Host Marriott Reports First Quarter 2002 Funds From Operations of $.25 Per Diluted Share Exceeding Expectations by $.06
BETHESDA, Md., May 1 Host Marriott Corporation (NYSE:HMT), the nation's largest hotel real estate investment trust (REIT), today announced results of operations for the first quarter ended March 22, 2002. Operating results for the first quarter, although they remain below prior year levels, reflect steady improvement in the travel and leisure industry, supported by a strengthening economy. The results include the following:
* Comparative Funds From Operations (FFO) were $.25 per diluted share
for the first quarter ended March 22, 2002 versus FFO of $.41 per
diluted share for the first quarter ended March 23, 2001.
* Earnings before Interest Expense, Income Taxes, Depreciation and
Amortization and other non-cash items (EBITDA) for the first quarter
2002 were $205 million versus $238 million for the first quarter 2001.
* For the first quarter of 2002 the Company's diluted loss per share was
$.03 versus diluted earnings per share of $.12 for the first quarter of
* Total revenues were $790 million for the first quarter 2002 versus $873
million for the first quarter 2001.
Comparable RevPAR for the first quarter declined 12.3% and operating profit margins declined by 0.2 percentage points. The Company's first quarter RevPAR decline was the result of a 9.4% reduction in average room rate and occupancy declines of 2.4 percentage points. The Company's urban, resort and convention hotels, which represent 71% of first quarter EBITDA, had a strong RevPAR performance with a decline of only 8.7%, a result of a decline in average room rate of 7.9% while occupancy was down less than one percentage point from last year.
Mr. Christopher J. Nassetta, president and chief executive officer, stated, We are very pleased with the continuing strong improvement in operating results in the first quarter which significantly exceeded our expectations. We continue to see steady improvements in RevPAR each month, which has been helped by the strengthening economy. We continue to work with our operators to control operating expenses, which have resulted in an industry leading margin decline of less than a quarter of a percentage point. We expect these positive trends will continue throughout 2002.
As of March 22, 2002, the Company had $341 million in cash on hand and no amounts outstanding on its bank credit facility. Additionally, the Company has no significant maturities until 2005 and approximately 90% of its debt has a fixed interest rate with a weighted average cost of 7.94%. The Company intends to negotiate a new long-term bank credit facility during 2002 that will be smaller but more flexible than the existing agreement.
Mr. Robert Parsons, executive vice president and chief financial officer, stated, Our focused approach to maintaining a strong balance sheet and liquidity provides us with the financial flexibility that will enable us to take advantage of opportunities as they arise that will enhance shareholder value.
The Company's updated guidance for RevPAR for full year 2002 is a range between flat to down 2%. Based upon this guidance the Company estimates the following:
* FFO per share for the full year should be in the range of $1.12 to
* EBITDA for the full year should be between $875 and $915 million.
The Company policy on dividends generally has been to distribute the minimum amount necessary to maintain REIT status. The Company expects to reinstate the dividend on the common stock later this year if it continues to see improvement in operations. The Company intends to continue to pay dividends on its QUIPs and preferred stock.
Mr. Nassetta added, We are hopeful that the positive trends we have seen thus far will continue for the rest of the year and into 2003. We believe that the significant decline in supply for 2003 and the next several years, matched with increasing demand from a strengthening economy, should ultimately result in meaningful growth in RevPAR, earnings, dividends and shareholder value.