LaSalle Hotel Properties Reports RevPAR Decline for 2nd Qtr Better than Expectations Due  to Healthy Leisure Demand

LaSalle Hotel Properties today reported comparable funds from operations ("FFO") of $10.0 million for the quarter ended June 30, 2002 versus $13.3 million for the second quarter of 2001. On a per diluted common share/unit basis, comparable FFO for the second quarter 2002 was $0.52 versus $0.70 a year ago. Comparable FFO is defined as funds from operations before one-time items, including the purchase of LaSalle Hotel Lessee ("LHL"), the transition expenses associated with becoming a self-managed Real Estate Investment Trust ("REIT"), and costs associated with terminating third-party tenant leases.
    
For the quarter ended June 30, 2002 versus the same period in 2001, room revenue per available room ("RevPAR") declined 9.5 percent to $100.84. The average daily rate ("ADR") of $145.56 represented a 7.4 percent decrease over the prior year period, while occupancy declined 2.3 percent to 69.3 percent.
    
"The RevPAR decline for our portfolio in the second quarter was slightly better than our expectations due to healthy leisure demand at our drive-to- resorts," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "In addition, we also benefited from the steady but slow recovery of the business traveler segment, although we believe it will be at least another 12 to 15 months before this segment fully recovers."

For the second quarter 2002, the Company experienced net income applicable to common shareholders of $1.2 million, or $0.06 per diluted common share/unit, down compared with net income applicable to common shareholders of $3.7 million, or $0.20 per diluted common share/unit, a year earlier. The Company's comparable EBITDA decreased 15.4 percent to $17.5 million for the second quarter, compared to $20.7 million a year ago. Comparable EBITDA is defined as earnings before interest, taxes, depreciation, amortization and one-time items, including the purchase of LHL, the transition expenses associated with becoming a self-managed REIT, and costs associated with terminating third-party tenant leases.
    
The Company's hotels generated $17.8 million of EBITDA for the second quarter compared with $20.6 million for the prior year period. Despite a challenging operating environment, EBITDA margins and operating efficiencies at the hotels were well maintained during the second quarter, due to tight control of costs by the hotels' management and LaSalle's asset management team. Second quarter EBITDA margins across the Company's portfolio declined approximately 190 basis points from the prior year, despite a RevPAR decline of 9.5 percent.

This achievement was largely due to well-controlled expenses and operational improvements in the rooms and food and beverage departments throughout the Company's portfolio.
    
Early in the second quarter, the Company commenced the renovation and repositioning of the remaining two hotels in the D.C. Boutique Collection. The Hotel Madera and Hotel Helix are currently closed and are expected to reopen during the fourth quarter of 2002. The project is currently on schedule and on budget. The total redevelopment costs for the four hotels in the D.C. Boutique Collection are anticipated to be approximately $31.0 million, with approximately $14.2 million remaining to be spent.
    
During 2002, the Company anticipates spending a total of approximately $30.0 million throughout the portfolio, including the $14.2 million to complete the redevelopments of the Hotel Madera and Hotel Helix. The cost of guest refurbishments for the Westin conversions at the Dallas and New Orleans
properties is not included in this amount. The Company still expects that the Dallas and New Orleans properties will be converted to Westins; however, due to legal proceedings with Meridien, the anticipated conversions at both properties have been delayed. The capital investment for conversion of the properties to Westin remains approximately $6.0 million.
    
"We maintain our perspective that demand will continue to improve on a gradual basis throughout the remainder of 2002 and 2003, as corporate profits and employment improve with an expansion of the economy," said Mr. Bortz.  "Additionally, the capital investments we made throughout our portfolio, and most recently at our D.C. Boutique Hotels, should contribute to healthy increases in cash flow as the economy and lodging industry recover. We continue to remain optimistic that we are entering a new lodging cycle. Declining hotel supply growth, combined with the enhancements in our hotels' operating efficiencies should translate into superior returns for our hotels as the economy improves."

During the second quarter, the Company refinanced the $120.0 million secured mortgage on the Chicago Marriott Downtown through Cigna Corporation. The maturity of the loan, which has a term of two years with three one-year options, was extended until June 2004. LaSalle owns a 9.9 percent interest in the Chicago Marriott Downtown, and as a result, reflects its pro-rata share ($11.9 million) of the Chicago Marriott mortgage in its reported outstanding debt.
    
