WASHINGTON, D.C. MeriStar Hotels & Resorts is currently undergoing a restructuring following the REIT Modernization Act (RMA) and is in the process of laying off 20 employees and relocating nine additional staff members in different positions.
These changes are reflective of the fact that the RMA altered MeriStar s financial relationships the company has moved from the role of lessee to that of a pure management company. The corporate restructuring, according to the company s President, David McCaslin, would have been executed immediately following the enactment of the RMA, but MeriStar was tied up with the now-defunct American Skiing merger.
“We have adjusted well following the RMA and our first quarter results were even with last year and on target with the First Call expectations. We took some charges that resulted from the abolition of the merger, as well as some one-time write-offs of investments that will not be recurring,” said McCaslin.
In the economic slowdown, McCaslin sees MeriStar s new operations-focused role in the industry as a strongpoint. He predicts that “MeriStar is probably one of the few operating companies that is projecting earnings growth. We ve adjusted our expectations to take into account the economic situation, but it doesn t affect us very much because of our new role as strictly a management company.”
Furthermore, McCaslin expects that MeriStar s earnings for year-end 2001 “will be up a few cents” because in periods of economic slump, “there tends to be more management change.” McCaslin says that MeriStar picked up several management contracts in the first quarter, and that he expects business to continue on the same level, if not pick up, during the remainder of the year.
“If you look at us as an operator,” said McCaslin, “the tight economic time is an opportunity to demonstrate the value of the services we offer.”
In addition to focusing on obtaining management contracts, McCaslin said that European expansion of the company s Bridge Street worldwide housing properties is a focus and that the company is “narrowing its focus on golf we will spend more time trying to align our golf strategy with our Doral strategy. We will spend more time on making Doral a well-known resort and conference center brand.” (5/9/01) Kelly Wayne