ResortQuest International, Inc. (NYSE: RZT), the first brand name and online booking service (resortquest.com) in vacation rentals, resort property management and real estate sales, today announced pro forma results for the fourth quarter and full year ended December 31, 1998, meeting analysts` expectations.
``Since our IPO in May, we have completed 10 acquisitions—five since the beginning of the year—for a total investment of more than $60 million,`` said David Sullivan, chairman and chief executive officer. ``Our 1998 acquisitions were primarily summer resorts which have earnings concentration during the second and third quarters of the year. All acquisitions to date have been accretive to earnings on an annual basis, and we continue to have an aggressive appetite for increasing the size of our portfolio.``
Pro forma revenues for the fourth quarter rose 56 percent to $18.6 million. The company reported a pro forma net loss of $(920,000) for the fourth quarter, or $(0.05) per diluted share, as a result of the earnings seasonality of the vacation rental management companies acquired by ResortQuest since its May 1998 initial public offering (IPO).
The consolidated statements of pro forma income primarily include the effects of ResortQuest`s proceeds from the IPO and the acquisition of the 13 founding companies. Through year end, ResortQuest completed five additional acquisitions and incurred corporate costs, which are not retroactively included in the pro forma statements. Excluding these five acquisitions and adjusting prior year results to reflect corporate expense, ResortQuest`s operating income rose $194,000, a 44 percent increase for the period, and revenues rose $803,000, a 7 percent increase.
``We are pleased with our results during our start-up year and are well-positioned to take advantage of our breadth of inventory, geographic diversity, marketing expertise and operational systems,`` Sullivan said. ``Response to our interactive vacation property rental and booking web site, resortquest.com, has been exceedingly positive. Since introducing our new web site in January, Internet reservations and leads have more than doubled and now account for an estimated 10 percent of our business.``
Total lodging revenue on a same-store basis rose 3.5 percent for the quarter and occupied nights increased 1.2 percent. ``Our Beach, Mountain and Hawaii regions showed lodging revenue improvements of 9.9 percent, 6.0 percent and 2.3 percent, respectively,`` said David Levine, president and chief operating officer. ``The Mountain segment experienced below average snowfall early in the quarter, but our local management companies responded quickly and effectively.
``Our infrastructure and operating systems are now in place, which have simplified and accelerated the integration of new acquisitions. We have rated more than 90 percent of our properties using our proprietary five-tier quality rating system and expect to complete the grading of our remaining inventory shortly. By rating our properties and offering a consistent product across all locations, guests will know what to expect and have the confidence that currently is lacking in vacation home and condominium rentals.``
``We are beginning to see benefits from our economies of scale and have entered into contracts that have reduced telephone costs, insurance premiums, credit card fees and guest supply costs,`` said Jeff Jarvis, chief financial officer. ``We continue to maintain a strong and conservative balance sheet and have the capacity to make acquisitions with both stock and cash. We currently are exploring a number of alternatives to increase our availability of cash.``
For the full year 1998, pro forma total revenues rose to $69.4 million, up 22 percent from pro forma total revenues of $56.8 million in 1997. Pro forma net income was $6.4 million, or $0.39 per diluted share, compared to $6.9 million in 1997, or $0.43 per diluted share. Excluding the five post-IPO acquisitions and adjusting prior year results to reflect corporate expense, ResortQuest`s operating income increased $2.1 million, a 21 percent increase for the period, and revenues rose $5.2 million, a 9 percent increase.
Since the company commenced operations in May 1998 and its founding acquisitions required special accounting treatment, pro forma results most accurately reflect the financial status of the company. ResortQuest historical consolidated financial information for the fourth quarter and year ended December 31, 1998 and 1997 includes the results of Aston Hotels & Resorts prior to the founding acquisitions and the company`s initial public offering, and the combined balances and transactions of ResortQuest and the founding companies only since May 26, 1998. Comparability of actual results for the quarter, year and prior years may be misleading and are not necessarily indicative of the results of the combined operations. As a consequence, historical results are not included in this press release.
Memphis, Tenn.-based ResortQuest provides the first one-stop resource for vacation home and condominium rentals in premier resort destinations in North America. ResortQuest also is the first branded vacation rental, property management and real estate sales company to offer online booking through resortquest.com. ResortQuest`s current locations include Gulf Shores, Ala.; Scottsdale/Phoenix, Ariz.; Palm Desert, Calif.; Aspen, Breckenridge, Dillon and Telluride, Colo.; Bethany Beach, Del.; Captiva Island, Destin, Ft. Walton Beach and Sanibel Island, Fla.; St. Simons Island, Ga.; Hawaii, Maui, Oahu, and Kauai, Hawaii; Nantucket, Mass.; Big Sky, Mont.; the Outer Banks of North Carolina; Sunriver, Ore.; Hilton Head Island, S.C.; Park City, Utah; and Whistler, British Columbia.
The matters in this press release include ``forward looking statements`` within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained herein and in ResortQuest International`s filings with the Securities and Exchange Commission.