WASHINGTON—MeriStar Hospitality Corp. has reported financial results for third-quarter 2002, showing continued softness in the economy and general drop-off in travel during the weeks near 9/11 contributed to lower than anticipated transient business travel. Net loss was $29.4 million compared to $17.3 million in third-quarter 2001. Diluted net loss per share was $0.65 compared to $0.39 in the 2001. Comparative funds from operations (FFO) were $6.7 million, compared to $15.4 million in the year-ago quarter. Comparative FFO per diluted share was $0.13, compared to $0.29 last year. Revenues decreased 3.4% to $235.8 million. Comparative EBITDA declined 12.8% to $40 million. Hotel operating profit margins declined 220 basis points to 26.5%. Same-store RevPAR declined 5.3% to $60.95. ADR was off 3.5% to $94.36, while occupancy decreased 1.8% to 64.6%. “The challenging economic environment continues to have a direct influence on business travel,” said Paul Whetsell, chairman/CEO. “To offset weakness in the transient business sector, we shifted our marketing efforts to lower rated group and leisure business to boost occupancy. This put more pressure on profit margins, but our operator, Interstate Hotels & Resorts, continues to focus on controlling costs to mitigate the shift in customer mix. We expect to achieve economies of scale and other cost benefits going forward as a result of the increased size and scale of our operator following the completion of its merger in July.” RevPAR was down in July and August compared to the previous year but improved 9.3% in September. “While we are encouraged to see our first year-over-year RevPAR improvement since February 2001, the increase fell short of our expectations as travel was down significantly in the first two weeks of the month,” Whetsell said. “We see continued improvements in RevPAR for the remainder of the year, with October RevPAR expected to increase approximately 8% over October of 2001.”
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