Sonesta International Hotels Corp. (SNSTA) filed Quarterly Report for the period ended 2009-11-13.
Sonesta International is engaged in the operation of hotels that it owns or leases in Massachusetts, Florida, Louisiana and Anguilla, B.W.I. It also operates, under management agreements, hotels in Bermuda, Louisiana; and Egypt, and three Nile River cruise vessels. Sonesta International Hotels Corp. has a market cap of $34.76 million; its shares were traded at around $9.4 with and P/S ratio of 0.43. The dividend yield of Sonesta International Hotels Corp. stocks is 1.06%. Sonesta International Hotels Corp. had an annual average earning growth of 0.6% over the past 10 years.
Highlight of Business Operations:
During the third quarter of 2009 the Company recorded a pre-tax gain of $41,843,000 on the dissolution of a development partnership, in which the Company owned a 50% limited partnership interest. The partnership sold its assets, comprising the former Sonesta Beach Resort Key Biscayne, during September 2009 (see Note 3, Investment in Development Partnership). Pre-tax earnings at Royal Sonesta Hotel Boston decreased by $2,908,000 to a loss of $935,000 during the first nine months of 2009. The Company s loss from management activities increased, primarily due to lower management fee income from the Company s hotels in Egypt, and from lower fee income from Sonesta BayFront Hotel Coconut Grove and Trump International Beach Resort Sunny Isles. The management agreement for the Sunny Isles property was terminated by the Company effective April 1, 2008. Interest income decreased by $593,000 primarily due to lower rates of return on the investment of the Company s cash balances. Net income during the 2008 period included pre-tax income of $3,279,000 related to the settlement of a dispute with the owner of Trump International Sonesta Beach Resort Sunny Isles. A detailed analysis of the revenue and income by location follows.
Royal Sonesta Hotel Boston reported operating income of $1,222,000 during the first nine months of 2009 compared to $4,207,000 during the same period in 2008, a decrease of $2,985,000. Revenues decreased by $5,296,000, which decrease was partially offset by a decrease in expenses of $2,311,000, or 12%. Costs and operating expenses decreased by $1,577,000, or 14%, primarily due to lower payroll costs. The hotel has reduced staffing levels in all operating departments, and in addition eliminated certain management positions. Employee benefit costs also decreased due to the elimination of matching contributions to the Company s 401(k) plan, and the elimination of bonuses for the year 2009. Other decreases in expenses included lower administrative and general and human resources expenses, advertising and repairs and maintenance costs.
Operating income at Royal Sonesta Hotel New Orleans decreased from $517,000 during the nine month period ending September 30, 2008 to $361,000 during the nine period ending September 30, 2009. Decreases in revenues of $1,917,000 were for a large part offset by a decrease in expenses of $1,761,000. The decrease in expenses was mainly due to lower costs and operating expenses and rent expense. Costs and operating expenses decreased by $719,000, mainly due to lower payroll and benefits costs and lower utility costs. Rent expense decreased by $1,102,000. The Company operates the Royal Sonesta Hotel New Orleans under a lease, which stipulates a rent payable to the landlord equal to 75% of net cash flow. The rent savings was due to lower operating profits, as well as an increase in capital expenditures in 2009 compared to 2008. Capital expenditures are deductible from cash flow for rent purposes.
During the third quarter of 2009 the Company recorded a gain of $41,843,000 following the dissolution of a development partnership in which the Company was a 50% limited partner. The partnership sold the land and improvements which comprising the former Sonesta Beach Resort Key Biscayne during the 2009 third quarter (see Note 3, Investment in Development Partnership). Pre-tax income at Royal Sonesta Hotel Boston decreased from $1,606,000 to $760,000 in the third quarter of 2009 compared to last year. Demand for hotels in Boston remains weak amidst the economic recession. Pre-tax loss at Royal Sonesta Hotel New Orleans decreased from $570,000 in the 2008 third quarter to $147,000 during the 2009 third quarter. 2008 results were affected by Hurricane Gustav, which did not do any damage to the property but resulted in numerous cancellations during the month of September 2008. Income from management activities decreased due to lower income from the Company s hotels and ships in Egypt as well as lower management income from Sonesta BayFront Hotel Coconut Grove. A detailed analysis of revenues and income by location follows.
Revenues at Royal Sonesta Hotel New Orleans increased by $236,000 to $6,039,000 in the 2009 third quarter compared to last year. Room revenue increased by $148,000 due to a 4% REVPAR increase. The increase was entirely from increased occupancy levels. Revenues from other sources increased by $88,000, primarily due to higher food and beverage revenues as a result of the increased occupancy levels. Business during the month of September 2008 was affected by Hurricane Gustav, which, even though it did not do any damage to the hotel, caused numerous cancellations during that month, resulting in a loss of revenues of approximately $500,000.
Royal Sonesta Hotel Boston reported operating income of $1,480,000 during the 2009 third quarter compared to $2,349,000 during the 2008 third quarter, a decrease of $869,000. Revenue decreases of $1,468,000 during the 2009 third quarter were partially offset by decreased expenses of $599,000. The decrease in expenses was primarily from a $320,000 decrease in costs and operating expenses, mainly due to lower payroll and employee benefits costs. The hotel also reported lower administrative and general and human resources expenses, and lower repairs and maintenance and sales and marketing costs.
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