MeriStar Hotels & Resorts (NYSE: MMH), the nation`s largest independent hotel management company, today announced results for the second quarter ended June 30, 2001. For comparative purposes, the results for the three months ended and six months ended June 30, 2000 are presented on a pro forma basis as if the 106 leases with MeriStar Hospitality Corporation (NYSE: MHX) that were converted to management contracts on January 1, 2001 had been converted on January 1, 2000.
Revenues for the 2001 second quarter increased 24.4 percent to $83.5 million. Excluding non-recurring items, net loss for the quarter was ($0.5) million, or $(0.01) per share on a diluted basis, compared to net income of $1.9 million, or $0.06 per share in the 2000 second quarter. Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) declined 19.9 percent to $5.5 million.
During the second quarter, the company recorded the following non-recurring charges:
* $0.6 million of costs related to the company`s terminated merger with American Skiing Company (NYSE: SKI - news).
* $0.9 million of costs related to the corporate restructuring that resulted in a 10 percent reduction in corporate overhead on a run-rate basis.
Same-store revenue per available room (RevPAR) for all full-service managed hotels in the 2001 second quarter declined 5.0 percent to $79.65. Occupancy declined 5.6 percent to 71.9 percent and average daily rate (ADR) advanced 0.6 percent to $110.71. Same-store RevPAR for all limited-service, leased hotels in the 2001 second quarter declined 2.4 percent to $56.88. ADR rose 5.2 percent to $82.07, and occupancy decreased 7.2 percent to 69.3 percent.
``The sluggish U.S. economy had a major impact on our BridgeStreet subsidiary in the 2001 second quarter, which was the primary cause for our lower results,`` said Paul Whetsell, chairman and chief executive officer of MeriStar. ``However, our BridgeStreet operations in London, where we have added more units, were ahead of our internal plan, although not enough to offset the U.S. declines.
``The flexible nature of our corporate housing inventory allows us to respond quickly to economic changes by reducing the number of leased units,`` said Whetsell. ``We plan to shut down operations in three smaller, secondary markets, which will result in a total charge of $0.5 million to $1.0 million in the third and fourth quarters. At the same time, we are expanding our corporate housing business in select U.S. and European markets.``
Whetsell said that the slowing economy also had a negative impact on earnings from its managed hotels, but to a much lesser extent. ``Converting from leases to management contracts on January 1, 2001, as a result of the REIT Modernization Act has significantly reduced our earnings volatility,`` he said.
MeriStar`s managed hotels` results were most negatively influenced by a sharp reduction in business travel, as well as leisure travel in some markets. ``We continue to monitor and seek additional ways to enhance returns for our owners,`` Whetsell said. ``We are aggressively pursuing more group business in the second half and are prepared to take advantage of any improvement in the economy.``