Four Seasons Hotels Inc. (TSE-ME Symbol “FSH”; NYSE Symbol
“FS”) today reported its results for the first quarter ended March 31, 1998. Net earnings increased
33.7% to $7.7 million ($0.23 basic and fully diluted earnings per share) for the three months ended
March 31, 1998, as compared to $5.8 million ($0.19 basic and fully diluted earnings per share) for
the first quarter of 1997, due primarily to the growth of Four Seasons` management operations and
reduced interest expense.
“The first quarter results demonstrate the continued growth of our management business and the
importance of our geographic diversity” commented Isadore Sharp, Chairman and Chief Executive
Officer. “Despite the impact of the turmoil in Asia we were able to achieve significant growth in
our earnings as a result of increased management fees from recently added properties and from
vacation ownership. In addition, the reduction in interest expense, which is a result of the
restructuring of the Company’s debt last year, was fully reflected in the first quarter. Four Seasons
is now in a strong financial position to pursue the many exciting development opportunities that are
currently in front of the Company.”
IMPROVED OPERATING PERFORMANCE
In the first quarter of 1998, REVPAR (room revenue per available room, defined as occupancy
multiplied by achieved room rate), on a U.S. dollar basis, for Core Hotels in North America and in
Europe, increased 10.4% and 8.3%, respectively, when compared to the same period in 1997. As
a result of the financial disruption in Asia, REVPAR, on a US dollar basis, in the Company`s Asian
Core Hotels decreased 31.2% in the first quarter of 1998, as compared to the same period in 1997.
The gross operating profit margin of Core Hotels in North America and Europe increased from
30.7% to 33.4% and from 36.1% to 38.4%, respectively, for the first quarter of 1998, as compared
to the first quarter of 1997. As a result of the decline in REVPAR in Asia, the gross operating profit
margin of the Core Hotels in that region declined from 35.4% to 31.9%. The overall increase in
Core Hotels` gross operating profit resulted in a 48% increase in the Company`s management
incentive fee revenues (which are tied to the profitability of certain of the managed hotels) in the first
quarter of 1998, as compared to the first quarter of 1997.
Total revenues of all managed hotels increased to $521.6 million for the quarter ended March 31,
1998, as compared to $485.3 million in the first quarter of 1997. North American and European
Core Hotels made up 82% of the revenues and 83% of the gross operating profits of all Core Hotels
for the quarter ended March 31, 1998. Total fee revenues were $27.8 million in the first quarter of
1998, as compared to $24.2 million for the quarter ended March 31, 1997. Hotel management
earnings, before depreciation and amortization, for the first quarter of 1998 increased 17.9% to $16.9
million, as compared to $14.3 million in the first quarter of 1997. Operating margins from the hotel
management business increased to 60.8% in the first quarter of 1998 from 59.2% for the first quarter
of 1997.
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