HSTHost Hotels & Resorts

We note your reconciliation of Comparable hotel EBITDA to Net income on page 81. In future filings please begin the reconciliation with Net income, to give equal or greater prominence to the GAAP measure being presented. Please refer to Question 102.10 of the C&DIs on Non-GAAP Financial Measures.

Rest of the question

This comment is also applicable to the extent this measure is presented in your earnings release filed on Form 8-K and within the supplemental financial information posted on your website. Item 8. Financial Statements and Supplementary Data 15. Geographic and Business Segment Information, page 128

We confirm that in future filings of Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P., including our earnings press release filed on Form 8-K, and in supplemental information posted on our website, we will begin our reconciliation of Comparable hotel EBITDA to Net income with Net income.

Item 8. Financial Statements and Supplementary Data

15. Geographic and Business Segment Information, page 128 Read in the reply ↗

We note your disclosure that all of your operating segments meet the aggregation criteria to be grouped as a single reportable segment. Please tell us how you considered the need to aggregate your operating segments into reportable segments by brand or property type.

Rest of the question

In your response, please explain to us in sufficient detail how you determined all of your operating segments meet the aggregation criteria of ASC Topic 280-10-50-11.

We consider each one of our hotels to be an operating segment meeting the definition set forth in ASC Topic 280; however, no individual hotel is a reportable segment because none meets the quantitative threshold for reportable segments. For purposes of determining reportable segment(s), we aggregate all of the Company’s properties, regardless of brand or property type, because all of our hotels meet the criteria for aggregation set forth in ASC Topic 280-10-50-11.

Rest of the answer

Specifically we believe that:

•

Aggregation is consistent with the objective and basic principles of this subtopic; and,

The properties have the following similar economic characteristics:

○

The nature of the products and services,

The nature of the production processes,

The type or class of the customer for their products and services, and

The methods used to distribute their products and services.

All but seven of the 96 hotels in the Company’s portfolio are classified by the lodging industry as upper-upscale and luxury properties and represent over 98% of revenues. Further, as disclosed in the 10-K, no single property represents more than 7% of total revenues. The remaining seven hotels are defined as upscale or midscale and represent less than 2% of revenues and as such do not either individually or in the aggregate approach the quantitative thresholds necessary to qualify as a reportable segment.

All of the properties in the portfolio, regardless of brand or property type, share very similar long-term financial performance and economic characteristics, including the nature of their products, services and production processes and the methods used to distribute their product. The hotels are designed and operated to appeal to similar individuals and group leisure and business customers that travel to upper-upscale and luxury properties. For example, while approximately 64% of total revenues are generated from room revenues, the individual hotels typically include meeting and banquet facilities, a variety of restaurants and lounges, swimming pools, exercise/spa facilities, gift shops, and parking facilities. Importantly, these amenities are either a brand(s) standard and/or customer expectation across all of the upper-upscale and luxury hotels in the portfolio. All of the properties in the portfolio react similarly to economic stimulus such as business investment, changes in GDP and changes in travel patterns. Capital allocation decisions to acquire, enhance, redevelop, or perform renewal and replacement expenditures are determined on a property-by-property basis to appropriately match each hotel within its specific market to seek to improve operating performance and include consideration of local market changes in supply and demand.

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Geographic and Business Segment Information, page 128 We have considered your response to our prior comment two. Please elaborate on how you determined your operating segments meet the aggregation criteria of ASC Topic 280-10-50-11 to be aggregated into one reportable segment.

Rest of the question

In your response please address the following:  Please expand on your determination that all of your hotels share similar economic characteristics. In your response, please address the fact that average room rate and revenue per available room appears to vary by property type as disclosed in your earnings release.  Please elaborate on how you concluded all of your properties offer similar products and services and serve a similar type or class of customer. Your response should address how these criteria are similar among each property type (Urban, Suburban, Resort and Airport). For example, please explain to us how determined your resort properties serve a similar type or class of customer as your urban or airport properties.

