SOURCE: Supertel Hospitality, Inc.

Supertel Hospitality, Inc.

March 31, 2010 19:56 ET

Supertel Hospitality Reports 2009 Fourth Quarter, Full-Year Results

NORFOLK, NE--(Marketwire - March 31, 2010) - Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT) which owns 114 hotels in 23 states, today announced its results for the fourth quarter and year ended December 31, 2009.

Revenues from continuing operations for the 2009 fourth quarter decreased 10.5 percent to $19.6 million, compared to the year-ago period, and decreased 10.4 percent to $89.0 million for the full year. Net loss attributable to common shareholders was $(25.7) million, or $(1.17) per diluted share, for the 2009 fourth quarter, compared to net earnings available to common shareholders of $3.0 million, or $0.14 per diluted share, in the 2008 same quarter. For the full year 2009, net loss attributable to common shareholders was $(28.9) million, compared with net earnings available to common shareholders of $5.5 million in 2008.

The 2009 fourth quarter loss included an aggregate $23.3 million non-cash impairment charge, compared to $0.3 million of impairment charges recorded in the 2008 like period. Of this, $12.4 million was charged against hotels in discontinued operations, and $10.9 million was booked against hotels held for use. For the full year 2009, impairment charges against discontinued properties totaled $13.2 million. Total impairment charges for the year were $24.1 million.

Funds from operations (FFO) were $(23.5) million, or $(1.07) per diluted share, for the 2009 fourth quarter, compared to $1.2 million, or $0.06 per diluted share, in the same 2008 period. Adjusted FFO for the 2009 fourth quarter (excluding the effects of impairment charges) were $(0.2) million, or $(0.01) per diluted share, compared to $1.5 million or $0.07 per diluted share for the same 2008 period. FFO for the full year 2009 was $(16.9) million or $(0.78) per diluted share, compared to $14.9 million, or $0.70 per diluted share, for the full year 2008. Adjusted FFO for the full year 2009 (excluding the effects of impairment charges) were $7.3 million, or $0.34 per diluted share, compared to $15.1 million or $0.71 per diluted share for the full year 2008.

Earnings before interest, taxes, depreciation and amortization, noncontrolling interest and preferred stock dividends (Adjusted EBITDA) decreased to $(19.0) million for the 2009 fourth quarter and was $(1.9) million for the full year 2009.

2009 Fourth Quarter and Full Year Highlights

--  Sold two hotels in the 2009 fourth quarter.  Divested eight properties
    for the full year for net proceeds of $17.2 million.

--  Classified 18 properties as held for sale in the 2009 fourth quarter,
    for a total of 19 properties held for sale as of December 31.

--  Refinanced a $9.0 million mortgage loan and extended the term of a
    second $9.0 million loan.

--  Reduced total liabilities to $199.9 million at the end of fiscal 2009
    from $216.5 million at the end of fiscal 2008.

--  Reorganized the senior management team, appointed a new chairman, and
    expanded an existing executive position to include COO duties.

"During the past year, the new management team reviewed all aspects of the company and its growth strategies," said Kelly A. Walters, Supertel president and CEO. "A key part of that process was finalized in the fourth quarter when we completed a comprehensive review of our hotel portfolio. We have updated our strategy to not only reflect today's changed economic conditions but also how we will evaluate our hotels and their value based on new and more stringent criteria. The review of each property now includes debt service capability, hold period, estimated return on investment, and local market conditions.

"Implementing this updated strategy has created impairment issues and short-term losses, but we believe it will result in a stronger, more resilient real estate portfolio that will be less susceptible to the value swings that occur in the hotel industry," he said.

Fourth Quarter Results

The company had a net loss of $(25.4) million for the 2009 fourth quarter, compared to net earnings of $3.6 million for the same 2008 period. The 2009 fourth quarter loss includes a $23.3 million non-cash impairment charge. Additionally, the 2008 fourth quarter resulted in net income due to a $5.6 million gain being recognized on the sale of two hotels in the fourth quarter, partially offset by a loss from continuing operations of $(0.7) million and a $(1.3) million loss from discontinued operations. All income and expenses related to sold hotels are classified as discontinued operations.

After recognition of non-controlling interest and dividends for preferred stock shareholders, the net loss attributable to common shareholders was $(25.7) million, or $(1.17) per diluted share, for the 2009 fourth quarter, compared with net earnings available to common shareholders of $3.0 million, or $0.14 per diluted share, for the like 2008 period.

