If you thought the lodging and hospitality industry would hit the brakes amid a consumer pullback and a generally more sluggish economy, you may be in the wrong room. That's the takeaway from the latest results from Host Hotels
For the quarter ended Sept. 7, 2007, Host's funds from operations (FFO), a key financial measure for REITs, rose 38% to $210, from $152 a year ago. Host earned $0.38 per share, compared to $0.28 in the year-ago period; analysts apparently had expected $0.33.
Looking ahead (and despite all sorts of qualifiers about the company being "in the preliminary stages of its budget process for 2008"), management appears to anticipate that RevPAR (revenue per available room) will increase by about 5%-8% for the year.
Host's results will be followed by such other hospitality REITs as Sunstone
With REITs increasingly ently under fire as inappropriate investments, amid housing woes and increasingly crunched credit, Host Hotels has demonstrated that some REITs do remain highly attractive. And while the company's share price has bounced around during the past year, and remains close to its October 2006 levels, those investors who understand REITs and stand to benefit from their advantages would do well to keep this company in mind.
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