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Reports Record Earnings For 2000
TORONTO - Feb. 15, 2001-- Four Seasons Hotels Inc. (NYSE:FS) (TSE:FSH.)
today reported its fourth quarter 2000 and year-end results for the year
ended December 31, 2000.
Net earnings for the quarter ended December 31, 2000 increased 13.6
% to $38.5 million ($1.11 basic earnings per share), as compared to $33.9
million ($0.98 basic earnings per share) for the quarter ended December
31, 1999. For the year ended December 31, 2000, net earnings increased
19.2% to $103.1 million ($2.98 basic earnings per share), as compared to
$86.5 million ($2.52 basic earnings per share) for the year ended December
31, 1999.
�We are extremely pleased with the financial results for the quarter
and the 2000 fiscal year,� said Isadore Sharp, Chairman and Chief Executive
Officer. �Despite the significant increase in our tax costs and negative
effects of the Vancouver strike, our overall growth program allowed us
to realize record earnings for 2000. We expect 2001 will be another exciting
year for the Company. This year we have already opened three new Four Seasons
hotels in Caracas, Prague and Dublin. We look forward to the opening of
several other new projects over the next 12 months, including a new Four
Seasons hotel in San Francisco and a Four Seasons resort in Sharm El Sheikh,
Egypt.�
Consolidated revenues increased 21.4% to $104.1 million for the quarter
ended December 31, 2000, as compared to $85.8 million for the quarter ended
December 31, 1999. Consolidated revenues increased 25.2 % to $347.5 million
for the year ended December 31, 2000, as compared to $277.5 million in
1999.
OPERATING IMPROVEMENTS
The US Core Hotels(1) continued their solid operating performance in
the fourth quarter of 2000, with an improvement in RevPAR(2), on a US dollar
basis, of 3.7% and an improvement in gross operating profits of 3.8%, as
compared to the fourth quarter of 1999. The US RevPAR growth was negatively
affected by lower occupancies in the Atlanta and Seattle markets. For the
full year 2000, RevPAR of the US Core Hotels, on a US dollar basis, increased
9.7%, while gross operating profits increased 12.7%, as compared to the
same period in 1999.
In the fourth quarter of 2000, Other North American Core Hotels(3) realized
an improvement in RevPAR, on a US dollar basis, of 4.6%, while gross operating
profits increased 1.9%, as compared to the fourth quarter of 1999. For
the full year 2000, Other North American Core Hotels experienced a 1.3%
increase in RevPAR, on a US dollar basis, and a 1.1% decrease in gross
operating profits, as compared to the same period in 1999. The Other North
American segment was negatively affected by the Vancouver city-wide hotel
strike during the third quarter of 2000.
The European Core Hotels� RevPAR, on a US dollar basis, decreased 2.7%,
and gross operating profits decreased 1.1 % in the fourth quarter of 2000,
as compared to the same period in 1999. This decline was caused by the
weaker Euro exchange rates. On a Euro basis, the RevPAR increase was 17.3%
in the fourth quarter of 2000 and gross operating profits increased 20.2%,
as compared to the same period in 1999. For the full year 2000, European
Core Hotels� RevPAR, on a US dollar basis, increased 4.4%, as compared
to the same period in 1999. Gross operating profits increased 11.9% for
the full year 2000, as compared to 1999. On a Euro basis, RevPAR increased
20.8% and gross operating profits increased 29.5% for the full year 2000,
as compared to 1999.
During the fourth quarter of 2000, RevPAR in the Company�s Asian Core
Hotels, on a US dollar basis, increased 15.6%, while gross operating profits
increased 25.2%, as compared to the fourth quarter of 1999. For the full
year 2000, RevPAR, on a US dollar basis, for the Asian Core Hotels increased
14.7% and gross operating profits increased 27.8%, as compared to the same
period in 1999.
REVENUE AND PROFITABILITY GROWTH IN HOTEL MANAGEMENT
BUSINESS
Revenues under management for the quarter ended December 31, 2000 increased
16.9% to $773.8 million, as compared to $662.2 million for the quarter
ended December 31, 1999. Revenues under management for the year ended December
31, 2000 increased 19% to $2.8 billion, as compared to $2.4 billion for
the year ended December 31, 1999.
Fee revenues increased 36% to $53.8 million for the quarter ended December
31, 2000, as compared to $39.6 million for the same period in 1999. Fee
revenues increased 28.7% to $185.3 million for the year ended December
31, 2000, as compared to $144 million for the same period in 1999. The
Company�s management incentive fees, which are tied to the profitability
of certain managed hotels, increased to $14.5 million for the quarter ended
December 31, 2000, as compared to $10.5 million for the quarter ended December
31, 1999. The Company�s management incentive fees increased to $49.8 million
for the year ended December 31, 2000, as compared to $35.1 million in 1999.