The Company’s hotel portfolio is focused on similar properties at the high-end of the hotel property spectrum. STR Global, a third-party independent research firm recognized for aggregation of hospitality data and reporting, classifies hotels into discrete categories based on average room rates and brand name (i.e., luxury, upper upscale, upscale, upper midscale, midscale and economy). All but seven of the 96 hotels in the Company’s portfolio, which represents over 98% of revenues in 2016, are classified by STR Global as upper-upscale or luxury properties.

Rest of the answer

Luxury and upper upscale categories are marketed and operated to appeal to similar individual and group leisure and business customers who are willing to pay a higher rate for the room and related amenities relative to the products and services in the midscale or economy categories. The seven remaining hotels owned by the Company are defined by STR Global as upscale or midscale and while they may offer different amenities and have different economic characteristics as compared to the Company’s luxury and upper upscale properties, these seven hotels represent less than 2% of the Company’s revenues and as such do not either individually or in the aggregate approach the quantitative thresholds necessary to qualify as a reportable segment.

The Company considers each hotel to be an operating segment meeting the definition set forth in ASC Topic 280; however, no individual hotel is a reportable segment because none meets the quantitative threshold for reportable segments. No single property represents more than 7% of the Company’s total revenues. The Company aggregates all of its properties, regardless of brand or property type, because it believes its hotels meet the criteria for aggregation. The Company believes that this aggregation is consistent with the objectives and principles of the standard as the properties have similar economic characteristics and possess the other similar characteristics required for aggregation, including in terms of the nature of their products, services and customers. Additionally, the Company believes that the economic and other characteristics of its properties and operations are such that aggregating subgroups of its hotels into multiple operating segments would not help investors to better understand the Company’s performance, better assess its prospects for future cash flows, or make a more informed judgement about the Company as a whole. This similarity of long-term financial performance is demonstrated by the highly correlated RevPAR growth across all property types as shown in the table included herein. RevPAR is the most commonly used measure within the hotel industry and is defined as the product of the average daily room rate charged and the average daily occupancy achieved. Accordingly, for the reasons discussed, the Company continues to believe that aggregation is appropriate for its portfolio.

First, all of the Company’s luxury and upper upscale properties share the qualitative and quantitative characteristics noted in ASC Topic 280 regardless of property type (e.g. urban, suburban, resort and airport). The Company’s properties cater to a similar mix of business transient, leisure and group travelers who require high-quality hotel accommodations. Properties classified as upper-upscale and luxury are designed and operated to appeal to these customers and are expected to provide products and services that lower tiered categories generally do not provide, such as meeting and banquet facilities, a variety of restaurants and lounges, swimming pools, exercise/spa facilities, gift shops, and parking facilities. This is true regardless of property type, location, or brand. Differences in average room rates are primarily driven by supply/demand dynamics and economic conditions in a specific market as discussed in more detail below.

All of the properties in the portfolio react similarly to economic stimulus such as business investment, changes in GDP, and changes in travel patterns. This is evidenced by the chart presented below which plots the historical correlation of annual comparable hotel RevPAR growth for each of the Company’s property types. Since 2005, annual RevPAR growth has had a correlation coefficient of 91% or higher across each of the property types and a correlation coefficient of 96% or greater within the overall portfolio. Annual fluctuations can be caused by distinct market factors, for example, the extensive renovations undertaken at a particular property, the difficult operating environment in a particular market as the result of new supply, a reduction or increase in domestic or international travel, or other market-specific factors that affect the operating performance.

