HST YOUTUBE

In preparation for HST's Q3 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from HST’s Q2 earnings call.


 

2Q YOUTUBE

  • “The fundamentals of our business remain attractive. Transient demand has recovered to prior peak levels, and group demand continues to improve. As RevPAR is increasingly driven by improvements in average rate, margin growth and flow-through will accelerate. Additions to supply have been restrained and will likely remain well below historical levels for at least the next three years. Construction costs are beginning to increase again, which will further help limit new supply”
  • “We expected our operating results to be significant impacted by substantial renovations at our Sheraton New York and Philadelphia Marriot hotels in the second quarter. Excluding results from these hotels, our RevPAR increase for the quarter would have been 7.6%. In addition, it is worth noting that our comparable hotel results do not include the performance of the $1.7 billion of acquisitions we have completed over the last 12 months, which are performing exceptionally well and have generated an average RevPAR increase of over 18% for the quarter”
  • “Our business mix trends for the quarter were quite favorable as we saw strong demand increases from our higher rated customer segments and solid rate growth across the board. Rate growth in Q2, driven by exceptional growth in transient demand, was the best we had seen since 2007.”
  • “Group demand for the quarter was essentially flat with last year as increases in corporate and association business were essentially offset by reductions in discount groups. The growth in these higher priced segments was even more pronounced in our luxury hotels.”
  • Repositioning: “We expect to spend $220 million to $240 million on these types of projects”
  • “We expect to spend approximately $320 million to $345 million on maintenance capital expenditures.”
  • “We are expecting improved performance in the second half of the year due to less disruption from renovation at our hotels, an improving macroeconomic outlook relative to the first half of the year and solid group bookings for the third and fourth quarters”
  • We will continue to be aggressive, but disciplined, as we evaluate new investments to further enhance the value of our company.”
  • “We’ve seen a big increase in tour groups throughout Europe this year. I think that a better economy in the rest of the world has ultimately contributed to better results in Europe. So I think we may see that trend moderate a little bit for the second half of the year only as we start to move out of the tourist season. But the bottom line is so far … Europe seems to be holding up relatively well”
  • “I think as we also feel that as we look at the group booking pace as it carries into the second half of the year, it does seem to be a little bit stronger, the rate does seems to be growing. So that gives us a fair amount of confidence that things should be a little bit better.”
  • Guidance FY11:
    • Comparable hotel RevPAR: +6% to 7.5%
    • Adjusted operating profit margins: +90 to 120bps
    • Adjusted EBITDA of $1.020 to $1.050BN
    • FFO per diluted share of $0.87 to $0.91 which has been reduced by $0.03 per share for acquisitions, debt repayment and impairment costs
    • “We expect the RevPAR increase to continue to be driven more by rate growth than 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  should help to drive growth in banquet and audio-visual revenues and solid F&B flow through”
    • “We expect unallocated costs to increase more than inflation, particularly for utilities where we expect higher growth due to an increase in both rates and volume, and sales and marketing cost, where higher revenues will increase cost. We also expect property taxes to rise in excess of inflation and property insurance to increase well in excess of inflation due to an increase in insurable values and premium increases in the second half of the year”
    • Regional guidance for 3Q11:
      • San Fran: “continue to outperform our portfolio in the third quarter due to excellent group and transient demand and further ADR increases.”
      • Hawaii: “Slightly underperform the portfolio in the third quarter due to some disruption from renovation activity.”
      • “Tampa hotels to perform very well in the third quarter due to strong group bookings”
      • “We expect our Miami and Fort Lauderdale hotels to have a great third quarter and to outperform the portfolio because of strong group demand which should drive a significant increase in ADR.”
      • “We expect the Phoenix market to significantly outperform our portfolio in the third quarter due to strong group demand and growth in both group and transient rates, particularly at the Westin Kierland which will benefit from the new ballroom.”
      • “We expect our San Diego hotels to underperform the portfolio due to lower levels of group business which will result in weak transient pricing through the summer months”
      • “We expect the Chicago market to perform very well in the third quarter.”
      • “We expect RevPAR for our New York hotels to improve significantly for the rest of the year.”
      • “We expect the D.C. market to continue to underperform the portfolio in the third quarter; however, our urban hotels will continue to significantly outperform the suburban hotels.”
      • “Our Boston hotels are expected to continue to underperform the portfolio in the third quarter due to lower levels of group demand.”
      • “We expect the Philadelphia market to outperform the portfolio in the third quarter as the renovation wraps up and group demand increases”