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Host Hotels & Resorts Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 30, 2012 05:54PM
Host Hotels & Resorts Inc. (HST) filed Quarterly Report for the period ended 2012-03-23. Host Hotel&rsrt has a market cap of $11.78 billion; its shares were traded at around $16.64 with a P/E ratio of 18.1 and P/S ratio of 2.4. The dividend yield of Host Hotel&rsrt stocks is 1.4%.
Highlight of Business Operations:The first quarter results do not reflect the month of March for our hotels that report results on a calendar quarter basis (approximately 45% of the comparable hotel revenue). On a calendar quarter basis, which includes the March results for these hotels, as well as eight additional days of March for our Marriott hotels, comparable hotel RevPAR increased 6.4% compared to the first calendar quarter of 2011.
Operating margins (calculated based on U.S. generally accepted accounting principles (GAAP) operating profit as a percentage of GAAP revenues) increased 150 basis points in the first quarter of 2012 compared to 2011. Operating margins calculated using GAAP measures are affected significantly by several items, including our most recent acquisitions. Our comparable hotel adjusted operating profit margins, which exclude, among other items, operations from our recently acquired hotels, depreciation and corporate expenses, increased 100 basis points in the quarter.
Redevelopment and Return on Investment Projects. We believe these projects increase cash flow and improve profitability by capitalizing on changing market conditions and the favorable locations of our properties. As more fully discussed in our annual report on Form 10-K, we classify these capital projects as follows: redevelopment, targeted return on investment (ROI), value enhancement, and acquisition expenditures. We invested a total of $62 million on these projects, including $14 million on acquisition capital expenditures, in the first quarter of 2012, as compared to a total of $46 million in the first quarter of 2011. These investments included renovations to (i) the lobby and restaurants at The Ritz-Carlton, San Francisco, W Seattle and the Atlanta Marriott Perimeter Center, (ii) the meeting space at the Chicago Marriott OHare and the San Diego Marriott Marquis & Marina and (iii) the conversion of hotel rooms to apartments at the Sheraton Indianapolis. During the quarter, acquisition capital projects included the work to convert the New York Helmsley to the Westin Grand Central, as well as substantially
Group revenue increased 5.3% for the quarter, reflecting a 3.8% increase in room nights and a 1.5% improvement in average rate. The room night increase resulted from strong demand growth in the association and corporate segments of 11.3% and 6.2%, respectively, partially offset by a decline of 5.3% in our discount segment.
Cash Provided by Operations. Cash provided by operations during the first quarter of 2012 increased by $36 million to $73 million compared to the first quarter of 2011, due primarily to improved operating profit at our hotels.
Stocks Discussed: HST,