Hospitality Properties CEO Discusses Q3 2010 Results - Earnings Call Transcript
Hospitality Properties Trust (
)
Q3 2010 Earnings Call Transcript
November 8, 2010 1:00 pm ET
Executives
Carlynn Finn – Manager, IR
John Murray – President
Mark Kleifges – CFO
Analysts
David Loeb – Baird
Brian Maier – Citadel Securities
Jeff Donnelly – Wells Fargo
Michael Salinsky – RBC Capital Markets
Dan Donlon – Janney Capital Markets
Presentation
Operator
Compare to:
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Hospitality Properties Trust Q2 2010 Earnings Call Transcript
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Hospitality Properties Trust Q1 2010 Earnings Call Transcript
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Hospitality Properties Trust Q4 2009 Earnings Call Transcript
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Hospitality Properties Trust Q3 2009 Earnings Call Transcript
Welcome to the Hospitality Properties Trust Q3 2010 financial results conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session; instructions will be given at that time. (Operator Instructions)
I would now like to turn the conference over to Carlynn Finn, Manager of Investor Relations. Please go ahead.
Carlynn Finn
Thank you, Larry and good afternoon. Joining me on today’s call are John Murray, President and Mark Kleifges, Chief Financial Officer. John and Mark will make a short presentation which will be followed by a question-and-answer session. I would also note that the recording and retransmission of today’s conference call is strictly prohibited without the prior written consent of HPT.
Before we begin today’s call, I would like to read our Safe Harbor statement. Today's call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws. These forward-looking statements are based on HPT's present belief in expectations as of today November 8, 2010, the company undertakes no obligation to revise or publicly release the results of any revisions to the forward-looking statements made in today's conference call other than through filings with the Securities and Exchange Commission or SEC
In addition, this call may contain non-GAAP numbers, including funds from operations or FFO. A reconciliation of FFO to net income, as well as components to calculate AFFO, CAD or FAD are available in our supplemental package found in the Investor Relations section of the company's website. Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Forms 10-Q and 10-K filed with the Securities and Exchange Commission and in our Q3 supplemental operating and financial data found on our website at www.hptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements.
Now I would like to turn the call over to John Murray.
John Murray
Thank you, Carlynn. Good afternoon and welcome to the third quarter 2010 earnings call. Today HPT reported third quarter FFO per share of $0.82. Focusing first on HPTs hotel investments third quarter RevPAR increased 6.7% across our 289 hotels driven by a 6.2 percentage point increase in average occupancy, 74.4%, it was partially offset by 2.2% decline in average daily rate to $89.43.
Compared with the 2009 third quarter, RevPAR increased in all regions except the west central and northern regions, which were negatively impacted by weakness in Texas, Arizona, Missouri and Kansas. RevPAR at our SpringHill Suites, Country Inns & Suites and Candlewood Suites hotels gained 15%, 9.3% and 8.7%, respectively this quarter.
Demonstrating the appeal of all Suites for select service and extended stay hotels. HPT's hotels are primarily in suburban locations and diversified across all hotel segments except economy with concentration in the upper scale and mid-priced without food and beverage industry segments. The average RevPAR increase of our mid scale without F&B hotels was 8.3%, slightly above the segments average.
However, in the upper scale segment RevPAR, our hotels increased 5.2%, whereas the segment was up 8.9% this quarter. HPT's hotels underperformance versus the segment as a whole, reflects our upscale hotels are primarily select service suburban assets, as lodging recovers from the great recession, urban full service upscale hotels have achieved stronger improvement because they are more surveillance impacted on the way down.
Nonetheless, our trends in occupancy rate and RevPAR continue to improve and most indications are that the positive of momentum will continue. Growing rate remains challenging, despite strong occupancy growth and mid 70s average occupancy across our 289 hotels, ADR only increased in five of our 11 hotel portfolios this quarter versus last year. Our managers continue to work on balancing guest mix to reduce this kind of business with the legacy impact of previously negotiated special rates will remain an issue through year-end.
Also while our extended stay hotels are successful in selling stays of 30 days or more, rates for longer term stays are lower. Finally, 15 of our hotels, including 12 courtyards were been renovated during the quarter causing some displacement. The mix in relative significance of each of these factors varies greatly by market and by hotel. We have seen consistent RevPAR improvement in each month and great efforts have been made to better manage rate.
There is a clear disparity between the top and bottom performing markets among Smith Travel top 25 markets and in the top 25 markets versus all other markets. More HPT hotels are located in quarter's less well performing markets of Houston, Dallas and Phoenix than in this quarter's top three RevPAR markets for New York, New Orleans or Denver. In any case, it is difficult to draw useful comparisons and conclusions between HPT's performance and average national revenue statistics.
As the economic recovery continues, updated projections by our managers generally indicate slightly positive RevPAR for the full year 2010, roughly 2%. However, there is continued uncertainty because booking windows remain short and it is difficult for our operators to accurately project monthly revenue until that month.
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