MeriStar Hotels & Resorts, Inc. (NYSE: MMH), the nation`s largest independent, non- branded hotel management company, today announced pro forma results for the third quarter and nine months ended September 30, 1998.
For the 1998 third quarter, MeriStar Hotels & Resorts reported pro forma net income of $0.9 million. Pro forma earnings per share were $0.04 on a diluted basis, exceeding consensus analyst estimates by one cent. Pro forma revenues were $269.4 million, and pro forma earnings before interest expense, income taxes, depreciation and amortization (EBITDA) was $4.3 million. For comparison purposes, pro forma earnings amounts are calculated prior to the adoption of EITF 98-9 issued by the Financial Accounting Standards Board`s Emerging Issues Task Force in May 1998. Full operating results incorporating the adoption of EITF 98-9 are included with this press release.
Operating results for the third quarter were up substantially on a same-store basis. Pro forma revenue per available room (RevPAR) for full-service, leased hotels increased 5.2 percent to $68.58, compared to $65.21 for the same period last year. Same-store average daily rate (ADR) rose 3.6 percent to $90.96, and occupancy increased 1.1 percentage points to 75.4 percent, compared to 74.3 percent in the same period of 1997. Pro forma RevPAR for the company`s entire portfolio of leased hotels increased 4.7 percent to $66.26 compared to $63.26 for the same period last year.
``We are pleased that third quarter earnings per share exceeded consensus analyst estimates for our first quarter as a new public company,`` said Paul W. Whetsell, chairman and CEO of MeriStar Hotels & Resorts. ``In addition to strong operating results for the third quarter, we recently announced several new management contracts. We continue to pursue multiple external growth avenues, including resort, conference center and golf course management.``
``Geographic diversity, quality assets and a focused operating approach positioned us to achieve these results and outperform our competitive sets,`` said David E. McCaslin, president of MeriStar Hotels & Resorts. ``RevPAR growth trends are stronger in major market and resort locations. During the third quarter, we tailored our sales efforts to optimize bottom- line growth, resulting in both ADR and occupancy increases.``
EITF 98-9 affects the recognition of contingent rental expense in interim periods. This pronouncement requires a lessee to recognize contingent rental expense for interim periods prior to the achievement of the specified target that triggers the contingent rental expense, if the achievement of that target by the end of the fiscal year is considered probable. This new accounting pronouncement relates only to the company`s recognition of lease expense in interim periods for financial reporting purposes; it has no effect on the timing of rent payments under the company`s leases or the company`s annual lease expense calculations. Under the provisions of EITF 98-9, the company has deferred recognition of $5.8 million of lease expense as of September 30, 1998 in its pro forma financial statements.
MeriStar Hotels & Resorts leases or manages 215 hotels with 45,141 rooms in 34 states, the District of Columbia, Canada and the U.S. Virgin Islands.
For more information about MeriStar Hotels & Resorts, Inc. and MeriStar Hospitality Corporation (NYSE: MHX), visit the companies` web site: www.meristar.com.