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Host Marriott Corporation Doubles 3rd Quarter Loss
to $97 million, Compared to Loss
of $47 million Last Year; 
Likely Will Not Pay a 4th Qtr Dividend
Hotel Operational Data
BETHESDA, Md., Oct. 15, 2003 -- Host Marriott Corporation (NYSE: HMT - News), the nation's largest lodging real estate investment trust (REIT), today announced results of operations for the third quarter of 2003. Third quarter results include the following:
  • Total revenue was $760 million and $2,422 million, respectively, for the third quarter and year-to-date 2003 as compared to $777 million and  $2,463 million, respectively, for the same periods of 2002.
  • Net loss was $88 million and $136 million, respectively, for the third quarter and year-to-date 2003 as compared to $38 million and $13 million, respectively, for the third quarter and year-to-date 2002. (The net loss includes the cumulative effect of a change in accounting principle relating to SFAS No. 150, of $24 million in the quarter and year-to-date 2003.)
  • The Company's diluted loss per share was $.35 and $.61, respectively, for the third quarter and year-to-date 2003 as compared to diluted loss per share of $.18 and $.15, respectively, for the same periods of 2002.
  • Funds From Operations, or FFO, per diluted share, was $.03 and $.40, respectively, for the third quarter and year-to-date 2003 as compared to $.14 and $.75 per diluted share, respectively, for the third quarter and year-to-date 2002.
  • Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items, was $122 million and $487 million, respectively, for the third quarter and year-to-date 2003 versus $153 million and $581 million, respectively, for the same periods of 2002.
FFO per diluted share and Adjusted EBITDA are non-GAAP financial measures within the meaning of the Securities and Exchange Commission, or SEC, rules. See the discussion beginning on page 5 of this press release for additional information on the use of these measures.

Operating Results

Comparable hotel RevPAR for the third quarter declined 2.5% as a result of a 1.5% reduction in average room rate and an occupancy decline of 0.7 percentage points compared to the same period in 2002. Year-to-date comparable hotel RevPAR declined 5.6% with a decline in room rate of 2.6% and a decrease in occupancy of 2.2 percentage points compared to the same period in 2002. The Company's earnings and FFO per diluted share include certain unusual items described on page 22.

Christopher J. Nassetta, president and chief executive officer, stated, "Our results for the third quarter were generally in line with expectations, with RevPAR at the higher end of our range and margins at the lower end. Our RevPAR results have clearly improved over the first half of the year. Further improvement should occur in 2004, as lodging demand benefits from a strengthening economy and levels of new supply continue to decline."

Acquisitions and Dispositions

The Company recently announced that it has signed an agreement to acquire the 806-room Hyatt Regency Maui Resort and Spa, a premier luxury resort hotel in Hawaii for $321 million, or $398,000 per room. In addition to increasing the geographic diversity of the portfolio, the hotel benefits from extremely high barriers to entry for new supply. The acquisition is consistent with Host Marriott's strategy of acquiring high quality properties in difficult to duplicate locations. The purchase is subject to customary closing conditions and is expected to close by year-end.

"We are pleased with the pending acquisition of the Hyatt Regency Maui. It will be the Company's first property in Hawaii, a market that should continue to perform well. We are continuing to pursue additional acquisitions that are consistent with our target profile of upscale and luxury properties in markets with significant barriers to entry," said James F. Risoleo, executive vice president, acquisitions and development.

Balance Sheet

As of September 12, 2003, the Company had $547 million in cash on hand and $250 million of availability under its credit facility. The Company does not believe that it will need to borrow under the credit facility for the remainder of 2003.

During August 2003, the Company issued 27.5 million shares of common stock for net proceeds of $251 million, which will be used to partially fund the purchase of the Hyatt Regency Maui.

Also in August, the Company entered into two, four-year interest rate swap agreements, which mature October 2007, effectively converting its $242 million Series G senior notes to floating rate debt. The Company also redeemed $71 million of its Series A senior notes using the proceeds from the sale of three non-core properties. In September, we refinanced the $95 million mortgage debt secured by the JW Marriott Hotel in Washington, D.C. with an $88 million floating-rate mortgage loan. The effect of these transactions is that the Company's total fixed rate debt has been reduced from 90% to 84%.

W. Edward Walter, executive vice president and chief financial officer, stated, "The combination of our equity issuance, which will facilitate the acquisition of the Hyatt Regency Maui, the senior notes redemption, the swap transaction and the mortgage refinancing have furthered our progress toward reducing our leverage and adding flexibility to our balance sheet."

2003 Outlook

The Company's updated guidance for RevPAR for full year 2003 is for a decline of approximately 4% to 5% and fourth quarter RevPAR of flat to down 2.5%. Based upon this guidance, the Company estimates the following for full year 2003:

  • Diluted loss per share should be approximately $.75 to $.71;
  • Net loss should be approximately $174 million to $160 million;
  • FFO per diluted share should be approximately $.62 to $.66; and
  • Adjusted EBITDA should be approximately $715 million to $730 million.
Although the Company has more than adequate liquidity, based upon the current forecast, the Company believes that it is unlikely that a fourth quarter 2003 dividend will be paid on its preferred or common shares due to limitations in the Company's senior notes indenture and credit facility, both of which restrict the Company's ability to pay dividends when the Company's EBITDA to interest coverage ratio (as defined in our senior notes indenture) is below 2.0 to 1.0.

HOST MARRIOTT CORPORATION
Introductory Notes to Financial Information

The Company

Host Marriott Corporation, herein referred to as we or Host Marriott, is primarily the owner of hotel properties. We operate as a self-managed and self-administered real estate investment trust, or REIT. We conduct our operations as an umbrella partnership REIT through an operating partnership, Host Marriott, L.P., or Host LP, of which we are the sole general partner. For each share of our common stock, Host LP has issued to us one unit of operating partnership interest, or OP Unit. When distinguishing between Host Marriott and Host LP, the primary difference is the 8% partnership interests of Host LP held by outside partners as of September 12, 2003, which is reflected as minority interest in our balance sheet and minority interest expense in our statement of operations. Readers are encouraged to find further detail regarding our organizational structure in our annual report on Form 10-K.

Non-GAAP Financial Measures

Included in this press release are certain "non-GAAP financial measures," which are measures of our historical or future financial performance that are different from measures calculated and presented in accordance with generally accepted accounting principles, or GAAP, within the meaning of applicable SEC rules. They are as follows: (i) Funds From Operations per diluted share, (ii) EBITDA, (iii) Adjusted EBITDA and (iv) Comparable Hotel Results. The following discussion defines these terms and presents why we believe they are useful measures of our performance.

