Host Marriott Corp. (HMT), the largest U.S. hotel owner, on Wednesday reported a second-quarter profit, reversing a year-earlier loss as the industry showed more signs of business travelers returning to the road.

Bethesda, Md.-based Host Marriott posted a net profit of $17 million, or 2 cents per share, compared with a loss of $14 million, or 9 cents per share, a year earlier.

Host, whose hotel properties include Marriotts (search), Ritz-Carltons (search) and Hyatts (search), said funds from operations, a measure of cash flow closely watched in the industry, fell to 21 cents per share from 22 cents per share.

Excluding a one-time 9 cent charge, funds from operations were 30 cents a share, beating Wall Street estimates of 28 cents a share, according to Reuters Estimates.

"Given Host's larger properties relative to its competitors, the numbers are a clear signal that business travel is recovering, accompanied by continued strength in leisure travel," Marc Falcone, analyst at Deutsche Bank, said.

The company, which owns high-end and mid-scale hotels managed by sister corporation Marriott International Inc. (MAR) and other operators, said revenue per available room, which reflects both hotel occupancy and room rates, rose 8.8 percent.

Total revenue rose to $927 million from $828 million a year earlier.

Host, the largest real estate investment trust focused on hotels, suffered during the three-year industry downturn, but is now raising its forecasts as an expected industry recovery has begun to accelerate.

"Our leading indicators continue to suggest we are in the early stages of a strong recovery and that we should continue to see positive results throughout the remainder of the year and into 2005," Christopher Nassetta, chief executive officer, said in a statement.

Host said it expects third-quarter revenue per room to rise about 6 percent to 8 percent and raised its full-year growth forecast to range between 5.5 percent to 7 percent. Host had previously forecast revenue per room for the full year to increase by 4 percent to 6 percent.

Falcone, who has a "buy" rating on Host Marriott shares, said he expects the increased forecast to favor the stock. "Not only did they raise their guidance, they also reinstated the dividend. The stock will react favorably - it was not reflecting the potential for a reinstated dividend," he said.

Host expects a loss of 11 cents to 13 cents for the third quarter and a loss of 17 cents to 24 cents for the full year. It expects funds from operations to range between 9 cents and 11 cents a share in the third quarter and 70 cents to 76 cents a share for the year.

Analysts expect funds from operations of 8 cents for the third quarter and 86 cents for the year.