Host Hotels and Resorts operates primarily in the hotel and lodging segment. It owns luxury and upper upscale hotels across the United States as well as in other countries. However, it is highly dependent on the US market, which accounts for over 90% of its revenue. To address this over-reliance and capitalize on global opportunities, Host Hotels should diversify its business strategy through joint ventures in other segments like food and beverage, reduce its dependency on any single market by expanding into new international markets, and address factors like safety perceptions that negatively impact travel.

1. Crafting the Future of
Host Hotels and
Resorts

2. Area of Operation: Segments
 Host Hotels and Resorts is a part of the Real Estate
Investment Trust, REIT, governmental program.
◦ This program involves investment in all types of businesses including
Health Care, Mortgages, Retail, Residential, Lodging, etc.
Health Care
Industrial/Office
Infrastructure
Lodging/Resort
Mortgage
Residential
Retail
Self Storage
Timber
Other
 Host Hotels and Resorts
only operates in one
segment: Hotel & Lodging

3. Area of Operations: Brands
Westin
W Hotel
The Luxury Collection
Swissotel
St Regis
Sheraton
The Ritz-Carlton
Pullman
Novotel
Marriott
IBIS

4. Area of Operations:
Geographic
Geographically Host Hotels and Resorts’ domestic location is the United
States; the majority of their hotels are located there. However, they also
have locations in Canada, Chile, Mexico, joint ventures in Europe, and
newer locations in the Asia-Pacific region.

5. Company Strategies
Level of Business Specific Strategy Type
Corporate Single Business Strategy- only operate in
the lodging industry
Business: Competitive Focused Differentiation- Focused on their
one operating segment and differentiate themselves
through the quality of their product
Blue Ocean N/A
Timing First Mover- Host is the most global competitor in
the industry
Marketplace Approach Analyzer- Host focuses most of their efforts on their
stable American market with other international markets
still developing
Functional: R&D Functional Activity
Marketing Functional Activity
Production Critical Activity
Human Relations Critical Activity
International Global Strategy- Host has globally expanded to
many different parts of the world including Asia-Pacific,
Europe, South America, etc. They are the most global
company in the industry by far

6. Performance: Income
Statement2010 2011 2012
Total
Revenue
4,361,000 4,924,000 5,286,000
Gross Profit 2,693,000 3,064,000 3,306,000
Operating
Income
(loss)
223,000 326,000 383,000
Net Income
(loss)
(130,000) (15,000) 61,000
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2010
2011
2012
All
numbers
are in
thousand
s

7. Performance: Ratios
Profitability Ratios 12/31/2012 12/31/2011 12/31/2010
ROA % (Net) 0.47 (0.12) (1.04)
ROE % (Net) 0.9 (0.23) (2.08)
ROI % (Operating) 3.1 2.68 1.87
EBITDA Margin % 7.47 6.74 4.94
Calculated Tax Rate % 73.81 EBT<0 EBT<0
Revenue per Employee 22,624,710 22,821,918 21,857,143
Liquidity Ratios 12/31/2012 12/31/2011 12/31/2010
Quick Ratio 2.07 4.63 5.28
Current Ratio 2.34 4.93 5.55
Net Current Assets % TA 1.99 5.26 7.62
Debt Management 12/31/2012 12/31/2011 12/31/2010
LT Debt to Equity 0.79 0.86 0.87
Total Debt to Equity 0.79 0.86 0.87
Interest Coverage 1.09 0.92 0.59
Asset Management 12/31/2012 12/31/2011 12/31/2010
Total Asset Turnover 0.4 0.39 0.36
Accounts Payable Turnover 28.57 26.1 23.23
Cash & Equivalents Turnover 8.48 5.16 3.22
Per Share 12/31/2012 12/31/2011 12/31/2010
Cash Flow per Share 1.09 0.95 0.79
Book Value per Share 9.42 9.47 9.33

8. Leadership: Management
Profile  Richard Marriott: Chairman of the
Board
 W. Edward Walter: Chief Executive
Officer
 Elizabeth Abdoo: General Counsel
and Secretary
 Minaz Abji: Asset Management
 Joanne G. Hamilton: Human
Resources
 Gregory J. Larson: Chief Financial
Officer
 James F. Risoleo: Executive Vice
President
 Struan Robertson: Chief
Investment Officer
 Brian G. Macnamara: Corporate
Controller
Richard E.
Marriott
W. Edward
Walter
Elizabeth A.
Abdoo
James F. Risoleo Struan Robertson Brian G
Macnamara
Minaz Abji Joanne G.
Hamilton
Gregory J. Larson

