 |
Prime Hospitality Corp. Reports First Quarter Results |
|
Prime reported a net loss for the first quarter of 2004 of $2.9 million, or $.06 per share, compared to a loss of $6.6 million, or $.15 per share, for the first quarter of 2003. |
Click here for financial tables
The first quarter of 2003 included a loss of $.05 per share from discontinued operations and a gain of $.01 per share from the retirement of debt.
'Our first quarter results reflect the continued improvement in hotel demand," said A.F. Petrocelli, chairman and CEO of Prime. "Our goal was to generate higher room rates, which we achieved through better yield management and less reliance on discount distribution channels. This resulted in improved operating margins and profitability. Looking forward, as business travel improves, we believe there is further rate potential."
"During the quarter, we converted two full-service hotels in Fairfield and Secaucus, NJ to our Prime Hotels and Resorts brand. We are currently in the process of converting the 12 full-service hotels which we added through our new management agreement with Hospitality Properties Trust. By mid-year, we expect to have 15 Prime Hotels open in 10 states and we look forward to the opportunities this presents for all of our brands."
Operating Results
For the quarter, total revenues before cost reimbursements increased by $14.2 million to $102.8 million due to the addition of twelve full-service hotels in January 2004.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by $3.3 million to $10.7 million in the first quarter of 2004. This was due to the elimination of deficits incurred in the first quarter of 2003 on a lease with Hospitality Properties Trust ("HPT"), which was terminated and converted to a management agreement in December 2003, and operating improvements at existing hotels. Interest expense declined by 14.4% to $4.8 million for the quarter ended March 31, 2004, primarily due to debt reductions.
Revenue per available room ("REVPAR") at our comparable hotels increased by 1.4% in the first quarter of 2004 as compared to the first quarter of 2003. The results were driven by a higher average daily rate ("ADR"). For the first quarter of 2004, ADR increased by 3.5% to $69.59 and occupancy decreased by 1.2 percentage points to 57.7%. Gross operating profit margins at comparable hotels increased by 1.4 percentage points due to higher ADR and operating efficiencies.
System-Wide Performance
For the first quarter of 2004, we reported a 3.7% REVPAR increase at our comparable AmeriSuites hotels, as occupancy increased by 1.9 percentage points to 59.9% and ADR increased by 0.5% to $71.11. Increases were reported in Dallas, Miami, Orlando and Phoenix while decreases were posted in Chicago and Nashville.
For the first quarter of 2004, we reported a 1.0% REVPAR decrease at our comparable Wellesley Inns & Suites hotels, ADR increased by 6.8% to $61.60 and occupancy decreased by 4.6 percentage points to 58.2%. The South Florida and Phoenix markets reported increases while revenues decreased in Austin and the Northeast.
Prime's upscale full-service hotels, which are located in the Northeast, reported a 2.3% REVPAR decrease for the first quarter of 2004 as occupancy decreased by 2.1 percentage points to 52.0% and ADR increased by 1.6% to $114.13. The full-service hotels were impacted by a decrease in group business at the Saratoga Springs, NY hotel.
Hotel Developments
As of March 31, 2004, we had 148 AmeriSuites, 81 Wellesley Inns & Suites and three Prime Hotels in operation. Although we intend to expand our brands through franchising, we will consider corporate development or acquisition opportunities in strategic markets.
Under our new management agreement with HPT, in January 2004 we began operating twelve full-service hotels currently branded as Wyndham hotels. We are in the process of converting these hotels to the Prime Hotels and Resorts brand with our first conversion in downtown Salt Lake City to occur in mid-May. We expect all the conversions to the Prime brand to be completed by mid-year. We currently have three Prime Hotels open, including two Radisson hotels in Fairfield, NJ and Secaucus, NJ which we converted on March 1, 2004. We expect that by July 2004 we will have 15 Prime Hotels in 10 states encompassing almost 3,000 guestrooms.
Currently, we have four AmeriSuites under construction and a pipeline of 20 executed franchise agreements, including three in the planning stage. There is also one franchised Wellesley Inn under conversion.
During the quarter, we continued our installation of high speed internet access in our AmeriSuites, Wellesley Inns & Suites and Prime Hotels and Resorts brands. This new amenity will be available on both a wired and wireless basis in all guest and meeting rooms and via wireless access in all common areas, including hotel lobbies, fitness centers, pool areas and restaurants. We have installed this feature in the majority of our hotels and expect the installations to be complete by the end of the second quarter of 2004.
Financial Condition
As of March 31, 2004, we had $227.7 million in debt and $14.4 million in cash and cash equivalents. Our debt to book capitalization percentage is 25.1%. Our debt to last twelve months EBITDA ratio is 3.75 times, and our EBITDA to interest is 3.21 times. Under our revolving credit facility, we are required to maintain a debt to EBITDA ratio of 4.25 times and an EBITDA to interest ratio of 2.50 times.
2004 Outlook
Our current estimate is that REVPAR for comparable hotels will increase by 3% - 4% for the full year 2004 resulting in EBITDA in the range of $65 - $70 million and earnings per share before asset transactions in the $.05 - $.10 range. We estimate earnings per share for the second quarter of 2004 to be $0.08 per share.
We currently expect capital expenditures to be approximately $15 million in 2004 with the majority to be spent on maintenance capital. Based on the EBITDA estimates and after deducting interest, taxes and maintenance capital expenditures, we would expect to generate approximately $30 million in free cash flow in 2004 before asset sales.
Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages and franchises 258 hotels throughout North America. The Company owns and operates three proprietary brands that compete in different segments: AmeriSuites® (all-suites), Wellesley Inns & Suites® (limited-service) and Prime Hotels & Resorts (full-service). Also within our portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Sheraton, Holiday Inn and Ramada.
|
|
|
 |
|
 |
|
Post Release
Get Content
Email News Brief
Saved Articles
Advertising
Handheld
XML/RSS
Post News