Host Hotels & Resorts, Inc. (HST) Earnings Call Transcript & Summary

Host Hotels & Resorts welcomes you to Investor Day 2023. To kick of our business session. Here is Jaime Marcus, Senior Vice President, Investor Relations.

Good morning everyone. Thank you so much for being here with us today. We are so excited to have you here, both in person and on the live stream. And we're looking forward to showcasing the dramatic transformation of Host Hotels & Resorts. This is the first Investor Day that we have hosted since this management team began transitioning in 2017 and we are thrilled to give you an in-depth at what makes hopes so uniquely positioned to outperform. Jim will kick things off in a few moments, but just a few housekeeping notes to start. We will have a dedicated Q&A session at the end of our programming, and you are welcome to submit a question at any point during the business session. [Operator Instructions] 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, 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, we will be discussing certain non-GAAP financial information, such as adjusted EBITDAre and EBITDA margin. You can find more information on these measures and reconciliations to the most directly comparable GAAP information in the reconciliations and supplemental financial information section of this presentation. Both President and Chief Executive Officer, to the stage to kick things off. Come on up, Jim.

Thank you, everyone. Thanks for coming. We appreciate the effort. I think it's a good thing that travel is a little complicated these days. When you all agree, the airports are crowded. People are back on planes, hotels are crowded. It really is a terrific feeling to be here in person, face to face, enjoying the experience of our iconic properties with you. Last night, we were at the Four Seasons. You see what we got here. Jamie, hang on. Speaking with experiences, I hope you had a great time at the Four Seasons last night. As you saw, the resort is in a class by itself. Between the 5-acre water park, 67,000 square feet of indoor and outdoor meeting space, the Michelin Star Capa restaurant, and the Nightly Fireworks from multiple Disney Parks, which we saw last night, is easy to understand why consumers and groups will pay $1,000 a night to stay at the resort. And after the reception last night, hopefully, you have a better understanding of what we've been talking about, as it relates to elevated group spend. We are really proud of that acquisition. Not only its performance but our execution and acquiring it. We purchased the resort for $610 million in cash in April 2021. The owners were reluctant sellers as they believe the asset was worth meaningfully more than we offered but it was the last asset in the fund, and as a result of the uncertainty created by COVID, Host was able to acquire an incredible asset at what we think was a great price. That was the second acquisition in the pool service lodging REIT space during the pandemic, a time when no one else was transacting. Just so happened, we also bought the first hotel that traded during the depths of the pandemic, the Hyatt Regency Austin, which you will hear more about later today. Many were skeptical about the acquisition metrics for the Four Seasons Orlando. In fact, the sentiment was somewhat similar to February 2019 when we acquired the 1 Hotel South Beach. Fortunately, the performance of the Four seasons Orlando has also been similar to that of the 1 Hotel. At acquisition, the property had not reached stabilization. We paid 16.8x 2019 EBITDA for the Four Seasons. And as of year-end 2022, the multiple was down to 8.4x, as you heard on the tour yesterday, the Four Seasons is an exceptional performer for us. It averages over $600 in ancillary spend per occupied room. It has developed a reputation for exceptional luxury weddings and larger events. And very importantly, the CEO of Disney prefers to stay at the resort when he is in town. Think about that one for a minute. We also recently announced our plans to develop and sell 43 simple condominiums on a 5-acre development parcel at Golden Oak adjacent to our Four Seasons resort. The development will feature a 31 unit mid-rise building and 90 tax condominium villas. We expect to invest between $150 million and $170 million on this ROI development project, and we are targeting a mid- to high teens cash-on-cash return. Construction is expected to begin in the fourth quarter of 2023. We are also very pleased with how the Marriott transformational capital program and other ROI initiatives at Orlando World Center are performing for us. This asset has been an absolute workhorse for Host, and it was our #1 EBITDA producer last year at $90 million. You're among the first to see the extensive renovations property-wide including some incredible public spaces such as a new Magnolia ballroom and a fantastic water park, both of which are on our tour later today. It's worth pointing out that the Four Seasons and World Center were meaningful contributors to our all owned hotel EBITDA last year. Both properties are excellent examples of host investment strategy realized, which is exactly what we want to illustrate for you today. Let's briefly touch on what we have planned for you. Typically, you hear from just a few of us, Sourav, Jamie, myself. Well, I think that's good, but maybe sometimes I think we talk too much. On today's docket, you'll get to hear from all of our leaders and their collective teams. That's really important to us because we have some incredible people at Host, and we think it should be important to you that you have the opportunity to understand what goes in to our decision-making process and how we get from A to B and how we create value. Our people, platform and portfolio are our competitive advantage, and as you'll see today, everything at Host is interrelated. We'll show you why that matters through a series of panels and presentations. First up is Sourav Ghosh, Executive Vice President and Chief Financial Officer, will discuss our recent operational results, our 2023 outlook and the building blocks for future EBITDA growth. That's a slide and a commentary you're going to be really interested in. Then Michael Rock, Senior Vice President and Head of Asset Management, will moderate a panel on Host unique approach to asset management. Next, Mike Lentz, Executive Vice President, Development, Design and Construction, we'll dive deeper into capital expenditures; and Michael Chang, Vice President of Energy and Sustainability, will touch on our holistic corporate responsibility program, which drives all aspects of our business. Nate Tyrrell, Executive Vice President and Chief Investment Officer; and Raj Contractor, Senior Vice President and Head of Investments, will cover the transactions landscape and our approach to capital allocation. After that, we'll take a quick break and welcome Deanne Brand, Senior Vice President of Strategy and Analytics and our Treasurer, to the stage to lead a panel on the real value of our in-house analytics capabilities. We'll conclude the business session with a Q&A session with our senior team, followed by lunch at Siro in the lobby of the hotel. And then we'll show up all the renovations at Orlando World Center before closing with a farewell reception. This morning, we're going to focus on our blue chip positioning. We'll paint a picture for you of who we are, where we've been and how we got here today, which is a very, very good place to be. We will also touch on what we see for the future and why we believe Host Hotels & Resorts is the best relative investment in the lodging REIT space today. Throughout today's sessions, we'll recap our winning track record over the past 6 years since the company began transitioning and we'll look at our continued offensive and opportunistic positioning today. Combining the two, you'll see that consistency is Host currency. That is the punchline we want you to leave here with. We are not unveiling a new plan, and there is no new direction for the company. What we have been doing has been working. So we are simply going to keep doing what we have been doing over the past 6 years. This consistency is why we believe we are best positioned to continue elevating the EBITDA growth profile of our portfolio and outperforming in the future. We believe this consistency puts Host on a path to $2 billion in adjusted EBITDAre over time, which Sourav will get into shortly. Our success is made possible by our best-in-class people, platform and portfolio. Together, they are our competitive advantage. And today, we're going to give you an inside look at them. Shining a brighter light on the Host team is always a privilege. Our leaders and their teams are industry veterans. They have years, often decades of experience and their respected deals before they come to Host. They'll cover their backgrounds in more detail throughout today's sessions but the thing I want to broadly highlight is that each one of our team members operates with the highest level of integrity. That integrity is what it takes to get into Host and it's what it takes to make it a Host. It's what is required to continually make the right business decisions, and it's what allows Host to have a sterling reputation in the industry, which leads me to our platform. Our platform is defined by 5 things that we believe no other owner can replicate, and that's because everything is interrelated at Host, including the tenets of our platform. It would be very difficult to have just one of these tenants. And as you'll see here and throughout the day, one good thing consistently leads to another. First, our reputation, this includes our track record with investors, with banks, with managers, but it is especially important with buyers and sellers. Buyers and sellers know that Host can close a deal with speed and surety. The Four Seasons Jackson Hole acquisition process took less than 30 days to close. We don't let complicated deal structures or tight time lines get in the way of closing deals. and as Nate and Raj will talk about later, sometimes we win deals because our team has the resources to comfortably close when others stumble over complexity or require financing. And we are great stewards of these iconic properties. Sellers will forgo a marketed process or award us the deal despite Host not being the highest bidder because they know we will close and that the asset will be well maintained. This was a case with the Alila Ventana Big Sur. Hyatt wanted it in Host hands because of our reputation and relationship with them, and by the way, we acquired Alila Ventana, a 9.3x 2021 forecast EBITDA. It's Host reputation that opens opportunities for us that simply don't exist for other owners. Second, our size and scale. Many have historically viewed this as a negative that makes it hard for us to move the needle, but we view it as a positive that enhances our ability to move the needle. We are the largest owner of Marriott and Hyatt properties, and we own some of their own jewels. Many people on our team have come from the brands. So when we call, they pick up and listen. We have very symbiotic relationships with our managers, which means we can get their support and effect a real meaningful change. As an example, our relationships are -- allowed us to work alongside our managers to redefine the operating model and our size and scale, ensure the value of these changes is meaningful. Third, Host is the only lodging REIT with an in-house independent enterprise analytics team. You'll hear from them today, too. These are the folks who benchmark performance by asset type or geography to keep assets running optimally using our own data. I can't emphasize that enough. It's our data. It's a database that we built over 20-plus years that allows us to match more properties across the United States. They are the ones who developed and maintain our IBM Watson model, looking at market performance forecast. They are the ones who act as Switzerland, sitting independently from the investments and CapEx teams to provide objective, data-driven analysis that underpins our underwriting and ensures we're always taking a measured approach. Throughout the ownership cycle, we use data to our advantage with every acquisition, disposition, renovation and construction project. It's how we talk ourselves out of bad decisions and into smart win. It's how we test our hunches and assuage our concerns before we make big calculated bets. Fourth, our access to capital. We have all the tools available to us in our capital allocation toolbox and importantly, at best-in-class pricing. Even during the depths of the pandemic between the Delta and Omicron variant, we were able to issue a $450 million green bond deal to refinance our Series D bonds at 2.9%, the lowest interest rate in Host history. More recently, in a rising interest rate environment, we recast our $2.5 billion credit facility with no increase in pricing, and pricing incentives tied to environmental targets. And finally, our balance sheet. Our balance sheet is a fortress foundation of everything we do here at Host. We maintain low leverage and a well-staggered maturity schedule. Candidly, that's not new since this management team began transitioning. What is new is now we actually use the balance sheet, and importantly, we use it to create lasting value for our shareholders. That means more than smart acquisitions. Renovations and new construction are essential to how we build value. Other owners just aren't able to invest and reinvest at the scale Host does. All the while we maintain a straightforward, low-levered balance sheet that allows us to remain offensive and opportunistic in any environment. While other owners were largely sidelined during the pandemic, we continued investing and reinvesting due to the strength of our balance sheet, and that has left us well positioned to take advantage of the next lodging cycle. Because of our people, platform and portfolio, Host Hotels is in very good shape. We are a recognized leader in the lodging industry. Now let's look at the points that prove it. As I said, everything at Host is interrelated, and one good decision consistently leads us to another. We are fueling an upward spiral, driving exceptional best-in-class performance consistently year after year. Shifting to where we stand today. Let's take a step back and look at Host more broadly. As many of you know, we were the first lodging REIT, but a fun fact many of you may not be aware of is that Host actually spun Marriott international out, not vice versa. We are the biggest lodging REIT with very low leverage. We ended the first quarter with an enterprise value of $15.7 billion at 2.2x leverage with $2.3 billion of liquidity, counting FF&E reserves and availability under our credit facility. We are the only lodging REIT in the S&P500 and have been since 2007. We are the only investment-grade lodging REIT and have been since 2013. We are committed to our investment-grade rating as it has served us well through multiple market cycles. From a portfolio perspective, today, we have 77 hotels, 41,900 rooms and 165 employees. In 2017, those stats stood at 94 hotels, 52,600 rooms and 208 employees. We are well diversified. No single market makes up more than 10% of our 2022 total revenue. Our business mix was roughly a 1/3 business transient, a 1/3 leisure and a 1/3 group based on 2022 room revenue. 87% of our hotels are brand managed based on room count. Over 80% of our revenue comes from Marriott and Hyatt branded hotels because despite only having 2 Four Seasons and a portfolio of 77 hotels, these 2 hotels contributed 5% of our 2022 total revenue and approximately 99% of our hotels are upper upscale and luxury. As the company and portfolio stand today, Host Hotels is in terrific shape. We're proud of our accomplishments over the past 6 years when this management team began the transition to the company we are today. Back then, Host portfolio looked very different. Today, we have far fewer hotels producing the same level of EBITDA, which demonstrates the dramatic improvement in the portfolio quality. It's kind of funny we were hopeful these improvements would be enough for multiple expansion relative to the other lodging REITs. But as they say, hope is not a strategy. That's the real reason why you're -- why we've invited you all down here today, and with these improvements, we fundamentally believe that Host should be trading at a significant multiple premium to the other lodging REITs, and by the time you leave here today, I think you agree that Host is in a comp set of its own. Looking back at late 2019, we knew the prior cycle was coming to a close. We didn't know it was going to be a pandemic, but we purposely positioned ourselves with asset sales and a balance sheet at 1.6x net leverage, and then the pandemic came. Because we had the balance sheet, we were able to acquire opportunistically and continue with transformational renovation plans and ROI projects. Both are key drivers, elevating our EBITDA growth profile today. We were able to execute on these projects during the pandemic at a time of lower node demand, and we collected over $74 million in operating profit guarantees from Marriott through the Marriott Transformational Capital Program. When our New York Marriott Marquis was closed in 2020, we moved construction workers into the hotel to keep construction going safely and efficiently. There's a similar story on Maui when Hawaii was shut down. We were able to speed up the transformational renovation of the Hyatt Regency [indiscernible] and construction of the Andaz Maui Villas. For the last 6 years in County, we made some very big calculated bets, leveraging our size, scale and platform to deliver a winning track record. So let's highlight some key metrics that distinguish Host Hotels today. First, our long-term capital allocation multiples. We've been net sellers since 2018, selling $5 billion of assets at 17x EBITDA, including foregone CapEx and accretively recycling that into $3.5 billion of high-quality assets at 14x EBITDA. One of the biggest bets we made pre-pandemic was on the 1 Hotel in South Beach. The acquisition metrics on that deal were met with some apprehension when it was announced. A 13 on the EBITDA multiple and $1.4 million per key, but that one certainly has paid off. As of year-end 2022, the EBITDA multiple was below 8x and the property generated over $80 million of EBITDA. More recently, we've been net acquirers. We believe this is the right way to create value at the beginning of a cycle. Over the last 3 years, we've sold $1.5 billion of assets at 17.5x EBITDA, including forgone CapEx and accretively recycled it into $1.9 billion of assets at just 13.1x EBITDA. I mentioned earlier, our big bet on the Four Seasons Orlando. That resort, combined with our other 7 recent acquisitions, are driving meaningful EBITDA growth well ahead of underwriting. You'll hear more about how these deals came to be and how we got comfortable with these big bets during the investments in enterprise analytics sessions later this morning. We were able to achieve this winning track record due to our platform and team. With our size, scale and reputation, Host is often the first call as an all-cash buyer. We had the balance sheet, access to capital and analytical wherewithal to make smart capital allocation decisions, which have ultimately created significant value for our shareholders. In aggregate, our 8 recent acquisitions represent buyback market deals, including 2 deals ahead of foreclosure auction, 5 new markets for Host, Austin, the Florida Keys, Big Sur, Savannah and Jackson Hole, 3 ultra luxury resorts, 8 fee simple assets with no meaningful CapEx required in the near term, some iconic in irreplaceable real estate, and most importantly, expected EBITDA growth well above our portfolio average. Contrast that with our 11 recent dispositions, those assets represent 3 ground leased assets, a handful of inflexible operating models, some tired brands, several commodity assets in less desirable markets or submarkets, a successful exit from a repositioned legacy asset, more than $470 million of estimated foregone CapEx over the next 5 years and most importantly, expected EBITDA growth well below our portfolio average. And we were able to accretively recycle capital, selling EBITDA at nearly 4.5x more than where we bought, including foregone CapEx. The 8 assets we purchased over the past few years have continued to contribute to our outperformance and are meaningfully ahead of our underwriting expectations. Based on full year 2023 forecast, EBITDA from the 8 hotels we acquired in 2021 and 2022 is expected to be comfortably within our targeted range of 10x to 12x and well ahead of our underwritten stabilization period. The are nice, but as they say, show me the money. If you look at our key dashboard metrics. Over the past 6 years, our ability to deliver speaks for itself. Even during a time frame where we had a once in a century global pandemic and lost 95% of our revenue overnight, Host still created meaningful shareholder value. We improved the quality of our portfolio to 77 iconic hotels while increasing RevPAR by 9%, total RevPAR by 15% and EBITDA per Key by 31%. We also work with our operators to redefine the hotel operating model, which we believe will lead to meaningful long-term margin expansion and we did all of this while increasing net leverage only 0.2 of a turn. This is a very clear picture of our investment strategy at work. Looking at our capital allocation efforts from a slightly different vantage point, since 2017, we have increased the RevPAR of our top 40 hotels by 16%, total RevPAR by 24% and EBITDA per Key by 50%. In 2017, we had 5 hotels with an EBITDA greater than $50 million, and at the end of 2022, that number stood at 9 hotels. And I think this stat is particularly impressive. At the end of 2022, the EBITDA per Key of our entire portfolio was greater than the EBITDA per Key of our top 40 hotels in 2017. It's hard to argue with stats like that. Our efforts to elevate the EBITDA growth profile of our assets and improve the quality of our cash flows speak for themselves. Our results compare to the other full-service lodging REITs also speak for themselves. Since 2017, we have improved the RevPAR of our portfolio by 9% compared to the other full-service lodging REIT average at 1%. We improved the TRevPAR by 15%, theirs improved 9%, and we improved our EBITDA per Key by 31%, theirs improved only 3%. As we think about our current positioning relative to the other full-service lodging REITs between 2020 and 2022 we have invested $34,000 per key in our assets compared to their $17,000 per Key. As of the first quarter, our leverage is 2.2x compared to their 5x, and our weighted average maturity is 5 years compared to their 3.4 years. Based on our track record and current positioning, we believe we are very well positioned relative to the other full-service lodging REITs. Speaking of results, there is no better measure than total shareholder return. As of May 5, our total shareholder returns were #1 amongst the other full-service lodging REITs on 1, 3, 5, 7 and 10-year basis. I think that consistent #1 speaks for itself. Despite a #1 ranking, many would say Host has been generating the same amount of EBITDA for years. And that is true with a few important call-outs. We expect to generate nearly $1.6 billion of EBITDA with 77 hotels versus $1.5 billion with the 94 hotels we owned in 2017. That is a dramatic improvement in the quality of our cash flow and we continue to believe that a $1 of EBITDA from the Four Seasons is not the same as $1 of EBITDA from the Sheraton. Since 2013, we have also returned $6.3 billion of capital to shareholders, of which $3.3 billion has been returned since 2017, and our annual dividend yield since 2013 is an average 3.4%. Now that you have a better understanding of our track record and positioning today, let's shift our focus to look at the bigger picture and where we stand amid the uncertainty of the current macroeconomic environment. The word uncertainty today covers a lot of ground, -- economic politics, even World piece. The financial sector is turbulent. Capital markets are just starting to open up again. For most of that means, that is relatively unavailable or too expensive. Lending standards are tightening, and the buyer pool for sales that are in process has shrunk. For host, on the other hand, it's full steam ahead. While we are seeing troubling signs for some sellers, and we are willing to be patient. But it isn't just about our balance sheet and liquidity profile. We believe Host is well positioned because travel demand outlooks are showing continued strength and consumers appear to be more resilient than anyone anticipated. Balance sheets remain strong and excess savings is elevated. 80% of household mortgage debt was locked in at fixed rates during the pandemic and is insulated from the recent rate increases. Consumers also continue to favor services over goods. The labor market remains strong and the unemployment rate is at a historical low. We also have a few tailwinds in the lodging industry in the form of international demand and occupancy that is continuing to ramp with more room to grow. All of these factors support our optimistic view on health of the consumer and lodging fundamentals. However, the uncertainty is likely to continue over the near term. One very important difference when comparing today's uncertain macroeconomic environment, to those in the past is the supply picture. The total pipeline is down 8% since the start of the pandemic, while rooms under construction are down over 25% and have been trending down every quarter since mid-2020. The forecast for supply growth in 2023 and 2024 have an average growth rate around 1%, well below the long-term historical average of 1.8%, and well below average growth rates of 2.5%, which is where we stood heading into the last 3 recessions in 1991, 2001 and 2009. Host portfolio market-weighted estimated supply growth through 2024 is approximately 1%, which is in line with the total U.S. average driven by very low growth rates in places like San Diego, Hawaii and Seattle. Looking at property type, direct competition for the host portfolio is even lower. Big box and luxury supply growth is forecast to be close to zero. The majority of the current pipeline is already under construction, and there are very few new projects being planned, given the tight credit conditions for construction financing. The supply picture, coupled with our continued belief that consumers will prioritize experiences, particularly at our 16 iconic resorts gives us confidence that Host is well positioned to outperform in the current macroeconomic environment. To continue with our views of how Host is positioned today, I would like to welcome Sourav Ghosh, Executive Vice President and Chief Financial Officer, to the stage.

