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Supertel Hospitality Reports 2014 Second Quarter Results

August 14, 2014

NORFOLK, NE -- (Marketwired) -- 08/14/14 -- Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT), today announced its results for the second quarter ended June 30, 2014. 

2014 Second Quarter Key Events 

•Revenues from continuing operations of $16.1 million increased 8.6 percent over the same 2013 period. •Improved revenue per available room (RevPAR) 8.7 percent to $45.39 for the same-store, continuing operations hotels. •Sold five hotels in the second quarter and one hotel following the close of the quarter. •Improved Adjusted EBITDA to $5.1 million, an increase of 16.0 percent over the same 2013 period. •Increased Adjusted FFO (AFFO) to $2.0 million, an increase of 131.4 percent over the same 2013 period.

Second Quarter Operating and Financial Results

Second quarter 2014 revenues from continuing operations rose 8.6 percent to $16.1 million compared to the same year-ago period. The increase was due in part to improved results at the four hotels rebranded in 2013, improvement in the Washington D.C. market, increased construction business in the Midwest, along with aggressive rate and sales strategies implemented to capitalize on improving economic conditions.

Supertel had a 2014 second quarter net loss attributable to common shareholders of $(11.3) million, or $(3.44) per basic and diluted share, compared to net earnings of $1.5 million or $0.53 per basic share and $(0.01) per diluted share for the same 2013 period. The loss was due to the change in valuation of the derivative liabilities for the quarter. The fair value of the derivative liabilities increased by an aggregate of $11.7 million and decreased by an aggregate of $2.1 million during the second quarter of 2014 and 2013, respectively. The change in fair value is due primarily to a change in the conversion price of the Series C Preferred Stock and exercise price of the related warrants following the completion of the company's 2014 second quarter subscription rights offering.

Funds from operations (FFO) was $(9.6) million for the 2014 second quarter, compared to $3.0 million in the same 2013 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities, acquisition and termination expense, and terminated equity transactions expense, in the 2014 second quarter was $2.0 million, compared to $0.9 million in the same 2013 period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $(7.4) million for the 2014 second quarter, compared to $6.1 million in the same year-ago period. Adjusted EBITDA, which is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives, acquisition and termination expense and terminated equity transactions expense, was $5.1 million, compared to $4.4 million for the 2013 second quarter.

In the second quarter 2014, the 47-hotel same store portfolio reported an increase in revenue per available room (RevPAR) of 8.7 percent to $45.39, led by a 7.7 percent improvement in occupancy to 69.9 percent, and a 0.9 percent increase in ADR to $64.92, compared to the 2013 second quarter. 

"I am pleased with the improvements we saw in the second quarter," said Jeffrey Dougan, Supertel's Chief Operating Officer. "It is clear that our work to properly position each hotel within its submarket is starting to pay off."

Disposition Program

In the 2014 second quarter the company sold five hotels with an aggregate of 378 rooms and combined gross proceeds of $9.2 million. The proceeds were used to reduce debt.

The five sold hotels include:

•65-room Baymont Inn and Suites in Brooks, Kentucky sold April 24, 2014 for $1.7 million•101-room Super 8 in Omaha, West Dodge, Nebraska sold May 6, 2014 for $1.6 million•108-room Super 8 in Boise, Idaho sold June 4, 2014 for $2.8 million•40-room Super 8 in Clarinda, Iowa sold June 11, 2014 for $1.7 million•64-room Super 8 in Norfolk, Nebraska sold June 23, 2014 for $1.4 million

Following the close of the 2014 second quarter, the company sold the 172-room Savannah Suites in Jonesboro, Georgia on July 15, 2014 for $1.4 million.

As of June 30, 2014, the company is marketing 16 hotels for sale and expects to generate approximately $23.7 million in gross proceeds to be used primarily to pay off the underlying loans and provide capital to reinvest in existing core properties.

Subsequent Events

On August 1, 2014, Supertel's revolving credit facility with Great Western Bank was extended to June 30, 2015. Additionally, the interest rate was reduced from 4.95 percent to 4.5 percent.

