ResortQuest International, Inc. (NYSE:RZT), the first brand name and online booking service (ResortQuest.com) in vacation condominium and home rentals, sales and property management services, today announced results for the fourth quarter and full year ended December 31, 1999.
Revenues for the 1999 fourth quarter rose 20 percent to $23.2 million from $19.4 million in the fourth quarter last year. For the 13-week period, the company reported a net operating loss of $(4.5) million, or $(0.24) per diluted share, before unusual items, compared to $(0.05) per diluted share in the 1998 fourth quarter. The loss was primarily the result of the seasonal impact of acquisitions completed during 1999, a marked slowdown in vacation travel related to millennium issues, and a snow drought at the company`s winter resorts, which impacted both leisure travel and leisure real estate sales. Results were in line with the company`s previously announced projections.
“The fourth quarter is traditionally our slowest period and, as a result, is most impacted by any shift in demand,” said David Levine, president and chief executive officer. “The situation was further exacerbated by the type and timing of our 1999 acquisitions, the majority of which were summer resorts, which typically post losses during the fourth quarter. The benefit from these acquisitions primarily come during the spring and summer seasons. Fortunately, Y2K was a one-time event, and snow has finally arrived in the Colorado Rockies. Among the areas that received a more normal snowfall, Whistler in British Columbia and our property in Montana are having a good first quarter. Overall bookings at our winter resorts have improved since the snow drought ended.
“We accurately forecasted the negative impact of Y2K and a lack of snow on our same-store lodging revenue, which declined 1.5 percent for the quarter while occupied nights decreased 2.1 percent,” Levine added. Mountain properties suffered most from the slowdown in vacation travel, reporting a 25.3 percent decline in total lodging revenues and a 28.8 percent decline in occupied room nights. The Beach region showed an 18 percent improvement in lodging revenues, primarily the result of acquisitions in 1999. For the year, total lodging revenues were up 4 percent.
The company also reported $1.4 million, net of tax, of unusual charges, which included deferred costs for acquisitions the company no longer plans to pursue, costs associated with a study to identify alternative equity sources, and a severance accrual for certain former members of management. “We are confident that the factors which caused these disappointing results are behind us now and that we have the right plan and the right people in place to regain our momentum in 2000 and beyond,” Levine said.
Strong Unit Growth
Levine noted that 1999 was a year of incredible growth for the company as ResortQuest acquired 13 property management companies and achieved critical mass. “We entered a number of key strategic vacation markets last year, including Orlando, Palm Springs/Palm Desert, Tucson/Scottsdale and Hilton Head, increasing our range and diversity of vacation experiences. We now are over 17,000 units strong in 40 of the most desirable resort locations in North America.
“Our focus in 2000 will be on fully integrating the 18 companies we`ve acquired in the past 18 months and enhancing internal growth,” Levine noted. “While we have made tremendous strides, we still see room for improvement and are now enhancing operating and reporting systems and training programs to manage our properties more efficiently. These new initiatives, together with our ability to cross-sell between locations, will enable us to further improve yield management and occupancy, as well as increase our rental program in each market. We also are increasing our efforts to generate incremental revenue sources, such as travel insurance and services.
“At the corporate level, we plan to take further advantage of our size to achieve greater economies of scale, which will lower operating costs. We recently negotiated more favorable rates for telecommunications, insurance, credit card processing and other cost items that together are expected to produce significant savings in 2000.”
Levine remarked that the company had made major improvements and enhancements to its state-of-the-art web site during the year, including the addition of virtual tours. “Response to our web site, ResortQuest.com, continues to gain momentum, with Internet bookings now accounting for 9 percent of our business, compared to a lodging industry average of about 2 percent.”
For the full year 1999, total revenues rose to $127.9 million, up 131 percent from total revenues of $55.4 million in 1998, principally the result of the inclusion of the founding companies for a full year, plus 13 acquisitions completed during the year. Net income from continuing operations rose to $6.5 million, excluding unusual items, or $0.36 per diluted share, compared to $3.5 million in 1998, or $0.32 per diluted share.