MeriStar Hotels & Resorts (NYSE: MMH), the nation`s largest independent hotel management company, today announced that it has lowered its earnings guidance for the second quarter ended June 30, 2001, due primarily to continuing softness in the economy.
The company said that it expected second quarter net income to be $(0.01) to $0.00 per share on a diluted basis, compared to analysts` current consensus estimate of $0.04 per share.
The company said that the sluggish economy has had the most significant impact on second quarter earnings at its BridgeStreet Corporate Housing Worldwide subsidiary. ``There was a substantial decline in corporate housing demand in the second quarter as corporations reduced extended business travel,`` said Paul W. Whetsell, chairman and chief executive officer of MeriStar Hotels & Resorts. ``However, the flexible structure of our corporate housing business allows us to quickly modify our leases, and we now are reducing our leased inventory for the third quarter, which should diminish the negative impact on earnings for the second half of the year.``
Whetsell said that lower revenues at its managed hotels also will impact second quarter results, but to a much lesser degree. ``One benefit of changing from leases to management contracts as a result of the REIT Modernization Act at the beginning of the year is a significant reduction in earnings volatility,`` he said.
``We are working hard to maximize returns for our hotel owners,`` Whetsell noted. ``The biggest decline in revenues is from business travel, and we are responding with more aggressive marketing and shifting to more meeting and group-oriented bookings.``
For the remainder of the year, Whetsell noted that reduced business travel will continue to affect lodging demand. ``We are taking advantage of the flexible nature of our cost structure to minimize the effect of the sluggish economy during the remainder of 2001,`` he said. ``We expect our operating performance to improve in the third and fourth quarters, but fall below previous expectations.``
Whetsell said that the outlook for the remainder of the year reflects the current economic conditions and is subject to change as the economy responds to changing business conditions.
MeriStar Hotels & Resorts operates 269 hospitality properties with more than 55,000 rooms in 36 states, the District of Columbia, Canada, and Puerto Rico, including 54 properties managed by Flagstone Hospitality Management, a subsidiary of MeriStar Hotels & Resorts.
Through its Doral Golf division, MeriStar manages 11 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, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, 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 and operating strategies; 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. For a more detailed description of some of those risks and uncertainties, please read the section titled ``Risk Factors`` and ``Forward-Looking Information`` in the annual report on Form 10-K of MeriStar Hotels & Resorts for the year ended December 31, 2000.