WestCoast Hospitality Reports 2nd Qtr Net Income of $3.1 million Compared with $4.5 million a Year Earlier, RevPAR Declines 8.2% / Hotel Statistics / July 2002

Hotel Online Special Report

advertisement

WestCoast Hospitality Reports 2nd Qtr Net Income of
$3.1 million Compared with $4.5 million a Year Earlier,
RevPAR Declines 8.2%
Hotel Statistics

SPOKANE, Wash., July 30, 2002 - WestCoast Hospitality Corporation (NYSE:
WEH) today reported second quarter earnings for the three months ended June 30, 2002. Earnings Per Share was $0.24, a 41% increase compared to EPS of $0.17 in the second quarter of 2001, excluding a one-time gain from insurance settlement of $3.7 million. Including the one-time gain, EPS in the second quarter of 2001 was $0.34. During the quarter, total revenue increased 59.2%, from $32.4 million in the second quarter of 2001 to $51.6 million in the same period of 2002 and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) increased 19.0%, to $11.0 million. EPS results are within the range of guidance issued by the Company of $0.19 to $0.25.

During the quarter, RevPAR (Revenue Per Available Room) at all comparable hotels (hotels owned, managed or franchised under WestCoast or Red Lion for more than one year, including the Red Lion hotels acquired in December 2001) decreased 8.2% when compared to the same period of 2001. RevPAR results came from a 2.9% point drop in occupancy and a 4.0% decline in ADR (Average Daily Rate). RevPAR results varied by market, with properties in first tier markets experiencing the softest demand. However, some markets faired quite well, including Salt Lake City, where strong demand continues in the wake of the Winter Olympics held during the first quarter. Bookings at the Company's Central Reservations Office have been increasing and showing gains over prior year during the month of July, with especially strong increases in online bookings through the Company's internet site as well as third party websites. While encouraging, the Company is cautious in drawing long-term assumptions from the increase in booking pace, as the overall economic climate remains cloudy.

The Company added to the Red Lion brand during the quarter with Red Lion's first franchise agreement under WestCoast ownership. The conversion of the Red Lion Inn at Salmon Creek, in Vancouver, Washington was announced on May 30 and has since been completed. The Company also added to the support of its hotels during the quarter with the promotion of four vice presidents, including: Matt Engles, VP of Hotel Operations; Tom Maier, VP of Hotel Operations; Todd Thoreson, VP of Hotel Operations; and Ron Grasgreen, VP of Brand Services. Each VP of Hotel Operations serves a group of properties while Ron Grasgreen supports conversions and aids properties in complying and benefiting from brand standards. This group comes with strong backgrounds in the hotel industry with companies such as DoubleTree, Starwood Hotels and Resorts, Sheraton and Promus.

EBITDA was within range of Company guidance, increasing from $9.2 million in the second quarter of 2001 to $11.0 million in the comparable period of 2002. Margin decreases resulted primarily from the acquisition of Red Lion Hotels and Inns, which included twelve hotels controlled through operating leases, which negatively impact EBITDA ratios when compared to treatment of owned hotels. Most of the integration of Red Lion Hotels is complete, and the Company's lead referral program, called STARS, continued to increase the pace of bookings created through the program. During the second quarter, the dollar amount of definite bookings created in the program doubled the amount generated during the first quarter of 2002, as the two brands began to better establish relationships.

Don Barbieri, Chairman and CEO, said, "Our Red Lion and WestCoast brands are finding ways to better leverage each other's strengths, and share in market and customer knowledge in order to deliver customers to each other. We have gone to the same platform for measuring customer satisfaction in our hotels so that we may better understand and compare the desires of our customer in order to deliver consistent value in both WestCoast and Red Lion branded properties. While desired amenities may vary by customers staying at one of our limited service properties to those staying at one of our WestCoast Grand Hotels, certain services and amenities desired remain common and integral to perceived value. We want to deliver those consistently and relentlessly, so that the customer does find value in staying within our Family of Hotels."

