Good day, ladies and gentlemen, and welcome to the Host Hotels & Resorts, Incorporated First Quarter 2018 Earnings Call. As a reminder, today's conference is being recorded. And at this time, I'd like to turn the floor over to Ms. Gee Lingberg, Vice President. Please go ahead, ma'am. Gee Lingberg - Host Hotels & Resorts, Inc.: Thanks, Greg. Good morning, everyone. Welcome to the Host Hotels & Resorts first quarter 2018 earnings call. Before we begin, I'd like to remind everyone that many of the comments made today are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDAre and comparable hotel results. You can find this information, together with reconciliations to the most directly comparable GAAP information, in today's earnings press release, in our 8-K filed with the SEC, and the supplemental financial information on our website at hosthotels.com. This morning, Jim Risoleo, our President and Chief Executive Officer, will provide an overview of our first quarter results and our outlook for 2018. Michael Bluhm, our Chief Financial Officer, will then provide details on our first quarter performance by markets, discuss margins, and the balance sheet. Following their remarks, we will be available to respond to your questions. And now, I'd like to turn the call over to Jim. James F. Risoleo - Host Hotels & Resorts, Inc.: Thank you, Gee, and thanks everyone for joining us this morning. We are pleased to report a quarter that materially exceeded our internal expectations on…

And first from Barclays, we'll hear from Anthony Powell.

Hi. Good morning, everyone. James F. Risoleo - Host Hotels & Resorts, Inc.: Morning, Anthony. Michael D. Bluhm - Host Hotels & Resorts, Inc.: Morning.

Morning. Could you talk about your capital allocation priorities for the rest of the year? Are you seeing attractive acquisition opportunities in the market? And given the increase in merger activity in the space in recent years, are public company acquisitions a more realistic possibility for you right now? James F. Risoleo - Host Hotels & Resorts, Inc.: That's a multiple-part question, Anthony. Let me break it down a little bit for you as I answer it. First of all, I would tell you that we're not seeing a large amount of individual or portfolio acquisition opportunities that fit our profile. And when I say fit our profile, I'm not only talking about the nature of the asset, but I'm talking about the disciplined way in which we underwrite these potential investment opportunities. So, that's one of the reasons why we didn't include any additional acquisitions in our guidance for the balance of the year. Of course, we're still looking at opportunities as they present themselves, and we're trying to get out ahead of the pack and bring to bear the attributes of the company and our scale and our access to information, and the fact that we do have an investment-grade balance sheet as opportunities present themselves. On the M&A front, I would say that, as I've said in the past, we are very open-minded and we evaluate all opportunities to enhance NAV, and we'll continue to think about our strategy in that context going forward.

Great. Thank you.

Next question will come from Chris Woronka with Deutsche Bank.

Hey. Good morning, guys. James F. Risoleo - Host Hotels & Resorts, Inc.: Good morning, Chris.

Good morning. I wanted to ask about some of the changes that have come into play recently with some of the cancellation policies. I guess both Marriott and Hilton and – do you think those are beginning to have a more sustainable positive impact on rate growth and revenue management, given that the booking window has continued to extend out? James F. Risoleo - Host Hotels & Resorts, Inc.: We're very pleased with the implementation of the new cancellation policies. We have seen a, clearly, have seen a difference in booking patterns at the hotels. And most importantly, we're delighted that our property managers are enforcing the policies. We saw an uptick in cancellation fees in quarter one. It wasn't across the portfolio, it really dealt with the groups at five different hotels. But to be able to collect cancellation fees from groups, that is really something new. And we're also seeing it happen with the transient customer as well.

Great. Very good. Thanks, Jim.

Next from BTIG, we'll hear from Jim Sullivan.

Good morning, guys. James F. Risoleo - Host Hotels & Resorts, Inc.: Hey, Jim.

