Host Hotels & Resorts will leave the chandelier on for you. It's the nation's largest hospitality real estate investment trusts and one of the top owners of luxury and upscale hotels. It owns about 120 luxury and upscale hotels in the US, Canada, New Zealand, Chile, Australia, Mexico, the UK, and Brazil, altogether comprising more than 62,500 rooms. Properties are managed by third parties; most operate under the Marriott brand and are managed by sister firm Marriott International. Other brands include Hyatt, Ritz-Carlton, Sheraton, and Westin. To maintain its status as a real estate investment trust (REIT), which carries tax advantages, Host operates through majority-owned Host Hotels & Resorts LP.
Host generates most if its revenue -- some 94% -- from its US operations.
Since logging disappointing declines in fiscal 2009 due to the downturn in the global economy, Host has seen positive revenue growth as the economic environment continues to improve.
Host boosted its fiscal 2012 revenue by 6% to $5.3 billion from $5 billion in 2011. It also posted a profit of $61 million during the same reporting period against a loss of $15 million. The REIT and luxury hotel operator points to rooms, food and beverage, and other revenue for the sales increases. Room revenue rose 7% due to strong growth in room rates coupled with occupancy growth. Comparable hotel revenue per available room improved, as well, thanks to an increase in average room rate and a 200-basis-point increase in average occupancy. Recently acquired hotels also boosted room revenue and food and beverage sales. Food and beverage revenues rose 5%, primarily due to an increase in comparable food and beverage revenue, driven by improvements in banquet and audio visual revenues during the first half of the year, while outlet revenue improved in the second half of the year, as new and recently renovated restaurants performed well. Other revenues increased 8%, due to $5 million in retail lease revenue at the New York Marriott Marquis (as a result of a new lease agreement with Vornado Realty Trust), as well as an increase of $12 million in revenues for hotels leased from HPT.
Mergers and Acquisitions
Host acquires and develops midscale and upscale properties in select target markets. In 2013 the company acquired fee-simple interest in the 426-room Hyatt Place Waikiki Beach in Honolulu, Hawaii, from an affiliate of Chartres Lodging Group and Morgan Stanley Real Estate Fund VII Global for $138.5 million. The move followed its 2012 purchase of 888-room Grand Hyatt Washington for about $400 million and its acquisition of land in Rio de Janeiro to develop two hotels with a total count of 405 rooms that are due to open in 2014.
Host in 2011 bought the New York Helmsley Hotel from Helmsley Enterprises and announced plans to renovate the 775-room property and reopen it under the Westin brand. In a separate deal, Host acquired the Manchester Grand Hyatt, San Diego's largest hotel, for $570 million.
Host's strategy is to acquire hotels in central business districts of major cities resorts, and convention centers, while reducing its exposure to non-core, suburban, airport assets. The company also considers acquiring midscale properties to complement its traditional focus on upscale and luxury hotels.
While Host emphasizes US acquisitions, it still looks to diversity its holdings at home and abroad, sometimes through joint ventures. To this end, it entered a joint venture with White Lodging Services to develop a 255-room Hyatt Place in Nashville, Tennessee, at a total cost of $46 million including the purchase of land. It entered a joint venture in 2012 with an affiliate of Hyatt Hotels Corp. to develop, sell, and operate a 131-unit vacation ownership project adjacent to the company's Hyatt Regency Maui Resort & Spa. The Maui project is expected to open in late 2014.
Host owns about a third of a joint venture with Dutch pension fund Stichting Pensioenfonds that owns more than a dozen hotels in six European countries. The REIT also holds a quarter of a joint venture with Singapore's GIC Real Estate that acquired a minority interest in another joint venture that is developing seven hotel properties in India. It is also looking at opportunities in Australia, China, Japan, and Vietnam.
The Vanguard Group, Inc., owns about 13% of the company, which operates through majority-owned Host Hotels & Resorts LP.
Formerly known as Host Marriott, Host Hotels & Resorts split from Marriott International in 1993. The company adopted its current name in 2006 after it diversified its portfolio beyond the Marriott brand. The Marriott family has mostly sold its interest in Host.