Press Release
February 23, 2001
WASHINGTON, DC -- MeriStar Hotels & Resorts (NYSE: MMH), the nation's largest independent hotel management
company, yesterday announced results for the fourth quarter and full year ended December 31, 2000.
Revenues for the 2000 fourth quarter rose 11.7 percent to $342.1 million from $306.3 million in the 1999 fourth
quarter. Excluding non-recurring items, net income for the quarter was $(4.1) million, or $(0.11) per share on
a diluted basis, compared to $0.01 per share in the 1999 fourth quarter, and earnings before interest, taxes, depreciation
and amortization (EBITDA) were $(2.4) million, compared to $3.2 million in the fourth quarter of 1999.
During the fourth quarter, the company recorded the following non-recurring charges:
Same-store average daily rate (ADR) for full-service, leased hotels in the 2000 fourth quarter advanced 4.7
percent to $104.86, while occupancy rose 1.1 percent to 66.2 percent. RevPAR rose 5.9 percent to $69.46, compared
to the 1999 fourth quarter.
RevPAR for all leased hotels improved 5.0 percent in the 2000 fourth quarter to $65.52. ADR rose 5.2 percent to
$100.35, and occupancy declined 0.3 percent to 65.3 percent.
``Our results for the fourth quarter and full year 2000 are disappointing. Although top-line revenue growth at
our leased hotels continued to be strong, we were not able to benefit at the bottom line due to increased lease
payments and higher operating costs, particularly for energy, insurance and guest loyalty programs,'' said Paul
Whetsell, chairman and chief executive officer of MeriStar. ``The effect of these costs under our lease agreements
began in the third quarter and was much more pronounced in the fourth. We achieved more positive results in both
our corporate housing and hotel management businesses with solid top- and bottom-line performance, consistent with
our expectations.''
Whetsell added, ``With the implementation of the REIT Modernization Act, we have converted all of our hotel leases
with MeriStar Hospitality to management contracts, eliminating the volatility of the leases. The new management
contracts have a base fee of 2.5 percent and, including incentive fees, can increase to as much as 4.0 percent
of total revenues. As a result of the decreased leakage prior to conversion, our expected total fees in 2001 have
changed from 2.75-3.25 percent to 2.5-3.0 percent.''
Full-Year 2000
Excluding non-recurring items, net income for 2000 was $4.5 million, or $0.13 per share on a diluted basis, compared
to $0.24 per diluted share in 1999. Revenues for the 12 months increased 9.2 percent to $1.41 billion. Earnings
before interest expense, income taxes, depreciation and amortization (EBITDA) for 2000 were $23.9 million compared
to $23.3 million in 1999.
Same-store average daily rate (ADR) for full-service, leased hotels improved 5.7 percent to $107.84 in 2000, while
occupancy rose 0.1 percent to 72.0 percent. Revenue per available room (RevPAR) increased 5.7 percent to $77.60,
compared to 1999. RevPAR for all leased hotels advanced 4.9 percent to $73.11. ADR improved 5.5 percent to $102.38,
and occupancy declined 0.6 percent to 71.4 percent.
Outlook
``The enhanced cash flow predictability from the new management contracts, along with expected growth in BridgeStreet
corporate housing, will create significant value as we merge with American Skiing to form Doral International,''
said Whetsell. ``Our announcement today about the revision of the exchange ratio of MeriStar shares into Doral
shares from 1.88 to 1.75 reflects the change in performance under the hotel leases.''
MeriStar Hotels & Resorts operates 269 hospitality properties with more than 55,000 rooms in 36 states, the
District of Columbia, Canada, Puerto Rico and the U.S. Virgin Islands, including 54 properties managed by Flagstone
Hospitality Management, a subsidiary of MeriStar Hotels & Resorts. Through its Doral Golf brand, MeriStar manages
11 golf courses. BridgeStreet Accommodations, a MeriStar subsidiary, is one of the world's largest corporate housing
providers, offering upscale, fully furnished corporate housing throughout the United States, Canada and Europe.
For more information about MeriStar Hotels & Resorts, visit the company's Web site: www.meristar.com.
This press release contains forward-looking statements about MeriStar Hotels & Resorts, Inc., 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 MeriStar Hotels & Resorts and American Skiing Company to complete their merger,
the ability of MeriStar Hotels & Resorts to successfully implement its acquisition strategy and operating strategy;
the merged company's ability to manage rapid expansion; significant leverage; changes in economic cycles; competition
from other hospitality companies; and changes in the laws and government regulations applicable to the companies.
