HST adjusted EBITDA beat consensus but was in-line with our projection.  However, implicit Q4 guidance was lower indicating that RevPAR is not recovering as quickly as we thought and significant cost reductions may be over.  This leads credence to our 2010 call that Street estimates are too high for HST and most of the lodging sector.




3Q09 Review


HST beat consensus but missed our revenue estimate by 4% or $32MM and missed our adjusted EBITDA estimate by $1MM


  • RevPAR was 1.8% worse than our estimate
    • Occupancy was 0.9% better while ADR was 3% lower
  • We also didn't account for the disposition of Hanover Marriott until 4Q09, hence our room count was also higher
    • HST sold Hanover Marriott for $27MM or 76k per key to HEI Hotels, which will invest $20MM to renovate the asset
  • Lower RevPAR and earlier closing on the disposition of Hanover Marriott accounted for $15MM lower revenues vs our estimate.  Lower F&B and other revenues accounted for the remaining variance


The revenue miss was offset by better cost management

  • Total operating expenses decreased 14% y-o-y vs our estimate of an 11% reduction.  This compares to a 17% decline in 2Q09 and an 11% decline in 1Q09 y-o-y operating expenses.
    • Cost per occupied room decreased by 3.7% and overall room costs were down 11.5% (vs our estimate of 11%)
    • Hotel departmental expenses decreased 16% (8.5% per occupied room) vs our estimate of a 10% y-o-y decline

Property EBITDA margins came in at 16.2%, 10 bps better than our estimate of 16.1%




HST increased the low end of its FY09 guidance

  • Increased the low end of FY09 RevPAR guidance to -22% from -23%
  • Low end of adjusted hotel operating profit margins raised by 10 bps to 640 bps
  • FFO guidance lowered to $0.46 to $0.51 from $0.68 to $0.71 (new guidance includes non-cash charges of $0.25)
  • Increased the low end of Adjusted EBITDA guidance by $60MM to $760MM




Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more