Wyndham International, Inc. (NYSE:WYN) today reported results for the third quarter and nine months ended Sept. 30, 2001.
The terrorist attacks caused a decline in occupancy in many of Wyndham International`s key markets and contributed to an 8.4 percentage point drop in comparable owned and leased hotels` occupancy for the third quarter. As a result, the portfolio also had a decline of 7.0% in average daily rate (ADR) and 17.1% decline in revenue per available room (RevPAR) for the third quarter. For the nine months ended Sept. 30, 2001, occupancy at comparable owned and leased properties was down 4.1 percentage points, with ADR down 0.5% and RevPAR down 5.8%.
According to Smith Travel Research, the upper-upscale hotel category experienced a RevPAR loss of 9.0% year-to-date through September; compared to a 7.2% RevPAR decline at Wyndham-branded owned, leased and managed hotels for the same period. Similarly, Summerfield Suites by Wyndham experienced a year-to-date RevPAR decline of 4.1%, versus the extended stay industry RevPAR decline of 6.9%.
On a pro forma basis, which reflects adjustments for asset acquisitions and dispositions, earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, was $71.9 million in the third quarter of 2001, down from $122.2 million for the same quarter last year. The company reported a net loss of $83.9 million for the quarter on a pro forma basis, an improvement of $34.3 million versus the same period in the prior year. The company reported a loss of $0.67 per diluted share, compared to a loss of $0.86 per diluted share for the same quarter last year.
Wyndham initiated cost containment programs in March in response to economic uncertainty, with further reductions in May and July. Despite the substantial decline in revenue following the September 11 attacks, Wyndham achieved a 50.5% flow through on decremental revenues to EBITDA during the third quarter, reflecting the effectiveness of the cost containment initiatives.
“We proactively streamlined operating costs which delivered a strong flow through,” stated Fred J. Kleisner, chairman and chief executive officer of Wyndham International. “Given the unique and very difficult circumstances that arose this quarter, we are pleased that the Wyndham brand is gaining market share.”
Occupancies have improved substantially since September 11 from a low of 38% occupancy the week of September 17 to the mid-60`s for the week of October 28. Wyndham has a breakeven occupancy of approximately 55% to cover operating costs as well as debt service.
Wyndham maintains a solid cash position with access to a revolving credit line through its banking relationships. Following the September 11 attacks, Wyndham`s lender group waived certain financial covenants during the third and fourth quarters. To reflect the emerging new operating environment, the company and its lenders are currently working on a long-term amendment targeted for completion before Feb. 28, 2002.
“We continue to see occupancies in the low to mid 60`s for the overall company. In October, over 80% of our owned and leased portfolio sustained occupancies above 55%, and 30% of the hotels achieving occupancies of 70% and greater,” continued Kleisner. “With our credit facility waiver in place and our amendment process underway we are aggressively focused on managing the business and will continue to do so.”
The company continues to make progress with its three-year plan to focus on proprietary branded operations. Year-to-date, the company has sold $212 million in non-strategic assets, including the Ambassador West hotel in Chicago sold in October. All of the sale proceeds were used to reduce debt. The Wyndham brand also expanded in third quarter with six new franchise and management contracts: the Wyndham Pittsburgh Airport; the Wyndham Sapphire Beach Club and Resort in St. Maarten; The Kelly House and The Harbor View, Wyndham Luxury Resorts in Martha`s Vineyard Mass.; the Wyndham Palm Springs; and The St. Anthony—A Wyndham Historic Hotel in San Antonio, Texas.
The Wyndham Newark Airport is planned to open at the end of 2001; and the recently opened Golden Door Spa at The Boulders—A Wyndham Luxury Resort in Carefree, Ariz., is driving renewed demand for the property.
Wyndham International, Inc. offers upscale and luxury hotel and resort accommodations through proprietary lodging brands and a management services division. Based in Dallas, Wyndham International owns, leases, manages and franchises hotels and resorts in the United States, Canada, Mexico, the Caribbean and Europe. For more information, visit www.wyndham.com. For reservations, call 800/WYNDHAM. Cautionary Statement