Thank you, Jim, and good morning, everyone. I'm excited to be here in Orlando, and I'm looking forward to discussing our operational performance, our 2023 outlook and what you're all waiting for the building blocks for potential future EBITDA growth. As you heard from Jim, we believe Host Hotels is the blue chip in our space. And our operational performance backs that up. Speak of operational performance. Since the second quarter of 2022, we have delivered both RevPAR and total RevPAR above 2019 levels, most recently reporting first quarter RevPAR growth of 7.4% and total RevPAR growth of 10.3% versus 2019. Our strong results were driven by both occupancy increases and continued rate strength, particularly in the group business segment at our downtown hotels. Starting with leisure, although the region rates are moderating, they remain well above 2019 levels. We have had double-digit rate growth compared to 2019 at our 16 resorts for the seventh consecutive quarter. For context, transient rates at our resorts were 54% above 2019 in the first quarter after being up nearly the same amount at the end of 2022. 6 resorts had average transient rates above $1,000. Yes, above $1,000, and you were at one of those resorts yesterday. And hopefully, you could see why. While we believe leisure rates will continue to moderate, we are confident that rates will settle well above 2019 levels on a go-forward basis. Moving on to business transient revenue. Business ranging revenue is improving at a slow and steady pace, with demand driven by small- and medium-sized businesses. Our operators achieved high single-digit increases on special corporate rates in 2023, and overall business transient rates in the first quarter were up 10% to 2019. While business transient demand is continuing to evolve, revenue in this segment improved 400 basis points compared to 2019 on a quarterly sequential basis. On the group front, this marks the third quarter the group revenue has surpassed 2019 levels. Group revenues were up 4% above the first quarter of 2019 driven by 14% rate growth. The short-term booking trend continued with a pickup of 102,000 group room nights or 28% more rooms booked in the quarter for the quarter compared to 2019. In the first quarter, we booked over 500,000 group rooms for 2023, and total group revenue pace was 2.5% ahead of same time 2019. We picked up 237,000 group room nights for the second half of 2023, which is 35% more than we picked up in the first quarter of '19 for the second half of '19. For 2023, we now have 3.4 million definite group room nights on the books, which represent 94% of comparable full year 2022 actual group room nights, which is up from 80% at the end of 2022. For full year 2023, group rate on the books is up over 6% at the same time last year, a 90 basis point increase since the fourth quarter. Overall, April was a solid group booking month. And full year 2023, total group revenue pace further improved relative to 2019 to up 3.2% as of April from up 2.5% as of March. So yes, take note of that, that's the new data that's out there. We continue to be very encouraged by large group base we have on the books, particularly given the short-term booking trends. Our strong performance in the first quarter, coupled with our improved outlook for the year, gave us the confidence to substantially raise our full year RevPAR growth guidance range to 7.5% to 10.5%, nearly doubling the midpoint of our full year expected RevPAR growth to 9% from 5% last quarter. This marks the fourth consecutive quarter since the onset of the pandemic that we have achieved RevPAR, adjusted EBITDAre and EBITDA margins ahead of 2019. At the midpoint, our full year 2023 RevPAR guidance is 7% above 2019. Our outperformance can be attributed to the capital allocation decisions made over the last 6 years and our unwavering focus on margin improvement. And we believe our execution on both fronts will continue to create value for shareholders for years to come. At the 9% midpoint, we raised our adjusted EBITDA guidance by $125 million in our full year 2023 EBITDA is forecasted to be 3% above 2019. Our full year guidance assumes year-over-year comparable hotel RevPAR presented changes in the second half of the year to be up low single digits at the midpoint. Shifting gears to our margin. Our margin performance, our comparable hotel EBITDA margin has meaningfully improved compared to 2019 despite lagging occupancy and 4 years of inflationary pressure. We expect margins in 2023 relative to 2019 to be up 25 basis points at the low end of our guidance to up 95 basis points, which reflects our efforts to transform the portfolio and evolve the hotel operating model. We believe this is particularly impressive when you consider that our forecasted total hotel expense CAGR from 2019 to 2023 is only 1.8% versus the forecasted core CPI CAGR of 4% over the same period. When thinking about margin expansion in the future from current business levels, we would expect approximately 30 to 40 basis points of margin expansion for each point of occupancy growth, which brings me to the slide you've all been waiting for. Looking beyond 2023, we think of EBITDA growth across all aspects of our business, and we thought it would be beneficial to walk you through the potential EBITDA growth building blocks as we see them today. First we have operations. Let's start with the low-hanging fruit, which is the additional EBITDA contributions from the Ritz called the Naples Beach and Hyatt Coconut Point, are 2 noncomparable hotels that were impacted by Hurricane Ian. These 2 properties were expected to contribute an additional $71 million of EBITDA in 2023. We expect that number to grow meaningfully in the coming years. But some of that growth gets picked up in the portfolio reinvestment bucket. Moving on to operations more broadly. There is value attributable to the occupancy gap to 2019. The value is intertwined with margin improvements above 2019 when you consider the efforts to redefine the operating model. Using the midpoint of 2023 forecasted total RevPAR, occupancy and margin, we believe there could be up to $100 million of incremental EBITDA by increasing occupancy by roughly 4 points, which is approximately half the occupancy gap to 2019. Wrapping up on operations. While we certainly expect rate growth in the future, for the purposes of this analysis and discussion, we have not made that assumption -- any assumption for rate growth. What we can tell you is that today's business volumes, we expect 1 point of occupancy growth to lead to approximately 30 to 40 basis points of margin expansion. Shifting to acquisitions, as we stand today, we could acquire between $2.5 billion and $3.5 billion of assets while still maintaining a leverage level of 3x to 3.5x. Taking the midpoint of $3 billion and assuming a blended tax multiple, this could represent up to $200 million of incremental EBITDA. It is worth pointing out that the assumptions I just mentioned would approximate what we have successfully executed since 2018. Continuing with acquisitions, we then target stabilizing recently acquired hotels approximately 2x below the acquisition multiple, 2 to 3 years after the acquisition on a blended basis. This represents up to $40 million of EBITDA if we were able to acquire $3 billion of assets at a 14x EBITDA multiple and stabilize those assets at 12x. We are also assuming no dispositions, and while we may still be opportunistic on the sales front, we are very happy with the portfolio we have today. The final building block is reinvestment in our portfolio. Taking a step back, if you think about how we reinvest via ROI capital expenditures, which we split out in our CapEx guidance, our run rate for ROI CapEx is likely to be in the $200 million to $300 million range per year over the near term. We target low to mid-teen cash-on-cash returns for ROI CapEx investments. Assuming that we reinvest $250 million per year at a cash on cash return of 12%, this could represent up to $100 million of incremental EBITDA after several years of investing at these levels. And that 12% cash and cash, by the way, is on the lower end. Taken together, these potential EBITDA growth building blocks represent a path towards $2 billion in EBITDA, which would be more than 25% above the midpoint of our 2023 adjusted EBITDA. While this potential EBITDA growth is heavily dependent on the macroeconomic environment, travel trends, the transaction market and the assumptions listed on this slide, we believe we are best positioned for the opportunities that lie ahead, given our people, our platform and our portfolio. Now let's bring Jim back to the stage to highlight why we believe you should invest in Host.

