Compensated Awareness Post View
Disclaimer
Supertel Hospitality, Inc. (SPPR) Utilizing New Investment Strategy to Maximize Returns in Growing Hotel Industry
Supertel Hospitality is a self-administered real estate investment trust that specializes in the ownership of select-service hotels. The company currently owns 49 hotels in 19 states that are operated by various third-party management companies – including Hilton Hotels and Resorts® (HLT), Choice Hotels® (CHH) and Wyndham® Hotels (WYN) – through franchise agreements.
In recent months, Supertel has initiated a new investment strategy involving upper midscale and upscale hotels in order to maximize shareholder returns in the future. In the first quarter of 2015, the company announced the sale of four hotels around the country for a cumulative sum of $7.5 million. In the second quarter, the company sold three additional properties for $9.3 million, and seven other hotels were also listed for sale as of March 31, 2015. With this influx of capital, Supertel has taken steps toward improving its balance sheet by repaying underlying loans. Following associated debt repayments, these sales are expected to generate approximately $14.5 million in net proceeds, which should enable the company to more effectively adhere to its updated investment strategy.
“The company is actively seeking acquisitions as we expand the efforts to recycle capital into newer hotels with higher margins in sectors and markets with characteristics having the potential to create higher shareholder value,” Bill Blackham, chief executive officer of Supertel, stated in a news release. “As this effort is underway, the underlying hotel portfolio appears to be on track to deliver an increased contribution and that should help to accelerate growing the company during this time of transition.”
Despite its transitional efforts, Supertel has realized noteworthy financial growth from its portfolio of properties in recent months. The company’s first quarter revenue from continuing operations was $12.3 million, which was a 9.3 percent year-over-year increase. Likewise, Supertel’s revenue per available room (RevPAR) improved by 9.9 percent to $35.19 for the period, outperforming the growth of the national hotel industry by nearly two percent.
As the global economy continues to recover moving forward, the hotel industry is expected to experience strong growth. According to a report by Statista, revenue generated by the global hotel industry is expected to climb to $550 billion in 2016, representing a 20 percent improvement over the results of 2011. For Supertel, this industry growth should provide a strong platform to post improved financial results. For prospective investors, the company’s recent efforts to increase shareholder value could foreshadow an opportunity to realize strong returns in the years to come.
For more information, visit www.supertelinc.com
