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Strategic Hotel Capital, Inc. Reports Net Loss for the
3rd Qtr of $3.1 million; RevPAR Up 9.2%
Over Prior Year
Hotel Operating Statistics

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CHICAGO, Nov. 9, 2004 - Strategic Hotel Capital, Inc.  (NYSE: SLH) ("Strategic Hotel" or "the company") today reported results for the quarter ended September 30, 2004 and its business outlook for the remainder of 2004.

Third Quarter Highlights

  •  RevPAR for comparable hotels increased 9.2 percent over 3Q03.
  •  Occupancy rate for comparable hotels increased 5.2 percent over 3Q03.
  •  Hotel revenue for comparable hotels increased 23.7 percent over 3Q03.
  •  Closed on the Ritz-Carlton Half Moon Bay acquisition.
  •  Paid a quarterly dividend of $0.22 per share on October 14, 2004.
  •  Adjusted EBITDA of $14 million is in line with prior guidance.
Operating Results

We present certain information about our hotel operating results and statistics for the properties owned or leased by us after the IPO and refer to these properties as the "REIT" hotels.  Due to our limited period of ownership of the Ritz-Carlton Half Moon Bay, we have excluded the hotel from the statistics presented below.  RevPAR increased by 9.2 percent for the company owned and leased REIT hotels during the third quarter of 2004 as compared to the same period in 2003.  REIT hotel occupancy was 68.9 percent, representing a 5.2 percent gain over the third quarter 2003 occupancy rate of 65.5 percent.  The average daily room rate ("ADR") for REIT hotels increased 3.8 percent, from $154.87 in 3Q03 to $160.79 for 3Q04.  Net loss for the quarter totaled $3.1 million or $0.11 loss per diluted share.  Funds from Operations ("FFO") per diluted share was $0.17 for the three months ended September 30, 2004.  As previously announced, the company's Board of Directors declared a dividend for the quarter ended September 30, 2004 of $0.22 per share, which was paid on October 14, 2004.

"We are pleased with our operational results for the quarter that were in line with our internal guidance," stated Laurence Geller, chief executive officer of Strategic Hotel.  "We are encouraged by the signs of a sustainable recovery in the lodging sector, in particular the increased pricing power that room rates witnessed during the quarter."

Portfolio Update

For the North American REIT hotels, comparable hotel RevPAR for the third quarter increased 7.9 percent compared to the third quarter of 2003, resulting from a 6.1 percent increase in occupancy and a 1.7 percent increase in ADR.  Comparable hotel operating profit margins increased by 50 basis points during the third quarter.

For the European REIT hotels, comparable hotel RevPAR for the third quarter increased 12.6 percent over the third quarter of 2003, driven by a 1.6 percent increase in occupancy and a 10.8 percent increase in ADR.

Acquisition Update

During the quarter, the company closed on its previously announced acquisition of the Ritz Carlton Half Moon Bay, a 261-room ocean-side resort in Northern California. The acquisition was funded by a $75 million mortgage loan provided by an affiliate of Deutsche Bank, and by borrowings under the company's revolving line of credit.

2004 Outlook

For the North American segment of the REIT portfolio, management expects comparable hotel RevPAR growth for the fourth quarter of 2004 to be in the range of 2.5 to 3.5 percent.  For the company's European properties, management expects comparable hotel RevPAR growth for the fourth quarter of 2004 to be in the range of 9 to 10 percent.  Management is reaffirming its previous guidance for the fourth quarter 2004, and anticipates that the company's adjusted EBITDA should be in the range of $18.8 million to $19.9 million, net loss in the range of $1.6 million to $0.8 million and diluted FFO in the range of $9.8 million to $10.9 million.  This outlook assumes a continuation in the economic and lodging sector recovery.

As management is in the initial phase of the portfolio's hotel budgetary process for 2005, the company anticipates that it will be prepared to issue formal guidance for 2005 in conjunction with the fourth quarter year-end 2004 earnings release.
 
