SPOKANE, Washington—Red Lion Hotels Corporation announced Wednesday its results for the first quarter ended March 31, 2012. The company reported for the first quarter revenues of $32.7 million and EBITDA of $1.2 million both from continuing operations before special items.
Overview:
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RevPAR for owned and leased hotels increased 7.3 percent year-over-year.
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Occupancy increased 360 basis points year-over-year driven primarily by an increase in the transient segment/
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ADR for owned and leased hotels was flat year-over-year.
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Comparable EBITDA from continuing operations before special items increased $1.7 million compared with the first quarter of 2011.
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Net loss from continuing operations was $6.6 million, including a pre-tax impairment charge of $5.9 million; net loss from continuing operations was $4.5 million in the first quarter of 2011
Comparable operating results and data from continuing operations (as disclosed in the table by the same title) for the periods included in this release exclude from hotel operations the results of the Red Lion Hotel on Fifth Avenue in Seattle, which was sold in the second quarter of 2011. Following the sale, this property continues to operate as a franchised hotel and the company is therefore required to report its financial results in continuing operations.
Total revenue from continuing operations reported during the first quarter of 2012 was $32.7 million compared to $33.6 million in the first quarter of 2011. On a comparable basis, total revenue increased $1.9 million from $30.8 million in the first quarter of 2011. First quarter net loss from continuing operations was $6.6 million, or a net loss of $0.34 per share, compared to a net loss from continuing operations of $4.5 million or a net loss of $0.24 per share, in the first quarter of 2011. In the first quarter of 2012, comparable EBITDA from continuing operations before special items improved to $1.2 million, compared to ($0.5) million in the first quarter of 2011.
"During the first quarter, the company generated RevPAR growth which outpaced the midscale hotel segment and resulted in an increase in total revenue and EBITDA," said President and Chief Executive Officer Jon E. Eliassen. "We successfully implemented targeted sales and marketing programs that allowed us to improve occupancy in what is typically our slowest period, without sacrificing rate. Industry trends indicate that midscale RevPAR growth will moderate for the rest of this year, so we are not increasing our current guidance of 2-4 percent RevPAR growth for 2012. We are continuing to focus on improving profitability and successfully executing our three-pronged strategy to reduce debt, expand our franchise program and improve the competitive position of our hotels to enhance value for all Red Lion Hotels stakeholders."
First Quarter 2012 Results
In the first quarter of 2012, for comparable owned and leased hotels from continuing operations, RevPAR increased 7.3 percent year-over-year driven by a 360 basis point increase in occupancy to 52.0 percent, partially offset by a 0.2 percent decline in ADR to $77.29. On a comparable basis, EBITDA from continuing operations before special items improved to $1.2 million for the first quarter compared to ($0.5) million in the prior year period. The acquisition of the previously leased iStar hotels contributed facility lease savings of $0.9 million in the quarter.
Comparable hotel revenue of $28.3 million was 6.2 percent higher compared to the same period a year ago. Comparable hotel direct operating margin increased to 11.1 percent from 9.1 percent in the same period in 2011 primarily driven by a change in mix of promotional activities targeting the transient segment and seasonal labor reductions.
Franchise revenue increased to $1.1 million from $0.7 million. Profitability improved year-over-year primarily due to increased rooms revenue at our franchised hotels.
Revenue in the entertainment segment declined $0.3 million primarily as a result of lower sales volume in the ticketing portion of the business. However, overall profitability for the segment improved as a result of the mix of shows produced in the first quarter of 2012.
Asset Impairments
During the first quarter, the company recorded a pre-tax asset impairment charge of $5.9 million in continuing operations related to the company's assets held for sale and fair market value indications received during the marketing process.
The company considers these impairment charges as special items and these are excluded from reported EBITDA from continuing operations before special items for the first quarter of 2012 and separately identified in the company's operating results.
Liquidity and Balance Sheet
As of March 31, 2012, the company had $3.4 million in cash and cash equivalents, and $10.0 million available on its line of credit. As of March 31, 2012, the company had outstanding debt of $100.2 million, of which $30.8 million is classified as current debt.
Capital expenditures during the first quarter totaled $1.2 million.
Outlook for 2012
The company is reaffirming its RevPAR guidance for 2012, previously provided on February 28, 2012, based on the management team's outlook for the markets in which the company operates and currently available information:
Full year 2012 RevPAR for company owned and leased hotels is expected to increase 2 to 4 percent compared to 2011 on an annual basis.
The company expects to invest approximately $10.0 million in capital improvements in 2012.
Read the full earnings report here.
