 2023.

Current wording

Rooms. Total rooms revenues increased $182 million, or 5.3%, in 2025, reflecting a full year of operations for the 2024 Acquisitions and an increase in rooms revenue at our comparable hotels of $120 million, or 3.5%, primarily due to an increase in average room rate of 4.4% driven by transient demand.

Previous wording

Other revenues. Total other revenues increased $57 million, or 11.8%, in 2024, driven by results from the 2024 Acquisitions and the reopening of The Ritz-Carlton, Naples. Other revenues at our comparable hotels increased $31 million, or 6.2%, primarily due to strong spa and other ancillary revenues.

Current wording

Other revenues. Total other revenues increased $62 million, or 11.4%, in 2025, driven by a full year of results from the 2024 Acquisitions and an increase in other revenues at our comparable hotels of $40 million, or 7.3%, primarily due to an increase in spa, golf and other ancillary revenues, boosted by the continued recovery on Maui.

Previous wording

Our operating costs and expenses, which consist of both fixed and variable components, are affected by several factors. Rooms expenses are affected mainly by occupancy, which drives costs related to items such as housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues and are affected by occupancy and the mix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, which comprise approximately 57% of these expenses in any given year. During 2024, these expenses increased approximately 5% compared to 2023, primarily due to an overall increase in general wage rates and benefits. Wage and benefit rate inflation is expected to be approximately 6% in 2025.

Current wording

Our operating costs and expenses, which consist of both fixed and variable components, are affected by several factors. Rooms expenses are affected mainly by occupancy, which drives costs related to items such as housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses correlate closely with food and beverage revenues and are affected by occupancy and the mix of business between banquet, audio-visual and outlet sales. However, the most significant expense for the rooms, food and beverage, and other departmental and support expenses is wages and employee benefits, which comprise approximately 58% of these expenses in any given year. During 2025, these expenses increased approximately 5% on a per available room basis compared to 2024, primarily due to an overall increase in general wage rates and benefits. Wage and benefit rate inflation is expected to be approximately 5% in 2026.

Previous wording

The increases in expenses for rooms, food and beverage, other departmental and support, and management fees were generally due to the corresponding increases in revenues due to the 2024 Acquisitions, the reopening of The Ritz-Carlton, Naples, and also reflected increased expenses at our comparable hotels primarily due to increased wages and benefits, as follows:

Current wording

The increases in expenses for rooms, food and beverage, other departmental and support, and management fees were generally due to the corresponding increases in revenues due to a full year of operations from the 2024 Acquisitions, and also reflected increased expenses at our comparable hotels primarily due to increased wages and benefits, as follows:

Previous wording

Rooms. Rooms expenses increased $62 million, or 7.9%, in 2024. Our comparable hotels rooms expenses increased $33 million, or 4.1%, in 2024, driven by an overall increase in wage rates. Wages and benefits represented approximately 67% of our 2024 and 2023 rooms expenses.

Current wording

Rooms. Rooms expenses increased $57 million, or 6.7%, in 2025. Our comparable hotels rooms expenses increased $40 million, or 4.7%, in 2025, driven by an overall increase in wage rates. Wages and benefits represented approximately 67% of our 2025 and 2024 rooms expenses.

Previous wording

Food and beverage. F&B expenses increased $95 million, or 9.1%, in 2024. For our comparable hotels, F&B expenses increased $41 million, or 3.9%, in 2024. Overall, F&B costs as a percentage of revenues remained consistent year over year. Wages and benefits represented approximately 69% of our 2024 and 2023 F&B expenses.

Current wording

Food and beverage. F&B expenses increased $87 million, or 7.7%, in 2025. For our comparable hotels, F&B expenses increased $60 million, or 5.3%, in 2025. Overall, F&B costs as a percentage of revenues increased year over year, reflecting higher wages and a shift to more outlet sales, which generally have a higher cost as a percentage of revenue as compared to banquet sales. Wages and benefits represented approximately 69% of our 2025 and 2024 F&B expenses.

Previous wording

Other departmental and support expenses. Other departmental and support expenses increased $103 million, or 8.0%, in 2024. On a comparable hotel basis, other departmental and support expenses increased $62 million, or 3.2%. These increases were primarily due to higher wage expense. Wages and benefits represented approximately 41% of our 2024 and 2023 other departmental and support expenses.

