posted a first-quarter profit that easily beat Wall Street's rising expectations, while saying the recovery in business travel is picking up steam.
Four Seasons announced first-quarter net earnings of $11.5 million, or 31 cents a share, up sharply from last year, when the company lost $9.3 million, or 27 cents a share. (All figures are based on the Canadian dollar.)
On an adjusted basis, which is how Wall Street views the company, Four Seasons earned $7.7 million, or 21 cents a share, easily topping the 15-cent Wall Street estimate and the year-ago adjusted profit of $2.5 million, or 7 cents a share. On Monday, Four Seasons was upgraded to buy from neutral by UBS.
Consolidated revenue came in at $73.7 million, up from $68.9 million a year ago, driven by a 13.9% jump in management fee revenue. And in a sign that travel, especially business travel, is coming back strongly, the company said that revenue per available room, a key industry metric called revpar, rose 14.1% year over year.
"The recovery in travel demand accelerated throughout the first quarter and has continued into April. If current trends continue, we anticipate that 2004 will be a year of substantial rebound for the lodging industry and for Four Seasons," said Douglas Ludwig, chief financial officer.
Though the strong trends prompted the upscale hotel operator to issue positive comments about the second quarter, it would not give guidance for 2004 because customers tend to book at the last minute, providing little visibility on future earnings streams.
That said, Four Seasons expects second-quarter revpar at core hotels to increase more than 15% over last year, fueled by a recovery in Asian travel, which will boost operating margins by 200 basis points.