FFO per Diluted Share

The National Association of Real Estate Investment Trusts, or NAREIT, defines Funds From Operations, or FFO, as net income (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is presented on a per share basis after making adjustments for the effects of dilutive securities. We use FFO per diluted share as a measure of our performance because historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, because real estate values have historically risen or fallen with market conditions, most industry investors have considered presentation of operating results for real estate companies that use historical cost accounting to be less informative. NAREIT adopted the definition of FFO in order to promote an industry-wide standard measure of REIT operating performance. Accordingly, as a member of NAREIT, we have adopted FFO per share as a measure to evaluate our performance in comparison to our peer group in NAREIT, substantially all of which use the same measure. We believe that the presentation of FFO per diluted share provides useful information to investors regarding our results of operations because it is a better measure of our operating performance. In addition, it facilitates comparisons between us and other REITs, including when making investment decisions. FFO per diluted share is also used by the Compensation Policy Committee of the Board of Directors to establish criteria for performance-based compensation and in the annual budget process.

EBITDA

Earnings before Interest Expense, Income Taxes, Depreciation and Amortization, or EBITDA, is a commonly used measure of performance in many industries which management believes provides useful information to investors regarding our results of operations. EBITDA helps us and our investors evaluate the ongoing operating performance of our properties and facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. Management uses EBITDA to provide a baseline when evaluating hotel results. Management also uses EBITDA as one measure in determining the value of acquisitions and dispositions and, like FFO per diluted share, it is widely used by management in the annual budget process.

Adjusted EBITDA

Management has historically adjusted EBITDA when evaluating our performance because we believe that the exclusion of certain recurring items described below is necessary to provide the most accurate measure of the performance of our investment portfolio and to more fully reflect the ongoing value of the company as a whole. We adjust EBITDA for the following items and refer to this measure as Adjusted EBITDA:

    * Gains and Losses on Dispositions and Related Debt Extinguishments -- We
      exclude the effect of the gains and losses recorded on the disposition
      of assets and the related debt extinguishments because we believe that
      including them in EBITDA is not consistent with reflecting the ongoing
      performance of our remaining assets.  In addition, material gains or
      losses from the depreciated value of the assets disposed of, and the
      related debt extinguishments could be less important to investors, given
      that the depreciated asset often does not reflect the market value of
      real estate assets (as noted above for FFO).

    * Consolidated Partnership Adjustments -- We exclude the minority interest
      in the income or loss of our consolidated partnerships because we
      believe that including them in EBITDA does not reflect the impact of the
      minority interest position on our performance because these amounts
      effectively include our minority partners' pro-rata portion of
      depreciation, amortization and interest expense, which are excluded from
      EBITDA.  However, we believe that the cash distributions paid to
      minority partners is a more relevant measure of the effect of our
      minority partner's interest on our performance, and we have included the
      effect of these cash distributions in the calculation of Adjusted
      EBITDA.

    * Equity Investment Adjustments -- We exclude the equity in earnings
      (losses) of unconsolidated investments in partnerships and joint
      ventures because our percentage interest in the earnings (losses) does
      not reflect the impact of our minority interest position on our
      performance and these amounts effectively include our pro-rata portion
      of depreciation, amortization and interest expense, which are excluded
      from EBITDA.  However, we believe that cash distributions we receive are
      a more relevant measure of the performance of our investment and,
      therefore, we include the cash distributed to us from these investments
      in the calculation of Adjusted EBITDA.

    * Cumulative effect of a change in accounting principle -- Infrequently,
      the Financial Accounting Standards Board (FASB) promulgates new
      accounting standards that require the statement of operations to reflect
      the cumulative effect of a change in accounting principle.  We exclude
      these one-time adjustments because they do not reflect actual
      performance of the company for that period.  As a result of our adoption
      of SFAS No. 150, "Accounting for Certain Financial Instruments with
      Characteristics of both Liabilities and Equity," or SFAS No. 150,
      beginning in the third quarter of 2003, we have recorded a one-time
      adjustment to show the cumulative effect of the change in fair value of
      certain minority partner interests in our consolidated partnerships.
      See page 11 for a further discussion of SFAS No. 150 and its effect on
      the financial statements.
 

Limitations on the Use of FFO per Diluted Share, EBITDA and Adjusted EBITDA

FFO per diluted share, as presented, may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO. In addition, although FFO per diluted share is a useful measure when comparing our results to other REITs, it may not be helpful to investors when comparing us to non-REITs. EBITDA and Adjusted EBITDA, as presented, may also not be comparable to measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations, or any other operating performance measure prescribed by GAAP. Cash expenditures for various long-term assets (such as renewal and replacement capital expenditures), interest expense (for EBITDA and Adjusted EBITDA purposes only) and other items have been and will be incurred and are not reflected in the EBITDA, Adjusted EBITDA and FFO per diluted share presentations. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statement of operations and cash flows include disclosure of our interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures. Additionally, FFO per diluted share, EBITDA and Adjusted EBITDA should not be considered as a measure of our liquidity or indicative of funds available to fund our cash needs, including our ability to make cash distributions. In addition, FFO per diluted share does not measure, and should not be used as a measure of, amounts that accrue directly to shareholders' benefit.

Comparable Hotel Results

We present certain operating results and statistics for the periods included in this report on a comparable hotel basis. We define our comparable hotels as full-service properties (i) that are owned or leased by us and the operations of which are included in our consolidated results, (ii) for which we reported operating results throughout the reporting periods being compared, and (iii) that have not sustained substantial property damage or undergone large-scale capital projects during the reporting periods being compared. We consider 116 of our portfolio of 120 full-service hotels to be comparable hotels for the periods presented in this quarterly report. The operating results of the following hotels that we own as of September 12, 2003 are excluded from comparable hotel results:

  • the New York Financial Center Marriott (substantially damaged in the September 11, 2001 terrorist attacks and re-opened in January 2002);
  • the Boston Marriott Copley Place (acquired in June 2002);
  • The Ritz-Carlton, Naples Golf Resort (opened in January 2002); and
  • The JW Marriott, Washington, D.C. (consolidated in our financial statements in the second quarter of 2003).
During 2003, we sold the Ontario Marriott, the Norfolk Waterside Marriott, the Oklahoma City Waterford Marriott and the Palm Beach Gardens Marriott. For this reason, the operating results of these hotels are also not included in our comparable hotel results.