Jim, I wonder if you could comment about New York. The results were pretty decent in the quarter. And kind of two-part question here. What's your outlook for the balance of the year in that market? And secondly, in connection with that, do you have any read on international inward bound traffic trends, either in the quarter or currently? James F. Risoleo - Host Hotels & Resorts, Inc.: A couple questions. All right. With respect to international inbound, we did see a pickup on international inbound. And in conversations we've had with Marriott International, they've seen a pickup of about 13%. So, our total of our book of business, and it's spread across various gateway markets, New York being one of them, we generate about 10% of our business from international travel. So, we expect that that will help us not only in New York but in some of the other gateway markets where we operate, such as San Francisco, Miami, Los Angeles, and Seattle as well. With respect to New York, Jim, I think our take on the city is, yes, we did see a pickup in the first quarter. We saw a nice bump in demand. We did see business travel return to our New York markets. However, there is still a lot of supply coming online this year and a lot of supply coming online next year. So, I would not anticipate seeing a material acceleration in performance in New York in 2018.

Okay. Great. Thanks.

Next question comes from Rich Hightower with Evercore.

Hi. Morning, guys. James F. Risoleo - Host Hotels & Resorts, Inc.: Morning, Rich.

Thanks for taking the question here. So, I just want to go back to one of the prepared comments on the pickup in business transient during the quarter and the balance for the rest of the year. So it seems like demand is getting unambiguously stronger, but pricing was a little soft. Is that just sort of a timing issue? There's usually a lag between demand and pricing power, and if that's the case, is there any sort of ADR pickup in transient demand folded in the guidance at this point? James F. Risoleo - Host Hotels & Resorts, Inc.: Yeah. Rich, I had a little bit of a difficult time hearing you. I think your question was related to the pickup in business demand in – if I could paraphrase it, tell me if I'm on the right track here. When is rate going to fall off?

Yeah. That's generally correct. And then, how much of that is baked in the guidance as well? James F. Risoleo - Host Hotels & Resorts, Inc.: Well, we have seen in the first quarter business transient demand pick up in really across the board but mainly in a handful of markets. We saw business demand pick up in Chicago, New York, San Francisco, Denver, and San Diego. And with respect to the rate, we continue to look at corporate profits, and we continue to look at the business investment number, or non-fixed residential investment number, which is strong and has been increasing over the last several years. That's a pretty good indicator from our perspective of what's going to happen with the business traveler. So in the first quarter in particular, while business demand room nights was up, as I mentioned, our group pace was down predominantly as a result of the holiday shifts, as a result of Easter and Passover shifting, and group business going down. So, we were not in a position in Q1 to really drive rate and yield the business traveler. We are hopeful that that will change over the course of the year.

Okay. Thanks for that, Jim. Would you say that any such pickup is reflected in guidance at this point? James F. Risoleo - Host Hotels & Resorts, Inc.: No, it's not, Rich. As I mentioned, we're optimistic but – and we're going to be tracking business travel very closely over the balance of the year, but while I'd like to say that one quarter makes a trend, we're not ready to predict that just yet.

All right. Great. Thanks for that, Jim.

Moving on, we have Michael Bellisario from Baird. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Good morning, everyone. James F. Risoleo - Host Hotels & Resorts, Inc.: Hey, Mike. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Just want to go back to the first question on capital allocation. Maybe can you share your thoughts on the assets and portfolios that you have seen transact? And then maybe how has that changed the way you think about monetizing more of your assets or maybe selling some of the lower-tier properties within your portfolio? James F. Risoleo - Host Hotels & Resorts, Inc.: Well, of course, we track every deal in the market even if it's not an asset that we may be interested in acquiring. So, we're getting a fairly good sense of what's happening on the acquisition side, the bid-ask between buyers and sellers and the debt capital markets are strong. So, as we sit back and think about what does that mean to us, I'll start with a premise that we're very comfortable with the portfolio that we have today. That said, we would certainly be opportunistic sellers if we could achieve pricing on an asset or group of assets that exceeds our hold value. We look at every hotel at least on an annual basis, if not, more frequently to draw a point of view of what that asset is worth to us. And if we see the pendulum swinging in a way that we may be able to meaningfully beat those hold values, then of course, we would take advantage of that opportunity. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Thank you.

Next from Citi, we have Smedes Rose.