Capital Reinvestment

The company invested $0.9 million in capital improvements throughout the portfolio in the 2014 second quarter to upgrade its properties and maintain brand standards, bringing the year to date investment to $1.3 million. Notable capital improvements included renovations at the former Captain's Table restaurant located at the Solomons (Beacon Marina), Maryland Comfort Inn; computer upgrades at all hotels to ensure PCI compliance; and an exterior update at the Burlington, Iowa Super 8.

Balance Sheet

As of June 30, 2014, Supertel had $81.7 million in outstanding debt on its continuing operations hotels with an average term of 2.3 years and weighted average annual interest rate of 6.4 percent.

Dividends

The company did not declare a dividend on common stock in the 2014 second quarter. The company's board of directors elected to suspend the payment of monthly dividends commencing December 31, 2013 on the outstanding shares of its 8.00% Series A Cumulative Convertible Preferred Stock (NASDAQ: SPPRP), quarterly dividends on the outstanding shares of its 10.00% Series B Preferred Cumulative Stock (NASDAQ: SPPRO), and the quarterly dividends on the outstanding shares of its 6.25% Series C Cumulative Convertible Preferred Stock to preserve capital and improve liquidity. The board of directors will continue to monitor the dividend policy.

Outlook 2014

"The company generated meaningful progress in its operational and financial pursuits in the second quarter. RevPar increased significantly over our same quarter results in 2013, sales of non-core assets continued as called for in our business plan, and Supertel's debt burden is now more consistent with the industry," said Kelly Walters, Supertel's President and Chief Executive Officer.

"Looking forward, the company must grow its asset base to compete effectively for capital in the public markets. Buoyed by the improving balance sheet, the Board of Directors is actively engaged with our financial advisors to chart a path toward restoring our access to equity capital. Patience remains essential as we continue our transformation to premium branded, select service hotels where economies of scale work in our favor."

About Supertel Hospitality, Inc.

Supertel Hospitality, Inc. (NASDAQ: SPPR) is a self-administered real estate investment trust that specializes in the ownership of select-service hotels. The company currently owns 62 hotels comprising 5,459 rooms in 20 states. Supertel's hotels are franchised by a number of the industry's most well-regarded brand families including Hilton, Choice and Wyndham. For more information or to make a hotel reservation, visit www.supertelinc.com.

Forward Looking Statement

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company's filings with the Securities and Exchange Commission.

SELECTED FINANCIAL DATA:

Supertel Hospitality, Inc. Balance Sheet As of June 30, 2014 and December 31, 2013 (Dollars in thousands, except share and per share data) As of June 30, December 31, 2014 2013 -------------- -------------- (unaudited) ASSETS Investments in hotel properties $ 192,518$ 194,078 Less accumulated depreciation 69,220 68,475 -------------- -------------- 123,298 125,603 Cash and cash equivalents 639 45 Accounts receivable, net of allowance for doubtful accounts of $17 and $20 2,187 1,083 Prepaid expenses and other assets 5,258 4,000 Deferred financing costs, net 2,332 2,601 Investment in hotel properties, held for sale, net 28,958 38,753 -------------- -------------- $ 162,672$ 172,085 ============== ============== LIABILITIES AND EQUITY LIABILITIES Accounts payable, accrued expenses and other liabilities $ 9,662$ 7,745 Derivative liabilities, at fair value 15,510 5,907 Debt related to hotel properties held for sale 23,666 35,224 Long-term debt 81,743 82,821 -------------- -------------- 130,581 131,697 -------------- -------------- Redeemable preferred stock 10% Series B, 800,000 shares authorized; $.01 par value, 332,500 shares outstanding, liquidation preference of $8,312 7,662 7,662 EQUITY Shareholders' equity Preferred stock, 40,000,000 shares authorized; 8% Series A, 2,500,000 shares authorized, $.01 par value, 803,270 shares outstanding, liquidation preference of $8,033 8 8 6.25% Series C, 3,000,000 shares authorized, $.01 par value, 3,000,000 shares outstanding, liquidation preference of $30,000 30 30 Common stock, $.01 par value, 200,000,000 shares authorized; 4,684,266 and 2,897,539 shares outstanding 47 29 Additional paid-in capital 137,941 135,293 Distributions in excess of retained earnings (113,694) (102,747) -------------- -------------- Total shareholders' equity 24,332 32,613 Noncontrolling interest Noncontrolling interest in consolidated partnership, redemption value $22 and $87 97 113 -------------- -------------- Total equity 24,429 32,726 -------------- -------------- COMMITMENTS AND CONTINGENCIES $ 162,672$ 172,085 ============== ==============

