MEMPHIS— RFS Hotel Investors, Inc. lowered its third-quarter earnings guidance as a result of continued softness in business travel exacerbated by weak lodging demand during the first two weeks of September. The company expects RevPAR to decline approximately 4% to 5% for third quarter, compared to previous guidance of flat to an increase of 5%. Estimated FFO per share, for the quarter, was reduced to $0.34 to $0.36, compared to earlier guidance of $0.40 to $0.45. As reported by Smith Travel Research, hotel industry RevPAR declined 2% in July, 5% in August and approximately 6% to 7% in the first two weeks of September as compared to the prior-year periods. Most industry reports had forecasted improving comparative RevPAR performance throughout the third quarter. RFS RevPAR declined 6% in July, 9% in August, and approximately 10% in the first two weeks of September as compared to the prior-year periods. RFS RevPAR results continue to be hindered by relative overweighting in upper upscale hotels in Silicon Valley and San Francisco, which have experienced an average decline in third-quarter RevPAR of approximately 20% through September 17, according to the company. Robert Solmson, the REIT’s chairman/CEO, said, “We believe we are nearing the end of a cyclical downturn for the hotel business. Our current level of earnings before interest, taxes, depreciation and amortization (EBITDA) and the companys low leveraged balance sheet permit us to affirm our dividend policy. We expect to pay dividends in 2002 aggregating $1 per share.” The Company will update its earnings guidance for the remainder of 2002 during its third quarter earnings release on October 29. RFS owns 58 hotels with approximately 8,400 rooms located in 24 states.
