Shares of LaSalle Hotel Properties jumped last week after the company announced it was losing less money and seeing more guests in its hotel rooms than this time last year.
The Bethesda-based company, which owns 18 upscale hotels in 11 states and the District, said that between January and March it saw a 7.1 percent increase in the number of visitors to its hotels, and that revenue per room rose 7.2 percent compared with the first three months of 2003.
Shares rose 45 cents to close at $22.95 on the New York Stock Exchange yesterday. They have risen $1.73 since the company made its earnings announcement Wednesday.
“Business-travel demand continues to strengthen and group-booking activity is gaining momentum,” said Jon Bortz, LaSalle’s chairman and chief executive officer. “The [revenue per available room] growth we achieved in our portfolio exceeded our expectations as the recovery in business travel occurred sooner and with more strength than we expected.”
LaSalle’s revenue grew to $50.82 million in the first quarter of 2004, up from $30.39 million in the comparable quarter of 2003. Revenue per room at LaSalle’s business hotels grew 22.8 percent, while revenue from convention hotel rooms grew just 4.3 percent. Revenue per room from resort hotels fell 12.5 percent, but analysts blamed the decline on an unusually strong first quarter in 2003 resulting from the Super Bowl in San Diego.
While the company was pulling in more revenue during the first quarter, it was also spending more. Operating expenses rose from $35.2 million during the first quarter last year to $52.83 million this year. Wages, benefits, insurance costs, property taxes and energy costs all rose more than the rate of inflation during the quarter, LaSalle said.
LaSalle reported a net loss in the first quarter of $6.2 million, or 25 cents per share, compared with a loss of $6.3 million, or 34 cents per share, for the first quarter of 2003.
The company said it would explore ways to decrease its expenses and operate its hotels more efficiently.
Despite its lack of profits, the company has been active in acquiring new properties and throwing capital at existing projects. In February, it bought a 615-room Marriott hotel in downtown Indianapolis, and invested $1.6 million for the Lansdowne Resort development in Lansdowne, 12 miles from Washington Dulles International Airport in Virginia.
The company also owns five hotels in the District, including the Holiday Inn on the Hill, located at 415 New Jersey Ave. NW.
Analysts said LaSalle has more available cash than most of its competitors, and will be able to expand and inject money into existing properties while other companies are less active.
“We favor companies with a superior ability to sustain and grow cash flow through internal [and] external initiatives,” said Wachovia analyst Jeffrey Donnelly. “We believe better capitalized hoteliers, such as LaSalle, will be in position to take advantage of the favorable supply-demand imbalance.”
Analyst were optimistic that the remainder of this year will be strong for travel. Political conventions in Boston and New York are expected to fill hotel rooms, and the District is expected to lure tourists to the World War II memorial dedication on Memorial Day.
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