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Press Release: Prime Hospitality Corp.
April 30, 2004
FAIRFIELD, NJ -- Prime Hospitality Corp. (NYSE: PDQ), a leading hotel owner, operator and franchisor, reported
its results for the three months ended March 31, 2004.
Prime reported a net loss for the first quarter of 2004 of $2.9 million, or $.06 per share, compared to a loss
of $6.6 million, or $.15 per share, for the first quarter of 2003. The first quarter of 2003 included a loss of
$.05 per share from discontinued operations and a gain of $.01 per share from the retirement of debt.
'Our first quarter results reflect the continued improvement in hotel demand," said A.F. Petrocelli, chairman
and CEO of Prime. "Our goal was to generate higher room rates, which we achieved through better yield management
and less reliance on discount distribution channels. This resulted in improved operating margins and profitability.
Looking forward, as business travel improves, we believe there is further rate potential."
"During the quarter, we converted two full-service hotels in Fairfield and Secaucus, NJ to our Prime Hotels
and Resorts brand. We are currently in the process of converting the 12 full-service hotels which we added through
our new management agreement with Hospitality Properties Trust. By mid-year, we expect to have 15 Prime Hotels
open in 10 states and we look forward to the opportunities this presents for all of our brands."
Operating Results
For the quarter, total revenues before cost reimbursements increased by $14.2 million to $102.8 million due to
the addition of twelve full-service hotels in January 2004.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by $3.3 million to
$10.7 million in the first quarter of 2004. This was due to the elimination of deficits incurred in the first quarter
of 2003 on a lease with Hospitality Properties Trust ("HPT"), which was terminated and converted to a
management agreement in December 2003, and operating improvements at existing hotels. Interest expense declined
by 14.4% to $4.8 million for the quarter ended March 31, 2004, primarily due to debt reductions.
Revenue per available room ("REVPAR") at our comparable hotels increased by 1.4% in the first quarter
of 2004 as compared to the first quarter of 2003. The results were driven by a higher average daily rate ("ADR").
For the first quarter of 2004, ADR increased by 3.5% to $69.59 and occupancy decreased by 1.2 percentage points
to 57.7%. Gross operating profit margins at comparable hotels increased by 1.4 percentage points due to higher
ADR and operating efficiencies.
System-Wide Performance
For the first quarter of 2004, we reported a 3.7% REVPAR increase at our comparable AmeriSuites hotels, as occupancy
increased by 1.9 percentage points to 59.9% and ADR increased by 0.5% to $71.11. Increases were reported in Dallas,
Miami, Orlando and Phoenix while decreases were posted in Chicago and Nashville.
For the first quarter of 2004, we reported a 1.0% REVPAR decrease at our comparable Wellesley Inns & Suites
hotels, ADR increased by 6.8% to $61.60 and occupancy decreased by 4.6 percentage points to 58.2%. The South Florida
and Phoenix markets reported increases while revenues decreased in Austin and the Northeast.
Prime's upscale full-service hotels, which are located in the Northeast, reported a 2.3% REVPAR decrease for the
first quarter of 2004 as occupancy decreased by 2.1 percentage points to 52.0% and ADR increased by 1.6% to $114.13.
The full-service hotels were impacted by a decrease in group business at the Saratoga Springs, NY hotel.
Hotel Developments
As of March 31, 2004, we had 148 AmeriSuites, 81 Wellesley Inns & Suites and three Prime Hotels in operation.
Although we intend to expand our brands through franchising, we will consider corporate development or acquisition
opportunities in strategic markets.
Under our new management agreement with HPT, in January 2004 we began operating twelve full-service hotels currently
branded as Wyndham hotels. We are in the process of converting these hotels to the Prime Hotels and Resorts brand
with our first conversion in downtown Salt Lake City to occur in mid-May. We expect all the conversions to the
Prime brand to be completed by mid-year. We currently have three Prime Hotels open, including two Radisson hotels
in Fairfield, NJ and Secaucus, NJ which we converted on March 1, 2004. We expect that by July 2004 we will have
15 Prime Hotels in 10 states encompassing almost 3,000 guestrooms.
Currently, we have four AmeriSuites under construction and a pipeline of 20 executed franchise agreements, including
three in the planning stage. There is also one franchised Wellesley Inn under conversion.
