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IRVING, TX-FelCor Lodging Trust Inc., using a $430-million renovation plan to bolster gains, wrapped up work on 17 hotels in the first quarter. In monitoring eight that debuted their new looks at the year’s start, the reinvestment has delivered double-digit RevPAR growth.

“This year, there will be some noise in our numbers. That is inevitable when you’re doing this kind of work,” Richard A. Smith, president and CEO of the locally based REIT, told shareholders and analysts during yesterday’s conference call. To date, FelCor has completed renovations at 29 of 83 earmarked hotels. If the plan stays on track, 70 hotels will be completed by year’s end. And so far, he said it is “on budget and on time.”

FelCor had penciled 21 hotels to be completed in the first quarter, but four rolled to Q2 when deliveries of materials didn’t reach job sites in time. Smith said there was no financial impact as a result of the delays because the team was able to “respond quickly to unforeseen issues.” In the first quarter, FelCor spent $77.2 million on renovation work.

Eight hotels, paced through their work in Q4 2006, have produced RevPAR growth of 12.5% in the first quarter and seven-point gains for respective market shares, according to Smith. March RevPAR for the finished package hit 15.5% and April, 17.5%. “Our daily focus this year is purely on executing the remaining renovation plan,” Smith said. “The results so far clearly indicate the fruits of that effort.”

Andrew J. Welch, FelCor’s executive vice president and CFO, reported RevPAR grew 1% for the entire portfolio in Q1 versus 2006′s numbers although 40% of its assets were under renovation. RevPAR for assets under renovation dipped 5%. The remaining 47 hotels reflected an average RevPAR growth of 8.2%. “RevPAR growth will accelerate as our hotels come out of renovation,” Welch said.

Occupancy also took a hit due to the renovations, dropping overall by 6.3% for the portfolio. On a brighter note, the REIT’s team reported the average daily room rate rose 7.8% in the annual quarterly comparison.

As the renovation cycle continues, FelCor is nearing the end of a major disposition plan. The last eight hotels are “all under hard contract,” Smith said. The last pass for $125 million will be made before the second quarter ends. When the dust settles, total sales will have yielded $720 million or $50 million to $100 million more than original projections. First-quarter sales generated $64.7 million from three hand-offs.

Smith said the disciplined approach to the strategy in play has positioned the REIT for acquisitions of upper-upscale assets in major metros, with high barriers to entry as the beacon. In addition, the development and redevelopment pipeline is holding $150 million of projects. “We are definitely going to be moving forward from this point toward looking at those opportunities,” he said. “That’s the last piece of the plan. As we get over the hump, we’re very focused on looking at markets.”

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