CFO: Lodgian continues to gain market share

Will Atkinson | May 05, 2008 1:19pm EDT | Comment

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Lodgian, Inc. (AMEX:LGN) CFO James MacLennan said the Atlanta, Ga.-based company’s core hotels are in good physical condition and continue to gain market share. MacLennan made the comments during a Monday morning conference call.

“The upgrades that are underway will further strengthen our [hotel] portfolio,” he said.

At the end of the first quarter, Lodgian had 11 hotel properties up for sale. The 158-room Holiday Inn in Frederick, Maryland, was sold for $5 million in April, CEO Peter Cyrus said. The net proceeds of $4.7 million will be used for general corporate purposes, MacLennan said.

Following the close of the first quarter, Lodgian settled an insurance claim for its Holiday Inn in Marietta, Ga. The hotel had been shut down since January 2006 because of a major fire, the CEO said. Starting the second quarter, the Marietta hotel will be classified as a discontinued operation and Cyrus said the property will soon be marketed for sale.

“Our analysis has demonstrated to us that we would be unable to receive an appropriate return on investment if we were to redevelop the asset,” Cyrus said. “Therefore, we have decided to place the hotel for sale.”

Going forward, Lodgian’s core portfolio will be comprised of 34 hotels. The firm does not currently expect any further changes in its core portfolio, the chief executive said.

Lodgian reported early Monday that its first-quarter loss widened to $7.5 million, or $0.33 per share, versus a loss of $0.2 million, or $0.01 per share, a year earlier. The quarterly results for the three months ended March 31 included a loss from discontinued operations of $2 million. Wall Street analysts expected a loss of $0.02 per share.

Quarterly revenue edged up to $56 million from $54.8 million during the same period of 2007. The results missed Wall Street’s expectation of $62.1 million.

During the first quarter, Lodgian completed a $30 million stock buyback and announced a new repurchase program of up to an additional $10 million.

“In the total program, we have acquired just over 3 million common shares — about 12% of shares outstanding — from May 2006 through March 2008 at a total cost of about $33 million,” MacLennan said. “We intend to buy back shares from time to time as market conditions warrant.”

Excluding five hotels that were undergoing extensive renovations, Lodgian’s revenue per available room — a popular hotel industry measure of business — rose 4.4% during the quarter.

During the first quarter, total operating expenses rose to $20.4 million, compared with $19.7 million a year earlier.

“Given rising prices for many of the elements in a hotel, we managed costs pretty effectively in the first quarter,” James McGrath, vice president for hotel operations, said. “We are looking for ways to reduce our overall costs and have been met with success in a number of areas.”

No analysts asked questions during the conference call.

During midday trading, LGN are down 3.45%, or $0.35, at $9.80.