Sonesta International Hotels Corp. (SNSTA, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $36.9 million; its shares were traded at around $10 with and P/S ratio of 0.4. Sonesta International Hotels Corp. had an annual average earning growth of 0.6% over the past 10 years.
Revenues from management activities decreased from $4,783,000 during the first six months of 2008 to $2,144,000 during the first six months of 2009, a $2,639,000 decrease. The 2008 period included $840,000 of management income from Trump International Sonesta Beach Resort Sunny Isles. The management agreement for this hotel was terminated by the Company effective April 1, 2008. Management income from Sonesta Bayfront Hotel Coconut Grove decreased by $554,000 compared to 2008. The Company is committed to an annual minimum return payment to the hotel s owner, and the Company s policy is to eliminate fees from its income if it does not expect to earn the annual minimum return. As a result, the Company did not record any fee income from the Coconut Grove operations during the first six months of 2009. Demand in Egypt has declined moderately, but did result in decreases in fee income from the Company s managed hotels in this country by $563,000. The decrease was mainly from lower fees earned from the Company s resort hotels. The remaining decrease in management income was due to lower income from the Company s licensed hotels in St. Maarten and from lower income from the Company s purchasing subsidiary, which provides services to Sonesta hotels and third party clients.
Royal Sonesta Hotel Boston reported an operating loss of $258,000 during the six-month period ended June 30, 2009 compared to operating income of $1,858,000 during the same period in 2008, a decrease of $2,116,000. Revenues decreased by $3,828,000, and this decrease was partially offset by a decrease of $1,712,000, or 14%, in overall expenses. Costs and operating expenses decreased by $1,257,000, or 18%, mainly due to lower payroll costs. Helped by lower occupancies, the hotel has reduced staffing levels in all operating departments. Employee benefit costs also decreased due to the elimination of the matching contributions to the Company s 401(k) plan, and the elimination of any bonus payments for 2009. The remaining decrease in expenses was due to decreases in the hotel s overhead costs, including administrative and general expense, maintenance costs and advertising and human resources expenses.
Operating income at Royal Sonesta Hotel New Orleans decreased by $577,000 to $510,000 in the six-month period ended June 30, 2009 compared to last year. Decreases in revenues of $2,153,000 were for a large part offset by a $1,576,000 decrease in expenses. This decrease was mainly due to a $562,000 decrease in costs and operating expenses, resulting mainly from lower payroll and benefit costs, and due to a decrease in rent expense of $793,000. The Company operates the Royal Sonesta Hotel New Orleans under a lease, which includes a rent payable to the landlord equal to 75% of net cash flow. The rent savings was due to the lower operating profits.
During the second quarter of 2009, the Company recorded a net loss of $109,000, or $(0.03) per share, compared to net income of $1,506,000, or $0.41 per share, during the second quarter of 2008. The pre-tax income during the second quarter of 2009 at Royal Sonesta Hotel Boston was $534,000 compared to $1,838,000 during the 2008 second quarter. Demand in the Boston area during the 2009 second quarter continued to be very soft. Income from management activities decreased by $1,031,000 on a pre-tax basis, primarily from lower fee income from Sonesta Bayfront Hotel Coconut Grove and the Company s managed properties in Egypt. A detailed analysis of the revenues and income by location follows.
Royal Sonesta Hotel Boston reported operating income of $1,255,000 during the 2009 second quarter, a $1,329,000 decrease compared to operating income of $2,584,000 in the 2008 second quarter. Revenue declined by $2,340,000, and this decrease was partially offset by decreases in expenses totaling $1,011,000, representing a 15% decrease in overall expenses. The bulk of the savings came from a $741,000, or 19%, decrease in costs and operating expenses. This resulted primarily from lower payroll and employee benefit costs, due to the lower occupancies and the Company s decisions to eliminate contributions to 401(k) plans and bonuses for the 2009 year.
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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 $36.9 million; its shares were traded at around $10 with and P/S ratio of 0.4. Sonesta International Hotels Corp. had an annual average earning growth of 0.6% over the past 10 years.
