AUSTIN–Summit Hotel Properties Inc. saw continued solidification of its key operating and strategic objectives, according to company executives. The locally-based company released its first quarter results on Monday.
“In the first quarter, we continued to make solid progress on all of our key operating and strategic objectives,” said Dan Hansen, Summit's president and CEO, in the report. “Our portfolio recorded strong gains in RevPAR, driven by growth in both average daily rates and occupancy. As a result, we generated a healthy increase in our hotel EBITDA margins, excluding the hotels under renovation, and our New Orleans hotels, which had benefited from the Super Bowl in the prior year.”
Revenue for Q1 totaled $89.5 million, as compared to the first quarter in 2013, when total revenue was $59.7 million. Pro forma RevPAR increased by 7.5% growing to $85.76 in the first quarter.
Adjusted EBITDA increased to $27.2 million in the Q1 from $18.9 million during Q1 2013, which is an increase of 44.0%.
During Monday's investor call, Hansen said the Baton Rouge, LA and Phoenix/Scottsdale markets were the strongest, posting 16.1% and 15.9% RevPAR. “Both of these markets are benefiting from the renovations completed last year and we anticipate strong RevPAR growth to continue,” Hansen said.
During the first quarter, Summit purchased four hotels, adding 591 rooms to its portfolio, for a total of $125.7 million. The acquisitions include the 182-key Hilton Garden Inn, Houston; the 98-room Hampton Inn in Santa Barbara, CA; the 101-key Four Points by Sheraton in San Francisco; and the 210-key Double Tree by Hilton in San Francisco.
“While we continue to see a steady pipeline of potential acquisitions, we remained extremely selective in targeting only the right hotel that fit our long-term growth objectives,” Hansen said during the investor call. “We have several potential acquisitions in various stages of due diligence and remain focused on the highest quality, premium, select service assets that will provide strong in-place yields and create long-term value.”
Since January 2013, Summit has acquired 23 hotels. In the first quarter is also disposed of two hotels for a total selling price of $3.1 million.
In addition to the new acquisitions, Summit spent $16.8 million on 11 renovations. Roughly $4.3 million was spent on the renovation of the Holiday Inn Express & Suites in San Francisco, which was the largest project. Upgrades were given to the lobby, common areas, guestrooms, business center, fitness center and building exterior.
”Our completed renovation of the Holiday Inn Express & Suites in San Francisco is a prime example of the opportunity we have within our portfolio to execute upgrades and renovations to improve the quality and value of our portfolio” Hansen said. “We completed 11 projects in the first quarter, and our team continues to execute these improvement programs in order to drive revenue growth, operating margins and value across our portfolio.”
The real estate investment trust has a portfolio of 90 hotels, totaling 11,353 rooms in 22 states. Hansen said, “Our top priority remains on the organic growth of our existing portfolio through operational efficiencies, target renovation and upgrade programs to further capture the embedded growth.”
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