Approximately one half of the increase in fees related to the strong internal
growth in our existing hotels, while the other half was contributed by
our new hotels, hotels under development and our residential projects.
Management earnings before other operating items increased 41.1% to
$125.8 million for the year ended December 31, 2000, as compared to $89.1
million in 1999. Management earnings before other operating items increased
54.2% to $39.1 million in the fourth quarter of 2000, as compared to $25.4
million in the fourth quarter of 1999. The increase in fourth quarter management
earnings was caused by a 39% increase in management incentive fees due
to higher profitability of the Core Hotels and fees from recently opened
hotels. Fees from hotels under development and residential management and
royalty fees also contributed to the gains during the quarter.
The Company�s management operations contributed approximately 90.2%
of earnings before other operating items for the year ended December 31,
2000, as compared to 91.4% in 1999. For the quarter ended December 31,
2000, the profit margin on the management business was 72.7 %, as compared
to 64.1% for the same period in 1999. For the full year 2000, the Company�s
profit margin on its management operations was 67.9%, as compared to 61.9%
in 1999.
OWNERSHIP EARNINGS
Included in ownership earnings are the consolidated revenues and expenses
from the Company�s 100% interest in The Pierre hotel in New York, the Four
Seasons hotel in Vancouver, the Four Seasons hotel in Berlin, dividend
distributions from the Company�s 25% interest in The Regent Hong Kong and
other minority interests.
In the fourth quarter of 2000, ownership earnings before other operating
items decreased 24.7% to $8.6 million, as compared to $11.5 million in
the fourth quarter of 1999, primarily as a result of the timing of owner
distributions from the Company�s minority interests.
Ownership earnings before other operating items were $13.6 million for
the year ended December 31, 2000, as compared to $8.4 million for the year
ended December 31, 1999. The improved ownership earnings were the result
of strong operations in New York and Hong Kong, offset by the reduction
in earnings at the Four Seasons Hotel Vancouver resulting from the hotel
strike in the third quarter of 2000. The impact of the strike was a reduction
in ownership earnings of approximately $2.9 million.
OTHER OPERATING INCOME
Other operating income for the year ended December 31, 2000 was $8.7
million, as compared to $3.6 million for the comparable period of 1999.
This other operating income was primarily the recovery of loss provisions
set up in previous years for possible impairment of certain assets, together
with foreign exchange losses. The provisions were no longer required due
to subsequent cash recoveries and operating cash flow improvements which
substantiated the recoverable value of the underlying assets.
NET INTEREST INCOME
The Company had net interest income of $1.5 million in the fourth quarter
of 2000, as compared with net interest income of $1.3 million in the fourth
quarter of 1999. For the full year 2000, the Company had net interest income
of $4.2 million, as compared to net interest income of $409,000 for the
comparable period of 1999. These increases are the result of increased
interest income from investments made in notes receivable in connection
with certain of its new projects.
BALANCE SHEET
As at December 31, 2000, the Company�s cash reserve was $218.1 million,
as compared to total long-term debt of $204.9 million as at December 31,
1999. Shareholders� equity was $708.2 million as at December 31, 2000.
INCOME TAX EXPENSE
The Company�s effective tax rate for the quarter ended December 31,
2000 was 25.6%, as compared to 2.7% for the same period in 1999. The Company�s
effective tax rate for the year ended December 31, 2000 was 25.4%, as compared
to 2.8% in 1999. The higher effective tax rate was due primarily to the
utilization in 1999 of the benefits of the unrecorded tax losses created
by the write-down in hotel investment values in 1993 and 1995 and the implementation
of the new Canadian income tax accounting standards.
Also, included in the fourth quarter 2000 tax expense was a $3.2 million
additional expense related to the scheduled reductions in the Canadian
income tax rates to be implemented over the next four years, as announced
by the Canadian Federal government late in the fourth quarter of 2000.
This one time expense (�Reduction of future income tax assets�) was a result
of the decrease in the income tax rates relating to the ongoing benefit
of the Company�s future income tax assets. The reduced tax rates should
allow the Company to achieve lower overall income tax rates on its income
in future years.
2001
In 2001 the Company expects that RevPAR and gross operating profits
in its Core Hotels in the US, Europe and Other North American regions should
increase by more than 5%. In the US market this assumes that GDP growth
will range between 2% to 2.5%.
We expect that the US and Europe regions will see their growth rates
biased towards the later half of the year based on the anticipated demand
levels. In the Asian market, the Company anticipates that increases in
demand as a result of the continuing recovery in most of the Asian markets
should result in the Core Hotels increasing RevPAR and gross operating
profits by more than 8%.
