WestCoast Hospitality Corporation Continues RevPAR Growth;
Announces First Quarter 2005 Results SPOKANE, Wash., April 28
/PRNewswire-FirstCall/ -- WestCoast Hospitality Corporation
(NYSE:WEH) today announced results for the quarter ended March 31,
2005. Hotel Statistics During the first quarter of 2005,
system-wide RevPAR (revenue per available room) for comparable
hotels (hotels owned, leased, managed and franchised for at least
one year) increased 2.5% over the 2004 first quarter level to
$35.71. This increase was due to a 1.4 point increase in average
occupancy, to 52.1%, offset by a slight decrease of 0.3% in ADR
(average daily rate), to $68.49. Consolidated Company Performance
In the first quarter, total revenue from continuing operations was
$35.4 million, down 2.1% from the comparable period in 2004.
Revenues in the hotels and restaurants division were higher as a
result of a 4.4% increase in RevPAR from continuing operations at
owned and leased hotels. The company increased hotels and
restaurants division revenues despite the traditionally slow Easter
holiday travel period falling in March this year as opposed to
April in 2004 and one less day in February compared to a leap year
in 2004. Revenues for the entertainment division decreased $0.8
million, primarily due to fewer shows and performances scheduled in
the first quarter of 2005 compared to 2004. Revenues in the
company's real estate division were lower due to a slight reduction
in management fees in the first quarter of 2005 and higher than
usual commissions earned in the first quarter of 2004. The
company's interest expense increased by $0.8 million in the
quarter, primarily as a result of the issuance in 2004 of trust
preferred securities to replace previously outstanding preferred
stock. For the first quarter of 2005, the loss applicable to common
shareholders was $3.1 million ($0.24 per share) compared to a loss
of $2.7 million ($0.21 per share) in the first quarter of 2004.
EBITDA (earnings before interest, taxes, depreciation and
amortization) from continuing operations was $1.9 million, down
from $2.4 million in the prior year quarter. Arthur Coffey,
President and Chief Executive Officer, said, "We are on schedule
with our accelerated product improvement plan announced late last
year and expect that execution of this plan, along with the growth
in industry demand, will make 2005 a very positive year for the
company. We believe our continued increase in RevPAR, the two
recent full service franchise additions in Portland, Oregon and
Tacoma, Washington and the franchise term extensions with two other
hotels reflect the growing confidence in our product and our Red
Lion brand. Our hotels performed well during the quarter given the
challenges of comparing to a leap year in 2004 and Easter occurring
during the seasonally slow first quarter of 2005." Recent Events
During the first quarter, the company announced the addition of the
318 room, full service Red Lion Hotel on the River, Jantzen Beach,
in Portland, Oregon to its franchise network. On April 14, the
company announced the addition of the 119 room, full service Red
Lion Hotel Tacoma, in Tacoma, Washington, to its franchise network.
With the addition of these two hotels to its system, there are now
61 Red Lion hotels operating in North America. The company is also
pleased to announce that the new owner of the Red Lion Hotel
Austin, in Austin, Texas, and the new lessee of the Red Lion Hotel
Modesto, in Modesto, California, have each recently signed new
franchise license agreements to continue the Red Lion brand at
their hotels. The entertainment division has secured Disney's The
Lion King for a six-week engagement for 46 performances at the
Spokane Opera House beginning October 2005. With this engagement,
the total number of performances the company presents in 2005 will
substantially exceed the number of performances in 2004. This
engagement is expected to have a positive impact on the division's
revenues and profits and on the company's Spokane hotels, which are
already booking hotel packages for show patrons. The real estate
division recently announced the redevelopment of Lincoln Plaza in
Spokane, Washington, a 110,000 square foot office and retail center
it owns that will feature newly renovated retail and Class A office
space near key downtown amenities. This redevelopment is expected
to be substantially complete by mid 2006 and is expected to have a
favorable impact on the division's profits. In November 2004, the
company announced its plan to invest $40 million to improve
comfort, freshen decor and upgrade technology at its Red Lion
hotels. The company also announced its plan to sell 11
non-strategic hotels and other non-core properties and use the
proceeds from the sales to support this accelerated $40 million
hotel investment. In connection with the company's announcement, it
reclassified 11 hotels and one office building as discontinued
operations. To date, the company has received acceptable offers on
a number of the hotels and associated transactions are in various
stages of completion. The office building is being marketed in a
"calls for offer" process that is expected to be completed in May
2005. Arthur Coffey added, "We are pleased with the level of
interest in these properties for sale and we are on schedule with
our planned timeline for completion of the hotel improvements."
