Revenue, FFO Decline for Supertel Hospitality

Funds from operations likewise fell this quarter. Supertel saw FFO decline from $2.5 million in Q1 2008 to $1.1 million this past quarter.

Still the first quarter was not all bad news for the REIT. The company outperformed the industry standard of RevPAR, with a decline of only 8.4%, as opposed to the industry standard of 17.7%.

"In spite of the slack business climate, we are encouraged by how our portfolio performed against the industry, reporting an 8.4% decline in RevPAR, which compares to the industry-wide decrease of 17.7%, according to STR data," says CEO Kelly Walters. "Nearly all of the decline was due to a drop in occupancy, down 8.0%. We were able to hold our average daily room rate, to a decline of only 0.4% for the quarter, which compares favorably to the market's 7.7% drop overall for the same period."

The higher than average RevPAR, Walters attributes to a change in traveler demands. "We believe we are gaining some benefit from travelers moving down a tier in their lodging preferences due to the economy," he says. "We are working hard to satisfy these new guests with the intent of retaining their business after the economy rebounds. Given the difficult operating environment, we believe our operators did a commendable job in the first quarter."

Supertel also sold the Super 8 hotel in Charles City, IA for $1.1 million; and listed seven other assets for sale.

"We are actively marketing the remaining seven properties and have received positive buyer interest," says CFO Donavon Heimes. "Financing remains difficult to obtain; however, we anticipate that qualified buyers for properties priced under $5 million will find it somewhat easier to obtain loans from local banks and other sources."

Supertel owns 122 hotels in 25 states. The 10,659 rooms are located in hotels branded under the names of Hampton Inn, Holiday IN Express, Supertel Inn, Days Inn, Ramada Limited, etc...