 

Strategic Hotel Capital, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)

                           Three Months Ended         Nine Months Ended
                               September 30,            September 30,
                             2004         2003        2004         2003
    Revenues:
    Rooms                  $44,544      $76,391     $215,937     $232,958
    Food and beverage       25,030       35,992      110,148      117,057
    Other hotel operating
     revenue                 9,798       12,993       36,994       40,454
                            79,372      125,376      363,079      390,469
    Lease revenue            5,692        5,127       20,919       21,372
      Total revenues        85,064      130,503      383,998      411,841

    Operating Costs
     and Expenses:
    Rooms                   11,314       20,419       54,922       59,695
    Food and beverage       19,510       29,674       85,155       91,682
    Other departmental
     expenses               26,057       36,604      103,554      108,284
    Management fees          2,997        4,163       13,285       13,861
    Other property level
     expenses                5,769        8,010       23,927       26,746
    Lease expense            3,189            -        3,189            -
    Depreciation and
     amortization           10,753       19,988       50,810       62,444
    Corporate expenses       4,299        4,755       24,493       16,272
      Total operating costs
       and expenses         83,888      123,613      359,335      378,984
        Operating income     1,176        6,890       24,663       32,857

    Interest expense         6,254       28,083       57,097       82,384
    Interest income            (43)        (704)      (1,013)      (2,332)
    Loss on early
     extinguishment of debt     17        2,977       21,963       14,528
    Other (income) expenses,
     net                    (1,359)       1,722          684        5,032
    Loss before income
     taxes, minority
     interests and
     discontinued
     operations             (3,693)     (25,188)     (54,068)     (66,755)
    Income tax expense
     (benefit)                 405       (2,293)         760       (1,544)
    Minority interests        (989)         155       (1,917)       2,834
    Loss from continuing operations  (3,109)     (23,050)     (52,911)     (68,045)
    Income from discontinued
     operations                  -          775       75,662       25,684
    Net (Loss) Income       (3,109)     (22,275)      22,751      (42,361)

    Basic and Diluted (Loss)
     Income Per Share:
    Loss from continuing operations per share   $(0.11)      $(1.21)      $(2.36)      $(4.18) Income from discontinued operations per share        -         0.04         3.38         1.58 Net (loss) income per share                  $(0.11)      $(1.17)      $ 1.02       $(2.60)
    Weighted-average
     common shares
     outstanding        28,689,288   19,007,969   22,379,762   16,297,666

    The company's Consolidated Statements of Operations for the third quarter and year to date 2004 include for the entire period: the results of the 15 hotels currently owned and leased by the company, referred to as the REIT Hotels; and before June 29, 2004, the date of the IPO, the results of 7 other hotels, which were distributed out of the company and in which the company no longer has an ownership interest.

                Strategic Hotel Capital, Inc. and Subsidiaries
                Unaudited Condensed Consolidated Balance Sheet
                      (In Thousands, Except Share Data)

                                                   September 30,   June 30,
                                                      2004           2004
    Assets
    Property and equipment                          $953,904       $844,709
      Less accumulated depreciation                 (210,616)      (200,111)
        Net property and equipment                   743,288        644,598
    Goodwill and intangible assets (net of
     accumulated amortization of $118 and $0)         73,614         55,224
    Investment in hotel joint ventures                10,934         10,473
    Cash and cash equivalents                         32,123         58,765
    Restricted cash and cash equivalents              27,114         21,105
    Accounts receivable (net of allowance for
     doubtful accounts of $346 and $348)              23,486         21,235
    Deferred financing costs (net of accumulated
     amortization of $724 and $0)                     11,872         11,639
    Other assets                                      75,602         67,250
        Total assets                                $998,033       $890,289

    Liabilities and Owners' Equity Liabilities:
      Accounts payable and accrued expenses          $56,159        $52,473
      Distributions payable                            8,721              -
      Bank credit facility                            50,000         31,500
      Mortgages and other debt payable               490,017        415,418
      Deferred fees on management contracts            2,377          2,421
      Deferred gain on sale of hotels                110,057        109,209
        Total liabilities                            717,331        611,021
    Minority interests                                66,554         79,591
    Owners' equity:
      Distributions to members                      (246,808)      (227,829)
      Common shares ($0.01 par value; 150,000,000
       common shares authorized; 30,035,701 and
       26,254,034 common shares issued and
       outstanding)                                      300            263
      Additional paid-in capital                     730,020        686,065
      Deferred compensation                           (2,193)        (2,921)
      Accumulated deficit                           (262,455)      (259,346)
      Accumulated distributions to owners             (6,652)             -
      Accumulated other comprehensive income           1,936          3,445
        Total owners' equity                         214,148        199,677
        Total liabilities and owners' equity        $998,033       $890,289
 

