In preparation for HST’s Q4 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from HST’s Q3 earnings call.




  • “RevPAR growth in our portfolio has been consistently strong since April of this year. As we have transitioned more fully into a recovery, the composition of that RevPAR growth has turned more favorable as the improvement has been increasingly driven by increases in average rate. We are also continuing to benefit from a shift in business mix towards higher rated segments and these improving demand trends allow us to be less reliant on just booking discounted business.”
  • “We would expect to see additional strengthening on the rate side as our business mix continues to shift more towards the higher rated segments and as the impact of last year’s special corporate rates, which were determined during a weak environment, diminish and are replaced by higher price contracts.”
  • “On the group side, the strengthening demand trends we have been enjoying all year carried into the third quarter, as group revenues improved by more than 9%. The bulk of this improvement was caused by an almost 8% increase in room nights although it still benefited from a 1.3% increase in average rate, which was our first average rate increase in the group sector since the fourth quarter of 2008. The demand growth was led by association business, which grew by more than 11%, and our luxury corporate segment, which increased by 27%.”
  • “Our booking cycle continues to be very short-term. Bookings in the quarter, for the quarter exceeded last year’s strong pace, and were well above levels we experienced in 2007. Group booking activity for the fourth quarter is up nearly 6% compared to 2009, with the improvement occurring over the last 90 days as our fourth quarter room night pace was negative at the start of the third quarter. As we look out to 2011, our booking pace for the combined first three quarters is up slightly and we would expect that surplus to strengthen as we progress into the year.”
  • 2010 Guidance:
    • Capital expenditure: $300 to $320MM
    • RevPAR: 5.5%-6.5% (increase offset by “more cautious outlook with respect to food and beverage and ancillary revenue.”)
    • “We expect comparable hotel adjusted operating profit margins to be up 15 basis points at the high end of the RevPAR range and flat at the low end of the range. These amounts have been reduced by 70 basis points for the year-over-year difference in cancellation and attrition fees and 30 basis points for incremental property level bonus expense.”
    • Adjusted EBITDA: $815 to $830MM
    • FFO: $0.67-$0.69
  • “As we look to next year, we believe that the positive trends we are seeing now will continue, resulting in improvements in RevPAR margins and EBITDA.”
  • Regional 4Q outlook:
    • New Orleans: “We expect the property to underperform the rest of the portfolio due to less city-wide business.”
    • Orlando: ”We expect the hotel to underperform the portfolio… due to lower levels of group business and the start of a rooms renovation at the hotel.”
    • “We expect our Chicago hotels to perform in-line with the portfolio.”
    • “We expect the Boston market to underperform the portfolio… due to fewer citywide room nights and the ballroom renovation at the Sheraton Boston.”
    • “We expect New York City to have a very good fourth quarter, even with rooms renovations at the New York Marriott Marquis and the Sheraton New York Hotel & Towers.”
    • Hawaii: “While both of our hotels will have some of their rooms out of service due to renovations, we still expect them to continue to outperform the portfolio.”
    • “We expect Denver to continue to outperform the portfolio, as we expect both group and transient demand to remain strong.”
    • “We expect our San Francisco hotels to perform in-line with the portfolio”
    • “We expect our San Antonio hotels to rebound …and outperform the portfolio due to a substantial increase in group and city-wide demand.”
    • “We expect our Phoenix hotels to continue to underperform the portfolio as the renovation and construction projects at the Westin Kierland continue.”
    • “Our San Diego hotels started to rebound in the third quarter and we expect them to significantly outperform the portfolio."
  • “As we look out towards the end of the year, we’re expecting that roughly a third of our hotels will be paying incentive management fees.”
  • Customers “were probably being a bit more cautious about what they spent on food and beverage. Specifically on breaks, that seemed to be the area, as we talked to the operators, where we were feeling the most impact. It’s just coffee and water and soda instead of more elaborate food displays. And so the net effect is that group spending per customer, is down just a little bit.”
  • “We’re not seeing quite as much spending in spas and golf as we might have anticipated. With the strong increase in occupancy that we’ve had, we would have normally expected those revenues to trend up a little bit more aggressively. If you look at where ended up, I think we’re probably up – probably about a 4% increase in occupancy, yet our ancillary revenues were only up about 1%.”
  • “I still suspect that on general the majority of the acquisitions that we complete will be domestic.”
  • “As you look into 2011, you’ll probably find that wage increases will trend slightly above inflation, kind of consistent with the long-term average.”
  • “I think that the [RevPAR] comp gets slightly more difficult in Q4… we do have some renovations happening at some of our larger hotels that are going to hit in November and December of this year.”
  • “Booking pace continues to follow the same pattern of being about in-line a quarter out and then getting very strong during that quarter preceding the actual quarter that happens and then bookings in the quarter continue to be good. We’re also comforted by the fact that as demand has continued to improve, we’re finding better ability to both stop the limit providing discounts to customers to solicit business and at the same time to begin to move rate.”

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