Manchester Grand Hyatt San Diego

BETHESDA, MD—Host Hotels & Resorts outdid analyst expectations for its first quarter performance by posting strong net earnings and Funds From Operations. Driving the growth was its group business division.

For the first quarter, adjusted FFO reached $257 million, from $214 million a year earlier.

Net earnings for the first quarter reached $179 million from $56 million a year earlier. Adjusted EBITDA reached $308 million from $283 million a year ago.

Analyst firms MLV & Co. and RBC Capital Markets zeroed in on Host’s strong performance in group bookings. MLV said the strength in group, “which saw room revenues up 11% and consequently portfolio-wide catering revenues up 13.5%” led to the REIT’s strong revenue and margin performance for the quarter.

Indeed, it went on to note that if the group recovery holds during the next few months, “operating expectations will need to be brought in.”

For its part RBC said that the REIT’s strong group business “allowed the company to target higher rated customers in high occupancy markets.”

Also of note was the geographic makeup of its portfolio’s performance. RBC observed that the company’s East Coast hotels were soft but key markets of DC and New York outperformed the broader market.

In total, New York increased RevPAR 4.2% and D.C. declined “modestly” according to RBC, by 0.2%.

The true RevPAR growth, however, occurred on the West Coast hotels with San Francisco, Seattle, San Diego and Los Angeles posting RevPAR growth of 25.3%, 18.5%, 15.9% and 8.5% respectively.

Another item of interest from the REIT’s earnings statement-it is planning to step up its capital expenditures for acquisitions in the remaining quarters of the year.

The REIT didn’t make any acquisitions in the past quarter spending about $3 million on such projects, including the completion of the first phase of the renovation of over 100,000 square feet of meeting space and expansion of the fitness center at the Manchester Grand Hyatt San Diego.

For the rest of the year, though, it expects that acquisition capital expenditures will total $30 million to $35 million.