Hotel Online Special Report Lodgian’s Improved Operating Performance Driven by Successful Hotel Renovations and Upscale Brand Repositionings ATLANTA, Sept. 17, 1999 – Lodgian, Inc., (NYSE: LOD), one of the nation’s largest owners and operators of hotels, today said that the Company expects to report results for the third quarter ending September 30, 1999 which include:
- Net income per common share before extraordinary items of $0.23 to $0.25, versus a net loss per share before extraordinary items of $0.71 in the third quarter 1998;
- Same-Unit Revenue Per Available Room (RevPAR) of $51.15 to $51.30, for a 6.0 to 6.3 percent increase compared to $48.25 for the third quarter 1998;
- Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) between $46.0 to $46.5 million, an increase of 82 to 84 percent compared to $25.3 million in the year ago quarter;
- Total revenues between $153.0 to $154.0 million, an increase of 51 to 52 percent versus the $101.4 million reported in the third quarter 1998; and
- EBITDA margin improvement to approximately 30.0 percent for third quarter 1999 from 25.0 percent in 1998.
Lodgian will report an extraordinary loss, net of tax benefit, of approximately $6.0 million in the third quarter 1999 as a result of its recapitalization and debt extinguishment completed in July. This will reduce net income per common share by approximately $0.22. In addition, the third quarter 1999 anticipated results reflect an after-tax gain of approximately $840,000 from the sale of two hotels and one land parcel. Furthermore, the net loss incurred for the third quarter 1998 reflected a non-recurring expense, net of tax benefit, of $18.9 million relating to the elimination of two interest rate swap transactions. Lodgian also provided preliminary anticipated ranges for fourth quarter 1999 versus the comparable prior year period as follows:
- Fourth quarter net income (loss) per common share of ($0.01) to $0.01 (before any effect from potential asset sales), versus $0.01 net income per share before extraordinary items in 1998;
- Same-Unit Fourth quarter RevPAR of $43.10 to $43.50, a 6.0 to 7.0 percent increase compared to $40.66 for the fourth quarter 1998;
- Fourth quarter EBITDA between $37.5 to 38.5 million, an increase of 55 to 60 percent compared to $24.1 million for 1998; and
- Fourth quarter revenues between $142.0 to 144.0 million, an increase of 30 to 35 percent compared to $108.6 million for the year ago quarter.
Lodgian, which owns or manages 134 hotels with more than 25,000 rooms, is a successor to Servico, Inc. as a result of Servico’s merger with Impac Hotel Group, LLC. The merger was completed on December 11, 1998. Because the merger was accounted for under the purchase method of accounting, Lodgian’s earnings results for the third quarter 1998 do not reflect Impac’s contributions.
Robert S. Cole, Lodgian’s President and CEO, noted: “Lodgian’s continued improved operating performance for the third quarter and anticipated improvement for the fourth quarter over 1998 is being driven by successful hotel renovations and upscale brand repositionings, as well as our commitment to improving operating margins and developing the industry’s premier sales organization. Since the beginning of 1999 we have augmented our already strong corporate and regional operating teams by recruiting fifteen senior management individuals from other hotel companies in the areas of sales, operations and finance.”
For July and August, Lodgian’s 132 consolidated hotels consisted of 77 stabilized hotels, 34 stabilizing hotels and 21 hotels being repositioned. Total RevPAR was as follows:
Total RevPAR—July and August 1999 Hotel Classification Occupancy ADR RevPAR Stabilized 73.4% $73.14 $53.67 Stabilizing 70.3% $75.61 $53.19 Being Repositioned 69.7% $80.11 $55.83 Total 71.9% $74.99 $53.95
For properties owned and operated for at least 12 months, same-unit RevPAR for July and August 1998 and 1999 was as follows:
Same-Unit RevPAR—July and August Hotel Classification 1998 1999 % Change Stabilized $52.28 $53.74 +2.8% Stabilizing $46.14 $52.34 +13.4% Being Repositioned $49.18 $55.83 +13.5% Total Same-Unit $50.28 $53.81 +7.0%
Cole added that Lodgian’s third quarter operating performance is notable given that revenues, EBITDA and net income were adversely affected by delayed openings of its Marriott in downtown Portland, which opened August 10, its Courtyard in Livermore, California, now set to open October 1, and its room expansion of the Comfort Inn-Boston, just completed this week.
Cole also indicated that Lodgian is on track with the execution of its current business strategy that includes the following:
- Improve Lodgian’s balance sheet and liquidity through its most recent successful recapitalization along with reducing total debt by selling non-core hotels;
- Focus on day-to-day operations that will result in improved same-unit RevPAR growth and improved EBITDA margins throughout the portfolio;
- Renovate and rebrand existing hotels that will lead to future internal growth, improved asset quality and a consolidation of the number of brands in Lodgian’s portfolio; and
- Selectively pursue external growth opportunities primarily by developing Marriott branded hotels and acquiring existing assets at steep discounts to replacement cost, on and off-balance sheet.