Hotels and Restaurant Division Performance For the first quarter,
the company reported hotel and restaurant revenue from continuing
operations of $30.8 million, up $0.5 million from the previous
comparable quarter. Direct expenses increased $0.4 million to $27.7
million. RevPAR from continuing operations was up 4.4% from the
first quarter of 2004, generated by a 2.7 point increase in
occupancy. John Taffin, Executive Vice President, Hotel Operations,
said, "We achieved solid occupancy gains in our seasonally slow
first quarter and maintained ADR." The company expects to complete
the installation of its beds, pillows and linens package at all
owned Red Lion Hotels by the end of the second quarter. In mid
April, as part of the previously announced $40 million accelerated
investment plan, renovations began at three Red Lion Hotels in
Boise, Idaho; Kelso, Washington; and Seattle, Washington at the
SeaTac International Airport. These renovations are expected to be
completed in June to take advantage of the busy summer travel
season. The company is in the process of installing new Micros
property management systems in 15 of its Red Lion hotels, and the
company's new website is expected to be launched in May. "We are
looking forward to completing many of our improvement initiatives
before the summer travel season begins. We expect to be able to
increase rates to take advantage of seasonal demand and maximize
returns on our investment in hotel renovations," said Mr. Taffin.
Franchise, central services and development revenue was $0.6
million in the first quarter of 2005, a slight increase from the
first quarter of 2004. Expenses decreased slightly to $0.2 million
in the first quarter of 2005. "We continue to experience strong
interest in our Red Lion brand from prospective franchisees, as
demonstrated this year by the addition of two new franchised hotels
and the term extensions of two existing franchised hotels by new
operators," said John Taffin, Executive Vice President, Hotel
Operations. About WestCoast Hospitality Corporation WestCoast
Hospitality Corporation is a hospitality and leisure company
primarily engaged in the ownership, management, development and
franchising of upper mid-scale, full service hotels under its Red
Lion(R) and WestCoast(R) brands. In addition, through its
entertainment division, which includes its TicketsWest.com, Inc.
subsidiary, it engages in event ticket distribution and promotes
and presents a variety of entertainment productions. G&B Real
Estate Services, its real estate division, engages in traditional
real estate-related services, including developing, managing and
brokering sales and leases of commercial and multi-unit residential
properties. This press release contains forward-looking statements
within the meaning of federal securities law, including statements
concerning plans, objectives, goals, strategies, projections of
future events or performance and underlying assumptions (many of
which are based, in turn, upon further assumptions). The
forward-looking statements in this press release are inherently
subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those expressed. Such
risks and uncertainties include, among others, economic cycles;
international conflicts; changes in future demand and supply for
hotel rooms; competitive conditions in the lodging industry;
relationships with franchisees and properties; impact of government
regulations; ability to obtain financing; changes in energy,
healthcare, insurance and other operating expenses; ability to sell
non-core assets; ability to locate lessees for rental property and
managing and leasing properties owned by third parties; dependency
upon the ability and experience of executive officers and ability
to retain or replace such officers as well as other matters
discussed in the company's annual report on Form 10-K for the 2004
fiscal year and in other documents filed by the company with the
Securities and Exchange Commission. CONTACT: Anupam Narayan,
Executive Vice President, Chief Financial Officer of West Coast,