In addition to excluding non-comparable full-service properties, our comparable hotel operating results reflect the following adjustments:

  • comparable hotel results exclude operating results for our non-hotel properties and our leased limited-service hotels;
  • the revenues and expenses at our comparable hotel properties have been adjusted so that the comparable results include the same number of days of operations between years (see Reporting Periods below); and
  • we exclude depreciation and amortization and corporate and other expenses from operating profit as presented in our statements of operations.
We believe that the comparable hotel results are useful measures of our performance that help us and our investors evaluate the ongoing operating performance of our hotels and facilitate comparisons with other REITs and hotel owners. Because the results are for comparable properties, they present results without giving effect to any acquisitions or dispositions, significant property damage or large scale capital improvements incurred during the relevant periods. This allows management and investors to measure performance of the full-service hotels we owned during the entirety of the periods being compared. In addition, because the results exclude non-cash expenses and corporate-level costs and expenses such as general administrative costs, management believes they are a useful measure of the core performance of our full-service hotel properties. For this reason, management also uses these results for internal budgeting purposes and in making decisions on whether to acquire or dispose of hotel properties.

While these measures are based on GAAP, costs such as depreciation and amortization, income taxes, interest expense, corporate expenses, and other corporate items have been incurred by us and are not reflected in this presentation. As a result, the comparable hotel results do not represent our total revenues, expenses or operating profit and these comparable hotel results should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our consolidated statement of operations includes such amounts, all of which should be considered by investors when evaluating our performance.

Reporting Periods

Operating Results (as reported in our statement of operations). The results we report in our statement of operations are based on results reported to us by our hotel managers. These hotel managers use different reporting periods. Marriott International, Inc., the manager of the majority of our properties, uses a year ending on the Friday closest to December 31 and reports twelve weeks of operations for each of the first three quarters and sixteen or seventeen weeks for the fourth quarter of the year for our Marriott branded hotels. In contrast, other managers of our hotels, such as Hyatt, report results on a monthly basis. In addition, Host Marriott, as a REIT, is required by tax laws to report results on the calendar year. As a result, we elected to adopt the reporting periods used by Marriott International, but have modified them so that our fiscal year always ends on December 31 to comply with REIT rules. Our first three quarters of operations end on the same day as Marriott International, but our fourth quarter ends on December 31.

Two consequences of the reporting cycle we have adopted are: (1) quarterly start dates will usually differ between years, except for the first quarter which always commences on January 1, and (2) our first and fourth quarters of operations and year-to-date operations may not include the same number of days as reflected in prior years. For example, the third quarter of 2003 ended on September 12 and the third quarter of 2002 ended on September 6, though both quarters reflect twelve weeks of operations. In contrast, year-to-date results through the third quarter of 2003 reflect results through September 12, 2003 and include 255 days of operations, while our year-to-date results as of September 6, 2002 reflect 249 days of operations.

In addition, for results reported by hotel managers using a monthly reporting period (approximately one-fourth of our full-service hotels), the month of operation that ends after quarter-end is included in our results of operations in the following fiscal quarter. For example, if our first quarter ends March 15th, operations for the entire month of March for the hotel are reported in our second fiscal quarter. Accordingly, our results of operations include results from hotel managers reporting results on a monthly basis as follows: first quarter (January, February), second quarter (March - May), third quarter (June - August), and fourth quarter (September - December).

Hotel Operating Statistics. We use a measure common in the industry to evaluate the operations of a hotel-room revenue per available room, or RevPAR. RevPAR is defined as the product of the average daily room rate charged and the average daily occupancy achieved. RevPAR does not include food and beverage or other ancillary revenues such as parking, telephone, or other guest services generated by the property. In contrast to the reporting periods for our statement of operations, our hotel operating statistics (i.e., RevPAR, average daily rate and average occupancy) are always reported based on the reporting cycle used by Marriott International. This facilitates year-to- year comparisons of hotel results, as each reporting period will be comprised of the same number of days of operations as in the prior year (except in the case of fourth quarters comprised of seventeen versus sixteen weeks). This means, however, that the reporting periods we use for hotel operating statistics may differ slightly from the reporting periods used for our statement of operations for the first and fourth quarters where, as noted above, we are required by the REIT tax laws to report results on the calendar year. For the hotel operating statistics reported here:

    * hotel results for the quarters ended September 12, 2003 and September 6,
      2002 reflect results for the twelve week periods from June 21, 2003 to
      September 12, 2003 and June 15, 2002 to September 6, 2002, respectively,
      for our Marriott-managed hotels and results for June, July and August
      for operations of all other hotels which report results on a monthly
      basis.

    * hotel results for year-to-date September 12, 2003 and year-to-date
      September 6, 2002 reflect results for the thirty six week periods (or
      252 days) from January 4, 2003 to September 12, 2003 and December 29,
      2001 to September 6, 2002, respectively, for our Marriott-managed hotels
      and results for January through August for operations of all other
      hotels which report results on a monthly basis.
 
 

HOST MARRIOTT CORPORATION
Consolidated Balance Sheets (a)
(unaudited, in millions, except share amounts)

                                                 September 12,    December 31,
                                                     2003              2002

                     ASSETS
                                                    $6,954            $7,031
    Property and equipment, net                         54                53
    Notes and other receivables                         68                82
    Due from managers                                   84               133
    Investments in affiliates                          491               523
    Other assets                                       134               133
    Restricted cash                                    547               361
    Cash and cash equivalents                       $8,332            $8,316
 
 

         LIABILITIES AND SHAREHOLDERS' EQUITY

    Debt
      Senior notes                                  $3,162            $3,247
      Mortgage debt                                  2,317             2,289
      Other                                            102               102
                                                     5,581             5,638

    Accounts payable and accrued expenses              148               118
    Minority interest liability(b)                     112                --
    Other liabilities                                  184               252
        Total liabilities                            6,025             6,008

    Minority interests of Host Marriott, L.P.          111               131
    Interest of minority partners of
     other consolidated partnerships(b)                  2                92
    Company-obligated mandatorily
     redeemable convertible preferred
     securities of a subsidiary whose
     sole assets are convertible
     subordinated debentures due 2026
     ("Convertible Preferred Securities")              475               475

    Shareholders' equity
    Cumulative redeemable preferred stock
     (liquidation preference $354
     million), 50 million shares
     authorized; 14.1 million shares
     issued and outstanding                            339               339
    Common stock, par value $.01, 750
     million shares authorized; 295.7
     million shares and 263.7 million
     shares issued and outstanding,
     respectively                                        3                 3
    Additional paid-in capital                       2,363             2,100
    Accumulated other comprehensive income (loss)        7                (2)
    Deficit                                           (993)             (830)
        Total shareholders' equity                   1,719             1,610
                                                    $8,332            $8,316

    (a) Our consolidated balance sheet as of September 12, 2003 has been
        prepared without audit. Certain information and footnote disclosures
        normally included in financial statements presented in accordance with
        GAAP have been omitted. The consolidated balance sheets should be read
        in conjunction with the consolidated financial statements and notes
        thereto included in the annual report on Form 10-K for the year ended
        December 31, 2002.

    (b) See footnote (d) to the Statements of Operations for detail.
 