The Company expects that its investment spending levels in 2001 will
be similar to those realized in 2000. The majority of the investments made
by the Company are for minority interests in new hotel and residential
projects which it will brand and manage under long-term management agreements.
The Company anticipates selling certain of its hotel ownership interests
in 2001, which, if sold, could generate asset proceeds of more than $50
million. The Company would expect to continue to manage these hotels under
long-term management agreements.
With respect to The Regent Hong Kong, the Company will continue its
discussions in an effort to secure a favourable outcome in the rent review
that will determine the lease payments for the ten- year renewal period
which commences January 1, 2001. The Company is also continuing its discussions
to obtain a firm commitment for a new management agreement for the hotel.
CONCLUSION
�As expected, the Company�s financial results for the fourth quarter
were driven by strong contributions from recently opened Four Seasons hotels
and hotel and residential projects under development,� said Douglas Ludwig,
Executive Vice President and Chief Financial Officer. �We expect this trend
to continue in 2001, as the contributions from recently opened Four Seasons
hotels in Paris, Canary Wharf, Scottsdale, Punta Mita and Las Vegas increase
and this year�s scheduled openings begin to make more significant contributions.�
All dollar amounts referred to above are Canadian dollars unless otherwise
noted.
SUMMARY OF HOTEL OPERATING DATA - CORE
HOTELS(1)
Three months ended December 31,
(Unaudited)
2000 1999
Variance
Worldwide
No. of Properties
39 39
--
No. of Rooms
11,355 11,355
--
Occupancy(2)
71.1% 69.0%
2.1%
ADR(3) - in US dollars
$294 $288
1.9%
in equivalent Canadian dollars
$447 $423
5.6%
RevPAR(4) - in US dollars
$209 $199
5.0%
in equivalent Canadian dollars
$318 $292
8.8%
Gross operating margin(5)
37.8% 37.0%
0.8%
United States
No. of Properties
20 20
--
No. of Rooms
6,348 6,348
--
Occupancy(2)
72.7% 73.3%
(0.6%)
ADR(3) - in US dollars
$356 $341
4.4%
in equivalent Canadian dollars
$541 $500
8.2%
RevPAR(4) - in US dollars
$259 $249
3.7%
in equivalent Canadian dollars
$393 $366
7.4%
Gross operating margin(5)
37.1% 37.3%
(0.2%)
Canada/Mexico/Caribbean
No. of Properties
3 3
--
No. of Rooms
1,004 1,004
--
Occupancy(2)
64.2% 62.6%
1.6%
ADR(3) - in US dollars
$179 $175
2.1%
in equivalent Canadian dollars
$272 $257
5.8%
RevPAR(4) - in US dollars
$115 $110
4.6%
in equivalent Canadian dollars
$175 $161
8.4%
Gross operating margin(5)
29.4% 29.9%
(0.5%)
Asia/Pacific
No. of Properties
11 11
--
No. of Rooms
3,132 3,132
--
Occupancy(2)
70.0% 62.4%
7.6%
ADR(3) - in US dollars
$191 $186
3.0%
in equivalent Canadian dollars
$291 $273
6.8%
RevPAR(4) - in US dollars
$134 $116
15.6%
in equivalent Canadian dollars
$204 $170
19.7%
Gross operating margin(5)
42.5% 37.5%
5.0%
Europe
No. of Properties
5 5
--
No. of Rooms
871 871
--
Occupancy(2)
71.3% 68.6%
2.7%
ADR(3) - in US dollars
$305 $326
(6.4%)
in equivalent Canadian dollars
$464 $478
(3.0%)
RevPAR(4) - in US dollars
$217 $223
(2.7%)
in equivalent Canadian dollars
$331 $328
0.8%
Gross operating margin(5)
37.0% 37.3%
(0.3%) |
(1) The term �Core Hotels� means hotels and
resorts under management or anticipated to be under management for the
full year of both 2000 and 1999. Changes from the 1999/1998 Core Hotels
are the additions of the Four Seasons Hotel Berlin, the Four Seasons Resort
Kuda Huraa and the Four Seasons Resort Bali at Sayan.
(2) Occupancy percentage is defined as the
total number of rooms occupied divided by the total number of rooms available.
(3) ADR is defined as average daily room
rate per room occupied.
(4) RevPAR is defined as average room revenue
per available room. RevPAR is a commonly used indicator of market performance
for hotels and represents the combination of the average daily room rate
and the average occupancy rate achieved during the period. RevPAR does
not include food and beverage or other ancillary revenues generated by
a hotel.
(5) Gross operating margin represents gross
operating profit as a percent of gross operating revenue.
