February 22, 2001—MeriStar Hotels & Resorts (NYSE: MMH), the nation`s largest independent hotel management company, today announced results for the fourth quarter and full year ended December 31, 2000.
Revenues for the 2000 fourth quarter rose 11.7 percent to $342.1 million from $306.3 million in the 1999 fourth quarter. Excluding non-recurring items, net income for the quarter was $(4.1) million, or $(0.11) per share on a diluted basis, compared to $0.01 per share in the 1999 fourth quarter, and earnings before interest, taxes, depreciation and amortization (EBITDA) were $(2.4) million, compared to $3.2 million in the fourth quarter of 1999.
During the fourth quarter, the company recorded the following non-recurring charges:
—$2.7 million of costs related to the company`s pending merger with American Skiing Company to form Doral International, Inc. As the acquired entity for accounting purposes, the company is required to expense currently all costs it incurs in connection with the merger.
—$0.3 million of costs related to the company`s conversion of hotel leases with MeriStar Hospitality Corporation into long-term management contracts, effective January 1, 2001, under the provisions of the REIT Modernization Act.
—An asset impairment charge of $21.7 million related to the write-down of long-lived intangible assets for the company`s leases of certain limited-service hotels. This charge is a non-cash adjustment to the carrying value of those assets.
Same-store average daily rate (ADR) for full-service, leased hotels in the 2000 fourth quarter advanced 4.7 percent to $104.86, while occupancy rose 1.1 percent to 66.2 percent. RevPAR rose 5.9 percent to $69.46, compared to the 1999 fourth quarter.
RevPAR for all leased hotels improved 5.0 percent in the 2000 fourth quarter to $65.52. ADR rose 5.2 percent to $100.35, and occupancy declined 0.3 percent to 65.3 percent.
``Our results for the fourth quarter and full year 2000 are disappointing. Although top-line revenue growth at our leased hotels continued to be strong, we were not able to benefit at the bottom line due to increased lease payments and higher operating costs, particularly for energy, insurance and guest loyalty programs,`` said Paul Whetsell, chairman and chief executive officer of MeriStar. ``The effect of these costs under our lease agreements began in the third quarter and was much more pronounced in the fourth. We achieved more positive results in both our corporate housing and hotel management businesses with solid top- and bottom-line performance, consistent with our expectations.``
Whetsell added, ``With the implementation of the REIT Modernization Act, we have converted all of our hotel leases with MeriStar Hospitality to management contracts, eliminating the volatility of the leases. The new management contracts have a base fee of 2.5 percent and, including incentive fees, can increase to as much as 4.0 percent of total revenues. As a result of the decreased leakage prior to conversion, our expected total fees in 2001 have changed from 2.75-3.25 percent to 2.5-3.0 percent.``
Excluding non-recurring items, net income for 2000 was $4.5 million, or $0.13 per share on a diluted basis, compared to $0.24 per diluted share in 1999. Revenues for the 12 months increased 9.2 percent to $1.41 billion. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) for 2000 were $23.9 million compared to $23.3 million in 1999.
Same-store average daily rate (ADR) for full-service, leased hotels improved 5.7 percent to $107.84 in 2000, while occupancy rose 0.1 percent to 72.0 percent. Revenue per available room (RevPAR) increased 5.7 percent to $77.60, compared to 1999. RevPAR for all leased hotels advanced 4.9 percent to $73.11. ADR improved 5.5 percent to $102.38, and occupancy declined 0.6 percent to 71.4 percent.
This press release contains forward-looking statements about MeriStar Hotels & Resorts, Inc., including those statements regarding future operating results and the timing and composition of revenues, among others. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the following: the ability of MeriStar Hotels & Resorts and American Skiing Company to complete their merger, the ability of MeriStar Hotels & Resorts to successfully implement its acquisition strategy and operating strategy; the merged company`s ability to manage rapid expansion; significant leverage; changes in economic cycles; competition from other hospitality companies; and changes in the laws and government regulations applicable to the companies.