• It's Here!

    Etf Pro

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

In line

CONF CALL NOTES

  • Feel good about the outlook for 2013
  • Strong F&B and audio/visual in 2Q but do not believe strong pace to continue
  • Strong increases in ADR
  • Group and transient demand increased 2.5% - rate increased 3.5%; outpaced industrywide pace
    • Transient rev 6.4%
    • Group revs +6.2%
  • All segments benefited from mix shift as highest price transient demand increased by nearly 9%;  higher price corporate demand increased by over 7% 
  • Govt contracts fell more than 10%
  • Gov business represented 6% of its business; govt group business was up 35% and transient declined 4%
  • Remainder of 2013:  group will be weak in 3Q as middle of quarter tends to be influenced by discount business
  • 2014 group room nights and rates are higher YoY
  • Have not included any additional acquisitions in guidance
  • Sold Ritz-Carlton San Fran at $479k
  • Completed room renovation at Philly Airport Marriott
  • 2H 2013:  Short-term group will be weaker than last year while transient demand will remain robust
  • Houston:  top performing market, REVPAR +16.1%; shifted out lower rated group business; expect 3Q to outperform
  • Seattle:  +14.5% REVPAR; both group and transient drove rate; expect 3Q to be solid
  • Atlanta:  +11.4% REVPAR; NCAA Final Four drove rate; strong citywide calendar will lead to a strong 3Q
  • San Francisco:  +11.2% REVPAR; room rates will lead to a strong 3Q
  • Chicago:  +10.9% REVPAR; boosted by city-wide demand in May/June; F&B +17.6%; expect 3Q to continue to outperform
  • Los Angeles:  +8.8% REVPAR; expect solid 3Q as strong transient demand persists
  • NY:  +5.7% REVPAR; large increase in supply have suppressed rates; expect 3Q to hold up relatively well compared with rest of competition
  • Boston:  +2.2% REVPAR; expect 3Q to improve but will underperform the rest of the portfolio
  • DC:  +0.30% REVPAR; expect 3Q to underperform 
  • Latin America:  -10% REVPAR;  expensive renovations at JW Marriott in Mexico City - renovations will be completed in 3Q and unrest in Brazil
  • Calgary Marriott:  +3.6% REVPAR, despite flooding in Alberta, CA; flooding has adversely impact Calgary's biggest event - Calgary Stampede; expect 3Q to underperform
  • Euro JV:  +3.9% REVPAR (constant euros);  
  • Successful refi on Euro mortgage loan:  37MM euros, all-in rate of 4.5%
  • F&B up due to positive mix and solid catering contribution
  • Corporate group business was healthy 
  • REVPAR will continue to be driven by rate
  • Utility rates will likely increase
  • Insurance costs will increase at inflation rate
  • 20-24% of 2013 EBITDA will be earned in 3Q

Q & A

  • Weak group business in 3Q but stronger group business in 4Q
  • Group in 2H 2013:  room nights about flat but revenues will be up 3-3.5%
  • Transient pricing should accelerate further
  • Non-room revenue:  April was stronger in general; new retail at Marquis helped results
  • Forecast issuing another 5 million shares for the rest of 2013 but it will depend on M&A outlook
  • Continue to drive transient business into higher-priced segments
  • 2H 2013:  lower growth in other income (rentals/retail)
  • Hyatt Place Waikiki Beach return expectations:  unlevered IRR 9.5-10%; cap rate: 6%
  • Ritz-Carlton:  cap rate: 3%
  • Europe:  more single asset transactions, few portfolio on market because of challenging financial circumstances
  • Australia:  1-2 portfolios on market; overall feel good about the market despite lower commodity demand
  • One-time severence charge (Larry's departure at CFO) was incorporated in corp expense
  • Group:  37% of business (in the past, it was 40-41%)
    • Typically, 70-75% booked at beginning of year
    • Have 95% of rooms booked for rest of 2013
    • 2014 pace is higher
  • Would like to sell more properties but hope to be a net buyer
  • DC outlook:  not seeing group bookings pick up in 2014
  • NY outlook:  lots of new supply hurting rate growth; will host Super Bowl in 2014
  • Strong correlation between employment growth and corporate demand
  • Slow recovery in group
  • Probably Grand Hyatt DC would sell at close to where HST bought it; believes in the DC market long term