RLH Corporation Makes Progress Toward Asset-Light Model

DENVER—RLH Corporation has experienced a transformative 2018 as it made headway with its strategic goals for the company.

“It was a key transition year in the execution of the strategy we laid out in 2014 to position the company to an asset-light franchising and branding company,” said Greg Mount, president/CEO, RLH Corporation, in a recent earnings call.

Mount added, “The year was a big step to achieving our stated goals as we delivered progress on a number of key initiatives. We further expanded our geographic footprint and marketing resources with the acquisition of Knights Inn. We made substantial progress to becoming capital wide as we sold nine company owned hotels for over $116 million, which contributed $14.5 million in 2017 EBITDA, while executing 167 franchise license agreements and achieved 23% in unit growth taking us to 86,000 rooms.”

First Quarter Highlights

Adjusted EBITDA for the first quarter was $998,000, as compared to $1.1 million in the first quarter of 2018. With the elimination of the $865,000 of EBITDA from the nine hotels sold throughout 2018, Adjusted EBITDA increased $803,000 over the prior year.

Net loss for the quarter was $4.1 million or ($0.17) per share compared to net income of $2.6 million or $0.10 per diluted share in the prior year period.

Royalty fees increased 34% year-over-year to $5.7 million reflecting the organic growth and the acquisition of the Knights Inn.

Franchised Segment Adjusted EBITDA increased 51% year-over-year to $3.7 million while Franchise Segment Adjusted EBITDA margin increased 400 bps.

Recapitalized Salt Lake City, UT and Olympia, WA hotels with $16.6 million of mortgage debt.

Executed 56 franchise agreements in the first quarter comprised of eight upscale and midscale hotels and 48 select-service hotels.

Launched its wholly owned subsidiary RLabs, a lodging technology innovator that will leverage the company’s groundbreaking RevPak platform, creating additional asset light revenue streams.

“Our first quarter results demonstrate the strength of our asset light business model, which saw royalty revenue increase approximately 34%, and a 400 basis point expansion in the franchise segment Adjusted EBITDA margin,” said Mount. “During the quarter, we signed 56 franchise agreements, with eight in the higher margin upscale service brands.   We have strong momentum in these early months and are excited about the progress we continue to make in growing our core franchise business and the opportunities to provide new or expanded services to our franchise hotels.”

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