Steiner Leisure Ltd. Reports Operating Results (10-K)
Steiner Leisure Ltd. has a market cap of $680.1 million; its shares were traded at around $45.94 with a P/E ratio of 15.6 and P/S ratio of 1.1. Steiner Leisure Ltd. had an annual average earning growth of 11.7% over the past 10 years. GuruFocus rated Steiner Leisure Ltd. the business predictability rank of 4-star.
Highlight of Business Operations: Steiner Leisure provides its shipboard services in treatment and fitness facilities located on cruise ships. On most newer ships, our services are provided in enhanced, large spa facilities. Many of these facilities are in large fitness and treatment areas, generally located in a single passenger activity area. As of February 11, 2011, 116 of the 151 ships we served had large spa facilities. Ships with large spa facilities provided us with average weekly revenues of $59,521 in 2010 and $56,524 in 2009, as compared to average weekly revenues of $16,986 in 2010 and $14,397 in 2009 for the other ships we served. Our services include massages, facials, waxing, aromatherapy treatments, seaweed wraps, aerobic exercise, yoga, Pilates, hair styling, manicures, pedicures and teeth whitening, as well as a variety of other specialized beauty and body treatments and services, acupuncture (on more than half of the ships we serve) and medi-spa services (BOTOX® Cosmetic, Dysport®, Restylane®, and Perlane® and Veinwave™ treatments and RevitaLash® products) (on some of the ships we serve). Our range of services is designed to capitalize on the significant consumer interest in health awareness, personal care and fitness.
We are obligated to make minimum payments to certain cruise lines regardless of the amount of revenues we receive from guests. As of December 31, 2010, these payments are required by cruise line agreements covering a total of 76 ships served by us. As of December 31, 2010, we had guaranteed total minimum payments to cruise lines (excluding payments based on minimum amounts per passenger per day of a cruise applicable to certain ships served by us) of approximately: $78.8 million in 2011, $3.6 million in 2012, $3.6 million in 2013 and $3.6 million in 2014. These amounts could increase under new or renewed agreements. The amounts set forth for the years after 2011 are the amounts that are currently calculable. It is anticipated that the actual amounts for each of those years will be significantly higher than the amounts indicated.
We operate our land-based spas pursuant to agreements with the owners of the properties involved. Our hotel spas generally are required to pay rent based on a percentage of our revenues, with others having fixed rents. Similar to some of our cruise line agreements, certain of our land-based spa agreements also require that we make minimum rental payments irrespective of the amount of our revenues. As of December 31, 2010, we had guaranteed total minimum payments to owners of our land-based venues of approximately: $7.5 million in 2011, $6.6 million in 2012, $5.5 million in 2013, $5.1 million in 2014, $4.8 million in 2015 and $8.0 million in total thereafter.
In connection with our proposed spa at the Tropicana Las Vegas Hotel and Casino and with our spas at the Atlantis Resort and Casino, the One&Only Ocean Club, the Planet Hollywood Resort and Casino, the Hilton Hawaiian Village Beach Resort and Spa, the Loews Miami Beach Hotel, the Mohegan Sun Resort, the Wyndham Rio Mar, the Swan and Dolphin Hotel, the Grand Californian Hotel and at certain other hotels, in order to obtain the agreements for these premises, we agreed to build out all or a portion of the spa facilities at our expense. The costs of these build-outs have ranged from under $500,000 to approximately $15.6 million. We believe that in order to procure agreements for certain spas at hotels in the future, we may be required to fund the build-out, in whole or in part, of the spa facilities at those hotels. Those build-outs also likely will involve expenditures per facility comparable to, or in excess of, the expenditures we have spent to date on the build-out of hotel spa facilities. The terms of the agreements for our land-based spas range, typically, from three to 25 years (including the terms of renewals available at our option).
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