NEW YORK - A nearly 10 percent drop in costs and higher-than-expected revenue helped Host Hotels & Resorts post third-quarter results that surpassed expectations, and its shares rose nearly 5 percent.
The owner of 112 luxury and upscale hotels also said on Wednesday that there were signs of improved demand for hotel rooms.
While overall demand continues to be weak compared to pre-downturn levels... we did see several positive trends develop this quarter, said Chief Executive Edward Walter during a conference call with analysts.
One positive trend was that corporate demand fell just 10 percent, the lowest decline in the past five quarters, Walter said. The number of transient room nights sold was flat from a year earlier, marking the first time in seven quarters this measure did not show a significant decline.
Host 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 measure for real estate investment trusts (REITs).
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.
Revenue fell 20 percent to $912 million, beating analysts' estimates of slightly below $893 million, said Host, which owns hotels run by operators that include Marriott International and Starwood Hotels & Resorts.
Revenue per available room, a standard gauge of health in the hotel industry, fell 21.3 percent for the quarter.
Host shares were up 56 cents to $11.84 in noon trading on the New York Stock Exchange, near a session high of $11.86.
DISTRESSED ACQUISITIONS POSSIBLE