Host Hotels & Resorts will leave the chandelier on for you. It's the nation's largest hospitality real estate investment trust and one of the top owners of luxury and upscale hotels. It owns about 115 luxury and "upper upscale" hotels mostly in the US, but also in Canada, Australia, New Zealand, Chile, Mexico, and Brazil, totaling some 60,000 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 Hotels & Resorts also owns non-controlling interests in two international joint ventures (JVs) in Europe and the Asia/Pacific region. Its JV in Europe owns 19 luxury and upperscale hotels spanning some 6,500 rooms in Belgium, France, Germany, Italy, Poland, Spain, Sweden, the Netherlands, and the UK. Its Asia/Pacific JV is much smaller, and owns one upscale hotel in Australia, four hotels in India and minority interests in three operating hotels in India (two upscale, and one midscale).
Host's most valuable and prolific hotel brand is the Marriott. Of the 114 hotel properties Host owned in 2014, almost half of the properties were Marriott branded and generated nearly 49% of the company's total revenue for the year. The company's nine Hyatt branded hotels generated around 12% of total revenue in 2014, while its collection of 26 Starwood Hotels (which included the Westlin, Sheraton, W, St. Regis, and the Luxury Collection brands) combined contributed roughly 25% to its total revenue.
About 74% of Host's revenue came from its 76 upper-upscale hotel properties in 2014, while 23% came from its 23 luxury hotel properties.
The Maryland-based REIT owned 97 properties in 20-plus US states and the District of Columbia in 2014, as well as 17 international properties. Host generates 95% of its revenue from its US hotels, with its largest markets in New York, Florida, and Washington D.C. About 2% of the company's overall revenue comes from Canada, while the remainder mostly comes from its hotels in Australia, Brazil, Chile, Mexico, and New Zealand.
Host Hotels & Resorts' revenue and profit have been mostly trending upward in recent years as a strengthening global economy has spawned more willing travelers. After a small dip in 2013, the company's revenue rebounded by 4% to $5.35 billion in 2014 thanks mostly to growth in rooms' revenue with overall RevPAR (revenue per available room) increasing by 5%. Host's food and beverage revenues also increased by 3% for the year thanks to higher income from banquet, audio visual, and outlet services.
Higher revenue coupled with higher gains on the sales of assets in 2014 also drove net income higher by 131% to $732 million. Cash levels also jumped by 13% to $1.15 billion thanks mostly to higher cash earnings.
Host's strategy, reaffirmed in 2015, is to build, renovate, or acquire hotels in domestic gateway cities and resort markets, which include New York, Washington D.C., Boston, Florida, Chicago, Los Angeles, San Francisco, San Diego, Seattle, Houston, and Hawaii. According to Host, these target markets have been historically shown to have outperformed the broader US lodging industry in terms of real revenue per available room growth. Indeed, in 2014 the company earned 62% of its revenue from its Urban properties and 19% of revenue from its Resort and Conference properties; which were all in these markets or similar markets.
To diversify its revenue streams and add favorable risk-adjusted returns, the company also in 2015 reaffirmed its international expansion plans, targeting more presence in the markets of Western Europe through its European joint venture, as well as Australia, Singapore, Mexico, and Brazil.
Mergers and Acquisitions
In 2014, the company purchased the 242-room hotel in Miami's business and financial district (within walking distance of the American Airlines Arena and near Bayfront Park, giving it a waterfront view). The company also entered a management agreement with Destination Hotels & Resorts to rework and relaunch the hotel under an independent identity later in the year.
Expanding its business further abroad in 2014, the company's joint venture in Europe purchased a 90% stake in the entity that owned the 394-room fee-simple Grand Hotel Esplanade in Berlin, for a purchase price of €81 million. The new JV planned to rebrand the hotel with an international brand under a franchise agreement.
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 opened in time for the FIFA World Cup in 2014. The REIT also sells non-core properties from time to time, including five locations in 2013 and two to date in 2014 for a total sales price of $960 million.
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.
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.