of $16.9 million on Revenues of $64.1 million
Hotel Operating Statistics
|NEW YORK - May 8, 2006 -- Morgans Hotel Group Co. (NASDAQ: MHGC), a
fully integrated hospitality company that owns and operates boutique hotels
in gateway cities under brands such as Delano and Mondrian, today reported
financial results for the first quarter 2006.
First quarter 2006 metrics are in line with the Company's expectations. Revenue per available room (RevPAR) for owned hotels was $196.25, a 4.1% increase over first quarter 2005 and a 23.8% increase over first quarter 2004. Total revenues, which include food and beverage, other hotel revenues and management fees, increased 2.9% to $64.1 million as compared to $62.3 million in the first quarter of 2005. As anticipated, adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $17.4 million.
Mr. W. Edward Scheetz, President and Chief Executive Officer stated, "Our results for the first quarter of 2006 were in line with our expectations. RevPAR at our hotels continues to grow, up almost 25% from two years ago, which illustrates the continued strength of both our brands and our markets. We continue to see positive trends in all of our markets, New York, Miami, Los Angeles, San Francisco, and London, and so we expect continued growth. We are also very excited to have closed on our first acquisition since our IPO, the 194 room James Hotel in Scottsdale, Arizona which we have re-branded as the Mondrian Scottsdale. Over the coming months, we will begin renovations to make the hotel reflective of the Mondrian brand standard and expect to complete renovations by year-end 2006. We look forward to the Mondrian Scottsdale's contribution to profitability. We are also very optimistic about our acquisitions pipeline. We are seeing attractive acquisition opportunities in our current markets and our target markets. Our brands are strong, our markets are strong, we have a new hotel in our portfolio and a robust acquisition pipeline. Morgans Hotel Group is well positioned for growth in 2006 and beyond."
First Quarter Operating Results
RevPAR for the company's owned hotels was $196.25 for the first quarter 2006, a 4.1% increase over the comparable period in 2005. The increase in RevPAR was driven by strong performances at the Clift hotel in San Francisco and the Mondrian hotel in Los Angeles, which posted RevPAR growth of nearly 17% and 7%, respectively.
The RevPAR growth for the Company's owned hotels was driven by average daily rate (ADR) growth, which increased by 7.1%, or $19.01, to $286.49 for the first quarter of 2006, from $267.49 for the first quarter of 2005. Occupancy at the Company's owned portfolio was 68.5% in the first quarter 2006 as compared to 70.5% in the first quarter of 2005. We are pushing rate at our properties, and expect increased occupancy to follow.
Our London hotels, which we own through a 50/50 joint venture, posted
very strong first quarter results, underscoring the strength of the London
market. In constant dollars, the Company's Sanderson and St. Martins Lane
posted RevPAR growth of 7.0% and 15.2%, respectively, for the first quarter
of 2006. However, the strength of the US dollar relative to the British
pound offset this improvement.
The second quarter has started off strongly. The Company's properties performed well in April with RevPAR growth of 7.5% for the entire portfolio. London experienced the most growth, with a RevPAR increase of 12%. Other cities also posted strong RevPAR growth; New York at 9.1% and Miami at 8.1%.
Balance Sheet and Financing
As of March 31, 2006, adjusted long-term debt was $483.4 million. Cash and cash equivalents were $60.3 million, and cash reserves were $33.6 million, resulting in net debt of $389.5 million. The Company's weighted average debt maturity was 4.4 years and its weighted average interest rate was 5.8%. The Company also has an undrawn $125 million revolving credit facility.
On May 3, 2006, the Company completed the purchase of the Mondrian Scottsdale, formerly known as the James hotel with a final payment of $43.2 million, bringing the total purchase price to $47.8 million. The Company funded the acquisition with proceeds from the IPO and intends to secure mortgage financing on the property. The Company intends to upgrade the property over the next several months to bring it to the level of our Mondrian. We also plan to open an Asia de Cuba restaurant and a Skybar at the property. We expect to complete the repositioning by the end of 2006.
In January 2006, the Company entered into a 50/50 joint venture with Boyd Gaming Corporation (NYSE: BYD - News) to develop two flagship hotels with a total of 1,600 rooms in Las Vegas on the Strip bearing the Company's Delano and Mondrian brands. We have continued to work with Boyd on pre-development of the hotels. The project is expected to be completed in 2010.
In January 2006, the Company completed the acquisition of the property across from the Delano Miami Hotel for approximately $14.3 million. The Company expects to convert the property into additional guest rooms and additional guest facilities and have the property in operation by the end of 2007.
Guidance For 2006
The statements below are the Company's outlook or forecast for the Company's business for the fiscal year ending December 31, 2006. Based upon the Company's expectations for continued improvement of the U.S. economy, moderate supply growth, further rate improvement in the luxury lodging and consumer service sectors, recent joint-venture announcements, along with planned expense increases, the Company continues to expect to meet the following financial targets for the full year 2006:
8.0% to 10.0%
Adjusted EBITDA for 2006 includes costs of approximately $2.0 million related to public company expenses and excludes non-cash stock compensation expense which is estimated to be approximately $7.5 million in 2006.
The Company anticipates spending approximately $10 million for the upgrade
to the Delano over the summer and approximately $4 to $5 million for the
renovation and re-branding of Mondrian Scottsdale. In addition, maintenance
capital expenditures for 2006 are estimated to be approximately $10 to
Morgans Hotel Group Co
|Also See:||Morgans Hotel Group Co. Reports Net loss for the 4th Qtr 2005 of $4.1 million; Anticipates Spending $20 to $25 million for Upgrades of Hotels and the Re-branding of Mondrian Scottsdale / Hotel Operating Statistics / March 2006|
|Morgans Hotel Group Co. Acquires the 194-room James Hotel in Scottsdale; Will Re-Brand as Mondrian Scottsdale, Don Jacinto Named General Manager / May 2006|