                          HOST MARRIOTT CORPORATION
                  Consolidated Statements of Operations (a)
              (unaudited, in millions, except per share amounts)

                                            Quarter ended      Year-to-date
                                         Sept. 12, Sept. 6, Sept. 12, Sept. 6,
    Revenues                                 2003     2002     2003     2002
      Rooms                                  $463     $473   $1,436   $1,467
      Food and beverage                       218      220      746      744
      Other                                    49       64      157      182
        Total hotel sales                     730      757    2,339    2,393
      Rental income(b)                         20       20       71       70
      Other income                             10       --       12       --
        Total revenues                        760      777    2,422    2,463

    Operating Costs and Expenses
      Rooms                                   124      123      360      359
      Food and beverage                       180      179      565      553
      Hotel departmental expenses             224      221      664      635
      Management fees                          28       29       98      109
      Other property-level expenses(b)         71       69      220      201
      Depreciation and amortization            86       85      258      251
      Corporate and other expenses             15       11       42       40
        Total operating costs and expenses    728      717    2,207    2,148

    Operating profit                           32       60      215      315
      Minority interest income (expense)        9        3       11       (8)
      Interest income                           2        7        7       14
      Interest expense                       (109)    (107)    (327)    (318)
      Net gains on property transactions        1        1        4        3
      Equity in losses of affiliates           (4)      (3)     (13)      (6)
      Dividends on Convertible Preferred
       Securities                              (7)      (7)     (22)     (22)

    Loss before income taxes                  (76)     (46)    (125)     (22)
    Benefit (provision) for income taxes       11        7       10       (8)

    Loss from continuing operations           (65)     (39)    (115)     (30)
    Income from discontinued
     operations(c)                              1        1        3       17

    Loss before cumulative effect of a
     change in accounting principle           (64)     (38)    (112)     (13)

    Cumulative effect of adoption of
     SFAS 150(d)                              (24)      --      (24)      --

    Net loss                                  (88)     (38)    (136)     (13)

    Less:  dividends on preferred stock        (9)      (9)     (27)     (27)

    Net loss available to common
     shareholders                            $(97)    $(47)   $(163)    $(40)

    Basic and diluted loss per common
     share                                 $(0.35)  $(0.18)  $(0.61)  $(0.15)

    (a) Our consolidated statements of operations have been prepared without
        audit.  Certain information and footnote disclosures normally included
        in financial statements presented in accordance with GAAP have been
        omitted.  The unaudited consolidated statements of operations should
        be read in conjunction with the consolidated financial statements and
        notes thereto included in our annual report on Form 10-K for the year
        ended December 31, 2002.

    (b) Rental income and expense are as follows:
 

                                             Quarter ended      Year-to-date
                                              Sept.    Sept.    Sept.    Sept.
                                               12,      6,       12,      6,
                                              2003     2002     2003     2002

    Rental Income                              $3       $2      $20      $19
      Full-service                             17       18       51       51
      Limited service and office buildings    $20      $20      $71      $70

    Rental and other expenses (included
     in "Other property-level expenses")       $2       $2       $5       $5
      Full-service                             17       17       50       50
      Limited service and office buildings    $19      $19      $55      $55

    (c) Reflects the results of operations and gain (loss) on sale, net of
        related income tax, for four properties disposed of during 2003 and
        one in 2002.

    (d) The FASB recently issued SFAS No. 150.  This statement requires
        issuers to classify as liabilities (or assets in some circumstances)
        three classes of freestanding financial instruments that embody
        obligations for the issuer.  Previously, many such instruments had
        been classified as equity.  A freestanding financial instrument is an
        instrument that is entered into separately and apart from any of the
        entity's other financial instruments or equity transactions, or that
        is entered into in conjunction with some other transaction and is
        legally detachable and separately exercisable, such as certain put and
        call options.  These provisions are effective for financial
        instruments entered into or modified after May 31, 2003, and otherwise
        is effective at the beginning of the first interim period beginning
        after June 15, 2003.  As a result of further discussion by the FASB on
        October 8, 2003, it was determined that any minority partners'
        interest in consolidated partnerships with finite lives specified in
        the related partnership agreements should be reclassified as a
        liability and presented at the fair value as of the date of the
        balance sheet unless the interests are convertible into equity of the
        parent.  The effect of this change is shown on our statements of
        operations as a cumulative effect of a change in accounting principle.
        The minority interest liability will be fair valued and the gains and
        losses from changes in fair value of the liability are recorded in
        interest expense in the current period (i.e., a change in the fair
        value of our minority partners' equity in the partnership).

        We did not enter into any financial instruments within the
        scope of SFAS No. 150 during June 2003. However, as a result of
        adopting SFAS No. 150 on July 1, 2003 for existing financial
        instruments entered into on or before May 31, 2003, a cumulative
        effect of change in accounting principle of $24 million was recorded
        in the quarter.  As of September 12, 2003, total liabilities include
        $112 million of minority interest liabilities at their fair value.
 
 

                          HOST MARRIOTT CORPORATION
                          Loss per Common Share (a)
              (unaudited, in millions, except per share amounts)

                                       Quarter ended         Quarter ended
                                     September 12, 2003    September 6, 2002

                                                    Per                  Per
                                    Income         Share  Income        Share
                                    (Loss) Shares  Amount (Loss) Shares Amount

    Net loss                         $(88)  275.6 $(0.32) $(38)  263.3 $(0.15)
      Dividends on preferred stock     (9)     --  (0.03)   (9)     --  (0.03)
    Basic and diluted loss
     available to common
     shareholders and basic and
     diluted loss per common share   $(97)  275.6 $(0.35) $(47)  263.3 $(0.18)
 

                                     Year-to-date ended   Year-to-date ended
                                     September 12, 2003    September 6, 2002

                                                    Per                  Per
                                    Income         Share  Income        Share
                                    (Loss) Shares  Amount (Loss) Shares Amount

    Net loss                        $(136)  268.1 $(0.51) $(13)  262.7 $(0.05)
      Dividends on preferred stock    (27)     --  (0.10)  (27)     --  (0.10)
    Basic and diluted loss
     available to common
     shareholders and basic and
     diluted loss per common share  $(163)  268.1 $(0.61) $(40)  262.7 $(0.15)

    (a) Basic loss per common share is computed by dividing net loss available
        to common shareholders by the weighted average number of shares of
        common stock outstanding.  Diluted loss per common share is computed
        by dividing net loss available to common shareholders as adjusted for
        dilutive securities, by the weighted average number of shares of
        common stock outstanding plus other dilutive shares.  Dilutive
        securities may include shares granted under comprehensive stock plans,
        those preferred OP Units held by minority partners, other minority
        interests that have the option to convert their limited partnership
        interests to common OP Units and the Convertible Preferred Securities.
        No effect is shown for securities if they are anti-dilutive.
 