+1-509-459-6100, or . WestCoast Hospitality Corporation
Consolidated Statements of Operations (unaudited) ($ in thousands,
except footnotes) Three months ended March 31, 2005 2004 $ Change %
Change Revenue: Hotels and restaurants $30,773 $30,272 $501 1.7%
Franchise, central services and development 598 576 22 3.8%
Entertainment 2,804 3,585 (781) -21.8% Real estate 1,149 1,621
(472) -29.1% Corporate services 68 90 (22) -24.4% Total revenues
35,392 36,144 (752) -2.1% Operating expenses: Hotels and
restaurants 27,650 27,251 399 1.5% Franchise, central services and
development 158 267 (109) -40.8% Entertainment 2,468 2,801 (333)
-11.9% Real estate 627 928 (301) -32.4% Corporate services 82 72 10
13.9% Hotel facility and land lease 1,741 1,981 (240) -12.1%
Depreciation and amortization 2,839 2,477 362 14.6% Gain on asset
dispositions, net (189) (188) (1) -0.5% Total direct expenses
35,376 35,589 (213) -0.6% Undistributed corporate expenses 952 785
167 21.3% Total expenses 36,328 36,374 (46) -0.1% Operating loss
(936) (230) (706) -307.0% Other income (expense): Interest expense
(3,601) (2,846) (755) -26.5% Interest income 97 95 2 2.1% Other
income (expense), net (94) 17 (111) 652.9% Equity income (loss) in
investments, net (9) 19 (28) -147.4% Minority interest in
partnerships, net 50 52 (2) -3.8% Loss from continuing operations
before income taxes (4,493) (2,893) (1,600) -55.3% Income tax
benefit (1,696) (1,094) (602) -55.0% Net loss from continuing
operations (2,797) (1,799) (998) -55.5% Discontinued operations:
Loss from operations of discontinued business units, net of income
tax benefit of $121 and $295 (326) (549) 223 40.6% Net loss (3,123)
(2,348) (775) -33.0% Preferred stock dividend -- (377) 377 100.0%
Loss applicable to common shareholders $(3,123) $(2,725) $(398)
-14.6% EBITDA (A)(B) $1,912 $2,625 $(713) -27.2% EBITDA as a
percentage of revenues (B) 4.7% 6.3% EBITDA from continuing
operations (A) $1,947 $2,430 $(483) -19.9% EBITDA from continuing
operations (A)(B) as a percentage of revenues 5.5% 6.7% (A) The
definition of "EBITDA" and how that measure relates to net income
is discussed further in this release under Non-GAAP Financial
Measures. EBITDA represents net income (or loss) before interest
expense, income tax benefit or expense, depreciation, and
amortization. EBITDA is not intended to represent net income as
defined by generally accepted accounting principles in the United
States and such information should not be considered as an
alternative to net income, cash flows from operations or any other
measure of performance prescribed by generally accepted accounting
principles in the United States. We utilize EBITDA because
management believes that investors find it to be a useful tool to
perform more meaningful comparisons of past, present and future
operating results and as a means to evaluate the results of core
on-going operations. EBITDA from continuing operations is
calculated in the same manner, but excludes the operating
activities of business units identified as discontinued. (B) The
calculation of EBITDA as a percentage of revenues is based upon
total operating revenues, from both continuing and discontinued
operations, of $40,637,000 and $41,630,000 for the three months
ended March 31, 2005 and 2004, respectively. EBITDA from continuing
operations as a percentage of revenues is based upon the operating
results of continuing business units as presented in the
statements. WestCoast Hospitality Corporation Earnings Per Share
and Hotel Statistics (unaudited) (shares in thousands) Three months
ended March 31, 2005 2004 $ Change % Change Earnings per common
share: Basic Loss applicable to common shareholders before
discontinued operations (A) $(0.21) $(0.17) Loss on discontinued
operations (0.03) (0.04) Loss applicable to common shareholders
$(0.24) $(0.21) Diluted Loss applicable to common shareholders
before discontinued operations (A) $(0.21) $(0.17) Loss on
discontinued operations (0.03) (0.04) Loss applicable to common
shareholders $(0.24) $(0.21) Weighted average shares - basic 13,078
