RLH Corp. Finishes 2018 With 167 Executed Franchise Agreements

RLH Corp. Finishes 2018 With 167 Executed Franchise Agreements

RLH Corp. Finishes 2018 With 167 Executed Franchise Agreements

DENVER—Red Lion Hotels Corporation has reported its full year and fourth quarter 2018 results.

Full Year and Fourth Quarter Highlights

  • Despite the reduction of $14.5 million in EBITDA from the sale of nine company-owned hotels in 2018, the company’s Adjusted EBITDA for 2018 was down less than $10 million, from $25.7 million in 2017 to $15.8 million in 2018.
  • Net income for 2018 was $2 million or $0.08 per diluted share compared to net income of $0.6 million or $0.02 per diluted share in the prior year period. Net loss for the quarter was $7.3 million or ($0.30) per share compared to net income of $1.5 million or $0.06 per diluted share in the prior year period.
  • Royalty fees increased 27% in the year to $22.3 million, and 36% in the quarter to $5.7 million, reflecting the company’s organic growth and the benefit of the Knights Inn acquisition.
  • Achieved 23% unit growth expanding franchised hotel network to 1,327 hotels with nearly 86,000 rooms
  • Executed a total of 167 franchise agreements for the year and 58 franchise agreements in the fourth quarter
  • Internalized and streamlined the management of the company’s website, redlion.com, reducing ongoing website management costs by $1.8 million annualized
  • Enhanced Hello Rewards program to include other features such as Hello Bucks and Hello Rates
  • Acquired Knights Inn for $27 million: the acquisition added more than 350 select-service segment hotels across North America
  • Sold nine hotels, which generated gross proceeds of more than $116 million
  • Subsequent to quarter end, launched its wholly owned subsidiary RLabs, a lodging technology innovator that will leverage the company’s RevPak platform, creating additional asset light revenue streams

RLH Corporation President/CEO Greg Mount stated: “2018 was a strategic shift for us as we completed the execution of our strategy of becoming an asset-light franchise and branding company. We achieved our objectives in 2018 by selling nine hotels while continuing to grow our franchise revenues by over 20%, and increasing our high margin franchise EBITDA. As high-margin franchise business replaces the $14.5 million in EBITDA from our JV assets, we are confident in our ability to continue to grow our asset-light revenue streams as demonstrated by our 27% growth in royalty fees and our 23% unit growth during 2018.”

He continued, “In 2019, we are focused on the growth of our upscale and midscale franchise agreement portfolios through organic development and through complementary acquisitions to help accelerate growth and scale the RLH platform. Additionally, we will continue to look for opportunities such as Canvas to further grow our revenue vertically while holding our corporate overhead. Our teams are focused on execution and excited to have the bulk of the asset sales behind us.”

2019 Expectations

The company is providing expectations for 2019 that do not contemplate incremental sales of the owned hotels. However, the company expects that sales of the remaining hotels will reduce the company’s profitability in 2019. As sales are closed, the company will disclose the material terms of each transaction in 8K filings, including the historical Adjusted EBITDA relating to the hotels sold. In addition, the company will provide updated guidance to account for the sales of the hotels at the time it reports quarterly results.

The company expects to execute between 160 and 200 franchise license agreements in 2019.
Corporate selling, general and administrative expenses are expected to be $29.5 million to $31.5 million, including stock compensation expense. Adjusted EBITDA from continuing operations is expected to be between $20.5 million and $22.5 million in 2019.

Source : Hotel Business

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