Supertel Hospitality, Inc. Statement of Operations For three and six months ended June 30, 2014 and 2013, respectively (Dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2014 2013 2014 2013 -------- -------- -------- -------- REVENUES Room rentals and other hotel services $ 16,059$ 14,789$ 27,349$ 26,170 -------- -------- -------- -------- EXPENSES Hotel and property operations 11,102 10,878 20,924 20,710 Depreciation and amortization 1,617 1,532 3,219 3,122 General and administrative 1,092 980 2,077 2,039 Acquisition and termination expense 0 28 0 49 Terminated equity transactions (3) 0 65 0 -------- -------- -------- -------- 13,808 13,418 26,285 25,920 -------- -------- -------- -------- EARNINGS BEFORE NET LOSS ON DISPOSITIONS OF ASSETS, OTHER INCOME, INTEREST EXPENSE AND INCOME TAXES 2,251 1,371 1,064 250 Net loss on dispositions of assets (1) (8) (27) (37) Other income (loss) (11,624) 2,131 (9,478) 1,834 Interest expense (1,819) (1,330) (3,548) (2,669) Loss on debt extinguishment (94) (117) (104) (208) Impairment 0 (7) 119 (7) -------- -------- -------- -------- EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (11,287) 2,040 (11,974) (837) Income tax expense 0 0 0 0 -------- -------- -------- -------- EARNINGS (LOSS) FROM CONTINUING OPERATIONS (11,287) 2,040 (11,974) (837) Gain (loss) from discontinued operations, net of tax 829 338 1,011 (850) -------- -------- -------- -------- NET EARNINGS (LOSS) (10,458) 2,378 (10,963) (1,687) Loss (earnings) attributable to noncontrolling interest 15 (4) 16 3 -------- -------- -------- -------- NET EARNINGS (LOSS) ATTRIBUTABLE TO CONTROLLING INTERESTS (10,443) 2,374 (10,947) (1,684) Preferred stock dividends declared and undeclared (858) (837) (1,704) (1,674) -------- -------- -------- -------- NET EARNINGS (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $(11,301)$ 1,537$(12,651)$ (3,358) ======== ======== ======== ======== NET EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED EPS from continuing operations - Basic $ (3.69)$ 0.41$ (4.42)$ (0.87) ======== ======== ======== ======== EPS from discontinued operations - Basic $ 0.25$ 0.12$ 0.33$ (0.29) ======== ======== ======== ======== EPS Basic $ (3.44)$ 0.53$ (4.09)$ (1.16) ======== ======== ======== ======== EPS Diluted $ (3.44)$ (0.01)$ (4.09)$ (1.16) ======== ======== ======== ========

Reconciliation of Non-GAAP Financial Measures (Unaudited - In thousands, except per share data) Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- Weighted average shares outstanding for: calculation of earnings per share - basic 3,287 2,889 3,092 2,888 ======== ======== ======== ======== calculation of earnings per share - diluted 3,287 10,389 3,092 2,888 ======== ======== ======== ======== Weighted average shares outstanding for: calculation of FFO per share - basic 3,287 2,889 3,092 2,888 ======== ======== ======== ======== calculation of FFO per share - diluted 3,287 10,389 3,092 2,890 ======== ======== ======== ======== Reconciliation of Weighted average number of shares for EPS basic to FFO per share diluted: EPS basic shares 3,287 2,889 3,092 2,888 Restricted Stock - - - 2 Series C Preferred Stock - 3,750 - - Warrants - 3,750 -------- -------- -------- -------- FFO per share diluted shares 3,287 10,389 3,092 2,890 ======== ======== ======== ======== Reconciliation of net loss to FFO Net loss attributable to common shareholders $(11,301)$ 1,537$(12,651)$ (3,358) Depreciation and amortization 1,655 1,842 3,331 3,802 Net (gain) loss on disposition of assets (465) (1,350) (608) (1,297) Impairment 506 954 477 1,461 -------- -------- -------- -------- FFO $ (9,605)$ 2,983$ (9,451)$ 608 Unrealized (gain) loss on derivatives 11,718 (2,137) 9,603 (1,820) Gain on debt conversion (88) - (88) - Acquisition and termination expense - 28 - 49 Terminated equity transactions (3) - 65 - -------- -------- -------- -------- Adjusted FFO $ 2,022$ 874$ 129$ (1,163) ======== ======== ======== ======== FFO per share - basic $ (2.92)$ 1.03$ (3.06)$ 0.21 ======== ======== ======== ======== Adjusted FFO per share - basic $ 0.62$ 0.30$ 0.04$ (0.40) ======== ======== ======== ======== FFO per share - diluted $ (2.92)$ 0.13$ (3.06)$ 0.21 ======== ======== ======== ======== Adjusted FFO per share - diluted $ 0.17$ 0.13$ 0.04$ (0.40) ======== ======== ======== ========



