First Quarter Net Loss of $26.4 million Compared to
a Loss of $21.4 million in 2003;
RevPAR for the 24 Hotel Portfolio Increased 2.5% to $88.37
|TORONTO, April 20, 2004 - Legacy Hotels Real Estate Investment Trust
("Legacy") (TSX: LGY.UN) today announced its unaudited financial results
for the three months ended March 31, 2004. All amounts are in Canadian
dollars unless otherwise indicated. Legacy will hold its annual and special
meeting of unitholders at 10:00 a.m. Eastern Time on April 22, 2004 at
The Fairmont Royal York in Toronto.
"We are pleased to report improving performance through most of our portfolio with revenue per available room ("RevPAR") up 2.5%," commented Neil J. Labatte, Legacy's President and Chief Executive Officer. "The travel recovery in both Canada and the U.S. is encouraging, with occupancies increasing throughout the majority of our portfolio. Our Canadian portfolio's RevPAR exceeded 2002 levels for the comparable period. In addition, our recent diversification in the United States appears well timed as the U.S. lodging industry is benefiting from improving travel demand."
Continued Mr. Labatte. "The first quarter is traditionally Legacy's lowest earnings period, however, we are encouraged by recent trends, which point to the anticipated strong recovery in the lodging sector in 2004."
Three Months Ended March 31, 2004
First quarter revenues increased $19.9 million or 15.3% to $150.2 million. The addition of The Fairmont Olympic Hotel, Seattle in August 2003 contributed $11.0 million in revenues during the quarter. Our second U.S. property, in Washington, D.C., also benefited from improving travel demand in the U.S. Together, both properties achieved revenue growth of 9% on a U.S. currency basis over their performance in 2003. The average Canadian dollar exchange rate has appreciated approximately 14% compared to the first quarter of 2003, which reduces the Canadian dollar equivalent of our U.S. revenues.
Revenues at our Canadian portfolio increased in virtually all markets, led by improved performance at Fairmont The Queen Elizabeth following the completion of its major renovation project in the second quarter of 2003. Our properties in British Columbia benefited from strong demand growth at each of the hotels. The Toronto market continues to strengthen with occupancy and revenues at our three Toronto hotels returning to historical levels for the first quarter. Performance at Fairmont Le Château Frontenac was below expectations this quarter as a result of lower than anticipated U.S. and international travel demand. The lower demand is consistent with first quarter results for other major Canadian resorts which rely on this customer segment.
Hotel EBITDA(1) more than doubled to $11.1 million in the first quarter. Hotel EBITDA margin, defined as hotel EBITDA as a percentage of revenues, improved to 7.4% compared with 4.2% in the first quarter of 2003 as a result of higher occupancy and diligent adherence to cost control measures.
A $7.8 million increase in amortization, primarily due to a change in accounting policy (See Trust Developments), contributed to the increase in the first quarter net loss of $26.4 million or $0.28 diluted net loss per unit compared to a loss of $21.4 million or $0.24 diluted net loss per unit in 2003. Net loss was also impacted by increased interest and amortization expenses related to the recent hotel acquisition in Seattle. Distributable loss(2) per unit for the period improved to $0.15 per unit compared to a net loss of $0.17 per unit in the prior period. Given the seasonality of the portfolio and the fixed nature of certain operating costs, first quarter results are not indicative of results for the full year. Legacy historically incurs a loss in the first quarter.
RevPAR for the portfolio increased 2.5% to $88.37 for the first quarter of 2004 compared to 2003. The strength in occupancy, which improved 2.9 points, offset the drop in average daily rate ("ADR") of 2.4%. After adjusting for the foreign exchange impact, RevPAR increased approximately 5% over 2003.
At the Fairmont managed properties, RevPAR increased 5.0% to $97.95 as a result of a 4.8 point improvement in occupancy and a 3.4% decrease in ADR. Strong performance was experienced through the majority of the portfolio led by an approximate 40% RevPAR improvement at Fairmont The Queen Elizabeth following the completion of its extensive renovation program in the spring of 2003. Strong performance at each of our hotels in British Columbia contributed to an approximate 20% RevPAR improvement for the region. Reduced visitation from U.S. and international travellers resulted in an approximate 15% RevPAR decline at Fairmont Le Château Frontenac.
At the Delta managed properties, RevPAR of $69.64 was down 3.7% due to a drop in both occupancy and ADR of 0.8 points and 2.4%, respectively. Performance at our Ottawa and Montreal hotels was below expectations this quarter, which led to the overall decline in RevPAR. Both properties are anticipating strong performance through the balance of the year with annual results expected to exceed 2002 levels.
Effective January 1, 2004, Legacy has adopted the straight-line method of amortization for hotel buildings in accordance with new accounting standards issued by the Canadian Institute of Chartered Accountants. This change in accounting policy has been applied prospectively. While significantly impacting net income, this change does not affect distributable income and therefore will not impact future distributions to unitholders.
Capital expenditures during the quarter totalled $4.9 million. Following the completion of several significant capital projects over the past three years, Legacy anticipates investing approximately $45 million in its properties in 2004. Attractive returns on the capital invested are expected once the properties realize the full benefit of these improvements, which typically occurs two to three years after completion.
"Group business bookings for the balance of this year remain ahead of booking levels experienced at this time last year for the corresponding period. This trend is promising since booking levels at the end of March 2003 had not yet been impacted by cancellations due to SARS concerns," commented Mr. Labatte. "While it is still early in the recovery, we remain optimistic with respect to the strength of recovery for our critical summer leisure and tour business. Our preliminary expectations are that both occupancies and rates in 2004 will return to levels realized in 2002."
Continued Mr. Labatte, "We recognize the importance of distributions
to our unitholders. Should our performance and business volumes continue
to build as expected over the next few months, we would hope to resume
distributions in the second quarter."
Legacy is Canada's premier hotel real estate investment trust with 24 luxury and first-class hotels and resorts with over 10,000 guestrooms located in Canada and the United States. The portfolio includes landmark properties such as Fairmont Le Château Frontenac, The Fairmont Royal York, The Fairmont Empress and The Fairmont Olympic Hotel, Seattle.
This press release contains certain forward-looking statements relating, but not limited to, Legacy's operations, anticipated financial performance, business prospects and strategies.
Tel: (416) 874-2765
|Also See:||Fairmont Affiliate Acquires the 450 room Four Seasons Olympic for Approximately US$100 million; Will be Flagged The Fairmont Olympic Hotel, Seattle / July 2003|
|Dennis Clark Named General Manager of the Fairmont Olympic Hotel, Seattle; Legacy's Acquisition Represents a Natural Complement to Fairmont's Presence in Vancouver and Victoria, British Columbia / Aug 2003|