SUMMARY OF HOTEL
OPERATING DATA - CORE HOTELS(1)
Years ended December 31,
(Unaudited)
2000 1999
Variance
Worldwide
No. of Properties
39 39
--
No. of Rooms
11,355 11,355
--
Occupancy(2)
72.5% 69.8%
2.7%
ADR(3) - in US dollars
$287 $272
5.4%
in equivalent Canadian dollars
$425 $403
5.4%
RevPAR(4) - in US dollars
$208 $190
9.5%
in equivalent Canadian dollars
$308 $281
9.5%
Gross operating margin(5)
37.1% 35.5%
1.6%
United States
No. of Properties
20 20
--
No. of Rooms
6,348 6,348
--
Occupancy(2)
76.5% 74.9%
1.6%
ADR(3) - in US dollars
$340 $317
7.4%
in equivalent Canadian dollars
$505 $470
7.4%
RevPAR(4) - in US dollars
$261 $237
9.7%
in equivalent Canadian dollars
$386 $352
9.8%
Gross operating margin(5)
37.0% 36.2%
0.8%
Canada/Mexico/Caribbean
No. of Properties
3 3
--
No. of Rooms
1,004 1,004
--
Occupancy(2)
67.4% 68.4%
(1.0%)
ADR(3) - in US dollars
$186 $181
2.7%
in equivalent Canadian dollars
$275 $268
2.8%
RevPAR(4) - in US dollars
$125 $124
1.3%
in equivalent Canadian dollars
$185 $183
1.3%
Gross operating margin(5)
31.4% 33.0%
(1.6%)
Asia/Pacific
No. of Properties
11 11
--
No. of Rooms
3,132 3,132
--
Occupancy(2)
65.6% 59.9%
5.7%
ADR(3) - in US dollars
$182 $174
4.8%
in equivalent Canadian dollars
$270 $257
4.8%
RevPAR(4) - in US dollars
$119 $104
14.7%
in equivalent Canadian dollars
$177 $154
14.7%
Gross operating margin(5)
37.8% 33.1%
4.7%
Europe
No. of Properties
5 5
--
No. of Rooms
871 871
--
Occupancy(2)
73.3% 68.7%
4.6%
ADR(3) - in US dollars
$314 $321
(2.1%)
in equivalent Canadian dollars
$465 $475
(2.1%)
RevPAR(4) - in US dollars
$230 $221
4.4%
in equivalent Canadian dollars
$341 $327
4.5%
Gross Operating margin(5)
39.8% 37.0%
2.8% |
(1) The term �Core Hotels� means hotels and resorts
under management or anticipated to be under management for the full year
of both 2000 and 1999. Changes from the 1999/1998 Core Hotels are the additions
of the Four Seasons Hotel Berlin, the Four Seasons Resort Kuda Huraa and
the Four Seasons Resort Bali at Sayan.
(2) Occupancy percentage is defined as the total
number of rooms occupied divided by the total number of rooms available.
(3) ADR is defined as average daily room rate per
room occupied.
(4) RevPAR is defined as average room revenue per
available room. RevPAR is a commonly used indicator of market performance
for hotels and represents the combination of the average daily room rate
and the average occupancy rate achieved during the period. RevPAR does
not include food and beverage or other ancillary revenues generated by
a hotel.
(5) Gross operating margin represents gross operating
profit as a percent of gross operating revenue.
SUMMARY OF HOTEL OPERATING DATA -
ALL MANAGED HOTELS
As at December 31,
(Unaudited)
2000 1999
Variance
Worldwide
No. of Properties
48 47
1
No. of Rooms
14,052 13,779
273
United States
No. of Properties
22 22
--
No. of Rooms
6,982 6,982
--
Canada/Mexico/Caribbean
No. of Properties
5 5
--
No. of Rooms
1,340 1,340
--
Asia/Pacific
No. of Properties
14 13
1
No. of Rooms
4,475 4,202
273
Europe
No. of Properties
7 7
--
No. of Rooms
1,255 1,255
-- |
Four Seasons Hotels and Resorts is the world�s leading operator of luxury
hotels and currently manages 51 properties in 23 countries, primarily under
the Four Seasons and Regent brand names. Four Seasons Hotel Caracas opened
in January 2001; Four Seasons Hotel Prague and Four Seasons Hotel Dublin
opened in February 2001. Other hotels expected to enter the market in 2001
include San Francisco, California; and Sharm El Sheikh, Egypt.
Openings in 2000 included Four Seasons Hotel Cairo at the First Residence
(May 2000) and Four Seasons Resort Club Scottsdale at Troon North, which
opened its first phase in April 2000. While most hotels bear the respective
names of Four Seasons or Regent, some do not, including The Ritz-Carlton
in Chicago and The Pierre in New York.
Certain statements contained in this press release that do not relate
to historical information are �forward-looking statements� within the meaning
of the United States Private Securities Litigation Reform Act of 1995 and
are thus prospective.
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