                Strategic Hotel Capital, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to Funds from Operations (FFO) and EBITDA
                                 (Unaudited)
    We present two non-GAAP financial measures herein for the company that we believe are useful to investors as key measures of our operating performance:
Funds from Operations, or FFO; and Earnings Before Interest Expense, Taxes, Depreciation and Amortization, or EBITDA. Reconciliation of these measures to net income (loss), the most directly comparable GAAP measure, is set forth in the following tables.
    We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which adopted a definition of FFO in order to promote an industry-wide standard measure of REIT operating performance that would not have certain drawbacks associated with net income under GAAP. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding gains (or losses) from sales of property plus real estate-related depreciation and amortization, and after adjustments for our portion of these items related to unconsolidated partnerships and joint ventures. We also present diluted FFO, which is FFO less convertible debt interest expense and minority interest expense on convertible minority interests. We believe that the presentation of FFO and diluted FFO provides useful information to investors regarding our results of operations because they are measures of our ability to service debt, fund capital expenditures and expand our business. In addition, FFO is widely used in the real estate industry to measure operating performance without regard to items such as depreciation and amortization.
    EBITDA represents net income (losses) excluding: (i) interest expense, (ii) income tax expense, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA also excludes interest expense, income tax expense and depreciation and amortization of our equity method investments. EBITDA is presented on a full participation basis, which means we have assumed conversion of all minority interests into SHCI common shares.  We also present adjusted EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks.  We believe EBITDA and adjusted EBITDA are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA and adjusted EBITDA as measures in determining the value of acquisitions and dispositions.
    We caution investors that amounts presented in accordance with our definitions of FFO, diluted FFO, EBITDA and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. FFO, diluted FFO, EBITDA and adjusted EBITDA should not be considered as an alternative measure of our net loss or operating performance. FFO, diluted FFO, EBITDA and adjusted EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that FFO, diluted FFO, EBITDA and adjusted EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily a better indicator of any trend as compared to comparable GAAP measures such as net loss (income). In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow.  Below, we include a quantitative reconciliation of FFO, diluted FFO, EBITDA and adjusted EBITDA to the most directly comparable GAAP financial performance measure, which is net income (loss).

                           Three months ended         Nine months ended
                              September 30,              September 30,
                            2004         2003          2004        2003

                                           (unaudited)
                                          (In thousands)

    Net (loss) income      $(3,109)   $(22,275)      $22,751    $(42,361)

    Depreciation and
     amortization-
     continuing operations  10,753      19,988        50,810      62,444

    Depreciation and
     amortization-
     discontinued
     operations                  -       1,256             -       4,508

    Gain on sale of
     assets-discontinued
     operations                  -        (100)      (75,982)    (21,073)

    Realized portion of
     deferred gain on sale
     leasebacks             (1,122)          -        (1,122)          -

    Deferred tax expense
     on realized portion
     of deferred gain on
     sale leasebacks           322           -           322           -

    Minority interest adjustments            (2,807)       (113)       (2,931)       (363)
    Joint venture
     adjustments               881         757         2,680       2,490

    FFO                      4,918        (487)       (3,472)      5,645
      Convertible debt
       interest expense          -       2,126         4,105      12,834
      Convertible minority
       interests             1,818         268         1,014       3,197

    FFO-diluted             $6,736      $1,907        $1,647     $21,676

    Net (loss) income      $(3,109)   $(22,275)      $22,751    $(42,361)

    Depreciation and
     amortization-
     continuing
     operations             10,753      19,988        50,810      62,444

    Depreciation and
     amortization-
     discontinued
     operations                  -       1,256             -       4,508
    Interest expense-
     continuing operations   6,254      28,083        57,097      82,384

    Interest expense-
     discontinued operations     -       1,406           577       4,891

    Income taxes               744        (411)        1,585       1,215

    Minority interests        (989)        155        (1,917)      2,834

    Joint venture
     adjustments             1,505         776         6,203       4,617

    EBITDA                 $15,158     $28,978      $137,106    $120,532

      Realized portion of
       deferred gain on
       sale leasebacks      (1,122)          -        (1,122)          -

    Adjusted EBITDA        $14,036     $28,978      $135,984    $120,532
 
 

                Strategic Hotel Capital, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to EBITDA and FFO for 4th Quarter Forecast
                                                       Three months ended
                                                       December 31, 2004
                                                     Low-End        High-End
                                                     of Range       of Range
                                                          (in millions)
    Net loss                                           $(1.6)         $(0.8)
    Depreciation and amortization                       12.1           12.1
    Interest expense                                     7.2            7.2
    Income taxes                                         1.3            1.3
    Minority interests                                  (0.5)          (0.2)
    Joint venture adjustments                            1.5            1.5
    EBITDA                                              20.0           21.1
    Realized portion of deferred gain on sale
     leasebacks                                         (1.2)          (1.2)
    Adjusted EBITDA                                    $18.8          $19.9

