WestCoast Q1 Loss Grows by 15%

SPOKANE, WA-WestCoast Hospitality Corp. this week reported a 15% drop in first quarter profit despite improvements in its hotel and restaurant division. The locally headquartered hotelier said the loss is in part due to decreased revenues from its entertainment division and increased interest expense.For the first quarter, the loss applicable to common shareholders was $3.1 million ($0.24 per share) compared to a loss of $2.7 million ($0.21 per share) in the first quarter of 2004. Revenue was $35.4 million, down 2.1% compared to the first quarter of 2004.Hotel and restaurant revenue from continuing operations were $30.8 million in the first quarter, up $500,000 from the same quarter in 2004. RevPAR from continuing operations was up 4.4% from the first quarter of 2004, generated by a 2.7 point increase in average occupancy to 52.1% offset only slightly by a 0.3% drop in ADR to $68.49. WestCoast president and CEO Arthur Coffey says the hotel and restaurant division improvements occurred despite the traditionally slow Easter holiday travel period falling in March this year as opposed to April in 2004 and one less day in February compared to a leap year in 2004.On the down side, revenues for WestCoast’s entertainment division decreased $0.8 million, primarily due to fewer shows and performances scheduled in the first quarter of 2005 compared to 2004. The company’s interest expense increased by $0.8 million in the quarter, primarily as a result of the issuance in 2004 of trust preferred securities to replace previously outstanding preferred stock.WestCoast added two Red Lion hotels to its franchise network in the first quarter (and two renewed franchise agreements, bringing its total number of Red Lion hotels to 61. It also continued a $40-million initiative to upgrade its Red Lion hotels. The cost of the effort is being offset by the sale of 11 non-strategic hotels and one office building, though none of the properties have sold yet. Another of its office buildings, the 111,000-sf Lincoln Plaza in Spokane, is being renovated. Looking ahead, the entertainment division is expected to improve its results in 2005, having secured secured Disney’s The Lion King for a six-week engagement for 46 performances at the Spokane Opera House beginning October 2005. As a result, the total number of performances the company presents in 2005 will substantially exceed that of 2004, which is expected to have a positive impact on the division’s revenues and profits and on the company’s Spokane hotels, which are already booking hotel packages for show patrons. “We believe our continued increase in RevPAR, two recent full service franchise additions in Portland, Oregon and Tacoma, Washington and the franchise term extensions with two other hotels reflect the growing confidence in our product and our Red Lion brand,” says Coffey. “We are on schedule with our accelerated product improvement plan announced late last year and expect that execution of this plan, along with the growth in industry demand, will make 2005 a very positive year for the company.”The company’s share price on Thursday rose $0.12 to close at $6.97, which is $0.17 below its 52-week high. In early trading Friday, shares had changed hands at anywhere from $6.87 to $6.93.