Host Marriott's earnings rise 32% Operating results, buying campaign credited

Lodging

July 16, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Host Marriott Corp., basking in the glow of the hotel industry's resurgence, yesterday reported its earnings before interest, taxes and noncash charges rocketed 32 percent to $107 million in the second quarter.

The Bethesda-based hotel owner attributed the improved earnings to gains in operating results vs. the same period in 1995, as well as a buying campaign that has added 11 upscale properties valued at $825 million to the company's portfolio this year.

"We are seeing strong year-to-year improvements in operating results from comparable hotels," said Terence C. Golden, Host Marriott's president and chief executive, in a prepared statement. "Through our aggressive full-service hotel acquisition program, we are also building a solid foundation for future growth."

Golden added that Host Marriott, which has acquired 6,564 rooms thus far this year, expects to purchase $1.3 billion worth of new hotels in 1996. In all, the company's portfolio as of June 14 contained 67 upscale, full-service hotels valued at $4.2 billion.

Analysts had projected that Host Marriott would purchase between $800 million and $1 billion worth of new property this year.

The company's earnings surge comes amid tremendous growth in key hotel industry barometers such as revenue per available room, average occupancy levels and daily room rates, all of which have rebounded significantly from the early 1990s economic recession that crippled hotel owners and operators.

Those factors pushed Host Marriott's revenues up 53 percent to $167 million in the second quarter.

"They have two main things going for them," said Michael G. Mueller, a Montgomery Securities analyst in San Francisco who tracks Host Marriott. "One is their position in upscale properties. They have the highest quality hotels in the world, properties that are one of a kind, which works to limit potential competition. And two, in a positive industry cycle, their affiliation with the Marriott name really provides a lot of clout and benefits."

For the six months, Host Marriott generated earnings before interest expenses, taxes, depreciation and amortization of $182 million, a 23 percent jump over the comparable period last year. At the same time, its revenues climbed to $297 million, a 42 percent increase.

Host Marriott's common stock fell 12 1/2 cents yesterday to close at $12.62 1/2 per share.

Pub Date: 7/16/96

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