NEW YORK - Host Hotels & Resorts Inc's third-quarter results surpassed analyst expectations on Wednesday aided by higher-than-expected revenue, four hotel sales and a nearly 10 percent reduction in costs.
The owner of luxury and upscale hotels reported funds from operations (FFO) of 11 cents per share, down from 31 cents a year earlier. Analysts on average had expected 8 cents, according to Thomson Reuters I/B/E/S.
FFO removes the profit-reducing effect of depreciation, a noncash accounting item. FFO is a common performance metric for real estate investment trusts (REITs).
Revenue fell 20 percent to $912 million, besting analysts' estimates of slightly below $893 million, said Host, which owns hotels run by operators that include Marriott International and Starwood Hotels & Resorts.
A decline in business travel has hurt upscale and luxury hotels in the past year, forcing operators to lower room rates. This in turn has hurt margins for hotel owners and forced them to cut costs and slow development.
Many of Host's 112 hotels are operated by Marriott, which last week provided a somber 2010 outlook.
Host said its capital expenditures in the third quarter fell nearly 60 percent to $63 million. Its total debt fell 5.7 percent to $5.5 billion.
Revenue per available room, a standard measure in the industry, fell 21.3 percent for comparable hotels. During the quarter, Host sold three Marriott hotels and one Starwood property for about $90 million and recorded a gain of $9 million on the sales.
In the third quarter, Host swung to a net loss of $58 million, or 9 cents per share, compared with a profit of $47 million a year earlier. Analysts had forecast a 14-cent loss.
For 2009, Host said it should see FFO of 46 cents to 51 cents a share, while analysts on average have forecast 50 cents.
The company said it expected full-year EBITDA of $760 million to $800 million, while analysts were expecting about $800 million.
Assuming last minute transient demand remains strong as it has been in the last several months, (implied) 4Q guidance could prove conservative, FBR Capital Markets analyst Patrick Scholes said in a research note. (Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn and Maureen Bavdek)