Hersha Sees Q1 Payoff Due to New Focus

The total operating revenues for its 56 consolidated hotels increased from $23.9 million in the Q1 2006 to $46.4 million for Q1 of this year, an increase of 94%, Shah said. The increase was due to an increase in room revenues and hotel acquisitions such as the acquisition of the LodgeWorks portfolio which increased its presence in the California and Arizona markets, as GlobeSt.com reported.

There was an increase in net loss applicable to common shareholders for Q1 of $5.4 million, as compared to a net loss of $5.1 million for the Q1 2006, CFO Ashish Parikh said. The increase was due to increased interest expenses and other expenses from Hersha's property acquisitions.

However, operating income increased in the first quarter to $5.8 million, compared to $1.9 million for the first quarter of 2006; due to an increase in the average daily rate, partial stabilization of newer assts and the ability to decrease some administrative costs because of the increased scale of operations from acquisitions, Parikh said.

The company has 71 properties in its portfolio with a total of 9,191 rooms, said Parikh. Hersha owns an interest in 12 hotels in the Metro-New York City area. "Hersha now owns interest in four hotels in Manhattan proper and earns approximately 40% of its earnings before interest taxes, depreciation and amortization from a total of 12 properties in the New York City metropolitan market," including Manhattan, Queens, Brooklyn, Long Island and northern New Jersey, Shay said.

Additionally, Hersha owns interests in seven hotels opened in 2006 or later. Hersha had previously announced a change in the company's strategy of focusing on newer hotels and increasing their presence in high barrier to entry metro markets such as New York City. "Our acquisition activity has been focused on newer hotels with best in class franchise affiliations in central business districts and first ranked suburban markets that have displayed the highest growth in the current year," Shah said.