NYSE AMEX:IHT Phoenix, Arizona
85020
FOR
FURTHER INFORMATION:
602-944-1500
email: mberg@innsuites.com
INNSUITES HOSPITALITY
TRUST (IHT) REPORTS SECOND FISCAL QUARTER EARNINGS
Phoenix, AZ, September 4, 2009 -
InnSuites Hospitality Trust (NYSE AMEX:IHT)
Highlights:
·
Adjusted EBITDA
declined by 48.5% from $2.7 million to $1.4 million for the six month period of
February 1 to July 31, 2009.
·
Net income (loss)
attributable to controlling interest decreased to a loss of $111,000, or $(0.01)
per basic share, for the six months ended July 31, 2009 from income of $1.6
million, or $0.18 per basic share, for the six months ended July 31, 2008,
primarily due to a decline in revenue due to lower occupancy and an increase of
$947,000 in non-cash depreciation expense.
·
Revenues for the
first six months of fiscal 2010 of $9.5 million were down $2.3 million, or 19.6%,
compared to $11.8 million in the prior year period, reflecting declining rates
and occupancy in the current economic conditions.
·
The Trust
continues to tighten cost controls and manage rates to partially mitigate the
effects of the economic conditions.
InnSuites Hospitality Trust reported operating income of $401,000 for the six
months ended July 31, 2009, a decline of $2.2 million from the prior year
period operating income of $2.7 million.
The Trust also reported a net loss attributable to controlling interest
of $111,000, or $0.01 per basic and diluted share, for the six months ended July
31, 2009, down from net income of $1.6 million, or $0.18 per basic share and
$0.15 per diluted share, in the prior year period. These declines are primarily due to decreased
revenues due to reduced occupancy and room rates and an increase of $947,000 in
depreciation expense due to the suspension of depreciation in the first six
months of fiscal year 2009 while the Trust’s Hotels were classified as “held for sale.”
For the second
fiscal quarter (May 1 to July 31, 2009), the Trust reported an operating loss of $541,000, a decline of $979,000
from the prior year period operating income of $438,000. The Trust also reported a net loss
attributable to controlling interest of $645,000, or
$0.07 per basic and diluted share, down from net income of $123,000, or $0.01 per
basic share and $0.00 per diluted share, in the prior year period. These declines are primarily due to decreased
revenues due to reduced occupancy and room rates and an increase of $468,000 in
depreciation expense due to the suspension of depreciation in the first six
months of fiscal year 2009 while the Trust’s Hotels were classified as “held for sale.”
The Trust reported
earnings before minority interest, interest, taxes, depreciation and
amortization (Adjusted EBITDA) of $1.4 million for the six months ended July 31,
2009, as compared to $2.7 million in the prior year period, a decline of $1.3
million, or 48.5%. The Trust reported Adjusted EBITDA of $(54,000) for the
three months ended July 31, 2009, as compared to $457,000 in the prior year
period, a decline of $510,000, 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 income attributable to controlling interest for the three and six
month periods ended July 31, 2009 and 2008 follows:
|
|
For the six months ended |
|
For the three months
ended |
||||
|
|
7/31/2009 |
|
7/31/2008 |
|
7/31/2009 |
|
7/31/2008 |
|
Net income (loss)attributable to controlling interest |
$(111,113) |
|
$1,629,202 |
|
$(644,555) |
|
$122,792 |
|
Add back: |
|
|
|
|
|
|
|
|
Depreciation |
982,305 |
|
34,991 |
|
487,402 |
|
18,954 |
|
Interest
expense |
758,753 |
|
760,083 |
|
376,671 |
|
375,013 |
|
Income tax
expense |
- |
|
- |
|
- |
|
- |
|
Minority
interest |
(236,985) |
|
259,977 |
|
(269,686) |
|
(60,017) |
|
Less: |
|
|
|
|
|
|
|
|
Interest
income |
(9,926) |
|
(484) |
|
(3,589) |
|
(231) |
|
ADJUSTED EBITDA |
$1,383,034 |
|
$2,683,769 |
|
$(53,757) |
|
$456,511 |
The Trust reported
revenue of $9.5 million for the six months ended July 31, 2009, a decrease of
19.6% from $11.8 million for the prior year period. The Trust reported revenue of $4.0 million for
the three months ended July 31, 2009, a decrease of 20.4% from $5.0 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. 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 upcoming Fall special direct mailing offers Studio suites for $69, Family suites for $79 and Presidential Jacuzzi suites for $99 at select hotels from September 15, 2009 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.
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 www.innsuites.com. For investor information, visit
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.