Fourth quarter 2009 revenues from continuing operations decreased $2.3 million, or 10.5 percent, primarily due to the economic downturn. The company's 59 continuing operations economy hotels reported a 12.2 percent decrease in revenue per available room (RevPAR) to $24.34 in the 2009 fourth quarter, caused by a 9.8 percent drop in occupancy to 51.6 percent and a 2.7 percent decrease in average daily rate (ADR) to $47.12. The company's eight continuing operations extended-stay hotels reported a 6.5 percent increase in RevPAR to $15.62, as a result of an 11.4 percent increase in occupancy to 63.5 percent, offset by a 4.4 percent decline in ADR to $24.60.

Fourth quarter RevPAR for the company's 29 continuing operations midscale without food and beverage hotels decreased 11.6 percent to $32.73, the result of a 7.6 percent drop in occupancy to 49.6 percent, and a 4.2 percent decrease in ADR to $66.03.

The portfolio of 96 hotels in continuing operations in the 2009 fourth quarter, compared with the same period a year earlier, reported a 5.9 percent decline in occupancy, and a 4.8 percent decrease in ADR, for a 10.5 percent decline in RevPAR, compared to an 11.7 percent RevPAR decline for the industry, as reported by Smith Travel Research.

"It remains a very difficult operating environment," Walters said. "We believe the past two years have been the most challenging from an operations standpoint since the Great Depression. As the year progressed, the rate of decline slowed, a trend that continues into the 2010 first quarter."

Hotel and property operations expenses from continuing operations for the 2009 fourth quarter declined $0.5 million, or 3.1 percent. The decrease primarily results from cost-saving measures implemented to compensate for lower occupancy.

Interest expense from continuing operations remained essentially unchanged at $2.6 million for the quarter. Depreciation and amortization expense from continuing operations remained flat at $3.1 million.

Property operating income (POI) is calculated as revenue from room rentals and other hotel services less hotel and property operations expenses. For the 2009 fourth quarter, POI from continuing operations decreased $1.8 million, or 32.9 percent, compared to the year-ago period. This decrease resulted from the decline in revenue, slightly offset by reduced expenses.

General and administration expense from continuing operations for the 2009 fourth quarter dropped $0.1 million, or 9.5 percent, compared to the year-ago period. The decrease is related primarily to reduction in professional fees, partially offset by an increase in payroll expense due to severance pay.

Disposition Program

During 2009, the company sold eight hotels for approximately $17.2 million, resulting in a gain on sale of approximately $2.5 million, which was used to strengthen the balance sheet by reducing debt. The properties sold are:

--  Super 8              Charles City, IA   43 rooms
--  Holiday Inn Express  Gettysburg, PA     51 rooms
--  Masters Inn          Kissimmee, FL      116 rooms
--  Comfort Inn          Ellsworth, ME      63 rooms
--  Super 8              Anamosa, IA        35 rooms
--  Comfort Inn          Dahlgren, VA       59 rooms
--  Masters Inn          Orlando, FL        120 rooms
--  Masters Inn          Kissimmee, FL      187 rooms

"The sale of these assets and the 18 properties we have currently classified as held for sale will strategically strengthen our portfolio," Walters said. "A key component of our new strategy is to reduce our weighting in the economy sector. This segment has relatively low barriers to new competition and has small owner/operators whose cost structure often is substantially lower than the large owner/operator cost structure.

"Economy hotels will remain an important part of our portfolio," he noted. "However, over time, we intend to balance our portfolio with more properties in the midscale without food and beverage segment, which historically has been less volatile for us, with more moderate declines in the down-part of the economic cycle and greater upside potential during the up-portion of the economic cycle."

Balance Sheet

The company continued to improve its balance sheet in 2009 through dispositions, debt repayment, debt extensions and refinancings. In the second quarter, the company refinanced a $9.0 million, 8.4 percent loan scheduled to mature in November 2009. The loan was refinanced using a $10 million, 5.5 percent facility due in May 2012. A second $9.0 million loan was extended and currently is due in August 2010. "We are negotiating with the lender and with other credit sources to refinance this loan, which is our principal debt maturing in 2010. Sales of hotels in 2010 are also expected to reduce the amount of the loan we ultimately refinance," Walters said.

