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 a really 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.”
Top 25 Hotel Owners
Survey rankings are based on the total number of hotel rooms owned as of Dec. 31, 2001. Companies also were asked to provide the total number of hotels in their portfolios.
- Accor Lodging North America
14651 Dallas Pkwy., Suite 500 Dallas, TX 75254
Phone: (888) 842-2942
Fax: (972) 702-3610
E-mail: [email protected]
Officers: Georges LeMener, President/CEO; Armand E. Sebban, Group Exec. VP, Finance/CFO; David O'Shaughnessy, Group Exec. VP, Franchising Quality & Technical Resources
Total Number of Rooms: 111,890
Total Number of Hotels: 984 - Host Marriott Corp.
10400 Fernwood Rd., Bethesda, MD 20817
Phone: (301) 380-9000
Fax: (301) 380-4336
E-mail: [email protected]
Web site: www.hostmarriott.com
Officers: Christopher Nassetta, President/CEO; Robert E. Parsons, Exec. VP/CFO; W. Edward Walter, Exec. VP/COO
Total Number of Rooms: 58,000
Total Number of Hotels: 122 - Hilton Hotels Corp.
9336 Civic Center Dr., Beverly Hills, CA 90210
Phone: (310) 278-4321
Fax: (310) 205-7655
Web site: www.hiltonfranchise.com
Officers: Steve Bollenbach, President/CEO; Tom Keltner, Exec. VP, Brand Performance & Development; Matt Hart, Exec. VP/CFO
Total Number of Rooms: 53,140
Total Number of Hotels: 130 - FelCor Lodging Trust Inc.
545 E. John Carpenter Frwy., Suite 1300 Irving, TX 75062
Phone: (972) 444-4900
Fax: (972) 444-4949
E-mail: [email protected]
Web site: www.felcor.com
Officers: Thomas J. Corcoran Jr., President/CEO/Director; Richard J. O'Brien, Exec. VP/CFO; Lawrence D. Robinson, Exec. VP/General Counsel & Secretary
Total Number of Rooms: 48,467
Total Number of Hotels: 183 - MeriStar Hospitality Corp.
1010 Wisconsin Ave. N.W. Washington, DC 20007
Phone: (202) 295-1000
Fax: (202) 295-2230
E-mail: [email protected]
Web site: www.meristar.com
Officers: Paul Whetsell, Chairman/CEO; John Emery, President/COO; Bruce Wiles, CIO
Total Number of Rooms: 28,653
Total Number of Hotels: 112 - Equity Inns Inc.
7700 Wolf River Blvd., Germantown, TN 38138
Phone: (901) 754-7774
Fax: (901) 754-2374
E-mail: [email protected]
Web site: www.equityinns.com
Officers: Phillip H. McNeill Sr., Chairman/CEO; Howard A. Silver, President/COO; Donald H. Dempsey, Exec. VP/CFO
Total Number of Rooms: 12,284
Total Number of Hotels: 96 - John Q. Hammons Hotels Inc.
300 John Q. Hammons Pkwy., Suite 900 Springfield, MO 65806
Phone: (417) 864-4300
Fax: (417) 873-3540
E-mail: [email protected]
Web site: www.jqhhotels.com
Officers: John Q. Hammons, Founder/Chairman/CEO; Paul Muellner, CFO; Lou Weckstein, President
Total Number of Rooms: 11,633
Total Number of Hotels: 47 - Baymont Inns & Suites
250 E. Wisconsin Ave., Suite 1700 Milwaukee, WI 53202
Phone: (414) 905-1000
Fax: (414) 905-2270
Web site: www.baymontinns.com
Officers: Stephen Marcus, Chairman/CEO; Jim Abrahamson, President/COO; Daniel Daniele, Sr. VP, Brand Management
Total Number of Rooms: 11,000
Total Number of Hotels: 102 - Sunstone Hotel Investors Inc.
903 Calle Amanecer, Suite 100 San Clemente, CA 92673
Phone: (949) 369-4000
Fax: (949) 369-4210
Web site: www.sunstonehotels.com
Officers: Robert Alter, CEO; Mark Mance, President/CIO
Total Number of Rooms: 10,611
Total Number of Hotels: 52 - Innkeepers USA Trust
306 Royal Poinciana Way Palm Beach, FL 33480
Phone: (561) 835-1800
Fax: (561) 835-0457
E-mail: [email protected]
Web site: www.innkeepersusa.com
Officers: Jeffrey H. Fisher, President/CEO; David Bulger, CFO/Treasurer/Exec. VP; Mark A. Murray, General Counsel & Secretary
Total Number of Rooms: 8,131
Total Number of Hotels: 67 - Carlson Hospitality Worldwide
P.O. Box 59159, Minneapolis, MN 55459
Phone: (763) 212-5526
Fax: (763) 212-3400
E-mail: [email protected]
Web site: www.regenthotels.com
Officers: Curtis C. Nelson, President/CEO; Trudy Rautio, CFO; Jay Witzel, Exec. VP
Total Number of Rooms: 8,116
Total Number of Hotels: 30 - American Property Management Corp.
