Host Marriott expands Company buys 1 hotel, controlling interest in 2

September 20, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

Bethesda-based Host Marriott Corp. has bought a Ritz-Carlton Hotel in Atlanta and acquired a controlling interest in two other Ritz-Carlton hotels for $331 million.

The posh hotels -- two in Atlanta and one in Naples, Fla. -- are the latest deals in an aggressive acquisition strategy the lodging company embarked on in 1993.

The deals announced yesterday are the first Ritz-Carlton Hotels in which Host Marriott has purchased stakes, but the company says it's interested in acquiring interests in more of the hotels, whose name is associated with top-drawer service and luxury.

Host Marriott said the deals mean the company has spent $1.1 billion expanding its holdings since 1993.

The publicly held company, which lost $143 million on $484 million in revenues in 1995, expects to spend $1.3 billion for expansion by year's end, said Terence C. Golden, Host Marriott's president and chief executive officer.

The deals announced yesterday include Host Marriott paying $269 million for a majority interest in a new partnership that owns the 463-room Ritz-Carlton in Naples and the 553-room Ritz-Carlton Buckhead in Atlanta. As a result of those deals, existing debt on the two establishments was reduced by Host Marriott to about $224 million, the company said.

Marriott also bought the 447-room Ritz-Carlton in downtown Atlanta for $62 million.

Marriott spokesman Terry Souers said guests at the hotels won't see any changes in the service nor the rooms. "Where Host Marriott hopes to make a difference is on the operational end," he said. "The company can help these hotels make money by cutting costs through its purchasing power and other economies of scale."

The three Ritz-Carltons are expected to generate about $41 million in earnings before taxes and other expenses during 1996, Host Marriott said.

Golden, the CEO, said the hotels "represent the level of quality we are seeking through our acquisition strategy."

He said the company, which owns 71 full-service hotels operated under the Marriott name, is interested in more investments in hotels managed by Ritz-Carlton.

Shares in Host Marriott, which owns 103 hotels and holds an interest in 258 other lodging properties, closed yesterday at $14.125, up 25 cents.

Pub Date: 9/20/96

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