On the company’s second-quarter call, Red Lion Hotels Corporation’s President and CEO Greg Mount gave insight on its growth in franchised business.
SPOKANE, Washington—Second-quarter performance for Red Lion Hotels Corporation remained similar to its first-quarter results, but this quarter’s increased growth in franchised business gave the company confidence, said Greg Mount, RLHC’s CEO and president.
Mount noted franchise revenue increased more than 200% compared to the second quarter of 2016. A large portion of that growth was attributed to the acquisition of the Vantage Hospitality brands, which closed in September 2016.
Its franchise-division profits increased more than 400% to $3.6 million, he said, and profit margin increased from 15.1% in the second quarter of 2016 to 28.6% in the second quarter of 2017.
“The key factor for driving growth of our franchised business is adding new franchise contracts to the system,” he said. “So far this year, we have executed 44 franchise agreement fees in the second quarter and 78 agreements year to date as compared to 14 deals during the first half of 2016.”
In addition, Mount said RLHC will continue to see increasing deal momentum, which is primarily due to the “range of brand alternatives we can offer to hotel owners and lenders,” along with “the flexibility we can offer the owner’s contract structures and property improvement plan recommendations.”
RLHC also announced to analysts that the company’s headquarters and principal executive office moved to Denver, but it will still have regional offices in Spokane, Washington, and Coral Springs, Florida.
“We really needed to align our geography more towards the center of the country and really in a marketplace that has two really big things,” Mount said. “One, this great airlift, which we have in Denver, as well as having access to human capital we need to be able to continue to grow and execute on our strategy. We felt Denver was really the best location for that. We’ll continue to keep a satellite on Spokane and Coral Springs (offices) and support those accordingly, but we’re very excited about moving our headquarters.”
In the second quarter of 2017, RLHC’s systemwide occupancy dropped 100 basis points year over year to 65.3%, average daily rate grew 3.2% to $92.03 and revenue per available room increased 1.7% to $60.09, according to the news release.
A total of 1,110 RLHC hotels are open with 71,100 available rooms as of 30 June 2017. During the second quarter, 29 new hotels opened with 1,800 available rooms.
As of press time, RLHC’s shares were down 20.9% year to date. The Baird/STR Hotel Stock Index was up 23.8% for the same time period.