    Net loss                                           $(1.6)         $(0.8)
    Depreciation and amortization                       12.1           12.1
    Realized portion of deferred gain on sale
     leasebacks                                         (1.2)          (1.2)
    Deferred tax on realized deferred gain               0.3            0.3
    Minority interest adjustments                       (3.0)          (3.0)
    Joint venture adjustments                            0.7            0.7
    FFO                                                  7.3            8.1
    Convertible minority interests                       2.5            2.8
    Diluted FFO                                         $9.8          $10.9
 
 

                Strategic Hotel Capital, Inc. and Subsidiaries
          Discussion of REIT Hotel Results and Operating Statistics
                                 (Unaudited)
    The company's Consolidated Statements of Operations for the third quarter and year to date 2004 include for the entire period: the results of the 15 hotels currently owned and leased by the company, referred to as the REIT Hotels; and before June 29, 2004, the closing date of the IPO, the results of 7 other hotels, which were distributed out of the company and in which the company no longer has an ownership interest.
    The results of operations of the distributed assets are not reflected as discontinued operations because we are deemed to have continuing involvement as a result of our agreement to asset manage those assets.  As a result of this accounting presentation, we also present for REIT hotels operating results (revenues, expenses, and adjusted operating income) and selected operating statistics (RevPAR, average daily rate, average occupancy and operating margins, the latter of which is a non-GAAP financial measure).  Reconciliation of adjusted operating income to net income (loss), the most directly comparable GAAP measure, is set forth in the following tables.
    We present these hotel operating results on a REIT hotel basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels and facilitates comparisons with other hotel REITs and hotel owners. In particular, these measures assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to operations at the REIT hotels or from the distributed assets. While management believes that presentation of REIT hotel results is a supplemental measure that provides useful information in evaluating the ongoing performance of the company, this measure is not used to allocate resources or to assess the operating performance of each of these hotels, as these decisions are based on data for individual hotels and are not based on REIT hotel results. For these reasons, we believe that REIT hotel operating results, when combined with the presentation of GAAP operating profit, revenues and expenses, provide useful information to investors and management.
    As a result of the elimination of the non-REIT hotel operations, the REIT hotel operating results we present do not represent our total revenues, expenses or operating profit in accordance with GAAP.  These results should not be used to evaluate our performance as a whole. Our consolidated statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.

                Strategic Hotel Capital, Inc. and Subsidiaries
                           Schedule of REIT Hotels
    REIT Hotel                            Location            Number of Rooms United States:
    Hyatt Regency La Jolla at Aventine    La Jolla, CA              419
    Hyatt Regency Phoenix                 Phoenix, AZ               712
    Hyatt Regency New Orleans             New Orleans, LA         1,184
    Loews Santa Monica Beach Hotel        Santa Monica, CA          342
    Hilton Burbank Airport and Convention
     Center                               Burbank, CA               488
    Embassy Suites Lake Buena Vista
     Resort                               Lake Buena Vista, FL      333
    Marriott Rancho Las Palmas Resort     Rancho Mirage, CA         444
    Marriott Lincolnshire Resort          Lincolnshire, IL          390
    Marriott Chicago Schaumburg           Schaumburg, IL            398
    Ritz-Carlton Half Moon Bay            Half Moon Bay, CA         261
      Total Number of United States Rooms                         4,971
    European:
    Paris Marriott Champs-Elysees (1)     Paris, France             192
    Marriott Hamburg (2)                  Hamburg, Germany          277
    Inter.Continental Prague (3)          Prague, Czech Republic    372
      Total Number of European Rooms                                841
    Mexican:
    Four Seasons Punta Mita Resort        Punta Mita, Mexico        140
    Four Seasons Mexico City              Mexico City, Mexico       240
      Total Number of Mexican Rooms                                 380

