La Quinta executives didn’t take analyst questions on the company’s first-quarter earnings call and didn’t release 2018 guidance ahead of closing its REIT spinoff and Wyndham’s acquisition of its franchise and management business at the end of the month.
IRVING, Texas—La Quinta Holdings’ real estate investment trust CorePoint Lodging is expected to hit the New York Stock Exchange at the end of May, and Wyndham Hotel Group’s acquisition of La Quinta’s franchise and management business will close shortly after, executives said on a first-quarter earnings call Tuesday.
In anticipation of those deals closing, executives didn’t provide guidance for 2018 and did not accept questions from analysts.
La Quinta’s Board of Directors approved the spinoff of the company’s owned assets into CorePoint Lodging, with the record date for the spin scheduled for 18 May, according to a news release. The REIT is expected to start trading on the New York Stock exchange on 31 May.
“We’re on track to complete the spinoff of our owned assets as CorePoint Lodging, and then execute the sale of La Quinta’s franchise and management businesses to Wyndham Hotel Group,” La Quinta President and CEO Keith Cline said.
Once the spinoff is completed, “La Quinta will merge with a wholly owned subsidiary of Wyndham Worldwide in accordance with and subject to the terms of the merger agreement,” the release states.
Q1 performance, hurricane hurdles
La Quinta’s comparable systemwide revenue per available room increased 4.3% to $57.59 year-over-year during the quarter, according to an earnings release. This rise in RevPAR was driven by a 7.8% increase at franchise locations and a 0.2% increase at owned hotels.
Systemwide occupancy decreased 0.3% to 62.9% for the quarter, while average daily rate rose 4.4% to $91.60.
Excluding owned hotels affected by Hurricane Irma and Hurricane Harvey and owned hotels undergoing renovations, systemwide comparable RevPAR increased 5.9%. Cline said the hurricane and renovation impacts “left nearly 3% to 4% of our owned hotel rooms out of service during the first quarter, negatively impacting our owned revenue, RevPAR and RevPAR index.”
The company’s rooms out of service because of hurricane damage were mostly in Florida.
“As of today, rooms out of service numbered approximately 1,100 rooms in Florida, and just under 100 in Texas,” he said. “We’re making meaningful progress getting these hotels repaired, rooms cleaned, refreshed and back into service for our guests.”
He said this is an ongoing challenge, and estimated the revenue loss from hurricane damage could range from $40 million to $50 million, “translating to an adjusted (earnings before interest, taxes, depreciation and amortization) loss of $28 million to $35 million for the full-year 2018,” Cline said.
As of press time, La Quinta’s stock was trading at $19.62 per share, up 6.3% year to date. The Baird/STR Hotel Stock Index was down 0.2% for the same time period.