Compared to net loss of $(2.7) million in 2nd Qtr 2004
|ARLINGTON, Va.--- Aug. 9, 2005--Interstate Hotels & Resorts (NYSE:IHR),
the nation's largest independent hotel management company, today reported
results of operations for the second quarter ended June 30, 2005. The company
exceeded its earnings guidance of May 5 and raised its 2005 full-year earnings
guidance for the second time this year.
For the 2005 second quarter, net income was $1.7 million, or $0.06 per diluted share, compared to net loss of $(2.7) million, or $(0.09) per diluted share, in the second quarter 2004. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), excluding non-recurring items, special charges and discontinued operations, was $7.9 million, up 23.6 percent from $6.4 million in the 2004 second quarter. Net income, excluding non-recurring items and special charges, was $2.6 million, or $0.09 per share, compared to net income of $1.3 million, or $0.04 per share, for the same period a year earlier.
Second-quarter 2005 results for Adjusted EBITDA, excluding non-recurring items, special charges and discontinued operations, exceeded the company's upwardly revised guidance of $6.5 million to $7.5 million. Net income and earnings per share (EPS), both excluding non-recurring items, special charges and discontinued operations, exceeded the high end of the company's guidance by $0.4 million and $0.02, respectively. Both hotel management and BridgeStreet operations contributed to the strong second-quarter results.
Total revenue in the 2005 second quarter, excluding other revenue from managed properties (reimbursable costs), was $55.2 million, compared to $46.5 million in the 2004 second quarter. The company experienced revenue increases across all areas of business. The increase is primarily due to the February 2005 acquisition of the Hilton Concord hotel in San Francisco and strong performance from the BridgeStreet Corporate Housing Worldwide subsidiary, as well as higher management fee revenue resulting from a greater number of managed properties compared to the same period last year and favorable operating results across the company's portfolio.
Hotel Operating Results
Same-store revenue per available room (RevPAR) for all managed hotels, excluding those hotels affected by the hurricanes that struck Florida in the fall of 2004, improved 11.1 percent to $82.02, which is 0.6 percentage points above the high end of the company's guidance, and 2.8 percentage points above the industry average of 8.3 percent, as reported by Smith Travel Research. Average daily rate (ADR) improved 8.6 percent to $110.34, while occupancy rose 2.3 percent to 74.3 percent.
Same-store RevPAR for all full-service managed hotels, excluding those hotels affected by the hurricanes, rose 11.4 percent to $85.84. ADR improved 9.0 percent to $115.29, while occupancy advanced 2.3 percent to 74.5 percent.
Same-store RevPAR for all select-service managed hotels, excluding those hotels affected by the hurricanes, increased 9.1 percent to $64.64, led by a 6.5 percent improvement in ADR to $87.63 and a 2.4 percent increase in occupancy to 73.8 percent.
"Interstate posted strong results for the second quarter," said Thomas F. Hewitt, chief executive officer. "As the economy continues to strengthen, we have aggressively raised ADR without impacting occupancy. We believe the industry will continue to enjoy strong demand growth as business travel continues to increase, which should allow us to raise room rates for the remainder of the year."
BridgeStreet Results Up Substantially
The company's BridgeStreet division reported substantially improved revenues and profitability over the prior year, led by strong results in four key markets: New York, London, Washington, D.C., and Chicago. BridgeStreet's Smart Growth program, which was launched earlier this year and focuses on yield management and optimizing apartment rentals, positively impacted rate and occupancy, which rose 8.6 percent and 2.2 percent, respectively, for the second quarter.
The division also has benefited from the strength and quality of its
licensing program, which provides BridgeStreet with significantly enhanced
distribution in more than 90 U.S. market statistical areas (MSAs). Following
the close of the second quarter, one of BridgeStreet's Global Partners
added apartments to the program in Boca Raton, Ft. Lauderdale, South Miami
Beach and Miami, Florida.
Acquisition and Divestment
The company benefited from its first full quarter of ownership of the
329-room Hilton Concord in the East Bay area of San Francisco, Calif.,
acquired in February 2005. "We have determined that we now will own the
hotel outright, rather than sell the property into a joint venture partially
owned by Interstate," Hewitt noted. The Hilton Concord exceeded the company's
pro forma results in the 2005 second quarter.
Key Financial Information
On June 30, 2005, Interstate had:
"We remain optimistic about the outlook for our managed hotel portfolio and for the industry as a whole," Richardson said. "With the addition of the Hilton Concord to our portfolio, continued aggressive growth in RevPAR, a projected modest increase in incentive fees and continued strength from BridgeStreet, we are raising our guidance for the second time this year."
The company provides the following range of estimates for the third quarter and full year 2005:
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.
Interstate Hotels & Resorts
|Also See:||Interstate Hotels & Resorts Selected to Manage Upscale Portfolio of 22 Hotels; Interstate Now Manages 330 Hotels / March 2005|
|Interstate Hotels & Resorts Acquires the 329-room Hilton Concord for $29.15 million / February 2005|