HST YOUTUBE

In preparation for HST's Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from HST’s Q1 earnings call.

1Q YOUTUBE

• “Transient segment, business trends continue to be positive, with an overall average rate increase of 6.2% for the quarter, driven by an 8% increase in our premium and corporate segment and a 5 plus percentage increase in our special corporate segment.”
• “Group business, we benefited from a demand increase of 4% at an average rate increase of more than 2%, resulting in an overall Group revenue increase of 6.4%. The main driver for these results was a 24% increase in demand from our higher-rated corporate Group business, as that segment continues to recover ground loss in the downturn. Our association business, which has longer booking lead times, was off this quarter by 17%, but it is expected to recover significantly over the course of the remainder of the year. Every segment of our Group business experienced average rate growth, and all but the corporate segment are now exceeding 2007 rate levels. However, given that overall Group demand is still more than 13% behind 2007 levels, we were still expecting to see an increase in Group business drive our recovery.”
• “Our booking pace outlook improved over the course of the quarter, especially in March, and exceed 2010 in our booking pace from last quarter. We expect overall Group revenues to increase meaningfully this year”
• “For the full year, we expect to spend approximately $230 million to $250 million on these types of projects.  For the full year, we expect to spend $300 million to $325 million on maintenance capital expenditures.”
• “We expect that our disposition activity will pick up in the second half of 2011 and become even more active in ‘12 and ‘13. With that being said, our guidance currently does not assume any dispositions.”
• “We remain optimistic that the economy will continue to pick up steam this year.  As the recovery continues, we expect demand to remain strong and average rates to keep improving, as our business mix shifts the higher rate of business segments”
• “We expect comparable hotel RevPAR will increase 6% to 8% for the year, with adjusted margins increasing 100 to 140 basis points.  It is worth noting that we expect the second half of the year will exhibit better relative performance than the first half on both the RevPAR and margin front, as we expect to be more significantly affected by renovation work in the first and second quarters.  Now we anticipate that pricing will be better during the latter stages of the year.”
• FY 2011 Guidance: “Adjusted EBITDA of $1.01 billion, to $1.045 billion, an FFO per share of $0.88 to $0.93.”
• “Over the next three quarters with the expectation of a full year common dividend of $0.10 to $0.15 per share.”
• Regional RevPAR guidance for 2Q11:
  • San Francisco: “continue to outperform our portfolio… due to excellent Group and transient demand and further ADR increases”
  • San Diego: “underperform the portfolio due to fewer citywide and overall reduced group demand only partially offset by improvements in transient demand and rates.”
  • “We expect Hawaii to have an outstanding second quarter due to further improvements in group and transient demand as well as increases in ADR.”
  • New Orleans: “underperform the portfolio … due to a decline in group demand”
  • Phoenix: “outperform our portfolio… due to strong corporate group demand and ADR gains”
  • Boston: “underperform the portfolio…due to the reduced citywide demand and the displacement of business as we wrap up our meeting space renovation at the Sheraton Boston.”
  • San Antonio: “great second quarter and to outperform the portfolio because of strong group demand, which should drive a significant increase in ADR”
  • “With the renovations continuing into the second quarter, we expect our New York hotels to continue to underperform our portfolio, however, we do believe that our New York hotels will have a great third and fourth quarter”
  • “The Philadelphia market will continue to struggle in the second quarter due to the renovation of the hotel, which is expected to be completed in August of this year. However, we expect our Philadelphia hotels to have a strong second half of the year.”
• “On a full year basis for 2011, hotel level bonuses are expected to be roughly flat relative to 2010.”
• “In the first quarter of 2011, cancellation and attrition fees were well below the levels (in 1Q10 which were elevated), the typical level, and that trend’s expected to continue throughout 2011”
• “Looking forward to the rest of the year, we expect the RevPAR increase to continue to be driven more by rate growth and occupancy, which should lead to strong rooms flow through, even with growth in wage and benefit costs above inflation.”
• “We expect some increase in group demand as well as higher quality groups, which had helped to drive growth in banquet and audio-visual revenues and solid F&B flow through, particularly in the second half of the year, as payroll tax and bonus expense comparisons become easier.”
• “We expect unallocated costs to increase more than inflation, particularly for utilities, where we expect higher growth due to an increase in rates and volumes and sales and marketing costs, where higher revenues and implementation of new sales and marketing initiatives will increase costs. We also expect property taxes to rise in excess of inflation.”
• “I think we will be opportunistic about selling some of our larger hotels, but I think the focus initially will really be as you were suggesting on the non-core assets”
• “Washington was one of the markets that held up the best in the downturn. So it declined the least. As all these different markets start to work their way back to where they were before and then move beyond that, we’ve generally assumed that Washington growth would be fine in a historical context but in the short-term would likely be lower than certainly markets like New York, Boston and San Francisco, but not because it’s not a healthy market, but because the overall level of decline there was just lower.”
• Q: “Guidance on corporate expense is $99 million versus last year’s $108 million. How do you account for that being down?”
  • A: “One of the bigger factors is just the way that our compensation program works. The amount of shares that we earn depend upon primarily on our relative performance compared to the rest of the market, and at this point in the year we tend to just use target for a number and then we refine that number as we get later into the year. Last year, because we performed so well against NAREIT and so well against the lodging companies that are in our index, our compensation was higher, and that’s why you saw the number being higher”