La Quinta Holdings Inc. Reports Fourth Quarter And Full Year 2016 Results

28/02/2017 14:36

IRVING, Texas, Feb. 28, 2017 /PRNewswire/ -- La Quinta Holdings Inc. ("La Quinta" or the "Company") (NYSE: LQ) today reported its fourth quarter and full year results, for the period ended December 31, 2016.

Fourth Quarter 2016 Highlights

System-wide comparable RevPAR increased 1.8 percent, and excluding properties located in STR-defined "oil tracts", RevPAR increased 2.9 percent and grew RevPAR index by 108 bps
Grew franchise and other fee based revenue 7.2 percent
Net Loss was $(28) thousand and Adjusted Net Income was $0.9 million; Net Loss per Share was flat and Adjusted Earnings per Share was $0.01
Generated total Adjusted EBITDA of $69.9 million
Opened 12 franchised hotels, totaling over 1,000 rooms, including key locations in downtown Dallas, Texas, and Colorado Springs, Colorado
Increased franchise pipeline to 248 hotels, the Company's highest level since 2008, representing approximately 23,100 additional rooms by signing 35 franchise agreements, including key locations in Indianapolis and Seattle, and an agreement which brings the total pipeline in Mexico to 22 hotels

Full Year 2016 Highlights

Open and operating franchise unit base grew 4 percent while the development pipeline increased by 9 percent
Grew franchise and other fee based revenue 6.4 percent
Net Loss was $(1.3) million and Adjusted Net Income was $58.3 million; Net Loss per Share was $(0.01) and Adjusted Earnings per Share was $0.49
Cash flow generation remained strong, as demonstrated by $360.4 million of Total Adjusted EBITDA
Sold 19 owned hotels and exited 25 franchised properties, as part of the Company's key strategic priority to drive consistency of product
Launched several new loyalty program enhancements for La Quinta ReturnsTM, with the program being ranked in the top 5 by U.S. News and World Report as a Best Travel Rewards program in U.S. News's Best Travel Rewards 2016-17 rankings

Overview

"This was a year of significant investment at La Quinta. We invested in our people, in our properties and in laying the foundation for the future of our brand. We made these investments because we believe they will propel us forward and position La Quinta for long-term growth – and we are already starting to see the benefits of our work," said Keith A. Cline, President and Chief Executive Officer of La Quinta.

"During the fourth quarter and throughout 2016, we made meaningful progress on the Company's strategic initiatives to drive consistency in our product and in the delivery of an outstanding guest experience, as well as to drive increased engagement with the La Quinta brand. We saw growth in comparable RevPAR and RevPAR index, as well as improvement in Net Promoter Scores again this quarter, reflecting our ongoing investment in the guest experience. We continued to drive product consistency by removing both owned and franchised hotels from the brand, and beginning a significant repositioning program within our owned hotels. We also introduced several enhancements to our loyalty program to drive guest engagement.

Mr. Cline continued, "We announced in January that we are pursuing the separation of our real estate business from our franchise and management businesses, which could involve spinning off our owned real estate assets as a separate company. This could be the next logical step as we execute on our key initiatives. We believe this separation could allow us to take advantage of growth opportunities that naturally flow from each business model and could prove to be the best path to maximizing the return on our investments in capital and people."

The Company's system-wide portfolio, as of December 31, 2016, is located across 48 states in the U.S., as well as in Canada, Mexico, Honduras and Colombia. The portfolio includes:

	December 31, 2016				December 31, 2015
	# of hotels		# of rooms		# of hotels		# of rooms
Owned⁽¹⁾		321		41,000		340		43,400
Joint Venture		1		200		1		200
Franchised⁽²⁾		566		46,000		545		43,900
Totals		888		87,200		886		87,500


⁽¹⁾	As of December 31, 2016 and 2015, Owned included five hotels (700 rooms) and 13 hotels (1,500 rooms), respectively, designated as assets held for sale, which are subject to definitive purchase agreements.
⁽²⁾	As of December 31, 2016 and 2015, Franchised included five hotels (600 rooms) and one hotel (100 rooms), respectively, under temporary franchise agreements related to formerly owned hotels which are in the process of leaving the system.

