HALIFAX, NOVA SCOTIA -- (Marketwire) -- 03/28/13 -- Royal Host Inc. (TSX: RYL) (TSX: RYL.DB.B) (TSX: RYL.DB.C) (TSX: RYL.DB.D) ("Royal Host" or the "Company") today announced results for the three months (the "Fourth Quarter") and year ended December 31, 2012.
($000's except key performance indicators)
The Company experienced a slight decrease in its revenue and gross margin from Comparable Hotels(1) as compared to 2011. Revenues and gross margins were up overall at the Company's comparable full service hotels. These improvements were offset by an overall decline at the Company's select service hotels. 2012 RevPAR at Comparable Hotels was down 1.1% with comparable full service RevPAR steady and comparable select service RevPAR down 3.7%.
(1) Comparable Hotels are hotels owned by the Company for the entire current period as well as the comparable period from the prior year. The six hotels sold by the Company during 2011, two hotels sold during 2012 and one hotel damaged by a fire during 2011 and a flood in 2012 are not included in Comparable Hotel information throughout this press release (both financial information and operational Key Performance Indicators).
Highlights of the financial results of the year ended December 31, 2012 include:
-- Recorded a decline in Comparable Hotel revenue of 0.8% to $68,835 compared to $69,398 in 2011.-- Generated Comparable Hotel RevPAR of $54.02, a decrease of 1.1% over $54.61 in 2011, Comparable Hotel Occupancy of 56.7% (2011 - 56.9%), and Comparable Hotel ADR of $95.26 (2011 - $95.94).-- Achieved a 15.8% increase in franchising revenue to $2,039 from $1,761 in 2011.-- Experienced an increase in Comparable Hotel Gross Margin Percentage of 0.5 percentage points to 18.8% in 2012 from 18.3% in 2011.-- Recorded an increase in net loss of $8,394 including a $6,273 year-over- year decline in gains from property sales and a $5,108 year-over-year decline in gains from debenture repurchases.-- Funds From Operations declined by $4,490 including a $5,108 decline in year-over-year gains on the repurchases of convertible debentures.-- Adjusted Funds From Operations declined $3,973 to $168 from $4,141 in 2011.-- Invested $8,482 in capital improvements at its hotels compared to $3,218 in 2011, completing repositionings of three of its four hotels in Atlantic Canada.-- Achieved an increase in cash flow from operations of $2,222 to $3,155 from $933 in 2011 primarily as a result of decreased interest and corporate administration costs.-- Achieved an 8.6% decline in corporate administration costs.
Key events of the year ended December 31, 2012 include:
-- Completed substantial issuer bids ("SIB") which resulted in the repurchase in July 2012 of $2,000 in principal value of the Company's 6.25% convertible debentures (now known as 7.50% convertible debentures), $5,631 in principal value of the Company's 5.90% convertible debentures and $7,567 of the Company's 6.00% convertible debentures and when combined with repurchases under normal course issuer bids ("NCIBs") recorded an accounting gain of $865.-- Sold (i) two non-core select service hotels and a parcel of vacant land for gross proceeds of $5,262 yielding a pre-tax loss on disposition of properties of $54 and (ii) its entire investment of trust units in a lodging REIT for $369.-- Completed the refinancing of the $20,147 mortgage secured by the London Hilton and the Ottawa Chimo properties extending the mortgage maturity to 2017 and providing more than $9,000 to fund the renovation and branding of the Ottawa Chimo property which is currently underway. Executed franchise agreements with Holiday Inn® and Ramada® related to its hotels in Ottawa, Ontario and Trenton, Ontario, respectively. In addition, converted its full service hotel in Thunder Bay, Ontario to the independently branded Airlane Hotel and Conference Centre.-- Amended the terms of its Series C, 6.25% convertible subordinated debentures due September 30, 2013, extending the maturity to September 30, 2018, increasing the annual interest rate by 1.25% to 7.50%, and reducing the conversion price from $4.87 to $3.50 per Common Share in the Company.-- Borrowed $7,000 under two separate loan facilities with Clarke Inc. ("Clarke") to fund subsequent repurchases of convertible debentures under a Substantial Issuer Bid and also repaid $2,000 to extinguish one of the Clarke facilities.