Well, by now, this slide should look familiar. Our competitive advantage boils down to our people, our platform and our portfolio. You have heard about our track record and the state of our business within the context of the current macroeconomic uncertainty. So let's talk about why we believe you should own Host? Because we have the team, we have the fortress balance sheet. We have access to capital. We have the independent analytic capabilities, the size, the scale and the reputation. So we can make big, fast, smart moves, as you've seen. Even with our winning track record, the investment community often says, that's great, but how will Host continue to deliver EBITDA growth for shareholders? The answer is simple. We will continue to remain opportunistic through offensive positioning. After all, you can't score points on defense. And we hope by now, you can see that our platform is unlike any other lodging read out there, bar none. Our platform has allowed us to create meaningful shareholder value and we believe it will allow us to continue to move the needle on portfolio quality and EBITDA growth in the future and we've got the portfolio to outperform. We are well diversified across geographies and business mix. We've redefined the operating model and the portfolio is refreshed. We've added high performers, sold bottom performers and meaningfully reinvested where it counts. All this taken together means we've improved the quality of our cash flow and elevated the EBITDA growth profile of our portfolio. You have already seen it in our results and it is why we believe we are very well positioned for the future. That's what we want to get across today. Consistency is our currency. Host Hotels is the blue chip in our space. We're in the best shape for the current macroeconomic conditions and the opportunities that lie ahead. We will continue doing what we have been being doing because consistency is our currency. We're not only encouraged about the future. We are excited and we're ready. Now let us show you why. [Presentation]

And that's just a small glimpse of our 77 hotels. It's a fantastic portfolio. We are so well positioned to continue to outperform. The entire team gets up every day, really excited about what lies ahead. But if there is one person at Host whose energy could match that video, it is Michael Rock, our Senior Vice President and Head of Asset Management. Michael, wherever you are, the stage is yours.

Well, good morning. Sourav said, we'd show you how we believe Host is really best positioned for the opportunities that lie ahead, and boy, if video doesn't give you a clear view on the iconic assets. But behind those assets, making sure the value remains just as strong is asset management, my realm. And like every area of our business, we have a very unique approach. And that's why consistency is fundamental to this overriding approach to the business. So before I talk about our asset management philosophy overview at Host, I bring up to a panel from my team, just a little bit about me. I started in this business in 1985 in the hotel business. I worked for Marriott International for over 27 years, all of it in operations and all of it at the hotel level. General Manager, several times over, Marriott's largest casino and brands such as JD Marriott, Edition and Ritz-Carlton. And one of those General Manager assignments was at a Host-owned hotel. And that's what started the relationship and honestly opened the opportunity and the door for me to join the Host a little more than 10 years ago. So now let's talk a little bit about asset management philosophy at Host. First, the role of the asset manager. They are the conduit for all aspects of host. Primary point of contact with the property teams, the tip of the spear, if you will. We have tremendous support and resources at Host. From enterprise analytics, engineering and technical services, development, design, construction, investments and more. But asset managers are that conduit. We're the person that's ultimately responsible for the performance and the execution of the asset. People ask what I do for living at Asset Management, I said we're in the performance improvement business. Asset -- that's our job. We don't want to just report the news of what happened. Our job is to make the news happen. Goal is to drive the overall performance, working with our operators to get the right return on investment opportunities, value enhancements, capital investments, operational decisions, selling strategies, positioning, marketing and everything all combined together to outperform the competition, and you do that, you get some math. I thought this room would appreciate some math. V equals I over C, and that's our formula for asset management and Host. V is the value of the real estate, C is the cap rate, always expressed as a percentage, and I is the income or net operating income that the property is producing. And so working with our operators to improve performance and making decisions around the investment and renovations has this huge positive multiplying effect in terms of the value of the real estate. And that's how our team looks at driving value at Host. We're also in Performance improvements business, we're also in the influence business. It's something I've kind of always personally relied on for success, and it's one of the things that really attracted me to Host because we are in that business. And yes, contractually, there's a lot of things we control like operating budgets and capital investments in certain long-term contracts. But we don't control every decision needed to drive the most value. Our hotel managers control day-to-day operations, but we work very, very, more very closely with them to make sure the decisions that they're making are in Host's best interest and ultimately increase the value of the real estate. So what do we do with my team, we placed a premium on relationships skills. We collaborate with all of our operating partners. We're all working towards the same results. You see as Jim said, everything at Host is interrelated. And because of this, asset managers at Host spend a tremendous out of time looking out the windshield instead of looking in the rearview mirror. We're very focused short-, medium- and long-term decisions that drive performance and a little less focused than what happened last month. You can't change the past. You can learn from it and if you can learn something through a past and apply that to the future months, great. But I find it to be a much, much more proactive and forward-looking asset management team at Host versus others who spend a lot of their time driving through the rearview mirror. If I was to characterize it, I'd put it this way. A lot of others asked what happened and why and at Host, we ask what can be and how. And that's a distinct competitive advantage. Collaboration, you are we. Well, at Host, were tremendous collaborators and cooperators. We have resources that others simply don't have. You heard me mention before, enterprise analytics, engineering and technical services, design, development and construction. And these allow us to be a part of the solution to unlock performance. So we don't ask our general managers, what are you going to do to improve. Instead, we ask what can we do together to fix things and improve and drive better results. It sets high performance standards for our operators, and we fully understand that an adversary relationship will not lead to the best possible results. Hotels? Are they widgets or are they snowflakes. Now I was giving a verge of this talk earlier this year to a college class and no one in the class knew what a widget was. So I have to come up with a different terminology for that. But I would suggest that hotels are much more like snowflakes because widgets are kind of they're changeable, very much the same, not a whole lot of variation and snowflakes, look the same from a distance. But the closer you get to them, the more distinctly different they've become and that's our approach at Host to get very, very close, dig into where performance can really go, fully appreciating the distinct nuances and differences of each asset, market, operating model and the competitive environment so we can unlock that performance upside. Pivoting over to talk about renovation and reinvestment. We want to play offense or defense. Well, you already heard offense and defense today mentioned, right? We focus our CapEx investments in areas that allow us to drive EBITDA growth that's playing offense versus simply upgrading the look and protecting any downside, that's playing defense. In my opinion, this is a key differentiator between Host and others in the field. We identify the project and really prioritize the ones that are going to allow us to drive the greatest performance impact. And we'll unlock more of the real estate value, looking at these assets and again, the market, the model, competitors and this is where this accretive recycling capital program we've done in the past 6 years has really paid off. Our portfolio consists of higher EBITDA growth potential assets because of our recent capital allocation efforts. We also like to do multiyear planning and repositioning when we can -- we're very strategic here in trying to line up renovations at the same time as opposed to doing something in the hotel every 2 or 3 years. We love to layer these renovations on top of themselves. It does a couple of things. First of all, it really limits the overall business interruption that might be associated with renovations. And second, it really allows our managers to reintroduce these assets to the marketplace with aggressive PR and marketing and changing our pricing strategies at a transformed asset that you can really drive more performance with. And you're going to hear a lot about that later from Mike Lentz from development, design and construction later on. We also like unlocking the value through renovations and ROIs. We're constantly evaluating and figuring out how we can drive increased activation and driving ancillary revenues. This is arguably the funnest part of our job in asset management. We work with all these great resources that we have to reinvent the parts of what each asset offers in a way that really drives performance and unlocks that value. And how do we get that done? Well, when we're walking through the assets with our property teams, we're always asking ourselves, is this the highest and best use? This is a question we ask all the time. Is this the highest and best use of this area to drive EBITDA? Well, if you take that library in Toronto and make it a top golf swing suite, right? You could take that seldom use [ wet lawn ] in Maui in Wailea and Andaz and build luxury villas on top of it. You can take the excess flat lot parking in Scottdale at the Western Caroline and build an AC hotel on it. Water parks, both here and at Ritz-Carlton Naples, built on empty lots and seldom used pool facilities. And you're likely to see some creative uses of the space later on in your tour today. A little foreshadowing. And then lastly, are we in the real estate business of the travel business? We are a real estate company, but we're in the travel business, inevitably linked to travel because no one pays me to sleep in their own bed or to eat in their own kitchen. And the last thing, as I wrap up about kind of the role of asset management philosophy and host are the 2 questions. Each of my 9 asset managers has the assets these 2 questions after every property visit. When they get back on that plane or in their car, the first question is, did I personally add value by being here today? And the second was, are they anxious to see me back as soon as possible? And if you can answer yes to both of those, then not only have I done my job, I've also done it in the right way. And now join me in welcoming, let's mix my Rockstar team as they come up to the stage here. We have Kerry Gaber, Market Vice President of Asset Management; Travis Snyder, Market Vice President, Asset Management; and Joe Tapley, Vice President of Asset Management. Let's give them a round of applause. As I watch you coming up here, I just kind of hit me, but each of you individually carries as much EBITDA responsibility as other lodging REITs. Just we talk about size and scale of Host. Yes. You guys knew that already, though. You knew that already. Well, look, let's get to know each of you a little bit in your background. So we'll start with Kerry and then we'll go to Travis and Joe. So Kerry tell us about yourself.

All right. So this will get a little boring because I think they'll kind of start it the same way. So I started working for Marriott International and finance out of college. I started in a property role, I think, down in Fort Lauderdale, and then I got to move to Nashville, Tennessee, which to me, that was a foreign place. I didn't understand why everybody let me out in traffic all the time. I was like, wow, they're very nice there. So after that, I moved up into a regional role, this is where I got to understand what owner relations was, and this is also where I got to familiarize myself with different ownership groups and learned which ones I would not work for. Host was the #1 on the list of the ones I would work for and where I saw a future maybe as an asset manager. Eventually, I moved up into corporate roles, Marriott, I was a finance business partner supporting the sales and revenue organization, the brand team and the operations team. So everyone who reported to the President. So we worked on all kinds of special projects. We manage the marketing fund. We worked on owner disclosure. So it was a great experience for me to understand how the company works and how the company could be influenced. My next role was with Ritz-Carlton. I worked for the CFO at Ritz-Carlton. So I had a kind of a unique job there where I worked on special projects. I worked a lot on the Edition brand and launching that brand.

Wait a minute. You're the one that was responsible for that pro forma I had to live up to?

I was. Sorry, Michael. I primarily worked in New York, London and Miami then. So I worked on the Edition brand. I worked on the operating model for the Ritz-Carlton Hotel, so how we could reinvent those and improve financial performance of those, and then I got to work on a lot of international projects. So I got to work on a project in Kazakhstan, Riyadh and the Dorado Beach Ritz-Carlton preserve down in Puerto Rico. So it was a great experience. But at that point, I've been working for Marriott for around 15 years and had the opportunity to join Host and asset management. So I've been with Host and Asset Management for 10 years now. And when I was looking right before we had this meeting about what markets I'd covered in the U.S. and outside the U.S., I think in the United States, the only market I haven't really covered personally between Marriott and Host is the Pacific Northwest. So you can ask me anything, but don't ask me about Seattle or Portland or any of those markets. I also have the opportunity to cover [indiscernible] when I worked for Marriott as well. So yes, that's a little bit about me, but I've covered pretty much every asset type out there in lodging.

Fantastic. Travis?

All right. Great. Thank you so much again for being here. Good morning. Like Kerry, I started with Marriott right out of college. I was working as an Assistant Director of Finance and Accounting at one of their hotels, and really fell in love with the business and have been in the industry ever since. I just celebrated 30 years. It's making me feel pretty old here this morning, but during that time of held positions, as I said, on property, at the regional and corporate levels. I mean both on the brand and ownership side. I spent 23 years with Marriott, including 4 years with their vacation club division, 4 years with a company called CNL Hotels and Resorts and just celebrated over 3.5 years with Host. So during the career, I've had a chance to work on a number of great things, hotel openings, repositioning hotels, a lot [indiscernible] I led the largest transformation the company's history to reposition their main product offering from a weak spaced real estate product to a more flexible points-based product, backed by real estate. And in my last position at Marriott, I was Vice President of Development and Global Asset Manager with responsibility for new hotel development openings and negotiating transactions on behalf of Marriott. Now at host, I get the pleasure to work with this fantastic team overseeing some of our great assets in San Francisco, New York, Boston, Naples and previously also had D.C.

Right. Great. Joe?

It's a pleasure to be here with you. I am the newest member of the group. Like my colleagues, I started out my career on the operations side in the lodging industry, primarily in the finance discipline. I've held roles with Interstate now Aimbridge as well as Marriott Hotels & Resorts. During my tenure with Marriott, I had the opportunity to open a couple of iconic properties for Ritz-Carlton, one of which was an early mixed-use project in the Ritz-Carlton Sarasota, which I believe was a second condo hotel in that brand. And then thereafter I had the opportunity to be on the opening team of Ritz-Carlton's first early expression of a lifestyle hotel in the Ritz-Carlton South Beach. I transition into asset management through private equity, consecutively with 2 high net worth family groups. Both were owners and developers of luxury real estate. My roles prior to joining Host were primarily in asset management. But I also had some various roles in finance and feasibility responsibilities. My responsibility is comprised of resorts, city hotels, destinations from the Caribbean to Hawaii to the Northeast United States.

