MeriStar Hotels & Resorts (NYSE: MMH), the nation`s largest independent hotel management company, today announced results for the first quarter ended March 31, 2001.
On January 1, 2001, the company converted its 106 leases with MeriStar Hospitality Corporation (NYSE: MHX), and the company`s results now include management fee revenue rather than hotel operations for those hotels. For comparative purposes, the results for the first quarter ended March 31, 2000 are presented on a pro forma basis assuming these leases were converted to management contracts on January 1, 2000.
Revenues for the 2001 first quarter rose 49.5 percent to $79.8 million from $53.4 million in the 2000 first quarter. Excluding non-recurring items, net income for the quarter was $0.2 million, or $0.01 per share on a diluted basis, equal to $0.01 per share in the 2000 first quarter. Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) increased 86.0 percent to $6.5 million from $3.5 million in the 2000 first quarter.
During the first quarter, the company recorded the following non-recurring charges:
* $3.8 million of costs related to the company`s terminated merger with American Skiing Company.
* An asset impairment charge of $15.3 million related to the write-down of certain assets, including investments in affiliates, accounts and notes receivable, and obsolete fixed assets.
These write-downs resulted from changes in the company`s business structure and operations in 2001, and changes in the economic climate adversely impacting the value of some of the company`s investments and receivables.
Same-store average daily rate (ADR) for all full-service, managed hotels in the 2001 first quarter advanced 4.1 percent to $116.59, while occupancy declined 0.3 percent to 68.6 percent. RevPAR rose 3.7 percent to $79.97, compared to the 2000 first quarter. Same-store RevPAR for all limited-service, leased hotels in the 2001 first quarter improved 1.6 percent to $52.77. ADR rose 6.8 percent to $81.56, and occupancy decreased 4.9 percent to 64.7 percent.
``The conversion of our 106 leases with MeriStar Hospitality to management contracts at the beginning of the year provides us with a more stable earnings stream,`` said Paul Whetsell, chairman and chief executive officer of MeriStar. ``Our base management fees will not be impacted by changes in operating costs under our management agreement with MeriStar Hospitality. For the remaining 51 leases with other owners, we have successfully implemented cost control measures resulting in solid bottom-line performance in the first quarter.``
As a result of the change to management contracts and the decision not to proceed with a previously announced merger with American Skiing Company, MeriStar Hotels & Resorts restructured the company following the close of the first quarter. The restructuring will reduce corporate overhead by 10 percent on a run rate basis and is expected to result in a charge of $1 million to $2 million in the second quarter. ``We reorganized our business lines to more closely tie costs to fee revenue and believe we are now appropriately structured for the current economic outlook,`` Whetsell said.
He added that the company`s corporate housing division, BridgeStreet Corporate Housing Worldwide, continued to post strong results. ``We continue to reap the benefits of the strong growth potential in this market segment.`` Whetsell also highlighted the performance of the MeriStar Investment Partners portfolio. For the 10 hotels in the portfolio, RevPAR advanced 12.9 percent and gross operating profit increased 13.7 percent compared to the 2000 first quarter.