Current wording

Other departmental and support expenses. Other departmental and support expenses increased $83 million, or 6.0%, in 2025. On a comparable hotel basis, other departmental and support expenses increased $46 million, or 3.3%. These increases were primarily due to higher wage expense. Wages and benefits represented approximately 42% of our 2025 and 2024 other departmental and support expenses.

Previous wording

Management fees. Total management fees increased $5 million, or 2.0%, in 2024. Base management fees, which generally are calculated as a percentage of total revenues, increased $10 million, or 6.7%, compared to 2023. At our comparable hotels, base management fees increased $6 million, or 3.8%, for 2024. Incentive management fees, which generally are based on the amount of operating profit at each hotel after we receive a priority return on our investment, decreased $5 million, primarily due to the closure of The Don CeSar, and the decrease at our comparable hotels of $3 million, or 2.8%, which was due to renovations at certain properties.

Current wording

Management fees. Total management fees increased $8 million, or 3.1%, in 2025. Base management fees, which generally are calculated as a percentage of total hotel revenues, increased $6 million, or 3.8%, compared to 2024. At our comparable hotels, base management fees increased $4 million, or 2.5%, for 2025. Incentive management fees, which generally are based on the amount of operating profit at each hotel after we receive a priority return on our investment, increased $2 million, primarily due to the increase in incentive management fees at our comparable hotels of $2 million, or 2.4%, which was due to the improved operations at our properties.

Previous wording

Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property-level expenses increased $28 million, or 7.3%, in 2024, due to increases in property insurance premiums and property taxes. Other property-level expenses at our comparable hotels increased $12 million, or 3.1%, in 2024. Other property-level expenses were partially offset by the receipt of operating profit guarantees from Marriott and Hyatt under the transformational capital programs in both 2024 and 2023.

Current wording

Other property-level expenses. These expenses generally do not vary significantly based on occupancy and include expenses such as property taxes and insurance. Other property-level expenses increased $15 million, or 3.6%, in 2025, primarily due to increases in property taxes and insurance due to the 2024 Acquisitions. Other property-level expenses at our comparable hotels increased $6 million, or 1.6%, in 2025. Other property-level expenses were partially offset by the receipt of operating profit guarantees from Marriott and Hyatt under the transformational capital programs in both 2025 and 2024.

Previous wording

General and administrative costs primarily consist of wages and benefits, travel, corporate insurance, legal fees, audit fees, building rent and systems costs. The overall decrease in corporate and other expenses for the year ended December 31, 2024 is primarily due to a decrease in litigation accruals, partially offset by an increase in systems costs and other administrative fees.

Current wording

General and administrative costs primarily consist of wages and benefits, travel, corporate insurance, legal fees, audit fees, building rent and systems costs. Corporate and other expenses increased for the year ended December 31, 2025, due primarily to an increase in compensation expense, partially offset by a decrease in litigation accruals.

Previous wording

Net gain on insurance settlements. The following table details our gain on insurance settlements for property damage and business interruption, net of property damage and remediation losses, related to Hurricanes Ian, Helene and Milton, the Maui wildfires and other weather events (in millions):

Current wording

Net gain on insurance settlements. The following table details our gain on insurance settlements for property damage and business interruption, net of property damage and remediation losses, related to Hurricanes Ian, Helene and Milton, the 2023 Maui wildfires and other weather events; the only insurance claims currently outstanding related to these matters is from Hurricanes Helene and Milton (in millions):

Previous wording

Interest expense. Interest expense increased $24 million, or 12.6%, in 2024 as compared to 2023, primarily due to higher outstanding debt balances during 2024 as we issued additional senior notes to fund our 2024 Acquisitions. The following table presents certain components of interest expense (in millions):

Current wording

Interest expense. Interest expense increased $20 million, or 9.3%, in 2025 as compared to 2024, primarily due to higher outstanding debt balances during 2025, as we issued $1.3 billion of senior note debt in 2024 to partially fund our 2024 Acquisitions and refinance $400 million of senior notes. We also refinanced $900 million of senior note debt in 2025 at slightly higher interest rates, on average. The following table presents certain components of interest expense (in millions):

Previous wording

(1)Total cash interest expense paid was $172 million and $183 million in 2024 and 2023, respectively, which includes an increase (decrease) due to the change in accrued interest of $(33) million and $2 million for 2024 and 2023, respectively.

Current wording

(1)Total cash interest expense paid was $241 million and $172 million in 2025 and 2024, respectively, which includes an increase (decrease) due to the change in accrued interest of $17 million and $(33) million for 2025 and 2024, respectively.