WestCoast Hotels guest affinity program, WestAwards, also serves as a customer retention tool and continues to mature. During the quarter, point redemption amounts increased by 204% compared to the second quarter of 2001, and increased by 83.6% compared to the first quarter of 2002.

TicketsWest, the Company's entertainment division, continued to further its penetration into the Colorado ticketing market during the quarter. TicketsWest entered into outlet distribution agreements with the Denver Center of Performing Arts as well as the University of Colorado. The Denver Center of Performing Arts provides ticketing for most of the 2000+ events held at the Denver Performing Arts
Complex each year. As more venues are added, TicketsWest expects to continue to improve operating margins, add content to its website, www.ticketswest.com, and create more packaging opportunities with the Company's hotel division. While revenue has fluctuated with event scheduling, for the six months ended June 30, operating expense margins improved from 95.2% of revenue in the first half of 2001 to 83.8% during the comparable period of 2002. The margin improvement is largely attributable to increased penetration in markets currently served. TicketsWest has built ticket distribution infrastructures over the past two years. The incremental cost to add new venues to the infrastructure is minimal and allows for much higher operating margins as the outlet systems are utilized by more venues.

Real Estate Division revenue decreased 13.4% during the quarter, to $2.1 million. The revenue decline was due to the sale of an 80.1% interest in the WHC building during the first quarter. The proceeds were used to pay down debt and for further growth of the Company. The Company will continue to sell non-core real estate assets during the upcoming years.

During the quarter, interest expense declined 11.3% as a result of decreased debt levels and interest rates. On July 22, 2002, the Company announced that it completed the renewal/extension of the Company's $68.5 million Revolving Credit Facility with a syndicate of six lenders lead by U.S. Bank. The most current interest rate under the credit facility was set at 4.375%. Cash flow per share of stock, defined as net cash provided by operating activities excluding changes in current assets and liabilities, was $0.50 per share in the quarter compared to $0.41 per share in the comparable period of 2001. The consistently strong cash flow production in an unfavorable economic environment gives Company management confidence in the strength of WestCoast Hospitality Corporation and its business plan.

Supplemental Information #1
WestCoast Hospitality Corporation
Summary Statements of Income
(unaudited)
(in thousands) Three months ended June 30,
2002 2001 $ Change % Change

Revenues under Management(A) $73,344 $56,013 $17,331 30.9%

    Revenues:
       Hotels & Restaurants                $46,736 $27,373 $19,363    70.7%
       Franchise, Central Services and
        Development                          1,183      795      389    48.8%
       TicketsWest                           1,493    1,723     (230) -13.3%
       Real Estate Division                  2,139    2,469     (330) -13.4%
       Corporate Services                       72       58       13    24.6%

Total Revenues 51,623 32,418 19,205 59.2%

    Operating Expenses:
       Hotels & Restaurants                 36,869   19,324 (17,545) -90.8%
       Franchise, Central Services and
        Development                            568      416     (152) -36.3%
       TicketsWest                           1,467    1,677      210    12.5%
       Real Estate Division                  1,030    1,124       94     8.3%
       Corporate Services                       53       45       (8) -18.8%
       Depreciation and Amortization         2,659    2,535     (124)   -4.9%
       Amortization of Goodwill                  0      214      214   100.0%

Total Direct Expenses 42,646 25,335 (17,311) -68.3%

Undistributed Corporate Expenses 637 588 (49) -8.1%

Total Expenses 43,283 25,923 (17,360) -67.0%

Operating Income 8,340 6,495 1,845 28.4%

    Other Income (Expense):
       Interest Expense                     (2,655) (2,994)     339    11.3%
       Interest Income                         116       60       56    93.0%
       Other Income (Expense)                   92    3,787   (3,695) -97.6%
       Conversion Expenses                      (6)      (3)      (3) -86.9%
       Equity in Investments                    16       18       (2) -11.6%
       Minority Interest in Partnerships       (61)    (159)      98    62.0%

