|DALLAS, July 9, 1998 - Patriot American Hospitality,
Inc., (NYSE: PAH) whose shares are paired and trade with those of Wyndham
International, Inc., today responded to the "Heard on the Street" column
in today's The Wall Street Journal.
According to James D. Carreker, chairman and chief executive officer of Wyndham International, the hotel operating company paired with Patriot American:
"Without question, the lodging and REIT industries are undergoing a period of transition. Our company has been one of the most dynamic acquirers and consolidators in the lodging and REIT industries... strong testimony to the leadership, vision and market savvy of Paul Nussbaum, chairman and chief executive officer of Patriot American, as well as other members of our senior management team. We have grown quickly, acquiring nine companies in a 12-month period, and we recognize that while this pace has been challenging, we are well-positioned to enjoy continued growth largely through the implementation of our long-term operational strategy, which includes aggressive re-branding and conversion of appropriate owned properties to our core Wyndham brand, as well as the realization of cost savings through the integration of our recently acquired companies."
"We are building a company for the long-term, one that can withstand inevitable economic fluctuations. We have assembled proven, industry-leading management expertise and have acquired companies that have withstood past economic cycles including Carefree Resorts, Wyndham Hotel Corporation, Summerfield Suites, Interstate Hotels Company, Arcadian International, and Gencom American Hospitality, to name a few. Given our status as a fully integrated, multiple branded operating company with the management expertise of nine proven operating companies in one, we strongly reject the notion that we have not proven that we can operate what we have acquired. Our operating fundamentals have been, and will continue to be, strong. We posted FFO growth of 47%, an impressive RevPAR of 8.9% for our owned hotels, and 11.8% for our Wyndham-branded portfolio, in this year's first quarter. We are optimistic that in a year where most lodging companies are expected to achieve RevPAR growth for the full year in the single digits, we will outperform our competitive set with the potential of achieving double-digit RevPAR growth."
"With regard to capital spending next year, on a per hotel basis, our
revenue-protecting and revenue-enhancing capital expenditures will be as
aggressive as they've been this year. The total figure next year will be
less than this year, but not as a reflection of our balance sheet, which
has been and will continue to be strong. By virtue of our aggressive acquisitions
pace last year and the first part of this year, we have committed significant
funds to renovate, reposition and re-brand a large portion of these properties
this year. In fact, of the $188 million committed in 1998, approximately
70%, or $131 million, is over and above our recurring capital expenditure
"Regarding our increased debt, our 1999 EBITDA to interest coverage ratio is over three times, modestly in line with other hotel real estate companies. The rise in industry-wide debt-to-market capitalization reflects multiple contractions in the hotel and REIT industries. We are comfortable with our current leverage and reiterate our commitment to long-term operating strategies designed to weather short-term contractions in our stock price, as well as industry fluctuations."
"We are approaching new development deliberately and strategically, and since we do not operate in the limited service sector, we are not concerned that our upscale and luxury properties nationwide will be negatively impacted by the 'cranes everywhere in the Sunbelt.' We don't deny that there's a great deal of new supply coming in. However, although the new supply is below our quality and price levels, many people tend to make inappropriate generalizations and group all companies together. As such, many of the criticisms launched in the 'Heard on the Street' column are not specific to Patriot American, but to all hotel REITs and C-corps."
"We urge investors to maintain a critical eye when reading generalizations about the REIT and lodging industries, and to review various reports offered by the leading analysts covering Patriot American. Our company is well- positioned to achieve and sustain continued growth through brand development, conversions to one of our core proprietary brands, strategic development and an aggressive franchising program."
About Patriot American Hospitality, Inc. and Wyndham International,
Inc. Based in Dallas, Texas, Patriot American Hospitality, Inc. is currently
the nation's second-largest hotel real estate investment trust (REIT) with
a portfolio comprised of 462 owned, managed, leased or franchised hotels
with more than 97,000 rooms. Wyndham International, Inc., comprised of
the Luxury Hotel Division, the Wyndham Hotel Group, and the Asset Management
Group, leases, manages and franchises primarily upscale hotel and resort
properties represented by its proprietary brands, and provides management
services for third-party owned hotels and resorts.
|Also See:||Patriot American Hospitality Unveils a New Hotel Division: Grand Bay Hotels and Resorts / June 1998|
American Hospitality and Wyndham International to Acquire Summerfield Hotel
|If You Can't Beat 'Em...The big news on REITs during 1998 / Horwath Landauer / May 1998|