PHOENIX, Dec. 1 /PRNewswire-FirstCall/ -- InnSuites Hospitality Trust (NYSE Amex: IHT)
Highlights: -- Adjusted EBITDA improved by over 100% from $(12,000) to $85,000 for the three month period of August 1 to October 31, 2009 compared to the prior year quarter. Adjusted EBITDA decreased 45.0% from $2.7 million to $1.5 million for the nine month period from February 1 to October 31, 2009 compared to the prior year period. -- Net loss attributable to controlling interest was $633,000, or $(0.07) per basic share, for the nine months ended October 31, 2009 compared to a similar loss of $645,000, or $(0.07) per basic share, for the nine months ended October 31, 2008. -- Revenues for the first nine months of fiscal 2010 of $13.1 million were down $2.9 million, or 18.3%, compared to $16.0 million in the prior year period, reflecting declining rates and occupancy in the current economic conditions. -- The Trust refinanced its Albuquerque, New Mexico property, reducing the interest rate and netting cash proceeds of $617,000.
InnSuites Hospitality Trust reported operating income of $10,000 for the nine months ended October 31, 2009, a decline of $249,000 from the prior year period operating income of $259,000. The Trust also reported a net loss attributable to controlling interest of $633,000, or $(0.07) per basic and diluted share, for the nine months ended October 31, 2009, up from $645,000, or $(0.07) per basic and diluted share, in the prior year period. The prior year results include additional depreciation recorded in the prior year when the hotel properties were reclassified from "held for sale" to "held for use," resulting in a $952,000 decrease in depreciation expense in the current fiscal year. The decrease in depreciation is offset by decreased hotel revenues reflecting the current economic conditions.
For the third fiscal quarter (August 1 to October 31, 2009), the Trust reported an operating loss of $391,000, an increase of $2.0 million from the prior year period operating loss of $2.4 million. The Trust also reported a net loss attributable to controlling interest of $522,000, or $(0.06) per basic and diluted share, up from a net loss of $2.3 million, or $(0.25) per basic and diluted share, in the prior year period. These increases are primarily due to additional depreciation of $1.9 million recorded in the prior year three month period when the hotel properties were reclassified from "held for sale" to "held for use."
The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $1.5 million for the nine months ended October 31, 2009, as compared to $2.7 million in the prior year period, a decline of $1.2 million, or 45.0%. The Trust reported Adjusted EBITDA of $85,000 for the three months ended October 31, 2009, as compared to $(12,000) in the prior year period, an improvement of $97,000, or greater than 100%. Adjusted EBITDA is a non-GAAP financial measure that management believes provides meaningful insight into the Trust's financial performance and its operating profitability before non-operating expenses (such as interest and "other" non-core expenses) and non-cash charges (depreciation and amortization).
A reconciliation of Adjusted EBITDA to net loss attributable to controlling interest follows:
For the nine months ended For the three months ended 10/31/2009 10/31/2008 10/31/2009 10/31/2008 ---------- ---------- ---------- -----------
Net loss attributable
to controlling
interest
$(632,513) $(645,213) $(522,200) $(2,290,734) Add back:
Depreciation 1,460,517 2,412,974 478,212 2,377,983 Interest expense 1,170,610 1,132,156 411,858 372,073 Income tax expense (35,828) 209,606 (35,828) 209,606 Non-controlling
interest (481,007) (437,442) (243,222) (681,100) Less:
Interest income (11,279) (597) (1,353) (113) ADJUSTED EBITDA $1,470,500 $2,671,484 $85,467 $(12,285)
The Trust reported revenue of $13.1 million for the nine months ended October 31, 2009, a decrease of 18.3% from $16.0 million for the prior year period. The Trust reported revenue of $3.6 million for the three months ended October 31, 2009, a decrease of 14.8% from $4.2 million for the prior year period. The decrease in revenues is primarily due to a decrease in occupancy and room rates reflecting the current economic conditions.
FUTURE POSITIONING
For the 2010 current fiscal year, InnSuites projects a continued reduction in revenue and plans to offset the decline in revenues by focusing on improved sales efficiency and effective cost controls. For next fiscal year 2011, InnSuites projects slight improvements in occupancy and ADR during the first half of the year with greater improvements during the second half of the year. Although the travel and hospitality industries are down worldwide, InnSuites is experiencing strength relative to the rest of the industry by continuing to refurbish its hotels, increase boutique fashion trends, as well as increase internet marketing as more and more travelers move to the value-oriented InnSuites Suite Hotels and value suite concept "By the day and extended stay."
As part of InnSuites' efforts to mitigate the decline in revenues, it has actively marketed promotional rates to prior and potential guests. The recent Holiday special direct mailing offers two-for-one Studio suites for $99, Executive suites for $119, and Family suites for $129 at select hotels through January 18, 2010.
Our long-term strategic plan is to obtain full benefit of our real estate equity and to migrate our focus from a hotel owner to a hospitality service company by expanding our trademark license, management, reservation and advertising services. This plan is similar to strategies followed by international diversified hotel industry leaders, which over the last several years have reduced real estate holdings and concentrated on hospitality services.
Your Suite Choice®- Value Concept
InnSuites Hospitality Trust is a mid-market studio and two-room suite hospitality business trust owning five moderate service and full service hotels containing 843 hotel suites and managing and/or licensing ten hotels located in Arizona, New Mexico, Texas and Southern California. For reservations, call 1-888-INNSUITES, or visit http://www.innsuites.com/. For investor information, visit http://www.innsuitestrust.com/.
Certain matters within this press release may be discussed using forward-looking language as specified in the 1995 Private Securities Litigation Reform Act and InnSuites Hospitality Trust intends that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include, but are not limited to: (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) the Trust's financing plans; (v) the Trust's position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) the Trust's plans and expectations regarding future sales of hotel properties; and (vii) trends affecting the Trust's or any hotel's financial condition or results of operations. InnSuites Hospitality Trust cautions that these statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements contained herein. Such risks include, but are not limited to: a) local or national economic and business conditions, including, without limitation, conditions which may affect public securities markets generally, the hospitality industry or the markets in which the Trust operates or will operate, b) fluctuations in hotel occupancy rates; c) changes in room rental rates which may be charged by InnSuites Hotels in response to market rental rate changes or otherwise; d) seasonality of our business; e) interest rate fluctuations; f) changes in governmental regulations, including federal income tax laws and regulations; g) competition; h) any changes in the Trust's financial condition or operating results due to acquisitions or dispositions of hotel properties; i) insufficient resources to pursue our current strategies; j) concentration of our investments in the InnSuites Hotels® brand; k) loss of franchise contracts; l) real estate and hospitality market conditions; m) hospitality industry factors, n) our ability to meet present and future debt service obligations; o) terrorist attacks or other acts of war; p) outbreaks of communicable diseases; q) natural disasters; and r) loss of key personnel.
InnSuites Hospitality Trust
CONTACT: Marc Berg, Executive Vice President of InnSuites Hospitality
Trust, +1-602-944-1500, mberg@innsuites.com
Web Site: http://www.innsuites.com/
