HALIFAX, NOVA SCOTIA — (Marketwire) — 03/28/13 — Royal Host Inc. (TSX: RYL) (TSX: RYL.DB.B) (TSX: RYL.DB.C) (TSX: RYL.DB.D) (“Royal Host” or the “Company”) today announced results for the three months (the “Fourth Quarter”) and year ended December 31, 2012.
ANNUAL HIGHLIGHTS
($000-s except key performance indicators)
The Company experienced a slight decrease in its revenue and gross margin from Comparable Hotels(1) as compared to 2011. Revenues and gross margins were up overall at the Company-s comparable full service hotels. These improvements were offset by an overall decline at the Company-s select service hotels. 2012 RevPAR at Comparable Hotels was down 1.1% with comparable full service RevPAR steady and comparable select service RevPAR down 3.7%.
(1) Comparable Hotels are hotels owned by the Company for the entire current period as well as the comparable period from the prior year. The six hotels sold by the Company during 2011, two hotels sold during 2012 and one hotel damaged by a fire during 2011 and a flood in 2012 are not included in Comparable Hotel information throughout this press release (both financial information and operational Key Performance Indicators).
Highlights of the financial results of the year ended December 31, 2012 include:
Key events of the year ended December 31, 2012 include:
SELECTED FINANCIAL INFORMATION
The following table highlights the Company-s financial results for the three month and annual periods ending December 31:
As at March 28, 2013, Royal Host had 17,490,675 common shares outstanding
HOSPITALITY REVENUE
The following table highlights the Company-s hospitality revenue composition for the three month and annual periods ending December 31:
Fourth Quarter Analysis
Overall, comparable full service hotel revenue declined 3.4% in the three months ended December 31, 2012 as compared to the same period in 2011 with declines experienced across all but two of these properties.
During the three months ended December 31, 2012, hotel revenue from the remaining thirteen comparable select service hotels decreased 2.5%, to $4,092 from $4,196 in the same period in 2011. Results across the portfolio were mixed with nine of the properties experiencing decreases in hotel revenue as compared to the same period in 2011. These decreases in hotel revenue were partially offset by improvements at the other four properties.
Annual Analysis
Overall, comparable full service hotel revenue in the year ended December 31, 2012 remained stable as compared to 2011, but mixed results were experienced across these properties. Three of the full service properties saw improvements in hotel revenue, however these results were offset by decreases in revenue at the remaining six full service properties. On a RevPAR basis, five full service properties saw improvements, however, overall hotel revenue was pulled down by declines in food and beverage revenue with a shift in business away from the group segment. The most notable positive contribution to comparable full service revenue was from the Holiday Inn Oakville property which had a renovation completed in the first quarter of 2011.
During the year ended December 31, 2012, hotel revenue from the thirteen comparable select service hotels decreased 2.3%, to $17,398 from $17,814 in 2011. Results across the portfolio were mixed with six of the properties experiencing improvements in hotel revenue as compared to 2011. These increases in hotel revenue were more than offset by declines at the other seven properties.
OPERATING STATISTICS
Key performance indicators for hotel revenue are summarized below for comparable full and select service hotels in the fourth quarter:
The Company-s comparable full service hotels experienced a 4.1% decline in RevPAR from $59.76 in the three months ended December 31, 2011 to $57.30 for the same period in 2012. This decline in RevPAR was due to a slight decline in occupancy from 56.4% to 56.1%, a relative decrease of 0.5 percentage points and a more significant decline in ADR from $105.89 to $102.23 or 3.5%. In order for these full service properties to compete in markets with significant downward pressure on occupancy, rates were lowered in the fourth quarter. Declines in RevPAR were experienced at six of the nine comparable full service properties.
There was a significant decrease in RevPAR for the Company-s comparable select service hotels of 8.0%, to $36.87 for the three months ended December 31, 2012 from $40.09 for the same period in 2011. Occupancy declined from 49.9% to 45.2%, with its impact being tempered by an improvement in ADR from $80.37 to $81.53. Several hotels experienced significant declines due to local market and demand conditions and the hotels with positive performance did not achieve results significant enough to offset the declines.