9. Leadership: Board of
Directors
Board Members Department Title
Richard E. Marriott Chairman of the Board
Sheila Colleen Bair Director
Robert M. Baylis Director
Terence C. Golden Director, Audit
Ann McLaughlin Korologos Director, Compensation,
Corporate Governance &
Nominating
John B. Morse Director, Audit, Corporate
Governance & Nominating
Walter C. Rakowich Director, Compensation &
Auditing
Gordon H. Smith Director, Audit, Corporate
Governance, & Nominating
W. Edward Walter Director, President, Chief
Executive Officer
Mary L. Baglivo Director, Compensation

10. Essential Challenges For Host
Hotels and Resorts
Operational Challenges:
-Competitive Industry
-Geographic Concentration
(95% of revenue in 2012 was from the
US)
Strategic Challenges:
-Very reliant on one specific
segment
-Dependent on Human Resources
Performance Challenges:
-Economic Uncertainty
Leadership Challenges:
-No vision statement displayed

11. Key Issues to be Resolved
1. Perception of safe
travel effects
performance of
international travel
2. Possibility of industry
suffering from
another recession
3. Global expansion
opportunities
Critical Issues To Be Addressed by Host Hotels &
Resorts, Inc. based on External Analysis

12. Critical Issues To Be Addressed by Host
Hotels & Resorts, Inc. based on Internal
Analysis
1. Less dependency on US market
2. Need for advancing Internet
capabilities
3. Lack of internet or mobile
applications
Key Issues to be Resolved

13. SWOT Analysis
STRENGTHS WEAKNESSES
S1. First Mover in the Industry
S2. Access to Financial Capital
S3. Domestic and International location for
Properties
S4. Stock Prices increase over past year
S5. High Profitability
W1. High Dependency on US Market
W2. Focusing on American markets while those
internationally are still developing
W3. Single business strategy- only operating one
segment but only generate the amount of revenue
that this segment can bring
W4. Taking advantage of internet capabilities
W5. Lack of Internet or mobile application
OPPORTUNITIES THREATS
O1. Global Expansion
O2. Acquiring most prominent real estate
locations
O3. Online Reservation System
O4. Companies targeting mid-scaled hotel
properties
O5. Building a strong brand name with a
recognizable logo to increase public awareness
T1. Perception of safe travel effects performance of
international travel
T2. Industry suffering from another recession
T3. Overcrowding of REITs trying to target upper-
upscale and luxury properties
T4. Security threats on international markets
T5. Emergence of new, younger travelers who
demand updated facilities and High-tech features in
the rooms mean costly upgrades for operators

14. • Lessen the dependency
on US market
High
dependency on
US market
• Reduce dependency on
any one market
Perception of
safety affects
travel
• Differ diversification
strategy
Inability to
capitalize on
global
opportunities
Critical Issues &
Recommendations

15. Report Date
12/31/2013
Market Revenue (in
Millions USD)
% of Total
Revenue
United States 4,895 94.8%
Australia 40 0.77%
Brazil 30 0.58%
Canada 97 1.88%
Chile 34 0.66%
Mexico 24 0.46%
New Zealand 46 0.89%
Total 5,166
Lessen the dependency on
US market
High
dependency on
US market
Problem
US market is highly saturated and competitive
• Other brand name hotels
• REIT companies
(Source: Mergent Online, 2014)

16. (Source: Pearce, Hotels and Other Lodging Places, 2014)

17.  Franchising
 Strategic Alliances and Joint Ventures
Global Expansion: Vehicles

18. Global Expansion: Implementation
Objective: Address the need for a diverse company
portfolio through an effective marketing campaign that
places emphasis on the variety of locations, leveraging
themselves against competitors, while continuing to
expand the customer base.
Time Frame: 6 months
Responsibility
 Marketing Team (marketing researchers and sales
representatives)
 Top Management
 Board of Directors

19. Global Expansion: Implementation
Resources Required
 Maintaining a strong balance sheet
 Ability to secure most prominent
locations
 Skills and background knowledge to
implement the marketing
 Name branding
Capabilities Required
 Access to financial capital

20. Global Expansion: Execution
PlanAgenda: Lessen the dependency on US market to minimize the effect
of overcrowding of REITs trying to target upper-upscale and luxury
properties by diversifying the company portfolio into international
markets.
6/1/14
6/30/14
7/1/14
8/31/14
9/1/14
9/30/14
10/1/14
12/1/14
Task #1:
Assemble a
specialized
marketing team
Task #2:
Brainstorm
marketing
strategies
Task #3: Present
top marketing
strategies to Board
of Directors
Task #4: Implement
marketing strategy

