• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In preparation for HOT's 3Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary

"Our conviction [is] that the value of our company is set to rise with an unprecedented and seemingly unstoppable growth in the ranks of a new class of affluent global business and leisure travelers.  This major secular trend will continue to fuel demand for our brands well into the future.”

 


YOUTUBE FROM Q2 CONFERENCE CALL

  • “Occupancies have now reached the point where we expect rates to rise further, and as you expect, higher revenues mean higher margins
  • “With supply already tight in the U.S. and Europe, we foresee strong rate increases not just for the rest of this year, but also for corporate rate negotiations for next year.”
  • “Our leisure business is doing quite well as high-end guests fare better than the economy as a whole.  The strength of our business will mean less inventory sold through costly channels such as OTAs.”
  • “Tour flows steadily improved up 4% and for the first time in nearly four years, realized price increased.  Our vacation ownership team continues to do a stellar job driving sales and generating cash from the business.  We expect more of the same for the coming years.”
  • “Our outlook for the rest of 2011 is robust with solid group and transient pays and with good prospects for rate and margin.  In line with our baseline scenario, we expect REVPAR growth of 7% to 9% in 2012. We’re sticking to our 2011 EBITDA range to of $975 million to $1 billion and I should add that’s in spite of asset sales, which will reduce full-year EBITDA by about $20 million.  We’re also raising our EPS range to $1.67 to $1.77.  We have maintained the outlook range we first provided late last year despite a $25 million to $30 million EBITDA hit from the unexpected events in North Africa and Japan and an additional $20 million in lost EBITDA from asset sales completed in Q2 which were not included in our outlook”
  • “At this point, there is no discernible impact on our business from the much-discussed soft patch in the U.S. economy or the debt limit shenanigans in Washington.  Transient revenue pace, both corporate and leisure, is up double digits in Q3.  Leads are up, group pace is gaining steam and booking windows are lengthening.  So far in July, the momentum of the second quarter has been sustained.  As we’ve said before, rate is a make or break variable this year.  Rate trends are improving as occupancies enter the 70s percent.  Like you, we remain on high alert for any signs of a change in trend.  Since we do not see any evidence of that, our outlook assumes the normal cyclical recovery we have been experiencing in lodging will continue”
  • “The Euro crisis has not impacted our business so far in Europe which is one of our strongest regions in the quarter.  In local currencies, system REVPAR in Europe was up 12%.  Rate was up 5.1% and occupancies up 4.5 points.”
  • “Tour flows have improved while close rates are stable.  Mixed management is improving price realization. Default rates continue to improve and are now back to 2007 levels.  We expect these trends to continue.  We remain focused on cash flow generation with a securitization plan in the fourth quarter.  SVO will generate over $150 million in cash this year and over $700 million in total in the last three years.”
  • “Our SG&A declined in the quarter.  This is partially due to lapping incentive compensation accruals from last year.  We also had some legal expenses last year.  These positives were offset by higher cost of non-U.S. overhead due to the weak dollar.  For the year, we continue to expect a 4% to 5% increase.”
  • “We are more comfortable with the middle of the EBITDA outlook range rather than the high end where many of your estimates currently are.”
  • “On the fee front, North Africa and Japan hurt 2011 management fees by as much as $18 million or the reduction of almost 300 basis points in year over year fee growth.  Two-thirds of the impact is on incentive fees and most significantly in the fourth quarter when these fees were anticipated.  As such, our Q4 fee growth rate will be lower than the trend we have seen in the first three quarters.  Some of this impact is offset by favorable currency translation due to the weak dollar of 200 basis points positive for the year.”
  • “At Bal Harbour, construction is proceeding on schedule.  We’re also on track to receive our TCO in Q4. Our plan is to start closing in November.  Meanwhile, the sales pace is good this year, particularly from Latin-American buyers. Square foot rates realized on new sales are at pre-crisis levels and deposits are much higher, more than 40%. We expect that there will be revenue profits and cash from Bal Harbour in the fourth quarter as we start closings, which are not currently in our outlook.
    • “We’re approaching close to 60% of the value that is already on the contract, and the value we provided you before is north of $1 billion in terms of the condos.  Now there will also be a hotel there that we intend to keep.  We have got deposits already for many of the sales done prior to this year in the 20% range and then more recently our deposits have been much higher than that…more than 40%.  Our indications are very good that the closing rates will be high… The good news is the square footage rates we’re selling at right now are at pre-crisis level….It does vary depending upon the units, but it’s well north of $1,000 and could be north of $1,300 and $1,400 depending upon the unit.”
  • “We expect that ratings will move probably toward the end of this year or into next year and our priority is we have maturities next year, roughly $600 million in public debt as well as there’s some debt on assets which is a small amount, maybe another $50 million or so that can be pre-paid.  So there’s about $615 in prepayments and in repayments that we can make next year.  So our priorities remain, as we’ve said before, healthy reinvestment in our business, reducing our debt levels, and then, of course, returning cash to shareholders”
  • “The group pace in 2012 continues to improve particularly as you’re seeing the booking window lengthen.  Today, it’s still volume driven.  Rate is marginally positive, but as Frits mentioned in his comments, rate on newly booked business in the second quarter was up 9% and for periods beyond 2012, we saw rate increases closer to 13%.  Another interesting thing that we saw during the second quarter was a pretty big shift in percentage of business being booked more than 12 months out.  So we saw very strong pickup in terms of the business being booked for 2013 and beyond.”
  • NOLs: “There’s a fair amount of work underway that we’re comfortable that we will use most if not all of it before the end of the year and essentially be able to realize the value as asset sales are done in the future”
  • “We see a market for 1s and 2s as we’ve been doing, but not a market for a mega sale”