Historical Change in RevPAR Correlation by Property Type

Urban

Suburban

Resort

Airport

Portfolio

100

%

Despite the high correlation of RevPAR growth across all property types, the Company’s 2016 RevPAR demonstrates a significant dispersion within and across the portfolio and property types. The following table demonstrates the broad RevPAR dispersion for the Company’s 2016 comparable hotels:

2016 RevPAR Range by Property Type

Lowest

Highest

Median

Average

$

90.36

156.52

139.49

135.14

102.01

478.00

191.41

196.32

82.21

267.13

131.71

143.18

51.27

352.74

174.98

182.97

The dispersion of RevPAR performance among property types is further illustrated by the following examples:

The six comparable airport properties for 2016 had a median RevPAR of $139.49, which is higher than the RevPAR for 18 of its urban properties;

The 11 comparable resort properties had the greatest variation in RevPAR of any property type;

RevPAR for the top 20 comparable properties for 2016 included 14 urban, four resort, and two suburban properties; and

RevPAR for the bottom 20 comparable properties also included a similar mix of property types which was 10 urban, eight suburban, one resort and one airport property.

Similarly, properties in Manhattan, San Francisco or Los Angeles, or in any suburban, airport or resort location might have a higher RevPAR than a property of the similar size, property type, or brand located in different markets. In other words, hotels with very similar economic characteristics may have a different RevPAR based solely on location. Accordingly, the Company believes that the primary determinant of RevPAR is not property type but rather the amalgamation of many property specific factors, including geographic location, level and quality of amenities, new supply, or changes in demand. Despite the dispersion in room rates and in

RevPAR levels between properties in different locations or property types, the Company believes that its properties share similar economic characteristics — and the Company manages them similarly — because they are all subject to the same economic dynamics and act in tandem in response to changes in economic stimulus. This is demonstrated by the tight correlation in RevPAR growth noted in the chart above.

Second, the Company believes that its customer base is consistent across its entire portfolio. These customers seek high quality hotel accommodations and are willing to pay a higher rate for the room and related amenities relative to the products and services in the midscale or economy categories. The Company’s customers fall into three broad groups: transient, group business and contract, which accounted for approximately 60%, 35% and 5%, respectively of its 2016 room sales. Transient customers are composed of individual leisure and business travelers, which are further divided into categories such as retail, special corporate, government, discount, and rewards program customers. Based on booking information for which we rely upon the brands or hotel operators to provide, the Company estimates that approximately 50% of its transient customers are business travelers. Group and contract business primarily represents corporate and association customers and may vary in size from smaller, hotel specific meetings to city-wide events, though overall approximately 80% of these customers are business travelers. As a result, across the

Company’s portfolio approximately 60% are business travelers, while 40% are considered leisure travelers. Specifically, the Company’s customer mix between business and leisure is consistent across all property types as noted in the below table:

2016 Mix of Business by Property Type

Business

Leisure

Total Portfolio

The business mix noted in the table above is a result of the Company’s strategic decision to focus on ownership of hotels with multiple demand drivers that offer meeting and banquet facilities and other amenities necessary to attract a significant business component, regardless of property type. Hence, the Company’s resort hotels attract and cater to similar customers as the Company’s urban and airport hotels (e.g., the Company’s resort hotels cater to business travelers in the same way as the Company’s urban and or airport properties, and are not focused purely on leisure customers as other resort properties might be). Further, as a result of its concentrated ownership in the upper-upscale and above categories, the Company’s 2016 domestic comparable hotel average room rate is higher than the overall U.S. industry across all classes of hotels regardless of property type. The consistency of the business mix demonstrates the similarity in the customer base and hotel profile of the Company’s properties, regardless of whether they are located in airport, urban, resort or suburban settings, which in turn creates the premium room rates noted in the below table:

2016 Average Room Rate by Property Type

Host U.S.

Properties

U.S.

Industry

Overall

Host

Premium

158.03

113.58

269.97

168.93

195.55

105.69

229.47

177.34

All Hotels

226.07

124.01

For all of the above reasons, the Company does not believe aggregating its operating results into reportable segments of airport, resort, urban and suburban is appropriate because such aggregation does not satisfy the objectives and principles of the standard.

