EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
Contact:
Bruce Riggins Melissa Thompson Jerry Daly or Carol McCune
Director of Finance Director of Corporate Daly Gray Public Relations (Media)
(202) 295-2276 Communications (703) 435-6293
(202) 295-2228
MERISTAR HOSPITALITY CORPORATION REPORTS FOURTH-QUARTER, YEAR-END RESULTS
RESULTS EXCEED ANALYSTS' ESTIMATES BY $0.04; COMPANY PROVIDES GUIDANCE FOR 2002
WASHINGTON, D.C., January 30, 2002--MeriStar Hospitality Corporation
(NYSE: MHX), the nation's third largest hotel real estate investment trust
(REIT), today announced results for the fourth quarter and year ended December
31, 2001. For comparative purposes, the results for the three and 12 months
ended December 31, 2000, are presented on a pro forma basis as if the 106 leases
with MeriStar Hotels & Resorts (NYSE: MMH) that were converted to management
contracts on January 1, 2001, had been converted on January 1, 2000.
Results continue to reflect a sluggish economy and significantly lower
levels of travel nationwide following the terrorist attacks on September 11.
Recurring funds from operations (Recurring FFO) for the 2001 fourth quarter were
$14.2 million, compared to $45.0 million for the 2000 fourth quarter. Recurring
FFO represents funds from operations, as defined by the National Association of
Real Estate Investment Trusts, adjusted for significant non-recurring items.
Recurring FFO per diluted share was $0.27, compared to $0.84 for the 2000 fourth
quarter. FFO results were $0.04 higher than the consensus analysts' estimate of
$0.23. Revenues decreased 20.8 percent to $227.5 million. Recurring earnings
before interest expense, income taxes, depreciation and amortization (EBITDA)
declined 41.3 percent to $43.8 million. Operating profit margins for owned
hotels decreased 270 basis points to 29.6 percent.
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During the fourth quarter, the company recorded the following non-recurring
charges:
o An asset impairment charge of $43.6 million related to the write-down
of certain hotel assets. These write-downs resulted from the negative
impact of changes in the economic climate on the value of these assets.
o A $6.7 million charge to recognize the effect of interest rate swaps
that were converted to non-hedging derivatives upon the repayment of
portions of the company's senior secured credit facility in December
2001.
Revenue per available room (RevPAR) for the 2001 fourth quarter
declined 24.1 percent to $53.05. Average daily rate (ADR) decreased 10.0 percent
to $95.09, while occupancy fell 15.6 percent to 55.8 percent.
"MeriStar and the entire travel industry continued to feel the negative
effects of the sluggish economy and the dramatic post-September 11 falloff in
business and leisure travel nationwide, particularly at urban and resort
properties in `fly-to' locations," said Paul W. Whetsell, chairman and CEO of
MeriStar Hospitality. "Although our RevPAR decline in the fourth quarter was
dramatic, our gross operating profit margins were down only 270 basis points, a
testament to the effectiveness of cost-cutting measures that were implemented
subsequent to September 11. Since September when RevPAR dropped 31 percent, we
have seen a steady, gradual improvement in our hotel operating results, with
RevPAR declining less in each successive month--26 percent in October, 24
percent in November and 22 percent in December. We expect this trend to continue
into 2002."
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FULL-YEAR RESULTS
For the full year 2001, recurring FFO decreased to $147.0 million, and
FFO per diluted share declined to $2.77. Revenues were off 9.4 percent to $1.08
billion, and EBITDA declined 21.5 percent to $267.9 million. RevPAR for all
hotels owned for the full year fell 10.4 percent to $69.37. ADR decreased 2.5
percent to $105.04, and occupancy decreased 8.2 percent to 66.0 percent.
OPERATING PERFORMANCE IN SIGNIFICANT MARKETS
RevPAR and EBITDA contributions in significant markets for the fourth
quarter and full year 2001 are as follows:
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2001 DECEMBER 31, 2001
EBITDA EBITDA
REVPAR CONTRIBUTION % OF TOTAL REVPAR CONTRIBUTION % OF TOTAL
CHANGE (IN 000S) EBITDA CHANGE (IN 000S) EBITDA
------ --------- ------ ------ --------- ------
New Jersey -19.8% 6,240 14.3% -9.9% 27,682 10.3%
Mid-Atlantic -18.7% 6,223 14.2% -5.8% 27,848 10.4%
Houston -3.0% 3,142 7.2% 0.7% 11,944 4.5%
Southern California -25.8% 2,904 6.6% -10.3% 20,023 7.5%
Tampa/Clearwater -19.0% 2,025 4.6% -1.2% 16,038 6.0%
Atlanta -26.6% 1,551 3.5% -12.6% 7,884 2.9%
Orlando -34.9% 1,343 3.1% -14.3% 12,868 4.8%
Connecticut -15.3% 1,272 2.9% -9.3% 6,227 2.3%
Northern California -53.1% 1,129 2.6% -27.7% 18,850 7.0%
Chicago -38.0% 795 1.8% -25.3% 7,133 2.7%
Dallas -29.0% 625 1.4% -15.9% 4,652 1.7%
Colorado -27.6% 591 1.3% -11.5% 5,379 2.0%
Southwest Florida -33.7% (578) -1.3% -7.0% 19,740 7.4%
IMPROVED BALANCE SHEET
"During the quarter, we made several improvements to our balance sheet
that will give us
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greater flexibility going forward," said John Emery, MeriStar president and
chief operating officer. "We amended the terms of our senior credit facility,
relaxing the financial covenants and allowing us to extend the maturity. With
the successful issuance of $250 million in senior unsecured notes in December,
we reduced our revolver to 13 percent of our total debt at December 31. Our
total debt is now $1.7 billion, with an average maturity of six years at an
average rate of 8.6 percent. Our balance sheet remains prudently leveraged, and
we are well prepared to weather the current economic conditions and to take
advantage of the expected rebound in the economy later this year."
