Host Hotels & Resorts' luxury hotels form a constellation of stars. 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 105 luxury and "upper upscale" hotels mostly in the US, but also in Canada, Australia, New Zealand, Chile, Mexico, and Brazil, totaling some 56,000 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 105 hotel properties Host owned in 2015, almost half of the properties were Marriott branded and generated 42% of the company's total revenue for the year. The company's nine Hyatt branded hotels generated 13% of total revenue in 2015, while its collection of 26 Starwood Hotels (which included the Westlin, Sheraton, W, St. Regis, and the Luxury Collection brands) combined contributed 26% to its total revenue.
About 72% of Host's revenue came from its 71 upper-upscale hotel properties in 2014, while 26% came from its 24 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 12 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.
The REIT's revenue climbed 1% to $5.39 billion during 2015 thanks mostly to growth in rooms' revenue with overall comparable hotel RevPAR (revenue per available room) increasing by almost 4%. Host's food and beverage revenues also increased by 1% for the year thanks to higher income from banquet and audio visual services.
Despite revenue growth in 2015, Host's net income fell 24% to $558 million mostly as it collected less in gains from hotel property sales than in the prior year. The REIT's cash levels rose 2% to $1.17 billion for the year thanks mostly to an increase in cash-based earnings.
Host's strategy, reaffirmed in 2016, 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 2015 the company earned 62% of its revenue from its Urban properties and 21% 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 2016 reaffirmed its international expansion plans, targeting more presence in the markets of Western Europe through its European joint venture, as well as Singapore, Mexico, and Brazil.
The REIT slowed its pace of property acquisitions during 2015 as a long lodging industry recovery and a low-interest environment led to few opportunities to buy low-priced lodging property. Host took advantage of the high property valuations in selling $930 million worth of its own properties through 2015, while making a $400 million acquisition of the Scottsdale, Arizona-based 643-room The Phoenician luxury collection resort and a $34 million acquisition of Minneapolis Marriott City Center.
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.
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.