The company as of December 31, 2009 has $164.5 million in outstanding debt on hotels in continuing operations with an average term of 4.8 years and weighted average annual interest rate of 5.98 percent.

Dividends

The company did not declare a common stock dividend for the 2009 fourth quarter or full year. The company will monitor requirements to maintain its REIT status and will regularly evaluate the dividend policy.

Outlook

"The economy is showing signs of stabilizing, and the rate of decline in RevPAR appears to be slowing," Walters said. "The pace of declining occupancy is decelerating but getting traction in room rates remains a challenge. We continue to work closely with our management companies to enhance revenues while stringently controlling costs. We not only are looking at today, but at how we can continue to hold costs without sacrificing the guest experience when the economy begins to gain momentum. Our foremost priorities in 2010 are preserving and generating capital sufficient to fund our liquidity needs.

"We are finalizing our strategic plan and intend to provide greater detail in the near future," he noted. "Our senior management team is in harmony with a more clarified vision of the future, and we are taking the appropriate steps to optimize our opportunities as the economy rebounds."

About Supertel Hospitality, Inc.

As of March 31, 2010, Supertel Hospitality, Inc. (NASDAQ: SPPR) owns 114 hotels comprised of 9,929 rooms in 23 states. The company's hotel portfolio includes Super 8, Comfort Inn/Comfort Suites, Hampton Inn, Holiday Inn Express, Supertel Inn, Days Inn, Ramada Limited, Guest House Inn, Sleep Inn, Savannah Suites, Masters Inn, Key West Inns and Baymont Inn. This diversity enables the company to participate in the best practices of each of these respected hospitality partners. The company specializes in limited service hotels, which do not normally offer food and beverage service. For more information or to make a hotel reservation, visit www.supertelinc.com.

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company's filings with the Securities and Exchange Commission.

SELECTED FINANCIAL DATA:

The following table sets forth the Company's balance sheet for the years ended December 31, 2009 and 2008. The Company owned 115 and 123 hotels, respectively.

(in thousands, except share and per share data).


                                                        As of
                                             December 31,    December 31,
                                                 2009            2008
                                            --------------  --------------

ASSETS
  Investments in hotel properties           $      319,770  $      330,271
  Less accumulated depreciation                     86,069          77,028
                                            --------------  --------------
                                                   233,701         253,243

  Cash and cash equivalents                            428             712
  Accounts receivable, net of allowance for
   doubtful accounts of $95 and $107                 2,043           2,401
  Prepaid expenses and other assets                  4,779           2,903
  Deferred financing costs, net                      1,414           1,580
  Investment in hotel properties held for
   sale                                             32,030          60,638
                                            --------------  --------------

                                            $      274,395  $      321,477
                                            ==============  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
  Accounts payable, accrued expenses and
   other liabilities                        $       10,340  $       13,697
  Debt related to hotel properties held for
   for sale                                         24,975          37,022
  Long-term debt                                   164,538         165,784
                                            --------------  --------------
                                                   199,853         216,503
                                            --------------  --------------

  Redeemable noncontrolling interest in
   consolidated partnership,
   at redemption value                                 511           1,778

  Redeemable preferred stock
   Series B, 800,000 shares authorized; $.01
    par value, 332,500 shares outstanding,
    liquidation preference of $8,312                 7,662           7,662


SHAREHOLDERS' EQUITY
  Preferred stock, 40,000,000 shares authorized;
    Series A, 2,500,000 shares authorized,
     $.01 par value, 803,270 shares
     outstanding, liquidation preference
     of $8,033                                           8               8
  Common stock, $.01 par value, 100,000,000
   shares authorized; 22,002,322
   and 20,924,677 shares outstanding                   220             209

  Additional paid-in capital                       120,153         112,804
  Distributions in excess of retained
   earnings                                        (54,420)        (25,551)
                                            --------------  --------------
    Total shareholder equity                        65,961          87,470

  Noncontrolling interest in consolidated
   partnership, redemption value
   $237 and $2,101                                     408           8,064

                                            --------------  --------------
    Total Equity                                    66,369          95,534
                                            --------------  --------------

                                            $      274,395  $      321,477
                                            ==============  ==============

