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CEO Spotlight: Host Hotels Trying to Grow Through Acquisitions

11/20/2013 | By Allen Kenney

Ed Walter, president and CEO of Host Hotels & Resorts, Inc. (NYSE: HST), joined REIT.com for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Walter concluded his one-year term as chair of NAREIT this month. He was asked to list some of the most pressing issues facing the REIT industry in the near term.

“One of the challenges of this entire recovery has been the fact that GDP growth and economic development have been slower than what we’ve usually seen coming out of a downturn,” Walter said. “As we look over the next couple of years, the wildcard in terms of how companies are going to perform and how the industry performs is going to relate very closely to what happens with the economy. If we can finally get one of these years where GDP growth starts to exceed by a reasonable margin 3 percent, I think there’s a chance to see some accelerated growth in many of our sectors.”

Walter also cited the political situation as a hurdle for the industry to overcome.

“The political gridlock in Washington has undermined the ability of our economy to grow,” he said. “I am unfortunately not that optimistic in the short term that is going to be solved. But if we can make some headway in Washington, I think that would help free up the competitive forces and we’d see stronger economic growth.”

Host Hotels has revealed that it plans to increase its acquisitions activity. Walter discussed some of the challenges in doing so.

“What we are seeing as we look out the next few years is that fundamentals in the lodging business are great,” he said. “Supply is still low—certainly for the next two years, and I suspect longer than that. The combination of good demand growth domestically and superb demand growth internationally has created an environment where we’re seeing demand growth above historical norms with supply growth projected to be below. While we would love to buy assets that take advantage of that, I think sellers are being very careful about what they put on the market because they also recognize that there’s a lot of upside.”