FFO and Adjusted FFO ("AFFO") are non-GAAP financial measures. We consider FFO and AFFO to be market accepted measures of an equity REIT's operating performance, which are necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation, amortization and impairment of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. AFFO is FFO adjusted to exclude gains or losses on derivative liabilities and gain on debt conversion, which are non-cash charges against income and which do not represent results from our core operations. AFFO also adds back acquisition costs and equity offering expense. FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and AFFO should not be considered as alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO and AFFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO and AFFO for similar REITs.

Diluted FFO per share and diluted Adjusted FFO per share are computed after adjusting the numerator and denominator of the basic computation for the effects of any dilutive potential common shares outstanding during the period. The Company's outstanding stock options and certain warrants to purchase common stock would be antidilutive and are not included in the dilution computation.

We use FFO and AFFO as performance measures to facilitate a periodic evaluation of our operating results relative to those of our peers. We consider FFO and AFFO to be useful additional measures of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO and AFFO provide a meaningful indication of our performance. 

EBITDA and Adjusted EBITDA (Unaudited - In thousands) Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- RECONCILIATION OF NET EARNINGS (LOSS) TO ADJUSTED EBITDA Net earnings (loss) attributable to common shareholders $(11,301)$ 1,537$(12,651)$ (3,358) Interest expense, including discontinued operations 2,167 2,097 4,347 4,327 Loss on debt extinguishment 94 608 104 891 Income tax expense (benefit), including discontinued operations 0 0 0 0 Depreciation and amortization, including discontinued operations 1,655 1,842 3,331 3,802 -------- -------- -------- -------- EBITDA (7,385) 6,084 (4,869) 5,662 Noncontrolling interest (15) 4 (16) (3) Net gain on disposition of assets (465) (1,350) (608) (1,297) Impairment 506 954 477 1,461 Preferred stock dividends declared and undeclared 858 837 1,704 1,674 Unrealized (gain) loss on derivatives 11,718 (2,137) 9,603 (1,820) Gain on debt conversion (88) 0 (88) 0 Acquisition and termination expense 0 28 0 49 Terminated equity transactions (3) 0 65 0 -------- -------- -------- -------- ADJUSTED EBITDA $ 5,126$ 4,420$ 6,268$ 5,726 ======== ======== ======== ========



EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We calculate EBITDA and Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though EBITDA and Adjusted EBITDA also do not represent an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we add back noncontrolling interest, net (gain) loss on disposition of assets, preferred stock dividends, acquisition expenses and equity offering expense which are cash charges. We also add back impairment, gain on debt conversion and unrealized gain or loss on derivatives, which are non-cash charges.

EBITDA and Adjusted EBITDA do not represent cash generated from operating activities determined by GAAP and should not be considered as alternatives to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. EBITDA and Adjusted EBITDA are not measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither do the measurements reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA and Adjusted EBITDA may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of our operating performance. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Property Operating Income (POI) - Continuing and Discontinued Operations

This presentation includes non-GAAP financial measures, and should not be considered as an alternative to loss from continuing operations or loss from discontinued operations, net of tax. The company believes that the presentation of hotel property operating income (POI) is helpful to investors, and represents a more useful description of its core operations, as it better communicates the comparability of its hotels' operating results. Same store results for the quarter are for 47 hotels in continuing operations.