The following table sets forth the Company's results of operations for the three and twelve months ended December 31, 2009 and 2008, respectively. (in thousands, except per share data)


                                   Three months          Twelve months
                                 ended December 31,    ended December 31,
                                --------------------  --------------------
                                Unaudited  Unaudited
                                  2009       2008        2009      2008
                                ---------  ---------  ---------  ---------
REVENUES
  Room rentals and other hotel
   services                     $  19,622  $  21,933  $  88,970  $  99,256
                                ---------  ---------  ---------  ---------

EXPENSES
  Hotel and property operations    15,963     16,479     67,360     71,132

  Depreciation and amortization     3,105      3,115     12,457     12,067
  General and administrative          675        746      3,813      3,696
                                ---------  ---------  ---------  ---------
                                   19,743     20,340     83,630     86,895
                                ---------  ---------  ---------  ---------

EARNINGS BEFORE NET GAINS
 (LOSSES) ON DISPOSITIONS
 OF ASSETS, OTHER INCOME,
 INTEREST EXPENSE, IMPAIRMENT
 LOSSES, NONCONTROLLING
 INTEREST AND INCOME TAX
 BENEFIT                             (121)     1,593      5,340     12,361

Net gains (losses) on
 dispositions of assets               (67)         -       (146)         1
Other income                           34         38        134        129
Interest expense                   (2,620)    (2,684)   (10,414)   (10,738)
Impairment losses                 (10,872)         -    (10,872)         -

EARNINGS (LOSS) FROM CONTINUING
 OPERATIONS BEFORE INCOME
 TAXES AND NONCONTROLLING
 INTEREST                         (13,646)    (1,053)   (15,958)     1,753

Income tax benefit                     12        373      1,047        507
                                ---------  ---------  ---------  ---------

EARNINGS (LOSS) FROM CONTINUING
 OPERATIONS                       (13,634)      (680)   (14,911)     2,260

Earnings (loss) from
 discontinued operations          (11,800)     4,265    (12,614)     4,999
                                ---------  ---------  ---------  ---------

NET EARNINGS (LOSS)               (25,434)     3,585    (27,525)     7,259

Noncontrolling interest income
 (expense)                            150       (247)       130       (603)
                                ---------  ---------  ---------  ---------

NET INCOME (LOSS) ATTRIBUTABLE
 TO CONTROLLING INTERESTS         (25,284)     3,338    (27,395)     6,656

Preferred stock dividends            (368)      (369)    (1,474)    (1,160)

NET EARNINGS (LOSS)
 ATTRIBUTABLE TO                ---------  ---------  ---------  ---------
 COMMON SHAREHOLDERS            $ (25,652) $   2,969  $ (28,869) $   5,496
                                =========  =========  =========  =========

NET EARNINGS (LOSS) PER COMMON
 SHARE - BASIC AND DILUTED
EPS from continuing operations  $   (0.63) $   (0.05) $   (0.75) $    0.04
                                =========  =========  =========  =========
EPS from discontinued
 operations                     $   (0.54) $    0.19  $   (0.58) $    0.22
                                =========  =========  =========  =========
EPS basic and diluted           $   (1.17) $    0.14  $   (1.33) $    0.26
                                =========  =========  =========  =========

AMOUNTS ATTRIBUTABLE TO COMMON
 SHAREHOLDERS
Income from continuing
 operations, net of tax         $ (13,932) $  (1,036) $ (16,386) $     826
Discontinued operations, net of
 tax                              (11,720)     4,005    (12,483)     4,670
                                ---------  ---------  ---------  ---------
Net earnings (loss)             $ (25,652) $   2,969  $ (28,869) $   5,496
                                =========  =========  =========  =========




RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

In thousands, except per share data:


                                    Three months         Twelve months
                                 ended December 31,    ended December 31,
                                --------------------  --------------------
                                unaudited  unaudited
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Weighted average number of
 shares outstanding for EPS
  basic                            21,956     20,924     21,647     20,840
  diluted                          21,956     20,924     21,647     20,840
Weighted average number of
 shares outstanding for FFO per
 share
  basic                            21,956     20,924     21,647     20,840
  diluted                          21,956     20,924     21,647     22,346

