SPOKANE, Wash., Oct. 26, 1998 - Cavanaughs Hospitality
Corporation (NYSE: CVH) today reported record results for the third quarter
and nine months ending September 30, 1998. The third quarter results were
the largest revenues and net income in the history of the Company. "All
divisions of the Company were very profitable," said Donald K. Barbieri,
President and CEO. "Our new acquisitions are helping us capture new markets
and our Entertainment and Real Estate Services Divisions are continuing
to grow and contribute to earnings."
The Company reported a third quarter net income of $4.1 million, or
$.32 per share, a 166% increase from
$1.6 million, or $.22 per share for the same period a year ago. Total Revenues
for the Company rose $12 million or 77.3% from $15.6 million in the third
quarter of 1997 to $27.6 million for the comparable period in 1998. EBITDA
(earnings before interest, income taxes, depreciation and amortization)
a traditional measure of hotel company earnings, rose $4.3 million, or
73.7% from $5.8 million in the third quarter of 1997 to $10.0 million in
the third quarter of 1998. EBITDA as a percentage of revenue was 36.4%
for the 1998 period.
"These results are particularly significant," said Barbieri, "in that
the flow through of new revenues generated from our acquisitions was outstanding.
In addition, our Entertainment Division and our Real Estate Services Division
began new growth during the period with the Entertainment Division adding
both Yakima, Washington and Billings, Montana to its presentation venue
list. These new cities will add customers and name penetration as the Company
continues to use entertainment to add synergy to its hotel operations.
The Real Estate Services Division concluded significant lease negotiations
in the quarter that will bring $9.98 million dollars of revenue to the
Company in the initial term of these new leases."
On October 16, 1998 the Company announced new leases with The Northern
Trust Bank (Nasdaq: NRS), Red Robin Restaurants, Starbucks Corporation
(Nasdaq: SBUX), The Buckle (NYSE: BKE) and Magic Diamond Casino. In addition,
the Company announced new subleases with Travelers Property Casualty (NYSE:
TAP) for approximately 38,000 square feet and additional lease options,
exercisable by Travelers in early 1999, for an additional 27,000 square
feet. "While both the Entertainment and Real Estate Services Divisions
will not likely grow at the same percentage growth of the Hotel and Restaurant
Division," said Barbieri, "the synergy and stability of their growth will
have great earnings impact on the Company."
"This year has been a great year for the Company," said Barbieri. "In
the nine months ending September 30, 1998 we have seen income before extraordinary
items increase 228.8% to $6.7 million, or $.61 per share from $2.0 million
in the first nine months of 1997, or $.29 per share for the comparable
period of 1997. EBITDA for the nine months rose 60.0% from $12.9 million
to
$20.6. During the third quarter, while our average daily rate (ADR)
for Comparable hotels (hotels owned for over one year) grew 10.8% to $87.36,
our occupancy actually decreased by 7.8 percentage points to 69.2% due
to one time events in 1997 and an increase in rooms available due to a
chain-wide room renovation in 1997 which took a number of rooms out of
service. In addition, one of the hotels in the comparison group dropped
a large block of lower rate contract rooms in the period, choosing to replace
them with higher rate corporate rooms for future months.
Despite the drop in occupancy, room revenue in the period for the Comparable
hotels were up 2.1%. The same store REVPAR growth in the fourth quarter
has returned to the double digit level through the first three weeks of
the October. On a quarter to date basis through the first three weeks of
October, the Company has achieved a Comparable hotel REVPAR growth of 21.7%
with occupancy growing from 64.1% in 1997 to 68.6% and ADR growing from
$74.34 in 1997 to $84.52 in 1998. I am very pleased with where the fourth
quarter is going and comfortable that we will meet or exceed the analysts
consensus estimates for the quarter and year."
During the third quarter the Company closed on the acquisitions of four
hotels comprised of 651 rooms from Sunstone Hotel Investors, Inc. The Company
also entered into an agreement to purchase the 177 room former Olympia
Holiday Inn Select, in Olympia, Washington. That acquisition is projected
to close in December, 1998. The four hotels purchased during the period
are located in Boise, Twin Falls, and Pocatello, Idaho, and Helena, Montana
and they position the Company as the largest owner-manager of a full-service
hotel brand in Idaho and Montana. They also fill in a region of the Northwest
that previously was void of the Cavanaughs brand, providing greater connectivity
throughout the chain which now stretches from Seattle, Washington to Salt
Lake City, Utah and from Helena, Montana to Portland, Oregon.
"Looking ahead to 1999," said Barbieri, "we will have an exciting year
with continued growth as our 1998 acquisitions have a full year to perform
under our management and we continue to acquire leading full service hotels
in key markets. When we went public in April of 1998, we said our goal
was to become the dominant full service hotel company in the Northwest,
with our real estate services and entertainment divisions providing great
synergy to that effort. I'm proud that we have walked the talk in 1998.
The successes we are having in each market segment of our hotel division
and the growth in entertainment and real estate division operations bodes
well for 1999 and beyond."
Cavanaughs Hospitality Corporation serves the Northwest with 3,756 full
service hotel rooms in 18 hotels (exclusive of the recently announced Olympia,
Washington facility now under contract), including 45 restaurants and lounges
and 179,900 square feet of meeting space. GB Real Estate Services is the
real estate division of Cavanaughs Hospitality Corporation and manages
590,000 square feet of Company owned commercial real estate and 3.1
million square feet of third party owned commercial real estate and 2,200
units of third party owned apartment and condominium properties. In addition,
CVH provides entertainment services through GB Select-a-Seat, a 20-outlet
computerized ticket company, and GB Presents, a Broadway and special event
presenting company.
No assurance can be given that earnings will not be lower than management
currently anticipates. Statements in this release may be construed to be
forward looking and are made pursuant to the Safe Harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that all forward looking statements involve risks and uncertainties, including
without limitation, risks relating to the operation and acquisition of
hotels, the availability of capital to finance growth, and the historical
cyclicality of the lodging industry, as well as the other matters disclosed
in the documents filed by the Company with the Securities Exchange Commission.
Cavanaughs Hospitality Corporation
Hotel Statistics: Comparable hotels (hotels
owned > 1 year)
|
Three months ended Sept. 30,
|
Nine months ended Sept.30,
|
|
|
|
|
|
|
|
F/Y 98
|
F/Y 97
|
$ Change
|
% Change
|
F/Y 98
|
F/Y 97
|
$ Change
|
% Change
|
Occupancy |
69.2% |
77.0% |
- |
-7.8% |
64.5% |
64.2% |
- |
0.2% |
Average Rate |
$87.36 |
$78.85 |
$8.51 |
10.8% |
$82.28 |
$75.26 |
$7.02 |
9.3% |
RevPAR |
$60.48 |
$60.73 |
($0.25) |
-0.4% |
$53.06 |
$48.35 |
$4.71 |
9.7% |
|