MeriStar Hotels & Resorts (NYSE: MMH), the nation’s largest independent hotel management company, today announced that it has jointly agreed with American Skiing Company (NYSE: SKI) to withdraw plans to merge the two companies due to the impact of adverse economic conditions on the companies’ ability to effect the capital markets transactions required to consummate the merger. Accordingly, MeriStar’s shareholders meeting, scheduled for March 26, has been cancelled. There will be no termination fees due or payable by either party.
“Given the slowdown in the economy, we believe it is more prudent for us to continue to focus on our core business of operating hotels, rather than consummate the merger,” said Paul Whetsell, MeriStar Hotels & Resorts chairman and chief executive officer. “American Skiing has great potential, and we wish them well in their future endeavors.”
Whetsell noted that MeriStar Hotels & Resorts is confident that its first quarter earnings remain in line with internal forecasts. He added that for the short term, the company will continue to focus on its three primary businesses:
1) Hotel management—With 268 primarily full-service hotels and resorts under a variety of franchise flags in the United States, Canada and the Caribbean in its management portfolio, MeriStar is the nation’s largest independent hotel management company. Hospitality management will remain the primary focus, and the company will concentrate on growth by improving operations at properties currently under management, as well as adding new properties to its management portfolio.
2) BridgeStreet Corporate Housing Worldwide—Presently the third largest provider of corporate housing, BridgeStreet serves a broad cross-section of major international corporations with facilities in the United States, Canada and Europe. The company currently is examining growth opportunities both in the United States and overseas.
3) Doral resorts and conference centers—MeriStar currently manages four Doral resorts and conference centers, located in the United States and the Caribbean, as well as 12 golf courses. The company expects to selectively add to Doral by branding certain resorts and conference centers it currently manages, as well as through new management contracts and joint venture activity.
“Our hotel management business provides substantial, consistent cash flow, even in a changing economy, and positions us to continue to reduce debt and execute our growth strategy,” said John Emery, MeriStar’s chief investment officer. “We continue to have a prudent and conservative capital structure that gives us flexibility and liquidity.”
MeriStar Hotels & Resorts operates 268 hospitality properties with more than 55,000 rooms in 36 states, the District of Columbia, Canada, Puerto Rico and the U.S. Virgin Islands, including 54 properties managed by Flagstone Hospitality Management, a subsidiary of MeriStar Hotels & Resorts. Through its Doral Golf brand, MeriStar manages 12 golf courses. BridgeStreet Corporate Housing Worldwide, a MeriStar subsidiary, is one of the world’s largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada and Europe. For more information about MeriStar Hotels & Resorts, visit the company`s Web site: www.meristar.com.
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 to successfully implement its acquisition strategy and operating strategy; the 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 company.