Boston, MA 05/13/2014 (wallstreetpr) – Chesapeake Lodging Trust (NYSE:CHSP)’s performance primarily depends on the results of its 17-hotel and 20-hotel portfolio. Factors like occupancy, revenue per available room (RevPAR) and average daily rate (ADR) mainly drive revenue and operating profit for the business.
Factor 1: Occupancy, ADR and RevPAR
Chesapeake Lodging Trust (NYSE:CHSP) recently published its first quarter results with total revenue of $94.8 million, up by 34% (1Q2013: $70.6 million), due to growing demand for rooms especially from corporate and holiday customers. As a result, the occupancy rate for 17-Hotel portfolio increased by 430 basis points (bps) to 78.6% and RevPAR up by 12% YoY with ~6% increase in ADR. Similarly, the 20-Hotel portfolio’s occupancy rate was up by only 170 bps to 74.4% with 7.1% YoY increase in RevPAR with ~5% increase in ADR.
Factor 2: Adjusted Hotel EBITDA
The hotels were able to report higher revenue with increasing RevPAR as a result of high ADR across the comparable and non-comparable hotels. The reduction in operating expenses raised the adjusted Hotel EBITDA –$21 million for 17-Hotel portfolio (+29%) and $21.9 million for 20-Hotel portfolio (+19%). Subsequently, it improved the hotel operating margin to 25.1% for 17-Hotel portfolio (+320 bps) and 23.1% for 20-Hotel portfolio (220bps).
Factor 3: Adjusted Corporate EBITDA and AFFO per diluted shares
The growing segment operating results improved the overall performance of Chesapeake Lodging Trust (NYSE:CHSP). So, the adjusted Corporate EBITDA increased to $18 million (1Q2013: $12.2 million) and adjusted FFO to $12.2 million/ $0.25 per diluted shares (1Q2013: $6.8 million or $0.15 per diluted share).
Financially stable to support the trend
Based on the growing operating activities, the Trust was able to generate positive cash of $10.4 million from its operation during the period. It also used $21.6 million of cash for the addition and modification of existing hotels. Net cash balance as of March 31, 2014 was $34.7 million.
Considering the recent operating trends, Chesapeake Lodging Trust (NYSE:CHSP) expects growth in adjusted Hotel EBITDA, adjusted Corporate EBITDA and adjusted FFO per diluted shares. Therefore, the Trust updated its guidance for FY2014 with adjusted Corporate EBITDA ($132.7-$138 million) and AFFO per diluted shares ($1.93-$2.03).