MeriStar Hotels & Resorts, Inc.
Statements of Operations (1)
(Unaudited, in thousands except per share
amounts and operating statistics)
Three Months Ended Dec. 31,
2000 1999
Revenue
Rooms $ 208,540 $ 197,762
Food and beverage 82,218 81,498
Corporate Housing 26,111 --
Other operating departments 21,603 24,328
Management and other fees 3,599 2,677
----------- -----------
----------- -----------
Total revenue 342,071 306,265
Operating expenses by department:
Rooms 52,373 49,485
Food and beverage 57,697 58,281
Corporate Housing Expense 18,046 --
Other 12,886 10,704
Undistributed operating expenses:
Administrative and general 59,659 50,605
Property operating costs 42,808 42,250
Participating lease expense 101,000 91,732
Depreciation and amortization 2,930 1,560
Merger and lease conversion costs 2,989 --
Loss on asset impairment 21,657 --
----------- -----------
----------- -----------
Total operating expenses 372,045 304,617
----------- -----------
----------- -----------
Net operating income (29,974) 1,648
Interest expense, net 1,871 1,149
Equity in losses of affiliates -- 31
----------- -----------
----------- -----------
Income before minority interests
and income taxes (31,845) 468
Minority interests (2,360) 52
Income taxes (11,409) 154
----------- -----------
----------- -----------
Net income $ (18,076) $ 262
=========== ===========
=========== ===========
Weighted average number
of diluted #
shares of common
stock outstanding 35,950 30,077
=========== ===========
=========== ===========
Net income per diluted common
share $ (0.50) $ 0.01
Effect of non-recurring items (0.39) --
----------- -----------
----------- -----------
Net income per
diluted common share
excluding non-recurring items $ (0.11) $ 0.01
=========== ===========
=========== ===========
(1)Excludes the
effect of EITF 98-9
Pro forma operating statistics
for hotels leased:
Full-service hotels:
Occupancy 66.2% 65.5%
ADR $ 104.86 $ 100.15
RevPAR $ 69.46 $ 65.57
All hotels:
Occupancy 65.3% 65.5%
ADR $ 100.35 $ 95.36
RevPAR $ 65.52 $ 62.42
Twelve Months Ended Dec. 31,
2000 1999
Revenue
Rooms $ 929,585 $ 894,983
Food and beverage 304,415 295,551
Corporate Housing 64,872 --
Other operating departments 92,790 91,540
Management and other fees 19,957 10,040
----------- -----------
----------- -----------
Total revenue 1,411,619 1,292,114
Operating expenses by department:
Rooms 219,197 213,239
Food and beverage 219,791 217,349
Corporate Housing Expense 42,827 --
Other 53,132 43,188
Undistributed operating expenses:
Administrative and general 233,553 208,576
Property operating costs 188,235 182,412
Participating lease expense 431,014 404,086
Depreciation and amortization 9,470 6,014
Merger and lease conversion costs 2,989 --
Loss on asset impairment 21,657 --
----------- -----------
----------- -----------
Total operating expenses 1,421,865 1,274,864
----------- -----------
----------- -----------
Net operating income (10,246) 17,250
Interest expense, net 6,401 4,692
Equity in losses of affiliates -- 31
----------- -----------
----------- -----------
Income before minority interests
and income taxes (16,647) 12,527
Minority interests (1,094) 1,916
Income taxes (6,173) 3,926
----------- -----------
----------- -----------
Net income $ (9,380) $ 6,685
=========== ===========
=========== ===========
Weighted average number
of diluted #
shares of common
stock outstanding 34,148 28,406
=========== ===========
=========== ===========
Net income per diluted common
share $ (0.27) $ 0.24
Effect of non-recurring items (0.40) --
----------- -----------
----------- -----------
Net income per
diluted common share
excluding non-recurring items $ 0.13 $ 0.24
=========== ===========
=========== ===========
(1)Excludes the
effect of EITF 98-9
Pro forma operating statistics
for hotels leased:
Full-service hotels:
Occupancy 72.0% 71.9%
ADR $ 107.84 $ 102.04
RevPAR $ 77.60 $ 73.40
All hotels:
Occupancy 71.4% 71.8%
ADR $ 102.38 $ 97.00
RevPAR $ 73.11 $ 69.69
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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