Hotel Reservations Network (Nasdaq: ROOM), the leading provider of discount hotel rooms worldwide, today announced record revenues, EBITDA, and adjusted EPS for the 4th quarter and full year ended December 31, 2001, despite a weakened economy and a challenging travel environment.
For the 4th quarter ended December 31, 2001, HRN increased its net revenue by 42% to $141.7 million from $100.0 million a year earlier. EBITDA increased 30% to $22.9 million from $17.6 million, while adjusted net income (which excludes all non-cash expenses including depreciation and amortization, amortization of goodwill, non-cash marketing and distribution expenses, and the related tax effects of these non-cash items) increased 24% to $15.6 million from $12.6 million. Adjusted earnings per share, diluted, increased by 23% to $0.27 from $0.22.
For the full year ended December 31, 2001, HRN increased its net revenue by 64% to $536.5 million from $328.0 million a year earlier. EBITDA increased 55% to $81.4 million from $52.6 million, while adjusted net income (which excludes all non-cash expenses including depreciation and amortization, amortization of goodwill, non-cash marketing and distribution expenses, and the related tax effects of these non-cash items) increased 53% to $57.6 million from $37.6 million. Adjusted earnings per share, diluted, increased by 43% to $1.00 from $0.70.
“2001 was another strong year for HRN. We are very pleased to have exceeded expectations in a time of economic uncertainty marked by one of the worst downturns in the travel industry in recent history” said David Litman, chairman and chief executive officer of Hotel Reservations Network.
“Because of the precipitous decline in travel, major airlines eliminated over 20% of their schedules and hotels on average reduced rates by approximately 17%. Yet, we were still able to show solid growth in revenue and profits. We are most excited about the growth of 74% in room nights sold, albeit at lower room rates. As room rates begin to increase over this year, we would expect to benefit even more from the high growth in our transaction volumes.”
Mr. Litman continued, “After 10 years in this business we have proven ourselves to be the premier supplier of accommodation values. In this economic slowdown our lodging partners have turned to us for continued support in filling rooms, and hundreds of new properties have come to us because of our demonstrated track record. We added 667 new properties in the fourth quarter, the most ever added in a single quarter, for a total of over 4,500 properties at the end of 2001.”
“We have examined every aspect of our business during the last quarter and have reduced costs in many areas, while improving our service at the same time. We have also invested in the necessary infrastructure for our budgeted growth in the future,” Mr. Litman noted.
“2002 has also started off well,” Mr. Litman added. “While hotel pricing has not yet rebounded to the levels of recent years, our business is still growing rapidly. We set several new daily booking records in January, including the dollar amount of sales booked (over $2.5 million), the number of room nights booked (over 22,000), and the number of customer transactions (over 10,000). We are very encouraged by these trends.”
Bob Diener, president of HRN, stated, “To build on this momentum, HRN intends to launch a new brand for our service in the first half of this year. At the time of the brand launch we will also introduce a new website, which adds many new enhancements to our existing functionality and features. We believe this will further increase our distribution and sales conversion rate of lookers to bookers. We will be supporting this brand launch with an advertising and public relations campaign that will consist of television, radio, print and on-line media throughout 2002. We expect to spend at least $10 million for this branding campaign, in addition to the $10-12 million we would ordinarily spend in marketing and advertising to support our direct channel. We will be tracking the results of our increased advertising closely to insure success.”
Mr. Diener added, “We believe that the worldwide lodging market is so vast - with over $250 billion in annual sales - that there is more than ample room for us to build our own proprietary brand name while also continuing to strengthen and increase our distribution through our affiliate sales channels. We think that our branding campaign will help to increase the consumer’s general awareness of booking hotels and lodging over the Internet and help increase affiliate sales as well as our own. We have barely scratched the surface of the potential of this huge market.”
Mr. Diener further stated, “HRN is also pleased with the performance of both of our 2001 acquisitions, TravelNow and AceNet. TravelNow and its affiliates more than quadrupled the number of HRN’s net rate hotel rooms sold in 2001 versus 2000. As a result of this and other efforts, TravelNow produced a substantial increase in revenue and EBITDA in 2001. Also, AceNet surpassed its 2001 budget for revenues and EBITDA. Atlantic City has proven to be a strong drive-to market and the management of AceNet was able to exceed our original expectations that were set prior to September 11th. These two companies are what HRN looks for when making acquisitions: strong management, demonstrated growth, and strategic value to HRN within our core area of focus, lodging. We will continue to evaluate other acquisition opportunities in 2002.”
“We have often been asked in the past how we would be affected by calamitous external events and a soft economy, and unfortunately, the tragic events of September 11, 2001 caused us to experience both. Not only did HRN’s bookings rebound quickly, but we exceeded our pre-September 11th outlook in a year when many in the travel sector struggled and did not meet expectations. Our results show the extraordinary resilience and strength of the HRN model.”