During the quarter, we continued our installation of high speed internet access in our AmeriSuites, Wellesley Inns
& Suites and Prime Hotels and Resorts brands. This new amenity will be available on both a wired and wireless
basis in all guest and meeting rooms and via wireless access in all common areas, including hotel lobbies, fitness
centers, pool areas and restaurants. We have installed this feature in the majority of our hotels and expect the
installations to be complete by the end of the second quarter of 2004.
Financial Condition
As of March 31, 2004, we had $227.7 million in debt and $14.4 million in cash and cash equivalents. Our debt to
book capitalization percentage is 25.1%. Our debt to last twelve months EBITDA ratio is 3.75 times, and our EBITDA
to interest is 3.21 times. Under our revolving credit facility, we are required to maintain a debt to EBITDA ratio
of 4.25 times and an EBITDA to interest ratio of 2.50 times.
2004 Outlook
Our current estimate is that REVPAR for comparable hotels will increase by 3% - 4% for the full year 2004 resulting
in EBITDA in the range of $65 - $70 million and earnings per share before asset transactions in the $.05 - $.10
range. We estimate earnings per share for the second quarter of 2004 to be $0.08 per share.
We currently expect capital expenditures to be approximately $15 million in 2004 with the majority to be spent
on maintenance capital. Based on the EBITDA estimates and after deducting interest, taxes and maintenance capital
expenditures, we would expect to generate approximately $30 million in free cash flow in 2004 before asset sales.
Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages and franchises 258 hotels
throughout North America. The Company owns and operates three proprietary brands that compete in different segments:
AmeriSuites® (all-suites), Wellesley Inns & Suites® (limited-service) and Prime Hotels & Resorts
(full-service). Also within our portfolio are owned and/or managed hotels operated under franchise agreements with
national hotel chains including Hilton, Sheraton, Holiday Inn and Ramada. Prime can be accessed over the internet
at www.primehospitality.com.
Prime Hospitality Corp. will hold a conference call on April 29, 2004 at 9:30 a.m. EDT to discuss our first quarter
results. Investors and members of the media may participate by calling 800-243-6403. A recording of the call will
be available through May 13, 2004 by calling 800-839-6713 and using the conference ID# 6046670.
Statements in this press release, other than statements of historical information, may constitute forward-looking
statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "believe", "anticipate", "project", "expect", "intends",
"may result", "will continue", and words of similar impact identify forward-looking statements.
Forward-looking statements involve known and unknown risks which may cause the Company's actual results in future
periods to differ materially from expected results. These risks include but are not limited to changes in economic
conditions, supply and demand changes for hotel rooms, competition within the lodging industry, relationships with
owners, franchisees and suppliers, the impact of government regulations, the availability of capital, the ability
to attract and retain personnel and the impact of emerging technologies. Prime undertakes no obligation to update
the information set forth herein. For further information regarding forward-looking statements and to some of the
factors and uncertainties affecting us, please refer to the Company's filings with the Securities and Exchange
Commission (SEC) copies of which are available from the SEC or may be obtained upon request from the Company.
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousands, Except Per Share Amounts)
2004 2003
Revenues:
Owned hotels $61,187 $62,268
Cash flow hotels 35,258 20,799
Management, franchise and other fees 6,330 5,494
Total revenue before cost reimbursements 102,775 88,561
Cost reimbursements 7,895 7,206
Total revenue 110,670 95,767
Costs and expenses:
Owned hotels 43,649 45,243
Cash flow hotels 37,013 25,470
Brand operating 4,206 3,531
General and administrative 7,231 6,900
Depreciation and amortization 10,255 10,633
Total costs and expenses before
reimbursable costs 102,354 91,777
Reimbursable costs 7,895 7,206
Total costs and expenses 110,249 98,983
Operating income (loss) 421 (3,216)
Investment income 25 442
Interest expense (4,818) (5,628)
Gains (losses) on retirement of debt --- 800
Other income (loss) 11 ---
Income (loss) before equity in earnings
of unconsolidated joint ventures, income
taxes and discontinued operations (4,361) (7,602)
Equity in earnings of unconsolidated joint ventures 74 190
Income (loss) before income taxes
and discontinued operations (4,287) (7,412)
Provision (benefit) for income taxes (1,672) (2,891)
Income (loss) before discontinued operations (2,615) (4,521)
Discontinued operations:
Income (loss) from discontinued
operations, net of income taxes (126) (565)
Gain (loss) on disposal, net of income taxes (121) (1,546)
Net income (loss) $(2,862) $(6,632)
Earnings (loss) per common share:
Basic:
Income (loss) before discontinued operations $(0.06) $(0.10)
Income (loss) from discontinued operations --- (0.05)
Net income (loss) $(0.06) $(0.15)
Diluted:
Income (loss) before discontinued operations $(0.06) $(0.10)
Income (loss) from discontinued operations,
net of income taxes --- (0.05)
Net income (loss) $(0.06) $(0.15)
Prime Hospitality Corp.