        Total Number of Rooms                                     6,192
 

    (1) On June 29, 2004, we eliminated the collateralized guarantee related to the Paris Marriott Champs-Elysees and no longer have continuing involvement as defined by generally accepted accounting principles.  Accordingly, a sale of the Paris Marriott Champs-Elysees was recorded and the leaseback has now been recorded as an operating lease as of June 29, 2004.   SHCI eliminated the finance obligation on the consolidated balance sheet and now records lease expense instead of mortgage interest and depreciation expense.
    (2) Subsequent to the February 2004 sale of the Hamburg Marriott, on March 1, 2004 we acquired the 65% interest we did not previously own in the joint venture that leases the hotel.  On June 29, 2004, we eliminated the collateralized guarantee on the sale leaseback related to the property and no longer have continuing involvement which required treating the transaction as a financing. Accordingly, a sale of the Hamburg Marriott was recorded and the leaseback has now been recorded as an operating lease as of June 29, 2004.   SHCI eliminated the finance obligation on the consolidated balance sheet and now records lease expense instead of mortgage interest and depreciation expense.
    (3) We have a 35% interest in the joint venture that owns the Inter.Continental Prague and account for our investment under the equity method of accounting.  Our equity in earnings (loss) of the hotel joint venture is included in other expenses, net in our consolidated statements of operations.
 

                Strategic Hotel Capital, Inc. and Subsidiaries
                    Supplemental REIT Hotel Operating Data
                                 (Unaudited)

                           Three months ended         Nine months ended
                              September 30,              September 30,
                            2004         2003          2004        2003
                                      (Dollars in thousands)
    REIT Hotel Revenues:
      Room                 $44,544      $38,949      $137,867    $127,743
      Food and beverage     25,030       18,922        74,302      67,141
      Other hotel operating
       revenue               9,798        8,251        28,300      26,982
                            79,372       66,122       240,469     221,866
      Lease revenue (1)      5,692        2,671        17,384      15,311

        REIT hotel revenues 85,064       68,793       257,853     237,177

    REIT Hotel Expenses:
      Room                  11,314        8,979        31,009      27,272
      Food and beverage     19,510       15,403        55,290      50,100
      Other departmental
       expenses             26,057       21,360        72,264      65,183
      Management fees        2,997        2,732        10,364       9,850
      Other property level
       expenses              5,769        3,428        14,158      11,789
      Lease expense          3,189            -         3,189           -
        REIT hotel expenses 68,836       51,902       186,274     164,194

    REIT Hotel Adjusted
     Operating Income       16,228       16,891        71,579      72,983
      Interest expense, net  6,211       16,211        33,846      46,851
      Loss on early
       extinguishment of
       debt                     17        2,977         9,300       8,561
      Other (income)
       expenses, net (2)    (1,359)       1,722           684       5,032
    Income (loss) before
     income taxes and
     minority interests     11,359       (4,019)       27,749      12,539
      Income tax expense
       (benefit)               405       (2,293)          760      (1,544)
      Minority interests      (989)         155        (1,917)      2,834

    REIT Hotel Net Income
     (Loss)                 11,943       (1,881)       28,906      11,249
    REIT depreciation and
     amortization          (10,753)      (9,673)      (31,125)    (29,262)
    Corporate expenses      (4,299)      (4,755)      (24,493)    (16,272)
    Non-REIT hotel results, net                         -       (6,741)      (26,199)    (33,760)
    Income from discontinued
     operations                  -          775        75,662      25,684

    Net (Loss) Income      $(3,109)    $(22,275)      $22,751    $(42,361)
 

    (1) Until March 1, 2004, the Hamburg Marriott was accounted for under the equity method.  After March 1, 2004 when we acquired our joint venture partner's 65% leasehold interest in the property, we record lease revenue for the Hamburg Marriott.  Lease revenue for the three and nine months ended September 30, 2004 and 2003 includes revenues from the Hyatt Regency New Orleans until June 29, 2004 when we converted the Hyatt Regency New Orleans lease to a management agreement.  Prior to June 29, 2004, the Paris Marriott Champs-Elysees was accounted for as a finance obligation and we consolidated its results because of a continuing involvement in supporting the financing of the property through a collateralized guarantee.  On June 29, 2004, we recorded a sale and leaseback related to the Paris Marriott Champs-Elysees.  Subsequent to June 29, 2004, we only earn lease revenue from the Hamburg Marriott and the Paris Marriott Champs-Elysees.
    (2) Other expenses, net includes our equity in earnings or losses of our investments in the Prague hotel joint venture for the three and nine months ended September 30, 2004 and 2003.  Earnings or losses from our investment in the Hamburg Marriott hotel joint venture are included in the three and nine months ended September 30, 2003 and are included in the nine months ended September 30, 2004 until the acquisition of our joint venture partner's interest in the property on March 1, 2004.
 

