SILVER SPRING, MD? Newly named to succeed CEO Terence Golden at the helm of the good ship Host Marriott, Christopher Nassetta has already set one vital standing order for himself: Don?t rock the boat! Not that Nassetta plans any dramatic course alterations for the company at this point. After all, in his former post as COO for the organization, he had been innately involved in much of the decision-making regarding Host Marriott?s presence and position in the marketplace, including its move to take the company public as well as its strategy of buying up suitable properties in earnest. Assessing the present state of the company, Nassetta pointed out: ?Operations this year shape up a bit stronger than we previously expected. However, next year?s situation is certainly one that bears watching as somewhat more supply comes on line.? He contended the operational watchword will be ?discipline,? if Host Marriott is to continue to create value throughout its portfolio. ?I expect we will continue in our current strategy of focusing our efforts internally,? he said, adding that this would entail such undertakings as: investing in upgrades and enhancements within Host Marriott?s existing portfolio; selling off non-core assets (and even core properties if the price offered is one the organization simply can?t turn down); and buying back much of its outstanding stock which, though lately somewhat improved in price, is still viewed as being ?exceptionally undervalued.? For the year, Host Marriott?s stock is up about $2 to over $10 per share at presstime. Despite Wall Street?s comparatively lackluster appraisal of per-share worth, times have generally been good for Host Marriott since Golden brought Nassetta aboard five years ago as his successor-in-waiting. Between 1996 and 1998, the hotel-ownership organization spent $6 billion adding to its portfolio in the upper upscale and luxury arena. That buying binge came to an abrupt end when? as a result of rising interest rates, tighter equity capital markets and fewer outstanding deal-making opportunities? Host Marriott bought no new properties in 1999. (The REIT did, however, loosen its purse strings recently with the purchase of controlling economic interest in the J.W. Marriott on Pennsylvania Avenue in Washington, D.C.) In another maneuver to boost share price, the company repurchased 16.3 million shares for $150 million over the past year. And, as a means of raising further capital to buy back more stock as well as pay down existing debt, it was reported Host Marriott is actively looking to sell some $200 million in assets. Sources say the company has also earmarked some $400 million for expanding its hotels and adding such perks as spas at the resorts, while at the same time enhancing retail and restaurant space at many of its locations. By the same token, Nassetta pointed out that the company is also exploring non-real-estate-related ways of raising revenues, with such areas as concierge services, parking and technology being looked into. Finally, by way of offering a brief glimpse of what may well lay ahead for the company, Nassetta said the marketplace can expect to see Host Marriott continue to strategy on the upper- upscale and luxury end of the business, a focus that will likely include expanding Host Marriott?s working relationships with some of the industry?s top lodging brands.