The Company has consistently aggregated its hotel results into a single reportable segment for over 20 years. The question of reportable segments was also addressed with the Staff in a 2004 comment letter exchange. In the Company’s comment letter response of February 23, 2004, the Company noted that it aggregated all of its hotel properties because it believed that they met the aggregation criteria set forth in paragraph 17 of SFAS 131. The Company believes that continues to be the case based on its current portfolio. As part of its business strategy to focus and improve its portfolio, the Company has over time recycled out of lower quality hotels (with a lower RevPAR) and acquired higher quality hotels (with a higher RevPAR). Since 2010, the Company has acquired 34 hotels with an average RevPAR of $174, while disposing of 48 hotels with an average RevPAR of $110. For this and the above reasons, the Company believes that aggregating its hotels into a single reportable segment continues to be appropriate.

The Company’s presentations of hotel industry operating statistics such as average room rate and RevPAR are used to describe the performance of its hotels from several points of view (e.g. “same-store”, property type and location). The Company believes providing several points of view assists investors in understanding the broad geographic diversity of its portfolio, the effect of local market conditions and national trends, and enhances comparisons with other lodging REITs. The Company believes ASC Topic 280 was not intended to discourage the presentation of supplemental information about operations if the Company believes that investors would find the information useful.

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Geographic and Business Segment Information, page 128 1. We note your response to our prior comment one and that despite the dispersion in room rates and in RevPAR levels between properties in different locations or property types (Urban, Suburban, Resort and Airport), you believe that your hotels share similar economic characteristics.

Rest of the question

Please clarify if your chief operating decision maker relies on certain performance measures (i.e. operating margin, net income, EBITDA, etc.) to evaluate the operating performance of your hotels and if such measures are evaluated in the determination that all of your hotels share similar economic characteristics.

The Company aggregates all of its luxury and upper-upscale hotels properties, regardless of brand, location or property type, because it believes that this presentation is consistent with the objective and

Securities and Exchange Commission

Page of 5 basic principles of Accounting Standards Codification (ASC) 280, including areas identified in paragraph 50-11 of ASC 280. As we noted in the

Company’s previous response, differences in average room rates are primarily driven by supply/demand dynamics and economic considerations in a specific market.

Rest of the answer

Nevertheless, all of the properties in the portfolio possess similar economic characteristics because they react similarly to economic stimulus such as business investment, changes in GDP, and changes in travel patterns. In the Company’s prior response, this similarity was demonstrated by the strong correlation of .90 or greater for annual RevPAR (revenue per available room) growth for the urban, suburban, resort and airport property types over the past 10 years.

The

Company’s CEO (its chief operating decision maker or CODM) and senior management rely on several performance measures to evaluate the performance of the properties other than RevPAR, of which the primary measure is EBITDA. The Company believes that EBITDA is a measure of performance that provides useful information to the CODM and investors in evaluating the ongoing operating performance of the properties after removing the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). The CODM uses EBITDA to assess the performance of each of the Company’s 95 hotel properties and as part of the annual budget process to determine the level of capital expenditures at individual hotel properties. In addition, the CODM uses EBITDA to determine the value of hotel properties for acquisition or disposition transactions. As with RevPAR, EBITDA performance shows a strong correlation across the portfolio and reinforces the Company’s determination that its portfolio of hotel properties reacts similarly to economic stimulus and, thus, has similar economic characteristics.

In response to the Staff’s comment letter of July 13 and conference call with the Company on July 25, the Company has prepared a graphical analysis of EBITDA performance by property type and two additional graphs using RevPAR Growth and EBITDA per Room Growth for a comparable domestic portfolio that demonstrates that a similar correlation exists across geographic locations. For each analysis (i.e. Property RevPAR Growth, EBITDA per Room Growth, and EBITDA Growth by Property Type) the Company has used a comparable hotel set of 68 domestic properties based on its policy for comparable hotels as disclosed in its filings with the

SEC. These properties were owned and consolidated for the entirety of the 10-year period presented. While the Company currently owns 89 domestic properties, its comparable domestic portfolio has changed over time due to acquisitions, dispositions, substantial property damage or business interruption, and large-scale capital projects. These factors are temporary and are not likely to affect the long term performance of the hotels. As a result, while our entire portfolio of 95 hotels demonstrates a strong correlation, the Company believes this is best illustrated with the 68 comparable domestic properties over the entirety of the 10-year period presented. The

Company notes that its seven international hotels owned at December 31, 2016 represented less than 3% of revenues and, as such, do not either individually or in the aggregate approach the quantitative thresholds necessary to qualify as a reportable segment.

