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Will Coronavirus Hurt Host Hotels' Performance This Year?

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Host Hotels & Resorts Inc. HST announced that its operations have been adversely impacted by the coronavirus outbreak but not to the extent that it would affect its 2020 guidance right now.

The company reported that total revenues witnessed a negative impact of approximately $14 million year to date. The impact on net income is $7 million and the effect on adjusted EBITDA amounts to around $7 million, so far. This results in a decrease of 0.5% at the mid-point of the company’s adjusted EBITDA outlook of $1.36-$1.405 billion for the full year.

Particularly, business in California, where coronavirus cases have been reported, has been impacted mainly due to group business cancellations. The company has reassured that it is working closely with the operators of its properties.

Nonetheless, the company noted that the coronavirus outbreak has not yet affected the current-year guidance. However, Host Hotels has cautioned regarding the uncertainties and did not make any further assurances regarding the impact of the same on its performance.

During its fourth-quarter earnings call, the company provided the 2020 guidance. It projects adjusted FFO per share at $1.65 - $1.71. The total comparable hotel RevPar for the year is estimated in the range of 0-1%.

Per a report from CBRE Group CBRE, U.S. hotel demand increased 2% nationally, while supply grew 2.1% during the December-end quarter. National occupancy edged down 0.1% year over year to 61.8%, while ADR was up 0.7%. Also, RevPAR was up 0.7%, denoting a slower pace than the prior year’s 2.4%.

Nevertheless, it is being feared that the emergence of coronavirus as a global pandemic might impede this growth significantly. China, with the most frequent travelers in the world with 180-million passport holders, has been the worst affected. Business travel is estimated to see a loss of 37%, per a survey by the Global Business Travel Association, while leisure travel also looks no better.

Host Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have depreciated 24.4% in the past year, underperforming the industry’s rise of 8.1%.

Zacks Rank & Stocks to Consider

Prologis, Inc. PLD currently carries a Zacks Rank of 2 (Buy). The company’s FFO per share estimate for 2020 has been revised 1.4% upward to $3.72 in a month’s time. The stock has rallied 25.5% in the past year.
Highwoods Properties’ HIW Zacks Consensus Estimate for the current-year FFO per share has moved marginally upward to $3.63 over the past month. Shares of this Zacks #2 Ranked company have gained 3.4% over the past year.

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