Host Marriott Corporation (NYSE: HMT), the nation’s largest hotel real estate
investment trust (REIT), today announced results of operations for the second quarter and twenty-four weeks ended June
14, 2002. Operating results for the travel and leisure industry continue to strengthen from levels in the fourth quarter of
2001, particularly for the larger urban, downtown and resort hotels. Second quarter results include the following:
?The Company’s diluted earnings per share was $.06 and $.03 for the second quarter and year-to-date 2002,
respectively versus diluted earnings per share of $.16 and $.28 for the same periods of 2001, respectively.
?Total revenues were $920 million and $1,710 million for the second quarter and year-to-date 2002 versus $994
million and $1,867 million for the same periods of 2001, respectively.
?Comparative Funds From Operations (“FFO”) were $.36 and $.61 per diluted share for the second quarter and the
twenty-four weeks ended June 14, 2002, respectively versus FFO of $.55 and $.96 per diluted share for the second
quarter and the twenty-four weeks ended June 15, 2001, respectively.
?Earnings before Interest Expense, Income Taxes, Depreciation and Amortization and other non-cash items
(“EBITDA”) was $238 million and $443 million for the second quarter and year-to-date 2002, respectively versus
$304 million and $542 million for the same periods of 2001, respectively.
Comparable RevPAR for the second quarter declined 9.8% and operating profit margins declined by 2.7 percentage points.
The Company’s second quarter RevPAR decline was the result of a 7.9% reduction in average room rate and occupancy
decline of 1.6 percentage points. Year-to-date, comparable RevPAR declined 11% (8.6% decline in average room rate
combined with an occupancy decline of 1.9 percentage points), while margins declined by 1.5 percentage points. The
Company’s urban, resort and convention hotels, which contributed 71% of the second quarter EBITDA, had a stronger
second quarter RevPAR performance than the overall portfolio with a decline of only 7.2%. Year-to-date these properties
recorded a decline in RevPAR of 7.4%.
Mr. Christopher J. Nassetta, president and chief executive officer, stated, “We were pleased with hotel operations in the
second quarter and believe that we are nearing the end of a very difficult operating environment. We are continuing to
work with our operators to carefully control costs in order to maintain the efficiencies we have gained so as business
continues to recover we will drive greater profitability from our outstanding portfolio of hotels.”
As of June 14, 2002, the Company had $243 million in cash on hand and no significant debt maturities until 2005. The
Company’s debt has a weighted average cost of 7.94%, of which approximately 90% has a fixed rate of interest. In June,
the Company signed a new long-term bank credit facility that provides the company with an aggregate revolving loan
commitment of up to $400 million. The loan has an initial maturity of 2005, with an option to extend for an additional
year, which is two years beyond the credit facility it replaced while also providing greater flexibility.
Mr. Robert Parsons, executive vice president and chief financial officer, stated, “We are very pleased to have completed the
new credit facility which provides the company with greater flexibility in the current environment. Our strong balance
sheet and liquidity provide us with the financial flexibility to take advantage of opportunities that enhance shareholder
value such as the recently completed purchase of the Boston Marriott Copley Place.”
The Company’s updated guidance for RevPAR for full year 2002 is for a decline of between 2% and 4%. Based upon this
guidance the Company estimates the following:
?FFO per share for the full year should be in the range of $1.05 to $1.15; and
?EBITDA for the full year should be between $860 and $900 million.
The Company policy on dividends generally has been to distribute the minimum amount necessary to maintain REIT status.
The Company expects to reinstate a minimal dividend on its common stock during the fourth quarter if it continues to see
improvement in operations. The Company intends to continue to pay dividends on both its QUIPs and preferred stock.
Mr. Nassetta added, “We believe that the expected decline in supply over the next few years, matched with an increase in
business travel as a result of the strengthening economy, should ultimately result in meaningful growth in RevPAR,
earnings, dividends and shareholder value.”
Host Marriott is a Fortune 500 lodging real estate company that currently owns or holds controlling interests in 123 upscale
and luxury hotel properties primarily operated under premium brands, such as Marriott, Ritz-Carlton, Hyatt, Four Seasons,
Swiss™tel and Hilton. For further information, please visit the Company’s website at www.hostmarriott.com.
This press release includes various references to Comparative FFO and EBITDA. Comparative FFO represents Funds
From Operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for contingent rental
revenues on hotels leased to third parties and substantial non-recurring items. The Company considers Comparative FFO
and EBITDA to be indicative measures of its operating performance, due to the significance of its long-lived assets and because such data is considered useful by the investment community to better understand the Company’s results, and can
be used to measure its ability to service debt, fund capital expenditures, and expand its business. However, such
information should not be considered as an alternative to net income, operating profit, cash from operations, or any other
operating or liquidity performance measure prescribed by accounting principles generally accepted in the United States.
Cash expenditures for various long-term assets, interest expense (for EBITDA purposes only) and other items that have
been, and will be, incurred are not reflected in the Comparative FFO and EBITDA presentations. Although FFO and
EBITDA are considered standard benchmarks utilized by the investment community, our Comparative FFO and EBITDA
may not be comparable to similarly titled measures reported by other companies.
Certain matters discussed in this press release are forward-looking statements within the meaning of federal securities
regulations. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may
cause the actual transactions, results, performance or achievements to be materially different from any future transactions,
results, performance or achievements expressed or implied by such forward-looking statements. General economic
conditions, competition, and governmental actions will affect future transactions, results, performance, and achievements.
These risks are presented in detail in our filings with the Securities and Exchange Commission. Although the Company
believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give
no assurance that our expectations will be attained or that any deviations will not be material. The Company undertakes no
obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
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