Great, That is lots of experience up here. It's terrific.

Well, Kerry, let's start with you. Share some of your learnings from your years at Host and the kind of key differences, if you would, between like urban big-box hotels and convention hotels versus a resort property.

So when we look at the different markets that we kind of operate in, when we look at an urban box, what's important to those hotels or what typically you see come through there or people who are interested in leisure travel and business travelers. So one of the things we need to make sure that we have and understand is the customer experience, both from a leisure perspective and from a business traveler perspective. So you're all business travelers there. One of the things that's important to you, right, is technology. So as we look at an asset management to recapitalize our assets, we ensure that we're upgrading and having the exact technology and current technology that's out there put into our rooms and put into our public spaces. One group that you won't hear from today, but has been tremendous help to us is our information technology folks. So what they like to go to a hotel and you can't use your cell phone, right? It doesn't work. So our information technology group, based on our size and kind of our influence has been able to get for us distributed antenna systems into a lot of our hotels that have solved the mobile piece for us. And Mike's group, where you'll hear from later, they help us tremendously when we look to renovate meeting space and/or rooms to ensure our WiFi technology is current and up to date. We find that's very important to the business traveler. Another thing that's important to the business traveler is fitness facilities, right? So we invest heavily in our fitness facilities. One example of that -- a lot of you have seen is San Francisco Marriott Marquis. So today, what is a fabulous fitness center, I think, one of the best in our portfolio and the best out there was a pool that cost us a lot of money to maintain, right? It's an elevated pool. Mike's team does not like elevated pools. So we were able to fill them out pool and create a spectacular fitness center that helps us to market that hotel to business and convention travelers today. We also have created in-room fitness experience. Michael alluded to this earlier. So you'll find in some of our urban big boxes, we have fitness rooms. So we've got equipment in the room for the guest that we sell at a premium because that is important to a business traveler. Some people have gotten used to having things in their homes and they want that translated to their lodging experience. Another way that we focus on our urban hotels from a business traveler perspective is marketing our location, right? We have really nice located hotels. If you look at the Grand Hyatt San Francisco, our proximity to Salesforce. You look at Travis's hotel, the Marriott Marquis, our proximity at Times Square and a lot of financial organizations there, as a lot of you know, you're from New York. So we make sure that we've invested -- Eric has helped us over AE (sic) [ EA ] group, sorry. We have way too many acronyms. I can't remember.

Enterprise intellect.

Enterprise Analytics, sorry. So he's helped us to do these mappings drone footage with true tour so that you can see the proximity of our assets the key destinations in the marketplace, whether that's a leisure perspective or that's from a group perspective. So we've invested heavily in that as well. So those are some of the things we've done from an urban box perspective. If we look at resorts, right, which you're in today. So people want comfortable spacious rooms. They want multiple dining options. They want unique things to do in amenities. So one of the best examples we have here is Venetian, right? We massively repositioned this resort to make sure that it was all things to all people, right? You've got wonderful dining options in Venetian. You've got a fabulous golf course, great fitness facility, great aquatic center, and that has resulted in us improving market share at that hotel, 34% right? It's a massive improvement from when we acquired that asset. It's been a great story for us. Another one here you'll see today is World Center, right? We mentioned the water park earlier, but the water park allowed us to raise the resort fee here $7 and increase our transient rooms by [ 7,000 ] room nights. So it's a great story, and it's ensuring that we have a great future to grow revenue at these 2 resorts. If you look at our convention hotels, so what the conventioneer wants is they want unique meeting spaces, right? Look at -- you saw a picture earlier on the ballrooms at San Diego Marriott Marquis, we built 235,000 square foot ballroom there. That has allowed us to increase our banquet contribution from group 64%, right? That's a massive improvement in revenue streams at that property. And you'll see today when we walk around this property, we added the Magnolia meeting space. We added 60,000 square feet of meeting space. We have 4 ballrooms. We were only able to really utilize 3 of them. This allows us to fully utilize all 4 because we have the breakout space, right? And we're on track to make that pro forma, and that's a mid- to high teens return for us here at World Center. I mean, this is a massive property. And I think this is a massive market for meetings, right, in Orlando. So we have to continue to maintain and grow and keep up.

Great. Fabulous. Travis, going to turn to you now. Tell us about some of the goings on to New York Marriott Marquis. I want to hear about some of the performance now that the renovations are complete and how we're delivering those results and a little bit more about our food and beverage partnership with Union Square Hospitality Group.

Absolutely. I should tell the audience that everyone at Host knows very well. I'd love to talk about the New York Marquis. So while I'll try to be here, I can't promise that. Mike Lentz will talk a little bit later about the details of the renovation. But over a 3-year period, we completely transformed the hotel, touching virtually every guest-facing area. The feedback to date from both transient and group customers has been simply fantastic. It was interesting. Much of the renovation happened during the pandemic and we had a decision to make, as Jim talked about a little bit earlier, we could have stopped the renovation, but we decided to continue and we had a strategic objective of coming out of the pandemic who would outperform our competitors. So I'm happy to report that the renovated product has allowed us to share shift business and outperform the competitors. While there's some comparability issues on a full year basis from a market share standpoint, Q1 compared to 2019, we are significantly outperforming from a market share standpoint. RevPAR index is up 15% for that time period, occupancy index is up 8%, and ADR index is up 7%. The quality of the product has really allowed us to take a different approach to pricing the hotel. We now take much more of a luxury approach. We don't really fade retail price in any longer. So on an absolute dollar basis, the ADR at the hotel was up just over 8% compared to 2019. From a group perspective, the results are even more remarkable. Group RevPAR index for Q1 compared to 2019 is up 44%. Yes, that's right. I said 44%. And room nights, actual room nights projected for 2023 and what we actualized in 2022 are 208,000 room nights in each of those years. We will do over 400,000 rooms at the Marquis over the past 2 years. It's a 15-year high. So the results have been really fantastic from the renovation. I think the next piece you're asking about Union Square Hospitality.

[indiscernible]

So again, one of my favorite topics to talk about. So in 2021, Union Square Hospitality was selected to operate food and beverage outlets at the hotel, Union Square events were selected to operate our banquet and catering department. And as far as I'm aware, this is the first time that all food and beverage has been outsourced at a Marriott managed convention hotel in North America. I will tell you that this change really represents the power of Host from my perspective and our ability to achieve results with our operating partners. Let's just say, and there's a number of people in the room today who are in those initial meetings with Marriott. It was a very hard known. In fact, it was -- it's never going to happen. We're not going to do it. And there may have been some more juice that I'm not going to repeat today.

Selective editing.

But again, I think using the data from our Enterprise Analytics team, leveraging our relationships at all levels in the organization. And really, frankly, our entire team just not willing to take no for an answer. We ultimately reached agreement with Marriott to outsource and beverage. Today, the execution of food and beverage at the Marquis is seamless to the customer. There's high-quality service and terrific culinary experiences. Now the part that we all really care about the financial impact, right? So from a financial impact on a year-to-date basis, food and beverage revenue is down approximately $4 million to 2019. This is all attributed to the view complex. We have a restaurant in the lounge on the 47th and 48th floor of the hotel that's been closed since early part of the pandemic. However, F&B profit is up $5.6 million.

Yes, I said it.

Down $4 million in revenue, but up over $5 million in profit. Our F&B margin by this move is approaching 35% versus 11% in 2019. To put a bow on the impact of this F&B change, New York hotels typically don't make money in January and February. The Marquis made money in both months this year. It's been a huge achievement. So again, I think we've been talking about it all morning, but this really represents the power of the Host platform.

That's just terrific results. And we have a similar story to tell about Boston Copley.

Yes, absolutely. Thanks for bringing that up. So Copley is very similar. Host made a very significant investment in the hotel to do significant renovations. Those renovations, along with the hotel being very well located in the city. A history of strong performance allowed us to attract a national restaurant company, Darden Restaurants who took over outlets through a lease structure there actually rebranded as a Yard House and that deal provides for a cash-on-cash return of over 30%.

Fantastic. Joe, we're going to turn to you, as you mentioned earlier, one of our newer members of the team here, can you compare and contrast a little bit asset management Host versus elsewhere? Put you on the spot here.

Absolutely. Absolutely. I won't mention any names either. So some of the similarities between some of the private equity groups that I've worked with in private owners versus host One, we're all aligned on in respect to key metrics. Several conversations around performance. Michael Rock mentioned about looking out through the rare -- through the rare window. We did a lot of that at other groups. Also, their approach to utilizing major brands to operate hotels as expected, debt sources and limited partners find these agreements to be attractive to the asset, which is what we do here at Host. They also pursue quality assets with high barriers of entry in a particular market or submarket with the goal of adding value through a property improvement plan. We both do the same. Some of the areas of difference is, as mentioned, Host articulates the metrics into actionable steps, one in which we can enhance the value of the asset, make improvements. And we have this important mechanism that supplies us efficient data in order to be superior to others and make these metrics actionable. With respect to our partners, size and scale gives us an opportunity and attention necessary alignment with our operating partners, which is vastly different than some of the smaller groups. And lastly, host outlook in terms of investment cycle allows asset managers to take the time to adjust projects and initiatives based on the macroeconomic environment rather than a firm predetermined sort of debt window that we have to adhere to because of other obligations.

Great. Well, now let's talk more about the topic that takes up most of the time in our interactions with our properties, and that is pricing. So how sustainable is the ADR that we're seeing now and some steps to help support that? So let's start with Joe, and then we'll go to Travis and Kerry.

Sure. So my experience with regard to pricing and ADR is essentially a value proposition. We'll try to drive what our operators is how valuable that proposition is to guess and how meaningful it is. When it comes to pricing, our managers are unapologetic about what we've charged in recent years, they challenge the market, make an offer and adjust accordingly. We're fortunate that we have the predictive tools available to us to take the guesswork out of the equation that allows us to be thoughtful in our recommendations to our operators, as well a real-time pace and competitive data to support those decisions. ADR increases moving forward maybe may moderate but from where we are today, we believe that the starting point is sustainable. Our customers are willing to pay for experiences. We must -- but we must continue to deliver on exceptional service to drive that pricing value.

Great. That's kind of similarly -- I think we heard that yesterday in our introductory comments over the Four Seasons, the pricing and the experience in the source that goes with that. We very much hand in glove.

Yes, right.

Yes. Travis?

Sure, thanks. So just to offer a few additional thoughts. While we're constantly pushing 80 on RevPAR, it's critically important, and there's a significant focus. One of the things that we focus on just as much that has already been talked a little bit about today is TRevPAR total revenue per available room. And that's a constant focus for us also. As a group, we're focused on the future. We engage with our general managers, our operators on driving ADR. But again, we spend as much time talking to them about pushing ancillary spend, pricing on our food and beverage, pricing at our cabanas, I mean [ hack ] some of the cabanas are well over $1,000 a day at our resorts. We're looking at -- again, Jim talked about earlier, Michael has talked about it, really any underutilized space in the hotel, how do we continue to drive value and find opportunities to create additional EBITDA through these spaces? Another area where we've been spending a lot of time is on dynamic pricing. So if you think about room rates, there's a constant movement in pricing, but really looking at the ancillary spend and turn higher demand periods, how can we charge more for those periods. If you think about it, TRevPAR is really kind of an actual evolution of revenue management, right, fits squarely into where customers are looking for experiences. And when our hotels can tailor those experiences and services to meet the customers' needs, we think that it really drives TRevPAR. One example of this is that the New York Marquis where we had some underutilized space, hotels signed a deal with a group called Lepetit Chef, they offer these kind of really cool kind of animated dining experiences. And at over $200 a person, it's been selling out ever since they started about a year ago.

It's a great story.

All right. So I'm going to take a slightly different approach on driving revenue growth. I'm going to talk about banquet and catering contribution. So today, obviously, you hear us talk about that we're at record highs for these numbers. This doesn't come by any accident, right? It's -- we've taken a much more strategic approach to driving big point and catering contribution with our operators. So one thing that you see today, regardless of whether your eating in our hotels are eating out somewhere, the portions and the pricing, one has gone down and one has gone up, right? Your full and your stake has gotten smaller, but your pricing for that has gone up. So we do focus on that, right? We're faced with high inflation, customers understand that, and we make sure that the operators are charging appropriately. Escalation percentages and contracts. So we signed contracts with group many years out based on the hotels we have, they're booking 4, 5, 6 years out. So we want to make sure that the operators are putting the proper escalation in those contracts to ensure that we don't have an issue in the future. Another thing that we do, which Travis just alluded to, is kind of peak demand, pricing and location. So our resorts, if you want an event outside or you want it in a high season, you're going to pay 15% to 20% more for that event. So here in Florida, if you want something in Q1 outdoors, it's going to cost you quite a bit more than if you want it in July. So we're just ensuring that we have that strategy and we're implementing that appropriately. -- consumption strategy. So you saw a great example of this last night, right? Did you see the waiters and waitresses, servers walking around with the trays, right? So the more of that you consume, the more the host paid for you to have that event, right? So our strategy with the operators is always be walking around with something in your hand, right? Because the more that they're taking that, the more our average checks are going up and our cover counts are going up. So this is very strategic that we are passing our derves and drinks and desserts and anything else that you will pay for...

Ease of access with the alcohol comes to you that actually drive some incremental revenues in product...

Absolutely. The other thing that we've seen is a big trend in food and beverage today is sober people or sober-curious individuals, right? So that's revenue that we're losing on the beverage side, which is highly profitable. So you will see that a lot of our properties have made mocktail menus today. So you're going to pay as much for a mock tail as you are for a glass of wine. And so they've implemented some pretty extensive mocktail menus to ensure that we're retaining that revenue. So we did all of this recently at a hotel. We had a large convention hotel that was coming into the year with $6 million down in banquet and catering pace. They're now going to be up 3%. So that's a $9 million swing by implementing all these strategies that we just talked about here today. So...

