Q3 2015 Financial Reports Round Up: Marriott, MGM, Host, & Hersha
October 29, 2015 7:18am
Marriott International Reports Third Quarter 2015 Net Income of $210 million, a 9% Increase Over 2014 Third Quarter Income. Systemwide RevPAR Rose 4.5% in the Third Quarter.
Third quarter 2015 net income totaled $210 million, a 9 percent increase over 2014 third quarter net income. Diluted earnings per share (EPS) in the third quarter totaled $0.78, a 20 percent increase from diluted EPS in the year-ago quarter. On July 29, 2015, the company forecasted third quarter diluted EPS of $0.72 to $0.76.
Arne M. Sorenson, president and chief executive officer of Marriott International, said, "Our company posted solid performance in the third quarter. North American systemwide RevPAR rose over 4 percent despite the impact of unfavorable holiday shifts on our group business compared to the year-ago quarter. Our hotels are full with occupancy at nearly 78 percent allowing us to continue to raise rates and reduce lower-rated business to drive RevPAR.
"Our global development pipeline continues to increase, reaching more than 260,000 rooms at the end of the quarter as owner and franchisees continue to choose our brands. Combined, our pipeline and open rooms exceed one million rooms worldwide. Recently unveiled in the U.S., Moxy and AC Hotels have a combined five hotels open and 82 hotels signed or approved domestically. Our newest brand, Delta Hotels, expects to open its first U.S. property later this year, a conversion from a competitor's brand.
"Our asset-light business model continues to deliver significant profit growth with modest capital requirements, yielding outstanding return to shareholders. For the full year 2015, we expect to return more than $2.25 billion to shareholders through dividends and share repurchases, a record which would bring our total return to shareholders to nearly $8 billion over the last 5 years. Over the last 12 months, our return on invested capital has totaled 47 percent.
"For 2016, we expect systemwide constant dollar RevPAR will increase 4 to 6 percent in North America, outside North America and worldwide. Our group bookings for our North American full-service hotels for 2016 are up more than 7 percent with about 75 percent of expected group business volume booked thus far.
"Given our strong development pipeline, we anticipate our number of rooms will increase 7 to 8 percent, gross, in 2015, including the 9,600 rooms from the Delta acquisition, accelerating to 8 percent, gross, in 2016. Nearly 40 percent of our more than 260,000 room pipeline is already under construction."
For the 2015 third quarter, RevPAR for worldwide comparable systemwide properties increased 4.5 percent (a 2.2 percent increase using actual dollars).
In North America, comparable systemwide RevPAR increased 4.2 percent (a 3.7 percent increase using actual dollars) in the third quarter of 2015, including a 4.2 percent increase (a 3.6 percent increase in actual dollars) in average daily rate. RevPAR for comparable systemwide North American full-service hotels (including Marriott Hotels, The Ritz-Carlton, Renaissance Hotels, Gaylord Hotels and Autograph Collection Hotels) increased 3.7 percent (a 3.0 percent increase in actual dollars) with a 3.2 percent increase (a 2.5 percent increase in actual dollars) in average daily rate. RevPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 4.6 percent (a 4.1 percent increase in actual dollars) in the third quarter with a 4.8 percent increase (a 4.3 percent increase in actual dollars) in average daily rate.
International comparable systemwide RevPAR rose 6.2 percent (a 4.0 percent decline using actual dollars) in the third quarter. International RevPAR growth was helped during the quarter by the earlier start of Ramadan and very strong demand in Europe.
Marriott added 68 new properties (10,253 rooms) to its worldwide lodging portfolio in the 2015 third quarter, including Mandapa, A Ritz-Carlton Reserve in Indonesia and The Hotel Lucerne, Autograph Collection in Switzerland. Twenty-one properties (2,596 rooms) exited the system during the quarter. At quarter-end, the company's lodging system encompassed 4,364 properties and timeshare resorts for a total of 750,000 rooms.
The company's worldwide development pipeline totaled 1,591 properties with more than 260,000 rooms at quarter-end, including nearly 600 properties with roughly 95,000 rooms under construction and over 100 properties with approximately 20,000 rooms approved for development, but not yet subject to signed contracts.
MARRIOTT REVENUES totaled approximately $3.6 billion in the 2015 third quarter compared to revenues of nearly $3.5 billion for the third quarter of 2014. Base management and franchise fees totaled $397 million compared to $381 million in the year-ago quarter, an increase of 4 percent. The year-over-year increase largely reflects higher RevPAR and new unit growth partially offset by $4 million of unfavorable foreign exchange. In addition, the company recognized $2 million of deferred base management fees related to the performance of a limited-service portfolio and $8 million of relicensing fees. In the year-ago quarter, the company recognized $6 million of deferred base management fees related to the performance of a limited-service portfolio, $9 million of deferred base management fees related to an owner's sale of a Courtyard portfolio and $9 million of relicensing fees.
