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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 28, 2003.

OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-14625

HOST MARRIOTT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

6903 Rockledge Drive, Suite 1500, Bethesda, Maryland               20817

                (Address of Principal Executive Offices)                       (Zip Code)

(240) 744-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No

The registrant had 264,630,723 shares of its $0.01 par value common stock outstanding as of May 1, 2003.

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INDEX

PART I.    FINANCIAL INFORMATION

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HOST MARRIOTT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

March 28, 2003 and December 31, 2002

(in millions, except per share amounts)

See Notes to Condensed Consolidated Financial Statements.

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HOST MARRIOTT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter Ended March 28, 2003 and March 22, 2002

(unaudited, in millions, except per share amounts)

See Notes to Condensed Consolidated Financial Statements.

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HOST MARRIOTT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended March 28, 2003 and March 22, 2002

(unaudited, in millions)

See Notes to Condensed Consolidated Financial Statements.

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HOST MARRIOTT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended March 28, 2003 and March 22, 2002

(unaudited, in millions)

Supplemental schedule of noncash investing and financing activities:

During the first quarter of 2002, 1.1 million shares of common stock were issued to acquire minority interests in the partnership that owns the San Diego Marriott Hotel and Marina. This transaction resulted in an increase of $10.5 million to property and equipment and equity to reflect the fair value of the interests acquired.

During January 2002, we transferred the St. Louis Marriott Pavilion to the mortgage lender. We recorded the difference between the debt extinguished, the deferred incentive management fees forgiven and the fair value of the assets surrendered of $22 million, net of tax expense of $9 million, as income from discontinued operations in the accompanying consolidated statements of operations.

See Notes to Condensed Consolidated Financial Statements.

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HOST MARRIOTT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Host Marriott Corporation, a Maryland corporation operating through an umbrella partnership structure, is primarily the owner of hotel properties. We operate as a self-managed and self-administered real estate investment trust, or REIT, with our operations conducted solely through an operating partnership, Host Marriott, L.P., or the operating partnership, or Host LP, and its subsidiaries. We are the sole general partner of the operating partnership and as of March 28, 2003, own approximately 90% of the partnership interests in the operating partnership, which are referred to as OP Units.

We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America, or GAAP, in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made are adequate to prevent the information presented from being misleading. However, the unaudited condensed consolidated financial statements 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.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of March 28, 2003 and the results of our operations and cash flows for the quarter ended March 28, 2003 and March 22, 2002. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

Our operating results are based on a calendar year ended December 31 as required by tax laws relating to REITs. However, our quarterly results are reported on a quarterly schedule that is used by Marriott International, Inc., the manager of the majority of our properties, whose year ends on the Friday closest to December 31 and which reflect twelve weeks of operations for the first three quarters of the year and sixteen or seventeen weeks for the fourth quarter of the year. Therefore, in any given quarter, quarter-over-quarter results will have different ending dates. For example, the first quarter of 2003 ended on March 28 and the first quarter of 2002 ended on March 22. As a result, during the first quarter of 2003, we included 87 days of operations, while for the first quarter of 2002, we included 81 days of operations.

Additionally, approximately one-fourth of our full-service hotels have managers that have a different quarterly accounting calendar from us. For these hotels, which record revenues on a monthly basis as compared to our four-week period, the accompanying consolidated financial statements reflect only two months of operations. We record three months of operations in each of the second and third quarters and four months of operations in the fourth quarter for these hotels.

Certain reclassifications, primarily debt extinguishments, have been made to the prior period financial statements to conform to the current presentation.

Principles of Consolidation

We consolidate entities (in the absence of other factors determining control) when we own over 50% of the voting shares of another company or, in the case of partnership investments, when we

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HOST MARRIOTT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

own a majority of the general partnership interest. The control factors we consider include the ability of minority shareholders or other partners to participate in or block management decisions. All material intercompany transactions and balances have been eliminated.