Reconciliation of Weighted
 average number of shares for
 EPS diluted to FFO per share
 diluted:
EPS diluted shares                 21,956     20,924     21,647     20,840
Common stock issuable upon
 exercise or conversion of:
  Series A Preferred Stock              -          -          -      1,506
                                ---------  ---------  ---------  ---------
FFO per share diluted shares       21,956     20,924     21,647     22,346
                                =========  =========  =========  =========

Reconciliation of net earnings
 (loss) to FFO-Unaudited
Net earnings (loss) available
 to common shareholders         $ (25,652) $   2,969  $ (28,869) $   5,496
Depreciation and amortization,
 including disc ops                 3,370      3,837     14,241     14,982
Net (gains) losses on
 disposition of assets             (1,217)    (5,583)    (2,264)    (5,581)
                                ---------  ---------  ---------  ---------
  FFO                           $ (23,499) $   1,223  $ (16,892) $  14,897
Impairment                         23,305        250     24,148        250
Adjusted FFO (without
 impairment expense)            $    (194) $   1,473  $   7,256  $  15,147
                                =========  =========  =========  =========


FFO per share - basic           $   (1.07) $    0.06  $   (0.78) $    0.71
                                =========  =========  =========  =========
Adjusted FFO per share (without
 impairment expense) - basic    $   (0.01) $    0.07  $    0.34  $    0.73
                                =========  =========  =========  =========
FFO per share - diluted         $   (1.07) $    0.06  $   (0.78) $    0.70
                                =========  =========  =========  =========
Adjusted FFO per share (without
 impairment expense) - diluted  $   (0.01) $    0.07  $    0.34  $    0.71
                                =========  =========  =========  =========

FFO is a non-GAAP financial measure. We consider FFO to be a market accepted measure of an equity REIT's operating performance, which is necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation and amortization of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO for similar REITs.

We use FFO as a performance measure to facilitate a periodic evaluation of our operating results relative to those of our peers, who, like us, are typically members of NAREIT. We consider FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a meaningful indication of our performance.

We view the impairment charges as a nonrecurring expense, and we have excluded the impairment charges in calculating Adjusted FFO.

                                    Three months         Twelve months
                                 ended December 31,    ended December 31,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
                               (Unaudited)(Unaudited)
RECONCILIATION OF NET EARNINGS
 (LOSS) TO ADJUSTED EBITDA
Net earnings (loss)
 available to common
 shareholders                   $ (25,652) $   2,969  $ (28,869) $   5,496
  Interest expense,
   including disc ops               3,232      3,376     13,015     13,848
  Income tax benefit,
   including disc ops                (141)      (117)    (1,647)      (305)
  Depreciation and
   amortization, including
   disc ops                         3,370      3,837     14,241     14,982
                                ---------  ---------  ---------  ---------
    EBITDA                        (19,191)    10,065     (3,260)    34,021
  Noncontrolling interest            (150)       247       (130)       603
  Preferred stock dividend            368        369      1,474      1,160
                                ---------  ---------  ---------  ---------
    Adjusted EBITDA             $ (18,973) $  10,681  $  (1,916) $  35,784
                                =========  =========  =========  =========

Adjusted EBITDA is a financial measure that is not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We calculate Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though Adjusted EBITDA also does not represent an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we also add back preferred stock dividends and noncontrolling interests, which are cash charges.

Adjusted EBITDA doesn't represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. Adjusted EBITDA is not a measure of our liquidity, nor is Adjusted EBITDA indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither does the measurement reflect cash expenditures for long-term assets and other items that have been and will be incurred. Adjusted EBITDA may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of our operating performance. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

The following table sets forth the operations of the Company's same store hotel properties for the three and twelve months ended December 31, 2009 and 2008, respectively. This presentation includes non-GAAP financial measures. The Company believes that the presentation of hotel property operating income (POI) is helpful to investors, and represents a more useful description of its core operations, as it better communicates the comparability of its hotels' operating results.

