PRNewswire-FirstCall FAIRFIELD, N.J. Oct. 30 :
Prime Hospitality Corp. , a leading hotel owner, operator and franchisor,
reported its results for the three and nine months ended September 30,
Net income before asset transactions for the third quarter of 2003 was
$2.1 million, or $.05 per share, compared to $2.2 million, or $.05 per
share, for the third quarter of 2002. The third quarter of 2002, also
included a loss of $.02 per share from the funding of deficits on the
hotels leased from Hospitality Properties Trust (“HPT”).
Total net income, which also includes gains and losses from asset
transactions, was $2.0 million, or $.05 per share, for the third quarter
of 2003 compared to $2.8 million, or $.06 per share, in the third quarter
of 2002. The 2002 results included gains on asset sales partially offset
by debt retirement costs.
“Our third quarter results reflected strong occupancy levels due to
increased leisure travel over the summer months,” said A.F. Petrocelli,
chairman and CEO of Prime. “While we have seen a modest recovery in
corporate transient travel, until this rebounds more significantly,
pricing will remain challenging.
“We continue to strengthen our financial position. We have discontinued
the funding of losses on our lease with HPT which negatively impacted cash
flow by $11.5 million annually and we retired another $10.5 million of
debt in the quarter.”
For the nine months ended September 30, 2003, Prime reported a net loss
before asset transactions of $1.2 million, or $.03 per share, compared to
net income before asset transactions of $8.7 million, or $.19 per share,
for the comparable period in 2002. The total net loss, which includes
lease termination charges and gains and losses from asset sales and debt
retirements, for the nine months ended September 30, 2003 was $22.4
million, or $.50 per share, compared to a net loss of $0.9 million, or
$.02 per share, for the comparable period in 2002.
For the quarter, total revenues decreased by $14.5 million to $89.2
million due to the deconsolidation of the HPT hotels and the impact of
asset divestitures. Revenue per available room (“REVPAR”) at Prime`s
comparable owned and leased hotels increased by 0.3% in the third quarter
of 2003 as compared to the third quarter of 2002. The results were
affected by higher occupancies and a lower average daily rate (“ADR”) due
to a higher percentage of leisure and group travel. For the third quarter
of 2003, occupancy increased by 5.8 percentage points to 66.9% and ADR
decreased by 8.4% to $67.17. Gross operating profit margins at comparable
owned and leased hotels declined by 1.8 percentage points due to the lower
Earnings before interest, taxes, depreciation and amortization (“EBITDA”)
decreased by $1.4 million to $18.2 million in the third quarter of 2003.
Interest expense declined by 26.8%, or $1.8 million, to $4.9 million for
the quarter ended September 30, 2003 primarily due to debt reductions and
lower interest rates.
For the third quarter of 2003, Prime reported a 1.5% REVPAR decrease at
its comparable AmeriSuites hotels, as occupancy increased by 4.0
percentage points to 68.3% and ADR decreased by 7.3% to $68.34. Increases
were reported in Cincinnati, Oklahoma City and Richmond while decreases
were posted in Chicago, Denver, Orlando and the Northeast.
For the third quarter of 2003, Prime reported a 3.7% REVPAR increase at
its comparable Wellesley Inns & Suites hotels, as occupancy increased by
7.6 percentage points to 63.5% and ADR decreased by 8.9% to $55.05. The
South Florida and Phoenix markets reported increases while revenues
decreased in the Northeast.
Prime`s upscale full-service hotels which are located in the Northeast,
reported a 0.1% REVPAR decrease for the third quarter of 2003 as occupancy
increased by 2.0 percentage points to 71.5% and ADR decreased by 2.9% to
$118.73. The full-service hotels were impacted by an increase in revenue
at the recently converted Prime Hotel in Saratoga Springs, NY and
decreases in the suburban New York City market.
As of September 30, 2003, Prime had 148 AmeriSuites and 81 Wellesley Inns
& Suites hotels in operation. Although Prime intends to expand its brands
primarily through franchising, it will consider corporate development
opportunities in strategic markets with high barriers to entry.
During the third quarter, Prime converted two owned Ramada Inns to
Wellesley Inns. The new hotels converted in the quarter are located in
Armonk, NY and Clifton, NJ. This year Prime has converted nine hotels to
the Wellesley brand including five owned hotels.
Currently, Prime has two AmeriSuites under construction and a pipeline of
21 executed franchise agreements including eight in the planning stage.
There is also one franchised Wellesley Inn under conversion.
During the second quarter, Prime announced an agreement for the
installation of high speed internet access in its AmeriSuites, Wellesley
Inns & Suites and Prime Hotels and Resorts brands. The new amenity will be
available on both a wired and wireless basis in all guest and meeting
rooms as well as wireless access in all common areas including hotel
lobbies, fitness centers, pool areas and restaurants. Prime has already
installed this feature in over 80 hotels and expects the installations to
be substantially complete by year end.
In October 2003, Prime assumed management of its first hotel in New York
City, the Empire Hotel at Broadway and 63rd Street across from Lincoln
In July 2003, Glen Rock Holding Corp, a subsidiary of the Company, did not
make its scheduled monthly rent payment of approximately $2.0 million to
HPT and received a default notice from HPT. The lease covers 24
AmeriSuites hotels owned by HPT. Prime is continuing to operate the hotels
on an interim basis as AmeriSuites while HPT decides the long-term
management and franchise affiliation of these hotels.
As of September 30, 2003, Prime had $243.7 million in debt and $18.4
million in cash and cash equivalents. During the quarter, Prime reduced
its debt balance by $10.5 million funded by operating cash flow and the
financing of its 40% owned Quebec Holiday Inn Select hotel. Prime`s debt
to book capitalization percentage is 26.3%. Adjusted on a pro-forma basis
for the HPT lease which is required under its revolving credit facility,
Prime`s debt to last twelve months EBITDA ratio is 4.0 times, and its
EBITDA to interest is 3.0 times. Under its revolving credit facility, the
Company is required to maintain a debt to EBITDA ratio of 4.25 times and
an EBITDA to interest ratio of 2.50 times.
Prime Hospitality Corp., one of the nation`s premiere lodging companies,
owns, manages and franchises 247 hotels throughout North America. The
Company owns and operates three proprietary brands that compete in
different segments: AmeriSuites(R) (all-suites), Wellesley Inns &
Suites(R) (limited-service) and Prime Hotels & Resorts (full-service).
Also within its portfolio are owned and/or managed hotels operated under
franchise agreements with national hotel chains including Hilton,
Radisson, Sheraton, Holiday Inn and Ramada. Prime can be accessed over the
internet at http://www.primehospitality.com/.
Prime Hospitality Corp. will hold a conference call on October 30, 2003 at
9:30 a.m. EST to discuss our third quarter results. Investors and members
of the media may participate by calling 800-603-4335. A recording of the
call will be available through November 13, 2003 by calling 800-642-1687
and using the conference ID# 2902984.