13,024 Weighted average shares - diluted (B) 13,078 13,024 Key
Comparable Hotel Statistics: Combined (owned, leased, managed and
franchised) (C) Average occupancy (D)(G) 52.1% 50.7% ADR (E) $68.49
$68.72 $(0.23) -0.3% RevPAR (F)(G) $35.71 $34.83 $0.88 2.5% (A) The
net loss used to calculate the net earnings or loss per share
applicable to common shareholders before discontinued operations
includes all dividends on the retired cumulative preferred shares
if applicable for the period presented. (B) For the three months
ended March 31, 2005 and 2004, all 1,066,400 and 680,755 options
outstanding to purchase common stock were anti-dilutive and are
therefore not included in the calculation of earnings per common
share. In addition, the 286,161 convertible operating partnership
("OP") units were anti-dilutive and are therefore not included in
the calculation of diluted weighted average shares for those same
periods. (C) Includes all hotels owned, leased, managed and
franchised for greater than one year by WestCoast Hospitality
Corporation. No adjustment has been made for hotels classified as
discontinued operations. (D) Average occupancy represents total
paid rooms divided by total available rooms. Total available rooms
represents the number of rooms available multiplied by the number
of days in the reported period. (E) Average daily rate ("ADR")
represents total room revenues divided by the total number of paid
rooms occupied by hotel guests. (F) Revenue per available room
("RevPAR") represents total room and related revenues divided by
total available rooms. (G) Rooms under significant renovation were
excluded from total available rooms. Due to the short duration of
renovation, in the opinion of management, excluding these rooms did
not have a material impact on RevPAR or average occupancy.
WestCoast Hospitality Corporation Consolidated Balance Sheets
(unaudited) ($ in thousands, except share data) March 31, December
31, 2005 2004 Assets: Current assets: Cash and cash equivalents
$7,185 $9,577 Restricted cash 4,312 4,092 Accounts receivable, net
9,272 8,464 Inventories 1,826 1,831 Prepaid expenses and other
5,189 3,286 Assets held for sale: Assets of discontinued operations
62,191 61,757 Other assets held for sale 1,599 1,599 Total current
assets 91,574 90,606 Property and equipment, net 222,804 223,132
Goodwill 28,042 28,042 Intangible assets, net 13,445 13,641 Other
assets, net 9,192 9,191 Total assets $365,057 $364,612 Liabilities:
Current liabilities: Accounts payable $5,208 $4,841 Accrued payroll
and related benefits 5,526 4,597 Accrued interest payable 664 700
Advance deposits 571 188 Other accrued expenses 9,854 7,322
Long-term debt, due within one year 7,205 7,455 Liabilities of
discontinued operations 22,908 22,879 Total current liabilities
51,936 47,982 Long-term debt, due after one year 125,203 125,756
Deferred income 8,335 8,524 Deferred income taxes 16,292 15,992
Minority interest in partnerships 2,499 2,548 Debentures due
WestCoast Hospitality Capital Trust 47,423 47,423 Total liabilities
251,688 248,225 Stockholders' equity: Preferred stock - 5,000,000
shares authorized; $0.01 par value; no shares issued or outstanding
-- -- Common stock - 50,000,000 shares authorized; $0.01 par value;
13,086,176 and 13,064,626 shares issued and outstanding 131 131
Additional paid-in capital, common stock 84,572 84,467 Retained
earnings 28,666 31,789 Total stockholders' equity 113,369 116,387
Total liabilities and stockholders' equity $365,057 $364,612
WestCoast Hospitality Corporation Consolidated Statement of Cash
Flows (unaudited) ($ in thousands) Three months ended March 31,
2005 2004 Operating activities: Net loss $(3,123) $(2,348)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 2,874 3,076 (Gain) loss
on disposition of property, equipment and other assets (99) (189)
Write-off of deferred loan fees 5 -- Deferred income tax provision
300 200 Minority interest in partnerships (50) (119) Equity in
investments 9 (19) Compensation expense related to stock issuance 5
