DiamondRock Hospitality Co. (DRH), a lodging focused real estate company, Friday reported a sharp decline in fourth quarter profit, a direct reflection of current market turmoil. Funds from operations were down more than 14% from the prior year, hurt by lower room occupancy and average daily rate, amid global economic downturn. Expecting 2009 to be difficult, the company said it intends to preserve its profits and increase liquidity by reducing capital expenditures, expenses and dividend.
Fourth quarter net income dropped to $13.8 million or $0.15 per share from $25.1 million or $0.26 per share in the year-ago quarter.
Funds from operations or FFO were $38.93 million or $0.43 per share, down 14.7% from $45.64 million or $0.48 per share in the comparable quarter a year ago. On an adjusted basis, FFO, excluding certain one-time charges, was $41.5 million or $0.46 per share.
On average, eleven analysts polled by Thomson Reuters expected earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude one-time special items.
Quarterly revenues were down at $217.96 million, compared to $234.26 million in the year-earlier quarter, below Street estimates of $211.65 million. Same-store RevPAR decreased 9.4% to $120.33 from the corresponding quarter a year ago.
Revenue per available room or RevPAR declined primarily due to a 3.6 percentage point decrease in occupancy to 67.8% and a 4.6 percent decrease in the average daily rate to $177.56.
Operating income declined to $26.30 million from $40.53 million in the year-ago quarter.
For full-year 2008, net income decreased to $52.9 million or $0.56 per share from $68.3 million or $0.72 per share last year.
FFO for the year slipped to $131.09 million or $1.41 per share from $140.00 million or $1.49 per share a year ago. Adjusted FFO was $137.8 million or $1.48 per share for the year.
Revenues for the year dropped to $693.2 million from $717.4 million in the prior year.Same-store RevPAR decreased 3.3%.
The Street expected earnings of $1.46 per share on revenues of $6890.93 million for the year.
DiamondRock announced that it will not pay any further dividends in 2008, and intends to pay its next dividend to shareholders of record as of December 31, 2009.
DRH is currently trading at $3.28, up $0.28 or 9.33%, on a volume of 0.84 million shares.
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