Host Marriott posts a loss of 3 cents a share for 1st quarter

Decline in business travel reduces revenue by 10%

May 02, 2002|By BLOOMBERG NEWS

BETHESDA - Host Marriott Corp., an owner of Four Seasons, Marriott and Hyatt hotels, reported yesterday a fiscal first-quarter loss, reflecting a decline in business travel that sliced revenue by 10 percent.

Host posted a loss of $8 million, or 3 cents a share, for the period that ended March 22, compared with net income of $27 million, or 12 cents, for last year's first quarter. Revenue fell to $790 million, Chief Financial Officer Robert Parsons said in a conference call. Funds from operations (FFO), a measure of cash flow, fell less than expected.

As a hotel owner, Host Marriott is more exposed than are rivals such as Starwood Hotels & Resorts Worldwide Inc. or Hilton Hotels Corp. to the decline in business travel, because it gets the bulk of its profit from room revenue rather than from franchising and management fees. Business travel will recover this year as corporations increase spending, boosting Host's profit, analysts and shareholders said.

"Corporate spending won't pick up until earnings pick up," said Robert Crosby, senior portfolio manager at Munder Capital, which owns 170,000 Host Marriott shares. "The revenue-per-room gains are going to accelerate in the second half of the year."

Host Marriott said its FFO fell to $79 million, or 25 cents, from $136 million, or 41 cents. On that basis, which isn't in accordance with generally accepted accounting principles, the company's results exceeded Wall Street's expectation of 19 cents a share.

Host Marriott is the largest hotel-owning real estate investment trust, with 122 properties.

The company's margin fell 0.2 percent from a year earlier to 27 percent. Host Marriott credited a reduction in hours worked by employees and lower utility bills for limiting the decline.

Revenue per room, a measure of occupancy and room rate, fell 12 percent from a year earlier, the company said. For the full year, revenue per room is expected to range from unchanged to a decline of up to 2 percent.

Host Marriott's shares rose 14 cents to $12.05 yesterday. They have risen 34 percent this year.

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