-- Provision for doubtful accounts (28) (23) Change in current
assets and liabilities: Restricted cash (280) (336) Accounts
receivable (927) (837) Inventories 23 150 Prepaid expenses and
other (1,846) (1,489) Accounts payable 304 (1,013) Accrued payroll
and related benefits 1,036 1,179 Accrued interest payable (34) (2)
Other accrued expenses and advance deposits 3,171 2,293 Net cash
provided by operating activities 1,340 523 Investing activities:
Purchases of property and equipment (2,283) (7,019) Proceeds from
disposition of property and equipment -- 7 Proceeds from
disposition of investment -- 122 Investment in WestCoast
Hospitality Capital Trust -- (1,423) Advances to WestCoast
Hospitality Capital Trust (11) (2,065) Proceeds from collections
under note receivable 4 -- Other, net 65 (14) Net cash used in
investing activities (2,225) (10,392) Financing activities:
Proceeds from note payable to bank 50 11,000 Repayment of note
payable to bank (50) (11,000) Proceeds from debenture issuance --
47,423 Repurchase and retirement of preferred stock -- (29,412)
Proceeds from long-term debt 3,794 -- Repayment of long-term debt
(4,871) (1,080) Proceeds from issuance of common stock under
employee stock purchase plan 67 51 Preferred stock dividend
payments -- (1,011) Proceeds from option exercises 33 140 Additions
to deferred financing costs (270) (26) Net cash provided by (used
in) financing activities (1,247) 16,085 Net cash in discontinued
operations (260) 29 Change in cash and cash equivalents: Net
increase (decrease) in cash and cash equivalents (2,392) 6,245 Cash
and cash equivalents at beginning of period 9,577 7,884 Cash and
cash equivalents at end of period $7,185 $ 14,129 WestCoast
Hospitality Corporation Additional Hotel Statistics (unaudited)
System Hotels as of March 31, 2005 Meeting Space Hotels Rooms (sq.
ft.) Owned or Leased Hotels: (A) Red Lion Hotels 38 6,642 312,528
WestCoast Hotels 3 692 40,500 Other Brands 1 153 3,945 42 7,487
356,973 Managed Hotels: Red Lion Hotels 1 150 5,234 WestCoast
Hotels 1 72 1,800 Other Brands 1 254 36,000 3 476 43,034 Franchised
Hotels: Red Lion Hotels 21 3,548 151,351 WestCoast Hotels 1 257
15,000 22 3,805 166,351 Total 67 11,768 566,358 Comparable Hotel
Statistics (B) Three months ended Three months ended March 31, 2005
March 31, 2004 Average Average Occupancy ADR RevPAR Occupancy ADR
RevPAR (C)(F) (D) (E)(F) (C)(F) (D) (E)(F) Owned or Leased Hotels:
Continuing Operations 54.0% $67.33 $36.37 51.3% $67.87 $34.83
Discontinued Operations 37.5% 56.51 21.17 38.2% 53.82 20.57 50.3%
65.51 32.93 48.4% 65.36 31.60 Combined System Wide (G) 52.1% $68.49
$35.71 50.7% $68.72 $34.83 Red Lion Hotels (Owned, Leased, Managed
and Franchised) (H) 53.3% $67.21 $35.83 51.6% $67.94 $35.06 (A)
Statistics include 11 hotels previously identified as discontinued
business units, aggregating 1,649 rooms and 57,645 square feet of
meeting space. (B) Includes all hotels owned, leased, managed and
franchised for greater than one year by WestCoast Hospitality
Corporation. (C) Average occupancy represents total paid rooms
divided by total available rooms. Total available rooms represents
the number of rooms available multiplied by the number of days in
the reported period. (D) Average daily rate ("ADR") represents
total room revenues divided by the total number of paid rooms
occupied by hotel guests. (E) Revenue per available room ("RevPAR")
represents total room and related revenues divided by total
available rooms. (F) Rooms under significant renovation were
excluded from total available rooms. Due to the short duration of
renovation, in the opinion of management, excluding these rooms did
not have a material impact on RevPAR or average occupancy. (G)
Includes all hotels owned, leased, managed and franchised for
greater than one year by WestCoast Hospitality Corporation. No
adjustment has been made for hotels classified as discontinued
operations. (H) Includes all hotels owned, leased, managed and
franchised for greater than one year operated under the Red Lion