Income Before Income Taxes 5,842 7,204 (1,362) -18.9%

Income Tax Provision 2,062 2,649 587 22.1%

Income Before Extraordinary Item 3,780 4,555 (775) -17.0%

Extraordinary Item, net of taxes 0 (23) 23 100.0%

Net Income 3,780 4,532 (752) -16.6%

Preferred Stock Dividend 645 0 (645) -100.0%

Net Income to Common Shareholders $3,135 $4,532 $(1,397) -30.8%

EBITDA $10,999 $9,245 $1,754 19.0%
EBITDA % of Revenues 21.3% 28.5% -7.2%

(A) Includes WestCoast Hospitality Corporation revenues and revenues of third party owned properties under Company management.

                        WestCoast Hospitality Corporation
                Earnings Per Share and Pro Forma Hotel Statistics
                                   (unaudited)

Three months ended June 30,
2002 2001 $ Change % Change

    Weighted Shares of Stock
     Outstanding                 12,970,473   12,948,396
    Weighted OP Units
     Outstanding                    286,161      286,161
    Total OP and Stock Shares
     Outstanding                 13,256,634   13,234,557

Earnings (Loss) per Share
of Stock $0.24 $0.35 $(0.11) -31.4%

Cashflow per Share of
Stock(A) $0.50 $0.41 $0.09 22.0%

    Hotel Statistics:
      Combined (Owned, Managed
       and Franchised)(B)

          Occupancy                   63.1%        66.0%                -2.9%
          Average Daily Rate         $80.71       $84.07       $(3.36) -4.0%
          RevPAR                     $50.91       $55.45       $(4.54) -8.2%
          Room Revenue          $62,631,688 $68,159,324 $(5,527,636) -8.1%

    (A) Net cash provided by operating activities excluding changes in
         current assets and liabilities
    (B) Includes hotels owned, managed and franchised for greater than one
         year by WestCoast Hospitality Corporation and Red Lion Hotels, Inc

                        WestCoast Hospitality Corporation
                           Summary Statements of Income
                                   (unaudited)
                                  (in thousands)
                                              Six months ended June 30,
                                            2002      2001   $ Change % Change

Revenues under Management(A) $134,469 $103,979 $30,490 29.3%

    Revenues:
       Hotels & Restaurants               $83,941   $50,317 $33,624    66.8%
       Franchise, Central Services and
        Development                         1,934     1,463      471    32.2%
       TicketsWest                          3,472     3,676     (204)   -5.5%
       Real Estate Division                 4,611     4,958     (347)   -7.0%
       Corporate Services                     134       156      (22) -14.1%

Total Revenues 94,092 60,570 33,522 55.3%

    Operating Expenses:
       Hotels & Restaurants                71,389    37,544 (33,845) -90.1%
       Franchise, Central Services and
        Development                         1,019       754     (265) -35.1%
       TicketsWest                          2,911     3,500      589    16.8%
       Real Estate Division                 2,242     2,258       16     0.7%
       Corporate Services                     101        84      (17) -20.7%
       Depreciation and Amortization        5,376     5,028     (348)   -6.9%
       Amortization of Goodwill                 0       428      428   100.0%

Total Direct Expenses 83,038 49,596 (33,442) -67.4%

Undistributed Corporate Expenses 1,209 1,172 (37) -3.1%

Total Expenses 84,247 50,768 (33,479) -65.9%

Operating Income 9,845 9,802 43 0.4%

    Other Income (Expense):
       Interest Expense                    (5,522)   (6,351)     829    13.1%
       Interest Income                        158       142       16    10.9%
       Other Income (Expense)               3,100     4,808   (1,708) -35.5%
       Conversion Expenses                     (7)       (5)      (2) -29.3%
       Equity in Investments                  (12)       27      (39) -143.6%
       Minority Interest in Partnerships      (66)     (146)      80    55.0%

