Host Hotels Reports 6.5 Percent Increase in Quarterly Revenue
By Kerry Medina
July 17, 2012 10:37 PM
Lodging real estate investment trust Host Hotels & Resorts announced results of operations for the second quarter ended June 15, 2012. The increase in total revenues for the second quarter and year-to-date 2012 reflect the improved performance of the company's owned hotels due to improvements in comparable hotel RevPAR of 6.1 percent for both the second quarter and year-to-date, and improvements in comparable food and beverage revenues of 5.7 percent and 5.8 percent for the second quarter and year-to-date, respectively.
Quarterly total revenues were $1.37 billion, a 6.5 increase from the year-ago quarter.
In addition, the improvement in operating results for year-to-date 2012 includes operations for the 10 hotels (nearly 4,000 rooms) acquired in the first half of 2011, which increased revenues by an incremental $56 million. If the company reported its results on a calendar quarter basis, then comparable hotel RevPAR would have increased 6.8 percent for the second quarter 2012 compared to 2011. The increase in comparable hotel RevPAR was primarily driven by improvements in average room rates coupled with continued occupancy growth.
For the quarter and year-to-date, average room rates improved 3.7 percent and 3.3 percent, respectively, while occupancy improved 1.7 percentage points to 77.6 percent and 1.9 percentage points to 73.7 percent, respectively. The improvements in revenues led to strong margin growth as comparable hotel adjusted operating profit margins increased 120 basis points and 110 basis points for the second quarter and year-to-date 2012, respectively.
The company invested approximately $50 million and $98 million in the second quarter and year-to-date 2012, respectively, in redevelopment and return on investment (ROI) expenditures. In conjunction with the acquisition of a property, the company prepares a capital improvement plan designed to enhance profitability. The company spent approximately $50 million and $64 million on acquisition projects in the second quarter and year-to-date, respectively, and expects to invest between $115 million and $125 million for 2012.
The company anticipates that for 2012, comparable hotel RevPAR will increase 5.5 percent to 7 percent; total revenues under GAAP will increase 6.3 percent to 7.8 percent; total comparable hotel revenues will increase 5 percent to 6.6 percent; operating profit margins under GAAP will increase approximately 130 basis points to 190 basis points; and comparable hotel adjusted operating profit margins will increase approximately 90 basis points to 130 basis points. Based upon these parameters, the company estimates that its full year 2012 guidance is as follows: earnings per diluted share should range from approximately $0.14 to $0.19, net income should range from $104 million to $140 million, and Adjusted EBITDA should be approximately $1.14 billion to $1.17 billion.