CapStar Hotel Company (NYSE: CHO), a leading hotel investment and management corporation, today announced record financial results for the fourth quarter and year ended December 31, 1997.
Net income for the quarter rose 152 percent to a record $6.0 million, or $0.25 per share (diluted), compared to net income of $2.4 million, or $0.19 per share (diluted) for the fourth quarter of 1996. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the 1997 fourth quarter were $22.9 million, compared to 1996 EBITDA of $8.1 million, a 181 percent increase. Revenue increased 220 percent to $104.5 million from $32.7 million in the comparable quarter a year earlier.
Net income for the year, excluding an extraordinary expense related to expanding the company`s credit facility, was $24.2 million, or $1.27 per share (diluted), compared to $4.4 million for 1996. EBITDA for 1997 rose 199 percent to $82.5 million, compared to $27.6 million for 1996. Revenue for 1997 rose to $316.4 million compared to $109.8 million last year, an increase of 188 percent.
“Earnings growth came from improved operating results and from acquisitions, with both trends continuing into 1998,” said Paul Whetsell, CapStar president and CEO. “We are pleased that we have exceeded consensus analyst expectations in every quarter since our IPO in August 1996.
“To date in 1998, we have acquired or contracted to purchase seven properties,” Whetsell continued. “Overall, there are fewer properties on the market for sale, but we continue to have a full pipeline of attractive acquisition candidates, both portfolios and individual properties. We are concentrating on large urban properties where barriers to new competition are highest, and, to a lesser extent, on resorts, a highly fragmented segment which tends to be undermanaged.”
Fourth quarter 1997 revenue per available room (RevPAR) on a pro forma basis for the 41 hotels owned as of September 30, 1997, was $58.37, compared to $53.43 for the same period last year, an increase of 9.2 percent. Average daily rate (ADR) rose to $87.88, an increase of $5.31, or 6.4 percent, and occupancy rates increased to 66.4 percent from 64.7 percent in the comparable period in 1996.
RevPAR for 1997 increased 10.0 percent to $63.32 from $57.55 in 1996. ADR for 1997 grew 5.8 percent to $87.61 from $82.84 in 1996, while occupancy rates increased to 72.3 percent from 69.5 percent in 1996.
“CapStar continued to see a combination of both short-term and long-term operating improvements during the year,” Whetsell said. “Short-term benefits result from the operating procedures we institute in the first three to six months after our takeover of a property, while long-term gains are realized through our distinctive renovation and repositioning programs that help drive earnings over a much longer, multi-year period. As an example of the continued long-term operating benefits we enjoyed, our original 12-hotel portfolio from the time of our IPO registered 10.5 percent RevPAR growth in 1997.”
“During the year, we raised $1.2 billion in debt and equity for our acquisition program,” said John Emery, chief financial officer. “We remain prudently leveraged, with a significant portion of our debt being fixed-rate and long-term. We have $300 million available for opportunistic acquisitions in 1998.”
Washington, D.C.-based CapStar Hotel Company owns and manages upscale, full-service hotels and resorts throughout the U.S. and Canada under such internationally known brands as Hilton, Sheraton, Marriott, Embassy Suites, Westin, Renaissance and Doubletree. Including one hotel currently under contract, CapStar`s hotel portfolio comprises 54 owned hotels with 14,503 rooms, 40 leased hotels with 5,687 rooms, and 27 managed hotels with 4,631 rooms, for a total of 121 properties with 24,821 rooms. The company continues to actively seek acquisitions and management contracts in major markets and resort locations throughout North America.
Statements in this release looking forward in time involve risks and uncertainties, including the ability of the Company to successfully implement its acquisition strategy and operating strategy, the Company`s ability to manage rapid expansion, changes in economic cycles, competition from other hospitality companies, changes in the laws and government regulations applicable to the Company and other risk factors detailed in the Company`s Securities and Exchange Commission filings.