Unaudited-in thousands except statistical data: Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- Total Same Store Hotels: Revenue per available room (RevPAR): $ 45.39$ 41.75$ 38.75$ 37.12 Average daily room rate (ADR): $ 64.92$ 64.35$ 62.83$ 62.94 Occupancy percentage: 69.9% 64.9% 61.7% 59.0% Revenue from room rentals and other hotel services consists of: Room rental revenue $ 15,514$ 14,278$ 26,348$ 25,246 Telephone revenue 3 3 5 5 Other hotel service revenues 542 508 996 919 -------- -------- -------- -------- Total revenue from room rentals and other hotel services $ 16,059$ 14,789$ 27,349$ 26,170 ======== ======== ======== ======== Hotel and property operations expense Total hotel and property operations expense $ 11,102$ 10,878$ 20,924$ 20,710 ======== ======== ======== ======== Property Operating Income ("POI") Total property operating income $ 4,957$ 3,911$ 6,425$ 5,460 ======== ======== ======== ======== POI as a percentage of revenue from room rentals and other hotel services Total POI as a percentage of revenue 30.9% 26.4% 23.5% 20.9% ======== ======== ======== ======== --------------------------------------------------------------------------- Discontinued Operations Room rentals and other hotel services Total room rental and other hotel services $ 4,739$ 7,614$ 8,987$ 14,411 ======== ======== ======== ======== Hotel and property operations expense Total hotel and property operations expense $ 3,484$ 6,119$ 7,104$ 12,120 ======== ======== ======== ======== Property Operating Income ("POI") Total property operating income $ 1,255$ 1,495$ 1,883$ 2,291 ======== ======== ======== ======== POI as a percentage of revenue from room rentals and other hotel services Total POI as a percentage of revenue 26.5% 19.6% 21.0% 15.9% ======== ======== ======== ========



(Unaudited - In thousands, except statistical data)

POI from continuing operations is reconciled to net loss as follows:                       

Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- Net earnings (loss) from continuing operations $(11,287)$ 2,040$(11,974)$ (837) Depreciation and amortization 1,617 1,532 3,219 3,122 Net loss on disposition of assets 1 8 27 37 Other (income) expense 11,624 (2,131) 9,478 (1,834) Interest expense 1,819 1,330 3,548 2,669 Loss on debt extinguishment 94 117 104 208 General and administrative expense 1,092 980 2,077 2,039 Acquisition and termination expense 0 28 0 49 Equity offering expense (3) 0 65 0 Impairment expense 0 7 (119) 7 -------- -------- -------- -------- POI - continuing operations $ 4,957$ 3,911$ 6,425$ 5,460 ======== ======== ======== ========



POI from discontinued operations is reconciled to loss from discontinued operations, net of tax, as follows:

Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- Gain (loss) from discontinued operations $ 829$ 338$ 1,011$ (850) Depreciation and amortization from discontinued operations 38 310 112 680 Net gain on disposition of assets from discontinued operations (466) (1,358) (635) (1,334) Interest expense from discontinued operations 348 767 799 1,658 Loss on debt extinguishment 0 491 0 683 Impairment losses from discontinued operations 506 947 596 1,454 -------- -------- -------- -------- POI - discontinued operations $ 1,255$ 1,495$ 1,883$ 2,291 ======== ======== ======== ========

Three months Six months ended June 30, ended June 30, 2014 2013 2014 2013 -------- -------- -------- -------- POI--continuing operations 4,957 3,911 6,425 5,460 POI--discontinued operations 1,255 1,495 1,883 2,291 -------- -------- -------- -------- Total - POI $ 6,212$ 5,406$ 8,308$ 7,751 ======== ======== ======== ======== Total POI as a percentage of revenues 29.9% 24.1% 22.9% 19.1% ======== ======== ======== ========



The comparisons of same store operations are for 47 hotels in continuing operations as of April 1, 2013 for the three months ended June 30, 2014 and exclude 16 properties held for sale.