Hi. Thanks. You mentioned in your opening remarks that the trends in the leisure markets were strong in the first quarter, and some of it, I think, was related to displacement from markets being out of service. I mean, when you talk to the operators, do you have a sense of how much of the incremental demand is that versus just continued strong trends from organic leisure growth? And I guess what I'm kind of wondering is, are we setting up for just sort of a really tough comp as those other markets come back online? James F. Risoleo - Host Hotels & Resorts, Inc.: Smedes, I don't think we're setting ourselves up for a tough comp as other markets come online. Are the markets you're referring to the Caribbean and the Florida Keys in particular?

Well, just the Caribbean in general. Post-hurricane, there's a lot of rooms out of service, and there's been a lot of negative headlines around Mexico. And I'm just wondering if you're saying – if we're just moving people from those places to your resorts, which is great, but I'm just wondering how sustainable is that? James F. Risoleo - Host Hotels & Resorts, Inc.: I think that, as we think about transient revenues in the first quarter, roughly – our rough breakdown is – if you think about our segmentation at the top line, we're roughly 40% group, 55% transient, 5% contract. Of the transient base, about 40% of that is leisure and about 50% is business, and about 10% is government. So, if you break it down from that perspective, we saw a pickup in leisure business, and we saw a pickup in business transient traveler really across the board. I mean, the markets that drove leisure for us in the quarter, in addition to the Florida Gulf Coast, were Maui, Phoenix, and Orlando. And as I mentioned before, the markets that really drove business for us were Chicago, New York, San Francisco, Denver, and San Diego. I think this really points out, Smedes, to the nature of the assets we own and the broad geographic diversification of the portfolio that we have. So, we fill in where we can and we drive business in all the markets.

Okay. I appreciate that color. I just wanted to ask you, so could you maybe just talk a little bit about group trending specifically in 2019 and particularly in San Francisco, and maybe any thoughts – are there any change in strategy with the Hyatt that you acquired there in terms of group versus transient of that property or any kind of thoughts you can provide there? James F. Risoleo - Host Hotels & Resorts, Inc.: Sure. Well, as we all know, 2018 – coming into the latter part of 2018, and 2019, and 2020, San Francisco is forecasted to have some very good growth. And we're excited to participate in that growth as we go forward. The Hyatt is roughly a 20% group house, 80% transient, 20% group. And I can tell you that, as we underwrote that transaction, we had a clear view into group bookings for 2018 and 2019, and we're very comfortable with the forecasted RevPAR performance for that hotel going forward. The same with the Marquis, we took a look at that asset and made a decision that – just given the scale that we have and our ability to effectively manage complex renovations and think about displacement at that hotel, that it made sense to get the bulk of the work done this year, all the public space done this year, most of the rooms done this year, and modest rooms out of service going forward, so that we can also participate in a pickup in group business in 2019 at that hotel.

Great. Okay. Thank you.

Next question will come from Thomas Allen with Morgan Stanley. Thomas G. Allen - Morgan Stanley & Co. LLC: Hey. Good morning. Couple of questions on current trends. Can you give us any commentary around either quarter-to-date or April RevPAR? And then, you may have given this, I didn't hear, but what would 1Q RevPAR been ex the holiday adjustments – the holiday? Thanks. James F. Risoleo - Host Hotels & Resorts, Inc.: Thomas, I am not sure that I have the data to tell you what Q1 would have been ex the holiday. The only thing I will point to, again, which I think is impressive is if you were to exclude Houston and Washington, D.C. from our results, our Q1 RevPAR would have been 3.8%, which I think is really strong performance. I mean, it is really strong performance and we're very proud of the ability of our managers and asset managers and enterprise analytics to drive that number going forward. With respect to April, we don't have April results in yet. We have most of them in, but given that we have a couple of days left in the quarter to report, I'm not comfortable giving you a hard number, but I will tell you April was in line with our expectations, maybe a little stronger. Thomas G. Allen - Morgan Stanley & Co. LLC: Okay. Thanks. And then... James F. Risoleo - Host Hotels & Resorts, Inc.: A little stronger than our expectations. Thomas G. Allen - Morgan Stanley & Co. LLC: A little stronger. Okay. Perfect. And then just a follow-up, the UNITE HERE, the union put out a report about some of your peers talking about how they were entering to negotiations this summer after five years – after having not done so in five years. Where are you in terms of labor negotiations for major properties? Thanks. James F. Risoleo - Host Hotels & Resorts, Inc.: Well, we don't sit at the table with UNITE HERE or any of the other unions, but we do collaborate with our management companies with respect to the positions that we feel are most appropriate as conversations are had with representatives of the labor unions. And negotiations and conversations have begun in the Boston marketplace and in Los Angeles. So, our best guess of what that looks like is baked into our guidance for the year. Thomas G. Allen - Morgan Stanley & Co. LLC: Helpful. Thank you.