Balance Sheet Information
(Unaudited)
(In Thousands, except per share amounts)
March 31, December 31,
2004 2003
Cash and cash equivalents $14,372 $12,901
Fixed assets 917,999 925,380
Total assets 1,004,267 1,007,305
Revolving credit facility 35,000 35,000
Other debt 192,690 193,602
Total debt 227,690 228,602
Stockholders' equity $680,064 $681,014
Quarterly weighted average diluted shares
outstanding 44,838 44,737
Book value per quarterly weighted average
diluted share $15.17 $15.22
Prime Hospitality Corp.
Comparable Hotel Performance Summary
March 31, 2004
Three Months Ended
March 31,
2004 2003 Variance
Owned and Leased Hotels:
Occupancy 57.7% 58.9% (1.2) pts.
ADR $69.59 $67.21 3.5%
REVPAR $40.14 $39.59 1.4%
System-Wide Hotels:
AmeriSuites
Occupancy 59.9% 58.0% 1.9 pts.
ADR $71.11 $70.74 0.5%
REVPAR $42.56 $41.04 3.7%
Wellesley Inns & Suites
Occupancy 58.2% 62.8% (4.6) pts.
ADR $61.60 $57.68 6.8%
REVPAR $35.88 $36.24 (1.0)%
Full-Service Brands
Occupancy 52.0% 54.1% (2.1) pts.
ADR $114.13 $112.33 1.6%
REVPAR $59.40 $60.79 (2.3)%
Prime Hospitality Corp.
Hotel Statistics
March 31, 2004
March 2004
# of # of
Hotels Rooms
AmeriSuites
Owned 62 8,024
(1) Managed - Cash Flow Interest 42 5,214
Managed 8 1,077
Franchised 36 4,196
Total 148 18,511
Wellesley Inns & Suites
Owned 56 6,901
Managed 6 668
Franchised 19 1,895
Total 81 9,464
(2) Prime Hotels & Resorts
Owned 3 595
Total 3 595
(2) Non-Proprietary Brands
Owned 2 505
(1) Managed - Cash Flow Interest 12 2,321
Managed 10 1,934
Joint Venture 2 665
Total 26 5,425
Total Portfolio
Owned 123 16,025
Managed - Cash Flow Interest 54 7,535
Managed 24 3,679
Franchised 55 6,091
Joint Venture 2 665
Total 258 33,995
Note: 1) The managed-cash flow interest hotels are operated under
management agreements where Prime guarantees a minimum level of
cash flow and has a significant participation in cash flow
above the minimum levels.
2) The non-proprietary brand hotels include 12 managed-cash flow
hotels to be converted to the Prime hotel brand in 2004.
Prime Hospitality Corp.
Supplemental Financial Information Reconciliation of Net Income
(Unaudited)
Three Months Ended March 31, 2004 and 2003
($ in thousands)
Three Months Ended
March 31,
2004 2003
Net income (loss) before discontinued operations $ (2,615) $(4,521)
Provision (benefit) for income taxes (1,672) (2,891)
Loss (gain) from asset transactions (11) (800)
Equity in earnings of unconsolidated joint ventures (74) (190)
Interest expense 4,818 5,628
Investment income (25) (442)
Depreciation and amortization 10,255 10,633
EBITDA $10,676 $ 7,417
Source: Prime Hospitality Corp.