Host Marriott profit falls with room revenue

Sept. 11 victim omits 4th-quarter dividend

October 19, 2001|By BLOOMBERG NEWS

Host Marriott Corp., an owner of 125 hotels including the Marriott World Trade Center in New York, reported lower third-quarter earnings yesterday as a result of falling room and occupancy rates and said it would not pay a dividend in the fourth quarter .

Company officials said a slowdown in travel before the Sept. 11 terrorist attacks, combined with the dive afterward, forced it to suspend the dividend payment.

President Christopher Nassetta said he was unsure when payments would resume, though the dividend would probably be lower. "We're concerned about rates through the fourth quarter and the rest of next year," he said.

Funds from operations, a measure of cash flow used by REITs, fell to $90 million, or 28 cents a share, in the quarter ended Sept. 7 from $133 million, or 42 cents, a year earlier. Revenue rose to $848 million from $227 million, reflecting the purchase of the leases on 116 of its hotels.

The Bethesda-based company was expected to earn 26 cents.

Average occupancy at its hotels has improved to the 60 percent to 70 percent range from as low as 38 percent after the attacks, Nassetta said.

Average room rates are still down, and meetings and conferences scheduled for its hotels are drawing 20 percent to 25 percent fewer guests than expected.

"The conference and the group business has picked up materially in the past few weeks," Nassetta said. "People aren't canceling. The big issue right now is attrition."

Occupancy in the hotels owned or controlled by Host Marriott fell 5.9 percent in the third quarter. Revenue per available room fell 12 percent.

Host Marriott shares lost 15 cents to $6.63 yesterday. The shares have fallen 42 percent since the attacks, which destroyed the Marriott World Trade Center and damaged the Marriott Financial Center.

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