Hedgeye - HST YOUTUBE

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

YOUTUBE FROM 3Q CONFERENCE CALL

"We continue to be encouraged by the positive trends in group business. Group bookings in the quarter for the remainder of the year increased 9%.... and the average rate on those bookings rose by more than 6%. Total bookings for the remainder of the year are now more than 7.5% ahead of last year's pace, and the overall rate for the third and fourth quarters has increased well over 2%, indicating revenue improvement of 10%. We're also seeing the positive booking activity extend into 2013 in both demand and rate, indicating that our group hotels are benefiting from increased business spending and should continue to perform well for the remainder of this year and next."
"On the disposition front, we have one smaller asset under contract, which is expected to close in late summer, and we are also actively marketing several additional properties which we expect to close during the fourth quarter. While the sale market is difficult to predict, the guidance assumes we complete incremental sales in the $300 million to $400 million range by year-end."
"It is worth noting that we are seeing great results at our three recently redeveloped hotels: the Chicago O'Hare Marriott, the Atlanta Perimeter Marriott and the Sheraton Indianapolis, where RevPAR is running better than 35% ahead of pre-renovation levels."
"During the quarter, we completed the renovation of the rooms at the New York Helmsley Hotel as a part of the conversion process of this hotel to the Westin Grand Central and have also decided to renovate the lobby and create a new restaurant/bar outlet in the front of the hotel which should be complete by early fall."
Regional RevPAR outlook:

"We expect Philadelphia to be a top performing market in the third quarter due to strong group and transient demand, which should allow us to drive pricing."
"We expect our Chicago hotels to underperform our portfolio in the third quarter due to lower levels of citywide and group demand when compared to the third quarter of 2011."
"We expect our Boston hotels to have a strong third quarter."
"We expect our Atlanta hotels to underperform our portfolio in the third quarter due to renovations at the Ritz-Carlton Buckhead and the Four Seasons."
"We expect our San Francisco hotels to continue to perform very well in the third quarter as strong demand will allow us to continue to drive rate."
"RevPAR for our New York hotels increased 4.8% due to growth in ADR. Results were negatively impacted by the second and final stage of the rooms renovations at the New York Marriott Marquis and the Sheraton New York and a rooms renovation at the W Union Square....We expect our New York hotels to perform better in the third quarter."
"Our Miami and Fort Lauderdale hotels struggled in the quarter as RevPAR declined 20 basis points....The weakness was due to less transient and group demand. We expect our Miami and Fort Lauderdale hotels to perform better in the third quarter due to better group bookings."

"We continue to see improvements in catering, meeting room rental and audio-visual revenues, as well as reductions in food and beverage cost as a percentage of revenue."
"Looking to the rest of 2012, we expect that comparable hotel RevPAR will be driven more by both occupancy and rate growth, but rate growth should be increasingly more important throughout the year. The additional rate growth should lead to solid rooms' flow through even with growth in wage and benefit cost. We expect the positive trends in group demand to continue which should help drive growth in banquet and audio-visual revenues and good F&B flow through."
"We expect unallocated cost to increase more than inflation, particularly for sales and marketing where higher revenues will increase cost. We also expect utilities to decline slightly for the full year."
"We expected a property tax increase of roughly 8% to 9% this year. At this point, we expect an increase in the 6% area as we have been successful in reducing some of the assessments."
"Taking into consideration the acquisition of the Hyatt DC and the expected term loan and the related use of proceeds from the term loan to repay approximately $400 million of debt, our outstanding debt will increase approximately $100 million to roughly $5.3 billion. We will have approximately $760 million of capacity in our credit facility and approximately $150 million of cash and cash equivalents."
"We will certainly be pushing for higher pricing next year to reflect the more competitive market conditions."
"If trends hold the way they are now, we would probably do a little bit less in special corporate or have fewer special corporate accounts next year – or at least fewer special corporate accounts with less room availability, because we will be recognizing the fact that, number one, we've got more group business on the books, we have higher occupancy and we really ultimately would like to be able to push even more of our business into those more highly rated corporate and premium categories."
"We are starting to see an ability to negotiate better cancellation penalties, better attrition clauses and overall better contracts. But....it depends a lot on the hotel....I think what we're seeing this year is ultimately a slight increase in attrition and cancellation fees on a year-to-date basis compared to what we had last year."
[2012 group business booked] "It's slightly north of 90%, maybe... 91%, something like that."
[3Q vs 4Q REVPAR growth] "I don't know that we necessarily see a big difference in trends between the quarters right now."
[Acquisitions environment] "I'd say expectations have moderated a bit. But clearly we're seeing more activity, more opportunity right now than we did in the beginning of the year, and I think it doesn't surprise me in some ways that that would happen. I think conditions are better. So we didn't try to predict the number of acquisitions that we would get done, but we certainly still are looking to be active. And I would still say that at the end of the day, for the full-year, it is our intent to be a net acquirer as opposed to a net seller in 2012."
"I think what we're finding on wages and benefits right now is that we're probably looking at our overall wages and benefits kind of increasing somewhere a little bit north of 3% over the last quarter."
"We'd like to buy existing full-service there, because we still feel very good about the overall opportunity in Brazil. And on the select service side, we think that matches up well with the sort of emerging wealth that's happening within the country of Brazil..... I think we could see some incremental investment in some other select service hotels in a couple of the major markets within Brazil. Nothing necessarily imminent, but we are looking at some opportunities there."
"The new supply in India is picking up a bit. It's certainly nowhere near the level of what we've seen in China, but I'd say right now, we have a cautious outlook on India."
2H vs 1H Europe REVPAR: "We generally would expect it to be in line with what we've seen in the first half of the year."

"The one market that's underperformed year-to-date has really been Brussels. But we have a sense that that will do a little bit better in the second half of the year."

"We do intend to be an active seller over the next two and three years. And as we are consistent with what we've described in the past, a number of these suburban assets, both in core and non-core markets and airport locations, leaving out the ones that are sort of directly attached to the airport, those are the hotels that would be high on our priority list in terms of hotels that should be sold."