Hurricanes, Renovations Hurt Lodgian's Bottom Line

Earnings before interest, taxes, depreciation and amortization from continuing operations in the quarter, decreased 5.9% to $14.7 million versus $15.6 million a year ago. EBITDA included $2.1 million of hurricane damages at eight Florida and South Carolina hotels and reorganization-related charges. Adjusted EBITDA, excluding hurricane damage and reorganization-related charges was $16.8 million in third quarter this year and $15.9 million last year.

Lodgian president and CEO W. Thomas Parrington remains upbeat despite the soft profit and loss statement. "The lodging industry continued its comeback in the third quarter, which was reflected in occupancy and rate gains our properties, resulting from rising business and leisure travel demand," Parrington says in a prepared statement.

Additionally, the company's properties that were renovated in 2003 and early 2004 "experienced improved occupancy and much stronger average daily rates," Parrington says. Room revenue from continuing operations increased 3.7% to $64.8 million. Total revenue from continuing operations rose 3.4% to $84.6 million.

"During the quarter, 12 hotels were under renovation, causing a displacement of $900,000 of total revenue, and an additional eight hotels were adversely affected by the four hurricanes that hit the Southeast in the third quarter, causing a displacement of an additional $1.1 million of total revenue," Parrington notes.

Hotel renovations also reduced occupancy levels at the 12 renovated hotels. "In spite of these challenges, occupancy was up 1.2% in our continuing operations hotels, while average daily rate rose 2.8%, leading to a 4.2% gain in RevPAR for the third quarter," says the Lodgian chief.

Parrington adds, "As our hotels complete their renovations programs, we are becoming more aggressive on room rate and are beginning to see the benefits of our portfolio improvement program at the approximately 35% of our hotels where renovations have been completed."