Company Press Release
August 1, 2000
WASHINGTON, DC--MeriStar Hospitality Corporation (NYSE: MHX), the nation's third largest hotel real estate investment
trust (REIT), yesterday announced results for the second quarter ended June 30, 2000.
Funds from operations (FFO) for the 2000 second quarter rose to $63.1 million, and FFO per diluted share rose 8.5
percent to $1.15. FFO results were $0.04 higher than consensus analyst expectations. Revenues increased 7.1 percent
to $108.2 million. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) rose
6.7 percent to $92.7 million.
Revenue per available room (RevPAR) for all hotels owned for the full 2000 second quarter advanced 7.1 percent
to $84.44. Average daily rate (ADR) increased 6.7 percent to $109.46, while occupancy increased 0.3 percent to
77.1 percent.
``Results for the second quarter were extremely positive, with our RevPAR growth continuing to outpace expectations,''
said Paul W. Whetsell, chairman and CEO of MeriStar Hospitality. ``Our RevPAR improvement resulted from a continued
strong economy and our proprietary marketing and management programs. In addition, we continue to benefit from
our major renovation programs carried out over the past three years, which have put our properties in excellent
physical condition to compete in our markets.''
Whetsell noted that during the quarter, the company sold three small hotels that were not consistent with MeriStar's
long-term focus on larger, upscale, full-service properties and used the $25 million in proceeds to pay down the
company's line of credit and to buy back stock.
John Emery, chief operating officer, commented, ``Our continued focus on growth within our existing assets is yielding
excellent bottom line results. At the same time, we have significantly increased our liquidity and improved our
capital structure, strengthening our base for prudent new growth. Currently, we have available in excess of $100
million to capitalize on investment opportunities that arise.
``Our investment in STS Hotel Net (www.hotelnet.com) represents our initial
foray into broadening value creation for shareholders beyond traditional real estate returns,'' Emery said. ``The
growth in the HotelNet.com travel portal already has far exceeded our initial expectations, with more than 325,000
hotel rooms under contract or letter of intent. The REIT Modernization Act will provide even more opportunity for
MeriStar to participate in business opportunities that capture value for our shareholders.''
Washington, D.C.-based MeriStar Hospitality Corporation owns 114 principally upscale, full-service hotels in major
market and resort locations with 29,090 rooms in 27 states, the District of Columbia and Canada. The company owns
hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree.
For more information about MeriStar Hospitality Corporation, visit the company's web site: www.meristar.com
This press release contains forward-looking statements about MeriStar Hospitality Corporation, including those
statements regarding future operating results and the timing and composition of revenues, among others. Except
for historical information, the matters discussed in this press release are forward-looking statements that are
subject to certain risks and uncertainties that could cause the actual results to differ materially, including
the following: the ability of the company to successfully implement its acquisition strategy and operating strategy;
the company's ability to manage rapid expansion; changes in economic cycles; competition from other hospitality
companies; and changes in the laws and government regulations applicable to the company.
MeriStar Hospitality Corporation
Statements of Operations (1)
(Unaudited, in thousands except per share
amounts and operating statistics)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenue
Participating lease revenue $106,151 $ 98,909 $204,353 $191,104
Office rental and
other revenue 2,031 2,076 3,608 3,358
-------- -------- -------- --------
Total revenue 108,182 100,985 207,961 194,462
Expenses
Administrative and general 2,379 1,208 4,150 2,743
Office rental and
other expense 737 488 1,343 984
Property taxes, insurance
and other 12,402 12,413 25,093 26,015
Depreciation and amortization 28,113 24,578 54,743 48,466
Interest expense, net 29,657 26,407 58,417 50,496
-------- -------- -------- --------
Total expenses 73,288 65,094 143,746 128,704
-------- -------- -------- --------
Income before minority
interests, income taxes,
gain on sale of assets
and extraordinary item 34,894 35,891 64,215 65,758
Minority interests 3,209 3,661 6,158 6,765
Income taxes 634 359 1,161 1,180
-------- -------- -------- --------
Income before gain on sale of
assets and extraordinary item 31,051 31,871 56,896 57,813
Gain on sale of assets,
net of taxes 3,425 - 3,425 -
Extraordinary item, net of taxes - - 3,054 -
-------- -------- -------- --------
Net income $ 34,476 $ 31,871 $ 63,375 $ 57,813
======== ======== ======== ========
Diluted funds from operations
Income before gain on
sale of assets and
extraordinary item $ 31,051 $ 31,871 $ 56,896 $ 57,813
Minority interest to common
OP unit holders 3,068 3,541 5,875 6,482
Interest on convertible debt 1,832 2,026 3,823 4,119
Hotel depreciation and
amortization 27,106 23,593 52,804 46,616
-------- -------- -------- --------
$ 63,057 $ 61,031 $119,398 $115,030
======== ======== ======== ========
Weighted average number of
diluted shares of common
stock outstanding 54,887 57,669 55,673 57,485
======== ======== ======== ========
Funds from operations
per diluted share $ 1.15 $ 1.06 $ 2.14 $ 2.00
======== ======== ======== ========
(1) Excludes the effect of SAB 101 which would be a decrease to
participating lease revenue of $(26,643) and $(59,322) for the
three and six months ended June 30, 2000, respectively. There
would be a decrease of $(26,930) and $(56,314) for the three and
six months ended June 30, 1999, respectively.
Operating Information
EBITDA $ 92,664 $ 86,876 $177,375 $164,720
Occupancy 77.1% 76.9% 73.9% 74.0%
ADR $ 109.46 $ 102.56 $ 110.41 $ 104.71
RevPAR $ 84.44 $ 78.86 $ 81.59 $ 77.54
RevPAR Increase 7.08% 5.22%
--------------------------------------------------------------------------------
Contact:
Bruce Riggins
Director of Finance
(202) 295-2276
OR
Melissa Thompson
Director of Corporate Communications
(202) 295-2228
OR
Jerry Daly or Carol McCune
Daly Gray Public Relations (Media)
(703) 435-6293