FAIRFIELD, N.J., Feb. 4, 1999 - Prime Hospitality Corp.
(NYSE: PDQ) today reported income before special charges of $11.8 million
in the fourth quarter of 1998, a 19% increase over the comparable level
of $9.9 million in 1997. Diluted earnings per share before special charges
increased by 10% to $.22 per share in the fourth quarter of 1998 compared
to $.20 per share in 1997. Revenues increased to $122.1 million and earnings
before interest, taxes, depreciation and amortization (EBITDA) increased
to $36.4 million for the fourth quarter.
Total net income, which also includes the effects of special charges
and asset transactions, was $11.0 million, or $.20 per share in the fourth
quarter of 1998, compared to a net loss of $5.4 million or $.12 per share
in 1997. Special charges in the fourth quarter of 1998 were primarily comprised
of a pre-tax severance charge of approximately $1.0 million related to
the resignation of Prime's former president and chief operating officer.
In the fourth quarter of 1997, special charges consisted of $18.5 million
of pre-tax costs in connection with Prime's merger with Homegate Hospitality,
Inc. in December 1997.
"We have made significant progress in several areas over the past quarter,"
said A.F. Petrocelli, Chairman and CEO of Prime. "Our hotels performed
well above the industry average, with comparable owned AmeriSuites and
full-service hotels each achieving 7% REVPAR increases. In addition, our
hotel development is on target with previously announced plans and we have
raised new capital through AmeriSuites asset sales. With strong hotel cash
flow, funds from asset sales and reduced development spending, we are in
an excellent position to capitalize on new opportunities."
For the year ended December 31, 1998, Prime reported net income of $53.8
million, or $1.00 per share, as compared to $25.9 million, or $.54 per
share, in 1997. Income before asset transactions and special charges was
$53.4 million, or $1.00 per share, an increase of 33% over $40.0 million,
or $.79 per share in 1997.
Hotel Operations
Prime's comparable owned hotels achieved a 5.4% REVPAR growth rate for
the quarter, significantly exceeding industry-wide averages estimated at
3.0%. For the quarter, the comparable owned AmeriSuites hotels generated
a 7.2% REVPAR increase, as average daily rates ("ADR") increased by 3.6%
to $78.56, and occupancy advanced by two percentage points to 63.4%.
The remaining AmeriSuites, which have been open for less than a full year,
achieved an $85.94 ADR and a 56.8% occupancy rate.
The comparable owned full-service hotels achieved a 7.1% REVPAR
increase, as ADR increased by 8.6% to $101.49 and occupancy decreased by
one percentage point to 67.9%. Prime's Wellesley Inns, all of which
are comparable, reported a 0.3% REVPAR increase as ADR increased by 2.2%
to $57.09, and occupancy decreased by one percentage point to 69.3%.
Prime's newly-built HomeGate Studios Suites hotels, all of which
have been operated for less than a full year, achieved a $358 average weekly
rate. Occupancy levels were 52.4% reflecting the start-up nature
of these hotels.
The performance of the Frenchman's Reef Marriott hotel in St. Thomas,
U.S.V.I. was impacted during the quarter by the completion of the Hurricane
Georges restoration and a reduction in airline flights to the island. This
resulted in operating results which were approximately $1.5 million, or
$.02 per share below historical levels.
Brand Development
Prime is currently in the process of completing its development pipeline.
Since the beginning of the fourth quarter, Prime has opened 13 AmeriSuites
and six HomeGates and currently has six AmeriSuites and seven HomeGates
under construction. Upon completion of its current development program,
Prime will have 97 AmeriSuites and 44 HomeGate hotels in operation.
Prime also owns 13 land sites and will consider development of certain
of these sites as one of its options from the proceeds of asset sales.
Prime is also seeking to continue its aggressive expansion of its AmeriSuites,
HomeGate and Wellesley Inns brands through franchising. To date, Prime
has signed eight new AmeriSuites and one new Wellesley Inn franchise agreement
with 25 AmeriSuites applications pending.
Other Events
During the quarter, Prime generated $13.5 million in asset sales including
the sale of an AmeriSuites hotel in Ontario Mills, CA. Prime's next
scheduled sale, the Portland, ME AmeriSuites hotel for $10.2 million, is
targeted to close in early February. Prime has several other potential
AmeriSuites hotel sales under negotiation and expects to utilize the proceeds
for the repurchase of stock, the reduction of debt and/or the development
of its brands.
MeriStar Hospitality Corp. (NYSE: MHX) recently announced that they
will be unable to fulfill their contractual obligation to purchase nine
full-service hotels from Prime. Under the terms of the contract, Prime
is to receive a $4 million contract termination fee by March 1999. Prime
had previously modified its business and development plans in September
1998 under the assumption that MeriStar would be unable to consummate this
transaction due to changes in the capital markets. Prime will continue
to operate the nine full-service hotels which generated $80.3 million in
revenue and $25.7 million in EBITDA in 1998.
Prime Hospitality Corp., one of the nation's premiere lodging companies,
is an owner, manager and franchisor of 189 hotels throughout the United
States and the U.S Virgin Islands. The Company operates three proprietary
brands, AmeriSuites(R) (all-suites), HomeGate Studios Suites(R) (extended-stay)
and Wellesley Inns(R) (limited-service). Also within its portfolio are
owned and/or managed hotels operated under franchise agreements with national
chains.
Statements in this press release, other than statements of historical
information, are forward-looking statements that are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve known and unknown risks which
may cause the Company's actual results in future periods to differ materially
from expected results. These risks are described in the Company's filings
with the Securities and Exchange Commission (SEC) over the last 12 months,
copies of which are available from the SEC or may be obtained upon request
from the Company.
Prime Hospitality Corp.
Hotel Performance Summary
Threeee Months Ended
December 31, 1998
Hotel Data(1)
|
Company Owned
|
Total Brand
|
AmeriSuites |
|
|
Occupancy |
63.4% |
64.2% |
ADR |
$78.56 |
$77.87 |
REVPAR |
$49.80 |
$49.95 |
REVPAR Growth |
7.2% |
7.1% |
Wellesley Inns |
|
|
Occupancy |
69.3% |
69.3% |
ADR |
$57.09 |
$57.09 |
REVPAR |
$39.56 |
$39.56 |
REVPAR Growth |
0.3% |
0.3% |
Full-Service |
|
|
Occupancy |
67.9% |
|
ADR |
$101.49 |
|
REVPAR |
$68.88 |
|
REVPAR Growth |
7.1% |
|
Total |
|
|
Occupancy |
66.1% |
|
ADR |
$77.83 |
|
REVPAR |
$51.44 |
|
REVPAR Growth |
5.4% |
|
(1) Hotel data is presented for comparable hotels
open for the full period in both 1998 and 1997. The Total Brand amounts
represent both Company owned comparable hotels and hotels franchised through
sale/leaseback agreements.
|