That's just -- that's another fantastic story.

Can I tag on to that one...

Take away.

So it's really interesting. We talked earlier about benchmarking, and we definitely use a lot of data from the Enterprise Analytics team to really see if we're getting the best results. But as Kerry was talking about this topic in particular, it's another example of where our size and scale matters in terms of sharing best practices at a recent department meeting, Kerry brought forward some best practices from some of her hotels. We were able to broadcast that out across all the other hotels. And while they were doing a lot of the things, I heard from almost every hotel, hey, I've got a couple of nuggets out of here that's going to help us drive revenue. So again, that kind of collaboration really helpful.

Propagating those good ideas throughout the portfolio is tremendous. Great. Well, Travis, since we're with you, give us your insight here and the benefits of having a brand at a hotel.

Oh boy, let me think about that one for a second. So no, I think, look, if -- as we talked earlier, everyone on the stage really kind of started their career on the brand side, right, before entering asset management. And so I think one of the great things is we know the inner workings, right? We know how the sausage is made in the brands. We know what's important to them. And I think that positions us really well when we're trying to get things done. You can certainly argue, and I'm not going to hide from this, right? There's this kind of natural friction between sometimes what the brands want and what's good for the hotel owners. So when you think about brand standards that are rolled out and we say, jeez, what the heck are they thinking with that? That can't happen. I think the good news, though, is the brands, there's no denying that based on their size and scale, that they have an advantage, right? And so if you just think about the room nights they generate, the ancillary spend that comes from the rewards programs, it's just really, really significant. So then that's all good. How do you then solve for this issue of the conflict. And I think it's been really interesting at Host. We have some real competitive advantages just like the brands have an advantage due to size and scale, we have an advantage from size and scale. I'm stealing Jim's line, but when we call, they answer the phone and having worked there for 23 years, not only they answer to the phone, there's a significant amount of activity that kicks off to figure out, Host is calling, how do we solve this issue?

You've been on both [indiscernible].

Yes, yes, yes. I've been working on solving some of those. So I think there's that. I think one thing that a lot of us, many of us participate in brand advisory boards and owner advisory councils. It's another way that we're able to have influence. And then I think you really can't overstate the power of the relationships at all levels, right? I mean we all have our relationships, and as I think our executive team with a test, when we need some help, we call and they make the phone calls and just a number of examples, whether it's really a very complicated capital plan that was put together through MTCP and getting that done. On a portfolio level, our individual asset issues like the New York Marquis, where we outsourced food and beverage, we're able to leverage all of that together to get the best outcome For Host.

Great. Kerry, let's talk about margins. So get -- share with us like some of the best methods you've found in driving hotel margin performance.

Absolutely. One of our favorite things to talk about at Host. So we've talked about it a lot today already, but I can't stress enough the importance of the relationship we have with Enterprise Analytics, who you'll hear from in a little while. This is one of my favorite things about working with Host, having a financial background. I love data, as many of you do. And the ability that we have with the large portfolio that we have and have had, and the tools that this group provides to us from a benchmarking perspective are incredible. It's a great partnership between both organizations, and I think it allows us to drive really great results. One of the things that we did in our partnership was worked with a company called Carpedia, this was to improve our productivity in the hotel. And you might find that, okay, we've got some benchmarks and this hotel does the front office better than this hotel. So let's show some improvement. Well, this process really took it a level deeper. It actually looked at the functions that people were performing, right? So we learned in many of our properties, ones like this one, right? This is 2010 room hotel with 0.5 million square feet of meeting space is large, right? A lot of square footage you covered. What we learned about the employees, when they needed supplies, we're having to walk all the way back to the central locations to get them, whether that was an engineer or a housekeeper. So one of the things that was done as a part of that project to improve our productivity was to locate closets. This is a simple thing, but a massive saving in productivity, right? Locate maintenance closets and lending closets and supply closets, it's closer to where people were doing the actual work. So that was a great opportunity for us. Just look how work was done, right, and try to find an improvement that yielded millions of dollars in savings to us from a productivity perspective, and that was a great partnership between these 2 groups at Host. Another thing that we did from a productivity perspective, which you'll hear us talk a lot about because it is our largest expense labor rate. As we looked at our front offices, right? We have people standing at the desk. We have people behind the desk that you do not see answering the phone, right? So one of -- that was a large area of opportunity that we identified early on, and we combined that function for the PBX operators and the front desk employees. And then now we're taking that to the next level with artificial intelligence in phone -- when we're replacing our phone switches, having some of that automated. So again, that yields us a large saving in productivity improvement, and that's a great partnership between our 2 groups. And actually, that also is a partnership with Mike's Group, and the technology folks. The third way we kind of improve our margins, right, is our ROI projects that you hear us talk a lot about, right? Simple things, just really taking a look at the business and how it's running and how we can improve. At Grand Hyatt D.C. right? We were leasing a fitness center space in the building next door, right? We were paying 6 figures a year for this fitness center. It was great. It was nice, but we had space in our own building. It was like that when we acquired the asset, but we realized that we had the opportunity to build our own fitness center and terminate that lease, right? And save us a significant amount of money. So there's things like that, that we're doing. We have the opportunity in Boston, you already heard Travis talk about the restaurants. Well, long before that, we lease the Starbucks as well. This is a highly traffic into Starbucks right by the tea and the Copley Mall and people are entering all the office buildings. So we're walking into their on a daily basis. But again, because of your labor cost in a city like Boston, right, our margin was in the teens, right? Now we have a 6-figure lease with Starbucks. And Starbucks really doesn't lease many locations. So that was the power of our location and our relationship with Starbucks.

Some great examples. Joe, tell us about the multiyear repositioning going on at the Fairmont Kea Lani. We've been working at this for a while and really some exciting stuff to share with the group.

So on to the other end of the country. Very excited to talk about this project. We're now within days of completing the guest room renovation, all suites, all villas. The lobby renovation begins in July. As we finish the physical side of the transformation, we're continuing to enhance and refine the resorts positioning as Maui's only suite and villa luxury oasis, quite a unique asset. Continued commitment to sustainability. We'll stick with many of the projects and programs that we've done geared towards sustainability, one in which is rooted in Aloha, which is a reforestation initiative, directly impacting the island's most precious resources in which we -- is a great example in which we have our guests, our staff and members of the community participate in. There are numerous other sustainability programs in place and planned dedicated to perpetuating Hawaiian culture and strengthening the connection between the community and that's indicative of Fairmont Kea Lani's grand division for the resort. What's forthcoming is an immersive experience from arrival to departure. We're focused on honoring the history and rich culture of Maui as well as the community of Wailea and all that drives the mystique of the destination. Embracing sense of place through all levels of the resorts transformation has and will continue to allow our operators to drive a higher price point. We continue to focus on what this experience is worth and not what it costs, and this posture has been holding true thus far with our guests.

Well, I think it's interesting, too, I would tie in that immersive experience you're discussing to that luxury price point. And again, connecting with the comments we've talked about today and also Thomas' comments last night before seen Orlando, those things really go synergistically together.

And it's a natural process of marketing that they take away that experience and share that with those that they know. It certainly enhances our ability to talk about the resort more.

Great. All right, again, Final question. What is the future of Asset Management? Kerry?

Okay. Future of asset management.

You are the future, you guys are the future of asset management. We know that -- but, specifically?

I mean it's continuing to look at the business, right? And what is the customer looking for? So one of the things we know the customer is looking for is experiences, right? So as we look at all of our assets and where we can continue to grow our revenue streams, I think experiences is one of those large areas of opportunity, right? So you look at properties like Alila Ventana, right? So you haven't had the pleasure of going there yet. We highly recommend that you visit, but in an effort to find more things to do and find ways to market that destination and generate additional revenue streams besides the rooms. We've created some significantly interesting bookable experiences, right? One that Nate really likes is the beekeeping experience there. If you haven't had a chance to do that, it's a really great experience to interact with the bees and extract your own honey. You can also make things with it. Another thing that we've done there and this is a little more aspirational in marketing in nature, but we've created the XPT experience with Gabby and Laird Reece. So far, we're thinking it's going to be somewhere around $60,000. You can have a nice health and wellness retreat with Gabby and Laird Reece at the Alila Ventana. Mike also tell Jackson Hole, right? We've got the Wolf experience. So for, I think it's $25,000. You can file an helicopter into the park and search for wolves, right? So it's really making these experiences that people will book, right? We have high net worth individuals staying in these hotels. So we will capitalize on these bookable experiences, but it also gives us a great opportunity to market the resorts. If you look at our group guests, right, so from a bookable experience perspective there in San Diego, we've done a couple of interesting things. We created a Topgolf Swing Suite on the Bay at the Marriott Marquis which is booked heavily by groups. They were looking for more things to do with their affiliates when they were in town. So this was an opportunity as to go that revenue stream. At the Hyatt Manchester from a leisure perspective, we've got the rooftop cinema, which has a nice view of the city where we show movies. And we have a food and beverage concession opportunity there as well as groups can book that privately for their own events. In keeping with we were talking yesterday as we were walking around the Four Seasons, the sports piece, right? Pickleball has made a bank for sports and fitness facility. So what we've done, Coronado has done something very unique with respect to that. They've created actually pickleball championships. So groups can come. They can book. They can have a lesson. They can have an awards dinner, all [indiscernible] pickleball. And they're booking a lot of groups this extenuating opportunity. And the other thing that we've done, and we talked about earlier is just making rooms with equipment for them, for health-conscious travelers, right? Hyatt Manchester created a Peloton experience. So you can rent A Peloton room where has the treadmill, the bike equipment, weights and mats and everything for a private fitness work out when you have your stay there in San Diego.

Great. Thanks, Joe.

So 2 things to stand at top of mind for me are technology and really storytelling about what our hotels offer. The labor market continues to change and in some cases, be elusive in some positions -- necessary task and hotel are less engaging and desired. We've taken the approach of deploying technology advancement to try to aid or combat that. For example, at the Hyatt Regency now we deployed robotic vacuums. They called Whiz Robots. They vac in public spaces, quarters, meeting spaces and kids like to chase them. Our managers have found some of these tasks of doing that kind of vacuuming to be mundane, deploying them elsewhere, employees. We've had the opportunity to work with our hotels to engage -- to create boost engagement as well as save labor costs.

I tell you the people that are happiest with the Whiz Robot vacuums are the housekeepers because the people who used to vacuum the floor all day are now running [indiscernible] up to the housekeepers and making them more efficient and making their jobs easier to do.

It is a connection. Absolutely. The second item that's high on my list is storytelling. It's really no longer productive to just continue to populate social media with messages. We now need to make a connection with our guests or potential guests and articulate a story going back to the Fairmont Kea Lani about exactly what we're doing. Our story is about what we deliver, and the feeling that we want guests to leave with, we're confident through these efforts of making this connection, we'll be able to continue to drive competitive advantage throughout our entire portfolio.

Travis brings us some.

So -- everything you guys said. But I think what I would say is having been here for over 3 years now, there's this incredible energy at Host, right, about looking forward and about continuing to get the most out of the assets and driving EBITDA. And so really, from my perspective, that's it, just not being satisfied, continuing to look forward, continuing to find innovative ways to drive revenue at our Hotels & Resorts to continue to redefine that operating model and really leverage everything our great platform has to offer.

That's great. Well, thanks, team for the brushstrokes on asset management. Applause for who did a great job with the panel. Thank you very much. Thank you. Thank you. And coming up next to drive home some of the finer points of capital expenditures and corporate responsibility please, let's hear from Mike Lentz, Executive Vice President, Development, Design & Construction.