 

HOST MARRIOTT CORPORATION
                            Hotel Operational Data
                       Comparable Hotels by Region (a)
                                 (unaudited)

                 As of September 12, 2003   Quarter ended September 12, 2003
                                                         Average
                     No. of      No. of    Average      Occupancy
                    Properties   Rooms    Daily Rate   Percentages    RevPAR
    Atlanta             15       6,563     $125.74        67.7%       $85.14
    DC Metro            12       4,593      141.73        73.7        104.41
    Florida             12       7,303      123.35        65.7         81.04
    International        6       2,552      114.22        67.5         77.11
    Mid-Atlantic         9       6,222      163.66        75.4        123.43
    Mountain             8       3,313       90.18        64.1         57.79
    New England          6       2,277      120.28        66.4         79.89
    North Central       15       5,395      122.02        73.6         89.83
    Pacific             22      11,526      137.01        73.8        101.18
    South Central       11       6,317      111.52        73.8         82.27
      All Regions      116      56,061      129.03        71.0         91.62
 

                               Quarter ended September 6, 2002
                                             Average                  Percent
                               Average      Occupancy                Change in
                              Daily Rate   Percentages  RevPAR        RevPAR
    Atlanta                    $128.93        66.0%     $85.15           0.0%
    DC Metro                    137.54        73.3      100.80           3.6
    Florida                     119.94        64.8       77.70           4.3
    International               111.15        76.5       85.02          (9.3)
    Mid-Atlantic                175.98        75.4      132.66          (7.0)
    Mountain                     89.45        64.7       57.87          (0.1)
    New England                 132.24        76.3      100.92         (20.8)
    North Central               120.53        73.8       88.91           1.0
    Pacific                     141.79        74.1      105.09          (3.7)
    South Central               110.67        74.8       82.77          (0.6)
      All Regions               130.99        71.7       93.92          (2.5)
 

               As of September 12, 2003     Year-to-date September 12, 2003
                                                         Average
                     No. of      No. of    Average      Occupancy
                    Properties   Rooms    Daily Rate   Percentages    RevPAR
    Atlanta             15       6,563     $132.62        66.6%       $88.29
    DC Metro            12       4,593      142.31        71.8        102.21
    Florida             12       7,303       157.2        71.5        112.39
    International        6       2,552      110.19        65.3         71.96
    Mid-Atlantic         9       6,222      170.33        73.6        125.32
    Mountain             8       3,313      102.98        64.5         66.43
    New England          6       2,277      120.79        61.9         74.77
    North Central       15       5,395      119.82        67.2         80.55
    Pacific             22      11,526      147.21        69.0        101.57
    South Central       11       6,317      125.28        76.2         95.41
      All Regions      116      56,061      139.02        69.7         96.90
 

                             Year-to-date September 6, 2002
                                             Average                  Percent
                               Average      Occupancy                Change in
                              Daily Rate   Percentages  RevPAR         RevPAR
    Atlanta                    $139.90        68.0%     $95.14          (7.2)%
    DC Metro                    141.33        71.0      100.39           1.8
    Florida                     154.74        72.5      112.19           0.2
    International               110.20        71.8       79.10          (9.0)
    Mid-Atlantic                181.52        76.9      139.51         (10.2)
    Mountain                    108.65        67.5       73.34          (9.4)
    New England                 129.19        68.4       88.31         (15.3)
    North Central               118.88        68.5       81.41          (1.1)
    Pacific                     152.21        71.5      108.87          (6.7)
    South Central               129.43        78.3      101.33          (5.8)
      All Regions               142.71        71.9      102.63          (5.6)
 
 

                          HOST MARRIOTT CORPORATION
                            Hotel Operational Data
                      Comparable Ritz-Carlton Hotels (b)
                                 (unaudited)

              As of September 12, 2003      Quarter ended September 12, 2003
                                                       Average
                   No. of      No. of     Average     Occupancy
                  Properties   Rooms     Daily Rate  Percentages       RevPAR
    Ritz-Carlton      9        3,536     $  201.96     66.6%       $   134.52
 

                        Quarter ended September 6, 2002

                                    Average                       Percent
                     Average       Occupancy                     Change in
                   Daily Rate     Percentages         RevPAR       RevPAR
    Ritz-Carlton    $  201.94         63.0%        $  127.20         5.8%
 
 

              As of September 12, 2003   Year-to-date September 12, 2003
                                                       Average
                   No. of      No. of     Average     Occupancy
                  Properties   Rooms     Daily Rate  Percentages       RevPAR
    Ritz-Carlton      9        3,536     $  229.38     65.9%       $   151.24
 

                       Year -to-date September 6, 2002

                                    Average                       Percent
                     Average       Occupancy                     Change in
                   Daily Rate     Percentages         RevPAR      RevPAR
    Ritz-Carlton    $  231.93         66.2%        $  153.63        (1.6)%

    (a) See discussion of Comparable Hotel Results.

    (b) Includes nine Ritz-Carlton properties owned by us for all periods
        presented, excluding The Ritz-Carlton, Naples Golf Resort, which was
        placed in service in January 2002.
 
 

                          HOST MARRIOTT CORPORATION
                            Hotel Operational Data
                    All Full Service Hotels by Region (a)
                                 (unaudited)

                 As of September 12, 2003   Quarter ended September 12, 2003
                                                         Average
                    No. of      No. of     Average      Occupancy
                 Properties(b)  Rooms(b)  Daily Rate   Percentages  RevPAR
    Atlanta           15        6,563      $125.74        67.7%     $85.14
    DC Metro          13        5,365       144.07        75.0      108.11
    Florida           13        7,598       122.98        64.8       79.72
    International      6        2,552       114.22        67.5       77.11
    Mid-Atlantic      10        6,726       164.24        75.0      123.19
    Mountain           8        3,313        90.18        64.1       57.79
    New England        7        3,416       135.95        72.3       98.27
    North Central     15        5,395       122.02        73.6       89.83
    Pacific           22       11,526       137.01        73.8      101.18
    South Central     11        6,317       111.16        73.8       82.08
       All Regions   120       58,771       130.54        72.3       92.97
 

                                     Quarter ended September 6, 2002

                                           Average                   Percent
                            Average       Occupancy                 Change in
                           Daily Rate    Percentages   RevPAR(a)     RevPAR
    Atlanta                 $128.93         66.0%       $85.15         0.0%
    DC Metro                 135.58         74.4        100.92         7.1
    Florida                  118.77         63.5         75.36         5.8
    International            111.15         76.5         85.02        (9.3)
    Mid-Atlantic             176.37         75.6        133.28        (7.6)
    Mountain                  89.45         64.7         57.87        (0.1)
    New England              145.11         75.3        109.22       (10.0)
    North Central            120.53         73.8         88.91         1.0
    Pacific                  140.58         74.0        104.08        (2.8)
    South Central            109.99         74.8         82.26        (0.2)
       All Regions           131.58         71.6         94.27        (1.4)
 