Highlight of Business Operations:
During the first six months of 2009 the Company recorded a net loss of $2,321,000, or $(0.63) per share, compared to net income of $1,596,000, or $0.43 per share, during the first six months of 2008. The economic recession continued to affect the Company s business during the first six months of 2009. Royal Sonesta Hotel Boston reported a pre-tax loss of $1,695,000 during the first six months of 2009, compared to pre-tax income of $367,000 during the first six months of 2008. Pre-tax income from management activities decreased from $934,000 during the 2008 period to a pre-tax loss of $2,105,000 during the 2009 period, mainly due to lower income from Sonesta Bayfront Hotel Coconut Grove, lower fee income from the Company s operations in Egypt and lower income from Trump International Sonesta Beach Resort Sunny Isles. The management agreement for this property was terminated effective April 1, 2008. Interest income decreased by $405,000 to $208,000 during the first six months of 2009 compared to last year, primarily due to the lower rates of return on the Company s cash balances. A detailed analysis of the revenue and income by location follows.Revenues from management activities decreased from $4,783,000 during the first six months of 2008 to $2,144,000 during the first six months of 2009, a $2,639,000 decrease. The 2008 period included $840,000 of management income from Trump International Sonesta Beach Resort Sunny Isles. The management agreement for this hotel was terminated by the Company effective April 1, 2008. Management income from Sonesta Bayfront Hotel Coconut Grove decreased by $554,000 compared to 2008. The Company is committed to an annual minimum return payment to the hotel s owner, and the Company s policy is to eliminate fees from its income if it does not expect to earn the annual minimum return. As a result, the Company did not record any fee income from the Coconut Grove operations during the first six months of 2009. Demand in Egypt has declined moderately, but did result in decreases in fee income from the Company s managed hotels in this country by $563,000. The decrease was mainly from lower fees earned from the Company s resort hotels. The remaining decrease in management income was due to lower income from the Company s licensed hotels in St. Maarten and from lower income from the Company s purchasing subsidiary, which provides services to Sonesta hotels and third party clients.
Royal Sonesta Hotel Boston reported an operating loss of $258,000 during the six-month period ended June 30, 2009 compared to operating income of $1,858,000 during the same period in 2008, a decrease of $2,116,000. Revenues decreased by $3,828,000, and this decrease was partially offset by a decrease of $1,712,000, or 14%, in overall expenses. Costs and operating expenses decreased by $1,257,000, or 18%, mainly due to lower payroll costs. Helped by lower occupancies, the hotel has reduced staffing levels in all operating departments. Employee benefit costs also decreased due to the elimination of the matching contributions to the Company s 401(k) plan, and the elimination of any bonus payments for 2009. The remaining decrease in expenses was due to decreases in the hotel s overhead costs, including administrative and general expense, maintenance costs and advertising and human resources expenses.
Operating income at Royal Sonesta Hotel New Orleans decreased by $577,000 to $510,000 in the six-month period ended June 30, 2009 compared to last year. Decreases in revenues of $2,153,000 were for a large part offset by a $1,576,000 decrease in expenses. This decrease was mainly due to a $562,000 decrease in costs and operating expenses, resulting mainly from lower payroll and benefit costs, and due to a decrease in rent expense of $793,000. The Company operates the Royal Sonesta Hotel New Orleans under a lease, which includes a rent payable to the landlord equal to 75% of net cash flow. The rent savings was due to the lower operating profits.
During the second quarter of 2009, the Company recorded a net loss of $109,000, or $(0.03) per share, compared to net income of $1,506,000, or $0.41 per share, during the second quarter of 2008. The pre-tax income during the second quarter of 2009 at Royal Sonesta Hotel Boston was $534,000 compared to $1,838,000 during the 2008 second quarter. Demand in the Boston area during the 2009 second quarter continued to be very soft. Income from management activities decreased by $1,031,000 on a pre-tax basis, primarily from lower fee income from Sonesta Bayfront Hotel Coconut Grove and the Company s managed properties in Egypt. A detailed analysis of the revenues and income by location follows.
Royal Sonesta Hotel Boston reported operating income of $1,255,000 during the 2009 second quarter, a $1,329,000 decrease compared to operating income of $2,584,000 in the 2008 second quarter. Revenue declined by $2,340,000, and this decrease was partially offset by decreases in expenses totaling $1,011,000, representing a 15% decrease in overall expenses. The bulk of the savings came from a $741,000, or 19%, decrease in costs and operating expenses. This resulted primarily from lower payroll and employee benefit costs, due to the lower occupancies and the Company s decisions to eliminate contributions to 401(k) plans and bonuses for the 2009 year.
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