SPOKANE, Wash. - WestCoast Hospitality Corporation (NYSE: WEH) today announced financial results for its second quarter ended June 30, 2004. System-wide RevPAR (revenue per available room) for comparable hotels (hotels owned, leased, managed and franchised for at least one year) increased 6.6% in the second quarter of 2004 to $43.99 from $41.26 in the second quarter of 2003. The increase in RevPAR resulted from a 4.2 point increase in average occupancy, to 62.3% in the second quarter of 2004 from 58.1% for the second quarter of 2003. Average daily rate decreased slightly to $70.60 in the most recent quarter from $71.00 during the prior year comparable quarter. The Company reported total revenues of $48.9 million for its second quarter of 2004, compared to $48.1 million for the comparable period in 2003. Earnings per share was $0.06 in the second quarter of 2004, compared to earnings per share of $0.09 in the prior year second quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) was $8.4 million in the second quarter of 2004 compared to $8.7 million for the second quarter of 2003. The Company is also happy to report that Mr. Arthur M. Coffey, its President and Chief Executive Officer, returned to working in the office in May, 2004 and has resumed all his duties after his recuperation from a snowmobile accident in February, 2004.
"I'm very excited to return to the office and work directly with my colleagues." stated Mr. Coffey. "I am also pleased that we have now experienced year on year revenue increases in two consecutive quarters. I am optimistic that this is a trend that will continue. We took advantage of the economic downturn over the past year by solidifying our balance sheet and I believe the economic growth in our markets will support our ongoing strategy of increasing our market share. "
In the second quarter of 2004, the Company continued to grow bookings through its increased focus on direct sales, competitive rate strategies, the "Stay Comfortable" advertising campaign and its "We Promise or We Pay" branded website best rate booking initiative. During the quarter, the Company also completed the launch of "Net4Guests," its privately-labeled wireless internet service that provides hotel guests and GuestAwards frequency program members with free high speed internet access. The Company also completed the large majority of its capital program connected to our Stay Comfortable advertising campaign, which significantly improves room amenities with new pillow-top beds and an upgraded pillow and linens package. The Company is launching a marketing campaign geared specifically to increasing awareness of the Net4Guests and the Stay Comfortable guest room upgrade programs.
Hotel and restaurant revenue increased, to $44.1 million in the second quarter of 2004 from $43.3 million in the comparable period of 2003. Corresponding operating expenses increased to $36.6 million, from $35.1 million in the second quarter of 2003. Increases in expenses were mainly attributable to costs of increases in service levels, higher variable costs associated with increases in occupancy, and investments in sales and marketing efforts.
"We are receiving excellent guest feedback for our Net4Guests and room upgrade programs," noted Mr. Coffey. "We are pleased with the success of our efforts to increase occupancy in our hotels, and these new initiatives will support our goal of maximizing our yields."
Franchise, central services and development revenue was $715 thousand compared to $888 thousand in the prior year period. The decrease was primarily due a reduction in the number of hotels franchised by the Company, offset by increased royalty fees from existing franchisees. Operating expenses for the second quarter of 2004 declined $88 thousand compared to the prior year period.
Entertainment division revenue increased to $1.8 million in the second quarter of 2004 from $1.4 million in the comparable period of 2003. Operating expenses for this division increased to $1.8 million in the second quarter of 2004 from $1.3 million in the second quarter of 2003. The increase in revenues was primarily due to an increase in the number of event presentations during the quarter, from none in the second quarter of 2003 to two in 2004, and an increase in ticketing fees. The increase in operating expenses was largely due to the costs associated with the increase in number of event presentations during the quarter, and partially due to increases in ticketing operating costs from the second quarter of 2003 to the second quarter of 2004.
Real estate division revenue decreased, to $2.2 million in the second quarter of 2004 from $2.4 million in the second quarter of 2003. Expenses decreased as well, to $1.1 from $1.2 million in the prior year quarter. The revenue decrease was primarily due to a decrease in leasing fees and rental income.
WestCoast Hospitality Corporation is a hospitality and leisure company primarily engaged in the ownership, management, development and franchising of mid-scale, full service hotels under its WestCoast® and Red Lion® 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 2003 fiscal year and in other documents filed by the Company with the Securities and Exchange Commission.
Source: WestCoast Hospitality Corporation (Financial)