Host Hotels (HST) Q3 2025: Asset Sales Mask Weaker Operating Profit

Host Hotels & Resorts (HST), one of the largest lodging real estate investment trusts (REITs) in the U.S., focuses on luxury and upper upscale hotels. We're diving into their latest Q3 2025 financial filing to see how the company performed and what we can learn about its financial health and strategic direction. The results show a company with stable revenues but a sharp divergence between its bottom-line net income and its core operational profitability.

A Tale of Two Profits

At first glance, Host Hotels had a stellar quarter. While total revenues were nearly flat, rising just 0.9% to $1.33 billion compared to the same period last year, net income soared by an impressive 94% to $163 million.

To understand how the company's revenues flowed through to its profits during the third quarter, the following diagram provides a visual breakdown.

So, what fueled this massive jump in net income? It wasn't a sudden surge in hotel bookings. The key driver was a $122 million item listed as "Other gains" on the income statement, a stark contrast to just $1 million in the same quarter last year. The filing reveals these gains are primarily from the sale of assets, including the disposition of the Washington Marriott at Metro Center in August 2025.

However, a closer look at the company's core operational performance tells a different story. Operating Profit, which reflects the earnings from the company's primary business activities before interest and taxes, actually decreased by 25% to $101 million. The company's operating profit margin tightened from 10.2% to 7.6%. This decline was driven by a combination of higher property-level operating costs and a smaller net gain from insurance settlements compared to the prior year.

This trend is confirmed by the company's Adjusted EBITDAre (Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate), a non-GAAP measure favored by REITs to gauge operational performance. It slipped 3.3% to $319 million for the quarter, reinforcing that the core hotel business faced some headwinds.

A Mixed Map of Performance

The performance across Host's hotel portfolio was highly varied, underscoring a complex operating environment. The company's overall comparable hotel RevPAR (Revenue Per Available Room), a critical industry metric measuring hotel performance, was essentially flat with a minor 0.2% increase.

However, this stable top-level number masks significant regional differences:

• Strong Performers: Maui was a standout, with RevPAR surging 19.7% as the region continues to recover. Other bright spots included Atlanta (+18.1%) and Phoenix (+10.8%).
• Challenged Markets: Several key markets faced significant downturns. Austin saw a dramatic RevPAR drop of 31.7%, while New Orleans (-20.1%) and Washington, D.C. (-14.9%) also experienced steep declines.

This geographic disparity highlights the localized nature of the hospitality recovery and the different demand drivers affecting each market.

Looking Ahead

Host Hotels & Resorts' third-quarter results present a nuanced picture. While strategic asset sales provided a significant boost to the bottom line, the core hotel operations showed signs of pressure with lower profitability and uneven performance across its portfolio. Investors will be watching closely to see if Host can translate its high-quality portfolio into stronger organic growth and improved operating margins in the coming quarters, particularly in its underperforming markets.