“I would also reiterate that the completion of our $565 million recapitalization program in July put in place a capital structure that now allows the company to execute its business strategy without the pressure of near-term debt maturities. The number of hotels subject to financing that was restrictive in terms of asset sales and prepayment has been greatly reduced. As a result, the company can be more aggressive with the disposition of hotels in order to reduce debt levels,” cited Cole.
The Company also remains on track with its goal of reducing the ratio of total debt to EBITDA and improve the ratio of EBITDA to cash interest expense. Kenneth Posner, Lodgian’s CFO, observed: “We’ve improved Lodgian’s cash position not only through our recapitalization program but with proceeds from the sale of non-core assets. For example, in the second quarter, Lodgian sold its 50 percent joint venture interest in six hotels in Europe, and in July we sold our only Days Inn and Howard Johnson hotels, as well as one parcel of land. These transactions, along with a hotel sale in the first quarter of 1999, provided a total of approximately $17 million in cash. Currently under contract or letter of intent to be sold are four additional hotels that would generate an estimated $30 million in proceeds which will be available to pay down debt. Our cash reserves currently exceed $40 million, a substantial increase over second quarter levels. In addition, the Company has access to a $50 million working capital facility.”
Added Posner, “Our cash interest coverage through the second quarter was approximately 2.3-to-1 and we expect to conclude the year with approximately 2.1-to-1 total cash interest coverage (not including preferred equity dividends). Moreover, our available cash flow—defined as EBITDA less cash interest expense, capital expenditures before new development projects and preferred equity dividends for the year 1999 — is anticipated to approach $1.00 per common share.”
Additionally, consistent with its renovation and repositioning strategy Lodgian has selected the following hotels for future rebranding. These properties should help in providing a catalyst for continued internal growth:
Existing Property New Brand Omni-Albany, NY Crowne Plaza Omni-West Palm Beach, FL Crowne Plaza Ramada Plaza-Houston, TX Crowne Plaza Clarion-Niagara Falls, NY Holiday Inn Select Clarion-Pittsburgh, PA Crowne Plaza Comfort Inn-Boston/Revere Courtyard by Marriott Doubletree Club-Hollywood, CA Holiday Inn Doubletree Club-Louisville, KY Radisson
Concluded Cole: “In the second quarter, we reported a 5.9 percent increase in same-unit RevPAR—among the best of any public lodging company and nearly triple the 2.0 percent industry average. We anticipate turning in a strong number for the balance of this year as well as next year, notwithstanding the intensely competitive lodging environment and with a significant portion of our portfolio being impacted by ongoing hotel renovations.”
About Lodgian Lodgian, Inc. owns or manages a portfolio of 134 hotels with more than 25,000 rooms in 35 states and Canada. The hotels are primarily full service, providing food and beverage service, as well as lodging and meeting facilities. Substantially all of Lodgian’s hotels are affiliated with nationally recognized hospitality brands such as Holiday Inn, Crowne Plaza, Marriott, Sheraton, Hilton, Doubletree and Westin.
Lodgian’s common shares are listed on the New York Stock Exchange under the symbol “LOD.” Lodgian is a component of both the Russell 2000® Index, representing small cap stocks, and the Russell 3000® Index, representing the broader market.
Forward-Looking Statements Note: Statements in this press release which are not strictly historical are “forward – looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Total RevPAR—July and August 1999 Hotel Classification Occupancy ADR RevPAR Stabilized 73.4% $73.14 $53.67 Stabilizing 70.3% $75.61 $53.19 Being Repositioned 69.7% $80.11 $55.83 Total 71.9% $74.99 $53.95 Same-Unit RevPAR—July and August Hotel Classification 1998 1999 % Change Stabilized $52.28 $53.74 +2.8% Stabilizing $46.14 $52.34 +13.4% Being Repositioned $49.18 $55.83 +13.5% Total Same-Unit $50.28 $53.81 +7.0% Existing Property New Brand Omni-Albany, NY Crowne Plaza Omni-West Palm Beach, FL Crowne Plaza Ramada Plaza-Houston, TX Crowne Plaza Clarion-Niagara Falls, NY Holiday Inn Select Clarion-Pittsburgh, PA Crowne Plaza Comfort Inn-Boston/Revere Courtyard by Marriott Doubletree Club-Hollywood, CA Holiday Inn Doubletree Club-Louisville, KY Radisson Contact: Ken Posner, Chief Financial Officer, 404-365-4469, or firstname.lastname@example.org, or Ginny Gaines Director of Corp. Comm., 404-365-3805, or email@example.com, both of Lodgian, Inc., www.lodgian.com Also See: Lodgian Sells Interest in European Hotels to Krasnapolsky Hotels & Restaurants N.V. / June 1999 Dave Murray the Opening GM at Lodgian’s Portland Marriott City Center / Aug 1999 Lodgian Completes $565 Million Recapitalization in Current Tight Market for Capital / July 1999