brand name. No adjustment has been made for hotels classified as
discontinued operations. WestCoast Hospitality Corporation
Reconciliation of EBITDA to Net Income (unaudited) ($ in thousands)
The following is a reconciliation of EBITDA and EBITDA from
continuing operations to net income (loss) for the periods
presented: Three months ended March 31, 2005 2004 EBITDA from
continuing operations $1,947 $2,430 Income tax benefit - continuing
operations 1,696 1,094 Interest expense - continuing operations
(3,601) (2,846) Depreciation and amortization - continuing
operations (2,839) (2,477) Net loss from continuing operations
(2,797) (1,799) Loss on discontinued operations (326) (549) Net
loss $(3,123) $(2,348) EBITDA $1,912 $2,625 Income tax benefit
1,817 1,390 Interest expense (3,978) (3,287) Depreciation and
amortization (2,874) (3,076) Net loss $(3,123) $(2,348) NON-GAAP
FINANCIAL MEASURES EBITDA is defined as net income (or loss),
before interest, taxes, depreciation and amortization. EBITDA is
considered a non-GAAP financial measurement. We believe it is a
useful financial performance measure for us and for our
shareholders and is a complement to net income and other financial
performance measures provided in accordance with generally accepted
accounting principles in the United States ("GAAP"). EBITDA from
continuing operations is calculated in the same manner, but
excludes the operating results of business units identified as
discontinued under GAAP. We use EBITDA to measure the financial
performance of our owned and leased hotels because it excludes
interest, taxes, depreciation and amortization, which bear little
or no relationship to operating performance. By excluding interest
expense, EBITDA measures our financial performance irrespective of
our capital structure or how we finance our properties and
operations. We generally pay federal and state income taxes on a
consolidated basis, taking into account how the applicable taxing
laws apply to our company in the aggregate. By excluding taxes on
income, we believe EBITDA provides a basis for measuring the
financial performance of our operations excluding factors that our
hotels and other operations cannot control. By excluding
depreciation and amortization expense, which can vary from hotel to
hotel based on historical cost and other factors unrelated to the
hotels' financial performance, EBITDA measures the financial
performance of our hotels without regard to their historical cost.
For all of these reasons, we believe that EBITDA provides us and
investors with information that is relevant and useful in
evaluating our business. However, because EBITDA excludes
depreciation and amortization, it does not measure the capital we
require to maintain or preserve our long-lived assets. In addition,
because EBITDA does not reflect interest expense, it does not take
into account the total amount of interest we pay on outstanding
debt nor does it show trends in interest costs due to changes in
our borrowings or changes in interest rates. EBITDA, as defined by
us, may not be comparable to EBITDA as reported by other companies
that do not define EBITDA exactly as we define the term. Because we
use EBITDA to evaluate our financial performance, we reconcile all
EBITDA measures to net income, which is the most comparable
financial measure calculated and presented in accordance with GAAP.
EBITDA does not represent cash generated from operating activities
determined in accordance with GAAP, and should not be considered as
an alternative to operating income or net income determined in
accordance with GAAP as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator
of liquidity. DATASOURCE: WestCoast Hospitality Corporation
CONTACT: Anupam Narayan, Executive Vice President, Chief Financial
Officer of West Coast, +1-509-459-6100, or Web site:
http://www.westcoasthotels.com/ Web site: http://www.redlion.com/
Web site: http://www.westcoasthotels.com/ Web site:
http://www.ticketswest.com/ Web site: http://www.g-b.com/
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