Income Before Income Taxes 7,496 8,277 (781) -9.4%

Income Tax Provision 2,646 3,046 400 13.1%

Income Before Extraordinary Item 4,850 5,231 (381) -7.3%

Extraordinary Item, net of taxes 0 (23) 23 100.0%

Net Income 4,850 5,208 (358) -6.9%

Preferred Stock Dividend 1,291 0 $(1,291) -100.0%

Net Income to Common Shareholders $3,559 $5,208 $(1,649) -31.7%

EBITDA $15,221 $15,258 $(37) -0.2%
EBITDA % of Revenues 16.2% 25.2% -9.0%

(A) Includes WestCoast Hospitality Corporation revenues and revenues of third party owned properties under Company management.

                        WestCoast Hospitality Corporation
                Earnings Per Share and Pro Forma Hotel Statistics
                                   (unaudited)
                             Six months ended June 30,
                                 2002          2001        $ Change   % Change

    Weighted Shares of Stock
     Outstanding               12,970,473    12,946,696
    Weighted OP Units
     Outstanding                  286,161       286,161
    Total OP and Stock
     Shares Outstanding        13,256,634    13,232,857

Earnings (Loss) per
Share of Stock $0.27 $0.40 $(0.13) -32.5%

Cashflow per Share of
Stock(B) $0.65 $0.64 $0.01 1.6%

    Hotel Statistics:
      Combined (Owned,
       Managed and
       Franchised)(B)

          Occupancy                 57.7%         61.2%                 -3.5%
          Average Daily Rate       $79.70        $82.67        $(2.97) -3.6%
          RevPAR                   $45.99        $50.60        $(4.61) -9.1%
          Room Revenue       $112,549,046 $123,371,549 $(10,822,503) -8.8%

                        WestCoast Hospitality Corporation
                   Consolidated Balance Sheet at June 30, 2002
                                   (unaudited)
                        (in thousands, except share data)

    Assets:
      Current assets:
        Cash and cash equivalents                                      $6,186
        Accounts receivable                                            10,102
        Inventories                                                     2,461
        Assets held for sale                                           21,382
        Prepaid expenses and deposits                                   3,086
            Total current assets                                       43,217

      Property and equipment, net                                     248,973
      Intangible assets, net                                           34,920
      Other assets, net                                                29,635

Total assets $356,745

    Liabilities:
      Current liabilities:
        Accounts payable                                               $7,081
        Accrued payroll and related
         benefits                                                       7,741
        Accrued interest payable                                          741
        Income taxes payable                                            2,469
        Advance deposits                                                  616
        Other accrued expenses                                         10,199
        Long-term debt, due within one
         year                                                           4,486
        Capital lease obligations, due
         within one year                                                  380
            Total current liabilities                                  33,713

      Long-term debt, due after one
       year                                                           101,382
      Notes payable to bank                                            49,000
      Capital lease obligations, due
       after one year                                                      84
      Deferred income                                                   2,769
      Deferred income taxes                                            14,360
      Minority interest in partnerships                                 3,006
            Total liabilities                                         204,314

    Stockholders' equity:
      Preferred stock - 5,000,000
       shares authorized; $0.01 par value
        607,542 shares issued and
         outstanding                                                        6
      Additional paid-in capital,
       preferred stock                                                 30,371
      Common stock - 50,000,000 shares
       authorized; $0.01 par value;
        12,970,473 shares issued and
         outstanding                                                      130
      Additional paid-in capital,
       common stock                                                    84,022
      Retained earnings                                                37,902
            Total stockholders' equity                                152,431