KEY FINANCIAL INFORMATION
o Total debt to annual EBITDA of 6.1x
o Annual interest coverage ratio of 2.2x o Capitalized interest
of $0.8 million and $6.1 million, respectively, for the three
months and year ended December 31, 2001, compared to $2.9
million and $8.6 million for the same periods in 2000
o Capital expenditures of $11.8 million and $45.8 million,
respectively, for the three months and year ended December 31,
2001
o Note receivable from MeriStar Hotels & Resorts was $36.0
million at December 31, 2001
o Cash balance of $44.8 million at December 31, 2001
LONG-TERM DEBT
Long-term debt as of December 31, 2001, consists of the following (in 000s):
BALANCE INTEREST RATE MATURITY
Revolver $ 224,000 LIBOR + 400bps 2003
Convertible Notes 154,300 4.75% 2004
Subordinated Notes 202,817 8.75% 2007
Senior Unsecured Notes 299,192 9.00% 2008
Senior Unsecured Notes 248,420 10.50% 2009
CMBS 319,788 7.76% 2009
Senior Unsecured Notes 199,282 9.13% 2011
Mortgage Debt and Other 52,335 9.00% Various
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$1,700,134
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DIVIDEND POLICY
Whetsell noted that the challenging economic climate coupled with the
unprecedented decline in business travel since mid-September caused the company
to reduce its fourth quarter dividend from $0.505 to $0.01. "During these
difficult times, we want to maintain a conservative approach toward the
dividend," Whetsell added. "Based on the current outlook, we expect to retain
the dividend at the $0.01 level through the second quarter. Based on our
forecast for 2002, we anticipate increasing the dividend to $0.25 in the third
quarter; however, the actual increase, if any, will be determined by factors
including our operating results, capital expenditure requirements, the economic
outlook and IRS dividend payout requirements for REITs."
EARNINGS GUIDANCE
Based on current trends, MeriStar estimates 2002 first-quarter RevPAR
to decline 14 to 18 percent, compared to the 2001 first quarter. EBITDA in the
first quarter is projected to be $58 million to $60 million, and FFO per diluted
share is expected to be $0.46 to $0.50. The company expects full-year 2002
EBITDA to be $245 million and FFO per diluted share to be $2.05. RevPAR in 2002
is expected to decline 2.5 percent compared to full year 2001.
For more information about MeriStar Hospitality, visit the company's
Web site at WWW.MERISTAR.COM. An updated investor presentation, including 2002
financial forecast, will be posted to the Investor Relations section of the
company's Web site later today. To listen to a webcast of the company's
fourth-quarter conference call today, January 30, at 9 a.m. Eastern time, go to
the Web site and click on Investor Relations, Fourth-Quarter Conference Calls.
Interested parties also may listen to an archived webcast of the conference call
on the Web site,
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or may dial (800) 405-2236, reference number 432662, to hear a telephone replay.
The archived webcast will be available through Thursday, February 28, and the
telephone replay will be available through Friday, February 1, 2002.
Washington, D.C.-based MeriStar Hospitality Corporation owns 112
principally upscale, full-service hotels in major markets and resort locations
with 28,597 rooms in 27 states, the District of Columbia and Canada. The company
owns hotels under such internationally known brands as Hilton, Sheraton,
Marriott, Westin, Radisson and Doubletree. For more information about MeriStar
Hospitality Corporation, visit the company's Web site: www.meristar.com.
THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS," WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, ABOUT THE
COMPANY, INCLUDING THOSE STATEMENTS REGARDING FUTURE OPERATING RESULTS AND THE
TIMING AND COMPOSITION OF REVENUES, AMONG OTHERS, AND STATEMENTS CONTAINING
WORDS SUCH AS "EXPECTS," "BELIEVES" OR "WILL," WHICH INDICATE THAT THOSE
STATEMENTS ARE FORWARD-LOOKING. EXCEPT FOR HISTORICAL INFORMATION, THE MATTERS
DISCUSSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT
TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING THE EFFECTS OF THE EVENTS OF SEPTEMBER 11, 2001, AND THE
DOWNTURN IN THE ECONOMY. ADDITIONAL RISKS ARE DISCUSSED IN THE COMPANY'S FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000.