Supertel Hospitality, Inc. Operating Statistics by Region For three and six months ended June 30, 2014 and 2013, respectively (Unaudited - except per share data) Three months ended June 30, Three months ended June 30, 2014 2013 ------------------------------ ------------------------------ Room Room Region Count RevPAR Occupancy ADR Count RevPAR Occupancy ADR ----- ------ --------- ------ ----- ------ --------- ------ Mountain 106 $47.14 79.6% $59.26 106 $47.46 83.6% $56.79 West North Central 1,150 38.98 71.2% 54.73 1,150 37.54 69.4% 54.09 East North Central 723 47.80 68.5% 69.78 723 45.83 67.0% 68.42 Middle Atlantic 142 48.48 78.0% 62.18 142 46.54 74.3% 62.61 South Atlantic 1,097 53.82 70.2% 76.62 1,097 47.13 60.6% 77.80 East South Central 364 45.28 67.4% 67.14 364 38.46 59.4% 64.75 West South Central 176 21.58 58.1% 37.12 176 18.63 46.1% 40.44 ----- ------ --------- ------ ----- ------ --------- ------ Total Same Store 3,758 $45.39 69.9% $64.92 3,758 $41.75 64.9% $64.35 ----- ------ --------- ------ ----- ------ --------- ------ Total Continuing Operations 3,758 $45.39 69.9% $64.92 3,758 $41.75 64.9% $64.35 ===== ====== ========= ====== ===== ====== ========= ====== States included in the Regions Mountain Montana West North Central Iowa, Kansas, Missouri, Nebraska and South Dakota East North Central Indiana and Wisconsin Middle Atlantic Pennsylvania South Atlantic Florida, Maryland, North Carolina, Virginia and West Virginia East South Central Kentucky and Tennessee West South Central Louisiana

Three months ended June 30, Three months ended June 30, 2014 2013 ------------------------------- ------------------------------- Room Room Brand Count RevPAR Occupancy ADR Count RevPAR Occupancy ADR ----- ------- --------- ------- ----- ------- --------- ------- Select Service Upscale Hilton Garden Inn 100 $ 85.19 73.4% $116.03 100 $ 87.85 69.3% $126.71 ----- ------- -------- ------- ----- ------- -------- ------- Total Upscale 100 $ 85.19 73.4% $116.03 100 $ 87.85 69.3% $126.71 ----- ------- -------- ------- ----- ------- -------- ------- Upper Midscale Comfort Inn / Suites 1,298 54.11 71.9% 75.28 1,298 48.66 65.8% 74.00 Other Upper Midscale 59 34.29 50.5% 67.83 59 26.54 40.5% 65.50 ----- ------- -------- ------- ----- ------- -------- ------- Total Upper Midscale 1,357 $ 53.25 71.0% $ 75.04 1,357 $ 47.70 64.7% $ 73.77 ----- ------- -------- ------- ----- ------- -------- ------- Midscale Sleep Inn 90 50.03 65.7% 76.13 90 45.20 58.9% 76.74 Quality Inn 122 40.26 56.2% 71.65 122 32.20 46.7% 68.89 ----- ------- -------- ------- ----- ------- -------- ------- Total Midscale 212 $ 44.41 60.2% $ 73.72 212 $ 37.72 51.9% $ 72.67 ----- ------- -------- ------- ----- ------- -------- ------- Economy Days Inn 642 35.86 66.3% 54.08 642 34.10 62.5% 54.61 Super 8 1,246 37.95 72.1% 52.64 1,246 36.37 70.3% 51.71 Other Economy (1) 201 50.18 69.5% 72.23 201 40.67 51.7% 78.63 ----- ------- -------- ------- ----- ------- -------- ------- Total Economy 2,089 $ 38.48 70.1% $ 54.93 2,089 $ 36.09 66.1% $ 54.58 ----- ------- -------- ------- ----- ------- -------- ------- Total Same Store 3,758 $ 45.39 69.9% $ 64.92 3,758 $ 41.75 64.9% $ 64.35 ----- ------- -------- ------- ----- ------- -------- ------- Total Continuing Operations 3,758 $ 45.39 69.9% $ 64.92 3,758 $ 41.75 64.9% $ 64.35 ===== ======= ======== ======= ===== ======= ======== ======= 1 Includes Rodeway Inn and Independent Brands



The comparisons of same store operations are for 47 hotels in continuing operations as of January 1, 2013 for the six months ended June 30, 2014 and exclude 16 properties held for sale.

