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John Q. Hammons Hotels, Inc. Reports Net Income $163,000
for the 2003 3rd Quarter, Compared to a Loss of
$1,063 million for the 2002 3rd quarter;
RevPAR up 2.5%
(SPRINGFIELD, MO., November 11, 2003) ---- John Q. Hammons Hotels, Inc. (AMEX: JQH) today reported on its third quarter 2003 results. 

Year-to-Date Results

Basic earnings per share for the nine months ended October 3, 2003 were $0.09, compared to a loss per share of ($0.36) for the nine months ended September 27, 2002.  Net income for the nine months ended October 3, 2003 was $0.4 million, compared to a net loss of ($1.8) million for the same period in 2002.  The 2002 nine months included a charge of $7.4 million ($1.8 million, net of minority interest) applicable to extinguishment of debt costs, primarily related to the refinancing of a significant portion of our long-term debt completed in May of 2002.  We produced EBITDA for the nine months ended October 3, 2003 of $92.5 million, compared to $92.2 million in the 2002 period (See attached table for reconciliation of net income to EBITDA and for the definition of EBITDA). 

Total revenues for the 2003 nine months were $327.6 million, a decrease of $0.9 million, compared to the same period in 2002.  Revenue Per Available Room (RevPAR) was $65.21 for the 2003 nine months, up slightly, compared to the prior year’s level of $64.85, while the industry’s RevPAR for the first nine months of 2003 was down 0.8%, to 50.67, from the 2002 period, as reported by Smith Travel Research.

Third Quarter Results

Basic earnings per share for the three months ended October 3, 2003 were $0.03, compared to a loss per share of ($0.21) for the same period in 2002.  Net income was $0.2 million for the 2003 quarter, compared to a loss of ($1.1) million for the 2002 quarter.  EBITDA was $31.2 million for the 2003 quarter, up $4.1 million or 15.1% compared to the 2002 third quarter EBITDA of $27.1 million (See attached table for reconciliation of net income to EBITDA and for the definition of EBITDA).  The increase was primarily attributable to the improved management of labor costs, favorable workers’ compensation loss experience and decreases in franchise termination fees (relating to the 2002 conversion of certain brand names of our properties).

Total revenues for the 2003 third quarter were $108.9 million, compared to $105.9 million for the 2002 quarter, reflecting our ability to drive rate at our properties.  Our Revenue Per Available Room (RevPAR) was $66.78 for the 2003 third quarter, up 2.5% compared to the prior year’s level of $65.12, while the industry’s RevPAR for the third quarter of 2003 was up 2.3% compared to the same period in 2002, to $54.71 as reported by Smith Travel Research. 

Chairman Comments

“We continue to exceed the industry’s RevPAR comparisons and maintain our operating margins, while still attending to our high level of quality and service,” stated Mr. John Q. Hammons, Chairman and Chief Executive Officer.  “We pride ourselves in the fact that we have positioned ourselves as an industry leader, set to outperform as the industry continues to show signs of improvement.” 

Financing Activities

Since the beginning of 2003, we retired a $6.3 million mortgage (Springdale Hampton Inn), set to mature in the fourth quarter of 2003, as well as a $5.2 million note (Denver Airport Holiday Inn), bringing total debt reduction for the first nine months of 2003 to over $17 million.  The remaining current portion of long-term debt ($7.6 million) is attributable only to scheduled principal amortization on various individual hotel mortgages. 

Operations Outlook

We forecast that the industry should begin to recover in late 2003 and throughout 2004, generating year-over-year RevPAR comparable to, or slightly above last year’s levels.  This recovery should help to further our cash generation and produce favorable results due to our focus on operational efficiencies. 


 
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except share data)
                     
        Three Months Ended   Nine Months Ended
        Oct. 3, 2003   Sept. 27, 2002   Oct. 3, 2003   Sept. 27, 2002
REVENUES:                    
  Rooms     $ 70,664    $ 68,938    $ 207,026    $ 205,979 
  Food and beverage     26,096    24,950    82,625    84,338 
  Meeting room rental, related party management fee and other     12,091    12,021    37,994    38,182 
    Total revenues   108,851    105,909    327,645    328,499 
                     
OPERATING EXPENSES:                    
  Direct operating costs and expenses:                  
    Rooms   17,369    17,731    50,695    51,499 
    Food and beverage   20,159    20,697    64,047    66,071 
    Other   706    840    2,099    2,445 
                     
  General, administrative, sales and management expenses     34,818    34,963    104,640    102,742 
                     
  Repairs and maintenance     4,595    4,555    13,633    13,512 
                     
  Depreciation and amortization     12,818    13,203    37,885    39,291 
                     
    Total operating costs   90,465    91,989    272,999    275,560 
                     
INCOME FROM OPERATIONS       18,386    13,920    54,646    52,939 
                     
OTHER INCOME (EXPENSE):                    
  Other income         175   
  Interest income     143    308    478    756 
  Interest expense and amortization of deferred financing fees     (17,410)   (17,931)   (52,617)   (53,415)
  Extinguishment of debt costs     (318)   (591)   (318)   (7,383)
                     
                     
INCOME (LOSS) BEFORE MINORITY INTEREST AND PROVISION                     
  FOR INCOME TAXES     801    (4,294)   2,364    (7,103)
  Minority interest in (earnings) loss of partnership     (608)   3,262    (1,795)   5,396 
                     
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES        193    (1,032)   569    (1,707)
  Provision for income taxes     (30)   (30)   (120)   (120)
                     
NET INCOME (LOSS) ALLOCABLE TO THE COMPANY       $ 163    $ (1,062)   $ 449    $ (1,827)
                     
BASIC EARNINGS (LOSS) PER SHARE:                    
  Net earnings (loss) allocable to Company     $ 0.03    $ (0.21)   $ 0.09    $ (0.36)
                     
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING       5,094,778   5,083,829    5,089,445   5,080,372 
                     
DILUTED EARNINGS (LOSS) PER SHARE:                    
  Net earnings (loss) allocable to Company     $ 0.03    $ (0.21)   $ 0.09    $ (0.36)
                     
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING       5,384,894   5,083,829    5,262,806   5,080,372 
                     
Although we are not developing new hotels, Mr. Hammons personally has numerous projects in various stages of development, including properties in Oklahoma City; Hot Springs, Ark.; St. Charles, Mo.; Junction City, Kan.; Frisco, Texas; Albuquerque, N.M. and North Charleston, S.C.. 

We are a leading independent owner and manager of affordable upscale, full service hotels located primarily in key secondary markets.  We own 47 hotels located in 20 states, containing 11,629 guest rooms or suites, and manage 11 additional hotels located in seven states, containing 2,623 guest rooms or suites.  The majority of these 58 hotels operate under the Embassy Suites, Holiday Inn and Marriott trade names.  Most of our hotels are located near a state capitol, university, convention center, corporate headquarters, office park or other stable demand generator.  A copy of this press release announcing our earnings as well as other statistical information will be available in the Investor Relations section of our website at www.jqhhotels.com. 

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, regarding, among other things, our operations outlook, business strategy, prospects and financial position. These statements contain the words “believe,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “will,” and similar words. 


 
Contact:
Paul Muellner
Chief Financial Officer
John Q. Hammons Hotels, Inc.
417-864-4300

 
Also See: John Q. Hammons Hotels, Inc. Reports Profit for First Half of 2003; RevPAR for the Six Months Equal to Prior Year's / Hotel Operating Statistics / Aug 2003


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