Accounting for Stock-based Compensation

We maintain two stock-based employee compensation plans. Prior to 2002, we accounted for those plans under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Effective January 1, 2002, we adopted the fair value recognition provisions of the Financial Accounting Standards Board’s SFAS No. 123, “Accounting for Stock-Based Compensation,” and applied it prospectively to all employee awards granted, modified or settled after January 1, 2002. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all of our outstanding and unvested awards in each period.

New Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The provisions of this standard, which primarily relate to the rescission of SFAS No. 4, eliminated the requirement that gains and losses from the extinguishment of debt be classified as extraordinary items, unless it can be considered unusual in nature and infrequent in occurrence. These provisions are effective in fiscal years beginning after May 15, 2002. We adopted the provisions of SFAS No. 145 beginning January 1, 2003. Accordingly, we have reclassified extraordinary gains or losses from debt extinguishments in prior periods.

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HOST MARRIOTT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders as adjusted for potentially dilutive securities, by the weighted average number of shares of common stock outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans, 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. All of the potentially dilutive securities were anti-dilutive for the first quarter of 2003 and 2002.

In the first quarter of 2003, we repurchased $8 million of our 9.25% senior notes due in 2007 at par and prepaid $17 million of mortgage debt related to two of our Ritz-Carlton properties. We did not incur any prepayment penalties as a result of these debt extinguishments. The loss on the extinguishment of debt, which was minimal, is included in interest expense in the accompanying statements of operations.

On March 20, 2003, our Board of Directors declared a quarterly cash dividend of $0.625 per share for each class of our preferred stock. The first quarter dividend on the preferred stock was paid on April 15, 2003 to shareholders of record as of March 31, 2003.

Our foreign operations consist of four properties located in Canada and two properties located in Mexico. There were no intercompany sales between the properties and us. The following table presents revenues for each of the geographical areas in which we own hotels.

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HOST MARRIOTT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Our other comprehensive income (loss) consists of unrealized gains and losses on foreign currency translation adjustments, changes in the fair value of the currency forward contracts and the receipt of cash from HMS Host Corporation, or HM Services, subsequent to the exercise of the options held by certain former and current employees of Marriott International, Inc., pursuant to our distribution agreement with HM Services.

On January 24, 2003, we sold the 299-room Ontario Airport Marriott for total consideration of $26 million. Our carrying amount for this hotel on the date of sale was $24 million of fixed assets, net of depreciation, and there was no mortgage debt. We recognized a minimal gain on the sale in the first quarter of 2003. During January 2002, we disposed of the St. Louis Marriott Pavilion through a transfer of the property to the mortgage lender. For the first quarters 2003 and 2002, our revenues for these properties were $862,000, and $2,460,000, respectively, and our income (losses) were $47,000, and $(125,000), respectively.

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HOST MARRIOTT CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Overview

The following discussion and analysis of our financial condition and the results of operations should be read in conjunction with the consolidated financial statements included elsewhere in this report. This discussion includes forward-looking statements about our business and operations. We identify forward-looking statements in this report by using words or phrases such as “believe,” “expect,” “may be,” “intend,” “predict,” “project,” “plan,” “objective,” “will be,” “should,” “estimate,” or “anticipate,” or the negative thereof or other variations thereof or comparable terminology. All forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause our actual transactions, results, performance or achievements to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include those risk factors included in our 2002 annual report on Form 10-K dated March 31, 2003 and in other filings with the Securities and Exchange Commission, or the SEC. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Host Marriott Corporation, a Maryland corporation, is the owner of 122 hotel properties, which operate primarily in the luxury and upper-upscale hotel segments. We conduct our operations as an umbrella partnership REIT through our direct and indirect subsidiaries, including Host Marriott, L.P., a Delaware limited partnership of which we are the sole general partner and hold approximately 90% of the partnership interests. As of March 2003, the National Association of Real Estate Investment Trusts ranks us as the largest lodging REIT.

