Host Marriott Corp. continued to reap the benefits of the hotel industry's surge in its third quarter, generating a nearly 50 percent gain in earnings over the same period a year ago.
The Bethesda-based lodging company reported earnings before interest expenses, taxes and non-cash charges of $151 million in the quarter ended Sept. 12, results fueled primarily by its upscale Marriott and Ritz-Carlton projects. Revenue in the quarter rose 47 percent, to $246 million.
"The strong supply and demand fundamentals in these segments, combined with our high quality portfolio concentrated in urban locations and convention/resort markets continue to fuel our growth," said Terence C. Golden, company president and chief executive.
For the first nine months of the year, Host Marriott reported earnings before interest, taxes and non-cash charges of $479 million, a 69 percent gain from the first 36 weeks of 1996. The company's revenue for the three quarters jumped by 66 percent, to a total of $768 million.
In addition to the hotel industry's continued high trend, a phenomenon brought about largely by the healthy overall economy, Host Marriott's financial performance in 1997 has been boosted by $1.4 billion in hotel property acquisitions and the company's $550 million purchase in June of senior living communities developed by the Forum Group Inc., analysts said.
As a result, Host Marriott expects earnings before interest, taxes and non-cash items to cover its interest expenses by 2.5 times by the end of 1997, up from 2.0 last year. The increase in that figure is significant because some investors have shied away from Host Marriott stock in the past because of the perception that the company has had difficulty meeting its debt service.
Host Marriott also has $900 million in cash for acquisitions, it said.
Host Marriott owns 94 full-service hotels that maintain a 82.3 percent average occupancy rate and a $129 average room rate.
"They're positioned exactly where they want to be," said Mark Mutkoski, a BT Alex. Brown Inc. "They're in gateway cities with properties at the high end of the market. You can't find a company with a better concentration."
Despite the earnings, Host Marriott's stock price fell by 50 cents to close at $22.50 yesterday.
Pub Date: 10/14/97