Host Hotels & Resorts Inc. (HST), in association with Kokua Hospitality, LLC, is transforming the San Francisco-based The Powell Hotel and renaming the property as Axiom Hotel. The company had purchased Powell Hotel in early 2014. Presently closed for renovation, the property is slated to reopen in fall 2015 with 152 rooms.
Kokua Hospitality has been selected as the operator for the project. Notably, the hotel management firm Kokua has earned its reputation for being a turnaround specialist aiding institutional and select private lodging investors.
The move comes as part of Host Hotels’ strategic steps to beef up its portfolio quality. The company has been focusing on streamlining the number of markets in which it operates, as well as exploring strategic investment opportunities in gateway cities and urban and resort/conference markets. The company is enhancing its property base with investments in upscale properties, which can be operated by an independent manager or without an affiliation from any major brand.
We believe that the move would serve to enhance Host Hotels’ top line going forward. This is because the renovated property, positioned in the vibrant San Francisco downtown, is expected to enjoy solid demand from tourists as well as business travelers.
Host Hotels also came up with encouraging results in third-quarter 2014. It reported an earnings surprise of 6.25%, benefiting from a notable rise in comparable revenue per available room (RevPAR) and occupancy. Going forward, we believe that the company’s strategic portfolio enhancement activities bode well for its long-term growth.
Host Hotels currently carries a Zacks Rank #3 (Hold). Some better-ranked lodging REITs include Chatham Lodging Trust (CLDT), FelCor Lodging Trust Incorporated (FCH) and RLJ Lodging Trust (RLJ). All the stocks have a Zacks Rank #2 (Buy).
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