John Q. Hammons Hotels Inc. posts 121 percent increase in EPS for second quarter

Business Wire, July 27, 1995

SPRINGFIELD, Mo.--(BUSINESS WIRE)--July 27, 1995--John Q. Hammons Hotels, L.P. Thursday reported a 4.1 percent increase in total revenues and a 66.1 percent increase in income before income taxes for the second quarter of 1995.

Excellent operating performance, higher interest income, and a lower effective tax rate contributed to a 121 percent increase in earnings per share over the 1994 proforma for John Q. Hammons Hotels Inc. (NYSE:JQH), the general partner that owns 28.31 percent of the company.

Per share earnings of John Q. Hammons Hotels Inc. were $.31 for the second quarter of 1995 and were 121 percent higher than the 1994 second quarter proforma per share earnings of $.14. Proforma calculations for 1994 are necessary because John Q. Hammons Hotels Inc. had an initial public stock offering as of Nov. 16, 1994.

Occupancy rates were up for the second quarter of 1995 due to the strong performance of the company's hotel located at the entrance to the new Denver International Airport. With the opening of the new airport in February, the hotel occupancy increased more than 10 points and the average room rate increased 17 percent over the first half of 1994. Overall company occupancy for the second quarter of 1995 was 72.2 percent versus 71.4 percent in 1994.

The average room rate for the second quarter was $71.13 compared to $68.85 in 1994. For the first six months, average room rates have increased 4.1 percent to $70.99, from $68.17 in the same period of 1994.

David B. Jones, the company's president and chief operating officer, said healthy fundamentals in the hospitality industry along with the company's aggressive growth in convention and group bookings, resulted in a 4.9 percent increase in revenue per available room during the first six months of 1995.

According to Jones, "The full-service sector is the place to be in the hospitality industry because there has been limited new development in this sector and today's consumer is demanding a quality product supported by exceptional service levels and at an excellent price value. The company's portfolio is well positioned to take advantage of these trends."

A significantly lower effective income tax rate contributed to the higher per share earnings for the quarter and the first half. The effective income tax rate for all of 1995 is expected to be 2 percent rather than approximately 38 percent and is due primarily to special allocations of income tax depreciation to John Q. Hammons Hotels Inc. in excess of its proportionate share of depreciation related to its share of the company's net assets. This special allocation of depreciation is expected to last more than five years.

The cash position of the company remains strong with more than $63 million available for development and operations. Three existing unencumbered hotels and the unencumbered new construction also are available to provide significant borrowing power in the future.

Highlights of the company's development program during the first half of 1995 were the announcement of a 300-room resort hotel being built in conjunction with the PGA's World Golf Village development in St. Augustine, Fla., and the opening of its Bakersfield Holiday Inn Select hotel as scheduled and on budget. This hotel is located adjacent to the city-owned convention center, which can accommodate meetings of up to 3,000 people.

In addition to continued hotel development, the company opened six Pizza Hut franchises and two Damon's Rib restaurants located within the company's hotels in the first half of 1995. Damon's is a national restaurant company with more than 80 units. These franchise concepts are an example of ways that the company is improving the utilization of its existing assets to increase shareholder return.

The company expects to open five additional hotels by the end of October in Montgomery, Ala.; Bowling Green, Ky.; Davenport, Iowa; Springdale, Ark.; and Monterey, Calif. The company is focusing on development growth and is investigating building additional suite products.

Five of the six hotels opening in 1995 are located adjacent to convention center facilities, fitting with the company's development strategy of catering to the market segment desiring quality meeting facilities. The company expects to start construction on two additional full-service hotels by mid-summer.

John Q. Hammons Hotels Inc., a New York Stock Exchange company headquartered in Springfield, operates 37 hotels in 18 states, and has seven other hotels currently under development. By the end of 1995, the company will operate 42 hotels with 10,472 rooms, in 20 states. -0-

                     John Q. Hammons Hotels L.P.
                        Financial Highlights
       (dollars in thousands except room rates, Occ% and Rev Par)