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If any period could be considered the worst of times for a company, it would be the fourth quarter of 2001 for Host Marriott Corp. (NYSE: HMT). Like its competitors, the Bethesda, Md.-based company had to ride out one of the worst slumps in the hotel sector's history following Sept. 11. Even worse, the terrorist attacks destroyed the company's World Trade Center Marriott and forced the nearby Marriott Financial Center to close until Jan. 7, 2002.

Revenues dropped by about 60% at Host Marriott's hotels in the weeks immediately following the attacks, and the company adopted a variety of cost-cutting measures in response to the drastic decline in occupancies. But business picked up slowly in October through December of 2001, and the cutbacks in operations and emphasis on maintaining liquidity helped the company emerge from the downturn in good shape, with $341 million in cash on hand.

The company's stock price -- which dropped from about $12 to $6.22 immediately after Sept. 11 -- also has recovered its value. As of June 19, the stock price was $11.53. With 58,000 rooms, Host Marriott ranks second in NREI's first-ever Top Hotel Owners survey, behind Accor North America, which owns 111,890 rooms under its Motel 6, Red Roof Inns and Studio 6 brands.

"On 9/11, a lot happened to our industry and our company," says company CEO Christopher Nassetta. "I think we did areally terrific job managing through what has clearly been one of the most difficult operating environments in the lodging industry's history."

And Nassetta says there is a silver lining to the recent difficulties -- the policies Host Marriott implemented have positioned the company for growth. "One of the big benefits on the cost side was not only that it helped us post 9/11, but it also helped us in a weak operating environment," he says. "It's also going to result in greater efficiency as the business continues to recover so that we will be able to drive greater profitability."

Staff reductions resulted in the biggest cost savings in the wake of Sept. 11. In particular, the company -- working with its operators -- eliminated mid-level management positions at its large convention hotels. "We got more efficient and figured out ways to operate these hotels with 10% to 20% fewer managers," he says. The company also temporarily closed wings and floors of hotels to reduce operating costs, and implemented more modest measures such as reducing hours at restaurants and simplifying menus.

Now that the worst of the industry downturn is over, the company plans to focus on revenue-generating initiatives at its existing hotels, and pursue opportunities to acquire properties and portfolios. The company has been extremely quiet on the acquisition front since the collapse of the financial markets in 1998, Nassetta notes, because of the difficulty in making purchases that would produce the desired yields in relation to the company's cost of capital.

"We think there will be some interesting opportunities for us to acquire assets or portfolios that will add value on a per-share basis to the company," he says. "Whatever we do, we will continue to be focused on the very high end of the business and very high-quality assets."

There is already proof of the switch in strategy. On June 18, the company purchased the 1,139-room Boston Marriott Copley Place for $214 million. The property occupies a prime spot in Boston's Back Bay district across from the upscale Copley Place Shopping Galleries.

Nassetta believes the decrease in the rate of hotel construction nationwide matched with an improving economy will lead to significant growth in revenues over the next several years.

"When you match a reasonable rate of growth in the economy with very little new supply, the overall effect is going to be very positive for our industry," he says. "It will allow us to get our pricing power back, as well as stabilize and improve our operations."