| March 15, 2002 - Candlewood Hotel Company, Inc., a leading owner, manager,
developer and franchisor of high quality, value-oriented, business-travel
hotels, today announced results for its fourth quarter and 2001 year end.
"Although we are not happy about fourth quarter results, we are pleased
with our operating results for the fourth quarter when compared to our
key competitors and the industry overall. As I have said from our founding
in 1995, a quality product coupled with a strong direct sales force provide
a competitive advantage during slow economic times," said Jack P. DeBoer
chairman and chief executive officer. "Our fourth quarter occupancy of
70.7 percent is an increase of 60 basis points over the fourth quarter
of 2000 and is the second highest among our competitors."
During the fourth quarter, Candlewood's revenue growth continued to
be impacted by the weak economy. In addition, the seasonality of the decreased
business traveler demand over the holiday period generally has a negative
impact on the company's revenue per available room (RevPAR) during the
fourth quarter. The effects of this softer demand were offset by Candlewood's
increased market share of the extended stay segment, due in part to its
direct sales force efforts. The overall lodging industry experienced an
estimated RevPAR decline of 15 percent, compared to a 6.2 percent RevPAR
decline at Candlewood.
"While encouraged by our increased market share, our primary goal for
2002 is to grow absolute RevPAR as the economy begins to recover," continued
DeBoer. "We are seeing positive macro-economic reports, with lower
factory inventories, decreasing unemployment figures, and a modest increase
in consumer confidence. Fundamentally, we believe the lodging industry
is in a good position to move forward, with historically low supply growth
of 1.8 percent forecasted for 2002, in combination with reduced operating
expense levels. In addition, the extended stay segment has experienced
the sharpest decline in hotel development activity - a 75 percent reduction
of new supply from peak levels in the third quarter of 1998. We are beginning
to see RevPAR improvements within our portfolio."
Fourth Quarter 2001 Results
The combined results of the Candlewood hotels owned, leased and managed
by Candlewood for the fourth quarter of 2001 were as follows: RevPAR of
$38.84, average daily rate (ADR) of $54.90 and average occupancy of 70.7
percent. For the fourth quarter of 2000, revenue results were as follows:
RevPAR was $41.39, ADR was $59.05 and average occupancy was 70.1 percent.
Total consolidated hotel-operating revenues for the fourth quarter of
2001 were $29.2 million, compared to $31.2 million for fourth quarter of
2000. The decrease in hotel operating revenues is primarily attributable
to a decrease in average daily rate. Candlewood had a loss before preferred
dividends of $4.8 million in the fourth quarter 2001, compared to $0.7
million in the fourth quarter 2000. After preferred dividends, Candlewood
had a loss of $0.76 per share for the quarter ended December 31, 2001 compared
to a loss of $0.30 per share for the quarter ended December 31, 2000.
During the fourth quarter of 2001, Candlewood opened one Candlewood
Suites franchise hotel in Colorado Springs, Colorado. As of December 31,
2001, Candlewood had 105 hotels open including 27 franchised hotels and
78 hotels owned, leased or managed by Candlewood. At December 31, 2000,
Candlewood had 91 hotels open; including 17 franchised hotels and 74 hotels
owned, leased or managed by Candlewood.
Full Year Results
The combined results for the Candlewood hotels owned, leased and managed
by Candlewood for the year ended December 31, 2001 were as follows: RevPAR
of $43.32, ADR of $59.36 and average occupancy of 73.0 percent. For the
year ended December 31, 2000, revenue results were as follows: RevPAR was
$44.00, ADR was $58.25 and average occupancy was 75.5 percent.
Total consolidated hotel-operating revenues for the year ended December
31, 2001 were down slightly to $130.1 million from $131.2 million the prior
year. The decrease in 2001 hotel operating revenues compared to 2000
is primarily attributable to the decline in business travel as a result
of the softer U.S. economy and to a lesser extent, the impact of
the events of September 11. The loss before preferred dividends for the
year 2001 was $5.1 million, compared to income before preferred dividends
of $5.7 million in the year 2000. For the year ended December 31, 2001,
Candlewood had a net loss after dividends of $1.46 per share compared to
a net loss after preferred dividends in 2000 of $0.26 per share.
DeBoer commented, "2001 was a challenging year in the lodging industry,
however, we laid the groundwork for future growth. We implemented a program
with Amazon.com to attract new customers and enhance loyalty among our
existing customer base. Additionally, we began a cross marketing program
with Enterprise Rent A Car. Our direct sales force is strong, and has demonstrated
the ability to grow market share."
Financial Position
Commenting on Candlewood's financial position, Warren D. Fix, Chief
Financial Officer, said, "The primary reason for the decline in RevPAR
that we experienced was a decrease in ADR due to the reduction in short-term
higher-ADR business travel. In fact, our occupancy rates improved in the
fourth quarter over the same period in 2000. The majority of our variable
hotel expenses - labor and utilities - vary as a function of occupancy.
The primary contributors to our net loss in 2001 were the decrease in same
store RevPAR, increased resources spent on sales and marketing, and significant
increases in insurance and utility costs. We implemented a number of cost
reducing initiatives during this difficult operating year, including refinements
to our labor model. As previously announced, during the fourth quarter
we completed a headcount reduction, streamlining communication between
senior management and the hotel staff. This has facilitated a more direct
reporting system and has met with positive feedback."