Third quarter worldwide incentive management fees totaled $68 million, a 1 percent increase compared to the year-ago quarter primarily due to higher managed hotel RevPAR and house profit margins largely offset by $4 million of unfavorable foreign exchange. In the 2015 third quarter, 64 percent of worldwide company-managed hotels earned incentive management fees compared to 56 percent in the year-ago quarter.
On July 29, the company estimated total fee revenue for the third quarter would total $470 million to $480 million. Actual total fee revenue of $465 million in the quarter was modestly lower than estimated reflecting lower than expected RevPAR growth, particularly in North America and the Middle East and Africa region, renovations, and delays in new unit openings.
Worldwide comparable company-operated house profit margins increased 50 basis points in the third quarter with higher room rates, improved productivity, and lower food and utility costs. House profit margins for comparable company-operated properties outside North America increased 60 basis points and North American comparable company-operated house profit margins increased 40 basis points from the year-ago quarter.
OWNED, LEASED, AND OTHER REVENUE, NET OF DIRECT EXPENSES, totaled $54 million, compared to $55 million in the year-ago quarter. The year-over-year decrease largely reflects lower termination fees and lower results from one North American full-service hotel under renovation largely offset by higher credit card branding fees and lower pre-opening costs.
DEPRECIATION, AMORTIZATION, and OTHER expenses totaled $31 million in the 2015 third quarter compared to $33 million in the year-ago quarter.
GENERAL, ADMINISTRATIVE, and OTHER expenses for the 2015 third quarter totaled $149 million compared to $172 million in the year-ago quarter. Expenses declined in the quarter largely due to lower compensation expense, lower legal costs and net favorable foreign exchange largely due to the devaluation of the Venezuelan Bolivar in the year-ago quarter.
On July 29, the company estimated general, administrative, and other expenses for the third quarter would total approximately $165 million. Actual expenses in the quarter were lower than expected largely due to general admin savings and lower transition expenses relating to the Delta acquisition, as well as timing.
INTEREST EXPENSE, NET increased $17 million in the third quarter. Interest expense for the third quarter increased $14 million largely due to lower capitalized interest expense and higher interest expense associated with a new debt issuance. Interest income declined $3 million largely due to a year-over-year decrease in loans receivable.
EQUITY IN EARNINGS decreased $4 million in the third quarter to $8 million. Results decreased largely due to deferred tax true-ups due to tax law changes recorded in the year-ago quarter partially offset by an adjustment of liabilities in an International joint venture in the third quarter of 2015.
On July 29, the company estimated equity in earnings for the third quarter would total approximately $0 million. Actual results in the quarter were above the estimate largely due to the adjustment mentioned above.
Provision for Income Taxes
The provision for income taxes in the 2014 third quarter included a $6 million non-recurring tax charge.
Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (EBITDA)
For the third quarter, adjusted EBITDA totaled $431 million, a 10 percent increase over third quarter 2014 adjusted EBITDA of $393 million. See page A-8 for the adjusted EBITDA calculation.
At quarter-end, total debt was $4,304 million and cash balances totaled $95 million, compared to $3,781 million in debt and $104 million of cash at year-end 2014.
Weighted average fully diluted shares outstanding used to calculate diluted EPS totaled 267.3 million in the 2015 third quarter, compared to 295.4 million in the year-ago quarter.
The company repurchased 9.8 million shares of common stock in the third quarter at a cost of $702 million. To date in 2015, the company has repurchased 25.1 million shares for $1.9 billion.
To view full third quarter financial results and tables please visit:
MGM Resorts International Reports Third Quarter 2015 Net Income of $66.4 million Compared to a Net Loss of $20.3 million for the Same Year Ago Quarter Along with an 8% increase in REVPAR at the Company's Las Vegas Strip Resorts
MGM Resorts International (NYSE: MGM) today reported financial results for the quarter ended September 30, 2015.
"Our strong third quarter results exemplify the power of our portfolio of assets and brands as we continue to drive growth in our Las Vegas and regional resorts. Our Profit Growth Plan is beginning to see initial success with the initiatives launched to date, and we expect these efforts to further enhance our already improving profits and margins, as we roll out many more opportunities in the coming months," said Jim Murren, Chairman & CEO of MGM Resorts International. "We are continuing to make positive strides with respect to our development pipeline and look forward to an exciting 2016 as we anticipate welcoming the new Las Vegas Arena and The Park next spring and both MGM National Harbor and MGM Cotai in late 2016. Our strategic investments are allowing us to solidify our leadership in the marketplace and further position the Company for growth."
