Host Marriott plans to sell, buy hotels

February 06, 1994|By Bloomberg Business News

NEW YORK -- Host Marriott Corp., in an attempt to boost profits and reduce competition, wants to sell its low-priced hotels and buy luxury hotels, resorts, and suites, said Stephen Bollenbach, chief executive and president.

And Host Marriott, created last October in the split of the old Marriott Corp., has a $1 billion kitty for acquisitions.

"We hope to look like a company that has a collection of full-service hotels in markets where it's hard to duplicate those hotels," Mr. Bollenbach said in an interview.

The 51-year-old executive, who's been in the hotel business since 1982, said he likes the hotel markets in Hawaii and Southern California. Host Marriott is in negotiations to buy a full-service hotel in Houston that's expected to offer double-digit returns in the first year of ownership, he said.

It's also trying to expand overseas. Host Marriott is in a bidding contest for Ciga Hotels Spa of Italy, a debt-laden company that's owned by the Aga Khan.

The company can afford to buy companies because it sold $242 million of stock last month. Mr. Bollenbach said that it can borrow about $3 for each dollar it raised.

Besides, it's cheaper to buy hotels now than to build them, Mr. Bollenbach said. Host Marriott recently paid about $40 million, or $68,000 a room, for the 580-room Fort Lauderdale Marina Marriott. Replacing the hotel would cost as much as $150,000 a room, Mr. Bollenbach said.

At the close of the third quarter last year, Host Marriott owned 24 full-service hotels with 10,560 rooms that charged an average $89 a night. The company controls the Marriott Marquis in Times Square in New York; the JW Marriott Hotel in Washington, D.C.; Frenchman's Reef in St. Thomas; the Duna Hotel in Budapest, Hungary; and the Marriott Surfers Paradise Resort in Australia.

The company also owns more than 100 lower-priced hotels such the Courtyard by Marriott hotels that charge about $65 a night. Mr. Bollenbach said he hopes to sell these hotels, if the price is right.

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