The Company is a Maryland real estate investment trust organized to buy, own and lease primarily upscale and luxury full-service hotels located in convention, resort and major urban business markets.
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LaSalle Hotel Properties (LHO) is a hotel REIT (real estate investment trust) that buys, owns and leases upscale and luxury full-service hotels primarily located in convention, resort and major urban business markets. The company’s portfolio consists of 30 hotels with approximately 8,700 suites/rooms located in 11 states as of Sept. 2006. The company generates around 60% of EBITDA from hotels properties located in five major markets viz. San Diego, Boston, Chicago, LA and NY.
The US lodging industry has rebounded after the downturn from 2000 to 2003 caused by 9/11 attacks that plummeted travel industry and left hotels half empty. Since then, the industry is witnessing higher occupancy rate led by recovery in travel industry and supply constraint. For 2006, industry occupancy increased by 0.5% to 63.4%, average room rate (ADR) increased 7% to $97.31 and revenue per available room (RevPar) gained 7.5% to $61.69.
Although, the industry room supply increased 0.6% in 2006, but demand (roomnights sold) gained by 1.1%, resulting into revenue increase of 8.1%. Lodging industry outlook looks bright as demand among all travelers remains high, and bookings for conferences and meetings continue to increase, translating into expected RevPar growth of 9.1% in 2007.
LHO’s organic growth strategy is focused on increasing revenues through continuous re-development of pipeline, whereas inorganic growth strategy is based on enhancing hotels portfolio. Endorsing the same, the company recently completed its five acquisitions of hotel properties in crowded markets.
For the first nine months ended Sep. 2006, LHO witnessed increase in RevPar by 10.7%, ADR by 9.5% and occupancy rate of 76%, way above the industry averages. Further, LHO’s underlevered balance sheet endows it with adequate opportunity to go on for acquisition spree. Given the acquisition led growth strategy; brighter industry outlook, higher RevPar, ADR and occupancy rate, LaSalle is all set to deliver robust performance in 2007.