Total liabilities and
stockholders' equity $356,745

                        WestCoast Hospitality Corporation
                       Consolidated Statement of Cash Flows
                          Six Months Ended June 30, 2002
                                   (unaudited)
                                  (in thousands)
    Operating activities:
       Net income                                                      $4,850
       Adjustments to reconcile net
        income to net cash
          provided by operating
          activities:
           Depreciation and amortization                                5,376
           Gain on disposition of
            property and equipment and
            other assets                                               (2,002)
           Deferred income tax provision                                  200
           Minority interest in
            partnerships                                                   66
           Equity in investments                                          (12)
           Compensation expense related
            to stock issuance                                               7
           Change in current assets and
            liabilities:
              Accounts receivable                                      (1,001)
              Inventories                                                 (81)
              Prepaid expenses and
               deposits                                                (1,675)
              Accounts payable and income
               taxes payable                                            2,880
              Accrued payroll and related
               benefits                                                   875
              Accrued interest payable                                    (36)
              Other accrued expenses                                    1,495

                   Net cash provided by
                    operating activities                               10,942
    Investing activities:
       Additions to property and
        equipment                                                      (2,468)
       Proceeds from disposition of
        property and equipment                                          1,827
       Other, net                                                         165

Net cash used in investing
activities (476)

    Financing activities:
       Repayment of note payable to bank                               (7,650)
       Repayment of long-term debt                                     (1,563)
       Proceeds from issuance of common
        stock under
         employee stock purchase plan                                      49
       Preferred stock dividend paid                                     (645)
       Principal payments on capital
        lease obligations                                                (187)
       Additions to deferred financing
        costs                                                             (19)

Net cash used in financing
activities (10,015)

    Change in cash and cash equivalents:
       Net increase in cash and cash
        equivalents                                                       451
       Cash and cash equivalents at
        beginning of period                                             5,735

Cash and cash equivalents at end
of period $6,186

     Supplemental Information #2
     WestCoast Hospitality Corporation
     Year 2002 Performance Guidance
     As of July 30, 2002
     (in thousands except EPS and
      cash flow per share)
                                            Estimated    Estimated Prior Year
                                                Q3         Total      Variance

    Revenue               High                59,000      202,100       68%
                          Low                 55,000      194,100       61%
                          Average             57,000      198,100       64%

2001 Actual 33,844 120,633

    EBITDA                High                14,500       36,500       21%
                          Low                 13,000       34,200       13%
                          Average             13,750       35,350       17%

2001 Actual 10,086 30,206

    Cash Flow             High                 9,000       21,600       31%
                          Low                  7,900       18,800       14%
                          Average              8,450       20,200       22%

2001 Actual 5,834 16,486

    Net Income to         High                 5,500        9,500       25%
     Common Shareholders Low                  4,700        8,250        9%
                          Average              5,100        8,875       17%

2001 Actual 2,924 7,578

    Earnings Per Share    High                 $0.42        $0.73       25%
                          Low                  $0.36        $0.64        9%
                          Average              $0.39        $0.68       17%

2001 Actual $0.23 $0.59

    Cash Flow
     Per Share(A)         High                 $0.69        $1.66       31%
                          Low                  $0.61        $1.45       14%
                          Average              $0.65        $1.55       22%

2001 Actual 0.41 1.27

(A) Net cash provided by operating activities excluding changes in
current assets and liabilities

WestCoast Hospitality Corporation owns, manages and franchises more than 90 hotels in 16 states.

This release and supplemental information contains forward looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Contact:
WestCoast Hospitality Corporation
Stephen Barbieri,
VP, Chief Communications Officer
WestCoast Hospitality Corporation
+1-509-323-7211
InvestorRelations@WestCoastHotels.com

Also See:	WestCoast Hospitality Reports For the Year Ended 2001 Eearnings of $0.59 Per Share; Hotel Occupancy at 60.5%, Down from 62.8% / Feb 2002
	Westcoast Hospitality Corp RevPAR Increases 9.2% in 1st Qtr, Occupancy Moves to 56.8% / May 2001

To search Hotel Online data base of News and Trends Go to Hotel.Online Search