                                                      Year-to-date
                   As of September 12, 2003         September 12, 2003
                                                         Average
                   No. of      No. of       Average     Occupancy
                Properties(b)  Rooms(b)   Daily Rate   Percentages  RevPAR
    Atlanta          15        6,563       $132.62        66.6%     $88.29
    DC Metro         13        5,365        141.49        72.5      102.58
    Florida          13        7,598        158.70        70.9      112.59
    International     6        2,552        110.19        65.3       71.96
    Mid-Atlantic     10        6,726        171.69        73.4      125.96
    Mountain          8        3,313        102.98        64.5       66.43
    New England       7        3,416        139.13        67.7       94.19
    North Central    15        5,395        119.82        67.2       80.55
    Pacific          22       11,526        147.06        69.0      101.50
    South Central    11        6,317        124.52        76.1       94.78
       All Regions  120       58,771        140.23        69.9       98.07
 

                                Year-to-date September 6, 2002
                                           Average                   Percent
                            Average       Occupancy                 Change in
                           Daily Rate    Percentages    RevPAR(a)    RevPAR
    Atlanta                 $139.90         68.0%       $95.14        (7.2)%
    DC Metro                 138.74         71.7         99.44         3.2
    Florida                  155.61         71.6        111.43         1.0
    International            110.20         71.8         79.10        (9.0)
    Mid-Atlantic             181.10         76.6        138.70        (9.2)
    Mountain                 108.62         67.5         73.32        (9.4)
    New England              136.05         69.1         93.96         0.2
    North Central            118.88         68.5         81.41        (1.1)
    Pacific                  150.89         71.6        108.03        (6.0)
    South Central            128.21         77.7         99.68        (4.9)
       All Regions           142.76         71.8        102.57        (4.4)

    (a) See discussion of Reporting Periods on page 7.

    (b) The number of properties and the room count reflect all consolidated
        properties as of September 12, 2003. However, the operating statistics
        include the results of operations for four hotels sold in 2003 and one
        sold in 2002 prior to their disposition.
 
 

                          HOST MARRIOTT CORPORATION
                   Schedule of Comparable Hotel Results (a)
                           (unaudited, in millions)

                                           Quarter ended      Year-to-date
                                       September September September September
                                            12,       6,       12,      6,
                                            2003     2002     2003     2002

    Number of hotels                         116      116      116      116
    Number of rooms                       56,061   56,061   56,061   56,061
    Percent change in Comparable RevPAR   (2.5)%            (5.6)%
    Operating profit margin under GAAP(b)   4.2%     7.7%     8.9%    12.8%
    Comparable hotel operating profit
     margin(c)                             16.6%    19.1%    21.5%    24.9%

    Comparable hotel sales
      Room                                  $439     $450   $1,360   $1,440
      Food and beverage                      211      213      713      736
      Other                                   49       53      157      174
        Comparable hotel sales(d)            699      716    2,230    2,350

    Comparable hotel expenses
      Room                                   119      117      341      350
      Food and beverage                      172      170      535      540
      Other                                   32       32       95       99
      Management fees, ground rent
       and other costs                       260      260      780      777
        Comparable hotel expenses(e)         583      579    1,751    1,766

    Comparable Hotel Operating Profit        116      137      479      584

      Non-comparable hotel results, net(f)     7        7       23       10
      Office building and limited service
       properties, net                        --        1        1        1
      Business interruption insurance
       proceeds                               --       11       --       11
      Other income                            10       --       12       --
      Depreciation and amortization          (86)     (85)    (258)    (251)
      Corporate and other expenses           (15)     (11)     (42)     (40)

    Operating Profit                         $32      $60     $215     $315

    (a) See discussion of Comparable Hotel Results and Reporting Periods
        beginning on page 6.

    (b) Operating profit margin under GAAP is calculated as the operating
        profit divided by the total revenues per the Consolidated Statements
        of Operations.

    (c) Comparable hotel operating profit margin is calculated as the
        comparable hotel operating profit divided by the comparable hotel
        sales per the schedule above.

    (d) The reconciliation of total revenues per the consolidated statements
        of operations to the comparable hotel sales is as follows (in
        millions):

                                         Quarter ended        Year-to-date
                                      Sept. 12,  Sept. 6,  Sept. 12,  Sept. 6,

                                            2003    2002      2003      2002

    Revenues per the consolidated
     statements of operations               $760    $777    $2,422    $2,463
    Non-comparable hotel sales               (43)    (41)     (143)     (100)
    Hotel sales for the property for
     which we receive rental income, net       9       9        31        30
    Rental income for office buildings
     and limited service hotels              (17)    (18)      (51)      (51)
    Other income                             (10)     --       (12)       --
    Business interruption insurance
     proceeds                                 --     (11)       --       (11)
    Adjustment for hotel sales for
     comparable hotels to reflect thirty-
     six weeks of operations for
     Marriott-managed hotels                  --      --       (17)       19
      Comparable hotel sales                $699    $716    $2,230    $2,350
 

    (e) The reconciliation of operating costs per the consolidated statements
        of operations to the comparable hotel expenses is as follows (in
        millions):

                                         Quarter ended        Year-to-date
                                      Sept. 12,  Sept. 6,  Sept. 12,  Sept. 6,
                                            2003    2002      2003      2002

    Operating costs and expenses per the
     consolidated statements of
     operations                             $728    $717    $2,207    $2,148
    Non-comparable hotel expenses            (37)    (35)     (127)      (91)
    Hotel expenses for the property for
     which we receive rental income           10      10        36        35
    Rent expense for office buildings and
     limited service hotels                  (17)    (17)      (50)      (50)
    Adjustment for hotel expenses for
     comparable hotels to reflect thirty-
     six weeks of operations for
     Marriott-managed hotels                  --      --       (15)       15
    Depreciation and amortization            (86)    (85)     (258)     (251)
    Corporate and other expenses             (15)    (11)      (42)      (40)
      Comparable hotel sales                $583    $579    $1,751    $1,766

    (f) Non-comparable hotel results, net includes the following items: (i)
        the results of operations of our non-comparable hotels and (ii) the
        difference between the comparable hotel operating profit which
        reflects 252 days of operations year-to-date and the operating results
        included in the consolidated statements of operations which reflects
        255 and 249 days for year-to-date 2003 and 2002, respectively.  For
        further detail see Comparable Hotel Results and Reporting Periods
        beginning on page 6.
 
