Prime Hospitality Trims Loss

The hotel industry recovery is spreading to smaller players, with Prime Hospitality ( PDQ) announcing a first-quarter loss that was narrower than last year's quarter, while raising second-quarter and 2004 earnings guidance.

Prime, whose brands include Prime Hotels, AmeriSuites and Wellesley Inns, announced a first-quarter net loss of $2.9 million, or 6 cents a share, which is better than the net loss of $6.6 million, or 15 cents a share, it had a year ago. According to Thomson Financial, analysts expected the company to lose 7 cents a share.

Total revenue came in at $110.7 million, up 15.5% from the year-ago $95.8 million, driven by the company's addition of a dozen new hotels in January.

At hotels it owned a year ago, revenue per available room, a key metric called revpar, rose 1.4% from the year-ago quarter, driven by higher room rates. In the first quarter, the company's average daily rate, or ADR, at comparable hotels came in at $69.59, up 3.5% from last year, but occupancy suffered as a result. The company filled 57.7% of its rooms at hotels it owned a year ago, down from 56.5% last year.

Going forward, Prime said that revpar results would improve, with growth between 3% and 4% in fiscal 2004. The company said second-quarter EPS would come in at 8 cents a share, a penny better than current estimates. Also, Prime said fiscal 2004 EPS would range between 5 cents and 10 cents a share, higher than the current Wall Street estimate of 7 cents a share.

Over the last two weeks, a wide variety of hotel companies have beaten estimates and raised guidance, like Starwood Hotels ( HOT), Hilton Hotels ( HLT) and Marriott ( MAR).

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