                              Three months             Twelve months
                           ended December 31,        ended December 31,
                        ------------------------  ------------------------
                           2009         2008         2009         2008
                        -----------  -----------  -----------  -----------
Same Store: *           (Unaudited)  (Unaudited)
  Revenue per
   available room
   (RevPAR):
      Midscale w/o
       F&B **           $     32.73  $     37.01  $     38.00  $     43.49
      Economy           $     24.34  $     27.71  $     28.19  $     31.03
      Extended Stay     $     15.62  $     14.67  $     15.58  $     16.18
                        -----------  -----------  -----------  -----------
         Total          $     25.31  $     28.29  $     28.96  $     32.20
                        ===========  ===========  ===========  ===========

  Average daily room
   rate (ADR):
      Midscale w/o
       F&B **           $     66.03  $     68.94  $     67.78  $     71.17
      Economy           $     47.12  $     48.43  $     48.83  $     49.48
      Extended Stay     $     24.60  $     25.73  $     24.78  $     25.30
                        -----------  -----------  -----------  -----------
         Total          $     47.88  $     50.31  $     49.90  $     51.54
                        ===========  ===========  ===========  ===========

  Occupancy
   percentage:
      Midscale w/o
       F&B **                  49.6%        53.7%        56.1%        61.1%
      Economy                  51.6%        57.2%        57.7%        62.7%
      Extended Stay            63.5%        57.0%        62.9%        63.9%
                        -----------  -----------  -----------  -----------
         Total                 52.9%        56.2%        58.0%        62.5%
                        ===========  ===========  ===========  ===========



                              Three months             Twelve months
                           ended December 31,        ended December 31,
                        ------------------------  ------------------------
                           2009         2008         2009         2008
                        -----------  -----------  -----------  -----------
                        (Unaudited)  (Unaudited)

Total Hotels:
  Revenue per available
   room (RevPAR):       $     25.31  $     28.29  $     28.96  $     32.20
  Average daily room
   rate (ADR):          $     47.88  $     50.31  $     49.90  $     51.54
  Occupancy
   percentage:                 52.9%        56.2%        58.0%        62.5%

Revenue from room
 rentals and other
 hotel services
 consists of:
  Room rental revenue   $    18,995  $    21,245  $    86,239  $    96,258
  Telephone revenue              73           67          299          319
  Other hotel service
   revenues                     554          621        2,432        2,679
                        -----------  -----------  -----------  -----------
Total revenue from room
 rentals and other
 hotel services         $    19,622  $    21,933  $    88,970  $    99,256
                        ===========  ===========  ===========  ===========

Room rentals and other
 hotel services
  Total room rental and
   other hotel services $    19,622  $    21,933  $    88,970  $    99,256
                        ===========  ===========  ===========  ===========

Hotel and property
 operations expense
  Total hotel and
   property operations
   expense              $    15,963  $    16,479  $    67,360  $    71,132
                        ===========  ===========  ===========  ===========

Property Operating
 Income ("POI")
  Total property
   operating income     $     3,659  $     5,454  $    21,610  $    28,124
                        ===========  ===========  ===========  ===========

POI as a percentage of
 revenue from room
 rentals and other
 hotel services
  Total POI as a
   percentage of
   revenue                     18.6%        24.9%        24.3%        28.3%
                        ===========  ===========  ===========  ===========

* Same Store reflects 96 hotels in continuing operations for the three months and year to date ended December 31, 2009 and 2008.

** "w/o F & B" indicates without food and beverage.

RECONCILIATION OF NET
 EARNINGS (LOSS) TO POI        Three months             Twelve months
                            ended December 31,        ended December 31,
                        ------------------------  ------------------------
                            2009         2008         2009         2008
                        -----------  -----------  -----------  -----------
                        (Unaudited)  (Unaudited)
Net earnings (loss)     $   (25,434) $     3,585  $   (27,525) $     7,259
Depreciation and
 amortization,
 including disc ops           3,370        3,837       14,241       14,982
Net (gain) loss on
 disposition of assets,
 including disc ops          (1,217)      (5,583)      (2,264)      (5,581)
Other income                    (34)         (38)        (134)        (129)
Interest expense,
 including disc ops           3,232        3,376       13,015       13,848
General and
 administrative expense         675          746        3,813        3,696
Impairment losses            23,305          250       24,148          250
Income tax benefit,
 including disc ops            (141)        (117)      (1,647)        (305)
Room rentals and other
 hotel services -
 discontinued
 operations                  (2,893)      (5,262)     (16,524)     (25,729)
Hotel and property
 operations expense -
 discontinued
 operations                   2,796        4,660       14,487       19,833
                        -----------  -----------  -----------  -----------
POI                     $     3,659  $     5,454  $    21,610  $    28,124
                        ===========  ===========  ===========  ===========

The following table presents our RevPAR, ADR and Occupancy, by region, for the three months ended December 31, 2009 and 2008, respectively. The comparisons of same store operations are for 96 hotels in continuing operations as of October 1, 2008.