 

                          HOST MARRIOTT CORPORATION
                             Other Financial Data
          (unaudited, in millions, except per share and ratio data)

                                                 September 12,    December 31,
                                                     2003              2002

    Equity
    Common shares outstanding                        295.7             263.7
    Common shares and minority-held
     common OP Units outstanding                     320.0             291.5
    Preferred OP Units outstanding                    0.02              0.02
    Class A Preferred stock outstanding                4.1               4.1
    Class B Preferred stock outstanding                4.0               4.0
    Class C Preferred stock outstanding                6.0               6.0
    Class D Preferred stock outstanding (a)           0.03                --

    Security pricing:
      Share price-common (a)                    $     9.99        $     8.85
      Share price-Class A Preferred (a)         $    25.25        $    26.15
      Share price-Class B Preferred (a)         $    25.10        $    25.65
      Share price-Class C Preferred (a)         $    25.25        $    25.70
      Share price-Convertible Preferred
       Securities (a)                           $    44.19        $    36.94

    Dividends per share (year-to-date
     2003 and full year 2002)
      Common (b)                                $       --        $       --
      Class A Preferred (c)                     $     1.88        $     2.50
      Class B Preferred (c)                     $     1.88        $     2.50
      Class C Preferred (c)                     $     1.88        $     2.50
      Class D Preferred (c)                     $     1.25        $       --

    Debt
      Percentage of fixed rate debt                     84%               90%
      Weighted average interest rate                   7.8%              7.9%
      Weighted average debt maturity             4.8 years         5.5 years
      Credit facility, outstanding balance      $       --        $       --

    Other Financial Data
      Construction in progress                  $       54        $       39

    (a) Share prices are the closing price on the balance sheet date, as
        reported by the NYSE for the common and preferred stock. The shares of
        Convertible Preferred Securities are not traded on an exchange. Our
        Convertible Preferred Securities per share price is deemed to be the
        higher of the buy or sell price as provided by the trading desk for
        Goldman Sachs in New York, New York on the relevant date.
    (b) We did not declare a common stock dividend in the first three quarters
        of 2003 or in full year 2002.
    (c) Dividends reflect a quarterly cash dividend of $.625 per share for the
        Class A, Class B, Class C and Class D preferred stock.
 
 

                          HOST MARRIOTT CORPORATION
         Reconciliation of Net Loss Available to Common Shareholders
                  to Funds From Operations per Diluted Share
              (unaudited, in millions, except per share amounts)
 

                                        Quarter ended        Quarter ended
                                     September 12, 2003    September 6, 2002

                                                  Per                   Per
                                  Income         Share  Income         Share
                                  (Loss) Shares  Amount (Loss) Shares  Amount
    Net loss available to
     common shareholders           $(97)  275.6   $(.35) $(47)  263.3  $(.18)
    Adjustments:
      Cumulative effect of change
       in accounting principle       24      --     .09    --      --     --
      Depreciation and
       amortization                  86      --     .31    87      --    .33
      Partnership adjustments        (3)     --    (.01)    2      --    .01
      FFO of minority partners
       of Host LP (a)                (1)     --      --    (4)     --   (.02)
    Adjustments for dilutive
     securities:
      Assuming distribution of
       common shares granted under
       the comprehensive stock plan
       less shares assumed purchased
       at average market price       --     2.9      --    --     3.0     --
      Assuming conversion of
       Convertible Preferred
       Securities                    --      --      --    --      --     --
    FFO per diluted share (b) (c)    $9   278.5    $.03   $38   266.3   $.14
 
 

                                     Year-to-date           Year-to-date
                                  September 12, 2003      September 6, 2002
                                                 Per                    Per
                                 Income         Share   Income         Share
                                 (loss) Shares  Amount  (loss) Shares  Amount
    Net loss available to
     common shareholders          $(163)  268.1   $(.61) $(40)  262.7  $(.15)
    Adjustments:
      Cumulative effect of change
       in accounting principle       24      --     .09    --      --     --
      Gain from discontinued
       operations                    --      --      --   (13)     --   (.05)
      Depreciation and
       amortization                 257      --     .96   254      --    .97
      Partnership adjustments         3      --     .01    18      --    .07
      FFO of minority partners
       of Host LP (a)               (12)     --    (.05)  (19)     --   (.08)
    Adjustments for dilutive
     securities:
      Assuming distribution of
       common shares granted under
       the comprehensive stock
       plan less shares assumed
       purchased at average
       market price                  --     2.5      --    --     3.2     --
      Assuming conversion of
       Convertible Preferred
       Securities                    --      --      --    22    30.9   (.01)
    FFO per diluted share (b) (c)  $109   270.6    $.40  $222   296.8   $.75

    (a) Represents FFO attributable to the minority interest in Host LP.

    (b) FFO per diluted share in accordance with NAREIT is adjusted for the
        effects of dilutive securities. Dilutive securities may include shares
        granted under comprehensive stock plans, those preferred OP Units held
        by minority partners, other minority interests that have the option to
        convert their limited partnership interest to common OP Units and the
        Convertible Preferred Securities.  No effect is shown for securities
        if they are anti-dilutive.

    (c) In the third quarter of 2003, the FFO per diluted share includes the
        following items:

        * the recognition of approximately $9.6 million of other income from
          the settlement of a claim that we brought against our directors' and
          officers' insurance carriers for reimbursement of defense costs and
          settlement payments incurred in resolving a series of related
          actions brought against us and Marriott International that arose
          from the sale of certain limited partnership units to investors
          prior to 1993.  The settlement amount, net of taxes of approximately
          $2.4 million, resulted in FFO per diluted share of approximately
          $.02 for the quarter.

        * in conjunction with the redemption of $71 million of our Series A
          senior notes, we incurred approximately $2.3 million of expense
          related to the 2.627% premium paid and the acceleration of related
          deferred financing fees.  This change decreased FFO per diluted
          share by approximately $.01 for the quarter.
 
 

                          HOST MARRIOTT CORPORATION
           Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
                           (unaudited, in millions)

                                       Quarter ended          Year-to-date
                                   September  September  September   September
                                      12,         6,         12,         6,
                                     2003       2002        2003       2002

    Net loss                         $(88)      $(38)      $(136)      $(13)
      Interest expense                108        107         326        318
      Dividends on Convertible
      Preferred Securities              7          7          22         22
      Depreciation and amortization    86         85         258        251
      Income taxes                    (11)        (7)        (10)         8
      Discontinued operations (a)       1          1           4          3
    EBITDA (b)                        104        155         465        589
      Gains and losses on
       dispositions and related
       debt extinguishments            --         (1)         (2)       (16)
      Consolidated partnership
       adjustments:
      Minority interest
       (income) expense                (9)        (3)        (11)         8
      Distributions to minority
       interest partners of Host LP
       and other minority partners     (1)        (2)         (5)        (9)
      Equity investment adjustments:
      Equity in losses of affiliates    4          3          13          6
      Distributions received from
       equity investments              --          1           3          3
      Cumulative effect of change
       in accounting principle         24         --          24         --
    Adjusted EBITDA (b)              $122       $153        $487       $581

    (a) Reflects the interest expense, depreciation and amortization and
        income taxes included in discontinued operations.