The results of operations for the Company for the three months ended December 31, 2016 and 2015 include the following highlights ($ in thousands, except per share amounts):

	Three months ended December 31,
	2016			2015			% chg
Total Revenue	$	222,616		$	228,877			-2.7	%
Franchise and Management Segment Adj. EBITDA		27,585			27,253			1.2	%
Owned Hotels Segment Adj. EBITDA		51,382			60,356			-14.9	%
Total Adj. EBITDA		69,933			77,971			-10.3	%
Total Adj. EBITDA margin		31.4	%		34.1	%
Operating Income		22,214			27,241			-18.5	%
Operating Income Margin		10.0	%		11.9	%
Adj. Operating Income		23,716			33,041			-28.2	%
Adj. Operating Income Margin		10.7	%		14.4	%

	Three Months Ended				Three Months Ended
	December 31, 2016				December 31, 2015				% Change
	Net (Loss) Income		Basic and Diluted EPS		Net Income		Basic and Diluted EPS		Net Income				Basic and Diluted EPS
Net (Loss) Income Attributable to La Quinta Holdings' stockholders	$	(28)	$	-	$	7,828	$	0.06	NM			⁽¹⁾		-100.0	%
Adjusted Net Income Attributable to La Quinta Holdings' stockholders	$	873	$	0.01	$	11,308	$	0.09		-92.3	%			-91.6	%

⁽¹⁾	Change in terms of percentage is not meaningful.

The results of operations for the Company for the full year ended December 31, 2016 and 2015 include the following highlights ($ in thousands, except per share amounts):

	Twelve months ended December 31,
	2016 ⁽¹⁾			2015			% chg
Total Revenue	$	1,006,254		$	1,029,974			-2.3	%
Franchise and Management Segment Adj. EBITDA		116,806			114,610			1.9	%
Owned Hotels Segment Adj. EBITDA		279,536			314,278			-11.1	%
Total Adj. EBITDA		360,378			394,042			-8.5	%
Total Adj. EBITDA margin		35.8	%		38.3	%
Operating Income		78,464			128,071			-38.7	%
Operating Income Margin		7.8	%		12.4	%
Adj. Operating Income		177,814			200,243			-11.2	%
Adj. Operating Income Margin		17.7	%		19.4	%


⁽¹⁾	The Company sold 19 and 12 owned hotels during 2016 and 2015, respectively.

	Year ended				Year ended
	December 31, 2016				December 31, 2015				% Change
	Net (Loss) Income		Basic and Diluted EPS		Net Income		Basic and Diluted EPS		Net Income				Basic and Diluted EPS
Net (Loss) Income Attributable to La Quinta Holdings' stockholders		(1,288)		(0.01)		26,365		0.20	NM			⁽¹⁾	NM			⁽¹⁾
Adjusted Net Income Attributable to La Quinta Holdings' stockholders	$	58,322	$	0.49	$	70,147	$	0.54		-16.9	%			-9.3	%


⁽¹⁾	Change in terms of percentage is not meaningful.

Comparable hotel statistics	Three months ended December 31, 2016			Variance three months ended December 31, 2016 vs. 2015			Year ended December 31, 2016			Variance year ended December 31, 2016 vs. 2015
Owned Hotels
Occupancy		60.7	%		-127	bps		65.5	%		-185	bps
ADR	$	80.98			3.1	%	$	84.68			2.1	%
RevPAR	$	49.17			1.0	%	$	55.44			-0.7	%
Franchised Hotels
Occupancy		63.7	%		86	bps		67.7	%		-8	bps
ADR	$	88.61			1.2	%	$	92.99			0.9	%
RevPAR	$	56.47			2.6	%	$	62.92			0.7	%
System-wide
Occupancy		62.2	%		-25	bps		66.5	%		-100	bps
ADR	$	84.73			2.2	%	$	88.73			1.5	%
RevPAR	$	52.67			1.8	%	$	59.03			0.0	%

Three months ended December 31, 2016

Variance three months ended December 31, 2016 vs. 2015

Year ended December 31, 2016

Variance year ended December 31, 2016 vs. 2015

RevPAR Index⁽¹⁾

95.6

108 bps

95.2

-43 bps

⁽¹⁾

Information based on the STR competitive set of hotels existin

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