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Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.

1Q14 CONSENSUS ESTIMATES

• Total revenues:  $1,264 million

• Adjusted EBITDA:  $293 million

• FFO:  $0.30/share

MANAGEMENT GUIDANCE

FY 2014:

  • Comparable hotel RevPAR - domestic: 5% - 6%
  • Comparable hotel RevPAR - int'l constant US$: 5.5% - 6.5%
  • Total comparable RevPAR - constant US$: 5% - 6%
  • Total revenues (GAAP): +2.9% to +3.9%
  • Total comparable hotel revenues: +4.3% to 5.3%
  • Operating profit margins (GAAP): 140-160 bps
  • Comparable hotel adj. operating profit margins: 60-110 bps
  • Adjusted EBITDA $1,350-$1,390 million
  • Net Income: $490-$527 million
  • Diluted EPS: $0.63-$0.68
  • FFO (NAREIT)/share: $1.39-$1.44
  • FFO (Adj)/share: $1.40-$1.44

QUESTIONS FOR MANAGEMENT

  • CapEx - total value of growth vs. maintenance capex programs?  ROI on renovations from last 2 years? 
  • Views on:
    • Washington DC
    • New York
    • Chicago
    • California: San Diego, Los Angeles, vs. San Francisco?
    • Urban vs. Suburban vs. Resort/Conference
  • Where are inflation pressures negatively impacting margins?
  • Does the company want to achieve a debt rating upgrade from BBB to BBB+ or A- ?
  • What is the Company's dividend strategy/policy - given the $0.01/share increase each of the past 13 quarters to Q1 2014's dividend/share of $0.14?
  • How much current cash is trapped overseas? How do you plan to utilize this cash?
  • Recent commentary from Delta Air Lines indicated strong price taking in April, May and June of this year, how does that compare with what the company is seeing for advance bookings?

RECENT MANAGEMENT COMMENTARY

RevPAR

  • Comparable same-store RevPAR was +6.6% (constant dollars), with room rate +4.4% and occupancy up 140 bps.
  • Actual RevPAR, which includes the 10 properties that were either acquired or under renovation last year, was +7.2%, with rate +4.7% and occupancy +180 bps.
  • Adjusted operating margins were +130 bps.
  • F&B revenue increased 6.1% during Q1 2014.

Group

  • About 70.0% of 2014 group business has been booked.
  • Group revenue is tracking +5.5%, with room nights up 3.0% and rate +2.5%.
  • Group revenue is still 10.0% below prior peak levels
  • Group revenues booked in Q4 for 2014 and 2015 exceeded the prior-year’s strong pace
  • For 2014, group booking pace is up 3% in room nights with average rates projected to be up in every quarter
  • More than 70% of our expected group rooms for the year have been booked
  • Revenues for the year up more than 5.5%, and we expect a solid year from our group segments

Transient

  • Strong demand in our higher-rated retail and corporate business, which increased more than 6.5%

Peak

  • 2013 results for portfolio RevPAR was $151 and occupancy of 76.0% versus prior peak inflation adjusted RevPAR of $178 and occupancy of 78.0%.
  • More room to grow before the portfolio achieves prior peak levels. 
  • F&B revenues are still roughly 10% behind 2007 level
  • Margins are still 300 bps below peak and profitability 15.0% on a non-inflation adjusted basis

Asset Sales

  • Disposed of nearly $700 million of assets over last 12 months.
  • Over the past 12 months, the company sold six hotels for $667 million.
  • Since the start of 2012, the company has sold $1.1 billion of assets.
  • Marketing additional assets but sale multiples could be in the low double digits as substantial capex is needed for several properties

Other

  • equity issuance this year should be minimal in the absence of significant acquisition opportunities, as HST is approaching its leverage target of 3x.”

Market Trends

  • San Francisco:  mix shift to higher-rated transient and group
  • San Diego:  strong group & transient
  • Hawaii: occupancy -430bps due to timeshare construction at the Hyatt Hotel in Maui
  • Due to the negative impact of the unfavorable exchange rates this quarter, nominal comparable international hotel RevPAR grew only 0.9%
  • Expect European joint venture hotels’ RevPAR to increase from 2013 levels, but will continue to unde rperform our total portfolio in 2014