Six months ended June 30, Six months ended June 30, 2014 2013 ----------------------------- ----------------------------- Room Room Region Count RevPAR Occupancy ADR Count RevPAR Occupancy ADR ----- ------ --------- ------ ----- ------ --------- ------ Mountain 106 $39.90 70.1% $56.90 106 $39.19 71.1% $55.13 West North Central 1,150 32.87 62.2% 52.88 1,150 31.99 60.8% 52.58 East North Central 723 42.04 62.0% 67.85 723 39.44 59.9% 65.81 Middle Atlantic 142 40.78 69.2% 58.91 142 40.72 67.6% 60.28 South Atlantic 1,097 45.69 61.5% 74.30 1,097 44.38 58.7% 75.63 East South Central 364 37.45 57.5% 65.11 364 34.21 53.4% 64.10 West South Central 176 20.86 56.0% 37.26 176 17.66 42.0% 42.06 ----- ------ -------- ------ ----- ------ -------- ------ Total Same Store 3,758 $38.75 61.7% $62.83 3,758 $37.12 59.0% $62.94 ----- ------ -------- ------ ----- ------ -------- ------ Total Continuing Operations 3,758 $38.75 61.7% $62.83 3,758 $37.12 59.0% $62.94 ===== ====== ======== ====== ===== ====== ======== ====== States included in the Regions Mountain Idaho and Montana West North Central Iowa, Kansas, Missouri and Nebraska East North Central Indiana and Wisconsin Middle Atlantic Pennsylvania South Atlantic Florida, Maryland, North Carolina, Virginia and West Virginia East South Central Kentucky and Tennessee West South Central Louisiana

Six months ended June 30, 2014 Six months ended June 30, 2013 ------------------------------- ------------------------------- Room Room Brand Count RevPAR Occupancy ADR Count RevPAR Occupancy ADR ----- ------- --------- ------- ----- ------- --------- ------- Select Service Upscale Hilton Garden Inn 100 $ 73.26 65.7% $111.58 100 $ 81.83 64.6% $126.61 ----- ------- -------- ------- ----- ------- -------- ------- Total Upscale 100 $ 73.26 65.7% $111.58 100 $ 81.83 64.6% $126.61 ----- ------- -------- ------- ----- ------- -------- ------- Upper Midscale Comfort Inn / Suites 1,298 $ 45.79 63.4% $ 72.25 1,298 $ 42.92 60.5% $ 70.88 Clarion 59 31.18 47.0% 66.30 59 30.48 44.1% 69.07 ----- ------- -------- ------- ----- ------- -------- ------- Total Upper Midscale 1,357 $ 45.16 62.7% $ 72.06 1,357 $ 42.37 59.8% $ 70.82 ----- ------- -------- ------- ----- ------- -------- ------- Midscale Sleep Inn 90 41.43 58.4% 70.94 90 38.81 53.7% 72.32 Quality Inn 122 31.99 46.8% 68.38 122 25.55 38.3% 66.66 ----- ------- -------- ------- ----- ------- -------- ------- Total Midscale 212 $ 36.00 51.7% $ 69.61 212 $ 31.18 44.8% $ 69.53 ----- ------- -------- ------- ----- ------- -------- ------- Economy Days Inn 642 30.79 59.4% 51.81 642 30.42 57.0% 53.32 Super 8 1,246 31.81 62.6% 50.80 1,246 30.65 61.2% 50.11 Other Economy (1) 201 49.78 64.9% 76.64 201 47.09 57.8% 81.53 ----- ------- -------- ------- ----- ------- -------- ------- Total Economy 2,089 $ 33.22 61.9% $ 53.71 2,089 $ 32.16 59.6% $ 53.98 ----- ------- -------- ------- ----- ------- -------- ------- Total Same Store 3,758 $ 38.75 61.7% $ 62.83 3,758 $ 37.12 59.0% $ 62.94 ----- ------- -------- ------- ----- ------- -------- ------- Total Continuing Operations 3,758 $ 38.75 61.7% $ 62.83 3,758 $ 37.12 59.0% $ 62.94 ===== ======= ======== ======= ===== ======= ======== ======= 1 Includes Rodeway Inn and Independent Brands

Contact: Ms. Krista Arkfeld Director of Corporate Communications karkfeld@supertelinc.com



Source: Supertel Hospitality, Inc.


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