21. Global Expansion: Key Challenges
 Regulations in terms of real estate and
buying abroad
 Customers with new cultural
backgrounds and sensitivities

22. Credit Ratings
BBB-
BBB
A
Improve Corporate Credit Rating
Lower Cost of Borrowing
Better Access to Capital
Markets
Host: B-
Ashford Hospitality Trust: B-
FelCor Lodging Trust Inc: C
Strategic: C
Global Expansion:
Competition

23.  Target key gateway markets with
significant barriers to entry
 Apply market-specific enhancements
 Maintain a strong balance sheet
 Maintain a portfolio of large and valuable
hotels in the US
Global Expansion: Preparing to Face
the Challenges

24. Perception of safety
affects travel
The industry is highly affected by travel patterns
• Strength of economy
• GDP
• Local market factors
Problem: Local market factors like civil unrest, political
uprisings, terrorist attacks, outbreak of disease or other
circumstances leading to dangerous travel conditions
negatively affect travel to these destinations and
demand for lodging.
Reduce dependency on any
one market

25. Reducing Dependency on Any One
Market: Implementation Plan
Objective: To successfully operate domestically and
globally, Host Hotels & Resorts must further penetrate
and develop its markets.
Time Frame: 1.5 years
Responsibility
 Marketing and Sales Departments
 Top Management
 Board of Directors
 Accounting and Finance

26. Reducing Dependency on Any One
Market: Implementation Plan
Resources Required
 Financial capital
 Ability to secure most prominent
locations
 Room features
Capabilities Required
 Research & Development
 Access to financial capital
 Advertising
 Name Branding

27. Reducing Dependency on Any One
Market: Execution Plan
Agenda: Exploit domestic and international markets for properties to
capitalize on acquiring most prominent real estate, thereby reducing
travel.
6/1/14
7/30/14
10/1/14
10/31/14
11/1/14
4/30/15
5/1/14
11/1/15
12/1/15
Task #1: Create a
specialized team to
strategically locate most
appropriate markets
Task #2: BOD
decides on which
facilities to pursue
Task #3: Organize
construction efforts
Task #4: Begin
operating facilities
Task #5: Evaluate
the effects on
finances and
operating segments

28. Reducing Dependency on Any
One Market: Competition
Strategic Hotels & Resorts
 Research-based selection of target
markets and individual properties.
 Target upper upscale and luxury
hotels
Strategic
Host
DRH
FelCor Ashford
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0 10 20 30 40 50 60 70 80
Revenues(Millions)
Years Public
Strategic Group Map

29. Inability to
capitalize on
global
opportunities
Room
Sales
65%
Other
35%
Revenue
Opportunity to
generate more
revenue
Differ
diversification
strategy
More revenue
More access to
capital
Acquire most
prominent real
estate globally

30. Differ diversification strategy:
Vehicles
 Joint Ventures
 Explore agreement options

31. Differ diversification strategy:
Implementation Plan
Objective: To successfully operate in global markets, Host Hotels &
Resorts must diversify its strategy to generate more revenue from other
segments, increasing access to capital and thereby acquiring most
prominent real estate locations globally, gaining market share in a highly
profitable industry.
Time Frame: 1 year
Responsibility
 Marketing Department, Top Management Team, Board of
Directors, Accounting/Finance Department
Resources Required
 Adequate amounts of research done to form joint ventures with
restaurants and spas; trained staff, external relationships, and
appropriate technology.
Capabilities Required
 Development of internal staff and training of employees to be able to
serve consumers in, for example, food and beverage, and other
segments.

32. Differ diversification strategy:
Execution Plan
Agenda: diversify business strategy to capitalize on acquiring most
prominent real estate both domestically and internationally
6/1/14
8/31/14
9/1/14
9/30/14
10/1/14
2/28/15
3/1/15
5/1/15
Task #1: Identify
potential
candidates for
JVs and
partnerships
Task #2: BOD
select
companies for
JVs and
partnerships
Task #3: Form JVs
and train staff
appropriately
Task #4: Evaluate
performance and
assess process

33. Differ diversification strategy:
Key Challenges
 Picking the right joint venture
 Choosing which amenities to focus on
 Being the first mover

34. Differ diversification strategy:
Competitors
Rooms
56%
Food and
Beverage
33%
Other hotel
operating
revenue
10%
Lease
revenue
1%
Strategic Hotels & Resorts
Revenue, 2013
Source: Strategic Hotels & Resorts, Inc. 2013 Annual Report

35. Differ diversification strategy:
Preparing to Face the
Challenges
 Research
 Act Quickly
 Focus on Food and Beverage
 Focus on other amenities