Our hotels are operated under brand names that are among the most respected and widely recognized in the lodging industry—including Marriott, Ritz-Carlton, Four Seasons, Hilton and Hyatt. Our properties are located in central business districts of major cities, near airports and in resort/convention locations. Our portfolio depends on revenue from large and small group business, business travel, as well as leisure and discount travelers. The target profile of our portfolio includes upper-upscale and luxury properties in hard to duplicate locations that may allow us to maintain room rate and occupancy premiums over our competitors. We seek to maximize the value of our portfolio through aggressive asset management, by directing the managers of our hotels to reduce operating costs and increase revenues and by completing selective capital improvements.

Our results of operations primarily represent hotel level sales, which are room, food and beverage and other ancillary income such as telephone, parking and other guest services. Operating expenses consist of the costs to provide these services as well as depreciation, management fees, real and personal property taxes, ground rent, equipment rent, property insurance and other costs.

We have a significant fixed-cost component associated with owning and operating hotels, which does not necessarily decrease when circumstances such as market factors cause a reduction in property revenues. As a result, changes in RevPAR (defined below) can result in a greater percentage change in our earnings and cash flows. In response to the decline in the operations of our hotels beginning in 2001, we have been working with our hotel managers to achieve certain cost reductions at the properties. We believe that these efforts have slowed the decrease in our operating margins and that we have achieved some

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

meaningful long-term efficiencies. In 2003, maintaining our operating margin will be difficult due to declining revenues and because certain of our costs, such as insurance, utilities, wages and benefits, are expected to increase at a rate greater than inflation.

Our customers can be broadly grouped into three segments: transient, group and contract. The transient segment, which includes the individual corporate and leisure traveler, is generally booked at a premium rate when compared to our group and contract business. The transient segment of our business has been the most severely impacted by the current operating environment. As a result, our managers have been working to increase our group and contract business, which is generally booked at discounted rates, in order to maintain occupancy.

Reporting Periods and Comparable and Non-Comparable Properties

Our operating results are based on a calendar year ended December 31 as required by tax laws relating to REITs. However, our quarterly results are reported on a quarterly schedule that is used by Marriott International, Inc., the manager of the majority of our properties whose year ends on the Friday closest to December 31 and which reflect twelve weeks of operations in the first three quarters of the year and sixteen or seventeen weeks of operations for the fourth quarter of the year. Therefore, in any given quarter, quarter-over-quarter results will have different ending periods. For example, the first quarter of 2003 ended on March 28 and the first quarter of 2002 ended on March 22. As a result, during the first quarter of 2003, we included 87 days of operations, while for the first quarter of 2002, we included 81 days of operations.

Additionally, approximately one-fourth of our full-service hotels have managers that have a different quarterly accounting calendar from us. For these hotels, which record revenues on a monthly basis as compared to our four-week period, the accompanying consolidated financial statements reflect only two months of operations. We record three months of operations in each of the second and third quarters and four months of operations in the fourth quarter for these hotels.

Our reported hotel operating statistics (RevPAR, average daily rate and average occupancy) as well as comparable hotel results reflect the twelve weeks, or 84 days, ended March 28, 2003 and March 22, 2002 for our Marriott-managed hotels and two months of operations for our other managers in order to present these measures on a comparable basis.

We define our comparable hotels as properties that are consolidated in our financial statements for the periods presented and for which we reported operating results throughout 2003 and 2002. We exclude from our comparable operating results hotels that have been acquired or sold during 2003 or 2002, or that have had substantial property damage or that have undergone large-scale capital projects. We also exclude rental and other income from non-hotel properties and the results of our leased limited service hotels. For the first quarters of 2003 and 2002, we consider 119 of our properties to be comparable. The three non-comparable properties that we currently own for the periods presented are 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), and The Ritz-Carlton, Naples Golf Resort (opened January 2002). Our non-comparable hotel results also include one non-consolidated leased property, the JW Marriott in Washington, D.C., whose sales and rental expense are included in our statements of operations in accordance with GAAP.

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Recent Events

On June 26, 2003, our 500-room Swissôtel-Boston will be re-branded as a Hyatt Regency. We believe that the broader brand name recognition and resources of Hyatt’s management company will help improve operations and drive increased profitability in the long term. This re-branding is consistent with our strategy to engage the leading hotel management companies to operate our properties.

