WASHINGTON—Oct. 30, 2002—MeriStar Hospitality Corporation (NYSE: MHX), the nation`s third largest hotel real estate investment trust (REIT), today announced financial results for the third quarter ended September 30, 2002. In addition, the company announced that it completed the refinancing of its senior credit facility.
The lingering softness in the economy and general drop-off in travel during the weeks around the anniversary of the September 11 terrorist attacks contributed to lower than anticipated transient business travel during the third quarter. For the 2002 third quarter, net loss was $(29.4) million compared to $(17.3) million in the 2001 third quarter. Diluted net loss per share was $(0.65), compared to $(0.39) in the 2001 third quarter. Comparative funds from operations (FFO) were $6.7 million, compared to $15.4 million for the 2001 third quarter. Comparative FFO represents funds from operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for significant non-recurring items, and the effect of non-hedging derivatives. Comparative FFO per diluted share was $0.13, compared to $0.29 for the 2001 third quarter.
Revenues decreased 3.4 percent to $235.8 million. Comparative earnings before interest expense, income taxes, depreciation and amortization (EBITDA) declined 12.8 percent to $40.0 million. Hotel operating profit margins declined 220 basis points to 26.5 percent.
Same-store revenue per available room (RevPAR) declined 5.3 percent to $60.95. Average daily rate (ADR) was off 3.5 percent to $94.36, while occupancy decreased 1.8 percent to 64.6 percent.
The challenging economic environment continues to have a direct influence on business travel,” said Paul Whetsell, chairman and chief executive officer. “To offset weakness in the transient business sector, we shifted our marketing efforts to lower rated group and leisure business to boost occupancy. This put more pressure on profit margins, but our operator, Interstate Hotels & Resorts, continues to focus on controlling costs to mitigate the shift in customer mix. We expect to achieve economies of scale and other cost benefits going forward as a result of the increased size and scale of our operator following the completion of its merger in July.”