"This refinancing extends the maturity of our Chicago Marriott loan at a very favorable interest rate," advised Hans Weger, Chief Financial Officer of LaSalle Hotel Properties. "The pricing and terms of the financing reflect the stability of the property and overall confidence the financing community has in its long-term cash flows and asset value."

At the end of the second quarter 2002, LaSalle Hotel Properties had total outstanding debt, including its $11.9 million portion of the joint venture debt related to the Chicago Marriott, of approximately $258.0 million, which was down approximately $114.0 million from a year ago. For the quarter, the Company's corporate EBITDA covered its interest expense by approximately 5.0 times. As of June 30, 2002, the Company had $85.8 million outstanding on its $210.0 million unsecured credit facility.
    
"Our efforts to strengthen the balance sheet over the last nine months have positioned the Company to take advantage of favorable acquisition opportunities that we expect will heighten over the next 12 to 18 months," said Mr. Weger.  "Our current capital structure enables the Company to complete more than $100 million of hotel acquisitions."
    
On July 15, LaSalle Hotel Properties announced its second quarter 2002 common dividend of $0.01 per common share. The dividend is payable on August 15, 2002 to all common shareholders of record as of July 31, 2002. The Company paid a preferred dividend of $0.64 per preferred share on July 15, 2002 to all preferred shareholders of record as of July 1, 2002.

2002 Outlook

"We are pleased with our portfolio's operating performance in this challenging environment and believe the hotel industry will continue its gradual recovery in the second half of 2002," noted Mr. Bortz. "However, due to the resulting delay with the Westin conversions at Dallas and New Orleans, as well as increased challenges in maintaining room rates in some markets, we anticipate that our annual results will be in the lower half of our previously provided guidance of comparable FFO of $1.80 to $1.90 per diluted share/unit and a portfolio RevPAR decline of 2 to 4 percent."
    
LaSalle Hotel Properties is a leading multi-tenant, multi-operator REIT, which owns 17 upscale and luxury full-service hotels, totaling approximately 5,900 guestrooms in 13 markets in 11 states and the District of Columbia. LaSalle Hotel Properties focuses on investing in upscale and luxury full- service hotels located in urban, resort and convention markets. The Company seeks to grow through strategic relationships with premier internationally recognized hotel operating companies including Marriott International, Inc., Starwood Hotels & Resorts Worldwide, Inc., Radisson Hotels International, Inc., Crestline Hotels & Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Interstate Hotels Corporation, and the Kimpton Hotel & Restaurant Group, LLC.
    
Certain matters discussed in this press release may be deemed to be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 

Further information available at  http://www.lasallehotels.com/

Tourism Remains Backbone of Jordan’s ASEZ

The Aqaba Special Economic Zone (ASEZ) authority anticipates that the tourism sector will make up the lion’s share of future investments in the zone, claiming approximately 50% of the total within the next 20 years.

One of the biggest tourism developments projects currently under way is the $500m Tala Bay project by the Jordan Projects for Tourism Development (JPTD) company, which is a consortium consisting of Abujaber Investment group, Orascom Projects and Touristic Development, Zara Investments, the Social Securities Corporation and Al-Haqq establishments.

The founders of JPTD have covered 75% of the company’s capital; the remaining 25% were floated for public offering and were bought last week by 11 of JPTD’s members. The project is located on the southern shore of Jordan about 14km south of the city of Aqaba and will consist of an integrated tourist and residential community to be built on approximately 2.671m square metres of land. There will be several hotels of all categories, villas and apartments, a school, commercial, cultural, entertainment and sport centres as well as a full fledged 18-hole golf course and a marina town to accommodate between 65 and 90 boats.

According to the manager of the marina project, Ayman Osama Al-Mifleh, Tala Bay will be targeting tourists from all over the world and of different income groups. "Our target is to attract tourists that are willing to spend up to $100 dollars per night, as well as ones that can only spend $20 per night." The project has several phases and is forecast to be completed over a period of 15 years, with the first phase expected to be operational by the end of 2003. This phase will include the marina town, the marina, a golf course and 1300 hotel rooms.

For now, regional turbulence and the September 11th attacks on the United States have hindered developments in Jordan’s tourism sector on the whole and specifically JPTD’s plans. The company had originally planned to build two five-star hotels by the end of the first phase of the project, but then changed plans and started building two four-star hotels instead.

