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In preparation for HST's Q4 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.



YOUTUBE FROM Q3 2011 CONFERENCE CALL

  • “Despite the upheaval in the equity markets created by headlines about legislative gridlock and slow employment growth in the U.S. and sovereign debt risks in the EU, our outlook for the remainder of the year remains quite positive.  Our fourth quarter group booking pace is quite solid compared with last year with bookings up over 2% and revenues ahead by almost 5%. In addition, our transient bookings are up over 6% with very strong rate growth. While a realistic appraisal of the impact of weaker economic data suggests that we will not experience significant outperformance in the fourth quarter, we do expect that fourth quarter RevPAR growth will generally be in-line or slightly better than what we experienced in the last two quarters, leading to full-year RevPAR growth of between 6.25% and 6.75%.”
  • “Assuming that adjusted profit margins expand between 80 and 90 basis points, we would project that adjusted EBITDA will range between $1,015 million and $1,025 million which will reflect full-year growth of 23% over 2010. We project FFO per diluted share between $0.86 and $0.88 which has been reduced by $0.03 per share for acquisition, debt repayment, and impairment costs.”
  • “While we are not prepared to offer any specific guidance relative to RevPAR or revenue growth for 2012 and we fully appreciate the event risk that may threaten overall economic growth for next year, we would confirm the sentiments offered by others in the industry that the fundamentals for our business continue to be attractive. We would start by noting that supply growth in 2012 is projected to be roughly 0.5% which is a small fraction of the long-term industry average. This would suggest that occupancy rate should continue to grow even if economic growth is more modest than expected earlier in the year.”
  • “The group booking pace for next year is strong, with room nights up over 4% at higher rates, especially in the important second and fourth quarters where room nights are ahead by more than 9%.”
  • “The recently issued government per diem rates which increased an average of 5% across our major markets, plus expectations for successful special corporate negotiations, all point towards higher transient rates. Given the significant recovery in occupancy rates over the last two years, we should be starting the year in a position of strength, which suggests that we should benefit from both mix shift and absolute rate increases across most segments. In short, there is a clear opportunity for very solid RevPAR growth for next year.”
  • “On the disposition front, we are marketing a few selected properties for sale but would expect that these transactions would most likely not close until the first quarter of next year.”
  • “For the year, we expect to spend approximately $300 million to $320 million on maintenance capital expenditures.”
  • “Margins for the quarter benefited from better productivity as wages and benefits on a per occupied room basis were essentially flat. Rooms flow-through was good at roughly 75%.”
  • “F&B flow-through was approximately 26%, which was better than the first half of the year, but profits were still lower than expected. There were two primary reasons. The first is that we had a number of restaurants and some meeting space under renovation in the quarter where the negative impact on F&B profits was higher than anticipated. In addition, a few hotels had lower group spend only a portion of which was anticipated.”
  • “Looking forward to the fourth quarter, we expect margins to generally perform in-line with what we experienced in the first three quarters of the year. We should get some benefit from a RevPAR increase driven more by rate growth than occupancy and the potential for improvement in F&B flow through. We do; however, expect unallocated cost to increase more than inflation, particularly for awards and sales and marketing cost or higher revenues will increase cost and we expect property taxes to rise well in excess of inflation due to refunds received in the fourth quarter of 2010 that will not recur in the fourth quarter of this year.”
  • “With the extension of the closing until mid-December, our current guidance assumes that there would be minimal EBITDA from the acquisition in 2011. If we do not acquire the hotel, we would forfeit our $15 million deposit and reduce our 2011 adjusted EBITDA by $15 million.”
  • “If we do not close the acquisition, NAREIT FFO would be an additional $8 million or roughly $0.01 per share lower than our current guidance. This amount represents the loss of the deposit partially offset by the transfer taxes and interest expense that we would not have to pay.”
  • “Net-net the bookings for the fourth quarter are better than where they were earlier in the year. As we've worked our way through the year, we've seen continued improvement in the fourth quarter. Probably more importantly as we look at what has actually happened over the course of the last 60 to 90 days; our bookings for the fourth quarter were stronger than they had been in 2010. So we booked more room nights in the last 60 days for the fourth quarter than we did last year. And those bookings were also ahead of the pace that we had seen in 2007.”
  • “Overall, we continue to feel that the quarter is going to be good. Our property level forecasts are frankly stronger than the guidance that we're giving. I think the properties are a bit more optimistic than we are, but I think we felt like it made sense to dial back a little bit on that…We're not going to outperform in the fourth quarter, but we still expect to perform in-line in Q4.”
  • “To achieve 6.5% that means we need to achieve 7% growth in the fourth quarter. So, that's the 7% that you were just talking about. And obviously, if we hit 7% that would be the strongest quarter of the year.”
  • “Generally I think our philosophy on this is stock purchases are best funded from the proceeds of asset sales, where you are effectively selling a part of the company at a market level price and getting an opportunity to buy part of it back at a discount price.”
  • Group bookings for 2012: “room nights were up about 4% and then rate was up roughly 1%.”
    • “Right now, we're at about 55% of our – what we would, at this point, estimate would be our total room nights for 2012. And I don't think that that's too far off of where we would normally be. We would expect to get to the end of the year and be around 70% of our room nights for next year booked.”
  • “If we included all of the acquisitions, so in other words, our acquisitions were up over 14% in the third quarter. So if we looked at that on a pro forma basis compared to last year, that would have added an incremental 70 basis points to our third quarter RevPAR growth. So 6.4% would have gone to 7.1% and obviously if you add the hurricane disruption then you end up at 7.7% for the quarter.”
  • “On the group side, we're still 9% to 10% below where we were in '07; we are not that far below on rate, but we are way behind in terms of room nights. So, when I think about '12, I think that's the area where we have an opportunity for outperformance as group activity continues to improve.”
  • “I would expect that as you look at that opportunity next year it tends to be more on the rate side than on the room night side, simply because the demand piece of that has already been quite strong”