CHARLOTTE, NC—Extended Stay America Inc. and ESH Hospitality Inc. have consolidated results for Q1. Among some of the highlights:
- Net Income of $28.4 million
- Total revenues of $277.7 million
- Comparable system-wide RevPAR declined 1.6% to $46.74
- Adjusted EBITDA of $116.3 million
- Adjusted FFO of $0.36 per diluted Paired Share
- Adjusted Paired Share Income of $0.16 per diluted Paired Share
Extended Stay America’s President/CEO, Jonathan Halkyard, said, “We believe the progress we’ve made in recent months has set us up for success operationally and with our ongoing ESA 2.0 growth strategy. Today we increased our dividend for the fifth consecutive year, highlighting our strong cash generation ability and our commitment to return significant capital to shareholders.”
Hotel and Development Pipeline
As of March 31, the company had a pipeline of 60 hotels representing approximately 7,300 rooms.
The company invested $55.3 million in capital expenditures during Q1. This includes $14.8 million in renovation capital, $11.9 million in IT capital and $8.0 million in capital for ESA 2.0 hotel development and land acquisitions.
Net income was $28.4 million compared to $31.1 million in the same period in 2018, a decrease of 8.7%. The decline in net income was due to a decline in comparable system-wide RevPAR, an increase in operating expenses on a comparable company-owned basis and an increase in income tax rate, partially offset by lower depreciation and a decline in net interest expense.
Total revenues were $277.7 million, a decrease of 6.7% over the same period in the prior year primarily due to asset dispositions in 2018. Adjusting for asset dispositions, total revenues declined 0.8%.
Comparable system-wide RevPAR declined 1.6% over the same period in 2018 to $46.74, driven by a 3.0% decline in average daily rate, partially offset by a 110 basis point increase in occupancy to 71.4%. Comparable company-owned RevPAR decreased 2.1% during the first quarter to $48.23, including minor displacement for renovations during the quarter. Total company-owned RevPAR increased 0.6% during the quarter, reflecting the sales of non-core hotels in 2018.
Adjusted EBITDA was $116.3 million, a decline of 12.0% compared to the same period in 2018. The decline in adjusted EBITDA was due primarily to asset dispositions in 2018 resulting in lost contribution of $6.9 million as well as an increase in comparable hotel operating expenses and a decline in comparable system-wide RevPAR. Adjusted EBITDA excludes non-cash equity-based compensation expense of $2.1 million and $1.3 million in other expenses.
Adjusted FFO was $68.4 million compared to $80 million in the same period in 2018. The decline in adjusted FFO was primarily due to a decline in comparable system-wide RevPAR and an increase in comparable company-owned hotel operating expenses. Adjusted FFO per diluted Paired Share was $0.36 compared to $0.42 in the same period in 2018.
Adjusted Paired Share Income was $29.5 million, or $0.16 per diluted Paired Share, compared to $37.5 million, or $0.19 per diluted Paired Share, in the same period in 2018. The decline in Adjusted Paired Share Income per diluted Paired Share was due to a decline in comparable system-wide RevPAR and an increase in comparable company-owned hotel operating expenses, partially offset by lower depreciation expense and lower net interest expense.