Strategic Hotel Capital, Inc. and Subsidiaries
                   Selected REIT Hotel Operating Statistics
     The operating statistics below do not include the Ritz-Carlton Half Moon Bay, which was acquired on August 24, 2004.
    United States Hotels (as of September 30, 2004)
    9 Properties
    4,710 Rooms

                            Three months ended          Nine months ended
                               September 30,               September 30,
                          2004     2003  Change     2004      2003    Change

    Average Daily Rate  $129.54  $126.71   2.2%   $140.35   $140.79   (0.3)%
    Average Occupancy      66.1%    62.3%  3.8pts    69.1%     66.6%   2.5pts
    RevPAR               $85.66   $78.90   8.6%    $97.01    $93.76    3.5%
    Operating Profit
     Margin                28.0%    27.8%  0.2pts    33.4%     35.1%  (1.7)pts

    Mexican Hotels (as of September 30, 2004)
    2 Properties
    380 Rooms

                            Three months ended          Nine months ended
                               September 30,               September 30,
                          2004     2003  Change     2004      2003    Change

    Average Daily Rate  $268.48  $268.44   0.0%   $346.07   $333.14    3.9%
    Average Occupancy      61.3%    59.1%  2.2pts    67.4%     64.6%   2.8pts
    RevPAR              $164.46  $158.71   3.6%   $233.09   $215.06    8.4%
    Operating Profit
     Margin                28.0%    25.9%  2.1pts    40.5%     37.5%   3.0pts

     Total North American Hotels (as of September 30, 2004)
     11 Properties
     5,090 Rooms

                            Three months ended          Nine months ended
                               September 30,               September 30,
                          2004     2003  Change     2004      2003    Change

    Average Daily Rate  $139.41  $137.02   1.7%   $155.64   $155.01    0.4%
    Average Occupancy      65.8%    62.0%  3.8pts    69.0%     66.4%   2.6pts
    RevPAR               $91.67   $84.98   7.9%   $107.37   $102.99    4.3%
    Operating Profit
     Margin                28.0%    27.5%  0.5pts    34.5%     35.5%  (1.0)pts

    European Hotels (as of September 30, 2004)
    3 Properties
    841 Rooms

                             Three months ended         Nine months ended
                                September 30,              September 30,
                           2004     2003  Change      2004     2003  Change
    Average Daily Rate   $256.27  $231.39  10.8%    $231.08  $217.96  6.0%
    Average Occupancy       87.2%    85.8%  1.4 pts    81.1%    76.9% 4.2 pts
    RevPAR               $223.59  $198.50  12.6%    $187.42  $167.59 11.8%
    Operating Profit
     Margin                 53.2%    54.3% (1.1) pts   48.9%    50.5%(1.6) pts

    Total Hotels (as of September 30, 2004)
    14 Properties
    5,931 Rooms

                            Three months ended        Nine months ended
                                September 30,            September 30,
                           2004     2003  Change    2004     2003  Change

    Average Daily Rate   $160.79  $154.87  3.8%   $168.11  $165.22  1.7%
    Average Occupancy       68.9%    65.5% 3.4 pts   70.7%    67.9% 2.8 pts
    RevPAR               $110.72  $101.37  9.2%   $118.91  $112.25  5.9%
    Operating Profit
     Margin                 34.0%    33.7% 0.3 pts   37.3%    38.1%(0.8) pts
    Our portfolio breakdown between North America and European hotels constitutes the differentiation between wholly owned assets in the North American segment, and joint ventures and two leaseholds in the European segment.

Strategic Hotel Capital, Inc., is a real estate investment trust (REIT) which owns and asset manages high-end hotels and resorts.  The company has ownership interests in 15 properties with an aggregate of 6,192 rooms.

This press release contains forward-looking statements about Strategic Hotel Capital, Inc. (the "Company").  Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including but not limited to the following: the uncertainty of the national economy; economic conditions generally and the real estate market specifically; the effect of threats of terrorism and increased security precautions on travel patterns and hotel bookings; the outbreak of hostilities and international political instability; legislative or regulatory changes, including changes to laws governing the taxation of REITs; cash available for capital expenditures; availability of capital; ability to obtain or refinance debt; rising interest rates; rising insurance premiums; competition; demand for hotel rooms in our current and proposed market areas; and changes in generally accepted accounting principles, policies and guidelines applicable to REITs. 


 
Contact:
Strategic Hotel Capital, Inc.
http://www.shci.com
Also See: Strategic Hotel Capital, Inc. Acquiring The 261 room Ritz-Carlton Half Moon Bay for $124.4 Million / July 2004
Strategic Hotel Capital, Inc. with Ownership Interests in 14 Properties Reports 2nd Qtr Net Loss of $41.8 million / Hotel Operating Statistics / August 2004


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