Host Marriott Beats Forecasts

Higher average room rates help funds from operations to rise 48%.
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Host Marriott


checked in with stronger-than-expected quarterly results as its hotels continued to benefit from brisk travel demand.

The lodging real estate investment trust reported net income of $91 million, or 22 cents a share, for its second quarter, which ended June 17. That compares to net income of $17 million, or 2 cents a share, a year before.

Funds from operations, a key gauge of the company's performance, totaled 31 cents a share, up 48% from a year before. The latest quarter's figure included costs of 6 cents a share related to the company's refinancing of senior notes and the redemption of preferred stock.

Adjusted FFO of 37 cents a share topped the average analyst forecast of 34 cents a share from Thomson First Call.

Shares gained 4 cents, or 0.2%, to $18.02.

Total revenue was $993 million, up 10.6% from $898 million a year before and ahead of the $974 million analyst consensus.

"We had an outstanding second quarter as we continue to benefit from significant increases in average room rates, as well as improving occupancy," said Christopher Nassetta, Host Marriott's president and chief executive officer. "We expect that lodging demand and business travel will continue to increase, driving continued strong results in the second half of 2005."

Revenue per available room, a key industry metric also known as revpar, increased 9.8% in the second quarter at hotels Host Marriott owned a year before. Comparable hotel adjusted operating profit margins increased 2.0 percentage points year over year.

Looking ahead, Host Marriott expects comparable hotel revpar to increase 6.5% to 8.0% in the third quarter. For the full year, the company expects revpar to rise 8.0% to 9.0%. Previously, Host Marriott offered a full-year forecast for a revpar improvement of 7.0% to 9.0%.