T2113 consolidating the last few days. Indications are
for the market to continue to move down.
This articles says it all. Business travel and leisure
travel are expect to be down this year. It does not
say much about consumer or business confidence.
***************
Reuters
Host Marriott Loss Narrows But Warns
Wednesday February 26, 4:15 pm ET
By Lauren Weber
NEW YORK (Reuters) - Host Marriott Corp. (NYSE:HMT - News), the largest U.S. hotel owner, on Wednesday reported a narrower fourth-quarter loss, but warned that 2003 results would fall sharply as the lodging industry struggles with the combined effects of a weak economy and war anxieties.
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Shares of the Bethesda, Maryland company hit a 52-week low of $6.67 in morning trade on the New York Stock Exchange (News - Websites) before recovering slightly and closing down 1 cent to $6.97.
"Things got worse over the last couple of weeks, just since February 7, when the U.S. went to increased alert," said analyst J. Cogan of Banc of America Securities (News - Websites), referring to the government's heightened terrorism warning. "Things have gotten weaker and estimates have to come down."
The real estate investment trust, or REIT, expects 2003 funds from operations (FFO), a common measure of REIT operating performance, to drop by as much as 28 percent in 2003, within a range of 80 cents to 90 cents per share. The company posted FFO of $1.11 per share in 2002.
Analysts on average are expecting FFO of 98 cents a share for 2003, in a range of 78 cents to $1.18, according to Thomson First Call (News - Websites).
The company, which owns hotels managed by other companies under Marriott, Ritz-Carlton and other brands, also said FFO in the first quarter will likely be 15 cents to 17 cents, missing analysts' average forecast of 21 cents.
In a conference call with investors and analysts, Chief Financial Officer Ed Walter said revenue per available room (RevPAR), a key industry measure that combines occupancy with room rates, will likely be down 4 percent to 6 percent in the first quarter and down 2 percent to 4 percent in the second.
But he expressed optimism about the second half of the year, saying he anticipates RevPAR up 1 percent to 3 percent in the third quarter and up 3 percent to 5 percent in the fourth. in total, RevPAR will be flat to down modestly for the year.
Lehman Brothers analyst Joyce Minor was not as upbeat.
"I think some investors will be skeptical you get that magnitude of a turnaround in the second half of the year," she said. "I am not suggesting that is unique to Host. My guess is that most are waiting for that second-half rebound, but we have all been hoping for a second-half rebound about three years in a row. Maybe this will be the year."
Host Marriott said it has $361 million in cash on hand. The company, which sold its Ontario Airport Marriott last month, said it expects to sell about $100 million to $250 million worth of assets in 2003 and will use the proceeds to pay down its debt or reinvest in its portfolio of hotels.
The company expects its margins to fall 1 percent to 2 percent during the year, in part because of higher wage and benefit costs. It sees 2003 earnings before interest, taxes, depreciation and amortization of $770 million to $800 million.
The company expects to spend about $240 million on capital expenditures, mostly toward the end of the year.
DIVIDEND MAY BE CUT
Host Marriott also said it was unlikely it would pay a "meaningful" dividend on common shares during 2003.
"We do not expect to pay more than a minimal, if any, common dividend in 2003," Walter said, but he added the company will make distributions on its preferred stock at least for the first three quarters of 2003.
Host Marriott said fourth-quarter net loss, after preferred dividend payments, narrowed to $11 million, or 4 cents a share, from $32 million, or 12 cents a share, a year earlier.
Funds from operations more than doubled to $92 million, or 34 cents a share, from $42 million, or 16 cents a share, a year earlier. Analysts, on average, estimated funds from operations of 30 cents a share, according to Thomson First Call.
The company benefited from higher occupancy rates and easier comparisons with last year, when travel plummeted following the Sept. 11 attacks,
Total revenue rose to $1.18 billion from $1.05 billion with comparable room revenue rising 10.6 percent. Occupancy was up 6.4 percentage points and room prices rose modestly, it said.
Earnings before interest, taxes, depreciation and amortization rose to $261 million from $209 million. (Additional reporting by Peter Henderson) |