JPTD’s project comes at a time when the ASEZ’s commercial, tourism and economic projects have been booming like never before. Since the inauguration of the zone, 18 months ago, total merchandise coming into the ASEZ increased by JD170m. Moreover, according to the owner of a car parts store, car parts sales have increased by more than 100% in the same period. Additionally, the number of commercial ships increased by 8%, local imports and transit by 8% and exports by an impressive 43%.

Furthermore, according to the private commission of ASEZ, commercial agreements have been signed with prominent investors from the private sector allowing them to establish three of the biggest trading centres in the city, at a cost of JD150 million. More recently, on June 10th, the King Abdullah II Design and the Development Bureau and SWESCO Sweden AB, signed a joint venture agreement to establish SWESCO in the ASEZ. SWESCO is a Swedish company specialized in the production of mobile hangars and shelters made out of composite materials.

The number of companies registered in the ASEZ currently stands at 879, with total investments worth JD1.72bn, including Tala Bay. Of all the company’s registered in the zone, 334 are new with investments exceeding JD500m in value, 55 are foreign and 69 have mixed capital. The ASEZ authority is expecting 70 000 job opportunities to be available in the zone over the next 20 years, $60m per annum in revenues and the population, which currently stands at 70 000, to increase to over 300 000 over the same period.

ASEAN revs up marketing

TravelWeeklyEast.com   -  The Association of Southeast Asian nations (ASEAN) convened its week of NTO meetings here today with a commitment to a higher level of visibility for the region in months to come.

Despite a tough year for tourism, marketing task force chairman Sheikh Jamaluddin told TravelWeekly the region was set to benefit from a greater level of tourism exposure, especially through the Visit ASEAN Campaign (VAC).

"Our campaign should be more visible from October-November. We have the ASEAN Summit in November in Phnom Penh, where the leaders will sign the ASEAN agreement. The whole momentum for tourism is there," said Sheikh Jamaluddin, who is director general of Brunei Tourism.

Each country would in turn be working closely with advertising agencies and CNN to get the brand campaign out, he said. The key trade components remained the air and hotel passes, he mentioned.

A budget of more than US$500,000 had been allocated to the campaign for the coming year, he said, which would become the equivalent of US$1 million once individual countries had done their own push.

ASEAN had done a great deal after September 11 to promote safety and had been vigilant to prevent the threat of terrorism, he said.

The tourism agreement, signed by each ASEAN leader, would provide a "blueprint for cooperation for tourism in South-east Asia", and bring the industry's exposure to a new level, he said.

Source:  TravelWeeklyEast.com

IMX appoints Tom Hulton

Former ICCA chief is International Relations director

IMEX, the new Frankfurt-based trade show for the meetings and incentive travel industry, has appointed Tom Hulton as director of international relations. Hulton resigned last month as chief executive at the International Congress and Convention Association.

Hulton’s responsibilities include: to help raise the political profile of business tourism within government circles in Europe; to develop the exhibition’s ‘Young Buyers for Tomorrow’ campaign; and to encourage all-industry co-operation.

The inaugural IMEX show will take place in Frankfurt on April 8-10.

Summer hotel splash for UK and Ireland

A number of new properties are opening their doors this summer in key cities in the UK and Ireland.

Ramada International has used the historic city of York to unveil its new Encore Hotels mid-priced brand, designed to appeal to the young at heart through its use of contemporary decor and bright colours. All rooms have a work area with dataports and electrical sockets.

The 104-room Ramada Encore York is a limited-service hotel within walking distance of the city’s main attractions and railway station. It has opening rates of £75 per room including breakfast for up to two adults and two children.

Ramada has also opened the Ramada Glasgow Airport Hotel, managed by Jarvis Hotels. This 108-room property has a shuttle bus to the terminal which is only 500 metres away and is a 15-minute drive from the Scottish Exhibition and Conference Centre. Facilities include 10 meeting rooms and an Italian restaurant. Opening rates start at £69.

For travellers with business in Manchester who prefer smaller-scale, four-star comfort, there is now the Didsbury House townhouse hotel in the southern suburb of Didsbury.

A sister property to the acclaimed Eleven Didsbury Park, it mixes modern design with Victorian architecture. Two of the 26 rooms are duplex suites. Facilities include a spa, treatment rooms, two seminar rooms and bar food as well as a vehicle to shuttle you to local restaurants. Rates start from £79.50.

In Ireland, Radisson SAS has opened it fourth hotel with a 154-room property in Limerick. It has 25 business class room, conference facilities, and six meeting rooms as well as health and leisure facilities. Opening rates start at £88. 

Source: Businesstraveller.com