Lodgian's Room Revenue Up But Six-Month Loss Tops $18M

The locally based national hotel management chain reported six-month room revenue from continuing operations of $121.9 million, up 6.1% from last year's comparable period and total revenue of $163.4 million, a 4.6% increase.

And earnings before interest, taxes, depreciation and amortization rose to $33.7 million, including $300,000 of bankruptcy-related charges, up from $23.1 million, including $5.2 million in bankruptcy-related charges. That's the good news.

The not-so-good news is that Lodgian, which manages 87 hotels in 30 states and Canada, lost $18.2 million in the first half from continuing operations. That loss was almost three times greater than then $6.4-million loss the company posted in the first half of 2003. But Lodgian president and CEO Tom Parrington is confident the company is on the right recovery path, he says in a prepared statement.

"We achieved several important milestones during the second quarter, including $370 million of new debt financing to retire existing debt; an $18.3-million share common stock offering; and the exchange of 1,483,558 shares of preferred stock for 3,941,115 shares of common stock," Parrington says.

The company is sitting on $56 million in cash and plans to invest $43 million in capital improvements this year and another $11 million in first quarter 2005. "These improvements, funded with proceeds from its recent common stock offering and with cash reserves, will substantially complete all of Lodgian's deferred renovations," Parrington says.

During the second quarter, eight hotels were under renovation, causing a $500,000 shortfall in room revenue. Even so, second-quarter room revenue increased 5.4% to $64.3 million and total revenue rose 4.5% to $86.6 million.

"Of particular note is that the RevPAR improvement was driven more by room rate, which rose 3.8%, than by occupancy, up 1.6%--another positive sign that the hotel economy is improving," Lodgian's chief executive says. "Higher rate also translated into better-adjusted EBITDA margins for us--24.2% versus 20.6% in last year's second quarter."

Among Lodgian's major investors are Oaktree Capital Management of Atlanta, Blackstone Real Estate Advisors of New York and Merrill Lynch, Pierce, Fenner & Smith Inc.

Lodgian emerged from Chapter 11 under the US Bankruptcy Code on Nov. 22, 2002 with 78 owned hotels. The hotels were owned by Lodgian subsidiaries Impac Hotels II LLC and Impac Hotels III LLC. When the two subsidiaries filed for court protection on Dec. 5, 2001, Lodgian listed total assets of $1 million and debt of $968.7 million, as GlobeSt.com previously reported.