With the continued resurgence of business and leisure travel sparking renewed interest in luxury accommodations, upscale hotelier Four Seasons
Domestic occupancy levels improved 160 basis points to 70.9%, which, coupled with a solid 6% increase in average daily rates, produced an 8.3% gain in RevPAR (revenues per available room). International growth rates were even stronger -- ranging from 11.5% in Europe to nearly 50% in the Middle East -- lifting worldwide RevPAR 14.3%. Though the key metric slowed from the second quarter's 22.7% spike, it compares well with similar gains of 9.3% at Marriott
Management fees rose 26.8% to $36.5 million, thanks to improvements in gross operating revenues and profits at managed properties, which gained 12.2% and 22.3%, respectively. Incentive fee income soared 54%, with 33 hotels (seven more than last year) entitled to receive fee income. More importantly, profit margins expanded by better than six full points to 71.9%, resulting in net income from management operations of $26.3 million, a 40% increase from the $18.8 million earned a year ago. (Anyone really interested -- or, really bored -- in converting these figures to U.S. dollars may be curious to know the current exchange rate is $0.83 U.S. to $1 Canadian.)
At the high end of the lodging market, Four Seasons is more vulnerable than its rivals to downturns in the global economy. With travel on the rebound, however, the company is primed to capitalize on a stronger pricing environment. Furthermore, earnings have doubled in each of the past two quarters, RevPAR growth is among the best in the industry, margins are steadily improving, and the already-clean balance sheet has strengthened. Nevertheless, with the stock trading around 67 times trailing earnings, Four Seasons remains extravagantly priced for most.
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Fool contributor Nathan Slaughter owns none of the companies mentioned.