Thank you, Michael, and good morning, everyone. I lead capital expenditure projects, which includes renewals and renovations, ROI investments and investments in sustainability. And I have the good fortune to share with you this morning some really great work that's done by the in-house talented team of professionals that work for me. As you heard from Jim, our size and our scale give us the ability to have subject matter expertise in multiple areas, from design and procurement to engineering and cost management. And included in that expertise is energy and sustainability. And I'm joined this morning by Michael Chang, who will be discussing corporate responsibility and, in particular, some of our environmental initiatives. So let's get started. Using our CapEx guidance from 2023 to help you understand sort of how we think about capital and capital allocation within Host as it relates to capital expenditures. All of this is centered around driving EBITDA growth to improve the cash flow of our portfolio. As you've heard today, our people, our platform and our portfolio are Host competitive advantage. And everything we do is interrelated from pre-acquisition due diligence to underwriting and budget reconciliations. Our long-term capital planning touches really every group within Host. Using our guidance, I'd like to break that down a little bit. The first bucket is Renewals & Renovations. We include in this bucket all of our front of house reinvestment as well as building replacements, investments in central plant, building envelope and infrastructure. Hotel management agreements differ in terms of owner funding required for Renewals & Renovations, and we're always looking for ways to combine R&R investments with ROI opportunities. The next bucket is ROI projects. This is really a broad category. It includes everything from brand reinvestment programs like the Marriott Transformational Capital Program, to sustainability ROIs and investments in co-gen plants, renewable energy, technology initiatives to reduce energy and water consumption. Other types of ROI projects include ground-up development, guest room and meeting space expansions and initiatives to repurpose underutilized spaces. ROI projects can be sourced from a number of different areas within Host. For example, a brand reinvestment program like the MTCP might come from investments where operations ROIs like repurposing underutilized spaces will come from our asset managers. All major ROI projects are underwritten by our Enterprise Analytics team. So you can see it's a very collaborative process. The final bucket insurable reconstruction, Typically, this is a very small area of capital for us, but the impact of Hurricane Ian, which is categorized as a 500-year event makes that much more significant in 2023. You've heard us talk a lot about the Marriott Transformational Capital Program. So I thought I'd use a few -- take a few moments to show you where we are as we approach the completion of this initiative. Recall the genesis of the program was the convergence of a number of Host-owned assets that were in need of cycle-based renovations. Marriott's rollout of a new series of brand standards, and a significant owner-funded shortfall that would result from complete implementation. We negotiated operating profit guarantees to offset business interruption and enhanced owners' priority treatment on incremental investment, which reduces the IMF paid to Marriott. On average, we're targeting 3 to 5 points of RevPAR index share gain from these 16 properties following their transformational renovations. It's really a win-win for both Marriott and Host as we now have on brand assets in some of the most important markets to Marriott's elite-level Bonvoy customers. We believe piecemeal renovations will not move the needle. And when an asset is not #1 in its comp set, there's an opportunity to gain market share through transformational renovations focused on updated guest rooms, public space, lobby and lobby bar experiences, loyalty club lounges, fitness centers, those things that help a hotel present like a new asset and are important to our customers. During the pandemic, we extended this initiative to include 8 additional assets that would benefit from transformational renovations. The MTCP 15 of 16 assets are now complete, and later this month, we'll complete the Marriott Metro Center in D.C. On the 8 other assets, we're about 90% complete now. We'll complete the West in Denver early next month. Ritz, Naples beach renovations are substantially complete, simply waiting on the hurricane restoration work to reopen that property. And the final asset, as Joe mentioned, Fairmont Kea Lani will finish in December, and I've pulled a couple of case studies from our investor presentation to show some results. Let's start right here at the Orlando World Center. In October 2021, we completed the third and final phase of guest room renovations. I like this before and after slide because it really highlights some of the themes associated with Marriott's new guest room design standards. LVT hard surface flooring, resized case goods, architectural features. And finally, indigenous design elements often found in the vinyl wall covering or the artwork that is unique to every property. I think this achieves the goal of making the room feel larger and through finishes and furnishings. The guest bathrooms underwent a similar transformation with tub-to-shower conversions in 75% of the guest rooms, new vanities and lighted mirrors and barn doors wherever possible. the bathrooms themselves are not any larger, but through some of these design moves, we help them to feel a bit larger. Another aspect of the MTCP was improving the arrival experience, which is accomplished through a number of design moves, including new registration desks and pods, activated lobbies with improved lobby bars and site-specific enhancements like the sushi bar here at the World Center. The first of 2 value enhancement projects at Orlando World Center included the addition of a 2.5-acre water park. The new water park opened in March of 2022, just in time for spring break. Another value enhancement project is the Magnolia meeting space. And we talked about this briefly, briefly earlier, but I'll just kind of explain sort of the background. The hotel manager identified the fact that breakout meeting rooms were holding the property back from its ability to maximize the utilization of the large ballrooms and effectively layer group business. Working with Host Asset Management and Enterprise Analytics, we underwrote the addition of 24 meeting rooms ranging in size from 1,500 to 1,800 square feet and constructed this 60,000 gross square foot expansion, which finished last May. Over the next 3 years, we have $233 million of group room nights and catering revenue on the books utilizing the Magnolia meeting space and another tentative $9 million -- $19 million rather. So we're on track to achieve our optimal group room mix at this property by 2025. The cumulative impact of the MTCP transformational renovations as well as the addition of the water park and meeting space helps this property become the #1 EBITDA contributor in our portfolio in 2022 at $90 million. You can see we've had material improvements in RevPAR, total RevPAR and banquet revenue per group room night, all leading to a 27% EBITDA increase and a 200 basis point EBITDA margin improvement. Moving on to another transformational renovation. The New York Marriott Marquis also a multiyear property that took 3 years to renovate all the guest rooms. Here, you see we did not install LVT flooring because that LVT flooring replacement is tied to case goods. Case goods were in like new condition. So we're really pleased with how this renovation transformed the room with new soft goods, flooring, wall covering, lighting and artwork. Many of you are familiar -- rather are from New York. So the next time you visit Times Square, I would encourage you to check out the Broadway lounge on the 8th floor of the Marquis. Here, we removed a former walkway that encircle the restaurant and effectively cut off views to Times Square. The result is a fabulous 2-story space that is one of the best places in Times Square to have a drink or to ring in the new year. This picture shows 1 of 2 8-foot by 75-foot video billboard suspended from the 9th floor bridge, that's a prefunction area. We use that to bring Times Square into the lobby. Here's a shot of our updated registration desk. This photograph shows our lobby bar, Revel & Rye. Here's a shot of the M Club lounge, the mother of all M Club lounges, the largest in the Marriott system. And here you see the Broadway lounge by daytime. It's really a beautiful space. The New York Marquis is a great representative of the MTCP program, as the renovation was truly transformational. And I'm glad we continued through the pandemic because doing the construction on the 8th floor in that atrium space, during any time other than the pandemic when the hotel was effectively closed would have been incredibly disruptive and caused a great deal of business interruption. The multiyear transformation completed in the third quarter of 2021, so we have a little more than one year of post-renovation results. And while RevPAR index share isn't comparable because one of the hotel comp sets is -- one of the hotels in the comp set is closed. We can share some high-level numbers, Q1 2023 transient rate, up 21% from pre-renovation ADRs. Groups have reacted very favorably to the new rooms, meeting space and amenities, giving the property the confidence to push group room rates by 12% over 2019. In 2022, I think you heard Travis mention, we had over 208,000 group room nights, setting an all-time record for this property, and we're set to exceed that number or meet that number again in 2023. Additional ROI initiatives undertaken during the reposition included outsourcing F&B, as Travis mentioned, as well as constructing a cogen plant that will result in a stabilized cash flow improvement of $3.1 million annually. Michael is going to discuss that a little later. In addition to the 16 assets in the MTCP program, we had 8 other assets, a number of hotels and resorts that we thought extensive renovations would really benefit those assets that we completed during the pandemic at the Hyatt Regency Maui, we completed this extensive renovation of guestrooms, suites, corridors as well as the new arrival experience. The extensive renovations to the guest room bathrooms included converting tubs-to-showers installing dual vanities and reorganizing the fixtures to improve space utilization and expand the bathroom, which was achieved by removing a traditional closet in favor of an open-closet concept that provides more storage and less space. We took full advantage of the pandemic and completed an incredibly invasive renovation of the Atrium tower ground floor. We needed to replace the waterproofing and drainage in the planters. And the only way to do it was to demolish the entire atrium, dig up the lobby and then put it all back. We also had to replace risers and distribution piping, which caused this guestroom renovation to be incredibly complex and would have been terribly disruptive, if not completed during the pandemic. The result is a beautiful new atrium space that enhances the arrival experience and embraces the Aloha spirit. Had we not been able to do this project during a period when Maui was effectively closed to tourism, it would have been very difficult. Here's the case study slide for the Hyatt Regency Maui completed in December of 2020. We had 10 points of RevPAR index share gain. We've seen 51% increase in ADR, 27% increase in food and beverage spend per occupied room, and 590 basis point hotel EBITDA margin improvement over 2019. Moving on to the Fairmont Kea Lani. We've mentioned this one also, but here are some slides and some pictures to go with it. Following a series of piecemeal renovations, this hotel simply did not keep up with the other assets in the luxury properties in Wailea. So last year, we started a truly transformative renovation. This is an extensive repositioning renovation that includes all guest rooms, suites and villas, as well as a new arrival experience that is aimed at positioning the property as the most authentic Hawaiian luxury resort. Using a deal structure similar to that of the MTCP, our investments in asset management team negotiated a reinvestment deal with Accor, which combined with a targeted increase in average daily rate should enable us to achieve double-digit cash-on-cash returns. This is an all-suite hotel where the standard guest rooms occupy 2 bays and over 850 square feet. Here you see before and after views of the parlor or the living room portion of the guestroom and here you see before and after views of the guestrooms bedroom. The new rooms are lighter, brighter and incorporate Hawaiian patterns and colors. In fact, we engaged a native Hawaiian designer to help review the design to ensure its authenticity. The bathrooms here were already huge, already had [indiscernible] but the pedestal sinks wall sconces and stone gave it a dated feel, so we replaced almost all of it. As I mentioned, in addition to transforming the guest rooms, suites and villas, we'll also transform the arrival experience. By removing the central fountain and opening the Arches will dramatically change sight lines to the ocean upon arrival. And by removing the ornate stone flooring in favor of simpler stone finishes and patterns with the introduction of live plantings will give the lobby a whole new field. As we get towards the lobby bar, we'll wrap columns organically in wood and surround them with native foliage and set the mood for a new lobby bar that will have unparalleled ocean and sunset views. We'll complete the guest room villas and room renovations here this month, and we'll start the lobby transformation in July. That's set to complete in early December in time for festive. This is the final property in the 24 asset program of transformational renovations that we've targeted an increase of 3 to 5 points of RevPAR index share gain. But I think you can see on some of these case studies, we're well ahead of that target. Shifting to our ROI development projects. While we're not typically a ground-up developer, we collaborate with investments, asset management and enterprise analytics to identify and underwrite development and redevelopment projects. To monetize excess or underutilized real estate in our portfolio, where we aim to generate at a minimum mid to -- low to mid-teens unlevered cash-on-cash returns on our investments. I'm going to share some case studies on some recent completions and give you a peek at some upcoming ROI development projects as we continue to extend the pipeline with new opportunities to elevate the EBITDA growth profile of our platform. At the Westin Kierland, we identified excess parking and we processed an update to the planned unit development, which created a 2-acre development parcel, leveraging our in-house Development, Design & Construction expertise. We constructed this 165 key premium select service hotel. While the brand's design standards are very prescriptive, leaving little room for interior design teams discretion, we're proud to say this hotel won best new premium select service hotel for Marriott in 2021. The hotel opened in January of '21 and exceeded underwriting well ahead of anticipated stabilization. Our 2022 NOI represents a 17% cash-on-cash return. When Host acquired the Andaz, Wailea, we acquired a fully entitled condo project with an expiring special management area permit. Our predevelopment team secured a permit transfer and a 2-year extension, which was just enough time to complete Design, Engineering & Construction of 19 luxury 3 and 4 bedroom pillars, despite pandemic-related delays. Completed and opened in May of 2021, these Ilikai villas had a 2022 RevPAR of $1,080, which was 21% ahead of underwriting. At the Ritz, Naples Tiburon, this project was underwritten to improve summer occupancy without any expected ADR premium, but the development project has come out of the gates with incredible performance. In an underutilized area of the resort, we added a 1.5-acre water park, including a Lazy River water slides and kids pool play and play area. To make room, we relocated the family pool, expanded the pool deck area and incorporated a number of private cabanas and event lawn. Finally, we added a new poolside restaurant bar, kitchen and completed the construction during the pandemic with minimal guest disruption. The impact of the Aquatics program and the F&B outlet has had on the resort is nothing short of amazing. Compared to 2019, hotel EBITDA increased by 87% to $23 million. EBITDA margins improved by 500 basis points. Total RevPAR is up 59% and RevPAR is up 69%. And the resorts RevPAR index share grew from 166 in 2019 to 205 in 2022. Staying in Naples and moving over to the beach resort. This property was built to luxury standards of 1985. The hotel simply didn't have enough suites to satisfy demand. So we combined standard guest rooms to create multi-based suites, enabling us to harvest keys from in the existing hotel for a new expansion tower. The transformational renovation will add ultimately a net 24 additional keys for a total of 474 keys, but more importantly, it will increase the suite count from 35 suites to 92 suites. To accompany the repositioned guestrooms and suites, we're renovating and expanding the guest room bathrooms to increase fixture counts and elevate the level of design and functionality. We're increasing the pool deck area by over 50%, adding new cabanas and bungalows. We're adding a new poolside food and beverage outlet and bar, and we're adding a new club launch that will eliminate the capacity constraint on upsells. And finally, we're enhancing the arrival experience with a reimagined lobby and lobby bar. We were set to open this project in December of last year, but Hurricane Ian had another thing coming for us. On September 28, when Ian made landfall near Cape Coral, it was a high-end category for hurricane with sustained winds of 155 miles per hour, making it the fourth largest hurricane or fourth strongest hurricane to hit Florida since recordkeeping began in 1851. Ian brought nearly 18-foot storm surge to Charlotte Harbor along with 20 inches of rain and the impacted areas will take years to recover. The Ritz-Carlton, Naples was severely damaged as a result of the storm surge and had -- and has undergone extensive reconstruction. As we've been rebuilding the impacted areas, we've looked for ways to enhance resilience. And Michael is going to talk a little bit more about that when he covers climate risk and asset vulnerability. But I'm thrilled to say that we're about 6 weeks away from our targeted reopening. These drone camera shots were taken just 2 weeks ago. On the left, you see the family pool and on the right, you see 2 new adult pools. The tower in between those 2 is our new Vanderbilt tower and on the pool level is our new food and beverage outlet and our new bar. Note, in the upper right-hand corner, you see an image there. It's an example of planned future CapEx that was accelerated to avoid future disruption. We identified that the waterproofing above the Valet parking garage had 5 to 10 years or less remaining useful life. So we excavated the entire entry drive Porte cochere to replace that waterproofing and weather-type the parking garage. This is a 5-month project that would have been incredibly disruptive if it were done during any time other than a hotel closure. Construction of the new tower, all the guest rooms and lobby is substantially complete, and we're in the punch list process, turning areas over to the operations team. Here are some photographs of the new arrival experience. Across the top, you see our new registration concierge and seating groups across the bottom, you see our new champagne bar, which replaces a tea service area. This really elevates the Ritz-Carlton to modern luxury expectations. Here are some shots of our beautiful new club lounge, I mentioned earlier that this is larger. It's 6x the size of the old club lounge, removing a limit on the number of upsells. Prior to the pandemic, the club lounge sold at an annualized ADR premium of $220 per night. Club access rooms are now priced at a premium ranging from $500 to $900 per night depending on the season. Note, we retained and renovated the old club lounge to give the hotel another space to sell for group business. Here are some shots of our beautiful new suites and guest rooms. Across the top, you see images of our suites. And across the bottom, you see our standard guest rooms. Note the middle photos show how we elevated the design of the guest bathrooms, moving to just really enhance the new experience there. Okay. I've got some new projects I want to show. Hilton Singer Island. We've looked at redeveloping this property in a number of different ways, and we've determined that the best near-term solution is to convert it to an independent lifestyle hotel while maintaining the option to develop over the existing surface lot in the future. The repositioning will address all front-of-house areas, including new guest rooms, suites, bathrooms, 3-meal restaurant, new arrival lobby, meeting space, and we've added several ROI projects, including a lobby cafe and marketplace, a new indoor outdoor bar, additional meeting space and the expansion of the pool deck in addition of cabanas. We estimate mid-teens cash-on-cash returns on the repositioning reinvestment, and we expect to complete it in December of '23. When we acquired the Phoenician, concurrent with the repositioning renovation, we processed a new master plan PUD, converting 27 holes of golf to 18-hole -- a new 18-hole resort course, and freeing up approximately 50 acres for development. We've sold approximately 40 acres for $90 million for residential development. And when we repositioned the resort, we upsized the tennis complex, the fitness center, the spa, the pools and amenity areas to support a fee-based membership program. We also retained sites for future development and expansion of the resort, including this 2-acre site circled in red, which is adjacent to the Canyon Suites. Here, we've designed 8 luxury villas ranging from 2,500 to 3,500 square feet that can be sold as 20 separate keys. It gives us a product category that we don't currently have expanding the resorts offering. And I'll move pretty quickly through this because we all saw it yesterday when we were on the tour. But when we acquired the Four Seasons resort here at Walt Disney World. We also acquired an adjacent 5-acre development parcel, which is fully entitled for 40 fee simple condominiums that we anticipate selling as Four Seasons branded condos. In addition, to access to the Four Seasons, world-class amenities, including the spa, pools, water park and food and beverage outlets, these condos will be part of Disney's Golden Oak Private Residence Club and can purchase golf membership at our Four Seasons Tranquilo Golf Club. We're in the process of finalizing agreements for licensing and management as well as sales and marketing, and we've targeted a marketing launch in the second quarter of 2024. Municipal and environmental approvals are in process, and we expect to break ground on the project in the fourth quarter of 2023 and complete construction in the fourth quarter of 2025. As we pointed out during the property tour, the 5-acre development site is immediately north and west of the resort and its entry drive adjacent to the water park. Condo owners will enter the resort through the Four Seasons neighborhood where there's an existing gate. We anticipate the building architecture, I should say, is meant to really be a transition from the large-scale Tuscan architecture of the hotel to more simpler contemporary architecture of the existing residences. The darker base colors relate more to the hotel, where is the lighter and simpler details at the roof line relate more to the residences. The condo tower is stair-stepped to put most of the density nears the hotel where we have 8 stories over parking and 2 floors over parking in the corner, closest to the residences. On the other end of the site, closest to the existing Four Seasons Residences, we have 2-story villas planned. Here's some imagery of the South and East elevation. This is the West elevation. You'll notice architecturally, there's some differences between some of these as we're working on finalizing details however, they are subtle. This is an alternative of the West elevation and the pool complex and another option for the entry. Turning to corporate responsibility. Host program was formalized in 2010 with our first generation environmental goals and our first goals that we're focused on social and employee community engagement. The world of ESG has changed significantly since then with increased interest by institutional investors who are focused on ESG matters and demanding greater disclosure and management of long-term environmental and social risks. I'm proud to share that we've been recognized as a sustainability leader for over a decade as a result of our transparency and our management of our environmental impacts. Our CR program is centered around creating long-term value through responsible investment, an overarching strategy, which guides our focus across environmental, social and governance topics. Over the years, we've achieved numerous industry first, reflecting our commitment to industry-leading ESG initiatives and integration of ESG into our business strategy. We're one of the first real estate companies and the first hospitality company to set an emissions target that's verified by the science-based targets initiative, and that's been verified since 2016. We're the first lodging REIT to issue green bonds and a sustainability-linked credit facility to drive environmental initiatives such as increasing lead certifications in our portfolio and increasing renewable energy consumption. As a result of these initiatives, we've continued to lower our cost of capital. On the social side, we are the first lodging REIT to issue social targets, including 2 diversity-related targets and 1 employee engagement target. Here to reveal more about our comprehensive efforts is Michael Chang, he's a leader in-house corporate responsibility program with a focus on environmental sustainability. Michael? Stage is yours.

