Wyndham International, Inc. (NYSE:WYN) today reported results for the fourth quarter and for the full year ended December 31, 1999. The company said earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, increased 9.5% to $622.1 million for the full year from $568.2 million the prior year. Wyndham said it met its expectations for the fourth quarter, with EBITDA, as adjusted, of $141.2 million.
For the fourth quarter, Wyndham reported a net loss of $150.7 million, or $1.05 per share (diluted) compared with a loss of $91.0 million or $1.01 per share (diluted) for the same period last year. The results were impacted by a non-recurring, largely non-cash charge of $131.0 million, net of taxes, or $0.78 per share (diluted) to reflect, among other things, the value of certain non-core assets currently being held for sale as part of Wyndham`s strategy to focus on its core proprietary brands. Without the charge, the company would have reported a loss of $19.7 million or $0.27 per share (diluted) for the fourth quarter.
James D. Carreker, chairman and chief executive officer, said: “Overall, we experienced solid growth in EBITDA, as adjusted, for the full year even though 1999 was a year of significant transition for the company. Looking back on 1999, we enjoyed strong demand through April and posted solid first quarter results. We began to implement strategic change in our portfolio in the second quarter and accelerated those changes into the latter half of the year. As expected, travel fears due to Y2K concerns also impacted our fourth quarter results. These events may continue to impact our short-term performance but we are well-positioned to meet our financial objectives and earnings expectations for 2000.”
“Our new management team, a stronger financial base and improved operating performance underscore the strength of our strategic thrust. We continue to experience improving performance by our core brands and have made substantial progress towards lowering our corporate cost structure and rationalizing our portfolio of owned and leased assets,” said Mr. Carreker.
Fourth Quarter Performance: The company said its fourth quarter was paced by a solid performance of its core proprietary brands partially offset by weakness in leisure travel during the last weeks of December due to Y2K concerns. On a comparable basis, proprietary branded owned and leased hotels realized RevPAR growth of 3.4% and EBITDA growth of 14.1%.
Non-proprietary branded owned and leased hotels have begun to turn around with a 1.0% RevPAR gain, recovering from a 0.2% decline reported in the third quarter. As previously announced, these hotels have experienced weakness in revenue and EBITDA growth due to short-term disruptions, including property level management or franchise changes. Additionally, hotels held for sale posted 0.7% RevPAR change. In total, comparable owned and leased hotels realized RevPAR growth of 1.7%.
The company`s core brand, Wyndham Hotels & Resorts, posted 1.7% RevPAR growth for the quarter. These hotels experienced a significant drop-off in occupancy and revenues during the last weeks of 1999, as Y2K concerns discouraged travel, particularly to its Caribbean destinations. Excluding the Caribbean resorts, Wyndham Hotels & Resorts would have posted 4.5% RevPAR growth in the quarter.
“We achieved top line growth during the fourth quarter and for the year in our core brands. Similarly, for comparable owned and leased assets that are proprietary-branded, we achieved revenue and EBITDA improvement,” said Mr. Carreker. “Non-proprietary branded hotels have begun to stabilize with 1.0% RevPAR improvement. We are anticipating positive EBITDA growth in those assets next year.”
During the fourth quarter, Wyndham intensified its efforts to lower its ongoing corporate expenses and announced the closure of the Wichita headquarters of Summerfield Suites. Corporate general and administrative costs decreased to $19.4 million from $22.6 million in the third quarter.
Frederick J. Kleisner, president and chief operating officer, said, “During the fourth quarter, we completed important steps towards streamlining and simplifying our organization. We now have a single operating structure across our brands and management services division. We have completed consolidation of our purchasing function into a single unit. We are in the process of implementing a single global distribution system code for our core brands. After closing the Wichita and Phoenix division offices, all of our North American operations will be based in Dallas. With a single focus in these areas, we can support the revenue generating opportunities at each of our hotels.”
Also in the quarter, Wyndham completed its previously announced Rights Offering in December. In addition, the company completed the sale of its portfolio of 11 U.K.-based historic-style Arcadian hotels for approximately $124 million. The company also continued to build its portfolio of core branded hotels in the U.S. It purchased and converted a flagship hotel in New Orleans and completed the conversion of the Casa Marina Resort properties to the Wyndham brand. For the year, the company added 22 core branded hotels and resorts in North America.
Full Year Results: For the full year, EBITDA, as adjusted, improved 9.5% to $622.1 million. The company reported a net loss of $1.1 billion or $7.20 per share (diluted) compared with a loss of $158.2 million or $2.57 per share (diluted) for 1998, largely reflecting a previously announced charge in the second quarter. At that time, the company took $893.8 million in non-recurring, largely non-cash charges associated with its restructuring and reorganization, as well as for deferred taxes. Excluding non-recurring and related charges of $965.3 million, net of taxes, net loss declined to $1.21 per share in 1999.
Wyndham Hotels & Resorts had a 4.7% RevPAR increase for the year. Wyndham Luxury Resorts, formerly Grand Bay, reported 1.0% RevPAR gain for the year. Summerfield Suites realized a 0.6% RevPAR change and Wyndham Garden reported 1.9% decline.
Overall, RevPAR at comparable owned and leased hotels increased 0.9%, reflecting continued weakness in the non-proprietary branded hotels.