    (b) See discussion of EBITDA and Adjusted EBITDA.
 

                          HOST MARRIOTT CORPORATION
  Reconciliation of Net Loss Available to Common Shareholders to Funds From
        Operations per Diluted Share for Full Year 2003 Forecasts (a)
              (unaudited, in millions, except per share amounts)

                                                      Low-end of Range
                                                  Full Year 2003 Forecast

                                               Income                Per Share
                                               (Loss)     Shares       Amount
    Forecast net loss available to
     common shareholders                       $(209)      276.5       $(.75)
    Adjustments:
      Cumulative effect of change in
       accounting principle                       24         --          .09
      Depreciation and amortization              374         --         1.34
      Partnership adjustments                     (2)        --           --
      FFO of minority partners of Host LP (b)    (15)        --         (.05)
    Adjustment for dilutive securities: (c)
      Assuming distribution of common
       shares granted under the
       comprehensive stock plan less shares
       assumed purchased at average market
       price                                      --         2.9         (.01)
    FFO per diluted share (d)                   $172       279.4        $0.62
 

                                                     High-end of Range
                                                  Full Year 2003 Forecast

                                               Income               Per Share
                                               (Loss)     Shares      Amount
    Forecast net loss available to
     common shareholders                       $(195)      276.5       $(.71)
    Adjustments:
      Cumulative effect of change in
       accounting principle                       24          --         .09
      Depreciation and amortization              374          --        1.34
      Partnership adjustments                     (2)         --          --
      FFO of minority partners of Host LP (b)    (16)         --        (.05)
    Adjustment for dilutive securities: (c)
      Assuming distribution of common
       shares granted under the
       comprehensive stock plan less shares
       assumed purchased at average market
       price                                      --         2.9         (.01)
    FFO per diluted share (d)                   $185       279.4         $.66
 
 

                          HOST MARRIOTT CORPORATION
     Notes to Reconciliation of Net Loss Available to Common Shareholders
                  to Funds From Operations per Diluted Share

    (a) The amounts shown in these reconciliations are based on management's
        estimate of operations for full year 2003. These tables are forward-
        looking and as such contain assumptions by management based on known
        and unknown risks, uncertainties and other factors which may cause the
        actual transactions, results, performance or achievements to be
        materially different from any future transactions, results,
        performance or achievements expressed or implied by this table.
        General economic conditions, competition and governmental actions will
        affect future transactions, results, performance and achievements.
        Although we believe the expectations reflected in this reconciliation
        are based upon reasonable assumptions, we can give no assurance that
        the expectations will be attained or that any deviations will not be
        material.

        For purposes of preparing the full-year 2003 forecasts, we have made
        the following assumptions:

        * RevPAR will be flat to down 2.5% for the fourth quarter and decrease
          between 4% and 5% for the full-year 2003 for the high and low ends
          of the forecasted ranges, respectively.

        * Comparable hotel operating profit margins will decrease between
          2.5 percentage points and 3.0 percentage points for the full-year
          2003 for the high and low end of the forecasted ranges,
          respectively.

        * $150 million of hotels will be sold during 2003 and the proceeds
          will be utilized to retire debt, including proceeds from the $97
          million in dispositions completed to date.

        * $210 million in renewal and replacement capital expenditures will be
          incurred during 2003.

        * Fully diluted shares will be 279.4 million full-year 2003.

    (b) Represents FFO attributable to the minority interests in Host LP
        during 2003.

    (c) These shares are dilutive for purposes of the FFO per diluted share
        calculation, yet are anti-dilutive for the purposes of the earnings
        per share calculation. This is due to the net loss that is forecasted
        for 2003 compared to net earnings for FFO for the year.

    (d) FFO per diluted share in accordance with NAREIT is adjusted for the
        effects of dilutive securities. Dilutive securities may include shares
        granted under comprehensive stock plans, those preferred OP Units held
        by minority partners, other minority interests that have the option to
        convert their limited partnership interest to common OP Units and the
        Convertible Preferred Securities.  No effect is shown for securities
        if they are anti-dilutive.
 
 

                          HOST MARRIOTT CORPORATION
                   Reconciliation of Net Loss to EBITDA and
                 Adjusted EBITDA for Full Year 2003 Forecasts
                           (unaudited, in millions)

                                                        Full Year 2003
                                                  Low-end           High-end
                                                  of Range          of Range

    Net Loss                                       $(174)            $(160)
      Interest expense                               463               463
      Dividends on Convertible
       Preferred Securities                           32                32
      Depreciation and amortization                  374               374
      Income taxes                                   (10)              (10)
      Discontinued operations (a)                      4                 4
    EBITDA                                           689               703
      Gains and losses on dispositions and
       related debt extinguishments                   (4)               (4)
      Consolidated partnership adjustments:
        Minority interest (income) expense           (12)              (11)
        Distributions to minority interest
         partners of Host LP and other
         minority partners                            (6)               (6)
      Equity investment adjustments:
        Equity in (earnings) losses of
         affiliates                                   20                20
        Distributions received from
         equity investments                            4                 4
        Cumulative effect of change in
         accounting principle                         24                24
    Adjusted EBITDA                                $ 715              $730

    (a) Reflects the interest expense, depreciation and amortization and
        income taxes included in discontinued operations.

This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: national and local economic and business conditions that will affect occupancy rates at our hotels and the demand for hotel products and services; threats of terrorism that affect travel patterns and demand for hotels; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; relationships with property managers; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes. For further information regarding risks and uncertainties associated with our business, please refer to the Company's filings with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of October 14, 2003 and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

Host Marriott is a Fortune 500 lodging real estate company which currently owns or holds controlling interests in 120 upscale and luxury hotel properties primarily operated under premium brands, such as Marriott, Ritz-Carlton, Hyatt, Four Seasons and Hilton. 

 

 
Contact:
Host Marriott Corporation
www.hostmarriott.com
Also See: Host Marriott to Acquire the Hyatt Regency Maui Resort and Spa For $321 Million, $398,000 per room / October 2003
Host Marriott Reports Loss of $43 million Compared with Loss of $8 million in Year-ago 1st Quarter; Forecasts a Loss for the Full Year / Hotel Operational Data / April 2003
Host Marriott Reports a 3rd Quarter Loss of $47 million Compared with a Loss of $16 million in Prior Year; Expects RevPAR for full year 2002 to Decline between 4% and 5% / Oct 2002

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