John Q. Hammons Hotels, Inc. Posts Strong Increase In Pro-Forma Earnings Per Share For Fourth Quarter And Year 1994

Business Wire, Feb 7, 1995

SPRINGFIELD, Mo.--(BUSINESS WIRE)--Feb. 7, 1995--(SWN)--John Q. Hammons Hotels, L.P. (the company) today reported a 9.4 percent increase in earnings before interest, income taxes, depreciation and amortization (EBITDA) for the year 1994, which contributed to a strong increase in pro-forma earnings per share for John Q. Hammons Hotels, Inc. (NYSE: JQH), the general partner that owns 28.31 percent of the company.

For the year 1994, John Q. Hammons Hotels, Inc. (the general partner) recorded pro-forma earnings of $.48 per share before extraordinary item, compared with $.28 per share for the year 1993. For the fourth quarter ended Dec. 30, 1994, the general partner posted pro-forma earnings of $.10 per share, compared with a break-even per share on a pro-forma basis for the comparable period in 1993. Pro-forma calculations are necessary due to the initial public offering of common stock of John Q. Hammons Hotels, Inc., commenced on Nov. 16, 1994. These pro-forma calculations included an increase in 1993 annual interest expense of $5.1 million, and a decrease in 1994 interest expense of $1.9 million.

John Q. Hammons Hotels, L.P. reported total revenues of $216.7 million for the year 1994, compared with $210.9 million in 1993. EBITDA was $62.3 million in 1994, an increase of 9.4 percent from $57.0 million in 1993. Net income before income taxes and extraordinary item was $15.4 million in both 1994 and 1993.

For the fourth quarter ended Dec. 30, 1994, the company posted total revenues of $51.8 million, compared with $51.7 million for the comparable period in 1993. EBITDA for the fourth quarter of 1994 was $14.7 million, a 15.9 percent increase from $12.7 million recorded in the comparable period in 1993. Net income before income taxes and extraordinary item was $3.0 million in fourth-quarter 1994, an 83 percent increase from $1.7 million in the fourth quarter of 1993.

According to David B. Jones, president and chief operating officer, fourth-quarter and 1994 results exceeded the company's expectations due to continued improvement in revenue-per-available-room. He also said that cost reductions in the food and beverage department resulted in higher operating margins and a 3.5 percent increase in department profits.

In addition, a 4.3 percent increase in the company's average room rate for 1994 contributed to overall increases in income and enabled the company to offset the higher fixed interest cost associated with the company's February 1994 public offering of 8-7/8 percent first mortgage 10-year notes.

Jones added that room occupancy increases in many of the company's markets in 1994 were offset by two major renovation projects, which impacted total company-wide occupancy by three-tenths of 1 percentage point. The company expects occupancy rates and average room rates for the industry to continue to improve in 1995, and that this should enable the company to continue its growth in room revenue.

Total room revenue for the year increased 5.8 percent, and was partially offset by a decrease in food and beverage revenue, as the company continued to realign these operations in the fourth quarter. New food and beverage franchise operations beginning in early 1995 are expected to generate additional gross revenues and a further increase in food and beverage profits.

Overall company EBITDA margins were 28.7 percent in 1994, compared with 27.0 percent in 1993. This improvement continued the company's five-year trend in margin increases due to a concentrated effort to improve operating efficiencies.

The company's development activities continue at a rapid pace, with construction of five new full-service hotels on schedule to open between June 1 and the end of 1995. These hotels are located in Bakersfield and Monterey, Calif.; Montgomery, Ala.; Bowling Green, Ky.; and Davenport, Iowa. Four of the five hotels are located adjacent to convention center facilities, supporting the company's development strategy of catering to the market segment desiring quality meeting facilities. The company expects to open three additional full-service hotels in 1996 and four in 1997.

John Q. Hammons Hotels, L.P. owns and manages 31 hotels located in 16 states containing 8,054 guest rooms or suites. The company also manages five additional hotels located in three states containing 1,157 guest rooms or suites. -0-