Red Lion Hotels Reports 8 Percent Decline in Quarterly Revenue
Red Lion Hotels Corporation, a Western U.S.-based owner and franchisor of midscale hotels, announced its results for the second quarter ended June 30, 2012. Total revenue from continuing operations reported during the second quarter of 2012 was $38.8 million compared to $42.2 million in the second quarter of 2011, a decline of 8 percent.
On a comparable basis, hotel revenue increased by $1.6 million and franchise revenues increased by $0.4 million, offset by a decrease in entertainment revenues of $2.3 million. Second-quarter net loss from continuing operations was $0.4 million, or $0.02 per share, compared to net income from continuing operations of $19.1 million or $1 per diluted share, in the second quarter of 2011. Second quarter of 2011 results include a $33.5 million gain on the sale of Seattle Fifth Avenue, which is classified as a special item for EBITDA purposes. In the second quarter of 2012, comparable EBITDA from continuing operations before special items increased to $5.5 million, compared to $4.7 million in the second quarter of 2011.
“We increased our overall market share driven by strong occupancy growth and improved our RevPAR performance. As a result of our continued occupancy growth, we are well-positioned to increase rates when the midscale segment rebounds. We also generated significant margin improvements in the first half of the year,” said President and Chief Executive Officer Jon Eliassen. “In addition, subsequent to quarter-end, we appointed an executive vice president for franchise development, and announced a new hotel franchise agreement in Southern California. We also closed on the sale of one non-core hotel and announced a sale agreement for another. These achievements are part of our continued execution of our strategy to improve the competitive position of our core hotel properties, expand our franchise network and reduce debt to enhance value for all Red Lion Hotels shareholders.”
In the second quarter of 2012, for comparable owned and leased hotels from continuing operations, RevPAR increased 5.4 percent year-over-year driven by a 280 basis point increase in occupancy to 66.8 percent and a 1 percent increase in ADR to $84.28. On a comparable basis, EBITDA from continuing operations before special items increased to $5.5 million for the second quarter compared to $4.7 million in the prior year period. The acquisition of the previously leased iStar hotels contributed facility lease savings of $0.6 million in the quarter.
Comparable hotel revenue of $34.5 million was 4.9 percent higher compared to the same period a year ago. Comparable hotel direct operating margin increased to 24.4 percent from 23.1 percent in the same period in 2011 primarily driven by a change in mix of promotional activities targeting the transient segment partially offset by higher reservation and credit card fees related to the increases in occupancy and rooms revenue. Revenue and profitability in the entertainment segment declined $2.3 million and $0.7 million, respectively. The declines were primarily a result of the mix of entertainment shows produced and fewer shows in the second quarter of 2012 as compared to the prior-year period. Franchise revenue increased to $1.3 million from $0.9 million. Profitability improved year-over-year primarily due to increased rooms revenue at the company's franchised hotels.