"As we stated in the third quarter, our focus was to conserve cash and
extend or modify our short-term debt. We reached an agreement with Hilton
to extend the maturity on the debt due in November 2001 to June 2002,"
Fix continued. "We also made the decision to suspend the preferred stock
dividends for November 2001 and February 2002. We ended the year 2001 with
a cash balance of $18.0 million compared to $21.8 million at December 31,
2000. For 2002, we will continue to conserve cash and explore refinancing
opportunities for our hotels, including the potential sale and leaseback
of properties."
Outlook 2002
"In striving to attain our goal of absolute RevPAR growth in 2002, our
primary focus will be on greater core customer retention, as well as more
effective and efficient sales calls," DeBoer commented. "Industry specialists
see increased demand by the corporate business traveler as the catalyst
to a lodging industry rebound. The fact that our business model cultivates
this type of traveler, combined with recent corporate expense reductions
for travel, position Candlewood to capture additional market share when
the recovery occurs."
CANDLEWOOD HOTEL COMPANY,
INC.
FOURTH QUARTER OPERATING RESULTS
(Unaudited) (In thousands, except share and per share data)
For the three-
months ended For the year ended
December 31, December 31,
2001 2000 2001
2000
Revenues:
Hotel operations
$29,046 $30,067 $127,092 $127,771
Other income
189 1,170 3,031
3,458
Total hotel operating revenues
29,235 31,237 130,123 131,229
Proceeds from sales
of hotels, net
of deferred
gain of $64 and $0,
respectively
- -
28,850 -
Deferred gain recognition
on sales
of hotels
231 596 1,280
2,183
Total
revenues
29,466 31,833 160,253 133,412
Operating costs
and expenses:
Hotel operating
expenses
18,691 16,965 74,451 67,993
Corporate operating
expenses 2,278
1,788 7,162 6,392
Rent expense on
leased hotels 7,055
6,204 26,523 25,056
Hotel opening costs
- 122
230 279
Depreciation and
amortization 2,808
2,701 11,641 10,578
Total operating costs and expenses
30,832 27,780 120,007 110,298
Costs of hotels
sold
- -
29,064 -
(1,366) 4,053 11,182 23,114
Interest income
161 316
761 1,150
Interest expense
(3,614) (5,034) (17,081) (18,577)
Income
(loss) before preferred
dividends
(4,819) (665) (5,138) 5,687
Preferred stock dividends
(2,023) (2,017) (8,025) (8,025)
Net loss available to common stockholders
(6,842) (2,682) (13,163) (2,338)
Per share data:
Net income (loss) per share
of common stock - basic and diluted
$(0.76) $(0.30) $(1.46) $(0.26)
Average
weighted shares of common
stock outstanding
9,025 9,025 9,025
9,025
CANDLEWOOD
HOTEL COMPANY, INC.
For the three-
months ended For the year ended
December 31, December 31,
2001 2000 2001
2000
Hotel statistics
(Candlewood owned,
leased or
managed)
# of Hotels
77 73
77 73
Average occupancy %
70.7% 70.1% 73.0%
75.5%
Average daily rate
$54.90 $59.05 $59.36 $58.25
Revenue per available room
$38.84 $41.39 $43.32 $44.00
Growth
-6.2%
-1.5%
Hotel statistics
- comparable hotels
(owned, leased
or managed open as
of beginning
of period)
# of Hotels
72 72
66 66
Average occupancy %
70.6% 70.5% 73.4%
76.0%
Average daily rate
$52.63 $58.85 $56.21 $56.87
Revenue per available room
$37.17 $41.48 $41.27 $43.20
Growth
-10.4%
-4.5%
As of December 31,
2001
2000
Open Hotels
Owned
31
32
Leased
36
34
Managed (A)
2
2
Joint Venture
9
6
Franchised
27
17
Total Open
105
91
Under Construction
Owned
-
1
Leased
-
-
Managed
-
-
Joint Venture
-
3
Franchised
3
7
Total Under Construction
3
11
Total Hotels
108
102
Open Rooms
Owned
3,783
3,971
Leased
4,294
3,893
Managed (A)
191
179
Joint Venture
1,159
785
Franchised
2,759
1,907
Total Open
12,186
10,735
Under Construction
Rooms
Owned
-
214
Leased
-
-
Managed
-
-
Joint Venture
-
373
Franchised
270
666
Total Under Construction
270
1,253
Total Rooms
12,456
11,988
Signed Franchise
Agreements
26
27
(A)
Includes two managed hotels not under the Candlewood brand. |
Candlewood Hotel Company, headquartered in Wichita, Kansas, owns, operates
and franchises Candlewood Suites and Cambridge Suites -- hotel properties
that offer high-quality accommodations for all guests, while catering to
mid-market and upscale business and personal travelers seeking multiple
night stays. Candlewood Hotel Company was founded in late 1995 by
Chairman and CEO Jack DeBoer - founder of Residence Inn.
The financial results may not be indicative of results for future periods.
The matters in this press release include "forward looking statements"
within the meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 and are qualified by cautionary statements contained herein and in
Candlewood Hotel Corporation filings with the Securities and Exchange Commission. |