Next from UBS, we have Robin Farley.

On the – great. I know you highlighted already some of the reasons that margins were up even though rate was down, and I guess my question is how sustainable is that when we look after your guidance for this year, when we look to next year, in terms of maintaining that? James F. Risoleo - Host Hotels & Resorts, Inc.: Robin, we – there were a number of factors that drove margin performance in the first quarter. Clearly, we had ancillary income increases in a number of different areas that tracked increased demand. And as I mentioned, we had the one-time tax rebate at Westin Grand Central, which contributed 28 basis points. But that said, we were able to increase our full-year EBITDA margin guidance by 10 basis points. So, we saw improvements in rooms productivity. We saw improvements in food and beverage productivity. We saw a decline in food procurement cost. We continue to see benefits from Marriott's implementation of Make a Green Choice, which was a Starwood legacy program that is really helping us. I think we saw the Make a Green Choice program accelerate about 3.4% in the quarter. We think there's a lot more room to go with that initiative going forward. We saw improvements in procurement cost on the Starwood legacy hotels as they get plugged into Avendra going forward. And there are a number of other things that we're excited about in connection with the Starwood integration into Marriott as we go forward. And we think that we'll continue to find ways to improve margin performance both on the Marriott legacy hotels as well as the Starwood legacy hotels. Another example is that Marriott is implementing Starwood's best practices on worker compensation at our Marriott legacy hotels, which is also helping us reduce cost. And then again, we have time and motion studies available to us on the balance of the portfolio, the medium and smaller hotels. We certainly wouldn't expect to see the same level of benefits as a result of those time and motion studies that we saw on the bigger box hotels. But we will continue to see productivity improvements and cost savings along those lines. I just want to leave you with one thought, we're never done. So, we're always looking for the next opportunity to increase productivity and to reduce cost as we look at our assets going forward.

And then just as a follow-up, when we think about the sort of idea that RevPAR has to be up 2% to 3% in order to see margin growth, do you think that will be different in 2019? In other words, given the initiatives you just laid out for us, is that kind of benchmark lower than for 2019? James F. Risoleo - Host Hotels & Resorts, Inc.: I would tell you that our forecast would have flat margins at 2% RevPAR growth. I don't see any reason to move off of that at this point. I mean, this year, we're going to increase margins 10 basis points to 2%. So, I think a good bet is if you have 2% and flat margins, that should be achievable.

Okay. Great. Thank you.

Next, we'll hear from Jeff Donnelly with Wells Fargo.

Good morning, guys. Maybe kind of a two-parter. First was, just Marriott recently put through a plan to reduce third-party commission rates. So, I'm just curious, how much of your business came through that third-party channel, and maybe how that has affected your group pace in 2018 or 2019? And maybe just as a follow up, what is it about the opportunity with IBM that led you to approach them, and what specifically do you hope to improve? I'm just curious how, I guess, Watson is differentiated from the service the brands provide you. James F. Risoleo - Host Hotels & Resorts, Inc.: Let me answer the first question – second question first, Jeff, because we're really excited about our newfound relationship with IBM Research. The world is moving to artificial intelligence and predictive capabilities. And while we all, everyone in our space has access to a lot of structured data, we have access to new supply, we have access to historical RevPAR, we have access to projected RevPAR, which doesn't always turn out to be what the forecasts are. We had several meetings with the researchers at IBM to look at ways that we can predict RevPAR, which I think is something a bit different and it would be much more quantitative than is available to anyone today. They were willing to enter into this arrangement with us, given our scale and access to information. So we can look at various markets across the country and look at unstructured data in addition to structured data, such as what's happening in, pick a city, X, Y, Z city, what's happening in terms of businesses moving to those cities. What's happening with respect to the municipality's support of the growth in industry and jobs? What's happening in higher education, in housing?…

Yeah. Thanks, guys.