8910 University Center Ln., Suite 500 San Diego, CA 92122
Phone: (858) 964-5500
Fax: (858) 964-5511
E-mail: [email protected]
Web site: www.apmc.net
Officers: Michael Gallego, President/CEO; James Long, Partner; William Littlefield, VP, Corporate Affairs
Total Number of Rooms: 7,273
Total Number of Hotels: 32 - Sunburst Hospitality Corp.
10770 Columbia Pike, Silver Spring, MD 20901
Phone: (301) 592-3800
Fax: (301) 592-3830
Web site: www.sunbursthospitality.com
Officers: James A. MacCutcheon, President/CEO; Kevin P. Hanley, Exec. VP/COO; Chuck Warczak, Sr. VP/CFO/Treasurer
Total Number of Rooms: 7,032
Total Number of Hotels: 52 - Tishman Realty Corp.
666 Fifth Ave., New York, NY 10103
Phone: (212) 399-3600
Fax: (212) 708-6750
E-mail: [email protected]
Web site: www.tishman.com
Officers: John A. Vickers, Chairman/CEO; William Sales, President; Frank Beck, CFO
Total Number of Rooms: 6,844
Total Number of Hotels: 9 - Cooper/CSS Hotels
1407 Union Ave., Suite 400, Memphis, TN 38104
Phone: (901) 725-9631
Fax: (901) 274-9169
E-mail: [email protected]
Officers: Pace Cooper, President/CEO; Hugh McFarland, VP, Operations; Dave Krueger, CFO
Total Number of Rooms: 4,122
Total Number of Hotels: 22 - Candlewood Hotel Co. Inc.
8621 E. 21st. St. N., Suite 200 Wichita, KS 67206
Phone: (316) 631-1300
Fax: (316) 631-1333
Web site: www.candlewoodsuites.com
Officers: Jack P. DeBoer, CEO; Warren D. Fix, CFO; James E. Roos, President/COO
Total Number of Rooms: 3,783
Total Number of Hotels: 31 - Peabody Hotel Group
5118 Park Ave., Suite 245, Memphis, TN 38117
Phone: (901) 762-5400
Fax: (901) 762-5464
E-mail: [email protected]
Web site: www.peabodyhotelgroup.com
Officers: Marty Belz, President; David Shamoian, Exec. VP; Michael Craft, VP/CFO
Total Number of Rooms: 3,400
Total Number of Hotels: 11 - Capital Hotel Management LLC
100 Cummings Ctr., Suite 244G
Beverly, MA 01915
Phone: (978) 522-7000
Fax: (978) 717-9990
Web site: www.capitalhotelmgt.com
Officers: Ken Wilson, CEO; Chad Crandell, President
Total Number of Rooms: 3,327
Total Number of Hotels: 6 - Hersha Hospitality
510 Walnut St., Philadelphia, PA 19106
Phone: (215) 238-1046
Fax: (215) 238-0157
Web site: www.hershahotels.com
Officers: Hasu P. Shah, Chairman/CEO; KD Patel, President
Total Number of Rooms: 2,400
Total Number of Hotels: 24 - InnSuites Hospitality Trust
1615 E. Northern Ave., Suite 102 Phoenix, AZ 85020
Phone: (602) 944-1500
Fax: (602) 678-0281
E-mail: [email protected]
Web site: www.innsuites.com
Officers: James Wirth, President; Marc E. Berg, Exec. VP; Andy Waters, CFO
Total Number of Rooms: 1,864
Total Number of Hotels: 11 - Pinnacle Hotels USA
1775 Hancock St., Suite 185 San Diego, CA 92115
Phone: (619) 296-9610
Fax: (619) 296-9124
Web site: www.pinnaclehotelsusa.com
Officers: Dr. Barry Lall, President/CEO; Suresh Patel, VP
Total Number of Rooms: 1,781
Total Number of Hotels: 20 - The Generation Cos. LLC
1822 E. Hwy. 54, Suite 300, Durham, NC 27713
Phone: (919) 361-9000
Fax: (919) 361-9009
Web site: www.generationcompanies.com
Officers: H. Mark Daley III, President; Ron Jacobsen, VP, Operations; Greg Barrow, VP, Development
Total Number of Rooms: 1,757
Total Number of Hotels: 13 - Larry Blumberg & Assoc. Inc.
2733 Ross Clark Cir., Dothan, AL 36301
Phone: (334) 793-6855
Fax: (334) 793-1707
E-mail: [email protected]
Officers: Larry Blumberg, Chairman/CEO; Barry Kraselsky, President/COO; Terrell Hodnett, VP, Accounting & Systems
Total Number of Rooms: 1,580
Total Number of Hotels: 19 - Pacific Valley Investors Inc.
1050 Ralston Ave., Belmont, CA 94002
Phone: (650) 637-8865
Fax: (650) 637-9623
E-mail: [email protected]
Officers: Wayne Levenfeld, President; Gary Bruton, VP, Operations; Elisabeth Scharbaum, VP, Operations
Total Number of Rooms: 1,405
Total Number of Hotels: 9 - Trans Inns Management Inc.
31525 W. Twelve Mile Rd. Farmington Hills, MI 48334
Phone: (248) 489-4333
Fax: (248) 489-4330
E-mail: [email protected]
Web site: www.transinns.com
Officers: Daniel Vosotas, President; James Oberliesen, VP, Operations; Joe Popp, VP, Finance
Total Number of Rooms: 1,341
Total Number of Hotels: 12