Thank you, Mike, and good morning, everyone. As Mike mentioned, Host has been recognized for over a decade for its leadership and sustainability. We've highlighted a few leading ESG recognitions demonstrating our success and our consistent focus on creating value and scaling impact through environmental and social initiatives. Over the next few slides, I'll cover the evolution of our corporate responsibility program and how we create value through responsible investment and how our environmental initiatives contribute to our long-term sustainability aspirations. So Host CR program has evolved significantly over the last 15 years, while maintaining its holistic and pragmatic approach to ESG. In response to shareholder requests for ESG information, Host formalized our CR program in 2010, and we added Board oversight along with our first-generation greenhouse gas and energy goal shortly after. Throughout the years, we have demonstrated our commitment to ESG with a deliberate expansion of our CR program, adding goals around material topics such as water, construction waste and renewable energy and new initiatives to engage our supply chain to seek -- seeking to integrate sustainability in the products and materials for our renovation and redevelopment activities. From a performance perspective, we have consistently met our ESG goals ahead of schedule and are currently on track to meet our third-generation 2025 goals, including our verified science-based greenhouse gas target at the highest ambition level. As our investors and stakeholders increasingly prioritize these issues, we also strengthened the governance of our program to further embed ESG into our business, forming our cross-functional CR advisory committee, engaging with financial reporting to put appropriate controls in place over our ESG data and increasing oversight with our executive steering committee, including Mike and the heads of HR, Legal and IR. So not only were our efforts recognized by investors in leading frameworks, we were also achieved many industry firsts, as Mike mentioned, from setting verified science-based targets, incorporating SASB nonfinancial metrics in our 10-K to launching a lead program for existing hotels, enabling us to issue nearly $2 billion in green bonds and link sustainability pricing incentives to our $2.5 billion credit facility. So what began as a program focused on ESG disclosure 15 years ago has evolved into a key component of our business strategy, while enabling access to lower cost of capital through sustainable financing. To continue to meet investor expectations and maintain leadership in a quickly evolving landscape, we launched our aspirational 2050 vision last year to become a net positive company. This long-term holistic framework serves to guide our ESG strategy across environmental and social topics, material to our business beyond just net-zero emissions. The 5 topic areas include net positive, where we aim to go beyond net-zero impact across -- in our approach to energy emissions, water, waste and biodiversity, climate resiliency through sustainable certifications and reducing exposure to climate risk, responsible supply chain because our suppliers are essential partners to achieving our long-term CR goals, and maintaining our status as an employer of choice where -- because our people are what sets us apart, and we strive to build a diverse, inclusive, innovative and engaging workplace for them to grow their careers. Lastly, social impact, which is our commitment to corporate citizenship and supporting our communities. So for the remainder of our time, I'll focus on our current efforts towards becoming a net positive company and owning one of the most resilient portfolios. Making responsible investments that reduce environmental impacts while striving to generate best-in-class returns is a central theme to our CR program. Over the last 5 years, we've invested in over 600 sustainability projects with expected annual utility savings of roughly $20 million, representing an average of 15% to 20% cash-on-cash returns. The environmental impact of these investments are what drive our performance against our third-generation 2025 environmental targets. Here, we have a sustainability ROI case study on the cogeneration plant on the New York Marriott Marquis. A cogen plant, also known as a combined heat and power plant is a system that generates both electricity and heat. Cogen is generally more efficient because you can use both the electricity and heat output, which results in cost savings and reduce emissions while increasing resiliency by reducing demand on electric grid and creating power redundancy. So in addition to the transformational renovation, we're building a 4.2-megawatt cogen plant that will reduce the amount of electricity we purchase from the utility by nearly 75% through the electricity that we will generate and the electric consumption we will eliminate using the waste heat to reduce the use of existing central plant equipment. We're also installing a 1.1 megawatt hour battery -- that system will allow us to -- allow the hotel to avoid purchase the energy during peak periods of time. So to better illustrate the scale of the project, we've built a 3-story structure on top of the existing boiler plant housing custom system components that were built off-site and put together at the property, a formidable project in the middle of Manhattan. This project is a great example of our investment strategy at work and one that was made easier by the size and scale of our platform. Responsible investment in tech innovation also plays a key role in achieving our net positive aspiration. For over a decade, we've had processes and systems in place to monitor and benchmark our greenhouse gas, energy and water performance. This data is critical when modeling and funding sustainability ROI projects. We've had great success rolling out projects such as LED lighting, guestroom energy management fixtures in low-flow -- guestroom energy management systems and low-flow plumbing fixtures across the portfolio which often have cash-on-cash returns exceeding double digits. After more than a decade of making these types of investments, we've taken care of most of the low-hanging fruit using our proprietary ROI diagnostic tool. As a result, we've been piloting emerging technologies such as AI and machine learning assisted, smart building and ongoing commissioning platforms to further identify investment opportunities and maximize operational efficiencies. We also have pilots around robotics and next-generation EV charging infrastructure to support the transition to electric vehicles. Our fortress balance sheet also has allowed host to invest in PropTech and Climate Tech venture capital funds, which gives us early access to emerging technologies aimed at addressing climate change and making aging buildings more efficient and resilient. Our commitment to responsible investment has also allowed us to lower our cost of capital on approximately $4.3 billion of sustainable financing further demonstrating our ESG leadership and our pragmatic approach to the net positive and resiliency pillars of our 2050 vision. Since 2019, we have issued over $1.8 billion in green bonds with nearly $1.5 billion already allocated to the acquisitions of LEED-certified properties and projects that have achieved certification through our LEED program with existing hotels. This January, we closed on the refinancing of our $2.5 billion credit facility with no increase in pricing, linking 2-way pricing incentives that contribute to our verified science-based target and resiliency goals. So through our sustainability link credit facility, we have established a goal of more than tripling the number of hotels with LEED certification in just over 4 years. Historically, it's been especially challenging to LEED certify existing full service upper upscale luxury, convention-type hotels due to their intensive energy and water use. However, we've developed a novel approach to lead certifying our hotels following transformational renovations and built an improved pipeline of projects that we expect will exceed our 2027 goal with our current portfolio. Last fall, the JW Marriott Washington, D.C. was the first full-service hotel in the D.C. Metro area to achieve LEED existing building certification at the gold level. This certification was made possible with an engaged hotel management team, and we have invested in various sustainability upgrades, including rooftop solar PV estimated to save over 400,000 annual utility expense. We have also established the goal of more than tripling the use of renewable energy as a percentage of our electricity consumption by 2027. Host has over a decade of experience, implementing large-scale rooftop solar, and we expect to procure roughly 12% of electricity from renewable sources in 2022, and we'll have 11 hotels with on-site solar PV, generating 10% to over 25% cash-on-cash returns. But scaling renewable energy is not easy. The financial viability of solar is still largely dependent on policy, rebates and incentives. Even in Hawaii, where electricity rates are roughly 2 to 4x of that in the mainland, state and federal incentives are critical to making these solar investments pencil. There are also physical limitations to scaling on-site solar. If we were to put solar on all available rooftop space across our portfolio, we would only generate under 20% of our electricity use. So we look to offsite solar products such as renewable energy credits to make significant progress. But this is a short-term solution until new technologies and products become viable. I'd like to switch our focus a little bit on climate resiliency. We make significant investments to harden our assets to prepare for extreme climate-related events. We execute on projects such as replacements and restorations of exterior walls, doors and windows, roofs, grounds and elevated relocated equipment to further increase the resilience of our hotels. On average, approximately 6% of our CapEx were related -- were on related projects over the past 6 years. We also hold annual extreme weather and climate resiliency webinars, with hotel property teams to engage on preparedness expectations, best practices and Host's resource that are available to restore business operations as soon as possible after an event. This year, we began developing a formal climate risk program that will inform a more proactive and organized approach to managing these risks in our portfolio. Prior to Hurricane Ian, we had already planned and budgeted for it with. A portfolio climate risk analysis across 6 climate perils, including flood, wind, fire, heat, cold and water stress. The results of this analysis, along with our internal historical experience and knowledge of our assets, in addition to the models from our insurance providers, will guide our strategy to better manage our exposure to climate risk in our portfolio. So in this last case study, I'd like to highlight some of our resiliency measures we are implementing at the Ritz-Carlton, Naples. We are using the Hurricane Ian recovery phase to design and implement new climate resiliency measures that are targeted to withstand a 500-year event. These measures include, constructing a new elevated central energy plant, elevating electrical equipment where feasible. And this last picture shows the existing Gumbo Limbo beachfront restaurant. We're showing this picture that was taken maybe 2 weeks ago because the entire restaurant was raised in 2018, which prevented any major structural or catastrophic loss. The hotel also benefited from hurricane-rated windows and doors and [indiscernible] that were installed in 2013. The guest rooms remain largely intact without significant damage from water intrusion during Hurricane Ian because of these measures. These measures also demonstrate the effectiveness of our resilience investments, and we are using our size and scale to implement them consistently across our portfolio to be guided by our new climate risk program. So I hope you leave here today with a better understanding of our sustainability efforts, how they are integrated into our business strategy and how they contribute to our long-term aspiration of becoming a net positive company by 2050. Our commitment to sustainability is not just a moral imperative. It is also a strategic investment that drives responsible growth, positions Host as a leader with one of the most iconic, irreplaceable sustainable and resilient portfolios in the lodging industry. Up next, now let's open the aperture to look at Host's overall investment strategy. Please welcome to the stage, Nate Tyrrell, Executive Vice President and Chief Investment Officer; and Raj Contractor, Senior Vice President of Investments.