The first two tables below demonstrate correlation by geographical location wherein each line represents one of the 68 individual comparable properties, the blue line represents the portfolio average for RevPAR growth and EBITDA per room growth and the red line is annual US GDP growth. The third table presents EBITDA performance by property type. The Company notes the strong correlation for each of these metrics across the portfolio regardless of starting point of individual properties and that the primary determinant for RevPAR and EBITDA is based on location and property specific factors. Further and consistent with ASC 280, the

Company believes that temporary factors such as heightened supply, international travel restrictions, or other significant business events or disruptions over a short period of time which cause differences in performance should not result in distinct operating segments.

Note: For presentation purposes and graph scaling, five properties which had an EBITDA change of

150% or greater in any given year have been removed from the EBITDA per Room Growth graph.

As shown above, although each of the hotels has a different starting point for RevPAR and EBITDA per Room, the movement of individual hotels is consistent with the portfolio average. The Company notes the following statistical facts regarding the portfolio which further illustrate the correlation of its properties:

•

EBITDA by Property Type has a correlation coefficient of at least .92 with the overall portfolio.

The Company’s individual properties are positively correlated to GDP growth with an average correlation coefficient of .75 for RevPAR growth. Individual property RevPAR and EBITDA per room correlation to the portfolio average can fluctuate over the ten-year period due to variations in individual properties and specific market conditions. However, 43 of 68 properties have a correlation coefficient to the portfolio average of .85 and .75 or higher for RevPAR and EBITDA, respectively. Examples of individual markets and properties that negatively affected correlation on a temporary basis include:

The Washington, D.C. metropolitan area, including the Virginia and Maryland suburbs, did not experience as great of a decline in performance in 2009 during the recession due to the increased performance as a result of the inauguration; and,

Four properties in New York City were affected by very high levels of new supply in 2015 and 2016.

Company believes that properties of similar size, property type or brand located in different markets have different RevPAR or EBITDA based on location and market specific factors. Accordingly, the Company believes the primary determinant of performance is the amalgamation of many property specific factors including geographic location, level and quality of amenities, new supply, or changes in demand. Despite the dispersion in performance and operating statistics in different locations and property types, the Company believes that all of its 95 properties share similar economic characteristics because they are all subject to the same economic dynamics and respond similarly to changes in economic stimulus. The Company believes that temporary factors such as heightened supply or international travel restrictions over a short period of time which causes differences in RevPAR, EBITDA and overall performance should not result in distinct operating segments when over the long term the Company expects the prospects and performance of the market to be similar to the remainder of the portfolio.

The Company considers each one of its hotels to be an operating segment meeting the definition set forth in ASC Topic 280. The Company continues to believe that the aggregation of all of its properties is appropriate due to the similarity of its hotel properties with regards to their economic characteristics and the nature of their products, services and customers. As discussed in the

Company’s prior response, all of its luxury and upper-upscale properties have similar customers and cater to a similar mix of business transient, leisure and group customers. These customers seek high-quality hotel accommodations and who require the amenities provided by these categories of hotels, such as meeting and banquet facilities, a variety of restaurants and lounges, swimming pools, exercise/spa facilities. This is true regardless of property type or geographic market.

Additionally, because the performance of the hotels are similar in response to economic stimulus as demonstrated above, the Company believes that aggregating subgroups would not help its investors to better understand the Company’s performance and prospects for future cash flows.

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