Strategic Hotels & Resorts Inc. (BEE)
Q3 2012 Earnings Call
November 08, 2012, 10:00 am ET
Executives
Jon Stanner - Vice President, Capital Markets & Treasurer
Rip Gellein - Chairman, President & CEO
Diane Morefield - EVP & CFO
Analysts
Jonathan Mohraz - JPMorgan
Jeff Donnelly - Wells Fargo
Ryan Meliker - MLV & Company
Will Marks - JMP Securities
Ian Weissman - ISI Group
Bill Crow - Raymond James & Associates
Presentation
Operator
Good day, ladies and gentlemen and welcome to the Third Quarter 2012 Strategic Hotels & Resorts Earnings Conference Call. My name is Jasmine, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today's conference, Mr. Jon Stanner, Vice President, Capital Markets and Treasurer. Please proceed.
Jon Stanner
Thank you and good morning, everyone. Welcome to the Strategic Hotels & Resorts third quarter 2012 earnings conference call. Our press release and supplemental financials were distributed yesterday and are available on the company’s website in the Investor Relations section. We are hosting a live webcast of today’s call, which can be accessed by the same section of the site with a replay of today’s call also available for the next month.
Before we get underway, I would like to say that this conference call will contain forward-looking statements under Federal Securities Laws. These statements are based on current expectations, estimates and projections about the market and the industry in which the company operates, in addition to the management’s beliefs and assumptions.
Forward-looking statements are not guarantees of performance and actual operating results maybe affected by a wide variety of factors. For a list of these factors, please refer to the forward-looking statement notice included within our SEC filings. In the press release and supplemental financials the company has reconciled all non-GAAP financial measures to the directly comparable GAAP measures in accordance with Reg G requirements.
I would now like to introduce the members of the management team here with me today. Rip Gellein, Chairman and Chief Executive Officer and Diane Morefield, Chief Financial Officer. Rip?
Rip Gellein
Good morning, everyone. Thank you for joining us on our third quarter conference call. We are very pleased with our third quarter results and we look forward to discussing the highlights. We continue to execute on our clearly defined strategy of conservatively managing and restructuring our balance sheet, while we are smartly growing our world-class portfolio of hotels with deals like the JW Marriott, Essex House and executing on the operation side every day in a best-in-class fashion.
Today, I will give you an update on the short-term effects of Hurricane Sandy, a quick update on our acquisition of the Essex House, the status of our sale of the Four Seasons Jackson Hole and lastly some early thoughts on trends for 2013.
As you know, last Friday we announced Laurence Geller’s departure as CEO and a Member of the company’s Board. The separation agreement between Laurence and Company was filed on Monday of this week. In addition, my employment agreement has been finalized and should be filed next week. On behalf of our team and the entire Board of Directors, I want to again thank Laurence for his many, many (inaudible) and wish him all the best. While Laurence has moved on, nothing else about our team, our strategy or our vision is changing. Our focus on delivering shareholder value remains paramount.
Our strategy is simple; use our industry leading asset management expertise to extract incremental value from our existing properties, conservatively manage our balance sheet and seek selective and accretive opportunities to grow our portfolio. With the industry best high-end hotel portfolio and an experienced leadership team, we believe we have the right framework to continue to deliver on our strategy.
Before we get into the details of the quarter, let me provide you with an update on the impact of Hurricane Sandy on our portfolio. As many of you know, we have three hotels on the East Coast of the country, two of which, the Four Seasons in Washington DC and the Essex House in New York City were directly in the path of the storm. Most importantly, there were no reported injuries at either hotel and both properties remained open and occupied throughout the storm and sustained no significant damage.
The Essex House was fully occupied throughout the week of the storm as many hotels in Southern Manhattan were forced to close, for instance, Le Parker Meridien hotel across the street from us was evacuated due to the damaged crane overhead.
We do expect some minor softness at our other properties throughout the portfolio given the travel difficulties emanating from the East Coast, but the cumulative impact will likely be less than $500,000 in revenue.
Yesterday, we reported another very solid quarter of operating results which Diane will provide you with more details on shortly. Comparable EBITDA for the quarter was $46.6 million in our total U.S. portfolio experienced RevPAR growth of 5.8% largely driven by rate increases. Excluding the Four Seasons in Washington DC which faced an unusually difficult comparison to last year, RevPAR in our US portfolio of hotels increased 7.4% which is once again near the top of our peer set. This came despite what was a weaker September for the industry given the shift in the Jewish holidays and the Fourth of July holiday falling on Wednesday which had a significant impact on business travel for that entire week.
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