Hersha Shifts Focus to Internal Growth

PHILADELPHIA-After three years of expansion, Hersha Hospitality Trust narrows its focus to more whole-ownership versus JVs, a slowdown of acquisitions, and internal-oriented growth of its relatively young portfolio. Operating revenues increased 91.7% to $39.3 million in the final quarter of 2006, up from $20.5 million in the same quarter a year ago.

The increase came primarily from acquisitions and increased room revenues. RevPAR for its 52 consolidated hotels rose 18.3% for the quarter to $79.98, driven by a 12.8% rise in average daily rates to $116.70. Occupancy rose 4.9% to 68.53% for the quarter. Operating margins also rose from 38.8% at the end of 2005 to 41.8% by Dec. 31, 2006, and adjusted funds from operations were up 45%.

The results reflect the company’s strategy “of increasing our presence in high barrier to entry metro markets with a specific focus on New York City, adding newer hotels to our portfolio and increasing our already strong concentration of extended-stay hotel properties,” said Jay Shah, CEO, during a conference call. He said 75% of EBITDA comes from four metro markets: Philadelphia, Washington, DC and Boston in addition to New York.