Well, good afternoon. It is fantastic to see so many familiar faces. For those of you who don't know my partner, Raj well, he's our Head of Investments. He's been involved in all of the terrific transactions that you've been hearing about over the last decade or so. He grew up in New Orleans, went to Tulane and then to Stanford. He has 2 awesome kids and a wife who is even more impressive than he is. He's also a big New Orleans Saints fan.

Thanks for that, Nate. I think most of you, if not all of you already know Nate, he's a lot older than I am. And he's been working at Host since what? It was called Host Marriott, something like, what, 18 years ago?

Yes, sir.

He leads investments in asset management. So both Michael Rock and I report to him. And he's modest about this, but he's a double Harvard grad, and he played football there. He's a father of 2 great kids, including a chess genius. And unfortunately, he's a Tampa Bay Bucs fan, but don't hold that against them. He's a good guy nonetheless.

Great. So now that we've covered our introductions, what we thought we'd do is spend the next 30 minutes talking about the investments group, about our strategy, current investment trends that we're seeing in the market, our unique platform, our track record and then maybe share some inside stories about some of our favorite deals. So look, we have a lot to celebrate. As you've heard over the last 6 years, our capital allocation efforts have truly transformed our portfolio. And we're really very well positioned to take advantage of any of the opportunities that may come out of the current macroeconomic environment. In a different time in place, with a drink in hand for everyone, ideally very good tequila for me, we might offer a toast and celebration and thank you both to the Host investment team for all these accomplishments, but also to our investors for their support. However, since it is only 11:00 in the morning, we're just going to stick with some coffee. And thank you to the investments team, and thank you to our investors.

Cheers.

So first, let me clarify that when we thank our investments team, we are not just talking about the handful of people who report to Raj directly because no deal happens at Host without contributions from a large and diverse group of people. Raj's Investments group is responsible for leading the execution of our investment strategy, including the acquisition of new hotels, dispositions of existing hotels and the reinvestment into our existing portfolio. They really serve as the quarterbacks of transactional activity, but working in concert with all of the functions that you see here on this slide or at Host, including asset management, design and construction, finance and accounting, enterprise analytics, legal, investor relations; and of course, last but not least, human resources who help us hire the best and the brightest. We believe that this cross-functional collaboration, it's truly what differentiates Host in the lodging industry. It allows us to move quickly, armed with value-enhancing data to provide certainty to our counterparties and to help us make good investment decisions. So when you combine that with our investment-grade balance sheet, it's earned us the reputation as the buyer of choice for hotel real estate. Our investment strategy is focused on taking advantage of the current market environment to raise the EBITDA growth profile of Host through acquisition, sales and by reinvesting in our portfolio. So in simple terms, we're investing in assets that we think will produce elevated EBITDA growth over the next 3 to 5 years. Sometimes that comes from well-timed purchases of hotels with unique attributes and really good market dynamics. Other times, it comes from the upside that we're able to unlock through our asset management capabilities or through ROI opportunities.

So thanks for that overview, Nate. So you've been around a while and you've seen some cycles in the hotel sector. How would you describe the current state of the market?

So let me start with the big picture. There are some clear long-term trends that suggest that right now is a great time to invest in hotels. On the demand side, people are clearly more interested in spending on travel and experiences than they are on goods. And hotels are capturing a much bigger share of consumers' wallets than they did 30 years ago. In addition, there are 38 million more people in the key demographics that spend the most on travel. That's in the 25 to 39 age range and in the active retirement ages of 55 to 79.

So hold on. You know you're in that active retirement age bracket or almost there, don't you?

Thank you. I'm just going to ignore that. Post COVID, there's simply much more locational flexibility around work, which is driving longer hotel stays. And finally, as Jim mentioned, near-term supply growth of only around 1% is the lowest that we've seen in the industry in decades. So it's a very favorable setup for hotel investment today. However, the current transaction market has clearly been chilled by tighter credit and higher borrowing costs. So Raj, you're in the market talking to brokers and owners and touring assets really every day, can you take a minute and just describe what you're seeing on the ground in terms of deal activity?

Sure. So as you mentioned, there's just not a whole lot trading right now. There's been some pockets of activity in some build markets like Tampa and Nashville, Phoenix, things like -- markets like that. And these are well-capitalized buyers and assets with good cash flow. So they can trade at cap rates high enough to cover the high debt costs. And sellers are able to get a good return on their basis from a few years ago. There's definitely liquidity for lodging. Debt is available for those types of deals and borrows up to 65% LTV, but it's expensive. Over SOFR plus 400 or north of 9%. We -- in the debt market, we've heard that big money center banks like Wells Fargo are back quoting on multiple deals. And the CMBS SASB market is open for hotel deals under $1 billion, especially in refinancings at similar rates. More broadly, although the current capital market dislocation has indeed slowed some things, it looks like owners will face some pressure to sell either because of end fund life issues or because hotel owners are facing a wave of impending loan maturities, the largest in history coming due at any one time. Many of these loans were originated at peak values with substantially higher leverage and many contain use of personal guarantees. And some owners possess little liquidity and asset level cash flows are insufficient from refinancing, principal balances, forbearance and property renovations. So approximately 25% of CMBS loans maturing in '23 and '24 are full-service hotels. And I believe, and I know you believe that we have some real competitive advantages here. All these factors create opportunities for Host due to our access to capital and our exceptional credibility. But there's competition. High net worth individuals and family offices have always competed for luxury hotels. Sovereign wealth funds who have been out in the market some time appear to be gearing up for increased acquisitions and activity in the U.S. And some of the biggest PE firms have raised enormous amounts of capital and increased their allocation for lodging. So long story short, we will be shooting fish in a barrel. So Nate, a question for you, and I'm sure all these guys are thinking the same thing. A good friend of mine, who runs a hedge fund, looked recently at our IR presentation and asked hey, everything says the same thing. What really differentiates you guys?

It's 2 simple words. It's our platform, which you've obviously heard a lot about this morning. But there is no doubt in my mind that Host has the single best platform for investing in hotel real estate. It's something that we have been building for 20 years. It is truly unique, and it is not easily replicable. Our platform is a combination of exceptional access to capital plus our ability to leverage data, plus an incredible group of people who are not only expert in what they do, but love working together. And hopefully, you've gotten a feel for that over the last 24 hours and have done so for many years. Our culture is just truly cross-functional. And what I mean by this is everyone at Host understands that we're in the same business, right? We're investing in hotels, we're collaborating with our managers to create value at our properties. Everyone has a role to play. Treasury is constantly improving our access to capital. Design and construction is finding the most effective and impactful ways to reposition our assets, enterprise analytics produces this data-driven analysis that our asset managers then use to drive property improvement. And our investments team sources opportunities and then works hand-in-hand with legal to negotiate transactions. Everyone understands the roles of their teammates, and they know really how to work together to accomplish our goals. Collaboration of expertise is infused in our daily processes. And this was a result of a very deliberate change in both our culture and our organization. It's the magic that makes our platform unique. So the net result of all of that is that our platform allows us to see around corners, often solving problems before they even exist. And there's a really simple example of this in action that we see on a regular basis. So Rick Werber, who runs our engineering group and works for Mike, handles all of the engineering. He's the first tour that we schedule any time we look at a new acquisition. His epic 4-hour back-of-the-house tours, where he crawls through spaces that normal people avoid is really legendary because he's able to so quickly and effectively assess any CapEx risk and then pull together fantastic mitigation plans. Mike actually said to me the other day that he thinks Rick can actually smell when a pipe is going to leak. I think he was joking, but even if he was, that's not far from the truth. And applied expertise like this is what enhances the probability that the investment decisions that we make are the right investment decisions, whether it's buying, selling, renovating or developing to achieve the attractive cash-on-cash returns that you've heard about a little bit earlier. So then if you add to that, our extensive relationships, which we've developed over decades, plus the credibility and the momentum that we've built through all of our recent transaction activity, and it means that we really do see more opportunities than most hotel investors. Sellers want to sell to us, buyers want to transact with us. And it just increases the likelihood that we see an off-market deal or we win a bid, sometimes even if we're not the highest bidder. So in short, our unique and irreplaceable platform generates more investment opportunities for us. It ensures that we make the best decisions when we see those opportunities. And so Raj, given that our track record is really the best evidence of the strength of our platform, and it's what we think is probably the best predictor of what's to come in the future, maybe you can spend a few minutes kind of hitting the highlights.

Sure. So I know Jim spoke about this earlier, and I hope people don't mind I'm continuing to brag a little bit. But since 2018, we sold almost $5 billion of hotel assets at a 17x EBITDA multiple and acquired $3.5 billion at a 14x EBITDA multiple. Think about that for a minute. We did more than $8.5 billion in transactions over the last 5 years. For those keeping track, that aggregate transaction value is greater than the total enterprise value of any of the other publicly traded lodging REITs. We bought relevant experiential assets in high-growth markets and sold assets with significant capital requirements and low cash flows. As Michael Rock likes to say, we sold Chevys and we bought Maseratis. So no offense to Chevy owners out there, but the point is that we sold older hotels with lower potential and need of outsized CapEx, and we bought newer assets that we believe are well positioned for accelerated EBITDA growth and several with extraordinary pricing power. We did this accretively, selling at higher multiples than where we bought and is evidenced by the RevPAR, TRevPAR and EBITDA per key improvement, as Jim shared earlier, the result has been a material and dramatic transformation in our portfolio. To your point about platform, making -- helping us make the right decisions, our recent acquisitions were acquired at 13.1x EBITDA multiple. And they're meaningfully ahead of our underwriting expectations, putting us well within our target to stabilize EBITDA multiple range of 10 to 12x, well ahead of schedule. These transactions played an integral part in delivering our strong operational performance over the past few quarters. And our portfolio is stronger than it's ever been. So a question for you. Oh, sorry now you have to...

Yes, I'm going to ask you. I want to hear from you. You just went through the highlights. I want to know what's your favorite deal that you worked on?

It's a good question. So I love them all, but if I had to pick one, it would be the 1 Hotel South Beach. So we've been tracking this deal since [indiscernible] renovated, redeveloped it and reopened it. This asset is clearly the best physical asset on South Beach. A lot of you guys have seen it. Four pools, oversized rooms, great amenities. We engaged with them early, but another group actually bid higher than we did. A lot of people don't know that. But they weren't able to figure out the complexities of the condo structure there. And when it was clear the other group couldn't close, we were able to quickly step in working with legal and CapEx and quickly assess any risk of the condo structure and moved quickly to negotiate transaction documents, and we closed the deal all cash in a very short period of time. We took some risk. In fact, well, you guys didn't like the deal, right? Around the Street having some concern that $610 million purchase price is very high price per key, I heard it so many times. However, it was also a 12.6x EBITDA multiple, which you guys didn't talk about. And our analysis suggested there was an upside working with SH, the operator who is relatively new, but highly scaled and had a really good on-property team. And for context, as Jim mentioned, the hotel achieved an 8x multiple based on '22 performance and produced over $80 million of EBITDA last year. These results have been nothing short of astounding. With our hotel manager, we've experimented with dynamic pricing, added a revenue generating Beach Club. We've booked elite group business. We've got high-end transient guests there. And the hotel is a leader in sustainability. But here's a fun fact. So Nate, you mentioned to get tequila earlier. So a bottle of Clase Azul Reposado, which we could buy at a liquor store for like -- something like $140, retail is at $1,400 at the 1 Hotel South Beach. So 10x. And we sell a lot of them. So that's -- when we talk about extraordinary pricing power, that's amazing.

Okay. So now you get to ask me.

Now I get to ask you. What's your favorite deal?

So by the way, for the record, Clase Azul Reposado is my favorite tequila.

So now I know what to get you for Christmas. Although I'm not going to buy them at the 1, unless you give me a raise.

Deal. Look, we've purchased so many terrific hotels that it really is difficult to choose. I mean the hotel Van Zandt in Austin has to be one of the coolest hotels and one of the hottest real estate markets in the country. We just hosted our Board of Directors meeting there and our Annual Shareholders meeting there last week. Baker's Cay has in Key Largo has the best hook and cook experience -- fishing experience, if that's your thing. However, The Don CeSar is probably my favorite for several reasons. First of all, it is my hometown, right? I grew up on that beach. I went to bar Mitzvahs and proms and weddings at the hotel. I remember what it was like back then and truly have a real feeling of personal pride when I go back today and see all of the incredible improvements that we've made. Second, it is a perfect example of our team coming together to execute our business plan. Many of our investors may remember that our plan was to convert from Lowe's to independent to use our asset management and revenue management capabilities to both reduce expenses and improve market share. And then after a few years, renovated the property to further accelerate our EBITDA growth. Well, The Don did about $15.5 million of EBITDA in 2016, the year before that we bought it for $214 million. And I'm pleased to report that after doing all of the things we said we were going to do, that Don produced $35 million of EBITDA in 2022. So after factoring in $29 million of -- for renovations, our current basis is only 6.9x 2022 EBITDA. So that's a home run in my hometown, which is why I love it.

That's awesome. It's a amazing hotel. So how about your least favorite deal?

Selling is much more difficult than buying. It's -- so for me, it was probably the sale of our European joint venture interest, which just was so long and complicated. It took well over a year. Plus although it was clearly the right thing to do from a business perspective, it -- I do miss having a reason to regularly visit the Hotel Arts in Barcelona and the Renaissance Paris Vendome in Paris.