of $378,000 Compared with a Loss of $19.4 million
a Year Earlier; Adds 26 Management Contracts
|ARLINGTON, Va - Oct. 29, 2003 - Interstate Hotels & Resorts (NYSE:
IHR), the nation's largest independent hotel management company, today
reported historical results for the third quarter ended September 30, 2003.
Interstate Hotels & Resorts was formed July 31, 2002, following the merger of MeriStar Hotels & Resorts and Interstate Hotels Corporation. For 2002, both historical financial data and combined pro forma financial data (assuming the merger was completed on January 1, 2002) are included in the tables of this press release. Historical financial data represents results for Interstate Hotels Corporation through July 31, 2002, and results for Interstate Hotels & Resorts subsequent to July 31, 2002.
For the 2003 third quarter, net loss was $(0.4) million, or $(0.02) per share. On a historical basis, net loss available to common shareholders was $(19.4) million, or $(1.12) per share, in the 2002 third quarter.
The statement of operations for the 2003 third quarter includes the following non-recurring items and special charges:
Third-quarter 2002 pro forma net loss was $(10.1) million, or a loss of $(0.50) per share. Third-quarter 2002 pro forma EBITDA, excluding non-recurring items and special charges, was $7.3 million, and pro forma net loss, excluding non-recurring items and special charges, was $(0.5) million, or $(0.03) per share.
EBITDA and net income, excluding non-recurring items and special charges, are non-GAAP financial measures within the meaning of the Securities and Exchange Commission (SEC) regulations. See the discussion below in the "Non-GAAP Financial Measures" section of this press release. Reconciliations of EBITDA and EBITDA and net income, excluding non-recurring items and special charges, are provided in the tables of this press release.
Same-store revenue per available room (RevPAR) for all full-service managed hotels in the 2003 third quarter decreased 1.4 percent from the prior year's third quarter to $67.95. Occupancy increased 2.0 percent to 68.2 percent, and average daily rate (ADR) decreased 3.4 percent to $99.65. Same-store RevPAR for all limited-service managed hotels in the 2003 third quarter decreased 1.1 percent to $55.60. Occupancy increased 0.6 percent to 70.0 percent, and ADR declined 1.6 percent to $79.40.
"Leisure travel improved throughout the summer vacation months," said Paul W. Whetsell, chairman. "Group business also was quite active during the period, as we aggressively marketed to this segment. However, increased business travel did not materialize as expected in late August and September. Business travel typically lags an economic rebound by six months, and this historic pattern is holding true. Advanced business travel bookings in the fourth quarter remain soft, but we are seeing some improvements for the first quarter of 2004."
During the quarter, Interstate signed 26 management contracts, led by 22 properties owned by CNL Hospitality Properties, Inc. In addition, the company completed the acquisition of the first hotel in its $400 million acquisition fund, Northridge Interstate Hospitality Fund, a joint venture with Northridge Capital, Inc.
"The 209-room Sheraton Long Island in Smithtown, N.Y., is typical of the type of asset we seek to acquire: first-class, full-service, stabilized hotels in strong markets with high barriers to new competition," said Steve Jorns, chief executive officer. "We expect to benefit from both our management fees and our participation in the underlying real estate investment. We have an active pipeline of potential additional acquisitions as we head into 2004."
The company's BridgeStreet Corporate Housing Worldwide operations continued to have relatively better performance in domestic markets as compared to international markets. Results in Canada were negatively impacted by the aftereffects of the SARS outbreak, and some European markets were impacted by sluggish economies. "We continue to adjust our rooms inventory in those markets that remain soft," Jorns said.
BridgeStreet added three Licensed Global Partners during the quarter, bringing the total to nine. In addition, BridgeStreet expanded its BridgeStreet Concierge service, a comprehensive service that provides BridgeStreet guests with 24/7 coverage.
Interstate had $24.5 million of availability on its revolving credit facility as of September 30, according to James A. Calder, chief financial officer. "We continue to have excellent flexibility to respond to management contract options that require sliver investments, as well as to real estate investment opportunities through joint ventures," he said.
Key Financial Information
Interstate also announced the resignation of John Emery and J. Taylor Crandall from the company's board of directors, effective October 22, 2003. Last week, Emery announced that he would resign as president and chief operating officer of the company at the end of 2003. Crandall previously served on the boards of MeriStar Hospitality and Interstate. His resignation from Interstate's board eliminates the shared board positions between the two companies, with the exception of the chairman.
Outlook and Guidance
"The exact timing of a meaningful rebound in business travel is still unclear," Jorns said. "Based on historical patterns and early booking trends, business travel will not likely pick up until 2004. We are buoyed by the continued strength in the leisure market and look forward to similar patterns in business travel in the future. Based on this lack of clarity and the current short-term outlook, we are providing more conservative guidance for the remainder of the year."
For the full year 2003, Interstate expects net income of $4.2 million to $5.4 million ($0.20 to $0.25 per share) and net income, excluding non-recurring items and special charges, of $1.0 million to $2.2 million ($0.05 to $0.10 per share). The company estimates that EBITDA, excluding non-recurring items and special charges, will be $27 million to $29 million.
Interstate expects 2003 fourth quarter net income of $0.6 million to
$1.8 million ($0.03 to $0.08 per share); net income, excluding non-recurring
items and special charges, of between $1.9 million and $3.1 million ($0.09
to $0.15 per share); and EBITDA, excluding non-recurring items and special
charges, of $9.3 million to $11.3 million. Reconciliations of forecasted
EBITDA and net income, excluding non-recurring items and special charges
to net income, for the year ending December 31, 2003, and the three months
ending December 31, 2003, are included in the tables of this press release.
Interstate Hotels & Resorts operates more than 300 hospitality properties with nearly 67,000 rooms in 42 states, the District of Columbia, Canada and Russia. BridgeStreet Corporate Housing Worldwide, an Interstate Hotels & Resorts subsidiary, is one of the world's largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada, the United Kingdom, France and 39 additional countries through its network partners.
This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as "expects," "believes" or "will," which indicate that those statements are forward-looking.
|Also See||Interstate Hotels & Resorts Reports a 1st Qtr Profit $4.4 million; RevPAR decreased 2.2% to $66.26 / Hotel operating statistics / May 2003|
|MeriStar Hospitality Board Approves MeriStar Hotels & Resorts' Merger with Interstate Hotels; Will Combine Two Independent Hotel Management Companies that Will Operate 412 Hotels / May 2002|