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Hotel Industry News |
Saturday November 22nd, 2008 |
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WestCoast Hospitality Corporation Announces Third Quarter Results; Reports Positive RevPAR Comparisons |
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SPOKANE, Wash., Oct. 30 WestCoast Hospitality Corporation (NYSE:WEH) today reported financial results for the three and nine months ended September 30, 2003. The Company returned to positive RevPAR (Revenue Per Available Room) comparisons during the 2003 quarter with RevPAR increasing slightly, from $49.98 to $50.08, or 0.2%. |
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The Company reported third quarter 2003 revenue of $54.5 million, compared to $55.7 million in the third quarter of 2002. Net income to common shareholders was $2.6 million in the third quarter of 2003, compared to $3.9 million in the third quarter of 2002. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization and other items. See "Adjusted EBITDA" in attachment) was $11.4 million in the third quarter of 2003, versus $12.0 million in the comparable period of 2002. Diluted earnings per share in the third quarter of 2003 was $0.20, compared to $0.29 in the prior year comparable period. Net income and earnings per share were negatively impacted by a $1.6 million pre-tax non-cash depreciation expense associated with assets previously held for sale on the balance sheet, negatively impacting earnings per share by $0.09. The depreciation was recaptured in accordance with generally accepted accounting principles because the Company has not entered into purchase and sales agreements on the assets and does not expect to do so in the allotted timeframe. The Company continues to market these non-core assets and intends to sell these Washington assets in the next year. Proceeds from the sales are intended to be used to reduce debt, enhance the hotel division growth, and general corporate purposes.
Arthur Coffey, President and Chief Executive Officer of WestCoast Hospitality Corporation, stated, "Revenue in our hotel division began to stabilize during the third quarter, and our brand repositioning efforts that took place in the first quarter already appear to be having a positive effect. We are pleased with our operating margins, which reflect the execution of our cost containment measures. We have also started to see positive results from our ADS (Alternate Distribution System) channel management initiatives which were launched in select hotels during the third quarter. We are still cautious about predicting the strength of the economic recovery and will continue to be focused on efforts to gain market share and operating our properties with the efficiencies and cost containment measures that have been put in place during the past year. We continue to hone our yield management practices with the technology that we put in place in our central reservations office earlier in the year. This technology continues to provide us with opportunities for improvement in yield and electronic distribution channel management and we will work towards realizing those benefits. Lastly, in addition to our ongoing efforts to gain market share and maintain cost control, we are excited about the added depth to our management team."
RECENT EVENTS
The Company recently added depth to its management team by naming John Taffin as Executive Vice President of Hotel Operations. Mr. Taffin has 21 years of hospitality industry experience including various management roles with Red Lion Hotels, from 1982 to 1995, and WestCoast Hospitality Corporation, from 1995 to 2002, most recently as Senior Vice President of Hotel Operations. Mr. Taffin's proven track record in hotel operations, both at the property level and in overseeing large groups of hotels, is an asset to the Company. WestCoast also recently added Tom McKeirnan as Vice President and Assistant General Counsel. Mr. McKeirnan previously represented WestCoast as outside counsel. He has a strong background in hospitality, acquisitions, real estate and entertainment law and provides leadership as an excellent strategic planner.
The Company also recently appointed Jon Eliassen to its Board of Directors. Mr. Eliassen recently retired as Chief Financial Officer for Avista Corporation, where his career spanned 33 years. As Avista's CFO, Mr. Eliassen presided over all accounting, treasury, audit and information services for the diversified utility. Mr. Eliassen's financial background will be extremely valuable on the WestCoast Board of Director's Audit Committee. With the addition of Mr. Eliassen, the Company has seven Directors, four of which are independent from the Company.
The Company has recently exercised the option to acquire the Red Lion Hotel Yakima Gateway, located adjacent to the Yakima Convention Center. The Company has leased the 172-room property since 1997.
During the month of October the Company replaced its existing credit facility with a new credit facility provided by Wells Fargo Bank, National Association, which will provide revolving lines of credit totaling $10 million and a $4 million term loan for acquisition of the Red Lion Yakima Gateway Hotel.
OPERATING RESULTS
The Company reported hotel and restaurant revenue of $49.2 million at owned and leased hotels for the third quarter of 2003, compared to $50.5 million in the third quarter of 2002. Combined hotel RevPAR (owned, managed and franchised) increased 0.2% during the quarter. Combined average daily rate declined 1.4% and occupancy increased 1.1 percentage points. Operating margins in the division remained approximately flat at 21% despite increased medical and insurance costs. The Company launched a new ADS channel management program in select hotels on August 1 and has realized positive revenue trends in those properties during the trial period. The Company has now expanded the program throughout its system of hotels. ADS channels are third party internet sites and WestCoast has corporate agreements with all of the leading ADS providers.
Franchise, central services and development revenue was $1.0 million in the third quarter of 2003, versus $1.4 million in the comparable period of 2002. The revenue decline was primarily due to a net decline in the number of hotels franchised by the company and the associated royalty fees. The decline in franchised properties included a group of hotels whose license agreements expired at the end of the first quarter.
Entertainment division revenue was $2.0 million in the third quarter of 2003, compared to $1.5 million in the third quarter of 2002. The revenue increase was primarily a result of the presentation of a six performance Broadway production during the period, as compared to no presentations during the third quarter of 2002. Expenses increased from $1.2 million in the third quarter of 2002, to $1.8 million in the comparable period of 2003, primarily due to expenses associated with the Broadway production. During the quarter, TicketsWest continued to add venues and announced an agreement to provide ticketing services to Montana State University.
Real estate division revenue remained stable during the third quarter of 2003 at $2.2 million. Expenses in the division declined 7.9%, from $1.3 million to $1.2 million. The Company plans to expand its development, management and leasing for third parties. It also continues to market certain Washington commercial real estate assets it owns and intends to sell properties having $21.7 million of book value in the coming year.
WestCoast Hospitality Corporation owns, manages, franchises and develops hotels under its Red Lion and WestCoast brands focusing on serving business, convention and leisure travelers in first, second and third tier markets.
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