Not many positives can be drawn from yesterday's news of the airplane bomb plot in the U.K., other than that it was discovered and stopped before anybody got hurt. By the same token, though, I don't think the revelation will move the needle much when it comes to luxury tourism and the fortunes of Four Seasons (NYSE:FS).
Once again, this Canada-based operator of luxury hotels posted solid results, but they necessitate some explanation. Total revenue fell by 9%, but revenue under management increased by nearly 11%, and the company's hotel management fees grew by more than 16%. Moreover, the gross operating margin continues to expand, and the company logged 18% growth in operating earnings.
So what about profits? Well, reported earnings dropped by 42%. As you might suspect from a global operator of tourist destinations, foreign currency is a big factor with results. If you opt to back those out, profit growth would have been on the order of 24%.
Although the U.S. is a significant center of attention at Four Seasons, accounting for about half of revenue under management, the company does still benefit from diversification. So while terrorism-related occupancy issuances in Bali were partly responsible for the below-average growth in revenue per available room in Asia, overall RevPAR was nevertheless up more than 12%, and up nearly 12% in the United States.
Although there's nothing good about terrorism, it isn't necessarily as troublesome for the travel and leisure industry as it used to be. People are getting used to the new world, and I'm not sure that averted disasters change behavior or attitudes much. Consequently, I don't think lodgers such as Four Seasons or Starwood (NYSE:HOT), nor airliners such as Continental (NYSE:CAL), have much to fear unless there's a successful attack.
Four Seasons carries a premium valuation, but then it pretty much always has. It has less asset risk than many operators, since it manages rather than owns most of its properties, and it owns a rock-solid name brand. It's not my destination of choice for investing, but it might be worth checking on from time to time, in the off chance that it does someday get cheap.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
