HST 1Q 2012 REPORT CARD

04/25/12 12:26PM EDT

In an effort to evaluate performance, we compare how the quarter measured up to previous management commentary and guidance.

OVERALL:  BETTER - You wouldn't know it from the stock action but HST more than delivered in Q1 and forward commentary remained positive.  Guidance was raised.

  • 2012 GUIDANCE
    • BETTER:  HST raised RevPAR guidance by 1%, EBITDA guidance by $20-30MM and Adjusted FFO by 4 cents
  • GROUP BOOKINGS
    • BETTER:  Stronger demand has driven group bookings up 7.5% YoY for the remaining three quarters.  ADR is up 2% and recent bookings were up 8%.  Transient bookings also continue to run well ahead of last year's levels and suggest strong rate growth.  
  • TRANSACTION ACTIVITY OUTLOOK
    • SAME:  Reiterated a growing investment pipeline and expect further transactions later in 2012. 
  • DISPOSITION ACTIVITY
    • SAME:  The disposition of the San Francisco Airport Marriott at $113MM is in-line with its guidance of $100-115MM for the 1H of 2012.  
  • COST INFLATION/MARGIN IMPACT
    • SAME:  2012 comparable hotel adjusted operating profit margins is expected to increase 50 bps- in the middle of HST's previous guidance range of 25-75 bps.   
  • REGIONAL GUIDANCE
    • SLIGHTLY BETTER:  Most of the markets' REVPAR expectations came in as expected.  Atlanta outperformed in 1Q with 2Q looking rosy as well.  
  • EUROPEAN JV
    • SLIGHTLY BETTER:  European JV REVPAR (in constant euros), excluding the Sheraton Roma, came in at 4.8% in 1Q.  Even though this is within the company's previous guidance of 3-5%, HST had mentioned that they were more conservative with the REVPAR assumptions at the corporate level. The Westin Europa & Regina in Venice, the Sheraton Warsaw, the Sheraton Skyline in London and the Paris Versailles all had double digit RevPAR increases 1Q.
  • CAPITAL RECYCLING PLAN
    • SAME:  The $48MM spent on redevelopment and ROI capital projects is on schedule with HST's plan to be an active recycler of capital in the next 2-3 years.  HST expects to spend $150-170MM in 2012 for these capital reinvestment projects.  
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