NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: ROYAL HOST REAL ESTATE INVESTMENT TRUST
TSE SYMBOL: RYL.UN
APRIL 10, 2000
Royal Host Year End Results Meet Forecast
CALGARY, ALBERTA--Royal Host Real Estate Investment Trust (Royal
Host) announced today that its year end results for 1999 met the
market forecast of per unit cash available for distribution of
$1.02.
"We are pleased with the financial results for 1999 and will
continue to derive substantial growth and improvement from our
operations in 2000," says R.B. Royer, President and CEO Royal
Host. "We also have begun the due diligence process to extend the
maturity on a substantial portion of our current debt. Combined,
these give us confidence that we are able to maintain our current
distribution policy," added Royer.
FINANCIAL RESULTS
Cash available for distribution in 1999 increased to $23.4 million
or $1.02 per unit compared to $18.3 million or $0.93 per unit in
1998. During 1999, Royal Host distributed $21.9 million to
unitholders of which 68.4% was tax deferred.
Total revenues were $130 million for the year, an increase of 66%
over 1998. The improvement in room revenues, and food and
beverage sales was a result of both the increase in the number of
properties from 18 to 36 in 1998 and the continuing growth trend
at the hotels.
In addition, other hospitality revenues increased by 163% to $25
million in 1999 primarily due to the diversification of the
business mix into hotel management, franchising and vacation
ownership.
"We believe that the acquisition of Royco Hotels & Resorts Ltd.
(Royco) and RVI Holiday Limited Partnership (RVI), provides the
opportunity to broaden our revenue streams. These new businesses
offer substantial future opportunities for growth to Royal Host
and its unitholders," says Royer.
/T/
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HOTEL STATISTICS For the year ended December 31,
1999 1998 % change
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36 Hotel Portfolio
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Average daily room rate $80.54 $73.34 9.8%
Occupancy % 66.6% 71.3% (4.7%)
Revenue per available room $53.66 $52.22 2.8%
Total available room nights (000's) 1,614 1,053
Same property analysis
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Revenue per available room $55.25 $52.22 5.8%
Total available room nights (000's) 1,105 1,053
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/T/
To compare hotel statistics for 1998 and 1999, the same time
period must be included in each year. Not all hotels were owned
by Royal Host for the full year in 1998 but were owned for the
full year in 1999. It is important to compare the same portfolio
and time periods due to the high seasonality experienced by the
hotel industry. The first quarter is traditionally the weakest of
the year whereas the second and third quarters tend to generate
the strongest results of the year. Royal Host uses same property
analysis to adjust for seasonality and changes in the hotel
portfolio. To illustrate "same property analysis", if a hotel was
acquired on May 1, 1998, hotel statistics are compared for May 1
to December 31, 1999 versus 1998.
Same property RevPAR increased 5.8% in 1999, from $52.22 in 1998
to $55.25. This is consistent with the growth in RevPAR for the
Canadian hotel industry in 1999 according to Pannell Kerr Forster
Consulting Inc. (Trends in the Canadian Hotel Industry -
Highlights for the Year 1999).
In 1999, Royal Host continued to focus on key operating strategies
that included expansion and renovation at selected properties in
the portfolio and using management expertise to improve unitholder
value. The extensive renovation, upgrading and expansion program
included the following:
* The Grand Okanagan Resort and Conference Centre: an investment
of $22.4 million, over two years, for the addition of 120
four-star guest rooms, a European-style spa, and a 21,000 square
foot, world-class casino;
* $9 million to renovate the newly repositioned Hilton, London,
Ontario and Travelodge Hotel Dixon Road (Toronto Airport). The
program included state-of-the-art computerized reservation and
front-desk systems and computer access capabilities creating
executive style floors; and,
* $14 million spent on renovations at repositioned Travelodge
properties and several other Royal Host hotels.
COMPLETION OF MANAGEMENT COMPANY ACQUISITION
To complete the 1998 purchase of Royco and RVI, 1,444,445
redeemable partnership units were issued as additional proceeds of
purchase effective January 1, 2000, due to the earnings of the
acquired businesses substantially exceeding the minimum threshold
required under the agreement.
OUTLOOK
In 1999, Royal Host refocused on capitalizing more effectively on
its core strengths in the hotel and hospitality industry. Royal
Host plans to combine the benefits of increased brand equity
through selected hotel ownership, management contracts,
franchising and vacation ownership.
"The cornerstones of Royal Host's growth strategy includes driving
cost reductions, streamlining operations, and improving services
throughout. These combined, will improve our bottom line and
allow us the opportunity to seek new sources of management,
franchise and vacation ownership income," says Royer.
/T/
ROYAL HOST REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Net Earnings
and Cash Available for Distribution
For the years ended December 31, 1999 and 1998
(in thousands of dollars)
1999 1998
Hospitality Revenues
Rooms 83,079 54,067
Food and beverage 21,873 14,571
Lease and other hospitality revenues 24,618 9,374
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129,570 78,012
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Hospitality Expenses 89,592 53,087
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Operating Income 39,978 24,925
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Other (Income) and Expenses
Interest income (477) (4,379)
Interest on installment receipts
term loans - 3,464
Interest on mortgages and other debt 11,899 5,475
Trust administration 2,332 1,700
Capital and other taxes 610 323
Non-recurring acquisition costs 2,200 -
Depreciation and amortization 20,678 10,080
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37,242 16,663
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Net Earnings 2,736 8,262
Add: Depreciation and amortization 20,678 10,080
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Cash Available for Distribution 23,414 18,342
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Per Unit Cash Available for Distribution
Basic 1.02 0.93
Fully diluted 0.94 0.92
ROYAL HOST REAL ESTATE INVESTMENT TRUST
Consolidated Balance Sheets
As at December 31, 1999 and 1998
(in thousands of dollars)
1999 1998
ASSETS
Current Assets
Cash and short-term investments 7,291 14,642
Accounts and notes receivable 8,055 5,485
Other current assets 3,720 2,904
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19,066 23,031
Capital Assets 347,300 334,911
Long-term Notes Receivable and
Other Assets 4,180 4,680
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370,546 362,622
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LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued
liabilities 12,812 11,510
Current portion of mortgages
and other debt 115,547 62,490
Other current liabilities 3,503 1,669
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131,862 75,669
Mortgages and Other Debt 41,057 77,019
Deferred Revenue 1,446 855
Equity 196,181 209,079
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370,546 362,622
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/T/
Royal Host REIT owns 36 hotels, manages 78 properties and
franchises 83 locations for more than 16,000 guest rooms in the
mid-market to upscale segments. Royal Host also owns the
Travelodge Master Franchise in Canada, provides hotel and resort
management services for the portfolio and to third party
properties, markets vacation intervals in hotels and resorts, and
operates a facility for customers to trade and bank prepaid
vacation weeks. Royal Host units are traded on The Toronto Stock
Exchange (RYL.UN).
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FOR FURTHER INFORMATION PLEASE CONTACT:
Royal Host Real Estate Investment Trust
Ellen Walsh
Director of Communications
(403) 292-0933
(403) 292-0922 (FAX)
Website: www.royalhost.com
Email: investorinfo.@royalhost.com
