Press Release: Interstate Hotels Corporation
February 14, 2002
PITTSBURGH, PA -- Interstate Hotels Corporation (Nasdaq:IHCO), one of the largest independent hotel management
companies in the United States, yesterday announced results for the fourth quarter ended December 31, 2001.
For the fourth quarter of 2001, the Company reported a net loss of $3.1 million compared to a net loss of $3.6
million for the same period last year reflecting earnings per share of $(.55) compared to $(.54), respectively.
Earnings before interest, income tax expense and depreciation and amortization (EBITDA) were $2.6 million versus
$(3.2) million in the fourth quarter of 2000. Total Company revenues decreased by $49.2 million to $10.6 million
in the fourth quarter of 2001 from $59.8 million for the same period in 2000 as a result of the conversion of the
Equity Inns leases into management contracts on January 1, 2001. The lodging revenues related to the leased hotels
that were recorded in 2000 are not reflected in the Company's 2001 financial statements, as the Company records
revenues from management fees only.
Revenue per available room (RevPAR) for comparable U.S. full-service hotels managed by the Company decreased 31.4%
for the quarter to $69.65 from $101.52 for the same period in 2000. Average daily room rate (ADR) decreased to
$121.79 from $139.51, while occupancy rates declined from 72.8% to 57.2% in the fourth quarter from a year ago.
The Company's fourth quarter RevPAR continued to be adversely impacted by the weakened economic conditions and
the aftermath of the September 11th events which led to the decline in lodging demand, particularly in the New
York and California markets.
According to Thomas F. Hewitt, Chairman and Chief Executive Officer of Interstate Hotels, ``Despite the obvious
challenges facing the hotel industry as a result of the tragic events of September 11th, we have seen positive
results due to our proactive approach to cost containment and sourcing new sales opportunities.''
Interstate Hotels Corporation operates approximately 135 hotels with more than 28,000 rooms in 37 states in the
United States as well as Canada and Russia. For more information, visit www.interstatehotels.com.
-- FINANCIAL TABLES FOLLOW --
Comparable Hotel Statistics(a)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
----------------------- -----------------------
U.S. Full-Service
Managed Hotels:
Occupancy 57.2% 72.8% 72.2% 80.2%
ADR $ 121.79 $ 139.51 $ 131.45 $ 136.04
RevPAR $ 69.65 $ 101.52 $ 94.86 $ 112.73
(a) Comparable U.S. hotels represent those operated by the Company
since January 1, 2000, excluding hotels that underwent a major
renovation or a change in franchise affiliation.
NOTE:
Certain matters discussed within this press release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company
believes the expectations reflected in such forward-looking statements
are based on reasonable assumptions, it cannot give assurance that its
expectations will be attained. Factors that could cause actual results
to differ materially from expectations include financial performance,
real estate conditions, execution of hotel development programs,
changes in the availability of additional management contracts, leases
or acquisitions, changes in local or national economic conditions and
other risks detailed from time to time in the Company's reports filed
with the SEC.
INTERSTATE HOTELS CORPORATION
Consolidated Statements of Operations
(Unaudited, in thousands except per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2001 2000 2001 2000
-------------------- --------------------
Lodging revenues:
Rooms $ 644 $ 43,932 $ 4,277 $191,811
Other departmental 35 2,678 149 11,661
Net management fees 5,956 8,580 24,525 29,481
Other fees 3,981 4,593 15,074 13,159
-------- -------- -------- --------
Total revenues 10,616 59,783 44,025 246,112
-------- -------- -------- --------
Lodging expenses:
Rooms 165 11,522 1,030 47,014
Other departmental 20 1,767 86 7,238
Property costs 300 15,876 1,531 61,767
General and
administrative 2,892 4,643 11,385 14,894
Payroll and related
benefits 4,404 6,819 19,738 22,704
Lease expense 8 19,366 482 88,594
Depreciation and
amortization 2,309 3,358 10,394 16,091
Joint Venture
formation costs -- 2,096 -- 2,096
Loss on impairment
of investment
in hotel leases -- -- -- 12,550
-------- -------- -------- --------
Total expenses 10,098 65,447 44,646 272,948
-------- -------- -------- --------
Operating income
(loss) 518 (5,664) (621) (26,836)
Other (expense) income:
Interest, net (881) 330 (1,673) 1,777
Other, net (2,909) (518) (5,131) (498)
Loss on impairment
of investment in
hotel real estate -- -- (3,026) --
-------- -------- -------- --------
Loss before income
tax benefit (3,272) (5,852) (10,451) (25,557)
-------- -------- -------- --------
Income tax benefit (371) (2,287) (3,295) (5,935)
-------- -------- -------- --------
Loss before
minority interest (2,901) (3,565) (7,156) (19,622)
-------- -------- -------- --------
Minority interest 64 (134) 194 (10,719)
-------- -------- -------- --------
Net loss $ (2,965) $ (3,431) $ (7,350) $ (8,903)
Less mandatorily
redeemable preferred
stock:
Dividends 158 127 634 127
Accretion 16 12 62 12
-------- -------- -------- --------
Net loss available
to common
stockholders $ (3,139) $ (3,570) $ (8,046) $ (9,042)
======== ======== ======== ========
Earnings per share:
Basic $ (0.55) $ (0.54) $ (1.30) $ (1.40)
Diluted $ (0.55) $ (0.54) $ (1.30) $ (1.40)
Common shares
outstanding:
Basic 5,730 6,561 6,200 6,474
Diluted 5,730 6,561 6,200 6,474
EBITDA $ 2,567 $ (3,249) $ 9,705 $ (1,858)
======== ======== ======== ========
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Contact:
Interstate Hotels Corporation
Investor Relations: Lisa O'Connor, 412/937-3319
or
Corporate Communications: Tom Loftus, 412/937-3382