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Host Hotels & Resorts Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 23, 2012 04:15PM
Host Hotels & Resorts Inc. (HST) filed Quarterly Report for the period ended 2012-06-15.
Highlight of Business Operations: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. During the first half of 2012, we invested a total of $162 million on these projects, including $64 million on acquisition capital expenditures, as compared to a total of $121 million for the corresponding period in 2011. These investments included completing the rooms renovation phase of the redevelopment at the 1,778-room Sheraton New York Hotel & Towers and the conversion of one tower at the Sheraton Indianapolis to apartments. For the full year 2012, we expect that our redevelopment and return on investment capital expenditures will total $165 to $175 million and our acquisition capital expenditures will total $115 to $125 million.
Rooms. Room revenues increased $50 million, or 6.5%, to $823 million and $107 million, or 8.3%, to $1,395 million for the quarter and year-to-date ended June 15, 2012, respectively, due to the improved room rates and occupancy levels as comparable RevPAR increased 6.1% for both periods. In addition, room revenues for the year-to-date ended June 15, 2012 increased $38 million due to incremental revenues from our Recent Acquisitions.
Other revenues from owned hotels. For the quarter and year-to-date ended June 15, 2012, other revenues from owned hotels increased $6 million, or 8.1%, to $80 million and $11 million, or 8.6%, to $139 million, respectively, which includes a 2.8% and 2.4% increase in comparable hotels for the quarter and year-to-date. Other revenues from owned hotels also increased $3 million, or 4.1%, and $5 million, or 3.9%, for the second quarter and year-to-date ended June 15, 2012, respectively, due to the inclusion of Tiburon Golf Ventures, L.P., following the acquisition of a controlling interest thereof on September 1, 2011.
Rooms. Room expenses increased $11 million, or 5.4%, to $214 million and $28 million, or 8.0%, to $379 million for the quarter and year-to-date ended June 15, 2012, respectively. The increase in room expenses reflects a moderate increase of 4.3% and 5.1% for the quarter and year-to-date, respectively, at our comparable hotels as growth in wages and travel agent commissions were partially offset by improved productivity. As a result, when coupled with the improved room revenue for the quarter, we experienced strong growth in comparable room operating profit. Room expense for the year-to-date ended June 15, 2012 increased $12 million due to incremental expenses from our Recent Acquisitions.
Management fees. Management fees, which generally are calculated as a percentage of revenues and operating profit, increased $4 million, or 7.7%, to $56 million and $6 million, or 7.1%, to $90 million for the quarter and year-to-date ended June 15, 2012, respectively, which is consistent with our overall improvements in revenues and operating profit. Our year-to-date management fees include $2 million of incremental costs from our Recent Acquisitions. Base management fees, which generally are calculated as a percentage of total revenues, increased $3 million and $5 million for the quarter and year-to-date ended June 15, 2012, respectively. Incentive management fees, which generally are calculated based on operating profit after a preferred return, increased $1 million for both the quarter and year-to-date ended June 15, 2012.
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