SPOKANE, WA, May 3, 2007 - Red Lion Hotels Corporation (NYSE:RLH) today announced results for the first quarter ended March 31, 2007.
Key First Quarter Operating Results
Arthur M. Coffey, President and CEO of Red Lion Hotels Corporation, said, "We performed very well in what is our seasonally slowest quarter. We had strong growth in EBITDA, which we drove through solid improvements in RevPAR and direct hotel operating margins. Our renovated hotels are attracting more guests at higher rates, and we remain well-positioned for our long-term goal of growth into new markets."
The company's total revenues from continuing operations during the quarter were $39.3 million, up 9.9% from the same quarter of 2006. Revenues in the hotel segment were up 10.8% over the prior year period to $34.4 million. Franchise and management revenues increased to $0.8 million. Revenues in the entertainment segment were relatively unchanged at $3.3 million.
EBITDA from continuing operations in the first quarter increased 53.8% to $3.1 million. Net loss from continuing operations improved to $2.0 million, or $0.10 per share, compared to a net loss of $2.7 million, or $0.20 per share, in the prior year period. Overall reported net loss was $2.0 million or $0.10 per share, compared to a net loss of $3.0 million, or $0.22 per share, in the prior year period.
RevPAR from continuing hotel operations at the company's owned and leased hotels increased 13.9% in the first quarter of 2007, driven by a 10.3% increase in ADR and a 1.7 percentage point increase in occupancy. For comparable system-wide hotels, RevPAR increased 8.7% in the first quarter of 2007, driven by a 6.9% increase in ADR and a 0.9 percentage point increase in occupancy. In comparing 2007 first quarter RevPAR and occupancy to that in the 2006 first quarter, it should be noted that the company did not exclude rooms out of service for renovations at owned, leased or franchised hotels for either of the comparable periods.
Revenues from continuing operations for owned and leased hotels increased 10.8% to $34.4 million during the first quarter of 2007. This increase was primarily driven by a 14.7% increase in hotel room revenues, as well as a 5.6% increase in food and beverage revenues. The hotels segment direct operating profit increased $1.3 million, or 39.8%, to $4.4 million in the first quarter of 2007. Direct operating margin for the hotels segment improved 266 basis points to 12.8% in the first quarter of 2007 from 10.2% in the first quarter of 2006.
"During the quarter we continued to take advantage of our recently completed hotel renovations by targeting higher rate and more profitable business. Our success in gaining occupancy from the higher rate transient and group market segments drove our strong growth in RevPAR and also achieved improved margins," commented John Taffin, Executive Vice President, Hotel Operations.
First Quarter 2007 Highlights and Key Events
Renovations at Company Owned Hotels
During the quarter, the company substantially completed renovations of public guest contact areas at company owned and leased hotels. Lobbies, restaurants and meeting rooms were remodeled with new finishes and furnishings. This was the final phase of the company's previously announced reinvestment program to upgrade hotels by renovating guestrooms and public areas to increase customer comfort.
Non-core Real Estate
The company continues to actively pursue the disposition of non-core real estate, which includes one remaining non-core hotel, an office complex and surplus undeveloped land previously identified as assets held for sale.
Outlook for 2007
The company reaffirms its previous guidance for 2007. The company continues to expect 2007 RevPAR growth for company owned and leased hotels in the range of 8% to 10%, driven primarily by anticipated increases in ADR. It also continues to expect direct hotel operating margins in 2007 to improve between 100 and 200 basis points and EBITDA from continuing operations in 2007 to be in the range of $31 to $33 million.
"In the coming months, we expect continued growth and improved margins in our existing operations. Completion by our franchisees of the hotel upgrades we have implemented at our owned and leased hotels will help ensure that Red Lion is perceived as an upscale brand that offers an attractive franchise opportunity and is poised for growth into new markets," Mr. Coffey concluded.
The company will host a conference call at 11:00 a.m. PT (2:00 p.m. ET) on Thursday, May 3, 2007 to discuss financial results for the first quarter ended March 31, 2007. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 230-1951. International callers should dial (612) 332-0637. There is no pass code required for this call. This conference call will be broadcast live over the Internet and can be accessed by all interested parties at www.redlion.com, in the Investor Relations portion of the website. To listen to the live call, please go to the Red Lion website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available at 6:00 p.m. PST on May 3, 2007 through June 2, 2007 at (800) 475-6701 or (320) 365-3844 (International) access code - 871882. The replay will also be available shortly after the call on the Red Lion website for 90 days.
About Red Lion Hotels Corporation
Red Lion Hotels Corporation is a hospitality and leisure company primarily engaged in the ownership, operation and franchising of midscale and upscale, full service hotels under its Red Lion® brand. As of March 31, 2007 the Red Lion hotel network was comprised of 57 hotels located in eight states and one Canadian province, with 10,001 rooms and 503,529 square feet of meeting space. The company also owns and operates an entertainment and event ticket distribution business. For more information, please visit the company's website at www.redlion.com.
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; 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 year ended December 31, 2006 and in other documents filed by the company with the Securities and Exchange Commission.
Red Lion Hotels Corporation
Julie Langenheim, Investor Relations Manager
CCG Investor Relations
Crocker Coulson, President
Elaine Ketchmere, VP Financial Writing