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Hotel revenues for our owned hotels increased $116 million, or 9%, for the quarter and $201 million, or 5%, for full year 2010. Total revenue increased $168 million, or 13%, for the fourth quarter and $293 million, or 7%, for full year 2010. Approximately 31% of the total revenue increase for the quarter and full year was due to the inclusion of property-level revenues for 71 leased, select-service hotels for which the Company previously recorded rental income due to the termination of two subleases in July 2010. See the notes to the consolidated statements of operations for further information.
Net loss was $6 million, or $.01 per diluted share, for the quarter compared to a net loss of $72 million, or $.12 per diluted share, for the fourth quarter of 2009. For full year 2010, the net loss was $132 million, or $.21 per diluted share, compared to a net loss of $258 million, or $.45 per diluted share, for full year 2009.
The Company’s operating results include transactions such as gains or losses on debt extinguishments, impairment charges, litigation costs, gains on dispositions and acquisition costs that can significantly affect earnings, FFO per diluted share and Adjusted EBITDA. The net effect of these items was a decrease to earnings per diluted share of $.02 and $.06 for the quarter and full year 2010, respectively, and a decrease of $.07 and $.23 in earnings per diluted share for the quarter and full year 2009, respectively.
FFO increased 57% to $177 million, or $.26 per diluted share, for the quarter. The net effect of the transactions noted above decreased FFO per diluted share by $.02 and $.06 for the fourth quarter of 2010 and 2009, respectively. For full year 2010, FFO increased 48% to $452 million, and FFO per diluted share increased 33% to $.68 per diluted share. The net effect of the above transactions decreased FFO per diluted share by $.06 and $.28 for full year 2010 and 2009, respectively.
Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items increased 25% to $286 million for the quarter and 3% to $824 million for full year 2010. Costs associated with successful acquisitions, which are now required to be expensed, decreased Adjusted EBITDA by $6 million and $10 million for the quarter and full year 2010, respectively. For 2009, litigation costs decreased Adjusted EBITDA by $41 million for both the quarter and full year.
Expected Acquisitions, Investments and Operating Performance for 2011
The discussion below assumes the Company will complete the acquisitions of the New York Helmsley Hotel, the Manchester Grand Hyatt San Diego and the New Zealand portfolio of seven hotels. While the Company is actively pursuing several other transactions, no further acquisitions or dispositions are assumed for 2011.
The Company expects that its investment in ROI and repositioning expenditures for 2011 will total approximately $290 million to $310 million, including $190 million of projects at the following properties:
- Sheraton New York Hotel & Towers – the complete renovation of all 1,756 rooms, as well as major mechanical upgrades to the heating and cooling system;
- Atlanta Marriott Perimeter Center – complete repositioning of the hotel including rooms renovation, lobby enhancements, mechanical systems upgrades, parking garage and exterior enhancements;
- Chicago Marriott O’Hare – complete repositioning of the hotel including rooms renovation, new meeting space and the creation of a new great room, food and beverage platform and lobby;
- San Diego Marriott Hotel & Marina – continuation of the extensive renovation and repositioning project begun in 2010; and,
- Sheraton Indianapolis – renovation of rooms, lobby, fitness center, bar and restaurant, as well as the conversion of an existing tower into 129 managed apartments.
The company anticipates its operating performance for 2011 will be within the following ranges:
- Comparable hotel RevPAR will increase 6% to 8%;
- Operating profit margins under GAAP will increase approximately 220 basis points to 280 basis points; and
- Comparable hotel adjusted operating profit margins will increase approximately 100 basis points to 140 basis points.
Outlook 2011
Based upon the estimates and expectations noted above, the Company’s full year 2011 guidance is as follows:
- earnings per diluted share should be approximately $.02 to $.07;
- net income should be approximately $19 million to $54 million;
- FFO per diluted share should be approximately $.87 to $.92 (including the effect of a reduction of $.01 due to debt extinguishment costs and pursuit costs for completed acquisitions); and
- Adjusted EBITDA should be approximately $1,000 million to $1,035 million.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
