Host Marriott ( HMT) beat Wall Street estimates for the third quarter and forecast continued strong unit revenue growth through next year, although analysts viewed other aspects of its outlook as a bit lackluster.

The Bethesda, Md., company said it lost $5 million, or 3 cents a share, in the quarter ended Sept. 9. That marked an improvement over its loss of $47 million, or 17 cents a share, in the third quarter of 2004.

Funds from operations, which is the way Wall Street gauges the company, were 19 cents a share, 2 cents better than the 17-cent average analyst forecast from Thomson First Call.

Revenue increased 7.7% to $841 million in the latest quarter from $781 million a year before.

Shares of Host Marriott, the nation's largest lodging real estate investment trust, fell 40 cents, or 2.3%, to $16.69 in early trading Wednesday.

Another measure of operating performance, adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, increased 18.8% to $158 million in the latest quarter.

The bottom line benefited from lower interest expense -- $94 million in the latest quarter, down from $108 million a year before.

Revenue per available room, a key industry metric also known as revpar, increased 8% at hotels Host Marriott owned a year ago, at the high end of the company's own forecast for 6.5% to 8% growth. Revpar growth was driven by a 6.3% increase in average room rates and a 1.2 percentage-point increase in occupancy.

Those numbers exclude results from the New Orleans Marriott, which was damaged by Hurricane Katrina. Host Marriott said it's unlikely that operations at the hotel would return to historical levels for a "period of time." The company still can't estimate the total extent of the property damage.

Nevertheless, the company said its insurance should cover the damage and the near-term loss of business. The overall impact of Katrina on third-quarter operations wasn't significant, Host Marriott added.

"We had another outstanding quarter, with very strong revpar growth and margin improvement, which drove significant growth in adjusted EBITDA and FFO per diluted share," said Christopher J. Nassetta, Host Marriott's CEO. "We expect lodging demand and business travel will continue to increase in the fourth quarter and into 2006, driving further improvements in our operating results and dividends to our stockholders."

For all of 2005, Host Marriott expects revpar growth of 8% to 9% and FFO of $1.07 a share to $1.10 a share. Because it includes a 9-cent charge in the first half of the year, the FFO forecast is roughly in line with the Wall Street consensus for $1.18 a share.

Looking ahead to 2006, Host Marriott expects revpar growth of 7% to 9%, the same range hotelier Marriott International ( MAR) offered when it reported earnings last week.

Although analysts say the revpar guidance is encouraging, other elements of Host Marriott's guidance were slightly weaker than or merely in line with expectations.

The forecast is "ok -- not outstanding," according to Marc Falcone, an analyst at Deutsche Bank, noting Host Marriott expects 2006 FFO of $1.35 a share to $1.45 a share, below the Wall Street consensus of $1.47. The company's expectation that hotel operating profit margins will increase about 1.3 to 1.5 percentage points is "decent, but a bit softer" than the revpar forecast implies, Falcone adds.