InnSuites Hospitality Trust (IHT) Reports Third Fiscal Quarter Results

InnSuites Hospitality Trust (NYSE Amex: IHT) Highlights:

• Adjusted EBITDA was $730,000 for the nine month period ended October 31, 2010 compared to $1.5 million in the prior year period.
• Net loss attributable to controlling interest was $(1.4) million, or $(0.16) per basic and diluted share, for the nine months ended October 31, 2010. This loss includes $1.4 million of non-cash depreciation. This compares to a loss of $(633,000), or $(0.07) per basic share and diluted share, for the nine months ended October 31, 2009. This loss includes $1.5 million of non-cash depreciation.
• Revenues for the first nine months of fiscal 2011 were $11.8 million compared to $13.1 million in the prior year period, reflecting declining occupancy and rates in the current economic conditions.
• The Trust's sales of membership interests in the subsidiary which owns and operates the Albuquerque, New Mexico hotel property were strong during the third quarter and subsequently.
• Subsequent to the end of the quarter, the Trust entered into a new revolving bank line of credit agreement for $500,000.

InnSuites Hospitality Trust reported an operating loss of $(670,000) for the nine months ended October 31, 2010, a decline of $680,000 from the prior year period operating income of $10,000. The Trust also reported a net loss attributable to controlling interest of $(1.4) million, or $(0.16) per basic and diluted share, for the nine months ended October 31, 2010, declining from $(633,000), or $(0.07) per basic and diluted share, in the prior year period. For the three months ended October 31, 2010, the Trust reported an operating loss of $(493,000), a decline of $102,000 from the prior year period operating loss of $(391,000). The Trust also reported a net loss attributable to controlling interest of $(675,000), or $(0.08) per basic and diluted share, for the three months ended October 31, 2010, declining from $(522,000), or $(0.06) per basic and diluted share, in the prior year period. Decreased hotel revenues, reflecting weakened economic conditions, were the primary driver of the decreased income figures.

The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $730,000 for the nine months ended October 31, 2010, as compared to $1.5 million in the prior year period, a decline of $777,000, or 51.7%. Adjusted EBITDA was $(28,000) for the three months ended October 31, 2010, as compared to $123,000 in the prior year period, a decline of $151,000, or over 100.0%. 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 EBITDA to net income attributable to Shareholders of Beneficial Interest for the nine and three months ended October 31 follows:

The Trust reported revenue of $11.8 million for the nine months ended October 31, 2010, a decrease of 10.2% from $13.1 million for the prior year period. The Trust reported revenue of $3.3 million for the three months ended October 31, 2010, a decrease of 7.8% from $3.6 million for the prior year period. The decreases in revenues are primarily due to a decrease in occupancy caused by the current difficult economic conditions.

Through October 31, 2010, the Trust has sold approximately 25% of its membership interests in Albuquerque Suite Hospitality, LLC, the subsidiary which owns and operates the Albuquerque, New Mexico hotel property, receiving $840,000 in cash proceeds. Rare Earth Financial, LLC, an affiliate of the Trust's President and CEO James Wirth, purchased $400,000 of this amount, representing approximately a 12% interest in the subsidiary. Subsequently, the Trust sold approximately 21% of additional interests in the month of November, receiving $705,000 in cash proceeds.

On November 23, 2010, the Trust entered into a $500,000 revolving bank line of credit agreement. The line of credit bears interest at the prime rate plus either 1.0% or 2.75%, depending on the level of the Trust's cash deposits with the lender, with a floor of 6.0%. The line of credit matures on May 23, 2011.

FUTURE POSITIONING

For the current fiscal year 2011, InnSuites projects a continued difficult economic environment, negatively affecting hotel revenue levels. The Trust plans to offset the decline in revenues by focusing on improved sales efficiency and effective cost controls. 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."

Our long-term strategic plan is to obtain the 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.

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