Key performance indicators for hotel revenue are summarized below for comparable full and select service hotels in the annual period:
The Company-s comparable full service hotels maintained the level of RevPAR achieved in 2011 increasing by only 0.1%, to $62.56 for the year ended December 31, 2012 compared to $62.50 for the same period in 2011. This consistency in RevPAR was due to an increase in occupancy from 60.1% for the year ended December 31, 2011 to 61.4% in 2012, a relative increase of 2.2%, tempered by a decline in ADR from $103.99 to $101.95 or 2.0%. The improvement in RevPAR that was achieved at the Company-s comparable full service properties was across five of the nine hotels.
There was a decrease in RevPAR for the Company-s comparable select service hotels of 3.7%, to $41.25 for the year ended December 31, 2012 from $42.82 in 2011. Occupancy declined from 52.2% to 49.8%, with its impact being tempered by a slight improvement in ADR from $82.06 to $82.91. The performance of our select service properties was mixed for the year ending December 31, 2012, with six of the thirteen comparable properties generating an increase in RevPAR.
2013 OUTLOOK
The hospitality industry in Canada has faced significant challenges in the last several years and this is expected to continue into 2013 as the Canadian economy continues to recover from recent downturns. We did not see the level of demand growth and pricing recovery that we expected in 2012. PKF Consulting Inc. forecasts 3.75% growth in RevPAR for the industry in Canada and we expect to achieve RevPAR growth at our comparable hotels in 2013. We also expect the comparable hotel RevPAR growth at our full service hotels to continue to exceed the comparable hotel RevPAR growth at our select service hotels.
BOARD OF DIRECTORS CHANGES
The Board of Directors of Royal Host has accepted the resignations of directors Scott McCrea and Alvin Poettcker. The Board would like to thank Mr. McCrea and Mr. Poettcker for their years of service and contributions to the Company and wish them well in their future endeavors.
The Board of Directors of Royal Host is pleased to announce the appointment of Michael Rapps as Chairman of the Company-s Board of Directors. Michael Rapps is Vice President Investments for Clarke Inc., a publicly traded investment holding company based in Halifax and Managing Director of Geosam Capital Inc., a private investment company focused on investing in small and mid-capitalization companies, with a focus on real estate and industrial investments. Prior to joining Geosam, Mr. Rapps practiced law at Davies Ward Phillips & Vineberg LLP. Mr. Rapps holds a BCL and an LLB from McGill University. Mr. Rapps serves on the Board of Holloway Lodging REIT, Supremex Inc., Bonnett-s Energy Corp. and Clarke Inc..
A full slate of Directors is expected to be presented for election at the Company-s upcoming Annual General Meeting, filling the two seats currently vacant.
ROYAL HOST INC.
Royal Host is a diversified hospitality company that delivers shareholder value through hotel ownership, investment and franchising. The Company-s hotels, which contain approximately 2,824 rooms, are located in five Provinces and Territories across Canada. Eighteen of the Company-s hotels operate under internationally recognized brands such as Travelodge®, Super 8®, Holiday Inn®, Hilton® and Country Inns & Suites®. Three of the Company-s hotels are independently branded. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.
Royal Host-s common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols “RYL”, “RYL.DB.B”, “RYL.DB.C” and “RYL.DB.D” respectively.
This press release may contain certain forward-looking statements relating, but not limited to, Royal Host-s operations, anticipated financial performance, business prospects, and strategies. Forward-looking information typically contains statements with words such as “anticipate”, “does not anticipate”, “believe”, “estimate”, “forecast”, “intend”, “expect”, “does not expect”, “could”, “may”, “would”, “will”, “should”, “budgeted”, “plan” or other similar terms and expressions suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Readers are therefore cautioned that Royal Host-s expectations, estimates and assumptions, although considered reasonable, may prove to be incorrect and readers should not place undue reliance on forward-looking statements.
Forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties, and other factors that are difficult to predict, and could result in the outcome of such events being materially different from those intended, planned, anticipated, believed, estimated, or expected in this news release. Such factors and assumptions include, but are not limited to, general economic conditions, levels of travel in Royal Host-s key market areas, political conditions and events, competitive pressures, changes in government policy or regulations, and lodging industry conditions. Royal Host does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances, unanticipated events or circumstances, or should its estimates or assumptions change, after the date hereof, except as expressly required by law.
This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
Contacts:
Royal Host Inc.
Michael McFeters
Chief Financial Officer
902.470.4515