Key results for the third quarter of 2015 include the following:
Host Hotels & Resorts Reports Third Quarter 2015 Net Income of $85 million compared to $144 million in third quarter 2014. Comparable RevPAR on a constant dollar basis improved 2.8% for the quarter. Authorizes an Additional $500 Million Share Repurchase Program.
Host Hotels & Resorts, Inc. (NYSE:HST), the nation’s largest lodging real estate investment trust (“REIT”), today announced results of operations for the third quarter of 2015.
“We delivered solid results in the third quarter and remain committed to our long-term strategic goal of generating superior returns for our stockholders by driving excellent operating performance, refining our strategy to adapt to changes in the lodging industry, selectively divesting assets and making well-considered, value-enhancing investments for continued growth,” said W. Edward Walter, President and Chief Executive Officer. “Although we have already returned more than $1 billion of capital to stockholders in 2015 through stock repurchases and consistently strong dividends, the decision to increase our stock repurchase program by an additional $500 million this quarter underscores the Board’s confidence in our plan and future prospects. We believe that repurchasing stock is the most attractive investment opportunity available to our company today; although we remain disciplined and opportunistic, we intend to move aggressively to repurchase shares as market conditions permit.”
Third quarter 2015 results reflect the following:
“We are excited to report that two key indicators of our financial performance, Adjusted FFO of $0.34 per share and Adjusted EBITDA of $323 million, beat consensus estimates in the third quarter,” added Gregory Larson, Executive Vice President and Chief Financial Officer. “The positive performance related to the better than expected results at our European joint venture and non-comparable hotels. In addition, our restricted stock expense accrual was reduced by the lower than anticipated stock price at the end of the quarter.”
Hersha Hospitality Trust Reports Third Quarter 2015 Net Income of $10.6 million compared to $4.1 million in the year ago quarter. Comparable Portfolio RevPAR Grew of 6.9%.
- Comparable Portfolio RevPAR Growth of 6.9% -
- Hotel EBITDA Growth of 10.5% -
- Adjusted FFO per Share Increases 24.1% -
- Repurchases 1.8 Million Common Shares for $41.6 Million -
- Accretive Acquisitions in Northern California -
Third Quarter 2015 Financial Results
Adjusted Funds from Operations (“AFFO”) in third quarter 2015 increased 17.7%, or $5.0 million, to $33.2 million, compared to $28.2 million in third quarter 2014. The Company’s weighted average diluted common shares and units of limited partnership interest in Hersha Hospitality Limited Partnership (“OP Units”) outstanding were approximately 49.9 million as of September 30, 2015, compared to approximately 51.9 million as of September 30, 2014. AFFO per diluted common share and OP Unit was $0.67 in third quarter 2015, compared to $0.54 per diluted common share and OP Unit reported in third quarter 2014. An explanation of certain non-GAAP financial measures used in this press release, including, among others, AFFO and Adjusted EBITDA, as well as reconciliations of those non-GAAP financial measures, is included at the end of this press release.
Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “Hersha’s well-positioned and geographically diverse portfolio continued to outperform in each of its core markets, delivering third quarter RevPAR growth of 6.9%. The Company’s carefully assembled Manhattan portfolio reported 4.2% RevPAR growth driven by continued focus on revenue management, outperforming the greater Manhattan market by 410 basis points, and representing the Company’s seventh consecutive quarter of outperformance in Manhattan. We also outperformed in our high growth markets, delivering double-digit RevPAR growth in our Boston, Miami and California hotels. Despite market volatility in August and September, we continue to see several years of strong fundamentals in our core markets, and are confident in the embedded earnings growth of our high quality portfolio.”
Mr. Shah continued, “During third quarter 2015, we continued to take advantage of market dislocation and repurchased $41.6 million of our common shares at a weighted average price of $23.69 per share. Our Board also authorized an additional $100 million share repurchase program through year-end 2016, which we will utilize during times of market volatility, or when we believe our shares do not appropriately reflect their value.”
Third Quarter 2015 Operating Results
During third quarter 2015, revenue per available room (“RevPAR”) at the Company's 48 comparable hotels increased 6.9% to $174.27. The Company’s average daily rate (“ADR”) for the comparable hotel portfolio increased 5.7% to $199.34, while occupancy increased 95 basis points to 87.4%. Hotel EBITDA margins for the comparable hotel portfolio increased 20 basis points to 38.9%. Consolidated portfolio Hotel EBITDA increased 10.5%, or $4.6 million, to $48.2 million as operators benefitted from pricing power given strong occupancies across the Company’s six markets.
The Company’s best performing market during the third quarter was Philadelphia, which reported 15.6% RevPAR growth. The Company’s Boston, South Florida, and West Coast portfolios reported 11.7%, 11.1% and 10.5% RevPAR growth, respectively.
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q3 2015 results
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