Next, from Raymond James, we have Bill Crow. Bill A. Crow - Raymond James & Associates, Inc.: Yeah. Good morning. That leads me into my question, which is, see if you can quantify the impact, not only of the 10% to 7% shift, but also in anticipation of Marriott's negotiations with the OTAs later this summer, let's call it, 100 basis points, every 100 basis points of take rate – commission rate goes down, what's the impact to you? I get the sense it's more impactful for Host than it is for many others. James F. Risoleo - Host Hotels & Resorts, Inc.: Bill, you're referring to the OTAs or the tender stuff? Bill A. Crow - Raymond James & Associates, Inc.: Yeah. I think there's two topics, right? The one that was just discussed, which is the big group commissions , if you save 300 basis points on a full-year basis, what does that translate into for you all? And then the second one is the OTAs and the negotiations, what every 100-basis-point reduction in that take rate would mean to you all? James F. Risoleo - Host Hotels & Resorts, Inc.: Well, I don't have the math in front of me, Bill, but I will tell you that we're getting roughly 10% of our business through the OTA channels. We can certainly do the math and get back to you on that number. With respect to the group commissions, we looked at a number of different scenarios before this program was rolled out. We sat down with Marriott and looked at upsides scenarios and downside scenarios. So, without giving a specific number, we feel that there will be benefit to the bottom line as we transition from 10% to 7% going forward. And that's why we were prepared to sign onto the program. Bill A. Crow - Raymond James & Associates, Inc.: Do you have a number for budget for group commissions for 2018 that we get that adjust? James F. Risoleo - Host Hotels & Resorts, Inc.: I don't. Not in front of me anyway. Well, let us look something up and we'll give you a call back. Bill A. Crow - Raymond James & Associates, Inc.: You got it. Appreciate it. That's it for me. James F. Risoleo - Host Hotels & Resorts, Inc.: Sure.

Next, we have Gregory Miller with SunTrust Robinson Humphrey.

Good morning, everyone. I'm on for Patrick. James F. Risoleo - Host Hotels & Resorts, Inc.: Greg.

Morning. I have a couple of questions related to the Hyatt acquisitions. I'm hoping that you could elaborate on the short-term and long-term opportunities with the three hotels and how long do you think it will take until you're at a stabilized level of operating performance? James F. Risoleo - Host Hotels & Resorts, Inc.: Sure. I think whenever we announced the acquisition last quarter, we talked about a stabilized yield somewhere in the mid-6s over the next two to three years. We saw a number of opportunities, and I don't think that's changed, Greg, by the way. If anything, we're very pleased with the performance out of the box of these three assets. We see opportunities at the Andaz Maui to develop a 19-acre parcel of land which we've allocated $15 million to for either for-sale housing or additional units that we can pulled into the hotel that wasn't underwritten when we made the acquisition. We see opportunities in Maui to collaborate with the Kea Lani Palace, which is four hotels up the beach from the Andaz and also collaborate and centralize services with our Hyatt Regency Kāʻanapali which is also on the island. We also – just as a general statement, we will be rolling out time and motion studies at all three hotels as we go forward and looking at ways that we can enhance productivity and drive down cost. In San Francisco, very much the same story. The Grand Hyatt Union Square, we see an opportunity to add some guest rooms to re-concept the food and beverage offerings to save money and make those offerings more efficient. Again, opportunities to collaborate between (56:50) and the Grand Hyatt which were in the same market, and opportunities to collaborate and centralize some services between the Grand Hyatt Union…

Great. Thanks so much. It sounds like there's a lot of tremendous opportunities there. Appreciate it. James F. Risoleo - Host Hotels & Resorts, Inc.: Sure thing.

And ladies and gentlemen, that does conclude our question-and-answer session for the day. I'd like to turn the floor back to Jim Risoleo for any additional or closing remarks. James F. Risoleo - Host Hotels & Resorts, Inc.: Well, everyone, thanks for joining us on the call today. We look forward to discussing second quarter results and how the year is progressing on our next call. Have a great day, everyone. Thank you.

Ladies and gentlemen, once again, that does conclude today's conference. Thank you for your participation. You may now disconnect.