ARLINGTON HEIGHTS, Ill.—Arlington Hospitality, Inc. [NASDAQ: HOST] today announced May 2003 same-room revenue per available room (RevPAR) results for the 62 AmeriHost Inn hotels in which the company has an ownership interest.
AmeriHost Inn is a mid-market, limited service hotel brand with approximately 100 properties located in 20 states. Arlington Hospitality, a hotel development and management company, owns and operates 62 AmeriHost Inn hotels, and is the nation`s largest owner and operator of the brand. Cendant Corporation [NYSE: CD] is the franchisor of the AmeriHost Inn brand.
Results are stated for those hotels, which have been open for at least 13 months during the period presented. Same-room RevPAR for the company`s AmeriHost Inn hotels increased 2.6 percent to $35.07 for the month of May 2003, compared to May 2002. Occupancy increased 2.4 percent to 60.3 percent, while average daily rate (ADR) increased 0.3 percent to $58.16. These results compare to a Smith Travel Research preliminary forecast of a flat to 2 percent decrease in RevPAR for May 2003 for the mid-scale without food and beverage segment.
“Our AmeriHost Inn hotels began to realize some firmness in room demand during the month of May as the uncertainties related to the war in Iraq subsided,” said Jerry H. Herman, Arlington Hospitality chief executive officer. “In particular, our AmeriHost Inn hotels experienced increased demand from leisure travelers, and we saw preliminary strengthening of demand in many markets. The significant improvement over last year`s results marks a very positive trend which we hope will continue.”
Arlington`s AmeriHost Inn hotels continued to outperform their segment and the industry as a whole. Herman noted, “Our mid-market without food and beverage segment, and the lodging industry in general, continues to experience declines in RevPAR, primarily due to the ongoing sluggish economy and resulting fall-off in business travel. We remain very aggressive in our marketing strategies, which are delivering the improvements. Another positive is that, for the 12 months ended May 31, 2003, our AmeriHost Inn hotels achieved nearly a 2 percent increase in same-room RevPAR, again, significantly better than our segment and the overall industry.”
As part of its hotel development strategy, Arlington Hospitality opportunistically sells existing AmeriHost Inn hotels, as well as other branded hotels it has built. These properties are wholly owned by the company, leased or are owned by a joint venture in which the company is a partner. The company typically facilitates the sale of hotels owned by joint ventures and landlords. Thus far, the second quarter of 2003 includes the sale of one non-AmeriHost Inn hotel owned by a joint venture. Year to date through May 31, Arlington has completed the sale of two wholly owned AmeriHost Inn hotels and facilitated the sale of one AmeriHost Inn hotel owned by a joint venture and the one non-AmeriHost Inn hotel owned by a joint venture. The sale of the two wholly owned properties generated gross sales proceeds of approximately $6.5 million, of which approximately $4.2 million was used to reduce debt. In addition, as recently announced, the sale of the non-AmeriHost hotel by a joint venture resulted in the reduction of debt of approximately $925,000 since this was a consolidated joint venture included in the company`s financial statements.
The company currently has five hotels (four AmeriHost Inn properties and one other branded hotel) under contract for sale, including hotels owned by joint ventures. These transactions are expected to be consummated during the next six months. The revenue and profit/loss from the sale of hotels, as well as the reduction of debt, will be reported in the company`s financial statements as of the date the sale transactions close. Although the company has these hotels under contract for sale, with nonrefundable cash deposits in certain cases, certain conditions to closing remain, and there can be no assurance that these sales will be consummated as anticipated.
The sale of AmeriHost Inn hotels wholly owned by Arlington Hospitality or in which the company has an ownership interest allows the company to realize a development incentive fee from its agreement with Cendant, in addition to any profits realized from the sale. The company also benefits from a long-term royalty sharing agreement with Cendant for each AmeriHost Inn hotel not owned by the company that is in the franchise system. The above-mentioned anticipated results from hotel sales do not include any of these fees and payments from Cendant. For a complete listing of all hotels for sale by the company, please visit the web site www.hotelsforsaleonline.com, or contact Leon Vainikos via email at [email protected] or by telephone at (847) 228-5401, ext. 334.
The amount of revenue and debt reduction described above relates solely to closed or pending sales activities. Any forecasted amounts from closed or pending sales could differ from the final amounts included in the company`s applicable quarterly and annual financial statements when issued. Furthermore, such forecasted amounts do not represent guidance on, or forecasts of, the results of the company`s entire consolidated operations, which are reported on a quarterly basis.
Consistent with the company`s recent public filings, the company is exploring a strategy of selling its nine non-AmeriHost Inn hotels along with 25 to 35 AmeriHost Inn hotels over the next two years. The company has selected a national hotel broker and is negotiating a written agreement for the broker to represent the company in the implementation of this strategy.
Management has begun to perform extensive financial and market analysis with the assistance of the national broker, and, in certain cases, an outside consultant to identify the AmeriHost Inn hotels to be marketed for sale. In addition, in determining which hotels are to be marketed for sale, management will be evaluating the impact on the company`s cash flow, operations, and financial position post sale, including any impact under Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The results of this hotel analysis and of an evaluation of the long-term effect on the company may have a significant effect on the quantity and timing of the hotels to be sold. If implemented, the company expects this strategy will reduce debt and generate cash to pursue development and other strategic objectives as well as increase the economic benefits of the company`s transaction with Cendant. In addition, certain of the hotels to be sold historically have operated at a deficit, and the successful sale of these properties is expected to eliminate future their anticipated deficits. There can be no assurances that any sales will be consummated or, if consummated, when and on what terms. The company expects to determine the feasibility and means to best implement its strategy and identify which hotels to initially market for sale in the next 30 days.
Arlington Hospitality also provides turnkey hotel development services for new construction hotel projects, including AmeriHost Inn hotels, as well as other hotel brands. To date in 2003, the company has opened two newly constructed AmeriHost Inn hotels for its own account and one newly constructed AmeriHost Inn hotel for a joint venture in which the company is a partner. Currently, the company has one wholly owned AmeriHost Inn hotel under construction. This hotel is expected to open in late June or early July 2003. The company also has several additional hotel projects in various stages of the pre-construction development process. For more information regarding turnkey development services, contact Jerry Herman via email at [email protected] or by telephone at (847) 228-5401, ext. 309.
From time to time, the company may utilize cash to purchase its own common stock. Currently, the Board of Directors has authorized the company to buy back, at any time and without notice, up to 1,000,000 shares of its own common stock under certain conditions. Year-to-date, the company has not purchased any shares under this authorization.
Arlington Hospitality, Inc. is a hotel development and management company that builds, operates and sells mid-market hotels, primarily the AmeriHost Inn brand. Currently, Arlington Hospitality, Inc. owns or manages 71 properties in 17 states, including 62 AmeriHost Inn hotels, for a total of 5,200 rooms, with one additional AmeriHost Inn & Suites hotel under construction. The AmeriHost Inn brand is a mid-market, limited service hotel brand with approximately 100 properties located in 20 states.