étude de marché, Host hotels & resorts, strategic analysis, Mariott, Ritz-Carlton, Hyatt, management, key executives
Host Hotels & Resorts (HST) is a real estate investment trust that exists since 1993 since the division of Marriott Corporation into management and property arms. HST is the first lodging real estate company.
It owns 119 luxury and upper-upscale, full service hotels managed by strong brands such as Marriott (75%), Ritz-Carlton, Swissotel, Hyatt, Westin, Fairmont and Four Seasons.
61% of the revenues stem from the rooms, 30% from the food and beverage revenue and 9% from some services such as parking, golf course, spa, telephone (...)
[...] Finally, the forecasted growth in sales from 2025 on is based on the average rate of growth of the economy and reaches 6%. The growth in capital is based on the sales growth and in the capital efficiency forecasts. In the past, the invested capital has increased by on average. Then I forecast a decrease of capital efficiency in 2009 of 10% given the ambitious rennovation program and the gloomy economic situation. During, the high growth period, the sales are growing quicker than the invested capital hence a capital efficiency increase of 16% for the first year. [...]
[...] After the decline of 24% and in 2001 and 2002, the annual TRS went around 40% two years in a row. The stock price has been strongly bitten and we can expect a rebound soon. Indeed, even if the operational environment will be still challenging, markets anticipate rebounds. The next chart shows a comparison between HST and the S & P 500: 11 HST has clearly outperformed the SPY during Hotel real estate booming and significantly underperfomed during real estate crisis. [...]
[...] On the long term, the construction pipeline in hotel is limited, and HST is concentrated in constrained markets. With a strong financial condition, HST can seize opportunities especially in international markets which should become one of the key growth drivers During last 10 years, the simple growth in invested capital for has increased by on average while the revenues have been increasing by on average. It is also worthy to not that during that period, the net operating profit has increased by on average. [...]
[...] However, given the important decline in hotels value and the negative annual return for Q we can expect a bottom. Moreover, HST is geographically diversified with hotels in most of the major metropolitan areas. HST is also investing in Europe and in Asia. Furthermore, HST owns luxury hotels in prime location in constrained markets and is focusing on transient demand. Therefore HST is less sensitive to a decline of leisure spending in a recession The credit crunch will also limit the number of new hotels and competitors limit overcapacity and should balance the supply demand ratio. [...]
[...] HST has more general expenses disclosed a lower operating profit margin of 26% vs 33%. But its assets generate more revenues therefore its capital efficiency and return on assets are both much higher. Moreover, HST is much larger in revenues, profit and market capitalization. However, LHO was growing at an annual rate of 30% between 2002 and 2007 while HST was growing at an annual growth rate. It mainly stems from the difference of size and the desire for HST to optimize its capital allocation by rigorously choosing its investment opportunities. [...]
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