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MERISTAR HOSPITALITY CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND OPERATING STATISTICS)
THREE MONTHS ENDED DECEMBER TWELVE MONTHS ENDED DECEMBER 31,
2001 2000 (1) 2001 2000 (1)
Revenue
Hotel operations:
Rooms $ 137,366 $ 176,113 $ 706,381 $ 782,288
Food and beverage 67,492 78,465 269,382 290,792
Other operating departments 17,047 19,938 81,971 84,660
Participating lease revenue 3,118 8,533 17,295 27,513
Office rental and other revenue 2,476 4,216 9,859 11,929
--------- --------- ---------- ----------
Total revenue 227,499 287,265 1,084,888 1,197,182
Hotel operating expenses by department:
Rooms 35,358 44,524 170,925 184,791
Food and beverage 46,044 55,442 194,495 209,962
Other operating departments 9,488 11,569 43,558 48,263
Office rental, parking and
other operating expenses 613 826 3,057 2,731
Undistributed operating expenses:
Administrative and general 40,995 45,385 169,279 176,997
Property operating costs 33,660 38,900 160,041 161,007
Property taxes, insurance and other 17,581 16,063 75,609 72,310
Depreciation and amortization 30,166 28,817 117,732 111,947
Interest expense, net 30,774 29,999 122,376 117,524
Write down of investment in STS Hotel Net - - 2,112 -
Loss on asset impairment 43,582 - 43,582 -
Swap termination costs - - 9,297 -
Loss on fair value of non-hedging
derivatives 6,666 - 6,666 -
Felcor merger costs - - 5,817 -
Costs to terminate leases with Prime
Hospitality Corporation - - 1,315 -
Restructuring charge - - 1,080 -
--------- --------- ---------- ----------
Total expenses 294,927 271,525 1,126,941 1,085,532
--------- --------- ---------- ----------
Income before minority interests, income
taxes, (loss)/gain on sale of asset and
extraordinary (loss)/gain (67,428) 15,740 (42,053) 111,650
Minority interests (5,090) 1,444 (2,958) 10,240
Income taxes (1,992) 286 (1,178) 2,028
Income before (loss)/gain on sale of asset (60,346) 14,010) (37,917) 99,382
and extraordinay (loss)/gain
(Loss)/gain on sale of asset, net of taxes - - (2,132) 3,425
Extraordinary (loss)/gain, net of taxes (1,489) - (2,713) 3,054
--------- --------- ---------- ----------
Net income $ (61,835) $ 14,010 $ (42,762) $ 105,861
========= ========= ========== ==========
Recurring funds from operations (2), diluted
Income before (loss)/gain on sale of
asset and extraordinary (loss)/gain $ (60,346) $ 14,010 $ (37,917) 99,382
Minority interest to common OP unit holders (5,230) 1,302 (3,523) 9,675
Interest on convertible debt 1,832 1,832 7,329 7,488
Hotel depreciation and amortization 28,970 27,812 113,167 107,996
Non-recurring items (net of income taxes):
Swap termination costs - - 8,998 -
Loss on fair value of non-hedging
derivatives 6,500 - 6,500 -
Write down of investment in STS Hotel Net - - 2,046 -
Loss on asset impairment 42,497 - 42,497 -
Costs to terminate leases with Prime
Hospitality Corporation - - 1,272 -
Felcor merger costs - - 5,622 -
Restructuring - - 1,053 -
Deferred cost on sale of asset - - - 1,542
--------- --------- ---------- ----------
$ 14,223 $ 44,956 $ 147,044 226,083
========= ========= ========== ==========
Weighted average number of diluted shares
of common stock outstanding 52,935 53,504 53,063 54,944
========= ========= ========== ==========
Recurring funds from operations per
diluted share $ 0.27 $ 0.84 $ $ 2.77 4.11
========= ========= ========== ==========
Operating Information
Recurring EBITDA $ 43,760 $ 74,556 $ 267,924 $ 341,121
Occupancy 55.8% 66.1% 66.0% 71.9%
ADR $ 95.09 $ 105.65 $ 105.04 $ 107.69
RevPAR $ 53.05 $ 69.85 $ 69.37 $ 77.46
RevPAR Decrease -24.05% -10.44%
(1) For comparative purposes, the results for the three and twelve months ended
December 31, 2000 are presented on a proforma basis assuming the leases
with MeriStar Hotels & Resorts were converted to management contracts on
January 1, 2000.
(2) Recurring funds from operations represents funds from operations, as
defined by the National Assocation of Real Estate Investment Trusts,
adjusted for significant non-recurring items.