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.
The Maryland-based REIT owns 99 properties in 20-plus US states and the District of Columbia, as well as 15 international properties. Host generates 95% of its revenue from its US operations. Canada accounts for 2%.
After three years of revenue growth (2009 thru 2012) following the downturn in the global economy, Host's revenue dipped 2% in 2013 versus 2012, to $5.17 billion. 2012 revenue has been restated to account for property sales. Taking into account the restatement, total revenue increased 2% in 2013 versus 2012, on a 5% rise in comparable hotel revenue. Revenue from the REIT's owned hotels accounts for 99% of its total revenue. Net income continued to rise, increasing 420% to $317 million in 2013.
Mergers, Acquisitions and Divestments
Host acquires and develops mid-scale 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 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.
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 mid-scale 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.
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.