On January 24, 2003, we sold the Ontario Airport Marriott for total consideration of $26 million and used the net proceeds to prepay mortgage debt of $17 million and to repurchase $8 million of 9.25% senior notes due in 2007 at par.

Lodging Performance

The current operating environment for our hotels remains challenging. The continued effects of the economic recession, the erosion of corporate profits and the war in Iraq have reduced business travel and, as a result, lodging demand. 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. Additionally, when describing our results of operations we refer to “comparable properties” (defined above).

The operating environment during the first quarter of 2003 and 2002 was difficult due to reduced airline travel, weak economic conditions and the general unrest as a result of the increased terror alert levels. During the first quarter of 2003, the operating environment was further strained by the war in Iraq and the outbreak of severe acute respiratory syndrome, or SARS. As a result, the lodging industry and our company experienced declines in RevPAR and operating profits because of reduced demand and rising operating expenses, including increased insurance costs. We expect these conditions to persist throughout 2003. We are expecting RevPAR to be down in the range of 6% to 8% for the second quarter and 2% to 3% for full year 2003. Although we and our operators continue to focus on limiting costs and maintaining margins, it is becoming more difficult to offset revenue declines with decreases in expenses. Certain important components of our operating costs, such as wages, benefits, utilities and insurance, are expected to increase at a rate greater than inflation in 2003. Thus, operating profits and margins for 2003 will likely be below 2002 levels, especially if economic conditions and, as a result, hotel revenues do not improve.

For the first quarter of 2003, RevPAR for our comparable properties decreased approximately 5.5% when compared to the same period in 2002. The decline is the result of a decrease in average occupancy of 2.3 percentage points and the decline in average room rates of 2.4%. The hotels in most of our key financial markets experienced declines in RevPAR due to the difficult operating environment. However, three of our key markets, Washington D.C., San Diego and Phoenix saw RevPAR gains of 6.0%, 16.4% and 1.3%, respectively, for the quarter. These gains are attributable to certain sporting events in the San Diego and Phoenix markets and an increase in government activity in the Washington, D.C. market. Our most difficult markets proved to be San Francisco and New York, with RevPAR declines of 17% for both markets. The San Francisco market continued to be weak, although these results were significantly affected by a major rooms renovation of the San Francisco Marriott Moscone Center. The New York decline is attributable to the harsh winter conditions, a strong reaction to the heightened terror alert and a rooms renovation at the New York Marriott Marquis.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Each of our market types (downtown, resort, airport and suburban), experienced declines in RevPAR for the first quarter of 2003 when compared to the first quarter of 2002. Our airport hotels, which had experienced significant RevPAR declines in the first quarter of 2002, had the best results for the quarter with RevPAR declining just 2.5%. RevPAR at our suburban hotels declined by 5.6%. RevPAR for our downtown urban hotels declined 6.9% for the first quarter, while our resort hotels performed better, with a decline of 3.5%.

Comparable Hotel-Level Results.    Our operating results for our comparable hotels include unaudited hotel-level EBITDA (Earnings before Interest Expense, Income Taxes, Depreciation and Amortization and other non-cash items). Comparable hotel-level EBITDA is a non-GAAP financial measure within the meaning of applicable SEC rules. We believe that the comparable hotel-level results help us and our investors evaluate the ongoing operating performance of our properties and facilitate comparisons with other REITs and hotel owners. These measures assist management by providing a baseline to assess property-level results, particularly as we acquire or sell assets. While these measures are based on GAAP, costs such as depreciation, corporate expenses, adjustments for non-comparable reporting periods and other non-core revenues and expenses have been incurred by us and are not reflected in this presentation. As a result, the comparable hotel-level results do not represent our total revenues or operating profit. For a definition of comparable properties and non-comparable properties, see “Management’s Discussion and Analysis of Results of Operations and Financial Condition—Reporting Periods and Comparable and Non-Comparable Properties.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Comparable Hotel-Level Results

(in millions, except hotel statistics)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

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The following tables set forth performance information for our properties by geographic region as of March 28, 2003 and March 22, 2002 for our comparable properties as well as the total portfolio:

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