                  Three months ended              Three months ended
                  December 31, 2009               December 31, 2008
            ------------------------------- -------------------------------
Same Store   Room           Occup-           Room           Occup-
Region       Count  RevPAR   ancy     ADR    Count  RevPAR   ancy     ADR
            ------- ------- ------  ------- ------- ------- ------  -------
Mountain        214 $ 25.29   53.6% $ 47.15     214 $ 30.44   61.1% $ 49.81
West North
 Central      2,670   24.48   52.2%   46.87   2,670   28.84   61.3%   47.04
East North
 Central      1,081   32.77   52.0%   63.05   1,081   37.25   58.3%   63.84
Middle
 Atlantic/
 New England    142   35.01   54.9%   63.82     142   38.48   57.4%   67.01
South
 Atlantic     2,772   22.12   53.6%   41.23   2,772   23.90   52.4%   45.59
East South
 Central        822   26.64   46.9%   56.81     822   28.88   49.6%   58.22
West South
 Central        456   26.48   63.6%   41.62     456   25.19   53.8%   46.82
            ------- ------- ------  ------- ------- ------- ------  -------
Total Same
 Store        8,157 $ 25.31   52.9% $ 47.88   8,157 $ 28.29   56.2% $ 50.31
            ------- ------- ------  ------- ------- ------- ------  -------


States included in the Regions

Mountain              Idaho and Montana
West North Central    Iowa, Kansas, Missouri, Nebraska and South Dakota
East North Central    Indiana and Wisconsin
Middle Atlantic/
 New England          Pennsylvania
South Atlantic        Delaware, Florida, Georgia, Maryland, North Carolina,
                       South Carolina, Virginia and West Virginia
East South Central    Alabama, Kentucky and Tennessee
West South Central    Arkansas and Louisiana

The following table presents our RevPAR, ADR and Occupancy, by region, for the twelve months ended December 31, 2009 and 2008, respectively. The comparisons of same store operations are for 96 hotels owned as of January 1, 2008, including nine of the ten hotels purchased on January 2, 2008.

                         2009                            2008
            ------------------------------- -------------------------------
Same Store   Room           Occup-           Room           Occup-
Region       Count  RevPAR   ancy     ADR    Count  RevPAR   ancy     ADR
            ------- ------- ------  ------- ------- ------- ------  -------
Mountain        214 $ 31.96   62.1% $ 51.50     214 $ 38.02   73.2% $ 51.97
West North
 Central      2,670   28.44   59.4%   47.86   2,670   31.47   65.2%   48.25
East North
 Central      1,081   36.25   58.5%   61.96   1,081   41.85   65.3%   64.11
Middle
 Atlantic/
 New England    142   38.90   58.9%   66.04     142   43.47   64.3%   67.63
South
 Atlantic     2,772   25.71   57.8%   44.48   2,772   28.39   60.3%   47.07
East South
 Central        822   31.29   53.2%   58.82     822   33.59   55.5%   60.53
West South
 Central        456   25.84   56.9%   45.38     456   27.91   59.7%   46.73
            ------- ------- ------  ------- ------- ------- ------  -------
Total Same
 Store
 Hotels       8,157 $ 28.96   58.0% $ 49.90   8,157 $ 32.20   62.5% $ 51.54
            ======= ======= ======  ======= ======= ======= ======  =======


States included in the Regions

Mountain              Idaho and Montana
West North Central    Iowa, Kansas, Missouri, Nebraska and South Dakota
East North Central    Indiana and Wisconsin
Middle Atlantic/
 New England          Pennsylvania
South Atlantic        Delaware, Florida, Georgia, Maryland, North Carolina,
                       South Carolina, Virginia and West Virginia
East South Central    Alabama, Kentucky and Tennessee
West South Central    Arkansas and Louisiana

Contact Information

  • Contact:
    Mr. Kelly A. Walters
    President and CEO
    Email Contact

    Ms. Connie Scarpello
    Sr. Vice President & CFO
    Email Contact
    402.371.2520

    Jerry Daly, Carol McCune
    Daly Gray
    (Media Contact)
    703.435.6293
    Email Contact