InnSuites Hospitality Trust (IHT) Reports Full Fiscal Year 2010 Earnings

The prior year results include additional deprecation recorded in the prior year when the hotel properties were reclassified from "held for sale" to "held for use," resulting in a $979,000 decrease in depreciation expense in the current fiscal year.  The decrease in depreciation is offset by decreased hotel revenues reflecting the current economic conditions.

The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $1.7 million for the fiscal year ended January 31, 2010, as compared to $3.2 million in the prior year, a decline of $1.5 million, or 47.1%. 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 loss attributable to controlling interest follows:

The Trust reported revenue of $16.9 million for the fiscal year ended January 31, 2010, a decrease of 17.0% from $20.4 million for the prior year.  The decrease in revenues is primarily due to a decrease in occupancy and room rates reflecting the current economic conditions.

In order to provide additional liquidity for fiscal year 2011, the Trust increased the mortgage note payable secured by its Yuma, Arizona property by $1.0 million subsequent to year end, netting cash proceeds of $975,000.  The transaction was an increase in the note payable with the current lender on the property, and the additional funding bears interest at 8.0% per annum.  The total revised mortgage note remains at less than 50% loan-to-value.  All other terms of the loan remained unchanged.

FUTURE POSITIONING

For current fiscal year 2011, InnSuites projects relatively flat occupancy and ADR during the first half of the year with slight improvements during the second half of the year.  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, the Trust has cut labor and other expenses and it has actively marketed promotional rates to prior and potential guests.  The recent Spring Special offers Studio InnSuites for $69, Executive/Family Suites for $89 and Presidential Jacuzzi Suites for $99 at select hotels through September 15, 2010.

InnSuites Hospitality Trust's 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.


Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet